SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only (As Permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WATAIRE INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
(_) Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated
and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
(_) Fee paid previously with preliminary materials.
(_)] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Preliminary Copy dated January 28, 2010
WATAIRE INTERNATIONAL, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY , 2010
Woodland Hills, California
February , 2009
A Special Meeting of Stockholders (the "Special Meeting")
of Wataire International, Inc., a Washington corporation (the
"Company"), will be held at _____________________, on
_____________ , _____________ __, 2010, at 10:00 A.M. (local
time) for the following purposes:
1.To amend the Articles of Incorporation of the Company to
increase the authorized number of shares of common stock from
100,000,000 shares, par value $.0001 per share, to 500,000,000
shares, par value $.0001 per share (Proposal No. 1); and
2. To transact such other business as may properly come
before the Special Meeting and any adjournment or postponement
thereof.
The Board of Directors has fixed the close of business on
______, February __, 2010, as the record date for determining
the stockholders entitled to notice of and to vote at the
Special Meeting and any adjournment or postponement thereof.
Shares of common stock can be voted at the meeting only if the
holder is present at the meeting in person or by valid proxy.
All stockholders are cordially invited to attend the Special
Meeting in person. However, whether or not you expect to attend
the Special Meeting in person, you are urged to mark, date, sign
and return the enclosed proxy card as promptly as possible in
the postage-prepaid envelope provided to ensure your
representation and the presence of a quorum at the Special
Meeting. If you send in your proxy card and then decide to
attend the Special Meeting to vote your shares in person, you
may still do so. Your proxy is revocable in accordance with the
procedures set forth in the Proxy Statement.
By Order of the Board of Directors,
Robert Rosner
Chairman and Chief Executive Officer
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE. IF A QUORUM IS NOT REACHED,
THE COMPANY WILL HAVE THE ADDED EXPENSE OF RE-ISSUING THESE
PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU
MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON.
THANK YOU FOR ACTING PROMPTLY
WATAIRE INTERNATIONAL, INC.
21900 Burbank Blvd, 3rd Floor
Woodland Hills, CA 91367
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors (the "Board") of Wataire
International, Inc., a Washington corporation (the "Company"),
of proxies in the enclosed form for use in voting at the
Special Meeting of Stockholders (the "Special Meeting") to be
held at ___________________, on ________, ___________ __, 2010,
at 10:00 A.M. (local time), and any adjournment or postponement
thereof.
Only holders of record of the Company's , par value $.0001
per share (the "common stock"), on February __, 2010 (the
"Record Date") will be entitled to vote at the Special Meeting.
At the close of business on the Record Date, the Company had
outstanding _______ shares of common stock.
Any person giving a proxy in the form accompanying this
Proxy Statement has the power to revoke it prior to its
exercise. Any proxy given is revocable prior to the Special
Meeting by an instrument revoking it or by a duly executed proxy
bearing a later date delivered to the Secretary of the Company.
Such proxy is also revoked if the stockholder is present at the
Special Meeting and elects to vote in person.
The Company will bear the entire cost of preparing,
assembling, printing and mailing the proxy materials furnished
by the Board of Directors to stockholders. Copies of the proxy
materials will be furnished to brokerage houses, fiduciaries and
custodians to be forwarded to the beneficial owners of the
common stock. In addition to the solicitation of proxies by use
of the mail, some of the officers, directors and regular
employees of the Company may (without additional compensation)
solicit proxies by telephone or personal interview, the costs of
which the Company will bear.
This Proxy Statement and the accompanying form of proxy is
being sent or given to stockholders on or about February ,
2010.
Stockholders of the Company's common stock are entitled to
one vote for each share held. Such shares may not be voted
cumulatively.
Each validly returned proxy (including proxies for which no
specific instruction is given) which is not revoked will be
voted "FOR" Proposal 1 as described in this Proxy Statement,
unless specified otherwise in the proxy, and, at the proxy
holders' discretion, on such other matters, if any, which may
come before the Special Meeting (including any proposal to
adjourn the Meeting).
Determination of whether a matter specified in the Notice
of Special Meeting of Stockholders has been approved will be
determined as follows.
As to Proposal No. 1, approval of the amendment of the
Articles of Incorporation of the Company to increase the
authorized number of shares of common stock, par value $.0001
per share, from 100,000,000 to 500,000,000, requires for
approval the affirmative vote of the holders of a majority of
the outstanding shares of the Company's common stock.
1
Abstentions will be considered shares present in person or
by proxy and entitled to vote and, therefore, will have the
effect of a vote against the matter. Broker non-votes will be
considered shares not present for this purpose and will have no
effect on the outcome of the vote. Abstentions and broker non-
votes will be counted for purposes of determining whether a
quorum is present for the Special Meeting.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE
ACTED UPON
Except as disclosed elsewhere in this Proxy Statement, none of
the following persons have any substantial interest, direct or
indirect, by security holdings or otherwise in any matter to be
acted upon:
1. any director or officer of our company since July 1, 2008,
being the commencement of our last completed audited financial
year; or
2. any associate or affiliate of any of the foregoing
persons.
The shareholdings of our directors and officers are set forth
below in the section entitled "Principal Stockholders."
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information
regarding the beneficial ownership of the Company's common stock
as of January 1, 2010, by (a) each person known by the Company
to own beneficially more than 5% of the Company's common stock,
(b) each director of the Company who beneficially owns common
stock, and (c) all officers and directors of the Company as a
group. Each named beneficial owner has sole voting and
investment power with respect to the shares owned.
As of January 1, 2010, there were 98,710,123 shares of common
stock outstanding.
Name and Address of Amount and Nature of Percentage of
Beneficial Owner Position Beneficial Ownership Common Stock (1)
Robert Rosner CEO, 41,498,328 shares (2) 34.95%
21550 Oxnard Street, Secretary,
Suite 300 Director
Woodland Hills,
California 91367
Wataire Ecosafe Shareholder 13,400,000 shares (3) 13.57%
Technologies Inc.
3033 King George Hwy
Suite 24
Surrey, BC Canada
All Directors and 41,498,328 shares 34.95%
Officers
as a group
(1 person)
(1) Based on 98,710,123 shares of common stock outstanding on
January 1, 2010.
2
(2) In addition to 21,498,328 shares of common stock owned
directly, Mr. Rosner holds debentures convertible into an
aggregate of 12,500,000 shares and warrants expiring September
30, 2014 to purchase an aggregate of 7,500,000 shares of common
stock at an exercise price of $.01 per share. The Company does
not have a sufficient number of authorized but unissued shares
of common stock to permit Mr. Rosner to convert the convertible
debenture or exercise the warrants held by him.
(3) Voting and dispositive power over the shares held of record
by Ecosafe Innotech Inc. (formerly, Wataire Ecosafe Technologies
Inc., formerly Wataire Industries Inc.) is exercised by its
board of directors.
Beneficial ownership of common stock has been determined for
purposes of the above table in accordance with Rule 13d-3 under
the Exchange Act, under which a person is deemed to be the
beneficial owner of securities if such person has or shares
voting power or investment power with respect to such
securities, has the right to acquire beneficial ownership within
60 days or acquires such securities with the purpose or effect
of changing or influencing the control of the Company. A person
is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this
proxy statement upon the exercise of warrants or options. Each
beneficial owner's percentage
ownership is determined by assuming that options and warrants
that are held by such person (but not those held by any other
person) and that are exercisable within 60 days from the date of
this Proxy Statement have been exercised.
PROPOSAL NO. 1
APPROVE AN AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
THE COMPANY'S COMMON STOCK, PAR VALUE $.0001 PER SHARE, FROM
100,000,000 TO 500,000,000
The Board of Directors of the Company has adopted a
resolution unanimously approving and recommending to the
Company's stockholders for their approval an amendment to the
Company's Articles of Incorporation to provide for an increase
of the number of shares of common stock that the Company is
authorized to issue from 100,000,000 to 500,000,000.
As of December 31, 2009, with 100,000,000 shares of common
stock authorized, we had 98,710,123 shares of common stock
issued and outstanding; 7,500,000 shares of common stock are
reserved for issuance upon the exercise of warrants; and
30,543,100 shares of common stock are reserved for issuance upon
conversion of outstanding convertible Debentures.
On September 14, 2009, the Company issued $325,000
aggregate principal amount of 5% Convertible Subordinated
Debentures, due October 1, 2011 (the "Debentures"). At the
effective date of filing an amendment to the Articles of
Incorporation of the Company providing for an increase in the
number of authorized shares of Common Stock to at least
500,000,000 shares, the unpaid principal amount of the
Debentures, together with unpaid accrued interest thereon, will
be automatically converted into such number of shares of Common
Stock as is determined by dividing: (x) the sum of the unpaid
principal and accrued interest by (y) the conversion price of
$0.01 per share. The Debentures are subordinated to Senior Debt
of the Company (as defined in the Debentures). $125,000
principal amount convertible subordinated debenture, due
October 1, 2011, convertible into 12,500,000 shares of common
stock, was issued to the Company's Chief Executive Officer in
exchange for cancellation of debt in the amount of $125,000 owed
by the Company to such officer. $200,000 principal amount of
convertible subordinated debentures, due October 1, 2011,
convertible into 20,000,000 shares of common stock were
subscribed for by investors in the Company for $200,000.
3
The proceeds of the Debentures to the Company were used
cancellation of $125,000 debt, as described above, and the
proceeds of the $200,000 principal amount of Debentures subscribed
for by investors were used for working capital and the payment
of outstanding payables.
The principal amount of and interest accrued on the Debentures
will automatically be converted into shares of common stock, at a
conversion price of $.01 per share, on the effective date of the
filing of the Amendment, resulting in the issuance of in excess
of 30,000,000 additional shares of common stock, which will have
a dilutive effect on our stockholders holding of our common stock.
Therefore, as of December 31, 2009, we have no shares of
common stock available for other corporate purposes. There are
currently no set plans or arrangements relating to the possible
issuance of any additional shares of common stock proposed to be
authorized. We are not party to any agreements or understandings
regarding any acquisitions, nor are any acquisitions under
negotiation.
The Board of Directors recommends the proposed increase in
the authorized number of shares of common stock to insure that a
sufficient number of authorized and unissued shares is available
(i) to raise additional capital for the operations of the
Company, (ii) to provide conversion shares for outstanding
convertible debentures and warrants, as described above, and
(iii) to make options and shares available to employees, future
non-employee directors and consultants of the Company as an
incentive for services provided to the Company. Such shares
would be available for issuance by the Board of Directors of the
Company without further action by the stockholders, unless
required by the Company's Articles of Incorporation or by the
laws of the State of Washington. Neither the presently
authorized shares of common stock nor the additional shares of
common stock that may be authorized pursuant to the proposed
amendment carry preemptive rights.
As of December 31, 2009, with 100,000,000 shares of common
stock authorized, we had 98,710,123 shares of common stock
issued and outstanding, and therefore we had 1,289,877 shares
available for issuance for the corporate purposes described
above.
The additional shares of common stock, if issued, would
have a dilutive effect upon the percentage of equity of the
Company owned by present stockholders. The issuance of such
additional shares of common stock might be disadvantageous to
current stockholders in that any additional issuances would
potentially reduce per share dividends, if any. Stockholders
should consider, however, that the possible impact upon
dividends is likely to be minimal in view of the fact that the
Company has never paid dividends, has never adopted any policy
with respect to the payment of dividends and does not intend to
pay any cash dividends in the foreseeable future. In addition,
the issuance of such additional shares of common stock, by
reducing the percentage of equity of the Company owned by
present stockholders, would reduce such present stockholders'
ability to influence the election of directors or any other
action taken by the holders of common stock.
If the amendment is approved, the Board of Directors will
have the right, without further stockholder approval or action,
to issue up to 500,000,000 shares of Common Stock. The ability
of the Company to issue such shares of Common Stock may, under
certain circumstances, make it more difficult for a third party
to gain control of the Company (e.g., by means of a tender
offer), prevent or substantially delay such a change of control,
discourage bids for the Common Stock at a premium, or otherwise
adversely affect the market price of the Common Stock.
4
If Proposal No. 1 is approved by the Company's
stockholders, the Board of Directors expects to file a Articles
of Amendment to the Company's Articles of Incorporation
increasing the number of authorized shares of common stock as
soon as practicable after the date of the Special Meeting. The
Articles of Amendment would amend Article II of the Company's
Articles of Incorporation to read as set forth in the text of
the proposed Amendment to our Articles of Incorporation attached
as Exhibit A to this Proxy Statement.
RECOMMENDATION OF THE BOARD OF DIRECTORS:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND THE ARTICLES OF INCORPORATION.
5
WATAIRE INTERNATIONAL, INC.
FINANCIAL INFORMATION
6
WATAIRE INTERNATIONAL, INC.
FINANCIAL STATEMENTS
March 31, 2009 and 2008
and
Management's Discussion and Analysis of Financial Condition and
Results of Operations
7
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE BOARD OF WATAIRE INTERNATIONAL, INC.
We have audited the accompanying consolidated balance sheets of
Wataire International, Inc. (a Developmental Stage Company) as of
March 31, 2009 and 2008, and the related statement of operations,
stockholders equity and cash flows for the periods then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform our audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such
opinion. An audit includes examining on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Wataire International, Inc. (a Developmental Stage Company) as of
March 31, 2009 and 2008, the results of its' operations and its'
stockholders equity and cash flows for the periods then ended in
conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. The
Company's viability is dependent upon its ability to obtain future
financing and the success of its future operations. These factors
raise substantial doubt as to the Company's ability to continue as a
going concern. Management's plan in regard to these matters is
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Gruber & Company, LLC Saint Louis, Missouri
July 22, 2009
8
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
as at March 31, 2009 and 2008
(Stated in US Dollars)
(Audited)
March 31 March 31
2009 2008
Assets
Current Assets
Cash 35 -
Accounts receivable - 2,800
Prepaid expenses & retainer 9,766 2,280
Advance on marketing agreeents 250,000 250,000
Advance on inventory - 174,635
Inventory 250,456 308,328
--------- ---------
Total Current Assets 510,257 738,043
Capital assets, net 308 615
Patents, Trademarks 31,434 20,746
Acquisitions of intangibles 2,546,062 2,546,062
--------- ---------
Total Assets 3,088,061 3,305,466
--------- ---------
Liabilities
Current Liabilities
Accounts payable 353,854 219,719
Bank indebtedness - 5,885
Shareholder loan and interest 106,589 101,589
Due to related parties 1,280 2,280
Deferred reveneu 189,067 154,540
--------- ---------
Total Liabilities 650,790 484,013
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,
redeemable at $0.005
Issued and outstanding:
87,110,123 common shares
(March 31, 2008: 74,399,011) 8,711 7,440
27,501 preferred shares
(March 31, 2008: 27,501) 3 3
Additional paid-in capital 12,880,264 12,551,535
Deficit accumulated during the
development stage (10,451,707) (9,737,525)
---------- ---------
Total Equity 2,437,271 2,821,453
---------- ---------
Total Liabilities and Stockholders' Equity 3,088,061 3,305,466
---------- ---------
The accompanying notes are an integral part of the financial statements
9
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended March 31, 2009 and 2008 and
for the period August 17, 2000 (Inception) to March 31, 2009
(Stated in US Dollars)
(Audited)
August 17
2000
Year ended (inception)
March 31 to March 31,
2009 2008 2009
Sales 174,540 195,792 488,102
Cost of sales (149,724) (139,871) (376,292)
Gross margin 24,816 55,921 111,810
Other income - - 9,500
------- ------- -------
24,816 55,921 121,310
Expenses
Advances written off 149,542 - 234,542
Amortization 307 19,975 70,743
Bad debt written off 2,800 - 2,800
Consulting fees 119,005 37,436 430,370
Donated services - - 11,250
Foreign exchange (gain)/loss 21,399 (49,118) (42,356)
General and administrative 54,979 81,438 236,435
Incorporation costs - - 2,005
Management fees 180,000 137,360 646,883
Marketing and promotion 30,692 55,211 164,601
Professional fees 54,126 81,482 363,855
Research & Development 105,000 97,143 202,143
Rent 11,341 29,906 49,009
Settlement of accounts payable - - (3,250)
Stock-based compensation - 1,617,300 8,010,050
Travel 9,807 39,270 70,246
Website development costs - - 8,700
------- ------- -------
Total expenses 738,998 2,147,403 10,458,026
Loss from continuing operations (714,182) (2,091,482) (10,336,716)
Loss from discontinued operations - - (114,991)
Net loss for the period (714,182) (2,091,482) (10,451,707)
Basis and diluted los per share (0.01) (0.03)
Weighted average number of
shares outstanding 80,863,905 70,725,144
The accompanying notes are an integral part of the financial statements
10
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period August 17, 2000 (Inception) to March 31, 2009
(Stated in US Dollars)
(Audited)
Shares Total
Subscrip Additional Stock-
Common -tions Preferred Paid-in Accum. holders'
Shares Amount Received Shares Amount Capital Deficit Equity
Common
shares
issued 200 - - - 10 10
Shares
subscrip
- -tion 150,280 150,280
Net loss
for the
period (216,896) (216,896)
- ---------------------------------------------------------------------
Bal,Sep
30, 2001 200 - 150,280 - - 10 (216,896) (66,608)
Shares
subscrip
- -tion 76,105 76,105
Net loss
for the
year (29,313) (29,313)
- ----------------------------------------------------------------------
Bal,Sep
30, 2002 200 - 226,385 - - 10 (246,209) (19,814)
Shares
subscrip
- -tion 5,000 5,000
Common
shares
issued 80,160 8 (231,385) 232,542 1,165
Adj to
number
of shares
out-
standing
as a
result
of the
acqui-
sition
of Millen
- -nium
Business
Gp. USA
Inc. (80,160) (8) (232,542) 232,560
Cimbix
Corp. 170,240 17 232,543 (232,560)
Fair
value
of
shares
issued
in conn-
ection
with
the
acqui-
sition
of Millen
- -nium
Business
Gp. USA
Inc. 80,360 8 2,501 1 (9)
Net
asset
deficiency
of legal
parent
at date
of reverse
take-over
transaction (20,167) (20,167)
Common
shares
issued 2,772 - 13,810 13,810
Common
shares
issued 1,000 - 7,500 7,500
Donated
services 2,250 2,250
Net loss
for the
year (98,849) (98,849)
- ---------------------------------------------------------------------
Bal,Sep
30, 2003 254,372 25 2,501 1 256,094 (365,225) (109,105)
The accompanying notes are an integral part of the financial statements
11
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period August 17, 2000 (Inception) to March 31, 2009
(Stated in US Dollars)
(Audited)
Total
Additional stock-
Common Preferred Paid-in Accum. holders'
shares Amount shares Amount Capital Deficit Equity
Bal,sep 254,372 25 2,501 1 256,094 (365,225) (109,105)
30,2003
- -----------------------------------------------------------------
Common
shares
issued 5,000 1 49,999 50,000
Common
shares
issued 600,000 60 29,940 30,000
Net loss
for the
year (227,180) (227,180)
- -----------------------------------------------------------------
Bal,sep
30,2004 859,372 86 2,501 1 336,033 (592,405) (256,285)
Common
shares
issued 160,000 16 484 500
Common
shares
issued 36,000,000 3,600 86,400 90,000
Common
shares
issued 8,960,000 896 94,304 95,200
Common
shares
issued 2,440,000 244 121,756 122,000
Common
shares
issued 250,000 25 11,225 11,250
Disposal
of MBG (140,949) (140,949)
Net loss
for the
year (79,243) (79,243)
- ----------------------------------------------------------------
Bal,Sep
30,2005 48,669,372 4,867 2,501 1 509,253 (671,648) (157,527)
Common
shares
issued 336,000 34 15,086 15,120
Common
shares
issued 10,000,000 1,000 619,000 620,000
Common
shares
issued 440,000 44 109,956 110,000
Common
shares
issued 1,000,000 100 559,900 560,000
Inventory
donated 9,945 9,945
Net loss
for the
year (297,661) (297,661)
- ----------------------------------------------------------------
Bal,Sep
30,2006 60,445,372 6,045 2,501 1 1,823,140 (969,309) 859,877
Common
shares
issued 272,536 27 204,375 204,402
Common
shares
issued 1,834,045 183 880,157 880,340
Common
shares
issued 1,000,000 100 409,900 410,000
Common
shares
issued 4,800,000 480 959,520 960,000
Stock-
based
compen-
sation 8,010,050 8,010,050
Net loss
for the
year (8,430,656) (8,430,656)
- ----------------------------------------------------------------
Bal,Sep
30,2007 68,351,953 6,835 2,501 1 12,287,142 (9,399,965) 2,894,013
Common
shares
issued 2,058,823 205 349,795 350,000
Common
shares
issued 588,235 60 99,940 100,000
Common
shares
issued 4,400,000 440 219,560 220,000
Cancel-
lation of
shares (1,000,000) (100) (409,900) (410,000)
Preferred
shares
issued 25,000 2 4,998 5,000
Net loss
for the
period (337,560) (337,560)
- ----------------------------------------------------------------
Bal,Mar
31,2008 74,399,011 7,440 27,501 3 12,551,535 (9,737,525) 2,821,453
Common
shares
issued 1,600,000 160 79,840 81,000
Common
shares
issued 1,111,112 111 99,889 100,000
Common
shares
issued 1,000,000 100 59,900 60,000
Common
shares
issued 1,000,000 100 49,900 50,000
Common
shares
issued 8,000,000 800 39,200 40,000
Net loss
for the
year (714,182) (714,182)
- ----------------------------------------------------------------
Bal,Mar
31,2009 87,110,123 8,711 27,501 3 12,880,264(10,451,707) 2,437,271
12
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the year ended March 31, 2009 and 2008 and
for the period August 17, 2000 (Inception) to March 31, 2009
(Stated in US Dollars)
(Audited)
August 17
2000
Year ended (inception)
March 31 to March 31
2009 2008 2009
- ----------------------------------------------------------------
Operating Activities
Loss from continuing operations (714,182) (2,091,322) (10,451,707)
Adjustments to reconcile loss to
cash used in operating activities:
Amortization 307 19,975 70,743
Donated services - - 11,250
Website development costs w/o - - 8,700
shares issued for service - - 122,070
Advances w/o 149,542 - 199,542
Change in non-cash woring capital item:
Accounts receivable 2,800 4,100 -
Prepaid expenses and retainers (7,486) (6,418) (9,766)
Deferred reveneu 34,527 154,540 189,067
Advance on marketing agreements - - (250,000)
Stock-based compensation - 1,617,300 8,010,050
Advance on inventory 25,093 123,734 (149,541)
Inventory 57,872 (305,403) (246,361)
Accounts payable 32,546 140,062 353,854
- -----------------------------------------------------------------
(418,981) (343,432) (2,142,099)
- -----------------------------------------------------------------
Investing Activities
License payment advanced - - (50,000)
Capital assets - (922) (922)
Advance to subsidiaries - - (115,091)
Acquisition of intangibles-net (10,688) (1,023,886) (1,467,624)
Website development costs - - (8,700)
Proceeds from disposition of
subsidiaries - - 100
- -----------------------------------------------------------------
(10,688) (1,024,808) (1,642,237)
- -----------------------------------------------------------------
Financing Activities
Bank indebtedness (5,885) 5,885 -
Promissory notes payable - (36,000) -
Shareholder loan & interest 106,589 - 106,589
Due to related parties (1,000) (159,495) 1,280
Shares issued for cash 180,000 985,341 1,792,102
Shares issued fo intangibles - 79,658 960,000
Shares issued for Debt 150,000 409,313 559,313
Shares issued for Promissory notes - 69,247 365,087
- -----------------------------------------------------------------
429,704 1,353,949 3,784,371
- -----------------------------------------------------------------
Increase/(Decrease) in Cash 35 (14,291) 35
Cash, beginning - 14,291 -
Cash, ending 35 - 35
The accompanying notes are an integral part of the financial statements
13
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
Note 1. General Organization And Business
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. On September 26, 2006, the Company approved a name change
from Cimbix Corporation to Wataire International, Inc.
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 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 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 March 31, 2009, the Company had not yet achieved profitable operations,
has accumulated losses of $10,451,707 since its inception 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 obtained additional funds by related party advances,
however there is no assurance that this additional funding is adequate and
further funding may be necessary.
Note 2. Significant Accounting Policies
These 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 :
14
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
(a) 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.
(b) 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.
(c) 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.
(d) Inventory
Inventory, which consists of finished goods, is valued at the lower of
cost net realizable value using the first in first out (FIFO) method.
(e) 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."
(f) 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.
15
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
(g) 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.
(h) 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.
(i) 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("ESP") on the face of the income statement.
Basic loss per share is computed by dividing the net loss available to
common shareholders by the weighted average number of common shares
outstanding during the year. Diluted EPS gives effect to all dilative
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 dilative potential common shares if their effect is
anti dilative.
(j) 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.
16
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
(k) 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 determinination of net income (loss)
for the year.
(l) Reclassifications
Certain items in the prior year financial statements have been reclassified
for comparative purposes to conform to the presentation in the current
period's presentation. These reclassifications have no effect to the
previously reported income (loss).
(m) Change in Reporting Year
The Company adopted March 31 as its fiscal year end from September 30
in 2008.
(n) Recently Issued Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 162, The
Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162
identifies the sources of accounting principles and the framework for
selecting the principles that are presented in conformity with generally
accepted accounting principles in the United States. SFAS No. 162 is
effective 60 days following the Securities and Exchange Commission
approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. The Company does not believe
SFAS No. 162 will have a material impact on its financial statements.
In March 2008, the FASB issued SFAS No. 161, Disclosure about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133.
SFAS No. 161 changes the disclosure requirements for derivative instruments
and hedging activities. Entities are required to provide enhanced
disclosures about (a) how and why an entity uses derivative instruments,
(b) how derivative instruments and related hedged items are accounted for
under Statement No. 133 and its related interpretations and (c) how
derivative instruments and related hedged items affect an entity financial
position, financial performance and cash flows. SFAS No. 161 is effective
for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged.
The Company does not believe SFAS No. 161 will have a material impact on
its financial statements.
17
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations.
SFAS No. 141(R) retains the fundamental requirements in SFAS No. 141,
Business Combinations, that the acquisition method of accounting be
used for all business combinations and for an acquirer to be identified
for each business combination. SFAS No. 141(R) requires an acquirer to
recognize the assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited exceptions
specified in SFAS No. 141(R). In addition, SFAS No. 141(R) requires
acquisition costs and restructuring costs that the acquirer expected but
was not obligated to incur to be recognized separately from the business
combination, therefore, expensed instead of part of the purchase price
allocation. SFAS No. 141(R) will be applied prospectively to business
combinations for which the acquisition date is on or after the beginning
of the first annual reporting period beginning on or after December 15,
2008. Early adoption is prohibited. The Company expects to adopt SFAS
No. 141(R) to any business combinations with an acquisition date on or
after January 1, 2009. The Company does not believe SFAS No. 141(R) will
have a material impact on its financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests
in Consolidated Financial Statements, an amendment to ARB No. 51. SFAS
No. 160 changes the accounting and reporting for minority interests,
which will be recharacterized as noncontrolling interests and classified
as a component of equity. SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December
15, 2008. Early adoption is prohibited. The Company does not believe SFAS
No. 160 will have a material impact on its financial statements.
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. SFAS No. 159 permits an
entity to irrevocably elect fair value on a contract-by-contract basis
as the initial and subsequent measurement attribute for many financial
assets and liabilities and certain other items including insurance
contracts. Entities electing the fair value option would be required to
recognize changes in fair value in earnings and to expense upfront cost
and fees associated with the item for which the fair value option is
elected. SFAS No. 159 is effective for fiscal years beginning after
November 15, 2007. Early adoption is permitted as of the beginning of
a fiscal year that begins on or before November 15, 2007, provided the
entity also elects to apply the provisions of SFAS No. 157, Fair Value
Measurements. The Company does not expect the adoption of SFAS No. 159
to have a material impact on its financial condition or results of
operations.
Note 3. Related Party Transactions
During the year ended March 31, 2009, directors of the company
charged the following expenses to the Company:
Management fees $180,000
Loan interest $5,000
18
Note 4. Common Stock
For the Year Ended March 31, 2008
Share Subscriptions
The Company entered into a private placement agreement to issue
588,235 common stock at $0.17 per share for proceeds of $100,000 on
December 5, 2007 to an accredited investor.
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.
For the Year Ended March 31, 2009
Share Subscriptions
On April 8, 2008, the Company entered into an agreement to issued
1,600,000 units at $0.05 per unit with Darfield Financial Corp. for
an aggregate amount of $80,000. Each unit consists of one common share
and one half warrant exercisable at $0.05 per share on or before
April 7, 2011.
On May 30, 2008 the Company entered into a private placement agreement
to issued 1,111,112 common stock at $0.09 per share for proceeds of
$100,000 to two accredited investors and to issued 555,556 common stock
to each investor.
Share For Debt Settlements
On June 17, 2008, the Company approved the issuance of 1,000,000 units
at $0.06 per share to settle amounts due to a director of the Company
totaling $60,000. Each unit contain one common share and one share
warrant exercisable at $0.06 per share on or before June 16, 2011.
On July 8, 2008, the Company approved the issuance of 1,000,000 units
at $0.05 per share to settle amounts due to a director of the Company
totaling $50,000. Each unit contain one common share and one share
warrant exercisable at $0.05 per share on or before July 7, 2011.
On January 9, 2009, the Company approved the issuance of 8,000,000
common shares at $0.005 per share to settle amounts due to a director
of the Company totaling $40,000.
On February 26, 2009, the Company have signed agreement with existing
warrant options holders to cancel all existing warrant options
available to the Company.
19
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
Note 5. Warrants
During February 2009, the Company received signed consent agreements
with all existing warrant holders that cancel the entire balance of
7,058,823 outstanding warrants.
Note 6. Stock Options and Stock Based Compensation
During 2006, the Company authorized a share option plan under which
employees were granted options to purchase shares of authorized but
unissued, common shares. During the years ended March 31, 2009 and
2008, all options issued in this plan were either forfeited as options
went unexercised due to employee terminations or cancelled via signed
consent agreements with all remaining option holders.
SFAS No. 123R also required the Company to change its classification,
in the consolidated statement of cash flows, of any tax benefits
realized upon the exercise of stock options in excess of that which is
associated with the expense recognized for financial reporting purposes.
No significant tax benefits were recognized for the periods ended
March 31, 2009 or 2008.
The Black-Scholes valuation model was utilized in estimating the
calculated value, with the following weighted average assumptions:
2009 2008
Expected Dividend Yield 0.00% 0.00%
Risk Free Interest Rate 3.00% 4.58%
Expected Volatility 150% 153%
Expected Option Life (in years average) 0.00 5.53
A summary of the status of the Company's share option plan for the
periods ended as of March 31, 2009 and 2008, is as follows:
Weighted Average
Number of Exercise
Options Price
Outstanding March 31, 2007 - -
Granted 12,270,000 $ 0.71
Forfeited/Cancelled (7,075,000) 0.75
Exercised - -
-----------------------------
Outstanding March 31, 2008 5,195,000 $ 0.67
Granted - -
Forfeited/Cancelled (5,195,000) -
Exercised - -
-----------------------------
Outstanding March 31, 2009 - -
There was no compensation charge associated with stock options included
in the statement of operations for the years ended March 31, 2009 and 2008.
20
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
Note 7. Contingencies
Agreement
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. During the year ended March 31,
2008, the Company paid $250,000 in respect to the cash portion of
the agreements and had 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 $250,000 is classified as an Advance on
Marketing Agreements on the balance sheet. The Company is currently
re-negotiating new terms on this agreement
Legal
On October 11, 2006, the Company was named as a co-defendant in a
lawsuit whereby the plaintiffs were 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 believed the claim
was without merit and was unlikely to succeed. The Company filed a
statement of defense denying the allegations and a counterclaim for
defamation. The court ordered a severance of the action, and required
the plaintiffs to prove their damages, before proceeding to trial
on issues of liability. The lawsuit by the plaintiffs was dismissed on
October 6, 2008.
Aquaduct International. LLC v. Wataire International, Inc. et. ai,
Los Angeles County Superior Court Case No. LC083752. This litigation
was commenced on December 11, 2008 by the Company's former distributor
over the alleged purchase of certain atmospheric water machines. On
July 20, 2009, the Company answered the lawsuit and filed a
cross-complaint against the plaintiff. Both parties are interested in
resolving this dispute informally rather than proceeding further into
litigation. To that end, mediation has been scheduled for August 20,
2009 in Los Angeles County with a private mediator. We cannot provide
a reasonable evaluation of the likelihood of an unfavorable outcome at
this time since no discovery has commenced on the Company's
cross-complaint and only very basic discovery has been performed in
connection with the complaint. No loss provision has been recorded as
of March 31, 2009.
Note 8. Inventory
At March 31, 2009 and 2008, inventories are comprised of finished
water-from-air machines totaling $250,456, and $308,328, respectively.
21
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
Note 9. 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 on 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 costof 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
-----------
$ 2,546,062
Note 10. Deferred Revenue
As of March 31, 2009 and 2008, deferred revenue totaled $189,067
and $154,540, respectively, consisting of cash payments made by
customers in advance of product shipment. Revenue will be
recognized when finished goods are shipped to the customer.
Note 11. Shareholder Loan
During the period ended March 31, 2008, the Company's CEO loaned
the Company $100,000. This loan is payable on demand with interest
accruing at 5% per annum. Accrued interest at March 31, 2009 and 2008,
totaled $6,589 and $1,589, respectively, and is included in the loan
balance.
22
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Stated in US Dollars)
(Audited)
Note 12. Subsequent Events
Subsequent to March 31, 2009:
The Company approved the issuance of 4,000,000 common shares at
$0.005 per share totaling $20,000 to an individual for
indebtedness to the Company.
Effective June 12, 2009, the Company's Chief Financial Officer and
Treasurer resigned and a new Director holding the same title
was appointed.
On July 16, 2009, the Company approved consulting agreements with
3 individuals. The Company intends to pay for these services by
issuing common shares to the consultants in lieu of consulting fees
and registering these shares by filing an S-8 registration statement
under the Securities Act of 1933. The total number of shares to
be issued totals 6,900,000 common shares.
Note 13. Income Taxes
The Company has losses for tax purposes totaling $10,451,707 which
may be applied against future taxable income. These losses begin to
expire in 2027. The potential taxbenefit arising from these losses
has not been recorded in the consolidated financial statements. The
Company evaluates its valuation allowance requirements on an annual
basis based on projected future operations. When circumstances change
and this causes a change in management's judgement about the
realizability of deferred tax assets, the impact of the change on
the valuation allowance is reflected in current operations.
23
Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion of our financial condition and results
of operations should be read in conjunction with the financial
statements and notes thereto and the other financial information
included elsewhere in this report. Certain statements contained
in this report, including, without
limitation, statements containing the words "believes,"
"anticipates," "expects" and words of similar import, constitute
"forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks and uncertainties.
Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of certain
factors, including our ability to create, sustain, manage or
forecast our growth; our ability to attract and retain key
personnel; changes in our business strategy or development
plans; competition; business disruptions; adverse publicity; and
international, national and local general economic and market
conditions.
Overview
Wataire is a Washington corporation incorporated on August 17,
2000. Wataire is currently in the development stage and has
completed its acquisition of all of the intellectual property
relating 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. To this end, the Company's
future results of operation will be highly dependent upon the
success of its efforts to sell and market its products and
technologies. The Company plans to sell its products to
distributors and also through multiple indirect channels, such
as resellers. The marketing and sales of these products are
highly dependent
Results of Operations for the Years ended March 31, 2009
The audited operating results and cash flows are presented for
the year ended March 31, 2009 and March 31, 2008 and for the
period of inception to March 31, 2009.
Revenues. For the year ended March 31, 2009, we had total
revenue of $174,540 compared to $195,792 for the year ended
March 31, 2008.
24
Operating Expenses. For the year ended March 31, 2009, we
had total operating expenses of $714,182 as compared to
$2,147,403 for the year ended March 31, 2008. The decrease
was predominately due to the stock based compensation of
$1,617,300.
Management Fees. For the year ended March 31, 2009, we had
management fees of $180,000 as compared to $137,360 for the
year ended March 31, 2008, an increased of $42,640 in
management fees.
Professional Fees. For the year ended March 31, 2009, we
had professional fees of $54,126 as compared to $81,482, a
decrease of $27,356.
Net Loss. The net loss for the year ended March 31, 2009
was $714,182 as compared to $2,091,482 for the year ended
March 31, 2008, a decrease of $1,377,300. 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 its branding and marketing efforts and therefore the
shares were not released by the
25
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 establish 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.
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
26
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 March 31, 2009, we have been unsuccessful in our
efforts to raise additional capital to meet our plan of
operations. Our cash position as of March 31, 2009 was $35.
Since inception, we have recognized no significant revenue. We
have accumulated operating losses of $10,451,707. 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
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.
27
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.
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 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
28
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 cases, 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.
29
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 instruments
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).
30
WATAIRE INTERNATIONAL, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 2009 and 2008
(UNAUDITED)
and
Management's Discussion and Analysis of Financial Condition and
Results of Operations
31
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
as at September 30, 2009 and March 31, 2009
(Stated in US Dollars)
Unaudited Audited
Sept. 30, March 31,
2009 2009
Assets
Current Assets
Cash 65 35
Prepaid expenses & retainer 9,758 9,766
Advance on marketing agreements 250,000 250,000
Inventory 250,456 250,456
---------------------------
Total Current Assets 510,279 510,257
Capital assets, net 154 308
Patents, Trademarks 31,434 31,434
Acquisitions of intangibles 2,546,062 2,546,062
---------------------------
Total Assets 3,087,929 3,088,061
---------------------------
Liabilities
Current Liabilities
Accounts payable 427,385 353,854
Shareholder loan and interest - 106,589
Due to related parties 48,872 1,280
Deferred revenue 168,424 189,067
---------------------------
Total Current Liabilities 644,681 650,790
Long Term Liabilities
5% Convertible Debentures 125,000 -
---------------------------
Total Liabilities 769,681 650,790
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, redeemable at $0.005
Issued and outstanding:
98,710,123 common shares
(March 31, 2009: 87,110,123) 9,871 8,711
27,501 preferred shares
(March 31, 2009: 27,501) 3 3
Additional paid-in capital 13,051,104 12,880,264
Deferred Stock-Based Comp. (126,667) -
Deficit accumulated during the
development stage (10,616,063) (10,451,707)
----------------------------
Total Equity 2,318,248 2,437,271
----------------------------
Total Liabilities and Stockholders' Equity 3,087,929 3,088,061
The accompanying notes are an integral part of the financial statements
32
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended September 30, 2009 and 2008 and
for the six months ended September 30, 2009 and 2008 and
for the period August 17, 2000 (Inception) to September 30, 2009
(Stated in US Dollars)
(Unaudited)
August 17
2000
For the 3 months ended For the 6 months ended (Inception)
September 30, September 30, to Sept. 30,
2009 2008 2009 2008 2009
Sales - - - 154,540 488,102
Cost of sales - - - (102,104) (376,292)
Gross margin - - - 52,436 111,810
Other income - - - - 9,500
-------------------------------------------------------
- - - 52,436 121,310
Expenses
Advances written off - - - - 234,542
Amortization 77 77 154 154 70,897
Bad debt written off - - - - 2,800
Consulting fees 600 29,005 600 119,005 430,970
Donated services - - - - 11,250
Foreign exchange
(gain)/loss - 4,627 - 6,028 (42,356)
General and
administrative 9,513 8,810 15,632 44,705 252,067
Incorporation costs - - - - 2,005
Management fees 45,000 45,000 90,000 90,000 736,883
Marketing and
promotion 13,000 27,149 13,000 29,513 177,601
Professional fees 22,884 4,168 35,994 31,548 399,849
Research & Development - 25,000 - 105,000 202,143
Rent - 1,875 - 5,732 49,009
Settlement of
accounts payable - - - - (3,250)
Stock-based compensation - - - - 8,010,050
Travel - 2,373 976 6,634 71,222
Website development
costs 8,000 - 8,000 - 16,700
-------------------------------------------------------
Total Expenses 99,074 148,084 164,356 438,319 10,622,382
Loss from continuing
operations (99,074) (148,084) (164,356) (385,883) (10,501,072)
Loss from discontinued
operations - - - - (114,991)
Net loss for the
period (99,074) (148,084) (164,356) (385,883) (10,616,063)
Basic and diluted
loss per share (0.00) (0.00) (0.00) (0.00)
Weighted average
number of shares
outstanding 96,231,862 79,023,166 93,225,970 77,708,666
The accompanying notes are an integral part of the financial statements
33
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended September 30, 2009 and 2008 and
for the period August 17, 2000 (Inception) to September 30, 2009
(Stated in US Dollars)
(Unaudited)
August 17,
For the 6 months ended 2000 (Inception)
Sept. 30, to Sept. 30,
2009 2008 2009
Operating Activities
Loss from continuing
operations (164,356) (385,883) (10,616,063)
Adjustments to reconcile
loss to cash used
in operating activities :
Amortization 154 154 70,897
Donated services - - 11,250
Website development
costs written off - - 8,700
Shares issued for services - - 122,070
Advances written off - - 199,542
Change in non-cash
working capital items :
Accounts receivable - - -
Prepaid expenses and retainers 8 (12,853) (9,758)
Deferred revenue (20,643) 86,274 168,424
Advance on marketing agreements - - (250,000)
Stock-based compensation - - 8,010,050
Advance on inventory - 6,791 (149,541)
Inventory - 10,253 (246,361)
Accounts payable and
accrued liabilities 73,531 (135,600) 427,385
---------------------------------------
Net cash used in
operating activities (111,306) (430,864) (2,253,405)
---------------------------------------
Investing Activities
License payment advanced - - (50,000)
Capital assets - - (922)
Advanced to subsidiaries - - (115,091)
Acquisition of intangibles-net - (10,689) (1,467,624)
Website development costs - - (8,700)
Proceeds from disposition
of subsibiaries - - 100
---------------------------------------
Net cash used in
investing activities - (10,689) (1,642,237)
---------------------------------------
Financing Activities
Bank indebtedness - (5,885) -
Shareholder loan & interest (106,589) 104,096 -
Due to related parties 47,592 53,717 48,872
Shares issued for cash - 180,000 1,792,102
Shares issued for Intangibles - - 960,000
Shares issued for Debt 172,000 110,000 731,313
5% Convertible debentures 125,000 - 125,000
Deferred stock-based comp. (126,667) - (126,667)
Shares issued for
Promissory Notes - - 365,087
---------------------------------------
Net cash provided by
financing activities 111,336 441,928 3,895,707
---------------------------------------
Increase/(Decrease) in Cash 30 375 65
Cash, beginning 35 - -
Cash, ending 65 375 65
The accompanying notes are an integral part of the financial statements
34
WATAIRE INTERNATIONAL, INC.
(Formerly Cimbix Corporation)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2009
(Stated in US Dollars)
Note 1. General Organization And Business
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. On September 26, 2006, the Company approved a name change
from Cimbix Corporationto Wataire International, Inc.
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 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 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 September 30, 2009, the Company had not yet achieved profitable operations,
has accumulated losses of $10,616,063 since its inception 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 obtained additional funds by related party advances,
however there is no assurance that this additional funding is adequate and
further funding may be necessary.
Note 2. Significant Accounting Policies
These 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 :
35
(a) 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.
(b) 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.
(c) 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.
(d) Inventory
Inventory, which consists of finished goods, is valued at the lower of cost net
realizable value using the first in first out (FIFO) method.
(e) 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."
(f) 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.
(g) 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.
h) 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.
36
(i) 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 the net loss available to
common shareholders by the weighted average number of common shares
outstanding during the year. Diluted EPS gives effect to all dilative
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 dilative potential common shares if their effect is anti
dilative.
(j) 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.
(k) 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 determinination of net income (loss)
for the year.
(l) Reclassifications
Certain items in the prior year financial statements have been reclassified
for comparative purposes to conform to the presentation in the current
period's presentation. These reclassifications have no effect to the
previously reported income (loss).
37
(m) Change in Reporting Year
The Company adopted March 31 as its fiscal year end from September 30
in 2008.
(n ) Recently Issued Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 162, The
Hierarchy of Generally Accepted Accounting Principles. SFAS No. 162
identifies the sources of accounting principles and the framework for
selecting the principles that are presented in conformity with generally
accepted accounting principles in the United States. SFAS No. 162 is
effective 60 days following the Securities and Exchange Commission's
approval of the Public Company Accounting Oversight Board amendments to
AU Section 411, The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles. The Company does not believe SFAS No. 162
will have a material impact on its financial statements.
In March 2008, the FASB issued SFAS No. 161, Disclosure about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement
No. 133. SFAS No. 161 changes the disclosure requirements for derivative
instruments and hedging activities. Entities are required to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement No. 133 and its related interpretations
and (c) how derivative instruments and related hedged items affect an
entitys financial position, financial performance and cash flows. SFAS
No. 161 is effective for financial statements issued for fiscal years
and interim periods beginning after November 15, 2008, with early
application encouraged. The Company does not believe SFAS No. 161 will
have a material impact on its financial statements.
In December 2007, the FASB issued SFAS No. 141(R), Business Combinations.
SFAS No. 141(R) retains the fundamental requirements in SFAS No. 141,
Business Combinations, that the acquisition method of accounting be used
for all business combinations and for an acquirer to be identified for
each business combination. SFAS No. 141(R) requires an acquirer to recognize
the assets acquired, the iabilities assumed, and any noncontrolling
interest in the acquiree at the acquisition date, measured at their fair
values as of that date, with limited exceptions specified in SFAS No. 141(R).
In addition, SFAS No. 141(R) requires acquisition costs and restructuring
costs that the acquirer expected but was not obligated to incur to be
recognized separately from the business combination, therefore, expensed
instead of part of the purchase price allocation. SFAS No. 141(R) will be
applied prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008. Early adoption is prohibited.
The Company expects to adopt SFAS No. 141(R) to any business combinations
with an acquisition date on or after January 1, 2009. The Company does
not believe SFAS No. 141(R) will have a material impact on its
financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests
in Consolidated Financial Statements, an amendment to ARB No. 51. SFAS No.
160 changes the accounting and reporting for minority interests, which
will be recharacterized as noncontrolling interests and classified as a
component of equity. SFAS No. 160 is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December
15, 2008. Early adoption is prohibited. The Company does not believe
SFAS No. 160 will have a material impact on its financial statements.
38
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. SFAS No. 159 permits an entity
to irrevocably elect fair value on a contract-by-contract basis as the
initial and subsequent measurement attribute for many financial assets and
liabilities and certain other items including insurance contracts. Entities
electing the fair value option would be required to recognize changes in
fair value in earnings and to expense upfront cost and fees associated
with the item for which the fair value option is elected. SFAS No. 159 is
effective for fiscal years beginning after November 15, 2007. Early
adoption is permitted as of the beginning of a fiscal year that begins on or
before November 15, 2007, provided the entity also elects to apply the
provisions of SFAS No. 157, Fair Value Measurements. The Company does not
expect the adoption of SFAS No. 159 to have a material impact on its
financial condition or results of operations.
Note 3. Related Party Transactions
During the period ended September 30, 2009, directors of the company charged
the following expenses to the Company:
Management fees $90,000
Loan interest $2,288
Note 4. Common Stock
For the Year Ended March 31, 2009
Share Subscriptions
On April 8, 2008, the Company entered into an agreement to issued 1,600,000
units at $0.05 per unit with Darfield Financial Corp. for an aggregate amount
of $80,000. Each unit consists of one common share and one half warrant
exercisable at $0.05 per share on or before April 7, 2011.
On May 30, 2008 the Company entered into a private placement agreement to
issued 1,111,112 common stock at $0.09 per share for proceeds of $100,000
to two accredited investors and to issued 555,556 common stock to each
investor.
Share For Debt Settlements
On June 17, 2008, the Company approved the issuance of 1,000,000 units at
$0.06 per share to settle amounts due to a director of the Company totaling
$60,000. Each unit contain one common share and one share warrant
exercisable at $0.06 per share on or before June 16, 2011.
On July 8, 2008, the Company approved the issuance of 1,000,000 units at
$0.05 per share to settle amounts due to a director of the Company
totaling $50,000. Each unit contain one common share and one share warrant
exercisable at $0.05 per share on or before July 7, 2011.
On January 9, 2009, the Company approved the issuance of 8,000,000 common
shares at $0.005 per share to settle amounts due to a director of the
Company totaling $40,000.
On February 26, 2009, the Company have signed agreement with existing
warrant options holders to cancel all existing warrant options available
to the Company.
39
For The Six Months Ended September 30, 2009
Shares For Debt and Service Settlements
On April 22, 2009, the Company approved the issuance of 4,000,000 common
shares at $0.005 per share to settle amounts due to a debtor of the Company
totaling $20,000.
On July 31, 2009, the Company approved the issuance of 7,600,000 common
shares at $0.02 per share for services provided by several professionals
for a 12 months period totaling $152,000.
On September 14, 2009, the Company entered into a definitive agreement
with the Chief Executive Officer and director of the Company for the
issuance of share purchase warrants for executive compensation, with a
term of five years, exercisable at $0.01 per share, for 7,500,000 shares
of common stock with a cashless exercise provision.
Note 5. Warrants
During February 2009, the Company received signed consent agreements with
all existing warrant holders that cancel the entire balance of 7,058,823
outstanding warrants.
Note 6. Stock Options and Stock Based Compensation
During 2006, the Company authorized a share option plan under which
employees were granted options to purchase shares of authorized but
unissued, common shares. During the years ended March 31, 2009
and 2008, all options issued in this plan were either forfeited as
options went unexercised due to employee terminations or cancelled via
signed consent agreements with all remaining option holders.
There was no compensation charge associated with stock options included
in the statement of operations for the six months ended September 30,
2009 and 2008.
Note 7. Contingencies
Agreement
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. During the year ended March 31, 2008, the
Company paid $250,000 in respect to the cash portion of the agreements
and had 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
$250,000 is classified as an Advance on Marketing Agreements on the
balance sheet. The Company is currently re-negotiating new terms on
this agreement.
Legal
On October 11, 2006, the Company was named as a co-defendant in a lawsuit
whereby The plaintiffs were 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 believed the claim was without merit and was
unlikely to succeed. The Company filed a statement of defense denying the
allegations and a counterclaim for defamation. The court ordered a severance
of the action, and required the plaintiffs to prove their damages, before
proceeding to trial on issues of liability. The lawsuit by the plaintiffs
was dismissed on October 6, 2008.
40
Aquaduct International. LLC v. Wataire International, Inc. et. Al.
This litigation was commenced on December 11, 2008 by the Company's former
distributor over the alleged purchase of certain atmospheric water machines.
On July 20, 2009, the Company answered the lawsuit and filed a cross-
complaint against the plaintiff. Both parties are interested in resolving
this dispute informally rather than proceeding further into litigation.
To that end, mediation has been scheduled for August 20, 2009 in Los
Angeles County with a private mediator. We cannot provide a reasonable
evaluation of the likelihood of an unfavorable outcome at this time since
no discovery has commenced on the Company's cross-complaint and only very
basic discovery has been performed in connection with the complaint. No
loss provision has been recorded as of March 31, 2009.
Note 8. Inventory
At September 30, 2009 and March 31, 2009, inventories are comprised of
finished water-from-air machines totaling $250,456, and $250,456, respectively.
Note 9. 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 on 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 $ 31,434
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
---------
$ 2,546,062
41
Note 10. Deferred Revenue
As of September 30, 2009 and March 31, 2009, deferred revenue totaled
$168,424 and $189,067, respectively, consisting of cash payments made by
customers in advance of product shipment. Revenue will be recognized when
finished goods are shipped to the customer.
Note 11. 5% Convertible Debentures
On September 14, 2009, the Company entered into a definitive agreement with
the Chief Executive Officer and director of the Company to convert the loan
of $100,000 plus interest and debt balance totaling $125,000 into a Two Year
5% Convertible Debentures. The Debentures accrue interest at a rate of 5% per
annum. The Debentures are automatically convertible into shares of the
Companys Common Stock at a per share conversion price of $0.01, upon
increase in the Companys authorized common stock.
Note 12. Income Taxes
The Company has losses for tax purposes totaling $10,616,063 which may be
applied against future taxable income. These losses begin to expire in 2027.
The potential tax benefit arising from these losses has not been recorded
in the consolidated financial statements. The Company evaluates its valuation
allowance requirements on an annual basis based on projected future operations.
When circumstances change and this causes a change in managements judgement
about the realizability of deferred tax assets, the impact of the change on
the valuation allowance is reflected in current operations.
42
Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
Wataire is a Washington corporation incorporated on August 17,
2000. Wataire is currently in the development stage and has
completed its acquisition of all of the intellectual property
relating 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. To this end, the Company's
future results of operation will be highly dependent upon the
success of its efforts to sell and market its products
and technologies. The Company plans to sell its products to
distributors and also through multiple indirect channels, such
as resellers.
Results of Operations for the six months periods ended September
30, 2009 and 2008.
The operating results and cash flows are presented for the six
months periods ended September 30, 2009 and 2008 and for the
period of inception to September 30, 2009.
Revenues. For the six months period ended September 30,
2009, we had total nil revenue compared to $154,540 for the
six months period ended September 30, 2008, a decrease of
$154,540 from our sales of products.
Operating Expenses. For the six months period ended
September 30, 2009, we had total operating expenses of
$164,356 as compared to $438,319 for six months period
ended September 30, 2008. The decrease of $273,963.
Management Fees. For the six months periods ended
September 30, 2009 and 2008, we had same amount of
management fees of $90,000.
Professional Fees. For the six months period ended
September 30, 2009, we had professional fees of $35,994 as
compared to $31,548 for the six months period ended
September 30, 2008, an increase of $4,446.
Net Loss. The net loss for the six months period ended
September 30, 2009 was $164,356 as compared to $385,883 for
the six months period ended September 30, 2008, a decrease
of $221,527.
42a
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 its 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.
43
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 establish 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.
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, 2009, we have been unsuccessful in our
efforts to raise additional capital to meet our plan of
operations. Our cash position as of June 30, 2009 was ($17).
Since inception, we have recognized no significant revenue. We
have accumulated operating losses of $10,506,425. 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.
44
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
15
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
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.
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 than its carrying value, the Company will reflect the
impairment of any such asset over its appraised value.
45
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 cases, 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.
46
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.
47
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 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).
48
PREEMPTIVE RIGHTS
Holders of our common stock do not have any preemptive
rights with respect to issuances of common stock by the
Company.
DISSENTERS' OR APPRAISAL RIGHTS
Under Washington law, our stockholders do not have any
dissenters' or appraisal rights with respect to the approval of
the Articles of Amendment to increase our authorized common
stock.
INDEPENDENT AUDITORS
There have been no changes in or disagreements with the
Company's independent registered public accounting firm in the
last two fiscal year. A representative of Gruber & Company, LLC,
the Company's independent registered public accounting firm is
not expected to be present at the Special Meeting.
AVAILABILITY OF CERTAIN DOCUMENTS REFERRED TO HEREIN
THIS PROXY STATEMENT AND THE APPENDIX HERETO REFER TO
CERTAIN DOCUMENTS OF THE COMPANY THAT ARE NOT PRESENTED HEREIN
OR DELIVERED HEREWITH. SUCH DOCUMENTS ARE AVAILABLE TO ANY
PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROXY
STATEMENT IS DELIVERED, UPON ORAL OR WRITTEN REQUEST, WITHOUT
CHARGE, DIRECTED TO ROBERT ROSNER, CHIEF EXECUTIVE OFFICER,
WATAIRE INTERNATIONAL, INC., 21900 BURBANK BLVD., 3RD FLOOR,
WOODLAND HILLS, CA 91367. IN ORDER TO ENSURE TIMELY DELIVERY OF
THE DOCUMENTS, SUCH REQUESTS SHOULD BE MADE BY FEBRUARY ,
2010.
OTHER MATTERS
The Board of Directors knows of no other business that will
be presented to the Special Meeting. If any other business is
properly brought before the Special Meeting, proxies in the
enclosed form will be voted in respect thereof as the proxy
holders deem advisable.
It is important that the proxies be returned promptly and
that your shares be represented. Stockholders are urged to mark,
date, execute and promptly return the accompanying proxy card in
the enclosed envelope.
By Order of the
Board of Directors,
/s/ Robert Rosner
Woodland Hills, California
Robert Rosner,
February , 2010 Chairman and Chief
Executive Officer
49
FORM OF PROXY FOR SPECIAL MEETING OF
WATAIRE INTERNATIONAL, INC.
21900 BURBANK BLVD., 3RD FLOOR
WOODLAND HILLS, CA 91367
(877) 602-9895
SOLICITATION ON BEHALF OF THE BOARD OF DIRECTORS OF WATAIRE
INTERNATIONAL, INC.
THE UNDERSIGNED hereby appoint(s) Robert Rosner and
___________, or either of them, with full power of substitution,
to vote at the Special Meeting of Stockholders of Wataire
International, Inc., a Washington corporation (the "Company"),
to be held on , 2010, at 10:00 A.M., Eastern Standard
Time, at______________________, or any adjournment thereof, all
shares of the common stock which the undersigned possess(es) and
with the same effect as if the undersigned was personally
present, as follows:
PROPOSAL (1): APPROVE AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE AUTHORIZED COMMON STOCK
FROM 100,000,000 SHARES TO 500,000,000 SHARES.
( ) For ( ) Against
( ) Abstain
PROPOSAL (2): TRANSACT SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
( ) In their discretion, the proxy-holders are
( ) Withhold Authority
authorized to vote upon such other business
as may properly come before the meeting or
any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL (1)
AND IN THE DISCRETION OF THE PROXIES NOMINATED HEREBY ON ANY
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
(Please sign exactly as name appears hereon. If the stock is
registered in the names of two or more persons, then each should
sign. Executors, administrators, trustees, guardians, attorneys
and corporate officers should include their capacity or title.)
Please sign, date
and promptly
return this Proxy
in the enclosed
envelope.
- ---------------------------------- ----------------
Signature Date
- ---------------------------------- ----------------
Signature Date
50
EXHIBIT A
UBI Number:
Washington Profit Corporation
See attached detailed instructions
( ) Filing Fee $30.00
( ) Filing Fee with Expedited Service $50.00
Page 1 of 1
STATE OF WASHINGTON SECRETARY OF STATE
APD
ARTICLES OF AMENDMENT
Chapter 23B.10 RCW
SECTION 1
NAME OF CORPORATION: (as currently recorded with the Office
of the Secretary of State) Wataire International, Inc.
SECTION 2
AMENDMENTS were adopted on this DATE: January , 2010
SECTION 3
ARTICLES OF AMENDMENT WERE ADOPTED BY: (please check one of the
following)
1:1 Board of Directors (shareholder action was not required)
(x) Duly approved by shareholders in accordance with 23B.10.030 and
23B.10.040 RCW
1:1 Incorporators (shareholder action was not required)
SECTION 4
AMENDMENTS TO ARTICLES ON FILE: (if necessary, attach additional
information)
Article II, Section 2.1 Authorized Capital, of the Articles of
Incorporation is amended as set forth in the Attachment.
51
SECTION 5
EFFECTIVE DATE OF ARTICLES OF AMENDMENT: (please check one of the
following)
( ) Upon filing by the Secretary of State
( ) Specific Date: (Specified effective date must be within 90 days
AFTER the Articles of Amendment have been filed by the Office
of the Secretary of State)
SECTION 6
SIGNATURE (see instructions page)
This document is hereby executed under penalties of perjury, and is, to
the best of my knowledge, true and correct.
X
Signature Printed Name/Title Date Phone Number
Profit Corporation - Amendment Washington Secretary of State Revised 02/09
ATTACHMENT
Section 2.1 of Article II is amended to read in its entirety as
follows:
2.1. Authorized Capital
The total number of shares that this corporation is
authorized to issue is 520,000,000, consisting of 500,000,000
shares of common stock, having a par value of $0.0001 per share,
and 20,000,000 shares of Preferred Stock, having a par value of
$0.0001 per share. The common stock is subject to the rights
and preferences of the Preferred Stock as set forth below.
52