<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON D.C.

                                ---------------

                                  FORM 10-K/SB



(MARK ONE)

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


For the fiscal year ended June 30, 2000

                                       OR

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


                         Commission File Number 0-29746


                            INNOVA PURE WATER, INC.
               --------------------------------------------------
               (Exact name of registrant as specified in charter)


                     Florida                             59-2567034
         --------------------------------            ------------------
           (State or other jurisdiction                (IRS Employer
         of incorporation or organization            Identification No.


13130 - 56th Court, Suite 609, Clearwater, Florida                    33760
--------------------------------------------------                  ----------
     (Address of principal executive offices)                       (Zip code)


Registrant's telephone number, including area code:       (727) 572-1000
                                                          --------------


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


         Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                  [X]  Yes                         [ ] No


         Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy of information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB   [X]

State issuer's revenues for its most recent reporting period June 30, 2000
 ....... $872,800


Aggregate market value of the voting stock held by non-affiliates of the
registrant at June 30, 2000 was $1,603,994.


            13130- 56th Court, Suite 605, Clearwater, Florida 33760
         -------------------------------------------------------------
         (Former name or former address, if changed since last report)



<PAGE>   2

                            INNOVA PURE WATER, INC.
                              FORM 10-KSB - INDEX


                                     Part I

Item 1.  Description of Business

Item 2.  Description of Property

Item 3.  Legal Proceedings

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



                                    Part II

Item 5.  Market Price of the Registrant's Securities and Related Stockholder
         Matters

Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

Item 7.  Financial Statements and Supplementary Data

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosures


                                    Part III

Item 9.  Directors and Executive Officers of the Registrant

Item 10. Executive Compensation

Item 11. Security Ownership of Certain Beneficial Owners and Management

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits, Consolidated Financial Statements, Schedules, and Reports
         on Form 8-K

         Signatures



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                            INNOVA PURE WATER, INC.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to
the provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about Innova Pure Water's industry, management beliefs, and
assumptions made by management. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict; therefore, actual results and outcomes may differ materially from what
is expressed or forecasted in any such forward-looking statements.



                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

GENERAL

         Innova Pure Water, Inc. a Florida corporation (the "Company" or
"Innova") was incorporated August 13, 1985. The Company designs, develops,
manufactures, and markets unique consumer water filtration and treatment
products. These products have been historically of the portable nature and
generally consist of a container serving as a water reservoir incorporating an
integral highly efficient water-filtering and treatment device. The container
may be in the shape and size of a bottle, pitcher or carafe. The Company also
has and continues to investigate counter top and in-line filtration systems and
is expanding into multi - purpose filtration products which include biological
treatment as well as high performance carafe type products

         The Company has become recognized as an innovator in the water
filtration field holding in excess of thirty patents directly associated with
water treatment and purification which provides the Company with competitive
advantages. It has been the Company's ability to create both new products and
develop technology that has permitted it to differentiate itself from other
competitors within the field and protect its product advantage. The Company has
also demonstrated the ability to address and open significant new markets
previously overlooked or ignored. Examples of these markets are portable
personal and sport type filter bottles; and products for the infant,
children's, and teen market. On the technology side, Innova has attracted
interest from large consumer products companies. This has led to the Company
differentiating itself as a product innovator and creator as well as product
producer, thus making the Company attractive as a strategic alliance partner to
strong multi-national marketing companies such as Culligan, GoodTimes and
others.

         In fact, we are currently negotiating with Culligan, a subsidiary of
Vivendi, which is headquartered in France. Vivendi is the forty billion dollar
conglomerate now negotiating to acquire Seagrams. The elimination of the need
for the Company to finance its own sales and marketing program has allowed the
Company to achieve profitability in the past, while attaining



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distribution that would otherwise be impossible. However, there is no assurance
that a final agreement will be reached with Culligan or the Company will
achieve profitability in the future.

         The water filtration products of the Company are designed to provide
an improved quality and much better tasting water for the average consumer at
an affordable price. The Innova filtration process has been shown under
independent taste tests to have no discernible taste or quality differences
from the expensive premium priced bottled waters, while costing a fraction of
the price. The products currently produced are primarily designed to treat tap
water, reducing chlorine, lead, taste and odor. Portable highly effective
filtration products will be introduced shortly for the removal of biological
contaminants including protozoa and bacteria. Also a unique line of filters to
adapt to 2 - 5 gallon water bottles commonly used in conjunction with coolers
and crocks is under consideration. Other future products under development
include a Carafe' and specialty filter bottle products. These products have
exceptional contaminant removal capabilities as well as possessing extended
life and ease of use without the filtration time required with current
competitive product. All products Innova develops are created to meet world
market requirements as well as the needs of the U.S. domestic market. To
enhance the opportunity for early extension though alliances into Europe and
Asia, Innova has recently retained the international consulting and search firm
Intercon, Ltd. There is no assurance that additional alliances will be
consummated or that the Company will be able to commercially exploit its water
purification technologies on a profitable basis.


CUSTOMERS, STRATEGIC ALLIANCES AND MARKETING

         The Company believes that as a result of the diminishing quality of
tap water, both domestically and world wide, the opportunities for the
application of the Company's water filtration products and technology will
continue to grow for a number of years. Domestically, the 1999 market for
bottled water was estimated at almost $5 billion registering a 14% increase
over 1998 and achieving strong market penetration. The water filter market
continues to grow reflecting consumer need for effective and efficient portable
filtration devices. It is management's opinion that there will be substantial
growth in sales in the water filtration product category, both domestically and
internationally. The water treatment industry is embryonic with major growth
still to come.

         It is the Company's opinion that to the consumer, drinking tap water
has become both distasteful and suspect as a result of the use of chlorine,
which forms carcinogenic by-products and is strongly suspected by some members
of the medical community to be a cause of arterial and heart disease. In
addition, the dangers and frequency of lead in tap water, as well as the
presence of Cryptosporidium, or Giardia, harmful protozoa, have made the
consumer aware of the potential dangers associated with drinking tap water. The
typical consumer of the Company's products primarily seeks clean, fresh tasting
water. A growing number of health conscious consumers are also becoming
concerned about the inherent quality of tap water. Lead, in water, has become a
serious health concern to a large percentage of the populace and especially to
mothers concerned for the health of their children.

         The retail customer base for the Company's products consists of all
major mass merchants, grocery, drug, and department store retailers as well as
hardware and homecenters. This also constitutes the basic domestic market
universe of strategic alliance partners that typically have wide distribution
in retail stores. While there is no assurance that Innova's products will be
purchased by retail customers, the Company hopes to be a substantial
participant in the market as the market for water treatment products increases.



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         The Company's products have been directly marketed via television and
print media by GoodTimes Licensing & Entertainment ("GoodTimes") with Richard
Simmons as the marketing spokesperson. In past years their infomercial
incorporating the Company's water treatment products was the top rated
infomercial for an extended period. Innova continues its relationship with
GoodTimes.

         In order to overcome the disadvantage of being a small company, and
lack of capital to adequately support a national sales program, the Company's
strategy remains to create strategic alliances with nationally recognized
companies. As a result, the Company obtains the distribution and sales of its
products on a national and international basis without incurring the sales and
marketing costs usually associated with the sales of consumer products. The
Company also benefits by the consumer acceptance of the brand names and the
reputation of the strategic alliance partners such as Culligan(R).

         On July 21, 1997, the Company entered into a strategic alliance, which
included manufacturing, developing, marketing, and distributing provisions with
Rubbermaid Incorporated ("Rubbermaid"). This agreement granted Rubbermaid
certain rights for the marketing and distribution of selected products
throughout the United States and internationally. The agreement also provided
that the Company would receive an additional $.10 on each of its filter
products for the first 10,000,000 units sold by Rubbermaid as compensation for
previous Innova research and development. These payments were in addition to
the normal contract sales price.

         Unfortunately, Newell Company, which acquired control of Rubbermaid in
May 1999, dictated that Rubbermaid immediately withdraw from the water
filtration market. This new category did not fit with their established product
lines and their need to reduce costs and return Rubbermaid to profitable
operations. This action was taken although the sales of Rubbermaid/Innova Water
Filtration Products had increased significantly over the preceding year
(Wal-Mart +97%). In June of 1999, Newell Rubbermaid released Innova from the
agreement and exited the consumer water filtration category. The termination of
the Rubbermaid alliance seriously affected Innova's sales and profits for the
fiscal year ended June 30, 2000.

         Innova found itself in a difficult position. It had a line of products
for a category becoming recognized as a major opportunity with unmet consumer
needs. As Innova did not have in house sales and marketing personnel, the
Company elected to seek other strategic alliances to replace Rubbermaid. While
it was known that this would not be a task which would be rapidly accomplished,
the Company believed that it would prove to be the best decision. To do
otherwise would have required Innova to return to developing a retail marketing
and sales capability. This would take time and considerable expense. Innova's
re-entry into the retail market with its own brand would also tend to confuse
the customers and be detrimental to establishing the follow-on strategic
alliances that would prove successful. Within a period of several weeks Innova
had entered into discussions with several of the major companies in the
consumer water filtration field. Innova received indications of interest and
commenced negotiations in August 1999, which appeared very promising with a
leading company in the consumer water filtration field. It was anticipated that
an agreement would be consummated by October 1999. When November 1999 came
without a satisfactory agreement, Innova commenced definitive negotiations with
Culligan. Verbal agreements were reached early in 2000 and Culligan introduced
the Innova line of personal water filter bottles at the Housewares Show in
Chicago in January 2000 under the Culligan name. The creation of packaging and
ancillary marketing support was completed in April 2000, permitting shipments
to commence in May 2000. The formal agreement between Innova and Culligan is
being finalized by the respective parties.

         Innova also continues to search for major multinational companies for
distribution in foreign markets. Several distributors in other countries, such
as Canada, Korea, South Africa, Israel, Australia, New Zealand, and Japan, have
commenced distribution of Innova products.



                                       5
<PAGE>   6

         Due to GoodTimes' stock ownership in the Company, management believes
GoodTimes has a financial incentive to continue marketing the Company's
products. Accordingly, the Company has agreed not to sell its products via
direct television advertising while promoted by GoodTimes. The Company and
GoodTimes continue to discuss and evaluate the development of products and
advertising campaigns, which could utilize television as a marketing platform
to increase sales. However, at the present time there are no current television
advertising campaigns planned with GoodTimes although newly developed products
will be under consideration. The Company is completing the development of new
products which it believes GoodTimes could market profitably and successfully
as they represent a major step forward in meeting the desires and needs of
water conscious consumers.


CURRENT PRODUCTS

         The Company currently produces products for distribution and sales
through its strategic alliance partners, as well as directly to select classes
of trade on both a domestic and international basis. All products are patent
protected under one or more issued patents. Additional patents are also
pending. See "Business-Intellectual Property." The products currently in
distribution are:

    1.   A 2 liter portable or refrigerator bottle with filter and pour-
         through sealing cap;

    2.   A 16 oz. standard 28 mm neck water bottle with replaceable filter and
         a push-pull valve cap;

    3.   A 16 oz. sport type bottle with integral replaceable filter mounted to
         the bottle top with a push-pull valve cap;

    4.   A 28 oz. sport type bottle which could be configured to adapt the
         "System" filters and treatment devices;

    5.   Replacement filters for installation into Culligan and Innova
         WaterWay(R) Sport type bottles, and others;

    6.   Replacement filters for sport and refrigerator bottles;

    7.   Baby bottle filters for infants.


         Innova has been successful in improving the functionality and
contaminant removal capability of its standard "A" and "B" filters used in the
sport and personal line of water filter bottles. Both filters now remove over
90% of chlorine when new and remain above the 75% minimum required over 20
gallons for certification by NSF International. Both also remove over 90% of
lead at a flow of 10ml/sec over the suggested 20 gallon life of the product. No
competitive product is certified for lead, nor can equal the Innova filters
certified chlorine removal capability.

         (NSF International, founded in 1944 as the National Sanitation
Foundation, is known for the development of standards, product testing, and
certification services in the areas of public health safety and protection of
the environment. The NSF International Mark is placed on millions of consumer,
commercial, and industrial products annually and is trusted by users,
regulators, and manufacturers alike.)

         The Company manufactures and assembles its product line In Clearwater,
Florida. It also utilizes several component vendors and contract manufacturers.
As a result of the vendor relationships established over the years, management
believes the Company is assured of



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reliable and available capacity to sustain the significant projected growth.
However, there is no assurance that such vendor relationships will continue in
such a successful manner.


PRODUCT DEVELOPMENT

         The Company is actively engaged in new product development and the
application of new and emerging technology for its strategic alliance partners.
It is the opinion of management that the technology and product concepts
controlled by the Company can permit its strategic alliance partners to become,
and remain, the dominant companies in the consumer water treatment category
domestically and internationally.

         Two new products have been developed and can be placed into
production and offered to our strategic alliance partners and distributors.

    1.   Drop-in filter to fit 28 mm bottleneck opening, retained in place by
         cap. To be used with figural bottle top designs; i.e. football
         helmets, etc.

    2.   Single orifice filter for inverted bottle use; i.e., cooler crock
         containers of 2 - 5 gallon nominal size

         The Company has a product development program to assure, to the degree
possible, that it remains the leader and principal source for portable water
treatment. The validation of Innova's patent covering the portable personal and
sport bottle segment as a result of winning Innova's patent infringement suit
against Aladdin Industries, and others provide a strong incentive to form an
alliance with Innova for most companies contemplating or desirous of entering
this market. Innova also possesses unique proprietary technology and product
designs which outperform and have significantly greater utility than present
carafe products currently in the market. This also provides a significant
negotiating advantage for Innova as well as providing the opportunity for
enhanced future revenue. Continuing along product lines Innova has in
development a family of sport-type water treatment products operating on the
"Systems" principal. Under the "System" approach the user of an Innova designed
sport-type bottle may incorporate one or more of a series of filters,
independently or in conjunction with a second treatment device. The
thusly-configured "System" can be used to treat most problems faced by users,
including biological contamination.

Products under development include:

    1.   A Sport type bottle employing the "System Concept" utilizing
         interchangeable filter elements to fill numerous consumer needs;

    2.   Various filters and treatment elements for the "System" product;

    3.   High performance carafe' and water filter bottles;

    4.   Filter assembly for protozoa adaptable to sports bottles incorporating
         a high performance carbon composite filter;

    5.   Filter life-time indicators;

    6.   Means to disinfect water;

    7.   Means to add flavor to water.

         New rapid filtration media adaptable to carafes and pitchers has also
been developed. The major problem with the water filtration carafes currently
being marketed is the slow filtration period required to process water before
it is available for drinking. There is also a useful volume constraint as,
typically only 50% of the volume of the carafe is available for filtered water.
Thus, frequently, insufficient amounts of filtered water is available and the
process time to filter additional water to satisfy the demand is simply too
long. The new Company technology under



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development fills rapidly, fully processing the water in less than
approximately three minutes, and pours freely. The process used is Static
Filtration(TM)with macro-porous media. Patents have been issued and others are
pending.

         There is also a demand for a means to alert the consumer/user when a
water filter should be replaced. To satisfy this requirement the company has
reviewed and prototyped several devices and has entered into a worldwide
license and has filed an U.S. patent application. The end product has the
potential for timing the life of toothbrushes and other time sensitive products
which come in contact with water. Innova as a component of its license is
required to actively market the indicators world wide for water treatment
applications.

         During fiscal years ended June 30, 2000 and June 30, 1999, the Company
spent $170,500 and $149,700, respectively, on research and product development.
At this time, management does not anticipate any major increases or decreases
in this level of spending for research and development in the future.


SALES AND BACKLOG

         The net sales for the fiscal year ended June 30, 2000 were $872,800.
The net sales for the preceding fiscal year ending June 30, 1999 were
$2,587,400. Gross revenue for fiscal year ending June 30, 2000 was $895,300 as
compared with gross revenue of $3,021,000 for the preceding year ended June 30,
1999.

         Orders during the first half of our fiscal year 2000 sales were very
low as a result of the decision of Rubbermaid to vacate the category. The third
quarter (January through March) of our fiscal year 2000 was also low as
Culligan prepared to enter the market with Innova products. The fourth quarter
of 2000, ending June 30th, was profitable as Culligan commenced shipment. As
had been noted in Footnote 1 of the accompanying annual financial statements,
64% of the Company's sales were to Culligan for the fiscal year ended June 30,
2000. The loss of Culligan as a customer would have a materially adverse impact
on our financial position.


COMPETITION

         The Company competes with many other companies that supply water
filtration products. The principal competitive product would be the "pour
through" carafe type product normally kept in the refrigerator and used in the
kitchen.

         Several companies, including Brita, Procter & Gamble (Pur), Culligan
and others compete in the pitcher or carafe products market segment which while
not portable outside the home and decidedly more expensive, are otherwise
directly competitive to the Innova two liter bottle. However, the Company has
the only product in a two liter size that is a truly portable pitcher type
product with a spill proof locking cap. The leading company in the domestic
pitcher category is Clorox, selling the Brita line under license from Brita
GmbH, Germany. Brita has entered the sport bottle market, introducing a single
competitive product at the January 2000, Housewares Show, which Innova
considers a direct infringement of one of Innova patents.

         The Company also competes indirectly with other companies that supply
bottled water, including The Perrier Group of America, Inc. (which includes
Arrowhead Mountain Spring Water, Poland Spring, Ozarka Spring Water,
Zephyrhills Natural Spring Water, Deer Park, Great Bear and Mountain Ice) and
Great Brands of Europe (which includes Evian Natural Spring Water and Dannon
Natural Spring Water). The Company also competes with numerous regional bottle
water companies located in the United States and Canada.

         The Company was the early leader in sales of portable bike, sport, and
16-oz. personal filter water bottles, as well as the two liter portable pitcher
all of which are covered by patents held by the Company. The category remains
relatively new with the majority of growth expected



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by the Company over the next several years. The Innova portable personal water
filter bottles were initially introduced by Richard Simmons under contract with
the Company's strategic partner, GoodTimes Licensing and Entertainment. In the
first year over 2,000,000 16-oz. personal water filter bottles and thousands of
30 oz. sport type bottles were sold.

         Since then, Aladdin Industries and others have entered this expanding
new market category. The Company's position in this market has been vigorously
defended against competition attempting to enter this market. Innova has been
victorious in litigation, protecting its patent position which has caused most
companies with potentially infringing products to withdraw from this market.
The exception being Brita against whom Innova is currently actively litigating
to protect its patents. However, many of the companies with whom the Company
currently competes, or may compete in the future, have greater financial,
technical, marketing, and sales resources, as well as greater name recognition
than the Company. There can be no assurance that the Company will have the
resources required to respond effectively to market or technological changes or
to compete successfully in the future, although its existing and pending
alliances provide certain advantages in these regards as does the Company's
patent position.


INTELLECTUAL PROPERTY

         The Company has rights to numerous patents in the consumer product
water treatment field in which 26 issued or allowed patents and three pending
patents are specifically related to consumer water treatment products. In total
the Company holds over 40 patents.

         The Company was the plaintiff in a patent infringement and unfair
competition lawsuit entitled Innova/Pure Water, Inc. v. Aladdin Sales &
Marketing, Inc., Filtex USA, Ltd., ACT Marketing, Inc., ACT Marketing, Ltd.,
Advanced Consumer Technologies, Inc., and Robert Luzenberg, Case No.
97-924-Civ-T-25D (M.D. Fla.) filed by the Company on April 18, 1997. The United
States Appellate Court entered a Judgment in favor of the Company. A subsequent
judgement was handed down by the Circuit Court ruling that the Company's patent
was infringed by the Aladdin and Filtex products. Damage payments were
negotiated and paid to the satisfaction of the Company and the defendants
withdrew their infringing product from the market.

         On July 30, 1999, Innova brought a similar action for infringement of
Innova patent #5,609,759 against Safari Water Filtration Systems, Inc. d/b/a
Safari Outdoor Products of Broom Field, Colorado. This case is pending in Tampa
Federal Court, Case No.99-1781-CIV-T-23A.

         On January 24, 2000, Innova brought a patent infringement suit against
the Brita Products Company of Oakland, California. This case is pending in
Tampa, Fl. Case No.8:00-157-CV-T-23A claiming infringement of Innova patent
#5,609,759. In the Brita suit Innova is seeking treble damages believing the
infringement was willful.


MANUFACTURING

         Operations are centered in the Company's facility, which historically
has performed the quality assurance, inspection, testing, assembly, packaging
and shipping functions. The Company's products consist principally of: (1) one
or more elements containing water treatment media; and (2) injection molded
plastic components, blow molded or injection molded containers which hold the
water to be processed as well as to support and position the water filtration
element. In addition, labels, bags, and a variety of boxes are also used to
package various



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products. The filtration media consist of proprietary monolithic filter
elements containing activated carbon with a plastic binder and one or more
other compounds depending upon the use to which the filter is to be applied.
The media compounds may include ion-exchange resins, zeolytes, iodinated
resins, or embody hydrophilic sub-micron ceramic components. Other process
media employed include company developed proprietary macro filtration media.
The medias are obtained from a variety of sources. Typically, each is procured
under the terms of a confidentiality agreement and to the Companies
specifications.

         The Company has a domestic filter element production capacity of over
12,000,000 per year. This capacity may be increased should demand increase
beyond the existing capacity. Two or more suppliers are available for most
components. By so doing the company has established a close working
relationship with competent suppliers to assure price and quality competition
and sufficient capacity to meet current and future requirements. All injection
and bottle molds and tooling are owned by Innova and may be removed and moved
at Innova's option. Even so there is no assurance, that such competitive
pricing and production capacity will be available in the future.

         Presently, two companies supply the blow-molded components. The
bottles and pitchers are secured from various companies, each somewhat of a
specialty. Typically, the Company owns the tooling to produce the blow molding
components.

         The Company has changed from principally manual assembly and packaging
operations to mechanized assembly and packaging operations. These operations
include assembling; (1) the media elements into the housings; (2) the closure
to the filter housings; (3) the top and valve components together; and (4) the
variety of components into the bottle or pitcher. Packaging consists of
semi-automatic assembly of certain filters into hermetically sealed bags, date
and lot stamping labels and shipping boxes.

         The Company possesses considerable in-house manufacturing know-how.
The expertise spans from tool and mold design to automated dispensing and
compacting of media, through inspection, assembly, and packaging. As such the
Company acts in an advisory capacity with many of its vendors, or specifies the
methodology to be used. This internal capability also keeps the Company from
becoming a "hostage" to any supplier and permits the Company to make justified
"make or buy" decisions based upon the true economic impact. This permits the
Company to purchase high quality components at a competitive price while
remaining independent.

         All Company vendors operate under confidentiality agreements. Several
organizations also support the Company in its product development program on an
as needed basis. The Company has relied on a limited number of vendors to
supply the components necessary for its products. A lack of necessary
components at favorable prices would adversely affect the Company.


PRODUCT LIABILITY INSURANCE AND WARRANTIES

         The Company maintains a $2,000,000 product liability insurance policy.
In the fifteen years in which the Company has produced and furnished products
to the retail trade and consumers, both domestically and internationally, no
product suits have been filed, nor consumer complaints received which would
lead to litigation.

         The Company warrants to its strategic alliance partners that the
products will be produced to mutually acceptable standards. Innova operates a
formal quality control program monitoring through Acceptable/Acceptance Quality
Level (AQL) standards, incoming



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<PAGE>   11

components, in process parts, and completed units. Detail product specification
sheets are in place as well as "Physical Proofs" which have been signed off and
accepted by both parties. In case of a question, the "Proof' samples are used
for comparison purposes to determine acceptability.


EMPLOYEES

         As of June 30, 2000, the Company had 10 employees, plus 2 functioning
in a consulting capacity. This includes its 3 executive officers, 3 persons
performing development, and 2 administrative and clerical persons. There are 2
manufacturing and production supervisors who are supplemented by as many as 35
contract employees, as required.


ITEM 2.  DESCRIPTION OF PROPERTY

         The Company occupies approximately 6,400 feet of air-conditioned
office, manufacturing and warehouse space located at 13130 - 56th Court, Suite
607-610, Clearwater, Florida 33760. The product development laboratory is also
located in the building. The facilities are leased and a new five year lease
commenced March 1, 1998. The monthly rent payment for these facilities is
approximately $4,800.


ITEM 3.  LEGAL PROCEEDINGS

         The Company was the plaintiff in a patent infringement and unfair
competition lawsuit entitled Innova/Pure Water, Inc. v. Aladdin Sales &
Marketing, Inc., Filtex USA, Ltd., ACT Marketing, Inc., ACT Marketing, Ltd.,
Advanced Consumer Technologies, Inc., and Robert Luzenberg, Case No.
97-924-Civ-T-25D (M.D. Fla.) filed by the Company on April 18, 1997. The United
States Appellate Court entered a Judgment in favor of the Company. A subsequent
judgement was handed down by the Circuit Court ruling that the Company's patent
was infringed by the Aladdin and Filtex products. Damage payments were
negotiated and paid to the satisfaction of the Company and the defendants
withdrew their infringing product from the market.

         On July 30, 1999, Innova brought a similar action for infringement of
Innova patent #5,609,759 against Safari Water Filtration Systems, Inc. d/b/a
Safari Outdoor Products of Broom Field, Colorado. This case is pending in Tampa
Federal Court, Case No.99-1781-CIV-T-23A.

         On January 24, 2000, Innova brought a patent infringement suit against
the Brita Products Company of Oakland California. This case is pending in
Tampa, Fl. Case No.8:00-157-CV-T-23A claiming infringement of Innova patent
#5,609,759. In the Brita suit Innova is seeking treble damages believing the
infringement was willful.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



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                                    PART II


ITEM 5.  MARKET PRICE OF THE REGISTRANT'S SECURITIES AND RELATED STOCKHOLDER
         MATTERS


MARKET PRICE OF THE REGISTRANT'S COMMON STOCK

         The Common Stock is traded in the over-the-counter market in the so
called "pink sheets," or on the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc. (the "NASD") under the symbol "IPUR."
The transfer agent and registrar for the Common Stock is Continental Stock
Transfer & Trust Company of New York. The following table sets forth for the
periods indicated the high and low sale prices for shares of the Common Stock
as reported on the OTC.



                                                    Sales Price
                                             High                  Low
-------------------------------             -----                ------

FISCAL YEAR ENDED JUNE 30, 1998
              Fourth Quarter                1.030                 0.690
              Third Quarter                 1.938                 1.016
              Second Quarter                1.313                 1.063
              First Quarter                 1.938                 0.531

FISCAL YEAR ENDED JUNE 30, 1999
              Fourth Quarter                0.906                 0.250
              Third Quarter                 0.531                 0.230
              Second Quarter                0.812                 0.250
              First Quarter                 0.968                 0.500

FISCAL YEAR ENDED JUNE 30, 2000
              Fourth Quarter                0.510                 0.220
              Third Quarter                 0.900                 0.063
              Second Quarter                0.240                 0.090
              First Quarter                 0.438                 0.125


         The Company's Common Stock is not listed on NASDAQ, but is traded in
the over-the-counter market on the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc. (the "NASD"). Accordingly, an investor
may find it more difficult to dispose of, or obtain accurate quotations as to
the market value of the common stock. Further, in the absence of a security
being quoted on NASDAQ, a market price of at least $5.00 per share or the
Company having in excess of $2,000,000 in net tangible assets, trading in the
Company's securities may be covered by a Securities and Exchange Commission
("SEC") rule that imposes additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with net worth in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse). For transactions covered by the rule, the broker-dealer
must make a special suitability determination for the purchaser and receive the
purchasers' written agreement to the transaction prior to the sale.
Consequently, the rule affects the ability of broker-dealers to sell the
Company's securities and also may affect the ability of shareholders to sell
their securities in the secondary market.

         Previously, the SEC adopted seven rules ("Rules") under the Securities
Exchange Act of 1934 requiring broker/dealers engaging in certain recommended
transactions with their customers in specified equity securities falling within
the definition of "penny stock" (generally non-NASDAQ securities priced below
$5.00 per share) to provide to those customers certain specified information.
Unless the transaction is exempt under the Rules, broker/dealers effecting
customer transactions in such defined penny stocks are required to provide
their customers with: (1) a risk disclosure document; (2) disclosure of current
bid and ask quotations, if any; (3) disclosure of the compensation of the
broker/dealers and its sales person in the transaction; and



                                      12
<PAGE>   13

(4) monthly account statements showing the market value of each penny stock
held in the customer's account.

         As a result of the aforesaid rules regulating penny stocks, the market
liquidity for the Company's securities could be severely adversely affected by
limiting the ability of broker-dealers to sell the Company's securities and the
ability of shareholders to sell their securities in the secondary market

         Recent SEC and NASD revisions and interpretations of Rule 15c2-11
require us to maintain our status as a reporting company under Section 12(q) of
the Securities Exchange Act of 1934. Our failure to timely file annual,
quarterly or other reports may affect our ability to maintain listing in the
OTC "Electronic Bulletin Board".


DILUTION AND ABSENCE OF DIVIDENDS

         The Company has not paid any cash dividends on its common or preferred
stock and does not anticipate paying any such cash dividends in the foreseeable
future. Earnings, if any, will be retained to finance future growth. The
Company may issue shares of its common stock and preferred stock in private or
public offerings to obtain financing, capital or to acquire other businesses
that can improve the performance and growth of the Company. Issuance and or
sales of substantial amounts of common stock could adversely affect prevailing
market prices in the common stock of the Company.


SHAREHOLDERS

         As of June 30, 2000, and there were approximately 400 beneficial
owners of the Company's common stock with 10,078,401 and 10,043,401 shares
issued and outstanding, respectively.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED,"
"BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "WILL,"
"COULD," "MAY," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION
REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH
FLOW. SUCH STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO
FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES,
INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS,
CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY
INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO
ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER
MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL, INCLUDING, WITHOUT
LIMITATION, THE RISKS DESCRIBED UNDER THE CAPTION "BUSINESS." SHOULD ONE OR
MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS
PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM
THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY,
ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY
THESE



                                      13
<PAGE>   14

CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR
DEVELOPMENTS.

Innova cautions readers that in addition to important factors described
elsewhere, the following important facts, among others, sometimes have
affected, and in the future could affect, the Company's actual results, and
could cause the Company's actual results during 2000 and beyond, to differ
materially from those expressed in any forward-looking statements made by, or
on behalf of, Innova.


INCOME STATEMENT DATA

<TABLE>
<CAPTION>

                                                                 Year Ended June 30
                                                               2000              1999
                                                          -------------      -----------
<S>                                                       <C>                <C>

Total sales revenue                                       $    872,800       $ 2,587,400
                                                          ==============================
Net (loss)/income                                         $   (922,200)      $   161,300
                                                          ==============================
(Loss)/earnings per common share - basic                  $       (.09)      $       .02
                                                          ==============================
Shares used in per share computation                        10,046,886        10,067,847
                                                          ==============================
(Loss)/earnings per common share - assuming dilution      $       (.09)      $       .02
                                                          ==============================
Shares used in diluted computation                          10,046,886        10,211,539
                                                          ==============================
</TABLE>


BALANCE SHEET DATA

                                                             June 30,
                                                               2000
                                                           -----------

         Total assets                                      $ 1,190,900
                                                           ===========
         Working capital                                   $   365,300
                                                           ===========
         Long-term debt                                         $8,600
                                                           ===========
         Stockholders' equity                              $   741,000
                                                           ===========


YEAR 2000

The "Year 2000" issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Programs with this
problem may recognize a date using "00" as the year 1900 rather than the Year
2000, resulting in system failures or miscalculations. Given this uncertainty,
the Company has recognized the need to remain vigilant in its Year 2000
analysis.


DETERMINATION OF YEAR 2000 READINESS

In 1999, the Company completed a review of its information technology (IT) and
non-information technology systems (non-IT). An inventory was taken of the
Company's essential data processing equipment as well as the equipment used in
the Company's manufacturing processes.

The Company compiled information on the Year 2000 compliance of its essential
data processing hardware, which include its computers, printers, scanners,
modems, copiers, and facsimile machines or any other equipment that may process
date data. This information was gathered by actual testing by the Company or
from the manufacturer either by direct correspondence or information that is
available from the manufacturer's Internet website. The Company found that all
essential data processing hardware is Year 2000 compliant.



                                      14
<PAGE>   15

A review of the Company's essential data processing equipment firmware and
software found it to be either Year 2000 compliant when it was purchased or was
able to be fixed by the download of a "patch" from the software manufacturer's
Internet website.

A review of the equipment used in the Company's manufacturing processes did not
find any potential problem areas due to date processing, including embedded
technologies. The potential for problems occurring in this area is decreased
because the Company essentially assembles complete components from outside
manufacturers into its finished products.

The manufacturer of the Company's telephone equipment does not list our
particular system as Year 2000 compliant. The flaw concerns the printing out of
voicemail reports where the year would be listed as 00 instead of 2000. Since
the system operated normally after January 1, 2000 and the Company does not use
this particular reporting function, it is not necessary to replace the
telephone system. This was the only potential problem area found in the review
of the Company's non-information technology systems.

As a result of these reviews, the Company feels that we are Year 2000 compliant
and that nothing further must be done to our IT and non-IT systems in order to
function normally during the Year 2000 internally.

An assessment of external risks, which are outside the Company's control, was
conducted. The Company identified four major suppliers and two major customers
that were contacted and asked to fill out a questionnaire about their Year 2000
capabilities and remediation programs. All but one responded that they were
Year 2000 compliant as of June 30, 1999. The Company experienced no supply
interruptions as a result of the Year 2000 changeover.

A survey of the Company's financial institution and utility companies, by
direct correspondence, Internet website, or published statements, found that
they were or would be Year 2000 compliant by December 31, 1999 with little risk
of service interruption due to untested systems or processes. There were no
interruptions of services experienced as a result of the Year 2000 changeover.


CONTINGENCIES

At this time, the Company has determined that it does not need to have
increased inventory levels on June 30, 2000 or purchase any additional
liability insurance due to any litigation that may result from the Year 2000
changeover.

The Company feels that the internal risk of a Year 2000 system failure is
minimal, but took the following steps in order to recover from such a failure:

    1.   All records were backed up before the end of business on December 31,
         1999.

    2.   Some essential systems had their internal system clocks turned back
         two weeks and maintained in December 1999 "time" until a determination
         was made that there were not any system failures, related to the Year
         2000 changeover, on similar systems on January 1, 2000. This would
         have caused an error in the system's date reporting, but essential
         services can still have been performed.

There were no Year 2000 problems encountered on or after January 1, 2000 and
all internal system clocks have been returned to the correct time and date.
There will be no errors in date reporting.



                                      15
<PAGE>   16

RESULTS OF OPERATIONS


NET SALES

Net sales for the twelve-month period ended June 30, 2000 were $872,800, a
decrease of 66 percent from the $2,587,400 of net sales for the comparable
period in 1999. This decrease is attributable to the decision by Newell, after
the acquisition of Rubbermaid, to alter priorities away from water filtration
and other new programs to concentrate on Rubbermaid's historic core business.
This decrease was partially offset by sales to U.S. Filter (Culligan) during
the fourth quarter of 2000.


COST OF SALES

For the year ended June 30, 2000, the cost of sales decreased to $501,600 from
the $1,458,500 of costs for the year ended June 30, 1999. This decrease is
mainly due to the decrease in sales.

Gross profit margin decreased 1 percent for the year ended June 30, 2000, to 43
percent from an overall gross profit margin of 44 percent for the year ended
June 30, 1999. This is principally attributable to the lower sales volume that
had to absorb the fixed costs of manufacturing.


OPERATING EXPENSE

Operating expenses for the year ended June 30, 2000 were $1,304,000, or 149
percent of net sales. For the comparable period in 1999, operating costs
amounted to $1,401,200, or 54 percent of net sales. The 95 percent increase as
a percentage of sales between these periods is due to the decrease in sales.


OTHER INCOME

For the year ended June 30, 2000, net interest income amounted to $14,000 as
compared to net interest income of $39,100 for the year ended June 30, 1999.
This decrease is due to the decrease in cash invested in interest bearing
securities or accounts with a major national bank.

Other income for the year ended June 30, 2000 of $8,500 was due principally to
a distribution from a trust fund administered by a law firm that represents the
Company.


INCOME TAXES

Due to the Company's history of operating losses, management has established a
valuation allowance in the full amount of the deferred tax assets arising from
these losses because management believes it is more likely than not that the
Company will not generate sufficient taxable income within the appropriate
period to offset these operating loss carryforwards.


NET INCOME

Net loss for the year ended June 30, 2000 amounted to $(922,200), as compared
to net income of $161,300 for the comparable period in 1999. The decrease in
income is primarily a result of the reduction in sales.



                                      16

<PAGE>   17

EARNINGS PER SHARE

For the year ended June 30, 2000, basic and diluted loss per share amounted to
$(.09). For the comparable period in 1999, basic and diluted earnings per share
amounted to $.02. The decrease in earnings per share is due to the decrease in
income between the comparable periods.



LIQUIDITY AND CAPITAL RESOURCES


OPERATING ACTIVITIES

For the year ended June 30, 2000, net cash used by operating activities
amounted to $304,100, a decrease from the $311,600 provided by operating
activities for the comparable period in 1999. The decrease is primarily a
result of the reduction in sales as indicated above.


INVESTMENT ACTIVITIES

The Company's investment activities include equipment purchases, litigation
involving patents, patent acquisitions, and net changes in related party
advances.

Net cash used by investing activities for the year ended June 30, 2000 was
approximately $174,400, as compared to net cash used by investing activities of
approximately $89,400 for the comparable period in 1999. The increase in cash
expended for investing activities is due primarily to an increase in
expenditures on patent infringement litigation and advances made to related
parties.


FINANCING ACTIVITIES

The Company's financing activities include payments on borrowings and capital
leases, and the acquisition of treasury stock.

Net cash of approximately $19,700 was used by financing activities for the year
ended June 30, 2000, as compared to net cash used by financing activities of
approximately $17,700 for the year ended June 30, 1999. The slight increase in
cash used for financing activities results from the acquisition of treasury
stock.


CAPITAL RESOURCES

At June 30, 2000, the Company does not have any material commitments for
capital expenditures other than for those expenditures incurred in the ordinary
course of business.

The Company believes that its current operations and cash balances will be
sufficient to satisfy its currently anticipated cash requirements for the next
12 months. However, additional capital could be required in excess of the
Company's liquidity, requiring it to raise additional capital through an equity
offering, secured or unsecured debt financing. The availability of additional
capital resources will depend on prevailing market conditions, interest rates,
and the existing financial position and results of operations of the Company.



                                      17
<PAGE>   18

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is presented at page F-1.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURES

None.


                                    PART III


ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The following table sets forth certain information with respect to
each person who is a director or an executive officer of the Company as of June
30, 2000.

<TABLE>
<CAPTION>

           Name        Age                         Position
-------------------  ------  --------------------------------------------------------
<S>                    <C>   <C>

John E. Nohren, Jr.    68    Chairman of the Board, Director, Chief Financial Officer
Rose C. Smith          47    President, Chief Executive Officer, Director
Robert Connell         44    Controller
Patricia Cary          52    Secretary
Peter Christensen      50    Director
Andrew Greenberg       45    Director
Mort Langer            57    Director
Frank Legnaioli        69    Director

</TABLE>


         Executive officers are elected by the Board of Directors and serve
until their successors are duly elected and qualify, subject to earlier removal
by the Board of Directors. Directors are elected at the annual meeting of
shareholders to serve for their term and until their respective successors are
duly elected and qualify, or until their earlier resignation, removal from
office, or death. The remaining directors may fill any vacancy in the Board of
Directors for an unexpired term. See "Board of Directors" for a discussion of
the Directors' terms.


BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS AND DIRECTORS

         John E. Nohren, Jr. has been Chairman of the Board of the Company
since its inception. Effective December 1996, with Mr. Nohren's consent and
approval, he resigned as President and Rose C. Smith was appointed his
successor. He subsequently resigned as Chief Executive Officer in June of 1997
when Rose C. Smith was appointed his successor. In June 1998, Mr. Nohren was
elected Treasurer and interim Chief Financial Officer. He was also the founder
and the major shareholder of a prior Company, Innova, Inc., founded in 1969 to
service the increasing requirement of the U.S. Department of Defense for
sophisticated automation and hazardous waste management. With government
funding, Mr. Nohren made technological advances for dealing with water
contamination of various nature. The applications included the treatment of
water in a chemical, biological, or nuclear war scenario. Also, the removal of
a variety of contaminants from the production of military products. The obvious
voids, and needs for the application of those technologies to consumers lead to
the formation of the Company in 1985. He is the named inventor on several of
the Company's patents. See "Certain Relationships and Related Transactions."

         Rose C. Smith was appointed President in June 1996, and President and
Chief Executive Officer effective June 30, 1997. Ms. Smith began her career in
the financial community at Bache and Co., Inc. (Prudential Securities, Inc.)
and was a financial adviser to the principals of the Moore McCormick Shipping
Lines. She functioned in a number of consulting



                                      18
<PAGE>   19

roles relative to product acquisition, licensing, and line extensions and has
been retained by Aguecheek Ltd. in England, which owned the licensing rights to
Armani, Valentino, Ungaro, Tiffany and others. Ms. Smith was also a consultant
regarding potential corporate acquisitions for Marubeni in Tokyo. She became
associated with the Company in 1993 as a marketing consultant, hence became the
Director of Business Development until elected President in 1996, and Chief
Executive Officer in June 1997.

         Robert Connell, Controller, joined Innova Pure Water, Inc. in
September 1993 as a corporate accountant and was appointed company controller
in August 1996. Mr. Connell began his career in August 1978 with Consolidation
Coal Company, now known as Consol Energy Incorporated. He left the company as a
senior accountant in the cost and budget section of the Northern West Virginia
Region Controller's Department in September 1988. Mr. Connell then attended
Santa Fe Community College in Gainesville, Florida, taking computer programming
languages and application courses until May 1990. From 1990 to 1993, he was
employed by Florida Savings and Loan (1990/91): Main Street Mortgage (1991/92):
and Kmart Corporation (1992 until hired by Innova).

         Patricia Cary, Corporate Secretary, joined Innova in July 1999. Prior
to joining the Company, she held various executive positions in the
science-technology field, banking industry, healthcare, medical and
manufacturing fields. With an expertise in serving as a liaison to members of
the board, corporate officers, executive staff and, particularly, start-up
offices and operations, she brings over 20 years of administrative experience
to Innova. Patricia is a native of Columbus, Ohio, and attended Ohio State
University.

         Peter Christensen has been a director of the Company since June 1995.
Since September 1997, he has been the Chief Executive Officer of ComTech,
Incorporated, a software company that provides integrated art print and mail
services as well as art electronic imaging, E-mail delivery, and electronic
payment services, integrated with credit card and personal financial software.
Since August 1995, Mr. Christensen has been a member of the board of Digital
Privacy, Inc., a smart card based computer and communications security company,
securing communications across the internet. Prior to joining ComTech,
Incorporated in 1997 he was a managing director at Paine Webber, for the period
1993 through 1997.

         Andrew Greenberg has been a director of the Company since 1997. Since
1986, he has been employed as President at GoodTimes Entertainment, a New York
based, privately held company which is a diversified international multimedia
entertainment organization.

         Mort Langer has been a director of the Company since 1987. Since 1993,
Mr. Langer has owned and operated Langer Partners, the management arm of Langer
Capital Management, L.L.P. where he serves as a partner. Prior to forming
Langer Partners, he worked at Bear, Stearns & Co., Inc. as Research Director
for their 35 other equity analysts.

         Frank Legnaioli has been a director of the Company since 1986. Mr.
Legnaioli is presently retired. Prior to his retirement, he worked for Paxton
Van Lines, Inc. in Springfield, Virginia for forty years. During his tenure at
Paxton Van Lines, Inc., it became the top grossing Atlas Van Lines agent in the
United States and abroad. He was one of the architects of the buy out of Atlas
Van Lines and turning it into a public company.


BOARD OF DIRECTORS

         The Company's Bylaws fix the size of the Board of Directors at no
fewer than one and no



                                      19
<PAGE>   20

more than nine members, to be elected annually by a plurality of the votes cast
by the holders of Common Stock, and to serve until the next annual meeting of
stockholders and until their successors have been elected or until their
earlier resignation or removal. Currently, there are six directors who were
elected on February 28, 1998. Mr. McKee who had been a long standing director
died during the year and his contribution to the corporation will be missed. No
replacement had been named, as of the date of this report.


ITEM 10. EXECUTIVE COMPENSATION


EXECUTIVE COMPENSATION

         The following table shows the compensation paid or accrued by the
Company for the fiscal years ended June 30, 1998, June 30, 1999 and June 30,
2000 to or for the account of the Rose Smith, President and Chief Executive
Officer and John E. Nohren, Jr., Chairman of the Board. No other executive
officer or director of the Company received benefits or an annual salary and
bonus in excess of $100,000 or more during the stated period. Accordingly, the
summary compensation table does not include compensation of other executive
officers.
<TABLE>
<CAPTION>

                                                      SUMMARY COMPENSATION TABLE


                       ANNUAL COMPENSATION                             LONG-TERM COMPENSATION AWARDS
                                                            Restricted
                                             Other Annual     Stock       OPTIONS/     LTIP        All Other
Name & Principal         Salary     Bonus    Compensation    Award(s)      SARS       Payouts    Compensation
Position (1)               ($)       ($)          ($)          ($)          (#)         ($)           ($)
---------------------   --------    -----    ------------   ----------    --------    -------    ------------
<S>                     <C>         <C>      <C>            <C>          <C>          <C>        <C>

Fiscal 2000
John E. Nohren, Jr.        ---       ---          ---           ---         ---           ---    $100,000 (2)
Chairman, CFO, BOD
Rose Smith              $127,456     ---          ---           ---         ---           ---
President and CEO
---------------------

Fiscal 1999
John E. Nohren, Jr.        ---       ---          ---           ---         ---           ---    $122,133 (2)
Chairman BOD, CFO
Rose Smith              $176,353     ---          ---           ---         ---           ---
President and CEO (1)
---------------------

Fiscal 1998
John E. Nohren, Jr.        ---       ---          ---           ---       190,000         ---    $152,908 (2)
Chairman BOD
Rose Smith              $211,603     ---          ---           ---       190,000         ---
President and CEO (1)

</TABLE>


(1)  Ms. Smith replaced Mr. Nohren as the President in June, 1996, and as CEO,
     effective June 30, 1997.

(2)  Represents payments made to Mr. Nohren pursuant to his royalty agreement.



                                      20
<PAGE>   21

EMPLOYMENT AND OTHER AGREEMENTS

         The Company entered into an employment agreement with Rose C. Smith
effective June 30,1997, which provides for her employment as President and
Chief Executive Officer for a five year term ending June 29, 2002. Under the
agreement Ms. Smith is to receive a base salary of $150,000 per year. Ms. Smith
is also to receive a bonus of two percent of net sales of the Company adjusted
by the annual gross margin achieved by the Company. The agreement contains a
restrictive covenant not to compete for the term of the agreement and for five
years following termination of service without cause. The agreement provides
for severance payments equal to 200% of the annual base compensation due under
the Agreement in the event there is a "change of control" of the Company, as
defined therein, and she is subsequently terminated without cause. For the
fiscal year ending June 30, 2000 and 1999, Ms. Smith reduced her base salary to
$110,000 and $127,500, respectively.

         The Company entered into a royalty agreement with John E. Nohren, Jr.
effective June 30, 1997, expiring on June 30, 2002. This agreement obligates
the Company to pay Mr. Nohren, in return for the assignment of his patent
rights, a minimum of $100,000 of royalties per year, with a cap of $300,000 per
year, during the term of his employment. The royalty payments will be
calculated based on five percent of net sales of products that incorporate
these assigned patents. Upon his termination, a three percent royalty shall be
paid over the residual life of his patents. Mr. Nohren elected to accept stock
at market for his minimum royalty commencing May 1, 2000.


AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES

         The information provided in the table below provides information with
respect to each exercise of stock options during fiscal 2000 and fiscal 1999 by
each of the executive officers named in the summary compensation table and the
fiscal year end value of unexercised options.

<TABLE>
<CAPTION>

                                                                                Value of
                                                                               Unexercised
                                                             Number of        In-the Money
                                                             Unexercised          Options
                                                         Options at FY-End    at FY-End($)
                                                            Exercisable         Exercisable
                                              Value         on or after         on or after
                        Shares Acquired/    Realized        July 1, 1999      July 1, 1999(1)
     Name               Exercised           ($) (1)      or July 1, 2000      or July 1, 2000
----------------------  ----------------    --------     -----------------    ---------------
<S>                     <C>                 <C>          <C>                  <C>

Fiscal 2000
John E. Nohren, Jr.          -----            -----            190,000               0
Rose Smith                   -----                             190,000               0
----------------------
Fiscal 1999
John E. Nohren, Jr.          -----            -----            190,000            14,535
Rose Smith                   -----            -----            190,000            14,535

</TABLE>


(1)  The aggregate dollar values in column (c) and (e) are calculated by
     determining the difference between the fair market value of the Common
     Stock underlying the options and the exercise price of the options at
     exercise or fiscal year end, respectively. In calculating the dollar value
     realized upon exercise, the value of any payment of the exercise price is
     not included.



                                      21
<PAGE>   22


STOCK OPTIONS

         The Company has in effect a stock option plan which authorizes the
grant of incentive stock options under Section 422 of the Internal Revenue Code
(the "1996 Plan"). The Plan was adopted in 1996. A total of 750,000 shares have
been reserved under the Plan. As of June 30, 2000, options to purchase a total
of approximately 584,600 shares at $.50 a share were outstanding under the 1996
Plan. The 1996 Plan provides that (a) the exercise price of options granted
under the Plan shall not be less than the fair market value of the shares on
the date on which the option is granted unless an employee, immediately before
the grant, owns more than 10% of the total combined voting power of all classes
of stock of the Company or any subsidiaries, whereupon the exercise price shall
be at least 110% of the fair market value of the shares on the date on which
the option is granted; (b) the term of the option may not exceed ten years and
may not exceed five years if the employee owns more than 10% of the total
combined voting power of all classes of stock of the Company or any
subsidiaries immediately before the grant; (c) the shares of stock may not be
disposed of for a period of two years from the date of grant of the option and
for a period of one year after the transfer of such shares to the employee; and
(d) at all time from the date of grant of the option and ending on the date
three months before the date of the exercise, the employee shall be employed by
Company, or a subsidiary of the Company, unless employment is terminated
because of disability, in which cased such disabled employee shall be employed
from date of grant to a year preceding the date of exercise, or unless such
employment is terminated due to death.

         In April 1999, the Board of Directors adopted a new stock option plan
(the "1999 Plan"). Under the 1999 Plan, 1,000,000 shares have been reserved for
issuance. The Plan provides that the exercise price of options cannot be less
than the greater of $.50 or the fair market value of the shares from the date
on which the option is granted. The 1999 Plan is similar to all of the other
terms and conditions as described above for the 1996 Plan. As of June 30, 2000,
options to purchase a total of approximately 100,000 shares at $.50 a share
were outstanding under the 1999 Plan.

         As of the date of this filing, the Company has outstanding options and
warrants to acquire 1,054,600 shares of Common Stock at an exercise price of
$.50 per share. Options to acquire 584,600 shares of Common Stock vest over a
three-year period commencing with the fiscal year beginning July 1, 1998 and
ending June 30, 2001. Option holders may exercise their option at any time
following a vesting year so long as the individual remains employed. Four years
of employment are required for vesting. All options must be exercised and
payment made no later than June 30, 2001. Unexercised options after that date
shall terminate. Employees have a 60-day period after termination of employment
to exercise options. The vesting schedule is subject to acceleration in the
event of a merger, sale or a change of control of the Company. The remaining
470,000 options and warrants are exercisable at any time at an exercise price
of $.50 per share and expire beginning October 30, 1998 through August 15,
2000. For all options and warrants issued, the exercise price of $.50 was
determined to be greater than the fair market value as of date of issuance.


DIRECTOR COMPENSATION

         A director who is an employee of the Company receives no additional
compensation for services as director or for attendance at or participation in
meetings except reimbursement of out-of-pocket expenses. An outside director is
reimbursed for out-of-pocket expenditures incurred in attending or otherwise
participating in meetings. All directors hold options to acquire up to 15,000
shares of Common Stock exercisable at $.50 per share. The Company has no other
arrangements regarding compensation for services as a director.



                                      22
<PAGE>   23

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information with respect to the
beneficial ownership of shares of Company Common Stock owned as of June 30,
2000 beneficially by (i) each person who beneficially owns more than 5% of the
outstanding Company Common Stock, (ii) each director of the Company, (iii) the
President and Chief Executive Officer of the Company (the only executive
officer of the Company whose cash and non-cash compensation for services
rendered to the Company for the year ended June 30, 2000, exceeded $100,000)
and (iv) directors and executive officers of the Company as a group:

<TABLE>
<CAPTION>

                         Amount and Nature of
Name of Beneficial Owner (3)              Beneficial Ownership (1)     Percent of Class (2) (8)
------------------------------------      ------------------------     -----------------------
<S>                                       <C>                          <C>

John E. Nohren, Jr. and
Francis Weaver Nohren (4)(5)                      2,143,216                    21.3
Rose C. Smith (6)                                   604,850                     6.0
Peter Christensen (9)                               624,500                     6.2
Mort Langer (10)                                    245,000                     2.4
Frank Legnaioli (9)                                 591,000                     5.9
Joe Cayre (7)                                     1,350,000                    13.5
Andrew Greenberg (9)                                167,000                     1.7
Barbara Albin                                       555,956                     5.5
All directors and executive officers
As a group (8 persons)                            4,397,066                    43.8

</TABLE>


(1)  Represents sole voting and investment power unless otherwise indicated.

(2)  Based on approximately 10,043,401 shares of Company Common Stock
     outstanding as of June 30, 2000 plus, as to each person listed, that
     portion of the unissued shares of Company Common Stock subject to
     outstanding options which may be exercised by such person, and as to all
     directors and executive officers as a group, unissued shares of Company
     Common Stock as to which the members of such group have the right to
     acquire beneficial ownership upon the exercise of stock options within the
     next 60 days.

(3)  The address of each individual is in care of the Company.

(4)  May be deemed to be a "founder" of the Company for the purpose of the
     Securities Act.

(5)  Represents aggregate shares held between Mr. Nohren individually, his wife
     individually and shares held in joint tenancy. Also includes options to
     acquire 190,000 shares of Common Stock exercisable at $.50 held by Mr.
     Nohren.

(6)  54,350 of the shares of common stock as set forth above are owned by
     Elliot Smith, husband of Rose C. Smith, President and Chief Executive
     Officer of the Company. Also includes 190,000 shares underlying options
     issued to Ms. Smith with an exercise price of $.50.

(7)  Represents shares held directly and 1,502,666 indirectly by Joe Cayre and
     his family pursuant to an agreement reached between the Company and the
     Good Times family of companies. See "Certain Relationships & Related
     Transactions."

(8)  Excludes shares reserved for issuance under outstanding options and
     warrants.

(9)  Includes options to acquire 15,000 shares of Common Stock at an exercise
     price of $.50 over a 3 year vesting term conditioned upon continued
     service as an outside director.

(10) Includes options to acquire up to 115,000 shares of Common Stock at an
     exercise price of $.50 per share.



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Mr. John E. Nohren, Jr., Chairman of the Board, has assigned the
rights to certain patents owned by him, to the Company. The patents are used by
the Company for its products. The Company entered into a royalty agreement with
John E. Nohren, Jr. on June 30, 1997, expiring on June 30, 2002, and which is
renewable at the Company's option. This agreement obligates the Company to pay
Mr. Nohren in return for the assignment of his patent rights to the Company, a
minimum of $100,000 of royalties per year, with a cap of $300,000 per year,
during the term of his active involvement. The royalty payments will be
calculated based on five percent of sales of products that incorporate these
assigned patents. Upon his full retirement, a three percent royalty shall be
paid over the residual life of his patents. See "Executive
Compensation-Employment Agreements."



                                      23
<PAGE>   24

           On October 30, 1997, The Company entered into a stock purchase
agreement with Innova Holdings, LLC. In connection with this agreement, The
Company issued 1,500,000 shares of its common stock to Innova Holdings, LLC in
exchange for the surrender of previously issued warrants to purchase the
11,000,000 shares of the Company's common stock as set forth above. The shares
were subsequently transferred to Joe Cayre and other family members. The
1,500,000 shares could not be sold, transferred, assigned, or pledged until
October 30, 1999.


ITEM 13. EXHIBITS, CONSOLIDATED FINANCIALS STATEMENTS, SCHEDULES AND REPORTS ON
         FORM 8-K

(a)      The following documents are filed as part of this report:

         (1) (2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

         Financial Statements filed as part of this Report are set forth in
         Item 7 and are presented at page F-1 of this Report; which list is
         incorporated herein by reference. The Financial Statement schedules
         and the Report of Independent Auditors as to Schedules follow the
         Exhibits.

(a)      (3) EXHIBITS.

(b)      Reports on Form 8-K

         None

(c)      Exhibits. See the Indexes to Exhibits below.


INDEX TO EXHIBITS

(1)      All of the items below are incorporated by reference to the
         Registrant's Registration Statement on Form 10KSB, File No. 0-29746.


                                    PART III

ITEM 1.  Index of Exhibits:

         The following exhibits are included as part of this report:


                  ITEM 15B. EXHIBITS AND SEC REFERENCE NUMBERS
<TABLE>
<CAPTION>

Number                              Title of Document                                   Location
------      --------------------------------------------------------------------     --------------
<S>         <C>                                                                      <C>

3(a)        Articles of Incorporation, as amended (1)
3(b)        Bylaws (1)
10(a)       [Reserved]
10(b)       Agreement with Rubbermaid Incorporated dated July 21, 1998 (1)
10(c)       [Reserved]
10(d)       Stock Purchase/Warrant Exchange Agreement with GoodTimes
            Entertainment, Inc. dated October 11, 1997 (1)
10(e)       Employment Agreement with Rose C. Smith dated Jun3e 30, 1997 (1)
10(f)       Royalty Agreement with John E. Nohren, Jr. dated June 30, 1997 (1)

</TABLE>


                                      24
<PAGE>   25
<TABLE>
<S>         <C>

10(g)       License Agreement with A. C. International dated May 21, 1998 (1)
10(h)       Supply and Distribution Agreement with Bowline Family Products, Inc.
                      Dated September 26, 1997 (1)
10(i)       [Reserved]
10(j)       Purchase and Supply Agreement with Rose Group dated January 22,
                      1997 (terminated) (1)
10(k)       Real Estate Lease with Carr Rubin Associates dated January 21,
                      1998 (1)
15          Specimen Certificate (1)
99(a)       1996 Incentive Stock Option Plan (1)
99(b)       1999 Incentive Stock Option Plan (1)

</TABLE>



                                    PART F/S

ITEM 1.  FINANCIAL STATEMENTS:

         The following is a list of each financial statement filed under ITEM
13 of this Registration Statement:

         1.       Audited Financial Statements consisting of the Company's
statements of operations, changes in stockholders' equity, and cash flows for
the year ended June 30, 1999, as audited by Pender Newkirk & Company, Certified
Public Accountant, along with its report thereon.

         2.       Audited Financial Statements consisting of a Balance Sheet as
of June 30, 2000 and the related statements of operations, changes in
stockholders' equity, and cash flows for the year ended June 30, 2000, as
audited by Pender Newkirk & Company, Certified Public Accountant, along with
its report thereon.


                                   SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.


INNOVA PURE WATER, INC.


Dated:     October 13, 2000            By: /s/ Rose C. Smith
                                           ------------------------------------
                                           Rose C. Smith
                                           President, Chief Executive Officer,
                                           Director


Dated:     October 13, 2000            By: /s/ John E. Nohren, Jr.
                                           ------------------------------------
                                           John E. Nohren, Jr.
                                           Chairman of the Board of Directors,
                                           Chief Financial Officer



Dated:     October 13, 2000            By: /s/ Robert Connell
                                           ------------------------------------
                                           Robert Connell
                                           Principal Accounting Officer



                                      25
<PAGE>   26

                            Innova Pure Water, Inc.
                              Financial Statements

                       Years Ended June 30, 2000 and 1999


Contents


Independent Auditors' Report on Financial Statements......................... 1

Financial Statements:

     Balance Sheet........................................................... 2
     Statements of Operations................................................ 3
     Statements of Changes in Stockholders' Equity........................... 4
     Statements of Cash Flows................................................ 5
     Notes to Financial Statements........................................ 6-15

Independent Auditors' Report




Board of Directors
Innova Pure Water, Inc.
Clearwater, Florida


We have audited the accompanying balance sheet of Innova Pure Water, Inc. as of
June 30, 2000 and the related statements of operations, changes in
stockholders' equity, and cash flows for the years ended June 30, 2000 and
1999. These financial statements are the responsibility of the management of
Innova Pure Water, Inc. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. These standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Innova Pure Water, Inc. as of
June 30, 2000 and the results of its operations and its cash flows for the
years ended June 30, 2000 and 1999 in conformity with accounting principles
generally accepted in the United States of America.



Pender Newkirk & Company
Certified Public Accountants
Tampa, Florida
August 25, 2000



                                      1

<PAGE>   27

                            Innova Pure Water, Inc.

                                 BALANCE SHEET

                                 June 30, 2000

<TABLE>
<S>                                                                    <C>

Assets
Current assets:
     Cash and cash equivalents                                         $   194,500
     Accounts receivable, trade, net of allowance for doubtful
         accounts of $8,800                                                304,100
     Other receivables, including related party of $116,000                141,800
     Inventories                                                           160,200
     Other current assets                                                    6,000
                                                                       -----------
Total current assets                                                       806,600

Property and equipment, net                                                 85,500

Other assets                                                               298,800
                                                                       -----------
                                                                       $ 1,190,900
                                                                       ===========


Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable, trade                                           $   314,700
     Accrued expenses, including related party of $52,400                  115,300
     Current portion of obligation under capital lease                       4,200
     Current portion of long-term debt                                       7,100
                                                                       -----------
Total current liabilities                                                  441,300
                                                                       -----------
Long-term liabilities:
     Obligation under capital lease, net of current portion                  2,300
     Long-term debt, net of current portion                                  6,300
                                                                       -----------
Total long-term liabilities                                                  8,600
                                                                       -----------
Stockholders' equity:
     Preferred stock; $.001 par value; 2,000,000 shares authorized;
         0 shares issued and outstanding
     Common stock; $.0001 par value; 50,000,000 shares authorized;
         10,078,401 shares issued and 10,043,401 shares outstanding          1,000
     Capital in excess of par value                                      8,066,000
     Accumulated deficit                                                (7,321,100)
                                                                       -----------
                                                                           745,900
     Treasury stock, at cost; 35,000 shares                                 (4,900)
                                                                       -----------
Total stockholders' equity                                                 741,000
                                                                       -----------
                                                                       $ 1,190,900
                                                                       ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.



                                      2

<PAGE>   28

                            Innova Pure Water, Inc.

                            Statements of Operations


<TABLE>
<CAPTION>

                                                             Year Ended June 30,
                                                           2000             1999
                                                       -----------     -----------
<S>                                                    <C>               <C>

Net sales, related parties                                             $   329,000

Net sales, other                                       $   872,800       2,258,400
                                                       -----------     -----------
                                                           872,800       2,587,400

Cost of sales                                              501,600       1,458,500
                                                       -----------     -----------

Gross profit                                               371,200       1,128,900
                                                       -----------     -----------


Operating expenses:
     Selling expenses                                       54,700         137,300
     General and administrative expenses                 1,078,800       1,114,200
     Research and product development                      170,500         149,700
                                                       -----------     -----------
                                                         1,304,000       1,401,200
                                                       -----------     -----------

Net loss from operations                                  (932,800)       (272,300)
                                                       -----------     -----------

Other (income) expenses:
     Interest, net                                         (14,000)        (39,100)
     Loss (gain) on disposal of fixed assets                11,900         (27,600)
     Other                                                  (8,500)       (366,900)
                                                       -----------     -----------
                                                           (10,600)       (433,600)
                                                       -----------     -----------

Net (loss) income                                      $  (922,200)    $   161,300
                                                       ===========     ===========


(Loss) earnings per common share                       $      (.09)    $       .02
                                                       ===========     ===========

(Loss) earnings per common share, assuming dilution    $      (.09)    $       .02
                                                       ===========     ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.



                                      3
<PAGE>   29

                            Innova Pure Water, Inc.

                 Statements of Changes in Stockholders' Equity

                       Years Ended June 30, 2000 and 1999


<TABLE>
<CAPTION>

                                                       Common Stock              Capital In
                                                ----------------------------      Excess Of           Accumulated       Treasury
                                                  Shares           Amount         Par Value             Deficit          Stock
                                                ----------      ------------     -----------        --------------      --------
<S>                                             <C>             <C>              <C>                <C>                 <C>

Balance, June 30, 1998                          10,064,871        $ 1,000        $ 7,980,000        $ (6,560,200)      $  5,700

Compensation for stock
     options issued                                                                   31,200

Stock issued for services
     and exercised options                          14,230                             7,900

Acquisition of treasury
     stock, 23,500 shares                                                                                                 8,000

Issuance of treasury stock
     for services, 23,333
     shares                                                                            6,000                             (8,000)

Retirement of treasury
     stock                                            (700)                           (5,700)                            (5,700)

Net income                                                                                               161,300
                                                ----------        -------        -----------        ------------       --------

 Balance, June 30, 1999                         10,078,401          1,000          8,019,400          (6,398,900)             0

Compensation for stock
     options issued                                                                   41,600

Acquisition of treasury
     stock, 60,000 shares                                                                                                 9,500

Issuance of treasury stock
     for services, 25,000
     shares                                                                            5,000                             (4,600)

Net loss                                                                                                (922,200)
                                                ----------        -------        -----------        ------------       --------

Balance, June 30, 2000                          10,078,401        $ 1,000        $ 8,066,000        $ (7,321,100)      $  4,900
                                                ==========        =======        ===========        ============       ========
</TABLE>

The accompanying notes are an integral part of the financial statements.



                                      4
<PAGE>   30

                            Innova Pure Water, Inc.

                            Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                             Year Ended June 30,
                                                                             2000           1999
                                                                           ---------     ---------
<S>                                                                        <C>           <C>

Operating activities
     Net (loss) income                                                     $(922,200)    $ 161,300
                                                                           ---------     ---------
     Adjustments to reconcile net (loss) income to net cash and
         cash equivalents (used) provided by operating activities:
             Depreciation and amortization                                   144,400       132,100
             Provision for losses on accounts receivable                                    (1,200)
             Loss (gain) on disposal of equipment                             11,900       (27,600)
             Stock issued or subscribed for services                          51,200        51,900
             (Increase) decrease in:
                 Accounts and other receivables                               99,500       400,700
                 Inventories                                                 (35,300)      229,200
                 Other assets                                                  9,900        (5,800)
             Increase (decrease) in accounts payable and
                 accrued expenses                                            336,500      (629,000)
                                                                           ---------     ---------
     Total adjustments                                                       618,100       150,300
                                                                           ---------     ---------
     Net cash and cash equivalents (used) provided by
         operating activities                                               (304,100)      311,600
                                                                           ---------     ---------

Investing activities
     Proceeds from sale of equipment                                                        49,800
     Acquisition of equipment                                                (15,900)      (70,200)
     Acquisition of patents                                                 (126,700)      (77,800)
     (Advances) payments (to) from related parties                           (31,800)        8,800
                                                                           ---------     ---------
     Net cash and cash equivalents used by investing activities             (174,400)      (89,400)
                                                                           ---------     ---------

Financing activities
     Acquisition of treasury stock                                            (9,500)       (8,000)
     Payments on long-term debt                                               (6,600)       (6,100)
     Payments on capital lease obligations                                    (3,600)       (4,800)
     Proceeds from issuance of common stock                                                  1,200
                                                                           ---------     ---------
     Net cash and cash equivalents used by financing activities              (19,700)      (17,700)
                                                                           ---------     ---------

Net (decrease) increase in cash and cash equivalents                        (498,200)      204,500

Cash and cash equivalents, beginning of year                                 692,700       488,200
                                                                           ---------     ---------

Cash and cash equivalents, end of year                                     $ 194,500     $ 692,700
                                                                           =========     =========

Supplemental disclosures of cash flow information and noncash
     financing activities:
         Cash paid during the year for interest                            $   2,200     $   3,300
                                                                           =========     =========

</TABLE>

The accompanying notes are an integral part of the financial statements.



                                      5
<PAGE>   31

                            Innova Pure Water, Inc.

                         Notes to Financial Statements

                       Years Ended June 30, 2000 and 1999



1.       Nature of Operations

Innova Pure Water, Inc. was incorporated in Florida in 1985 for the purpose of
developing, manufacturing, and marketing proprietary, state-of-the-art,
effective, and economical in-the-house and portable water purification
products. The corporate headquarters is located in Clearwater, Florida. Sales
are to both wholesale and retail markets throughout the United States,
principally on credit and primarily through strategic alliances. Sales are also
made to distributors in several foreign countries.

For the years ended June 30, 2000 and 1999, sales to one and two customers
amounted to approximately 64 and 89 percent of net sales, respectively.
Accounts receivable from these customers amounted to approximately $288,000 and
$50,600 at June 30, 2000 and 1999, respectively. Included in the above amount
for the year ended June 30, 1999 are sales to related stockholders of
approximately $329,000.

For the years ended June 30, 2000 and 1999, sales to foreign customers amounted
to approximately 21 and 7 percent of net sales to unaffiliated customers,
respectively. These sales were made to customers in various locations as
follows:

                                                  2000           1999
                                               ---------      ----------
         Brazil                                               $    1,000
         Japan                                 $  79,800          72,800
         New Zealand                              47,900          31,000
         England                                                   7,800
         Israel                                   15,000
         South Korea                              23,000
         Other                                    13,600          40,690
                                               ---------      ----------
                                               $ 179,300      $  153,290
                                               =========      ==========


On July 21, 1997, the Company entered into a strategic alliance that includes
manufacturing, developing, marketing, and distributing provisions with
Rubbermaid Incorporated(R) ("Rubbermaid"). This agreement grants Rubbermaid
certain rights to the products and technology of the Company as well as to
market and distribute certain products throughout the United States and
specific other countries during the term of the agreement. The Company also
granted Rubbermaid the non-exclusive right to market and distribute certain
products throughout the rest of the world with the exception of specific
products and/or markets reserved under pre-existing agreements under other
strategic alliances. In addition to the product price, the agreement calls for
a limited price adjustment of $.10 per unit for the first 10 million units of
products purchased by Rubbermaid. During the year ended June 30, 1999,
Rubbermaid and the Company agreed that the



                                      6
<PAGE>   32


1.       Nature of Operations (continued)

Company is entitled to a minimum of $500,000 less any limited price adjustments
already paid. Included in net sales for the years ended June 30, 1999 and 1998
are approximately $144,000 and $100,000, respectively, of revenues relating to
this limited price adjustment. In addition, included in other income for the
year ended June 30, 1999 is $256,000 for the remaining balance of the agreed
upon payment. As of September 23, 1999, this agreement was terminated.

The Company currently holds numerous patents in the field of water treatment
and has additional domestic and foreign patents pending. The Company pursues an
aggressive product development program with the goal to provide its strategic
partners with unique competitive advantages.


2.       Significant Accounting Policies

The significant accounting policies followed are:

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual results could differ
         from those estimates.

         Cash and cash equivalents consist of checking and operating accounts.
         The cash deposits are with a single financial institution and are in
         excess of the Federal Deposit Insurance Corporation's insurance
         coverage limit of $100,000 at June 30, 2000.

         Inventory is stated at the lower of cost, determined by the first-in,
         first-out method, or market.

         The Company extends credit to its various customers based on the
         customer's ability to pay. Based on management's review of accounts
         receivable, an allowance of $8,800 for doubtful accounts is considered
         necessary.



                                      7

<PAGE>   33

2.       Significant Accounting Policies (continued)

         Property and equipment are recorded at cost. Depreciation is
         calculated by the straight-line method over the estimated useful lives
         of the assets, ranging generally from 3 to 10 years. Additions to and
         major improvements of property and equipment are capitalized. Repair
         and maintenance expenditures are charged to expense as incurred. As
         property or equipment is sold or retired, the applicable cost and
         accumulated depreciation are eliminated from the accounts and any gain
         or loss is recorded. Depreciation expense amounted to approximately
         $87,100 and $107,900 for the years ended June 30, 2000 and 1999,
         respectively.

         When the Company has long-lived assets that have a possible impairment
         indicator, the Company estimates the future cash flows from the
         operation of these assets. If the estimated cash flows recoup the
         recorded value of the assets, they remain on the books at that value.
         If the net recorded value cannot be recovered, the assets are written
         down to their fair market value if lower than the recorded value.

         Deferred tax assets and liabilities are recognized for the estimated
         future tax consequences attributable to differences between the
         financial statements carrying amounts of existing assets and
         liabilities and their respective income tax bases. Deferred tax assets
         and liabilities are measured using enacted tax rates expected to apply
         to taxable income in the years in which those temporary differences
         are expected to be recovered or settled. The effect on deferred tax
         assets and liabilities of a change in tax rates is recognized in
         income in the period that includes the enactment date.

         Intangible assets that are included in other assets in the
         accompanying financial statements are being amortized over their
         estimated useful life of five years.

         The Company recognizes revenue at the time products are shipped. Any
         deposits received in advance of product shipment are reflected as
         liabilities until the products are shipped.


2.       Significant Accounting Policies (continued)

         Financial Accounting Standards Board Statement 123 (FASB 123),
         "Accounting for Stock-Based Compensation," provides that expense equal
         to the fair value of all stock-based awards on the date of the grant
         be recognized over the vesting period. Alternatively, this statement
         allows entities to continue to apply the provisions of Accounting
         Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to
         Employees," whereby compensation expense is recorded on the date the
         options are granted equal to the excess of the market price of the
         underlying stock over the exercise price. The Company has elected to
         continue to apply the provisions of APB Opinion No. 25 and provide pro
         forma disclosure of the provisions of FASB 123. Under APB Opinion No.
         25, the Company recorded approximately $41,600 and $31,200 of
         compensation expense for the years ended June 30, 2000 and 1999,
         respectively.

         The Company records shares of common stock as outstanding at the time
         the Company becomes contractually obligated to issue shares.



                                      8
<PAGE>   34

3.       Inventories

Inventories consist of:

         Raw materials                                               $ 128,300
         Finished goods                                                 17,600
         Work in process                                                14,300
                                                                     ---------
                                                                     $ 160,200
                                                                     =========


4.       Property and Equipment

Property and equipment consist of:

         Tooling                                                     $ 249,400
         Machinery and equipment                                       235,900
         Vehicles                                                       32,900
         Equipment under capital lease                                  18,100
                                                                     ---------
                                                                     $ 536,300

             Less:
                 Accumulated depreciation                              444,800
                 Accumulated depreciation on equipment
                   under capital lease                                   6,000
                                                                     ---------
                                                                     $  85,500
                                                                     =========



                                      9

<PAGE>   35

5.       Related Party Transactions and Commitments

The Company entered into an employment agreement with its President and Chief
Executive Officer effective June 30, 1997, which provides for her employment
for a five-year term ending June 29, 2002. Under the agreement, she is to
receive a base salary of $150,000 per year, as well as a bonus of two percent
of net sales of the Company, adjusted by the annual gross margin achieved.
During the years ended June 30, 2000 and 1999, the President and Chief
Executive Officer agreed to a temporary voluntary reduction in base salary to
$110,000 and $127,500 per year, respectively. For the years ended June 30, 2000
and 1999, commissions earned under the agreement amounted to approximately
$17,400 and $26,400, respectively, and are included in accrued expenses in the
accompanying financial statements. The agreement contains a restrictive
covenant not to compete for the term of the agreement and for five years
following termination of service without cause. The agreement provides for
severance payments equal to 200 percent of the annual base compensation due
under the agreement in the event there is a "change of control" of the Company,
as defined therein, and she is subsequently terminated without cause.

The Company has been assigned the rights to certain patents owned by the
majority stockholder of the Company who is also the Chairman of the Board of
Directors of the Company. The cost of maintaining these and other patents are
included in other assets and amounts to $291,600. The cost is being amortized
on a straight-line basis over a five-year period.

Effective June 30, 1997, the Company entered into an agreement with the
Chairman of the Board of Directors expiring on December 31, 2002. This
agreement obligates the Company to pay him, in return for the assignment of his
patent rights, a minimum of $100,000 of royalties per year, with a cap of
$300,000 per year. The royalty payments will be calculated based on five
percent of sales of products that incorporate these assigned patents. In the
event of his termination, a three percent royalty shall be paid over the
residual life of his patents. In connection with the assignment, the Company
paid $100,000 and $122,100 of royalty expense to the Chairman for the years
ended June 30, 2000 and 1999, respectively. At June 30, 2000, $16,700 is
included in accrued expenses.

The above employment agreements and assignment of rights to patents and royalty
payments are not necessarily indicative of the agreements that would have been
entered into by independent parties.

6.       Long-Term Debt

Long-term debt consists of:

         Note payable; 7.25% interest; monthly payments
             of principal and interest of $652 through
             April 30, 2002; collateralized by a vehicle               $ 13,400
         Less amounts currently due                                       7,100
                                                                       --------
                                                                       $  6,300
                                                                       ========

The following is a schedule by year of the principal payments required under
this note as of June 30, 2000:

         2001                                                          $  7,100
         2002                                                             6,300
                                                                       --------
                                                                       $ 13,400
                                                                       ========



                                      10
<PAGE>   36

7.       Capital Lease

The Company has capitalized a rental obligation under a lease of equipment. The
obligation, which matures in 2002, represents the total present value of future
rental payments discounted at the interest rate implicit in the lease. Future
minimum lease payments under the capital lease are as follows:

         Year Ending
            June 30,
         -----------
              2001                                                      $ 4,700
              2002                                                        2,300
                                                                        -------
         Total minimum lease payments                                     7,000
         Less:
             Amount representing interest                                   500
             Amount currently due                                         4,200
                                                                        -------
         Present value of net minimum lease payments, net of
             current portion                                            $ 2,300
                                                                        =======


8.       Lease Commitments

The Company rents its operating facilities under a noncancelable operating
lease expiring in March 2003.

The following is a schedule by year of future minimum rental payments required
under this lease as of June 30, 2000:

          Year Ending
            June 30,
          -----------
              2001                                                    $  40,800
              2002                                                       39,000
              2003                                                       30,100
                                                                      ---------
                                                                      $ 109,900
                                                                      =========

Rent expense amounted to approximately $121,300 and $120,200 for the years
ended June 30, 2000 and 1999, respectively.


9.       Income Taxes

The Company has incurred significant operating losses since its inception that
have been carried forward for income tax purposes and, therefore, no tax
liabilities have been incurred for the years presented. These operating losses
and timing differences due to the excess of amortization for financial
reporting purposes over the amount for tax purposes give rise to a deferred tax
asset and are as follows:

                                       2000               1999
                                    -----------       -----------

         Deferred tax asset         $ 2,756,200       $ 2,409,500
         Allowance                   (2,756,200)       (2,409,500)
                                    -----------       -----------
                                    $         0       $         0
                                    ===========       ===========

The Company has available at June 30, 2000 approximately $6,790,000 of unused
operating loss



                                      11
<PAGE>   37

carryforwards that may be applied against future taxable income, which would
reduce taxes payable by approximately $2.7 million in the future. These
operating loss carryforwards expire beginning in 2001. Income tax benefits
resulting from the utilization of these carryforwards will be recognized in the
year in which they are realized for federal and state tax purposes. For the
year ended June 30, 1999, the Company utilized approximately $148,500 of these
loss carryforwards.


10.      Earnings Per Share

The following data shows the amounts used in computing earnings per share and
the effect on income and the weighted average number of shares of dilutive
potential common stock:

<TABLE>
<CAPTION>

                                                                2000                1999
                                                            ------------       -----------
         <S>                                                <C>                <C>

         Net (loss) income                                  $   (922,200)      $   161,300
                                                            ============       ===========

         Weighted average number of common
             shares used in basic EPS                         10,046,886        10,067,847
         Effect of dilutive stock options and warrants                             143,692
                                                            ------------       -----------
         Weighted average number of common shares
             and dilutive potential common stock used
             in diluted EPS                                   10,046,886        10,211,539
                                                            ============       ===========

</TABLE>


11.      Preferred Stock

Effective October 24, 1996, the Board of Directors authorized 2,000,000 shares
of preferred stock with a par value of $.001 per share. The Board of Directors
is authorized to issue the preferred stock in series and to fix, in the manner
and to the full extent provided and permitted by law, the rights, preferences,
and limitations of each series of preferred stock. At June 30, 2000, there were
no shares of preferred stock issued or outstanding.


12.      Stock Options and Warrants

On April 22, 1999, the Company adopted the "1999 Stock Option Plan." Under the
plan, options to issue up to 1,000,000 shares of the Company's common stock may
be granted. The option price shall not be less than the greater of $.50 per
share or 100 percent of the fair market value of the underlying common stock on
the date of grant. As of June 30, 2000, 103,000 options had been granted under
the plan with various terms and expiration dates.

During the year ended June 30, 1997, the Company reserved 750,000 common shares
for issuance under the Company's 1996 incentive stock plan. During the year
ended June 30, 1998, 715,000 stock options, net of forfeitures, were granted
under this plan at an exercise price of $.50 per share. The options vest over a
three-year period beginning July 1, 1998 and expire on June 30, 2001. During
the years ended June 30, 2000 and 1999, 0 and 12,600 stock options were
exercised under this plan, respectively, and 24,900 and 95,900 stock options
were forfeited due to termination of employment, respectively.

12.      Stock Options and Warrants (continued)

Additionally, the Company had an incentive stock option plan for key employees
and advisory members. The plan allowed stock options to be granted to officers,
employees, directors, and



                                      12

<PAGE>   38

members of the technical and marketing advisory boards of the Company. As of
June 30, 1999, all options under this plan had expired.

In addition to the above stock option plans, the Company grants options to
various individuals to purchase the Company's common stock at the discretion of
the Board of Directors. During the year ended June 30, 1999, the Company
granted 120,000 stock options to certain individuals. These options are
exercisable at $.50 per share and may be exercised at any time through April
2001. During the years ended June 30, 2000 and 1999, no stock options were
exercised under this plan.

The following is a summary of stock option activity during 2000 and 1999:

<TABLE>
<CAPTION>
                                           Directors, Technical
                                           Advisory Board, and
                                            Marketing Advisory             1996 and 1999
                                         Board Stock Option Plan         Stock Option Plans                 Other
                                         -------------------------     ----------------------        ----------------------
                                                        Weighted                     Weighted                      Weighted
                                                         Average                      Average                       Average
                                            Number      Exercise         Number      Exercise         Number       Exercise
                                          of Shares       Price        of Shares       Price        of Shares        Price
                                          ---------     ---------      ---------     --------       ---------      --------
         <S>                              <C>           <C>            <C>           <C>            <C>            <C>

        Options granted and
           outstanding, June 30,
           1998                            108,500        $  .50        715,000        $  .50

        Options granted during
           the year                                                     103,000           .50         120,000         $ .50

        Options expired during
           the year                       (108,500)         (.50)

        Options forfeited during
           the year                                                     (95,900)         (.50)

        Options exercised during
           the year (at a price of
           $.50 per share)                                              (12,600)         (.50)
                                          ---------     --------        -------        ------       ---------         -----
        Options granted and
           outstanding,
           June 30, 1999                         0           .00        709,500           .50         120,000           .50

        Options forfeited during
           the year                                                     (24,900)         (.50)
                                          ---------     --------        -------        ------       ---------         -----
        Options granted and
           outstanding,
           June 30, 2000                         0        $  .00        684,600        $  .50         120,000         $ .50
                                          =========     ========        =======        ======       =========         =====

</TABLE>



12.      Stock Options and Warrants (continued)

The following table summarizes the status of options outstanding at
June 30, 2000:

<TABLE>
<CAPTION>

                                                  Outstanding Options                     Exercisable Options
                                          ------------------------------------=     --------------------------
                                                                     Weighted                      Weighted
                                                                      Average                       Average
                                                                     Remaining                     Remaining
                                          Exercise                  Contractual                   Contractual
                                           Price       Number           Life         Number          Life
                                          --------     ------       -----------     --------      ------------
         <S>                              <C>          <C>          <C>              <C>          <C>
         1996 and 1999 Stock
             Option Plans                  $ .50       684,600      2.132 years      489,731      2.58 years
         Other                             $ .50       120,000      1.00 year        120,000      1.00 year
                                                       -------                       -------
                                                       804,600                       609,731
                                                       =======                       =======
</TABLE>


In addition to the above, the Company has outstanding at June 30, 2000 warrants
to purchase 250,000 shares of the Company's common stock at a price of $.50 per
share. The warrants are exercisable at any time through August 15, 2001, at
which time the warrants expire.



                                      13

<PAGE>   39

At June 30, 2000, 250,000 shares of the Company's common stock have been
reserved for issuance under these warrants.

FASB 123 requires disclosure of pro forma net income (loss) as if the fair
value based method had been applied in measuring compensation costs for common
stock options and warrants granted. Pro forma net income (loss) and net income
(loss) per common share are as follows for the years ended June 30, 2000 and
1999:

                                                         2000            1999
                                                      -----------     ---------
As reported:
         Net (loss) income                            $  (922,200)    $ 161,300
                                                      ===========     =========
         Basic (loss) earnings per common share       $      (.09)    $     .02
                                                      ===========     =========
         Diluted (loss) earnings per common share     $      (.09)    $     .02
                                                      ===========     =========

         Pro forma:
         Net (loss) income                            $ 1,021,400)    $  43,600
                                                      ===========     =========
         Basic (loss) income per common share         $      (.10)    $     .00
                                                      ===========     =========
         Diluted (loss) income per common share       $      (.10)    $     .00
                                                      ===========     =========



12.      Stock Options and Warrants (continued)

The weighted average fair value of the options and warrants at their grant date
during 1999 was $.17. There were no options or warrants granted during the year
ended June 30, 2000. The estimated fair value of each option and warrant
granted is calculated using the Black-Scholes option pricing model. The
following summarizes the weighted average of the assumptions used in the model:

                                                                         1999
                                                                        ------

         Risk-free interest rate                                          5.44%
         Expected years until exercise                                    5.0
         Expected dividend yield                                            0
         Estimated fair market value of underlying stock                 $ .21


13.      Legal Settlements and Contingencies

The Company was the plaintiff in a patent infringement and unfair competition
lawsuit entitled Innova/Pure Water, Inc. v. Aladdin Sales & Marketing, Inc.,
Filtex USA, Ltd., ACT Marketing, Inc., ACT Marketing, Ltd., Advanced Consumer
Technologies, Inc., and Robert Luzenberg, Case No. 97-924-Civ-T-25D (M.D. Fla.)
filed by the Company on April 18, 1997. The Company claimed patent infringement
for one patent and false advertising on the part of the defendants. Prior to
trial, the Company resolved the false advertising claims on terms deemed
favorable to the Company by management. A subsequent judgment was handed down
by the Federal Circuit Court on August 10, 1999, ruling that the Aladdin and
Filtex products infringed the Company's U.S. Patent 5,609,759 and was
enforceable. Damage payments were negotiated and paid to the satisfaction of
the Company.

The Company is currently the plaintiff in a second patent infringement lawsuit
entitled Innova/Pure Water, Inc., Plaintiff v. Safari Water Filtration Systems,
Inc. d/b/a Safari Outdoor Products, Defendant; Case No. 99-1781-Civ-T-23F filed
by the Company on August 4, 1999. The case was filed with the U.S. District
Court, Middle District of Florida, Tampa Division. The Company has



                                      14

<PAGE>   40

claimed patent infringement of U.S. Patent 5,609,759 on the part of the
defendants. It is not yet possible to evaluate the likelihood of a favorable or
unfavorable outcome.

The Company is currently the plaintiff in a patent infringement lawsuit
entitled Innova/Pure Water, Inc., Plaintiff v. Brita Products Company,
Defendant; Case No. 00-157-Civ-T-26C filed by the Company on February 29, 2000.
The case was filed with the U.S. District Court, Middle District of Florida,
Tampa Division. The Company has claimed patent infringement of U.S. Patent
5,609,759 on the part of the Defendants. It is not yet possible to evaluate the
likelihood of a favorable or unfavorable outcome.



                                      15