U.S. SECURITIES AND EXCHANGE COMMISSION



WASHINGTON, D.C. 20549





FORM 10 - QSB





QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)

OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarter ended June 30, 2001



Capacitive Deionization Technology Systems, Inc.

(Formerly Far West Group, Inc.)

(Exact name of registrant as specified in its charter)



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



13636 Neutron Road, Dallas, Texas 75244-4410

(Address of Principal executive offices)



972-934-1586

(Registrant's telephone number)





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.



(1) yesX No___

(2) yesX No___





The number of shares outstanding of the registrant's  $.0001 par value common stock as of August 10, 2001 was 8,623,364.







|Capacitive Deionization Technology Systems, Inc. |                      
|------------------------------------------------ | ---------------------
|Index                                            |                      
|Part I                                           | Financial Information
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|                                                 | Item 1               
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|                                                 | Item 2               
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|Part II                                          | Other Information    
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|                                                 | Item 1               
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|                                                 | Item 2               
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|                                                 | Item 3               
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|                                                 | Item 4               
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|                                                 | Item 5               
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|                                                 | Item 6               
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|Signature page                                   |                      
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Part I     Financial Information



Item 1     Financial Statements



REPORT OF INDEPENDENT ACCOUNTANTS



Board of Directors

Capacitive Deionization Technology Systems, Inc.



We have reviewed the accompanying balance sheets of Capacitive Deionization Technology Systems, Inc. (Formerly FarWest Group, Inc.) as of June 30, 2001 and the related statements of operations and cash flows for the three and six months then ended. These financial statements are the responsibility of the Company's management.



We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants.  A review of interim financial information consists principally of analytical procedures applied to financial data and making inquiries of persons responsible for financial and accounting matters.  It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole.  Accordingly, we do not express such an opinion.



Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.



We have previously audited, in accordance with generally accepted auditing standards, the balance sheet of Capacitive Deionization Technology Systems, Inc. (Formerly FarWest Group, Inc.) as of December 31, 2000 and the related statements of operations and cash flows for the year then ended (not presented separately herein), and in our report dated February 26, 2001 we expressed an unqualified opinion on those financial statements.  In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2000 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.





/s/ Jackson & Rhodes P.C.



Jackson & Rhodes P.C.





Dallas, Texas

August 6, 2001







CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(Formerly FarWest Group, Inc.)

BALANCE SHEETS

|                                               |                                                |             | June 30,    | December 31,
|---------------------------------------------- | ---------------------------------------------- | ----------- | ----------- | ------------
|                                               |                                                |             | 2001        | 2000        
|                                               |                                                | (Unaudited) | (Audited)  
|Assets                                         |                                               
|Current assets:                                |                                                |             |            
|                                               | Cash                                           |             | $   609     | $4,877      
|                                               | Accounts receivable                            |             | 13,277      | 4,030       
|                                               |                                                |             |             |             
|                                               | Total current assets                           | 13,886      | 8,907      
|                                               |                                                |             |             |             
|Furniture and equipment                        |                                                | 25,294      | 25,294     
|                                               | Less accumulated depreciation                  |             | (10,682)    | (8,285)     
|                                               |                                                |             |             |             
|                                               |                                                |             | 14,612      | 17,009      
|                                               |                                                |             |             |             
|                                               |                                                |             | $28,498     | $25,916     
|Liabilities and Stockholders' Equity (Deficit) |                                               
|Current liabilities:                           |                                                |             |            
|                                               | Accounts payable and accrued liabilities       | $871,422    | $588,797   
|                                               | Accounts and notes payable to shareholder      | 136,616     | 136,616    
|                                               | Notes payable to stockholders                  |             | 114,000     | 66,000      
|                                               | Current portion of long-term debt              | 13,931      | 11,145     
|                                               | Payable to former subsidiary                   |             | 31,808      | 31,808      
|                                               |                                                |             |             |             
|                                               | Total current liabilities                      | 1,167,777   | 834,366    
|                                               |                                                |             |             |             
|Long-term and convertible debt                 | 31,240                                         | 31,026     
|                                               |                                                |             |             |             
|Stockholders' equity (Deficit):                |                                                |             |            
|                                               | Preferred stock, $.0001 par value, 20,000,000  |             |            
|                                               | shares authorized; none issued and outstanding | -           | -          
|                                               | Common stock, $.0001 par value, 80,000,000     |             |            
|                                               | shares authorized; 8,480,064 and 8,114,932     |             |            
|                                               | shares issued and outstanding                  | 874         | 811        
|                                               | Additional paid-in capital                     |             | 5,482,655   | 5,191,915   
|                                               | Accumulated deficit                            |             | (6,654,048) | (6,035,202) 
|                                               |                                                |             |             |             
|                                               | Total stockholders' equity (Deficit)           | (1,170,519) | (842,476)  
|                                               |                                                |             |             |             
|                                               |                                                |             | $28,498     | $25,916     

See accompanying notes to financial statements.



CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(Formerly FarWest Group, Inc.)

STATEMENTS OF OPERATIONS

For the Three and Six Months Ended June 30, 2001 and 2000

(Unaudited)

|                               |                               | Three months ended | Six months ended
|------------------------------ | ----------------------------- | ------------------ | ----------------
|                               |                               | June 30,           | June 301,       
|                               |                               | 2001               | 2000            
|                               |                               |                    |                 
|Revenues                       | $     -                       | $     -            | $     -         
|                               |                               |                    |                 
|Operating expenses:            |                               |                    |                 
|                               | Common stock and options      |                    |                 
|                               | issued for services:          |                    |                 
|                               | General and administrative    | 77,485             | 218,436         
|                               | Research and development      | 24,500             | -               
|                               | Research and development      | 101,215            | 255,714         
|                               | General and administrative    |                    |                 
|                               | (excluding amounts applicable |                    |                 
|                               | to stock and options issued   |                    |                 
|                               | for services each period)     | 151,649            | 146,845         
|                               |                               |                    |                 
|                               |                               | 354,849            | 620,995         
|                               |                               |                    |                 
|                               | Loss from operations          | (354,849)          | (620,995)       
|                               |                               |                    |                 
|Other expenses                 |                               |                    |                 
|                               | Interest expense              | (8,359)            | (4,491)         
|                               |                               |                    |                 
|                               | Net loss                      | $(363,208)         | $(625,486)      
|                               |                               |                    |                 
|Basic loss per common share:   | $(0.04)                       | $(0.08)            | $(0.07)         
|                               |                               |                    |                 
|Weighted average common shares |                               |                    |                 
|                               | Outstanding                   | 8,527,875          | 7,524,465       









See accompanying notes to financial statements.











CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(Formerly FarWest Group, Inc.)

STATEMENTS OF CASH FLOW

For the Six Months Ended June 30, 2001 and 2000

(Unaudited)

|                                                     |                                               |                                             | 2001         | 2000     
|---------------------------------------------------- | --------------------------------------------- | ------------------------------------------- | ------------ | ---------
|Cash flows from operating activities:                |                                               |                                            
|                                                     | Net Loss                                      | $(618,846)                                  | $(1,113,721)
|                                                     | Adjustments to reconcile net loss to net cash |                                             |             
|                                                     | Used in operating activities:                 |                                             |             
|                                                     |                                               | Depreciation                                | 2,397        | 2,464    
|                                                     |                                               | Shares issued for services                  | 201,918      | 376,859  
|                                                     |                                               | Change in operating assets and liabilities: |              |          
|                                                     |                                               | Accounts receivable                         | (9,247)      | (128,450)
|                                                     |                                               | Accounts payable and accrued liabilities    | 317,025      | (71,217) 
|                                                     |                                               |                                             |              |          
|                                                     |                                               | Net cash used in operating activities       | (106,753)    | (934,065)
|                                                     |                                               |                                             |              |          
|Cash flows from investing activities:                |                                               |                                            
|                                                     | Purchase of furniture and equipment           | -                                           | (14,848)    
|                                                     |                                               |                                             |              |          
|Cash flows from investing activities:                |                                               |                                            
|                                                     | Net advances from shareholders                | -                                           | (74,200)    
|                                                     | Sale of common shares                         | 54,485                                      | 1,144,000   
|                                                     | Net payments on long-term debt                | -                                           | (20,150)    
|                                                     | Proceeds from notes payable to stockholders   | 48,000                                      | -           
|                                                     | Payments to former subsidiary                 | -                                           | (239,300)   
|                                                     |                                               |                                             |              |          
|                                                     |                                               | Net cash provided by financing activities   | 102,485      | 811,350  
|                                                     |                                               |                                             |              |          
|Net increase (decrease) in cash and cash equivalents | (4,268)                                       | (138,563)                                  
|                                                     |                                               |                                             |              |          
|Cash at beginning of period                          | 4,877                                         | 389,401                                    
|                                                     |                                               |                                             |              |          
|Cash at end of period                                | $609                                          | $250,838                                   
|                                                     |                                               |                                            
|Supplemental disclosure:                             |                                               |                                            
|                                                     | Total interest paid                           | $    -                                      | $39,400     

Non-cash transactions:



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



During 2000, the Company converted $100,000 of convertible debt to common stock.



See accompanying notes to financial statements.

CAPACITIVE DEIONIZATION TECHNOLOGY SYSTEMS, INC.

(Formerly FarWest Group, Inc.)

NOTES TO FINANCIAL STATEMENTS

June 30, 2001



Note 1 - Future Operations



The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  The Company is reporting cumulative net losses from continuing operations since January 1, 1997 of approximately $6,700,000 as of June 30, 2001 and has utilized approximately $2,300,000 in cash from operations during the same period.



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



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



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



The Company recognizes the financial investment required to support the potential business opportunities, which are being discussed.  There is no guarantee that the Company can complete the funding necessary to develop the manufacturing and engineering structure to manufacture and install the potential CDT orders.  The company is currently discussing financing options which include:  a corporate partnership for manufacturing; joint ventures with an international investment group, a potential strategic alliance with a leading European water company, an investment alliance with a major U.S. engineering and construction company, and an investment/distribution agreement with a leading Pacific Rim water system company.  Management believes that there is a probability of obtaining the required financing for the next twelve months through one of the above.



The Company is dependent upon the proceeds of private placements and strategic alliances of the Company's securities to implement its business plan and to finance its working capital requirements.  Should the Company's plans or its assumptions change or prove to be inaccurate or offering proceeds are insufficient to fund the Company's operations, the Company would be required to seek additional financing sooner than anticipated.  Management is confident it will be able to continue raising funds in the balance of 2001 through private placements and investment/distribution agreements.





There can be no assurances given that the Company will be successful in generating sufficient revenues from its planned activities or in raising sufficient capital to allow it to continue as a going concern which contemplates increased operating expenses, acquisition of assets and the disposition of liabilities in the normal course of business.  These factors can affect the ability of the Company to implement its general business plan including the completion of the required manufacturing facilities and continued proprietary CDT product improvements.



Note 2 - Summary of Significant Accounting Policies and Practices



(a) Description of Business



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



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



(b) Net Loss per Weighted Average Share



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



(c) Basis of Presentation



The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB of Regulations S-B.  They do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements for the year ended December 31, 2000 included in the Company's Annual Report on Form 10-KSB filed with the Securities and Exchange Commission.  The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-KSB.  In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made.  Operating results for the six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001



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



Results of operations.



The Company did not recognize any revenue during the periods ending June 30, 2001 or 2000.  Initial revenues from sale of CDT bricks for pilot systems may occur during the third quarter of 2001.  Operating expenses were reduced to $354,849 compared to the second quarter 2000 operating expenses of $620,995.  The 2000 operating expenses reflect the final stages of the joint development program with ABB during the second quarter of 2000.  Operating expenses including, research and development expenses were reduced by approximately 45% compared to the second quarter of 2000.  Research and development activities continue to consume significant expenditures.



During the second quarter 2001 a private placement was completed providing the Company $29,500 in operating funds.  In addition, during the second quarter 2001, the Company issued 101,985 shares for services provided.  No director or officer received any shares for services during the second quarter of 2001.



During the first quarter 2001, Air Water Inc. ("Airwater"), Osaka, Japan advised the Company that they planned to exercise their option to purchase up to 400,000 additional shares of the Company's common stock.  The exercise of this option has been delayed primarily due to the Company's inability to complete pilot CDT bricks ordered by Airwater.  This delay was caused by inadequate funding and was not related to any technical problems.  The Company believes that Airwater will ultimately exercise their option once the Company is capable of delivering CDT bricks.



The Company held its rescheduled shareholders' meeting on July 31, 2001 at which time 62% of those entitled to vote approved change of the name of the Company to "Capacitive Deionization Technology Systems, Inc." ("CDT Systems, Inc.").



The Company has been advised that the pending brackish water pilot CDT system for the Kingdom of Jordan will be reevaluated prior to year end 2001.



Liquidity and capital resources.



Management recognizes the requirement for additional investment to execute the Company's business plan and complete the necessary manufacturing and research facilities.  Financing opportunities continue to be evaluated.  These include a manufacturing joint venture, including an equity investment in the Company; an assembly out-sourcing agreement in Canada and two marketing joint ventures.  There is no certainty if and when such funding can be completed.







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



Part II Other Information



Item 1	Legal



There were no legal proceedings instituted by or against the Company during the quarter ended June 30, 2001.  The following proceedings instituted in the year 1999 are currently in appeal by the former employees.



Three former employees of the Company or its former subsidiary, FarWest Pump Co., filed a lawsuit in Maricopa County Superior Court alleging the Company failed to pay them certain wages and provide them with stock options.  The former subsidiary of the Company, FarWest Pump, Inc., has also entered the lawsuit and asserted various claims against the three former employees and their current employer, Duncan Pump, Inc., including conversion, civil conspiracy, wrongful interference with contractual relationships, and violation of trade secrets.  The employees seek to recover approximately $250,000 in future wages and, in the aggregate, have asked to be awarded stock options permitting the purchase of up to 630,000 shares of stock of the Company at $.25 per share.  The employees also requested that any damages awarded be trebled under Arizona law applicable to the failure of an employer to pay wages.



During the quarter ended June 30, 2000, the Superior Court of Arizona Maricopa County ruled that the Company had no monetary liability to any of the three former employees of FarWest Pump Inc.  The court ruled that the stock option claims for one of the three ex-employees be dismissed; however, the claims of the other two ex-employees for 205,000 stock options at $.25 per share require further investigation.  The ex-employees have filed an appeal, including the employee whose claims were dismissed.  The employees also contest the Company's price of $.25 per share.  The Company has been advised that the appeal is currently scheduled for trial in the fourth quarter of 2001.



The Company is continuing to contest this matter vigorously and believes there is no validity to the ex-employees' stock option claims, pricing claims or any appeal action.







Item 2 Changes in Securities



During the quarter ended June 30, 2001, the Company issued 263,000 shares of common stock: 59,000 shares of common stock were issued for cash and 204,000 shares of common stock were issued for services.  None of these shares were issued to officers or directors.  The shares issued were in reliance upon Section 4(2) of the Securities Act of 1933.



During the period ended March 31, 2001, the Company issues 365,132 shares of common stock.  79,800 shares were issued in settlement of accounts payable, 235,332 shares were issued for services including 133,332 to three outside members of the Board of Directors and the Chairman of the Advisory Board, and 50,000 shares of common stock were issued for cash.  The shares issued were in reliance upon Section 4(2) of the Securities Act of 1933.



Item 3 Defaults upon senior securities



The Registrant does not have any outstanding debt or securities of this nature.



Item 4 Submission of matters to a vote of securities holders.



The Company held its annual stockholder meeting on July 31, 2001.  The following individuals were elected as directors until the Company's next annual meeting:



|Dallas Talley | Chris Sheppard     
|------------- | -------------------
|Robert Blaney | Thomas Friezen     
|Takeshi Ogata | Ann Cochran Heywood



Jackson & Rhodes P.C. appointment as auditors was ratified with 5,486,043 affirmative votes and 2,645,000 against.



Amendment to the Articles of Incorporation to change the Company's name form Far West Group, Inc. to Capacitive Deionization Technology Systems, Inc. was approved by 5,431,793 affirmative votes with 2,679,300 against.



Approved the 2001 Stock Option Plan with 4,188,012 affirmative votes; there were 2,890,725 votes against.



Item 5 Other information.



NONE



Item 6 Exhibits and Reports of Form 8-K.



Exhibit EX-3.(i)     Amended
and restated Articles of Incorporation





SIGNATURE



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



Capacitive Deionization Technology Systems, Inc.



/s/ Dallas Talley

Dallas Talley

Chairman of the Board,

Chief Executive and Financial

Officer



Dated: August 14, 2001