----

----

| þ                                            | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  |
|---------------------------------------------------|------------------------------------------------------------------------------------------|
|                                              |                                                                                     |
| For the quarterly period ended December 31, 2010  |
|                                              |                                                                                     |
| OR                                                |
|                                              |                                                                                     |
| o                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|                                              |                                                                                     |
| For the transition period from _______ to _______ |

| Delaware                                                     |   | 56-2600575               |
|--------------------------------------------------------------|--------|--------------------------|
| (State or other jurisdiction of          |   | (I.R.S. Employer    |
| incorporation or organization)                     |   | Identification No.) |
|                                                         |   |                     |
| 1460 Park Lane South, Suite 1, Jupiter, Florida              |   | 33458                    |
| (Address of principal executive offices) |   | (Zip Code)          |

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

| Class                                    |   | Outstanding at February 11, 2011 |
|------------------------------------------|--------|----------------------------------|
| Common Stock, $0.001 par value per share |   | 18,404,829 shares                |

----

----

----

| PART I – FINANCIAL INFORMATION |                                                                                         |
|--------------------------------------|----------------------------------------------------------------------------------------------|
|                                 |                                                                                         |   |   |   |   |
| Item 1.                              | Consolidated Financial Statements.                                                      |   |   | 3 |   |
|                                 |                                                                                         |   |   |   |   |
|                                 | Condensed Consolidated Balance Sheets                                                        |   |   | 3 |   |
|                                 |                                                                                         |   |   |   |   |
|                                 | Condensed Consolidated Statements of Operations (Unaudited)                                  |   |   | 4 |   |
|                                 |                                                                                         |   |   |   |   |
|                                 | Condensed Consolidated Statements of Cash Flows (Unaudited)                                  |   |   | 5 |   |
|                                 |                                                                                         |   |   |   |   |
|                                 | Notes to Condensed Consolidated Financial Statements (Unaudited)                        |   |   | 6 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 2.                         | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |   |   | 17 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 3.                    | Quantitative and Qualitative Disclosures About Market Risk.                                  |   |   | 23 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 4.                    | Controls and Procedures.                                                                     |   |   | 24 |   |
|                                 |                                                                                         |   |   |   |   |
| PART II – OTHER INFORMATION    |                                                                                         |
|                                 |                                                                                         |   |   |   |   |
| Item 1.                              | Legal Proceedings.                                                                           |   |   | 24 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 1A.                             | Risk Factors.                                                                                |   |   | 24 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 2.                              | Unregistered Sales of Equity Securities and Use of Proceeds.                                 |   |   | 24 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 3.                              | Defaults Upon Senior Securities.                                                             |   |   | 25 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 4.                              | Removed and Reserved.                                                                        |   |   | 25 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 5.                              | Other Information.                                                                           |   |   | 25 |   |
|                                 |                                                                                         |   |   |   |   |
| Item 6.                              | Exhibits.                                                                                    |   |   | 25 |   |
|                                 |                                                                                         |   |   |   |   |
| SIGNATURES                           |                                                                                         |   |   | 26 |   |

----

| ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS. |
|------------------------------------------------------------|

|                                                                                                                               |   | As of December 31, |        |   | As of June 30, |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|-------------|--------|--------------------------|--------|
|                                                                                                                               |   | 2010                         |        |   | 2010                     |   |
|                                                                                                                               |   | (Unaudited)                  |        |   |                     |   |
| ASSETS                                                                                                                             |   |
|                                                                                                                               |   |                         |        |   |                     |   |
| Cash and cash equivalents                                                                                                          |   | $                            | 147,450     |   |                     | $      | 625,796 |   |
| Accounts receivable trade, net                                                                                                     |   |                         | 57,880      |   |                     |   | 24,647 |   |
| Inventories                                                                                                                        |   |                         | 257,053     |   |                     |   | 198,274 |   |
| Prepaid consulting                                                                                                                 |   |                         | 181,792     |   |                     |   | - |   |
| Prepaid expenses and other current assets                                                                                          |   |                         | 56,011      |   |                     |   | 43,250 |   |
| Total current assets                                                                                                               |   |                         | 700,186     |   |                     |   | 891,967 |   |
|                                                                                                                               |   |                         |        |   |                     |   |   |   |
| Furniture, fixtures and equipment, net                                                                                             |   |                         | 16,123      |   |                     |   | 20,014 |   |
| Prepaid consulting                                                                                                                 |   |                         | -           |   |                     |   | 255,436 |   |
| Debt issue costs, net                                                                                                              |   |                         | 115,842     |   |                     |   | 254,852 |   |
| Deposits                                                                                                                           |   |                         | 29,872      |   |                     |   | 42,829 |   |
|                                                                                                                               |   |                         |        |   |                     |   |   |   |
|                                                                                                                               |   | $                            | 862,023     |   |                     | $      | 1,465,098 |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                     |   |
|                                                                                                                               |   |                         |        |   |                     |   |   |   |
| Accounts payable                                                                                                                   |   | $                            | 145,797     |   |                     | $      | 25,213 |   |
| Accrued expenses                                                                                                                   |   |                         | 11,475      |   |                     |   | 88,010 |   |
| Line of credit                                                                                                                     |   |                         | 2,458,156   |   |                     |   | 2,458,156 |   |
| Insurance premium finance contracts                                                                                                |   |                         | 34,236      |   |                     |   | 8,135 |   |
| Total current liabilities                                                                                                          |   |                         | 2,649,664   |   |                     |   | 2,579,514 |   |
| Total liabilities                                                                                                                  |   |                         | 2,649,664   |   |                     |   | 2,579,514 |   |
|                                                                                                                               |   |                         |        |   |                     |   |   |   |
| Commitments and contingencies (Note 6)                                                                                             |   |                         |        |   |                     |   |   |   |
|                                                                                                                               |   |                         |        |   |                     |   |   |   |
| Stockholders' equity (deficit)                                                                                                     |   |                         |        |   |                     |   |   |   |
| Preferred stock: $0.001 par value; 5,000,000 shares authorized;                                                                    |   |                         |        |   |                     |   |   |   |
|  no shares issued and outstanding                                                                                             |   |                         | -           |   |                     |   | - |   |
| Common stock: $0.001 par value; 50,000,000 shares authorized;                                                                      |   |                         |        |   |                     |   |   |   |
|  17,843,334 issued and 185,000 issuable at December 31, 2010 and 16,538,200 shares issued and outstanding as of June 30, 2010 |   |                         | 18,028      |   |                     |   | 16,538 |   |
| Additional paid in capital                                                                                                         |   |                         | 10,606,957  |   |                     |   | 8,512,232 |   |
| Accumulated deficit                                                                                                                |   |                         | (12,412,626 | )      |                     |   | (9,643,186 | ) |
| Total stockholders'  equity (deficit)                                                                                    |   |                         | (1,787,641  | )      |                     |   | (1,114,416 | ) |
|                                                                                                                               |   |                         |        |   |                     |   |   |   |
| Total liabilities and stockholders' equity (deficit)                                                                               |   | $                            | 862,023     |   |                     | $      | 1,465,098 |   |

----

|                                                    |   | For the Three Months Ended December 31, |       |   | For the Six Months Ended December 31, |   |
|---------------------------------------------------------|--------|----------------------------------------------|------------|--------|--------------------------------------------|--------|
|                                                    |   | 2010                                         |       |   | 2009                                       |   |   | 2010 |   |   | 2009 |   |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |
| Sales                                                   |   | $                                            | 60,637     |   |                                       | $      | 237,867 |   |   | $ | 89,194 |   |   | $ | 525,421 |   |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                                      |   |                                         | 30,206     |   |                                       |   | 68,924 |   |   |   | 38,870 |   |   |   | 160,130 |   |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                            |   |                                         | 30,431     |   |                                       |   | 168,943 |   |   |   | 50,324 |   |   |   | 365,291 |   |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:                                     |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses            |   |                                         | 1,690,215  |   |                                       |   | 948,089 |   |   |   | 2,571,396 |   |   |   | 1,686,747 |   |
| Research and development                                |   |                                         | 11,858     |   |                                       |   | 3,071 |   |   |   | 47,441 |   |   |   | 6,837 |   |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Total operating expenses                                |   |                                         | 1,702,073  |   |                                       |   | 951,160 |   |   |   | 2,618,837 |   |   |   | 1,693,584 |   |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Loss from operations                                    |   |                                         | (1,671,642 | )      |                                       |   | (782,217 | ) |   |   | (2,568,513 | ) |   |   | (1,328,293 | ) |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense)                                  |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                         |   |                                         | 1,040      |   |                                       |   | 49 |   |   |   | 2,314 |   |   |   | 61 |   |
| Interest expense                                        |   |                                         | (101,691   | )      |                                       |   | (116,906 | ) |   |   | (203,241 | ) |   |   | (228,163 | ) |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Total other income (expense)                            |   |                                         | (100,651   | )      |                                       |   | (116,857 | ) |   |   | (200,927 | ) |   |   | (228,102 | ) |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                |   | $                                            | (1,772,293 | )      |                                       | $      | (899,074 | ) |   | $ | (2,769,440 | ) |   | $ | (1,556,395 | ) |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Net loss per common share - basic and diluted           |   | $                                            | (0.10      | )      |                                       | $      | (0.06 | ) |   | $ | (0.16 | ) |   | $ | (0.11 | ) |
|                                                    |   |                                         |       |   |                                       |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding - basic and diluted |   |                                         | 17,332,044 |   |                                       |   | 14,028,038 |   |   |   | 17,000,947 |   |   |   | 13,943,989 |   |

----

|                                                                     |   | For the Six Months Ended December 31, |       |
|--------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                     |   | 2010                                            |       |   | 2009 |   |
| Cash flows from operating activities                                     |   |                                            |       |   |   |   |
| Reconciliation of net loss to net cash used in operating activities:     |   |                                            |       |   |   |   |
| Net loss                                                                 |   | $                                               | (2,769,440 | ) |   | $ | (1,556,395 | ) |
| Adjustments to reconcile net loss to net cash                            |   |                                            |       |   |   |   |   |   |
|  used in operating activities:                                      |   |                                            |       |   |   |   |   |   |
| Depreciation                                                             |   |                                            | 6,249      |   |   |   | 4,660 |   |
| Amortization of debt issuance costs                                      |   |                                            | 139,010    |   |   |   | 172,500 |   |
| Bad debt expense                                                         |   |                                            | 700        |   |   |   | - |   |
| Amortization of prepaid consulting                                       |   |                                            | 139,144    |   |   |   | 42,500 |   |
| Options issued for services                                              |   |                                            | 297,640    |   |   |   | - |   |
| Common stock issued for services                                         |   |                                            | 90,000     |   |   |   | - |   |
| Stock option compensation expense                                        |   |                                            | 477,674    |   |   |   | 203,259 |   |
| Changes in assets and liabilities:                                       |   |                                            |       |   |   |   |   |   |
| Accounts receivable                                                      |   |                                            | (33,933    | ) |   |   | (233,532 | ) |
| Inventories                                                              |   |                                            | (58,779    | ) |   |   | 71,492 |   |
| Prepaid expenses and other current assets                                |   |                                            | 20,076     |   |   |   | (3,098 | ) |
| Deposits and other assets                                                |   |                                            | 12,957     |   |   |   | (1,956 | ) |
| Accounts payable                                                         |   |                                            | 120,584    |   |   |   | 10,883 |   |
| Related party payable                                                    |   |                                            | -          |   |   |   | (60,000 | ) |
| Accrued expenses                                                         |   |                                            | (74,577    | ) |   |   | 68,632 |   |
| Net cash used in operating activities                                    |   |                                            | (1,632,695 | ) |   |   | (1,281,055 | ) |
| Cash flows from Investing Activities                                     |   |                                            |       |   |   |   |   |   |
| Purchases of equipment                                                   |   |                                            | (2,358     | ) |   |   | (1,103 | ) |
| Net cash used in investing activities                                    |   |                                            | (2,358     | ) |   |   | (1,103 | ) |
| Cash flows from Financing Activities                                     |   |                                            |       |   |   |   |   |   |
| Payments on Insurance Finance Contract                                   |   |                                            | (8,694     | ) |   |   | (15,362 | ) |
| Proceeds from sale of stock and warrants                                 |   |                                            | 1,165,401  |   |   |   | 470,000 |   |
| Proceeds from exercise of stock options                                  |   |                                            | -          |   |   |   | 15,000 |   |
| Proceeds from revolving line of credit, net                              |   |                                            | -          |   |   |   | 900,000 |   |
| Net cash provided by financing activities                                |   |                                            | 1,156,707  |   |   |   | 1,369,638 |   |
| Net increase in cash and cash equivalents                                |   |                                            | (478,346   | ) |   |   | 87,480 |   |
| Cash and cash equivalents - beginning                                    |   |                                            | 625,796    |   |   |   | 245,381 |   |
| Cash and cash equivalents - ending                                       |   | $                                               | 147,450    |   |   | $ | 332,861 |   |
|                                                                     |   |                                            |       |   |   |   |   |   |
| Supplemental Disclosure of Cash Flow Information:                        |   |                                            |       |   |   |   |   |   |
| Cash paid for interest                                                   |   | $                                               | 63,222     |   |   | $ | 24,986 |   |
| Cash paid for income taxes                                               |   | $                                               | -          |   |   | $ | - |   |
| Supplementary Disclosure of Non-cash Investing and Financing Activities: |   |                                            |       |   |   |   |   |   |
| Financing of prepaid insurance contracts                                 |   | $                                               | 32,837     |   |   | $ | 55,560 |   |
| Prepaid stock-based consulting                                           |   | $                                               | 65,500     |   |   | $ | 340,000 |   |

----

----

----

| Employee Options                                                                             |   |              |      |   |                            |   |   |                                        |   |   |                           |   |
|----------------------------------------------------------------------------------------------|--------|-------------------|-----------|--------|---------------------------------|--------|--------|---------------------------------------------|--------|--------|--------------------------------|--------|
|                                                                                         |   | Number of Options |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Life |   |   | Aggregate Intrinsic Value |   |
| Balance at June 30, 2009                                                                     |   |              | 2,714,000 |   |                            | $      | 0.92   |                                        |   |   | 8.20                           |   |   |   |   |
| Granted                                                                                      |   |              | -         |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Exercised                                                                                    |   |              | -         |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Forfeited                                                                                    |   |              | (500,000  | )      |                            | $      | 1.00   |                                        |   |   | 9.75                           |   |   |   |   |
| Expired                                                                                      |   |              | -         |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Outstanding at December 31, 2009                                                             |   |              | 2,214,000 |   |                            | $      | 0.90   |                                        |   |   | 7.40                           |   |   | $ | 2,434,552 |   |
| Exercisable at December 31, 2009                                                             |   |              | 987,573   |   |                            | $      | 0.88   |                                        |   |   | 5.80                           |   |   | $ | 1,101,658 |   |
|                                                                                         |   |              |      |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Weighted average fair value of options granted during the six months ended December 31, 2009 |   |              |      |   |                            |   | N/A    |                                        |   |   |                           |   |   |   |   |   |
|                                                                                         |   |              |      |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Balance at June 30, 2010                                                                     |   |              | 1,649,007 |   |                            | $      | 0.88   |                                        |   |   | 6.40                           |   |   |   |   |   |
| Granted                                                                                      |   |              | 2,283,000 |   |                            | $      | 1.22   |                                        |   |   | 5.14                           |   |   |   |   |   |
| Exercised                                                                                    |   |              | -         |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Options sold to third party                                                                  |   |              | -         |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Forfeited                                                                                    |   |              | -         |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Expired                                                                                      |   |              | -         |   |                            | $      | -      |                                        |   |   |                           |   |   |   |   |   |
| Outstanding at December 31, 2010                                                             |   |              | 3,932,007 |   |                            | $      | 1.07   |                                        |   |   | 5.38                           |   |   | $ | 528,709 |   |
| Exercisable at December 31, 2010                                                             |   |              | 1,604,507 |   |                            | $      | 0.94   |                                        |   |   | 4.99                           |   |   | $ | 428,709 |   |
|                                                                                         |   |              |      |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Weighted average fair value of options granted during the six months ended December 31, 2010 |   |              |      |   |                            | $      | 0.78   |                                        |   |   |                           |   |   |   |   |   |

----

| Options Issued to Directors                                                                  |   |              |    |   |                            |   |   |                                        |   |   |                           |   |
|----------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|---------------------------------|--------|--------|---------------------------------------------|--------|--------|--------------------------------|--------|
|                                                                                         |   | Number of Options |    |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Life |   |   | Aggregate Intrinsic Value |   |
| Balance at June 30, 2009                                                                     |   |              | 205,000 |   |                            | $      | 0.86   |                                        |   |   | 5.89                           |   |   |   |   |
| Granted                                                                                      |   |              | 100,000 |   |                            | $      | 1.84   |                                        |   |   | 10.00                          |   |   |   |   |
| Exercised                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Forfeited                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Expired                                                                                      |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Outstanding at December 31, 2009                                                             |   |              | 305,000 |   |                            | $      | 1.18   |                                        |   |   | 7.42                           |   |   | $ | 249,050 |   |
| Exercisable at December 31, 2009                                                             |   |              | 238,336 |   |                            | $      | 1.01   |                                        |   |   | 6.89                           |   |   | $ | 236,432 |   |
|                                                                                         |   |              |    |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Weighted average fair value of options granted during the six months ended December 31, 2009 |   |              |    |   |                            |   | N/A    |                                        |   |   |                           |   |   |   |   |   |
|                                                                                         |   |              |    |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Balance at June 30, 2010                                                                     |   |              | 370,000 |   |                            | $      | 1.28   |                                        |   |   | 7.41                           |   |   |   |   |   |
| Granted                                                                                      |   |              | 210,000 |   |                            | $      | 1.20   |                                        |   |   | 10.00                          |   |   |   |   |   |
| Exercised                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Forfeited                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Expired                                                                                      |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Outstanding at December 31, 2010                                                             |   |              | 580,000 |   |                            | $      | 1.25   |                                        |   |   | 7.86                           |   |   | $ | 72,650 |   |
| Exercisable at December 31, 2010                                                             |   |              | 334,166 |   |                            | $      | 1.22   |                                        |   |   | 6.67                           |   |   | $ | 69,650 |   |
|                                                                                         |   |              |    |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Weighted average fair value of options granted during the six months ended December 31, 2010 |   |              |    |   |                            | $      | 0.74   |                                        |   |   |                           |   |   |   |   |   |

----

| Non-Employee, Non-Director Options                                                           |   |              |    |   |                            |   |   |                                        |   |   |                           |   |
|----------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|---------------------------------|--------|--------|---------------------------------------------|--------|--------|--------------------------------|--------|
|                                                                                         |   | Number of Options |    |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Life |   |   | Aggregate Intrinsic Value |   |
| Balance at June 30, 2009                                                                     |   |              | 170,000 |   |                            | $      | 1.00   |                                        |   |   | 3.53                           |   |   |   |   |
| Granted                                                                                      |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Exercised                                                                                    |   |              | (15,000 | )      |                            | $      | 1.00   |                                        |   |   | -                              |   |   |   |   |
| Forfeited                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Expired                                                                                      |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |
| Outstanding at December 31, 2009                                                             |   |              | 155,000 |   |                            | $      | 1.00   |                                        |   |   | 3.02                           |   |   | $ | 155,000 |   |
| Exercisable at December 31, 2009                                                             |   |              | 155,000 |   |                            | $      | 1.00   |                                        |   |   | 3.02                           |   |   | $ | 155,000 |   |
|                                                                                         |   |              |    |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Weighted average fair value of options granted during the six months ended December 31, 2009 |   |              |    |   |                            |   | N/A    |                                        |   |   |                           |   |   |   |   |   |
|                                                                                         |   |              |    |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Balance at June 30, 2010                                                                     |   |              | 155,000 |   |                            | $      | 1.00   |                                        |   |   | 2.53                           |   |   |   |   |   |
| Granted                                                                                      |   |              | 350,000 |   |                            | $      | 1.22   |                                        |   |   | 5.00                           |   |   |   |   |   |
| Options purchased from officer                                                               |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Exercised                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Forfeited                                                                                    |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Expired                                                                                      |   |              | -       |   |                            | $      | -      |                                        |   |   | -                              |   |   |   |   |   |
| Outstanding at December 31, 2010                                                             |   |              | 505,000 |   |                            | $      | 1.15   |                                        |   |   | 4.04                           |   |   | $ | 31,000 |   |
| Exercisable at December 31, 2010                                                             |   |              | 505,000 |   |                            | $      | 1.15   |                                        |   |   | 4.04                           |   |   | $ | 31,000 |   |
|                                                                                         |   |              |    |   |                            |   |   |                                        |   |   |                           |   |   |   |   |   |
| Weighted average fair value of options granted during the six months ended December 31, 2010 |   |              |    |   |                            | $      | 0.85   |                                        |   |   |                           |   |   |   |   |   |

----

| Risk free interest rate      |   |   | 1.42% - 2.24   | %      |
|------------------------------|--------|--------|----------------|--------|
| Expected term (in years)     |   |   | 4.0 - 6.5      |   |
| Dividend yield               |   |   | –– |   |
| Volatility of common stock   |   |   | 89.4% - 96.46  | %      |
| Estimated annual forfeitures |   |   | –– |   |

----

----

| Warrants Issued as Settlements                                                                |   |               |    |   |                            |   |   |                       |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|---------------------------------|--------|--------|----------------------------|--------|
|                                                                                          |   | Number of Warrants |    |   | Weighted Average Exercise Price |   |   | Remaining Contractual Life |   |
| Balance at June 30, 2009                                                                      |   |               | 474,058 |   |                            | $      | 1.05   |                       |   |   | 0.91 |   |
| Granted                                                                                       |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Exercised                                                                                     |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Forfeited                                                                                     |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Expired                                                                                       |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Outstanding at December 31, 2009                                                              |   |               | 474,058 |   |                            | $      | 1.05   |                       |   |   | 0.41 |   |
| Exercisable at December 31, 2009                                                              |   |               | 474,058 |   |                            | $      | 1.05   |                       |   |   | 0.41 |   |
|                                                                                          |   |               |    |   |                            |   |   |                       |   |   |   |   |
| Weighted average fair value of warrants granted during the six months ended December 31, 2009 |   |               |    |   |                            |   | N/A    |                       |   |   |   |   |
|                                                                                          |   |               |    |   |                            |   |   |                       |   |   |   |   |
| Balance at June 30, 2010                                                                      |   |               | 474,058 |   |                            | $      | 1.05   |                       |   |   | 1.92 |   |
| Granted                                                                                       |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Exercised                                                                                     |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Forfeited                                                                                     |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Expired                                                                                       |   |               | -       |   |                            | $      | -      |                       |   |   | - |   |
| Outstanding at December 31, 2010                                                              |   |               | 474,058 |   |                            | $      | 1.05   |                       |   |   | 1.41 |   |
| Exercisable at December 31, 2010                                                              |   |               | 474,058 |   |                            | $      | 1.05   |                       |   |   | 1.41 |   |
|                                                                                          |   |               |    |   |                            |   |   |                       |   |   |   |   |
| Weighted average fair value of warrants granted during the six months ended December 31, 2010 |   |               |    |   |                            |   | N/A    |                       |   |   |   |   |

----

| Warrants issued for cash                                                                      |   |               |      |   |                            |   |   |                       |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------|-----------|--------|---------------------------------|--------|--------|----------------------------|--------|
|                                                                                          |   | Number of Warrants |      |   | Weighted Average Exercise Price |   |   | Remaining Contractual Life |   |
| Balance at June 30, 2009                                                                      |   |               | 528,303   |   |                            | $      | 1.14   |                       |   |   | 1.29 |   |
| Granted                                                                                       |   |               | 455,000   |   |                            | $      | 1.63   |                       |   |   | 3.0 |   |
| Exercised                                                                                     |   |               | -         |   |                            | $      | -      |                       |   |   | - |   |
| Forfeited                                                                                     |   |               | -         |   |                            | $      | -      |                       |   |   | - |   |
| Expired                                                                                       |   |               | -         |   |                            | $      | -      |                       |   |   | - |   |
| Outstanding at December 31, 2009                                                              |   |               | 983,303   |   |                            | $      | 1.37   |                       |   |   | 1.77 |   |
| Exercisable at December 31, 2009                                                              |   |               | 983,303   |   |                            | $      | 1.37   |                       |   |   | 1.77 |   |
|                                                                                          |   |               |      |   |                            |   |   |                       |   |   |   |   |
| Weighted average fair value of warrants granted during the six months ended December 31, 2009 |   |               |      |   |                            |   | N/A    |                       |   |   |   |   |
|                                                                                          |   |               |      |   |                            |   |   |                       |   |   |   |   |
| Balance at June 30, 2010                                                                      |   |               | 2,733,303 |   |                            | $      | 1.56   |                       |   |   | 2.37 |   |
| Granted                                                                                       |   |               | 715,000   |   |                            | $      | 1.25   |                       |   |   | 3.56 |   |
| Exercised                                                                                     |   |               | -         |   |                            | $      | -      |                       |   |   |   |   |
| Forfeited                                                                                     |   |               | -         |   |                            | $      | -      |                       |   |   | - |   |
| Expired                                                                                       |   |               | -         |   |                            | $      | -      |                       |   |   | - |   |
| Outstanding at December 31, 2010                                                              |   |               | 3,448,303 |   |                            | $      | 1.49   |                       |   |   | 2.17 |   |
| Exercisable at December 31, 2010                                                              |   |               | 3,448,303 |   |                            | $      | 1.49   |                       |   |   | 2.17 |   |
|                                                                                          |   |               |      |   |                            |   |   |                       |   |   |   |   |
| Weighted average fair value of warrants granted during the six months ended December 31, 2010 |   |               |      |   |                            |   | N/A    |                       |   |   |   |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Fair Value Measurements Using |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | Total                         |    |   | Quoted Prices in ActiveMarkets(Level 1) |   |   | Significant Other Observable Inputs(Level 2) |   |   | SignificantUnobservable Inputs(Level 3) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                          |    |   |   |   |   |   |   |   |   |   |
| Cash                                                                                  |   | $                             | 147,450 |   |   | $ | 147,450 |   |   | $ | –– |   |   | $ | –– |   |

----

|   | ● | The CEO’s wife is a bookkeeper at $1,000 per week, |
|--------|---------|----------------------------------------------------------|

|   | ● | The CEO and CTO’s father is a researcher at $1,200 per week, and |
|--------|---------|------------------------------------------------------------------------|

|   | ● | The CEO and CTO’s mother is a receptionist at $600 per week. |
|--------|---------|--------------------------------------------------------------------|

----

| ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
|----------------------------------------------------------------------------------------------------------------|

----

----

----

----

| PRICE PER SHARE |   | AMOUNT OF MONEY |
|-----------------|--------|-----------------|
| $1.00 - $1.39   |   | $30,000         |
| $1.40 - $1.79   |   | $60,000         |
| $1.80 - $2.99   |   | $120,000        |
| $3.00 - $3.99   |   | $240,000        |
| $4.00 or Higher |   | $500,000        |

----

| -  | The price of the product sold is fixed or determinable and evidence of an agreement is present |
|---------|------------------------------------------------------------------------------------------------|

| - | The title and risk of loss of the product has passed to the buyer and the sale is not contingent upon the buyer being able to resell the product. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------|

| - | We have a reasonable expectation that the buyer has the intent and the ability to pay for the product ordered. |
|---|----------------------------------------------------------------------------------------------------------------|

| -  | We have no future obligation to the seller related to the product sold. |
|---------|-------------------------------------------------------------------------|

----

| ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
|--------------------------------------------------------------------------------|

----

| ITEM 4. CONTROLS AND PROCEDURES. |
|--------------------------------------------|

| ITEM 1. LEGAL PROCEEDINGS. |
|--------------------------------------|

| ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
|--------------------------------------------------------------------------------|

| Name or Class of Investor |   | Date of Sale              |   | No. of Securities                                                                           |   | Reason for Issuance        |
|--------------------------------|--------|---------------------------|--------|--------------------------------------------------------------------------------------------------|--------|----------------------------|
|                           |   |                      |   |                                                                                             |   |                       |
| Investor Relations             |   | 9/29/10                   |   | 50,000 shares of common stock                                                                    |   | Investor relation services |
|                           |   |                      |   |                                                                                             |   |                       |
| Private Placement Investors    |   | 10/18/10 through 12/14/10 |   | 324,000 shares of common stock and 95,000 three-yearwarrants exercisable at $1.25 per share |   | Investment of $275,400     |
|                           |   |                      |   |                                                                                             |   |                       |
| Consultants                    |   | 12/8/10                   |   | 350,000 stock options exercisable at $1.22 per share                                             |   | Consulting services        |

----

| ITEM 3. DEFAULTS UPON SENIOR SECURITIES. |
|----------------------------------------------------|

| ITEM 4. (REMOVED AND RESERVED). |
|-------------------------------------------|

| ITEM 5. OTHER INFORMATION. |
|--------------------------------------|

| ITEM 6. EXHIBITS. |
|-----------------------------|

| Exhibit |    |                                                                                       |    | Incorporated by Reference |    | Filed orFurnished |         |
|---------|--------------|-------------------------------------------------------------------------------------------------|--------------|-------------------------------------|--------------|------------------------|--------------|
| #       |    | Exhibit Description                                                                        |    | Form                                |    | Date                   |    | Number |    | Herewith |   |
|    |         |                                                                                            |         |                                |         |                   |         |   |   |   |   |
| 3.1     |         | Certificate of Incorporation                                                                    |         | SB-2                                |         | 7/20/07                |         | 3.1 |   |   |   |
| 3.2     |         | Amended and Restated Bylaws                                                                     |         | SB-2                                |         | 7/20/07                |         | 3.2 |   |   |   |
| 3.3     |         | First Amendment to the Amended and Restated Bylaws adopted April 6, 2010                        |         | 10-K                                |         | 9/28/10                |         | 3.3 |   |   |   |
| 4.1     |         | Form of Private Placement Warrant                                                               |         |                                |         |                   |         |   |   | Filed |   |
| 10.1    |         | Form of Private Placement Subscription Agreement                                                |         |                                |         |                   |         |   |   | Filed |   |
| 10.2    |         | Lincoln Park Purchase Agreement                                                                 |         | S-1                                 |         | 11/4/10                |         | 10.13 |   |   |   |
| 10.3    |         | Amendment to Lincoln Park Purchase Agreement                                                    |         | S-1                                 |         | 11/4/10                |         | 10.16 |   |   |   |
| 10.4    |         | Lincoln Park Registration Rights Agreement                                                      |         | S-1                                 |         | 11/4/10                |         | 10.14 |   |   |   |
| 10.5    |         | Lincoln Park Warrant                                                                            |         | 8-K                                 |         | 9/7/10                 |         | 10.3 |   |   |   |
| 10.6    |         | Credit Enhancement and Financing Security Agreement                                             |         | 10-K                                |         | 9/28/09                |         | 10.1 |   |   |   |
| 10.7    |         | Revolving Line of Credit Agreement                                                              |         | 10-K                                |         | 9/28/09                |         | 10.2 |   |   |   |
| 10.8    |         | Renewal of Promissory Note dated May 20, 2010                                                   |         | 10-K                                |         | 9/28/10                |         | 10.7 |   |   |   |
| 10.9    |         | Credit Enhancement and Financing Security Agreement dated May 20, 2010                          |         | 10-K                                |         | 9/28/10                |         | 10.8 |   |   |   |
| 10.10   |         | Modification of Revolving Line of Credit Agreement dated May 20, 2010                           |         | 10-K                                |         | 9/28/10                |         | 10.9 |   |   |   |
| 10.11   |         | Reger Warrant                                                                                   |         | 10-K                                |         | 9/28/10                |         | 10.10 |   |   |   |
| 31.1    |         | Certification of Principal Executive Officer (Section 302)                            |         |                                |         |                   |         |   |   | Filed |   |
| 31.2    |         | Certification of Principal Financial Officer (Section 302)                                 |         |                                |         |                   |         |   |   | Filed |   |
| 32.1    |         | Certification of Principal Executive Officer and Principal Financial Officer (Section 906) |         |                                |         |                   |         |   |   | Furnished |   |

----

|              |         | GELTECH SOLUTIONS, INC.                              |   |
|-------------------|--------------|------------------------------------------------------|--------|
|              |         |                                                 |   |
| February 14, 2011 |    | /s/ Michael Cordani                             |   |
|              |         | Michael Cordani                                      |   |
|              |         | Chief Executive Officer(Principal Executive Officer) |   |
|              |         |                                                 |   |
| February 14, 2011 |         | /s/ Michael Hull                                |   |
|              |         | Michael Hull                                         |   |
|              |         | Chief Financial Officer(Principal Financial Officer) |   |