Cabo Verde Capital 10Q 2009 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________

Form 10-Q

[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ________ to _______

Commission file number 000-49955

Wataire International, Inc.

(Name of small business issuer in its charter)

Washington

91-2060082

(State or other jurisdiction of (I.R.S. Employer Identification No.)

incorporation or organization)

3^rd Floor, 21900 Burbank Blvd, Woodland Hills, California 91367

(Address of principal executive offices) (Zip Code)

877-602-8985

(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. (Check One):

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]

Smaller reporting company [X]

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares outstanding the issuer's common stock, $.0001 par value, was 79,110,123 as of July 31, 2008.

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements ........................................

Item 2.

Management's Discussion and Analysis of Financial Condition and

Results of Operations..........................................

Item 3.

Quantitative and Qualitative Disclosures About Market Risk....

Item 4T.

Controls and Procedures.......................................

PART II

Item 1.

Legal Proceedings..............................................

Item 1A.

Risk Factors...................................................

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds....

Item 3.

Defaults Upon Senior Securities................................

Item 4.

Submission of Matters to a Vote of Security Holders............

Item 5.

Other Information..............................................

Item 6.

Exhibits .....................................................

EXHIBIT INDEX...............................................................

Part 1. Item 1. Financial Statements

Wataire International, Inc.

Page No.

Balance Sheets as at June 30, 2008 and March 31, 2008 (Unaudited)

Statements of Operations

For the Three Months Ended June 30, 2008 and 2007 (Unaudited)

Statements of Stockholders' Equity (Capital Deficiency)

For the Period From Inception August 17, 2000 to June 30, 2008 (Unaudited)

Statements of Cash Flows

For the Three Months June 30, 2008 and 2007 (Unaudited)

Notes to Financial Statements (Unaudited)

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2008

(Stated in US Dollars)

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

June 30, 2008 and March 31, 2008

(Unaudited)

(Stated in US Dollars)


		June 30,	March 31,
ASSETS		2008	2008

Current
Cash		$ 780	-
Accounts receivable		2,800	2,800
Prepaid expenses & retainer		6,090	2,280
Advance on marketing agreements		250,000	250,000
Advance on inventory		173,447	174,635
Inventory		298,541	308,328
		731,658	738,043

Capital assets, net		538	615
License rights		-	-
Patents, Trademarks		31,435	20,746
Acquisitions of intangibles		2,546,062	2,546,062

		$3,309,693	$3,305,466
LIABILITIES
Current
Accounts payable		$213,241	$321,308
Bank Indebtedness		-	5,885
Promissory notes payable		102,835	-
Due to related parties		(36)	2,280
Deferred revenue		170,000	154,540
		486,040	484,013
STOCKHOLDERS’ EQUITY
Capital stock
Authorized:
100,000,000	common shares with a par value of $0.0001
20,000,000	preferred shares with a par value of $0.0001,
20,000,000	redeemable at $0.005
Issued and outstanding:
78,110,123	common shares (March 31, 2008: 74,399,011)	7,811	7,440
27,501	preferred shares (March 31, 2008: 27,501)	2	2
Additional paid-in capital		12,791,164	12,551,536
Share subscriptions		-	-
Deficit accumulated during the development stage		(9,975,324)	(9,737,525)

Total Equity		2,823,653	2,821,453

Total Liabilities and Stockholders’ Equity		$3,309,693	$3,305,466

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

for the three months ended June 30, 2008 and 2007 and,

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


						August 17,
						2000 (Date of
		For the three months ended				Inception) to
		June 30,				June 30,
	2008		2007		2008

Sales		$ 154,540		$ 3,541		$ 468,102
Cost of sales		(102,104)		(2,022)		(328,673)

Gross margin		52,436		1,519		139,429
Other income		-		-		9,500

		52,436		1,519		148,929
Expenses
Advances written off		-		-		85,000
Amortization		77		19,744		70,513
Consulting fees		90,000		6,227		401,365
Donated services		-		-		11,250
Foreign exchange (gain)/loss		1,401		(52,540)		(62,354)
General and administrative		35,895		23,713		217,350
Incorporation costs		-		-		2,005
Management fees		45,000		30,000		511,883
Marketing and promotion		2,364		7,285		136,273
Professional fees		27,380		19,216		337,109
Research & Development		80,000		-		177,143
Rent		3,857		7,737		41,525
Settlement of accounts payable		-		-		(3,250)
Stock-based compensation		-		1,617,300		8,010,050
Travel		4,261		9,382		64,700
Website development costs		-		-		8,700

Total Expenses		290,235		1,688,064		10,009,262

Loss from continuing operations		(237,799)		(1,686,545)		(9,860,333)

Loss from discontinued operations		-		-		(114,991)

Net loss for the period		$ (237,799)		(1,686,545)		$ (9,975,324)

Basic and diluted loss per share		$ (0.01)		$ (0.03)

Weighted average number of shares outstanding		76,379,719		61,453,089

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIENCY)

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


							Deficit
	Common Stock			Preferred Stock			Accumulated
			Share			Additional	During the
	Number of		Subscriptions	Number of		Paid-in	Development
	Shares	Amount	Received	Shares	Amount	Capital	Stage	Total

Issuance of common shares	200	$ -	$ -	-	$ -	$ 10	$ -	$ 10
Share subscriptions	-	-	150,280	-	-	-	-	150,280
Net loss for the period	-	-	-	-	-	-	(216,896)	(216,896)

Balance, September 30, 2001	200	-	150,280	-	-	10	(216,896)	(66,606)
Share subscriptions	-	-	76,105	-	-	-	-	76,105
Net loss for the year	-	-	-	-	-	-	(29,313)	(29,313)

Balance, September 30, 2002	200	-	226,385	-	-	10	(246,209)	(19,814)
Share subscriptions received	-	-	5,000	-	-	-	-	5,000
Issuance of common shares	80,160	8	(231,385)	-	-	232,542	-	1,165

Balance, carry forward	80,360	8	-	-	-	232,552	(246,209)	(13,649)

…/cont’d

SEE ACCOMPANYING NOTES

WATAIRE INTERNATIONAL, INC.

Continued

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIENCY)

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


							Deficit
	Common Stock			Preferred Stock			Accumulated
			Share			Additional	During the
	Number of		Subscriptions	Number of		Paid-in	Development
	Shares	Amount	Received	Shares	Amount	Capital	Stage	Total

Adjustment to number of shares outstanding as a result of the acquisition of Millennium Business Group USA, Inc.
Millennium Business Group USA, Inc.	(80,360)	(8)	-	-	-	(232,552)	232,560	-
Cimbix Corporation	170,240	17	-	-	-	232,543	(232,560)	-
Fair value of shares issued in connection with the acquisition of Millennium Business Group USA, Inc.	80,360	8	-	2,501	1	(9)	-	-
Net asset deficiency of legal parent at date of reserve take-over transaction	-	-	-	-	-	-	(20,167)	(20,167)
Issue of common shares	2,772	-	-	-	-	13,810	-	13,810
Issue of common shares	1,000	-	-	-	-	7,500	-	7,500
Donated services	-	-	-	-	-	2,250	-	2,250
Net loss for the year	-	-	-	-	-	-	(98,849)	(98,849)

Balance, September 30, 2003	254,372	25	-	2,501	1	256,094	(365,225)	(109,105)

…/cont’d

SEE ACCOMPANYING NOTES

WATAIRE INTERNATIONAL, INC.

Continued

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIENCY)

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


							Deficit
	Common Stock			Preferred Stock			Accumulated
			Share			Additional	During the
	Number of		Subscriptions	Number of		Paid-in	Development
	Shares	Amount	Received	Shares	Amount	Capital	Stage	Total

Balance, September 30, 2003	254,372	25	-	2,501	1	256,094	(365,225)	(109,105)
Issue of common shares	5,000	1	-	-	-	49,999	-	50,000
Issue of common shares	600,000	60	-	-	-	29,940	-	30,000
Net loss for the year	-	-	-	-	-	-	(227,180)	(227,180)

Balance, September 30, 2004	859,372	86	-	2,501	1	336,033	(592,405)	(256,285)
Issue of common shares	160,000	16	-	-	-	484	-	500
Issue of common shares	36,000,000	3,600	-	-	-	86,400	-	90,000
Issue of common shares	8,960,000	896	-	-	-	94,304	-	95,200
Issue of common shares	2,440,000	244	-	-	-	121,756	-	122,000
Issue of common shares	250,000	25	-	-	-	11,225	-	11,250
Disposal of MBG	-	-	-	-	-	(140,949)	-	(140,949)
Net loss for the year	-	-	-	-	-	-	(79,243)	(79,243)

Balance, September 30, 2005	48,669,372	4,867	-	2,501	1	509,253	(671,648)	(157,527)
Issue of common shares	336,000	34	-	-	-	15,086	-	15,120
Issue of common shares	10,000,000	1,000	-	-	-	619,000	-	620,000
Issue of common shares	440,000	44	-	-	-	109,956	-	110,000
Issue of common shares	1,000,000	100	-	-	-	559,900	-	560,000
Inventory donated	-	-	-	-	-	9,945	-	9,945
Net loss for the year	-	-	-	-	-	-	(297,661)	(297,661)

Balance, September 30, 2006	60,445,372	6,045	-	2,501	1	1,823,140	(969,309)	859,877

…/cont’d

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

WATAIRE INTERNATIONAL, INC.

Continued

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIENCY)

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


							Deficit
	Common Stock			Preferred Stock			Accumulated
			Share			Additional	During the
	Number of		Subscriptions	Number of		Paid-in	Development
	Shares	Amount	Received	Shares	Amount	Capital	Stage	Total

Balance, September 30, 2006	60,445,372	$ 6,045	-	2,501	$ 1	1,823,140	(969,309)	859,877
Issue of common shares	272,536	27	-	-	-	204,375	-	204,402
Issue of common shares	1,834,045	183	-	-	-	880,157	-	880,340
Issue of common shares	1,000,000	100	-	-	-	409,900	-	410,000
Issue of common shares	4,800,000	480	-	-	-	959,520	-	960,000
Net loss for the period	-	-	-	-	-	-	(8,430,656)	(8,430,656)
Stock-based compensation	-	-	-	-	-	8,010,050	-	8,010,050

Balance, September 30, 2007	68,351,953	$ 6,835	$ -	2,501	$ 1	$ 12,287,142	$ (9,399,965)	$ 2,894,013
Issue of common shares	2,058,823	205	-	-	-	349,795	-	350,000
Issue of common shares	588,235	60	-	-	-	99,940	-	100,000
Issue of common shares	4,400,000	440	-	-	-	219,560	-	220,000
Cancellation of shares	(1,000,000)	(100)	-	-	-	(409,900)	-	(410,000)
Issue of preferred shares	-	-	-	25,000	1	4,999	-	5,000
Net loss for the period	-	-	-	-	-	-	(337,560)	(337,560)

Balance, March 31, 2008	74,399,011	$ 7,440	$ -	27,501	$ 2	$ 12,551,536	$(9,737,525)	$ 2,821,453

WATAIRE INTERNATIONAL, INC.

Continued

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY (DEFICIENCY)

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


							Deficit
	Common Stock			Preferred Stock			Accumulated
			Share			Additional	During the
	Number of		Subscriptions	Number of		Paid-in	Development
	Shares	Amount	Received	Shares	Amount	Capital	Stage	Total

Balance, March 31, 2008	74,399,011	$ 7,440	-	27,501	$ 2	$ 12,551,536	$ (9,737,525)	$ 2,821,453
Issue of common shares	1,600,000	160	-	-	-	79,840	-	80,000
Issue of common shares	1,111,112	111	-	-	-	99,889	-	100,000
Issue of common shares	1,000,000	100	-	-	-	59,900		60,000
Net loss for the period	-	-	-	-	-	-	(237,799)	(237,799)

Balance, June 30, 2008	78,110,123	$ 7,811	-	27,501	$ 2	$ 12,791,164	$ (9,975,324)	$ 2,823,653

The number of preferred and common shares outstanding reflects a reverse split of 1 share for each 200 shares issued and outstanding on October 8, 2004. In addition, the number of shares outstanding reflects a forward split of 4 common shares for each 1 common share issued and outstanding on July 8, 2005. The par value and additional paid-in capital were adjusted in conformity with the number of shares then issued.

The Company has changed its year end and adopted a March 31 year end.

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATEDSTATEMENTSOFCASHFLOWS

for the three months ended June 30, 2008 and 2007 and,

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


			August 17,
			2000 (Date of
	For the three months ended		Inception) to
	June 30,		June 30,
	2008	2007	2008
Operating Activities
Loss from continuing operations	$ (237,799)	$(1,686,545)	$ (9,975,324)
Adjustments to reconcile loss to cash used in
operating activities:
Amortization	77	19,744	70,513
Donated services	-	-	11,250
Website development costs written off	-	-	8,700
Shares issued for services	-	-	122,070
Advances written off	-	-	50,000
Inventory	-	-	4,095
Stock-based compensation	-	1,617,300	8,010,050
Change in non-cash working capital items:
Accounts receivable	-	-	(2,800)
Prepaid expenses and retainers	(3,810)	(4,881)	(6,090)
Deferred revenue	15,460	-	170,000
Advance on marketing agreements	-	-	(250,000)
Advance on inventory	1,188	(36,414)	(173,447)
Inventory	9,787	(25,102)	(298,541)
Accounts payable	(108,067)	61,863	213,241

	(323,164)	54,035	(2,046,283)

Investing Activities
License payment advanced	-	-	(50,000)
Capital assets	-	-	(922)
Advanced to subsidiaries	-	-	(115,091)
Acquisition of intangibles-net	(10,689)	-	(1,467,625)
Website development costs	-	-	(8,700)
Proceeds from disposition of subsidiaries	-	-	100

	(10,689)	-	(1,642,238)

SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Continued

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

CONSOLIDATEDSTATEMENTSOFCASHFLOWS

for the three months ended June 30, 2008 and 2007 and,

for the period August 17, 2000 (Date of Inception) to June 30, 2008

(Unaudited)

(Stated in US Dollars)


			August 17,
			2000 (Date of
	Three months ended		Inception) to
	June 30,		June 30,
	2008	2007	2008

Financing Activities
Bank indebtedness	(5,885)	-	-
Promissory notes payable	102,835	20,835	102,835
Due to Related Parties	(2,315)	22,327	(36)
Share subscriptions	-	(880,341)	-
Common stock issued for cash	180,000	880,341	1,792,102
Common Stock issued for Marketing Agreement	-	-	-
Common Stock issued for Intangibles	-	-	960,000
Common Stock issued for Accounts Payable	60,000	-	469,313
Common Stock issued for Promissory Notes	-	-	365,087

	334,633	43,162	3,689,301

Increase (decrease) in cash during the period	780	(10,873)	780

Cash, beginning of the period	-	14,291	-

Cash, end of the period	$ 780	$ 3,418	$ 780

Non-Cash Transactions – Note 8

WATAIRE INTERNATIONAL, INC.

(A Development Stage Company)

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2008

(Stated in US Dollars)

Note 1

Interim Reporting

While the information presented in the accompanying interim three months consolidated financial statements is unaudited, it includes all adjustments, which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented in accordance with accounting principles generally accepted in the United States of America. These interim financial statements follow the same accounting policies and methods of their application as the Company’s March 31, 2008 annual consolidated financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim financial statements be read in conjunction with the Company’s March 31, 2008 annual financial statements.

The Company has changed its year end from September 30 to March 31. The attached financial statements have been conformed to reflect the change in yearend.

Operating results for the three months ended June 30, 2008 are not necessarily indicative of the results that can be expected for the year ended March 31, 2009.

Note 2

Nature and Continuance of Operations

The Company was incorporated on August 17, 2000 in the State of Washington, USA and the Company’s common shares are publicly traded on the OTC Bulletin Board.

The Company markets and distributes atmospheric water generator machines. It also owns all of the intellectual property relating to a water treatment process and devices for water-from-air machines. Management plans to further evaluate, develop and manage the commercialization, sub-license and/or commercial sale of these products.

These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2008, the Company had not yet achieved profitable operations, has accumulated losses of $9,975,324 since its inception, has a working capital of $245,618 and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Company’s ability to continue as a going concern. ;The Company’s ability to continue as a going concern is dependent upon future profitable operations and/or the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances, however there is no assurance of additional funding being available.

Note 3

Significant Accounting Policies

These interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in US dollars. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of

financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. Actual results may differ from these estimates.

The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Development Stage Company

The Company is a development stage company as defined in the Statements of Financial Accounting Standards (“SFAS”) No. 7. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. All losses accumulated since inception has been considered as part of the Company’s development stage activities.

Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Petsmo Inc. and Aqua Technologies, Inc. All inter-company transactions and balances have been eliminated.

Financial Instruments

The carrying values of cash, accounts receivable, accounts payable, promissory notes payable and due to related parties approximate fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Inventory

Inventory, which consists of finished goods, is valued at the lower of cost and net realizable value using the first in first out (FIFO) method.

Website Development Costs

Under the provisions of Statement of Position No. 98-1 “Accounting for the Costs of Computer Software Development or Obtained for Internal Use,” the Company previously capitalized costs of design, configuration, coding, installation and testing of the Company’s website up to its initial implementation. Costs are amortized to expense over an estimated useful life of three years using the straight-line method. Ongoing website post-implementation cost of operations, including training and application, are expensed as incurred. The Company evaluates the recoverability of website development costs in accordance with Financial Accounting Standards No. 121 “Accounting of the Impairment of Long Lived Assets.”

Intangible Assets and Amortization

The Company has adopted SFAS No. 142 “Goodwill and Other Intangible Assets”, which requires that goodwill not be amortized, but that goodwill and other intangible assets be tested annually for impairment. Intangible assets with a finite life will be amortized over the estimated useful life of the asset. The Company’s operational policy for the assessment and measurement of any impairment in the intangible assets, which primarily relates to contract-based intangibles such as license agreements and extensions, is to evaluate annually, the recoverability and remaining life of its intangible assets to determine the fair value of these assets. The methodologies to be used to estimate fair value include the use of estimates and

assumptions, including projected revenues, earnings and cash flows. If the fair value of any of these assets is determined to be less than its carrying value, the Company will reflect the impairment of any such asset over its appraised value.

Revenue Recognition

The Company receives revenues from the sale of water generator machines. The Company recognizes revenues when persuasive evidence of an arrangement exists, the product is delivered and collection is reasonably assured. A one-year warranty is provided by the Company on all its products.

Income Taxes

The Company follows SFAS No. 109, “Accounting for Income Taxes” which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.

Basic and Diluted Loss Per Share

The Company computes net loss per share in accordance with SFAS No. 128, "Earnings Per Share". SFAS 128 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted EPS gives effect to all dilutive potential common shares outstanding during the year including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the year is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti dilutive.

Stock-based Compensation

In December 2004, the Financial Accounting Standards Board issued FAS 123R “Share-Based Payment”, a revision to FAS 123. FAS 123R replaces existing requirements under FAS 123 and APB 25, and requires public companies to recognize the cost of employee services received in exchange for equity instruments, based on the grant-date fair value of those instruments, with limited exceptions. FAS 123R also affects the pattern in which compensation cost is recognized, the accounting for employee share purchase plans, and the accounting for income tax effects of share-based payment transactions. For small business filers, FAS 123R is effective for interim or annual periods beginning after December 15, 2005. The Company adopted FAS 123R on October 1, 2006.

Foreign Currency Translation

The Company translates foreign currency transactions and balances to its reporting currency, United States dollars, in accordance with SFAS No. 52, “Foreign Currency Translation”. Monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year. Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenues and expenses are translated at the rate approximating the rate of exchange on the transaction date. All exchange gains and losses are included in the determination of net income (loss) for the year.

Change in Reporting Year

The Company adopted March 31 as its fiscal year end from September 30. The operating results and cash flows are presented for the six months ended March 31, 2008. The audited comparative information represents the results of operations and cash for years ended September 30. Unaudited information as of March 31, 2007 and for the six months then ended is presented for comparative purposes.

Note 4

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, Business Combinations, and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. They also issued Statement of Financial Accounting Standards No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets, and Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, in August and October 2001, respectively.

SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for under the purchase method. SFAS 141 supersedes APB Opinion No. 16, Business Combinations, and Statement of Financial Accounting Standards No. 38, Accounting for Pre-acquisition Contingencies of Purchased Enterprises, and is effective for all business combinations initiated after June 30, 2001.

these assets. The methodologies to be used to estimate fair value include the use of estimates and assumptions, including projected revenues, earnings and cash flows. If the fair value of any of these assets is determined to be less than its carrying value, the Company will reflect the impairment of any such asset over its appraised value.

SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS 143 is effective in fiscal years beginning after June 15, 2002, with early adoption permitted. The adoption of SFAS No. 143 is not expected to have a material impact on the Company's financial statements.

SFAS 144 establishes a single accounting model for the impairment or disposal of long-lived assets, including discontinued operations. SFAS 144 superseded Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121), and APB Opinion No. 30, Reporting the Results of Operations--Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The provisions of SFAS 144 are effective in fiscal years beginning after December 15, 2001, with early adoption permitted, and in general are to be applied prospectively. The Company records impairment losses on long lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset's carrying amount. In such c ases, the amount of the impairment is determined on the relative values of the impaired assets.

Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51, Financial Statements, addresses consolidation by business enterprises of variable interest entities. It is effective immediately for variable interest entities created after January 31, 2003. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities acquired before February 1, 2003. The implementation of Interpretation No. 46 did not have a material effect on the Company's financial statements.

SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, amends and clarifies accounting for derivative instruments under SFAS No. 133. It is effective for contracts entered into after June 30, 2003. The impact of adoption of this statement is not expected to be significant.

SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liability and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The impact of adoption of this statement is not expected to be significant.

In December 2004, the FASB issued SFAS 153, Exchanges of Non-monetary Assets, an amendment of APB No. 29, Accounting for Non-monetary Transactions. SFAS 153 requires exchanges of productive assets to be accounted for at fair value, rather than at carryover basis, unless (1) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits or (2) the transactions lack commercial substance. SFAS 153 is effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not expect the adoption of this standard to have a material effect on its financial position, results of operations or cash flows.

In December 2004, the FASB issued Statement 123 (revised 2004) which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains services in share-based payment transactions. This Statement requires a public entity to measure the cost of services received in exchange for an award of equity instrume nts based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period).

Note 5

Related Party Transactions

During the six months ended March 31, 2008, and the six months ended March 31, 2007, directors of the company and the spouse of a director of the Company charged the following expenses to the Company:


	2008	2007

Cost of sales	$ -	$ 2,022
Administrative fees	5,355	5,058
Interest	-	-
Management fees	45,000	30,000

	$ 50,355	$ 37,080

Note 5

Related Party Transactions – (cont’d)

Amounts due to related parties are due to a director of the Company. The amounts are unsecured, non-interest bearing and have no specific terms of repayment.

Note 6

Common Stock – Note 11

Commitments:

Share For Debt Settlements

On October 5, 2007, the Company approved the issuance of 2,058,823 units at $0.17 per unit to settle amounts due to a director of the Company and a shareholder of the Company totaling $350,000. Each unit contained one common share and one share purchase warrant exercisable at $0.17 per share on or before September 30, 2010.

On March 19, 2008 the Company approved the issuance of 4,400,000 units at $0.05 per unit to settle amounts due to a director of the Company totaling $220,000. Each unit contained one common share and one half share purchase warrant exercisable at $0.05 per share on or before March 18, 2011.

On March 19, 2008 the Company approved the issuance of 25,000 preferred shares at $0.20 per share to settle amounts due to a director of the Company totaling $5,000.

On June 18, 2008, the Company approved the issuance of 1,000,000 units at $0.06 per unit to settle amounts due to a director of the Company totaling $60,000. Each unit contained one common share and one half share purchase warrant exercisable at $0.06 per share on or before Jun 17, 2011.

Note 7

Share Purchase Warrants

The following table summarizes the continuity of the Company’s warrants:

Note 7

Share Purchase Warrants - (cont’d)



	March 31, 2008
	Number of	Exercise	Expiry
	Warrants	Price	Date

Outstanding:	38,760	$2.50	April 5, 2008
Issued	272,536	$0.85	June 30, 2007
		or at $1.00	December 31, 2007
		or at $1.15	December 31, 2008
Issued	1,834,045	$0.85	April 30, 2007
		or at $1.00	October 31, 2007
		or at $1.15	April 30, 2008
Issued	2,058,823	$0.17	September 30, 2010
Issued	2,200,000	$0.05	March 18, 2011
Issued	800,000	$0.05	April 7, 2011
Issued	1,000,000	$0.06	June 16, 2011
	8,204,164
Expired	(1,872,805)
Outstanding, ending	6,331,359

Stock Purchase Options

On January 9, 2007, the board of directors amended its 2006 Stock Option Plan and increased the authorized reserved shares for issuance of incentive stock options to 11,000,000 shares of its common stock.

The following table summarizes the continuity of the Company’s stock options:



	June 30, 2008
		Weighted
	Number	Average
	of	Exercise
	Options	Price

Outstanding and exercisable, beginning	-	-
Granted	12,270,000	$0.71
Cancelled	(7,075,000)	$0.75

Outstanding and exercisable, ending	5,195,000	$0.67

The fair value of the stock options granted during the three months ended June 30, 2008 was determined using the Black-Scholes option pricing model with the following assumptions:

Note 7

Stock Options – (Cont’d)



Expected dividend yield	0.0%
Risk-free interest rate	4.58%
Expected volatility	153.04%
Expected option life	5.28 years

The compensation charge associated with stock options in the amount of $8,010,050 was included in the statement of operations for year ended March 31, 2008.

Additional information regarding stock options outstanding as at June 30, 2008 is as follows:


Number of
Common Shares	Exercise Prices	Expiry Date

425,000	$0.50	September 30, 2013
2,000,000	$0.62	September 30, 2013
800,000	$1.10	September 30, 2013
1,700,000	$0.57	September 30, 2013
270,000	$0.65	September 30, 2013

5,195,000

Note 8

Non-cash Transactions

Financing and investing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows. During the year ended September 30, 2006, the Company issued 336,000 common shares at $0.045 per share totalling $15,120 to consultants for consulting services. During the year ended September 30, 2007, the Company issued 272,536 common shares at $0.75 per share totalling $204,402 to directors and formers directors for accounts payable, promissory notes payable and amounts due to related parties. The Company issued 1,000,000 common shares to a marketing agreement at $0.41 per share totalling $410,000. During the six months ended March 31, 2008, the Company approved the issuance of 2,058,823 common shares at $0.17 per share totalling $350,000 to a director and shareholder of the Company for repayment of promissory notes, interest owed and other accounts payable. These transactions were excluded from the statements of cash flows. The Company approved the issuance of 4,400,000 common shares at $0.05 per share totalling $220,000 to a director for indebtedness and other accounts payable. The Company approved the issuance of 25,000 preferred shares at $0.20 per share totalling $5,000 to a director for indebtedness. The Company approve the issuance of 1,000,000 common shares at $0.06 per share totalling $60,000 to a director for indebtedness.

Note 9

Contingency

On October 11, 2006, the Company was named as a defendant in a lawsuit whereby the plaintiffs are claiming general damages, with respect to funds totaling approximately $94,000 which were allegedly misappropriated, interest, costs and such further and other relief as the court may deem just. Management of the Company believes the claim is without merit and it is unlikely to succeed. The Company has filed a statement of defense denying the allegations and a counterclaim for defamation. The court has ordered a severance of the action, and has required the plaintiffs to prove their damages, before proceeding to trial on issues of liability.

Note 10

License Rights - Note 12


	June 30,			September 30,
	2007			2006
		Accumulated
	Cost	Amortization	Net	Net

License rights	$ 1,180,000	$ 70,128	$ 1,109,872	$ 1,168,873

The license rights were amortized straight-line over the initial terms of 15 years until June 2007. The net cost of the license rights has been reclassified with the Intellectual Property acquired in July 2007. (See note 11)

Note 11

Commitments

On December 11, 2006 and December 12, 2006, the Company entered into two marketing agreements in which the Company would pay $1,000,000 and issue 1,000,000 common shares as follows:


		Common
	Cash	Shares

Upon filing a registration statement	$ -	100,000
January 15, 2007 (paid)	250,000	150,000
April 15, 2007	250,000	-
May 15, 2007	250,000	-
June 15, 2007	250,000	250,000
July 15, 2007	-	250,000
October 15, 2007	-	250,000

	$ 1,000,000	1,000,000

During the year ended March 31, 2008, the Company paid $250,000 in respect to the cash portion of the agreements and has issued 1,000,000 common shares of the Company. The 1,000,000 shares issued were not released to the marketing company as it has not commenced its branding and marketing efforts and the contract has expired. The 1,000,000 shares have been returned back to treasury. The Company is currently re-negotiating the new terms.

Note 12

Intellectual Property & Intangibles

On April 25, 2007, the Company entered into an agreement to acquire all of the intellectual property (“IP”) relating to a water treatment process and related devices for water-from-air machines from Wataire Industries Inc, Canadian Dew Technologies Inc., Terrence Nylander and Roland Wahlgren. Mr. Nylander was at the time of signing the agreement and currently, the President of the Company.

Consideration for the purchase of the IP was $476,190 (CAD $500,000), which was paid at March 31, 2007, the issuance of 4,800,000 shares of common stock of the Company, the agreement by the Company to pay a royalty equal to 5% of the gross profits from the sales of all apparatus or products relating to the IP for a period of 30 years from April 25, 2007 and a royalty equal to 5% of gross licensing revenues on the IP. This consideration is in addition to the 11,000,000 shares of common stock previously issued for the license rights as disclosed in the Company’s annual September 30, 2006 audited consolidated financial statements. The IP acquisition was completed in July 2007.

The IP acquired by the Company includes all copyrights, patent rights, trade secret rights, trade names, trademark rights, process information, technical information, contract rights and obligations, designs, drawings, inventions and all other intellectual and industrial property rights of any sort related to or associated with the invention.

The intangibles consist of patents and trademark applications of $31,434 and the cost of the acquisition of IP Technology of $2,546,062 as described above.



Patents, Trademark applications	$	31,435

4,800,000 shares issued to Wataire Ecosafe
and Canadian Dew Technologies		960,000
Cash consideration		476,190
Remaining license rights including
11,000,000 shares issued to Wataire Ecosafe		1,109,872
	$	2,577,497

Note 13

Deferred Revenue

Deferred revenue consists of cash payment made by customers for inventory. The revenue will be realized when inventory is shipped to the customers.

Note 14

Subsequent Events

The Company approved the issuance of 1,000,000 units at $0.05 per unit totaling $50,000 to a director for indebtedness. Each unit consists of one common share and one share purchase warrant exercisable at $0.05 per share on or before July 7, 2011.

PART I

This Interim Report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995 and concern matters that involve risks and uncertainties that could cause actual results to differ materially from historical results or from those projected in the forward-looking statements. Discussions containing forward-looking statements may be found in the material set forth under “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-K. Words such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “beli eve,” “estimate,” “predict,” “potential,” “continue” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable as of the date of this Report, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this Interim Report on Form 10-Q. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations.

Readers should carefully review and consider the various disclosures made by us in this Report, set forth in detail in Part I, under the heading “Risk Factors,” as well as those additional risks described in other documents we file from time to time with the Securities and Exchange Commission, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business. We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.

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

General

Wataire International, Inc. ("Wataire," the "Company," "us," or "we") was incorporated under the laws of the State of Washington on August 17, 2000 and has been a reporting issuer with the United States Securities and Exchange Commission (the "SEC") since November 2000.

On October 3, 2006, the Company changed its name to Wataire International, Inc. Previously, on August 26, 2003, the Company had changed its name from Corporate Development and Innovation, Inc. to Cimbix Corporation. The Company’s common stock traded in the Over-the-Counter Bulletin Board Market, but as a result of a late filing of the Company’s Form 10-KSB for its fiscal year ended September 30, 2007 (the filing date of which was subsequently corrected to be timely), our common stock now trades under the ticker symbol "WTAR" on the “Pink Sheets” market. In light of the corrected filing date, we have applied to the NASD to have our common stock re-admitted for trading in the Over-the-Counter Bulletin Board market.

The Company's business is still in its early developmental and promotional stages and to date, the Company's primary activities have involved significant re-structuring and re-organization. After involvement in Petsmobility and MBG businesses, in 2006 the Company entered into license agreement with Ecosafe Innotech Inc., (formerly Wataire Ecosafe Technologies Inc., formerly Wataire Industries

Inc.)(“Ecosafe”) to market and distribute their commercial water generation machines. On April 25, 2007, we entered into an agreement with Ecosafe, Canadian Dew Technologies Inc. (“CanDew”), Terrence Nylander and Roland Wahlgren to acquire all of the intellectual property (“IP”) relating to a water treatment process and devices for water-from-air machines. The agreements previously executed between the Company and Ecosafe have been terminated and cancelled and forms part of the current agreement. Mr. Nylander was, at the time, an officer and director of the Company.

Consideration for the purchase of the IP was $469,485 (CAD $500,000), which was paid at March 31, 2007, the issuance of 4,800,000 shares of common stock of the Company, the agreement by the Company to pay a royalty equal to 5% of the gross profits from the sales of all apparatus or products relating to the IP for a period of 30 years from April 25, 2007 and a royalty equal to 5% of gross licensing revenues on the IP. This consideration is in addition to the 11,000,000 shares of common stock previously issued for the license rights. The IP acquisition was completed in July 2007.

LIQUIDITY AND FINANCIAL RESOURCES

The Company remains in the development stage since inception. Operations were financed through proceeds from sales and the issuance of equity and loans from directors. The directors have also advanced funds into the Company to cover cash flow deficiencies. The advances have no stated repayment terms. These funds were used to pay inventory, services, legal and accounting expenses along with several other miscellaneous operational infrastructure costs.

The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. At June 30, 2008, we have been unsuccessful in our efforts to raise additional capital to meet our plan of operations. Our cash position as of June 30, 2008 was $780. Since inception, we have recognized no significant revenue. We have accumulated operating losses of $9,975,324 and as of June 30, 2008 we had a working capital of $245,618. At the present time, and over the next twelve months, our primary focus will be to develop our marketing plan, new initiatives and operational plan to establish sales and to explore various methods for raising additional funds.

Critical Accounting Policies

The Company's discussion and analysis of its financial condition and results of operations are based upon the Company's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires the Company to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company 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 carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

NEW ACCOUNTING PRONOUNCEMENTS

SFAS No. 142 addresses the financial accounting and reporting for acquired goodwill and other intangible assets. Under the new rules, the Company is no longer required to amortize goodwill and other intangible assets with indefinite lives, but will be subject to periodic testing for impairment. SFAS 142 supersedes APB Opinion No. 17, Intangible Assets. The Company's operational policy for the assessment and measurement of any impairment in the value of goodwill and intangible assets, which primarily relates to contract-based intangibles such as license agreements and extensions, is to evaluate annually, the recoverability and remaining life of its intangible assets to determine the fair value of these assets. The methodologies to be used to estimate fair value include the use of estimates and assumptions, including projected revenues, earnings and cash flows. If the fair value of any of these assets is determined to be less tha n its carrying value, the Company will reflect the impairment of any such asset over its appraised value.

amount. In such cases, the amount of the impairment is determined on the relative values of the impaired assets.

In December 2004, the FASB issued Statement 123 (revised 2004) which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains services in share-based payment transactions. This Statement requires a public entity to measure the cost of services received in exchange for an award of equity instruments based on the gr ant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period).

Results of Operations for the three months periods ended June 30, 2008 and June 30, 2007.

The Company has adopted a March 31 fiscal year end. The financial statements have been conformed to reflect the change in the yearend. The operating results and cash flows are presented for the three months ended June 30, 2008 and 2007.

Revenues. For the three months ended June 30, 2008, we had total revenues of $154,540 as compared to the total revenues of $3,541 for the three month period ended June 30, 2007, an increase of $150,999 from our sales of products.

Operating Expenses. For the three months ended June 30, 2008, we had total operating expenses of $290,235 as compared to total operating expenses of $1,688,064 for the three months period ended June 30, 2007, a decrease of $1,397,829. The decrease was predominately due to the stock based compensation of $1,617,300.

Management Fees. For the three months ended June 30, 2008, we had management fees of $45,000 as compared to $30,000 for the three months period ended June 30, 2007, an increase of $15,000 in management fees.

Professional Expenses. For the three months ended June 30, 2008 we had professional expenses of $27,380 as compared to $19,216 for the three months period ended June 30, 2007, an increase of $8,164.

Net Loss. For the three months ended June 30, 2008, we had a net loss of $237,799 as compared to a net loss of $1,686,545 for the three months period ended June 30, 2007, a decrease of $1,448,746. The decrease was generally due to the stock based compensation of $1,617,300.

Plan of Operation

We currently have minimal cash reserves and a significant working capital deficit. Accordingly, our ability to pursue our plan of operations is contingent on our being able to obtain funding for the development, marketing and commercialization of our products and services.

Management plans, as soon as finances permit, to hire additional management and staff for its US-based operations especially in the areas of finance, sales, marketing, and investor/public relations. The Company may also choose to outsource some of its marketing requirements by utilizing a series of independent contractors based on the projected size of the market and the compensation necessary to retain qualified employees. The Company engaged a marketing firm to handle the Company’s branding, marketing, advertising, media and public relations for the planned upcoming 2008 North American launch of its consumer product line of atmospheric water generators. The term of the engagement is for one year, and the Company has paid the marketing firm $250,000 and issued 1,000,000 shares of common stock that has been registered on Form S-8 for their services. The marketing agreements expired and the Company has not commenced i ts branding and marketing efforts and therefore the shares were not released by the Company. The Company is currently re-negotiating the terms of its agreements with the marketing firm.

To achieve our new operational plan, we will need to raise substantial additional capital for our operations through licensing fees and product sales, sale of equity securities and/or debt financing. We have no cash to fund our operations at this time, so we plan to sell licenses and products, offer common stock in private placements as well as seeking debt financing during the next 12 months to raise up to $8,000,000. We believe the proceeds from such efforts will enable us to expand our operations, buy inventory and start our marketing campaign.

Due to the "start up" nature of the Company's business, the Company expects to incur losses as the Company conducts its ongoing research, product and systems development programs. We will require additional funding to continue our operations, for marketing expenses, to pursue regulatory approvals for our products, for any possible acquisitions or new technologies, and we may require additional funding to establish manufacturing capabilities in the future. We may seek to access the public or private equity markets whenever conditions are favorable. We may also seek additional funding through strategic alliances or collaborate with others. We cannot assure you that adequate funding will be available on terms acceptable to us, if at all. Because we are presently in the early stages of development and promotional stages of our business, we can provide no assurance that we will be successful with our efforts to estab lish any revenue. In order to pursue our existing operational plan, we are dependent upon the continuing sales and financial support of creditors and stockholders until such time when we are successful in raising debt/equity capital to finance the operations and capital requirements of the Company or until such time that we can generate sufficient revenue from our various divisions.

BUSINESS

Our business plan is to fully exploit our products and technology by marketing and distributing our commercial and home/office water generation machines as well as their under-the-counter/over-the-counter units, and the water-producing greenhouse.

The atmospheric water generator produces purified water from the atmosphere by using a condensing surface and a special filtration system that removes dust, airborne particles and bacteria to generate clean drinking water and simultaneously cleaning the air. This method of extracting water vapor has been in use for many years. Some similar applications include air conditioners and dehumidifiers. The actual water production and cost per gallon varies with the humidity and temperature of the atmosphere at the specific site in which the unit is employed.

The Wataire water generation equipment is a water-from-air technology system developed by a team of specialized technicians incorporating patent pending technologies that control bacterial contamination. The Company currently sells two types of atmospheric units: (i) small-scale home/office units, which include a full-sized upright model and a countertop model and which can produce between four to seven gallons of water per day depending on humidity and temperature levels of the location of the unit, and (ii) commercial/industrial units capable of producing more than 5,000 liters (1320 gallons) of safe drinking water each day depending upon ambient conditions.

The home/office units are designed to replace bottled water and purified water dispensers, eliminating the need for replenishment and storage of plastic bottles. These units are intended for usage in residences, schools, offices, hospitals and restaurants. They can also serve as a personal disaster relief unit for

consumers in circumstances such as hurricane Katrina where residents in the affected area had no drinking water.

The industrial units are intended for use in military camps, industrial applications such as factories, commercial applications such as hotels, humanitarian and disaster relief applications where fresh drinking water is scarce.

The water generation equipment is a water-from-air technology system developed by a team of specialized technicians incorporating patent pending technologies that control bacterial contamination. The water generating units are equipped with an electronic control system that turns the machine on and off when full and can circulate the water to maintain clean drinking water 24 hours a day, 365 days a year. It has a dynamic display to allow for monitoring the machine's operation, showing when a new filter is required.

The system provides an independent, sustainable, safe water source for a wide variety of possible circumstances such as mining and petroleum exploration camps, bottled water and beverage manufacturers, food manufacturers, military camps, non-government organizations, humanitarian assistance organizations, emergency and disaster relief situations. According to field trials recently held in Belize and Thailand, the system performed well in a tropical environment producing the design projected volume of water and achieving the desired water quality standards. While we believe the unit is also economically viable in temperate climates, the Wataire units work best in the tropics due to the high humidity levels, which will produce the highest rate of water production at the lowest cost per gallon.

The patent pending water treatment system is comprised of a three-stage water treatment design that cleans water to meet World Health Organization guidelines. The unit consists of a filtration system, a food-grade dehumidifier water producing module, and a water treatment module. The water treatment process is proprietary and may be subject of various patent applications already filed.

The process basically involves taking filtered moist air from the atmosphere and dehumidifying it for treatment by the water treatment module. This produced water is then processed through sediment filters, ultra-fine filters, activated charcoal filters and ultraviolet light treatment that eliminate virtually all biological contaminants including bacteria, viruses, and pollutants that are in the air. Atmospheric water vapor is an abundant resource that can be used with virtually no negative environmental impacts. The machine should be situated in a space that can provide fresh flowing air to the machine intake as it dehumidifies the space. The water-from-air technology has received broad acceptance around the world as a new and sustainable source of potable water.

COMPETITION

Water purification and bottled water industries are highly competitive. According to past internal research, there were possibly nine entities experimenting with the technology of water generation, of which two or three were direct active competitors. Some of those companies have limited or no business activities while others have entered into strategic alliances with one another. The relatively high energy cost associated with changing water from its vapor phase in the air to the liquid phase appears to be an obstacle to making sales for a number of these competitors. Control of bacteria and viruses in the field of atmospheric water generation creates a technological challenge that our patent pending water treatment module has resolved.

The atmospheric water generator and filtration system industry is new, rapidly evolving and can compete with more traditional water treatment systems that rely on surface and ground water supplies. In the future, our competitors can and may duplicate or surpass in efficacy many of the products or services offered by us.

REGULATORY ENVIRONMENT

The manufacturing, processing, testing, packaging, labeling and advertising of the products that we sell may be subject to regulation by one or more U.S. federal agencies, including the Food and Drug Administration, the Federal Trade Commission, the CSA and UL in North America, the United States Department of Agriculture, the Environmental Protection Agency, the standards provided by the United States Public Health authority and the World Health Organization for Drinking Water. These activities may also be regulated by various agencies of the states, localities and foreign countries in which consumers reside.

CERTIFICATION AND TESTING

All the products that we sell and plan to sell will go through stringent testing that will have the appropriate UL, CE or CSA certifications on the products. The CSA Mark is an internationally recognized mark that appears on over one billion products worldwide. CSA International is a leader in standards development, certification and testing, and quality management registration. The CSA International marks are accepted by many electrical inspectors, gas inspectors, building inspectors and other governmental authorities that approve projects and products that are sold in Canada, the United States and all over the world. The Company uses the services of CSA International because they test, certify and ensure that products comply with applicable safety and/or performance standards applicable to the products for the sale in that country. These standards include UL, CSA, ANSI (American National Standards Institute), ASTM, NSF, OSHA (Occupational Safety and Health Administration under the US Department of Labor), NVLAP (National Voluntary Laboratory Accreditation Program), SCC (Standards Council of Canada), IAS (International Accreditation Service Inc.) and others.

At this time, the products carry the markings of CE and we are currently seeking CSA markings for Canada and UL markings the United States. These markings on the products indicate to governmental officials and consumers that the products may be legally placed on the market in the country for sale. It also indicates that the products met all safety requirements and tests, and such products are in conformity with the applicable standards.

RESEARCH AND DEVELOPMENTS

The Company does not have its own research and development department and will rely on Canadian Dew Technologies Inc. and other independent sources to furnish the Company with new technology and improvements on its existing applications, efficiency and theories of the underlying atmospheric water generators and filtration systems.

MARKET ANALYSIS AND STRATEGY

We believe a market opportunity exists for our atmospheric water generators and filtration systems. Our technology provides an alternative solution to the world’s shortage of fresh water and can provide clean, safe drinking water in various geographical settings. Today, governments and health professionals are increasingly conscious of the negative health effects of pollution, chemicals used to disinfect water supplies, and residual salt in desalinated water, and how they affect human health.

Our target markets for the water-from-air systems are businesses, governments, and people who are situated in the humid tropics. To date, our products have been sold in over 30 different countries and have received positive response from system users. Our systems, units and/or applications target various markets including military applications, oil and mining operations, new and existing tourist resorts, beverage bottling plants, new condominium developments and humanitarian missions.

The development of our marketing plan is still in its early stages; however, we anticipate having an outline of our marketing strategy in the fall of 2008. Management plans, as soon as finances permit, to hire additional management and staff for its US-based operations especially in the areas of finance, sales, marketing, and investor/public relations. The Company may also choose to outsource some of its marketing requirements by utilizing a series of independent contractors based on the projected size of the market and the compensation necessary to retain qualified employees.

In December 2006, the Company retained Cucoloris Films Inc. (“Cucoloris”), a Los Angeles based multimedia and marketing company to help us with our marketing needs. The term of the engagement is for one year, and the Company has paid the marketing firm $250,000 and issued 1,000,000 shares of common stock that has been registered on Form S-8 for their services. The marketing agreements expired and the Company has not commenced its branding and marketing efforts and therefore the shares were not released by the Company and have been returned to treasury. The Company is currently re-negotiating the terms of its agreements with the marketing firm.

PATENTS AND TRADEMAKS

The patent pending and/or trademarks and copyrights from Ecosafe, Terry Nylander, Roland Wahlgren and CanDew have been transferred to our name. The Company has filed other patents, trademarks and copyrights in other countries.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are primarily exposed to foreign currency risk, interest rate risk and credit risk.

Foreign Currency Risk - We import products from foreign countriesinto the United States and market our products in North America. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or, if we initiate our planned international operations, weak economic conditions in foreign markets. Because our revenues are currently denominated in U.S. dollars,

a strengthening of the dollar could make our products less competitive in foreign markets that we plan to enter. We have not hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars. We do not engage in financial transactions for trading or speculative purposes.

Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive to changes in the general level of U.S. interest rates. We do not have significant short-term investments, and due to the short-term nature of our investments, we believe that there is not a material risk exposure.

Credit Risk - Our accounts receivables are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.

ITEM 4. CONTROLS AND PROCEDURES.

The Company's Chief Executive Officer and its Chief Financial Officer are primarily responsible for the accuracy of the financial information that is presented in this quarterly Report. These officers have as of the close of the period covered by this Quarterly Report, evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-4c and 15d-14c promulgated under the Securities Exchange Act of 1934 and determined that such controls and procedures were effective in ensuring that material information relating to the Company was made known to them during the period covered by this Quarterly Report. There have been no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of our 2008 fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financ ial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

We are a defendant in a case brought in October 2006 in the Supreme Court of British Columbia, Canada entitled Atkinson et al. v. Cimbix Corporation et al. The action relates to allegations by plaintiffs that $94,000 was deposited into a law firm’s trust account for investment in On4 Communications Inc., formerly PetsMobility Network (Canada) Inc. (“On4”). The plaintiffs allege that the law firm deducted legal fees from the amount held in trust and transferred the balance of the funds to On4. Both the law firm and On4 are also defendants in the case. The Company believes the claims against it are without merit and unlikely to succeed. The Company has filed a statement of defense denying the allegations against it and has filed a counter claim for defamation. The investors have been repaid all of the funds by On4. The Company has not paid any amount to the plaintiffs. The Company takes the position that it has don e nothing wrong and, in any event, the plaintiffs have recovered the entirety of their loss from On4. The

court has ordered a severance of the action, and has required the plaintiffs to prove their damages, before proceeding to trial on issues of liability. The claim and counterclaim have been dismissed without costs.

On March 25, 2008, we received a subpoena from the Securities and Exchange Commission (“SEC”) issued in an investigation initiated by the SEC with respect to a number of companies traded on the “pink sheets” market (Our Company is not one of the companies that are the subject of the investigation). The subpoena, inter alia, requested documents relating to: contacts with personnel of and sales of our products to the U.S. Navy, sales of our products generally, the Company’s license agreement with Airborn Water Company, and display of the Company’s products at a music festival in Florida. Our Chief Executive Officer, Robert Rosner, has provided testimony to the SEC in this matter.

Item 1A. Risk Factors.

There have been no material changes to the risk factors described in our 10-K for the year ended March 31, 2008 filed with the Securities and Exchange Commission on .

Item 2. Unregistered Sales of Securities and Use of Proceeds.

In April 2008, the Company entered into a private placement with an accredited investor of $80,000 for 1,600,000 units, each unit consisting of a share of common stock and one half of a warrant whereby each whole warrant entitles the holder to purchase a share of common stock of the Company. The warrants stock will expire on April 7, 2011 and are exercisable at $0.05 per share. As of the date of this annual report, the shares have not been issued. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.

In May 2008, the Company entered into private placements with accredited investors of $100,000 for 1,111,112 common shares of the Company at $0.09 per share. As of the date of this annual report, the shares have not been issued. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.

In June 2008, the Company agreed to issue to Robert Rosner, our Chief Executive Officer, 1,000,000 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of $60,000 of indebtedness of the Company to Mr. Rosner ($0.06 per unit). The warrants stock will expire June 16, 2011 and exercisable at $0.06 per share. As of the date of this annual report, the shares have not been issued. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.

In July 2008, the Company agreed to issue to Robert Rosner, our Chief Executive Officer, 1,000,000 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of $50,000 of indebtedness of the Company to Mr. Rosner ($0.05 per unit). The warrants stock will expire July 07, 2011 and exercisable at $0.05 per share. As of the date of this annual report, the shares have not been issued. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Submission of Matters to a Vote of Security Holders.

Not Applicable.

Item 5. Other Information.

None.

Item 6. Exhibits

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002, filed herewith.

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002, filed herewith.

32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002, filed herewith.

32.1 Certification of the Chief Financial Officer pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002, filed herewith.

SIGNATURES

In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: August 18, 2008

WATAIRE INTERNATIONAL, INC.

By:_/s/ Robert Rosner

Chief Executive Officer, Director

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

Cabo Verde Capital (CAPV) 10-Q2009 Q1 Quarterly report

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