UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM~~Form 10-K

X ANNUAL .REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~ANNUAL~~For ~~REPORT~~the ~~PURSUANT~~fiscal TOyear ~~SECTION~~ended 13December OR31, ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2014

For the fiscal year ended December 31, 2013

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

Commission File Number: 0-30544

PureSafe Water Systems, Inc.

(Name of registrant as specified in its charter)

Delaware	86-0515678	~~86-0515678~~
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)	~~(I.R.S. Employer Identification No.)~~
35 East Mall, Plainview, New York		11803
(Address of principal executive offices)		(Zip Code)


35 East Mall, Plainview, New York	11803
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (516) 208-8250

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.001 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes . No X .

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Yes . No X .

Indicate by check mark if the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ~~. No~~ X . No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. .

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes . No X .

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer . Accelerated filer . Non-accelerated filer . (Do not check if a smaller reporting company) Smaller reporting company X .

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes . No X .

The aggregate market value of the voting and non-voting common equity of the registrant held by non-affiliates as of the last business day of the registrant's most recently completed second fiscal quarter was $141,~~590~~685,~~381~~473.

As of ~~October~~June 235, ~~2014~~2015, 1there were 2,~~414~~548,~~187~~778,~~330~~041 shares of the common stock of the registrant ~~were~~ issued and outstanding.

Table of Contents

PART I
Item 1.	Business.	4
Item 1A.	Risk Factors.	9
Item 1B.	Unresolved Staff Comments.	11
Item 2.	Properties.	11
Item 3.	Legal Proceedings.	11
Item 4.	Mine Safety Disclosures.	13
PART II
Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	13
Item 6.	Selected Financial Data.	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	21
Item 8.	Financial Statements and Supplementary Data.	21
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.	22
Item 9A.	Controls and Procedures.	22
PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	24
Item 11.	Executive Compensation.	27
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	37
Item 14.	Principal Accountant Fees and Services.	39
PART IV
Item 15.	Exhibits and Financial Statement Schedules	40

Mine Safety Disclosures.

PART II

Item 5.

Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 6.

Selected Financial Data.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 8.

Financial Statements and Supplementary Data.

Item 9.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

Item 9A.

Controls and Procedures.

Item 10.

Directors, Executive Officers and Corporate Governance.

Item 11.

Executive Compensation.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

Item 14.

Principal Accountant Fees and Services.

PART IV

Item 15.

Exhibits and Financial Statement Schedules

Introductory Comment - Use of Terminology

Throughout this Annual Report on Form 10-K, the terms the “Company,” “we,” “us” and “our” ~~refers~~refer to ~~PureSafe~~Puresafe Water Systems, Inc.

Note Regarding Forward - Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). To the extent that any statements made in this Form 10-K contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate” “expect,” “hope,” “intend,” “may,” “plan,” “potential,” “product,” “seek,” “should,” “will,” “would” and variations of such words. Forward-looking statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation:

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 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 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-K and, from time to time, in our other filings with the Securities and Exchange Commission.

Readers of this Annual Report on Form 10-K should carefully consider such risks, uncertainties and other information, disclosures and discussions which contain cautionary statements identifying important factors that could cause our actual results to differ materially from those provided in forward-looking statements. Readers should not place undue reliance on forward-looking statements contained in this Form 10-K. We do not undertake any obligation to publicly update or revise any forward-looking statements we may make in this Form 10-K or elsewhere, whether as a result of new information, future events or otherwise.

PART I

Item 1. ~~Business.~~

~~Organizational Structure~~Business.

~~Our~~Organizational company was incorporated in Delaware in 1987. Our business predecessor was incorporated in Arizona in 1985. In 1993, our business predecessor, then known as Auto Swap, U.S.A., Inc., merged with and into our company, although the business predecessor was treated as the surviving corporation for accounting purposes. Following the effectiveness of such merger, the surviving corporation changed its name to “Water Chef, Inc. and began operating the businesses previously conducted by the business predecessor, the manufacture and marketing of water coolers and filters. The manufacture and marketing of water coolers and filters constituted a substantial part of our business from 1993 until the fourth quarter of 2001, at which time such operations were sold and we began concentrating on the further development, manufacturing and marketing of a patented line of water purification systems. In 2007, new management commenced development of our “PureSafe™ First Response Water System” line of mobile water decontamination and purification systems (the “PureSafe FRWS”). In 2008, we changed our name to “PureSafe Water Systems, Inc.”Structure

~~With~~Our ~~the~~company ~~initial~~was ~~sales~~incorporated ofin ~~the~~Delaware ~~Puresafe~~in ~~FRWS~~1987. Our business predecessor was incorporated in ~~2011~~Arizona in 1985. In 1993, our business predecessor, then known as Auto Swap, U.S.A., Inc., merged with and ~~2012~~into our company, although the business predecessor was treated as the surviving corporation for accounting purposes. Following wethe ~~are~~effectiveness noof ~~longer~~such ~~deemed~~merger, tothe besurviving acorporation ~~development~~changed ~~state~~its ~~enterprise.~~name Weto ~~are~~“Water Chef, ~~however~~Inc. and began operating the businesses previously conducted by the business predecessor, anthe ~~early~~manufacture ~~stage~~and ~~commercial~~marketing ~~enterprise.~~of water coolers and filters. The ~~accompanying~~manufacture ~~financial~~and ~~statements~~marketing ~~have~~of ~~been~~water ~~prepared~~coolers ~~assuming~~and filters constituted a substantial part of our ~~Company~~business ~~will~~from ~~continue~~1993 asuntil the fourth quarter of 2001, at which time such operations were sold and we began concentrating on the further development, manufacturing and marketing of a ~~going~~patented ~~concern~~line of water purification systems. In ~~The~~2007, ~~PureSafe~~new ~~FRWS~~management iscommenced ~~the~~development ~~product~~of our “PureSafe™ First Response Water System” line byof ~~which~~mobile wewater ~~have~~decontamination ~~generated~~and purification systems (the “PureSafe FRWS”). In 2008, we changed our ~~first~~name ~~significant~~to ~~sales~~“PureSafe ~~since~~Water ~~2001~~Systems, Inc.”

~~General~~With the initial sales of the Puresafe FRWS in 2011 and 2012, for accounting purposes we are no longer deemed to be a development state enterprise. We are, however, an early stage commercial enterprise. The accompanying financial statements have been prepared assuming our Company will continue as a going concern. The PureSafe FRWS is the product line by which we have generated our first significant sales since 2001.

WeGeneral have developed a “PureSafe First Response Water System” (“PureSafe FRWS”) that is mobile, self-contained and purifies essentially any type of raw water source or decontaminates any contaminated water, including seawater, for emergency water supply production at a first response emergency site.

~~Recent~~We ~~Developments—Management~~have ~~Changes~~developed a “PureSafe First Response Water System” (“PureSafe FRWS”) that is mobile, self-contained and purifies essentially any type of raw water source or decontaminates any contaminated water, including seawater, for emergency water supply production at a first response emergency site.

~~Terry~~Recent R.Developments Lazar, former Chief Financial Officer of the Company and a director, resigned effective February 15, 2014 for personal reasons as Chief Financial Officer and from our Board of Directors, and on December 31, 2013, Gerard Stoehr’s contract as Chief Operating Officer expired Mr. Stoehr agreed to stay on with the Company as an independent consultant.

~~Effective~~Authorized ~~March~~Common 7,Stock ~~2014,~~Increase ~~Theresa Bischoff~~ and ~~Dr.~~Reverse ~~Stephen~~Stock E. Flynn resigned as a directors of the Company for personal reasons, and on April 2, 2014, our Board of Directors elected Stephen M. Hicks, to our Board of Directors, to fill a vacancy on the Board, and as President of the Company. Mr. Hicks is the Chief Executive Officer of Southridge LLC (“Southridge”), which has financed the Company in the past and continues to own debt and equity securities of the Company. Our Board also on the same date elected Gilbert Steedley as a director of the Company, to fill a vacancy on the Board of Directors, and elected Henry Sargent as Vice President and Secretary of the Company. Mr. Sargent is the Chief Operating Officer and General Counsel of Southridge.Split

OnA ~~June~~Preliminary ~~13,~~Information ~~2014,~~Statement was filed with the ~~Company~~SEC ~~entered~~on ~~into~~October a24, ~~consulting~~2014, ~~agreement~~and ~~with~~the ~~Tarpon~~Definitive ~~Bay~~Information ~~Partners~~Statement on December 11, ~~LLC~~2014, asetting ~~Florida~~forth ~~limited~~the ~~liability~~approval ~~company~~by ~~(“Tarpon”),~~written ~~for~~consent ~~the~~of ~~period~~stockholders ~~from~~of the ~~date~~following ofamendments (the ~~consulting~~“Amendments”) ~~agreement~~to ~~through~~our ~~March~~Certificate ~~31,~~of ~~2015.~~Incorporation: ~~The~~(1) ~~Agreement~~a ~~requires~~Reverse ~~Tarpon~~Stock toSplit ~~provide~~of ~~general~~the ~~management~~Company’s ~~and~~common ~~consulting~~stock ~~services~~at ~~and~~a ~~advisory~~ratio ~~services~~of tonot ~~the~~less ~~Company,~~than ~~including~~one-for-one ~~assistance~~hundred inand ~~connection~~not ~~with~~more ~~the~~than ~~restructuring~~one-for-five ofhundred ~~our~~as ~~outstanding~~determined ~~debt~~by ~~and~~our ~~equity~~Board ~~securities.~~of ~~Tarpon~~Directors is(the a“Reverse ~~controlled~~Stock ~~company~~Split”), insubject to the ~~Southridge~~Board’s ~~LLC~~discretion ~~group~~to ofdetermine, ~~companies.~~without ~~Stephen~~any ~~Hicks~~further action by stockholders, ~~President~~not ~~and~~to proceed with a ~~director~~reverse ofstock ~~the~~split ~~Company,~~if ~~controls~~it ~~Southridge~~determines ~~and~~that isa ~~the~~reverse ~~manager~~stock ofsplit ~~Tarpon.~~is ~~Pursuant~~no tolonger in the ~~terms~~best interest of the ~~consulting~~Company ~~agreement,~~and ~~upon~~its ~~execution~~stockholders, ofand (2) the ~~agreement,~~authorization ~~Tarpon~~of ~~received~~an 17increase ~~shares~~in ofthe anumber ~~newly~~of authorized ~~Series~~shares Hof ~~Preferred~~common ~~Stock~~stock ~~with~~from atwo ~~stated~~billion ~~value of $425~~(2,000,000,000) ~~and will receive additional~~ shares of ~~Series~~common Hstock, ~~Preferred~~par ~~Stock~~value ~~with~~$.001 aper ~~stated~~share, ~~value~~to often ~~$75~~billion (10,000 ~~monthly~~,000,000) ~~continuing~~shares ~~through the balance~~ of ~~the~~common ~~term~~stock, ofpar ~~the~~value ~~consulting~~$.00001 ~~agreement~~per share. The ~~execution~~Amendment ~~and~~increasing ~~delivery~~our ofauthorized ~~the~~common ~~Consulting~~stock ~~Agreement~~to ~~was~~10,000,000,000 ~~approved~~shares byhas become effective with the ~~directors~~filing of the ~~Company.~~Certificate ~~Mr.~~of ~~Hicks~~Amendment ~~did~~with ~~not~~the ~~participate~~Secretary inof ~~the~~State ~~vote~~of onthe ~~this~~State ~~matter~~of Delaware.

OnManagement June 13, 2014, the Board of Directors of the Company (Mr. Hicks not participating) authorized the issuance to Mr. Hicks of all of the fifty-one (51) authorized shares of a new Series G Preferred Stock for a purchase price of $1 per share. As a result of the voting rights granted to the Series G Preferred Stock in the Certificate of Designations, Mr. Hicks, as the Series G stockholder, holds in the aggregate approximately 51% of the total voting power of all issued and outstanding voting capital of the Company. Pursuant to the terms of the Board resolution authorizing the issuance of the Series G Preferred Stock, and authorizing the issuance of the shares to Mr. Hicks, the Company has the right to redeem said Preferred Stock of the Company upon his resignation or the termination of his services as President of the Company. The Company believes that the issuance of the Series G Preferred Stock to Mr. Hicks will facilitate the Company’s ability to manage its affairs.Changes

4Terry R. Lazar, former Chief Financial Officer of the Company and a director, resigned effective February 15, 2014 for personal reasons as Chief Financial Officer and from our Board of Directors, and on December 31, 2013, Gerard Stoehr’s contract as Chief Operating Officer expired. Mr. Stoehr agreed to stay on with the Company as an independent consultant.

OnEffective ~~the~~March ~~corporate~~7, ~~front~~2014, weTheresa ~~are~~Bischoff ~~negotiating~~and ~~with~~Dr. ~~creditors~~Stephen toE. ~~lower~~Flynn resigned as a directors of the Company’s ~~significant~~for ~~debt~~personal ~~load~~reasons, ~~including~~and ~~debt~~on ~~owed~~April 2, 2014, our Board of Directors elected Stephen M. Hicks, to our Board of Directors, to fill a vacancy on the ~~secured~~Board, ~~creditor~~and as President of the Company. Mr. WeHicks ~~have~~is ~~reduced~~the Chief Executive Officer of Southridge LLC (“Southridge”), which has financed the Company’s ~~fixed~~in ~~costs~~the ~~through~~past anand ~~ongoing~~continues ~~vendor~~to ~~review~~own debt and equity securities of the Company. WeOur ~~are~~Board ~~bringing~~also inon ~~capital~~the same date elected Gilbert Steedley as a director of the Company, to fill a vacancy on anthe Board of Directors, and elected Henry Sargent as ~~needed~~Vice ~~basis~~President and Secretary of the Company. Mr. Sargent is the Chief Operating Officer and General Counsel of Southridge.

~~Products~~4

WeIn ~~have~~June ~~identified~~2014 we retained Tarpon Bay Partners LLC (“Tarpon”), a company that is part of the ~~need~~Southridge LLC group, for ~~providing~~the ~~potable~~period ~~drinking~~from ~~water~~the ~~during~~date ~~emergencies~~of asthe aconsulting ~~market~~agreement ~~segment~~through ~~that~~March ~~requires~~31, ~~solutions~~2015, weas ~~can~~the Company’s strategic financial advisor to provide. Wegeneral ~~believe~~management ~~that~~and ~~dramatic~~consulting ~~changes~~services inand ~~weather~~advisory ~~patterns~~services to the Company, ~~global~~including ~~warming~~assistance in connection with the restructuring of our outstanding debt and ~~failing~~equity ~~water~~securities. ~~infrastructures,~~The Agreement requires Tarpon to provide angeneral ~~additional~~management ~~opportunity~~and ~~for~~consulting ~~our~~services ~~company~~and advisory services to ~~exploit~~the Company, including assistance in connection with the ~~marketplace~~restructuring byof ~~providing~~our ~~rapidly~~outstanding ~~deployable~~debt ~~units~~and toequity ~~areas~~securities. ~~where~~Tarpon ~~populations~~is ~~require~~a ~~potable~~controlled ~~drinking~~company ~~water~~in ~~quickly~~the Southridge LLC group of companies. ~~Populations~~Stephen ~~that~~Hicks, ~~have~~President ~~little~~and ~~mobility~~a ~~because~~director of ~~infrastructure~~the ~~failures~~Company, ~~need~~controls ~~drinking~~Southridge ~~water~~and ~~immediately~~is tothe ~~sustain~~manager ~~life~~of Tarpon. ItPursuant isto ~~anticipated~~the ~~that~~terms ~~our~~of ~~products~~the ~~would~~consulting ~~operate~~agreement, inupon ~~areas~~execution ~~where~~of the ~~populations~~agreement, ~~are~~Tarpon ~~clustered~~received so17 ~~that~~shares ~~potable~~of ~~drinking~~a ~~water~~newly inauthorized ~~disinfected~~Series ~~portable~~H ~~containers~~Preferred ~~can~~Stock bewith ~~provided~~a instated value of $425,000, and will receive additional shares of Series H Preferred Stock with a stated value of $75,000 monthly, continuing through the balance of the term of the consulting agreement. Tarpon received an ~~efficient~~initial ~~manner~~issuance of 17 shares of Series H Preferred (convertible into 151,785,714 shares of common stock) on June 17, 2014, and monthly issuances on July 1, August 1, September 1 and October 1, 2014, of three shares each of Series H Preferred Stock (convertible into 53,571,429, 68,181,818, 187,500,000 and 150,000,000 shares of common stock, respectively). Tarpon has waived its rights under the consulting agreement to the November and December 2014, and the January and February 2015, issuances of Series H Preferred Stock.

WeOn ~~have~~June ~~developed~~13, a2014, ~~patent~~the ~~pending~~Board ~~“PureSafe~~of ~~First~~Directors ~~Response~~of ~~Water~~the ~~System”~~Company ~~that~~(Mr. isHicks ~~self-contained~~not ~~and~~participating) ~~purifies~~authorized ~~most~~the ~~types~~issuance ofto ~~contaminated~~Mr. ~~fresh~~Hicks orof ~~service~~all ~~water,~~of ~~including~~the ~~seawater~~fifty-one ~~that~~(51) ~~may~~authorized beshares ~~found~~of at a ~~first~~new ~~response~~Series ~~emergency~~G ~~site.~~Preferred ~~This~~Stock ~~system~~for isa ~~uniquely~~purchase ~~mobile,~~price byof ~~helicopter~~$1 orper ~~transported by truck~~share. ~~The~~As ~~initial~~a ~~PureSafe~~result ~~FRWS~~of ~~prototype~~the ~~was~~voting ~~developed~~rights ~~using~~granted ~~advanced~~to ~~Israeli~~the ~~water~~Series ~~treatment~~G ~~technology.~~Preferred ~~The~~Stock ~~original~~in ~~prototype~~the ~~was~~Certificate ~~capable~~ of ~~producing 10~~Designations,~~000~~ ~~gallons~~Mr. ~~of water per day~~Hicks, ~~but~~as ~~could~~the ~~not~~Series ~~desalinate~~G ~~sea water~~stockholder, ~~and~~holds ~~did not have a built~~ in ~~generator~~the oraggregate ~~water~~approximately ~~bagging~~51% ~~capability.~~of ~~Adhering to~~ the ~~original~~total ~~treatment~~voting ~~train~~power ~~and~~of ~~process,~~all weissued ~~have~~and ~~since~~outstanding ~~built~~voting acapital ~~2nd~~of ~~prototype~~the ~~(FRWS unit)~~Company. ~~The~~Pursuant ~~FRWS~~to ~~unit~~the ~~can~~terms ~~produce~~of ~~EPA~~the ~~compliant~~Board ~~drinking~~resolution ~~from~~authorizing ~~contaminated fresh or surface water at~~ the ~~rate~~issuance of ~~30,000~~the ~~gallons~~Series ~~per~~G ~~day~~Preferred ~~to provide drinking water to 45~~Stock,~~000~~ ~~people. The unit has a built in generator~~ and ~~water~~authorizing ~~bagging capability at~~ the ~~rate~~issuance of ~~30,000~~the ½shares ~~liter~~to ~~bags of water per day (16~~Mr.9 ~~ozs). This represents approximately 5~~Hicks,~~000~~ ~~gallons~~the ofCompany ~~water. The unit also~~ has athe ~~built-in~~right ~~Water~~to ~~Filling~~redeem ~~Station~~said ~~that~~Preferred ~~can~~Stock ~~provide an additional 25,000 gallons~~ of ~~water~~the ~~that~~Company ~~can~~upon behis ~~delivered~~resignation inor ~~various formats. To prevent secondary contamination,~~ the ~~system~~termination ~~has the capability~~ of ~~disinfecting~~his ~~contaminated~~services ~~containers~~as byPresident ~~spraying the insides~~ of the ~~containers with ozonated water~~Company. The ~~unit~~Company ~~can~~believes bethat ~~easily~~the ~~converted~~issuance ~~into a stationary unit to provide for daily needs~~ of ~~a population lacking safe drinking water. This system has received Gold Seal Certification from~~ the ~~Water~~Series ~~Quality~~G ~~Association,~~Preferred ~~which~~Stock weto ~~believe is a significant accomplishment~~Mr. InHicks ~~addition,~~will ~~the~~facilitate ~~Nassau County Department of Health independently tested~~ the ~~PureSafe FRWS unit~~Company’s ~~water~~ability ~~quality~~to ~~and~~manage ~~the~~its ~~results exceeded all testing parameters~~affairs.

~~The~~On ~~PureSafe FRWS utilizes our patent pending technology which is comprised of a water extraction boom that extracts water from~~ the ~~ocean,~~corporate ~~streams~~front, ~~ponds,~~we ~~pools~~are ofnegotiating ~~floodwater~~with orcreditors a failed municipal distribution system. The extracted water is then treated by the application of advanced water treatment technologies which employ multiple stage filtration, multiple stage sanitation (including ozone, chlorine and ultraviolet purification techniques), reverse osmosis membranes, mineralization and final polishing to ~~meet~~lower the ~~standard~~Company’s ~~drinking~~significant ~~water~~debt ~~requirements of the U~~load.S. ~~Environmental~~We ~~Protection~~have ~~Agency~~reduced (the ~~“EPA”).~~Company’s ~~The~~fixed ~~system~~costs ~~provides~~through ~~redundancy~~an atongoing ~~the~~vendor ~~filtration~~review, and ~~sanitation~~are ~~stations~~planning ~~and~~to ~~the~~bring ~~duel~~in ~~capability~~capital of on~~-site~~ ~~filling~~an ~~of containers,~~ as ~~well~~needed ~~as an automatic water bag producing capability~~basis. The FRWS has obtained Water Quality Association (WQA) Gold Seal Certification. Water Quality Association is a not-for-profit, trade association and a world leader in standards development and product certification.

~~Marketing Plan~~Products

~~Our~~We ~~management~~have ~~understands~~identified the need for providing potable drinking water during emergencies as a market segment that requires solutions we can provide. We believe that dramatic changes in weather patterns, toglobal bewarming ~~successful~~and failing water infrastructures, weprovide ~~will~~an ~~need~~additional opportunity for our company to ~~create~~exploit anin ~~effective~~the ~~sales~~marketplace ~~organization~~by providing rapidly deployable units to ~~promote~~areas ~~our~~where ~~brand~~populations ~~and~~require ~~product~~potable ~~attributes~~drinking ~~through~~water aquickly. ~~variety~~Populations that have little mobility because of ~~outlets~~infrastructure ~~and~~failures ~~formats~~need ~~with~~drinking ~~clear~~water ~~branding~~immediately ~~messages.~~to ~~With~~sustain ~~this~~life. It inis ~~mind,~~anticipated that our ~~marketing~~products ~~plan~~would isoperate ~~based~~in onareas where the ~~following~~populations ~~key~~are ~~components:~~clustered so that potable drinking water in disinfected portable containers can be provided in an efficient manner.

·We have developed a patent pending “PureSafe First Response Water System” that is self-contained and purifies most types of contaminated fresh or service water, including seawater that may be found at a first response emergency site. This system is uniquely mobile, by helicopter or transported by truck. The initial PureSafe FRWS prototype was developed using advanced Israeli water treatment technology. The original prototype was capable of producing 10,000 gallons of water per day, but could not desalinate sea water, and did not have a built in generator or water bagging capability. Adhering to the original treatment train and process, we have since built a 2nd prototype (FRWS unit). The FRWS unit can produce EPA compliant drinking from contaminated fresh or surface water at the rate of 30,000 gallons per day to provide drinking water to 45,000 people. The unit has a built in generator and water bagging capability at the rate of 30,000 ½ liter bags of water per day (16.9 ozs). This represents approximately 5,000 gallons of water. The unit also has a built-in Water Filling Station that can provide an additional 25,000 gallons of water that can be delivered in various formats. To prevent secondary contamination, the system has the capability of disinfecting contaminated containers by spraying the insides of the containers with ozonated water. The unit can be easily converted into a stationary unit to provide for daily needs of a population lacking safe drinking water. This system has received Gold Seal Certification from the Water Quality Association, which we believe is a significant accomplishment. In addition, the Nassau County Department of Health independently tested the PureSafe FRWS unit’s water quality and the results exceeded all testing parameters.

~~Strategic~~ The ~~Alliances~~PureSafe –.FRWS Inutilizes ~~January~~our ~~2013~~patent wepending ~~entered~~technology ~~into~~which is comprised of a ~~strategic~~water extraction boom that extracts water from the ocean, streams, ponds, pools of floodwater or a failed municipal distribution system. The extracted water is then treated by the application of advanced water treatment technologies which employ multiple stage filtration, multiple stage sanitation (including ozone, chlorine and ~~exclusive~~ultraviolet ~~agreement~~purification ~~with~~techniques), ~~Global~~reverse ~~Equipment~~osmosis ~~Marketing~~membranes, ~~Inc~~mineralization and final polishing to meet the standard drinking water requirements of the U.S. Environmental Protection Agency (~~GEM~~the “EPA”). The ~~GEM~~system ~~will~~provides ~~sell~~redundancy at the filtration and ~~market~~sanitation ~~our~~stations ~~products~~and ~~utilizing~~the duel capability of on-site filling of containers, as awell ~~dba~~as ~~PureSafe~~an automatic water bag producing capability. The FRWS has obtained Water ~~System~~Quality ~~Sales~~Association (WQA) Gold Seal Certification. Water Quality Association is a not-for-profit, trade association and a world leader in standards development and product certification.

·5

~~Direct~~ Marketing and Sales – The marketing and sales plan will initially focus on short term developed business opportunities where money is currently available. The sales effort will be by both direct sales, development of an international dealer distribution network, and through the assistance of sales consultants and respresentatives.Plan

~~Referencing~~Our ~~our~~management ~~goals~~understands that, weto ~~are~~be ~~also~~successful, ~~redirecting~~we ~~the sales effort so that it~~ will noneed ~~longer~~to ~~predominantly~~create ~~rely~~an oneffective ~~one~~sales ~~sector~~organization ~~of the economy. We will now aim~~ to ~~expand~~promote our ~~product~~brand ~~to the oil~~ and ~~gas~~product ~~sector,~~attributes asthrough ~~well~~a asvariety ~~many~~of ~~government~~outlets and ~~municipalities;~~formats ~~agricultural,~~with ~~and~~clear ~~industrial~~branding ~~businesses~~messages. With Wethis ~~are~~in ~~reviewing the entire approach to the product with an aim to deepen and diversify our distribution channels~~mind, ~~lower~~ our ~~cost~~marketing ofplan ~~production,~~is ~~improve~~based ~~the Company’s profit margin~~ on ~~sales~~the ~~and~~following ~~maintain~~key ~~an inventory of units for immediate sale.~~components:

5·

AtStrategic ~~present~~Alliances ~~our~~–. ~~demonstration~~In ~~unit~~January is2013 onwe ~~the~~entered ~~road~~into in a ~~much~~strategic ~~more organized~~ and ~~deliberate~~exclusive ~~approach~~agreement towith ~~achieve~~Global ~~maximum~~Equipment ~~exposure~~Marketing, ~~through~~Inc. ~~the balance of this year~~(GEM). WeGEM will besell ~~updating our marketing materials~~ and ~~directing~~market ~~more resources to~~ our ~~sales~~products ~~and~~utilizing ~~marketing~~as ~~efforts.~~a ~~The~~dba ~~previously~~PureSafe ~~announced~~Water ~~sale~~System ~~to the Mexican Tequila company is moving forward~~Sales.

~~We are looking to employ a full time water technologist to assist our sales organization in analyzing prospective customer needs and researching new applications for product use.~~·

~~Manufacturing~~Direct Marketing and Sales – The marketing and sales plan will initially focus on short term developed business opportunities where money is currently available. The sales effort will be by both direct sales, development of an international dealer distribution network, and through the assistance of sales consultants and representatives.

InReferencing ~~September~~our ~~2009~~goals, we are also ~~formed~~redirecting ~~PureSafe~~the sales effort ~~Manufacturing~~so ~~and~~that it ~~Research~~will ~~Corporation,~~no aslonger apredominantly ~~wholly~~rely on ~~owned~~one ~~subsidiary~~sector of ~~PureSafe~~the ~~Water~~economy. ~~Systems,~~We ~~Inc.~~will Innow aim ~~January~~to expand our ofproduct to the ~~2013~~oil weand ~~entered~~gas ~~into~~sector, anas ~~Engineering~~well ~~Package~~as ~~Agreement~~many ~~with~~government ~~ETG/Engineering~~and ~~Technologies,~~municipalities; ~~Group~~agricultural, ~~Inc~~and industrial businesses. We ~~The~~are ~~Company~~reviewing ~~plans~~the toentire ~~have~~approach to the ~~ability~~product with an aim to ~~meet~~deepen ~~future~~and ~~market~~diversify ~~demands~~our bydistribution ~~having~~channels, ~~the~~lower ~~capability~~our tocost ~~outsource~~of production, improve the Company’s profit margin on sales and maintain an inventory of ~~our~~units ~~product~~for immediate sale.

~~Components~~At present our demonstration unit is on the road in a much more organized and deliberate approach to achieve maximum exposure through the balance of this year. We will be updating our marketing materials and directing more resources to our sales and marketing efforts. The previously announced sale to the Mexican Tequila company is moving forward.

~~The~~We ~~PureSafe~~are ~~FRWS~~looking ~~system has been designed~~ to ~~utilize~~employ ~~readily~~a ~~available~~full ~~off-the-shelf~~time ~~components~~water ~~and~~technologist ~~sub-systems.~~to ~~Sub-systems~~assist ~~and~~our ~~components~~sales ~~are~~organization ~~available~~in ~~from~~analyzing ~~multiple~~prospective ~~manufacturers.~~customer Weneeds doand ~~not~~researching ~~believe~~new ~~that~~applications ~~obtaining raw materials will be difficult, however some components require a twelve (12) week lead time~~ for ~~ordering~~product use.

~~Competition~~Manufacturing

WeIn ~~have~~September ~~identified~~2009, ~~the~~we ~~need~~formed ~~for~~PureSafe ~~providing~~Manufacturing ~~potable~~and ~~drinking~~Research ~~water~~Corporation, ~~during emergencies~~ as ~~well as~~ a ~~permanent~~wholly ~~solution~~owned tosubsidiary ~~populations that have little mobility because~~ of ~~infrastructure~~PureSafe ~~failures~~Water ~~and~~Systems, ~~need~~Inc. ~~drinking~~In ~~water~~January ~~immediately~~of to2013 ~~sustain~~we ~~life.~~entered Itinto isan ~~anticipated~~Engineering ~~that~~Package ~~individual~~Agreement ~~PureSafe~~with ~~FRWS~~ETG/Engineering ~~units~~Technologies, ~~will~~Group, beInc. ~~delivered~~The byCompany ~~the~~plans ~~owners~~ to ~~areas~~have ~~where~~ the ~~populations~~ability ~~are~~to ~~clustered~~meet sofuture ~~that~~market ~~potable~~demands ~~drinking~~by ~~water~~having inthe ~~disinfected~~capability ~~portable~~to ~~containers~~outsource ~~can~~production beof ~~provided~~our inproduct ~~an efficient manner.~~

This is a far different market than that addressed by a large segment of the industry which has concentrated on the multi-billion dollar municipal water treatment sector, or the small end of the marketplace for inexpensive more personal water filtration needs.. The municipal solution requires significant investment for infrastructure development ( e.g ., building plants and laying miles of distribution pipes). Products for residential or remote developing world markets do not offer the performance or features to meet the needs of the first response market or the needs of the underdeveloped nations of the world. In summary, although we face competition from numerous competitors, we believe the combined capability of water decontamination and delivery system of our PureSafe FRWS is unique to the market.Components

WeThe ~~have~~PureSafe ~~identified~~FRWS ~~the~~system ~~following~~has ~~types~~been ofdesigned ~~mobile~~to ~~water~~utilize ~~purification~~readily available off-the-shelf components and sub-systems,. Sub-systems and ~~the~~components ~~companies~~are available from multiple manufacturers. We do not believe that ~~manufacture~~obtaining ~~them,~~raw ~~where~~materials ~~the~~will ~~products~~be ~~are~~difficult, ~~competitive~~however ~~with~~some ~~the~~components ~~PureSafe~~require ~~First~~a ~~Responder~~twelve ~~Mobile~~(12) ~~Water~~week ~~Purification~~lead ~~System~~time for ordering.

~~There are four categories of existing water purification units:~~Competition

1We have identified the need for providing potable drinking water during emergencies as well as a permanent solution to populations that have little mobility because of infrastructure failures and need drinking water immediately to sustain life. It is anticipated that individual PureSafe FRWS units will be delivered by the owners to areas where the populations are clustered so that potable drinking water in disinfected portable containers can be provided in an efficient manner.

~~The~~This ~~first~~is ~~are~~a ~~those~~far ~~which~~different ~~are~~market ~~essentially~~than ~~very~~that addressed by a large, ~~not~~segment ~~very~~of ~~mobile~~the industry which has concentrated on the multi-billion dollar municipal water treatment sector, ~~almost~~or ~~“fixed”~~the ~~installation~~small ~~units~~end ~~used~~of ~~primarily~~the marketplace for ~~long~~inexpensive ~~term~~more ~~solutions~~personal ~~with~~water afiltration needs.. The municipal solution requires significant ~~amount~~investment for infrastructure development (e.g, building plants and laying miles of ~~lead~~distribution ~~time~~pipes). Products ~~Manufacturers~~for ~~include:~~residential ~~GE,~~or ~~Siemens~~remote developing world markets do not offer the performance or features to meet the needs of the first response market or the needs of the underdeveloped nations of the world. In summary, ~~and~~although ~~Severn~~we ~~Trent~~face competition from numerous competitors, ~~all~~we believe the combined capability of ~~which~~water ~~manufacture~~decontamination ~~large~~and ~~containerized~~delivery ~~systems~~system of our PureSafe FRWS is unique to the market.

2We have identified the following types of mobile water purification systems, and the companies that manufacture them, where the products are competitive with the PureSafe First Responder Mobile Water Purification System.

The second group includes those products that are smaller, cheaper, lighter in weight, but still unable to respond quickly because of their limited purification capabilities (the unit needs to be prepared in advance for the type of contamination it will face.) Manufacturers are: Ecospheres Technology, Lenntech, Testa/Viwa and Lifekeeper. None of these systems would fall in to the first responder category.6

3.There are four categories of existing water purification units:

1. The ~~third~~first ~~group~~are isthose ~~the~~which ~~category~~are ~~made~~essentially upvery oflarge, ~~specialty~~not ~~units~~very ~~designed~~mobile, toalmost be“fixed” ~~either~~installation ~~much~~units ~~lower~~used ~~cost,~~primarily ~~use~~for ~~only~~long ~~green~~term ~~power~~solutions (with ~~the~~a significant ~~limitations~~amount ~~caused~~of bylead ~~that), or meet a specialized and limited need~~time. Manufacturers include: ~~Mobile~~GE, ~~MaxPure~~Siemens, ~~Bi Pure Water~~ and ~~Rodi~~Severn ~~which~~Trent, ~~while~~all ~~they~~of ~~have~~which amanufacture ~~trailer~~large ~~mounted~~containerized ~~system, have no on board power source~~systems.

42. The second group includes those products that are smaller, cheaper, lighter in weight, but still unable to respond quickly because of their limited purification capabilities (the unit needs to be prepared in advance for the type of contamination it will face.) Manufacturers are: Ecospheres Technology, Lenntech, Testa/Viwa and Lifekeeper. None of these systems would fall in to the first responder category.

3. The ~~fourth~~third group ~~includes~~is ~~those~~the ~~companies~~category ~~which~~made ~~have~~up ~~similar~~of ~~claims~~specialty ~~and~~units ~~design~~designed ~~characteristics~~to asbe ~~PureSafe~~either ~~System.~~much ~~These~~lower ~~manufacturers~~cost, ~~include:~~use ~~Global~~only ~~Water~~green ~~Group~~power ~~which~~(with ~~manufactures~~the ~~different~~significant ~~size~~limitations ~~systems~~caused ~~with~~by ~~options~~that), ~~which~~or ~~include~~meet ~~the~~a ~~trailer,~~specialized ~~generator, treatment,~~ and ~~salinity~~limited ~~options;~~need. ~~Nirosoft,~~Manufacturers ~~which~~include ~~manufactures~~Mobile ~~systems~~MaxPure, ~~capable~~Bi ofPure ~~processing~~Water ~~different~~and ~~sources;~~Rodi ~~LifeStream~~which, ~~which~~while ~~has~~they have a ~~soft side~~ trailer; ~~and~~mounted ~~Aquapura Tempest~~system, ~~which~~have ~~has~~no ~~different types of units depending~~ on ~~the~~board power source.

64. The fourth group includes those companies which have similar claims and design characteristics as PureSafe System. These manufacturers include: Global Water Group which manufactures different size systems with options which include the trailer, generator, treatment, and salinity options; Nirosoft, which manufactures systems capable of processing different sources; LifeStream, which has a soft side trailer; and Aquapura Tempest, which has different types of units depending on the source.

In general, the markets in which we intend to operate are highly competitive with respect to performance, quality and price. We anticipate that we will directly compete with those competitors which we identified above, as well as with other local, regional and water treatment service and equipment providers. In the future, we also may face further competition from new market entrants and possible alliances between existing competitors. Most of our competitors have financial, marketing and other resources than we have. As a result, competitors may be able to respond more quickly to new or emerging trends and changes in technology, benefit from greater purchasing economies, offer more aggressive pricing to customers or devote greater resources to the promotion of their products than we are capable of accomplishing. In addition, our potential competitors in many cases already have customers to which they have sold water purification systems and these systems have an operating track record, in contrast to our FRWS which is a relatively new ~~productin~~production the market. There can be no assurance that we will be able to successfully compete in this market.

Markets Served

We have reviewed a study conducted by Frost & Sullivan examining the Mobile Water Treatment Market to aide us in identifying our target markets and our plan to penetrate those markets.

Definition of Mobile Water Treatment Systems (Frost & Sullivan Study)

Mobile Water Treatment Systems are trailer/skid mounted systems that offer quick, reliable and cost effective service to meet water crises. They provide various water treatment technologies such as reverse osmosis, filtration, demineralization, ion exchange, softening and deoxgenation.

Mobile Water Treatment Systems are innovative and immediate solutions to water crises in case of plant downtime, an industrial crisis, facility maintenance and emergency drinking water shortages. These systems can treat both surface and ground water requirements.

~~End Users/Target Market Segments~~7

~~Mobile~~End ~~water~~Users/Target ~~treatment~~Market ~~systems service end users and the market can be broken down into several treatment segments.~~Segments

~~Municipal~~Mobile ~~Treatment~~water treatment systems service end users and the market can be broken down into several treatment segments.

~~Demand~~Municipal is driven by area water shortages where local governments or municipalities lease equipment for short or long term durations. Demand is increased by natural emergencies such as drought, floods earthquakes, etc.Treatment

~~Target~~Demand ~~Organizations:~~is driven by area water shortages where local governments or municipalities lease equipment for short or long term durations. Demand is increased by natural emergencies such as drought, floods earthquakes, etc.

·Target Organizations:

~~Federal/State and Local Offices of Emergency Management~~·

·Federal/State and Local Offices of Emergency Management

~~Federal/State Department of Homeland Security~~·

·Federal/State Department of Homeland Security

~~Department of Public Works~~·

·Department of Public Works

~~Department of Public Safety~~·

·Department of Public Safety

~~Public Water Authority~~·

·Public Water Authority

~~Federal, State and Local Correctional Institutions/Facilities~~·

~~Quasi-Municipal~~Federal, ~~Treatment~~State and Local Correctional Institutions/Facilities

~~Key~~Quasi-Municipal ~~market driver is similar to municipal treatment but the affected population is unique to the organization’s specific function or purpose. They can be publically or privately operated and funded.~~Treatment

~~Target~~Key ~~Organizations:~~market driver is similar to municipal treatment but the affected population is unique to the organization’s specific function

·or purpose. They can be publically or privately operated and funded.

~~Public~~Target ~~(State) Universities~~Organizations:

~~Private~~Public (State) Universities

Private ~~Hospitals~~Universities

~~Nursing~~Private ~~Homes/Assisted Living Facilities~~Hospitals

~~Hotels~~Nursing ~~and~~Homes/Assisted ~~Resorts~~Living Facilities

~~Analytical~~Hotels ~~Laboratories~~and Resorts

~~Outpatient~~Analytical ~~Treatment Centers~~Laboratories

7·

~~Industrial~~Outpatient Treatment Centers

~~Key market driver is cost related to plant downtime in case of unavailability of purified and processed water for process support or as an ingredient in the end product.~~8

~~Target~~Industrial ~~Industries:~~Treatment

·Key market driver is cost related to plant downtime in case of unavailability of purified and processed water for process support or as an ingredient in the end product.

~~Power~~Target ~~Generation~~Industries:

~~Oil~~Power ~~and Gas Exploration~~Generation

~~Petrochemicals~~Oil and ~~Refineries~~Gas Exploration

~~Chemical~~Petrochemicals ~~Processing~~and Refineries

~~Metals~~Chemical ~~and Mining~~Processing

~~Electronics~~Metals and Mining

~~Food and Beverage Processing~~Electronics

~~Pharmaceuticals~~Food and Beverage Processing

~~The International Market~~·

~~The International Market encompasses the identified target markets as well as the need for drinking water for everyday use.~~Pharmaceuticals

~~World~~The ~~Water~~International ~~Facts~~Market

·The International Market encompasses the identified target markets as well as the need for drinking water for everyday use.

~~884~~World ~~million~~Water ~~people lack access to safe drinking water.~~Facts

~~3.575~~884 million people ~~die~~lack ~~each~~access ~~year~~to ~~from~~safe ~~water-related~~drinking ~~diseases~~water.

~~Every~~3.575 20million ~~seconds~~people adie ~~child~~each ~~dies~~year from a water -related ~~disease~~diseases.

InEvery ~~the~~20 ~~developing~~seconds ~~world~~a ~~24,000~~child ~~children~~dies ~~under the age of five die every day~~ from ~~preventable~~a ~~causes~~water ~~like~~related ~~diarrhea contracted from unclean water~~disease.

In ~~just~~the ~~one~~developing ~~day~~world ~~200~~24,000 ~~million~~children ~~hours~~under ofthe ~~women’s~~age ~~time~~of isfive ~~consumed~~die ~~for~~every ~~the~~day ~~most~~from ~~basic~~preventable ofcauses ~~human~~like ~~needs-collecting~~diarrhea ~~water~~contracted ~~for~~from ~~domestic~~unclean ~~use~~water.

~~Less~~In ~~than~~just 1%one ofday ~~the~~200 ~~world~~million hours of women’s ~~fresh~~time ~~water~~ is ~~readily~~consumed ~~accessible~~ for ~~direct~~the most basic of human needs-collecting water for domestic use.

~~More~~Less than 801% of ~~sewage~~the inworld’s ~~developing~~fresh ~~countries~~water is ~~discharged~~readily ~~untreated,~~accessible ~~polluting~~for ~~rivers,~~direct ~~lakes~~human ~~and coastal areas~~use.

~~Sources; Water.org, UN reports, WHO~~·

~~Intellectual~~More ~~Property~~than 80% of sewage in developing countries is discharged untreated, polluting rivers, lakes and coastal areas.

OnSources; ~~October 6, 2014, the Company received from the U~~Water.~~S. Patent & Trademark Office a Notice of Allowance (for issuance as a patent) and Fee(s) Due with respect to our application (No. 12/100~~org,~~137)~~ ~~for~~UN ~~versatile water purification systems and methods~~reports, ~~which application was filed April 9, 2008.~~WHO

~~Despite~~Intellectual our efforts to protect our intellectual property rights, unauthorized parties may attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. In addition, the laws of some foreign countries do not necessarily protect intellectual rights to as great an extent as do the laws of the United States. Monitoring and identifying unauthorized use of broadly disseminated products is difficult.Property

~~There~~On ~~can~~October be6, no2014, ~~assurance~~the ~~that~~Company ~~our~~received ~~means~~from ofthe ~~protecting~~U.S. ~~our~~Patent ~~intellectual~~& ~~property~~Trademark ~~rights~~Office ~~will~~a beNotice ~~adequate~~of orAllowance ~~that~~(for ~~our~~issuance ~~competitors~~as ~~will~~a ~~not~~patent) ~~independently~~and ~~develop~~Fee(s) ~~similar~~Due ~~technology~~with orrespect ~~duplicate~~to our ~~products~~application ~~or design around our patents or other intellectual property rights~~(No. ~~Further~~12/100,137) ~~there~~for ~~also~~versatile ~~can~~water bepurification nosystems ~~assurance~~and ~~that~~methods, ~~any~~which ~~issued~~application ~~patent~~was ~~will~~filed ~~provide~~April us9, ~~with any competitive advantages~~2008.

WeDespite ~~are~~our ~~not~~efforts ~~aware~~to ~~that~~protect ~~the~~our ~~PureSafe~~intellectual ~~FRWS~~property ~~materially infringes upon the proprietary~~ rights, ofunauthorized ~~third~~ parties. ~~There~~may ~~can~~attempt beto nocopy ~~assurance,~~aspects ~~however,~~of ~~that~~our ~~third~~products ~~parties~~or ~~will~~to ~~not~~obtain ~~claim~~and ~~such~~use ~~infringement~~information bythat ~~us.~~we ~~Any~~regard ~~such~~as ~~claims,~~proprietary. In ~~with or without merit~~addition, ~~could~~the belaws ~~time~~of ~~consuming,~~some ~~result~~foreign incountries ~~costly~~do ~~litigation,~~not ~~cause~~necessarily ~~product~~protect ~~shipment~~intellectual ~~delays~~rights ~~or might require us~~ to ~~enter~~as ~~into~~great ~~royalty~~an orextent ~~licensing~~as ~~agreements.~~do ~~Such~~the ~~royalty~~laws orof ~~licensing~~the ~~agreements,~~United ifStates. Monitoring ~~required,~~and ~~may~~identifying ~~not~~unauthorized beuse ~~available~~of onbroadly ~~terms~~disseminated ~~acceptable~~products tois usdifficult.

8There can be no assurance that our means of protecting our intellectual property rights will be adequate or that our competitors will not independently develop similar technology or duplicate our products or design around our patents or other intellectual property rights. Further, there also can be no assurance that any issued patent will provide us with any competitive advantages.

Litigation may be necessary to protect our proprietary technology. Our competitors and potential competitors may resort to litigation as a means of competition. Such litigation may be time consuming, costly and expose us to new claims that we may not have anticipated. Although patent and intellectual property disputes have often been settled through licensing, cross-licensing or similar arrangements, costs associated with such arrangements may be substantial, if they may be obtained at all. Any litigation involving us, whether as plaintiff or defendant, regardless of the outcome, may result in substantial costs and expenses to us and cause a significant diversion of effort by our technical and management personnel. In addition, there can be no assurance that litigation, instituted either by or against us, will not be necessary to resolve issues that may arise from time to time in the future with other competitors. Any such litigation could have a material adverse effect upon our business, operating results and financial condition. In the event of an adverse result in any such litigation, we could be required to expend significant resources to develop non-infringing technology, obtain licenses to the technology which is the subject of the litigation on terms not advantageous to us, pay damages, and/or cease the use of any infringing technology. There can be no assurance that we would have available funds sufficient to satisfy any cash awards.9

~~Seasonality~~We are not aware that the PureSafe FRWS materially infringes upon the proprietary rights of third parties. There can be no assurance, however, that third parties will not claim such infringement by us. Any such claims, with or without merit, could be time consuming, result in costly litigation, cause product shipment delays or might require us to enter into royalty or licensing agreements. Such royalty or licensing agreements, if required, may not be available on terms acceptable to us.

WeLitigation domay ~~not~~be ~~expect~~necessary ~~that~~to ~~the~~protect ~~sales~~our ofproprietary ~~the~~technology. Our ~~PureSafe~~competitors ~~FRWS~~and ~~will~~potential ~~have~~competitors ~~some~~may ~~level~~resort to litigation as a means of ~~fluctuation~~competition. Such ~~due~~litigation may be time consuming, costly and expose us to ~~seasonality~~new ofclaims ~~water~~that ~~trauma~~we ~~events~~may not have anticipated. Although patent and intellectual property disputes have often been settled through licensing, cross-licensing or similar arrangements, costs associated with such arrangements may be substantial, if they may be obtained at all. Any litigation involving us, whether as ~~hurricanes~~plaintiff or defendant, ~~tornados~~regardless of the outcome, ~~tsunamis~~may result in substantial costs and expenses to us and cause a significant diversion of effort by our technical and management personnel. In addition, ~~storms~~there can be no assurance that litigation, ~~flooding~~instituted either by or ~~other~~against ~~natural~~us, orwill ~~man-made~~not ~~disasters~~be necessary to resolve issues that may arise from time to time in the future with other competitors. Any ~~Preparedness~~such ~~requires~~litigation could have a ~~readiness~~material adverse effect upon our business, operating results and financial condition. In the event of an adverse result in any such litigation, we could be required to ~~address~~expend ~~disasters~~significant ~~prior~~resources to ~~their~~develop ~~occurrence.~~non-infringing Wetechnology, doobtain licenses to the technology which is the subject of the litigation on terms not ~~view~~advantageous ~~seasonality~~to asus, anpay ~~issue~~damages, ~~with~~and/or ~~respect~~cease the use of any infringing technology. There can be no assurance that we would have available funds sufficient to ~~international~~satisfy ~~markets~~any cash awards.

~~Research and Development~~Seasonality

We do not expect that ~~continued~~the ~~research~~sales ~~and~~of ~~development~~the PureSafe FRWS will behave ~~conducted~~some bylevel ~~ETG/Engineering~~of ~~Technologies~~fluctuation ~~Group~~due to seasonality of water trauma events such as hurricanes, ~~Inc~~tornados, tsunamis, storms, flooding or other natural or man-made disasters. ~~going~~Preparedness ~~forward~~requires ~~after~~a ~~they~~readiness ~~complete~~to address disasters prior to their ~~initial~~occurrence. ~~task~~We ~~under~~do ~~the~~not ~~agreement~~view inseasonality ~~place~~as an issue with respect to international markets.

~~Our~~Research ~~expenditures for research~~ and ~~development activities in fiscal 2013 were $55,874, and in fiscal 2012 were $62,032.~~Development

~~Insurance~~We expect that continued research and development will be conducted by ETG/Engineering Technologies Group, Inc. going forward after they complete their initial task under the agreement in place.

~~The~~Our ~~Company~~expenditures ~~maintains a $2 million general business liability policy. We believe such insurance coverage to be adequate~~ for ~~our~~research ~~current~~and ~~requirements.~~development Noactivities ~~assurance~~in ~~can~~fiscal be2014 ~~given~~were ~~that adequate insurance coverage~~$3, ~~at reasonable cost or otherwise~~474, ~~will~~and bein ~~available~~fiscal in2013 ~~the~~were ~~future~~$55,874.

~~Employees~~Insurance

AsThe ofCompany ~~October~~maintains ~~23,~~a ~~2014,~~$2 ~~the~~million ~~Company~~general ~~employed~~business aliability ~~Chief~~policy. ~~Executive~~We ~~Officer,~~believe asuch ~~Field~~insurance ~~Supervisor~~coverage ~~and~~to ~~one~~be ~~full~~adequate ~~time~~for ~~administrative~~our ~~employee~~current requirements. No assurance can be given that adequate insurance coverage, at reasonable cost or otherwise, will be available in ~~our~~the ~~headquarters~~future.

~~We have no collective bargaining agreement with any of our employees.~~Employees

~~Item~~As 1Aof May 1, 2015, the Company employed a Chief Executive Officer and one full time administrative employee in our headquarters, and a full-time field technician. We ~~Risk~~offer ~~Factors~~a health coverage plan for our employees.

We ~~will~~have ~~need~~no ~~additional~~collective ~~capital~~bargaining toagreement ~~finance~~with ~~existing~~any ~~obligations~~of ~~and to fund~~ our ~~operations and growth and we may not be able to obtain additional capital at all, or to obtain capital under terms acceptable to us~~employees.

WeItem ~~are~~1A seeking to raise additional capital. Due to our strategic alliance with GEM and ETG our financial requirements have been reduced. We anticipate that this amount of capital, if fully raised, will satisfy our financial obligations for approximately 24 months. In addition, unanticipated events could cause our revenues to be lower and our costs to be higher than expected, therefore creating the need for additional capital. Historically, cash generated from operations has not been sufficient to fund our capital requirements, and we have relied upon sales of securities, and loans from our officers to fund our operations. We cannot assure you that we will have sufficient funds available to meet our working capital requirements, or that we will be able to obtain capital to finance operations on favorable terms or at all. If we do not have, or are otherwise unable to secure necessary working capital, we may be unable to fund the continued manufacture of PureSafe units, and we may have to delay or abandon some or all of our development and expansion plans or otherwise forego market opportunities, any of which could harm our business.

9Risk Factors

We ~~have~~will aneed ~~history~~additional ofcapital ~~losses~~to ~~and~~finance weexisting ~~may~~obligations ~~continue~~and to ~~incur~~fund ~~losses~~our inoperations ~~the~~and ~~future~~growth and~~/or~~ we may ~~never~~not ~~achieve~~be able to obtain additional capital at all, or ~~maintain~~to ~~profitability~~obtain capital under terms acceptable to us.

~~Our~~We are seeking to raise additional capital. Due to our strategic alliance with GEM and ETG our financial ~~statements~~requirements have been ~~prepared~~reduced. ~~assuming~~We anticipate that wethis amount of capital, if fully raised, will ~~continue~~satisfy asour afinancial ~~going~~obligations ~~concern.~~for Atapproximately ~~December~~24 ~~31,~~months. In ~~2013~~addition, unanticipated events could cause our ~~stockholders’~~revenues ~~deficiency~~to ~~was~~be $5lower and our costs to be higher than expected,~~535~~ therefore creating the need for additional capital. Historically,~~503,~~ ascash ~~compared~~generated from operations has not been sufficient to $4fund our capital requirements,~~483,108~~ atand ~~December~~we 31have relied upon sales of securities, ~~2012~~and loans from our officers to fund our operations. We ~~Negative~~cannot assure you that we will have sufficient funds available to meet our working capital ~~was $5~~requirements,~~628,425~~ or that we will be able to obtain capital to finance operations on favorable terms or at ~~December~~all. 31If we do not have, ~~2013~~or are otherwise unable to secure necessary working capital, aswe ~~compared~~may be unable to $4fund the continued manufacture of PureSafe units,~~610,445~~ atand ~~December~~we 31may have to delay or abandon some or all of our development and expansion plans or otherwise forego market opportunities, ~~2012~~any of which could harm our business.

We continue to suffer recurring losses from operations and have an accumulated deficit since inception (1987) through December 31, 2013 of approximately $48.3 million, and a loss from operations of approximately $3.2 million for the year ended December 31, 2013. These conditions raise substantial doubt about our ability to continue as a going concern.10

~~Our~~We ~~independent~~have ~~registered~~significant ~~public~~debt ~~accountants~~liabilities, have ~~stated~~not inoperated ~~their~~profitably, ~~report~~and ~~that~~may ~~there~~continue isto ~~substantial~~incur ~~doubt~~losses ~~about~~in ~~our~~the ~~ability~~future toand/or ~~continue~~never asachieve aor ~~going~~maintain ~~concern~~profitability.

~~We have limited cash resources and have a working capital deficit.~~ Our ~~independent~~financial ~~registered~~statements ~~public accountants~~ have ~~stated~~been inprepared ~~their~~assuming ~~report~~ that ~~they~~we ~~have~~will ~~a substantial doubt about our ability to~~ continue as a going concern. At ByDecember ~~being~~31, ~~categorized in this manner~~2014, weour ~~may~~stockholders’ ~~find~~deficiency itwas ~~more~~approximately ~~difficult~~$8.1 inmillion, ~~the~~as ~~short~~compared ~~term~~ to ~~either~~approximately ~~locate~~$5.5 ~~financing~~million at ~~for~~December ~~future~~31, ~~projects~~2013. Negative orworking tocapital ~~identify~~was ~~lenders~~approximately ~~willing~~$8.2 tomillion ~~provide loans~~ at ~~attractive~~December ~~rates~~31, ~~which~~2014, ~~may~~as ~~require~~compared us to ~~use~~approximately ~~our cash reserves in order to expand~~$5.6 ~~Should~~million ~~this~~December ~~occur~~31, ~~and unforeseen events also require greater cash expenditures than expected, we could be forced to cease all or a part of our operations~~2013.

~~Technological~~We ~~change~~continue to suffer recurring losses from operations and ~~competition~~have ~~may~~an ~~render~~accumulated deficit since inception (1987) through December 31, 2014 of approximately $52.3 million, and a loss from operations of approximately $2.0 million for the year ended December 31, 2014. These conditions raise substantial doubt about our ~~potential~~ability ~~products~~to ~~obsolete~~continue as a going concern.

~~The~~At ~~water~~December ~~purification~~31, ~~industry continues to undergo rapid change~~2014, ~~competition~~the isCompany ~~intense~~had ~~and~~outstanding wenotes ~~expect~~payable it to ~~continually~~institutional ~~increase. Competitors may succeed in developing technologies~~ and ~~products~~other ~~that~~investors, ~~are~~consultants ~~more effective or affordable than any that we are developing or that would render our technology~~ and ~~products~~vendors, ~~obsolete~~plus oraccrued ~~noncompetitive.~~interest ~~Many~~thereon, of ~~our~~approximately ~~competitors~~$3,400,000. Of ~~have~~this ~~substantially greater experience~~amount, ~~financial~~debt ~~and~~to ~~technical~~related ~~resources~~parties ~~and~~totaled ~~production~~approximately ~~and development capabilities than we do~~$750,000. Payables ~~Accordingly,~~to ~~some~~trade ~~of our competitors may succeed in obtaining regulatory approval for products more rapidly or effectively than we can for technologies~~ and ~~products~~other ~~that~~non-financial ~~are~~creditors ~~more~~were ~~effective~~approximately ~~and/or~~$2,600,000 ~~affordable~~at ~~than~~December ~~any~~31, ~~that we are developing~~2014.

~~Product~~Our ~~liability~~independent ~~exposure~~registered ~~may~~public ~~expose~~accountants ushave stated in their report that there is substantial doubt about our ability to ~~significant~~continue ~~liability~~as a going concern.

We ~~face~~have anlimited ~~inherent~~cash ~~business~~resources ~~risk~~and ofhave ~~exposure~~a toworking ~~product~~capital ~~liability~~deficit. Our independent ~~and~~registered ~~other~~public ~~claims~~accountants ~~and~~have ~~lawsuits~~stated in ~~the~~their ~~event~~report that ~~the~~they have ~~development~~a orsubstantial ~~use~~doubt ofabout our ~~technology~~ability ~~or prospective products is alleged~~ to ~~have~~continue ~~resulted~~as ina ~~adverse~~going ~~effects~~concern. By being Wecategorized ~~may~~in ~~not~~this ~~be able to avoid significant liability exposure. We maintain a $2~~manner,~~000,000~~ ~~general~~we ~~and~~may ~~product~~find ~~liability~~it ~~policy~~more ~~which~~difficult ~~covers~~in the ~~manufacture~~short term ~~and~~to ~~marketing~~either oflocate ~~our~~financing ~~products.~~for ~~Although~~future weprojects ~~believe~~or ~~our~~to ~~insurance~~identify ~~coverage~~lenders willing to beprovide ~~adequate,~~loans weat ~~may~~attractive ~~not have sufficient insurance coverage~~rates, ~~and~~which we may ~~not~~require beus ~~able~~ to ~~obtain~~use ~~sufficient~~our cash ~~coverage~~reserves atin aorder ~~reasonable cost. An inability~~ to ~~obtain product liability insurance at acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of our products~~expand. Should Athis ~~product~~occur, ~~liability~~and ~~claim~~unforeseen ~~could~~events ~~hurt~~also require ~~our~~greater ~~financial~~cash ~~performance.~~expenditures ~~Even~~than ifexpected, we ~~avoid liability exposure, significant costs~~ could be ~~incurred~~forced ~~that~~to ~~could~~cease ~~hurt~~all or ~~our~~a ~~financial~~part ~~performance~~of ~~and~~our ~~condition~~operations.

~~Our~~Technological ~~inability~~change toand ~~protect~~competition ~~our intellectual property rights~~ may ~~force~~render usour topotential ~~incur~~products ~~unanticipated costs~~obsolete.

~~Our~~The ~~success~~water ~~will~~purification ~~depend,~~industry incontinues ~~part, on our ability~~ to ~~obtain~~undergo ~~and~~rapid ~~maintain~~change, competition ~~protection~~is inintense ~~the United States~~ and ~~other~~we ~~countries~~expect ~~for~~it ~~certain~~to ~~intellectual~~continually ~~property~~increase. Competitors ~~incorporated~~may ~~into~~succeed ~~our~~in developing ~~water~~technologies ~~purification systems~~ and ~~our proprietary methodologies. Our patent applications for our~~ products that are ~~currently~~more ~~pending,~~effective ~~and~~or ~~there~~affordable isthan any ~~no guarantee~~ that ~~such~~we ~~patents will be granted, and if they~~ are ~~not,~~developing weor ~~may~~that bewould ~~unable~~render ~~to obtain patents relating to~~ our technology. ~~Even~~and ifproducts obsolete ~~issued,~~or ~~patents~~noncompetitive. Many ~~may~~of beour ~~challenged,~~competitors ~~narrowed,~~have ~~invalidated~~substantially ~~or circumvented~~greater experience, ~~which~~financial ~~could~~and ~~limit~~technical ~~our~~resources ~~ability~~and toproduction ~~prevent~~and ~~competitors~~development capabilities ~~from~~than ~~marketing~~we ~~similar~~do. Accordingly, ~~solutions~~some ~~that limit the effectiveness~~ of our ~~patent~~competitors ~~protection~~may ~~and~~succeed ~~force~~in obtaining usregulatory toapproval ~~incur~~for ~~unanticipated~~products ~~costs.~~more Inrapidly ~~addition,~~or ~~existing~~effectively ~~laws~~than ofwe can ~~some~~for ~~countries~~technologies inand ~~which~~products wethat ~~may~~are ~~provide~~more ~~services~~effective and/or ~~solutions~~affordable ~~may~~than any ~~offer~~that ~~only~~we ~~limited~~are ~~protection of our intellectual property rights~~developing.

10Product liability exposure may expose us to significant liability.

~~Our~~We ~~products~~face ~~may~~an ~~infringe~~inherent business risk of exposure to product liability and other claims and lawsuits in the ~~intellectual~~event ~~property~~that ~~rights~~the development or use of ~~third~~our technology ~~parties,~~or ~~and~~prospective ~~third~~products ~~parties~~is alleged to have resulted in adverse effects. We may ~~infringe~~not ~~our~~be ~~proprietary~~able ~~rights~~to avoid significant liability exposure. We maintain a $2,000,000 ~~either~~general ofand product liability policy which ~~may~~covers ~~result~~the inmanufacture ~~lawsuits,~~and ~~distraction~~marketing of ~~management~~our products. Although we believe our insurance coverage to be adequate, we may not have sufficient insurance coverage, and we may not be able to obtain sufficient coverage at a reasonable cost. An inability to obtain product liability insurance at acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the ~~impairment~~commercialization of our ~~business~~products. A product liability claim could hurt our financial performance. Even if we avoid liability exposure, significant costs could be incurred that could hurt our financial performance and condition.

AsOur ~~the~~inability ~~number~~to ofprotect ~~patents,~~our ~~copyrights, trademarks and other~~ intellectual property rights ~~in our industry increases, products based on our technology~~ may ~~increasingly~~force ~~become the subject of infringement claims. Third parties could assert infringement claims against~~ us ~~in the future. Infringement claims with or without merit could be time consuming, result in costly litigation, cause product shipment delays or require us~~ to ~~enter~~incur ~~into~~unanticipated ~~royalty or licensing agreements~~costs. Royalty or licensing agreements, if required, might not be available on terms acceptable to us, or at all. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Litigation to determine the validity of any claims, whether or not the litigation is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel from productive tasks. If there is an adverse ruling against us in any litigation, we may be required to pay substantial damages, discontinue the use and sale of infringing products, expend significant resources to develop non-infringing technology or obtain licenses to infringing technology. Our failure to develop or license a substitute technology could prevent us from selling our products.

WeOur success will ~~face~~depend, ~~substantial~~in ~~competition~~part, on our ability to obtain and maintain protection in the United States and other countries for certain intellectual property incorporated into our water purification systems and our proprietary methodologies. Our patent applications for our products are currently pending, and there is no guarantee that such patents will be granted, and if they are not, we may be unable to obtain patents relating to our technology. Even if issued, patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to prevent competitors from marketing similar solutions that limit the effectiveness of our ~~PureSafe~~patent protection ~~FRWS~~and force us to incur unanticipated costs. In addition, existing laws of some countries in which we may provide services or solutions may offer only limited protection of our intellectual property rights.

WeOur ~~will~~products ~~experience~~may ~~competition~~infringe ~~from a large number of more established firms in~~ the ~~market~~intellectual ~~for~~property ~~water~~rights ~~purification systems. Many~~ of ~~these~~third ~~companies~~parties, ~~are much larger~~ and ~~have~~third ~~substantially~~parties ~~greater~~may ~~financial~~infringe ~~resources~~our ~~than~~proprietary ~~us. In addition~~rights, ~~our~~either ~~potential~~of ~~competitors in many cases already have customers to~~ which ~~they~~may ~~have~~result ~~sold~~in ~~water~~lawsuits, ~~purification~~distraction ~~systems~~of management and ~~these~~the ~~systems~~impairment ~~have~~of ~~an operating track record, in contrast to~~ our ~~FRWS which is a relatively new production the market~~business.

~~We do not anticipate paying cash dividends in the foreseeable future, which could adversely affect the price of our Common Stock.~~11

~~We,~~As bythe ~~reason~~number of ~~our~~patents, ~~anticipated~~copyrights, ~~financial~~trademarks ~~status~~ and ~~our~~other ~~contemplated~~intellectual property ~~financial~~rights ~~requirements~~in our industry increases, doproducts ~~not~~based ~~contemplate~~on orour ~~anticipate~~technology ~~paying~~may increasingly ~~any~~become ~~dividends~~the ~~upon~~subject ~~our~~of ~~Common~~infringement ~~Stock~~claims. Third parties could assert infringement claims against us in the ~~foreseeable~~ future. Infringement ~~Any~~claims ~~payment~~with ofor without ~~cash~~merit ~~dividends~~could be time consuming, result in ~~the~~costly ~~future~~litigation, ~~will~~cause product beshipment ~~dependent~~delays ~~upon~~or ~~the~~require ~~amount~~us ofto ~~funds~~enter ~~legally~~into ~~available,~~royalty ~~the~~or ~~earnings~~licensing agreements. Royalty or licensing agreements, ~~financial~~if ~~conditions~~required, ~~capital~~might ~~requirements~~not ~~and~~be ~~other~~available on ~~factors~~terms ~~that~~acceptable ~~the~~to ~~board~~us, ofor ~~directors~~at all. We may ~~believe~~initiate ~~are~~claims ~~relevant.~~or ~~Further,~~litigation ~~dividends~~against onthird parties ~~our~~for ~~common~~infringement ~~stock~~of ~~are~~our ~~subordinated~~proprietary rights or to ~~dividends~~establish ~~and~~the ~~liquidation~~validity of our proprietary rights. Litigation ofto determine the ~~holders~~validity of ~~our~~any ~~outstanding~~claims, whether ~~Series~~or Anot ~~and~~the ~~Series~~litigation Dis ~~preferred~~resolved ~~stock~~in our favor, could result in significant expense to us and divert the ~~rights~~efforts of our technical and management personnel from productive tasks. If there is an adverse ruling against us in any litigation, we may be required to pay substantial damages, discontinue the ~~holders~~use and sale of ~~our~~infringing ~~outstanding~~products, ~~Series~~expend Fsignificant ~~convertible~~resources ~~preferred~~to ~~stock~~develop non-infringing technology or obtain licenses to infringing technology. Our failure to develop or license a substitute technology could prevent us from selling our products.

~~Item~~We ~~1B.~~will ~~Unresolved~~face ~~Staff~~substantial ~~Comments~~competition in marketing our PureSafe FRWS.

~~Disclosure~~We ~~under~~will ~~Item~~experience 1Bcompetition isfrom ~~not~~a ~~required~~large number of ~~smaller~~more ~~reporting~~established firms in the market for water purification systems. Many of these companies are much larger and have substantially greater financial resources than us. In addition, our potential competitors in many cases already have customers to which they have sold water purification systems and these systems have an operating track record, in contrast to our FRWS which is a relatively new production the market.

~~Item~~Because 2.certain ~~Properties~~existing stockholders own a large percentage of our voting stock, other stockholders’ voting power may be limited.

~~The~~Our ~~Company~~controlling ~~leases~~stockholders ~~its~~and ~~offices~~directors atand 35their ~~East~~affiliates ~~Mall,~~beneficially ~~Plainview,~~own ~~NY,~~or oncontrol in excess of 70% of the voting power of our outstanding stock. As a ~~month-~~result, they have the ability to~~-month~~ ~~basis~~control all matters submitted to our stockholders for approval, atincluding athe ~~monthly~~election ~~rental~~and removal of $1directors and the approval of any merger,~~050~~ consolidation or sale of all or substantially all of our assets. These stockholders may make decisions that are adverse to your interests. See our discussion under the caption “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” for more information about ownership of our outstanding shares.

~~Item~~We 3.do ~~Legal~~not ~~Proceedings~~anticipate paying cash dividends in the foreseeable future, which could adversely affect the price of our Common Stock.

~~The~~We, ~~Company~~by isreason aof ~~defendant~~our inanticipated afinancial ~~suit~~status inand ~~the~~our ~~Supreme~~contemplated ~~Court~~financial ofrequirements, ~~the~~do ~~State~~not ofcontemplate ~~New~~or ~~York,~~anticipate ~~County~~paying ofany ~~Nassau,~~dividends ~~filed~~upon byour ~~Fairchild~~Common ~~Warehouse~~Stock ~~Associates,~~in ~~LLC~~the ~~(“Fairchild”),~~foreseeable asfuture. Any ~~plaintiff,~~payment ~~for recovery~~ of ~~past~~cash ~~rental~~dividends ~~payments~~in ~~for~~ the ~~Company’s~~future ~~former~~will ~~office~~be ~~space~~dependent atupon 25the ~~Fairchild~~amount ~~Avenue,~~of ~~Plainview,~~funds ~~New~~legally ~~York 11803~~available, ~~with~~the ~~money~~earnings, ~~damages~~financial conditions, ascapital ofrequirements ~~February~~and ~~2014,~~other ~~requested~~factors inthat the ~~amount~~board of ~~$475,930,~~directors ~~which~~may ~~have~~believe ~~been~~are ~~accrued~~relevant. ~~for~~Further, ~~and~~dividends ~~included~~on inour ~~accounts~~common ~~payable~~stock ~~and~~are ~~accrued~~subordinated ~~liabilities as of December 31, 2013. An inquest is set~~ to ~~begin~~dividends onand ~~December~~liquidation 3,rights ~~2014~~of ~~to determine~~ the ~~amount~~holders of ~~money~~our ~~damages~~outstanding ~~due~~Series onof ~~Fairchild’s~~preferred ~~claim~~stock.

11Item 1B

~~The~~Unresolved ~~Company~~Staff on April 4, 2013, was served with a summons and complaint, filed with the Supreme Court of the State of New York, County of New York, Levin Consulting Group, LLC (“Levin”), as plaintiff, where the plaintiff is claiming that additional shares of the Company’s Common Stock are issuable by the Company to plaintiff in connection with the exercise by plaintiff of a common stock purchase warrant issued by the Company. The warrant was originally issued contemporaneously with the issuance of a $20,000 promissory note to Levin. In June 2014 the Company entered into a settlement and has agreed to issue a convertible promissory note in the amount of $50,000 to the plaintiff. The convertible note matures on December 31, 2015 and accrues interest at 10% per annum. The holder may convert all or any portion of the outstanding principal and accrued and unpaid interest due and payable under the note into shares of the Company’s common stock at a conversion price equal to 50% of the lowest closing bid price of the Company’s common stock during the five trading days immediately prior to such applicable conversion date, in each case subject to the lender not being able to beneficially own more than 9.999% of our outstanding common stock upon any conversion. If the closing bid price for the common stock on the date in which the conversion shares are deposited into the holders brokerage account and the holder may execute trades of the conversion shares (“the “Clearing Date”) then the conversion price shall be adjusted such that the discount be taken from the closing bid price on the Clearing Date. The original $20,000 note remains outstanding. As of December 31, 2013 the Company has accrued a $50,000 loss as a result of the settlement and is included in accounts payable and accrued liabilities.Comments

~~The~~Disclosure ~~Company is in default~~ under aItem ~~May~~1B 30, 2012, Securities Purchase Agreement entered into with TCA Global Credit Master Fund, LP (“TCA”), providing for the issuance of $275,000 principal amount of senior secured redeemable and convertible debentures due November 30, 2012. On October 4, 2013, at the request of the lender due to default, the Company converted $303,499 of convertible notes and accrued interest into a new convertible note in the amount of $531,431. The increase in principal was due to amounts charged by the lender for penalties, interest, legal and other fees. The newly issued note bears interest at rates of 18% per annum and is due on demand. The lender may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable under the Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest daily volume weighted average price of the Company’s common stock during the five trading days immediately prior to such applicable conversion date, in each case subject to the lender not ~~being~~required ~~able to beneficially own more than 4.99%~~ of ~~our~~smaller outstanding common stock upon any conversion. The conversion price is subject to anti-dilution protection in the event that the Company issues additional equity securities at a price less than the conversion price. On March 10, 2014, TCA accelerated the outstanding principal balance, interest, calculated at the default rate of 18%, and all sums due under the original note and any amendments. In August 2014 a default final judgment was entered against the Company concluding that TCA is entitled to damages in the amount of $610,349, to foreclose upon the security interests, and to recover attorneys’ fees and costs incurred by TCA. In addition prejudgment interest shall be assessed at a rate of 18% per annum and post judgment interest shall be assessed at a rate of 4.75% per annum. As of December 31, 2013 the Company is reporting ~~a liability of $554,814 related to the TCA claim and is included in convertible notes payable~~companies.

OnItem ~~November 27, 2013, the Company entered into a settlement agreement with Tarpon Bay Partners LLC (“Tarpon”), a related party~~2. The manager of Tarpon is Stephen Hicks, the President of the Company. Tarpon previously purchase outstanding liabilities of the Company from TCA in the amount of $506,431 and Designs and Project Development Corporation (a former landlord) in the amount of $56,429. Per the terms of the settlement the Company was to issue Tarpon shares of common stock in one or more tranches as necessary, and subject to adjustment and ownership limitations, and a convertible promissory note in the principal amount of $75,000. The Company failed to issue shares to Tarpon and in the first quarter of 2014 TCA rescinded its liabilities purchase agreement with Tarpon. As of December 31, 2013 the Company is reporting a liability of $57,484 related to the Designs and Project Development Corporation claim and is included in notes payable and the $506,431 related to TCA has been included in convertible promissory notes.

~~On January 31, 2014, in conjunction with the settlement agreement outlined above, the Company issued Tarpon a convertible promissory note in the principal amount of $75,000~~Properties. The convertible note matures one year from the date of issuance with interest at 10% per annum. The convertible promissory note shall have no registration rights and shall be convertible into the common stock of the Company at any time at a conversion price equal to 75% of the low closing bid price for the twenty days prior to conversion.

The Company ~~was~~leases ~~notified~~its byoffices anat ~~April~~35 ~~22,~~East 2013 letter from The Depository Trust Company (“DTC”) that DTC had determined to impose a restriction on physical deposit and on Deposit/Withdrawal At Custodian (“DWAC”) electronic deposit transactions (referred to as a “deposit chill”) on the Company’s common stock. The effect of the deposit chill was thatMall, ~~for the period April 22~~Plainview, ~~2013 through August 6~~NY, ~~2013,~~on ~~when~~a ~~the~~month-to-month ~~deposit chill was lifted following submissions by the Company~~basis, noat ~~new~~a ~~shares~~current ofmonthly ~~the~~rental ~~Company’s common stock were accepted for deposit with DTC for electronic transfer. As~~ of ~~October 2014 the restriction had not been lifted~~$1,236.

AnItem ~~eviction notice was issued on October 8 by the landlord for 160 Dupont Street, Five Towns Realty Associates, Inc (“Five Towns Realty”)~~3. There is currently an outstanding balance of $54,739 that is subject to a lawsuit and is included in accounts payable and accrued liabilities at December 31, 2013. The Company is currently in negotiations with Five Towns Realty to reach a settlement.

12Legal Proceedings.

AnLoss ~~action~~contingencies ~~was~~considered ~~commenced~~remote onare ~~March~~generally ~~22,~~not ~~2012~~disclosed, inunless ~~the~~they ~~Supreme~~involve ~~Court~~guarantees, ofin ~~the~~which ~~New~~case ~~York for~~ the ~~County~~guarantees ofwould ~~Nassau,~~be bydisclosed. ~~Lazar,~~There ~~Sanders~~can ~~Thaler~~be &no ~~Associates,~~assurance ~~LLP,~~that asuch ~~dissolved~~matters ~~accounting~~will ~~firm~~not ofmaterially ~~which~~and ~~Terry~~adversely R.affect ~~Lazar,~~ the Company’s ~~former~~business, ~~CFO~~financial ~~was~~position, aand ~~member.~~results ~~Among~~of ~~the~~operations ~~parties~~or ~~named~~cash ~~as defendants were Mr~~flows. ~~Lazar~~As ~~and~~of ~~the~~December ~~Company.~~31, ~~The~~2014, ~~claim was made that~~ the Company ~~owned~~has ~~fees to~~ the ~~plaintiff~~following ~~and/or~~litigation ~~that such fees were paid to Terry Lazar who never forwarded them to the plaintiff~~outstanding. ~~Mr. Lazar undertook the defense of the action on his behalf and on behalf of the Company.~~

The ~~matter~~Company ~~proceeded~~has toremained a defendant in a lawsuit since September 12, 2012 in the Supreme Court of the State of New York, County of Nassau, filed by Fairchild Warehouse Associates, LLC (“Fairchild”), as plaintiff, for recovery of past rental payments for the Company’s former office space at 25 Fairchild Avenue, Plainview, New York 11803. An inquest began on December 10, 2014 to determine the amount of money damages due on Fairchild’s claim and on March 3, 2015 the court awarded judgment to the plaintiff against the Company in the sum of $25887,~~000~~929. Adding interests and costs to the awarded amount, judgment has been entered against the Company in the total sum of $36892,~~613~~042. AnInterest ~~appeal~~on ~~has been taken from~~ the judgment. ~~The~~will ~~appeal~~continue ~~has~~to ~~been~~accrue ~~perfected~~at by the ~~filing~~rate of ~~the~~9% ~~record~~per ~~and~~annum ~~brief~~until ~~in the Supreme Court of the state of New York~~satisfied. As of December 31, ~~2013~~2014 the Company ishas ~~reporting~~accrued a liability of $36804,~~613~~220 related to the judgment and is included in accounts payable and accrued liabilities at December 31, 2014.

~~Item 4. Mine Safety Disclosures.~~12

~~Not~~The Company is in default under a May 30, 2012, Securities Purchase Agreement entered into with TCA Global Credit Master Fund, LP (“TCA”), providing for the issuance of $275,000 principal amount of senior secured redeemable and convertible debentures due November 30, 2012. On October 4, 2013, at the request of the lender due to default, the Company converted $303,499 of convertible notes and accrued interest into a new convertible note in the amount of $531,431. The increase in principal was due to amounts charged by the lender for penalties, interest, legal and other fees. The newly issued note bears interest at rates of 18% per annum and is due on demand. The lender may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable under the Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest daily volume weighted average price of the Company’s common stock during the five trading days immediately prior to such applicable conversion date, in each case subject to the lender not being able to beneficially own more than 4.99% of our outstanding common stock upon any conversion. The conversion price is subject to anti-dilution protection and down round provisions in the event that the Company issues additional equity securities at a price less than the conversion price. On March 10, 2014, TCA accelerated the outstanding principal balance, interest, calculated at the default rate of 18%, and all sums due under the original note and any amendments. In August 2014 a default final judgment was entered against the Company concluding that TCA is entitled to damages in the amount of $610,349, to foreclose upon the security interests, and to recover attorneys’ fees and costs incurred by TCA. In addition prejudgment interest shall be assessed at a rate of 18% per annum and post judgment interest shall be assessed at a rate of 4.75% per annum. As of December 31, 2014 the Company has accrued a liability of $651,800 related to the TCA claim and is included in convertible notes payable.

~~PART~~On IINovember 27, 2013, the Company entered into a settlement agreement with Tarpon Bay Partners LLC (“Tarpon”), a related party. The manager of Tarpon is Stephen Hicks, the President of the Company. Tarpon previously purchased outstanding liabilities of the Company from TCA in the amount of $506,431 and Designs and Project Development Corporation (a former landlord) in the amount of $56,429. Per the terms of the settlement the Company was to issue Tarpon shares of common stock in one or more tranches as necessary, and subject to adjustment and ownership limitations, and a convertible promissory note in the principal amount of $75,000. The Company failed to issue shares to Tarpon and in the first quarter of 2014 TCA rescinded its liabilities purchase agreement with Tarpon. As of December 31, 2014 the Company has accrued a liability of $60,684 related to the Designs and Project Development Corporation claim and is included in notes payable and the $506,431 related to TCA has been included in convertible promissory notes.

~~Item~~On 5January 31, 2014, in conjunction with the settlement agreement outlined above, the Company issued Tarpon a convertible promissory note in the principal amount of $75,000. ~~Market~~The convertible note matures one year from the date of issuance with interest at 10% per annum. The convertible promissory note has no registration rights and shall be convertible into the common stock of the Company at any time at a conversion price equal to 75% of the low closing bid price for ~~Common~~the ~~Equity,~~twenty ~~Related~~days ~~Stockholder~~prior ~~Matters~~to conversion. The conversion price is subject to anti-dilution protection and ~~Issuer~~down ~~Purchases~~round provisions in the event that the Company issues additional equity securities at a price less than the conversion price. The Company may prepay the note at 150% of ~~Equity~~the ~~Securities~~entire outstanding principal amount of the note plus any accrued but unpaid interest.

~~Market~~An eviction notice was issued on October 8 by the landlord for 160 Dupont Street, Five Towns Realty Associates, Inc (“Five Towns Realty”). There is currently an outstanding balance of $54,739 that is subject to a lawsuit and is included in accounts payable and accrued liabilities at December 31, 2014. The Company is currently in negotiations with Five Towns Realty to reach a settlement.

~~Our~~An ~~common~~action ~~stock~~was iscommenced ~~traded~~on ~~over-~~March 22, 2012, in the~~-counter~~ ~~and~~Supreme ~~has~~Court ~~been~~of ~~available~~the New York for ~~quotation~~the onCounty of Nassau, by Lazar, Sanders Thaler & Associates, LLP, a dissolved accounting firm of which Terry R. Lazar, the ~~OTC~~Company’s ~~Markets~~former ~~Group~~CFO ~~OTCQB~~was ~~platform~~a ~~under~~member. Among the ~~trading~~parties ~~symbol~~named ~~“PSWS”~~as defendants were Mr. Lazar and the Company. The ~~following~~claim ~~table~~was ~~sets~~made ~~forth~~that the ~~range~~Company ofowned ~~high~~fees ~~and~~to ~~low~~the ~~bid~~plaintiff ~~prices~~and/or ~~for~~that ~~our~~such ~~common~~fees ~~stock~~were ~~for~~paid ~~the~~to ~~periods~~Terry ~~indicated~~Lazar aswho ~~derived~~never ~~from~~forwarded ~~the~~them ~~Google~~to ~~Finance~~the ~~website~~plaintiff. ~~The~~Mr. ~~information~~Lazar ~~reflects~~undertook ~~inter-dealer~~the ~~prices,~~defense ~~without~~of ~~retail~~the ~~mark-ups,~~action ~~mark-downs~~on orhis ~~commissions~~behalf and ~~may~~on ~~not~~behalf ~~necessarily~~of ~~represent~~the ~~actual transactions~~Company.

Quarter Ended	High Bid Price		Low Bid Price
March 31, 2011	$	0.118	$	0.110
June 30, 2011		0.067		0.046
September 30, 2011		0.104		0.096
December 31, 2011		0.062		0.058
March 31, 2012
June 30, 2012		0.063		0.035
September 30, 2012		0.035		0.013
December 31, 2012		0.02		0.003
March 31, 2013		0.019		0.008
June 30, 2013		0.021		0.017
September 30, 2013		0.017		0.007
December 31, 2013		0.008		0.003
March 31, 2014		0.005		0.002
June 30, 2014		0.004		0.001
September 30, 2014		0.004		0.001

The matter proceeded to inquest and the court awarded judgment to the plaintiff against the Company in the sum of $25,000. Adding interests and costs to the awarded amount, judgment has been entered against the Company in the total sum of $36,613. An appeal has been taken from the judgment. The appeal has been perfected by the filing of the record and brief in the Supreme Court of the state of New York. As of December 31, 2014 the Company has accrued a liability of $36,613 related to the judgment and is included in accounts payable and accrued liabilities at December 31, 2014.

~~Holders~~On October 23, 2014, the Company received a notice, filed with the Office of the District Administrative Judge, 10th Judicial District, Nassau County, New York, of the Company’s right to arbitrate a fee dispute with Steve Legum over $12,194 of legal fees in connection with Mr. Legum’s representation of the Company in the Levin Consulting Group matter. The Company did not file the Request for Fee Arbitration within the required 30 days of receipt of the notice, thereby forfeiting its right elect to resolve the dispute by arbitration. As of December 31, 2014 the Company has accrued a liability of $12,194 related to the dispute and is included in accounts payable and accrued liabilities at December 31, 2014.

AsItem ~~of October 23, 2014, we had approximately 520 stockholders of record~~4.

NoMine ~~dividends~~Safety ~~have been declared or paid on our common stock, and we do not anticipate that any dividends will be declared or paid in the foreseeable future~~Disclosures. Dividends on our common stock are subordinated to dividends and liquidation rights of the holders of our outstanding Series A, Series D and Series H preferred stock and the rights of the holders of our outstanding Series F convertible preferred stock.

13Not applicable.

~~Securities Authorized for Issuance under Equity Compensation Plans~~13

~~The~~PART following table shows information as of December 31, 2013 with respect to each equity compensation plan and individual compensation arrangements under which our equity securities are authorized for issuance to employees or non-employees.II

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (A)	Weighted-average exercise price of outstanding options, warrants and rights (B)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (C)
Equity compensation plans approved by security holders	6,000,000	$	0.0410	24,000,000
Equity compensation plans not approved by security holders	101,040,778	$	0.0134	−
Total	107,040,778	$	0.015

Item 5.

InMarket ~~November~~for ~~2008,~~Common ~~our stockholders approved the Company’s 2008~~ Equity ~~Incentive Plan (the “2008 Plan”)~~, ~~pursuant~~Related toStockholder ~~which~~Matters ~~30,000,000 shares are reserved for issuance to officers, directors, key employees~~ and ~~consultants~~Issuer ~~and~~Purchases ~~advisors. The purposes~~ of ~~the~~Equity 2008 Plan are (a) to enable us to attract and retain highly qualified personnel who will contribute to our success, and (b) to provide incentives to participants in the 2008 Plan that are linked directly to increases in stockholder value which will therefore inure to the benefit of all of our stockholdersSecurities. The 2008 Plan provides for its administrator (i.e., our board of directors, or a committee of the board in which each member will be an independent director) to have full authority, in its discretion, to:

select the persons, to whom awards will be granted, grant awards, determine the number of shares to be covered by each award, determine the type, nature, amount, pricing, timing and other terms of each award, and interpret, construe and implement the provisions of the 2008 Plan, including the authority to adopt rules and regulations. Under the 2008 Plan, we are authorized to award: stock options, stock bonuses, restricted stock, stock appreciation rights, commonly referred to as “SARs,” performance grants and other types of awards.Market

~~Sales~~Our common stock is traded over-the-counter and has been available for quotation on the OTC Markets Group OTCQB platform under the trading symbol “PSWS”. The following table sets forth the range of ~~Unregistered~~high ~~Securities~~and low bid prices for our common stock for the periods indicated as derived from the Google Finance website. The information reflects inter-dealer prices, without retail mark-ups, mark-downs or commissions and may not necessarily represent actual transactions.

The following table sets forth the unreported sales of unregistered securities for the fiscal year ended December 31, 2013:


Quarter Ended	High Bid Price		Low Bid Price
March 31, 2012
June 30, 2012		0.063		0.035
September 30, 2012		0.035		0.013
December 31, 2012		0.02		0.003

March 31, 2013		0.019		0.008
June 30, 2013		0.021		0.017
September 30, 2013		0.017		0.007
December 31, 2013		0.008		0.003

March 31, 2014		0.005		0.002
June 30, 2014		0.004		0.001
September 30, 2014		0.004		0.001
December 31, 2014		0.001		0.001

March 31, 2015		0.001		0.001

Date	Title and Amount(1)	Purchaser	Principal Underwriter	Total Offering Price / Underwriting Discounts
1/8/2013	10% Convertible promissory note in the principal amount of $25,000, due 2014, convertible at $0.03 per share, with 5-year warrants to purchase 1,666,667 shares of common stock at an exercise price of $.0036 per share.	Private investor.	NA	$	25,000/NA
5/13/2013	10% Convertible promissory note in the principal amount of $29,895, due 2014, convertible pursuant to a market price formula at time of conversion.	Private investor.	NA	$	29,895/NA
5/22/2013	12% loan agreement in the principal amount of $335,000, due 2014, convertible pursuant to a market price formula at time of conversion, with 5-year warrants.	Private Investor	NA	$	335,000/NA
7/11/2013	Convertible promissory note in the principal amount of $25,000, due September 30, 2013, convertible pursuant to a market price formula at time of conversion.	Private Investor	NA	$	25,000/NA

Holders

14As of April 8, 2015, we had approximately 476 stockholders of record.

8/19/2013	10% Convertible promissory note in the principal amount of $25,000, due 2014, convertible at $0.015 per share, with 5-year warrants to purchase 8,333,333 shares of common stock at an exercise price of $.003 per share.	Private Investor	NA	$	25,000/NA
8/16/2013	10% Convertible promissory note in the principal amount of $35,000, due 2014, convertible at $0.005 per share, with 5-year warrants to purchase 5,833,333 shares of common stock at an exercise price of $.006 per share.	Private Investor	NA	$	35,000/NA
9/5/2013	10% Convertible promissory note in the principal amount of $5,000, due 2014, convertible at $0.005 per share, with 5-year warrants to purchase 200,000 shares of common stock at an exercise price of $.006 per share.	Private investor.	NA	$	5,000/NA
9/12/2013	10% Convertible promissory note in the principal amount of $100,000, due 2014, convertible at $0.0085 per share, with 5-year warrants to purchase 10,416,666 shares of common stock at an exercise price of $.0096 per share.	Private investor.	NA	$	5,000/NA
10/14/2013	2,078,972 reset shares of common stock from prior conversion.	Private Investor (ASC Recap)	NA	$	14,345/NA
10/22/2013	1,582,546 reset shares of common stock from prior conversion.	Private Investor (SGI )	NA	$	9,495/NA
10/31/2013	3,000,000 shares of common stock issued upon conversion of $7,500 of the principal amount of a convertible note.	Private Investor (Vista Capital)	NA	$	7,500/NA
11/12/2013	2,233,996 shares of common stock issued upon conversion of $5,000 of the principal amount of and $585 of accrued interest on a convertible note.	Private Investor (Sazer)	NA	$	5,585/NA
12/19/2013	22,109,375 shares of common stock issued upon conversion of $35,000 of the principal amount of a convertible note and legal fees of $375.	Private Investor (Southridge).	NA	$	35,375/NA

No dividends have been declared or paid on our common stock, and we do not anticipate that any dividends will be declared or paid in the foreseeable future. Dividends on our common stock are subordinated to dividends and liquidation rights of the holders of our outstanding Series A, Series D, Series H, Series I and Series J preferred stock and the rights of the holders of our outstanding Series F convertible preferred stock.

~~Item~~Securities 6.Authorized ~~Selected~~for ~~Financial~~Issuance ~~Data.~~under Equity Compensation Plans

~~Disclosure~~The following table shows information as of December 31, 2014 with respect to each equity compensation plan and individual compensation arrangements under ~~Item~~which 6our isequity ~~not~~securities ~~required~~are ofauthorized ~~smaller~~for ~~reporting~~issuance ~~companies~~to employees or non-employees.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (A)		Weighted-average exercise price of outstanding options, warrants and rights (B)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (A)) (C)
Equity compensation plans approved by security holders							30,000,000

Equity compensation plans not approved by security holders		88,393,317	$	0.0106		-
Total		88,393,317	$	0.0106		-

~~Overview and Recent Developments~~14

WeIn ~~have~~November ~~developed~~2008, aour ~~patent~~stockholders ~~pending~~approved ~~“PureSafe~~the ~~First~~Company’s ~~Response~~2008 ~~Water~~Equity ~~System”~~Incentive Plan (the “~~PureSafe~~2008 ~~FRWS~~Plan”), ~~that~~pursuant isto ~~self-contained~~which ~~and~~30,000,000 ~~purifies~~shares ~~essentially~~are ~~any~~reserved ~~type~~for ofissuance ~~raw~~to ~~water~~officers, ~~source~~directors, orkey ~~decontaminate~~employees ~~any~~and ~~contaminated~~consultants ~~water~~and ~~without~~advisors. The ~~prior~~purposes ~~knowledge~~ of the ~~contaminants,~~2008 ~~including~~Plan ~~seawater~~are ~~that~~(a) ~~may~~to beenable ~~found~~us atto aattract ~~first~~and ~~response~~retain ~~emergency~~highly ~~site.~~qualified ~~This~~personnel ~~system~~who iswill ~~uniquely~~contribute ~~mobile,~~to byour ~~helicopter~~success, orand ~~transported~~(b) byto ~~truck.~~provide ~~The~~incentives ~~initial~~to ~~PureSafe~~participants ~~FRWS~~in ~~prototype~~the ~~was~~2008 ~~developed~~Plan ~~using~~that ~~advanced~~are ~~Israeli~~linked ~~water~~directly ~~treatment~~to ~~technology.~~increases ~~The~~in ~~original~~stockholder ~~prototype~~value ~~was~~which ~~capable~~will oftherefore ~~producing~~inure to ~~10,000~~the ~~gallons~~benefit of ~~water~~all ~~per~~of ~~day,~~our ~~but~~stockholders. ~~could~~The ~~not~~2008 ~~desalinate~~Plan ~~sea~~provides ~~water,~~for ~~and~~its ~~did~~administrator ~~not~~(i.e., ~~have~~our aboard ~~built~~of indirectors, ~~generator~~ or ~~water~~a ~~bagging~~committee ~~capability.~~of ~~Adhering to~~ the ~~original~~board ~~treatment~~in ~~train~~which ~~and~~each ~~process,~~member wewill ~~have~~be ~~since~~an ~~built~~independent ~~a 2nd prototype (FRWS unit~~director). ~~The~~to ~~FRWS~~have ~~unit~~full ~~can~~authority, ~~produce~~in ~~EPA~~its ~~compliant~~discretion, ~~drinking~~to: ~~water~~select at the ~~rate of 30~~persons,~~000~~ ~~gallons per day,~~ to ~~provide~~whom ~~drinking~~awards ~~water~~will tobe 45granted,~~000~~ ~~people.~~grant ~~This~~awards, ~~system~~determine ~~has~~the ~~received~~number ~~Gold~~of ~~Seal~~shares ~~Certification~~to ~~from~~be ~~the~~covered ~~Water~~by ~~Quality~~each ~~Association~~award, indetermine ~~September~~the ~~2010~~type, ~~was~~nature, ~~re-certified~~amount, inpricing, ~~April~~timing ~~2011~~ and ~~January~~other ~~2013,~~terms aof ~~significant~~each ~~accomplishment.~~award, Inand ~~addition~~interpret, ~~the~~construe ~~Nassau~~and ~~County~~implement ~~Department~~the provisions of ~~Health~~the ~~independently~~2008 ~~tested~~Plan, including the ~~PureSafe~~authority ~~unit’s~~to ~~water~~adopt ~~quality~~rules and regulations. Under the ~~results~~2008 ~~exceeded~~Plan, ~~all~~we ~~testing~~are ~~parameters.~~authorized ~~The~~to ~~FRWS-30K~~award: ~~unit~~stock ~~was~~options, ~~designed~~stock tobonuses, ~~meet~~restricted ~~the output~~stock, stock ~~ease~~appreciation ~~of operation~~rights, ~~mobility~~commonly ~~and~~referred ~~water~~to ~~quality requirements~~ as ~~described in the~~ “~~Operational Requirements Document~~SARs,” ~~issued~~performance bygrants ~~the~~and ~~U.S~~other ~~Department~~types of ~~Homeland Security (2009) for emergency water supplies~~awards.

~~Under our Exclusive~~ Sales ~~and~~of ~~Marketing~~Unregistered ~~Agreement with GEM present and future distributors and representatives will be integrated with GEM’s existing worldwide distributor network. GEM has appointed a Product Manager for our technology.~~Securities

15During the year ended December 31, 2014, multiple lenders requested to convert total aggregated $80,300 principal plus accrued interest of $24,937 into the Company’s common stock. The Company issued a total 282,923,584 shares of common stock in connection with such conversions.

WeThe ~~have~~following ~~sold~~table ~~three~~sets ~~FRWS~~forth ~~units, one being sold to an end user in~~ the ~~oil~~unreported ~~and~~sales ~~gas exploration business in Texas (delivered in Dec 2011), the second sold to the Department~~ of ~~Military~~unregistered ~~and~~securities ~~Veterans Affairs~~ for the ~~State~~fiscal ofyear ~~Alaska~~ended ~~(delivered~~December ~~in the first quarter of 2012) and the third sold to the State of Vera Cruz~~31, ~~Mexico in the fourth quarter of 2012. All of the sold units were manufactured in our production facility.~~2014:

~~Over the past several years we have demonstrated our FRWS system at several emergency preparedness conferences in New York and California, and numerous times at our offices in New York.~~15

Plan of Operations


Date	Title and Amount (1)	Purchaser	Principal Underwriter	Total Offering Price/ Underwriting Discounts
October 20, 2014	68,000,000 shares of common stock.	MACALLAN P	NA	$0.0000882 per share/NA
October 21, 2014	$50,000 principal amount convertible promissory note due May 1, 2015, without interest and a premium to be paid on redemption of $20,000. Upon maturity, at the election of the holder, the note is convertible into the Company’s common stock at a 50% discount of the lowest closing bid price during the 10 trading days prior to conversion.		NA	$50,000/NA
October 22, 2014	$14,000 principal amount 10% convertible promissory note due September 30, 2015 and convertible into the Company’s common stock at a conversion price of $0.0004 per share. In addition, 7,000,000 warrants were issued with an exercise price of $0.00048 per share. The warrants are fully vested and have a life of 5 years from date of issuance.		NA	$14,000/NA
November 10, 2014	$20,000 principal amount 10% convertible promissory note issued to Southridge II, a related party, due October 31, 2015, and convertible into common stock at a 50% discount of the lowest closing bid price during the 30 trading days prior to conversion.	Southridge II	NA	$20,000/NA
November 13, 2014	72,000,000 shares of common stock	MACALLAN P	NA	$0.0000556 per share/NA
November 13, 2014	On November 13, 2014 the Company issued a $ 12,500 principal amount 10% convertible promissory note due October 31, 2015, convertible into the Company’s common stock at a 50% discount of the lowest closing bid price during the 30 trading days prior to conversion.	Southridge II	NA	$12,500/ NA
November 17, 2014	$ 4,156 principal amount 10% convertible due October 31, 2015 and convertible into the Company’s common stock at a 50% discount of the lowest closing bid price during the 30 trading days prior to conversion.	Tarpon	NA	$4,156/NA
November 17, 2014	$ 25,000 principal amount 10% convertible promissory note due December 31, 2015 convertible into the Company’s common stock at a conversion price of $0.0002 per share. In addition, 25,000,000 warrants were issued with an exercise price of $0.00024 per share. The warrants are fully vested and have a life of 5 years from date of issuance.	Private investor	NA	$25,000/NA
November 24, 2014	110,555,556 shares of common stock.	Black Arch	NA	$0.00015 per share/NA
December 23, 2014	$ 15,000 principal amount promissory note due March 31, 2015 with the stated interest rate at 8%.	Southridge II	NA	$15,000/NA

~~Our plans for the next twelve months include:~~(1)

InThe ~~June~~issuances ~~2014~~to weexecutives, ~~retained~~employees, ~~Tarpon Bay Partners LLC~~lenders, aconsultants ~~company~~and ~~that~~investors isare ~~part~~viewed ofby the ~~Southridge~~Company ~~LLC~~as ~~group,~~exempt asfrom registration under the ~~Company’s~~Securities ~~strategic~~Act ~~financial~~of ~~advisor~~1933, toas ~~provide~~amended ~~general~~(“Securities ~~management~~Act”), ~~and~~alternatively, ~~consulting~~as ~~services~~transactions ~~and~~either ~~advisory~~not ~~services~~involving toany ~~the~~public ~~Company~~offering, ~~including~~or ~~assistance~~as inexempt ~~connection~~under ~~with~~ the ~~restructuring~~provisions of ~~our~~Regulation ~~outstanding~~D ~~debt~~promulgated ~~and~~by ~~equity~~the ~~securities~~SEC under the Securities Act.

~~Our marketing plan is based on the following key components:~~16

~~Strategic~~Item ~~Alliances – We entered into an Engineering Package Agreement in January 2013 with ETG/Engineering Technologies Group, Inc~~6. ETG will re-engineer and value engineer the system so that production can be outsourced. This should allow for the Company to meet future demands for the product. We also entered into a second agreement, with Global Equipment Marketing, Inc. (GEM). GEM will sell and market our products utilizing as a dba PureSafe Water System Sales.

~~Direct~~Selected ~~Marketing~~Financial ~~and Sales – The marketing and sales plan will initially focus on short term developed business opportunities where money is currently available~~Data. ~~The sales effort will be by both direct sales, development of an international dealer distribution network, and through the assistance of sales consultants and representatives.~~

~~Referencing~~Disclosure ~~our~~under ~~goals,~~Item we6 ~~are~~is ~~also~~not ~~redirecting~~required ~~the sales effort so that it will no longer predominantly rely on one sector~~ of ~~the~~smaller ~~economy.~~reporting ~~We will now aim to expand our product to the oil and gas sector, as well as many government and municipalities; and agricultural and industrial businesses~~companies. We are reviewing the entire approach to the product with an aim to deepen and diversify our distribution channels, lower our cost of production, improve the Company’s profit margin on sales and maintain an inventory of units for immediate sale.

AtItem ~~present our demonstration unit is on the road in a much more organized and deliberate approach to achieve maximum exposure through the balance of this year~~7. ~~We will be updating our marketing materials and directing more resources to our sales and marketing efforts.~~

NoManagement’s ~~assurance~~Discussion ~~can~~and beAnalysis ~~given that any~~ of ~~the~~Financial ~~above~~Condition ~~items~~and ~~will~~Results ~~be completed during the next twelve months or at any time in the future. Further, completion~~ of ~~all of such items does not guaranty that we will generate any revenue or become profitable at any time in the future~~Operations.

~~Results~~Overview ~~of Operations for the years ended December 31, 2013~~ and ~~2012~~Recent Developments

~~Revenues~~We have developed a patent pending “PureSafe First Response Water System” (“PureSafe FRWS”) that is self-contained and purifies essentially any type of raw water source or decontaminate any contaminated water without prior knowledge of the contaminants, including seawater that may be found at a first response emergency site. This Wesystem ~~recognized~~is $0uniquely ~~revenues~~mobile, ~~for~~by helicopter or transported by truck. The initial PureSafe FRWS prototype was developed using advanced Israeli water treatment technology. The original prototype was capable of producing 10,000 gallons of water per day, but could not desalinate sea water, and did not have a built in generator or water bagging capability. Adhering to the ~~year~~original ~~ended~~treatment ~~December~~train 31and process, ~~2013~~we ashave ~~compared~~since built ~~with~~a ~~$495~~2nd prototype (FRWS unit). The FRWS unit can produce EPA compliant drinking water at the rate of 30,000 ~~for~~gallons per day, to provide drinking water to 45,000 people. This system has received Gold Seal Certification from the ~~year~~Water ~~ended~~Quality ~~December~~Association 31in September 2010, ~~2012~~was re-certified in April 2011 and January 2013, a significant accomplishment. In addition, the Nassau County Department of Health independently tested the PureSafe unit’s water quality and the results exceeded all testing parameters. The FRWS-30K unit was designed to meet the output, ease of operation, mobility and water quality requirements as described in the “Operational Requirements Document” issued by the U.S Department of Homeland Security (2009) for emergency water supplies.

~~Cost~~Under ofour ~~goods~~Exclusive ~~sold~~Sales ~~for~~and ~~the~~Marketing ~~year~~Agreement ~~ended~~with ~~December~~GEM ~~31,~~present ~~2013~~and ~~was~~future ~~$56,344~~distributors asand ~~compared~~representatives ~~with~~will ~~$669,535~~be ~~for~~integrated ~~the~~with ~~year~~GEM’s ~~ended~~existing ~~December~~worldwide ~~31,~~distributor ~~2012~~network. ~~During~~GEM ~~the~~has ~~year~~appointed ~~ended~~a ~~December~~Product ~~31,~~Manager ~~2013~~for ~~inventory~~our ~~in the amount of $56,344 was abandoned~~technology.

~~Operating~~We ~~expenses~~have ~~for~~sold three FRWS units, one being sold to an end user in the ~~year~~oil ~~ended~~and ~~December~~gas ~~31,~~exploration ~~2013~~business ~~were~~in $2Texas (delivered in Dec 2011),~~558,393~~ ~~compared~~the second sold to ~~$2,442,130~~the Department of Military and Veterans Affairs for the ~~year~~State ~~ended~~of ~~December~~Alaska ~~31,~~(delivered in the first quarter of 2012,) aand ~~$116~~the third sold to the State of Vera Cruz,~~263~~ orMexico 5%in ~~increase~~the fourth quarter of 2012. All of the sold units were manufactured in our production facility.

~~The~~Over ~~following~~the ispast anseveral ~~analysis~~years ofwe ~~operating~~have ~~expense~~demonstrated ~~fluctuations~~our ~~between~~FRWS ~~2013~~system at several emergency preparedness conferences in New York and ~~2012~~California, and numerous times at our offices in New York.

~~Compensation~~Definitive ~~and~~Information ~~related~~Statement ~~benefits~~filed ~~expenses,~~with ~~including~~SEC ~~directors’ fees~~ for ~~the~~Capital ~~year~~Increase ~~ended~~and ~~December~~Reverse ~~31,~~Stock ~~2013 was $1,161,739 compared to $1,232,140 for the year ended December 31, 2012, a $70,401 or 6% decrease~~Split

~~Directors’~~A ~~fees~~Preliminary ~~increased~~Information ~~$31,200~~Statement ~~from~~was ~~$108~~filed with the SEC on October 24,~~000~~ ~~for~~2014, and the ~~year~~Definitive ~~ended~~Information Statement on December 3111, ~~2012~~2014, setting forth the approval by written consent of stockholders of the following amendments (the “Amendments”) to ~~$139,200~~our ~~for~~Certificate of Incorporation: (1) a Reverse Stock Split of the ~~year~~Company’s ~~ended~~common ~~December~~stock ~~31,~~at ~~2013.~~a ~~The~~ratio ~~$31,200~~of ornot ~~29%~~less ~~increase~~than one-for-one hundred and not more than one-for-five hundred as determined by our Board of Directors (the ~~directors~~“Reverse Stock Split”), subject to the Board’s ~~fees~~discretion to determine, without any further action by stockholders, not to proceed with a reverse stock split if it determines that a reverse stock split is no longer in the ~~result~~best interest of the ~~market~~Company ~~price~~and ~~fluctuation~~its ~~between~~stockholders, and (2) the ~~fair~~authorization of an increase in the number of authorized shares of common stock from two billion (2,000,000,000) shares of common stock, par value $.001 per share, to ten billion (10,000,000,000) shares of ~~the~~common ~~market~~stock, ~~price~~par onvalue $.00001 per share. The Amendment increasing our authorized common stock to 10,000,000,000 shares has become effective with the ~~date~~filing of ~~warrant~~the ~~issuance~~Certificate ~~and~~of Amendment with the ~~warrant~~Secretary ~~exercise~~of State of the State of Delaware.

16Plan of Operations

~~Salaries~~Our ~~expenses,~~plans ~~excluding Stock-based compensation, decreased from $742,702~~ for the ~~year~~next ~~ended~~twelve ~~December~~months 31, 2012 to $640,711 for the year ended December 31, 2013. The decrease was a result of the following approximate decreases; officer’s salaries decreased $66,000, office and administrative salaries decreased $24,000 and deferred compensation decreased $60,000.include:

~~Stock~~In ~~Based~~June ~~Compensation,~~2014 ~~excluding~~we ~~directors’~~retained ~~fees,~~Tarpon ~~consulting~~Bay ~~fees~~Partners ~~and marketing expense~~LLC, ~~decreased~~a ~~$2,200~~company ~~from~~that ~~$341,700~~is ~~for~~part ~~the~~of ~~year ended December 31, 2012 to $339,500 for~~ the ~~year~~Southridge ~~ended~~LLC ~~December 31~~group, ~~2013.~~as ~~We issued 27,000,000 shares of common stock to our employees and contractors during~~ the ~~year~~Company’s ~~ended~~strategic ~~December~~financial ~~31,~~advisor ~~2013 and recorded $171,300 stock-based compensation for such issuance. This is in comparison~~ to ~~2,300,000~~provide ~~shares~~general ofmanagement ~~common stock issued~~ and ~~$149,500~~consulting ofservices ~~stock-based compensation recorded in the year ended December 31, 2012, an increase of 24,700,000 shares~~ and ~~$21,800.~~advisory Inservices ~~addition,~~to ~~on February 11, 2013,~~ the ~~Compensation Committee granted our Chief Executive Officer and Chief Financial Officer a total of 25~~Company,~~000,000~~ ~~warrants~~including toassistance ~~purchase 25,000,000 shares of common stock at an exercise price of $0.0033 per share. We recorded $152,000 of stock-based compensation during 2013~~ in connection with ~~such grant. On October 25, 2012,~~ the ~~Compensation~~restructuring ~~Committee~~of ~~granted~~ our ~~Chief~~outstanding ~~Executive~~debt ~~Officer~~ and ~~Chief~~equity ~~Financial Officer a total of 30,000,000 warrants to purchase 30,000,000 shares of common stock at an exercise price of $0~~securities.~~006 per share. We recorded $145,800 of stock-based compensation during 2012 in connection with such grant.~~

~~Insurance~~Our &marketing ~~medical~~plan ~~benefits expense for the year ended December 31, 2013 was $82,553, compared to $83,557 for the year ended December 31, 2012, a $1,004 or 1% decrease. The decrease in total insurance premium~~ is ~~the~~based ~~net~~on ~~result of~~ the ~~reduction~~following inkey ~~our workers’ compensation insurance premium due to the reduction of production staff in 2013 and the increase the general liability premium in the same period.~~components:

~~Research~~Strategic ~~and~~Alliances ~~development~~– ~~expenses~~We ~~for~~entered ~~the~~into ~~year~~an ~~ended~~Engineering ~~December~~Package ~~31,~~Agreement in January 2013 ~~were~~with ~~$55,874~~ETG/Engineering ~~compared~~Technologies toGroup, ~~expenses~~Inc. ~~during~~ETG ~~the~~will ~~year~~re-engineer ~~ended~~and ~~December~~value ~~31,~~engineer ~~2012~~the ofsystem ~~$62,032,~~so athat ~~$6,158~~production orcan ~~10%~~be ~~decrease~~outsourced. InThis ~~the~~should ~~past~~allow ~~two~~for ~~years,~~the ~~due~~Company to ~~cash~~meet ~~restrictions,~~future wedemands ~~have~~for ~~curtailed~~ the ~~expenses~~product. We onalso ~~research~~entered ~~and~~into ~~development~~a ~~and~~second ~~have~~agreement, ~~focused~~with ~~our~~Global ~~resources~~Equipment onMarketing, ~~production~~Inc. ~~However,~~(GEM). weGEM ~~understand~~will ~~the~~sell ~~vital importance of research~~ and ~~development~~market ~~for~~ our ~~overall~~products ~~success.~~utilizing Weas ~~are~~a ~~committed~~dba ~~to continue to conduct research and development activities to ensure~~ PureSafe ~~FRWS~~Water ~~has~~System ~~the most advanced technology within the water filtration equipment industry~~Sales.

Professional, legal and consulting fees expenses for the year ended December 31, 2013 were $394,209, compared to $212,145 for the year ended December 31, 2012, a $182,064 or 86% increase. The main reason for the $182,064 increase is that, during the year ended December 31, 2013, we recorded $257,000 of stock-based consulting fees represented by 74,509,222 shares of our common stock being issued to two consultants and one investment banker for services we received. During the year ended December 31, 2012, we only issued 186,538 shares of common stock representing $10,900 of stock-based consulting fees. During 2012, we received a one-time adjustment bill from our auditor resulting in a higher than normal professional, legal and consulting fees for the year 2012 compared to 2013 which incurred no such adjustment.17

Direct Marketing ~~expenses,~~and ~~including~~Sales ~~stock-based~~– ~~compensation, decreased $187,718 from $213,553 for the year ended December 31, 2012 to $25,835 for the year ended December 31, 2013.~~ The ~~primary reason for the decrease was we made a non-recurring adjustment to accrue $169,444 in~~ marketing ~~consulting~~and ~~fees~~sales ~~that~~plan wewill ~~owed~~initially tofocus aon ~~consultant~~short interm ~~the~~developed ~~3rd~~business ~~quarter of 2012.~~opportunities

~~Occupancy~~Where ~~related~~money ~~expenses~~is ~~increased~~currently ~~$212,906 from $263,116 for the year ended December 31, 2012 to $476,022 for the year ended December 31, 2013~~available. ~~A main factor for the $212,906 increase in occupancy related expenses was due to a charge of $229,234 recorded during the year ended December 31, 2013 related to the Fairchild litigation.~~ The ~~increase~~sales ineffort ~~occupancy~~will ~~related~~be ~~expenses in 2013 compared to the same period in 2012 was offset~~ by ~~small~~both ~~decreases~~direct ~~in many different areas~~sales, ~~such~~development asof ~~reductions~~an ininternational ~~cleaning~~dealer ~~services~~distribution ~~and~~network, ~~repairs~~ and ~~maintenance.~~through ~~In addition in October 2013,~~ the ~~Company~~assistance ~~was~~of ~~evicted~~sales ~~from~~consultants ~~its Dupont Street facilities~~ and ~~moved to a location with a lower monthly rental amount~~representatives.

~~Loss~~Referencing onour ~~sale/abandonment~~goals, ofwe are also ~~fixed~~redirecting ~~assets - During~~ the sales effort ~~year~~so ~~ended~~that it ~~December~~will ~~31,~~no ~~2013~~longer wepredominantly ~~incurred~~rely on aone ~~loss~~sector of ~~$21,720 on~~ the ~~abandonment~~economy. ofWe ~~fixed~~will ~~assets.~~now aim Into expand our product to the ~~3rd~~oil ~~quarter~~and ofgas ~~2013~~sector, ~~after~~as ~~the~~well ~~Company~~as ~~moved~~many togovernment aand ~~new~~municipalities; ~~location,~~and ~~the~~agricultural ~~Company~~and ~~decided~~industrial tobusinesses. We ~~write-off~~are ~~all~~reviewing ~~fixed~~the ~~assets~~entire ~~that~~approach ~~were~~to ~~associated~~the product with ~~prior~~an ~~locations.~~aim ~~During~~to ~~2013~~deepen weand ~~sold~~diversify our ~~Ford~~distribution ~~truck and certain equipment and realized a $9~~channels,~~486~~ ~~gain~~lower ~~after~~our ~~writing-off~~cost ~~the balance~~ of ~~the assets. In March 2012~~production, weimprove ~~moved~~the ~~our~~Company’s ~~headquarters~~profit tomargin ~~our~~on ~~160~~sales ~~Dupont~~and ~~Street~~maintain ~~facility.~~an Asinventory ~~a result, we wrote-off $34,709~~ of ~~leasehold~~units ~~improvements~~for ~~during~~immediate ~~the year ended December 31, 2012~~sale.

~~Other~~At ~~administrative~~present ~~and~~our ~~general~~demonstration ~~expenses~~unit ~~increased~~is ~~$9,049~~on ~~from $340,878 for~~ the ~~year~~road ~~ended December 31, 2012 to $349,927 for the year ended December 31, 2013. A main factor~~ in ~~the~~a ~~increase~~much inmore ~~other~~organized ~~administrative~~ and ~~general~~deliberate ~~expenses~~approach ~~was~~to anachieve ~~increase~~maximum inexposure ~~litigation~~through ~~related~~the ~~settlement~~balance ~~charges~~ of ~~$161,613~~this ~~during~~year. We ~~2013~~will ~~partially~~be ~~offset~~updating byour amarketing ~~decrease~~materials ~~in production related expenses~~ and ~~other~~directing ~~expense~~more ~~not~~resources ~~included~~to inour ~~the~~sales ~~above~~and ~~discussion.~~marketing ~~During the year ended December 31, 2012, we incurred $68,667 in expenses on production related activities which we did not incur any for the year ended December 31, 2013~~efforts.

17No assurance can be given that any of the above items will be completed during the next twelve months or at any time in the future. Further, completion of all of such items does not guaranty that we will generate any revenue or become profitable at any time in the future.

~~Other~~Results ~~Income~~of ~~(Expenses)-net~~Operations for the years ended December 31, 2014 and 2013

Revenues. We ~~incurred~~recognized $~~(622,309)~~0 inrevenues ~~net non-operating expenses~~ for the ~~year~~years ended December 31, ~~2013,~~2014 ~~compared~~and ~~to $(142~~2013,~~920)~~ ~~for the year ended December 31, 2012, a $479,389 or 335% increase~~respectively.

~~The~~Cost ~~following~~of isgoods asold ~~detailed~~for ~~analysis~~the years ended December 31, 2014 was $0 as compared with $56,344 for ~~such~~the ~~increase:~~year ended December 31, 2013. During the year ended December 31, 2013 inventory in the amount of $56,344 was abandoned.

~~Interest~~Operating ~~expense~~expenses -for ~~non-debt discount related incurred during~~ the ~~years~~year ended December 31, ~~2013~~2014 ~~and~~were ~~2012 was~~ $~~830~~1,~~142~~901,469 ~~and~~compared to $~~365~~2,~~528~~558,393 ~~respectively~~for the year ended December 31, 2013, a $~~464~~656,~~614~~924 or ~~127~~26% ~~increase~~decrease.

The following ~~factors~~is ~~primarily~~an ~~impacted~~analysis ~~interest expense – non-debt discount for the year ended December 31, 2013: i) During the year ended December 31, 2013, we incurred approximately $125,000 in interest expense as the result~~ of ~~failing~~certain tooperating ~~issue conversion shares in a timely manner that was dictated by the terms of outstanding notes; ii) During the year ended December 31, 2013, we incurred approximately $228,000 in penalty interest~~ expense asfluctuations ~~the~~between ~~result of defaulting on our loan with TCA; and iii) During~~ the ~~year~~years ended December 31, ~~2013,~~2014 ~~we incurred approximately $245,000 in interest expense as the result of the fair value, on the date of issuance, of the conversion features~~ and ~~warrants issued with certain debt in excess of the face value of the debt~~2013.

~~The~~Compensation ~~following~~and ~~factors~~related ~~primarily~~benefits ~~impacted~~expenses, ~~interest~~including ~~expense~~directors’ –fees ~~non-debt discount~~ for the year ended December 31, ~~2012:~~2014 i)was ~~In the third quarter of 2012, we made two one-time entries; ii) On July 3, 2012, a customer requested to convert~~ $~~130~~327,~~000~~979 ~~customer~~compared ~~deposit into common stock. Based on the terms of the original sales/rental agreement, upon the issuance of 4,187,500 shares of common stock, we recorded $37,500 of interest expense~~ to ~~fulfill the Company’s obligation; iii) In September, 2012, the Company recorded~~ $851,~~000 of interest expense resulted from an agreement the Company entered into with a lender to amend certain convertible notes issued by the Company to the lender~~161,739 ~~dated~~for ~~as of March 27, 2012 and April 25, 2012 in~~ the aggregate principal amount of $100,000. The lender agreed to forgo the right to convert those notes into common stock and in exchange, the Company agreed to add an additional $85,000 to the original principal amount of $100,000 of the note. iiii) During the year ended December 31, ~~2012~~2013, wea ~~incurred approximately~~ $10833,~~000~~760 inor ~~interest~~72% ~~expense as the result of failing to issue conversion shares in a timely manner that was dictated by the terms of outstanding notes~~decrease.

~~Interest~~Directors’ ~~expense~~fees -decreased ~~debt~~$139,200 ~~discount~~from ~~incurred~~$139,200 ~~during~~for the ~~years~~year ended December 31, 2013 ~~and~~to ~~2012 was~~ $~~223,825~~0 ~~and~~for ~~$796,040,~~the ~~respectively,~~year aended ~~$572~~December 31,~~215~~ ~~or 72% decrease~~2014. The ~~main~~Company ~~reason~~paid ~~for~~no ~~the~~compensation ~~decrease~~to inits ~~debt-discount~~directors ~~related interest expense is that we fully amortized the debt discount of most of our loans that we entered in 2011 and 2012, and we entered into fewer loan agreements~~ during the year ended December 31, ~~2013 compared to the year ended December 31, 2012~~2014.

~~Changes~~Salaries inexpenses, ~~fair~~excluding ~~value~~Stock-based ofcompensation, ~~warrants~~decreased ~~and~~from ~~embedded~~$640,711 ~~conversion~~for ~~options~~the year ended December 31, 2013 to $307,750 for ~~years~~the year ended December 31, ~~2013~~2014. ~~and~~The ~~2012~~decrease ~~were~~was a result of the following approximate decreases; officer’s salaries decreased $~~393~~274,000 and office and administrative salaries decreased $~~998~~59,~~300, respectively~~000.

~~The~~Stock ~~change~~Based inCompensation, ~~fair~~excluding ~~value~~directors’ offees, ~~warrants~~consulting fees and ~~embedded~~marketing ~~conversion~~expense, ~~options~~decreased $336,690 from $339,500 for ~~any~~the ~~period~~year isended ~~always~~December ~~primarily~~31, ~~the~~2013 ~~result~~to of$2,810 for the ~~following~~year ~~factors~~ended December 31, 2014. ~~The~~We ~~first~~issued ~~factor~~51 isshares of series G preferred stock to our Company President during the ~~fair~~year ~~value~~ended weDecember 31, 2014 and recorded as$2,810 stock-based compensation for such issuance. During the ~~result~~year ofended ~~new~~December ~~issuances~~31, 2013 we issued 27,000,000 shares of ~~warrants~~common stock to our employees and ~~the~~contractors ~~embedded~~and ~~conversion~~recorded ~~value~~$171,300 stock-based compensation for such issuance. ~~The~~In ~~second~~addition, ~~factor~~on isFebruary 11, 2013, the ~~reduction~~Compensation ofCommittee ~~outstanding~~granted ~~options~~our orChief Executive Officer and Chief Financial Officer a total of 25,000,000 warrants to purchase 25,000,000 shares of common stock at ~~the~~an ~~end~~exercise price of ~~each~~$0.0033 ~~period~~per ~~due~~share. toWe ~~warrant/options~~recorded ~~exercise~~$152,000 orof ~~warrants/options~~stock-based ~~expired~~compensation during the ~~same~~year ~~period.~~ended ~~The~~December ~~third~~31, ~~factor~~2013 isin connection with such grant. In addition, during the ~~fluctuation~~year ofended December 31, 2013 the Company’s granted employees and contractors a total of 900,000 warrants to purchase 900,000 shares of common stock at an exercise price of $0.0033 per share. We recorded $16,200 of stock-based compensation during the year ended December 31, 2013 in connection with such grant.

~~Liquidity~~Research and ~~Capital~~development ~~Resources~~expenses for the year ended December 31, 2014 were $3,474 compared to expenses during the year ended December 31, 2013 of $55,874, a $52,400 or 94% decrease. In the past two years, due to cash restrictions, we have curtailed the expenses on research and development and have focused our resources on production. However, we understand the vital importance of research and development for our overall success. We are committed to continue to conduct research and development activities to ensure PureSafe FRWS has the most advanced technology within the water filtration equipment industry.

~~As of December 31, 2013, we maintained a cash balance of $2,199 as compared to $63,571 as of December 31, 2012.~~18

~~Net~~Professional, ~~cash~~legal ~~used~~and inconsulting ~~operating~~fees ~~activities~~expenses ~~during~~for the year ended December 31, ~~2013~~2014 ~~was~~were $1,~~037~~032,~~031~~335, compared to $~~974~~394,~~403~~209 ~~used~~for ~~during~~ the year ended December 31, ~~2012~~2013, a $62638,~~628~~126 or 6162% increase. The ~~Company~~main ~~expects~~reason ~~cash~~for ~~from~~the ~~operations~~$638,126 increase is that, during the year ended December 31, 2014, we recorded $669,935 of stock-based consulting fees represented by 29 shares of our series H preferred stock being issued to ~~remain~~Tarpon, ~~negative~~a ~~until~~related party, for services we ~~start~~received. During the year ended December 31, 2013 we recorded $257,000 of stock-based consulting fees represented by 74,509,222 shares of our common stock being issued to ~~generate~~two ~~adequate~~consultants ~~revenues~~and an investment banker for services we received. In addition legal and professional fees increased approximately $225,000 during the year ended December 31, 2014 as compared to the year ended December 31, 2013 due to increased fees incurred related to the Company’s public reporting requirements, litigation and patent related costs.

~~Net~~Marketing ~~cash~~expenses ~~provided~~decreased in$22,134 ~~investing~~from ~~activities~~$25,835 for the ~~years~~year ended December 31, 2013 ~~and~~to ~~2012 was~~ $143,~~742~~701 ~~and~~for ~~$0, respectively. We sold our Ford truck and certain equipment during~~ the year ended December 31, ~~2013~~2014. ~~and~~In ~~received~~the ~~cash~~past ~~proceeds~~two ~~of $22~~years,~~200~~ ~~cash.~~due ~~During~~to ~~the~~cash ~~year ended December 31~~restrictions, ~~2013~~ we ~~paid~~have ~~$7,458~~curtailed ~~for~~the ~~patent~~expenses ~~costs~~on marketing.

~~During~~Occupancy ~~the~~related ~~years~~expenses ~~ended~~decreased ~~December 31, 2013 and 2012, respectively, we received~~ $~~635~~113,~~314~~803 ~~and~~from $~~412~~476,~~270~~022 ~~through~~for ~~sales~~the ofyear ~~our~~ended ~~common~~December ~~stock~~31, ~~and~~2013 ~~warrant~~to ~~exercises. We received~~ $38362,~~423~~219 ~~from~~for ~~two~~year ~~investors~~ended toDecember ~~exercise their warrants to purchase 3~~31,~~483,567~~ ~~shares~~2014. ofThe ~~common~~fluctuation ~~stock~~in atoccupancy ~~exercise~~related ~~prices~~expenses ~~between~~in ~~$0.0096~~2014 ~~and~~compared ~~$0.0144.~~to Asthe ofsame ~~December~~period ~~31,~~in 2013, weis ~~have~~as ~~not~~a ~~issued~~result of the ~~shares in connections with such warrant exercises.~~following:

18Effective as of July 1, 2008, the Company entered into a seven-year lease for 5,300 square feet of space at 25 Fairchild Avenue in Plainview, New York. The facility is to serve as the Company’s executive offices, sales office, showroom and an assembly area.

~~Funds~~In ~~received~~March ~~from officers’ and directors’ loans and convertible loans during the year ended December 31, 2013 and~~ 2012 ~~were~~management ~~$9,051~~exercised ~~and~~a ~~$105,000,~~“Good ~~respectively;~~Guy ~~cash~~Clause” ~~received~~in ~~from~~its ~~issuing~~lease ~~convertible promissory notes was $376,500~~ and ~~$768,500,~~abandoned ~~respectively; and cash received from issuing promissory notes was $12,500 and $75,000, respectively. We paid $0 and $130,024 in financing costs associated with loans entered into during~~ the ~~years~~space ~~ended~~at ~~December~~25 ~~31,~~Fairchild 2013 and 2012, respectively; cash used to repay convertible notes payable was $32,500 and $0, respectively; cash used to repay officers and directors notes was $48,500 and $104,000, respectively; and cash used to repay notes payable was $29,871 and $207,000, respectivelyAvenue.

~~From~~On September 12, 2012, as a result of the ~~above~~Company’s ~~activities~~action, ~~net~~Fairchild ~~cash~~Warehouse ~~provided~~Associates, byLLC ~~financing~~(“Fairchild”), ~~activities~~as ~~during~~plaintiff, filed suit for recovery of past rental payments for the ~~years~~Company’s ~~ended~~former office space at 25 Fairchild Avenue, Plainview, N.Y. 11803. An inquest began on December 3110, ~~2013~~2014 to determine the amount of money damages due on Fairchild’s claim and ~~2012~~on ~~was~~March 3, 2015 the court awarded judgment to the plaintiff against the Company in the sum of $~~960~~887,~~917~~929. Adding interests and ~~$919~~costs to the awarded amount,~~746,~~ ~~respectively~~judgment has been entered against the Company in the total sum of $892,042.

~~Aggregating~~During ~~operating~~the year ended December 31, ~~investing~~2014 ~~and~~the ~~financing~~Company ~~activities~~recorded ~~from~~rent, ~~above~~rent related expenses and penalties of $328,290 ~~net~~as ~~cash~~a ~~used~~result ~~for~~of the ~~years~~judgment ~~ended~~which ~~December~~is ~~31,~~included ~~2013~~in ~~and~~occupancy ~~2012~~expense ~~was~~in ~~$61,372~~the ~~and~~accompanying ~~$54,657,~~consolidated ~~respectively~~statements of operations.

~~Going~~During ~~Concern~~the year ended December 31, 2013 the Company recorded rent, rent related expenses and penalties of $341,849 relating to the lawsuit which is included in occupancy expense in the accompanying consolidated statements of operations.

AtThe ~~December~~fluctuation ~~31,~~was ~~2013,~~also weimpacted ~~had~~due ato ~~working~~the ~~capital~~Company ~~deficit~~being ofevicted ~~approximately~~from ~~$5.6~~its ~~million.~~Dupont WeStreet ~~continue~~facilities toduring ~~suffer~~October ~~recurring~~2013 ~~losses from operations~~ and ~~have~~moving anto ~~accumulated~~a ~~deficit~~location ~~since~~with ~~inception~~a oflower ~~approximately~~monthly ~~$48.3~~rental ~~million~~amount. ~~These~~In ~~conditions~~addition ~~raise~~the ~~substantial~~company ~~doubt~~realized ~~about~~small ~~our~~decreases ~~ability~~in tomany ~~continue~~different areas, such as areductions ~~going~~in ~~concern~~cleaning services and repairs and maintenance.

~~The~~(Gain) ~~Company’s~~loss ~~continuation~~on assale/abandonment aof ~~going~~fixed ~~concern~~assets is- ~~dependent~~During ~~upon its ability to bring~~ the ~~Company’s~~year ~~products~~ended toDecember ~~market and generate revenues~~31, ~~control~~2014 ~~costs,~~the ~~and obtain additional financing, as required and on reasonable terms. The~~ Company’s ~~plans~~sold ~~with~~property ~~respect to these matters include restructuring its existing debt~~ and ~~raising~~equipment ~~additional~~in ~~financing~~settlement ~~through issuance~~ of ~~preferred~~liabilities ~~stock, common stock~~ and~~/or~~ ~~debt.~~recorded Ona ~~January~~gain ~~23,~~of ~~2013, the Company signed an Engineering Package Agreement~~ $(~~“ETG Agreement”) with Engineering Technologies Group~~6, ~~Inc. (“ETG”~~195)~~, Hopkinton, Massachusetts~~. ~~Under~~During the ~~engineering~~year ~~agreement,~~ended ~~ETG~~December ~~will~~31, ~~provide~~2013 ~~detailed~~we ~~electronic~~incurred ~~engineering~~a ~~drawings~~loss ~~and~~of ~~purchase~~$21,720 ~~specifications~~on ~~for~~ the ~~Company’s~~abandonment ~~water~~of ~~purification~~fixed ~~and~~assets. ~~filtration~~In ~~product and to facilitate~~ the ~~outsourcing~~3rd quarter of ~~the assembly, sub-assembly and manufacturing. On January 25,~~ 2013, after the Company ~~entered~~moved ~~into~~to ~~an Exclusive Sales and Marketing Agreement (the “Distribution Agreement”) with Global Equipment Marketing, Inc. (“GEM”), Hopkinton, Massachusetts,~~ a ~~distribution~~new ~~and marketing company. Under the Distribution Agreement~~location, ~~on an exclusive basis, GEM is responsible for promoting and selling~~ the Company’s ~~products~~decided atto ~~their~~write-off ~~cost~~all ~~and~~fixed ~~expense.~~assets Inthat ~~exchange,~~were ~~GEM~~associated ~~will receive a discount from the list prices of PureSafe products in connection~~ with ~~sales~~prior ~~to its dealers, distributors, representatives and resellers~~locations. ~~The~~During ~~Company~~2013 ~~remains~~we ~~responsible~~sold ~~for~~our ~~the~~Ford ~~design~~truck and ~~manufacturing~~certain ofequipment ~~the~~and ~~products.~~realized ~~The~~a ~~Company has been evicted from its facilities at 160 Dupont Street~~$9,486 ~~Plainview,~~gain NYafter ~~11803.~~writing-off ~~The~~the ~~Company~~balance ~~plans to outsource production~~ of the ~~product in the future~~asset. ~~Any remaining inventory was moved to ETG’s facilities in Hopkinton, Mass.~~

~~Effective~~Other ~~March~~administrative 7,and ~~2014,~~general ~~Theresa~~expenses ~~Bischoff~~decreased ~~and~~$232,234 ~~Dr.~~from ~~Stephen~~$349,927 E.for ~~Flynn~~the ~~resigned~~year asended aDecember ~~directors~~31, of2013 ~~the~~to ~~Company~~$117,693 for ~~personal~~the ~~reasons,~~year ~~and~~ended onDecember ~~April 2~~31, 2014, ~~the~~a ~~Board~~66% ~~of Directors elected Stephen M~~decrease. ~~Hicks~~A asmain afactor ~~director,~~in tothe ~~fill~~decrease ain ~~vacancy~~other onadministrative ~~the Board,~~ and asgeneral ~~President~~expenses ofwas the Company. ~~Mr.~~incurred ~~Hicks~~litigation isrelated ~~the~~settlement ~~Chief~~charges ~~Executive Officer~~ of ~~Southridge~~$161,613 ~~LLC~~during ~~(“Southridge”),~~2013 which ~~has~~we ~~financed~~did ~~the~~not ~~Company~~incur inany for the ~~past~~year ~~and~~ended ~~continues~~December to31, ~~own~~2014. In ~~debt~~addition, ~~and equity securities of~~ the Company. ~~Our~~realized ~~Board also on the same date elected Gilbert Steedley as~~ a ~~director~~combination of ~~the~~reductions ~~Company, to fill a vacancy on the Board~~ of ~~Directors,~~other ~~and~~expenses ~~elected~~that ~~Henry~~were ~~Sargent~~not asincluded ~~Vice~~in ~~President and Secretary of~~ the ~~Company.~~above Mrdiscussion. ~~Sargent is the Chief Operating Officer and General Counsel of Southridge.~~

~~The~~Other ~~Company’s~~Income goal is to generate the sales of the Company's flagship mobile water purification product and to ultimately diversify its product line through ingenuity and/or acquisition. In order to accomplish these goals we are redirecting the sales effort so that the Company will no longer predominantly focus on the government sector, a target with historically long lead times. In addition the Company is reviewing the entire approach to the product with an aim to 1(Expenses) ~~deepen and diversify our distribution channels, 2) lower our cost of production, 3) improve the Company's profit margin on and 4) maintain an inventory of units for immediate sale.~~-net

~~The~~We ~~Company~~incurred ~~requires~~$(2,086,458) ~~immediate~~in ~~capital~~net tonon-operating ~~remain~~expenses ~~viable.~~for ~~The~~the ~~Company~~year ~~can~~ended ~~give~~December no31, ~~assurance~~2014, ~~that~~compared ~~such financing will be available on terms advantageous~~ to ~~the Company~~$(622,309) orfor ~~at all. Should~~ the ~~Company~~year ~~not~~ended beDecember ~~successful~~31, in2013, ~~obtaining~~a ~~the necessary financing to fund its operations~~$1,464,149 ~~the Company would need to curtail certain~~ or ~~all~~235% ~~of its operational activities~~increase. ~~The accompanying audited consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.~~

~~Subsequent~~The tofollowing ~~December~~is ~~31,~~a ~~2013,~~detailed ~~the~~analysis Company has issued approximately $190,000 of notes payable and approximately $301,000 of convertible notes payable. From January 1, 2014 until October 23, 2014, the Company issued 414,812,709 shares of common stock for ~~the~~such ~~settlement of $219,620 loan principal plus $24,850 accrued interest and fees.~~increase:

19We recorded interest income on subscriptions receivable of $15,131 during the year ended December 31, 2013.

~~Critical~~We ~~Accounting~~received ~~Policies~~a ~~and~~one-time ~~Estimates~~refund from an insurance company as a result of a policy premium audit. We recorded $23,538 non-recurring non-operating income in connection with such refund during the year ended December 31, 2013.

~~Our~~Interest ~~financial~~expense ~~statements~~incurred ~~are~~during ~~prepared in accordance with accounting principles generally accepted in~~ the ~~United~~year ~~States~~ended ofDecember ~~America.~~31, ~~Preparation~~2014 ofand ~~the~~2013 ~~statements~~was ~~in accordance with these principles requires that we make estimates~~$1,121,492 ~~using available data~~ and ~~our judgment~~$1,053,978, ~~for such things as valuing assets~~respectively, ~~accruing liabilities and estimating expenses. We are considered~~ a ~~development~~$67,514 ~~stage~~or ~~enterprise~~6% ~~as defined in the Accounting standards Codification 915 “Development Stage Entities~~increase.~~” We are subject to a number of risks similar to those of other companies in an early stage of development.~~

~~The following is a list of what we believe are the most critical estimations that we make when preparing our financial statements.~~19

~~Stock-Based~~The ~~Compensation~~following factors primarily impacted interest expense for the year ended December 31, 2014: i) During the year ended December 31, 2014, we incurred approximately $40,000 in interest expense as the result of failing to issue conversion shares in a timely manner that was dictated by the terms of outstanding notes; ii) During the year ended December 31, 2014, we incurred approximately $265,000 in interest expense as the result of the fair value, on the date of issuance, of the conversion features and warrants issued with certain debt in excess of the face value of the debt.

WeThe ~~report~~following ~~stock~~factors ~~based~~primarily ~~compensation~~impacted ~~under~~interest ~~ASC~~expense ~~718~~for ~~“Compensation~~the –year ~~Stock~~ended ~~Compensation”.~~December ~~ASC~~31, ~~718~~2013: ~~requires~~i) ~~all~~During ~~share-based~~the ~~payments~~year ended December 31, 2013, we incurred approximately $125,000 in interest expense as the result of failing to ~~employees~~issue conversion shares in a timely manner that was dictated by the terms of outstanding notes; ii) During the year ended December 31, ~~including~~2013, ~~grants~~we incurred approximately $228,000 in penalty interest expense as the result of ~~employee~~defaulting ~~stock~~on ~~options~~our loan with TCA; and iii) During the year ended December 31, to2013, bewe ~~recognized~~incurred approximately $245,000 in interest expense as the ~~consolidated~~result ~~financial~~of ~~statements~~the ~~based~~fair value, on ~~their~~the ~~fair~~date ~~values~~of issuance, of the conversion features and warrants issued with certain debt in excess of the face value of the debt.

WeIn ~~account~~addition, ~~for~~the ~~equity~~change ~~instruments issued to non-employees~~ in ~~accordance~~interest ~~with~~expense ~~the~~for ~~provisions~~any ofperiod ~~ASC 718, which require that such equity instruments~~ is ~~recorded~~always ataffected ~~its~~by ~~fair~~the ~~value~~issuances onof ~~the~~new ~~measurement date~~debt, ~~which~~repayments isof ~~typically~~debt ~~the~~and ~~date~~conversions ~~the~~of ~~services are performed~~debt.

The ~~Black-Scholes~~accretion ~~option~~of ~~valuation~~debt ~~model~~discount isduring ~~used to estimate~~ the ~~fair~~years ~~value~~ended ofDecember ~~the~~31, ~~options~~2014 orand ~~their~~2013 ~~equivalent~~was ~~granted.~~$521,378 ~~The~~and ~~model~~$223,825, ~~includes~~respectively, ~~subjective~~a ~~input~~$297,553 ~~assumptions~~or ~~that~~133% ~~can materially affect the fair value estimates~~increase. The ~~model~~main ~~was~~reason ~~developed~~ for ~~use~~the increase in ~~estimating~~ the ~~fair~~accretion ~~value~~ of ~~traded~~debt ~~options~~discount oris ~~warrants.~~due ~~The~~to ~~expected~~the ~~volatility~~amortization isof ~~estimated based on~~ the ~~most~~debt ~~recent~~discount ~~historical~~of ~~period~~our ofloans ~~time~~that ~~equal~~we toentered during the ~~weighted~~fourth ~~average~~quarter ~~life~~ of 2013 and the ~~options~~year ~~granted~~2014.

~~The~~On ~~principal~~October ~~assumptions~~24, ~~used~~2014, the Company entered into an agreement in-order ~~applying~~to satisfy outstanding liabilities of the ~~Black-Scholes~~Company ~~model~~due ~~along~~to our former Chief Financial Officer (“CFO”) and former Director, Terry R. Lazar (“Lazar”), dating back to 2009. Mr. Lazar acted as CFO for the Company until February 15, 2014, and the Company has accrued approximately $510,000 in deferred compensation on behalf of Lazar, including accrued interest and warrants for his services on the Company’s Board (“Deferred Comp”). In addition, Lazar has loaned approximately $225,000 to the Company in the form of loans(s) (“Loan”). Mr. Lazar and the Company have agreed to satisfy and terminate all Deferred Comp and Loan obligations of the Company due to Lazar by having the Company issue to Lazar a new series of preferred stock. Per the terms of the agreement the Company shall issue 200 shares of preferred stock with a stated value equal to $200,000 in full satisfaction of the ~~results~~aforementioned ~~from~~liabilities. The Company recorded a gain on restructuring of debt of approximately $710,000 during the ~~model~~year ~~were~~ended asDecember ~~follows:~~31, 2014 related to the settlement. (See Financial Statement - Note 12)

	Years Ended December 31,
	2013	2012
Risk-free interest rate	0.3-1.6%	0.36%
Expected life, in years	3 to5 years	3 years
Expected volatility	125% to 175%	117%
Dividends	0%	0%

Changes in fair value of warrants and embedded conversion options for year ended December 31, 2014 and 2013 were $(1,677,600) and $393,000, respectively.

WeLiquidity ~~have issued equity instruments in the past to raise capital~~ and asCapital ~~a means of compensation to employees and for the settlement of debt.~~Resources

~~Derivative~~As ~~Financial~~of ~~Instruments~~December 31, 2014, we maintained a cash balance of $4,967 as compared to $2,199 as of December 31, 2013.

InNet ~~connection~~cash ~~with~~used ~~the~~in ~~issuance~~operating ofactivities ~~certain~~during ~~convertible~~the ~~promissory~~year ~~notes~~ended December 31, ~~the~~2014 ~~terms~~was of$616,388, ~~the~~compared ~~convertible~~to ~~notes~~$1,037,031 ~~included~~used anduring ~~embedded~~the ~~conversion~~year ~~feature~~ended ~~which~~December ~~provided~~31, ~~for~~2013, a ~~conversion~~$420,643 ofor 41% decrease. In the ~~convertible~~past ~~promissory~~two ~~notes~~years, ~~into~~due ~~shares~~to ofcash ~~our~~restrictions, ~~common~~we ~~stock~~have atcurtailed aexpenses ~~rate~~on ~~which~~salaries, ~~was~~marketing, ~~determined~~and toresearch beand ~~variable~~development. WeCurrently ~~determined~~the ~~that~~Company ~~the~~generates ~~conversion~~no ~~feature~~revenues ~~was~~and anrelies ~~embedded~~on ~~derivative~~debt ~~instrument~~financings ~~pursuant~~in-order to ~~ASC~~sustain ~~815~~operating ~~“Derivatives~~activities. ~~and~~The ~~Hedging~~Company expects cash from operations to remain negative until we start to generate adequate revenues.”

~~The~~Net ~~accounting~~cash ~~treatment~~provided ofby ~~derivative~~investing ~~financial~~activities ~~instruments~~for ~~requires that we record~~ the ~~conversion~~year ~~option~~ended ~~and~~December related warrants at their fair values as of the inception date of the convertible debenture agreements and at fair value as of each subsequent balance sheet date. As a result of entering into the convertible promissory notes31, we2014 ~~were required to reclassify all other non-employee warrants~~ and ~~options~~2013 aswas ~~derivative~~$0 ~~liabilities~~ and ~~record~~$14,742, ~~them at their fair values at each balance sheet date~~respectively. ~~Any~~During ~~change~~the inyear ~~fair~~ended ~~value~~December ~~was recorded as non-operating~~31, ~~non-cash~~2013 ~~income~~we orpaid ~~expense~~$7,458 for ~~each~~capitalized ~~reporting~~patent ~~period~~costs atand ~~each~~received ~~balance~~proceeds ~~sheet~~from ~~date. We reassess~~ the ~~classification~~sale of ~~the~~property ~~instruments~~and atequipment ~~each balance sheet date. If the classification changes as a result~~ of ~~events during the period~~$22, ~~the contract is reclassified as of the date of the event that caused the reclassification~~200.

~~Effects~~During the year ended December 31, 2014 and 2013, respectively, we received $0 and $570,800 through sales of ~~Recent~~our ~~Accounting~~common ~~Policies~~stock.

InDuring ~~July 2013,~~ the ~~FASB~~year ~~issued~~ended ~~ASU~~December ~~2013-11~~31, ~~“Income~~2013 ~~Taxes~~we ~~(Topic~~received ~~740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward~~$102,937 a Similar Tax Loss, or a Tax Credit Carryforward Exists.” Under this new guidance, companies must present this unrecognized tax benefit in the financial statements as a reduction to deferred tax assets created by net operating losses or other tax credits from ~~prior~~eight ~~periods~~investors ~~that~~who ~~occur~~exercised intheir ~~the~~warrants same taxing jurisdiction. If the unrecognized tax benefit exceeds such credits it should be presented in the financial statements as a liability. This update is effective for annual and interim reporting periods for fiscal years beginning after December 15, 2013. The adoption of this standard is not expected to ~~have~~purchase ashares ~~material impact on the Company’s financial position, results~~ of ~~operations~~our orcommon ~~cash flows~~stock.

20Funds received from officers’ and directors’ loans and convertible loans during the years ended December 31, 2014 and 2013 were $11,300 and $9,051, respectively; cash received from issuing convertible promissory notes was $429,156 and $376,500, respectively; and cash received from issuing promissory notes was $211,800 and $12,500, respectively. During the years ended December 31, 2014 and 2013 cash used to repay convertible notes payable was $0 and $32,500, respectively; cash used to repay officers and directors notes was $11,300 and $48,500, respectively; and cash used to repay notes payable was $21,800 and $29,871, respectively.

~~The~~From ~~U.S.~~the ~~Financial~~above ~~Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08~~activities, ~~Reporting~~net ~~Discontinued~~cash ~~Operations~~provided ~~and~~by ~~Disclosures~~financing ofactivities ~~Disposals~~during ~~of Components of an Entity (ASU 2014-08) in April 2014. This new standard raises~~ the ~~threshold~~years ~~for~~ended ~~disposals~~December ~~to qualify as discontinued operations~~31, ~~allows~~2014 ~~companies to have significant continuing involvement~~ and ~~continuing~~2013 ~~cash~~was ~~flows~~$619,156 and ~~provides~~$960,917 ~~for new and additional disclosures of discontinued operations and individually material disposal transactions~~respectively. The Company anticipates adopting the new standard when it becomes effective in the first quarter of 2015. The Company does not expect the adoption of ASU 2014-08 to have a material effect on its consolidated financial statements.

The FASB has issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the effect of the ASU on its financial position, results of operations and cash flows.20

~~The~~Aggregating ~~FASB has issued ASU No. 2014-09~~operating, ~~Revenue~~investing ~~from Contracts with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition~~ and ~~most~~financing ~~industry-specific~~activities ~~guidance~~from ~~throughout~~above, ~~the~~net ~~Codification.~~cash ~~The~~provided ~~standard~~(used) ~~requires~~for ~~that an entity recognizes revenue to depict~~ the ~~transfer~~years ofended ~~promised~~December ~~goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1~~31, ~~2017~~2014 and ~~should~~2013 bewas applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently evaluating the effect of the ASU on its financial position$2,768 ~~results of operations~~ and ~~cash~~$(61,372), ~~flows~~respectively.

InGoing August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2016 and the Company will continue to assess the impact on its consolidated financial statements.Concern

~~The~~At ~~FASB~~December ~~and~~31, ~~the SEC have issued certain other accounting standards updates and regulations that will become effective in subsequent periods; however~~2014, ~~management~~we ofhad ~~the~~a ~~Company~~working ~~does~~capital ~~not~~deficit ~~believe that any~~ of ~~those~~approximately ~~updates~~$8.2 ~~would~~million. ~~have~~We ~~significantly~~continue ~~affected~~to ~~the~~suffer ~~Company’s~~recurring ~~financial~~losses ~~accounting~~from ~~measures~~operations orand ~~disclosures~~have ~~had~~an ~~they~~accumulated ~~been~~deficit insince ~~effect~~inception ~~during~~of ~~2014~~approximately or$52.3 ~~2013,~~million. ~~and~~These ~~does~~conditions ~~not~~raise ~~believe~~substantial ~~that~~doubt ~~any~~about ofour ~~those~~ability ~~pronouncements~~to ~~will~~continue ~~have~~as a ~~significant~~going ~~impact on the Company’s consolidated financial statements at the time they become effective~~concern.

~~Item~~The 7ACompany’s continuation as a going concern is dependent upon its ability to bring the Company’s products to market and generate revenues, control costs, and obtain additional financing, as required and on reasonable terms. ~~Quantitative~~The Company’s plans with respect to these matters include restructuring its existing debt and ~~Qualitative~~raising ~~Disclosures~~additional ~~About~~financing ~~Market~~through ~~Risk~~issuance of preferred stock, common stock and/or debt. On April 2, 2014, The Company announced that Stephen Hicks and Gilbert Steedley were appointed to the Board of Directors and that Stephen Hicks was appointed President of the Company. Henry Sargent was appointed Vice President and Secretary.

~~Disclosure~~The ~~under~~Company’s ~~Item~~goal 7Ais to generate the sales of the Company's flagship mobile water purification product and to ultimately diversify its product line through ingenuity and/or acquisition. In order to accomplish these goals we are redirecting the sales effort so that the Company will no longer predominantly focus on the government sector, a target with historically long lead times. In addition the Company is ~~not~~reviewing ~~required~~the entire approach to the product with an aim to 1) deepen and diversify our distribution channels, 2) lower our cost of ~~smaller~~production, ~~reporting~~3) ~~companies~~improve the Company's profit margin on and 4) maintain an inventory of units for immediate sale.

~~Item~~The 8Company requires immediate capital to remain viable. ~~Financial~~The ~~Statements~~Company ~~and~~can ~~Supplementary~~give ~~Data~~no assurance that such financing will be available on terms advantageous to the Company, or at all. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all of its operational activities. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

WeSubsequent ~~set~~to ~~forth~~December ~~below~~31, a2014, ~~list~~the Company has issued approximately $254,000 of ~~our~~convertible ~~audited~~notes ~~financial~~payable. ~~statements~~From ~~included~~January in1, ~~this~~2015 ~~Annual~~until ~~Report~~June on5, ~~Form~~2015, ~~10-K~~the Company issued 558,685,711 shares of common stock for the settlement of $24,600 loan principal plus $4,584 accrued interest, and ~~their~~fees. ~~location~~As of June 5, 2015 the Company has cash of approximately $1,000 available for use.

Item		Page *
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets as of December 31, 2013 and 2012		F-2
Consolidated Statements of Operations for the Years Ended December 31, 2013 and 2012		F-4
Consolidated Statements of Changes in Stockholders’ Deficiency for the Years Ended December 31, 2013 and 2012		F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013 and 2012		F-7
Notes to Consolidated Financial Statements		F-9

Effects of Recent Accounting Policies

21The FASB and the SEC have issued certain accounting standards updates and regulations that will become effective in subsequent periods; however, management of the Company does not believe that any of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during 2014 or 2013, and does not believe that any of those pronouncements will have a significant impact on the Company’s consolidated financial statements at the time they become effective.

~~REPORT~~Critical OFAccounting ~~INDEPENDENT~~Policies ~~REGISTERED~~and ~~PUBLIC ACCOUNTING FIRM~~Estimates

ToOur consolidated financial statements are prepared in accordance with accounting principles generally accepted in the ~~Board~~United States of ~~Directors~~America. Preparation of the statements in accordance with these principles requires that we make estimates, using available data and ~~Shareholders~~our judgment, for such things as valuing assets, accruing liabilities and estimating expenses. The following is a list of what we believe are the most critical estimations that we make when preparing our consolidated financial statements.

ofStock-Based ~~PureSafe Water Systems, Inc. and Subsidiary~~Compensation

We ~~have~~report ~~audited~~stock-based ~~the~~compensation ~~accompanying~~under ~~consolidated~~ASC ~~balance sheets of PureSafe Water Systems, Inc~~718. ~~and~~ASC ~~Subsidiary~~718 ~~(the~~requires ~~“Company”)~~all asshare-based ofpayments ~~December~~to 31employees, ~~2013~~including ~~and~~grants ~~2012~~of ~~and~~employee ~~the~~stock ~~related consolidated statements of operations~~options, ~~stockholders'~~to ~~deficiency~~be ~~and~~recognized ~~cash~~in ~~flows for~~ the ~~years then ended. These~~ consolidated financial statements ~~are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements~~ based on ~~our~~their ~~audits~~fair values.

We ~~conducted~~account ~~our~~for ~~audits~~equity ininstruments ~~accordance~~issued ~~with~~to ~~the~~non-employees ~~standards~~as ofcompensation ~~the~~in ~~Public~~accordance ~~Company~~with ~~Accounting Oversight Board (United States). Those standards require that we plan and perform~~ the ~~audit~~provisions ~~to obtain reasonable assurance about whether the consolidated financial statements are free~~ of ~~material~~ASC ~~misstatement.~~718 ~~The~~and ~~Company is not required to have~~505, ~~nor~~which ~~were~~require we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that ~~are~~each ~~appropriate~~such inequity ~~the~~instrument ~~circumstances,~~is ~~but~~recorded ~~not~~at ~~for~~its ~~the~~fair ~~purpose~~value ~~of expressing an opinion~~ on the ~~effectiveness~~measurement ~~of the Company's internal control over financial reporting. Accordingly~~date, wewhich ~~express~~is notypically ~~such opinion. An audit also includes examining on a test basis, evidence supporting~~ the ~~amounts~~date ~~and disclosures in~~ the ~~financial~~services ~~statements,~~are ~~assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation~~performed. ~~We believe that our audits provide a reasonable basis for our opinion.~~

InThe ~~our~~Black-Scholes ~~opinion,~~option ~~the~~valuation ~~consolidated~~model ~~financial~~is ~~statements~~used ~~referred~~ to ~~above~~estimate ~~present fairly, in all material respects,~~ the ~~consolidated~~fair ~~financial~~value ~~position~~ of ~~PureSafe Water Systems, Inc. and Subsidiary as of December 31, 2013 and 2012 and~~ the ~~consolidated~~options ~~results~~or of their ~~operations~~equivalent ~~and~~granted. ~~their~~The ~~cash~~model ~~flows~~includes ~~for~~subjective ~~the~~input ~~years~~assumptions ~~then~~that ~~ended,~~can inmaterially ~~conformity~~affect ~~with accounting principles generally accepted in~~ the ~~United~~fair ~~States~~value ~~of America~~estimates.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has had recurring losses, and has a working capital and stockholders' deficiency as of December 31, 2013 and 2012. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.21

~~/s/~~The ~~Marcum~~model ~~LLP~~was developed for use in estimating the fair value of traded options or warrants that have no vesting restrictions and that are fully transferable. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the options granted.

~~Marcum~~We ~~LLP~~have issued equity instruments in the past to raise capital and as a means of compensation to employees and for the settlement of debt.

~~New~~Derivative ~~York, New York~~Liabilities

~~October~~In 23connection with the issuance of certain convertible promissory notes, ~~2014~~the terms of the convertible notes included an embedded conversion feature; which provided for the settlement of certain convertible promissory notes into shares of common stock at a rate which was determined to be variable with no floor. The Company determined that the conversion feature was an embedded derivative instrument pursuant to ASC 815 “Derivatives and Hedging”

FThe accounting treatment of derivative financial instruments requires that the Company record the conversion option and related warrants, if applicable, at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. As a result of entering into certain convertible promissory notes, the Company is required to classify all other non-1employee warrants as derivative liabilities and record them at their fair values at each balance sheet date because the Company could not determine it has enough authorized shares to settle the contracts. Any change in fair value was recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

~~PureSafe~~The ~~Water~~fair ~~Systems,~~value ~~Inc~~of conversion options that are convertible at a variable conversion price are required to be valued using a Binomial Lattice Model. ~~and~~The ~~Subsidiary~~Company determined the fair value of the conversion option using either the Black-Scholes Valuation Model or the Binomial Lattice Model to be materially the same.

~~Consolidated~~The ~~Balance~~Black-Scholes ~~Sheets~~Valuation Model is used to estimate the fair value of the warrants and conversion option. The model includes subjective input assumptions that can materially affect the fair value estimates. The model was developed for use in estimating the fair value of traded options or warrants. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the instrument granted.

		December 31, 2013		December 31, 2012
Assets
Current Assets
	Cash	$	2,199	$	63,571
	Inventories		141,636		322,718
	Prepaid expenses and other current assets		35,437		54,478
	Total Current Assets		179,272		440,767
	Property and equipment, net of accumulated depreciation of
	$179,290 and $164,710, respectively		-		49,014
	Patents and trademarks, net of accumulated amortization of
	$47,919 and $41,816, respectively		59,422		58,068
	Other assets		33,500		28,451
Total Assets		$	272,194	$	576,300
Liabilities and Stockholders' Deficiency
Current Liabilities:
	Accounts payable and accrued expenses	$	1,209,319	$	695,589
	Accrued compensation		1,267,382		972,286
	Deferred rent payable		-		7,050
	Accrued consulting and director fees		144,000		144,000
	Customer deposits		-		149,588
	Notes payable to officer and director
	(including accrued interest of $193,703 and $138,132, respectively)		827,254		811,132
	Convertible promissory note (including accrued interest of
	$154,528 and $141,564 and net of debt discount of $210,781
	and $80,606, respectively)		1,238,838		1,111,110
	Promissory notes payable (including accrued interest of
	$240,807 and $220,295 respectively)		593,153		706,829
	Fair value of detachable warrants and conversion option		299,000		263,300
	Accrued dividends payable		190,328		190,328
	Common stock to be issued		38,423		-
	Total Current Liabilities		5,807,697		5,051,212
Long-Term Liabilities:
	Promissory notes payable, net of current portion		-		8,196
	Total Long-Term Liabilities		-		8,196
Total Liabilities			5,807,697		5,059,408
Commitments and Contingencies
			-		-

Income taxes

FWe account for income taxes under guidance provided by ASC 740 “Income Taxes” which prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-2likely-than-not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to the interpretation are referred to as “unrecognized benefits.” A liability is recognized (or amount of net operating loss carry forward or amount of tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise’s potential future obligation to the taxing authority for a tax position that was not recognized as a result of applying the provisions of ASC 740.

Stockholders' Deficiency:
	Preferred stock par value $0.001 par value; 10,000,000 shares authorized;
	184,144 and 184,195 shares issued and outstanding (liquidation preference
	$3,025,450 and $2,917,150, as of December 31, 2013 and 2012,
	respectively)		184		184
	Common stock par value $0.001: 2,000,000,000 shares authorized; 934,171,800
	shares issued and 934,167,400 shares outstanding at December 31, 2013;
	561,343,935 shares issued and 561,339,535 shares outstanding
	at December 31, 2012		934,171		561,343
	Additional paid in capital		41,804,413		40,423,615
	Treasury stock, at cost, 4,400 shares of common stock		(5,768)		(5,768)
	Subscriptions receivable - (including accrued interest of
	$0 and $93,825 respectively)		-		(431,025)
	Accumulated deficit		(48,268,503)		(45,031,457)
	Total Stockholders' Deficiency		(5,535,503)		(4,483,108)
Total Liabilities and Stockholders' Deficiency		$	272,194	$	576,300

In accordance with ASC 740, interest costs related to unrecognized tax benefits are required to be calculated (if applicable) and would be classified as “Interest expense, net” in the consolidated statements of operations. Penalties would be recognized as a component of “General and administrative expenses.”

~~The~~Our ~~accompanying~~uncertain ~~notes~~tax positions are anrelated ~~integral~~to ~~part~~tax ofyears ~~these~~that ~~consolidated~~remain ~~financial~~subject ~~statements~~to examination by relevant tax authorities. We file income tax returns in the United States (federal) and in various state and local jurisdictions. We are no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2011.

~~F-3~~Item 7A

~~PureSafe~~Quantitative ~~Water~~and ~~Systems,~~Qualitative ~~Inc.~~Disclosures ~~and~~About ~~Subsidiary~~Market Risk

~~Consolidated~~Disclosure ~~Statements~~under Item 7A is not required of ~~Operations~~smaller reporting companies.

		For the Years Ended
		December 31, 2013		December 31, 2012
Sales		$	-	$	495,000
Cost of Sales			56,344		669,535
Gross Profit (Loss)			(56,344)		(174,535)
Operating expenses:
	Compensation and related benefits, including stock-based
	compensation of $478,700 and $449,700 for the years ended
	December 31, 2013 and 2012, respectively		1,161,739		1,232,140
	Insurance and medical benefits		82,553		83,557
	Research and development		55,874		62,032
	Professional, legal and consulting fees, including stock-based
	compensation of $257,000 and $4,500 for the years ended
	December 31, 2013 and 2012, respectively		394,209		212,145
	Marketing, including stock-based compensation of
	$0 and $13,900 for the years ended December 31, 2013
	and 2012, respectively		25,835		213,553
	Occupancy		476,022		263,116
	Loss on sale/abandonment of fixed assets		12,234		34,709
	Other administrative and general		349,927		340,878
	Total operating expenses		2,558,393		2,442,130
Loss from operations			(2,614,737)		(2,616,665)
Other income (expense):
	Interest income		15,131		20,349
	Other income		23,538		-
	Interest expense, including interest to related parties of
	$55,571 and $70,720 for the years ended December 31, 2013
	and 2012, respectively		(1,053,978)		(1,161,569)
	Change in fair value of derivative liabilities		393,000		998,300
	Total Other Income (Expense)		(622,309)		(142,920)
Net Loss			(3,237,046)		(2,759,585)
Dividend on preferred stock			(108,300)		(108,300)
Net Loss Attributable to Common Stockholders		$	(3,345,346)	$	(2,867,885)
Net Loss Attributable to Common Stockholders
	Per Share basic and diluted	$	(0.00)	$	(0.01)
Weighted average number of shares outstanding			922,685,840		388,044,980

~~The~~Item ~~accompanying notes are an integral part of these consolidated financial statements~~8.

~~F-4~~Financial Statements and Supplementary Data.

~~PureSafe~~We ~~Water~~set ~~Systems,~~forth ~~Inc.~~below a list of our audited financial statements included in this Annual Report on Form 10-K and ~~Subsidiary~~their location.

Consolidated Statement of Stockholders' Deficiency


Item	Page *

Reports of Independent Registered Public Accounting Firms	F-1
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2014 and 2013	F-4
Consolidated Statements of Changes in Stockholders’ Deficiency for the Years Ended December 31, 2014 and 2013	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014 and 2013	F-6
Notes to Consolidated Financial Statements	F-7

~~For the Years Ended December 31, 2013 and 2012~~23

	Preferred Stock		Common Stock		Additional Paid-In	Treasury Stock at	Subscription	Accumulated	Total
	Shares	Amount ($)	Shares	Amount ($)	Capital ($)	Cost ($)	Receivable ($)	Deficit ($)	Stockholders' Deficiency
Balance, December 31, 2011	184,144	184	340,389,004	340,387	38,667,449	(5,768)	(410,738)	(42,271,872)	(3,680,358)
Sale of common stock for cash	-	-	51,227,383	51,227	361,043	-	-	-	412,270
Common stock issued for loan conversion	-	-	158,491,010	158,491	693,061	-	-	-	851,552
Common stock issued for services	-	-	2,674,038	2,675	165,225	-	-	-	167,900
Common stock issued in connection with debt	-	-	4,375,000	4,375	170,625	-	-	-	175,000
Common stock issued for settlement of customer deposits (includes $37,500 of stock based compensation)	-	-	4,187,500	4,188	163,312	-	-	-	167,500
Issuance of Series B Preferred Stock	51	-	-	-		-	-	-	-
Reclassification of derivative liability	-	-	-	-	(80,100)	-	-	-	(80,100)
Warrants granted for services	-	-	-	-	283,000	-	-	-	283,000
Accrued interest	-	-	-	-	-	-	(20,287)		(20,287)
Net loss		-		-				(2,759,585)	(2,759,585)
Balance, December 31, 2012	184,195	184	561,343,935	561,343	40,423,615	(5,768)	(431,025)	(45,031,457)	(4,483,108)
Sale of common stock for cash	-	-	106,066,743	106,067	464,733	-	-	-	570,800
Common stock issued for warrant exercise	-	-	11,609,661	11,610	52,904	-	-	-	64,514
Common stock issued for settlement of notes payable	-	-	23,021,012	23,021	102,442	-	-	-	125,463
Common stock issued for settlement of convertible debt	-	-	121,376,671	121,377	369,494	-	-	-	490,871
Common stock issued for service	-	-	74,509,222	74,509	182,491	-	-	-	257,000

Scrudato & Co., PA

~~F-5~~CERTIFIED PUBLIC ACCOUNTING FIRM

Common stock issued for employee compensation	-	-	27,200,000	27,200	144,100	-	-	-	171,300
Common stock issued for penalty shares	-	-	9,044,556	9,044	32,890	-	-	-	41,934
Return of series B preferred stock for no consideration	(51)	-	-	-	-	-	-	-	-
Reclassification of derivative liability	-	-	-	-	175,000	-	-	-	175,000
Warrants granted for services	-	-	-	-	302,900	-	-	-	302,900
Accrued interest	-	-	-	-	-	-	(15,131)	-	(15,131)
Write-off subscription receivable and accrued interest	-	-	-	-	(446,156)	-	446,156	-	-
Net loss	-	-	-	-		-	-	(3,237,046)	(3,237,046)
Balance, December 31, 2013	184,144	184	934,171,800	934,171	41,804,413	(5,768)	-	(48,268,503)	(5,535,503)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

~~The~~To ~~accompanying~~the ~~notes~~Board ~~are an integral part~~ of ~~these~~Directors ~~consolidated~~and ~~financial~~Stockholders ~~statements~~of

~~F-6~~Puresafe Water Systems, Inc.

~~PureSafe~~We have audited the accompanying balance sheet of Puresafe Water Systems, Inc. as of December 31, 2014 and ~~Subsidiary~~the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company management. Our responsibility is to express an opinion on these financial statements based on our audit.

~~Consolidated~~We ~~Statements~~conducted our audit in accordance with the standards of ~~Cash~~the ~~Flows~~Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

		For the Years Ended
		December 31, 2013		December 31, 2012
Cash Flows From Operating Activities:
Net loss		$	(3,237,046)	$	(2,759,585)
Adjustments to reconcile net loss to net cash used in operating activities
	Depreciation		14,580		52,997
	Amortization of patents and trademarks		6,104		6,104
	Net loss on sale/abandonment of fixed assets		12,234		34,707
	Loss on abandonment of inventory		51,471		-
	Interest expense - amortization of deferred financing		25,066		125,428
	Interest expense - penalty interest		353,322		9,000
	Interest expense - stock based compensation, derivative liabilities		4,500		-
	Stock based compensation		731,200		505,600
	Loss on conversion of convertible notes to notes payable		-		85,000
	Deferred rent		(7,050)		(25,750)
	Interest receivable		(15,131)		(20,287)
	Accretion of debt discount		223,825		796,040
	Interest expense - derivative liabilities		245,200		-
	Change in fair value of warrants and embedded conversion option		(393,000)		(998,300)
Changes in assets and liabilities:
	Prepaid expenses and other current assets		19,041		2,196
	Inventories		129,611		145,375
	Other assets		465		34,705
	Customer deposits		(149,588)		149,588
	Accounts payable, accrued expenses, accrued interest, accrued dividends, accrued compensation, accrued consulting and director fees, and other current liabilities		948,165		882,779
Net Cash Used in Operating Activities			(1,037,031)		(974,403)
Cash Flows From Investing Activities:
	Patent costs		(7,458)		-
	Proceeds from sale of property and equipment		22,200		-
Net Cash Provided by Investing Activities			14,742		-
Cash Flows From Financing Activities:
	Cash proceeds from sale of common stock		570,800		412,270
	Cash proceeds from exercise of warrants		64,514		-
	Cash proceeds from the exercise of warrants, common stock to be issued		38,423		-
	Proceeds from convertible promissory notes		376,500		768,500
	Repayment of convertible notes payable		(32,500)		-
	Cash paid for loan costs		-		(130,024)
	Cash proceeds from officers and directors convertible loans		-		105,000
	Cash proceeds from promissory notes, officers and directors		9,051		-
	Repayment of officers and directors loans		(48,500)		(104,000)
	Cash proceeds from notes payable		12,500		75,000
	Repayment of notes payable		(29,871)		(207,000)
Net Cash Provided by Financing Activities			960,917		919,746

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Puresafe Water Systems, Inc. at December 31, 2014, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

~~F-7~~The accompanying financial statements have been prepared assuming that Puresafe Water Systems, Inc. will continue as a going concern. As more fully described in Note 3, the Company had an accumulated deficit at December 31, 2014, a net loss and net cash used in operating activities for the fiscal year then ended. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

Net decrease in cash			(61,372)		(54,657)
Cash at beginning of year			63,571		118,228
Cash at end of the year		$	2,199	$	63,571
Supplemental disclosures of cash flow information:
	Cash paid during the year for interest	$	29,717	$	28,837
Non-Cash Investing and Financing Activities:
	Common stock issued for the settlement of liabilities	$	616,334	$	851,552
	Common stock issued in connection with debt	$	-	$	175,000
	Common stock issued for the settlement of a customer deposit	$	-	$	130,000
	Reclassification of derivative liabilities to equity	$	175,000	$	-
	Reclassification of equity instrument to derivative liabilities	$	-	$	(80,100)
	Conversion of convertible notes payable to notes payable	$	-	$	185,000
	Debt discount recorded on convertible debt and warrants accounted for as derivative liabilities	$	354,000	$	-
	Loan financing costs	$	22,000	$	-
	Write-off subscription receivable and accrued interest	$	446,156	$	-
	Conversion of notes payable to convertible notes payable	$	-	$	207,770

/s/ Scrudato & Co., PA

~~The~~Scrudato ~~accompanying~~& ~~notes~~Co., ~~are an integral part of these consolidated financial statements~~PA

~~F-8~~Califon, New Jersey

~~PureSafe~~June ~~Water~~5, ~~Systems Inc. and Subsidiary~~2015

~~Notes~~7 toValley ~~Consolidated~~View ~~Financial~~Drive ~~Statements~~Califon, New Jersey 07830 (908)534-0008

~~NOTE~~Registered 1Public –Company ~~DESCRIPTION~~Accounting OFOversight ~~BUSINESS~~Board Firm

PureSafe Water Systems, Inc. (the "Company") is a Delaware corporation engaged in the design, development, manufacturing and sales of the PureSafe ™ First Response Water System (the “FRWS” ), both within and outside of the United States. The Company's corporate headquarters are located in Plainview, New York.F-1

~~NOTE~~REPORT ~~2 – BASIS~~ OF ~~PRESENTATION~~INDEPENDENT ~~AND~~REGISTERED PUBLIC ACCOUNTING ~~POLICIES.~~FIRM

~~Basis~~To the Board of ~~Presentation~~Directors and Shareholders

~~The~~of ~~Company’s~~PureSafe ~~consolidated~~Water ~~financial~~Systems, ~~statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U~~Inc.S. ~~GAAP”).~~and Subsidiary

~~Principles~~We have audited the accompanying consolidated balance sheet of ~~Consolidation~~PureSafe Water Systems, Inc. and Subsidiary (the “Company”) as of December 31, 2013 and the related consolidated statements of operations, stockholders' deficiency and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

~~The~~We ~~Company~~conducted ~~applies~~our ~~the~~audit ~~guidance~~in ofaccordance ~~Topic~~with ~~810~~the ~~“Consolidation”~~standards of the ~~FASB~~Public Company Accounting ~~Standards~~Oversight ~~Codification~~Board to(United ~~determine~~States). ~~whether~~Those ~~and~~standards ~~how~~require tothat ~~consolidate~~we ~~another~~plan ~~entity.~~and ~~Pursuant~~perform tothe ~~ASC~~audit ~~Paragraph~~to ~~810-10-15-10~~obtain ~~all~~reasonable ~~majority-owned~~assurance ~~subsidiaries—all~~about ~~entities~~whether inthe ~~which~~consolidated ~~a parent has a controlling~~ financial ~~interest—shall~~statements beare ~~consolidated~~free ~~except~~of ~~(1)~~material ~~when~~misstatement. ~~control~~The ~~does~~Company is not ~~rest~~required ~~with~~to ~~the parent~~have, ~~the~~nor ~~majority~~were ~~owner;~~we ~~(2)~~engaged ifto ~~the~~perform, ~~parent~~an isaudit ~~a broker-dealer within the scope~~ of ~~Topic~~its ~~940~~internal ~~and~~ control isover ~~likely~~financial toreporting. beOur ~~temporary;~~audit ~~(3)~~included ~~consolidation~~consideration byof aninternal ~~investment~~control ~~company~~over ~~within~~financial ~~the~~reporting ~~scope~~as ofa ~~Topic~~basis ~~946~~for ofdesigning aaudit ~~non-investment-company~~procedures ~~investee.~~that ~~Pursuant~~are toappropriate ~~ASC~~in ~~Paragraph 810-10-15-8~~ the ~~usual~~circumstances, ~~condition~~but not for athe ~~controlling~~purpose ~~financial interest is ownership~~ of aexpressing ~~majority~~an ~~voting~~opinion ~~interest,~~on ~~and,~~the ~~therefore,~~effectiveness asof athe ~~general~~Company's ~~rule~~internal ~~ownership~~control byover ~~one~~financial reporting. ~~entity~~Accordingly, ~~directly~~we orexpress ~~indirectly,~~no ofsuch ~~more~~opinion. ~~than~~An 50audit ~~percent~~also ofincludes ~~the~~examining ~~outstanding~~on ~~voting~~a ~~shares~~test ofbasis, ~~another~~evidence ~~entity~~supporting isthe aamounts ~~condition~~and ~~pointing~~disclosures ~~toward~~in ~~consolidation.~~the ~~The~~financial ~~power~~statements, toassessing ~~control~~the ~~may~~accounting ~~also~~principles ~~exist~~used ~~with~~and asignificant ~~lesser~~estimates ~~percentage~~made ~~of ownership, for example,~~ by ~~contract~~management, ~~lease,~~as ~~agreement~~well ~~with~~as ~~other~~evaluating ~~stockholders,~~the oroverall byfinancial ~~court~~statement ~~decree~~presentation. ~~The~~We ~~Company~~believe ~~consolidates~~that ~~all~~our ~~less-than-majority-owned~~audit ~~subsidiaries,~~provides ifa ~~any,~~reasonable inbasis ~~which~~for ~~the~~our ~~parent’s power to control exists~~opinion.

~~The~~In ~~Company's~~our opinion, the consolidated ~~subsidiaries~~financial ~~and/or~~statements ~~entities~~referred ~~are~~to above present fairly, in all material respects, the consolidated financial position of PureSafe Water Systems, Inc. and Subsidiary as ~~follows:~~of December 31, 2013 and the consolidated results of their operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Name of consolidated subsidiary or entity		State or other jurisdiction of incorporation or organization		Date of incorporation or formation(date of acquisition, if applicable)		Attributable interest
PureSafe Manufacturing and Research Corporation		Delaware		September 29, 2009		100%

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has had recurring losses, and has a working capital and stockholders' deficiency as of December 31, 2013. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~The consolidated financial statements include all accounts of the Company and consolidated subsidiaries and~~/ors/ ~~entities~~Marcum ~~as of December 31, 2013 and 2012 and for the years then ended.~~LLP

~~All~~Marcum ~~inter-company balances and transactions have been eliminated.~~LLP

~~Use~~New ofYork, ~~Estimates~~New York

~~The~~October ~~preparation~~23, of2014, ~~consolidated~~except ~~financial~~for ~~statements~~Note in15(a), ~~conformity~~as ~~with accounting principles generally accepted in the United States requires management~~ to ~~make~~which ~~estimates and assumptions that affect~~ the ~~reported~~date ~~amounts~~is ofJune ~~assets~~5, ~~liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.~~2015

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The most significant estimates, among other things, are used in accounting for allowances for deferred income taxes, expected realizable values for longF-lived assets (primarily intangible assets and property and equipment), contingencies, as well as the recording and presentation of its common stock and other securities. Estimates and assumptions are periodically reviewed and the effects of any material revisions are reflected in the consolidated financial statements in the period that they are determined to be necessary. Actual results could differ from those estimates and assumptions.2

F-9


PureSafe Water Systems, Inc. and Subsidiary
Consolidated Balance Sheets

				December 31, 2014		December 31, 2013

	Assets

	Current Assets
		Cash	$	4,967	$	2,199
		Inventories		141,636		141,636
		Prepaid expenses and other current assets		38,281		35,437
		Total Current Assets		184,884		179,272

		Property and equipment, net of accumulated depreciation of
		$44,449 and $179,290, respectively		-		-
		Patents and trademarks, net of accumulated amortization of
		$54,023 and $47,919, respectively		53,318		59,422
		Other assets		23,390		33,500
	Total Assets		$	261,592	$	272,194

	Liabilities and Stockholders' Deficiency

	Current Liabilities:
		Accounts payable and accrued expenses	$	1,474,363	$	1,209,319
		Accrued compensation		951,982		1,267,382
		Accrued consulting and director fees		144,000		144,000
		Notes payable to officer and director
		(including accrued interest of $170,710 and $193,703, respectively)		560,760		827,254
		Convertible promissory notes (including accrued interest of
		$327,807 and $154,528 and net of debt discount of $200,459
		and $210,781, respectively)		1,772,571		1,238,838
		Promissory notes payable (including accrued interest of
		$273,086 and $240,807 respectively)		842,531		593,153
		Fair value of detachable warrants and conversion option		2,354,600		299,000
		Accrued dividends payable		190,328		190,328
		Preferred stock to be issued		40,000		-
		Common stock to be issued		5,000		38,423

		Total Current Liabilities		8,336,135		5,807,697

	Total Liabilities			8,336,135		5,807,697

	Commitments and Contingencies
				-		-
	Stockholders' Deficiency:
		Preferred stock par value $0.00001 par value; 10,000,000 shares authorized;
		184,224 and 184,144 shares issued and outstanding (liquidation preference
		$3,858,801 and $3,025,450, as of December 31, 2014 and December 31, 2013,
		respectively)		2		2
		Common stock par value $0.00001: 10,000,000,000 shares authorized;
		1,743,981,286 shares issued and 1,743,976,886 shares outstanding at
		December 31, 2014; 934,171,800 shares issued and 934,167,400 shares
		outstanding at December 31, 2013		17,439		9,342
		Additional paid in capital		44,170,214		42,729,424
		Treasury stock, at cost, 4,400 shares of common stock		(5,768)		(5,768)
		Accumulated deficit		(52,256,430)		(48,268,503)

		Total Stockholders' Deficiency		(8,074,543)		(5,535,503)

	Total Liabilities and Stockholders' Deficiency		$	261,592	$	272,194

	The accompanying notes are an integral part of these consolidated financial statements

~~Cash and Cash Equivalents~~F-3

The Company considers all highly liquid instruments with original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2013 and 2012 the Company did not have any cash equivalents.


PureSafe Water Systems, Inc. and Subsidiary
Consolidated Statements of Operations

				For the Years Ended
				December 31, 2014		December 31, 2013

	Sales		$	-	$	-

	Cost of Sales			-		56,344

	Gross Profit (Loss)			-		(56,344)

	Operating expenses:
		Compensation and related benefits, including stock-based
		compensation of $2,810 and $478,700 for the years ended
		December 31, 2014 and 2013, respectively		327,979		1,161,739
		Insurance and medical benefits		60,263		82,553
		Research and development		3,474		55,874
		Professional, legal and consulting fees, including stock-based
		compensation of $669,935 and $257,000 for the years ended
		December 31, 2014 and 2013, respectively		1,032,335		394,209
		Marketing		3,701		25,835
		Occupancy		362,219		476,022
		(Gain) loss on sale/abandonment of fixed assets		(6,195)		12,234
		Other administrative and general		117,693		349,927
		Total operating expenses		1,901,469		2,558,393

	Loss from operations			(1,901,469)		(2,614,737)

	Other income (expense):
		Interest income		-		15,131
		Other income		2,568		23,538
		Interest expense, including interest to related parties of
		$61,809 and $55,571 for the years ended December 31, 2014
		and 2013, respectively		(1,121,492)		(1,053,978)
		Gain on restructuring of debt		710,066		-
		Change in fair value of derivative liabilities		(1,677,600)		393,000
		Total Other Income (Expense)		(2,086,458)		(622,309)

	Net Loss			(3,987,927)		(3,237,046)

	Dividend on preferred stock			(118,300)		(108,300)

	Net Loss Attributable to Common Stockholders		$	(4,106,227)	$	(3,345,346)

	Net Loss Attributable to Common Stockholders
		Per Share basic and diluted	$	(0.00)	$	(0.00)

	Weighted average number of shares outstanding			1,322,317,495		922,685,840

	The accompanying notes are an integral part of these consolidated financial statements

~~Patents and Trademarks~~F-4

Patents and trademarks amortize ratably over nine to fourteen years. The Company assesses the carrying value of its patents for impairment each year. Based on its assessments, the Company did not incur any impairment charges for the years ended December 31, 2013 and 2012.


PureSafe Water Systems, Inc. and Subsidiary
Consolidated Statement of Stockholders’ Deficiency
For the Years Ended December 31, 2014 and 2013
	Preferred Stock			Common Stock
		Shares	Amount	Shares	Amount	Additional Paid-In Capital	Treasury Stock at Cost	Subscription Receivable	Accumulated Deficit	Total Stockholders' Deficiency

Balance, December 31, 2012		184,195	$ 2	561,343,935	$ 5,614	$ 40,979,526	$ (5,768)	$ (431,025)	$ (45,031,457)	$ (4,483,108)
Sale of common stock for cash		-	-	106,066,743	1,061	569,739	-	-	-	570,800
Common stock issued for warrant exercise		-	-	11,609,661	116	64,398	-	-	-	64,514
Common stock issued for settlement of notes payable		-	-	23,021,012	230	125,233	-	-	-	125,463
Common stock issued for settlement of convertible debt		-	-	121,376,671	1,214	489,657	-	-	-	490,871
Common stock issued for service		-	-	74,509,222	745	256,255	-	-	-	257,000
Common stock issued for employee compensation		-	-	27,200,000	272	171,028	-	-	-	171,300
Common stock issued for penalty shares		-	-	9,044,556	90	41,844	-	-	-	41,934
Return of series B preferred stock for no consideration		(51)	-	-	-	-	-	-	-	-
Reclassification of derivative liability		-	-	-	-	175,000	-	-	-	175,000
Warrants granted for services		-	-	-	-	302,900	-	-	-	302,900
Accrued interest		-	-	-	-	-	-	(15,131)	-	(15,131)
Write-off subscription receivable and accrued interest		-	-	-	-	(446,156)	-	446,156	-	-
Net loss		-	-	-	-		-	-	(3,237,046)	(3,237,046)

Balance, December 31, 2013		184,144	$ 2	934,171,800	$ 9,342	$ 42,729,424	$ (5,768)	$ -	$ (48,268,503)	$ (5,535,503)
Common stock issued for cashless warrant exercise		-	-	526,315	5	(5)	-	-	-	-
Common stock issued for settlement of liabilities		-	-	36,748,182	367	38,056	-	-	-	38,423
Common stock issued for settlement of notes payable		-	-	11,363,636	114	12,386	-	-	-	12,500
Common stock issued for settlement of convertible debt		-	-	733,243,029	7,332	253,932	-	-	-	261,264
Common stock issued for penalty shares		-	-	27,928,324	279	65,376	-	-	-	65,655
Reclassification of derivative liability		-	-	-	-	398,300	-	-	-	398,300
Preferred stock issued for services		80	-	-	-	672,745	-		-	672,745
Net loss		-	-	-	-		-	-	(3,987,927)	(3,987,927)

Balance, December 31, 2014		184,224	$ 2	1,743,981,286	$ 17,439	$ 44,170,214	$ (5,768)	$ -	$ (52,256,430)	$ (8,074,543)

~~Property~~The ~~and~~accompanying ~~Equipment~~notes are an integral part of these consolidated financial statements

Property and equipment consists primarily of equipment and furniture and fixtures and is stated at cost. Depreciation and amortization are provided using the straight line method over the estimated useful lives (generally three to seven years) of the related assets. Leasehold improvements, once placed in service, are amortized over the shorter of the useful life or the remainder of the lease term. Expenditures for maintenance and repairs, which do not extent the economic useful life of the related assets, are charged to operations are incurred. Gains or losses on disposal of property and equipment are reflected in the statement of operations in the period of disposal.F-5

Revenue Recognition


PureSafe Water Systems, Inc. and Subsidiary
Consolidated Statements of Cash Flows
				For the Years Ended
				December 31, 2014		December 31, 2013
	Cash Flows From Operating Activities:
	Net loss		$	(3,987,927)	$	(3,237,046)
	Adjustments to reconcile net loss to net cash used in operating activities
		Depreciation		-		14,580
		Amortization of patents and trademarks		6,104		6,104
		Net (gain) loss on sale/abandonment of fixed assets		(6,195)		12,234
		Loss on abandonment of inventory		-		51,471
		Interest expense - amortization of deferred financing		10,110		25,066
		Interest expense - penalty interest		17,898		353,322
		Interest expense - stock based compensation, derivative liabilities		-		4,500
		Professional fees - note conversions		3,623		-
		Stock based compensation		672,745		731,200
		Deferred rent		-		(7,050)
		Interest receivable		-		(15,131)
		Gain on restructuring of debt		(710,066)		-
		Accretion of debt discount		521,378		223,825
		Interest expense - derivative liabilities		265,244		245,200
		Change in fair value of warrants and embedded conversion option		1,677,600		(393,000)
	Changes in assets and liabilities:
		Prepaid expenses and other current assets		36,756		19,041
		Inventories		-		129,611
		Customer deposits		-		(149,588)
		Other assets		-		465
		Accounts payable, accrued expenses, accrued interest, accrued dividends, accrued compensation, accrued consulting and director fees, and other current liabilities		876,342		948,165
	Net Cash Used in Operating Activities			(616,388)		(1,037,031)

	Cash Flows From Investing Activities:
		Patent costs		-		(7,458)
		Proceeds from sale of property and equipment		-		22,200
	Net Cash Provided by Investing Activities			-		14,742

	Cash Flows From Financing Activities:
		Cash proceeds from sale of common stock		-		570,800
		Cash proceeds from exercise of warrants		-		64,514
		Cash proceeds from the exercise of warrants, common stock to be issued		-		38,423
		Cash proceeds from convertible promissory notes		429,156		376,500
		Repayment of convertible notes payable		-		(32,500)
		Cash proceeds from promissory notes, officers and directors		11,300		9,051
		Repayment of officers and directors loans		(11,300)		(48,500)
		Cash proceeds from notes payable		211,800		12,500
		Repayment of notes payable		(21,800)		(29,871)
	Net Cash Provided by Financing Activities			619,156		960,917

	Net increase (decrease) in cash			2,768		(61,372)

	Cash at beginning of year			2,199		63,571

	Cash at end of the year		$	4,967	$	2,199

	Supplemental disclosures of cash flow information:
		Cash paid during the year for interest	$	1,048	$	29,717

	Non-Cash Investing and Financing Activities:
		Common stock issued for the settlement of liabilities	$	86,179	$	616,334
		Common stock issued for settlement of convertible debt	$	257,642	$	-
		Common stock issued for settlement of note	$	12,500	$	-
		Conversion of convertible debt, common stock to be issued	$	5,000	$	-
		Reclassification of derivative liabilities to equity	$	398,300	$	175,000
		Conversion of accrued liabilities to convertible notes	$	150,000	$	-
		Debt discount recorded on convertible debt and warrants accounted for as derivative liabilities	$	511,056	$	354,000
		Loan financing costs	$	-	$	22,000
		Write-off subscription receivable and accrued interest	$	-	$	446,156
		Note issued for insurance premium	$	39,600	$	-
		Property and equipment sold for settlement of liabilities	$	6,195	$	-
		Conversion of notes payable to convertible notes payable	$	-	$	-

The ~~Company~~accompanying ~~generally~~notes ~~recognizes revenues under Staff Accounting Bulletin No. 104 when the following criteria~~ are ~~met, persuasive evidence of~~ an ~~arrangement~~integral ~~exists,~~part delivery has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable, and collectibility is reasonably assured. In addition the Company may enter into agreements that include multiple elements (i.e., products and services/training). Revenue under multiple element arrangements is recognized in accordance with FASB ASC 605-25 Multiple-Element Arrangements (“ASC 605”). When vendor specific objective evidence or third party evidence of ~~selling~~these ~~price~~consolidated ~~for~~financial deliverables in an arrangement cannot be determined, the Company develops a best estimate of the selling price to separate deliverables and allocates arrangement consideration using the relative selling price method. Additionally, this guidance eliminates the residual method of allocation. If an arrangement includes undelivered elements that are not essential to the functionality of the delivered elements, we defer the fair value of the undelivered elements with the residual revenue allocated to the delivered elements. Fair value is determined based upon the price charged when the element is sold separately. If there is not sufficient evidence of the fair value of the undelivered elements, no revenue is allocated to the delivered elements and the total consideration received is deferred until delivery of those elements for which objective and reliable evidence of the fair value is not available. For the years ended December 31, 2013 and 2012, the Company did not have any multiple deliverable elements. statements

~~Inventories~~F-6

~~Inventory~~PureSafe ~~consisting~~Water ~~primarily~~Systems ~~of finished goods and raw materials is stated at the lower of cost or market utilizing the first-in, first-out method~~Inc. ~~The Company continually analyzes its slow-moving, excess~~ and obsolete inventories. Based on historical and projected sales volumes and anticipated selling prices, the Company establishes reserves. If the Company does not meet its sales expectations, these reserves are increased. Products that are determined to be obsolete are written down to net realizable value. As of December 31, 2013, the inventory has been written down to its net realizable value. Subsidiary

~~Deferred~~Notes ~~Financing~~to ~~Costs~~Consolidated Financial Statements

~~Cost~~NOTE ~~incurred~~1: inDESCRIPTION ~~conjunction~~OF with the debt financing has been capitalized and will be amortized to interest expense using the straight line method, which approximates the interest rate method over the term of the debt and is included as a component of other assets. Amortization of deferred financing cost was approximately $25,000 and $125,000 for the years ended December 31, 2013 and 2012, respectively.BUSINESS

~~Derivative~~PureSafe ~~Liabilities~~Water Systems, Inc. (the "Company") is a Delaware corporation engaged in the design, development, manufacturing and sales of the PureSafe ™ First Response Water System (the “FRWS”), both within and outside of the United States. The Company's corporate headquarters are located in Plainview, New York.

InNOTE ~~connection~~2: ~~with~~BASIS ~~the~~OF ~~issuance~~PRESENTATION ofAND ~~certain~~ACCOUNTING convertible promissory notes, the terms of the convertible notes included an embedded conversion feature; which provided for the settlement of certain convertible promissory notes into shares of common stock at a rate which was determined to be variable. The Company determined that the conversion feature was an embedded derivative instrument pursuant to ASC 815 “Derivatives and Hedging”POLICIES

~~F-10~~Basis of Presentation

The ~~accounting~~Company’s ~~treatment~~consolidated ~~of derivative~~ financial ~~instruments~~statements ~~requires~~have ~~that~~been ~~the~~prepared Company record the conversion option and related warrants at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. As a result of entering into the convertible promissory notes, the Company is required to classify all other non-employee warrants as derivative liabilities and record them at their fair values at each balance sheet date. Any change in ~~fair~~accordance ~~value~~with ~~was~~accounting ~~recorded~~principles asgenerally aaccepted ~~change~~ in the ~~fair~~United ~~value~~States of ~~derivative~~America ~~liabilities for each reporting period at each balance sheet date~~(“U. ~~The Company reassesses the classification at each balance sheet date~~S. ~~If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification~~GAAP”).

~~The~~Principles ~~fair value~~ of conversion options that are convertible at a fixed number of shares or at a fixed conversion price are recorded using the intrinsic value method and conversion options at variable rates are valued using a Black-Scholes Valuation Model. Variable conversion options are deemed to be a “down-round protection” and therefore, do not meet the scope exception for treatment as a derivative under ASC 815. Since, “down-round protection” is not an input into the calculation of the fair value of the conversion option and cannot be considered “indexed to the Company’s own stock” which is a requirement for the scope exception as outlined under ASC 815. The Company determined the fair value of the Binomial Lattice Model and the Black-Scholes Valuation Model to be materially the same. Warrants that have been reclassified to derivative liability that did not contain “down-round protection” were valued using the black-scholes model. The Company’s outstanding warrants did not contain any down round protection.Consolidation

The ~~Black-Scholes~~Company ~~Valuation~~applies ~~Model~~the isguidance ~~used~~of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to ~~estimate~~determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the ~~fair~~parent ~~value~~company; of(2) if the ~~warrants~~parent is a broker-dealer within the scope of Topic 940 and ~~conversion~~control ~~option.~~is ~~The~~likely ~~model~~to ~~includes~~be ~~subjective~~temporary; ~~input~~(3) ~~assumptions~~consolidation ~~that~~by ~~can~~an ~~materially~~investment ~~affect~~company within the ~~fair~~scope ~~value~~of ~~estimates~~Topic 946 of a non-investment-company investee. ~~The~~Pursuant ~~model~~to ~~was~~ASC ~~developed~~Paragraph 810-10-15-8 the usual condition for ~~use~~a incontrolling ~~estimating~~financial ~~the~~interest ~~fair~~is ~~value~~ownership of ~~traded~~a ~~options~~majority orvoting ~~warrants.~~interest, ~~The~~and, ~~expected~~therefore, ~~volatility~~as isa ~~estimated~~general ~~based~~rule onownership ~~the~~by ~~most~~one ~~recent~~reporting ~~historical~~entity, ~~period~~directly or indirectly, of ~~time~~more ~~equal~~than to50 percent of the ~~weighted~~outstanding ~~average~~voting ~~life~~shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the ~~instrument~~parent’s ~~granted~~power to control exists.

The ~~principal~~Company's ~~assumptions~~consolidated ~~used~~subsidiaries inand/or ~~applying~~entities ~~the~~are ~~Black-Scholes model were~~ as follows:

	For the Years Ended December 31,
Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest
	2013	2012
PureSafe Manufacturing and Research Corporation	Delaware	September 29, 2009	100%
Assumptions:
Risk-free interest rate	0.10 - 1.75%	0.37 - 1.18%
Expected life	3 - 5 years	1 month - 6 years
Expected volatility	125% - 175%	108%-171%
Dividends	0.0%	0.0%

~~Stock-Based~~The ~~Compensation~~consolidated financial statements include all accounts of the Company and consolidated subsidiaries and/or entities as of December 31, 2014 and 2013 and for the years then ended.

~~The~~All ~~Company~~significant ~~reports stock~~inter-~~based~~company ~~compensation~~balances ~~under~~and ~~Accounting~~transactions ~~Standard~~have ~~Codification~~been ~~(“ASC”) 718 “Compensation – Stock Compensation”~~eliminated. ~~ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values.~~

~~The~~Use ~~Company accounts for equity instruments issued to non-employees as compensation in accordance with the provisions~~ of ~~ASC 718, which require that each such equity instrument is recorded at its fair value on the measurement date, which is typically the date the services are performed.~~Estimates

~~For~~The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the ~~years~~United ~~ended~~States ~~December~~requires 31management to make estimates and assumptions that affect the reported amounts of assets, ~~2013~~liabilities and ~~2012~~disclosures of contingent assets and liabilities at the ~~Company~~date ~~recorded~~of ~~stock~~the ~~based~~condensed ~~compensation~~consolidated financial statements and the reported amounts of ~~$731,200~~revenues and ~~$505,600,~~expenses ~~respectively~~during the reporting period.

~~The~~Management ~~Black-Scholes~~bases ~~option~~its ~~valuation~~estimates ~~model~~on ishistorical ~~used~~experience and on various assumptions that are believed to ~~estimate~~be reasonable under the ~~fair~~circumstances, ~~values~~the results of ~~options.~~which ~~The~~form ~~model~~the ~~includes~~basis ~~subjective~~for ~~input~~making ~~assumptions~~judgments about the carrying value of assets and liabilities that ~~can~~are ~~materially~~not ~~affect~~readily ~~the~~apparent ~~fair~~from ~~value~~other ~~estimates~~sources. The ~~model~~most ~~was~~significant ~~developed~~estimates, ~~for~~among ~~use~~other things, are used in ~~estimating~~accounting for allowances for deferred income taxes, expected realizable values for long-lived assets (primarily intangible assets and property and equipment), contingencies, as well as the ~~fair~~recording ~~value~~and presentation of ~~traded~~its ~~options~~common orstock ~~warrants~~and other securities. ~~The~~Estimates ~~expected~~and ~~volatility~~assumptions isare ~~estimated~~periodically ~~based~~reviewed onand the ~~most~~effects ~~recent~~of ~~historical~~any ~~period~~material ofrevisions ~~time~~are ~~equal~~reflected toin the ~~weighted~~consolidated ~~average~~financial ~~life~~statements ofin the ~~subject~~period ~~options~~that orthey ~~warrants~~are determined to be necessary. Actual results could differ from those estimates and assumptions.

F-117

~~The~~Cash ~~principal~~and ~~assumptions~~Cash ~~used in applying the Black-Scholes model were as follows:~~Equivalents

	For the Years Ended December 31,
	2013	2012
Assumptions:
Risk-free interest rate	0.3 - 1.6%	.36%
Expected life	3 to 5 years	3 years
Expected volatility	125% - 175%	117%
Dividends	0.0%	0%

The Company considers all highly liquid instruments with original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2014 and 2013 the Company did not have any cash equivalents.

~~Fair Value of Financial Instruments~~Inventories

~~The~~Inventory ~~Company’s~~consisting ~~financial~~primarily ~~instruments~~of ~~consist~~finished ~~principally~~goods ofand ~~cash,~~raw ~~accounts~~materials ~~payable~~is ~~and~~stated ~~accrued~~at ~~expenses~~the ~~and~~lower ~~debt~~of ~~payable~~cost or market utilizing the first-in, first-out method. The Company ~~determines~~continually ~~the~~analyzes ~~estimated~~its ~~fair~~slow-moving, ~~value~~excess ofand ~~such~~obsolete ~~financial~~inventories. ~~instruments~~Based ~~presented~~on inhistorical ~~these~~and ~~financial~~projected ~~statements~~sales ~~using~~volumes ~~available~~and ~~market~~anticipated ~~information~~selling ~~and~~prices, ~~appropriate~~the ~~methodologies.~~Company ~~These~~establishes ~~financial~~reserves. ~~instruments~~If ~~are~~the ~~stated~~Company atdoes ~~their~~not ~~respective~~meet ~~historical~~its ~~carrying~~sales ~~amounts~~expectations, ~~which~~these ~~approximate~~reserves ~~fair~~are ~~value~~increased. ~~due~~Products that are determined to ~~their~~be ~~short~~obsolete ~~term~~are ~~nature~~written down to net realizable value.

~~Advertising~~Patents and ~~Marketing~~Trademarks

~~Advertising~~Certain patents and ~~marketing~~trademarks amortize ratably over nine to fourteen years. Patent costs ~~are~~for ~~expensed~~which asthere ~~incurred~~is ~~and~~uncertainty ~~are~~as ~~included~~to inthe ~~selling,~~future ~~general~~economic ~~and~~benefits ~~administrative~~are ~~expenses~~expensed. The Company ~~incurred~~assesses athe ~~charge~~carrying value of ~~approximately~~its ~~$25,835~~patents ~~and~~for ~~$213~~impairment each year. Based on its assessments,~~553~~ the Company did not incur any impairment charges for the years ended December 31, ~~2013~~2014 and ~~2012, respectively~~2013.

~~Income~~Property ~~Taxes~~and Equipment

~~Income~~Property ~~taxes~~and ~~are~~equipment ~~accounted~~consists ~~for~~primarily ~~under~~of ~~ASC~~equipment ~~740,~~and ~~"Income~~furniture ~~Taxes,"~~and ~~which~~fixtures and is anstated ~~asset~~at cost. Depreciation and ~~liability~~amortization ~~approach~~are ~~that~~provided ~~requires~~using the ~~recognition~~straight line method over the estimated useful lives (generally three to seven years) of ~~deferred~~the ~~tax~~related assets. ~~and~~Leasehold ~~liabilities~~improvements, ~~for~~once ~~the~~placed ~~expected~~in ~~future~~service, ~~tax~~are ~~consequences~~amortized ~~attributable~~over tothe ~~differences~~shorter ~~between~~of the ~~financial~~useful ~~statement~~life ~~carrying~~or ~~amounts~~the remainder of ~~existing~~the ~~assets~~lease ~~and~~term. ~~liabilities~~Expenditures for maintenance and ~~their~~repairs, ~~respective~~which ~~tax~~do ~~bases,~~not ~~and~~extent ~~net~~the ~~operating~~economic ~~loss~~useful ~~and~~life ~~tax~~of ~~credit~~the ~~carryovers.~~related ~~Valuation~~assets, ~~allowances~~are charged to operations are ~~established~~incurred. ~~when~~Gains ~~necessary~~or tolosses ~~reduce~~on ~~deferred~~disposal ~~tax~~of ~~assets~~property toand ~~amounts~~equipment ~~more~~are ~~likely~~reflected ~~than~~in ~~not~~the tostatement beof ~~realized~~operations in the period of disposal.

~~Impairment~~Revenue ~~of Long-Lived Assets~~Recognition

The Company ~~assesses~~generally ~~the~~recognizes ~~recoverability~~revenues ofunder ~~its~~Staff ~~long~~Accounting ~~lived~~Bulletin ~~assets,~~No. ~~including~~104 ~~property~~when ~~and~~the ~~equipment~~following ~~when~~criteria ~~there~~ are ~~indications~~met, ~~that~~persuasive ~~the~~evidence ~~assets~~of ~~might~~an bearrangement ~~impaired.~~exists, ~~When~~delivery ~~evaluating~~has ~~assets~~occurred ~~for~~or ~~potential~~services ~~impairment~~have been rendered, the ~~Company~~seller's ~~first~~price ~~compares~~to the ~~carrying~~buyer ~~amount~~is offixed ~~the~~or ~~asset~~determinable, toand collectibility is reasonably assured. In addition the ~~asset’s~~Company ~~estimated~~may ~~future~~enter ~~cash~~into ~~flows~~agreements that include multiple elements (~~undiscounted~~i.e., products and ~~without~~services/training). ~~interest~~Revenue ~~charges~~under multiple element arrangements is recognized in accordance with FASB ASC 605-25 Multiple-Element Arrangements (“ASC 605”). IfWhen ~~the~~vendor ~~estimated~~specific ~~future~~objective ~~cash~~evidence ~~flows~~or ~~used~~third party evidence of selling price for deliverables in ~~this~~an ~~analysis~~arrangement ~~are~~cannot ~~less~~be ~~than~~determined, the ~~carrying~~Company ~~amount~~develops a best estimate of the ~~asset,~~selling anprice ~~impairment~~to ~~loss~~separate ~~calculation~~deliverables isand ~~prepared.~~allocates ~~The~~arrangement ~~impairment~~consideration ~~loss~~using ~~calculation~~the ~~compares~~relative selling price method. Additionally, this guidance eliminates the ~~carrying~~residual ~~amount~~method of ~~the~~allocation. ~~asset~~If an arrangement includes undelivered elements that are not essential to the ~~asset’s~~functionality ~~estimated~~of ~~future~~the ~~cash~~delivered ~~flows~~elements, ~~(discounted~~we ~~and~~defer ~~with~~the ~~interest~~fair ~~charges).~~value Ifof the ~~carrying~~undelivered ~~amount~~elements ~~exceeds~~with the ~~asset’s~~residual ~~estimated~~revenue ~~futures~~allocated ~~cash~~to ~~flows~~the ~~(discounted~~delivered ~~and~~elements. ~~with~~Fair ~~interest~~value ~~charges),~~is determined based upon the ~~loss~~price charged when the element is ~~allocated~~sold toseparately. If there is not sufficient evidence of the ~~long-lived~~fair ~~assets~~value of the ~~group~~undelivered onelements, ano ~~pro~~revenue ~~rata~~is ~~basis~~allocated ~~using~~to the ~~relative~~delivered ~~carrying~~elements ~~amounts~~and the total consideration received is deferred until delivery of those ~~assets.~~elements ~~Based~~for onwhich ~~its~~objective ~~assessments,~~and ~~the~~reliable ~~Company~~evidence ~~did~~of ~~not~~the ~~incur~~fair ~~any~~value ~~impairment~~is ~~charges~~not ~~for~~available. For the years ended December 31, ~~2013~~2014 and ~~2012~~2013, the Company did not have any multiple deliverable elements.

~~Research~~Deferred ~~and~~Financing ~~Development~~Costs

~~Research~~Cost ~~and~~incurred ~~development~~in ~~costs~~conjunction ~~consist~~with ofthe ~~expenditures~~debt ~~incurred~~financing ~~during~~has ~~the~~been ~~course~~capitalized ofand ~~planned~~will ~~research~~be ~~and~~amortized ~~investigation~~to ~~aimed~~interest atexpense using the ~~discovery~~straight ofline ~~new knowledge~~method, which ~~will~~approximates bethe ~~useful~~interest inrate ~~developing~~method ~~new~~over ~~products~~the orterm ~~processes.~~of ~~The~~the ~~Company~~debt ~~expenses all research~~ and ~~development~~is ~~costs~~included as ~~incurred.~~a ~~The~~component ~~Company~~of ~~incurred~~other aassets. ~~charge~~Amortization of ~~approximately~~deferred financing cost was $5510,~~874~~110 and $6225,~~032~~066 for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively.

~~Subsequent Events~~F-8

~~The~~Derivative Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would require adjustment or disclosure in the consolidated financial statements.Liabilities

~~F-12~~In connection with the issuance of certain convertible promissory notes, the terms of the convertible notes included an embedded conversion feature; which provided for the settlement of certain convertible promissory notes into shares of common stock at a rate which was determined to be variable with no floor. The Company determined that the conversion feature was an embedded derivative instrument pursuant to ASC 815 “Derivatives and Hedging”

~~NOTE~~The 3accounting –treatment ~~GOING~~of ~~CONCERN~~derivative financial instruments requires that the Company record the conversion option and related warrants, if applicable, at their fair values as of the inception date of the agreements and at fair value as of each subsequent balance sheet date. As a result of entering into certain convertible promissory notes, the Company is required to classify all other non-employee warrants as derivative liabilities and record them at their fair values at each balance sheet date because the Company could not determine it has enough authorized shares to settle the contracts. Any change in fair value was recorded as a change in the fair value of derivative liabilities for each reporting period at each balance sheet date. The Company reassesses the classification at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

The ~~accompanying~~fair ~~consolidated~~value ~~financial~~of ~~statements~~conversion ~~have~~options ~~been prepared assuming~~ that ~~the~~are ~~Company~~convertible ~~will~~at ~~continue as~~ a ~~going~~variable ~~concern.~~conversion ~~The~~price ~~Company~~are ~~has~~required ~~incurred~~to abe ~~net~~valued ~~loss~~using ofa ~~approximately~~Binomial ~~$3,237,000~~Lattice ~~and $2,760,000 for each of the years ended December 31, 2013 and 2012 respectively~~Model. The Company ~~has~~determined athe ~~working~~fair ~~capital~~value ~~deficit~~ of ~~approximately~~the ~~$5.6~~conversion ~~million~~option ~~and~~using ~~$4.6~~either ~~million~~the asBlack-Scholes ofValuation ~~December~~Model ~~31,~~or ~~2013~~the ~~and~~Binomial ~~2012~~Lattice ~~respectively.~~Model ~~The Company continues~~ to ~~incur~~be ~~recurring~~materially ~~losses from operations and has an accumulated deficit since inception of approximately $48.3 million. These conditions raise substantial doubt about~~ the ~~Company's ability to continue as a going concern~~same.

The ~~Company’s~~Black-Scholes ~~continuation~~Valuation asModel ~~a going concern~~ is ~~dependent~~used ~~upon its ability~~ to ~~bring~~estimate the ~~Company’s~~fair ~~products~~value to market and generate revenues, control costs, and obtain additional financing, as required and on reasonable terms. The Company’s plans with respect to these matters include restructuring its existing debt and raising additional financing through issuance of preferred stock, common stock and/or debt. On January 23, 2013, The Company signed an Engineering Package Agreement (“ETG Agreement”) with Engineering Technologies Group, Inc. (“ETG”), Hopkinton, Massachusetts. Under the ~~engineering~~warrants ~~agreement, ETG will provide detailed electronic engineering drawings~~ and ~~purchase~~conversion ~~specifications for the Company’s water purification and filtration product and to facilitate the outsourcing of the assembly, sub-assembly and manufacturing~~option. OnThe ~~January~~model ~~25,~~includes ~~2013,~~subjective ~~the~~input ~~Company~~assumptions ~~entered~~that ~~into~~can anmaterially ~~Exclusive~~affect ~~Sales and Marketing Agreement (~~the ~~“Distribution~~fair ~~Agreement”)~~value ~~with Global Equipment Marketing, Inc~~estimates. ~~(“GEM”),~~The ~~Hopkinton,~~model ~~Massachusetts,~~was adeveloped ~~distribution and marketing company. Under the Distribution Agreement, on an exclusive basis, GEM is responsible~~ for ~~promoting~~use ~~and~~in ~~selling~~estimating the ~~Company’s~~fair ~~products~~value ~~at their cost and expense. In exchange, GEM will receive a discount from the list prices~~ of ~~PureSafe~~traded ~~products~~options inor ~~connection with sales to its dealers, distributors, representatives and resellers~~warrants. The ~~Company~~expected ~~remains~~volatility ~~responsible~~is ~~for~~estimated ~~the~~based ~~design~~on ~~and manufacturing of~~ the ~~products.~~most ~~The~~recent ~~Company~~historical ~~was~~period ~~evicted from its facilities at 160 Dupont Street, Plainview, NY 11803. The Company plans to outsource production~~ of ~~the~~time ~~product~~equal ~~in the future. Any remaining inventory was moved~~ to ~~ETG’s facilities in Hopkinton, Mass. On April 2, 2014, The Company announced that Stephen Hicks and Gilbert Steedley were appointed to~~ the ~~Board~~weighted ofaverage ~~Directors~~life ~~and that Stephen Hicks was appointed President~~ of the ~~Company.~~instrument ~~Henry Sargent was appointed Vice President and Secretary~~granted.

The ~~Company’s~~principal ~~goal~~assumptions isused toin ~~generate~~applying the ~~sales~~Black-Scholes ofmodel ~~the~~were ~~Company's~~as flagship mobile water purification product and to ultimately diversify it’s product line through ingenuity and/or acquisition. In order to accomplish these goals we are redirecting the sales effort so that the Company will no longer predominantly focus on the government sector, a target with historically long lead times. In addition the Company is reviewing the entire approach to the product with an aim to 1) deepen and diversify our distribution channels, 2) lower our cost of production, 3) improve the Company's profit margin on and 4) maintain an inventory of units for immediate sale.follows:

The Company requires immediate capital to remain viable. The Company can give no assurance that such financing will be available on terms advantageous to the Company, or at all. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all of its operational activities. The accompanying audited consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.


	For the Years Ended
	December 31,
	2014	2013
Assumptions:
Risk-free interest rate	0.02-1.78%	0.10-1.75%
Expected life	.01 - 5 years	3 - 5 years
Expected volatility	165%-176%	125%-175%
Dividends	0.0%	0.0%

~~Subsequent~~Stock-Based to December 31, 2013, the Company has issued approximately $190,000 of notes payable and approximately $301,000 of convertible notes payable. From January 1, 2014 until October 23, 2014, the Company issued 414,812,709 shares of common stock for the settlement of $219,620 loan principal plus $24,850 accrued interest and fees.Compensation

~~NOTE~~The 4Company reports stock-based compensation under Accounting Standard Codification (“ASC”) 718 “Compensation – ~~RECENT~~Stock ~~ACCOUNTING~~Compensation”. ~~PRONOUNCEMENTS~~ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated financial statements based on their fair values.

InThe ~~July~~Company ~~2013,~~accounts ~~the~~for ~~FASB~~equity instruments issued ~~ASU~~to ~~2013~~non-~~11,~~employees ~~“Income~~as ~~Taxes~~compensation ~~(Topic~~in ~~740):~~accordance ~~Presentation~~with ofthe anprovisions ~~Unrecognized~~of ~~Tax~~ASC ~~Benefit When a Net Operating Loss Carryforward~~718, awhich ~~Similar~~require Tax Loss, or a Tax Credit Carryforward Exists.” Under this new guidance, companies must present this unrecognized tax benefit in the financial statements as a reduction to deferred tax assets created by net operating losses or other tax credits from prior periods that ~~occur~~each ~~in the same taxing jurisdiction. If the unrecognized tax benefit exceeds~~ such ~~credits~~equity itinstrument ~~should be presented in the financial statements as a liability. This update~~ is ~~effective~~recorded ~~for~~at ~~annual~~its ~~and~~fair ~~interim~~value ~~reporting~~on ~~periods~~the ~~for~~measurement ~~fiscal years beginning after December 15~~date, ~~2013.~~which ~~The adoption of this standard~~ is ~~not~~typically ~~expected~~the todate ~~have a material impact on~~ the ~~Company’s~~services ~~financial~~are ~~position, results of operations or cash flows~~performed.

~~The~~For ~~U.S.~~the ~~Financial~~years ~~Accounting~~ended ~~Standards~~December ~~Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08~~31, ~~Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (ASU~~ 2014~~-08)~~ ~~in April 2014. This new standard raises the threshold for disposals to qualify as discontinued operations, allows companies to have significant continuing involvement~~ and ~~continuing~~2013 ~~cash flows and provides for new and additional disclosures of discontinued operations and individually material disposal transactions. The Company anticipates adopting~~ the ~~new standard when it becomes effective in the first quarter of 2015. The~~ Company ~~does~~recorded ~~not~~stock ~~expect~~based ~~the~~compensation ~~adoption~~ of ~~ASU~~$672,745 ~~2014-08~~and to$731,200, ~~have a material effect on its consolidated financial statements~~respectively.

FThe Black-13Scholes option valuation model is used to estimate the fair values of options. The model includes subjective input assumptions that can materially affect the fair value estimates. The model was developed for use in estimating the fair value of traded options or warrants. The expected volatility is estimated based on the most recent historical period of time equal to the weighted average life of the subject options or warrants. During the year ended December 31, 2014 the Company has not granted any options or warrants.

~~The FASB has issued ASU No. 2014~~F-12, Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the effect of the ASU on its financial position, results of operations and cash flows.9

The ~~FASB~~principal ~~has~~assumptions ~~issued~~used ~~ASU No. 2014-09, Revenue from Contracts with Customers. This ASU supersedes the revenue recognition requirements~~ in Accounting Standards Codification 605 - Revenue Recognition and most industry-specific guidance throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ~~ASU~~Black-Scholes ~~recognized~~model atduring the ~~date~~year ofended ~~initial~~December ~~application. The Company is currently evaluating the effect of the ASU on its financial position~~31, ~~results~~2013 ofwere ~~operations~~as ~~and cash flows.~~follows:

In August 2014, the FASB issued a new accounting standard which requires management to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern for each annual and interim reporting period. If substantial doubt exists, additional disclosure is required. This new standard will be effective for the Company for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company expects to adopt this new standard for the fiscal year ending December 31, 2016 and the Company will continue to assess the impact on its consolidated financial statements.


Assumptions:		December 31, 2013
Risk-free interest rate		0.3-1.6%
Expected life		3 - 5 years
Expected volatility		125%-175%
Dividends		0.0%

~~The~~Fair ~~FASB~~Value ~~and the SEC have issued certain other accounting standards updates and regulations that will become effective in subsequent periods; however, management~~ of ~~the~~Financial Company does not believe that any of those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during 2014 or 2013, and does not believe that any of those pronouncements will have a significant impact on the Company’s consolidated financial statements at the time they become effective.Instruments

~~NOTE~~The 5Company’s –financial ~~PROPERTY~~instruments ~~AND~~consist ~~EQUIPMENT~~principally of cash, accounts payable and accrued expenses and debt payable. The Company determines the estimated fair value of such financial instruments presented in these financial statements using available market information and appropriate methodologies. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short term nature.

~~Property~~Advertising and ~~equipment consist of the following at December 31, 2013 and 2012:~~Marketing

	2013		2012
Leasehold improvement	$	74,945	$	74,945
Furniture and fixtures		31,987		49,265
Equipment		72,358		89,514
		179,290		213,724
Accumulated depreciation and amortization		(179,290)		(164,710)
Property and equipment, net	$	−	$	49,014

Advertising and marketing costs are expensed as incurred and are included in selling, general and administrative expenses. The Company incurred a charge of $3,701 and $25,835 for the years ended December 31, 2014 and 2013, respectively.

~~Depreciation~~Income ~~and amortization expense was approximately $15,000 and $53,000 for the years ended December 31, 2013 and 2012, respectively.~~Taxes

OnIncome ~~October~~taxes 8are accounted for under ASC 740, ~~2013~~"Income Taxes," which is an ~~eviction~~asset ~~notice~~and ~~was~~liability ~~issued~~approach bythat requires the ~~landlord~~recognition of deferred tax assets and liabilities for the ~~Company’s~~expected ~~facilities~~future attax ~~160~~consequences ~~Dupont~~attributable ~~Street.~~to ~~The~~differences ~~Company~~between ~~abandoned~~ the ~~space~~financial onstatement ~~October~~carrying 11amounts ~~2013.~~of ~~Accordingly~~existing ~~the~~assets ~~Company~~and ~~recorded~~liabilities aand ~~charge~~their ofrespective ~~$21~~tax bases,~~720~~ ~~for~~and ~~the~~net operating loss onand ~~abandonment~~tax ofcredit ~~property~~carryovers. Valuation allowances are established when necessary to reduce deferred tax assets to amounts more likely than not to be realized.

~~During~~Impairment ~~the year ended December 31, 2013 the Company sold property and equipment and recorded a gain~~ of ~~$9,486.~~Long-Lived Assets

~~NOTE~~The 6Company –assesses ~~PATENTS~~the ~~AND~~recoverability ~~TRADEMARKS~~of its long lived assets, including property and equipment when there are indications that the assets might be impaired. When evaluating assets for potential impairment, the Company first compares the carrying amount of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset to the asset’s estimated future cash flows (discounted and with interest charges). If the carrying amount exceeds the asset’s estimated futures cash flows (discounted and with interest charges), the loss is allocated to the long-lived assets of the group on a pro rata basis using the relative carrying amounts of those assets. Based on its assessments, the Company did not incur any impairment charges for the years ended December 31, 2014 and 2013.

~~Patents~~Research and ~~trademarks as of December 31, 2013 and 2012 consist of the following:~~Development

	2013		2012
Patents	$	104,621	$	97,164
Trademarks		2,720		2,720
Total cost		107,341		99,884
Accumulated amortization		(47,919)		(41,816)
Patents and trademarks, net	$	59,422	$	58,068

Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred. The Company incurred a charge of $3,474 and $55,874 for the years ended December 31, 2014 and 2013, respectively.

~~F-14~~Subsequent Events

~~Amortization~~The ~~expense~~Company ~~for~~evaluates events that have occurred after the ~~years~~balance ~~ended~~sheet ~~December~~date ~~31,~~but ~~2013~~before ~~and~~the ~~2012~~financial ~~was~~statements ~~approximately~~are $6issued. Based upon the evaluation,~~100~~ the Company did not identify any recognized or non-recognized subsequent events that would require adjustment or disclosure in the consolidated financial statements.

~~The following table presents the Company's estimate for amortization expense for each of the five succeeding years and thereafter.~~F-10

Year Ended December 31,
2014	$	6,100
2015		6,100
2016		6,100
2017		6,100
2018		6,100
2019 and thereafter		28,922
	$	59,422

NOTE 3: GOING CONCERN

~~NOTE~~The 7accompanying –condensed ~~INVENTORIES~~consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred a net loss of approximately $4.0 million and $3.2 million for the years ended December 31, 2014 and 2013, respectively. The Company has a working capital deficit of approximately $8.2 million and $4.6 million as of December 31, 2014 and 2013, respectively. The Company continues to incur recurring losses from operations and has an accumulated deficit since inception of approximately $52.3 million. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

~~Inventories~~The ~~consist~~Company’s ofcontinuation as a going concern is dependent upon its ability to bring the ~~following~~Company’s atproducts ~~December~~to 31market and generate revenues, ~~2013~~control costs, and ~~2012~~obtain additional financing, as required and on reasonable terms. The Company’s plans with respect to these matters include restructuring its existing debt and raising additional financing through issuance of preferred stock, common stock and/or debt. On April 2, 2014, The Company announced that Stephen Hicks and Gilbert Steedley were appointed to the Board of Directors and that Stephen Hicks was appointed President of the Company. Henry Sargent was appointed Vice President and Secretary.

		2013		2012
Raw materials	$	−	$	43,684
Finished Goods		141,636		279,034
Total	$	141,636	$	322,718

The Company’s goal is to generate the sales of the Company's flagship mobile water purification product and to ultimately diversify its product line through ingenuity and/or acquisition. In order to accomplish these goals we are redirecting the sales effort so that the Company will no longer predominantly focus on the government sector, a target with historically long lead times. In addition the Company is reviewing the entire approach to the product with an aim to 1) deepen and diversify our distribution channels, 2) lower our cost of production, 3) improve the Company's profit margin on and 4) maintain an inventory of units for immediate sale.

~~During~~The ~~the~~Company ~~year~~requires ~~ended~~immediate ~~December~~capital 31to remain viable. The Company can give no assurance that such financing will be available on terms advantageous to the Company, ~~2013~~or ~~inventory~~at all. Should the Company not be successful in obtaining the ~~amount~~necessary offinancing ~~$56,344~~to ~~was~~fund ~~abandoned~~its asoperations, athe ~~result~~Company ofwould ~~moving~~need to acurtail ~~new~~certain ~~facility~~or all of its operational activities. ~~Our~~The ~~abandonment~~accompanying ~~charges~~unaudited ~~related~~condensed toconsolidated ~~inventory~~financial ~~have~~statements ~~been~~do ~~included~~not ininclude ~~“Cost~~any ofadjustments ~~Goods~~that ~~Sold”~~might inbe ~~our~~necessary ~~Statements~~should ofthe ~~Operations~~Company be unable to continue as a going concern.

~~NOTE~~Subsequent 8to –December ~~NET~~31, ~~LOSS~~2014, ~~PER~~the ~~SHARE~~Company OFhas ~~COMMON~~issued ~~STOCK~~approximately $254,000 of convertible notes payable. From January 1, 2015 until June 5, 2015, the Company issued 558,685,711 shares of common stock for the settlement of $24,600 loan principal plus $4,584 accrued interest, and fees. As of June 5, 2015 the Company has cash of approximately $1,000 available for use.

~~Basic~~NOTE ~~loss~~4: ~~per~~RECENT ~~share~~ACCOUNTING was computed using the weighted average number of outstanding common shares. Diluted loss per share includes the effect of dilutive common stock equivalents from the assumed exercise of options, warrants, convertible preferred stock and convertible notes. Common stock equivalents were excluded in the computation of diluted loss per share since their inclusion would be anti-dilutive.PRONOUNCEMENTS

~~Total~~The ~~shares~~U.S. ~~issuable~~Financial ~~upon~~Accounting ~~the~~Standards ~~exercise~~Board of(“FASB”) ~~warrants~~issued Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and ~~conversion~~Disclosures of ~~preferred~~Disposals ~~stock~~of ~~and~~Components ~~convertible~~of ~~promissory~~an ~~notes~~Entity ~~for~~(ASU 2014-08) in April 2014. This new standard raises the ~~years~~threshold ~~ended~~for ~~December~~disposals 31to qualify as discontinued operations, ~~2013~~allows companies to have significant continuing involvement and ~~2012~~continuing ~~were~~cash asflows ~~follows:~~and provides for new and additional disclosures of discontinued operations and individually material disposal transactions. The Company anticipates adopting the new standard when it becomes effective in the first quarter of 2015. The Company does not expect the adoption of ASU 2014-08 to have a material effect on its consolidated financial statements.

	December 31,
	2013	2012
Warrants	176,574,286	85,652,403
Convertible promissory notes	492,877,340	187,297,345
Convertible preferred stock	1,545,760	1,545,760
Total	670,997,386	274,495,508

~~For~~The ~~the~~FASB ~~years~~has ~~ended~~issued ~~December~~ASU 31No. 2014-09, ~~2013~~Revenue ~~and~~from ~~2012,~~Contracts ~~101,547,890~~with Customers. This ASU supersedes the revenue recognition requirements in Accounting Standards Codification 605 - Revenue Recognition and ~~7,101,783~~most ~~warrants~~industry-specific ~~were~~guidance ~~included~~throughout the Codification. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in ~~loss~~an ~~per~~amount ~~share~~that asreflects ~~their~~the ~~exercise~~consideration ~~price~~to ~~was~~which ~~determined~~the company expects to be ~~nominal~~entitled in exchange for those goods or services. This ASU is effective on January 1, 2017 and should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. The Company is currently evaluating the effect of the ASU on its financial position, results of operations and cash flows.

~~Fair Value~~F-11

~~ASC~~In ~~820~~August ~~“Fair~~2014, ~~Value~~the ~~Measurements~~FASB ~~and~~issued ~~Disclosures”~~a ~~defines~~new ~~fair~~accounting ~~value,~~standard ~~establishes~~which arequires ~~framework~~management ~~for~~to ~~measuring~~evaluate ~~fair~~whether ~~value~~there ~~and~~is ~~requires~~substantial ~~enhanced~~doubt ~~disclosures~~ about ~~fair~~an ~~value~~entity’s ~~measurements.~~ability Asto ~~defined~~continue inas ~~ASC~~a ~~820,~~going ~~fair~~concern ~~value~~for iseach ~~the~~annual ~~price~~and ~~that~~interim ~~would~~reporting beperiod. ~~received~~If tosubstantial ~~sell~~doubt anexists, ~~asset~~additional ordisclosure ~~paid~~is torequired. ~~transfer~~This anew ~~liability~~standard inwill anbe ~~orderly~~effective ~~transaction~~for ~~between~~the ~~market~~Company ~~participants~~for atannual ~~the~~and ~~measurement~~interim ~~date.~~periods ~~The~~beginning ~~Standard~~after ~~clarifies~~December ~~that~~15, ~~the~~2016. ~~exchange~~Early ~~price~~adoption is ~~the~~permitted. ~~price~~The inCompany anexpects ~~orderly~~to ~~transaction~~adopt ~~between~~this ~~market~~new ~~participants~~standard tofor ~~sell~~the anfiscal ~~asset~~year orending ~~transfer~~December a31, ~~liability~~2016 atand the ~~measurement~~Company ~~date~~will ~~and~~continue ~~emphasizes~~to ~~that~~assess ~~fair~~the ~~value~~impact ison aits ~~market-based~~consolidated ~~measurement~~financial ~~and not an entity-specific measurement~~statements.

FIn April 2015, the Financial Accounting Standards Board issued Accounting Standards Update 2015-03, Interest—Imputation of Interest. To simplify presentation of debt issuance costs, the amendments in this Update would require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs would not be affected by the amendments in this Update. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2014-250—Interest—Imputation of Interest (Subtopic 835-30), which has been deleted. The amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the effects of ASU 2015-03 on its consolidated financial statements.

~~ASC~~The ~~820~~FASB ~~establishes~~and the ~~following~~SEC ~~hierarchy~~have ~~used~~issued incertain ~~fair~~accounting ~~value~~standards ~~measurements~~updates and ~~expands~~regulations that will become effective in subsequent periods; however, management of the ~~required~~Company ~~disclosures~~does not believe that any of ~~assets~~those updates would have significantly affected the Company’s financial accounting measures or disclosures had they been in effect during 2014 or 2013, and ~~liabilities~~does ~~measured~~not believe that any of those pronouncements will have a significant impact on the Company’s consolidated financial statements at ~~fair~~the ~~value:~~time they become effective.

·NOTE 5: RELATED PARTIES

~~Level~~Related 1parties –of ~~Inputs use quoted prices in active markets for identical assets or liabilities that~~ the Company ~~has~~consist of the ~~ability~~following ~~to access.~~individuals/entities:

·Related Parties Relationship Southridge LLC (“Southridge”) An entity of which the President and member of the board of directors of the Company is the Chief Executive Officer. Southridge Partners II LP (“Southridge II”) An entity of which the President and member of the board of directors of the Company is the Manager of the general partner of Southridge II. Southridge II is a controlled company in the Southridge LLC group of companies. Tarpon Bay Partners, LLC (“Tarpon”) An entity of which the President and member of the board of directors of the Company is the Manager. Tarpon is a controlled company in the Southridge LLC group of companies. ASC Recap LLC (“ASC Recap”) An entity of which the President and member of the board of directors of the Company is the Manager. ASC Recap is a controlled company in the Southridge LLC group of companies.

~~Level~~NOTE 26: – 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.INVENTORIES

·Inventories consist of the following at December 31, 2014 and December 31, 2013:

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.


	December 31, 2014		December 31, 2013
Finished Goods	$	141,636	$	141,636
Total	$	141,636	$	141,636

InDuring ~~instances~~the ~~where~~year ~~inputs~~ended ~~used~~December to31, ~~measure~~2013 ~~fair~~inventory ~~value fall into different levels~~ in the ~~above~~amount ~~fair~~of ~~value hierarchy~~$56,344 ~~fair~~was ~~value~~abandoned ~~measurements~~as ina ~~their~~result ~~entirety~~of ~~are~~moving ~~categorized~~to ~~based~~a onnew ~~the~~facility. ~~lowest~~Our ~~level~~abandonment ~~input~~charges ~~that~~related ~~is significant~~ to ~~the~~inventory ~~valuation.~~have ~~The~~been ~~Company’s~~included ~~assessment~~in of“Cost ~~the significance~~ of ~~particular~~Goods ~~inputs~~Sold” toin ~~these~~our ~~fair~~Statements ~~measurements~~of ~~requires judgment and considers factors specific to each asset or liability~~Operations.

~~Liabilities measured at fair value on a recurring basis at December 31, 2013 and 2012 are as follows:~~F-12

	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance at December 31,
Embedded conversion feature	$	–	$	–	$	224,000	$	224,000
Warrant liability	$	–	$	–	$	39,300	$	39,300
Balance at December 31, 2012	$	–	$	–	$	263,300	$	263,300
Embedded conversion feature	$	–	$	–	$	206,500	$	206,500
Warrant liability	$	–	$	–	$	92,500	$	92,500
Balance at December 31, 2013	$	–	$	–	$	299,000	$	299,000

NOTE 7 – PROPERTY AND EQUIPMENT

~~Financial~~Property ~~assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques~~ and atequipment ~~least one significant model assumption or input is unobservable. The Company’s Level 3 liabilities~~ consist of ~~derivative~~the ~~liabilities~~following ~~associated~~at ~~with~~December ~~convertible~~31, ~~debt~~2014 ~~that contains an indeterminable conversion share price~~ and ~~the tainted warrants as the Company cannot determine if it will have sufficient authorized common stock to settle such arrangements.~~2013:

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs during the year ended December 31, 2013 and 2012.


	2014		2013
Leasehold improvement	$	−	$	74,945
Furniture and fixtures		−		31,987
Equipment		44,449		72,358
		44,449		179,290
Accumulated depreciation and amortization		(44,449)		(179,290)
Property and equipment, net	$	−	$	−

	Warrants		Conversion Feature		Total
Balance at - January 1, 2012	$	446,400	$	68,800	$	515,200
Change in fair value of derivative liability		(537,500)		(460,800)		(998,300)
Included in liabilities (debt discount)		28,100		621,000		649,100
Included in stock based compensation		17,200		–		17,200
Included in stockholder’s equity		85,100		(5,000)		80,100
Balance at - December 31, 2012	$	39,300	$	224,000	$	263,300
Included in stock based compensation		4,500		–		4,500
Change in fair value of derivative liability		(297,100)		(95,900)		(393,000)
Included in liabilities (debt discount)		114,000		240,000		354,000
Included in liabilities (derivative expense)		209,800		35,400		245,200
Included in stockholder's equity		22,000		(197,000)		(175,000)
Transfers in and /or out of Level 3		–		–		–
Balance at - December 31, 2013	$	92,500	$	206,500	$	299,000

Depreciation and amortization expense was approximately $0 and $15,000 for the years ended December 31, 2014 and 2013, respectively.

~~F-16~~During the year ended December 31, 2014 the Company sold property and equipment in settlement of liabilities and recorded a gain of $6,195.

~~NOTE~~On 9October –8, ~~NOTES~~2013 ~~PAYABLE~~an eviction notice was issued by the landlord for the Company’s facilities at 160 Dupont Street. The Company abandoned the space on October 11 2013. Accordingly the Company recorded a charge of $21,720 for the loss on abandonment of property.

~~Notes~~During ~~payable~~the ~~and~~year ~~accrued~~ended ~~interest at~~ December 31, 2013 the Company sold property and ~~2012~~equipment ~~consist~~and ofrecorded ~~the~~a ~~following:~~gain of $9,486.

	December 31,
	2013			2012
	$	−	(a)	$	15,221	(a)
		75,000	(b)		75,000	(b)
		245,860	(c)		237,006	(c)
		175,841	(d)		165,628	(d)
		83,952	(e)		222,170	(e)
		−	(f)		−	(f)
		12,500	(g)		−	(g)
Notes payable and accrued interest		593,153			715,025
Less: Current maturities		(593,153)			(706,829)
Notes payable and accrued interest, net of Current maturities	$	−		$	8,196

NOTE 8 – PATENTS AND TRADEMARKS

~~(a)~~Patents and trademarks as of December 31, 2014 and 2013 consist of the following:

In February, 2010, the Company acquired a vehicle for business use. Cost of the vehicle is approximately $30,000 and the Company financed the entire cost. The financing term is approximately $500 per month for sixty months based on an annual interest rate of 9%. During 2013 the loan was paid in full.


	2014		2013
Patents	$	104,621	$	104,621
Trademarks		2,720		2,720
Total cost		107,341		107,341
Accumulated amortization		(54,023)		(47,919)
Patents and trademarks, net	$	53,318	$	59,422

~~(b)~~Amortization expense for the years ended December 31, 2014 and 2013 was approximately $6,100.

InThe ~~April~~following ~~2001,~~table presents the Company's ~~issued~~estimate afor ~~$400,000~~amortization ~~promissory~~expense ~~note bearing interest at the rate of 2% per month. In consideration~~ for ~~the~~each ~~issuance~~ of ~~this note, 500,000 shares of common stock were issued to~~ the ~~note~~five ~~holder~~succeeding ~~and~~years ~~a $74,000 debt discount was recorded~~ and ~~fully amortized in the year ended December 31, 2001~~thereafter. The principal balance and accrued interest was payable on September 1, 2001. The Company did not make such payment and was required to issue an additional 100,000 shares to the note holder as a penalty. The Company recorded additional interest expense of $12,300 related to the issuance of these penalty shares.

In October 2007, the Company entered into a settlement agreement with this note holder. Under the settlement agreement, the Company became obligated to make payments of $75,000 each on or before December 31, 2007 and June 30, 2008. The June 20, 2008 payment remains unpaid. In addition, the Company was obligated to issue 2,500,000 shares of common stock to the note holder as settlement for the remaining balance due under the promissory note of $477,934. In January 2008, the Company issued 1,250,000 of the 2,500,000 shares.


Year Ended December 31,
2015	$	6,100
2016		6,100
2017		6,100
2018		6,100
2019		6,100
2020 and thereafter		22,818
	$	53,318

~~(c)~~F-13

~~These~~NOTE ~~are~~9: ~~unsecured~~NET ~~notes~~LOSS ~~bearing~~PER ~~interest~~SHARE atOF ~~rates~~COMMON ranging from 10% to 15% per annum, and have no specific due date for repayment. The outstanding amount of $245,860 and $237,006 include principal of $83,222 and accrued and unpaid interest of $162,638 and $153,784 as of December 31, 2013 and 2012, respectively. No demands for repayment have been made by the note holders. As of December 31, 2013, the Company is not compliant with the repayment terms of the notes and is in technical default.STOCK

~~(d)~~Basic loss per share was computed using the weighted average number of outstanding common shares. Diluted loss per share includes the effect of dilutive common stock equivalents from the assumed exercise of options, warrants, convertible preferred stock and convertible notes. Common stock equivalents were excluded in the computation of diluted loss per share since their inclusion would be anti-dilutive.

InTotal ~~September~~shares ~~2009,~~issuable upon the ~~Company~~exercise ~~entered into agreements with three~~ of ~~the~~warrants ~~Company’s consultants~~ and ~~vendors~~conversion ~~to defer a total in the aggregate~~ of ~~$236,624~~preferred instock ~~compensation~~and ~~owed~~convertible ~~to them. In return, the Company issued to the three vendors each a~~ promissory ~~note~~notes for the ~~deferment.~~years ~~The~~ended ~~notes matured in January 2011 and interest will be accrued at 10% per annum compounded monthly. As of~~ December 31, ~~2009~~2014 ~~the~~and ~~Company~~2013 ~~reclassified~~were ~~$236,624~~as ~~from current liabilities to long term liabilities.~~follows:

In February 2010, one of the above three vendors, requested to convert the note payable of $90,000 principal plus $5,781 accrued interest into the Company’s common stock. The request was approved by Board of Directors on February 19, 2010 and the conversion price was set at $0.055 which was the closing price published on OTCBB.com on the date of the approval of such request. On March 2, 2010, 1,741,464 shares were issued for such conversion.


	December 31,
	2014	2013
Warrants	209,756,376	176,574,286
Convertible promissory notes	17,182,666,484	492,877,340
Convertible preferred stock	612,584,721	1,545,760
Total	18,005,007,581	670,997,386

AsFor ofthe years ended December 31, ~~2013~~2014 and ~~2012~~2013, ~~the Company is reflecting a liability of $175~~139,~~841~~535,868 and ~~$165~~101,~~628 which includes accrued interest of $69~~547,~~217~~890 ~~and $59~~warrants,~~004,~~ respectively. Aswere ofincluded ~~December~~in ~~31,~~loss ~~2013~~per ~~the~~share ~~Company~~as istheir ~~not~~exercise ~~compliant~~price ~~with~~was ~~the~~determined ~~repayment~~to ~~terms~~be ~~of the notes and is in technical default~~nominal.

~~(e)~~Fair Value

InASC ~~2012,~~820 ~~the~~“Fair ~~Company~~Value ~~raised~~Measurements ~~$75~~and Disclosures” defines fair value,~~000~~ ~~through~~establishes ~~issuing~~a ~~multiple~~framework ~~promissory~~for ~~notes~~measuring fair value and requires enhanced disclosures about fair value measurements. ~~These~~As ~~notes~~defined ~~bear~~in ~~interest~~ASC ~~rate~~820, offair ~~10%~~value ~~per~~is ~~annum~~the ~~and~~price ~~are~~that ~~due~~would ~~and~~be ~~payable~~received to sell an asset or paid to transfer a liability in an orderly transaction between ~~October~~market 19participants ~~and~~at ~~October~~the ~~26,~~measurement ~~2012~~date. AsThe ofStandard ~~December~~clarifies ~~31,~~that ~~2012,~~the exchange price is the ~~Company~~price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date and emphasizes that fair value is ~~reflecting~~a ~~$76,452~~market-based ~~which~~measurement ~~includes~~and ~~$1,452~~not ofan ~~accrued~~entity-specific ~~interest~~measurement.

~~F-17~~ASC 820 establishes the following hierarchy used in fair value measurements and expands the required disclosures of assets and liabilities measured at fair value:

~~At the request of multiple lenders, the Company converted $207,770 of note payable and accrued interest to convertible notes payable in 2012.~~·

InLevel ~~September,~~1 at– ~~the~~Inputs ~~request~~use ofquoted ~~the~~prices ~~lender, the Company converted $100,000 of convertible notes payable to $185,000 of notes payable. The newly issued notes payable bear interest at rates of 6% and have maturity dates~~ in ~~December~~active ~~2012~~markets ~~through~~for ~~January~~identical ~~2013.~~assets ~~The~~or ~~Company~~liabilities isthat ~~required to repay~~ the ~~notes~~Company ~~payable~~has ~~in 5 installments with~~ the ~~final~~ability ~~payment~~to ~~of $65,000 in January 2013~~access. ~~As of December 31, 2012, the Company repaid $45,337 principal which consist $20,000 cash payment and $25,337 in issuing 8,774,761 shares of common stock.~~

During the year ended December 31, 2013, at the request of a lender the Company repaid $139,663 of debt and accrued interest for $14,200 in cash and the issuance of 23,021,012 shares of common stock for the settlement of $125,463 of the remaining balance.·

AsLevel of2 ~~December~~– ~~31,~~Inputs ~~2012~~use ~~and~~other ~~2011,~~inputs ~~the~~that ~~Company~~are isobservable, ~~reflecting~~either adirectly ~~liability~~or ofindirectly. ~~$83,952~~These ~~and~~inputs ~~$222,170~~include ~~which~~quoted ~~includes~~prices ~~accrued~~for ~~interest~~similar ofassets ~~$8,952~~ and ~~$7,507,~~liabilities ~~respectively.~~in Asactive ofmarkets ~~December~~as ~~31,~~well ~~2013~~as ~~the~~other ~~Company~~inputs issuch ~~not~~as ~~compliant~~interest ~~with~~rates ~~the~~and ~~repayment~~yield ~~terms~~curves ofthat ~~the~~are ~~notes~~observable ~~and~~at iscommonly inquoted ~~technical default~~intervals.

~~(f)~~·

OnLevel ~~December~~3 ~~16,~~– ~~2011,~~Inputs ~~the~~are ~~Company~~unobservable ~~issued a $140~~inputs,~~000~~ ~~promissory~~including ~~note~~inputs ~~bearing~~that ~~interest~~are atavailable ~~the rate of 15% per annum. This note shall be payable~~ in ~~one~~situations ~~monthly~~where ~~installment~~there ~~with~~is ~~the first such installment to be paid on the 15th day of March 2012. The Company may also~~little, atif ~~its discretion~~any, ~~permit~~market ~~repayment~~activity tofor ~~be made by assignment of its accounts receivable due from~~ the ~~State~~related ofasset ~~Alaska~~or liability.

AsIn ofinstances ~~December~~where ~~31,~~inputs ~~2011~~used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the ~~Company~~lowest level input that is ~~reflecting~~significant ato ~~liability~~the ofvaluation. ~~$140,978~~The ~~which~~Company’s ~~includes~~assessment ~~accrued~~of ~~interest~~the significance of ~~$978~~particular inputs to these fair measurements requires judgment and considers factors specific to each asset or liability.

~~On March 12, 2012, the Company repaid the Note Holder, principal and interest of total $145,794.~~F-14

OnLiabilities ~~September~~measured ~~17,~~at ~~2013,~~fair ~~the~~value ~~Company~~on ~~issued~~ a ~~$12,500~~recurring ~~promissory~~basis ~~note bearing interest~~ at ~~the rate of 5% per annum. This note matures on~~ December 31, 2014. Asand ~~of December 31,~~ 2013 ~~the~~are ~~outstanding~~as ~~principal balance on the note was $12,500.~~follows:

(g)


	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance

Embedded conversion feature	$	–	$	–	$	206,500	$	206,500
Warrant liability	$	–	$	–	$	92,500	$	92,500
Balance at December 31, 2013	$	–	$	–	$	299,000	$	299,000

Embedded conversion feature	$	–	$	–	$	2,343,200	$	2,343,200
Warrant liability	$	–	$	–	$	11,400	$	11,400
Balance at December 31, 2014	$	–	$	–	$	2,354,600	$	2,354,600

AsFinancial ofassets ~~December~~are ~~31,~~considered ~~2013~~Level 3 when their fair values are determined using pricing models, ~~the~~discounted ~~Company~~cash flow methodologies or similar techniques and at least one significant model assumption or input is inunobservable. ~~technical~~The ~~default~~Company’s Level 3 liabilities consist of derivative liabilities associated with convertible debt that contains an indeterminable conversion share price and the ~~repayment~~tainted ~~terms~~warrants ofas the ~~notes~~Company ~~payable~~cannot ~~outstanding~~determine if it will have sufficient authorized common stock to settle such arrangements.

~~NOTE~~The 10following –table ~~CONVERTIBLE~~provides ~~PROMISSORY~~a ~~NOTES~~summary ~~PAYABLE~~of the changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs during the year ended December 31, 2014 and 2013.

(a)


				Conversion
		Warrants			Feature		Total
Balance at – January 1, 2013	$		39,300	$	224,000	$	263,300

Included in stock based compensation			4,500		–		4,500
Change in fair value of derivative liability			(297,100)		(95,900)		(393,000)
Included in liabilities (debt discount)			114,000		240,000		354,000
Included in liabilities (derivative expense)			209,800		35,400		245,200
Included in stockholder's equity			22,000		(197,000)		(175,000)
Transfers in and /or out of Level 3			–		–		–
Balance at - December 31, 2013	$		92,500	$	206,500	$	299,000

Included in stock based compensation			–		–		–
Change in fair value of derivative liability			(118,400)		1,796,000		1,677,600
Included in liabilities (debt discount)			28,200		482,856		511,056
Included in liabilities (derivative expense)			10,900		254,344		265,244
Included in stockholder's equity			(1,800)		(396,500)		(398,300)
Transfers in and /or out of Level 3			–		–		–
Balance at - December 31, 2014	$		11,400	$	2,343,200	$	2,354,600

As of December 31, 2010, the Company has cumulative net liabilities of $428,475, net of $241,657 debt discount. The liability includes $645,000 unpaid convertible notes principal and $25,132 accrued interest for all the convertible notes the Company entered into prior to January 1, 2011. These notes mature in one year from the date issued and bear interest at 10% per annum and are convertible at the option of the holder in to shares of common stock. The conversion prices range from $0.044 to $0.07. As of January 1, 2011, the Company was not in compliance with the repayment terms of these notes.F-15

InNOTE 2011, the Company raised $300,000 through debt financing from multiple lenders. The Company issued each lender a convertible promissory note in the principal amount of money lender loaned to the Company. The promissory note matures in one year and bears interest at 10%: ~~per~~NOTES annum and is convertible at the option of the holder in to shares of common stock. The conversion prices range from $0.067 to $0.157. In addition the Company granted 634,229 warrants to the note holders. The warrants have a life of 5 years and are fully vested on the date of the grant, the exercise price of the warrants ranges from $0.084 to $0.1884.PAYABLE

~~The~~Notes ~~Company~~payable ~~accounted for the issuance of the convertible promissory note in accordance with ASC 815 ”Derivatives~~ and ~~Hedging”.~~accrued ~~Accordingly,~~interest ~~the warrants and the embedded conversion option of the convertible note are recorded as derivative liabilities~~ at ~~their~~December ~~fair market value and were marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of these note $300~~31,~~000~~ ~~was~~2014 ~~recorded net of a discount of $57,638. The debt discount consisted of approximately $13,719 related to the fair value of the embedded conversion option~~ and ~~approximately~~2013 ~~$43,919~~consist ~~related to the fair value~~ of the ~~warrants. The debt discount was being charged to interest expense ratably over the term of the convertible note.~~following:

During the year ended December 31, 2011, multiple lenders requested to convert total aggregated $125,000 principal plus accrued interest of $14,097 into the Company’s common stock. The Company issued total aggregated 2,539,747 shares of common stock in connection with such conversions.


		December 31
		2014			2013
	$	75,000	(a)	$	75,000	(a)
		254,714	(b)		245,860	(b)
		171,260	(c)		175,841	(c)
		91,452	(d)		83,952	(d)
		−	(e)		12,500	(e)
		90,000	(f)		−	(f)
		105,479	(g)		−	(g)
		15,026	(h)		−	(h)
		39,600	(i)		−	(i)
Notes payable and accrued interest		842,531			593,153
Less: Current maturities		(842,531)			(593,153)
Notes payable and accrued interest, net of Current maturities	$	−		$	−

~~F-18~~(a)

In ~~2012,~~April ~~the Company raised $768~~2001,~~500~~ ~~through debt financing from multiple lenders. The Company issued each lender a convertible promissory note in~~ the ~~principal amount of money lender loaned to the~~ Company. ~~The Company~~ issued ~~the lender for each loan~~ a ~~convertible~~$400,000 promissory note bearing interest at ~~rates~~the rate of 82% toper ~~12%~~month. ~~per~~In ~~annum~~consideration ~~with~~for ~~maturity~~the ~~dates~~issuance of ~~September~~this 15note, ~~2012 to November 16~~500,000 ~~2013.~~shares ~~The~~of ~~loans~~common ~~and~~stock ~~accrued~~were ~~interest~~issued ~~are~~ to ~~be paid on~~ the ~~maturity dates. Each loan is evidenced by the promissory~~ note ~~the~~holder ~~Company~~and ~~issued~~a to$74,000 ~~the~~debt ~~lender~~discount ~~which~~was ~~contains~~recorded ~~conversion~~and ~~clauses~~fully ~~that~~amortized ~~allow~~in the ~~lenders~~year ~~the~~ended ~~option~~December to31, ~~convert~~2001. ~~the~~The ~~loan~~principal ~~amount~~balance ~~plus~~and ~~all~~ accrued ~~and unpaid~~ interest ~~due~~was ~~under~~payable ~~the~~on ~~note~~September ~~into~~1, ~~common stock~~2001. ~~Each~~The ofCompany ~~the~~did ~~notes~~not ~~contains~~make ~~variable~~such ~~conversion~~payment ~~prices representing discount rate between 5%~~ and ~~50%~~was ofrequired ~~market~~to ~~price.~~issue Inan ~~addition,~~additional ~~the Company also issued total 1~~100,~~933,333~~000 ~~warrants~~shares to the ~~lenders~~note toholder ~~purchase~~as ~~additional~~a ~~shares of common stock at exercise of $0~~penalty.~~072~~ toThe ~~$0.05.~~Company ~~These~~recorded ~~warrants~~additional ~~have~~interest ~~term~~expense of 5$12,300 ~~years.~~related Into ~~addition~~the aissuance ~~note-holder received 4,375,000 shares~~ of ~~common~~these ~~stock~~penalty ~~in consideration for entering into the note~~shares.

~~The~~In ~~Company~~October ~~accounted~~2007, ~~for~~ the ~~issuance~~Company ofentered ~~the~~into ~~convertible~~a ~~promissory~~settlement ~~note~~agreement ~~in accordance~~ with ~~ASC~~this ~~815~~note ~~“Derivatives~~holder. ~~and~~Under ~~Hedging”.~~the ~~Accordingly~~settlement agreement, the ~~warrants~~Company ~~and~~became ~~the~~obligated ~~embedded~~to ~~conversion~~make ~~option~~payments of ~~the~~$75,000 ~~convertible~~each ~~note~~on ~~are~~or ~~recorded~~before asDecember ~~derivative~~31, ~~liabilities~~2007 atand ~~their~~June ~~fair~~30, ~~market~~2008. ~~value~~The ~~and~~June ~~were~~30, ~~marked~~2008 topayment ~~market~~remains ~~through~~unpaid. ~~earnings~~In ataddition, the ~~end~~Company was obligated to issue 2,500,000 shares of ~~each~~common ~~reporting~~stock ~~period.~~to ~~The~~the ~~gross~~note ~~proceeds~~holder ~~from~~as settlement for the ~~sale~~remaining ofbalance ~~these~~due ~~notes~~under ~~were~~the ~~recorded~~promissory ~~net~~note of a$477,934. ~~discount~~In January 2008, the Company issued 1,250,000 of ~~$649~~the 2,~~100~~500,000 shares. ~~The~~As ~~debt~~of ~~discount~~December ~~was~~31, ~~being~~2014, ~~charged~~the toCompany ~~interest~~is ~~expense~~not ~~ratably~~compliant ~~over~~with the ~~term~~repayment terms of the ~~convertible~~notes ~~note~~and is in technical default.

~~In addition, the Company incurred approximately $130,000 of financing cost related to these transactions which will be amortized over the term of the loans.~~(b)

OnThese ~~October~~are 4,unsecured ~~2013,~~notes atbearing ~~the~~interest ~~request~~at ofrates ~~the~~ranging ~~lender~~from ~~due~~10% to ~~default,~~15% ~~the~~per ~~Company converted $303~~annum,~~499~~ ~~of convertible notes~~ and ~~accrued~~have ~~interest~~no ~~into~~specific adue ~~new~~date ~~convertible~~for ~~note~~repayment. inThe ~~the~~outstanding amount of $~~531~~254,~~431.~~714 ~~The~~and ~~increase~~$245,860 ininclude principal ~~was~~of ~~due to amounts charged by the lender for penalties~~$83,222 ~~interest,~~and ~~legal~~accrued and ~~other~~unpaid ~~fees. The newly issued note bears~~ interest ~~at rates~~ of ~~18%~~$171,492 ~~per annum~~ and is$162,638 ~~due~~as ~~on demand. The lender may convert all or any portion~~ of ~~the~~December ~~outstanding principal~~31, ~~accrued~~2014 and ~~unpaid interest~~2013, ~~and~~respectively. ~~any~~No ~~other~~demands ~~sums~~for ~~due~~repayment ~~and~~have ~~payable~~been ~~under~~made ~~the~~by ~~Revolving Note into shares of~~ the ~~Company’s~~note ~~common~~holders. ~~stock~~As ~~at a conversion price equal to 85%~~ of ~~the~~December ~~lowest daily volume weighted average price of the Company’s common stock during the five trading days immediately prior to such applicable conversion date~~31, in each case subject to the lender not being able to beneficially own more than 4.99% of our outstanding common stock upon any conversion. The conversion price is subject to anti-dilution protection in the event that the Company issues additional equity securities at a price less than the conversion price. On March 10, 2014, ~~TCA accelerated~~ the ~~outstanding~~Company ~~principal~~is ~~balance,~~not ~~interest,~~compliant ~~calculated~~with at the ~~default~~repayment ~~rate~~terms of ~~18%, and all sums due under~~ the ~~original~~notes ~~note~~ and ~~any~~is ~~amendments.~~in ~~(see~~technical ~~Note 13 – Litigation)~~default.

During the year ended December 31, 2012, multiple lenders requested to convert total aggregated $664,576 principal plus accrued interest of $29,955 into the Company’s common stock. The Company issued total aggregated 146,134,552 shares of common stock in connection with such conversions.(c)

~~During~~In September 2009, the ~~year~~Company ~~ended~~entered ~~December~~into ~~31,~~agreements ~~2013,~~with ~~multiple~~three ~~lenders~~of ~~requested~~the Company’s consultants and vendors to ~~convert~~defer a total ~~aggregated~~in the aggregate of $~~342~~236,~~151~~624 ~~principal~~in ~~plus~~compensation ~~accrued~~owed ~~interest~~to ofthem. ~~$57~~In return,~~519~~ ~~into~~ the Company’s ~~common~~issued ~~stock~~to the three vendors each a promissory note for the deferment. The ~~Company~~notes ~~issued~~matured ~~total~~in ~~aggregated~~January ~~84,053,707~~2011 ~~shares~~and interest will be accrued at 10% per annum compounded monthly. As of ~~common~~December ~~stock~~31, in2009 ~~connection~~the ~~with~~Company ~~such~~reclassified ~~conversions~~$236,624 from current liabilities to long term liabilities.

~~During~~In February 2010, one of the ~~year~~above ~~ended~~three ~~December~~vendors, 31requested to convert the note payable of $90,000 ~~2013~~principal plus $5,781 accrued interest into the Company’s ~~repaid~~common ~~principal~~stock. The request was approved by Board of Directors on February 19, 2010 and the conversion price was set at $320.055 which was the closing price published on OTCBB.com on the date of the approval of such request. On March 2,~~500~~ 2010, 1,741,464 shares were issued for such conversion.

AsDuring ofthe year ended December 31, ~~2013,~~2014 the Company ismade ~~reflecting~~payments ~~liabilities~~to ofone ~~$1,055,272~~individual ~~including~~totaling ~~accrued interest of~~ $~~148~~15,~~843~~000 ~~and~~(See ~~the~~Note ~~Company~~14 is– ~~not~~Settlement inAgreement ~~compliance~~– ~~with the repayment terms with certain notes and is currently in technical default~~Kochan).

~~(b)~~As of December 31, 2014 and 2013, the Company is reflecting a liability of $171,260 and $175,841 which includes accrued interest of $79,636 and $69,217, respectively. As of December 31, 2014 the Company is not compliant with the repayment terms of the notes and is in technical default.

On August 3, 2011, the Company borrowed $125,000 from a private investor and issued to the investor a secured convertible promissory note in the principal amount of $125,000. The note matures on December 1, 2011 and bears interest at a stated rate of 8% per annum and the note is convertible into shares of common stock of the Company at a 30% discount from the current market price (as defined in the Note). The Company has the right to redeem the Note at any time by paying the outstanding principal amount of the Note multiplied by a premium according to the following schedule, plus all accrued interest: 120% of the outstanding principal amount if redeemed within 90 days after the issuance date; 125% of the outstanding principal amount if redeemed within 180 days after the issuance date; 130% of the outstanding principal amount if redeemed after 180 days after the issuance date. The Note is further guaranteed by two officers of the Company and secured by stock pledge agreements with each officer, pursuant to which each of the officers has pledged 2,000,000 shares of the Company’s common stock owned by them as collateral to secure payment of the Note. In connection with the issuance of the Note, the Company also issued to the investor a common stock purchase warrant, expiring August 3, 2018, to purchase 1,250,000 shares of common stock at an exercise price of $0.10 per share.F-16

~~F-19~~(d)

~~The~~During ~~Company~~September ~~accounted~~2012, ~~for~~at the ~~issuance~~request of the ~~convertible~~lender, ~~promissory~~the ~~notes~~Company inconverted ~~accordance~~$100,000 ~~with~~of ~~ASC~~convertible ~~815”~~notes ~~Derivatives~~payable ~~and~~to ~~Hedging.” Accordingly~~$185,000 ~~the warrants and the embedded conversion option~~ of ~~the~~notes ~~convertible~~payable. ~~note~~The ~~are~~newly ~~recorded~~issued asnotes ~~derivative~~payable ~~liabilities~~bear interest at ~~their~~rates ~~fair~~of ~~market~~6% ~~value~~ and ~~are~~have ~~marked~~maturity todates ~~market~~in ~~through~~December ~~earnings~~2012 atthrough ~~the~~January ~~end of each reporting period~~2013. The ~~gross~~Company ~~proceeds~~is ~~from~~required ~~the~~to ~~sale~~repay of the ~~note~~notes ofpayable ~~$125,000~~in ~~was~~5 ~~recorded~~installments ~~net~~with ofthe afinal ~~discount~~payment of $~~125~~65,000. ~~The~~in ~~debt~~January ~~discount~~2013. ~~consisted~~As of ~~$83~~December 31,~~900~~ to2012, the ~~fair~~Company ~~value~~repaid ~~of the warrants and~~ $4145,~~100~~337 ~~related~~principal towhich ~~the~~consist ~~fair value of the embedded conversion option. In addition to the~~ $~~125~~20,000 ~~mentioned~~cash ~~above,~~payment ~~the~~and ~~Company recorded a charge in the amount of~~ $1525,~~900~~337 ~~which represents the fair value of conversion options~~ in ~~excess~~issuing of8,774,761 ~~the~~shares ~~debt discount recorded. The debt discount will be charged to interest expense ratably over the term~~ of ~~the~~common ~~convertible notes~~stock.

InDuring ~~2012~~the year ended December 31, 2013, at the ~~lender~~request ~~requested~~of toa ~~convert~~lender ~~principal~~the Company repaid $~~125~~139,~~000~~663 ~~plus~~of debt and accrued interest offor $614,~~685~~200 ~~into~~in ~~the~~cash ~~Company’s~~and ~~common~~the ~~stock.~~issuance ~~The~~of ~~Company issued 3~~23,~~581~~021,~~697~~012 shares of common stock infor ~~connection~~the ~~with~~settlement ~~such~~of ~~conversion~~$125,463 of the remaining balance.

~~(c)~~In addition, during 2012, the Company raised $75,000 through issuing multiple promissory notes. These notes bear interest rate of 10% per annum and were due and payable between October 19 and October 26, 2012.

OnAs ~~January~~of 8December 31, ~~2013~~2014 ~~for~~and ~~gross proceeds of $25~~2013,~~000~~ the Company ~~issued~~is areflecting ~~convertible promissory note bearing interest at the rate of 10% per annum with~~ a ~~maturity~~liability ~~date~~ of ~~January 8~~$91,452 ~~2014. The loan~~ and ~~accrued~~$83,952 ~~interest~~which ~~are~~includes ~~to be paid on the maturity date. The promissory note contains conversion clauses that allow the lender the option to convert the loan amount plus all~~ accrued ~~and unpaid~~ interest ~~due under the note into common stock at a conversion rate~~ of $~~0.03~~16,452 ~~per~~and ~~share. In addition~~$8,952, ~~the~~respectively. ~~Company~~As ~~also~~of ~~issued~~December 131,~~666,667~~ ~~warrants~~2014 to the ~~lender~~Company tois ~~purchase~~not ~~additional~~compliant ~~shares~~with ofthe ~~common~~repayment ~~stock~~terms ~~at an exercise price~~ of ~~$0.0036~~the ~~per~~notes ~~share. These warrants are fully vested~~ and ~~have~~is ain ~~term~~technical ~~of 5 years~~default.

The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $13,600. The debt discount relates to the beneficial conversion feature embedded in the conversion option and the fair value of the warrants attached to the notes. The debt discount is charged to interest expense ratably over the term of the convertible note.(e)

~~During~~On September 17, 2013, the ~~year~~Company ~~ended~~issued a $12,500 promissory note bearing interest at the rate of 5% per annum. The note matures on December 31, ~~2013~~2014. On July 24, 2014 the note holder requested to convert total aggregated $2512,~~000~~500 principal ~~plus accrued interest of $167~~, into the Company’s common stock. The Company issued total aggregated 811,~~388~~363,~~890~~636 shares of common stock in connection with such conversion.

(df)

OnFrom ~~May~~January 1615, ~~2013,~~2014 ~~the~~through ~~Company~~February in23, ~~conjunction~~2014 ~~with~~the anCompany ~~existing~~issued ~~note~~Promissory ~~holder~~Notes ~~entered~~in ~~into a new loan agreement with a new lender for~~ the ~~sale~~aggregate ~~and~~principal ~~transfer~~amount of a $2090,000 ~~note~~to ~~plus~~seven ~~$4,895 accrued interest this note matured and was in technical default with the repayment provisions of the terms of the agreement~~lenders. The ~~Company~~Notes ~~cancelled~~bear ~~the~~no ~~original~~interest ~~note~~ and ~~issued~~mature ~~the~~one ~~new~~year ~~lender~~from athe ~~convertible promissory note for $29,895 bearing interest rate of 10% per annum with a maturity~~ date of ~~January 1, 2014~~issuance. ~~The~~A ~~loan~~UCC ~~and~~financing ~~accrued~~statement ~~interest~~was ~~are~~filed ~~to be paid~~ on the ~~maturity~~system ~~date.~~operating ~~The~~at ~~promissory note contains conversion clauses that allow~~ the ~~lender~~Landfill ~~the~~as ~~option~~security tofor ~~convert~~ the ~~loan~~Notes. ~~amount~~As ~~plus~~of ~~all~~September ~~accrued~~30, ~~and~~2014 ~~unpaid interest due under~~ the ~~note~~outstanding ~~into~~principal ~~common~~balance ~~stock~~on ~~at a conversion rate of~~ the ~~lesser~~notes ofwas a$90,000.) ~~60%~~As of ~~the~~February ~~low~~23, ~~traded~~2015, ~~price of~~ the Company’s ~~common~~is ~~stock~~not ~~for~~compliant ~~the~~with ~~twenty trading day period immediately preceding~~ the ~~date~~repayment atterms ~~the~~of ~~which Holder, by written notice gives notice to~~ the ~~Company~~notes ofand ~~its~~is ~~election~~in ~~to convert or b~~default.) ~~$0.01 per share.~~ The Company ~~recorded~~intends ~~$5,000~~to ~~loan~~request ~~cost~~that ~~in connection with~~ the ~~increase~~maturity date of ~~the~~these ~~principal~~notes ~~included~~be infurther ~~deferred~~extended, ~~financing~~however, ~~costs.~~there ~~The~~can ~~loan~~be ~~cost~~no ~~will~~assurance bethat ~~amortized~~a ~~over~~further ~~the~~extension ~~life~~will ofbe ~~the loan~~granted.

The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $19,930. The debt discount relates to the beneficial conversion feature embedded in the conversion option. The debt discount is charged to interest expense ratably over the term of the convertible note.(g)

~~During~~On ~~the~~April ~~year~~25, 2014 the Company ~~was~~issued ~~charged~~a promissory note for $ 100,000. The note matures on April 30, 2015 with the stated interest rate at 8%. As of December 31, 2014, outstanding principal and ~~penalties~~accrued byinterest on the note ~~holder~~was ~~totaling~~$100,000 and $335,~~515~~479, respectively.

During the year ended December 31, 2013, the note holder requested to convert total aggregated $29,895 principal plus accrued interest and penalties of $15,435, into the Company’s common stock. The Company issued total aggregated 10,000,000 shares of common stock in connection with such conversion.(h)

~~(e)~~On December 23, 2014 the Company issued a promissory note for $ 15,000 to Southridge II, a related party. The note matures on March 31, 2015 with the stated interest rate at 8%. As of December 31, 2014, outstanding principal and accrued interest on the note was $15,000 and $26, respectively. As of March 31, 2015, the Company is not compliant with the repayment terms of the notes and is in default. The Company intends to request that the maturity date of these notes be further extended, however, there can be no assurance that a further extension will be granted.

~~On May 22, 2013, the Company entered into a loan agreement~~ (~~“credit facility~~i) for the principal sum of $335,000 less any fees. The components of the credit facility are $300,000 proceeds of the loan plus $35,000 original issue discount. The maturity date is one year from the effective date of each draw made by the Company. The loan and accrued interest are to be paid on the maturity date. In addition after 90 days that the amount drawn is outstanding a one-time interest charge of 12% will be charged and added to the principal sum. The promissory note contains conversion clauses that allow the lender, at any time from 180 days after the Effective Date, the option to convert the amount payable plus all accrued and unpaid interest due under the agreement into common stock at a conversion price per share of the lesser of $0.018 or 60% of the lowest trade price in the 25 trading days preceding the conversion.

~~F-20~~In December 2014, the Company entered into a finance agreement with IPFS Corporation (“IPFS”). Pursuant to the terms of the agreement, IPFS loaned the Company the principal amount of $39,600, which would accrue interest at 7.25% per annum, to partially fund the payment of the premium of the Company’s Directors and Officers liability insurance. The agreement requires the Company to make nine monthly payments of $4,534, including interest starting on January 15, 2015.

~~The~~As ~~Company received net cash proceeds~~ of ~~$65,000~~December ~~upon entering the agreement on May 22~~31, ~~2013 and recorded $6~~2014,~~500~~ ~~loan~~the ~~cost~~outstanding inbalance ~~connection~~related ~~with~~to this ~~transaction.~~finance ~~The~~agreement ~~loan~~was ~~costs have been included in deferred financing costs and will be amortized through the maturity date of the loan~~$39,600.

The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $41,000. The debt discount relates to the beneficial conversion feature embedded in the conversion option. The debt discount is charged to interest expense ratably over the term of the convertible note. On August 20, 2013, the Company recorded a $8,580 one-time interest expense and added such amount to the principal of the May 22, 2013 draw when the Company failed to repay the loan within 90 days.(j)

OnIn ~~August~~February, 222010, ~~2013~~ the Company ~~drew~~acquired ~~down~~a ~~from~~vehicle ~~the~~for ~~credit~~business ~~facility~~use. ~~$35,500~~Cost ~~and~~of ~~received~~the ~~net~~vehicle ~~cash~~is ~~proceeds~~approximately of $30,000 ~~after~~and the ~~associated legal fees. The~~ Company ~~recorded~~financed ~~$5,500 loan cost in connection with this transaction and~~ the ~~loan~~entire cost ~~will be amortized through the maturity date of the loan~~. The ~~gross~~financing ~~proceeds~~term ~~from~~is ~~the~~approximately ~~sale~~$500 ofper ~~the~~month ~~note~~for ~~are~~sixty ~~recorded~~months ~~net~~based ofon aan ~~debt~~annual ~~discount~~interest rate of ~~$29,000~~9%. ~~The~~During ~~debt~~2013 ~~discount relates to~~ the ~~beneficial~~loan ~~conversion~~was ~~feature~~paid ~~embedded~~ in ~~the conversion option~~full. ~~The debt discount is charged to interest expense ratably over the term of the convertible note.~~

On October 23, 2013, the Company drew down from the credit facility $55,000 and received net cash proceeds of $50,000 after the associated legal fees. The Company recorded $5,000 loan cost in connection with this transaction and the loan cost will be amortized through the maturity date of the loan. The gross proceeds from the sale of the note are recorded net of a debt discount of $55,000. The debt discount relates to fair value of the conversion option of the note. The debt discount is charged to interest expense ratably over the term of the convertible note. The fair value of the conversion option on the date of issuance in excess of the face amount of the note was recorded to interest expense on the date of issuance.F-17

OnNOTE ~~July~~ 11,: ~~2013,~~CONVERTIBLE ~~the~~PROMISSORY ~~Company~~NOTES in conjunction with an existing note holder entered into a new loan agreement with a new lender for the sale and transfer of a $20,000 promissory note plus $5,095 accrued interest this note matured and was in technical default with the repayment provisions of the terms of the agreement. The Company cancelled the original promissory note and issued the new lender a convertible promissory note for $25,000 with a maturity date of September 30, 2013. The convertible promissory note contains conversion clauses that allow the lender the option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock at a conversion rate of the lesser of (a.) $0.015 or (b) 50% of the lowest closing bid price for the Company’s common stock during the twenty (20) trading day period immediately preceding the date at the which Holder, by written notice gives notice to the Company of its election to convert. The Company recorded $33,000 debt discount and the excess fair value of 8,000 was charged to interest expense upon the consummation of the arrangement.PAYABLE

During the year ended December 31, 2013, the note holder requested to convert total aggregated $25,470 principal plus accrued interest of $0, into the Company’s common stock. The Company issued total aggregated 4,209,917 shares of common stock in connection with such conversion.(a)

~~(f)~~As of December 31, 2010, the Company has cumulative net liabilities of $428,475, net of $241,657 debt discount. The liability includes $645,000 unpaid convertible notes principal and $25,132 accrued interest for all the convertible notes the Company entered into prior to January 1, 2011. These notes mature in one year from the date issued and bear interest at 10% per annum and are convertible at the option of the holder in to shares of common stock. The conversion prices range from $0.044 to $0.07. As of January 1, 2011, the Company was not in compliance with the repayment terms of these notes.

AOn ~~convertible~~November ~~promissory~~7, 2014, a note-holder ~~was~~entered ~~issued~~into ona ~~August~~Securities ~~19,~~Transfer ~~2013~~Agreement inpursuant to which the ~~amount~~note-holder ofsold $25,000 toof aprincipal ~~lender.~~plus ~~The~~accrued ~~note matures on August 19, 2014 with~~ interest atof ~~10%.~~the ~~The~~Original ~~note~~Notes isand ~~convertible into~~ the ~~Company’s~~rights ~~common~~associated ~~stock~~with atthe apurchase ~~conversion price of $0~~portion.~~015~~ ~~per~~The ~~shares.~~Company ~~In addition, 8,333,333 Warrants were~~ issued at a ~~price~~Replacement ofNote ~~$.003~~to ~~per~~the ~~share.~~purchaser ~~The~~along ~~warrants~~the ~~are~~same ~~fully~~terms ~~vested~~as ~~and~~the ~~have~~Purchased aNote ~~life~~with ofthe ~~five~~following ~~years~~amendments: ~~from date of issuance.~~

The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $121,400. The debt discount relates to the beneficial conversion feature embedded in the conversion option and the fair value of the warrants attached to the notes. The excess fair value of $96,400 was charged to interest expense on the date of the agreement and the debt discount is charged to interest expense ratably over the term of the convertible note.·

The replacement note shall be convertible into the Company’s common stock, at any time at the option of the Purchaser, at an initial conversion price per share equal to fifty percent (gthe “Discount”) of the lowest closing bid price for the Company’s common stock during the fifteen trading days immediately preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”) (“Initial Conversion Price”; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Closing Bid Price, then the Purchase Price shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price, and provided further, that if the Company’s common stock becomes chilled by the Deposit Trust Corporation (DTC) at the time that any portion of the principal and interest of the Replacement Note is converted by Holder, than the Discount shall be adjusted to sixty percent for so long as the Common Stock is chilled. For purposes of this Agreement, the Clearing Date shall be on the date in which the conversion shares are deposited into the Purchaser’s brokerage account and Purchaser’s broker has confirmed with Purchaser the Purchaser may execute trades of the conversion shares.

On July 25, 2013, the Company was advanced $10,000 from a lender and subsequently on August 16, 2013, the lender funded another $25,000. The Company issued a convertible promissory note for the total amount of $35,000 to the lender. The note matures in one year from the issuance date with interest at 10%. The note is convertible into the Company’s common stock at a conversion price of $0.005 per shares. In addition, 5,833,333 warrants were issued with an exercise price of $. 006 per share. The warrants are fully vested and have a life of 5 years from date of issuance.·

~~F-21~~The Replacement Note shall have a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.

The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $159,300. The debt discount relates to the beneficial conversion feature embedded in the conversion option and the fair value of the warrants attached to the notes. The excess fair value of $124,300 was charged to interest expense on the date of the agreement and the debt discount is charged to interest expense ratably over the term of the convertible note·

~~(h)~~The Company shall bear any and all miscellaneous expenses that may arise as a result of conversion and delivery of shares of common stock in respect of the Replacement Note.

OnIn ~~September~~2011, 5the Company raised $300,000 ~~2013~~through ~~the~~debt financing from multiple lenders. The Company issued each lender a convertible promissory note ~~for~~in $the ~~5,000~~principal amount of money lender loaned to the Company. The promissory note matures in one year ~~from~~and ~~the~~bears ~~issuance date with the stated~~ interest ~~rate~~ at 10%. ~~The~~per ~~note~~annum and is convertible ~~into~~at the ~~Company’s~~option of the holder in to shares of common stock. atThe a conversion ~~price~~prices ofrange from $0.~~005~~067 ~~per~~to ~~shares~~$0.157. In addition, ~~200~~the Company granted 634,~~000~~229 ~~Warrants~~warrants ~~were~~to ~~issued~~the ~~with~~note anholders. ~~exercise~~The ~~price~~warrants ofhave ~~$0.006~~a ~~per~~life ~~share.~~of ~~The~~5 ~~warrants~~years and are fully vested ~~and~~on ~~have~~the adate ~~life~~of the grant, the exercise price of 5the ~~years~~warrants ranges from ~~date~~$0.084 ofto ~~issuance~~$0.1884.

The Company accounted for the issuance of the convertible promissory note ~~and the warrants attached to the note~~ in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible ~~notes~~note are recorded as derivative liabilities at their fair market value and ~~are~~were marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of ~~the~~these note ~~are~~$300,000 was recorded net of a discount of $557,~~700~~638. The debt discount ~~relates~~consisted ~~to the beneficial conversion feature embedded in the conversion option and the fair value~~ of ~~the~~approximately ~~warrants~~$13,719 ~~attached~~related to the ~~notes. The excess~~ fair value of ~~$700 was charged to interest expense on~~ the ~~date~~embedded ofconversion ~~the~~option ~~agreement~~ and ~~the~~approximately ~~debt~~$43,919 ~~discount~~related ~~is charged~~ to ~~interest expense ratably over~~ the ~~term~~fair value of the ~~convertible note~~warrants. The debt discount iswas being charged to interest expense ratably over the term of the convertible note.

~~(i)~~During the year ended December 31, 2011, multiple lenders requested to convert total aggregated $125,000 principal plus accrued interest of $14,097 into the Company’s common stock. The Company issued total aggregated 2,539,747 shares of common stock in connection with such conversions.

On September 12, 2013 the Company issued a convertible promissory note for $ 100,000. The note matures in one year from the issuance date with the stated interest rate at 10%. The note is convertible into the Company’s common stock at a conversion price of $0.0085 per share. In addition, 10,416,666 warrants were issued with an exercise price of $0.0096 per share. The warrants are fully vested and have a life of 5 years from date of issuance.F-18

~~The~~On ~~Company~~April ~~accounted~~23, ~~for~~2014, ~~the~~a ~~issuance~~note-holder ofentered ~~the~~into ~~convertible~~a ~~promissory~~Securities ~~note~~Transfer ~~and~~Agreement ~~the~~pursuant ~~warrants attached~~ to which the note-holder insold ~~accordance with ASC 815 “Derivatives and Hedging”. Accordingly~~$25,000 ~~the~~of ~~warrants~~principal ~~and~~plus ~~the~~accrued ~~embedded~~interest ~~conversion option~~ of the ~~convertible~~Original ~~notes~~Notes ~~are recorded as derivative liabilities at their fair market value~~ and ~~are~~the ~~marked~~rights toassociated ~~market~~with ~~through earnings at~~ the ~~end~~purchase ~~of each reporting period~~portion. The ~~gross~~Company ~~proceeds~~issued ~~from the sale of the note are recorded net of~~ a ~~discount~~Replacement ofNote ~~$82,400. The debt discount relates~~ to ~~fair~~the ~~value~~purchaser ofalong the ~~warrants~~same ~~attached~~terms toas the ~~notes.~~Purchased ~~The~~Note ~~debt~~with ~~discount is charged to interest expense ratably over~~ the ~~term~~following ofamendments: ~~the convertible note.~~

~~(j)~~·

OnThe ~~December~~replacement 10note shall be convertible into the Company’s common stock, ~~2013~~at any time at the option of the Purchaser, at an initial conversion price per share equal to fifty percent (the “Discount”) of the lowest closing bid price for the Company’s ~~issued~~common stock during the fifteen trading days immediately preceding a ~~convertible~~conversion ~~promissory~~date, ~~note~~as reported by Bloomberg (the “Closing Bid Price”) (“Initial Conversion Price”; provided that if the closing bid price for $the 35common stock on the Clearing Date is lower than the Closing Bid Price,~~000.~~ ~~The~~then ~~note~~the ~~matures~~Purchase inPrice ~~one~~shall ~~year~~be adjusted such that the Discount shall be taken from the ~~issuance~~closing ~~date~~bid ~~with~~price on the ~~stated~~Clearing ~~interest~~Date, ~~rate~~and atthe ~~10%.~~Company ~~The~~shall ~~note~~issue isadditional ~~convertible~~shares ~~into~~to Purchaser to reflect such adjusted Purchase Price, and provided further, that if the Company’s common stock becomes chilled by the Deposit Trust Corporation (DTC) at athe ~~conversion~~time ~~price~~that any portion of ~~$0.005~~the ~~per~~principal ~~share.~~and Ininterest ~~addition,~~of 5the Replacement Note is converted by Holder,~~833,333~~ ~~warrants~~than ~~were~~the ~~issued~~Discount ~~with~~shall anbe ~~exercise~~adjusted ~~price~~to ofsixty ~~$0.006~~percent ~~per~~for ~~share~~so long as the Common Stock is chilled. ~~The~~For ~~warrants~~purposes of this Agreement, the Clearing Date shall be on the date in which the conversion shares are ~~fully~~deposited ~~vested~~into the Purchaser’s brokerage account and ~~have~~Purchaser’s abroker ~~life~~has ofconfirmed 5with ~~years~~Purchaser ~~from~~the ~~date~~Purchaser may execute trades of ~~issuance~~the conversion shares.

The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $35,000. The debt discount relates to fair value of the conversion option and the warrants attached to the notes. The debt discount is charged to interest expense ratably over the term of the convertible note. The fair value of the conversion option and warrants on the date of issuance in excess of the face amount of the note was recorded to interest expense on the date of issuance.·

~~(k)~~The Replacement Note shall have a limitation on conversion equal to 9.99% of the Company’s outstanding common stock.

During the year ended December 31, 2013 the Company issued a total of 121,376,671 shares of common stock upon requests from note holders to convert loans with principal plus accrued interest totaling $57,686 based on the terms set forth in the loans.·

~~F-22~~The Company shall bear any and all miscellaneous expenses that may arise as a result of conversion and delivery of shares of common stock in respect of the Replacement Note.

AsOn ofJuly ~~December~~10, 312014, ~~2013~~a note-holder entered into a Securities Transfer Agreement pursuant to which the note-holder sold $25,000 of principal plus accrued interest of the ~~Company~~Original isNotes inand ~~technical~~the ~~default~~rights associated with the ~~repayment~~purchase portion. The Company issued a Replacement Note to the purchaser along the same terms ofas the ~~convertible~~Purchased ~~notes~~Note ~~payable.~~with the following amendments:

~~Convertible promissory notes payable and accrued interest at December 31, 2013 and 2012 consists of the following:~~·

	December 31,
	2013		2012
Convertible notes payable	$	1,449,619	$	1,191,716
Discount on convertible notes		(210,781)		(80,606)
Convertible notes payable, net		1,238,838		1,111,110
Less current maturities		(1,238,838)		(1,111,110)
Long-Term Portion	$	−	$	−

The replacement note shall be convertible into the Company’s common stock, at any time at the option of the Purchaser, at an initial conversion price per share equal to fifty percent (the “Discount”) of the lowest closing bid price for the Company’s common stock during the fifteen trading days immediately preceding a conversion date, as reported by Bloomberg (the “Closing Bid Price”) (“Initial Conversion Price”; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Closing Bid Price, then the Purchase Price shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to Purchaser to reflect such adjusted Purchase Price, and provided further, that if the Company’s common stock becomes chilled by the Deposit Trust Corporation (DTC) at the time that any portion of the principal and interest of the Replacement Note is converted by Holder, than the Discount shall be adjusted to sixty percent for so long as the Common Stock is chilled. For purposes of this Agreement, the Clearing Date shall be on the date in which the conversion shares are deposited into the Purchaser’s brokerage account and Purchaser’s broker has confirmed with Purchaser the Purchaser may execute trades of the conversion shares.

~~NOTE 11 – CONVERTIBLE NOTES AND NOTES PAYABLE – OFFICERS & DIRECTOR~~·

~~Convertible~~The ~~notes~~Replacement ~~and~~Note ~~notes~~shall ~~payable~~have –a ~~Officers~~limitation &on ~~Director~~conversion ~~and~~equal ~~accrued~~to ~~interest~~9.99% atof ~~December~~the ~~31,~~Company’s ~~2013~~outstanding ~~and~~common ~~2012 consists of the following:~~stock.

	2013			2012
	$	435,382	(a)	$	406,682	(a)
		222,322	(b)		208,322	(b)
		54,008	(c)		57,260	(c)
		39,113	(d)		71,490	(d)
		46,378	(e)		42,378	(e)
		25,000	(f)		25,000	(f)
		5,051	(g)		−	(g)
Total		827,254			811,132
Less: Current maturities		(827,254)			(811,132)
Convertible notes and notes payable – Officers & Director and accrued interest, net of Current maturities	$	−		$	−

(The Company shall bear any and all miscellaneous expenses that may arise as a) result of conversion and delivery of shares of common stock in respect of the Replacement Note.

In ~~September 2009~~2012, the Company ~~entered~~raised ~~into~~$768,500 ~~agreements~~through ~~with~~debt ~~the~~financing ~~Chief~~from ~~Executive~~multiple ~~Officer~~lenders. ~~and~~The ~~Chief~~Company ~~Financial~~issued ~~Officer~~each ~~together~~lender a convertible promissory note in the principal amount of money lender loaned to ~~defer~~the Company. The Company issued the lender for each loan a ~~total~~convertible ofpromissory ~~$287,000~~note inbearing ~~compensation~~interest ~~owed~~at rates of 8% to ~~them~~12% asper annum with maturity dates of September 3015, ~~2009.~~2012 Into ~~return~~November 16, 2013. The loans and accrued interest are to be paid on the maturity dates. Each loan is evidenced by the promissory note the Company issued to the ~~Chief~~lender ~~Executive~~which ~~Officer~~contains ~~and~~conversion ~~Chief~~clauses ~~Financial~~that ~~Officer~~allow ~~each~~the alenders ~~promissory~~the ~~note~~option ~~for~~to convert the ~~deferment~~loan amount plus all accrued and unpaid interest due under the note into common stock. ~~The~~Each of the notes ~~mature~~contains invariable ~~January~~conversion ~~2011~~prices representing discount rate between 5% and ~~interest~~50% ~~will~~of bemarket ~~accrued~~price. In addition, the Company also issued total 1,933,333 warrants to the lenders to purchase additional shares of common stock at ~~10%~~exercise ~~per~~of ~~annum~~$0.072 ~~compounded~~to ~~monthly~~$0.05. These warrants have term of 5 years. In addition a note-holder received 4,375,000 shares of common stock in consideration for entering into the note.

AsThe Company accounted for the issuance of ~~December~~the ~~31,~~convertible ~~2013~~promissory note in accordance with ASC 815 “Derivatives and ~~2012~~Hedging”. Accordingly, the ~~Company~~warrants isand ~~reflecting~~the aembedded ~~liability~~conversion option of ~~$435,382~~the ~~and~~convertible ~~$406,682~~note ~~which~~are ~~includes~~recorded ~~$148,382~~as derivative liabilities at their fair market value and ~~$119,682~~were marked to market through earnings at the end of ~~accrued~~each ~~interest,~~reporting ~~respectively~~period. ~~and~~The gross proceeds from the ~~Company~~sale isof ~~not~~these ~~compliant~~notes ~~with~~were recorded net of a discount of $649,100. The debt discount was being charged to interest expense ratably over the ~~repayment~~term ~~terms~~of the convertible note.

~~(b)~~F-19

On April 7, 2010, the Company’s Chief Executive Officer, and the Company’s former 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~~incurred ~~warrants~~approximately ~~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~~130,000 ~~2010. The interests accrued on the loans are to be paid on the 7th day~~ of ~~each~~financing ~~month~~cost ~~until~~related ~~the loans mature and paid off. The loans were evidenced by the promissory notes the Company issued~~ to ~~the~~these ~~two~~transactions ~~officers~~ which ~~each~~will ~~contain~~be aamortized ~~conversion~~over ~~clause that allow~~ the ~~officers~~term 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.

~~The~~On ~~Company~~October ~~accounted~~4, ~~for~~2013, at the ~~issuance~~request of the ~~convertible~~lender ~~promissory~~due ~~note~~to indefault, ~~accordance~~the ~~with~~Company ~~ASC~~converted ~~815~~$303,499 ~~“Derivatives~~of convertible notes and ~~Hedging.”~~accrued ~~Accordingly,~~interest ~~the~~into ~~warrants~~a ~~and~~new ~~the~~convertible ~~embedded~~note ~~conversion~~in ~~option~~the amount of ~~the~~$531,431. ~~convertible~~The ~~note~~increase ~~are~~in ~~recorded~~principal aswas ~~derivative~~due ~~liabilities~~to atamounts ~~their~~charged ~~fair~~by ~~market~~the ~~value~~lender for penalties, interest, legal and ~~were~~other ~~marked~~fees. toThe ~~market~~newly ~~through~~issued ~~earnings~~note atbears ~~the~~interest ~~end~~at rates of ~~each~~18% ~~reporting~~per ~~period~~annum and is due on demand. The ~~gross~~lender ~~proceeds~~may ~~from~~convert ~~the~~all ~~sales~~or any portion of the ~~notes~~outstanding ofprincipal, ~~$200~~accrued and unpaid interest,~~000~~ ~~were~~and ~~recorded~~any ~~net~~other ofsums adue ~~discount~~and ofpayable ~~$101,600.~~under ~~The~~the ~~debt~~Revolving ~~discount~~Note ~~consisted~~into shares of ~~$34,800~~the ~~related~~Company’s common stock at a conversion price equal to 85% of the ~~fair~~lowest ~~value~~daily volume weighted average price of the ~~warrants~~Company’s ~~and~~common ~~approximately~~stock ~~$66~~during the five trading days immediately prior to such applicable conversion date,~~800~~ ~~related~~in each case subject to the ~~fair~~lender ~~value~~not being able to beneficially own more than 4.99% of our outstanding common stock upon any conversion. The conversion price is subject to anti-dilution protection in the ~~embedded~~event that the Company issues additional equity securities at a price less than the conversion ~~option~~price. ~~The~~On ~~debt~~March ~~discount~~10, ~~will~~2014, beTCA ~~charged~~accelerated tothe ~~interest~~outstanding ~~expense~~principal ~~ratably~~balance, ~~over~~interest, calculated at the ~~term~~default rate of 18%, and all sums due under the ~~convertible~~original note and any amendments. (See Note 14 – Litigation)

AsDuring ofthe year ended December 31, ~~2013, and~~ 2012, ~~the~~multiple ~~Company~~lenders isrequested ~~reflecting~~to aconvert ~~liability~~total ofaggregated $~~222~~664,~~322~~576 ~~and~~principal ~~$208,322~~plus ~~which~~accrued ~~includes~~interest ~~$22,322~~of ~~and~~ $829,~~322~~955 ~~accrued~~into ~~interest,~~the ~~respectively~~Company’s ~~and~~common ~~the~~stock. The Company isissued ~~not~~total ~~compliant~~aggregated ~~with~~146,134,552 ~~the~~shares ~~repayment~~of ~~terms~~common stock in connection with such conversions.

~~F-23~~During the year ended December 31, 2013, multiple lenders requested to convert total aggregated $342,151 principal plus accrued interest of $57,519 into the Company’s common stock. The Company issued total aggregated 84,053,707 shares of common stock in connection with such conversions.

~~(c)~~During the year ended December 31, 2013, the Company repaid principal of $32,500.

OnDuring ~~February 7, 2011,~~ the ~~Company’s~~year ~~Chief~~ended ~~Executive~~December ~~Officer and the Company’s former Chief Financial Officer each made loans of $50~~31,~~000~~ ~~to the Company. The loans accrue interest at the rate of 10% per annum. In addition~~2014, ~~the~~multiple ~~Company~~lenders ~~issued~~requested ~~warrants~~ to ~~each~~convert ~~officer~~total toaggregated ~~purchase 89,928 shares of common stock at an exercise price of~~ $~~0.139 per share. The loans are due and payable by or on February 7~~80,300 ~~2012.~~principal ~~The~~plus ~~loan is to be paid on the maturity date and the~~ accrued interest ~~is to be paid at the end~~ of ~~each~~$24,937 ~~month.~~into ~~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~~Company ~~price~~issued ~~was~~total ~~$0.139~~aggregated ~~per share~~282,923,584 ~~which~~shares ~~was the closing market price~~ of ~~the~~ common stock asin ofconnection ~~the~~with ~~closing~~such ~~date of the loans~~conversions.

~~The~~As ~~Company~~of ~~accounted~~December ~~for~~31, ~~the~~2014 ~~issuance~~and of2013, the ~~notes~~Company inis ~~accordance~~reflecting ~~with~~liabilities ~~ASC~~of ~~470~~$1,082,093 ~~“Debt”~~ and ~~accordingly the gross proceeds of~~ $~~100~~1,~~000~~055,272, ~~from~~respectively ~~the~~including ~~sales~~accrued ofinterest ~~the notes were recorded net~~ of a$255,962 ~~debt~~and ~~discount of~~ $33148,~~612~~843, respectively. The ~~debt~~Company ~~discount~~is ~~related~~not toin ~~the~~compliance ~~relative~~with ~~fair value of~~ the ~~warrants~~repayment terms and ~~was~~is ~~charged~~currently toin ~~interest expense ratably over the term of the loan~~default.

In 2011, the Company paid repaid $40,000 principal and paid $6,189 accrued interest. In 2012, the Company repaid $6,000 principal and paid $3,050 accrued interest. In 2013, the Company paid repaid $8,000 in principal.(b)

AsOn ofJanuary ~~December 31~~8, 2013, ~~and~~for ~~2012~~gross proceeds of $25,000 the Company isissued ~~reflecting~~ a ~~liability~~convertible promissory note bearing interest at the rate of ~~$54,008~~10% ~~and~~per ~~$57,260~~annum ~~which~~with ~~includes~~a $maturity date of January 8,~~008~~ ~~and~~2014. ~~$3,260~~The loan and accrued interest, ~~respectively~~are to be paid on the maturity date. The promissory note contains conversion clauses that allow the lender the option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock at a conversion rate of $0.03 per share. In addition, the Company isalso ~~not~~issued ~~compliant~~1,666,667 ~~with~~warrants to the ~~repayment~~lender ~~terms~~to purchase additional shares of common stock at an exercise price of $0.0036 per share. These warrants are fully vested and have a term of 5 years.

~~(d)~~The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $13,600. The debt discount relates to the beneficial conversion feature embedded in the conversion option and the fair value of the warrants attached to the notes. The debt discount is charged to interest expense ratably over the term of the convertible note.

OnDuring ~~March 16, 2011,~~ the ~~Company’s~~year ~~Chief~~ended ~~Financial~~December ~~Officer made a loan of $85~~31,~~000~~ ~~to the Company. The loan accrues interest at the rate of 10% per annum. In addition~~2013, the ~~Company~~note ~~issued~~holder ~~warrants~~requested to ~~purchase~~convert ~~174,180~~total ~~shares~~aggregated ~~of common stock at an exercise price of~~ $~~0.122 per share. The loan is due and payable by or on March 16~~25,000 ~~2012.~~principal ~~The~~plus ~~loan is to be paid on the maturity date and the~~ accrued interest ~~is to be paid at the end~~ of ~~each~~$167, ~~month.~~into ~~The loan is evidenced by~~ the ~~promissory note the~~ Company ~~issued to the officer which contains a conversion clause that allow the officer 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~~Company ~~price~~issued ~~was~~total ~~$0.122~~aggregated ~~per share~~8,388,890 ~~which~~shares ~~was the closing market price~~ of ~~the~~ common stock asin ofconnection ~~the~~with ~~closing~~such ~~date of the loans~~conversion.

The Company accounted for the issuance of the note in accordance with ASC 470 “Debt” and accordingly the gross proceeds of $85,000 from the sales of the note was recorded net of a debt discount of $28,610. The debt discount related to the relative fair value of the warrants and is being charged to interest expense ratably over the term of the note.(c)

InOn ~~2012~~May 16, 2013, the Company ~~repaid~~in conjunction with an existing note holder entered into a new loan agreement with a new lender for the sale and transfer of a $1820,000 note plus $4,895 accrued interest this note matured and was in ~~principal~~technical default with the repayment provisions of the terms of the agreement. InThe ~~2013~~Company cancelled the original note and issued the new lender a convertible promissory note for $29,895 bearing interest rate of 10% per annum with a maturity date of January 1, 2014. The loan and accrued interest are to be paid on the maturity date. The promissory note contains conversion clauses that allow the lender the option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock at a conversion rate of the lesser of a.) 60% of the low traded price of the Company’s ~~repaid~~common stock for the twenty trading day period immediately preceding the date at the which Holder, by written notice gives notice to the Company of its election to convert or b.) $360.01 per share. The Company recorded $5,~~500~~000 loan cost in connection with the increase of the principal included in deferred financing costs. The loan cost will be amortized over the life of the loan.

AsThe ofCompany ~~December~~accounted ~~31,~~for ~~2013,~~the ~~and~~issuance ~~2012,~~of the ~~Company~~convertible ispromissory ~~reflecting~~note aand ~~liability~~the ofwarrants ~~$39,113~~attached ~~and~~to ~~$71,490~~the ~~which~~note ~~includes~~in ~~$8,613~~accordance ~~and~~with ~~$4,490~~ASC ~~accrued~~815 ~~interest~~“Derivatives and Hedging”. Accordingly, ~~respectively~~the warrants and the ~~Company~~embedded isconversion ~~not~~option ~~compliant~~of ~~with~~ the ~~repayment terms.~~

~~(e)~~F-20

Onconvertible ~~March~~notes ~~28,~~are ~~2011,~~recorded ~~the~~as ~~Company’s~~derivative ~~Chief~~liabilities ~~Financial Officer made a loan of $40,000 to the Company. The loan pays interest monthly~~ at ~~the~~their ~~rate~~fair ofmarket ~~10%~~value ~~per~~and ~~annum.~~are Inmarked ~~addition, the Company issued warrants~~ to ~~purchase~~market ~~83,333~~through ~~shares~~earnings ~~of common stock~~ at anthe ~~exercise~~end ~~price~~ of ~~$0.12~~each ~~per~~reporting ~~share~~period. The ~~loan~~gross isproceeds ~~due~~from ~~and payable by or on March 28, 2012. The loan is to be paid on~~ the ~~maturity~~sale ~~date~~of ~~and~~ the ~~accrued~~note ~~interest~~are isrecorded tonet beof ~~paid~~a atdiscount ~~the end~~ of ~~each month~~$19,930. The ~~loan~~debt isdiscount ~~evidenced~~relates ~~by the promissory note the Company issued~~ to the ~~officer~~beneficial ~~which contains a~~ conversion ~~clause~~feature ~~that~~embedded ~~allow~~in the ~~officer~~conversion ~~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~~debt ~~price~~discount ~~was~~is ~~$0.12~~charged ~~per~~to ~~share,~~interest ~~which~~expense ~~was~~ratably ~~the~~over ~~closing market price of~~ the ~~common~~term ~~stock as~~ of the ~~closing~~convertible ~~date of the loans~~note.

~~The~~During ~~Company accounted for~~ the ~~issuance~~year ofended ~~the~~December ~~note in accordance with ASC 470 “Debt” and accordingly the gross proceeds of $40~~31,~~000~~ ~~from~~2013 the ~~sales~~Company ~~of the note~~ was ~~recorded net of a debt discount of $13,472. The debt discount related to the relative fair value of the warrants and is being~~ charged to interest ~~expense~~and ~~ratably~~penalties ~~over~~by the ~~term~~note ofholder ~~the~~totaling ~~note~~$33,515.

AsDuring ofthe year ended December 31, 2013 ~~and 2012~~, the ~~Company~~note isholder ~~reflecting~~requested ato ~~liability~~convert oftotal ~~$46,378~~aggregated ~~and~~ $4229,~~378~~895 ~~which~~principal ~~includes~~plus ~~$6,378~~accrued interest and penalties of $215,~~378~~435, ~~accrued~~into ~~interest,~~the ~~respectively~~Company’s common stock. The Company isissued ~~not~~total ~~compliant~~aggregated ~~with~~10,000,000 ~~the~~shares ~~repayment~~of ~~terms~~common stock in connection with such conversion.

~~(f)~~As of December 31, 2014 and 2013, the Company is reflecting liabilities of $18,080 and the Company is not in compliance with the repayment terms and is currently in default.

On February 13, 2012 and on October 5, 2012, the Company’s Chief Executive Officer each made a short term loan of $10,000 and $15,000 to the Company. These loans were intended to be repaid within 2 months. No documents were prepared nor interest accrued. As of December 31, 2013 and 2012, the Company is reflecting a liability of $25,000. The Company is not compliant with the repayment terms.(d)

On May 22, 2013, the Company entered into a loan agreement (g“credit facility) for the principal sum of $335,000 less any fees. The components of the credit facility are $300,000 proceeds of the loan plus $35,000 original issue discount. The maturity date is one year from the effective date of each draw made by the Company. The loan and accrued interest are to be paid on the maturity date. In addition after 90 days that the amount drawn is outstanding a one-time interest charge of 12% will be charged and added to the principal sum. The promissory note contains conversion clauses that allow the lender, at any time from 180 days after the Effective Date, the option to convert the amount payable plus all accrued and unpaid interest due under the agreement into common stock at a conversion price per share of the lesser of $0.018 or 60% of the lowest trade price in the 25 trading days preceding the conversion.

OnThe ~~January~~Company 3,received ~~2013,~~net ~~the~~cash ~~Company’s~~proceeds ~~Chief~~of ~~Executive~~$65,000 ~~Officer~~upon ~~each~~entering ~~made~~the aagreement ~~short~~on ~~term~~May ~~loan of $9~~22,~~051~~ to2013 ~~the~~and ~~Company.~~recorded ~~This~~$6,500 loan ~~was~~cost ~~intended~~in toconnection bewith ~~repaid~~this ~~within 2 months~~transaction. NoThe ~~documents~~loan ~~were~~costs ~~prepared~~have ~~nor~~been ~~interest~~included ~~accrued.~~in ~~During~~deferred ~~2013~~financing ~~$4,000~~costs ~~was~~and ~~repaid.~~will Asbe ofamortized ~~December~~through ~~31, 2013~~ the ~~Company~~maturity isdate ~~reflecting a liability~~ of ~~$5,051. The Company is not compliant with~~ the ~~repayment terms~~loan.

FThe Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $41,000. The debt discount relates to the beneficial conversion feature embedded in the conversion option. The debt discount is charged to interest expense ratably over the term of the convertible note. On August 20, 2013, the Company recorded a $8,580 one-24time interest expense and added such amount to the principal of the May 22, 2013 draw when the Company failed to repay the loan within 90 days.

~~NOTE~~On 12August –22, ~~RELATED~~2013 ~~PARTY~~the ~~TRANSACTIONS~~Company drew down from the credit facility $35,500 and received net cash proceeds of $30,000 after the associated legal fees. The Company recorded $5,500 loan cost in connection with this transaction and the loan cost will be amortized through the maturity date of the loan. The gross proceeds from the sale of the note are recorded net of a debt discount of $29,000. The debt discount relates to the beneficial conversion feature embedded in the conversion option. The debt discount is charged to interest expense ratably over the term of the convertible note.

(On October 23, 2013, the Company drew down from the credit facility $55,000 and received net cash proceeds of $50,000 after the associated legal fees. The Company recorded $5,000 loan cost in connection with this transaction and the loan cost will be amortized through the maturity date of the loan. The gross proceeds from the sale of the note are recorded net of a) debt discount of $55,000. The debt discount relates to fair value of the conversion option of the note. The debt discount is charged to interest expense ratably over the term of the convertible note. The fair value of the conversion option on the date of issuance in excess of the face amount of the note was recorded to interest expense on the date of issuance.

OnDuring ~~January 2, 2013,~~ the ~~Company~~year ~~issued~~ended aDecember ~~total~~31, ~~of 12~~2014,~~820,512~~ ~~warrants~~the tonote ~~purchase~~holder ~~common~~requested ~~stock~~ to ~~its~~convert ~~four~~total ~~directors~~aggregated $51,120 ~~including~~principal ~~warrants~~plus ~~issued~~accrued tointerest ~~its Chief Executive Officer and former Chief Financial Officer, each~~ of ~~which received 3~~$0,~~205,128~~ ~~warrants~~into ~~for their first quarter of 2013 director fees. The issuance is part of~~ the ~~annual compensation that was authorized by the~~ Company’s ~~Board~~common ofstock. ~~Directors~~The onCompany ~~December~~issued 6,total ~~2011,~~aggregated ~~when the Board approved replacing directors’ annual compensation of $50~~76,000,000 ~~with~~shares ~~three year warrants payable quarterly. The warrants have a term~~ of ~~three~~common ~~years and are fully vested on the date of issuance. The Company recorded $70,800 of~~ stock~~-based~~ ~~compensation~~ in connection with ~~this~~such ~~issuance~~conversion.

~~(b)~~As of December 31, 2014 and 2013, the Company is reflecting liabilities of $148,648 and $170,580, respectively including accrued interest of $29,188 and $0, respectively. The Company is not in compliance with the repayment terms and is currently in default.

On March 18, 2013, the Company issued to its Chief Executive Officer 15,000,000 shares of common stock and warrants to purchase an additional 15,000,000 shares of common stock at the exercise price of $0.0033 per share. The issuance was approved by the Company’s Compensation Committee on February 11, 2013. The warrants have a term of five years. The shares and warrants are fully vested on the date of grant. The Company recorded $188,700 of stockF-~~based compensation which includes $97,500 for the share issuance and $91,200 for the warrants granted.~~21

On July 11, 2013, the Company in conjunction with an existing note holder entered into a new loan agreement with ASC Recap, a related party, for the sale and transfer of a $20,000 promissory note plus $5,095 accrued interest this note matured and was in technical default with the repayment provisions of the terms of the agreement. The Company cancelled the original promissory note and issued the new lender a convertible promissory note for $25,000 with a maturity date of September 30, 2013. The convertible promissory note contains conversion clauses that allow the lender the option to convert the loan amount plus all accrued and unpaid interest due under the note into common stock at a conversion rate of the lesser of (ca.) $0.015 or (b) 50% of the lowest closing bid price for the Company’s common stock during the twenty (20) trading day period immediately preceding the date at the which Holder, by written notice gives notice to the Company of its election to convert. The Company recorded $33,000 debt discount and the excess fair value of 8,000 was charged to interest expense upon the consummation of the arrangement.

OnDuring ~~March 18, 2013,~~ the ~~Company~~year ~~issued~~ended toDecember ~~its~~31, ~~former Chief Financial Officer 10~~2013,~~000,000~~ ~~shares~~the ofnote ~~common~~holder ~~stock~~requested ~~and warrants~~ to ~~purchase~~convert antotal ~~additional~~aggregated 10$25,~~000,000~~470 ~~shares~~principal ofplus ~~common~~accrued ~~stock~~interest ~~at the exercise price~~ of $0~~.0033~~, ~~per~~into ~~share. The issuance was approved by~~ the Company’s ~~Compensation~~common ~~Committee on February 11, 2013~~stock. The ~~warrants~~Company ~~have~~issued atotal ~~term~~aggregated of4,209,917 ~~five years. The~~ shares ~~and warrants are fully vested on the date~~ of ~~grant.~~common ~~The Company recorded $125,800 of~~ stock~~-based~~ ~~compensation~~in ~~which~~connection ~~includes~~with ~~$65,000~~such ~~for the share issuance and $60,800 for the warrants granted~~conversion.

(de)

OnA ~~April~~convertible 5,promissory ~~2013,~~note ~~the~~was ~~Company~~ issued aon ~~total~~August ~~of 3~~19,~~846,152~~ ~~warrants~~2013 toin ~~purchase~~the ~~common~~amount ~~stock~~of ~~to its four directors~~$25,000 ~~including warrants issued~~ to ~~its~~a ~~Chief~~lender. ~~Executive~~The ~~Officer~~note ~~and~~matures ~~Chief~~on ~~Financial~~August ~~Officer~~19, ~~each~~2014 ofwith ~~which~~interest ~~received~~at ~~961,538 warrants for their second quarter of 2013 director fees~~10%. The ~~issuance~~note is ~~part~~convertible ofinto the ~~annual~~Company’s ~~compensation~~common ~~that~~stock ~~was~~at ~~authorized~~a byconversion ~~the~~price ~~Company’s Board~~ of ~~Directors~~$0.015 onper ~~December~~shares. 6In addition, ~~2011~~8,333,333 ~~when~~Warrants ~~the~~were ~~Board~~issued ~~approved~~at ~~replacing~~a ~~directors’~~price ~~annual compensation~~ of $~~50,000~~.003 ~~with~~per ~~three~~share. ~~year~~The warrants ~~payable~~are ~~quarterly.~~fully ~~The~~vested ~~warrants~~and have a ~~term~~life of ~~three~~five years ~~and~~from ~~are fully vested on the~~ date of issuance. ~~The Company recorded $27,600 of stock-based compensation in connection with this issuance.~~

~~(e)~~The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $121,400. The debt discount relates to the beneficial conversion feature embedded in the conversion option and the fair value of the warrants attached to the notes. The excess fair value of $96,400 was charged to interest expense on the date of the agreement and the debt discount is charged to interest expense ratably over the term of the convertible note.

On ~~July~~October 110, ~~2013~~2014, ~~the Company issued~~ a ~~total~~note-holder ofentered ~~2,702,704~~into ~~warrants~~a toSecurities ~~purchase~~Transfer ~~common~~Agreement ~~stock~~pursuant to ~~its~~which ~~four~~the ~~directors,~~note-holder ~~including~~sold ~~warrants issued to its Chief Executive Officer and Chief Financial Officer~~$15,000 ~~each~~ of ~~which~~principal ~~received 675,676 warrants for their third quarter~~ of ~~2013 director fees. The issuance is part of~~ the ~~annual~~Original ~~compensation~~Notes ~~that~~and ~~was authorized by~~ the ~~Company’s~~rights ~~Board~~associated ofwith ~~Directors on December 6, 2011, when~~ the ~~Board~~purchase ~~approved replacing directors’ annual compensation of $50,000 with three year warrants payable quarterly~~portion. The ~~warrants~~Company ~~have~~issued a ~~term~~Replacement ofNote ~~three~~to ~~years~~the ~~and~~purchaser ~~are~~along ~~fully vested on~~ the ~~date~~same ofterms ~~issuance.~~as ~~The~~the ~~Company~~Purchased ~~recorded~~Note ~~$40,800~~with ofthe ~~stock-based~~following ~~compensation~~amendments: ~~in connection with this issuance.~~

~~(f)~~·

OnThe ~~July~~replacement 7note shall be convertible into the Company’s common stock, ~~2013~~at any time at the option of the Purchaser, at an initial conversion price per share equal to forty five percent (the “Discount”) of the lowest closing bid price for the Company’s ~~issued~~common stock during the twenty trading days immediately preceding a ~~total~~conversion ofdate, ~~650~~as reported by Bloomberg (the “Closing Bid Price”) (“Initial Conversion Price”; provided that if the closing bid price for the common stock on the Clearing Date is lower than the Closing Bid Price,~~000~~ ~~warrants~~then the Purchase Price shall be adjusted such that the Discount shall be taken from the closing bid price on the Clearing Date, and the Company shall issue additional shares to ~~purchase~~Purchaser to reflect such adjusted Purchase Price, and provided further, that if the Company’s common stock tobecomes ~~its~~chilled ~~employees.~~by ~~The~~the ~~warrants~~Deposit ~~have~~Trust aCorporation ~~term~~(DTC) at the time that any portion of ~~three~~the ~~years~~principal and ~~are~~interest ~~fully~~of ~~vested~~the onReplacement Note is converted by Holder, than the ~~date~~Discount ofshall ~~issuance~~be adjusted to sixty percent for so long as the Common Stock is chilled. ~~The~~For ~~Company~~purposes ~~recorded~~of ~~$11~~this Agreement,~~700~~ ofthe ~~stock-based~~Clearing ~~compensation~~Date shall be on the date in ~~connection~~which the conversion shares are deposited into the Purchaser’s brokerage account and Purchaser’s broker has confirmed with ~~this~~Purchaser ~~issuance~~the Purchaser may execute trades of the conversion shares.

~~(g)~~·

On June 26, 2012 the Board of Directors of the Company designated and authorized the Series B Preferred Stock ("Series B") as set forth in a Certificate of Designation that was filed with the Secretary of State of the State of Delaware. The ~~Series~~Replacement BNote ~~has~~shall ahave ~~par value of $0.001 per share, no rights to dividends but provides for liquidation rights which entitle the holder to~~ a ~~pro-rata~~limitation ~~share~~on ~~of net assets. The Series B carried no~~ conversion ~~provisions.~~equal ~~Subsequent~~ to ~~March~~4.99% ~~31, 2013 all outstanding shares~~ of ~~Series B were returned by~~ the ~~holder for no consideration to the~~ Company~~, and the Company~~’s ~~Board~~outstanding ofcommon ~~Directors authorized cancellation of the Series B~~stock. ~~The Certificate of Amendment cancelling the Series B Preferred Stock was filed with the State of Delaware on April 16, 2013.~~

~~NOTE~~During 13the –year ~~COMMITMENTS~~ended ~~AND~~December ~~CONTINGENCIES~~31, 2014, the note holder requested to convert total aggregated $15,000 principal plus accrued interest of $0, into the Company’s common stock. The Company issued total aggregated 140,000,000 shares of common stock in connection with such conversion. As of December 31, 2014, 75,000,000 shares remain to be issued.

~~Operating~~As ~~Leases~~of December 31, 2014 and 2013, the Company is reflecting liabilities of $13,117 and $25,931, respectively including accrued interest of $3,117 and $931, respectively. The Company is not in compliance with the repayment terms and is currently in default.

~~25 Fairchild Ave~~(f)

~~Effective~~On ~~as of~~ July 125, ~~2008~~2013, the Company ~~entered~~was ~~into~~advanced $10,000 from a ~~seven-year~~lender ~~lease~~and ~~for~~subsequently 5on August 16,~~300~~ ~~square~~2013, ~~feet~~the lender funded another $25,000. The Company issued a convertible promissory note for the total amount of ~~space~~$35,000 to the lender. The note matures in ~~Plainview,~~one ~~New~~year ~~York~~from the issuance date with interest at 10%. The ~~facility~~note is toconvertible ~~serve~~into as the Company’s ~~executive~~common ~~offices,~~stock ~~sales~~at ~~office~~a conversion price of $0.005 per shares. In addition, ~~showroom~~5,833,333 ~~and~~warrants were issued with an ~~assembly~~exercise ~~area~~price of $. 006 per share. The warrants are fully vested and have a life of 5 years from date of issuance.

~~F-25~~The Company accounted for the issuance of the convertible promissory note and the warrants attached to the note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the warrants and the embedded conversion option of the

In March 2012 management exercised a “Good Guy Clause” in its lease and abandoned the space at 25 Fairchild Avenue. Accordingly the Company recorded a charge of $34,707 for the loss on abandonment of property. The Company continues to accrue rent and rent related expenses per the Lease agreement. The Company is a defendant in a suit in the Supreme Court of the State of New York, County of Nassau, filed by Fairchild Warehouse Associates, LLC, as plaintiff, for recovery of past rental payments for the Company’s former office space at 25 Fairchild Avenue, Plainview, N.Y. 11803, with money damages, as of February 2014, requested in the amount of $ 475,930 which have been accrued for as of December 31, 2013. During 2013 the Company recorded rent and rent related expenses of $341,849 which includes a charge of $229,234 relating to the lawsuit.F-22

~~160~~convertible ~~Dupont~~notes ~~Street~~are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $159,300. The debt discount relates to the beneficial conversion feature embedded in the conversion option and the fair value of the warrants attached to the notes. The excess fair value of $124,300 was charged to interest expense on the date of the agreement and the debt discount is charged to interest expense ratably over the term of the convertible note

OnAs ~~May~~of ~~24,~~December ~~2010~~31, ~~effective~~2014 ~~July~~and 12013, ~~2010,~~ the Company ~~entered into a two-year lease in Plainview, New York. The facility~~ is toreflecting ~~serve~~liabilities asof ~~the Company’s production facilities~~$39,881 asand ~~well as its’ headquarters. Under the terms of the lease the Company paid a deposit of approximate~~ $1236,~~000.~~332, ~~The~~respectively ~~minimum~~including ~~monthly~~accrued ~~lease~~interest ~~payments~~of ~~due under this lease are approximately~~ $64,~~000~~881 ~~for~~and ~~the period July~~ $1,332, ~~2010~~respectively. ~~through~~The ~~June~~Company ~~30,~~is ~~2011~~not ~~and~~in ~~approximately~~compliance ~~$10,700~~with ~~for~~ the ~~period~~repayment ~~July~~terms 1,and ~~2011~~is ~~through~~currently ~~June~~in ~~30, 2012~~default.

On October 8, 2013 an eviction notice was issued by the landlord for the Company’s facilities at 160 Dupont Street. The Company abandoned the space on October 11 and immediately moved to 485 Underhill Boulevard, Syosset N.Y. (g)

~~485~~On ~~Underhill~~September ~~Blvd~~5, 2013 the Company issued a convertible promissory note for $ 5,000. The note matures in one year from the issuance date with the stated interest rate at 10%. The note is convertible into the Company’s common stock at a conversion price of $0.005 per shares. In addition, 200,000 Warrants were issued with an exercise price of $0.006 per share. The warrants are fully vested and have a life of 5 years from date of issuance.

InThe ~~October~~Company ~~2013~~accounted for the ~~Company~~issuance ~~entered~~of ~~into~~the anconvertible ~~operating~~promissory ~~lease~~note ~~for~~and ~~its~~the ~~Syosset~~warrants Nattached to the note in accordance with ASC 815 “Derivatives and Hedging”.Y. ~~office~~Accordingly, ~~facility~~the ~~under~~warrants aand ~~month-~~the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to~~-month~~ ~~agreement~~market ~~starting~~through inearnings ~~October~~at ~~2013~~the end of each reporting period. The ~~Company~~gross ~~will~~proceeds ~~pay~~from ~~monthly~~the ~~rental~~sale ~~payments~~of the note are recorded net of a discount of $35,~~500~~700. The ~~Company~~debt ~~exited~~discount relates to the ~~space~~beneficial conversion feature embedded in ~~July~~the ~~2014~~conversion option and ~~moved~~the fair value of the warrants attached to 35the ~~East~~notes. ~~Mall,~~The ~~Plainview~~excess Nfair value of $700 was charged to interest expense on the date of the agreement and the debt discount is charged to interest expense ratably over the term of the convertible note.Y. The debt discount is charged to interest expense ratably over the term of the convertible note.

35As ~~East~~of ~~Mall~~December 31, 2014 and 2013, the Company is reflecting liabilities of $5,669 and $5,163, respectively including accrued interest of $669 and $163, respectively. The Company is not in compliance with the repayment terms and is currently in default.

In June 2014 the Company entered into an operating lease for its Plainview N.Y. office facility for a period of six months starting in July 2014. The Company will pay monthly rental payments of $1,050. The lease may be renewed in six month increments, with forty-five days’ notice and is subject to a 5% increase per annum.(h)

~~Litigation~~On September 12, 2013 the Company issued a convertible promissory note for $ 100,000. The note matures in one year from the issuance date with the stated interest rate at 10%. The note is convertible into the Company’s common stock at a conversion price of $0.0085 per share. In addition, 10,416,666 warrants were issued with an exercise price of $0.0096 per share. The warrants are fully vested and have a life of 5 years from date of issuance.

~~Certain~~The ~~conditions~~Company ~~may~~accounted ~~exist~~for asthe issuance of the ~~date~~convertible ~~the~~promissory ~~financial~~note ~~statements~~and ~~are~~the ~~issued,~~warrants ~~which~~attached ~~may~~to ~~result~~the note in aaccordance ~~loss~~with toASC ~~the~~815 ~~Company~~“Derivatives and Hedging”. Accordingly, ~~but~~the ~~which~~warrants ~~will~~and ~~only~~the beembedded ~~resolved~~conversion ~~when~~option ~~one~~of orthe ~~more~~convertible ~~future~~notes ~~events~~are ~~occur~~recorded oras ~~fail~~derivative liabilities at their fair market value and are marked to ~~occur~~market through earnings at the end of each reporting period. The ~~Company~~gross ~~assesses~~proceeds ~~such~~from ~~contingent~~the ~~liabilities~~sale of the note are recorded net of a discount of $82,400. ~~and~~The ~~such~~debt ~~assessment~~discount ~~inherently~~relates ~~involves~~to anfair ~~exercise~~value of ~~judgment~~the warrants attached to the notes. The debt discount is charged to interest expense ratably over the term of the convertible note.

InAs ~~assessing~~of ~~loss~~December ~~contingencies~~31, ~~related~~2014 toand ~~legal~~2013, ~~proceedings that are pending against~~ the Company, oris ~~unasserted~~reflecting ~~claims~~liabilities ~~that~~of ~~may~~$113,194 ~~result~~and ~~in such proceedings~~$103,056, ~~the~~respectively ~~Company~~including ~~evaluates~~accrued ~~the~~interest ~~perceived merits~~ of ~~any~~$13,194 ~~legal~~and ~~proceedings or unasserted claims~~$3,056, asrespectively. ~~well~~The asCompany ~~the~~is ~~perceived~~not ~~merits~~in ofcompliance with the ~~amount~~repayment ofterms ~~relief~~and ~~sought~~is orcurrently ~~expected~~in ~~to be sought therein~~default.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability and an estimate of the range of possible losses, if determinable and material, would be disclosed.(i)

~~Loss~~On ~~contingencies~~December ~~considered~~10, ~~remote~~2013 ~~are~~the ~~generally~~Company ~~not~~issued ~~disclosed,~~a ~~unless~~convertible ~~they~~promissory ~~involve~~note ~~guarantees~~for $ 35,000. inThe ~~which~~note ~~case~~matures ~~the~~in ~~guarantees~~one ~~would~~year befrom ~~disclosed.~~the ~~There~~issuance ~~can~~date bewith nothe ~~assurance~~stated ~~that~~interest ~~such~~rate ~~matters~~at ~~will~~10%. ~~not~~The ~~materially~~note ~~and~~is ~~adversely~~convertible ~~affect~~into the Company’s ~~business,~~common ~~financial~~stock ~~position,~~at ~~and~~a ~~results~~conversion price of ~~operations~~$0.005 orper ~~cash flows~~share. AsIn addition, 5,833,333 warrants were issued with an exercise price of ~~December~~$0.006 ~~31,~~per ~~2013,~~share. ~~the~~The ~~Company~~warrants ~~has~~are ~~the~~fully ~~following~~vested ~~litigation~~and ~~outstanding~~have a life of 5 years from date of issuance.

The Company isaccounted afor ~~defendant~~the inissuance aof ~~suit~~the inconvertible promissory note and the ~~Supreme~~warrants ~~Court~~attached ofto the ~~State~~note ofin ~~New~~accordance ~~York,~~with ~~County~~ASC of815 ~~Nassau~~“Derivatives and Hedging”. Accordingly, ~~filed~~the bywarrants ~~Fairchild~~and ~~Warehouse~~the ~~Associates,~~embedded ~~LLC~~conversion ~~(“Fairchild”),~~option of the convertible notes are recorded as ~~plaintiff,~~derivative ~~for~~liabilities ~~recovery~~at oftheir ~~past~~fair ~~rental~~market ~~payments~~value ~~for~~and ~~the~~are ~~Company’s~~marked ~~former~~to ~~office~~market ~~space~~through earnings at 25the ~~Fairchild~~end ~~Avenue,~~of ~~Plainview,~~each ~~New~~reporting ~~York~~period. ~~11803,~~The ~~with~~gross ~~money~~proceeds ~~damages,~~from asthe sale of ~~February~~the ~~2014,~~note ~~requested~~are inrecorded ~~the~~net ~~amount~~of a discount of $~~475~~35,~~930,~~000. ~~which~~The ~~have~~debt ~~been~~discount ~~accrued~~relates ~~for~~to ~~and~~fair ~~included~~value inof ~~accounts~~the ~~payable~~conversion option and ~~accrued~~the ~~liabilities~~warrants asattached ofto ~~December~~the ~~31, 2013~~notes. AnThe ~~inquest~~debt discount is ~~set~~charged to ~~begin~~interest expense ratably over the term of the convertible note. The fair value of the conversion option and warrants on ~~December~~the 3,date ~~2014~~of toissuance ~~determine~~in excess of the face amount of ~~money~~the ~~damages~~note ~~due~~was recorded to interest expense on ~~Fairchild’s~~the ~~claim~~date of issuance.

F-2623

~~The~~On ~~Company~~June ~~on April 4~~12, ~~2013~~2014, ~~was served with~~ a summons and complaint, filed with the Supreme Court of the State of New York, County of New York, Levin Consulting Group, LLC (“Levin”), as plaintiff, where the plaintiff is claiming that additional shares of the Company’s Common Stock are issuable by the Company to plaintiff in connection with the exercise by plaintiff of a common stock purchase warrant issued by the Company. The warrant was originally issued contemporaneously with the issuance of a $20,000 promissory note-holder ~~to Levin. In June 2014 the Company~~ entered into a ~~settlement~~Securities ~~and~~Transfer ~~has~~Agreement ~~agreed~~pursuant to ~~issue~~which athe ~~convertible promissory~~ note-holder insold ~~the amount of~~ $5035,000 ~~to the plaintiff. The convertible note matures on December 31, 2015 and accrues interest at 10% per annum. The holder may convert all or any portion~~ of ~~the outstanding~~ principal ~~and~~plus accrued ~~and unpaid~~ interest ~~due and payable under the note into shares~~ of the ~~Company’s~~Original ~~common~~Notes stock at a conversion price equal to 50% of the lowest closing bid price of the Company’s common stock during the five trading days immediately prior to such applicable conversion date, in each case subject to the lender not being able to beneficially own more than 9.999% of our outstanding common stock upon any conversion. If the closing bid price for the common stock on the date in which the conversion shares are deposited into the holders brokerage account and the ~~holder~~rights ~~may~~associated ~~execute~~with ~~trades of~~ the ~~conversion~~purchase ~~shares (“the “Clearing Date”) then the conversion price shall be adjusted such that the discount be taken from the closing bid price on the Clearing Date~~portion. The ~~original~~Company ~~$20,000~~issued ~~note~~a ~~remains~~Replacement ~~outstanding.~~Note Asto ofthe ~~December~~purchaser ~~31,~~along ~~2013~~ the ~~Company~~same ~~has~~terms ~~accrued a $50,000 loss~~ as ~~a result of~~ the ~~settlement~~Purchased ~~and~~Note iswith ~~included~~the infollowing ~~accounts~~amendments: ~~payable and accrued liabilities.~~

The Company is in default under a May 30, 2012, Securities Purchase Agreement entered into with TCA Global Credit Master Fund, LP (“TCA”), providing for the issuance of $275,000 principal amount of senior secured redeemable and convertible debentures due November 30, 2012. On October 4, 2013, at the request of the lender due to default, the Company converted $303,499 of convertible notes and accrued interest into a new convertible note in the amount of $531,431. The increase in principal was due to amounts charged by the lender for penalties, interest, legal and other fees. The newly issued note bears interest at rates of 18% per annum and is due on demand. The lender may convert all or any portion of the outstanding principal, accrued and unpaid interest, and any other sums due and payable under the Note into shares of the Company’s common stock at a conversion price equal to 85% of the lowest daily volume weighted average price of the Company’s common stock during the five trading days immediately prior to such applicable conversion date, in each case subject to the lender not being able to beneficially own more than 4.99% of our outstanding common stock upon any conversion. The conversion price is subject to anti-dilution protection in the event that the Company issues additional equity securities at a price less than the conversion price. On March 10, 2014, TCA accelerated the outstanding principal balance, interest, calculated at the default rate of 18%, and all sums due under the original note and any amendments. In August 2014 a default final judgment was entered against the Company concluding that TCA is entitled to damages in the amount of $610,349, to foreclose upon the security interests, and to recover attorneys’ fees and costs incurred by TCA. In addition prejudgment interest shall be assessed at a rate of 18% per annum and post judgment interest shall be assessed at a rate of 4.75% per annum. As of December 31, 2013 the Company is reporting a liability of $554,814 related to the TCA claim and is included in convertible notes payable.·

OnThe ~~November~~replacement ~~27,~~note ~~2013,~~shall be convertible into the Company’s ~~entered~~common ~~into~~stock, aat ~~settlement~~any ~~agreement~~time ~~with~~at ~~Tarpon~~the ~~Bay~~option ~~Partners~~of ~~LLC~~the ~~(“Tarpon”)~~Purchaser, aat ~~related~~an ~~party.~~initial ~~The~~conversion ~~manager~~price ofper ~~Tarpon~~share isequal ~~Stephen~~to ~~Hicks,~~fifty percent (the ~~President~~“Discount”) of the ~~Company.~~lowest ~~Tarpon~~closing ~~previously~~bid ~~purchase~~price ~~outstanding~~for ~~liabilities of~~ the Company’s ~~from~~common ~~TCA~~stock induring the ~~amount~~fifteen oftrading ~~$506,431~~days ~~and~~immediately ~~Designs~~preceding ~~and~~a ~~Project~~conversion ~~Development~~date, ~~Corporation~~as reported by Bloomberg (athe ~~former~~“Closing ~~landlord~~Bid Price”) in(“Initial Conversion Price”; provided that if the ~~amount~~closing ofbid ~~$56,429.~~price ~~Per~~for the ~~terms~~common ofstock on the ~~settlement~~Clearing Date is lower than the ~~Company~~Closing ~~was~~Bid toPrice, ~~issue~~then ~~Tarpon~~the ~~shares~~Purchase ofPrice ~~common~~shall ~~stock~~be inadjusted ~~one~~such orthat ~~more~~the ~~tranches~~Discount asshall ~~necessary~~be taken from the closing bid price on the Clearing Date, and ~~subject~~the Company shall issue additional shares to ~~adjustment~~Purchaser ~~and~~to ~~ownership~~reflect ~~limitations~~such adjusted Purchase Price, and aprovided ~~convertible~~further, ~~promissory~~that ~~note~~if inthe Company’s common stock becomes chilled by the ~~principal~~Deposit ~~amount~~Trust ofCorporation ~~$75,000.~~(DTC) ~~The~~at ~~Company~~the ~~failed~~time tothat ~~issue~~any ~~shares~~portion toof ~~Tarpon~~the principal and ininterest of the ~~first~~Replacement ~~quarter~~Note ofis ~~2014~~converted ~~TCA~~by ~~rescinded~~Holder, ~~its~~than ~~liabilities~~the ~~purchase~~Discount ~~agreement~~shall ~~with~~be ~~Tarpon.~~adjusted Asto ofsixty ~~December~~percent ~~31,~~for ~~2013~~so long as the ~~Company~~Common Stock is ~~reporting~~chilled. aFor ~~liability~~purposes of ~~$57~~this Agreement,~~484~~ ~~related~~the toClearing ~~the~~Date ~~Designs~~shall ~~and~~be ~~Project~~on ~~Development~~the ~~Corporation~~date ~~claim~~in ~~and~~which isthe ~~included~~conversion inshares ~~notes~~are ~~payable~~deposited ~~and~~into the ~~$506,431~~Purchaser’s ~~related~~brokerage toaccount ~~TCA~~and Purchaser’s broker has ~~been~~confirmed ~~included~~with inPurchaser ~~convertible~~the ~~promissory~~Purchaser ~~notes~~may execute trades of the conversion shares.

On January 31, 2014, in conjunction with the settlement agreement outlined above, the Company issued Tarpon a convertible promissory note in the principal amount of $75,000. The convertible note matures one year from the date of issuance with interest at 10% per annum. The convertible promissory note shall have no registration rights and shall be convertible into the common stock of the Company at any time at a conversion price equal to 75% of the low closing bid price for the twenty days prior to conversion.·

The ~~Company~~Replacement ~~was~~Note ~~notified~~shall byhave ~~an April 22, 2013 letter from The Depository Trust Company (“DTC”) that DTC had determined to impose~~ a ~~restriction~~limitation on ~~physical~~conversion ~~deposit~~equal ~~and on Deposit/Withdrawal At Custodian (“DWAC”) electronic deposit transactions (referred~~ to ~~as a “deposit chill”) on the Company’s common stock~~9.99% ~~The effect~~ of the ~~deposit chill was that, for the period April 22, 2013 through August 6, 2013, when the deposit chill was lifted following submissions by the~~ Company~~, no new shares of the Company~~’s outstanding common stock ~~were accepted for deposit with DTC for electronic transfer~~. ~~As of October 2014 the restriction had not been lifted.~~

An eviction notice was issued on October 8 by the landlord for 160 Dupont Street, Five Towns Realty Associates, Inc (“Five Towns Realty”). There is currently an outstanding balance of $54,739 that is subject to a lawsuit and is included in accounts payable and accrued liabilities at December 31, 2013. The Company is currently in negotiations with Five Towns Realty to reach a settlement.·

~~F-27~~The Company shall bear any and all miscellaneous expenses that may arise as a result of conversion and delivery of shares of common stock in respect of the Replacement Note.

AnDuring ~~action~~the ~~was~~year ~~commenced~~ended onDecember ~~March 22~~31, ~~2012~~2014, in the ~~Supreme~~note ~~Court~~holder ofrequested ~~the~~to ~~New~~convert ~~York~~total ~~for~~aggregated ~~the County of Nassau~~$15,000 byprincipal ~~Lazar,~~plus ~~Sanders~~accrued ~~Thaler~~interest ~~& Associates, LLP, a dissolved accounting firm~~ of ~~which Terry R. Lazar~~$1,283 into the Company’s ~~former~~common ~~CFO was a member~~stock. ~~Among the parties named as defendants were Mr. Lazar and the Company.~~ The ~~claim was made that the~~ Company ~~owned~~issued ~~fees~~total toaggregated ~~the~~110,555,556 ~~plaintiff~~shares ~~and/or that such fees were paid to Terry Lazar who never forwarded them to the plaintiff. Mr. Lazar undertook the defense~~ of ~~the~~common ~~action~~stock onin ~~his~~connection ~~behalf~~with ~~and~~such ~~on behalf of the Company~~conversion.

~~The~~As ~~matter~~of ~~proceeded~~December to31, ~~inquest~~2014 and ~~the~~2013, ~~court awarded judgment to~~ the ~~plaintiff against the~~ Company inis ~~the~~reflecting ~~sum~~liabilities of $2522,~~000.~~135 ~~Adding interests~~ and ~~costs to the awarded amount~~$35,204, ~~judgment~~respectively ~~has~~including ~~been~~accrued ~~entered~~interest ~~against the Company in the total sum~~ of $362,~~613.~~135 Anand ~~appeal~~$204, ~~has been taken from the judgment~~respectively. The ~~appeal~~Company ~~has~~is ~~been~~not ~~perfected by the filing of the record and brief~~ in ~~the~~compliance ~~Supreme~~with ~~Court of~~ the ~~state~~repayment ofterms ~~New~~and ~~York. As of December 31, 2013 the Company~~ is ~~reporting~~currently ain ~~liability of $36,613 related to the judgment~~default.

~~NOTE 14 – STOCKHOLDERS' DEFICIENCY.~~(j)

~~During~~On May 25, 2013, in conjunction with a liabilities purchase agreement with ASC Recap, a related party, the ~~year~~Company ~~ended~~issued ~~December~~ASC 31Recap a convertible promissory note in the principal amount of $25,000. ~~2013~~The convertible note matured November 30, 2013. The convertible promissory note shall be convertible into the common stock of the Company ~~recorded~~at any time at a conversion price equal to 50% of the ~~following~~low ~~transactions:~~closing bid price for the twenty days prior to conversion.

~~Debt~~During the year ended December 31, 2014, the note holder requested to convert total aggregated $25,000 principal plus fees of $375, into the Company’s common stock. The Company issued total aggregated 25,375,000 shares of common stock in connection with such conversion.

During the year ended December 31, 2013, the Company issued a total of 121,376,671 shares of common stock upon the requests from note holders to convert principal plus accrued interest totaling $490,871 into the Company’s common stock based on the terms set forth in the loans. The conversion rates were from $0.0009 to $0.014 per share(k)

~~During~~On ~~the~~January ~~year~~31, ~~ended~~2014, ~~December~~in 31conjunction with a settlement agreement with Tarpon, ~~2013~~a related party, the Company issued Tarpon a ~~total~~convertible promissory note in the principal amount of 23$75,~~021,012~~000. ~~shares~~The convertible note matures one year from the date of issuance with interest at 10% per annum. The convertible promissory note shall have no registration rights and shall be convertible into the common stock of the Company at any time at a conversion price equal to ~~settle~~75% ~~notes~~of ~~payable~~the low closing bid price for the twenty days prior to conversion. The conversion price is subject to anti-dilution protection and down round provisions in the event that the Company issues additional equity securities at a price less than the conversion price. The Company may prepay the note at 150% of the entire outstanding principal amount of the note plus any accrued but unpaid interest. As of ~~$125~~January 31,~~463~~ 2015, the Company is not compliant with the repayment terms of the notes and is in default. The Company intends to request that the maturity date of these notes be further extended, however, there can be no assurance that a further extension will be granted.

OnThe ~~February~~Company 4,accounted ~~2013,~~for the ~~Company~~issuance ~~issued~~of 4the convertible promissory note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly,~~856,726~~ ~~shares~~the embedded conversion option of ~~common~~the ~~stock~~convertible notes are recorded as derivative liabilities at their fair market value and are marked to amarket through earnings at the end of each reporting period. The gross proceeds from the sale of the note ~~lender~~are asrecorded ~~penalty~~net ~~shares~~of ~~for~~a ~~failing~~discount toof ~~issue~~$75,000. ~~shares~~The ~~timely~~debt ~~upon~~discount ~~receipt~~relates to fair value of the conversion ~~notice~~option. ~~from~~The debt discount is charged to interest expense ratably over the ~~lender~~term of the convertible note. The ~~Company~~fair ~~recorded~~value ~~$10,199~~of the conversion option on the date of issuance in excess of the face amount of the note was recorded to interest expense ~~for~~on ~~such~~the date of issuance.

OnAs ~~July~~of ~~15,~~December ~~2013~~31, ~~the Company issued 526~~2014,~~312~~ ~~shares~~outstanding ofprincipal ~~common~~and ~~stock~~accrued tointerest aon ~~note lender as penalty shares for failing to issue shares timely upon receipt of~~ the ~~conversion~~note ~~notice~~was ~~from~~$75,000 ~~the~~and ~~lender. The Company recorded~~ $76,~~895~~958, ~~of interest expense for such issuance~~respectively.

On October 14, 2013, the Company issued 2,078,972 shares of common stock to a note lender as penalty shares for failing to issue shares timely upon receipt of the conversion notice from the lender. The Company recorded $14,345 of interest expense for such issuance.F-24

On October 22, 2013, the Company issued 1,582,546 shares of common stock to a note lender as penalty shares for failing to issue shares timely upon receipt of the conversion notice from the lender. The Company recorded $9,495 of interest expense for such issuance.(l)

~~Cash~~On April 4, 2014 the Company issued a convertible promissory note in the principal amount of $50,000 to Tarpon, a related party. The convertible note matures one year from the date of issuance with the stated interest rate at 0%. The note is convertible into the Company’s common stock at a 40% discount of the lowest closing bid price during the 30 trading days prior to conversion.

~~Through~~The ~~Equity~~Company ~~Financing:~~accounted for the issuance of the convertible promissory note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, the embedded conversion option of the convertible notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $50,000. The debt discount relates to fair value of the conversion option. The debt discount is charged to interest expense ratably over the term of the convertible note. The fair value of the conversion option on the date of issuance in excess of the face amount of the note was recorded to interest expense on the date of issuance.

~~During~~As ~~the~~of ~~year ended~~ December 31, ~~2013~~2014, ~~for~~outstanding ~~cash~~principal ~~proceeds~~and ofaccrued ~~$570,800~~interest on the ~~Company~~note ~~sold~~was ~~106~~$50,~~066,743~~000 ~~shares of common stock~~ and ~~warrants to purchase additional 26,516,687 shares of common stock at exercise prices of~~ $0~~.0039~~, ~~to $0~~respectively.~~017 per share. The warrants have a term of three years and are fully vested on the date of issuance.~~

During the year ended December 31, 2013, for gross proceeds of $64,514, the Company issued 11,609,661 shares of common stock to multiple investors who exercised their warrants to purchase shares of common stock. The exercises prices ranged from $0.0035 to $0.0184.(m)

On ~~August~~April 2721, ~~2013~~2014 the Company ~~received~~issued ~~proceeds~~a ofconvertible ~~$10,500~~promissory ~~for~~note in the ~~exercise~~principal amount of 1$2,~~093~~500 to ASC Recap,~~750~~ ~~warrants~~a asrelated ofparty. ~~December~~The 31convertible note matures April 30, ~~2013~~2015 with the ~~shares~~stated ~~have~~interest ~~not~~rate ~~been~~at ~~issued~~0%. ~~and~~The ~~accordingly~~note is convertible into the Company’s ~~recorded~~common stock at a 50% discount of the ~~liability~~lowest ~~for~~closing bid price during the ~~share~~30 ~~issuance~~trading days prior to conversion.

OnThe ~~July~~Company 9accounted for the issuance of the convertible promissory note in accordance with ASC 815 “Derivatives and Hedging”. Accordingly, ~~2013~~the embedded conversion option of the ~~Company~~convertible ~~received~~notes are recorded as derivative liabilities at their fair market value and are marked to market through earnings at the end of each reporting period. The gross proceeds from the sale of the note are recorded net of a discount of $272,~~923~~500. ~~for~~The debt discount relates to fair value of the ~~exercise~~conversion option. The debt discount is charged to interest expense ratably over the term of ~~2,389,817~~the ~~warrants~~convertible asnote. The fair value of ~~December~~the ~~31,~~conversion ~~2013~~option on the ~~shares~~date ~~have~~of ~~not<~~

Filing Compare · PureSafe Water Systems, Inc.