U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549  FORM 10-Q (Mark One)  [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the period ended March 31, 2009  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE Act of 1934 for the transition period from ___ to ___.  Commission file number: 000-23319  AVANI INTERNATIONAL GROUP INC. (Name of Small Business Issuer in its charter)  Nevada                                         88-0367866 (State of                                      (I.R.S. Employer Incorporation)                                 I.D. Number)  108-2419 Bellevue Ave. West Vancouver, B.C. V7V 4T4 Canada (Address of principal executive offices)              (Zip Code)  Issuer's telephone number (604)-913 2386  Securities registered under Section 12 (b) of the Act:  Title of each class         Name of exchange on which to be registered            each class is to be registered  None                              None  Securities registered under Section 12(g) of the Act:  Common Stock (Title of Class)  Check whether issuer (1) filed all reports to be filed by Section 13 or  15(d) of the Exchange Act during the past 12 months (or such shorter  period that the registrant was required to file such reports), and (2)  has been subject to such filing requirements for the past 90 days. (1). [X] Yes  [  ] No (2). [X] Yes [  ] No  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [  ] Yes [X] No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. [X] Smaller Reporting Company  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [  ] No  The number of shares issued and outstanding of issuer's common stock, $.001 par value, as of April 30, 2009 was 17,582,571.    PART I - FINANCIAL INFORMATION  Item 1. Financial Statements. Page No. -Consolidated Interim Balance Sheets as of March 31, 2009 (unaudited) and December 31, 2008 (audited). 3 -Consolidated Interim Statements of Operations and Comprehensive Loss for the Three Months ended March 31, 2009 and 2008 (unaudited). 4 -Consolidated Interim Statements of Changes in Capital Deficit for the Three Months Ended March 31, 2009 and 2008 (unaudited). 5 -Notes to Consolidated Interim Financial Statements. 7 Item 2. Management's Discussion and Analysis. 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk. 12 Item 4. Controls and Procedures 12 Item 4(A)T Controls and Procedures. 13  PART II - OTHER INFORMATION Item 1. Legal Proceedings. 13 Item 1A. Risk Factors 13 Item 2. Unregistered Sales of Securities of Equity Securities and Use of Proceeds. 13 Item 3. Defaults upon Senior Securities. 13 Item 4. Submission of Matters to Vote of Security Holders. 13 Item 5. Other Information. 13 Item 6. Exhibits. 13 Signatures 14      2    Avani International Group Inc.Consolidated Interim Balance Sheets(Expressed in US dollars)March 31December 3120092008Assets(Unaudited)CurrentCash and cash equivalents$795,795$948,473Accounts receivable (net of allowance for doubtful accountsin 2009 - $Nil; 2008 - $Nil)5714,066Prepaid expenses3,4734,074799,839956,613Property, plant and equipment79,01280,304Other assets8,74710,333$887,598$1,047,250Liabilities and Capital DeficitLiabilitiesCurrentAccounts payable$760,958$852,719Accrued liabilities49,94851,724Debts payable142,181145,594Unearned revenue and deposits7,7888,065960,8751,058,102Capital DeficitCapital stock (Note 2)Authorized800,000,000 common shares, par value of $0.001
1,000,000 preferred shares, par value of $0.001Issued and outstanding17,582,571 (2008  17,582,571) common shares
- 1,000,000 preferred shares17,58317,583Additional paid-in capital8,116,0928,116,092Accumulated deficit(8,247,462)(8,177,264)Accumulated other comprehensive loss- foreign exchange translation40,51032,737(73,277)(10,852)$887,598$1,047,250The accompanying notes are an integral part of these consolidated interim financial statements.    3    Avani International Group Inc.Consolidated Interim Statements of Operations and Comprehensive Loss(Expressed in US Dollars)(Unaudited)For the three-month periods ended March 3120092008RevenueBottled water and supply sales$-$---Cost of revenueCost of goods sold (excluding depreciation)--Depreciation----Gross profit (loss)--Operating expensesMarketing15,90022,734General and administration53,79885,05269,698107,786Loss from operations(69,698)(107,786)Other income (expenses)Interest on debts payable(1,606)(1,992)Interest income24219Royalty income371-Equipment rental income493-500(1,973)Net loss for the period(70,198)(109,759)Foreign currency translation adjustment7,77321,274Comprehensive loss for the period$(62,425)$(88,485)Loss per share - basic and diluted$(0.01)$(0.01)Weighted average shares outstanding17,582,57115,582,571The accompanying notes are an integral part of these consolidated interim financial statements.  4


Avani International Group Inc.Consolidated Interim Statements of Changes in Capital Deficit(Expressed in US Dollars)(Unaudited)AccumulatedAdditionalOtherTotalCommon SharesPaid-inAccumulatedComprehensiveCapitalSharesAmountCapitalDeficitLossDeficitBalance, January 1, 200817,582,571$17,583$8,116,092$(7,947,590)$(58,433)$127,652Issuance of common stock-----Stock option compensation----Net profit (loss)  for the year---(229,674)-(229,674)Foreign exchange translation adjustment----91,17091,170Balance, December 31, 200817,582,57117,5838,116,092(8,177,264)32,737(10,852)Net loss for the period---(70,198)-(70,198)Foreign exchange translation adjustment----7,7737,773Balance, March 31, 200917,582,571$17,583$8,116,092$(8,247,462)$40,510$(73,277)Preferred SharesSharesBalance, January 1, 20081,000,000Issuance of preferred stock in 2008NilBalance, December 31, 20081,000,000Balance , March 31, 20091,000,000  5 The accompanying notes are an integral part of these consolidated interim financial statements.





Avani International Group Inc.Consolidated Statements of Cash Flows(Expressed in US Dollars)(Unaudited)For the three-month periods ended March 3120092008Cash provided by (used in)Operating activitiesNet loss for the year$(70,198)$(109,759)Adjustments to reconcile net loss for the year tonet cash provided by (used in) operating activitiesDepreciation2,8783,873Loss (gain) on disposal of assets-(Increase) decrease in assetsAccounts receivable3,4951,970Prepaid expenses601738Increase (decrease) in liabilitiesAccounts payable(91,761)22,854Accrued liabilities(2,053)2,179Unearned revenue and deposits(3,413)-(160,451)(78,145)Investing activitiesProceeds from sale of capital assets-Financing activitiesIssuance of common shares-Increase (Decrease) in cash during the period(160,451)(78,145)Effect of foreign exchange on cash7,773(28,157)Cash and cash equivalents, beginning of period948,4731,217,971Cash and cash equivalents, end of period$795,795$1,111,669Supplemental Information:Interest paid$1,606$1,992The accompanying notes are an integral part of these consolidated interim financial statements.   6


Avani International Group Inc.Consolidated Statements of Cash Flows(Expressed in US Dollars)(Unaudited) 1. Basis of Presentation and Ability to Continue as a Going Concern The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. The consolidated interim financial statements for the three-month period ended March 31, 2009 include the accounts of the Company and its wholly owned subsidiaries. All material inter-company balances and inter-company transactions have been eliminated. These statements reflect all adjustments, consisting of normal recurring adjustments which, in the opinion of management, are necessary for fair presentation of the information contained therein. After the sale of its property including land, building and building improvements on June 15, 2006, the Companys production of water has been suspended. For the three-month period ended March 31, 2009, the revenue from operations of the Company was Nil, and the result of its operation is a deficit of 70,198. Results of operations for the interim periods are not indicative of annual results. These accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.The Company has incurred accumulated losses to March 31, 2009 of $8,247,462.  The continuation of the Company is dependent upon the continuing financial support of creditors and stockholders, obtaining additional long-term financing, as well as achieving and maintaining a profitable level of operations.  The Company may be required to raise additional equity and debt capital as necessary to finance its on-going operations. Presently, it is seeking new business opportunities in Asia.  The Company can not predict when it will generate revenues from operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.  These financial statements do not include any adjustments that might arise from this uncertainty.   2. Capital Stock Transactions not disclosed elsewhere in these consolidated interim financial statements are as follows: a) As at March 31, 2009 and December 31, 2008, the Company had 750,000 fully exercisable share purchase warrants outstanding, which were granted on October 3, 2007 and are exercisable at any time within 5 years at an exercise price of $0.06 per share on or before October 2, 2012.      7    Avani International Group Inc.Consolidated Statements of Cash Flows(Expressed in US Dollars)(Unaudited)   b) A summary of share purchase warrant transactions for the periods presented is as follows:  WeightedAverageExerciseNumberPriceOutstanding at March 31, 2009 and December 31, 20081,500,000$0.06  c) The Company applies Accounting Principles Board (APB) Opinion 25 and related interpretations in accounting for stock options granted to employees.  Generally, under APB No. 25 compensation expense is recognized for the difference between the market price of the underlying stock and the exercise price of the stock options.  Accordingly, no compensation has been recognized in connection with options granted to employees. Had compensation cost been determined based upon the fair value of the stock options at the grant date consistent with the fair value method prescribed in SFAS No. 123, the Company's net loss and loss per share would have been increased to the pro forma amounts as indicated below.  Three-month  period
ended March 3120092008Net loss, as reported$(70,198)$(109,759)Deduct: stock-based employee compensation expensedetermined under fair-value based method for all awardsnot included in net loss--Pro-forma net loss$(70,198)$(109,759)Loss per share:Basic and diluted  as reported$(0.01)$(0.01)Basic and diluted  pro-forma$(0.01)$(0.01) d) All options granted by the Company expired in September 2006. As there was no stock-based compensation awarded to employees during the period ended March 31, 2009, the pro-forma information for the periods ended March 31, 2009 equals the information as reported on the Statement of Operations and Comprehensive Income (Loss).  e) On October 11, 2007, the Company filed with the Nevada Secretary of State a Certificate of Designations to create a class of preferred stock consisting of 1,000,000 shares and known as the Class A Super Voting Preferred Stock. On all matters presented to the shareholders for a vote, the Class A Super Voting Preferred Stock has 2,000 votes per share. No other rights, privileges, or features are attendant to the Class A Super Voting Preferred Stock. On December 13, 2007, the Company issued 1,000,000 shares of the Class A Super Voting Preferred Stock the Companys Chairman and President.    8    Avani International Group Inc.Consolidated Statements of Cash Flows(Expressed in US Dollars)(Unaudited)    3. Related Party Transactions  During the three-month period ended March 31, 2009, the president of the Company was paid $100,197 as overseas allowance for the years of 2007 and 2008. The Company accrued $18,000 as salary (2008 - $18,000) and $9,556 (2008 - $15,862) of overseas living allowance, all of which are payable to the President of the Company.  The Companys account payable total $760,958 as of March 31, 2009. Of the total amount, 437,503 is owed to the president of the Company and $253,706 is owed to a majority shareholder.   9   Item 2. Management's Discussion and Analysis and Plan of Operations.  General.  The Company has no revenues from operations. The Company suspended its water bottling operations in Canada during fiscal 2006. Since the suspension of its operations, the Company has sold its real estate located in Coquitlam, British Columbia, and has transported its proprietary oxygenated water producing equipment to Malaysia for storage.  Immediately following the suspension of its operations, the Company initially sought to relocate the manufacture and sale of its oxygen enriched bottled water in Malaysia. More recently, the Company believed that it would not resume its manufacturing operations in Malaysia due to the capital requirements necessary to resume and sustain manufacturing operations. Rather, it has sought to identify a joint venture partner or licensee in the Far East to utilize the Companys proprietary oxygen enriched proprietary equipment. Under this proposed arrangement, the Company expects that its licensee or joint venture partner will engage in the actual manufacture and sale of its oxygenated product, subject to the payment of a yet to be determined royalty to the Company. In doing so, management believes that it will limit its overhead and other expenditures attendant to its operations. In addition to its existing equipment, the Company also recovered from Avani O2 Water Sdn. Bhd equipment that was the subject of its prior joint venture with Avani O2.  To date, the Company has been unsuccessful in its efforts to identify a joint venture partner or licensee that will utilized its proprietary bottled water equipment. As a consequence, the Company expects to direct most of its ongoing efforts towards identifying a merger or acquisition candidate, unrelated to the bottled water business. The Company can not predict whether it will be successful in it efforts. (See discussion below in Liquidity and Capital Resources section).  Results of Operations March 31, 2009 compared with March 31, 2008.  During the three months periods ended March 31, 2009 and 2008, respectively, the Company had no revenues and it also had no cost of revenues due to its lack of operations.  Operating expenses which include marketing expenses and general and administrative expenses for the three month period ended March 31, 2009 totaled $69,698 contrasted with $107,786 for the comparable period in 2008, which represents a decrease of $38,088 or 35.3% from the prior period. Marketing expenses totaled $15,900 for the 2009 period contrasted with $22,734 for the 2008 period, representing a decrease of $6,834 or 30% from the prior period. Marketing expenses includes overseas allowance to the Company President and fees to an unrelated third party that provides various services to the Company. The decrease in marketing expenses is due to a reduction in the stated overseas living allowance. General and administrative expenses totaled $53,798 for the 2009 period contrasted with $85,052 for the comparable period in 2008, representing a decrease of $31,254 or 36.79% from the prior period. General and administrative costs includes the annual salary to the Companys President of $72,000, salaries for other employees, production and other equipment storage, rent, other office expenses, and legal and accounting fees. For the 2008 period, general and administrative expenses also included a finders fee payment of $40,000 which was paid in connection with a private placement of the common stock occurring in 2008.  As a result, general and administrative expenses decreased for the 2009 period.  In June 2006, the Company entered in a month to month office lease agreement with one of its officers and directors for a monthly sum of $400. The office space is approximately 120 square feet. The agreement is non-arms length however, the Company believes that the terms are consistent with rates in the area. The Company also pays AOWC a monthly fee of $3,000 to store production equipment, spare parts and inventory. The leasehold space is approximately 10,000 square feet and the arrangement is on a month to month basis. No research and development costs were  10   incurred in 2008 or 2007.  Other income for the three month period in 2009 was $500 compared with other income of $(1,973) for the comparable period in 2008. The increase in other income of $1,453 is due to interest income, royalty income (under an agreement with AOWC that has since terminated) , and equipment rental income with AOWC. In October 2008, the company entered into a monthly lease agreement with AOWC to lease certain furniture and non bottling equipment for a monthly sum of $600. The agreement term is two years.  Liquidity and Capital Resources. As of March 31, 2009, the Company had working capital deficit of $161,036. Working capital deficit as of December 31, 2008 was $101,489. The decrease in working capital deficit is principally due to the comprehensive loss of the Company which occurred through the first fiscal quarter of 2009.  Property, plant and equipment, net of accumulated depreciation, totaled $79,012 on March 31, 2009. Property, plant and equipment, net of accumulated depreciation, totaled $80,304 on December 31, 2008. The decrease is due to depreciation for a three month period in 2009.  The Company believes that it will be able to meet its anticipated expenditures for the 2009 period through some combination of; deferment of paying certain accounts payable and cash on hand. The Companys projected capital expenditures for 2009 fiscal year are as follows: $110,000 for marketing expenses and $250,000 for general and administrative expenses.  Other than as stated, above the Company does not have any projected capital expenditures.  Beyond fiscal 2009, the Company likely will need to raise additional capital pursuant to the private placement of its debt or equity. The Company also is aggressively exploring other business opportunities for purposes of effecting a business acquisition or combination.  In implementing a structure for a particular business acquisition, the Company may become a party to a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity.  As of the date of this filing, the Company has no formal plan, proposal, agreement, understanding or arrangement to acquire or merge with any specific business or company. The Company can not predict whether it will be sucessful in raising additional capital, or whether it will be sucessful in effecting any form of business acquisition or combination. The private placement of its capital stock in capital raising transaction, or the issuance of capital stock in effecting any form of business acquisition or combination may result in significant dilution to existing shareholders (See disclosure relating to Cautionary Statements in the Companys Form 10-K for the period ending December 31, 2008 (2008 Form 10-K). If the Company is unsuccessful in raising required funds, it will have a material adverse impact on the Company and its ability to re-commence operations and it future business in general. Accordingly, the Companys financial statements contain note disclosures describing the circumstances that lead to doubt over the ability of the Company to continue as a going concern. In their report on the consolidated financial statements for the year ended December 31, 2008, the Companys independent registered accountants included an explanatory paragraph regarding the Companys ability to continue as going concern.  Cautionary Statements.  Readers are urged to refer to the section entitled "Cautionary Statements in the Company's 2008 Form 10-K and elsewhere therein for a broader discussion of such risks and uncertainties. These risks include the lack of profitable operations, the need for additional capital to sustain operations, and significant dilution to existing shareholders.  Off-Balance Sheet Arrangement As the Company has adopted FIN 46R effective January 1, 2004, there are no off-balance sheet  11   arrangements at the end of the first quarter of 2009. Critical Accounting Policies Revenue Recognition. Revenue on sales of bottled water and sales of cooler and equipment is recognized when the products are delivered and title transfers to customers. Sales terms generally do not permit a right of return.  Revenue from leasing of water coolers and filters are accounted for as operating leases and, accordingly, rental income is reported over the terms of the leases. Deposits received for bottles and coolers are accrued as liabilities until refunded upon return of bottles and coolers. Freight charges billed to customers are included in Revenue while associated freight costs are included in Cost of Revenue.  Stock Based Compensation. Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation", requires the Company to provide pro-forma information regarding net income as if compensation cost for the Company's stock option plan had been determined in accordance with the fair value based method prescribed in SFAS No. 123.  The value of stock options granted to consultants is recognized in these consolidated financial statements as compensation expense using the Black-Scholes option pricing model.  Such compensation is amortized over the contract services period or, if none exists, from the date of grant until the options vest.  Compensation associated with unvested options is remeasured on each balance sheet date using the Black Scholes option pricing model. The Company has not adopted the fair value method of accounting for stock-based compensation awarded to employees.   The pro-forma loss per share equals the loss per share as reported. During the three months ended March 31, 2009 and 2008, no stock based compensation was granted.  Off Balance Sheet Arrangements. As the Company has adopted FIN 46R effective January 2004, there are no off balance sheet arrangements as of March 31, 2009.  New Accounting Pronouncement. There was no new accounting pronouncement that impacted the Company since the issuance of the audited consolidated financial statements.  Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not Applicable.  Item 4. Controls and Procedures.  (a) Under the supervision and with the participation of management, including the Companys President and Principal Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operations of its disclosure controls and procedures, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as of March 31, 2009 for this Form 10-Q. Based on this evaluation, the Companys  President and Principal Financial Officer concluded that the Companys disclosure controls and procedures were effective such that the material information required to be included in our Securities and Exchange Commission ("SEC") reports is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms relating to the Companys reporting obligations, and was made known to them by others within the Company, particularly during the period when this report was being prepared. (b) There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the period ended March 31, 2009 has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting.   12    Item 3(A)T. Controls and Procedures. Not applicable   Part II OTHER INFORMATION  Item 1. Legal Proceedings. None  Item 1A. Risk Factors. Not Applicable  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None  Item 3. Defaults upon Senior Securities. None  Item 4. Submission of Matters to a Vote of Securityholders. None  Item 5. Other Information. None  Item 6. Exhibits. Exhibit 31  Certification Pursuant To Section 302 Of The Sarbanes-Oxley Act Of 2002. Exhibit 32  Certification Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.     13    SIGNATURES  Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.  AVANI INTERNATIONAL GROUP, INC.  Date: May 7, 2009 /s/Dennis Robinson  Dennis Robinson  Treasurer and Principal  Financial Officer                  14