UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)


xQUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For
the Quarterly Period Ended March 31, 2009





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





For
the Transition Period from _________ to _________





Commission
file number: 333-135783





WATERPURE
INTERNATIONAL, INC.


(Exact
name of registrant as specified in its charter)





Florida
                
                20-3217152(State
      or other jurisdiction of incorporation or organization)
                
                (I.R.S.
      Employer Identification
No.)





525
Plymouth Road, Suite 310


Plymouth Meeting,
PA19462


(Address
of principal executive offices) (zip code)





(954)
728-2405


(Registrant’s
telephone number, including area code)





(Former
name, former address and former fiscal year, if changed since last
report)





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.  Yes x 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  ̈ 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.  See the definitions of “large accelerated filer”,
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company x(Do
      not check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2) of the Exchange Act. Yes  ̈ No   x.





As of May
18, 2009, there were 79,623,986 shares of registrant’s common stock
outstanding.






1







WATERPURE
INTERNATIONAL, INC.








INDEXPART
      I.
              FINANCIAL
      INFORMATIONITEM
      1.
              Financial
      Statements.
              Balance
      sheets as of March 31, 2009 (unaudited) and June 30, 2008
              3Statements
      of operations for the three and nine months ended March 31, 2009 and 2008,
      and cumulative from July 22, 2005 (inception) through March 31, 2009
      (unaudited)
              4Statements
      of changes in stockholders’ equity (deficiency) for the period from July
      22, 2005 (inception) through March 31, 2009 (unaudited)
              5Statements
      of cash flows for the nine month ended March 31, 2009 and 2008, and
      cumulative from July 22, 2005 (inception) through March 31,
      2009  (unaudited)
              7Notes
      to financial statements (unaudited)
              8-15ITEM
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              16-18ITEM
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              18ITEM
      4.
              Controls
      and Procedures
              18PART
      II.
              OTHER
      INFORMATIONITEM
      1.
              Legal
      Proceedings
              20ITEM
      1A.
              Risk
      Factors
              20ITEM
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              20ITEM
      3.
              Defaults
      Upon Senior Securities
              20ITEM
      4.
              Submission
      of Matters to a Vote of Security Holders
              20ITEM
      5.
              Other
      Information
              20ITEM
      6.
              Exhibits
              20SIGNATURES
              21










2











WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS








March
      31,2009
                      
                      
                      June
      30,(Unaudited)
                      
                      
                      2008ASSETSCash
                      
                      $
                      2,876
                      
                      
                      $
                      5,421Accounts
      receivable - net of allowance ($22,759 at March 31, 2009
      and  $2,762 at June 30, 2008)
                      
                      
                      -
                      
                      
                      
                      -Inventories
                      
                      
                      35,613
                      
                      
                      
                      87,957Other
      current assets
                      
                      
                      6,000
                      
                      
                      
                      -Total
      current assets
                      
                      
                      44,489
                      
                      
                      
                      93,378Trademark
                      
                      
                      325
                      
                      
                      
                      325Intangible
      asset - license, net of accumulated amortization
                      
                      
                      1,010,861
                      
                      
                      
                      1,056,785Total
      assets
                      
                      $
                      1,055,675
                      
                      
                      $
                      1,150,488LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIENCY)CURRENT
      LIABILITIESAccounts
      payable
                      
                      $
                      100,045
                      
                      
                      $
                      122,641Accrued
      expenses
                      
                      
                      230,981
                      
                      
                      
                      133,921Accrued
      royalties payable - current
                      
                      
                      50,000
                      
                      
                      
                      -Licensing
      fees - current
                      
                      
                      92,000
                      
                      
                      
                      230,000Deferred
      revenue
                      
                      
                      49,800
                      
                      
                      
                      -Notes
      payable
                      
                      
                      25,000
                      
                      
                      
                      25,000Convertible
      debt
                      
                      
                      100,313
                      
                      
                      
                      50,000Due
      to officers
                      
                      
                      87,493
                      
                      
                      
                      98,053Due
      to stockholders
                      
                      
                      77,624
                      
                      
                      
                      105,169Total
      current liabilities
                      
                      
                      813,256
                      
                      
                      
                      764,784Accrued
      royalties payable - non current
                      
                      
                      717,601
                      
                      
                      
                      496,373Licensing
      fees - non current
                      
                      
                      248,217
                      
                      
                      
                      -STOCKHOLDERS'
      EQUITY (DEFICIENCY)Common
      stock, par value $.0001 per share; 250,000,000 authorized
                      
                      
                      7,098
                      
                      
                      
                      3,147Preferred
      stock, par value $.001 per share; 1,000,000 authorized
                      
                      
                      -
                      
                      
                      
                      -Common
      stock to-be-issued
                      
                      
                      30,000
                      
                      
                      
                      355,000Additional
      paid-in-capital
                      
                      
                      3,770,762
                      
                      
                      
                      2,998,146Deficit
      accumulated during the development stage
                      
                      
                      (4,531,259
                      )
                      
                      
                      (3,466,962
                      )Total
      stockholders' deficiency
                      
                      
                      (723,399
                      )
                      
                      
                      (110,669
                      )Total
      liabilities and stockholders' equity (deficiency)
                      
                      $
                      1,055,675
                      
                      
                      $
                      1,150,488





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











3









WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENTS
OF OPERATIONS


FOR THE THREE MONTHS AND NINE MONTHS
ENDED MARCH 31, 2009 AND MARCH 31, 2008 AND CUMULATIVE FROM JULY 22, 2005
(INCEPTION) THROUGH MARCH 31, 2009


(Unaudited)










July
      22, 2005Three
      months
                      
                      
                      Three
      months
                      
                      
                      Nine
      Months
                      
                      
                      Nine
      Months
                      
                      
                      (inception)ended
                      
                      
                      ended
                      
                      
                      ended
                      
                      
                      ended
                      
                      
                      throughMarch
      31,
                      
                      
                      March
      31,
                      
                      
                      March
      31,
                      
                      
                      March
      31,
                      
                      
                      March
      31,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008
                      
                      
                      2009REVENUES
                      
                      $
                      8,349
                      
                      
                      $
                      40,896
                      
                      
                      $
                      91,481
                      
                      
                      $
                      62,243
                      
                      
                      $
                      163,411COST
      OF GOODS SOLD
                      
                      
                      9,415
                      
                      
                      
                      36,205
                      
                      
                      
                      60,580
                      
                      
                      
                      55,686
                      
                      
                      
                      131,647Gross
      profit/(loss)
                      
                      
                      (1,066
                      )
                      
                      
                      4,691
                      
                      
                      
                      30,901
                      
                      
                      
                      6,557
                      
                      
                      
                      31,764EXPENSESGeneral
      and administrative expenses
                      
                      
                      230,501
                      
                      
                      
                      1,196,327
                      
                      
                      
                      959,149
                      
                      
                      
                      1,624,674
                      
                      
                      
                      4,327,046LOSS
      FROM OPERATIONS
                      
                      
                      (231,567
                      )
                      
                      
                      (1,191,636
                      )
                      
                      
                      (928,248
                      )
                      
                      
                      (1,618,117
                      )
                      
                      
                      (4,295,282
                      )Interest
      expense
                      
                      
                      3,550
                      
                      
                      
                      4,078
                      
                      
                      
                      9,867
                      
                      
                      
                      10,523
                      
                      
                      
                      40,207Accretion
      of accrued royalties
                      
                      
                      29,913
                      
                      
                      
                      17,865
                      
                      
                      
                      67,445
                      
                      
                      
                      17,865
                      
                      
                      
                      98,954Amortization
      expense
                      
                      
                      21,966
                      
                      
                      
                      16,341
                      
                      
                      
                      58,737
                      
                      
                      
                      21,738
                      
                      
                      
                      96,816Loss
      before provision for income taxes
                      
                      
                      (286,996
                      )
                      
                      
                      (1,229,920
                      )
                      
                      
                      (1,064,297
                      )
                      
                      
                      (1,668,243
                      )
                      
                      
                      (4,531,259
                      )Provision
      for income taxes
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      loss
                      
                      $
                      (286,996
                      )
                      
                      $
                      (1,229,920
                      )
                      
                      $
                      (1,064,297
                      )
                      
                      $
                      (1,668,243
                      )
                      
                      $
                      (4,531,259
                      )Net
      loss per share basic and diluted
                      
                      nil
                      
                      
                      $
                      (0.05
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.07
                      )
                      
                      $
                      (0.17
                      )Weighted
      average per common share
                      
                      
                      60,269,994
                      
                      
                      
                      26,004,997
                      
                      
                      
                      47,125,299
                      
                      
                      
                      23,256,714
                      
                      
                      
                      26,666,466

















4





WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIENCY)


FOR THE PERIOD FROMJULY
22, 2005(INCEPTION) THROUGHMARCH
31, 2009





Common
      stock to-be-issued
                    
                    
                    Common
      stock issued and outstanding
                    
                    
                    Additonal
      paid-in-capital
                    
                    
                    Deficit
      accumulated during the development stage
                    
                    
                    Total
      stockholders' equity (deficiency)Shares
                    
                    
                    Amount
                    
                    
                    Shares
                    
                    
                    AmountBalance
      July 22, 2005 (inception)
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    -Common
      stock to be issued in connection with Incorporation (July 22,
      2005)
                    
                    
                    4,000,000
                    
                    
                    
                    10,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    10,000Common
      stock to be issued for consulting services
                    
                    
                    16,150,000
                    
                    
                    
                    40,375
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    40,375Common
      stock issued - private placement, net of issuance costs of
      $58,255
                    
                    
                    461,750
                    
                    
                    
                    126,445
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    126,445Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (64,361
                    )
                    
                    
                    (64,361
                    )Balance
      June 30, 2006
                    
                    
                    20,611,750
                    
                    
                    
                    176,820
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (64,361
                    )
                    
                    
                    112,459Issuance
      of shares
                    
                    
                    (20,611,750
                    )
                    
                    
                    (176,820
                    )
                    
                    
                    20,611,750
                    
                    
                    
                    2,061
                    
                    
                    
                    174,759
                    
                    
                    
                    -
                    
                    
                    
                    -Beneficial
      conversion of loan discount
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    18,750
                    
                    
                    
                    -
                    
                    
                    
                    18,750Common
      stock issued for consulting services
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    660,000
                    
                    
                    
                    66
                    
                    
                    
                    622,334
                    
                    
                    
                    -
                    
                    
                    
                    622,400Issuance
      of options for compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    231,300
                    
                    
                    
                    -
                    
                    
                    
                    231,300Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,113,231
                    )
                    
                    
                    (1,113,231
                    )Balance
      June 30, 2007
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    21,271,750
                    
                    
                    
                    2,127
                    
                    
                    
                    1,047,143
                    
                    
                    
                    (1,177,592
                    )
                    
                    
                    (128,322
                    )Common
      stock to-be-issued
                    
                    
                    1,750,000
                    
                    
                    
                    355,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    355,000Issuance
      of shares
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,330,000
                    
                    
                    
                    433
                    
                    
                    
                    468,567
                    
                    
                    
                    -
                    
                    
                    
                    469,000Issuance
      of shares as repayment of amount due to stockholders
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    467,626
                    
                    
                    
                    47
                    
                    
                    
                    70,097
                    
                    
                    
                    -
                    
                    
                    
                    70,144Common
      stock issued for consulting services
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    5,277,500
                    
                    
                    
                    528
                    
                    
                    
                    829,101
                    
                    
                    
                    -
                    
                    
                    
                    829,629Issuance
      of options for compensation
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    582,937
                    
                    
                    
                    -
                    
                    
                    
                    582,937Exercise
      of options
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    125,000
                    
                    
                    
                    12
                    
                    
                    
                    301
                    
                    
                    
                    -
                    
                    
                    
                    313Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (2,289,370
                    )
                    
                    
                    (2,289,370
                    )Balance
      June 30, 2008
                    
                    
                    1,750,000
                    
                    
                    
                    355,000
                    
                    
                    
                    31,471,876
                    
                    
                    
                    3,147
                    
                    
                    
                    2,998,146
                    
                    
                    
                    (3,466,962
                    )
                    
                    
                    (110,669
                    )




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











5











WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIENCY)


FOR THE PERIOD FROMJULY
22, 2005(INCEPTION) THROUGHMARCH
31, 2009


(continued)





Common
      stock to-be-issued
                      
                      
                      Common
      stock issued and outstanding
                      
                      
                      Additonal
      paid-in-capital
                      
                      
                      Deficit
      accumulated during the development stage
                      
                      
                      Total
      stockholders' equity (deficiency)Shares
                      
                      
                      Amount
                      
                      
                      Shares
                      
                      
                      AmountCancellation
      of common stock to-be-issued (unaudited)
                      
                      
                      (1,500,000
                      )
                      
                      
                      (330,000
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (330,000
                      )Issuance
      of shares (unaudited)
                      
                      
                      (250,000
                      )
                      
                      
                      (25,000
                      )
                      
                      
                      6,749,999
                      
                      
                      
                      675
                      
                      
                      
                      66,825
                      
                      
                      
                      -
                      
                      
                      
                      42,500Issuance
      of shares as repayment of amount due to
      officers             (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      1,000,000
                      
                      
                      
                      100
                      
                      
                      
                      49,900
                      
                      
                      
                      -
                      
                      
                      
                      50,000Issuance
      of shares as repayment of amount due to stockholders
      (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      666,111
                      
                      
                      
                      67
                      
                      
                      
                      41,483
                      
                      
                      
                      -
                      
                      
                      
                      41,550Beneficial
      conversion of loan discount (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      22,500
                      
                      
                      
                      -
                      
                      
                      
                      22,500Common
      stock issued for consulting services (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      31,092,600
                      
                      
                      
                      3,109
                      
                      
                      
                      591,908
                      
                      
                      
                      -
                      
                      
                      
                      595,017Common
      stock to-be-issued (unaudited)
                      
                      
                      6,000,000
                      
                      
                      
                      30,000
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      30,000Net
      loss (unaudited)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (1,064,297
                      )
                      
                      
                      (1,064,297
                      )Balance
      March 31, 2009
                      
                      
                      6,000,000
                      
                      
                      $
                      30,000
                      
                      
                      
                      70,980,586
                      
                      
                      $
                      7,098
                      
                      
                      $
                      3,770,762
                      
                      
                      $
                      (4,531,259
                      )
                      
                      $
                      (723,399
                      )








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








6




WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 STATEMENTS
OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED MARCH 31, 2009 AND MARCH 31, 2008
AND
 CUMULATIVE
FROM JULY 22, 2005 (INCEPTION) THROUGH MARCH 31, 2009
 (UNAUDITED)


July
      22, 2005Nine
      months
                      
                      
                      Nine
      months
                      
                      
                      (inception)ended
                      
                      
                      ended
                      
                      
                      throughMarch
      31,
                      
                      
                      March
      31,
                      
                      
                      March
      31,2009
                      
                      
                      2008
                      
                      
                      2009CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                      
                      $
                      (1,064,297
                      )
                      
                      $
                      (1,668,243
                      )
                      
                      $
                      (4,531,259
                      )Adjustments
      to reconcile net loss to net cash used in operatingactivities:Accretion
      of accrued royalties
                      
                      
                      67,445
                      
                      
                      
                      17,865
                      
                      
                      
                      98,954Amortization
      of  intangible asset - license
                      
                      
                      45,924
                      
                      
                      
                      21,738
                      
                      
                      
                      84,003Common
      stock issued for consulting services
                      
                      
                      595,017
                      
                      
                      
                      519,687
                      
                      
                      
                      2,087,421Issuance
      of stock options - employee
                      
                      
                      -
                      
                      
                      
                      576,092
                      
                      
                      
                      814,237Amortization
      of beneficial conversion discount
                      
                      
                      12,813
                      
                      
                      
                      -
                      
                      
                      
                      31,563Changes
      in operating assets and liabilities(Increase)/Decrease
      in:Accounts
      receivable
                      
                      
                      -
                      
                      
                      
                      (19,324
                      )
                      
                      
                      -Other
      receivables
                      
                      
                      -
                      
                      
                      
                      7,000
                      
                      
                      
                      -Other
      current assets
                      
                      
                      (6,000
                      )
                      
                      
                      (10,900
                      )
                      
                      
                      (6,000
                      )Inventories
                      
                      
                      52,344
                      
                      
                      
                      (17,719
                      )
                      
                      
                      (35,613
                      )Increase/(Decrease)
      in:Accounts
      payable and accrued expenses
                      
                      
                      81,464
                      
                      
                      
                      59,279
                      
                      
                      
                      331,026Accrued
      royalties and licensing fees payable
                      
                      
                      (23,000
                      )
                      
                      
                      (60,000
                      )
                      
                      
                      (86,000
                      )Deferred
      revenue
                      
                      
                      49,800
                      
                      
                      
                      -
                      
                      
                      
                      49,800Net
      cash used in operating activities
                      
                      
                      (188,490
                      )
                      
                      
                      (574,525
                      )
                      
                      
                      (1,161,868
                      )CASH
      FLOWS FROM INVESTING ACTIVITIES:Trademark
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (325
                      )Net
      cash used in investing activities
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (325
                      )CASH
      FLOWS FROM FINANCING ACTIVITIES:Net
      proceeds from private placement
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      126,445Proceeds
      from sale of founders shares
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      10,000Net
      proceeds from sale of stock and exercise of stock options
                      
                      
                      72,500
                      
                      
                      
                      450,813
                      
                      
                      
                      566,813Proceeds
      from notes payable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      50,000Repayment
      of notes payable
                      
                      
                      -
                      
                      
                      
                      (25,000
                      )
                      
                      
                      (25,000
                      )Advances
      from officers
                      
                      
                      39,440
                      
                      
                      
                      52,753
                      
                      
                      
                      137,493Advances
      from stockholders
                      
                      
                      14,005
                      
                      
                      
                      89,698
                      
                      
                      
                      189,318Proceeds
      from convertible debt
                      
                      
                      60,000
                      
                      
                      
                      -
                      
                      
                      
                      110,000Net
      cash provided by financing activities
                      
                      
                      185,945
                      
                      
                      
                      568,264
                      
                      
                      
                      1,165,069NET
      INCREASE/(DECREASE) IN CASH
                      
                      
                      (2,545
                      )
                      
                      
                      (6,261
                      )
                      
                      
                      2,876CASH,
      beginning of period
                      
                      
                      5,421
                      
                      
                      
                      10,918
                      
                      
                      
                      -CASH,
      end of period
                      
                      $
                      2,876
                      
                      
                      $
                      4,657
                      
                      
                      $
                      2,876




Supplemental
      disclosures of cash flow
information:


1)The Company issued 1,666,111
shares of common stock valued at $91,550 as repayment of amounts due to
stockholders and officers as described in Note 6.


2) The Company issued 100,000
shares of common stock valued at $7,000 as repayment of accounts
payable.


3) The Company recorded a
liability of $340,217 for amounts owed as a licensing fee for the license
acquisition as described in Note 4


4) The Company recorded accrued
royalties payable of $767,651, which represents the present value of the
guaranteed minimum payments for the license acquisition as described in Note
4.


5) The Company cancelled
1,500,000 shares of common stock valued at $330,000 as a result of the
modification of payment terms related to the license acquisition described in
Note 4.








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










7






WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS





NOTE
1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION





NATURE
OF OPERATIONS





WaterPure
International, Inc. (the “Company”) (a development stage company) was
incorporated in the state of Florida on July 22, 2005, for the purpose of
marketing selected private label products and services to the small office
and/or home office as well as the consumer markets. The Company intends to
market and eventually to manufacture the licensed Atmospheric Water Generators
from Everest Water Ltd., devices that harvest pure drinking water from ambient
air. These machines are engineered to produce drinking water virtually free of
any material, bacterial, organic or other contaminants. The Company also intends
to market mineral additives that will permit addition of organic minerals,
flavors and other desired additives to water produced by the machine. The
products will bear the Company’s own exclusive WaterPure branding.




DEVELOPMENT
STAGE COMPANY





The
Company is considered a development stage company as defined by Statement of
Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by
Development Stage Enterprises,” as it has no principal operations and
minimal revenue. Operations from the Company’s inception through March 31, 2009
were devoted primarily to strategic planning, raising capital and developing
revenue-generating opportunities.





BASIS
OF PRESENTATION





The
accompanying unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules and regulations of the Securities and Exchange Commission
(the “SEC”) for interim financial reporting. Certain information and footnote
disclosures normally included in the Company’s annual financial statements have
been condensed or omitted. In the Company’s opinion, the unaudited interim
financial statements and accompanying notes reflect all adjustments, consisting
of normal and recurring adjustments, that are necessary for a fair presentation
of its financial position and operating results for the three and nine month
interim periods ended March 31, 2009 and 2008 and cumulative period from
inception (July 22, 2005) to March 31, 2009.





The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for the entire fiscal year. This Form 10-Q should be
read in conjunction with the audited financial statements and notes there to
included in the Company’s Form 10-K as of June 30, 2008 and for the period
commencing from inception (July 22, 2005) through June 30, 2008.





NOTE
2 - GOING CONCERN/MANAGEMENT’S PLAN





The
accompanying unaudited interim financial statements have been prepared assuming
that the Company will continue as a going concern, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. The Company has incurred a net loss since its
inception totaling $4,531,259, has earned minimal revenues and has a working
capital deficit of $768,767, as of March 31, 2009. These matters raise
substantial doubt about the Company’s ability to continue as a going concern.
These financial statements do not include adjustments that might result from the
outcome of this uncertainty. In order to generate revenues and provide the
working capital needed to continue and expand operations, the Company’s
management has committed to a plan for increasing retail distribution channels
for its products and raising additional capital. There can be no assurances,
however, that the Company will be able to obtain the necessary funding to
finance their operations or grow revenue in sufficient amounts to fund their
operations.





NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES





DEVELOPMENT
STAGE COMPANY





The
Company is considered a development stage company as defined by Statement of
Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by
Development Stage Enterprises,” as it has no principal operations and
minimal revenue. Operations from the Company’s inception through March 31, 2009
were devoted primarily to strategic planning, raising capital and developing
revenue-generating opportunities.






8










WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED







NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued)





USE
OF ESTIMATES





The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those
estimates.





CASH
AND CASH EQUIVALENTS





The
Company considers financial instruments with a maturity date of three months or
less from the date of purchase to be cash equivalents. The Company had no cash
equivalents at March 31, 2009 and June 30, 2008.




ACCOUNTS
RECIEVABLE




The
Company makes judgments about the collectibility of accounts receivable to be
able to present them at their net realizable value on the balance sheet. 
Such judgments require careful analysis of the aging of customer accounts,
consideration of why accounts have not been paid, and review of historical bad
debt issues.  From this analysis, the Company determines an estimated
allowance for receivables that will ultimately become uncollectible.  As of
March 31, 2009, the Company had an allowance for bad debts of
$22,759.





INVENTORIES





The
Company states inventories at the lower of cost or market.  As of March 31,
2009, inventories consisted of purchased finished goods, plus directly
attributable acquisition costs.  Cost of inventory is determined using the
weighted average cost method.  The Company assesses the need to establish
inventory reserves for excess, obsolete or slow-moving inventory based on
changes in customer demand, technology developments and other
factors.





LONG-LIVED
ASSETS AND OTHER INTANGIBLE ASSETS




The
Company accounts for its long-lived assets in accordance with Statement of
Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible
Assets”, which requires that intangible assets with finite lives be
amortized over their respective estimated lives and No. 144, “Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed of,” which
requires that long-lived assets and certain intangible assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.  If undiscounted expected future
cash flows are less than the carrying value of the assets, an impairment loss is
to be recognized based on the fair value of the assets.




CONVERTIBLE
DEBT





The
Company accounts for its convertible debt in accordance with the provisions of
Emerging Issues Task Force Issue (“EITF”) 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features,”(“EITF 98-5”) and EITF
00-27 “Application of EITF
98-5 to Certain Convertible Instruments,” which require the embedded
beneficial conversion features present in convertible securities be valued
separately at issuance and recognized and measured by allocating a portion of
the proceeds equal to the intrinsic value of that feature to additional paid-in
capital.





REVENUE
RECOGNITION




The
Company recognizes revenue in accordance with Securities and Exchange Commission
(“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” which
outlines the four basic criteria that must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) the fee is fixed or determinable;
and (4) collectibility is reasonably assured.  Determination of criteria
(3) and (4) are based on management’s judgments regarding the fixed nature of
the fee charged for services rendered and products delivered and the
collectibility of those fees.







9






WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED





NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued)





DEFERRED
REVENUE





The
Company has entered into a Master Distributorship Agreement with a third-party
whereby the third-party will market and sell WaterPure branded machines to
customers and resellers. The third-party has entered into a purchase commitment
for 1,000 units and has deposited $50,000, which the Company will apply in $50
increments towards each WaterPure atmospheric water machine sold and delivered
within twenty-four month of the execution of the agreement. The Company has
recorded the deposit as deferred revenue, and recognizes the revenue as each
machine is sold.





INCOME
TAXES





The
Company recognizes deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Deferred tax liabilities and assets are determined based on the
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Differences between the financial statement
and tax basis of assets, liabilities, and other transactions did not result in a
provision for current or deferred income taxes for the periods from July 22,
2005 (inception) through March 31, 2009.





CONCENTRATIONS
OF CREDIT RISK





The
Company’s financial instruments that are exposed to a concentration of credit
risk are cash and accounts receivable. The Company places its cash with a high
credit quality institution. At March 31, 2009, the Company’s cash balance on
deposit did not exceed federal depository insurance limits. The Company
routinely assesses the financial strengths of its customers and, as a result,
believes that their accounts receivable, net of reserves, credit risk exposure
is limited.





FAIR
VALUE MEASURMENT





The
Company has partially implemented SFAS No. 157, “Fair Value Measurements” for
financial assets and financial liabilities. SFAS No. 157 defines fair value,
establishes a framework for measuring fair value, expands disclosure about fair
value measurements and is effective for fiscal years beginning after November
15, 2007, except as it relates to nonrecurring fair value measurements of
nonfinancial assets and liabilities. This standard only applies when other
standards require or permit the fair value measurements of nonfinancial assets
and liabilities. It does not increase the use of fair value measurement. The
Company has determined that none of its financial assets or liabilities are
measured at fair value on a recurring basis, therefore the disclosures by SFAS
No. 157 do not currently apply.





NET
LOSS PER COMMON SHARE





The
Company presents basic earnings (loss) per share and, if applicable, diluted
earnings per share pursuant to the provisions of SFAS No. 128, “Earnings per Share”. Basic
earnings (loss) per share are calculated by dividing net income or loss by the
weighted average number of common shares outstanding during each
period.





STOCK
BASED COMPENSATION AND PAYMENTS





The
Company accounts for equity instruments exchanged for services in accordance
with FAS No. 123(R),“Share-Based Payment”and EITF 96-18 “Accounting for Equity Investments
That are Issued to Other than Employees for Acquiring or in Conjunction with
Selling Goods or Services.” Under the provisions of FAS No. 123(R), share-based
compensation issued to employees is measured at the grant date, based on the
fair value of the award, and is recognized as an expense over the requisite
service period (generally the vesting period of the grant). Share-based
compensation issued to non-employees is measured at grant date, based on the
fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more readily measurable, and is recognized as
an expense over the requisite service period.







10








WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED





NOTE
3 - SIGNIFICANT ACCOUNTING POLICIES (continued)





RECENT
ACCOUNTING PRONOUNCEMENTS





There are
no accounting pronouncements not yet adopted that are expected to have a
significant impact on the Company.





NOTE
4 – INTANGIBLE ASSETS - LICENSE





On
December 7, 2007, the Company entered into licensing agreements with Everest
Water LTD for the manufacturing and marketing rights to atmospheric water
generators and mineral additive units. The Company agreed to pay $300,000, plus
1,500,000 shares of the Company’s common stock valued at $330,000 as
consideration under this agreement. The Company paid $50,000 with the execution
of the agreement and an additional $20,000 through July 31, 2008. On August 1,
2008, the Company and Everest Water LTD modified the payment terms of their
licensing agreement, because the cash payment obligation under the original
agreement could not be met by the Company. Under the amended payment terms, the
Company cancelled the shares to be issued to Everest and agreed to pay Everest
$430,000 over 33 months starting September 1, 2008, plus 8% royalty payments
with guarantee minimum payments as follows: $50,000 in year one, $60,000 in year
two, $70,000 in year three, $90,000 in year four and $100,000 each year after
until the termination of the licensing agreement which coincides with the
expiration of the last patent in August 2027. The Company has accounted for this
modification as a troubled debt restructuring under ETIF 96-19, “Debtor’s
Accounting for a Modification or Exchange of Debt Instruments.”





The
following table summarizes the various components of the Everest license as of
March 31, 2009:





March
      31,
                      
                      
                      June
      30,2009
                      
                      
                      2008Amended
      value of license described above
                      
                      $
                      1,094,864
                      
                      
                      $
                      1,094,864Less:
      accumulated amortization
                      
                      
                      84,003
                      
                      
                      
                      38,079License,
      net
                      
                      $
                      1,010,861
                      
                      
                      $
                      1,056,785





Total
amortization for the nine months ended March 31, 2009 and 2008 was $45,924 and
$21,738, respectively.





Contingencies
- Royalties





Pursuant
to the licensing agreement as described above, the Company will pay Everest
Water LTD an 8% royalty payment with a guarantee minimum payment. The Company
has recognized a liability of $767,601, which represents the present value of
the minimum royalty payments using the effective discount rate.





NOTE
5 – NOTES PAYABLE





The
Company entered into a Securities Purchase Agreement with accredited investors
on May 21, 2007 for the issuance of two $25,000 notes for a total of $50,000.
The notes payable accrue interest at 12% per annum and were due six months from
the date of issuance.  On November 15,2007,
the terms of these notes were extended for an additional six
months.





During
the year ended June 30, 2008, the Company repaid one of the $25,000 notes. The
other note is currently in default and is included in current liabilities on the
balance sheets.








11









WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED





NOTE
6 – ADVANCES FROM OFFICERS AND SHAREHOLDERS





Officers
and stockholders of the Company have provided various short-term working capital
advances. During the nine months ended March 31, 2009, short-term working
capital advances from officers and stockholders under this borrowing arrangement
totaled $39,440 and $14,005, respectively. During the nine months ended March
31, 2008, short-term working capital advances from officers and stockholders
under this borrowing arrangement totaled $52,753 and $89,698, respectively. The
Company issued 666,111 shares of common stock as repayment for $41,550 of the
amount due to stockholders and issued 1,000,000 shares of common stock as
repayment for $50,000 of the amount due to officers during the nine months ended
March 31, 2009. The Company does not intend to pay interest on the principal
borrowed from officers and stockholders as the advances are intended to be
short-term.





NOTE
7 – CONVERTIBLE DEBT





The
Company entered into a Securities Purchase Agreement with accredited investors
on May 21, 2007 for the issuance of an aggregate of $50,000 of convertible
notes. The convertible notes accrue interest at 12% per annum and are due two
years from the date of the note.  The note holder has the option to
convert any unpaid note principal to the Company’s common stock at a rate of
$0.25 per share. In accordance with EITF 98-5, during the year ended June 30,
2007, the Company recorded a debt discount of $18,750 on the debt, representing
the intrinsic value of the beneficial conversion features based upon the
difference between the fair value of the underlying common stock at the
commitment date and the effective conversion price embedded in the debt. The
Company determined the commitment date of the loans to be the date of the
agreement.





The Company entered into another
Securities Purchase Agreement with accredited investors on July 30, 2008 for the
issuance of an aggregate of $50,000 of convertible notes. The convertible notes
accrue interest at 8% per annum and are due one year from the date of the
note.  The note holders have the option to convert any unpaid note
principal to the Company’s common stock at a 30% discount to the average five
day stock price prior to conversion. In accordance with EITF 98-5, during the
nine months ended March 31, 2009, the Company recorded a debt discount of
$15,000 on the debt, representing the intrinsic value of the beneficial
conversion features based upon the difference between the fair value of the
underlying common stock at the commitment date and the effective conversion
price embedded in the debt. The Company determined the commitment date of the
loans to be the date of the agreement.





The
Company entered into a Securities Purchase Agreement with accredited investors
on November 18, 2008 for the issuance of an aggregate of $10,000 of convertible
notes. The convertible notes accrue interest at 12% per annum and are due one
year from the date of the note.  The note holder has the option to
convert any unpaid note principal to the Company’s common stock at a rate of
$0.005 per share. In accordance with EITF 98-5, during the nine months ended
March 31, 2009, the Company recorded a debt discount of $7,500 on the debt,
representing the intrinsic value of the beneficial conversion features based
upon the difference between the fair value of the underlying common stock at the
commitment date and the effective conversion price embedded in the debt. The
Company determined the commitment date of the loans to be the date of the
agreement.





NOTE
8 - STOCKHOLDERS’ EQUITY





During
the nine months ended March 31, 2009, the Company sold in private placement
12,499,999 shares, of which 6,499,999 have been issued and 6,000,000 are
to-be-issued for a total of $72,500. The fair value of the shares was determined
based on the closing market price of the shares at the date of the
agreements.





During
the nine months ended March 31, 2009, the Company issued 31,092,600 shares of
its common stock for consulting services totaling $595,017.





During
the nine months ended March 31, 2009, the Company issued 666,111 shares of
common stock as repayment of $41,550 of the amount due to stockholders and
issued 1,000,000 shares of common stock as repayment of $50,000 of the amount
due to officers.





On March
19, 2009, the Company filed an amendment to their Articles of Incorporation with
the State of Florida increasing the number of authorized shares of common stock
from 100,000,000 to 250,000,000, and further authorizing 1,000,000 shares of
preferred stock with a par value of $0.001.








12









WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED





NOTE
9 – STOCK OPTIONS





At the
time of inception (July 22, 2005), the Company issued 125,000 options to one of
its consultants for services rendered. The exercise price was $0.0025, the
options were immediately exercisable, and expired five years from the grant
date. These options were exercised on August 29, 2007.





During
the year ended June 30, 2007, the Company issued 500,000 options to one of its
executive officers. The exercise price is $0.55, which was the price of the
Company’s common stock on the grant date.  The options are immediately
exercisable and expire five years from the grant date.  The fair value
of the options was estimated at the date of grant using the Black-Scholes option
price model.





During
the year ended June 30, 2008, the Company issued 100,000 options to one of its
executive officers. The exercise price is $0.07, which was the price of the
Company’s common stock on the grant date.  The options are immediately
exercisable and expire five years from the grant date.  The fair value
of the options was estimated at the date of grant using the Black-Scholes option
price model. The Company determined that the stock option compensation was
$6,845 and was recognized during the year ended June 30, 2008.





During
the year ended June 30, 2008, the Company also issued 3,000,000 options to one
of its executive officers. The exercise price was $0.10, which is a discount to
the price of the Company’s common stock of $0.20 on the grant
date.  The options are immediately exercisable and expire five years
from the grant date.  The fair value of the options was estimated at
the date of grant using the Black-Scholes option price model. The Company
determined that the stock option compensation was $576,092 and was recognized
during the year ended June 30, 2008.





To
determine the fair value of the options granted during the years ended June 30,
2008 and 2007, the Company used the following assumptions in its Black-Scholes
option -price calculation:





Issue
      date
                June
      30, 2007
                January
      1, 2008
                June
      30, 2008Options
      issued
                500,000
                3,000,000
                100,000Risk-free
      interest rate
                5%
                3%
                3%Expected
      option life
                5
      years
                5
      years
                5
      yearsDividend
      yield
                0%
                0%
                0%Volatility
                120%
                157%
                194%Exercise
      price
                $0.55
                $0.10
                $0.07


These
assumptions were determined as follows:





·
            The
      risk free interest rate for the period within the contractual life of the
      option is based on the 5-year U.S. Treasury yield at the time of the
      grant.





·
            The
      expected term of the options granted represents the period of time that
      the options granted are expected to be
  outstanding.





·
            Historically,
      the Company has not paid a dividend on its common shares and does not
      expect to do so in the future.





·
            The
      volatility assumption represents an expectation of the volatility of the
      price of the underlying shares for the expected term of the option,
      considering factors such as historical stock price and stock volatility of
      other companies within the
industry.











13








WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED








NOTE
9 – STOCK OPTIONS (continued)





The
following is a summary of the status of stock option activity for the period
from inception (July 22, 2005) through March 31, 2009:





Options
                        
                        Weighted
      Average Exercise PriceOutstanding
      as of July 22, 2005 (inception)
                        
                        
                        -
                        
                        $
                        -Granted
                        
                        
                        125,000
                        
                        
                        0.0025Exercised
                        
                        
                        -
                        
                        
                        -Forfeited
                        
                        
                        -
                        
                        
                        -Expired
                        
                        
                        -
                        
                        
                        -Outstanding
      as of June 30, 2006
                        
                        
                        125,000
                        
                        $
                        0.0025Granted
                        
                        
                        500,000
                        
                        
                        0.5500Exercised
                        
                        
                        -
                        
                        
                        -Forfeited
                        
                        
                        -
                        
                        
                        -Expired
                        
                        
                        -
                        
                        
                        -Outstanding
      as of June 30, 2007
                        
                        
                        625,000
                        
                        $
                        0.4400Granted
                        
                        
                        3,100,000
                        
                        
                        0.0990Exercised
                        
                        
                        125,000
                        
                        
                        0.0025Forfeited
                        
                        
                        -
                        
                        
                        -Expired
                        
                        
                        -
                        
                        
                        -Outstanding
      as of June 30, 2008
                        
                        
                        3,600,000
                        
                        $
                        0.1610Granted
                        
                        
                        -
                        
                        
                        -Exercised
                        
                        
                        -
                        
                        
                        -Forfeited
                        
                        
                        -
                        
                        
                        -Expired
                        
                        
                        -
                        
                        
                        -Outstanding
      as of March 31, 2009
                        
                        
                        3,600,000
                        
                        $
                        0.1610





No
options were exercised and no funds were received from the exercise of
options during the nine-month period ended March 31, 2009.





NOTE
10 - RELATED PARTY TRANSACTIONS





LEASE





The
Company subleases its office space from Stein, Feldman and Sampson, LLC, of
which, Mr. Orr, the Company’s Chief Financial Officer is affiliated, for $500
per month on a month-to-month basis.




DUE
TO OFFICERS AND STOCKHOLDERS





During
the nine-months ended March 31, 2009, the Company received advances, made
repayments, and had amounts due to officers and stockholders as disclosed in
Note 6.











14










WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


NOTES
TO FINANCIAL STATEMENTS - CONTINUED








NOTE
11 - INCOME TAXES





The
Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in
Income Taxes – an interpretation of FASB Statement No. 109” (“FIN No.
48”), on July 1, 2007. FIN No. 48 requires that the impact of tax positions be
recognized in the financial statements if they are more likely than not of being
sustained upon examination, based on the technical merits of the position. As
discussed in the June 30, 2008 financial statements in the Form 10-K, the
Company has a valuation allowance against the full amount of its net deferred
tax assets. The Company currently provides a valuation allowance against
deferred tax assets when it is more likely than not that some portion, or all of
its deferred tax assets, will not be realized. There was no impact to the
Company as a result of adopting FIN No. 48 as the Company’s management has
determined that the Company has no uncertain tax positions requiring recognition
under FIN No. 48 both on July 1, 2007 (adoption) and on March 31,
2009.





The
Company is subject to U.S. federal income tax as well as income tax of certain
state jurisdictions.  The Company has not been audited by the I.R.S.
or any states in connection with income taxes. The periods from inception – 2008
remain open to examination by the I.R.S. and state authorities.





The
Company recognizes interest accrued related to unrecognized tax benefits in
interest expense. Penalties, if incurred, are recognized as a component of tax
expense.











15







ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS





This
Management's Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
Management's current views with respect to future events and financial
performance. You can identify these statements by forward-looking words such as
“may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or
similar words.  Those statements include statements regarding the
intent, belief or current expectations of us and members of our management team
as well as the assumptions on which such statements are based. Prospective
investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risk and uncertainties, and that
actual results may differ materially from those contemplated by such
forward-looking statements.





Readers
are urged to carefully review and consider the various disclosures made by us in
this report and in our other reports filed with the Securities and Exchange
Commission.  Important  factors  currently  known  to
Management  could  cause  actual  results  to
differ  materially  from  those in
forward-looking  statements.  We undertake no obligation to
update or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes in the future operating results
over time. We believe that our assumptions are based upon reasonable data
derived from and known about our business and operations.  No
assurances are made that actual results of operations or the results of our
future activities will not differ materially from our
assumptions.  Factors that could cause differences include, but are
not limited to, expected market demand for our products, fluctuations in pricing
for materials, and competition.





Overview





WaterPure
International, Inc. was organized under the laws of the state of Florida on July
22, 2005 and conducts business as a marketer of the WaterPure Atmospheric Water
Generator (“AWG”), a branded product of ours. We are structured as a marketing
entity, however, we are currently engaged in the design and development of
products may be involved with manufacturing products in the future. We intend to
introduce our first manufactured licensed products in June 2009. We intend to
operate in North America, South America and the Caribbean providing various
versions of our devices, which produce drinking water from ambient
air.





We are a
developing stage company, currently selling our products through our
distribution and marketing programs, which consists of placing our product in
retail establishments and through distributors. In December 2007, we entered
into two worldwide license agreements (amended August 4, 2008) with Everest
Water Ltd. for the manufacturing and marketing rights to advanced models of our
product. Our primary focus will be on strengthening the defined sales channels
and supporting them with meaningful marketing programs to the extent that funds
are available. We have sold our first units and have generated minimal revenues
from operations.





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 surface water
reservoirs and aquifers. Water generation treatment and filtration is poised to
be an important humanitarian industry as we learn more about global
warming.





Our
product line consists of two AWGs suitable for home and small office use and for
higher volume office or commercial use. In December 2007, we entered into two
worldwide license agreements with Everest Water Ltd. for the manufacturing and
marketing rights to advanced models of AWGs. One license is a non-exclusive
license for a stand-alone water generator and the second license is an exclusive
license for a mineral additive water generator process that will permit the
addition of organic minerals, flavors and other additives to the water produced
by the machine.





We
previously purchased our products from a manufacturer in South Korea under an
Original Equipment Manufacturer arrangement. However, as a result of a lack of
financing to purchase AWGs and uncertainty regarding the manufacturer’s ability
to deliver in accordance with orders, we have chosen not to continue our supply
relationship with the Korean manufacturer, but we may reestablish the
relationship at any time. Currently, we are selling the remaining inventory from
our original purchases from the Korean manufacturer and purchasing additional
AWGs from a supplier in North Carolina on an as-needed basis.






16







During
the three months ended March 31, 2009, we shifted our primary short term goals
to completing research and development and pre-production models for testing of
a “next generation” AWG, which we named “The Water Cycle”. We focused our
resources and personnel towards completing the sourcing of all materials needed
to build the new units plus finding a Project Manager to be responsible for both
final research and development and our new assembly line.  Our
marketing efforts will be focused on attaining new distributors for our products
that will be granted “exclusive” marketing rights to a territory or category of
trade in a specific territory.  We have begun negotiating these new
contracts with a variety of companies throughout the world. The first contract
was completed securing an exclusive distributorship for the state of
Florida.  We are working with this distributor to open a training
facility in Vero Beach, Florida to train other distributors in both sales and
maintenance procedures.





The Water
Cycle will be introduced formally in June 2009. It is a state of the art, custom
engineered, water production system that produces water in a wider range of
atmospheric conditions better than other AWG’s we have tested.  We
believe its ozonation process is an effective non-chemical method of eliminating
bacteria from water, and ozonation has been used for over one hundred years by
major municipalities around the world. The three stage filtration system helps
cleanse room air and produces pure bacteria-free water. Our new unit will be
manufactured in the USA.





We feel
that the differentiations in the new AWG could help us capture a larger market
segment in the future because of its design, features and worldwide respect for
“Made in USA” products, especially after the past product problems with a
variety of products manufactured overseas.





Results
of Operations





For
the Period from July 22, 2005 (Inception) through March 31, 2009





Since we were formed on July 22, 2005,
we have earned approximately $163,000 in revenues and have incurred a cumulative
net loss since our inception of approximately $4,531,000 through March 31, 2009.
Operations from inception through March 31, 2009 were devoted primarily to
strategic planning, raising capital and developing revenue-generating
opportunities.




Liquidity
and Capital Resources





As of
March 31, 2009, we have a working capital deficit of $768,767, have earned
minimal revenues and have incurred a net loss from our inception through March
31, 2009 totaling $4,531,259.





We have
financed our losses through the sale of our common stock, issuance of common
stock for services in lieu of cash, and loans from officers and stockholders.
During the nine months ended March 31, 2009, we received the following capital
infusions: $72,500 from the sale of 12,499,999 shares of our common stock and
loans from officers and stockholders totaling $39,440 and $14,005, respectively.
In addition, during the nine months ended March 31, 2009, in lieu of cash
payments, we issued 31,092,600 shares of common stock valued at $595,017 for
services rendered.  We issued 1,000,000 and 666,111 shares of our
common stock to repay $50,000 and $41,550 in advances from officers and
stockholders, respectively. We do not intend to pay interest on the advances
borrowed from officers and stockholders as the advances are intended to be
short-term.





On July
30, 2008, we entered into a Securities Purchase Agreement with accredited
investors for the issuance of an aggregate of $50,000 of convertible notes. The
convertible notes accrue interest at 8% per annum and are due one year from the
date of the convertible notes.  The note holders have the option to
convert any unpaid note principal in shares of our common stock at a 30%
discount to the average five day stock price prior to conversion.





On
November 18, 2008, we entered into a Securities Purchase Agreement with
accredited investors for the issuance of an aggregate of $10,000 of convertible
notes. The convertible notes accrue interest at 12% per annum and are due one
year from the date of the convertible notes.  The note holders have
the option to convert any unpaid note principal to shares of our common stock at
a price of $.005 per share.





We do not
have enough capital to support operations for the next 12 months. We anticipate
we will need approximately $2 million, consisting of approximately $900,000 for
manufacturing, $200,000 for sales and marketing and $600,000 for general and
administrative expenses and working capital. An additional $300,000 would be
utilized for the production and execution of our marketing support program. We
currently do not have any commitments for additional capital, and have no
assurances that capital will be available on terms acceptable to us, or at
all.






17







Our
independent registered public accounting firm has issued a going concern
paragraph in their Report of Independent Registered Public Accounting Firm on
our consolidated financial statements for the fiscal year ended June 30, 2008
that states there is substantial doubt about our ability to continue as a going
concern. The conditions that led to the going concern continue to exist as of
March 31, 2009. Our ability to continue as a going concern is dependent on our
ability to access capital through debt and equity funding as well as market and
sell our various products.





Critical
Accounting Policies





Our financial statements are prepared
based on the application of accounting principles generally accepted in the
United States of America. These accounting principles require us to exercise
significant judgment about future events that affect the amounts reported
throughout our financial statements. Actual events could unfold quite
differently than our previous judgments had predicted. Therefore, the
estimates and assumptions inherent in the financial statements included in this
report could be materially different once those actual events are known. We
believe the following policies may involve a higher degree of judgment and
complexity in their application and represent critical accounting policies used
in the preparation of our financial statements. If different assumptions or
estimates were used, our financial statements could be materially different from
those included in this report.





Revenue
Recognition





We
recognize revenues in accordance with Staff Accounting Bulletin 104, “Revenue Recognition” in
Financial Statements (SAB 104). We sell atmospheric water generators.
Revenue from such product sales is recognized when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable and
collectibility is probable.  At this time the earnings process is
complete and the risks and rewards of ownership have transferred to the
customer, which is generally when the goods are shipped and all our significant
obligations have been satisfied.





Accounts
Receivable





We must
make judgments about the collectibility of our accounts receivable to be able to
present them at their net realizable value on the balance sheet.  To
do this, we carefully analyze the aging of our customer accounts, try to
understand why accounts have not been paid, and review historical bad debt
problems.  From this analysis, we record an estimated allowance for
receivables that we believe will ultimately become uncollectible.  As
of March  31, 2009, we had an allowance for bad debts of $22,759.
We actively manage our accounts receivable to minimize our credit risks and
believe that our current allowance for doubtful accounts is fairly
stated.





Inventory
Valuation





We make
judgments about the ultimate realizability of our inventory in order to record
our inventory at its lower of cost or market.  These judgments involve
reviewing current demand for our products in comparison to present inventory
levels and reviewing inventory costs compared to current market
values.




Recent
Accounting Pronouncements





There are no accounting pronouncements
not yet adopted that are expected to have a significant impact on
us.





ITEM
3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Not required under Regulation S-K for
“smaller reporting companies.”





ITEM
4T - CONTROLS AND PROCEDURES





a)
Evaluation of disclosure controls and procedures.




Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as
of March 31, 2009. In designing and evaluating the disclosure controls and
procedures, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives. In addition, the design of disclosure
controls and procedures must reflect the fact that there are resource
constraints and that management is required to apply its judgment in evaluating
the benefits of possible controls and procedures relative to their
costs.





18


Based
on our evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance
that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required
disclosure.





A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within our company have been detected. Because
of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.




(b)
Changes in internal control over financial reporting.




We
regularly review our system of internal control over financial reporting and
make changes to our processes and systems to improve controls and increase
efficiency, while ensuring that we maintain an effective internal control
environment. Changes may include such activities as implementing new, more
efficient systems, consolidating activities, and migrating
processes.




We
determined on February 13, 2009 that a restatement of our financial statements
for the quarter ended September 30, 2008 was necessary due to certain clerical
errors. The restatement was required to properly reflect our financial results
for certain accounting related to accrued royalties and licensing fees. The
amended quarterly report on Form 10-Q/A was filed with the Securities and
Exchange Commission on February 20, 2009.




We
believe that the issues surrounding the restatement of the 10-Q for the quarter
ended September 30, 2008, mainly the internal controls related to the financial
closing, review, and analysis process has been addressed and we have taken
additional steps to avoid the reoccurrence of this condition by instituting a
policy requiring the Chief Financial Officer, at the end of each quarter, to
review our current licensing agreements to ensure that all royalty and licensing
fees have been properly recorded and that appropriate adjustments to previously
accrued royalties and licensing fees are recorded, if necessary. We believe that
these additional efforts taken by management to strengthen our internal controls
are currently effective.








19










PART
II - OTHER INFORMATION




Item
1. Legal Proceedings




We are
currently not a party to any material legal proceedings or claims.





Item
1A. Risk Factors





Not
required under Regulation S-K for “smaller reporting companies.”





Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds




During
the nine months ended March 31, 2009, we sold 12,499,999 shares of our common
stock to accredited investors for aggregate proceeds of $72,500.





During
the nine months ended March 31, 2009, in lieu of cash payments, we issued
31,092,600 shares of common stock valued at approximately $595,017 for services
rendered.





During
the nine months ended March 31, 2009, we issued 1,000,000 and 666,111 shares of
our common stock to repay $50,000 and $41,550 in advances from officers and
stockholders, respectively.





On
November 18, 2008, we entered into a Securities Purchase Agreement with
accredited investors for the issuance of an aggregate of $10,000 of convertible
notes. The convertible notes accrue interest at 12% per annum and are due one
year from the date of the convertible notes.  The note holders have
the option to convert any unpaid note principal in shares of our common stock at
a price of $.005 per share.




Item
3. Defaults Upon Senior Securities




We are
currently is in default on a $25,000 note, which was due May 15,
2008.





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




None.





Item
5. Other Information.




None.





Item
6. Exhibits





31.01
              Certification of Chief Executive Officer pursuant to
      Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of
2002





31.02
              Certification of Chief Financial Officer pursuant to
      Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section
      302 of the Sarbanes-Oxley Act of
2002





32.01
              Certifications of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002













20








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.







WATERPURE
INTERNATIONAL, INC.





Date:  May
      19, 2009
            By:/s/ PAUL S. LIPSCHUTZPaul
      S. LipschutzPresident
      (Principal Executive Officer)Date:  May
      19, 2009
            By:/s/ ROBERT F. ORRRobert
      F. OrrChief
      Financial Officer (Principal Financial Officer and Principal Accounting
      Officer)