----

----

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

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

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

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

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

----

----

----

| Item 1. | Financial Statements. |
|---------|-----------------------|

|                                                                                                                                                                                                                            |   | June 30,2009 |        |   | December 31,2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-------------|--------|------------------|--------|
|                                                                                                                                                                                                                            |   | (Unaudited)  |        |   |             |   |
| ASSETS                                                                                                                                                                                                                          |   |         |        |   |             |   |
| Current assets                                                                                                                                                                                                                  |   |         |        |   |             |   |
| Cash                                                                                                                                                                                                                            |   | $            | 85,813      |   |             | $      | 29,411 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                       |   |         | 48,459      |   |             |   | 53,890 |   |
| Total current assets                                                                                                                                                                                                            |   |         | 134,272     |   |             |   | 83,301 |   |
| Property and equipment, net of accumulated depreciation of $22,166 and $17,130, respectively                                                                                                                                    |   |         | 118,041     |   |             |   | 142,437 |   |
| Other assets                                                                                                                                                                                                                    |   |         |        |   |             |   |   |   |
| Patents and trademarks, net of accumulated amortization of $20,563 and $17,882, respectively                                                                                                                                    |   |         | 64,452      |   |             |   | 62,044 |   |
| Security deposit                                                                                                                                                                                                                |   |         | 26,860      |   |             |   | 26,860 |   |
| Total other assets                                                                                                                                                                                                              |   |         | 91,312      |   |             |   | 88,904 |   |
| Total Assets                                                                                                                                                                                                                    |   | $            | 343,625     |   |             | $      | 314,642 |   |
|                                                                                                                                                                                                                            |   |         |        |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                        |   |         |        |   |             |   |   |   |
| Current liabilities                                                                                                                                                                                                             |   |         |        |   |             |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                           |   | $            | 710,908     |   |             | $      | 410,925 |   |
| Accrued compensation                                                                                                                                                                                                            |   |         | 239,000     |   |             |   | 155,000 |   |
| Accrued consulting and director fees                                                                                                                                                                                            |   |         | 182,000     |   |             |   | 178,000 |   |
| Convertible notes payable to officer and director, including accrued interest of $11,199 and $12,171, respectively                                                                                                              |   |         | 61,199      |   |             |   | 186,891 |   |
| Convertible promissory note, including accrued interest of $2,708 and $208 and net of debt discount of $8,938 and $19,283 respectively                                                                                          |   |         | 43,771      |   |             |   | 30,925 |   |
| Notes payable, including accrued interest of $274,261 and $269,833, respectively                                                                                                                                                |   |         | 557,483     |   |             |   | 553,056 |   |
| Fair value of warrants and options                                                                                                                                                                                              |   |         | 398,700     |   |             |   | 121,100 |   |
| Fair value of embedded conversion options                                                                                                                                                                                       |   |         | 71,400      |   |             |   | 164,900 |   |
| Accrued dividends payable                                                                                                                                                                                                       |   |         | 190,328     |   |             |   | 190,328 |   |
| Total current liabilities                                                                                                                                                                                                       |   |         | 2,454,789   |   |             |   | 1,991,125 |   |
|                                                                                                                                                                                                                            |   |         |        |   |             |   |   |   |
| Stockholders' deficiency                                                                                                                                                                                                        |   |         |        |   |             |   |   |   |
| Preferred stock, $.001 par value; 10,000,000 shares authorized; 184,144 shares issued and outstanding (liquidation preference of $2,538,100 and $2,483,950 as of June 30, 2009 and December 31, 2008, respectively)             |   |         | 184         |   |             |   | 184 |   |
| Common stock $.001 par value; 450,000,000 shares authorized; 265,911,229 shares issued and 265,906,829 shares outstanding as of June 30, 2009 and 244,850,034 shares issued and 244,845,634 outstanding as of December 31, 2008 |   |         | 265,910     |   |             |   | 244,849 |   |
| Additional paid-in capital                                                                                                                                                                                                      |   |         | 29,709,888  |   |             |   | 28,528,973 |   |
| Treasury stock, at cost, 4,400 shares of common stock                                                                                                                                                                           |   |         | (5,768      | )      |             |   | (5,768 | ) |
| Subscription receivable (including accrued interest of $22,960 and $12,914, respectively)                                                                                                                                       |   |         | (360,160    | )      |             |   | (350,114 | ) |
| Accumulated deficit, including $17,189,621 and $15,563,011 of deficit accumulated during the development stage as of June 30, 2009 and December 31, 2008, respectively                                                          |   |         | (31,721,218 | )      |             |   | (30,094,607 | ) |
| Total stockholders’ deficiency                                                                                                                                                                                            |   |         | (2,111,164  | )      |             |   | (1,676,483 | ) |
| Total Liabilities and Stockholders' Deficiency                                                                                                                                                                                  |   | $            | 343,625     |   |             | $      | 314,642 |   |

----

|                                                                                                                                                                                                                                                                                           |   | Three Months Ended |        |   | Six Months Ended |   |        | January1, 2002 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|------------------|--------|-------------|----------------|--------|
|                                                                                                                                                                                                                                                                                           |   | June 30,           |        |   | June 30,         |   |        | to June        |   |
|                                                                                                                                                                                                                                                                                           |   | 2009               |        |   | 2008             |   |        | 2009           |   |   | 2008 |   |   | 30, 2009 |   |
| Sales                                                                                                                                                                                                                                                                                          |   | $                  | --          |   |             | $      | --          |           |   | $ | -- |   |   | $ | -- |   |   | $ | 471,290 |   |
| Costs and expenses (income) -                                                                                                                                                                                                                                                                  |   |               |        |   |             |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales                                                                                                                                                                                                                                                                                  |   |               | --          |   |             |   | --          |           |   |   | -- |   |   | $ | -- |   |   |   | 575,680 |   |
| Selling, general and administrative, including stock based compensation of $518,042 and $131,115 for the three months ended June 30, 2009 and 2008 and $582,004 and $238,188 for the six months ended June 30, 2009 and 2008 and $3,254,698 for the period of January 1, 2002 to June 30, 2009 |   | $                  | 876,386     |   |             | $      | 479,952     |           |   | $ | 1,294,798 |   |   |   | 958,566 |   |   |   | 10,218,725 |   |
| Non-dilution agreement termination costs                                                                                                                                                                                                                                                       |   |               | --          |   |             |   | --          |           |   |   | -- |   |   |   | -- |   |   |   | 2,462,453 |   |
| Research and development                                                                                                                                                                                                                                                                       |   |               | 5,802       |   |             |   | 54,404      |           |   |   | 8,036 |   |   |   | 165,925 |   |   |   | 713,804 |   |
| Interest expense, including interest expense to a related party of $2,083 and $0 for the three months ended June 30, 2009 and 2008, respectively and $8,333 and $0 for the six months ended June 30, 2009 and 2008, respectively and $142,106 for period of January 1, 2002 to June 30, 2009   |   |               | 56,798      |   |             |   | 4,823       |           |   |   | 101,877 |   |   |   | 84,322 |   |   |   | 1,618,597 |   |
| Financing costs - extension of warrants                                                                                                                                                                                                                                                        |   |               | --          |   |             |   | --          |           |   |   | -- |   |   |   | -- |   |   |   | 74,700 |   |
| Interest expense - conversion provision                                                                                                                                                                                                                                                        |   |               | --          |   |             |   | --          |           |   |   | -- |   |   |   | -- |   |   |   | 113,000 |   |
| (Gain) loss on settlement of debt                                                                                                                                                                                                                                                              |   |               | --          |   |             |   | --          |           |   |   | -- |   |   |   | (226,467 | ) |   |   | 2,229,903 |   |
| Change in fair value of warrants and embedded conversion option                                                                                                                                                                                                                                |   |               | 59,400      |   |             |   | 77,400      |           |   |   | 221,900 |   |   |   | 705,200 |   |   |   | (345,951 | ) |
| Total cost and expenses (income)                                                                                                                                                                                                                                                               |   |               | 998,386     |   |             |   | 616,579     |           |   |   | 1,626,611 |   |   |   | 1,687,546 |   |   |   | 17,660,911 |   |
|                                                                                                                                                                                                                                                                                           |   |               |        |   |             |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                                                                                                                                                                                                                                       |   |               | (998,386    | )      |             |   | (616,579    | )              |   |   | (1,626,611 | ) |   |   | (1,687,546 | ) |   |   | (17,189,621 | ) |
| Deemed dividend on preferred stock                                                                                                                                                                                                                                                             |   |               | --          |   |             |   | --          |           |   |   | -- |   |   |   | -- |   |   |   | (2,072,296 | ) |
| Preferred stock dividends                                                                                                                                                                                                                                                                      |   |               | (27,075     | )      |             |   | (27,075     | )              |   |   | (54,150 | ) |   |   | (54,150 | ) |   |   | (780,273 | ) |
|                                                                                                                                                                                                                                                                                           |   |               |        |   |             |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to common stockholders                                                                                                                                                                                                                                                   |   | $                  | (1,025,461  | )      |             | $      | (643,654    | )              |   | $ | (1,680,761 | ) |   | $ | (1,741,696 | ) |   | $ | (20,042,190 | ) |
|                                                                                                                                                                                                                                                                                           |   |               |        |   |             |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net loss attributable to common stockholders per common share                                                                                                                                                                                                                |   |               | *           |   |             |   | *           |           |   |   | (0.01 | ) |   |   | (0.01 | ) |   |   |   |   |
|                                                                                                                                                                                                                                                                                           |   |               |        |   |             |   |        |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares outstanding - basic and diluted                                                                                                                                                                                                                       |   |               | 245,072,651 |   |             |   | 242,948,162 |           |   |   | 246,116,473 |   |   |   | 230,555,597 |   |   |   |   |   |

| * | Less that $0.01. |
|---|------------------|

----

|                                                                 |   |            |     |   |         |   |     |    |   |   |            |   |   | Additional   |        |   | Treasury    |   |          |                |   |   |    |   |   | Total      |     |
|----------------------------------------------------------------------|--------|-----------------|----------|--------|--------------|--------|----------|---------|--------|--------|-----------------|--------|--------|--------------|-------------|--------|-------------|--------|---------------|---------------------|--------|--------|---------|--------|--------|------------|----------|
|                                                                 |   | Preferred Stock |     |   | Common Stock |   |     | Paid-In |   |   | Stock           |   |   | Subscription |        |   | Accumulated |   |          | Stockholders’ |   |
|                                                                 |   | Shares          |     |   | Amount       |   |     | Shares  |   |   | Amount          |   |   | Capital      |        |   | at Cost     |   |          | Receivable          |   |   | Deficit |   |   | Deficiency |     |
| Balance at December 31, 2008                                         |   |            | 184,144  |   |         | $      | 184      |    |   |   | 244,850,034     |   |   | $            | 244,849     |   |        | $      | 28,528,973    |                |   | $      | (5,768  | )      |   |       | (350,114 | ) |   | $ | (30,094,607 | ) |   | $ | (1,676,483 | ) |
|                                                                 |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of common stock and warrants:                     |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |
|                                                                 |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| $0.0330 per share – January 16, 2009                           |   |            | --       |   |         |   | --       |    |   |   | 757,576         |   |   |         | 758         |   |        |   | 24,242        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.0320 per share – January 30, 2009                           |   |            | --       |   |         |   | --       |    |   |   | 1,562,500       |   |   |         | 1,563       |   |        |   | 48,437        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 50,000 |   |
| $0.0 320 per share – February 09, 2009                         |   |            | --       |   |         |   | --       |    |   |   | 640,625         |   |   |         | 641         |   |        |   | 19,859        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 20,500 |   |
| $0.0 299 per share – February 13, 2009                         |   |            | --       |   |         |   | --       |    |   |   | 1,672,241       |   |   |         | 1,672       |   |        |   | 48,328        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 50,000 |   |
| $0.0 290 per share – February 17, 2009                         |   |            | --       |   |         |   | --       |    |   |   | 1,724,138       |   |   |         | 1,724       |   |        |   | 48,276        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 50,000 |   |
| $0.0 410 per share – April 29, 2009                            |   |            | --       |   |         |   |     |    |   |   | 609,756         |   |   |         | 610         |   |        |   | 24,390        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.0 440 per share – May 28, 2009                              |   |            | --       |   |         |   | --       |    |   |   | 568,182         |   |   |         | 568         |   |        |   | 24,432        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.0 420 per share – June 3, 2009                              |   |            | --       |   |         |   | --       |    |   |   | 595,238         |   |   |         | 595         |   |        |   | 24,405        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.0600 per share – June 17, 2009                              |   |            | --       |   |         |   | --       |    |   |   | 416,667         |   |   |         | 416         |   |        |   | 24,584        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 25,000 |   |
| $0.0 700 per share – June 23, 2009                             |   |            | --       |   |         |   | --       |    |   |   | 714,286         |   |   |         | 714         |   |        |   | 49,286        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 50,000 |   |
| Common stock issued in repayment of debt:                            |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |       |     |   |   |
| $0.0547 per share – March 14, 2009                             |   |            | --       |   |         |   | --       |    |   |   | 500,000         |   |   |         | 500         |   |        |   | 26,868        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 27,368 |   |
| $0.039 per share – April 17, 2009                              |   |            | --  |   |         |   | --  |    |   |   | 2,694,438  |   |   |         | 2,694  |   |        |   | 102,391  |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   | 105,085  |   |
| $0.040 per share – April 17, 2009                              |   |            | --       |   |         |   | --       |    |   |   | 2,605,548       |   |   |         | 2,606       |   |        |   | 101,613       |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   | 104,219 |   |
| Common stock issued for services                                     |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |       |     |   |   |
| $0.0200 per share – February 23, 2009                          |   |            | --       |   |         |   | --       |    |   |   | 1,000,000       |   |   |         | 1,000       |   |        |   | 19,000        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 20,000 |   |
| $0.041 per share – April 17, 2009                              |   |            | --       |   |         |   | --       |    |   |   | 4,750,000       |   |   |         | 4,750       |   |        |   | 190,000       |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 194,750 |   |
| $0.035 per share – May 6, 2009                                 |   |            | --       |   |         |   | --       |    |   |   | 250,000         |   |   |         | 250         |   |        |   | 8,500         |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 8,750 |   |
| Stock for receivables                                                |   |            | --       |   |         |   | --       |    |   |   | --              |   |   |         | --          |   |        |   | --            |                |   |   | --      |   |   |       | (10,046  | ) |   |   | -- |   |   |   | (10,046 | ) |
| Reclassification of warrants to derivative liability                 |   |            |     |   |         |   |     |    |   |   | --              |   |   |         | --          |   |        |   | 37,800        |                |   |   | --      |   |   |       | --       |   |   |   | -- |   |   |   | 37,800 |   |
| Amortization of warrants and options for employees and non-employees |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   | 358,504  |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   | 358,504  |   |
|                                                                 |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| Net loss                                                             |   |            | --       |   |         |   | --       |    |   |   | --              |   |   |         | --          |   |        |   | --            |                |   |   | --      |   |   |       |     |   |   |   | (1,626,611 | ) |   |   |  (1,626,611 | )  |
|                                                                 |   |            |     |   |         |   |     |    |   |   |            |   |   |         |        |   |        |   |          |                |   |   |    |   |   |       |     |   |   |   |   |   |   |   |   |   |
| BALANCE – June 30, 2009                                        |   |            | 184,144  |   |         | $      | 184      |    |   |   | 265,911,229     |   |   | $            | 265,910     |   |        | $      | 29,709,888    |                |   | $      | (5,768  | )      |   | $          | (360,160 | ) |   | $ | (31,721,218 | ) |   | $ | (2,111,164 | ) |

----

|                                                                                                                                                               |   | Six Months Ended |       |   | January1, 2002 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------|------------|--------|----------------|--------|
|                                                                                                                                                               |   | June 30,         |       |   | to June        |   |
|                                                                                                                                                               |   | 2009             |       |   | 2008           |   |   | 30, 2008 |   |
| Cash Flows from Operating Activities:                                                                                                                              |   |             |       |   |           |   |   |   |   |   |
| Net Loss                                                                                                                                                           |   | $                | (1,626,611 | )      |           | $      | (1,687,546 | ) |   | $ | (17,189,621 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities -                                                                                       |   |             |       |   |           |   |   |   |   |   |   |   |
| Depreciation                                                                                                                                                       |   |             | 11,869     |   |           |   | 2,313 |   |   |   | 28,999 |   |
| Loss on sale of property and equipment                                                                                                                             |   |             | 8,177      |   |           |   | -- |   |   |   | 8,177 |   |
| Amortization of patents                                                                                                                                            |   |             | 2,680      |   |           |   | 2,060 |   |   |   | 19,180 |   |
| Interest expense - amortization of deferred financing                                                                                                              |   |             | --         |   |           |   | 2,510 |   |   |   | 22,530 |   |
| Stock based compensation                                                                                                                                           |   |             | 582,004    |   |           |   | 238,188 |   |   |   | 3,254,698 |   |
| Interest expense - conversion provision                                                                                                                            |   |             | -          |   |           |   | -- |   |   |   | 113,000 |   |
| Stock subscription - interest receivable                                                                                                                           |   |             | (10,046    | )      |           |   | -- |   |   |   | (22,960 | ) |
| Accretion of debt discount                                                                                                                                         |   |             | 85,626     |   |           |   | 67,900 |   |   |   | 654,704 |   |
| Change in fair value of warrants and embedded conversion option                                                                                                    |   |             | 221,900    |   |           |   | 705,200 |   |   |   | (345,951 | ) |
| (Gain) loss on settlement of debt                                                                                                                                  |   |             |       |   |           |   | (226,467 | ) |   |   | 2,229,903 |   |
| Non-dilution agreement termination cost                                                                                                                            |   |             | --         |   |           |   | -- |   |   |   | 2,462,453 |   |
| Inventory reserve                                                                                                                                                  |   |             | --         |   |           |   | -- |   |   |   | 159,250 |   |
| Write-off of stock subscription receivable                                                                                                                         |   |             | --         |   |           |   | -- |   |   |   | 21,800 |   |
| Financing costs - warrant extension                                                                                                                                |   |             | --         |   |           |   | -- |   |   |   | 74,700 |   |
| Change in assets and liabilities -                                                                                                                                 |   |             |       |   |           |   |   |   |   |   |   |   |
| Prepaid expenses and other current assets                                                                                                                          |   |             | 5,431      |   |           |   | (1,779 | ) |   |   | 1,785 |   |
| Security deposit                                                                                                                                                   |   |             | --         |   |           |   | (17,441 | ) |   |   | (17,441 | ) |
| Accounts payable, accrued expenses, accrued dividends, accrued compensation, accrued consulting and director fees, customer deposits and other current liabilities |   |             | 430,611    |   |           |   | (77,287 | ) |   |   | 2,225,565 |   |
| Net Cash Used in Operation Activities                                                                                                                              |   |             | (288,359   | )      |           |   | (992,349 | ) |   |   | (6,299,229 | ) |
|                                                                                                                                                               |   |             |       |   |           |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                                                                                              |   |             |       |   |           |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                                                                 |   |             | --         |   |           |   | (101,891 | ) |   |   | (159,567 | ) |
| Proceeds from sale of property and Equipment                                                                                                                       |   |             | 4,350      |   |           |   | -- |   |   |   | 4,350 |   |
| Patent costs                                                                                                                                                       |   |             | (5,089     | )      |           |   | (23,154 | ) |   |   | (58,960 | ) |
| Net Cash Used in Investing Activities                                                                                                                              |   |             | (739       | )      |           |   | (125,045 | ) |   |   | (214,177 | ) |
|                                                                                                                                                               |   |             |       |   |           |   |   |   |   |   |   |   |
| Cash Flows from Financing Activities:                                                                                                                              |   |             |       |   |           |   |   |   |   |   |   |   |
| Reduction of stock subscription receivable                                                                                                                         |   |             | --         |   |           |   | -- |   |   |   | 65,700 |   |
| Proceeds from sale of preferred stock                                                                                                                              |   |             | --         |   |           |   | -- |   |   |   | 1,130,127 |   |
| Proceeds from sale of common stock                                                                                                                                 |   |             | 345,500    |   |           |   | 1,070,000 |   |   |   | 4,206,060 |   |
| Proceeds from exercise of warrants                                                                                                                                 |   |             | --         |   |           |   | 9,350 |   |   |   | 9,350 |   |
| Proceeds from sale of common stock to be issued                                                                                                                    |   |             | --         |   |           |   | -- |   |   |   | 300,000 |   |
| Deferred financing costs                                                                                                                                           |   |             | --         |   |           |   | -- |   |   |   | (22,530 | ) |
| Proceeds from convertible promissory note                                                                                                                          |   |             | --         |   |           |   | -- |   |   |   | 850,000 |   |
| Proceeds from officers’ and directors’ loans                                                                                                           |   |             | --         |   |           |   | -- |   |   |   | 300,000 |   |
| Repayment of notes payable                                                                                                                                         |   |             | --         |   |           |   | (57,958 | ) |   |   | (274,999 | ) |
| Net Cash Provided by Financing Activities                                                                                                                          |   |             | 345,500    |   |           |   | 1,021,392 |   |   |   | 6,563,708 |   |

----

|                                                                                      |   | Six Months Ended |    |   | January1, 2002 |   |
|-------------------------------------------------------------------------------------------|--------|------------------|---------|--------|----------------|--------|
|                                                                                      |   | June 30,         |    |   | to June        |   |
|                                                                                      |   | 2009             |    |   | 2008           |   |   | 30, 2009 |   |
| Net (Decrease) Increase in Cash                                                           |   |             | 56,402  |   |           |   | (96,002 | ) |   |   | 50,302 |   |
| Cash at Beginning of Year                                                                 |   |             | 29,411  |   |           |   | 415,400 |   |   |   | 35,511 |   |
|                                                                                      |   |             |    |   |           |   |   |   |   |   |   |   |
| Cash at end of period                                                                     |   | $                | 85,813  |   |           | $      | 319,398 |   |   | $ | 85,813 |   |
|                                                                                      |   |             |    |   |           |   |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                         |   |             |    |   |           |   |   |   |   |   |   |   |
| Cash paid during the year for -                                                           |   |             |    |   |           |   |   |   |   |   |   |   |
| Interest                                                                                  |   | $                | 943     |   |           | $      | 2,866 |   |   | $ | 371,296 |   |
|                                                                                      |   |             |    |   |           |   |   |   |   |   |   |   |
| NON-CASH INVESTING ACTIVITIES:                                                            |   |             |    |   |           |   |   |   |   |   |   |   |
| Notes receivable for common stock issued                                                  |   | $                | --      |   |           |   | 1,433,100 |   |   | $ | 337,200 |   |
|                                                                                      |   |             |    |   |           |   |   |   |   |   |   |   |
| NON-CASH FINANCING ACTIVITIES:                                                            |   |             |    |   |           |   |   |   |   |   |   |   |
| Compensation satisfied by issuance of common stock                                        |   |             | --      |   |           |   | -- |   |   | $ | 55,250 |   |
| Common stock issued in satisfaction of liabilities                                        |   | $                | 236,672 |   |           | $      | 362,509 |   |   | $ | 7,037,871 |   |
| Reclassification of derivative liabilities upon conversion of debt                        |   | $                | 86,400  |   |           | $      | 77,700 |   |   | $ | 587,566 |   |
| Reclassification of equity instruments to liabilities upon issuance of equity instruments |   |             | 48,600  |   |           | $      | -- |   |   | $ | 48,600 |   |
|                                                                                      |   |             |    |   |           |   |   |   |   |   |   |   |
| Cancellation of debt for no consideration                                                 |   |             | --      |   |           | $      | -- |   |   | $ | 1,327,321 |   |

----

----

----

|                         |   | June 30, |       |
|------------------------------|--------|----------|------------|
|                         |   | 2009     |       |   | 2008 |   |
| Warrants                     |   |     | 36,353,152 |   |   |   | 28,718,403x |   |
| Convertible promissory notes |   |     | 3,438,554  |   |   |   | 1,632,937 |   |
| Convertible preferred stock  |   |     | 1,545,760  |   |   |   | 1,587,760 |   |
| Total                        |   |     | 41,337,466 |   |   |   | 31,939,100 |   |

----

| 1. | 1,000,000 shares of common stock to a consultant pursuant to the term of a consulting agreement entered into in October 2007.  The Company recorded $20,000 of stock-based compensation in connection with this issuance; |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | 500,000 shares of common stock and granted a five-year option to purchase an additional 500,000 shares of common stock to the Company’s director of production.  The option was made fully exercisable as of its grant date and has an exercise price of $0.041 per share.  Such stock and option were granted under the Company’s 2008 Equity Incentive Plan. The Company recorded stock-basedcompensations of $20,500 and $14,200, respectively; |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | 250,000 shares of common stock and granted a five-year option to purchase an additional 250,000 shares of common stock to the Company’s controller.  The option was made fully exercisable as of its grant date and has an exercise price of $0.041 per share.  Such stock and option were granted under the Company’s 2008 Equity Incentive Plan. The Company recorded stock-based compensationsof $10,250 and $7,100, respectively |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (a) | In March 2007, the Company’s Chief Executive Officer and a former director each made loans of $50,000 to the Company. The loans pay simple interest at the rate of 10% per annum and were due and payable 120 days after funding. The loans from the Chief Executive Officer and the director carry an option that, if the loans were not repaid by June 14, 2007 and June 29, 2007, respectively, such options would entitlethe lenders to convert their debt into shares of Common Stock at a price equal to 50% of the average closing price of the Common Stock over the three previous business days preceding the date of demand for conversion is made. Under accounting guidance provide by EITF 00-19, the conversion price of the loans did not have a determinable number of shares the loans could be settled in and as a result, have been presented as a derivative liability. Accordingly, the conversion option will be marked to market throughearnings at the end of each reporting period.  As of June 30, 2009, the $50,000 loan and $11,199 of accrued interest owed to the former director is still outstanding.   In July 2009, the former director expressed that he would like the Company to pay him back the loan and accrued interest and did not want to convert the loan. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | On October 14, 2008, Leslie J. Kessler, the Company’s Chief Executive Officer, and Terry R. Lazar, the Company’s Chief Financial Officer each made loans of $50,000 to the Company. The loans accrue interest at the rate of 10% per annum.  In addition, the Company issued to each officer warrants to purchase 256,420 shares of common stock at an exercise price of $0.047 per share. The loans  aredue and payable by or on October 14, 2009;  provided ,  however , each executive officer may, at the officer’s option and in lieu of conversion as set in the loan agreements, demand repayment of the loan amount plus all accrued and unpaid interest as of the date demand is received by the Company. The loans are evidenced by the promissory notes of the Company issued to the two officers which each contain a conversion clause that grant the officers, exercisable at the officer’ssole discretion, to convert the loan amount plus all accrued and unpaid interest due under the note into common stock at any time.  The conversion price is $0.039 per share, the closing market price of the common stock as of the funding date of the loans. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (c) | In April 2009, the Company granted the Company’s chief executive officer the right to receive a total of 4,000,000 shares of common stock, 2,000,000 of which were issued in April 2009 and the remaining 2,000,000 shares are issuable on January 1, 2010.  In addition to such stock grants, the officer was granted a five-year option to purchase an additional 3,000,000 shares of common stock.  Theoption was made fully exercisable as of its grant date and has an exercise price of $0.041 per share.  Such stock and option are being issued and were granted under the Company’s 2008 Equity Incentive Plan.  The Company incurred stock-based compensation $82,000 and $84,900, respectively, in connection with such stock and option grant. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | In April 2009, the Company granted the Company’s chief financial officer the right to receive a total of 4,000,000 shares of common stock, 2,000,000 of which were issued in April 2009 and the remaining 2,000,000 shares are issuable on January 1, 2010.  In addition to such stock grants, the officer was granted a five-year option to purchase an additional 3,000,000 shares of common stock.  Theoption was made fully exercisable as of its grant date and has an exercise price of $0.041 per share.  Such stock and option are being issued and were granted under the Company’s 2008 Equity Incentive Plan.  The Company incurred stock-based compensation $82,000 and $84,900, respectively, in connection with such stock and option grant. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (e) | In April 2009, the Company granted the Company’s chief executive officer five-year warrants to purchase an aggregate 4,000,000 shares of common stock.  The warrants were made fully exercisable as of their grant date and have an exercise price of $0.041 per share.  The Company incurred stock-based compensation $113,200 in connection with the grant of such warrants. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (f) | In May 2009, the Company issued 250,000 shares of common stock to a director in order to fulfill the Company’s obligation in connection with the appointment of the director effective March 14, 2008.  The Company incurred stock-based compensation of $8,750 in connection with such stock issuance. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

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

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

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

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

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

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

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

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

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

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

| — | the other risks and uncertainties detailed in this Form 10-Q and, from time to time, in our other filings with the SEC. |
|---------|-------------------------------------------------------------------------------------------------------------------------|

----

----

|   | a. | We paid approximately $360,000 to Bircon Ltd on research and development for our prototype in the six months ended June 30, 2008 and made no such payments in the same period of 2009; |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b. | Our Chief Executive Officer, Chief Financial Officer and some of our consultants agreed to defer their compensation since August 2008 so we can utilize the limited funds in a more productive way. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

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

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

----

----

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

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

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

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

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

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

----

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

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

----

| Dated:  August 13, 2009 | PureSafe Water Systems, Inc. |
|-----------------------------------|------------------------------|
|                              |                         |   |
|                              | By:                          | /s/ Leslie J. Kessler |
|                              |                         | Leslie J. Kessler |
|                              |                         | Chief Executive Officer |
|                              |                         | (Duly Authorized Officer and |
|                              |                         | Principal Executive Officer) |
|                              |                         |   |
|                              | By:                          | /s/ Terry R. Kessler |
|                              |                         | Terry R. Kessler |
|                              |                         | Chief Financial Officer |
|                              |                         | (Duly Authorized Officer and |
|                              |                         | Principal Financial Officer) |

----