Summary of GELTECH SOLUTIONS, INC.

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

Certain statements in "Management's Discussion and Analysis and of Financial Condition and Results of Operations" are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements.

Overview

In 2007, we initiated marketing and sales of RootGel™, a product which reduces the use of water and is primarily marketed to golf courses and the agriculture market. In 2008, we initiated marketing FireIce™, a water soluble fire retardant which protects firefighters and is useful in containing fires including wildfires. We also intend later in fiscal 2009 or in fiscal 2010 to complete development of IceWear™, a cooling vest which can be worn by firefighters, racecar drivers and others who work in extreme heat. Our financial statements have been prepared on a going concern basis, and we need to become a viable business.

We were incorporated in July 2006 as a Florida corporation and reincorporated in Delaware in November 2006. Our products were initially developed by the GelTech Division of Dyn-O-Mat, Inc., a predecessor entity. Our Chief Technology Officer, Mr. Peter Cordani, invented FireIce and IceWear while at Dyn-O-Mat and developed an earlier version of RootGel™ at Dyn-O-Mat as well. Mr. Cordani developed the current version of RootGel™ on behalf of GelTech. Although we do not intend to begin marketing WeatherTech, our hurricane suppression product, in the foreseeable future. Mr. Cordani also developed that product while at Dyn-O-Mat.

RESULTS OF OPERATIONS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2008 COMPARED TO THE SIX MONTHS ENDED
DECEMBER 31, 2007.

Sales

For the six months ended December 31, 2008, we had sales of $29,062 as compared to sales of $15,358 for the six months ended December 31, 2007, an increase of $13,704 or 89.2%. Sales consisted of $5,773 for RootGel™ and $23,289 for FireIce™. All of the 2007 sales were from RootGel™.

Cost of Goods Sold

Cost of goods sold was $7,951 for the six months ended December 31, 2008 as compared to $8,576 for the three months ended December 31, 2007. The decrease is directly related to the increase in sales of FireIce™ which has a better profit margins than RootGel™.

Selling, General and Administrative Expenses

Selling, general and administrative ("S,G&A") expenses were $1,365,173 for the six months ended December 31, 2008 as compared to $848,606 for the six months ended December 31, 2007. The increase in 2008 expenses is due to the expansion of the executive and sales teams leading to higher direct payroll costs of $150,000, the vesting of increased employee stock options added $77,000 of expenses. Additionally, marketing expenses increased $62,000 as the Company began marketing two products in fiscal 2009 and related travel expenses increased $41,000. Professional fees and investor relations costs have increased $71,000 as a result of our stock trading on the over the counter market starting in June 2008. We have added members to our sales and administrative team and expect current S,G&A expenses to be capable of supporting the sales of our products into the marketplace. We expect S,G&A expenses for the remainder of the year will remain fairly constant and be approximately $650,000, excluding commissions, for a full quarter.

Research and Development Expenses

Research and development ("R&D") expenses were $112,797 for the six months ended December 31, 2008 as compared to $79,868 for the six months ended December 31, 2007. The increase in fiscal 2009 expenses of $32,929 reflects amounts remitted to the National Forest Service for environmental impact studies of FireIce™.

Loss from Operations

Loss from operations was $1,456,859 for the six months ended December 31, 2008 as compared to $921,692 for the six months ended December 31, 2007. The increased loss from operations resulted from increases in operating expenses identified above.

Interest Income

Interest income was $14,513 for the six months ended December 31, 2008 as compared to $11,078 for the six months ended December 31, 2007 and resulted from our investment of surplus funds.

Interest Expense

Interest expense was $7,490 for the six months ended December 31, 2008 as compared to $6,740 for the six months ended December 31, 2007. The increase resulted from our draws on our Line of Credit in November 2008.

Net Loss

Net loss was $1,449,836 for the six months ended December 31, 2008 as compared to $917,354 for the six months ended December 31, 2007. The higher net loss resulted from increases in staffing levels and higher level of marketing activities. Net loss per common share was $0.11 for the six months ended December 31, 2008 as compared to $0.09 for the six months ended December 31, 2007. The weighted average number of share outstanding as of December 31, 2008 and 2007 were 13,467,158 and 10,283,076, respectively.

RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2008 COMPARED TO THE THREE MONTHS ENDED
DECEMBER 31, 2007.

Sales

For the three months ended December 31, 2008, we had negative sales of $41,279 as compared to sales of $1,368 for the three months ended December 31, 2007, a decrease of $42,647. The decline in sales resulted from the issuance of credits to customers in December 2008 in the amount of $65,570 for the return of product sold in June 2008. Sales of product during the quarter consisted of $630 for RootGel™ and $23,661 for FireIce™. All of the 2007 sales were from RootGel™.

Cost of Goods Sold

Cost of goods sold was a negative $11,988 for the three months ended December 31, 2008 as compared to cost of sales of $1,322 for the three months ended December 31, 2007. The decrease was the result of the value of the inventory returned ($17,000) in connection with the Company's issuance of a credit to a customer in December 2008.

Selling, General and Administrative Expenses

S,G&A expenses were $642,670 for the three months ended December 31, 2008 as compared to $432,761 for the three months ended December 31, 2007. The increase in 2008 expenses is due to the expansion of the executive and sales teams leading to higher direct payroll costs of $71,000, the vesting of increased employee stock options added $36,000 of expenses. Additionally, increases in marketing emphasis resulted in an increase of $15,000 along with an increase in travel expenses of $6,000. Professional fees and investor relations costs have increased $28,000 as a result of our stock trading on the over the counter market starting in June 2008. We have added members to our sales and administrative team and expect current S,G&A expenses to be capable of supporting the sales of our products into the marketplace.

Research and Development Expenses

R&D expenses were $95,980 for the three months ended December 31, 2008 as compared to $54,132 for the three months ended December 31, 2007. The increase in fiscal 2009 expenses of $32,929 reflects amounts remitted to the National Forest Service for environmental impact studies of FireIce™.

Loss from Operations

Loss from operations was $767,941 for the three months ended December 31, 2008 as compared to $486,847 for the three months ended December 31, 2007. The increased loss from operations resulted from increases in staffing levels and the higher level of marketing activities.

Interest Income

Interest income was $1,746 for the three months ended December 31, 2008 as compared to $4,392 for the three months ended December 31, 2007 and resulted from our investment of surplus funds, the balances of which were lower in the three months ended December 31, 2008.

Interest Expense

Interest expense was $7,152 for the three months ended December 31, 2008 as compared to $3,150 for the three months ended December 31, 2007. The increase resulted from our draws on our Line of Credit in November 2008.

Net Loss

Net loss was $773,347 for the three months ended December 31, 2008 as compared to $485,605 for the three months ended December 31, 2007. The higher net loss resulted from increases in staffing levels and higher level of marketing activities. Net loss per common share was $0.06 for the three months ended December 31, 2008 as compared to $0.05 for the three months ended December 31, 2007. The weighted average number of share outstanding as of December 31, 2008 and 2007 were 13,471,466 and 10,282,434, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows used by operating activities for the six month period ended December 31, 2008 were $1,432,023 in which our net loss of $1,449,836 was impacted primarily by non-cash stock option compensation expense of $116,166 and by credits issued to customers of $65,570 reducing our accounts receivable which were partially offset by a decrease in accounts payable of $67,532 and accrued liabilities of $40,034, plus an increase in inventory of $83,840. For the six month period ended December 31, 2007, net cash used in operating activities was $998,621, comprised of the net loss for the period totaling $917,354, along with a decrease in accounts payable of $109, 923 and related party payables of $21,231 and partially offset by non-cash stock compensation expense of $39,170 .

Cash flows provided by investing activities for the six months ended December 31, 2008 were $745,143 which were related to the sale of short term marketable debt securities of $750,000, partially offset by purchases of equipment of $4,857. For the six month period ended December 31, 2007, net cash used in investing was $14,411which related to the acquisition of equipment.

Cash flows provided by financing activities for the six months ended December 31, 2008 were $547,097, resulting from advances against the Company's $1 million Line of Credit agreement of $558,000 which were offset by repayment of insurance premium finance contracts in the amount of $10,903. Cash flows provided by financing activities for the six months ended December 31, 2007 were $871,000, resulting from $1,000,000 received from the sale of common stock, reduced by $110,000 from the repayment of a note payable and $19,000 used to repurchase common stock.

At December 31, 2008, we had a working capital deficit of approximately $237,000. Additionally, as described in notes to our consolidated financial statements, we are required to pay our distributor $290,000 in 2009. As of the date of this report, we have approximately $88,000 in available cash and marketable debt securities. We do not anticipate the need to purchase any material capital assets in order to carry out our business.

In July 2008, we entered into a $4,000,000 revolving line of credit agreement with our largest shareholder. This line of credit will assist the Company in financing the purchase of inventory. The line of credit may only be used to finance firm sales orders. On February 10, 2009, we borrowed $100,000 under this line of credit. As a result, we entered into another secured line of credit agreement with our largest shareholder in September 2008. The new line of credit has no restrictions and permits us to borrow up to $1,000,000 to meet our working capital needs. In November 2008, we received $558,000 in advances against this line of credit. This shareholder/lender has assured us that he will provide any additional support we may require. However, the lender is an individual, and we have no

access to his financial condition. We do not know whether or how he has been impacted by the recession, stock market slump and the credit crisis. In addition, the Company received $100,000 on January 23, 2009 for the sale of 133,333 shares of the Company's common stock. The Company may be required to issue additional debt or equity financing in order to meet its future obligations. There is no guarantee that such financing will be available to the Company, particularly in light of current economic conditions. Since December 31, 2008, the Company has recorded FireIce sales of $199,496 and RootGel sales of $45,550, related to product shipments in January and February 2009, and has approximately $850,000 of open purchase orders for its FireIce product, however, if the Company is unable to generate substantial cash flows from additional sales of our products, or through financings including but not limited to the lines of credit, the Company may not be able to remain operational.

Related Person Transactions

For information on related party transactions and their financial impact, see Note 6 to the Condensed Consolidated Financial Statements (Unaudited).

Principal Accounting Estimates

In response to the SEC's financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its most subjective accounting estimation process for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the Company's financial condition. The accounting estimate is discussed below. This estimate involves certain assumptions that if incorrect could create a material adverse impact on the Company's results of operations and financial condition.

Stock-Based Compensation

Under Statement of Financial Accounting Standards No. 123, "Share-Based Payment" (revised 2004) or Statement 123(R), which was effective as of January 1, 2006, we recognize an expense for the fair value of our outstanding stock options as they vest, whether held by employees or others.

We estimate the fair value of each stock option and warrant at the grant date using the Black-Scholes option pricing model based upon certain assumptions which are contained in Note 7 to the unaudited condensed consolidated financial statements contained in this report. The Black-Scholes model requires the input of highly subjective assumptions including the expected stock price volatility. Because our stock options and warrants have characteristics different from those of traded options, and because changes in the subjective input of assumptions can materially affect the fair value estimate, in our management's opinion, the existing models may not necessarily provide a reliable single measure of the fair value of such stock options.

Forward-Looking Statements

The statements in this report relating to expectations regarding the Company's liquidity, availability of future financing and the sufficiency of S,G &A are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Additionally, words such as "expects", "anticipates", "intends", "believes", "will, and similar words are used to identify forward-looking statements.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements are the continuation of the recession, the condition of the global credit markets and the capital markets and our failure to general the sales we anticipate. Additionally, FireIce™ sales rely principally upon sales to state and local governments, which are facing serious shortfalls in revenue and budgetary constraints. This may have adversely affected and may in the future adversely affect our ability to sell FireIce™. For more information regarding some of the ongoing risks and uncertainties of our business, see the Risk Factors contained in our Form 10-K for the year ended June 30, 2009. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3.