----

----

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

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

----

----

----

|                                                                                                                                                                                                                                  |   | June 30,    |        |   | December 31 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|-------------|--------|-------------|--------|
|                                                                                                                                                                                                                                  |   | 2010        |        |   | 2009        |   |
| ASSETS                                                                                                                                                                                                                                |   | (unaudited) |        |   |        |   |
| Current Assets:                                                                                                                                                                                                                       |   |        |        |   |        |   |
| Cash                                                                                                                                                                                                                                  |   | $           | 249,728     |   |        | $      | 107,424 |   |
| Inventories                                                                                                                                                                                                                           |   |        | 273,140     |   |        |   | 97,115 |   |
| Prepaid expenses and other current assets                                                                                                                                                                                             |   |        | 64,642      |   |        |   | 120,083 |   |
| Total Current Assets                                                                                                                                                                                                                  |   |        | 587,510     |   |        |   | 324,622 |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
| Property and equipment, net of accumulated depreciation of $47,351 and $33,356,  respectively                                                                                                                               |   |        | 141,404     |   |        |   | 115,551 |   |
| Patents and trademarks, net of accumulated amortization of $26,556 and $23,504, respectively                                                                                                                                          |   |        | 65,928      |   |        |   | 68,980 |   |
| Other assets                                                                                                                                                                                                                          |   |        | 32,499      |   |        |   | 20,500 |   |
| TOTAL ASSETS                                                                                                                                                                                                                          |   | $           | 827,341     |   |        | $      | 529,653 |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                              |   |        |        |   |        |   |   |   |
| Current Liabilities:                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                                                 |   | $           | 780,878     |   |        | $      | 656,242 |   |
| Accrued compensation                                                                                                                                                                                                                  |   |        | 93,450      |   |        |   | 84,000 |   |
| Accrued consulting and director fees                                                                                                                                                                                                  |   |        | 144,000     |   |        |   | 140,000 |   |
| Convertible notes payable to officer and director (including accrued interest of $50,927 and $14,685 and net of debt discount of $59,610 and $14,706, respectively)                                                                   |   |        | 578,317     |   |        |   | 99,979 |   |
| Convertible promissory note (including accrued interest of $26,729 and $9,194 and net of debt discount of $80,558 and $104,214, respectively)                                                                                         |   |        | 421,171     |   |        |   | 279,980 |   |
| Promissory notes payable (including accrued interest of $147,192 and $127,221, respectively)                                                                                                                                          |   |        | 305,414     |   |        |   | 285,443 |   |
| Fair value of detachable warrants and options                                                                                                                                                                                         |   |        | 1,668,300   |   |        |   | 286,100 |   |
| Fair value of embedded conversion options                                                                                                                                                                                             |   |        | 1,292,100   |   |        |   | 197,900 |   |
| Accrued dividends payable                                                                                                                                                                                                             |   |        | 190,328     |   |        |   | 190,328 |   |
| Total Current Liabilities                                                                                                                                                                                                             |   |        | 5,473,958   |   |        |   | 2,219,972 |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
| Long Term Liabilities:                                                                                                                                                                                                                |   |        |        |   |        |   |   |   |
| Notes Payable                                                                                                                                                                                                                         |   |        | 28,256      |   |        |   | 236,624 |   |
| Notes payable to officers and directors                                                                                                                                                                                               |   |        | --          |   |        |   | 287,000 |   |
| Total Long Term Liabilities                                                                                                                                                                                                           |   |        | 28,256      |   |        |   | 523,624 |   |
| TOTAL LIABILITIES                                                                                                                                                                                                                     |   |        | 5,502,214   |   |        |   | 2,743,596 |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
| Commitments and Contingencies                                                                                                                                                                                                         |   |        |        |   |        |   |   |   |
|                                                                                                                                                                                                                                  |   |        |        |   |        |   |   |   |
| Stockholders' Deficiency:                                                                                                                                                                                                             |   |        |        |   |        |   |   |   |
| Preferred stock $.001 par value; 10,000,000 shares authorized; 184,144  shares issued and outstanding  (liquidation preference $2,646,400 and $2,592,250 as of June 30, 2010 and December 31, 2009, respectively) |   |        | 184         |   |        |   | 184 |   |
| Common stock, $.001 par value; 450,000,000 authorized; 296,021,380 shares issued and 296,016,980 shares outstanding at June 30, 2010; 272,162,945 shares issued and 272,158,545 outstanding at  December 31, 2009           |   |        | 296,025     |   |        |   | 272,162 |   |
| Additional paid-in capital                                                                                                                                                                                                            |   |        | 32,044,274  |   |        |   | 30,086,795 |   |
| Treasury Stock, at cost, 4,400 shares of common stock                                                                                                                                                                                 |   |        | (5,768      | )      |        |   | (5,768 | ) |
| Subscriptions receivable - related party  (including accrued interest of $43,192 and $33,076, respectively)                                                                                                                 |   |        | (380,392    | )      |        |   | (370,276 | ) |
| Accumulated deficit (including $22,097,600 and $17,665,444 of deficit accumulated during development stage at June 30, 2010 and December 31, 2009, respectively)                                                                      |   |        | (36,629,196 | )      |        |   | (32,197,040 | ) |
| Total Stockholders’ Deficiency                                                                                                                                                                                                  |   |        | (4,674,873  | )      |        |   | (2,213,943 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                                                                                                                                                                        |   | $           | 827,341     |   |        | $      | 529,653 |   |

----

|                                                                                                                                                                                                                                                                       |   | Three Months Ended June 30, |        |   | Six Months Ended June 30, |   |        | January 1, 2002 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|---------------------------|--------|-------------|-----------------|--------|
|                                                                                                                                                                                                                                                                       |   | 2010                        |        |   | 2009                      |   |        | 2010            |   |   | 2009 |   |   | To June 30, 2010 |   |
| Sales                                                                                                                                                                                                                                                                      |   | $                           | --          |   |                      | $      | --          |            |   | $ | -- |   |   | $ | -- |   |   | $ | 471,290 |   |
| Costs and expenses (income):                                                                                                                                                                                                                                               |   |                        |        |   |                      |   |        |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Sales                                                                                                                                                                                                                                                              |   |                        | --          |   |                      |   | --          |            |   |   |   |   |   |   |   |   |   |   | 575,680 |   |
| Selling, general and administrative, including stock-based compensation of $7,167 and $518,042 for the three months and $504,084 and $582,004 for the six months ended June 30, 2010 and 2009, respectively and $3,882,891 for the period January 1, 2002 to June 30, 2010 |   |                        | 579,942     |   |                      |   | 876,386     |            |   |   | 1,514,198 |   |   |   | 1,294,798 |   |   |   | 12,335,765 |   |
| Non-dilution agreement termination costs                                                                                                                                                                                                                                   |   |                        | --          |   |                      |   | --          |            |   |   | -- |   |   |   | -- |   |   |   | 2,462,453 |   |
| Research and development                                                                                                                                                                                                                                                   |   |                        | 52,850      |   |                      |   | 5,802       |            |   |   | 75,448 |   |   |   | 8,036 |   |   |   | 961,135 |   |
| Interest expense - including interest expense to a related party of $6,184 and $2,083 for the three months and $16,288 and $8,333 for the six months ended June 30, 2010 and 2009, respectively, and $237,053 for the period Jan 1, 2002 to June 30, 2010                  |   |                        | 57398       |   |                      |   | 56,798      |            |   |   | 257,010 |   |   |   | 101,877 |   |   |   | 1,918,322 |   |
| Financing costs - extension of warrants                                                                                                                                                                                                                                    |   |                        | --          |   |                      |   | --          |            |   |   | -- |   |   |   | -- |   |   |   | 74,700 |   |
| Interest expense - conversion provision                                                                                                                                                                                                                                    |   |                        | --          |   |                      |   | --          |            |   |   | -- |   |   |   | -- |   |   |   | 113,000 |   |
| (Gain) loss on settlement of debt                                                                                                                                                                                                                                          |   |                        | --          |   |                      |   | --          |            |   |   | -- |   |   |   | -- |   |   |   | 2,027,186 |   |
| Change in fair value of detachable warrants and, embedded conversion option                                                                                                                                                                                                |   |                        | 2,560,000   |   |                      |   | 59,400      |            |   |   | 2,585,500 |   |   |   | 221,900 |   |   |   | 2,100,649 |   |
| Total costs and expenses                                                                                                                                                                                                                                                   |   |                        | 3,336,639   |   |                      |   | 998,386     |            |   |   | 4,432,156 |   |   |   | 1,626,611 |   |   |   | 22,568,890 |   |
| Net (loss)                                                                                                                                                                                                                                                                 |   |                        | (3,336,639  | )      |                      |   | (998,386    | )               |   |   | (4,432,156 | ) |   |   | (1,626,611 | ) |   |   | (22,097,600 | ) |
| Deemed dividend on preferred stock                                                                                                                                                                                                                                         |   |                        | --          |   |                      |   | --          |            |   |   | -- |   |   |   | -- |   |   |   | (2,072,296 | ) |
| Preferred stock dividends                                                                                                                                                                                                                                                  |   |                        | (27,075     | )      |                      |   | (27,075     | )               |   |   | (54,150 | ) |   |   | (54,150 | ) |   |   | (888,573 | ) |
|                                                                                                                                                                                                                                                                       |   |                        |        |   |                      |   |        |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss attributable to common stockholders                                                                                                                                                                                                                               |   | $                           | (3,363,714  | )      |                      | $      | (1,025,461  | )               |   | $ | (4,486,306 | ) |   | $ | (1,680,761 | ) |   | $ | (25,058,469 | ) |
| Net loss attributable to common stockholders per common share -                                                                                                                                                                                                            |   |                        |        |   |                      |   |        |            |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted Net loss attributable to common stockholders per common share (* less than a penny a share)                                                                                                                                                              |   |                        | (0.01       | )      |                      |   | *           |            |   |   | (0.02 | ) |   |   | (0.01 | ) |   |   |   |   |
| Weighted average number of shares outstanding                                                                                                                                                                                                                              |   |                        | 289,903,354 |   |                      |   | 245,072,651 |            |   |   | 283,465,778 |   |   |   | 246,116,473 |   |   |   |   |   |

----

|                                                                            |   | Preferred Stock |    |   | Common Stock |   |   | Additional Paid-In |   |   | Treasury Stock |   |   | Subscription |    |   | Accumulated |   |       | Total Stockholders’ |   |
|---------------------------------------------------------------------------------|--------|-----------------|---------|--------|--------------|--------|--------|--------------------|--------|--------|----------------|--------|--------|--------------|---------|--------|-------------|--------|------------|---------------------------|--------|
|                                                                            |   | Shares          |    |   | Amount       |   |   | Shares             |   |   | Amount         |   |   | Capital      |    |   | at Cost     |   |       | Receivable                |   |   | Deficit |   |   | Deficiency |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |
| Balance at December 31, 2009                                                    |   |            | 184,144 |   |         | $      | 184    |               |   |   | 272,162,945    |   |   | $            | 272,162 |   |        | $      | 30,086,795 |                      |   | $ | (5,768 | ) |   | $ | (370,276 | ) |   | $ | (32,197,040 | ) |   | $ | (2,213,943 | ) |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from sale of common stock and warrants:                                |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.0530 per share – January 29, 2010                                      |   |            | --      |   |         |   | --     |               |   |   | 1,886,792      |   |   |         | 1,887   |   |        |   | 98,113     |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 100,000 |   |
| $0.0530 per share – April 5, 2010                                         |   |            | --      |   |         |   | --     |               |   |   | 471,698        |   |   |         | 472     |   |        |   | 24,528     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 25,000 |   |
| $0.0597 per share – April 15, 2010                                        |   |            | --      |   |         |   | --     |               |   |   | 1,675,042      |   |   |         | 1,675   |   |        |   | 98,325     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 100,000 |   |
| $0.0577 per share – April 20, 2010                                        |   |            | --      |   |         |   | --     |               |   |   | 433,276        |   |   |         | 433     |   |        |   | 24,567     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 25,000 |   |
| $0.0630 per share – April 30, 2010                                        |   |            | --      |   |         |   | --     |               |   |   | 793,651        |   |   |         | 794     |   |        |   | 49,206     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 50,000 |   |
| $0.0767 per share – May 13, 2020                                          |   |            | --      |   |         |   | --     |               |   |   | 651,890        |   |   |         | 652     |   |        |   | 49,348     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 50,000 |   |
| $0.1013 per share – May 14, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 740,375        |   |   |         | 740     |   |        |   | 74,260     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 75,000 |   |
| $0.1263 per share – May 17, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 197,941        |   |   |         | 198     |   |        |   | 24,802     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 25,000 |   |
| $0.2327 per share – May 26, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 128,922        |   |   |         | 129     |   |        |   | 29,871     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 30,000 |   |
| $0.2293 per share – May 27, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 109,027        |   |   |         | 109     |   |        |   | 24,891     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 25,000 |   |
| $0.2323 per share – June 3, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 107,619        |   |   |         | 108     |   |        |   | 24,892     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 25,000 |   |
| $0.1990 per share – June 4, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 125,628        |   |   |         | 126     |   |        |   | 24,874     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 25,000 |   |
| $0.1580 per share – June 15, 2010                                         |   |            | --      |   |         |   | --     |               |   |   | 632,911        |   |   |         | 633     |   |        |   | 99,367     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 100,000 |   |
| $0.24566 per share – June 17, 2010                                        |   |            | --      |   |         |   | --     |               |   |   | 432,922        |   |   |         | 433     |   |        |   | 105,918    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 106,351 |   |
| $0.24566 per share – June 17, 2010                                        |   |            | --      |   |         |   | --     |               |   |   | 108,230        |   |   |         | 108     |   |        |   | 26,480     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 26,588 |   |
|                                                                            |
| Common stock issued for accrued compensation and settlement of debt:            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.0510 per share – February 1, 2010                                      |   |            | --      |   |         |   | --     |               |   |   | 2,604,608      |   |   |         | 2,605   |   |        |   | 130,230    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 132,835 |   |
| $0.055 per share – February 19, 2010                                      |   |            | --      |   |         |   | --     |               |   |   | 1,741,464      |   |   |         | 1,741   |   |        |   | 94,039     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 95,780 |   |
| $0.0500 per share – June 2, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 530,278        |   |   |         | 530     |   |        |   | 25,984     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 26,514 |   |
| $0.0350 per share – May 28, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 1,580,967      |   |   |         | 1,581   |   |        |   | 53,753     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 55,334 |   |
| $0.0350 per share – June 7, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 50,000         |   |   |         | 50      |   |        |   | 1,700      |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 1,750 |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for services                                                |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.051 per share – February 1, 2010                                       |   |            | --      |   |         |   | --     |               |   |   | 2,375,000      |   |   |         | 2,375   |   |        |   | 117,475    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 119,850 |   |
| $0.057 per share – February  1, 2010                            |   |            | --      |   |         |   | --     |               |   |   | 2,000,000      |   |   |         | 2,000   |   |        |   | 112,000    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 114,000 |   |
| $0.057 per share – February 9, 2010                                       |   |            | --      |   |         |   | --     |               |   |   | 2,000,000      |   |   |         | 2,000   |   |        |   | 112,000    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 114,000 |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock issued for the exercise of warrants                                |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.24566 per share – June 17, 2010 (cashless)                             |   |            | --      |   |         |   | --     |               |   |   | 843,649        |   |   |         | 844     |   |        |   | (844       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | -- |   |
| $0.0600 per share – June 2, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 100,000        |   |   |         | 100     |   |        |   | 5,900      |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 6,000 |   |
| $0.0580 per share – June 4, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 50,000         |   |   |         | 50      |   |        |   | 2,850      |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,900 |   |
| $0.0410 per share – June 4, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 250,000        |   |   |         | 250     |   |        |   | 10,000     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 10,250 |   |
| $0.0510 per share – June 4, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 50,000         |   |   |         | 50      |   |        |   | 2,500      |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 2,550 |   |
| $0.0412 per share – June 9, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 291,262        |   |   |         | 291     |   |        |   | 11,709     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,000 |   |
| $0.0876 per share – June 9, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 273,973        |   |   |         | 274     |   |        |   | 23,726     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 24,000 |   |
| $0.0359 per share – June 9, 2010                                          |   |            | --      |   |         |   | --     |               |   |   | 334,448        |   |   |         | 334     |   |        |   | 11,672     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,006 |   |
| $0.0412 per share – June 15, 2010                                         |   |            | --      |   |         |   | --     |               |   |   | 291,262        |   |   |         | 291     |   |        |   | 11,709     |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 12,000 |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accrued interest                                                                |   |            | --      |   |         |   | --     |               |   |   | --             |   |   |         | --      |   |        |   | --         |                      |   |   | -- |   |   |   | (10,116 | ) |   |   | -- |   |   |   | (10,116 | ) |
| Reclassification of warrants/Conversion  to derivative liability, net |   |            | --      |   |         |   | --     |               |   |   | --             |   |   |         | --      |   |        |   | 295,400    |                      |   |   | -- |   |   |   | -- |   |   |   | -- |   |   |   | 295,400 |   |
| Amortization of detachable warrants for employees and non-employees             |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   | 156,234    |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 156,234 |   |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                        |   |            | --      |   |         |   | --     |               |   |   | --             |   |   |         | --      |   |        |   | --         |                      |   |   | -- |   |   |   |   |   |   |   | (4,432,156 | ) |   |   | (4,432,156 | ) |
|                                                                            |   |            |    |   |         |   |   |               |   |   |           |   |   |         |    |   |        |   |       |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE – June 30 2010                                                    |   |            | 184,144 |   |         | $      | 184    |               |   |   | 296,025,780    |   |   | $            | 296,025 |   |        | $      | 32,044,274 |                      |   | $ | (5,768 | ) |   | $ | (380,392 | ) |   | $ | (36,629,196 | ) |   | $ | (4,674,873 | ) |

----

|                                                                                                                                                                          |   | Six Months EndedJune 30, |       |   | For the Period From January 1, 2002 through June 30, 2010 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|--------|-----------------------------------------------------------|--------|
| Cash Flows from Operating Activities:                                                                                                                                         |   | 2010                     |       |   | 2009                                                      |   |   |   |   |
| Net loss                                                                                                                                                                      |   | $                        | (4,432,156 | )      |                                                      | $      | (1,626,611 | ) |   | $ | (22,097,600 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities -                                                                                                  |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Loss on Sale of Property and Equipment                                                                                                                                        |   |                     | --         |   |                                                      |   | 8,177 |   |   |   | 8,177 |   |
| Depreciation and amortization                                                                                                                                                 |   |                     | 13,995     |   |                                                      |   | 11,869 |   |   |   | 53,894 |   |
| Amortization of patents and trademarks                                                                                                                                        |   |                     | 3,052      |   |                                                      |   | 2,680 |   |   |   | 25,174 |   |
| Interest expense - amortization of deferred financing                                                                                                                         |   |                     | --         |   |                                                      |   | -- |   |   |   | 22,530 |   |
| Stock based compensation                                                                                                                                                      |   |                     | 504,084    |   |                                                      |   | 582,004 |   |   |   | 3,893,091 |   |
| Interest expense - conversion provision                                                                                                                                       |   |                     | --         |   |                                                      |   | -- |   |   |   | 113,000 |   |
| Interest receivable                                                                                                                                                           |   |                     | (10,116    | )      |                                                      |   | (10,046 | ) |   |   | (43,192 | ) |
| Accretion of debt discount                                                                                                                                                    |   |                     | 165,052    |   |                                                      |   | 85,626 |   |   |   | 852,873 |   |
| Change in fair value of detachable warrants and embedded conversion option                                                                                                    |   |                     | 2,585,500  |   |                                                      |   | 221,900 |   |   |   | 2,100,649 |   |
| (Gain)/loss on settlement of debt                                                                                                                                             |   |                     | --         |   |                                                      |   | -- |   |   |   | 2,027,187 |   |
| Non-dilution agreement termination cost                                                                                                                                       |   |                     | --         |   |                                                      |   | -- |   |   |   | 2,462,453 |   |
| Inventory reserve                                                                                                                                                             |   |                     | --         |   |                                                      |   | -- |   |   |   | 159,250 |   |
| Write-off of stock subscription receivable                                                                                                                                    |   |                     | --         |   |                                                      |   | -- |   |   |   | 21,800 |   |
| Financing costs - warrant extension                                                                                                                                           |   |                     | --         |   |                                                      |   | -- |   |   |   | 74,700 |   |
| Change in assets and liabilities -                                                                                                                                            |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Prepaid expenses and other current assets                                                                                                                                     |   |                     | 68,993     |   |                                                      |   | 5,431 |   |   |   | (846 | ) |
| Inventories                                                                                                                                                                   |   |                     | (189,578   | )      |                                                      |   | -- |   |   |   | (286,693 | ) |
| Other assets                                                                                                                                                                  |   |                     | (12,000    | )      |                                                      |   | -- |   |   |   | (23,081 | ) |
| Accounts payable, accrued expenses, accrued dividends,  accrued compensation, accrued consulting and director fees, customer deposits and other current liabilities |   |                     | 213,249    |   |                                                      |   | 430,611 |   |   |   | 2,714,970 |   |
| Net Cash Used in Operating Activities                                                                                                                                         |   |                     | (1,089,925 | )      |                                                      |   | (288,359 | ) |   |   | (7,921,664 | ) |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Cash Flows from Investing Activities:                                                                                                                                         |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Purchase of property and equipment                                                                                                                                            |   |                     | (9,916     | )      |                                                      |   |   |   |   |   | (177,893 | ) |
| Patent costs                                                                                                                                                                  |   |                     | --         |   |                                                      |   | (5,089 | ) |   |   | (66,429 | ) |
| Proceeds from sale of property & equipment                                                                                                                                |   |                     | --         |   |                                                      |   | 4,350 |   |   |   | 4,350 |   |
| Net Cash Used in Investing Activities                                                                                                                                         |   |                     | (9,916     | )      |                                                      |   | (739 | ) |   |   | (239,972 | ) |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| 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                                                                                                                                            |   |                     | 787,939    |   |                                                      |   | 345,500 |   |   |   | 5,188,999 |   |
| Proceeds from exercise of warrants                                                                                                                                            |   |                     | 81,706     |   |                                                      |   | -- |   |   |   | 91,056 |   |
| Proceeds from sale of common stock to be issued                                                                                                                               |   |                     | --         |   |                                                      |   | -- |   |   |   | 300,000 |   |
| Deferred financing costs                                                                                                                                                      |   |                     | --         |   |                                                      |   | -- |   |   |   | (22,530 | ) |
| Proceeds from convertible promissory note                                                                                                                                     |   |                     | 175,000    |   |                                                      |   | -- |   |   |   | 1,350,000 |   |
| Proceeds from officers and directors convertible loans                                                                                                                        |   |                     | 200,000    |   |                                                      |   | -- |   |   |   | 550,000 |   |
| Repayment of notes payable                                                                                                                                                    |   |                     | (2,500     | )      |                                                      |   | -- |   |   |   | (277,499 | ) |
| Net Cash Provided by Financing Activities                                                                                                                                     |   |                     | 1,242,145  |   |                                                      |   | 345,000 |   |   |   | 8,375,853 |   |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Net increase  in cash                                                                                                                                               |   |                     | 142,304    |   |                                                      |   | 56,402 |   |   |   | 214,217 |   |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Cash at beginning of  period                                                                                                                                        |   |                     | 107,424    |   |                                                      |   | 29,411 |   |   |   | 35,511 |   |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Cash at end of period                                                                                                                                                         |   |                     | 249,728    |   |                                                      |   | 85,813 |   |   |   | 249,728 |   |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                                                                                                                             |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Cash paid during the year for interest                                                                                                                                        |   |                     | 2,310      |   |                                                      |   | 943 |   |   |   | 373,853 |   |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Non-Cash Investing Activities:                                                                                                                                                |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Notes Receivable for common stock issued                                                                                                                                      |   |                     | --         |   |                                                      |   | -- |   |   |   | 337,200 |   |
|                                                                                                                                                                          |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Non-Cash Financing Activities:                                                                                                                                                |   |                     |       |   |                                                      |   |   |   |   |   |   |   |
| Compensation satisfied by issuance of common stock                                                                                                                            |   |                     | 84,000     |   |                                                      |   | -- |   |   |   | 139,250 |   |
| Common stock issued in satisfaction of liabilities                                                                                                                            |   |                     | 228,213    |   |                                                      |   | 236,672 |   |   |   | 7,576,506 |   |
| Reclassification of derivative liabilities                                                                                                                                    |   |                     | 295,400    |   |                                                      |   | 37,800 |   |   |   | 814,466 |   |
| Acquisition of property and equipment through note payable                                                                                                                    |   |                     | 30,000     |   |                                                      |   | -- |   |   |   | 30,000 |   |
| Cancellation of debt for no consideration                                                                                                                                     |   |                     | --         |   |                                                      |   | -- |   |   |   | 1,327,321 |   |

----

----

----

|                         |   | June 30, |       |
|------------------------------|--------|----------|------------|
|                         |   | 2010     |       |   | 2009 |   |
| Warrants                     |   |     | 35,726,652 |   |   |   | 36,353,152 |   |
| Convertible promissory notes |   |     | 15,052,835 |   |   |   | 3,438,554 |   |
| Convertible preferred stock  |   |     | 1,545,760  |   |   |   | 1,545,760 |   |
| Total                        |   |     | 52,325,247 |   |   |   | 41,337,466 |   |

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

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

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

----

|                                    |   | Quoted Prices inActive Markets forIdentical Liabilities(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |   |   | SignificantUnobservableInputs(Level 3) |   |   | Balance atJune 30, 2010 |   |
|-----------------------------------------|--------|------------------------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|----------------------------------------|--------|--------|-------------------------|--------|
| Embedded conversion feature             |   | $                                                                | -      |   |                                      | $      | -      |                                   |   | $      | 1,292,100               |   |   | $ | 1,292,100 |   |
| Warrant and option  liability |   | $                                                                | -      |   |                                      | $      | -      |                                   |   | $      | 1,668,300               |   |   | $ | 1,668,300 |   |
|                                    |   | $                                                                | -      |   |                                      | $      | -      |                                   |   | $      | 2,960,400               |   |   | $ | 2,960,400 |   |

|                                |   | EmbeddedConversion Feature |      |   | WarrantLiability |   |      | Total  |   |
|-------------------------------------|--------|----------------------------|-----------|--------|------------------|--------|-----------|--------|--------|
| Balance January, 1, 2010            |   | $                          | 197,900   |   |             | $      | 286,100   |   |   | $ | 484,000 |   |
| Included in income (expense)        |   |                       | 1,167,700 |   |             |   | 1,417,800 |   |   |   | 2,585,500 |   |
| Included in debt discount           |   |                       | 127,700   |   |             |   | 58,600    |   |   |   | 186,300 |   |
| Included in stockholder's equity    |   |                       | (201,200  | )      |             |   | (94,200   | )      |   |   | (295,400 | ) |
| Transfers in and /or out of Level 3 |   |                       | -         |   |             |   | -         |   |   |   | - |   |
| Balance June 30, 2010               |   | $                          | 1,292,100 |   |             | $      | 1,668,300 |   |   | $ | 2,960,400 |   |

----

----

----

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

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

|   |   |
|--------|--------|

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

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

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

| (f) | In June 30, 2010, the Company’s Chief Operating Officer requested to convert $25,000 he lent to the Company in October 2009 plus accrued interest $1,514 to the Company’s common stock.  The Company issued 530,278 shares of common stock to the designated party the Chief Operating Officer instructed.  In addition, the Chief Operating Officer also exercised 100,000 warrants that he received through the October 2009 loan, at the exercise price of $0.06 per share.  The Company issued 100,000 shares to the Chief Operating Officer and received $6,000 in connection with such warrant exercise. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | On April 7, 2010, the Company’s Chief Executive Officer, and the Company’s Chief Financial Officer each made loans of $100,000 to the Company.  The loans accrue interest at the rate of 7% per annum.  In addition, the Company issued warrants to each officer to purchase 431,034 shares of common stock at an exercise price of $0.059 per share.  The loans are due and payable by or on October 7, 2010.  The interest accrued on the loans are to be paid on the 7th day of each month until the loans mature and paid off.  The loans were evidenced by the promissory notes the Company issued to the two officers which each contain a conversion clause that allow the officers at the officer’s sole option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock.  The conversion price was set at $0.059 per share, which was the closing market price of the common stock as of the closing date of the loans. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| (a) | On July 12, 2010, the Company issued 1,764,706 shares of common stock in settlement of $90,000 of accounts payable due to Hidell-Eyster Technical Services (“Hidell-Eyster”) with whom the Company signed a General Management Agreement with in March 2010.  Hidell-Eyster subsequently transferred all shares to their employees including 419,118 shares to Carroll S. Keim, President and Chief Executive Officer of Hidell-Eyster, who also serves as the Company’s President under the March 2010 agreement, and 419,117 shares to Henry R. Hidell, Founder and Chairman of Hidell-Eyster, who also serves as the Company’s Chief Operating Officer under the same agreement. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | On July 12, 2010, the Company issued a total of 535,716 shares of common stock to its six Board directors each of which  received 89,286 shares.  The issuance is part of the annual compensation that was authorized by the Company’s Board of directors on May 26, 2010, when the Board approved the annual director fees to be $50,000, paid in shares of common stock,  payable quarterly, and  valued at the beginning of each quarter. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | On July 30, 2010, the Company issued 634,345 shares of common stock for gross proceeds of $42,000 received through exercise 634,345 warrants. On the date of exercise, the Company reclassified to equity $37,600 of the derivative liability related to the fair value of the warrants. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | On August 2, 2010, the Company issued 312,500 shares of common stock for gross proceeds of $12,000 received through exercise 312,500 warrants. On the date of exercise, the Company reclassified to equity $31,100 of the derivative liability related to the fair value of the warrants. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | On August 3, 2010, for gross proceeds of $125,000 the Company sold an aggregate of 1,156,766 shares of common stock and warrants to purchase additional 231,353 shares of common stock at an exercise price of $0.13.  The warrants have a term of three years.  The Company evaluated the transaction under ASC 815 and was not able to determine if the Company had sufficient authorized shares of common stock to settle the warrants.  Accordingly, on the date of closing the transaction the Company recorded the warrants as a derivative liability at their fair value of $16,000 and will be marked to market through earnings at the end of each reporting period. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

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

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

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

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

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

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

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

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

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

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

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

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

----

----

----

----

----

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

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

----

----

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

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

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

----

| Date              | Title and Amount(1)                                                                                                                    | Purchaser               | Principal | Total Offering Price/ UnderwriterUnderwriting Discounts |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------|-----------|---------------------------------------------------------|
|              |                                                                                                                                   |                    |      |                                                    |
| February 1, 2010  | 2,000,000 shares of common stock issued as executive compensation.                                                                     | Chief Executive Officer | NA        | $0.057 per share/NA                                     |
| February 1, 2010  | Five-year Warrants to purchase 50,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation. | Corporate employee      | NA        | $-0-/NA                                                 |
| February 1, 2010  | Five-year Warrants to purchase 50,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation. | Corporate employee      | NA        | $-0-/NA                                                 |
| February 1, 2010  | Five-year Warrants to purchase 50,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation. | Corporate employee      | NA        | $-0-/NA                                                 |
| February 1, 2010  | Five-year Warrants to purchase 25,000 shares of common stock at an exercise price of $0.051 per share issued as employee compensation. | Corporate employee      | NA        | $-0-/NA                                                 |
| February9, 2010   | 2,000,000 shares of common stock issued as executive compensation.                                                                     | Chief Financial Officer | NA        | $0.057 per share/NA                                     |
| February 26, 2010 | 500,000 shares of common stock issued as executive compensation.                                                                       | Corporate officer       | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 500,000 shares of common stock issued as executive compensation.                                                                       | Corporate employee      | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 50,000 shares of common stock issued as employee compensation.                                                                         | Corporate employee      | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 50,000 shares of common stock issued as employee compensation.                                                                         | Corporate employee      | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 50,000 shares of common stock issued as employee compensation.                                                                         | Corporate employee      | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 588,235 shares of common stock issued in settlement of $30,000 debt.                                                                   | Chief Financial Officer | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 1,058,824 shares of common stock issued in settlement of $54,000 debt.                                                                 | Chief Executive Officer | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 500,000 shares of common stock issued in settlement of $25,500 debt.                                                                   | Corporate officer.      | NA        | $0.051 per share/NA                                     |
| February 26, 2010 | 457,549 shares of common stock issued in settlement of $23,335 debt.                                                                   | Corporate employee      | NA        | $0.051 per share/NA                                     |
| March 2, 2010     | 1,741,464 shares of common stock issued in settlement of $95,780 debt.                                                                 | Consultant              | NA        | $0.055/NA                                               |

----

| March 5, 2010  | 25,000 shares of common stock issued as employee compensation.                                                                             | Corporate employee      | NA     | $0.051/NA           |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|--------|---------------------|
| March 5, 2010  | 600,000 shares of common stock issued as executive compensation.                                                                           | Chief Financial Officer | NA     | $0.051 per share/NA |
| March 8, 2010  | Five-year Warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.052 per share issued as executive compensation. | Chief Executive Officer | NA     | $-0-/NA             |
| March 8, 2010  | Five-year Warrants to purchase 2,000,000 shares of common stock at an exercise price of $0.052 per share issued as executive compensation. | Corporate officer       | NA     | $-0-/NA             |
| March 18, 2010 | 600,000 shares of common stock issued as executive compensation.                                                                           | Chief Executive Officer | NA     | $0.051 per share/NA |
|           |                                                                                                                                       |                    |   |                |
| March 22, 2010 | 943,396 shares of common stock and three year warrants to purchase 188,679 shares of common stock issued in 2010 private placement.        | Private investor.       | NA     | $0.053/NA           |
| March 22, 2010 | 943,396 shares of common stock and three year warrants to purchase 188,679 shares of common stock issued in 2010 private placement.        | Private investor.       | NA     | $.053/NA            |
| April 7, 2010  | Five-year Warrants to purchase 431,034 shares of common stock at an exercise price of $0.052 per share issued in connection with a loan.   | Chief Executive Officer | NA     | $-0-/NA             |
| April 7, 2010  | Five-year Warrants to purchase 431,034 shares of common stock at an exercise price of $0.052 per share issued in connection with a loan.   | Chief Financial Officer | NA     | $-0-/NA             |
| April 16, 2010 | 1,675,042 shares of common stock and three year warrants to purchase 335,008 shares of common stock issued in 2010 private placement.      | Private investor        | NA     | $0.0597/NA          |
| April 26, 2010 | 433,276 shares of common stock and three year warrants to purchase 86,655 shares of common stock issued in 2010 private placement.         | Private investor        | NA     | $0.0577/NA          |
| May 4, 2010    | 793,651 shares of common stock and three year warrants to purchase 158,730 shares of common stock issued in 2010 private placement.        | Private investor        | NA     | $0.0630/NA          |

----

| May 4, 2010  | 471,698 shares of common stock and three year warrants to purchase 94,340 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.0530/NA |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------|------------------|--------|------------|
| May 19, 2010 | 236,920 shares of common stock and three year warrants to purchase 47,384 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.1013/NA |
| May 19, 2010 | 246,792 shares of common stock and three year warrants to purchase 49,358 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.1013/NA |
| May 19, 2010 | 256,663 shares of common stock and three year warrants to purchase 51,333 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.1013/NA |
| May 19, 2010 | 651,890 shares of common stock and three year warrants to purchase 130,378 shares of common stock issued in 2010 private placement. | Private investor | NA     | $0.0767/NA |
| May 26, 2010 | 197,941 shares of common stock and three year warrants to purchase 39,588 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.1516/NA |
| May 26, 2010 | 128,922 shares of common stock and three year warrants to purchase 25,785 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.2327/NA |
| May 28, 2010 | 109,027 shares of common stock and three year warrants to purchase 21,805 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.2293/NA |
| May 28, 2010 | 1,580,967 shares of common stock issued in connection with loan conversion.                                                         | Private investor | NA     | $0.0350/NA |
|         |                                                                                                                                |             |   |       |
|         |                                                                                                                                |             |   |       |
| June 1, 2010 | 107,619 shares of common stock and three year warrants to purchase 21,524 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.2323/NA |
| June 4, 2010 | 125,628 shares of common stock and three year warrants to purchase 25,126 shares of common stock issued in 2010 private placement.  | Private investor | NA     | $0.1990/NA |

----

| June 7, 2010  | 50,000 shares of common stock issued in connection with loan conversion.                                                            | Private investor        | NA | $0.0350/NA  |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------|-------------------------|----|-------------|
| June 7, 2010  | 50,000 shares of common stock issued through exercise of warrants                                                                   | Private investor        | NA | $0.0580/NA  |
| June 7, 2010  | 250,000 shares of common stock issued through exercise of warrants                                                                  | Private investor        | NA | $0.0410/NA  |
| June 7, 2010  | 50,000 shares of common stock issued through exercise of warrants                                                                   | Private investor        | NA | $0.0510/NA  |
| June 8, 2010  | 530,278 shares of common stock issued through conversion of loan                                                                    | Chief Operating Officer | NA | $0.0500/NA  |
| June 9, 2010  | 100,000 shares of common stock issued through exercise of warrants                                                                  | Chief Operating Officer | NA | $0.0600/NA  |
| June 14, 2010 | 291,262 shares of common stock issued in connection with loan conversion.                                                           | Private investor        | NA | $0.0412/NA  |
| June 14, 2010 | 291,262 shares of common stock issued in connection with loan conversion.                                                           | Private investor        | NA | $0.0412/NA  |
| June 14, 2010 | 273,973 shares of common stock issued in connection with loan conversion.                                                           | Private investor        | NA | $0.0876/NA  |
| June 14, 2010 | 334,448 shares of common stock issued in connection with loan conversion.                                                           | Private investor        | NA | $0.0359/NA  |
| June 15, 2010 | 632,911 shares of common stock and three year warrants to purchase 126,582 shares of common stock issued in 2010 private placement. | Private investor        | NA | $0.1580/NA  |
| June 16, 2010 | 168,730 shares of common stock issued through exercise of warrants with cashless option                                             | Private investor        | NA | $0.24566/NA |
| June 16, 2010 | 674,919 shares of common stock issued through exercise of warrants with cashless option                                             | Private investor        | NA | $0.24566/NA |
| June 17, 2010 | 291262 shares of common stock issued through exercise of warrants                                                                   | Private investor        | NA | $0.0412/NA  |
| June 17, 2010 | 108,230 shares of common stock and three year warrants to purchase 21,646 shares of common stock issued in 2010 private placement.  | Private investor        | NA | $0.24566/NA |
| June 17, 2010 | 432,922 shares of common stock and three year warrants to purchase 86,584 shares of common stock issued in 2010 private placement.  | Private investor        | NA | $0.24566/NA |

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

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

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

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

| Number | Exhibit Description |
|--------|---------------------|

|   | 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer. |
|--------|------|------------------------------------------------------------------------|

|   | 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer. |
|--------|------|------------------------------------------------------------------------|

|   | 32.1 | Section 1350 Certification of Principal Executive Officer. |
|--------|------|------------------------------------------------------------|

|   | 32.2 | Section 1350 Certification of Principal Financial Officer. |
|--------|------|------------------------------------------------------------|

| Dated:  August 16, 2010 | PureSafe Water Systems, Inc. |
|-----------------------------------|------------------------------|
|                              |                         |   |
|                              |                         |   |
|                              | By:                          | /s/ Leslie J. Kessler |
|                              |                         | Leslie J. Kessler |
|                              |                         | Chief Executive Officer |
|                              |                         | (Duly Authorized Officer and |
|                              |                         | Principal Executive Officer) |
|                              |                         |   |
|                              | By:                          | /s/ Terry R. Lazar |
|                              |                         | Terry R. Lazar |
|                              |                         | Chief Financial Officer |
|                              |                         | (Duly Authorized Officer and |
|                              |                         | Principal Financial Officer) |

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