Capacitive Deionization Technology Systems (CDTN) 10QSB/A 2002 Q1 Quarterly report (small business) (amended)

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10 - QSB/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2002

Capacitive Deionization Technology Systems, Inc.

(Formerly Far West Group, Inc.)

(Exact name of registrant as specified in its charter)

Nevada	86-0867960
(State of Jurisdiction)	(I.R.S. Employer
	Identification No.)

13636 Neutron Road, Dallas, Texas 75244-4410

(Address of Principal executive offices)

972-934-1586

(Registrant's telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.

(1)  Yes         No  X 

(2)  Yes  X    No      

The number of shares outstanding of the registrant's $.0001 par value common stock as of April 30, 2002 was 11,136,818.

This Quarterly Report on Form 10-QSB/A is intended to amend and restate Part I in its entirety and Part II relating to Exhibits of the Company's Quarterly Report for March 31, 2002 on Form 10-QSB, as amended. The financial statements have been adjusted to reflect that the Company is a development stage entity and to reflect certain adjustments made to the balance sheets from 2001. The Company is also filing two exhibits for certifications now required by Sarbanes-Oxley Act of 2002.

Capacitive Deionization Technology Systems, Inc.

Index
Part I	Financial Information
	Item 1	Financial statements
		Balance Sheets as of March 31, 2002 and
		December 31, 2001
		Statements of Operations for the three
		months ended March 31, 2002 and 2001 and Cumulative Through March 31, 2002
		Statements of Cash Flows for the three
		months ended March 31, 2002 and 2001 and Cumulative Through March 31, 2002
		Notes to Financial Statements
	Item 2	Management's discussion and analysis
		of Financial Condition and Results
		of Operations
	Item 3	Controls and Procedures
Part II	Other Information
	Item 2	Changes in Securities and Use of Proceeds
	Item 6	Exhibits and Reports on Form 8-K
Signature Page

CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(A Development Stage Entity)

BALANCE SHEETS

Assets

	March 31	December 31,
	2002	2001
Current assets:	(Unaudited)	(Audited)
Cash	$      17,230	$        1,668
Furniture and equipment	25,294	25,294
Less accumulated depreciation	(14,265)	(13,065)
Total furniture and equipment	11,029	12,229
	$       28,259	$       13,897

Liabilities and Stockholders' Equity (Deficit)

Current liabilities:
Accounts payable	$     481,762	$     495,394
Wages payable	575,194	495,367 ��
Accrued liabilities	145,297	142,198
Customer deposits	68,200	48,200
Accounts and notes payable to shareholder	154,000	154,000
Current portion of long-term debt	24,497	23,297
Notes payable to outside stockholders	80,000	80,000
Payable to former subsidiary	31,808	31,808
Total current liabilities	1,560,758	1,470,264
Long-term debt	76,174	79,374
Commitments and contingencies	-	-
Stockholders' equity (Deficit):
Preferred stock, $.0001 par value, 20,000,000 shares
authorized; none issued and outstanding	-	-
Common stock, $.0001 par value, 80,000,000 shares
authorized; 10,927,520 and 10,075,901
shares issued and outstanding	1,092	1,007
Additional paid-in capital	6,628,590	6,176,765
Note receivable issued for stock	(175,000)	-
Accumulated deficit from previous operating activities	(3,523,977)	(3,523,977)
Deficit accumulated during the development stage	(4,539,378)	(4,189,536)
Total stockholders' equity (deficit)	(1,608,673)	(1,535,741)
	$      28,259	$       13,897

See accompanying notes to financial statements.

CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(A Development Stage Entity)

STATEMENTS OF OPERATIONS

Three Months Ended March 31, 2002 and 2001

And Cumulative Operations as a Development Stage Entity
(January 1, 2000 Through March 31, 2002)

(Unaudited)

			Cumulative
			Through
	2002	2001	March 31, 2002
Revenues	$         -	$         -	$         -
Operating expenses:
Common stock and options issued for services --
General and administrative	107,410	87,700	1,404,849
Common stock and options issued for services --
Research and development	17,000	12,233	176,283
Other research and development	132,781	140,736	1,956,049
Other general and administrative (excluding
amounts applicable to stock and options        issued for services each period)	72,089	12,660	857,244
	329,280	253,329	4,394,425
Loss from operations	(329,280)	(253,329)	(4,394,425)
Other income (expense):
Interest expense	(20,562)	(2,309)	(144,953)
Total other expense	(20,562)	(2,309)	(144,953)
Net loss	$    (349,842)	$    (255,638)	$(4,539,378)
Basic and diluted loss per common share	$        (0.03)	$        (0.03)
Weighted average common shares outstanding	10,634,187	8,347,020

CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

STATEMENTS OF CASH FLOWS

(A Development Stage Entity)

Three Months Ended March 31, 2002 and 2001

And Cumulative Operations as a Development Stage Entity
(January 1, 2000 Through March 31, 2002)

(Unaudited)

			Cumulative
			Through
	2002	2001	March 31, 2002
Cash flows from operating activities:
Net loss	$  (349,842)	$  (255,638)	$(4,539,378)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation	1,200	1,197	10,537
Shares issued for services	124,410	99,933	1,117,862
Stock options issued as compensation	-	-	463,270
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities	139,294	94,606	1,165,924
Net cash used in operating activities	(84,938)	(59,902)	(1,781,785)
Cash flows from investing activities:
Purchase of furniture and equipment	-	-	(14,169)
Cash flows from financing activities:
Net advances from shareholder	-	-	(96,388)
Net payments on long-term debt	-	-	(17,894)
Payments to former subsidiary	-	-	(238,192)
Sale of common shares	102,500	24,985	1,616,757
Proceeds (payments) - notes payable to stockholders	(2,000)	31,000	159,500
Net cash provided by financing activities	100,500	55,985	1,423,783
Net increase (decrease) in cash and cash equivalents	15,562	(3,917)	(372,171)
Cash at beginning of period	1,668	4,877	389,401
Cash at end of period	$       17,230	$            960	$       17,230
Supplemental disclosure:
Total interest paid	$           -	$           -	$       45,343

Non-cash transactions:

During 2001, the Company issued $34,400 of common stock for accounts payable.

During 2002, the Company issued 350,000 common shares for a note receivable of $175,000 and

      100,000 common shares for $50,000 in accounts payable.

See accompanying notes to financial statements.

CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(Formerly FarWest Group, Inc.)

NOTES TO FINANCIAL STATEMENTS

March 31, 2002

Note 1 - Future Operations

     The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company's significant operating losses and its working capital deficit and stockholders' deficit raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     The following is a summary of management's plan to raise capital and generate additional operating funds.

     The Company was funded initially through investment by the principal shareholder. Since 1998 funding has been through private investments including strategic alliances.

     Business opportunities for the next twelve months include international CDT systems sales to governments, major multi-national industrial corporations and U.S. pilot sales. Several opportunities are being discussed including: governments, humanitarian trust funds, industrial joint ventures, market sectors and geographic distribution agreements.

     The Company recognizes the extent of the financial investment necessary to support current business activities. There is no guarantee that the Company can complete the above-referenced financing; however, the Company is negotiating the following additional options:

     *     Additional strategic investment alliances.

     *     Expansion of current strategic and investment alliances.

     *     An industry specific joint venture.

     *     A joint venture with industry and government partners to accelerate pilot systems for
            the Powder River CBME Gas Wastewater Remediation Project.

     The Company is dependent upon the proceeds of private placements and strategic alliances of the Company's securities to implement its business plan and to finance its working capital requirements. Should the Company's plans or its assumptions change or prove to be inaccurate or offering proceeds are insufficient to fund the Company's operations, the Company would be required to seek additional financing sooner than anticipated. Management is confident it will be able to continue raising funds in the balance of 2002 through private placements and investment/distribution agreements.

    There can be no assurances given that the Company will be successful in generating sufficient revenues from its planned activities or in raising sufficient capital to allow it to continue as a going concern which contemplates increased operating expenses, acquisition of assets and the disposition of liabilities in the normal course of business. These factors can affect the ability of the Company to implement its general business plan including the completion of the required manufacturing facilities and continued proprietary CDT product improvements. The Company continues to enhance the CDT Technology licensed from Lawrence Livermore National Laboratory in parallel with making significant reductions in the manufacturing costs of the technology. The Company requires that a confidentiality agreement be executed prior to providing technological information to prospective clients and investors. The Company recognizes the risk of a pr ospective client or investor violating the confidentiality agreement and knowingly disclosing the Company's proprietary information including trade secrets. The Company continues to monitor all such relationships and vigorously enforces such agreements. The Company is aware of potential violation of an existing confidentiality agreement and is evaluating its enforcement action.

Note 2 - Summary of Significant Accounting Policies and Practices

     (a) Description of Business

     Capacitive Deionization Technology Systems, Inc. (Formerly FarWest Group, Inc.) (the "Company" or "CDT Systems, Inc.") was organized under the laws of the state of Nevada in July 1996 to serve as a water technology company.

     In January 1997, the Company entered into a manufacturing and marketing license agreement with Lawrence Livermore National Laboratories ("Lawrence Livermore") whereby the Company obtained the rights to Lawrence Livermore's patented Capacitive Deionization Technology ("CDT"). The company has the rights to develop and manufacture a carbon aerogel CDT product for commercial use in the desalination, filtration and purification of water. The manufacturing and marketing license is effective for the life of the patents (up to 17 years). To maintain the license the Company must make contracted annual royalty payments to Lawrence Livermore beginning at $25,000 per year, then becoming a percentage of revenue. The Company has completed development of its first release CDT unit and has completed plans and is negotiating financing to construct a volume production manufacturing facility in North Texas for its CDT bricks.

     (b) Net Loss per Weighted Average Share

     Net loss per weighted average share is calculated using the weighted average number of shares of common stock outstanding.

     (c) Basis of Presentation

     The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB of Regulations S-B. They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended December 31, 2001 included in the Company's Annual Report on Form 10-KSB to be filed with the Securities and Exchange Commission. The interim unaudited financial statements should be read in conjunction with those financial statements to be included in the Form 10-KSB. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, hav e been made. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002.

(d) Stock-Based Compensation

The Company applies the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations, in accounting for its stock-based compensation plans. Under Opinion 25, compensation cost is measured as the excess, if any, of the market price of the Company's stock at the date of the grant above the amount an employee must pay to acquire the stock. No compensation expense is recognized when the exercise price is equal to the market value of the stock on the day of the grant. The Financial Standards Board ("FASB") published SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS No. 123) on January 1, 1996 which encourages, but does not require, companies to recognize compensation expense for grants of stock, stock options and other equity instruments to employees based on new fair value accounting rules. Companies that choose not to adopt the new rules will continue to apply the existing rul es, but will be required to disclose pro forma net income under the new method.

The Company issued no options or warrants to employees during the quarters ended March 31, 2002 and 2001.

Item 2. Management's discussion and analysis of financial condition and results of operations.

     Results of operations.

          The Company did not recognize any revenue during the periods ending March 31, 2002 or 2001. Operating expenses were $329,280 compared to the first quarter of 2001 operating expenses of $253,329. Research and development expenditures for the quarter increased from $136,469 in the first quarter of 2001 to $149,781 in the first quarter 2002. The increase in operating expenses was primarily due to an increase in legal fees.

     During the first quarter 2002, a private placement of 555,000 shares of the Company's Rule 144 common stock was completed providing the Company $102,500 in cash and a note receivable of $175,000. The Company issued 100,000 shares to settle accounts payable totaling approximately $50,000. Further, the Company issued 196,619 shares for services provided.

           Liquidity and capital resources.

      Management recognizes the requirement for additional investment to execute the Company's business plan and complete the necessary manufacturing and research facilities. Financing transactions are currently being negotiated. These include an equity participation manufacturing joint venture, an equity investment in conjunction with a publicly financed trust fund and a long-term debt financing. There is no certainty that these fundings will be completed.

     Information regarding and factors affecting forward-looking statements.

Forward-looking statements include statements concerning plans, goals, strategies, future events or performances and underlying assumptions and other statements, which are other than statements of historical fact. Certain statements contained herein are forward-looking statements and, accordingly, involve risk and uncertainties, which could cause the actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company's expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management's examination of historical trends, data contained in the Company's records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result, or be achieved, or accomplished.

Item 3.     Controls And Procedures

     Within 90 days prior to the filing of this report, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's Chairman and Chief Executive Officer and the Company's Chief Financial Officer. Based on that evaluation, the Company's Chairman and Chief Executive Officer, and Chief Financial Officer concluded that the Company's disclosure control and procedures are effective. There have been no significant changes in the Company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date the Company carried out its evaluation.

     Disclosure controls and procedures are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company's reports filed under the Exchange Act is accumulated and communicated to management, including the Company's Chairman, Chief Executive Officer and President, and the Company's Chief Financial Officer as appropriate, to allow timely decision regarding required disclosure.

PART II

Item 2. Changes in Securities and Use of Proceeds

During the first quarter 2002, a private placement of 555,000 shares of the Company's Rule 144 common stock was completed providing the Company $102,500 in cash and a note receivable of $175,000. The Company issued 100,000 shares to settle accounts payable totaling approximately $50,000. Further, the Company issued 196,619 shares for services provided.

Item 6 Exhibits and Reports of Form 8-K.

     (a)   Form 8-K was filed by the Registrant on April 18, 2002 relating to its change in auditors
            for the year ended December 31, 2001.

Exhibits

31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Signatures

     Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized.

Capacitive Deionization Technology Systems, Inc.

    /s/ Dallas Talley                             

Dallas Talley

Chairman of the Board,

Chief Executive Officer

   /s/ Phil Marshall                       

Phil Marshall

Chief Financial Officer

Dated: November 13, 2003

Exhibit No.	EXHIBIT INDEX Description
31.1	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002