----

----

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

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

----

----

| Large      accelerated filer   o           |                                                                             |   | Accelerated      filer   o         |
|-----------------------------------------------------------|----------------------------------------------------------------------------------|--------|---------------------------------------------------|
| Non-accelerated      filer     o | (Do not check if a smaller reporting company) |   | Smaller      reporting company   x |

----

----

----

IN

|          |   |                                                                                                                                                                   |   | Page   |
|---------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| PART      I.  |   | FINANCIAL      INFORMATION                                                                                                                                             |   |   |
|          |   |                                                                                                                                                                   |   |   |
| Item      1.  |   | Financial Statements                                                                                                                                                   |   |   |
|          |   |                                                                                                                                                                   |   |   |
|          |   | Condensed Balance Sheet At June 30, 2008 (Unaudited) and      December 31, 2007                                                                                        |   | 2-3    |
|          |   |                                                                                                                                                                   |   |   |
|          |   | Condensed Statements of Operations (Unaudited) For the three      and six months ended June 30, 2008 and 2007 and for the period January 1,      2002 to June 30, 2008 |   | 4      |
|          |   |                                                                                                                                                                   |   |   |
|          |   | Condensed Statement of Stockholders' Deficiency (Unaudited)      For the Six Months Ended June 30, 2008                                                                |   | 5-6    |
|          |   |                                                                                                                                                                   |   |   |
|          |   | Condensed Statements of Cash Flows (Unaudited) For the Six      Months Ended June 30, 2008 and 2007 and for the Period January 1, 2002 to      June 30, 2008           |   | 7      |
|          |   |                                                                                                                                                                   |   |   |
|          |   | Notes to Condensed Financial Statements      (Unaudited)                                                                                                               |   | 8-13   |
|          |   |                                                                                                                                                                   |   |   |
| Item      2.  |   | Management’s Discussion and Analysis of Financial Condition and      Results of Operations                                                                       |   | 14-16  |
|          |   |                                                                                                                                                                   |   |   |
| Item      3.  |   | Quantitative and Qualitative Disclosures About Market      Risk                                                                                                        |   | 16     |
|          |   |                                                                                                                                                                   |   |   |
| Item      4T. |   | Controls and Procedures                                                                                                                                                |   | 16-17  |
|          |   |                                                                                                                                                                   |   |   |
| PART      II. |   | OTHER      INFORMATION                                                                                                                                                 |   |   |
|          |   |                                                                                                                                                                   |   |   |
| Item      1.  |   | Legal Proceedings                                                                                                                                                      |   | 17     |
|          |   |                                                                                                                                                                   |   |   |
| Item.      1A |   | Risk Factors                                                                                                                                                           |   | 17     |
|          |   |                                                                                                                                                                   |   |   |
| Item      2.  |   | Unregistered Sales of Equity Securities and Use of      Proceeds                                                                                                       |   | 17     |
|          |   |                                                                                                                                                                   |   |   |
| Item      3.  |   | Defaults Upon Senior Securities                                                                                                                                        |   | 17     |
|          |   |                                                                                                                                                                   |   |   |
| Item      4.  |   | Submission of Matters to a Vote of Security      Holders                                                                                                               |   | 17     |
|          |   |                                                                                                                                                                   |   |   |
| Item      5.  |   | Other Information                                                                                                                                                      |   | 17     |
|          |   |                                                                                                                                                                   |   |   |
| Item      6.  |   | Exhibits                                                                                                                                                               |   | 18     |
|          |   |                                                                                                                                                                   |   |   |
| SIGNATURES    |   |                                                                                                                                                                   |

----

ITEM 

CONDENSED 

|                                                                                                           |   | June 30, |    |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                                                                           |   | 2008          |    |   | 2007              |   |
| ASSETS                                                                                                         |   | (UNAUDITED)   |    |   |              |   |
|                                                                                                           |   |          |    |   |              |   |
|                                                                                                           |   |          |    |   |              |   |
| CURRENT      ASSETS:                                                                                           |   |          |    |   |              |   |
| Cash                                                                                                           |   | $             | 319,398 |   |              | $      | 415,400 |   |
| Prepaid      expenses and other current assets                                                                 |   |          | 32,225  |   |              |   | 41,988 |   |
|                                                                                                           |   |          |    |   |              |   |   |   |
| Total      Current Assets                                                                                      |   | $             | 351,623 |   |              |   | 457,388 |   |
|                                                                                                           |   |          |    |   |              |   |   |   |
| FIXED      ASSETS:                                                                                             |   |          |    |   |              |   |   |   |
| Property      and equipment  net of accumulated depreciation of $4,376 and      $2,063, respectively |   |          | 118,565 |   |              |   | 18,987 |   |
|                                                                                                           |   |          |    |   |              |   |   |   |
| OTHER      ASSETS                                                                                              |   |          |    |   |              |   |   |   |
| Patents      and trademarks, net of accumulated amortization of $15,335 and $13,275      respectively          |   |          | 59,417  |   |              |   | 38,323 |   |
| Deferred      financing fees, net of accumulated amortization of $7,530 and $5,020      respectively           |   |          | --      |   |              |   | 2,510 |   |
| Other      assets                                                                                              |   |          | 26,860  |   |              |   | 9,419 |   |
|                                                                                                           |   |          |    |   |              |   |   |   |
| Total      Other Assets                                                                                        |   |          | 86,277  |   |              |   | 50,252 |   |
|                                                                                                           |   |          |    |   |              |   |   |   |
| TOTAL      ASSETS                                                                                              |   | $             | 556,465 |   |              | $      | 526,627 |   |

----

|                                                                                                                                                                                                                                                              |   | June 30, |        |   | December, 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|-------------|--------|--------------------|--------|
|                                                                                                                                                                                                                                                              |   | 2008          |        |   | 2007               |   |
|                                                                                                                                                                                                                                                              |   | (UNAUDITED)   |        |   |               |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |
| LIABILITIES      AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                                     |   |          |        |   |               |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |
| CURRENT      LIABILITIES:                                                                                                                                                                                                                                         |   |          |        |   |               |   |
| Accounts      payable and accrued expenses                                                                                                                                                                                                                        |   | $             | 399,983     |   |               | $      | 492,825 |   |
| Accrued      compensation                                                                                                                                                                                                                                         |   |          | 99,000      |   |               |   | 104,000 |   |
| Accrued      consulting and director fees                                                                                                                                                                                                                         |   |          | 178,000     |   |               |   | 166,000 |   |
| Convertible      notes payable to officer and director (including accrued interest of      $6,233 and $7,425 respectively)                                                                                                                                        |   |          | 56,233      |   |               |   | 107,425 |   |
| Notes      payable (including accrued      interest of $271,259 and $417,542 Respectively)                                                                                                                                                                        |   |          | 565,836     |   |               |   | 895,077 |   |
| Convertible      promissory note (including accrued interest of $0 and $7,945 and net of      debt discount of $0 and $67,900 respectively)                                                                                                                       |   |          | --          |   |               |   | 190,045 |   |
| Fair      value of detachable warrants and options                                                                                                                                                                                                                |   |          | 904,000     |   |               |   | 170,900 |   |
| Fair      value of embedded conversion options                                                                                                                                                                                                                    |   |          | 133,700     |   |               |   | 239,300 |   |
| Accrued      dividends payable                                                                                                                                                                                                                                    |   |          | 190,270     |   |               |   | 190,270 |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |   |   |
| TOTAL      CURRENT LIABILITIES                                                                                                                                                                                                                                    |   | $             | 2,527,022   |   |               | $      | 2,555,842 |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |   |   |
| COMMITMENTS      AND CONTINGENCIES                                                                                                                                                                                                                                |   |          |        |   |               |   |   |   |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |   |   |
| STOCKHOLDER'S      DEFICIENCY:                                                                                                                                                                                                                                    |   |          |        |   |               |   |   |   |
| Preferred      stock  $.001 par value; 10,000,000 shares authorized; 185,194      shares issued and outstanding (liquidation preference $2,429,800 and      $2,375,650 as of June 30, 2008 and December 31, 2007,      respectively)                    |   |          | 185         |   |               |   | 185 |   |
| Common      stock  $.001 par value; 340,000,000 shares authorized      254,292,571 shares issued and 254,288,171 shares outstanding as of June      30, 2008; 204,177,806 shares issued and 204,173,406 shares outstanding as      of December 31, 2007 |   |          | 254,287     |   |               |   | 204,177 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                   |   |          | 29,269,920  |   |               |   | 26,129,184 |   |
| Treasury      stock, at cost - 4,400 shares of common stock                                                                                                                                                                                                       |   |          | (5,768      | )      |               |   | (5,768 | ) |
| Subscriptions      receivable – related party (including accrued interest of      $11,542)                                                                                                                                                                  |   |          | (1,444,642  | )      |               |   | -- |   |
| Accumulated      deficit (includes $15,512,943 and $13,825,397of deficit accumulated during      development stage as of June 30, 2008 and December 31, 2007,      respectively)                                                                                  |   |          | (30,044,539 | )      |               |   | (28,356,993 | ) |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |   |   |
| TOTAL      STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                                               |   |          | (1,970,557  | )      |               |   | (2,029,215 | ) |
|                                                                                                                                                                                                                                                              |   |          |        |   |               |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                                               |   | $             | 556,465     |   |               | $      | 526,627 |   |

----

CONDENSED 

|                                                                                                                                                                                                                                                                                                                                                  |   | For      the Three Months Ended June      30, |        |   | For      the Six Months Ended June      30, |   |        | For      the period January 1, 2002 to June 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-------------|--------|---------------------------------------------|--------|-------------|-------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                  |   | 2008                                          |        |   | 2007                                        |   |        | 2008                                            |   |   | 2007 |   |   | 2008 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |
| Sales                                                                                                                                                                                                                                                                                                                                                 |   | $                                             | -           |   |                                        | $      | -           |                                            |   | $ | - |   |   | $ | 0 |   |   | $ | 471,290 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      And Expenses:                                                                                                                                                                                                                                                                                                                               |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of Sales                                                                                                                                                                                                                                                                                                                                    |   |                                          | --          |   |                                        |   | 8,000       |                                            |   |   | -- |   |   |   | 23,000 |   |   |   | 575,680 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,      General and Administrative –  Including stock based      compensation of $131,115 and $503,838 for the three months ended June 30,      2008 and 2007 and $238,188 and $503,838 for the six months ended June 30,      2008 and 2007, and $2,420,192 for the period January 1, 2002 to June 30,      2008, respectively |   |                                          | 479,952     |   |                                        |   | 757,718     |                                            |   |   | 958,566 |   |   |   | 920,255 |   |   |   | 7,972,512 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-Dilution      Agreement Termination Cost                                                                                                                                                                                                                                                                                                          |   |                                          | --          |   |                                        |   | --          |                                            |   |   | -- |   |   |   | -- |   |   |   | 2,462,453 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| RESEARCH      AND DEVELOPMENT                                                                                                                                                                                                                                                                                                                         |   |                                          | 54,404      |   |                                        |   | --          |                                            |   |   | 165,925 |   |   |   | -- |   |   |   | 601,288 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense - Including interest expense to related parties of $0 and      $2,466 for the three months ended June 30, 2008 and 2007 and $0 and $      2,863 for the six months ended June 30, 2008 and 2007, and $126,765 for      the period January 1, 2002 through June 30, 2008,    respectively                                        |   |                                          | 4,823       |   |                                        |   | 31,925      |                                            |   |   | 84,322 |   |   |   | 139,200 |   |   |   | 1,507,950 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Financing      Costs – Extension of Warrants                                                                                                                                                                                                                                                                                                    |   |                                          | --          |   |                                        |   | --          |                                            |   |   | -- |   |   |   | -- |   |   |   | 74,700 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| (Gain)      /Loss on Settlement  of Debt                                                                                                                                                                                                                                                                                                    |   |                                          | --          |   |                                        |   | --          |                                            |   |   | (226,467 | ) |   |   | -- |   |   |   | 2,387,550 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Expense  - Conversion Provision                                                                                                                                                                                                                                                                                               |   |                                          | --          |   |                                        |   | 113,000     |                                            |   |   | -- |   |   |   | 113,000 |   |   |   | 113,000 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Change      in fair value of warrants and embedded conversion option                                                                                                                                                                                                                                                                                  |   |                                          | 77,400      |   |                                        |   | (94,100     | )                                               |   |   | 705,200 |   |   |   | 18,400 |   |   |   | 289,100 |   |
| Total      Expenses                                                                                                                                                                                                                                                                                                                                   |   |                                          | 616,579     |   |                                        |   | 816,543     |                                            |   |   | 1,687,546 |   |   |   | 1,213,855 |   |   |   | 15,984,233 |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss                                                                                                                                                                                                                                                                                                                                         |   |                                          | (616,579    | )      |                                        |   | (816,543    | )                                               |   |   | (1,687,546 | ) |   |   | (1,213,855 | ) |   |   | (15,512,943 | ) |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Deemed      dividend on Preferred Stock                                                                                                                                                                                                                                                                                                               |   |                                          | --          |   |                                        |   | --          |                                            |   |   | -- |   |   |   | -- |   |   |   | (2,072,296 | ) |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      Stock Dividends                                                                                                                                                                                                                                                                                                                        |   |                                          | (27,075     | )      |                                        |   | (74         | )                                               |   |   | ( 54,150 | ) |   |   | ( 213 | ) |   |   | (671,916 | ) |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      Loss Applicable to Common Stockholders                                                                                                                                                                                                                                                                                                       |   | $                                             | (643,654    | )      |                                        | $      | (816,617    | )                                               |   | $ | (1,741,696 | ) |   | $ | (1,214,068 | ) |   | $ | (18,257,155 | ) |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and Diluted Loss Per Common Share                                                                                                                                                                                                                                                                                                          |   | $                                             | (0.00       | )      |                                        | $      | (0.00       | )                                               |   | $ | (0.01 | ) |   | $ | (0.01 | ) |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                  |   |                                          |        |   |                                        |   |        |                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      Average Common Shares Outstanding – Basic and Diluted                                                                                                                                                                                                                                                                             |   |                                          | 242,948,162 |   |                                        |   | 185,852,398 |                                            |   |   | 230,555,597 |   |   |   | 187,799,075 |   |   |   |   |   |

----

CONDENSED 

|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   | Additional |    |
|------------------------------------------------------------------------------------------------------------------|--------|----------------------|---------|--------|-------------------|--------|--------|---------|--------|--------|-------------|--------|--------|------------|---------|
|                                                                                                             |   | Preferred      Stock |    |   | Common      Stock |   |   | Paid-in |   |
|                                                                                                             |   | Shares               |    |   | Amount            |   |   | Shares  |   |   | Amount      |   |   | Capital    |    |
| FOR      THE SIX MONTHS ENDED JUNE 30, 2008                                                                      |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |
| BALANCE      - JANUARY 1, 2008                                                                                   |   |                 | 185,194 |   |              | $      | 185    |    |   |   | 204,177,806 |   |   | $          | 204,177 |   |   | $ | 26,129,184 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Proceeds      from Sale of Common Stock:                                                                         |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0357      per share) February 29, 2008                                                                       |   |                 | --      |   |              |   | --     |    |   |   | 1,401,869   |   |   |       | 1,402   |   |   |   | 48,598 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0350      per share) March 7, 2008                                                                           |   |                 | --      |   |              |   | --     |    |   |   | 2,857,142   |   |   |       | 2,857   |   |   |   | 97,143 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0350      per share) March 13, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 1,428,571   |   |   |       | 1,429   |   |   |   | 48,571 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0343      per share) March 13, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 2,912,622   |   |   |       | 2,913   |   |   |   | 97,087 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0900      per share) March 26, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 1,666,667   |   |   |       | 1,667   |   |   |   | 148,333 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.1083      per share) March 26, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 461,538     |   |   |       | 462     |   |   |   | 49,538 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.1000      per share) April 11, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 1,000,000   |   |   |       | 1,000   |   |   |   | 99,000 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.1083      per share) May 5, 2008                                                                             |   |                 | --      |   |              |   | --     |    |   |   | 923,077     |   |   |       | 923     |   |   |   | 99,077 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0917      per share) May 15, 2008                                                                            |   |                 | --      |   |              |   | --     |    |   |   | 545,455     |   |   |       | 545     |   |   |   | 49,455 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0963      per share) May 15, 2008                                                                            |   |                 | --      |   |              |   | --     |    |   |   | 519,031     |   |   |       | 519     |   |   |   | 49,481 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0963      per share) May 12, 2008                                                                            |   |                 | --      |   |              |   | --     |    |   |   | 1,557,094   |   |   |       | 1,557   |   |   |   | 148,443 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.1000      per share) May 23, 2008                                                                            |   |                 | --      |   |              |   | --     |    |   |   | 500,000     |   |   |       | 500     |   |   |   | 49,500 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0840      per share) June 30, 2008                                                                           |   |                 | --      |   |              |   | --     |    |   |   | 833,333     |   |   |       | 833     |   |   |   | 69,167 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Stock      for Subscriptions Receivable –related party:                                                    |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0843      per share) May 12, 2008                                                                            |   |                 | --      |   |              |   | --     |    |   |   | 17,000,000  |   |   |       | 17,000  |   |   |   | 1,416,100 |   |
| Accrued      interest                                                                                            |   |                 | --      |   |              |   | --     |    |   |   | --          |   |   |       | --      |   |   |   | -- |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Stock      for compensation:                                                                                     |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0500      per share) March 13, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 1,000,000   |   |   |       | 1,000   |   |   |   | 49,000 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.0400      per share) March 26, 2008                                                                          |   |                 | --      |   |              |   | --     |    |   |   | 333,333     |   |   |       | 333     |   |   |   | 13,000 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.1000      per share) May 29, 2008                                                                            |   |                 | --      |   |              |   | --     |    |   |   | 1,000,000   |   |   |       | 1,000   |   |   |   | 99,000 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Common      stock issued in repayment of debt:                                                                   |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.02943      per share) January 9, 2008                                                                        |   |                 | --      |   |              |   | --     |    |   |   | 947,119     |   |   |       | 947     |   |   |   | 26,927 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.02500      per share) January 17, 2008                                                                       |   |                 | --      |   |              |   | --     |    |   |   | 2,146,324   |   |   |       | 2,146   |   |   |   | 51,512 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.22117      per share) January 17, 2008                                                                       |   |                 | --      |   |              |   | --     |    |   |   | 1,250,000   |   |   |       | 1,250   |   |   |   | 48,750 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.03108      per share) January 22, 2008                                                                       |   |                 | --      |   |              |   | --     |    |   |   | 6,899,269   |   |   |       | 6,899   |   |   |   | 207,530 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| ($0.02943      per share) February 1, 2008                                                                       |   |                 | --      |   |              |   | --     |    |   |   | 562,282     |   |   |       | 562     |   |   |   | 15,986 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Reclassification      of derivative liability                                                                    |   |                 | --      |   |              |   | --     |    |   |   | --          |   |   |       | --      |   |   |   | 77,700 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Amortization      of warrants and option over the vesting  period for employees      and non employees |   |                 | --      |   |              |   | --     |    |   |   | --          |   |   |       | --      |   |   |   | 74,854 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Issuance      of common stock for $100,000 of subscription payable($0.0443 per share)      January 4, 2008       |   |                 | --      |   |              |   | --     |    |   |   | 2,255,639   |   |   |       | 2,256   |   |   |   | (2,256 | ) |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Issuance      of shares for the exercise of Warrants ($0.0850 per share) March 26,      2008                     |   |                 | --      |   |              |   | --     |    |   |   | 110,000     |   |   |       | 110     |   |   |   | 9,240 |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| Net      loss                                                                                                    |   |                 | --      |   |              |   | --     |    |   |   | --          |   |   |       | --      |   |   |   | -- |   |
|                                                                                                             |   |                 |    |   |              |   |   |    |   |   |        |   |   |       |    |   |   |   |   |   |
| BALANCE      – June 30, 2008                                                                               |   |                 | 185,194 |   |              | $      | 185    |    |   |   | 254,288,171 |   |   | $          | 254,287 |   |   | $ | 29,269,920 |   |

----

|                                                                                                             |   | Treasury  |   |   |         |   |             |        |   |   | Total         |   |
|------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|--------|--------------|--------|------------------|-------------|--------|--------|---------------|--------|
|                                                                                                             |   | Stock     |   |   | Subscription |   |             | Accumulated |   |   | Stockholders' |   |
|                                                                                                             |   | - at cost |   |   | Receivable   |   |             | Deficit     |   |   | Deficiency    |   |
| FOR      THE SIX MONTHS ENDED                                                                                    |   |      |   |   |         |   |             |        |   |   |          |   |
| JUNE      30, 2008                                                                                               |   |      |   |   |         |   |             |        |   |   |          |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |
| BALANCE      – JANUARY 1, 2008                                                                             |   | $         | (5,768 | )      |         |   | --               |        |   | $      | (28,356,993   | )      |   | $ | (2,029,215 | ) |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Proceeds      from Sale of Common Stock:                                                                         |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| ($0.0357      per share) February 29, 2008                                                                       |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.0350      per share) March 7, 2008                                                                           |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 100,000 |   |
| ($0.0350      per share) March 13, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.0343      per share) March 13, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 100,000 |   |
| ($0.0900      per share) March 26, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 150,000 |   |
| ($0.1083      per share) March 26, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.1000      per share) April 11, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 100,000 |   |
| ($0.1083      per share) May 5, 2008                                                                             |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 100,000 |   |
| ($0.0917      per share) May 15, 2008                                                                            |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.0963      per share) May 15, 2008                                                                            |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.0963      per share) May 12, 2008                                                                            |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 150,000 |   |
| ($0.1000      per share) May 23, 2008                                                                            |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.0840      per share) June 30, 2008                                                                           |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 70,000 |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Stock      for Subscriptions Receivable –related party                                                     |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| ($0.0843      per share) May 12, 2008                                                                            |   |      | --     |   |         |   | (      1,433,100 | )           |   |   | --            |   |   |   | -- |   |
| Accrued      interest                                                                                            |   |      |   |   |         |   | ( 11,542    | )           |   |   |          |   |   |   | (11,542 | ) |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Stock      for compensation:                                                                                     |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| ($0.0500      per share) March 13, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.0400      per share) March 26, 2008                                                                          |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 13,333 |   |
| ($0.1000      per share) May 29, 2008                                                                            |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 100,000 |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Common      stock issued in repayment of debt:                                                                   |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| ($0.02943      per share) January 9, 2008                                                                        |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 27,874 |   |
| ($0.02500      per share) January 17, 2008                                                                       |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 53,658 |   |
| ($0.22117      per share) January 17, 2008                                                                       |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 50,000 |   |
| ($0.03108      per share) January 22, 2008                                                                       |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 214,429 |   |
| ($0.02943      per share) February 1, 2008                                                                       |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 16,548 |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Reclassification      of derivative liability                                                                    |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 77,700 |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Amortization      of warrants and option over the vesting  period for employees      and non employees |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 74,854 |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Issuance      of common stock for $100,000 of subscription payable($0.0443 per share)      January 4, 2008       |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | -- |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Issuance      of shares for the exercise of Warrants($0.0850 per share) March 26,      2008                      |   |      | --     |   |         |   | --               |        |   |   | --            |   |   |   | 9,350 |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| Net      loss                                                                                                    |   |      | --     |   |         |   | --               |        |   |   | (1,687,546    | )      |   |   | (1,687,546 | ) |
|                                                                                                             |   |      |   |   |         |   |             |        |   |   |          |   |   |   |   |   |
| BALANCE      – JUNE 30, 2008                                                                               |   | $         | (5,768 | )      |         | $      | (1,444,642       | )           |   | $      | (30,044,539   | )      |   | $ | (1,970,557 | ) |

----

CONDENSED 

|                                                                                                                                                            |   | For      the Six Months Ended |       |   | For      the Period January 1, 2002 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|------------|--------|-------------------------------------|--------|
|                                                                                                                                                            |   | June 30,                      |       |   | (Inception) to                 |   |
|                                                                                                                                                            |   | 2008                          |       |   | 2007                                |   |   | June 30, 2008 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES:                                                                                                                      |   |                          |       |   |                                |   |   |   |   |
| Net      loss                                                                                                                                                   |   | $                             | (1,687,546 | )      |                                | $      | (1,213,855 | ) |   | $ | (15,512,943 | ) |
| Adjustments      to reconcile net loss to net cash used in operating      activities:                                                                           |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                    |   |                          | 2,313      |   |                                |   | 234 |   |   |   | 4,376 |   |
| Amortization      of patents                                                                                                                                    |   |                          | 2,060      |   |                                |   | 927 |   |   |   | 13,953 |   |
| Interest      expense - deferred financing                                                                                                                      |   |                          | 2,510      |   |                                |   | 4,687 |   |   |   | 22,530 |   |
| Stock-based      compensation                                                                                                                                   |   |                          | 238,188    |   |                                |   | 503,838 |   |   |   | 2,420,193 |   |
| Interest      expense – conversion provision                                                                                                              |   |                          | --         |   |                                |   | 113,000 |   |   |   | 113,000 |   |
| Accretion      of debt discount                                                                                                                                 |   |                          | 67,900     |   |                                |   | 69,800 |   |   |   | 565,321 |   |
| Change      in fair value of warrants and embedded conversion option                                                                                            |   |                          | 705,200    |   |                                |   | 18,400 |   |   |   | 289,100 |   |
| (Gain)/loss      on settlement of debt                                                                                                                          |   |                          | (226,467   | )      |                                |   | -- |   |   |   | 2,387,550 |   |
| Non-dilution      agreement termination cost                                                                                                                    |   |                          | --         |   |                                |   | -- |   |   |   | 2,462,453 |   |
| Inventory      reserve                                                                                                                                          |   |                          | --         |   |                                |   | -- |   |   |   | 159,250 |   |
| Write-off      of stock subscription receivable                                                                                                                 |   |                          | --         |   |                                |   | -- |   |   |   | 21,800 |   |
| Financing      cost - warrant extension                                                                                                                         |   |                          | --         |   |                                |   | -- |   |   |   | 74,700 |   |
| Changes      in assets and liabilities:                                                                                                                         |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Prepaid      expenses                                                                                                                                           |   |                          | (1,779     | )      |                                |   | (11,403 | ) |   |   | 6,477 |   |
| Security      deposits                                                                                                                                          |   |                          | (17,441    | )      |                                |   | (3,198 | ) |   |   | (17,441 | ) |
| Accounts      payable, accrued expenses, accrued dividends, accrued compensation,      accrued consulting and director fees, and other current      liabilities |   |                          | (77,287    | )      |                                |   | 136,661 |   |   |   | 1,565,644 |   |
| NET      CASH USED IN OPERATING ACTIVITIES                                                                                                                      |   |                          | (992,349   | )      |                                |   | (380,909 | ) |   |   | (5,424,037 | ) |
|                                                                                                                                                            |   |                          |       |   |                                |   |   |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                                                                                       |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Purchase      of property and equipment                                                                                                                         |   |                          | (101,891   | )      |                                |   | (14,040 | ) |   |   | (122,941 | ) |
| Patent      costs                                                                                                                                               |   |                          | (23,154    | )      |                                |   | -- |   |   |   | (48,697 | ) |
| NET      CASH USED  IN INVESTING ACTIVITIES                                                                                                           |   |                          | (125,045   | )      |                                |   | (14,040 | ) |   |   | (171,638 | ) |
|                                                                                                                                                            |   |                          |       |   |                                |   |   |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                                                                                                                      |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Reduction      in stock subscription receivable                                                                                                                 |   |                          | --         |   |                                |   | -- |   |   |   | 65,700 |   |
| Proceeds      from sale of preferred stock                                                                                                                      |   |                          | --         |   |                                |   | -- |   |   |   | 1,130,127 |   |
| Proceeds      from sale of common stock                                                                                                                         |   |                          | 1,070,000  |   |                                |   | 450,000 |   |   |   | 3,760,560 |   |
| Proceeds      from sale of common stock to be issued                                                                                                            |   |                          | --         |   |                                |   | -- |   |   |   | 300,000 |   |
| Proceeds      from the exercise of warrants                                                                                                                     |   |                          | 9,350      |   |                                |   | -- |   |   |   | 9,350 |   |
| Deferred      financing costs                                                                                                                                   |   |                          | --         |   |                                |   | -- |   |   |   | (22,530 | ) |
| Proceeds      from convertible promissory note                                                                                                                  |   |                          | --         |   |                                |   | -- |   |   |   | 800,000 |   |
| Proceeds      from officers and director loans                                                                                                                  |   |                          | --         |   |                                |   | 100,000 |   |   |   | 100,000 |   |
| Repayment      of notes payable                                                                                                                                 |   |                          | (57,958    | )      |                                |   | (39,638 | ) |   |   | (263,645 | ) |
| NET      CASH PROVIDED BY FINANCING ACTIVITIES                                                                                                                  |   |                          | 1,021,392  |   |                                |   | 510,362 |   |   |   | 5,879,562 |   |
| NET      (DECREASE) INCREASE IN CASH                                                                                                                            |   |                          | (96,002    | )      |                                |   | 115,413 |   |   |   | 283,887 |   |
|                                                                                                                                                            |   |                          |       |   |                                |   |   |   |   |   |   |   |
| CASH      AT BEGINNING OF PERIOD                                                                                                                                |   |                          | 415,400    |   |                                |   | 99,716 |   |   |   | 35,511 |   |
| CASH      AT END OF PERIOD                                                                                                                                      |   | $                             | 319,398    |   |                                | $      | 215,129 |   |   | $ | 319,398 |   |
| SUPPLEMENTAL      DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                          |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Cash      paid during the period for: interest                                                                                                                  |   | $                             | 2,866      |   |                                | $      | -- |   |   | $ | 370,353 |   |
|                                                                                                                                                            |   |                          |       |   |                                |   |   |   |   |   |   |   |
| NON-CASH      INVESTING ACTIVITIES:                                                                                                                             |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Notes      Receivable for common stock issued                                                                                                                   |   | $                             | 1,433,100  |   |                                |   | -- |   |   | $ | 1,433,100 |   |
| NON-CASH      FINANCING ACTIVITIES:                                                                                                                             |   |                          |       |   |                                |   |   |   |   |   |   |   |
| Compensation      satisfied by issuance of common stock                                                                                                         |   | $                             | --         |   |                                | $      | -- |   |   | $ | 55,250 |   |
| Common      stock issued in satisfaction of liabilities                                                                                                         |   | $                             | 362,509    |   |                                | $      | 311,078 |   |   | $ | 7,037,871 |   |
| Reclassification      of derivative liabilities upon conversion of debt                                                                                         |   | $                             | 77,700     |   |                                | $      | 140,800 |   |   | $ | 219,200 |   |
| Reclassification      of equity instruments to liabilities upon issuance of debt                                                                                |   | $                             | --         |   |                                | $      | 247,100 |   |   | $ | 288,900 |   |
| Reclassification      of derivative liabilities upon conversion of preferred    stock                                                                           |   | $                             | --         |   |                                | $      | 3,200 |   |   | $ | 3,200 |   |
| Cancellation      of debt for no consideration                                                                                                                  |   | $                             | --         |   |                                | $      | 1,327,321 |   |   | $ | 1,327,321 |   |

----

NOTES 

----

----

|                              |   | June      30, |       |
|-----------------------------------|--------|---------------|------------|
|                              |   | 2008          |       |   | 2007 |   |
| Warrants                          |   |          | 28,718,403 |   |   |   | 16,912,352 |   |
| Convertible      promissory notes |   |          | 1,632,937  |   |   |   | 1,749,272 |   |
| Convertible      preferred stock  |   |          | 1,587,760  |   |   |   | 1,612,760 |   |
| Total                             |   |          | 31,939,100 |   |   |   | 20,274,384 |   |

----

----

|                        |   | Loan Amount |    |   | Number of Shares      purchased |   |
|-----------------------------|--------|-------------|---------|--------|---------------------------------|--------|
| Leslie      J. Kessler, CEO |   | $           | 547,950 |   |                            |   | 6,500,000 |   |
| Terry      R. Lazar, CFO    |   | $           | 547,950 |   |                            |   | 6,500,000 |   |
| Shaul      Kochan           |   | $           | 337,200 |   |                            |   | 4,000,000 |   |

----

|   | 1) | the      April 2008 agreements being deemed rescinded in all respects ab initio and      it being deemed as if the April 2008 agreements were never entered into,      and that all mutual promises, covenants and/or agreements contained in the      April 2008 agreements being of no force and/or  effect; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2) | Ms.      Kessler’s and Mr. Lazar’s notes, as well as their respective      obligations  to repay the amounts due under their respective      notes, being deemed cancelled in all respects ab initio, and it being      deemed as if the  notes were never entered into,      that   they each have  no obligation to repay the      amounts due under their respective notes and that all mutual promises,      covenants and/or agreements contained in their respective notes being of      no force and/or effect; and |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3) | the      aggregate 13 million shares issued to Ms. Kessler and Mr. Lazar being      deemed cancelled in all respects ab initio and it being deemed as if the      shares were never issued oroutstanding. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2009                     |   | $      | 60,400  |   |
|--------------------------|--------|--------|---------|--------|
| 2010                     |   |   | 62,200  |   |
| 2011                     |   |   | 64,100  |   |
| 2012                     |   |   | 66,000  |   |
| 2013                     |   |   | 68,000  |   |
| 2014      and thereafter |   |   | 142,200 |   |
| Total                    |   | $      | 462,900 |   |

----

ITEM 

----

|  | a.) | In      October 2007, the Company settled  an outstanding debt of      $702,933, including $302,933 interest expenses  with a note      holder.  The Company stopped accruing interest      expense. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b.) | In      January 2008, the Chief Executive Officer of the Company converted $58,658      of notes payable into 2,146,324 shares of common  stock. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|  | c.) | In      2007, the Company paid $110,000 to a note holder which significantly      reduced the outstanding principal.  The Company continued to pay      $10,000 each month to the note holder until the entire debt, including      accrued interests were paid off in July2008. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

ITEM 

ITEM 

----

ITEM 

ITEM 

ITEM 

ITEM 

ITEM 

ITEM 

----

ITEM 

|  Exhibit      No. |   |  Description                                                                                                                                                                                                                                                                               |
|------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1                   |   | Consulting      Agreement, dated as of June 6, 2008, by and between Water Chef, Inc., and      Hidell-Eyster International.                                                                                                                                                                     |
| 10.2                   |   | Form      of Stock Subscription Agreement utilized in the sale of common stock and      warrants from October 26, 2007 through July 18, 2008.                                                                                                                                                   |
| 10.3                   |   | Form      of  Warrant issued to investors in connection with      the  sale of common stock and warrants from October 26, 207      through July 18, 2008.                                                                                                                   |
| 10.4                   |   | Letter      Agreement, dated August 18, 2008, between Water Chef, Inc. and Leslie J.      Kessler. [Incorporated by reference to Exhibit 10.3 of the Corporation’s      Current Report on Form 8-K (Date of Report: August 18, 2008), filed with      the Commission on August 18, 2008.] |
| 10.5                   |   | Letter      Agreement, dated August 18, 2008, between Water Chef, Inc. and Terry R.      Lazar. [Incorporated by reference to Exhibit 10.4 of the Corporation’s      Current Report on Form 8-K (Date of Report: August 18, 2008), filed with      the Commission on August 18, 2008.]    |
| 31.1                   |   | Section      302 Certification of Principal Executive Officer.                                                                                                                                                                                                                                  |
| 31.2                   |   | Section      302 Certification of Principal Financial Officer.                                                                                                                                                                                                                                  |
| 32.1                   |   | Section      906 Certification of Principal Executive Officer.                                                                                                                                                                                                                                  |
| 32.2                   |   | Section      906 Certification of Principal Financial  Officer.                                                                                                                                                                                                                                 |

----

SIGNATURES

|                                  | WATER      CHEF, INC.                             |
|---------------------------------------|---------------------------------------------------|
|                                  | (Company)                                         |
|                                  |                                              |
| Date:  August      19, 2008 |                                              |
|                                  | Leslie J. Kessler                       |
|                                  | President      and Chief Executive Officer        |
|                                  | (Principal      Executive Officer)                |
|                                  |                                              |
| Date:  August      19, 2008 |                                              |
|                                  | Terry R. Lazar                          |
|                                  | Chief      Financial Officer                      |
|                                  | (Principal      Financial and Accounting Officer) |

----