UNITED STATES SECURITIES EXCHANGE COMMISSION WASHINGTON, D.C.  20549  FORM 10-KSB  [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR FISCAL YEAR ENDED:  September 30, 2007  COMMISSION FILE NO.:   000-49955  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR THE TRANSITION PERIOD FROM _____ TO _____  WATAIRE INTERNATIONAL, INC. ------------------------------------------------- (Name of small business issuer in its charter)  Washington                            91-2060082 -----------------------------------    ----------------------------- (State or other jurisdiction of              (I.R.S. Employer incorporation or organization)               Identification No.)  #300, Warner Center, 21550 Oxnard Street Woodland Hills, California                               91367 -----------------------------------------    ----------------------- (Address of principle executive offices)        ( Zip Code)  Issuer's telephone number:  (877) 602-8985 -----------------------  Securities registered under Section 12(b) of the Exchange Act:  None Securities registered under Section 12(g) of the Exchange Act:  Common Stock, $0.0001 par value ------------------------------------ (Title of Class)  Check whether the issuer (1) filed all reports required to be filed By Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.            YES [x]    NO [ ]  Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.   [ ]       Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).YES [ ]  NO [x]  Issuer's revenues for its most recent fiscal year was $308,062.  The aggregate market value of the voting common stock held by non-affiliates of the Registrant as of September 30, 2007 was approximately $5,869,515 dollars.  State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:  68,351,953 shares of $0.0001 par value common stock outstanding as of December 31, 2007.  Transitional Small Business Disclosure Format (check one):       Yes [ ] No [ x ]  <PAGE>  PART 1  Certain statements contained in this Form 10-KSB constitutes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933,as amended (the "Securities Act"), and Section 21E of the Exchange Act. These statements, identified by words such as "plan", "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under the captions "Description of Business", "Management's Discussion and Analysis or Plan of Operation" and elsewhere in this Form 10-KSB. We do not intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking information.   ITEM 1.  DESCRIPTION OF BUSINESS  OVERVIEW  Wataire International, Inc. ("Wataire," the "Company," "us," or "we") was incorporated under the laws of the State of Washington on August 17, 2000 and has been a reporting issuer with the United States Securities and Exchange Commission (the "SEC") since November 2000.  On October 3, 2006, the Company changed its name to Wataire International, Inc. Previously, on August 26, 2003, the Company had changed its name from Corporate Development and Innovation, Inc. to Cimbix Corporation.  The Company now trades under the ticker symbol "WTAR" on the Over-the-Counter Bulletin Board.  The Company's business is still in its early developmental and promotional stages and to date, the Company's primary activities have involved significant re-structuring and re-organization.  The Company sold its wholly owned subsidiaries, Millennium Business Group (USA) Inc. ("MBG USA") and Advanced Dental Technologies Inc. ("ADT"), to The Triple 8 Holding Trust ("Triple 8").  Since then, the Company entered into an exclusive world-wide licensing agreement with On4 Communications, Inc. ("On4"), formerly Petsmobility Networks (Canada) Inc., to market and      distribute the PetsCell technology and the "PetsMobility" brand products and services.  As of January 30, 2006, On4 and the Company re-negotiated the license agreement. The original license agreement was rescinded and the parties entered into an Asset Purchase Agreement pursuant to which the Company purchased the intellectual property rights relating to four established Web sites that promote the PetsMobility products, and we retained the non-exclusive worldwide right to market and distribute the PetsCell and the PetsMobility brand products. The purchase price for the assets acquired from On4 was $300,000 and consisted of $50,000 cash previously paid to On4 and 1,923,077 shares of the Company's common stock.   The agreement was mutually terminated on July 17, 2006 by both the Company and On4, and the 1,923,077 shares were not issued.  We hired consultants to address the viability, research, development and market of our then, exclusive worldwide license agreement with On4.  Our objective was to exploit our license agreement through product development for sales and sub-licensing of our license to earn royalty revenue streams. Since the license agreement was mutually rescinded and a new asset purchase agreement was entered into, we had to re-organize the Company's initiatives.  Only two of the consultants provided services, and we decided to terminate the consulting agreements.   Each consultant was provided written notice to terminate the consulting arrangements.   The Company cancelled 7,414,000 of the 8,000,000 common shares issued to the consultants for the On4 license.  On or about July 10, 2006 the Company entered into an exclusive license agreement with Wataire Ecosafe Technologies Inc., (formerly Wataire Industries Inc.)(Ecosafe) to market and distribute their commercial water generation machines.  The Company issued 10,000,000 common shares for an exclusive license of five years with an optional renewal period for an additional five years.  As part of the terms and conditions of the agreement, Ecosafe can nominate up to five individuals to be directors of Company.  On or around September 12, 2006, the Company entered into another exclusive license agreement with Ecosafe to market and distribute their home/office water generation machines.  The Company issued 1,000,000 common shares for an exclusive license arrangement of five years with an optional renewal period for an additional five years. On October 19, 2006, the Company and Ecosafe amended both exclusive license agreements to provide for a 15-year initial term with an optional period for an additional 10 years.  On September 21, 2006, the Company executed an agreement granting P204 Enterprises Ltd. (P204) the rights to sell atmospheric water generators under a private label brand.  The agreement provides that a minimum purchase of five containers of the home/office units as well as two 2,500 liter per day commercial units are to be ordered by P204 within 45 days of the signing of the agreement.  The contract is performance based and has a term of five years with an option to renew for a further five years.  P204 defaulted and the Company terminated the agreement.  On April 25, 2007, we entered into an agreement with Ecosafe, Canadian Dew Technologies Inc. (CanDew), Terrence Nylander and Roland Wahlgren to acquire all of the intellectual property (IP) relating to a water treatment process and devices for water-from-air machines.  The agreements previously executed on July 10, 2006, September 12, 2006 and amendments thereto between the Company and Ecosafe have been terminated and cancelled and forms part of the current agreement. Mr. Nylander was, at the time, an officer and director of the Company.  Consideration for the purchase of the IP was $469,485 (CAD $500,000), which was paid at March 31, 2007, the issuance of 4,800,000 shares of common stock of the Company, the agreement by the Company to pay a royalty equal to 5% of the gross profits from the sales of all apparatus or products relating to the IP for a period of 30 years from April 25, 2007 and a royalty equal to 5% of gross      licensing revenues on the IP.  This consideration is in addition to the 11,000,000 shares of common stock previously issued for the license rights as disclosed in the Companys annual September 30, 2006 audited consolidated financial statements.  The IP acquisition was completed in July 2007.  The IP acquired by the Company includes all copyrights, patent rights, trade secret rights, trade names, trademark rights, process information, technical information, contract rights and obligations, designs, drawings, inventions and all other intellectual and industrial property rights of any sort related to or associated with the invention.   BUSINESS  Our business is to fully exploit our products and technology by marketing and distributing our commercial and home/office water generation machines as well as their under-the-counter/over-the-counter units, and the water-producing greenhouse.  The atmospheric water generator produces purified water from the atmosphere by using a condensing surface and a special filtration system that removes dust, airborne particles and bacteria to generate clean drinking water and simultaneously cleaning the air. This method of extracting water vapor has been in use for many years.  Some similar applications include air conditioners and dehumidifiers. The actual water production and cost per gallon varies with the humidity and temperature of the atmosphere at the specific site in which the unit is employed.  The Wataire water generation equipment is a water-from-air technology system developed by a team of specialized technicians incorporating patent pending technologies that control bacterial contamination. The Company currently sells two types of atmospheric units:  (i) small-scale home/office units, which include a full-sized upright model and a countertop model and which can produce between four to seven gallons of water per day depending on humidity and temperature levels of the location of the unit, and (ii) commercial/industrial units capable of producing more than 5,000 liters (1320 gallons) of safe drinking water each day depending upon ambient conditions.  The home/office units are designed to replace bottled water and purified water dispensers, eliminating the need for replenishment and storage of plastic bottles.  These units are intended for usage in residences, schools, offices, hospitals and restaurants.  They can also serve as a personal disaster relief unit for consumers in circumstances such as hurricane Katrina where residents in the affected area had no drinking water.  The industrial units are intended for use in military camps, industrial applications such as factories, commercial applications such as hotels, humanitarian and disaster relief applications where fresh drinking water is scarce.  The water generation equipment is a water-from-air technology system developed by a team of specialized technicians incorporating patent pending technologies that control bacterial contamination. The water generating units are equipped with an electronic control system that turns the machine on and off when full and can circulate the water to maintain clean drinking water 24 hours a day, 365 days a year.  It has a dynamic display to allow for monitoring the machine's operation, showing when a new filter is required. Water generated from the Wataire machines meets World Health Organization drinking water standards.  The system provides an independent, sustainable, safe water source for a wide variety of possible circumstances such as mining and petroleum exploration camps, bottled water and beverage      manufacturers, food manufacturers, military camps, non-government organizations, humanitarian assistance organizations, emergency and disaster relief situations.  According to field trials recently held in Belize and Thailand, the system performed well in a tropical environment producing the design projected volume of water and achieving the desired water quality standards. While we believe the unit is also economically viable in temperate climates, the Wataire units work best in the tropics due to the high humidity levels, which will produce the highest rate of water production at the lowest cost per gallon.  The patent pending water treatment system is comprised of a three-stage water treatment design that cleans water to meet World Health Organization guidelines.  The unit consists of a filtration system, a food-grade dehumidifier water producing module, and a water treatment module. The water treatment process is proprietary and may be subject of various patent applications already filed.  The process basically involves taking filtered moist air from the atmosphere and dehumidifying it for treatment by the water treatment module.  This produced water is then processed through sediment filters, ultra-fine filters, activated charcoal filters and ultraviolet light treatment that eliminate virtually all biological contaminants including bacteria, viruses, and pollutants that are in the air. Atmospheric water vapor is an abundant resource that can be used with virtually no negative environmental impacts.  The machine should be situated in a space that can provide fresh flowing air to the machine intake as it dehumidifies the space.  The water-from-air technology has received broad acceptance around the world as a new and sustainable source of potable water.  Our target markets for the water-from-air systems are businesses, governments, and people who are situated in the humid tropics.  To date, our products have been sold in over 30 different countries and have received positive response from system users.  Our systems, units and/or applications target various markets including military applications, oil and mining operations, new and existing tourist resorts, beverage bottling plants, new condominium developments and humanitarian missions.  The Company has just begun a pilot soft marketing launch.  As of this date, the Company sold many home/office units, air purifiers and a commercial/industrial unit.  We are receiving orders from all parts of the world.  Recently, an independent evaluation initiated by Kansas State University Food Safety System Research department confirms the production of safe drinking water from our home/office atmospheric water generator unit.  Water collected from the water generator was evaluated to determine the natural bacterial populations in the product.  No microbial populations were detected in water collected.  The study confirms the ability of our water generator to produce safe drinking water from natural humidity in the atmosphere.  Further studies will be conducted to evaluate trace chemical impurities.  In August 2007, the Company was pleased to receive an initial report from the Mars Societys Flashline Mars Arctic Research Station (FMARS) that our atmospheric water generators provided safe drinking water for the 7 person crew on the 4 month simulated Mars mission in Canadas high arctic.  The purpose of the mission was to provide information and insight on what humans will be facing when they eventually land on the planet Mars.  The successful utilization of the Companys atmospheric water generators indicates plausible opportunities for future space exploration breakthroughs.  As part of our humanitarian efforts, our CI 2500 commercial water generator machine was on tour in the Southeastern United States to provide aide in the State of Louisiana and Georgia. The tour was successful and the Company was greeted by many State officials and members of Atlanta City Council, as well as Non-Government Officials interested in utilizing the Companys technology to provide drinking water on a large scale, and demonstrated the Mobile Emergency Response Unit (CI      2500 mobile unit) and 4010 home/office unit. While there, the Company was featured on local television broadcasts.  In November 2007, we were invited to London, England to accept the National Green Apple Award on behalf of the Company and our Australian distributor, Envirosource International Pty Ltd. The award for Environmental Best Practices recognizes, rewards and promotes environmental endeavors and initiatives at all levels.  The award promotes environmental work of local authorities, commerce and industries around the world and acknowledges the efforts for a greener earth. The award was presented in the House of Commons, London, UK and was hosted by the Rt. Hon. Patricia Hewitt, MP.  COMPETITION  Water purification and bottled water industries are highly competitive. According to past internal research, there were possibly nine entities experimenting with the technology of water generation, of which two or three were direct active competitors. Some of those companies have limited or no business activities while others have entered into strategic alliances with one another.  The relatively high energy cost associated with changing water from its vapor phase in the air to the liquid phase appears to be an obstacle to making sales for a number of these competitors.  Control of bacteria and viruses in the field of atmospheric water generation creates a technological challenge that our patent pending water treatment module has resolved.  The atmospheric water generator and filtration system industry is new, rapidly evolving and can compete with more traditional water treatment systems that rely on surface and ground water supplies. In the future, our competitors can and may duplicate many of the products or services offered by us.  We believe a robust market opportunity exists for our atmospheric water generators and filtration systems.  Our technology provides an alternative solution to the worlds shortage of fresh water and can provide clean, safe drinking water in various geographical settings. Today, governments and health professionals are increasingly conscious of the negative health effects of pollution, chemicals used to disinfect water supplies, and residual salt in desalinated water, and how they affect human health.  We want to be identified as an environmentally sustainable business. Clean drinking water is becoming a scarce commodity as our population increases.  Pollution from sewage, industry, agriculture and acid rain has destroyed many surface water reservoirs and aquifers.  We believe water generation treatment and filtration is poised to be an important humanitarian industry as we learn more about global warming.  MARKET ANALYSIS AND STRATEGY  Our development is still in its early stages, however we anticipate having an outline of our marketing strategy in the spring of 2008.  , In December 2006, the Company retained Cucoloris Films Inc. (Cucoloris), a Los Angeles based multimedia and marketing company to help us with our marketing needs.  Cucoloris is specialized in launching and handling large corporate brands for global marketing campaigns.  They have a long history of work with many non-profit organizations, government agencies and foundations including work for the Natural Resources Defense Council and produced many Public Service campaigns.  They have produced commercials all over the world and known for producing product launch and corporate image campaigns.  Some of their campaigns include Coca Cola, Kodak, American Airlines, Visa, Sprint, AT & T, Boeing as well as banks, insurance companies, automobiles and global Fortune 500 companies.  They have received over hundred awards and nominated as Production Company of the year by the California Film Commission.  Their Farm Aid commercial has been selected for the permanent collection at the Museum of Modern Art in New York. As we are still reorganizing our Company, we have not yet initiated on any marketing strategies.       We believe that with their specialized consultancy division in branding content, social messaging and viral marketing that their services will enhance the awareness of global warming and how our business can be identified as a very proactive, environmentally friendly company.  REGULATORY ENVIRONMENT  The manufacturing, processing, testing, packaging, labeling and advertising of the products that we sell may be subject to regulation by one or more U.S. federal agencies, including the Food and Drug Administration, the Federal Trade Commission, the CSA and UL in North America, the United States Department of Agriculture, the Environmental Protection Agency, the standards provided by the United States Public Health authority and the World Health Organization for Drinking Water.  These activities may also be regulated by various agencies of the states, localities and foreign countries in which consumers reside.  The Company cannot predict the nature of any future U.S. laws, regulations, interpretations or applications, nor can it determine what effect additional governmental regulations or administrative orders, when and if promulgated, would have on its business in the future. Although the regulation of water is less restrictive than that of drugs and food additives, the Company cannot assure you that the current statutory scheme and regulations applicable to water will remain less restrictive. Further, we cannot assure you that, under existing laws and regulations, or if more stringent statutes are enacted, regulations are promulgated or enforcement policies are adopted, it is or will be in compliance with these existing or new statutes, regulations or enforcement policies without incurring material expenses or adjusting its business strategy. Any laws, regulations, enforcement policies, interpretations or applications applicable to our business could require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not capable of reformulation, additional record keeping, and expanded documentation of the properties of certain products, expanded or different labeling or scientific substantiation.  CERTIFICATION AND TESTING  All the products that we sell and plan to sell will go through stringent testing that will have the appropriate UL, CE or CSA certifications on the products.  The CSA Mark is an internationally recognized mark that appears on over one billion products worldwide. CSA International is a leader in standards development, certification and testing, and quality management registration. The CSA International marks are accepted by many electrical inspectors, gas inspectors, building inspectors and other governmental authorities that approve projects and products that are sold in Canada, the United States and all over the world. The Company uses the services of CSA International because they test, certify and ensure that products comply with applicable safety and/or performance standards applicable to the products for the sale in that country.  These standards include UL, CSA, ANSI (American National Standards Institute), ASTM, NSF, OSHA (Occupational Safety and Health Administration under the US Department of Labor), NVLAP (National Voluntary Laboratory Accreditation Program), SCC (Standards Council of Canada), IAS (International Accreditation Service Inc.) and others.  Some of the products that CSA International tests and certifies include information technology equipment, laboratory equipment, test and measurement equipment, scientific equipment, medical equipment, HVAC equipment, hazardous location equipment, gas-fired products, lighting products, plumbing products, electronic products, fuel cells and many more.  Other applications include EMC (electromagnetic compatibility) emissions, safety of machines, voltage, pressure, gas appliances and medical devices.  At this time, the products carry the markings of CE and we are currently seeking CSA markings for Canada and UL markings the United States.  These markings on the products indicate to governmental      officials and consumers that the products may be legally placed on the market in the country for sale.  It also indicates that the products met all safety requirements and tests, and such products are in conformity with the applicable standards.  Independent companies are engaged to test the water quality produced by the atmospheric water generators and filtration systems.  These companies test for heavy metals, trace metals, microorganisms, color, temperature, PH levels, alkalinity, heterotrophic plate counts and others.  To date, many tests have been conducted and met all APHA and US EPA Standards. Copies of test results are available upon request.  RESEARCH AND DEVELOPMENTS  The Company does not have its own research and development department and will rely on, CanDew, Terrence Nylander and Roland Wahlgren to furnish the Company with new technology and improvements on its existing applications, efficiency and theories of the underlying atmospheric water generators and filtration systems.  CanDew has already conducted and will conduct further laboratory tests to determine the viability, safety and efficiency of the technologies.  They will test all the prototypes, products and systems to ensure they meet various manufacturing and regulatory standards.  The Company may further test the water produced by the atmospheric generators and filtration systems to ensure that it is in conformity and meets EPA standards.  The Company cannot assure that it will develop products that will be approved by any regulatory or safety agency for commercial distribution.  DEVELOPMENTS AND CONTEMPLATED ACTIVITIES  We currently have minimal cash reserves and a significant working capital deficit.   Accordingly, our ability to pursue our plan of operations is contingent on our being able to obtain funding for the development, marketing and commercialization of our products and services.  Management plans, as soon as finances permit, to hire additional management and staff for its US-based operations especially in the areas of finance, sales, marketing, and investor/public relations.  The Company may also choose to outsource some of its marketing requirements by utilizing a series of independent contractors based on the projected size of the market and the compensation necessary to retain qualified employees.  The Company engaged a marketing firm to handle the Companys branding, marketing, advertising, media and public relations for the upcoming 2008 North American launch of its consumer product line of atmospheric water generators.  The term of the engagement is for one year, and the Company has paid the marketing firm $250,000 and issued 1,000,000 shares of common stock that has been registered on Form S-8 for their services. The marketing agreements expired and the Company has not commenced its branding and marketing efforts and therefore the shares were not released by the Company. The Company is currently re-negotiating the terms of the remaining $750,000.  To achieve our new operational plan, we will need to raise substantial additional capital for our operations through licensing fees and product sales, sale of equity securities and/or debt financing.  We have no cash to fund our operations at this time, so we plan to sell licenses and products, offer common stock in private placements as well as seeking debt financing during the next 12 months to raise minimum proceeds of $8,000,000.  We believe the proceeds from such efforts will enable us to expand our operations, buy inventory and start our marketing campaign.  If we are able to raise the additional funding of $8,000,000 by selling licenses and products, or in private placement transactions and/or debt financing over the next 12 months to cover our minimum cash requirements to persons who are "accredited investors", it would be allocated as follows:  $1,500,000 for marketing, public relations and advertising;      $3,200,000 to purchase inventory; $1,000,000 for research and development; $900,000 for management salaries and wages; $300,000 for professional services and filing requirements; $500,000 for transaction costs; $600,000 for working capital;  Due to the "start up" nature of the Company's business, the Company expects to incur losses as the Company conducts its ongoing research, product and systems development programs.  We will require additional funding to continue our operations, for marketing expenses, to pursue regulatory approvals for our products, for any possible acquisitions or new technologies, and we may require additional funding to establish manufacturing capabilities in the future.  We may seek to access the public or private equity markets whenever conditions are favorable.  We may also seek additional funding through strategic alliances or collaborate with others. We cannot assure you that adequate funding will be available on terms acceptable to us, if at all. Because we are presently in the early stages of development and promotional stages of our business, we can provide no assurance that we will be successful with our efforts to establish any revenue.  In order to pursue our existing operational plan, we are dependent upon the continuing sales and financial support of creditors and stockholders until such time when we are successful in raising debt/equity capital to finance the operations and capital requirements of the Company or until such time that we can generate sufficient revenue from our various divisions.  In the process of carrying out its business plan, the Company may determine that it cannot raise sufficient capital to support any of its business divisions on acceptable terms, or at all. The Company's board of directors has a fiduciary duty to act in the best interests of the corporation and its shareholders. The board of directors may decide that it is in the best interests of the corporation and its shareholders to liquidate the business enter into a new line of business or engage in a business combination with another business.  The Company is not currently a party to any contracts, letters of intent, commitments or agreements and is not currently engaged in active negotiations with respect to any acquisitions other than disclosed elsewhere in this Annual Report. The Company continues to seek business opportunities to either complement or accentuate its current business initiatives.  EMPLOYEES  The Company currently has no employees but has contract staff.  The Company anticipates entering into an employment contract with Robert Rosner, our Chief Executive Officer, but can provide no assurance that we will come to terms for such employment agreement.  The Company looks to its directors and officers for their combined entrepreneurial skills and talents, and to outside subcontracted consultants.  Management plans to use consultants, attorneys and accountants as necessary until the Company has sufficient funds to execute strategies for the Company.  The Companys performance and success is dependent on managements ability to raise the necessary funds required to develop and promote the sale of its products.  PATENTS AND TRADEMAKS  We are currently transferring the patent pending and/or trademarks and copyrights from Ecosafe and CanDew to our name.   ITEM 2.  DESCRIPTION OF PROPERTY       Our principal executive offices are located at #300, Warner Center, 21550 Oxnard Street, Woodland Hills, California  91367.  We pay a monthly rent of $1,500 for the offices.  The Company's phone number is 310-728-6306.  The Company also maintains a business office in Canada located at Unit 4, 7218 Progress Way, Delta, BC  V4G 1H2.  The Canadian telephone number is 604-940-9142.  The Canadian office pays a monthly rent of $1,850.  SUBSIDIARIES  The Company has two wholly-owned subsidiaries both incorporated in the State of Nevada, one in the name of Petsmo Inc. (Petsmo), and the other in the name of Aqua Technologies Inc. (Aqua).   ITEM 3.  LEGAL PROCEEDINGS  We are a defendant in a case brought in October 2006 in the Supreme Court of British Columbia, Canada entitled Atkinson et al. v. Cimbix Corporation et al. The action relates to allegations by plaintiffs that $94,000 was deposited into a law firms trust account for investment in On4 Communications Inc., formerly PetsMobility Network (Canada) Inc. (On4). The plaintiffs allege that the law firm deducted legal fees from the amount held in trust and transferred the balance of the funds to On4. Both the law firm and On4 are also defendants in the case. The Company believes the claims against it are without merit and unlikely to succeed. The Company has filed a statement of defense denying the allegations against it and has filed a counter claim for defamation.  The investors have been repaid all of the funds by On4.  The Company has not paid any amount to the plaintiffs. The Company takes the position that it has done nothing wrong and, in any event, the plaintiffs have recovered the entirety of their loss from On4. The court has ordered a severance of the action, and has required the plaintiffs to prove their damages, before proceeding to trial on issues of liability.  ITEM 4.  SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS  None.  PART II   ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS  "Bid" and "asked" offers for the common stock are listed on the OTC-Bulletin Board published by the National Quotation Bureau, Inc. The trading symbol for the common stock was "CMBX" and was changed to "CBXC" in connection with the Company's reverse stock split in October 2004.  The Company received a new symbol WTAR after it changed its name to Wataire International, Inc. in October 2006.  Prior to January 2004, there was no trading market for the Company's common stock.  The following table sets forth the high and low bid prices for the Company's common stock for the periods indicated as reported by the NASD OTC-Bulletin Board.  The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.   Bid Prices Quarter Ended                     High     Low  September 30, 2007 0.30 0.13      June 30, 2007 0.73 0.22 March 31, 2007 1.40 0.48 December 31, 2006 0.86 0.35  September 30, 2006 0.62 0.22 June 30, 2006 0.18 0.04 March 31, 2006 0.29 0.05 December 31, 2005 0.85 0.13  September 30, 2005 2.00 0.25 June 30, 2005 0.26 0.04 March 31, 2005 0.13 0.01 December 31, 2004 25.00 0.01  September 30, 2004 0.60 0.02 June 30, 2004 0.60 0.40 March 31, 2004 0.00 0.00 December 31, 2003 0.00 0.00  There were approximately 115holders of record of the common stock as of December 31, 2007.  The Company believes that an undefined number of shares of its common stock are held in either nominee name or street name brokerage accounts.   Consequently, the Company is unable to determine the exact number of beneficial owners of its common stock.  The Company has never paid a cash dividend on its common stock and does not anticipate the payment of a cash dividend in the foreseeable future. The Company intends to reinvest in its business operations any funds that could be used to pay a cash dividend.  As at September 30, 2007, the Company had 68,351,953 shares of common stock issued and outstanding and 2,501 shares of preferred stock issued and outstanding.  Section 15(g) of the Securities Exchange Act of 1934: The Companys shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended 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 assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by this Section 15(g), the broker/dealer must make a special suitability determination for the purchase and have received the purchaser's written agreement to the transaction prior to the sale. Consequently, Section 15(g) may affect the ability of broker/dealers to sell the Companys securities and also may affect your ability to sell your shares in the secondary market.  Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to an understanding of the function of the penny stock market, such as "bid" and "offer" quotes, a dealers "spread" and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the NASD's toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.       RECENT SALES OF UNREGISTERED SECURITIES  In July 2006, the Company issued to Ecosafe 10,000,000 restricted shares of its common stock, $0.0001 par value per share which were not registered under the Act in consideration for the exclusive world wide license agreement with Ecosafe relating to commercial units valued at approximately $620,000.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In August 2006, the Company issued to Darfield Financial Corporation 440,000 restricted shares of its common stock, $.0001 par value per share, which were not registered under the Act in consideration for $110,000 pursuant to a private placement.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In September 2006, the Company issued to Ecosafe 1,000,000 restricted shares of its common stock, $0.0001 par value per share, which were not registered under the Act in consideration for the exclusive worldwide license agreement with Ecosafe relating to home/office units valued at approximately $560,000.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In October 2006, the Companys Board of Directors adopted the 2006 Stock Option Plan (the 2006 Plan), reserving 8,000,000 shares for issuance under the 2006 Plan, and granted a total of 1,475,000 non-qualified stock options to the following individuals:  Terrance Nylander (250,000 options), Roland Walgreen (175,000 options), Nand Shankar (250,000 options), Bruce H. Haglund (100,000 options), Maribel Jordan (150,000 options), Philip Fraser (300,000 options), Nicole Fraser (75,000 options), and Russ Lombardo (175,000 options).  These non-qualified stock options are exercisable at $.50 per share, expire on September 30, 2013, and are fully vested. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In October 2006, the Company agreed to issue to P204 Enterprises Ltd. 2,083,333 restricted shares of its Common Stock, $0.0001 par value per share, in consideration for $1,000,000. In connection with the sale of the Shares, the Company issued to P204 Enterprises Ltd. a warrant to purchase 2,083,333 shares of common stock of the Company.  On the condition that the Warrant is exercised on or before April 30, 2007, the exercise price of the warrants is $0.85 per share; on the condition that the warrant is exercised on or before October 31, 2007, the exercise price of the warrant is $1.00 per share; and on the condition that the warrant is exercised on or before April 30, 2008, the exercise price of the Warrant is $1.15 per share.  The Warrant expires on April 30, 2008. This transaction closed in January 2007.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In November 2006, the Company granted a total of 4,925,000 non-qualified stock options under the 2006 Plan to the following individuals:  Robert Rosner (2,000,000 options), William Robertson (1,500,000 options), Philip Fraser (1,200,000 options), and Russ Lombardo (225,000 options). These non-qualified stock options are exercisable at $.62 per share, expire on September 30, 2013, and are fully vested. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In December 2006, the Company agreed to pay $1,000,000 and issue 1,000,000 shares of its common stock to Cucoloris Films, Inc. (Cucoloris) pursuant to a Form S-8 registration statement as partial consideration for the services of Cucoloris to the Company.  The agreement provided for the registration of the shares prior to December 31, 2006, but the parties have agreed to the filing of the registration statement as soon as practicable after the filing of this Annual Report.  The Company      issued 1,000,000 shares and has paid $250,000.  We are renegotiating the terms of the remaining $750,000.  In January 2007, the Company agreed to issue to James Marsden 133,333 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, for a consideration of $100,000 ($.75 per unit).  The warrants stock expire in January 2009 and are exercisable at $.85 per share if the warrant is exercised on or before June 30, 2007, at $1.00 if the warrant is exercised on or before December 31, 2007, and at $1.15 if the warrant is exercised on or before December 31, 2008.  The subscription was not completed.  In January 2007, the Company agreed to issue to Robert Rosner, our Chief Executive Officer, up  to 200,000 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of up to $150,000 of indebtedness of the Company to Mr. Rosner ($.75 per unit).  The warrants stock expire in January 2009 and are exercisable at $.85 per share if the warrant is exercised on or before June 30, 2007, at $1.00 if the warrant is exercised on or before December 31, 2007, and at $1.15 if the warrant is exercised on or before December 31, 2008. The Company issued 195,334 units to Robert Rosner. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In January 2007, the Company agreed to issue to Donald Walker, a former officer and director of the Company, up to 80,000 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of up to $60,000 of indebtedness of the Company to Mr. Walker ($.75 per unit).  The warrants stock expire in January 2009 and are exercisable at $.85 per share if the warrant is exercised on or before June 30, 2007, at $1.00 if the warrant is exercised on or before December 31, 2007, and at $1.15 if the warrant is exercised on or before December 31, 2008. The Company issued 77,202 units to Donald Walker. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In January 2007, the Board of Directors approved an amendment to the 2006 Stock Option Plan to increase the number of shares issuable upon exercise of options to 11,000,000 shares and approved the grant of 875,000 non-qualified stock options under the 2006 Plan to the following individuals:  James Marsden (750,000 options), Adriana Mihalos (75,000 options), and Gary Tacon (50,000 options). These non-qualified stock options are exercisable at $1.10 per share, expire on September 30, 2013, and are fully vested. The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In January 2007, the Board of Directors approved the grant of 2,000,000 non-qualified stock options outside of the plan to two consultants (1,000,000 options each) with whom the Company is presently negotiating consulting agreements.  Neither the consulting agreements nor the stock option agreements have been executed as of the date of this Annual Report. The Company was unable to reach amicable terms with the two consultants for services. These non-qualified stock options were cancelled.  In April 2007, the Board of Directors approved the grant of 1,700,000 non-qualified stock options under the 2006 Amended Stock Option Plan to Robert Rosner (1,500,000 options) and Richard Jordan (200,000 options).  These non-qualified stock options are exercisable at $0.57 per share, expire on September 30, 2013, and are fully vested.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In May 2007, the Board of Directors approved the grant of 1,295,000 non-qualified stock options under the 2006 Amended Stock Option Plan to the following individuals: Connect Corporate Communications (300,000 options), Connect Capital (700,000 options), Gary Tacon (20,000 options), Adriana Mihalos (25,000 options) and James Marsden (250,000 options).  These non-qualified stock      options are exercisable at $0.65 per share, expire on September 30, 2013, and are fully vested.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In October 2007, the Company agreed to issue to Robert Rosner, our Chief Executive Officer, 696,494 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of up to $118,404 of indebtedness of the Company to Mr. Rosner ($.17 per unit).  The warrants stock will expire on September 30, 2010 and are exercisable at $0.17 per share. As of the date of this annual report, the units have not been issued.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In October 2007, the Company agreed to issue to Darfield Financial Corp., 1,362,329 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of up to $231,596 of indebtedness of the Company to Darfield Financial Corp. ($.17 per unit).  The warrants stock will expire on September 30, 2010 and are exercisable at $0.17 per share. As of the date of this annual report, the units have not been issued.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  In December 2007, the Company entered into a private placement with an accredited investor of $100,000 for 588,235 common shares of the Company at $0.17 per share.  As of the date of this annual report, the shares have not been issued.  The Company claims an exemption from registration of these securities pursuant to Section 4(2) of the Act.  ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Annual Report for the year ended September 30, 2007. This Annual Report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Certain statements contained in this Annual Report, including, without limitation, statements containing the words "believes," "anticipates," "expects" and the like, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.  Wataire International, Inc. is a Washington corporation incorporated on August 17, 2000.  Wataire is currently in the development stage and has completed its acquisition of all of the intellectual property relating a water treatment process and devices for water-from-air machines.  The agreements previously executed between the Company and Ecosafe have been terminated and cancelled and forms part of the current agreement.  To this end, the Companys future results of operation will be highly dependent upon the success of its efforts to sell and market its products and technologies.  The Company anticipates that sales and sub-licensing agreements generated by these products will constitute the majority of its revenue. The Company plans to sell its products to distributors and also through multiple indirect channels, such as resellers. The marketing and sales of these products are highly dependent upon the delivery of marketing strategies, inventory and current technologies.  PLAN OF OPERATION       We have hired a marketing firm to help us market and launch our products. Our objective is to exploit our products and technologies through product development for sales and sub-licensing to earn royalty revenue streams.  The cost of this program is at least $750,000 per our remaining contract in addition to other operating expenses as detailed below. The Company anticipates spending over the next year $1,500,000 on marketing, public relations and advertising; $3,200,000 on inventory; $1,000,000 on research and development; $900,000 on management salaries and wages for managers, staff, administration; $300,000 on professional services and filing requirements; $500,000 for transaction costs; and $600,000 on other administrative expenses and general working capital.  The total expenditures over the next 12 months are therefore expected to be $8,000,000.  Therefore the Company will require additional funds to implement its intended business initiatives.  These funds may be raised through equity financing, debt financing, licensing, sales of products, and royalty streams from licensing or other sources which may result in further dilution in the equity ownership of the Companys shares.  There is no assurance that the Company will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in the Companys common stock.  To achieve our new operational plan, we will need to raise substantial additional capital for our operations through licensing and product sales and/or the sale of equity securities and debt financing.  We have no cash to fund our operations at this time, so we plan to sell licenses and products, and offer common stock in private placements and debt financing during the next 12 months to raise minimum proceeds of $8,000,000.  We believe the proceeds from such private placements and debt financing will enable us to expand our operations, buy inventory and start our marketing campaign.  Due to the "start up" nature of the Company's business, the Company expects to incur losses as the Company conducts its ongoing sales and product development programs as well as its organization of the Company.  We will require additional funding to continue our sales and product development programs, for operating expenses, for marketing expenses, to pursue regulatory approvals for our products, for any possible acquisitions or new technologies, and we may require additional funding to establish manufacturing capabilities in the future.  We may seek to access the public or private equity markets whenever conditions are favorable.  We may also seek additional funding through strategic alliances or collaborate with others. We cannot assure you that adequate funding will be available on terms acceptable to us, if at all. Because we are presently in the early stages of development and promotional stages of our business and we can provide no assurance that we will be successful with our efforts to establish any revenue.  In order to pursue our existing operational plan, we are dependent upon the continuing financial support of creditors and stockholders until such time when we are successful in raising equity capital to finance the operations and capital requirements of the Company or until such time that we can generate our own revenue from our various divisions.  LIQUIDITY AND CAPITAL RESOURCES  The Company remains in the development stage since inception.  Operations were financed through proceeds from sales and the issuance of equity and loans from directors.  The directors have also advanced funds into the Company to cover cash flow deficiencies. The advances have no stated repayment terms.  These funds were used to pay inventory, services, legal and accounting expenses along with several other miscellaneous operational infrastructure costs.  The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  At September 30, 2007, we have been unsuccessful in our efforts to raise additional capital to meet our plan of operations. Our cash position as of September 30, 2007 was $11,555. Since inception, we have recognized no significant revenue.  We have accumulated operating losses of $9,399,965 and as of September 30, 2007 we had a working capital of $347,183.  At the present time, and over the next      twelve months, our primary focus will be to develop our marketing plan, new initiatives and operational plan to establish sales and to explore various methods for raising additional funds.  Results of operations for the year ended September 30, 2007, as compared to the year ended September 30, 2006   Revenues.   For the year ended September 30, 2007, we had total revenues of $308,062 as compared to the total revenues of $5,500 for the twelve month period ended September 30, 2006, an increase of $302,562 from our sales of products.  Operating Expenses.   For the year ended September 30, 2007, we had total operating expenses of $8,516,244 as compared to total operating expenses of $299,066 for the twelve-month period ended September 30, 2006, an increase of $8,217,178. The increase was predominately due to the stock based compensation of $8,010,050.  Other increases relate to the increased operational costs such as management fees, research and development costs, travel costs, marketing and promotional costs, professional fees and other general administrative and infrastructure costs.  Management Fees.  For the year ended September 30, 2007, we had management fees of $111,633 as compared to $75,000 for the twelve month period ended September 30, 2006, an increase of $36,633 in management fees.  Professional Expenses. For the year ended September 30, 2007 we had professional expenses of $111,986 as compared to $52,294 for the twelve month period ended September 30, 2006, an increase of $59,692, due to the increase accounting and legal counsel fees.  Net Loss. For the year ended September 30, 2007, we had a net loss of $8,430,656 as compared to a net loss of $297,661 for the twelve-month period ended September 30, 2006, an increase of $8,132,995.  The increase was generally due to the stock based compensation of $8,010,050.  NEW ACCOUNTING PRONOUNCEMENTS  In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, Business Combinations, and Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. They also issued Statement of Financial Accounting Standards No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets, and Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, in August and October 2001, respectively.  SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for under the purchase method. SFAS 141 supersedes APB Opinion No. 16, Business Combinations, and Statement of Financial Accounting Standards No. 38, Accounting for Pre-acquisition Contingencies of Purchased Enterprises, and is effective for all business combinations initiated after June 30, 2001.  SFAS No. 142 addresses the financial accounting and reporting for acquired goodwill and other intangible assets. Under the new rules, the Company is no longer required to amortize goodwill and other intangible assets with indefinite lives, but will be subject to periodic testing for impairment. SFAS 142 supersedes APB Opinion No. 17, Intangible Assets. The Company's operational policy for the assessment and measurement of any impairment in the value of goodwill and intangible assets, which primarily relates to contract-based intangibles such as license agreements and extensions, is to evaluate annually, the recoverability and remaining life of its intangible assets to determine the fair value of these assets.  The methodologies to be used to estimate fair value include the use of estimates      and assumptions, including projected revenues, earnings and cash flows.  If the fair value of any of these assets is determined to be less than its carrying value, the Company will reflect the impairment of any such asset over its appraised value.  SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS 143 is effective in fiscal years beginning after June 15, 2002, with early adoption permitted. The adoption of SFAS No. 143 is not expected to have a material impact on the Company's financial statements.  SFAS 144 establishes a single accounting model for the impairment or disposal of long-lived assets, including discontinued operations. SFAS 144 superseded Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121), and APB Opinion No. 30, Reporting the Results of Operations--Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. The provisions of SFAS 144 are effective in fiscal years beginning after December 15, 2001, with early adoption permitted, and in general are to be applied prospectively. The Company records impairment losses on long lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset's carrying amount. In such cases, the amount of the impairment is determined on the relative values of the impaired assets.  Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51, Financial Statements, addresses consolidation by business enterprises of variable interest entities. It is effective immediately for variable interest entities created after January 31, 2003. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities acquired before February 1, 2003. The implementation of Interpretation No. 46 did not have a material effect on the Company's financial statements.  SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, amends and clarifies accounting for derivative instruments under SFAS No. 133. It is effective for contracts entered into after June 30, 2003. The impact of adoption of this statement is not expected to be significant.  SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liability and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The impact of adoption of this statement is not expected to be significant.  In December 2004, the FASB issued SFAS 153, Exchanges of Non-monetary Assets, an amendment of APB No. 29, Accounting for Non-monetary Transactions. SFAS 153 requires exchanges of productive assets to be accounted for at fair value, rather than at carryover basis, unless (1) neither the asset received nor the asset surrendered has a fair value that is determinable within reasonable limits or (2) the transactions lack commercial substance. SFAS 153 is effective for non-monetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company does not expect the adoption of this standard to have a material effect on its financial position, results of operations or cash flows.       In December 2004, the FASB issued Statement 123 (revised 2004) which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation.  This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity's equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains services in share-based payment transactions. This Statement requires a public entity to measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award the requisite service period (usually the vesting period).   RISK FACTORS  We have sought to identify what we believe to be the most significant risks to our business.  However, we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.  Investing in our common stock involves a high degree of risk.  You should carefully consider the risks and uncertainties described below before you purchase any of our common stock.  These risks and uncertainties are not the only ones we face.  Unknown additional risks and uncertainties, or ones that we currently consider immaterial, may also adversely affect our business operations.  If any of the risks or uncertainties actually occurs, our business, financial condition or results of operations could be materially adversely affected.  If this event occurs, you could lose all or part of your investment.  Dependence upon external financing  It is imperative that we raise additional capital to complete our operational plan to promote and commercialize our newly acquired business combinations and activities. We will also require funds to sustain our business operations if we are not successful in earning revenues from our product sales and sub-licensing. We estimate that we would require additional funding of $8,000,000 to pursue our business strategy. If we are unable to obtain equity financing upon terms that our management deems sufficiently favorable, or at all, it would have a material adverse impact upon our ability to expand our current operational plan. Any sale of share capital will result in dilution to existing shareholders.  To date, we have generated some revenues from sales but not enough to sustain our business operations.  The success of our business depends on us receiving inventory and advertising materials from our suppliers and manufacturers.  The exact amount of our current and future capital requirements will depend on numerous factors, some of which are not within our control, including the progress of our development efforts, the costs of testing, supply of our products, demand of our products and changes in governmental regulation.  Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others.  The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our Common Stock. If we are unable to raise additional funds when we need them, we may have to curtail or discontinue our operations, in which case you could lose the entire amount of your investment in the Company.  We are in our early stages of development and face a risk of business failure.       We are in our early stages of development. We have no way to evaluate the likelihood that we will be able to operate the business successfully. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the technology and sales industries. We recognize that if we are unable to generate significant revenues from our sales, we will not be able to earn profits or continue operations. There is only a limited history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any additional operating revenues or ever achieve profitable operations from our current business initiatives. If we are unsuccessful in addressing these risks, our business will most likely fail.  We are competing against larger and better-financed companies  We operate in a highly competitive market with financial rewards pending on market performance.  Some of our competitors are multi-million dollar enterprises with more resources for marketing, distribution and development.  We may be in a disadvantage if any of our competitors focused on similar products we sell.  Because we dont have the infrastructure and personnel in place to adequately implement our business plans and operations, our business may fail.  Dependence on our suppliers  Our success is highly dependent upon the continued support and services of suppliers.  We are solely dependent on their support to provide enough inventory to meet our purchase orders.  If our suppliers are not able to manufacture enough products to meet the demands of our purchase orders, our business will most likely fail.  Demand for our products and services may fail to materialize  Our growth and success will depend on our success in introducing and selling our products.  The market for the products and services we plan to offer is relatively new and there is little hard data to validate market demand or predict how this demand will be segmented.  Even though there seems to be a lot of interest in our products and services, there could be much lower demand than believed, or interest in our products and services could decline or die out, which could adversely affect our ability to sustain our operations.  There is substantial doubt as to our ability to continue as a going concern  Our financial results for the twelve-month fiscal year ending September 30, 2007 show substantial losses. The accompanying financial statements have been prepared in conformity with the generally accepted accounting principles in the United States of American which contemplates the Company as a going concern. The Company has sought out additional investment to raise additional funds. However, there are no assurances that the Company will continue as a going concern without the successful completion of additional funding.  The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.  Our independent auditors, Gruber & Company LLC, have expressed substantial doubt about our ability to continue as a going concern given our recurring losses from operations and net stockholder's deficit.  This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise.  Dependence on key management and personnel       Our success is highly dependent upon the continued services of Robert Rosner, our Chief Executive Officer.  If he was to leave us this could have a materially adverse effect upon our business and operations. We anticipate entering into employment contract with Mr. Rosner but can provide no assurance that we will come to terms for such employment agreement.  Our business also requires additional staff in all areas to successfully bring our products to market. Our success depends on our ability to attract and retain technical and management personnel with expertise and experience in the pet and technology industry.  If we are unable to attract and retain qualified technical and management personnel, we will suffer diminished chances of future success.  We may be subject to product liability or breach of contract claim if our products do not work as promised from our Inventor(s) and predecessor  The atmospheric water generators are designed to facilitate potable safe drinking water. If the technology fails to work as manufactured by our inventor(s) and predecessor, customers may bring claims against us. Despite limitations on such claims, such claims can be costly and time consuming which could have a material adverse effect on our operations, even if we are found not to have been at fault.  We currently do not have liability insurance and anticipate that we will seek some coverage in the future if such coverage is available at a reasonable cost.  Government Regulation  Regulation by government authorities in the United States, Canada and foreign countries may be a factor in the development, manufacture and marketing of our products and in our research and product development activities. The process of obtaining these approvals and the subsequent compliance may require time and financial resources.  Limited experience to market our products  Even if we are able to develop our products and obtain the necessary regulatory approvals, we have limited experience or capabilities in marketing or commercializing our products. We currently have some sales and just engaged a marketing agency.  We do not have a distribution infrastructure in place. Accordingly, we are dependent on our ability to find collaborative marketing partners or contract sales companies for commercial sale of any of our products.  Even if we find a potential marketing partner, we may not be able to negotiate an advertising and/or licensing contract on favorable terms to justify our investment or achieve adequate revenues. Trading in our common shares on the OTC Bulletin Board is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments. Our common shares are currently quoted on the OTC Bulletin Board.  The trading price of our common shares has been subject to wide fluctuations.  Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control.  The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation.  There can be no assurance that trading prices and price earnings ratios previously experienced by our common shares will be matched or maintained.  These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance. Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.      In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold.  If we issue any such additional shares, such issuances will cause a reduction in the proportionate ownership and voting power of all other shareholders.  Further, any such issuance may result in a change in our control. Trading of our stock may be restricted by the Securities and Exchange Commissions "Penny Stock" regulations that may limit a stockholder's ability to buy and sell our stock.  The Company's common stock is considered a "penny stock" as defined in certain rules (the "Rules") under the Securities Exchange Act of 1934. In general, a security that is not quoted on NASD nor has a market price of less than $5 per share where the issuer does not have in excess of $2,000,000 in net tangible assets (none of which conditions the Company meets) is considered a penny stock.  The SEC's rules regarding penny stocks impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally persons with net worth in excess of $1,000,000 or an annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the rules, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale.  Thus the Rules affect the ability of broker-dealers to sell the Company's shares should they wish to do so because of the adverse effect that the Rules have upon liquidity of penny stocks. Unless the transaction is exempt under the Rules, under the Securities Enforcement Remedies and Penny Stock Reform Act of 1990, broker-dealers effecting customer transactions in penny stocks are required to provide their customers with (i) a risk disclosure document; (ii) disclosure of current bid and ask quotations if any; (iii) disclosure of the compensation of the broker-dealer and its sales personnel in the transaction; and (iv) monthly account statements showing the market value of each penny stock held in the customer's account. As a result of the penny stock rules the market liquidity for the Company's securities may be severely adversely affected by limiting the ability of broker-dealers to sell the Company's securities and the ability of purchasers of the securities to resell them. NASD sales practice requirements may also limit a stockholders ability to buy and sell our stock. In addition to the penny stock rules described above, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other information.  Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.   ITEM 7.  FINANCIAL STATEMENTS  Our financial statements are stated in United States dollars and are prepared in accordance with the United States generally accepted accounting principles. The audited financials statements ended September 30, 2007, the independent auditor's report, and the notes to the financial statements are attached at the end of this Annual Report.        Index  to  Financial  Statements:  1.   Independent Auditors'  Report;  2.   Audited Consolidated  Financial  Statements;  a.   Consolidated Balance Sheets as at September 30, 2007 and 2006;  b.   Consolidated Statements of Operations for the years ended September 30, 2007 and 2006, and for the period from August 17, 2000 (Date of inception) to September 30, 2007;  c.   Consolidated Statements of Cash Flows for the years ended September 30, 2007 and 2006 and for the period from August 17, 2000 (Date of inception) to September 30, 2007;  d.   Consolidated Statements of Stockholder's Equity (Deficiency) for the period August 17, 2000 to September 30, 2007;  e.   Statements of Discontinued Operations for the years ended September 30, 2007 and 2006;  f.   Notes to the Consolidated Financial Statements.   ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  None  ITEM 8A.  CONTROLS AND PROCEDURES As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this Annual Report, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's Chief Executive Officer and Chief Financial Officer.  Based upon that evaluation, our company's Chief Executive Officer and Chief Financial Officer concluded that our company's disclosure controls and procedures are effective as of the end of the period covered by this Annual Report.  There have been no changes in our internal controls over financial reporting that occurred during the period covered by this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Exchange Act is accumulated and communicated to management, including our company's President, to allow timely decisions regarding required disclosure.  ITEM 8B.  OTHER INFORMATION       On August 8,  2007,  the  Board  of  Directors  of  Wataire International,  Inc. (the "Registrant" or the Company) elected to  terminate  the services of Amisano Hanson, Chartered Accountants (Amisano Hanson) as the Company's independent auditors.  No  accountant's  report of the financial  statements  contained an adverse opinion  or a  disclaimer  of  opinion  or  was  qualified  or  modified  as  to uncertainty, audit scope or accounting  principles,  except for a going concern opinion  expressing  substantial  doubt  about the  ability  of the  Company  to continue as a going concern.  From inception to the date of this Report, there were no disagreements with Amisano Hanson on any matter of accounting principles or practices, financial disclosure, or auditing scope or procedure.  There were no reportable events, as described  in Item  304(a)(1)(iv)(B)  of  Regulation  S-B,  to the  date of this Report.  On August 8, 2007, the Company's Board of Directors approved the engagement of the firm Gruber & Company LLC of Lake St. Louis, Missouri as the Company's independent auditors.  During the Company's most recent fiscal year or any subsequent  interim period prior to engaging Gruber & Company LLC, the Company, or someone on the  Company's  behalf,  had not consulted  Gruber & Company LLC  regarding any of the accounting or auditing  concerns stated in Item 304(a)(2) of Regulation S-B.  During the last interim report, the Company provided Amisano Hanson with a copy of the above disclosure and requested that it furnish a letter to the Company, addressed to the SEC, stating that it agreed with the statements made herein or the reasons why it disagreed.   PART III   ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT  The Board of Directors meet in person or via telephone conferencing during our fiscal year ended September 30, 2007.  Each member of the Board of Directors attended the meetings.  Board of Director Members:  As of the date of this Annual Report, the Company had the following three members of the Board of Directors:  NameAgeOffice HeldRobert Rosner (1)43CEO, Secretary, Director, Chairman of the BoardTerry Nylander (2)61President, DirectorRichard Jordan (3)62Treasurer, CFO, Director  Notes: (1) Mr. Rosner was appointed a Director and Corporate Secretary on August, 2003; he resigned as Corporate Secretary on August 19, 2005 and was appointed Chief Executive Officer, Chairman of the      Board and President. Mr. Rosner was appointed Corporate Secretary on March 13, 2007 and resigned as President on April 23, 2007. (2) Mr. Nylander was appointed a Director on April 18, 2007 and as President on April 23, 2007. (3) Mr. Jordan was appointed a Director, Corporate Secretary, Treasurer and Chief Financial Officer on August 19, 2005; he resigned as Corporate Secretary on September 27, 2006.  On March 13, 2007, the Company accepted the resignations of Max Weissengruber and Nand Shankar.  On September 27, 2006, Nand Shankar was elected as Director and Corporate Secretary.  On July 27, 2006, Max Weissengruber, Mark Miziolek and Ron Moodie were elected as Directors of the Company pursuant to the license agreement with Wataire Industries Inc.  On December 20, 2006, the Board of Directors received and accepted the resignation of Mark Miziolek.  On January 5, 2007, the Board of Directors received and accepted the resignation of Ron Moodie.  As at September 27, 2006, Nand Shankar was elected as Director pursuant to the license agreement with Wataire Industries Inc.  Mr. Shankar was then elected as Corporate Secretary on September 27, 2006 when Richard Jordan resigned as Secretary.  On August 19, 2005, Donald Walker resigned as officer and director of the Company.  Mr. Rosner replaced Mr. Walker as President, Chief Executive Officer and Chairman of the Board, and Mr. Jordan filled the vacant director position and was appointed Corporate Secretary, Treasurer and Chief Financial Officer of the Company.  Set forth below is a brief description of the background and business experience of each of our executive officers and directors for the past five years.  Mr. Robert Rosner - President, Chief Executive Officer, Director and Chairman of the Board  Mr. Rosner has served as the Company's Chairman and Chief Executive Officer since August 2005.  He was the Vice President of Regulatory Affairs and Compliance and Corporate Secretary from August 2003 until August 2005.  He was President from August 2005 to April 2007. Mr. Rosner was appointed Corporate Secretary in March 2007. He has been a member of the Companys board of directors since August 2003. For the past five years Mr. Rosner also functioned as a VP of Investor Relations and Business Development for WI MBG USA Inc. From September 1999 until September 2003, Mr. Rosner was also the President of First Cypress Technologies Inc., a mining company listed on the OTC Bulletin Board.  He was the owner and the president of Rosner Communications Inc. from July 1985 to April 2004. Rosner Communications Inc. provided consulting services to public companies. Mr. Rosner was the president and a director of Nio Gold Mining Corp., a company listed on the Canadian Venture Exchange, from July 1994 to December 2002.  Mr. Rosner was the president and director of Fortuna Ventures Inc., a company listed on the Canadian Venture Exchange, from June 1996 to January 2005.  Mr. Rosner was the president and a director of Superior Networks, Inc., a company listed on the OTC Bulletin Board, from February 2002 to September 2002.  Mr. Richard Jordan - Treasurer, Chief Financial Officer and Director  Mr. Jordan has served as the Company's Secretary, Treasurer and Chief Financial Officer since August 19, 2005.  He resigned as the Companys Secretary on September 27, 2006. He has been a member of the Companys board of directors since August 2005. He has been a Certified General Accountant since 1974. Since May 1999, Mr. Jordan has also been an independent management consultant providing administration, finance and management support to a variety of small and medium sized businesses. From November 1999 to December 2001, Mr. Jordan was a director of Franchisemaster      Technologies Inc., a public company traded on the Canadian Venture Exchange. From June 2000 to February 2001, Mr. Jordan was the Chief Financial Officer of VOIP Telecom Inc., a telecommunications company whose shares have been traded on the OTC Bulletin Board. From January 1999 to February 2001, Mr. Jordan was the Corporate Secretary for Island Gold Mines, a junior mineral company listed on the Canadian Venture Exchange.  From September 1994 to February 2001, Mr. Jordan was the Corporate Secretary for International Wayside Gold Mines, a junior mineral company listed on the Canadian Venture Exchange.  Mr. Terry Nylander  President and Director  Mr. Nylander has served as the Companys President since April 23, 2007.  He has been a member of the Companys board of directors since April 18, 2007.  Since July 2004, Terrence Nylander has been a consultant providing research and development and product development services to Wataire Ecosafe Technologies Inc., a publicly traded company whose shares trade Over-The-Counters.  Since January 2003, Mr. Nylander has been the President of Canadian Dew Technologies Inc, a private company that developed the water-from-air technologies, proprietary software and systems, which includes products such as the WaterCondensator, WaterProducer, Water-producing Greenhouse and other innovative green technologies and know-how.Mr. Nylander was an award winning Realtor in Saskatchewan, Quebec and British Columbia.  As a former member of Canadas 31st Parliament, he was appointed to several key government committees including Finance, Trade and Economic Affairs, Agriculture, Regional Development, Natural Resources and Public Works, Indian Affairs and Northern Development, and the Miscellaneous Private Bills and Standing Orders Committee. During this time, Mr. Nylander was appointed by Canadas Prime Minister to a special Caucus Committee to devise proposals for An Energy Self Sufficiency Policy for Canada.  Other experience includes a lengthy time in the oilfield service industry and water well drilling business.  TERM OF OFFICE  Our  directors are  elected for a one-year term to hold office until the next annual  general  meeting  of  our  shareholders  or until removed from office in accordance  with  our  bylaws.  Our officers  are  appointed  by  our  board of directors  and  hold  office  until  removed  by  the  board.  ADVISORY BOARD MEMBERS  The Companys advisory board members were appointed by the Board of Directors to help oversee and provide support relating to the Companys business affairs.  The advisory board members meet in person or via telephone conferencing with the Board of Directors.  In May 2007, the Company initiated its Advisory Board consisting of Professor James Marsden, PhD and Mr. Brian Baker, BA.  Dr. James Marsden, a distinguished scientist and food safety and security expert, is the Companys Chairman of the Scientific Advisory Board.  Dr. Marsden currently serves as Regents Distinguished Professor and Associate Director of the Biosecurity Institute at Kansas State University (KSU). KSU has placed a major emphasis on food safety and security. The research and educational activities at KSU address issues that directly impact human health, agricultural security and the economy. The university is the site of the Biosecurity Research Institute and the National Agricultural Biosecurity Center.  Dr. Marsden will advise us on issues relating to the production of water for consumer products; products sized for large commercial applications; government and military systems; remote systems designed to produce drinking water and sanitation in developing countries.  Mr. Brian Baker is a co-founder and President of International Mascot Corporation (IMC), one of the largest producers of character costumes in the world, and as such has been involved in the operation      design, marketing, finance and manufacture of products for over 25 years.  Mr. Baker has made solid business decisions to attain positive growth for his global company. His solid understanding of the importance of maintaining control over certain niches in the marketplace provided a successful expansion of the companys operations in the mascot industry.  IMCs operations include a manufacturing and sales facility in Atlanta and Georgia.  IMC is developing two other companies, specifically producing multiple products of the same design using state-of-the-art production technology. Mr. Baker has been awarded the Canadian Export Award of Distinction and the Premiers Award of Distinction.  SECTION  16(a)  BENEFICIAL OWNERSHIP REPORTING COMPLIANCE  Section 16(a) of the Securities Act of 1934 requires the Company's officers and directors, and greater than 10% stockholders, to file reports of ownership and changes in ownership of its securities with the SEC.  Copies of the reports are required by SEC regulation to be furnished to the Company.  Based solely upon a review of the Forms 3, 4, and 5 furnished to us for the fiscal year ended September 30, 2007, we have determined that our directors, officers, and greater than 10% beneficial owners complied with all applicable Section 16 filing requirements, except as described below:  Mr. Nylander failed to timely file his initial Form 3 relating to their appointment as a director and/or executive officer of the Company.  Mr. Nylander has been informed of his reporting obligations, and is in the process of obtaining EDGAR codes in order to file his form. Mr. Rosner failed to timely file his Form 4 and Schedule 13D relating to his share holdings.  Ecosafe failed to timely file its initial Form 3 relating to the issuance of 11,000,000 shares and the 2,400,000 shares in accordance with the IP agreement for their atmospheric water generators.  Ecosafe has been informed of its reporting obligation.  CODE OF CONDUCT AND ETHICS  We have not adopted a code of conduct and ethics that applies to the principal executive officer, principal financial officer, principle accounting officer or controller or persons performing similar functions because we have not yet finalized the content of such a code.  However, we are in the process of drafting a code of conduct and ethics.  AUDIT COMMITTEE  We currently do not have an audit committee and therefore have not adopted any audit committee policies.  The functions of the audit committee are currently carried out by our Board of Directors.  We plan to have an audit committee at such time as we elect additional directors to our Board.   ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS COMPENSATION  The table below summarizes all compensation awarded to, earned by, or paid to our executive officers by any person for all services rendered in all capacities to us for the fiscal year ended September 30, 2007.  Only one officer and director received annual compensation in excess of $100,000 during the last three complete fiscal years.         Name and principal position
(a)Year
(b)Annual compensationLong-term compensationSalary
($)
(c)Bonus
($)
(d)Other annual compensation
($)
(e)AwardsPayoutsAll other
compensation
($)
(i)Restricted
stock
award(s)
($)
(f)Securities
underlying
options/
SARs
(#)
(g)LTIP
payouts
($)
(h)Robert Rosner(1)

CEO,
Secretary & Director2007
2006
2005
2004
2003120,000
45,000
75,000
105,000
NilNilNilNil3,500,000NilNilRichard Jordan

Treasurer, CFO &
Director2007
2006
2005Nil
30,000
2,500NilNilNil200,000NilNilTerrence
Nylander

President &
Director20072,360NilNilNil250,000NilNilNand
Shankar

Former Secretary & Former
Director2007
20064,275NilNilNil250,000NilNilMax Weissengruber

Former
Director2007
2006NilNilNilNilNilNilNilMark
Miziolek

Former Director2007
2006NilNilNilNilNilNilNilRon
Moodie

Former
Director2007
2006NilNilNilNilNilNilNil       Donald
Walker (2)

Former President,
Former CEO
& Former
Director2007
2006
2005
2004
2003Nil
48,750
56,250
NilNilNilNilNilNilNil  Notes:  As of December 31, 2007, none of the executive officers had any written employment contracts with the Company.  (1)  Mr. Robert Rosner earned for the 2005 fiscal year an annual base salary of $30,000 as officer of MBG USA before it was sold in March 2005, on top of his $45,000 base salary from the Company. (In 2004, Mr. Rosner earned a base fee as officer of MBG USA of $60,000 on top of his $45,000 base fee from the Company.)  (2) Mr. Donald Walker earned $15,000 as officer of the MBG USA before it was sold in March 2005, on top of his $33,750 base fee from the Company during the fiscal year ending September 2005. (In 2004, Mr. Walker earned $22,500 as officer of MBG USA, on top of his $33,750 base fee from the Company.)  ITEM 11. SECURTIY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND         MANAGEMENT  The following table sets forth information as of the date of this Annual Report, with respect to the Companys current directors, named executive officers, and each person who is known by the Company to own beneficially, more than 5% of the Companys common stock, and with respect to shares owned beneficially by all of the Companys directors and executive officers as a group.  Common Stock not outstanding but deemed beneficially owned by virtue of the right of an individual to acquire shares within 60 days is treated as outstanding only when determining the amount and percentage of Common Stock owned by such individual.  Except as noted, each person or entity has sole voting and sole investment power with respect to the shares shown.  Name and Address of Beneficial OwnerPositionAmount and Nature of Beneficial OwnershipPercent of
Common Stock (1)Robert Rosner
21550 Oxnard Street,
Suite 300
Woodland Hills, California 91367CEO, Secretary Director11,490,156 shares (2)16.18%Wataire Ecosafe Technologies Inc.
3033 King George Hwy Suite 24
Surrey, BC  CanadaShareholder13,400,000 shares (3)18.87%       Canadian Dew Technologies Inc.
4942 Weaver Drive
Delta, BC CanadaShareholder2,400,000 shares (4)3.38%Terrency Nylander
#4, 7218 Progress Way
Delta, BC  CanadaPresident,
Director250,000 shares (5)0.35%Richard Jordan
3602 Loraine Avenue
North Vancouver, BC CanadaTreasurer, CFO, Director200,000 shares (6)0.28%All Directors and Officers
as a group (3 persons)Total Shares (7)20.19%  (1) Beneficial ownership of common stock has been determined for purposes of the above table in accordance with Rule 13d-3 under the Exchange Act, under which a person is deemed to be the beneficial owner of securities if such person has or shares voting power or investment power with respect to such securities, has the right to acquire beneficial ownership within 60 days or acquires such securities with the purpose or effect of changing or influencing the control of the Company.. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days from the date of this information statement upon the exercise of warrants or options. Each beneficial owner's percentage ownership is determined by assuming that options and warrants that are held by such person (but not those held by any other person) and that are exercisable within 60 days from the date of this Annual Report have been exercised. For purposes of calculating beneficial ownership, assumes 70,990,011 shares of common stock of the Company as issued and outstanding as of the date of this Annual Report.  The amount issued is 68,351,953 common shares.  There is an additional 2,647,058 common shares that are issuable but have not been issued prior to the date of this Annual Report.  These shares relate to 2,058,823 common shares for cancellation of indebtedness of the Company and 588,235 common shares pursuant to a private placement as disclosed elsewhere in this report.   (2) Includes 6,401,834 shares of Common Stock issued, 195,334 shares issuable upon the exercise of warrants exercisable at $1.15 per share, 2,000,000 shares issuable upon the exercise of stock options exercisable at $.62 per share, and 1,500,000 shares issuable upon the exercise of stock options exercisable at $.57 per share, 696,494 shares in cancellation of indebtedness of the Company to Mr. Rosner and 696,494 shares issuable upon the exercise of warrants exercisable at $0.17 per share. See Certain Relationships and Related Transactions.  (3) Voting and dispositive power over the shares held of record by Wataire Ecosafe Technologies Inc. (formerly Wataire Industries Inc.) is exercised by its board of directors.  (4) Mr. Nylander is the President and director of Canadian Dew Technologies Inc.  (5) Represents 250,000 shares issuable upon exercise of stock options at $.50 per share.  (6) Represents 200,000 shares issuable upon exercise of stock options at $.57 per share.       (7) Includes Mr. Rosners, Mr. Nylander, and Mr. Jordans share positions, stock options, and warrants as noted in (2), (4), (5), and (6).   ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  In January 2007, the Company agreed to issue to Robert Rosner, our Chief Executive Officer, up to 200,000 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of up to $150,000 of indebtedness of the Company to Mr. Rosner ($.75 per unit).  The warrants stock expire December 31, 2008 and are exercisable at $.85 per share if the warrant is exercised on or before June 30, 2007, at $1.00 if the warrant is exercised on or before December 31, 2007, and at $1.15 if the warrant is exercised on or before December 31, 2008.  195,334 units were issued to Mr. Rosner.  In October 2007, the Company agreed to issue to Robert Rosner, our Chief Executive Officer, 696,494 units, each unit consisting of a share of common stock and a warrant to purchase a share of common stock, in consideration for the forgiveness of up to $118,404 of indebtedness of the Company to Mr. Rosner ($.17 per unit).  The warrants stock will expire on September 30, 2010 and are exercisable at $0.17 per share. As of the date of this annual report, the units have not been issued.  Our management is involved in other business activities and may, in the future become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between our business and their other business interests.  In the event that a conflict of interest arises at a meeting of our directors, a director who has such a conflict will disclose his interest in a proposed transaction and will abstain from voting for or against the approval of such transaction.   ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K  (a)     Exhibits and Index of Exhibits  Exhibit Number Description of Exhibit ---------     ------------------------------------------------- 3.3     Amendment of Articles of Incorporation (1) 10.1 License Agreement between the Company and Wataire Industries Inc. dated July 10, 2006 (2) 10.2 License Agreement between the Company and Wataire industries Inc. dated September 12, 2006 (5) 10.3 Amended License Agreement between the Company and Wataire Industries Inc. dated October 19, 2006 (6) 10.4 Amended License Agreement between the Company and Wataire Industries Inc. dated October 19, 2006 (6) 10.5 2006 Stock Option Plan (9) 10.6 Form of Stock Option Agreement at $0.50 (9) 10.7 Form of Stock Option Agreement at $0.62 (10) 10.8 Amended 2006 Stock Option Plan (8) 10.9 Consulting Agreement between Cucoloris Films Inc. and the Company dated December 11, 2006 (7) 10.10 Consulting Agreement between Cucoloris Films Inc. and the Company dated December 11, 2006 (7)      10.12 Warrant issued to P204 Enterprises Ltd. on October 17, 2006 (11) 10.13 License Agreement between Airborn Water Company and the Company dated January 25, 2007 (12) 10.14 IP Transfer Agreement between the Company, Wataire Industries Inc., Canadian Dew Technologies Inc., Terrence Nylander and Roland Wahlgren (13) 10.15 Form of Stock Option Agreement at $0.57 (14) 10.16 Form of Stock Option Agreement at $0.65 (15) 10.17 Compensation Agreement between Cucoloris Films Inc. and the Company dated May 23, 2007 10.18 Amendment to Agreement between Airborn Water Company and the Company dated June 20, 2007 (17) 10.19 Agreement between Access Energy Technologies and the Company dated  June 14, 2007 10.20 Amendment to Agreement between Access Technologies and the Company dated   June 20, 2007 (16) 10.21 Amendment to Agreement between Aquaduct and the Company dated June 20, 2007 (17) 31.1 Certification 302, CEO (8) 31.2 Certification 302, CFO (8) 32.1 Certification 906, CEO (8) 32.1 Certification 906, CFO (8) 99.1 License Agreement between the Company and On4 Communications Inc., formerly Petsmobility Network (Canada) Inc. (4) 99.2 Asset Purchase Agreement between the Company, Petsmobility Inc. and On4 Communications, Inc. (3) 99.3    Rescission Agreement between the Company and On4 Communications, Inc. (3) 99.4    Articles of Correction (3)   Notes:  (1) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated  June 14, 2004 and October 17, 2006. (2) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated July 14, 2006. (3) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated February 6, 2006. (4) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated June 17, 2005. (5) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated September 15, 2006 (6) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated October 23, 2006. (7) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated December 15, 2006. (8) Filed with this report. (9) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated October 10, 2006. (10) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated November 13, 2006. (11) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated October 20, 2006. (12) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated January 31, 2007      (13)      Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated April 30, 2007. (14) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated April 10, 2007. (15) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated May 9, 2007. (16) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated June 18, 2007. (17) Previously filed with the Securities and Exchange Commission as an exhibit to the Form 8-K dated June 20, 2007.  (b) Reports on Form 8-K  On October 10, 2007, we reported to the Securities and Exchange Commission that the Company agreed to issue a total of 2,058,823 units at $0.17 per unit for cancellation of indebtedness of the Company.  On December 11, 2007, we reported to the Securities and Exchange Commission that the Company approved the issuance of 588,235 common shares of the Company pursuant to a private placement at $0.17 per share for a total of $100,000 to an accredited investor.  ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES  AUDIT FEES  The aggregate fees billed for each of the fiscal years ended September 30, 2007 and 2006 for professional services rendered by the principal accountant for the audit of Wataire's annual financial statements and review of the financial statements included in the registrant's Form 10-QSB or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were estimated at $50,000 and $35,000 respectively.  AUDIT RELATED FEES - None  TAX FEES - None  ALL OTHER FEES - None  SIGNATURES   In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.  WATAIRE INTERNATIONAL, INC.  By:  /s/  ROBERT ROSNER ___________________________________ ROBERT ROSNER, CEO, Secretary and Director Date:     January 16, 2008        In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.   By:  /s/ ROBERT ROSNER ___________________________________ Robert Rosner, Chief Executive Officer, Secretary and Director Date:     January 15, 2008  By:  /s/ RICHARD JORDAN ____________________________________ Richard Jordan, Chief Financial Officer Treasurer and Director Date:     January 15, 2008  By: ____________________________________ Terrence Nylander, President Director Date:                     WATAIRE  INTERNATIONAL, INC. (A Development Stage Company) REPORT AND CONSOLIDATED FINANCIAL STATEMENTS September 30, 2007 and 2006 (Stated in US Dollars)        GRUBER & COMPANY LLC  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  The Board of Wataire International Inc.  We have audited the accompanying balance sheet of Wataire International Inc.(A Development Stage Company)  as of September 30, 2007 and 2006, and the related statements of operations, stockholders equity and cash flows for the years then ended and for the period from inception August 17, 2000 to September 30, 2007   These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.  In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at September 30, 2007 and 2006 and the results of its operations and its stockholders equity and  cash flows for the years then ended and from the period of inception August 17, 2000 to September 30, 2007   in conformity with accounting principles generally accepted in the United States of America.  The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in the notes to these financial statements the Company has incurred losses. This raises substantial doubt about its ability to continue as a going concern.  These financial statements do not include any adjustments that might result from the outcome of this uncertainty.    Gruber & Company, LLC Saint Louis, Missouri January 14, 2008


WATAIRE INTERNATIONAL, INC. (A Development Stage Company) CONSOLIDATED BALANCE SHEETS September 30, 2007 and 2006 (Stated in US Dollars)  ASSETS20072006CurrentCash$
11,555$
8,724Accounts receivable2,800829Prepaid expenses & retainer8,380-Advance on marketing agreements  Note 10660,000-Advance on inventory132,141-Inventory  Note 4329,2625,8501,144,13815,403Capital assets, net768-Acquisition of intangibles  Note 122,546,062-Licence rights  Note 8, 12-1,168,873$
3,690,968$
1,184,276LIABILITIESCurrentAccounts payable$
256,389$
143,145Promissory notes payable  Notes 4 and 9326,18936,000Due to related parties  Note 459,837145,254Deferred revenue154,540-796,955324,399STOCKHOLDERS EQUITYCapital stock  Notes 5, 10 and 12Authorized:100,000,000common shares with a par value of $0.000120,000,000Preferred shares with a par value of $0.0001,
redeemable at $0.005Issued and outstanding:68,351,953common shares (September 30, 2006: 60,445,372)6,8356,0452,501Preferred shares (September 30, 2006: 2,501)11Additional paid-in capital12,287,1421,823,140Share subscriptions--Deficit accumulated during the development stage(9,399,965)(969,309)  SEE ACCOMPANYING NOTES     2,894,013859,877$
3,690,968$
1,184,276  SEE ACCOMPANYING NOTES    WATAIRE INTERNATIONAL, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF OPERATIONS for the years ended September 30, 2007 and 2006 and for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars)  August 17,2000 (Date ofInception) to,September 30,200720062007Sales$
308,062$
5,500$
313,562Cost of sales  Note 4(222,474)(4,095)(226,569)Gross margin85,5881,40586,993Other income--9,50085,5881,40596,493ExpensesAdvances written off-50,00085,000Amortization59,15511,12770,282Consulting fees50,12479,963284,000Donated services--11,250Foreign exchange gain(71,730)-(71,730)General and administrative  Note 475,04722,789147,374Incorporation costs--2,005Management fees  Note 4111,63375,000391,883Marketing and promotion98,560-98,560Professional fees110,98652,294267,031Research & Development17,143-17,143Rent23,629-23,629Settlement of accounts payable--(3,250)Stock-based compensation  Note 58,010,050-8,010,050Travel31,6477,89339,540Website development costs--8,7008,516,244299,0669,381,467Loss from continuing operations(8,430,656)(297,661)(9,284,974)Loss from discontinued operations--(114,991)Net loss for the period$
(8,430,656)(297,661)$
(9,399,965)  SEE ACCOMPANYING NOTES     Basic and diluted loss per share$
(0.14)$
(0.01)Weighted average number of shares outstanding62,400,51051,321,602   SEE ACCOMPANYING NOTES    WATAIRE INTERNATIONAL, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS for the years ended September 30, 2007 and 2006 and for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars) (Unaudited)  August 17,2000 (Date ofInception) toSeptember 30,200720062007Operating ActivitiesLoss from continuing operations$
(8,430,656)$
(297,661)$
(9,284,974)Adjustments to reconcile loss to cash used in
operating activities:Amortization59,15511,12770,282Donated services--11,250Website development costs written off--8,700Shares issued for services-26,370122,070Advances written off-50,00050,000Inventory-4,0954,095Stock-based compensation8,010,050-8,010,050Change in non-cash working capital items:Accounts receivable(1,971)(829)(2,800)Prepaid expenses and retainers(8,380)29(8,380)Deferred revenue154,540-154,540Advance on marketing agreements(660,000)-(660,000)Advance on inventory(132,141)-(132,141)Inventory(323,412)-(329,262)Accounts payable113,244127,266256,389(1,219,571)(79,603)(1,730,181)Investing ActivitiesLicense payment advanced--(50,000)Capital assets(922)-(922)Advanced to subsidiaries--(115,091)Acquisition of intangibles-net(1,436,190)-(1,436,190)Website development costs--(8,700)Proceeds from disposition of subsidiaries--100(1,437,112)-(1,610,803) /contd   SEE ACCOMPANYING NOTES    Continued WATAIRE INTERNATIONAL, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS for theyears ended September 30, 2007 and 2006 and for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars) (Unaudited)   August 17,2000 (Date ofInception) toSeptember 30,200720062007Financing ActivitiesPromissory notes payable290,189(27,838)326,189Due to Related Parties(85,418)4,95965,686Common stock issued for cash880,341110,0001,386,262Common Stock issued for Marketing Agreement410,000-410,000Common Stock issued for Intangibles960,000-960,000Common Stock issued to Accounts Payable167,396-167,396Common Stock issued for Promissory Notes37,006-37,0062,659,51487,1213,352,539Increase (decrease) in cash during the period2,8317,51811,555Cash, beginning of the period8,7241,206-Cash, end of the period$
11,555$
8,724$
11,555 Non-cash Transactions  Note 6   SEE ACCOMPANYING NOTES


WATAIRE INTERNATIONAL, INC. (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars) (Unaudited)   DeficitCommon StockPreferred StockAccumulatedShareAdditionalDuring theNumber ofSubscriptionsNumber ofPaid-inDevelopmentSharesAmountReceivedSharesAmountCapitalStageTotalIssuance of common shares200$
-$
--$
-$
10$
-$
10Share subscriptions--150,280----150,280Net loss for the period------(216,896)(216,896)Balance, September 30, 2001200-150,280--10(216,896)(66,606)Share subscriptions--76,105----76,105Net loss for the year------(29,313)(29,313)Balance, September 30, 2002200-226,385--10(246,209)(19,814)Share subscriptions received--5,000----5,000Issuance of common shares80,1608(231,385)--232,542-1,165Balance, carry forward80,3608---232,552(246,209)(13,649) /contd   SEE ACCOMPANYING NOTES    WATAIRE INTERNATIONAL, INC. Continued (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars) (Unaudited)   DeficitCommon StockPreferred StockAccumulatedShareAdditionalDuring theNumber ofSubscriptionsNumber ofPaid-inDevelopmentSharesAmountReceivedSharesAmountCapitalStageTotalAdjustment to number of shares  outstanding as a result of the acquisition  of Millennium Business Group USA, Inc.Millennium Business Group USA, Inc.(80,360)(8)---(232,552)232,560-Cimbix Corporation170,24017---232,543(232,560)-Fair value of shares issued in connection  with the acquisition of Millennium  Business Group USA, Inc.80,3608-2,5011(9)--Net asset deficiency of legal parent at date  of reserve take-over transaction------(20,167)(20,167)Issue of common shares2,772----13,810-13,810Issue of common shares1,000----7,500-7,500Donated services-----2,250-2,250Net loss for the year------(98,849)(98,849)Balance, September 30, 2003254,37225-2,5011256,094(365,225)(109,105) /contd  SEE ACCOMPANYING NOTES    WATAIRE INTERNATIONAL, INC. Continued (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars) (Unaudited)  DeficitCommon StockPreferred StockAccumulatedShareAdditionalDuring theNumber ofSubscriptionsNumber ofPaid-inDevelopmentSharesAmountReceivedSharesAmountCapitalStageTotalBalance, September 30, 2003254,37225-2,5011256,094(365,225)(109,105)Issue of common shares5,0001---49,999-50,000Issue of common shares600,00060---29,940-30,000Net loss for the year------(227,180)(227,180)Balance, September 30, 2004859,37286-2,5011336,033(592,405)(256,285)Issue of common shares160,00016---484-500Issue of common shares36,000,0003,600---86,400-90,000Issue of common shares8,960,000896---94,304-95,200Issue of common shares2,440,000244---121,756-122,000Issue of common shares250,00025---11,225-11,250Disposal of MBG-----(140,949)-(140,949)Net loss for the year------(79,243)(79,243)Balance, September 30, 200548,669,3724,867-2,5011509,253(671,648)(157,527)Issue of common shares336,00034---15,086-15,120Issue of common shares10,000,0001,000---619,000-620,000Issue of common shares440,00044---109,956-110,000Issue of common shares1,000,000100---559,900-560,000Inventory donated-----9,945-9,945Net loss for the year------(297,661)(297,661)Balance, September 30, 200660,445,3726,045-2,50111,823,140(969,309)859,877 /contd  SEE ACCOMPANYING NOTES    WATAIRE INTERNATIONAL, INC. Continued (A Development Stage Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY) for the period August 17, 2000 (Date of Inception) to September 30, 2007 (Stated in US Dollars) (Unaudited)  DeficitCommon StockPreferred StockAccumulatedShareAdditionalDuring theNumber ofSubscriptionsNumber ofPaid-inDevelopmentSharesAmountReceivedSharesAmountCapitalStageTotalBalance, September 30, 200660,445,3726,045-2,50111,823,140(969,309)859,877Issue of common shares272,53627---204,375-204,402Issue of common shares1,834,045183---880,157-880,340Issue of common shares1,000,000100---409,900-410,000Issue of common shares4,800,000480---959,520-960,000Net loss for the period------(8,430,656)(8,430,656)Stock-based compensation-----8,010,050-8,010,050Balance, September 30, 200768,351,953$
6,835$
-2,501$
1$
12,287,142$
(9,399,965)$
2,894,013 The number of preferred and common shares outstanding reflects a reverse split of 1 share for each 200 shares issued and outstanding on October 8, 2004.  In addition, the number of shares outstanding reflects a forward split of 4 common shares for each 1 common share issued and outstanding on July 8, 2005.  The par value and additional paid-in capital were adjusted in conformity with the number of shares then issued.         SEE ACCOMPANYING NOTES


WATAIRE INTERNATIONAL, INC. (A Development Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS September 30, 2007 (Stated in US Dollars) (Unaudited)   Note 1 Nature and Continuance of Operations  The Company was incorporated on August 17, 2000 in the State of Washington, USA and the Companys common shares are publicly traded on the OTC Bulletin Board.  The Company markets and distributes atmospheric water generator machines.  It also owns all of the intellectual property relating to a water treatment process and devices for water-from-air machines.  Management plans to further evaluate, develop and manage the commercialization, sub-license and/or commercial sale of these products.  These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year.  Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  At September 30, 2007, the Company had not yet achieved profitable operations, has accumulated losses of $9,399,965 since its inception, has a working capital of $347,183 and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Companys ability to continue as a going concern.  The Companys ability to continue as a going concern is dependent upon future profitable operations and/or the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.  Management has obtained additional funds by equity financing and/or related party advances (Note 11), however there is no assurance that this additional funding is adequate and further funding may be necessary.  On September 26, 2006, the Company approved a name change from Cimbix Corporation to Wataire International, Inc.  Note 2 Significant Accounting Policies  These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in US dollars.  Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.  Actual results may differ from these estimates.  The financial statements have, in managements opinion, been properly prepared within the framework of the significant accounting policies summarized below:   Note 2 Significant Accounting Policies  (contd)  3     a) Development Stage Company  The Company is a development stage company as defined in the Statements of Financial Accounting Standards (SFAS) No. 7.  The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced.  All losses accumulated since inception has been considered as part of the Companys development stage activities.  b) Consolidation  These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Petsmo Inc. and Aqua Technologies, Inc.  All inter-company transactions and balances have been eliminated.  c) Financial Instruments  The carrying values of cash, accounts receivable, accounts payable, promissory notes payable and due to related parties approximate fair value because of the short-term nature of these instruments.  Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  d) Inventory  Inventory, which consists of finished goods, is valued at the lower of cost and net realizable value using the first in first out (FIFO) method.  e) Website Development Costs  Under the provisions of Statement of Position No. 98-1 Accounting for the Costs of Computer Software Development or Obtained for Internal Use, the Company previously capitalized costs of design, configuration, coding, installation and testing of the Companys website up to its initial implementation.  Costs are amortized to expense over an estimated useful life of three years using the straight-line method.  Ongoing website post-implementation cost of operations, including training and application, are expensed as incurred.  The Company evaluates the recoverability of website development costs in accordance with Financial Accounting Standards No. 121 Accounting of the Impairment of Long Lived Assets.   4    Note 2 Significant Accounting Policies  (contd)  f) Intangible Assets and Amortization  The Company has adopted SFAS No. 142 Goodwill and Other Intangible Assets, which requires that goodwill not be amortized, but that goodwill and other intangible assets be tested annually for impairment.  Intangible assets with a finite life will be amortized over the estimated useful life of the asset.  The Companys operational policy for the assessment and measurement of any impairment in the intangible assets, which primarily relates to contract-based intangibles such as license agreements and extensions, is to evaluate annually, the recoverability and remaining life of its intangible assets to determine the fair value of these assets.  The methodologies to be used to estimate fair value include the use of estimates and assumptions, including projected revenues, earnings and cash flows.  If the fair value of any of these assets is determined to be less than its carrying value, the Company will reflect the impairment of any such asset over its appraised value.  g) Revenue Recognition  The Company receives revenues from the sale of water generator machines.  The Company recognizes revenues when persuasive evidence of an arrangement exists, the product is delivered and collection is reasonably assured.  A one-year warranty is provided by the Company on all its products.  h) Income Taxes  The Company follows SFAS No. 109, Accounting for Income Taxes which requires the use of the asset and liability method of accounting for income taxes.  Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry forwards and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled.  i) Basic and Diluted Loss Per Share  The Company computes net loss per share in accordance with SFAS No. 128, "Earnings Per Share". SFAS 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted EPS gives effect to all dilutive potential common shares outstanding during the year including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the year is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti dilutive.  Note 2 Significant Accounting Policies  (Contd)   5    j) Stock-based Compensation  In December 2004, the Financial Accounting Standards Board issued FAS 123R Share-Based Payment, a revision to FAS 123.  FAS 123R replaces existing requirements under FAS 123 and APB 25, and requires public companies to recognize the cost of employee services received in exchange for equity instruments, based on the grant-date fair value of those instruments, with limited exceptions.  FAS 123R also affects the pattern in which compensation cost is recognized, the accounting for employee share purchase plans, and the accounting for income tax effects of share-based payment transactions.  For small business filers, FAS 123R is effective for interim or annual periods beginning after December 15, 2005.  The Company adopted FAS 123R on October 1, 2006.  k) Foreign Currency Translation  The Company translates foreign currency transactions and balances to its reporting currency, United States dollars, in accordance with SFAS No. 52, Foreign Currency Translation.  Monetary assets and liabilities are translated into the functional currency at the exchange rate in effect at the end of the year.  Non-monetary assets and liabilities are translated at the exchange rate prevailing when the assets were acquired or the liabilities assumed. Revenues and expenses are translated at the rate approximating the rate of exchange on the transaction date.  All exchange gains and losses are included in the determination of net income (loss) for the year.  Note 3 Related Party Transactions  During the years ended September 30, 2007 and 2006, directors of the Company and the spouse of a director of the Company charged the following expenses to the Company:  20072006Cost of sales$
-$
4,095Administrative fees25,26012,000Interest7,1806,000Management fees111,63375,000$
144,073$
97,095    6      Note 4 Related Party Transactions  (contd)  Included in inventory at September 30, 2007, are goods valued at $1,170 provided at no cost by a company with directors in common with the Company (2006 - $5,850).  Included in accounts payable at September 30, 2007 is $119,343 owing to directors and former directors of the Company and to the spouse of a director of the Company (2006 - $116,149).  Included in promissory notes payable at September 30, 2007 is $94,593 due to a director of the Company (2006 - $36,000). During the year, the promissory note payable and accrued interest ($36,000) was settled by the issuance of common shares at $0.75 per share.  The other promissory note payable was settled subsequent to this annual report by the issuance of $0.17 per unit whereby each unit consists of 1 common share and 1 share purchase warrant exercisable at $0.17 per warrant on or before September 30, 2010.  Amounts due to related parties are due to a director of the Company.  The amounts are unsecured, non-interest bearing and have no specific terms of repayment.  Note 5 Common Stock  Notes 10 and 12  Share For Debt Settlements  On January 9, 2007, the Company approved the issuance of 272,536 units at $0.75 per unit to settle amounts due to a director of the Company and a former director of the Company totaling $204,402.  Each unit contained one common share and one share purchase warrant exercisable at $0.85 per share on or before June 30, 2007, $1.00 per share on or before December 31, 2007, or at $1.15 per share on or before December 31, 2008.  Share Subscriptions  The Company entered into a private placement agreement to issue 2,083,333 units at $0.48 per unit for proceeds of $1,000,000.  Each unit contained one common share and one share purchase warrant exercisable at $0.85 per share on or before April 30, 2007, $1.00 per share on or before October 31, 2007 or at $1.15 per share on or before April 30, 2008.  At March 31, 2007, the Company had received subscriptions of $880,342 with respect to this private placement. The Company approved the issuance of 1,834,045 units.   Commitments:  Share Purchase Warrants  The following table summarizes the continuity of the Companys warrants:   7     Note 5 Common Stock  Notes 10 and 12  (contd)  Commitments:  (contd)  Share Purchase Warrants - (contd)  For the year endedSeptember 30, 2007Number ofExerciseExpiryWarrantsPriceDateOutstanding, beginning38,760$2.50April 8, 2008Issued272,536$0.85June 30, 2007or at $1.00December 31, 2007or at $1.15December 31, 2008Issued1,834,045$0.85April 30, 2007or at $1.00October 31, 2007or at $1.15April 30, 2008Outstanding, ending2,145,341   Stock Purchase Options  On January 9, 2007, the board of directors amended its 2006 Stock Option Plan and increased the authorized reserved shares for issuance of incentive stock options to 11,000,000 shares of its common stock.  The following table summarizes the continuity of the Companys stock options:  For the year endedSeptember 30, 2007WeightedNumberAverageofExerciseOptionsPriceOutstanding and exercisable,  beginning--Granted12,270,000$0.71Cancelled(3,500,000)$0.88Outstanding and exercisable, ending8,770,000$0.65   8    Note 5 Common Stock  Notes 10 and 12  (contd)  Commitments:  (contd)  Stock Purchase Options  (contd)  The fair value of the stock options granted during the year ended September 30, 2007 was determined using the Black-Scholes option pricing model with the following assumptions:  Expected dividend yield0.0%Risk-free interest rate4.58%Expected volatility153.04%Expected option life6.70 years  The compensation charge associated with stock options in the amount of $8,010,050 is included in the statement of operations for year ended September 30, 2007.  Additional information regarding stock options outstanding as at September 30, 2007 is as follows:  Number ofCommon SharesExercise PricesExpiry Date1,175,000$0.50September 30, 20133,725,000$0.62September 30, 2013875,000$1.10September 30, 20131,700,000$0.57September 30, 20131,295,000$0.65September 30, 20138,770,000  Note 6 Non-cash Transactions  Financing and investing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows.  During the year ended September 30, 2006, the Company issued 336,000 common shares at $0.045 per share totalling $15,120 to consultants for consulting services.  During the year ended September 30, 2007, the Company issued 272,536 common shares at $0.75 per share totalling $204,402 to directors and formers directors for accounts payable, promissory notes payable and amounts due to related parties.  The Company issued 1,000,000 common shares to a marketing agreement at $0.41 per share totalling $410,000.  These transactions were excluded from the statements of cash flows.  9     Note 7 Contingency  On October 11, 2006, the Company was named as a defendant in a lawsuit whereby the plaintiffs are claiming general damages, with respect to funds totaling approximately $94,000 which were allegedly misappropriated, interest, costs and such further and other relief as the court may deem just.  Management of the Company believes the claim is without merit and it is unlikely to succeed.  The Company has filed a statement of defense denying the allegations and a counterclaim for defamation.  The court has ordered a severance of the action, and has required the plaintiffs to prove their damages, before proceeding to trial on issues of liability.  Note 8 License Rights - Note 12  June 30,September 30,20072006AccumulatedCostAmortizationNetNetLicense rights$
1,180,000$
70,128$
1,109,872$
1,168,873  The license rights were amortized straight-line over the initial terms of 15 years until June 2007.  The net cost of the license rights has been reclassified with the Intellectual Property acquired in July 2007.  (See note 12)  Note 9 Promissory Notes Payable  The promissory notes payable are unsecured and bear interest at 10% per annum.  They are due as follows:  September 30,September 30,20072006January 28, 2007$
-$
36,000October 9, 200743,890-January 7, 2008187,706-January 9, 200894,593-$
326,189$
36,000   10     Note 10 Commitments  On December 11, 2006 and December 12, 2006, the Company entered into two marketing agreements in which the Company would pay $1,000,000 and issue 1,000,000 common shares as follows:  CommonCashSharesUpon filing a registration statement$
-100,000January 15, 2007 (paid)250,000150,000April 15, 2007250,000-May 15, 2007250,000-June 15, 2007250,000250,000July 15, 2007-250,000October 15, 2007-250,000$
1,000,0001,000,000  During the year ended September 30, 2007, the Company paid $250,000 in respect to the cash portion of the agreements and has issued 1,000,000 common shares of the Company.  The 1,000,000 shares issued were not released to the marketing company as it has not commenced its branding and marketing efforts and the contract has expired. The Company is currently re-negotiating the terms of the remaining $750,000.  Note 11 Intellectual Property  Note 5 and 8  On April 25, 2007, the Company entered into an agreement to acquire all of the intellectual property (IP) relating to a water treatment process and related devices for water-from-air machines from Wataire Industries Inc, Canadian Dew Technologies Inc., Terrence Nylander and Roland Wahlgren.  Mr. Nylander was at the time of signing the agreement and currently, the President of the Company.  Consideration for the purchase of the IP was $469,485 (CAD $500,000), which was paid at March 31, 2007, the issuance of 4,800,000 shares of common stock of the Company, the agreement by the Company to pay a royalty equal to 5% of the gross profits from the sales of all apparatus or products relating to the IP for a period of 30 years from April 25, 2007 and a royalty equal to 5% of gross licensing revenues on the IP.  This consideration is in addition to the 11,000,000 shares of common stock previously issued for the license rights as disclosed in the Companys annual September 30, 2006 audited consolidated financial statements.  The IP acquisition was completed in July 2007.  The IP acquired by the Company includes all copyrights, patent rights, trade secret rights, trade names, trademark rights, process information, technical information, contract rights and obligations, designs, drawings, inventions and all other intellectual and industrial property rights of any sort related to or associated with the invention.   Note 12 Comparative Figures   11    Certain comparative figures as at September 30, 2006 have been reclassified in order to conform with the financial statement presentation adopted for the year ended September 30, 2007.   Note 13 Subsequent Events  On October 5, 2007, the Company approved the issuance of 2,058,823 units at $0.17 per unit to settle amounts due to a director of the Company and a third party totalling $350,000.  Each unit contained one common share and one share purchase warrant exercisable at $0.17 per share on or before September 30, 2010.  On December 5, 2007 the Company entered into a private placement agreement to issue 588,235 common shares at a price of $0.17 per share for a total price of $100,000 to an individual who is an accredited investor.  Subsequent to September 30, 2007, the Company received $25,000 loan from a director and $100,000 loan from a shareholder.  Note 14 Income Taxes  The Company has losses for tax purposes totalling $9,399,965 which may be applied against future taxable income.  These losses begin to expire in 2026.  The potential tax benefit arising from these losses has not been recorded in the consolidated financial statements.  The Company evaluates its valuation allowance requirements on an annual basis based on projected future operations.  When circumstances change and this causes a change in managements judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current operations.  The tax effects of temporary differences that give rise to the Companys deferred tax assets are as follows:  200720062005Tax loss carry-forwards$         -$
329,565$
228,360Valuation allowance-(329,565)(228,360)$
-$
-$
-   12