UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





(Mark
One)


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





For
the Quarterly Period Ended September 30, 2008





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





For
the Transition Period from _________ to _________





Commission
file number: 333-135783





WATERPURE
INTERNATIONAL, INC.


(Exact
name of registrant as specified on its charter)





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





525
Plymouth Road, Suite 310


Plymouth Meeting, PA
19462


(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 is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company.  See the definitions of “large accelerated filer”
“accelerated filed,” 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
November 19, 2008, there were 41,540,587 shares of registrant’s common stock
outstanding.





1







WATERPURE
INTERNATIONAL, INC.








INDEXPART
      I.
              FINANCIAL
      INFORMATIONITEM
      1.
              Balance
      sheets as of September 30, 2008 (unaudited) and June 30,
    2008
              3Statements
      of operations for the three-months ended September 30, 2008 and 2007, and
      cumulative from July 22, 2005 (inception) through September 30, 2008
      (unaudited)
              4Statement
      of changes in stockholders’ equity (deficiency) for the period from July
      22, 2005 (inception) through September 30, 2008
(unaudited)
              5Statements
      of cash flows for the three month periods ended September 30, 2008 and
      2007, and cumulative from July 22, 2005 (inception) through September 30,
      2008  (unaudited)
              7Notes
      to financial statements (unaudited)
              14ITEM
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              15-17ITEM
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              18ITEM
      4T.
              Controls
      and Procedures
              18PART
      II.
              OTHER
      INFORMATIONITEM
      1.
              Legal
      Proceedings
              19ITEM
      1A.
              Risk
      Factors
              19ITEM
      2.
              Unregistered
      Sales of Equity Securities and Use of Proceeds
              19ITEM
      3.
              Defaults
      Upon Senior Securities
              19ITEM
      4.
              Submission
      of Matters to a Vote of Security Holders
              19ITEM
      5.
              Other
      Information
              19ITEM
      6.
              Exhibits
              19SIGNATURES
              20


2




WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


BALANCE
SHEETS




September
      30,
                              
                              
                              June
      30,2008
                              
                              
                              2008(Unaudited)ASSETSCash
                              
                              $
                              -
                              
                              
                              $
                              5,421Accounts
      receivable - net of allowance ($5,602 at Sepember 30, 2008 and $2,762
      at June 30, 2008)
                              
                              
                              19,416
                              
                              
                              
                              -Inventories
                              
                              
                              71,177
                              
                              
                              
                              87,957Total
      current assets
                              
                              
                              90,593
                              
                              
                              
                              93,378Trademark
                              
                              
                              325
                              
                              
                              
                              325Intangible
      asset - license, net of accumulated amortization
                              
                              
                              1,043,543
                              
                              
                              
                              1,056,785Total
      assets
                              
                              $
                              1,134,461
                              
                              
                              $
                              1,150,488LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIENCY)CURRENT
      LIABILITIESAccounts
      payable
                              
                              $
                              86,739
                              
                              
                              $
                              122,641Accrued
      expenses
                              
                              
                              154,496
                              
                              
                              
                              133,921Accrued
      royalties payable - current
                              
                              
                              44,372
                              
                              
                              
                              -Licensing
      fees - current
                              
                              
                              48,120
                              
                              
                              
                              230,000Notes
      payable
                              
                              
                              25,000
                              
                              
                              
                              25,000Convertible
      debt
                              
                              
                              87,500
                              
                              
                              
                              50,000Due
      to officers
                              
                              
                              52,032
                              
                              
                              
                              98,053Due
      to stockholders
                              
                              
                              90,769
                              
                              
                              
                              105,169Total
      current liabilities
                              
                              
                              589,028
                              
                              
                              
                              764,784Accrued
      royalties payable - non current
                              
                              
                              597,975
                              
                              
                              
                              496,373Licensing
      fees - non current
                              
                              
                              331,897
                              
                              
                              
                              -STOCKHOLDERS'
      EQUITY (DEFICIENCY)Common
      stock, par value $.0001 per share; 100,000,000 authorized
                              
                              
                              3,989
                              
                              
                              
                              3,147Common
      stock to-be-issued
                              
                              
                              -
                              
                              
                              
                              355,000Additional
      paid-in-capital
                              
                              
                              3,480,070
                              
                              
                              
                              2,998,146Deficit
      accumulated during the development stage
                              
                              
                              (3,868,498
                              )
                              
                              
                              (3,466,962
                              )Total
      stockholders' deficiency
                              
                              
                              (384,439
                              )
                              
                              
                              (110,669
                              )Total
      liabilities and stockholders' equity (deficiency)
                              
                              $
                              1,134,461
                              
                              
                              $
                              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 ENDED SEPTEMBER
30, 2008 AND SEPTEMBER 30, 2007 AND FOR


THE PERIOD FROM JULY 22, 2005
(INCEPTION) THROUGH SEPTEMBER 30, 2008


(Unaudited)






July
      22, 2005Three
      months
                        
                        
                        Three
      months
                        
                        
                        (inception)ended
                        
                        
                        ended
                        
                        
                        throughSeptember
      30,
                        
                        
                        September
      30,
                        
                        
                        September
      30,2008
                        
                        
                        2007
                        
                        
                        2008REVENUES
                        
                        $
                        48,012
                        
                        
                        $
                        17,179
                        
                        
                        $
                        119,942COST
      OF GOODS SOLD
                        
                        
                        31,088
                        
                        
                        
                        14,656
                        
                        
                        
                        102,155Gross
      profit
                        
                        $
                        16,924
                        
                        
                        $
                        2,523
                        
                        
                        $
                        17,787EXPENSESGeneral
      and administrative expenses
                        
                        
                        428,977
                        
                        
                        
                        227,686
                        
                        
                        
                        3,796,874LOSS
      FROM OPERATIONS
                        
                        
                        (412,053
                        )
                        
                        
                        (225,163
                        )
                        
                        
                        (3,779,087
                        )Interest
      expense
                        
                        
                        2,250
                        
                        
                        
                        3,000
                        
                        
                        
                        32,590Accretion
      of accrued royalties
                        
                        
                        (28,509
                        )
                        
                        
                        -
                        
                        
                        
                        3,000Amortization
      expense
                        
                        
                        15,742
                        
                        
                        
                        -
                        
                        
                        
                        53,821Loss
      before provision for income taxes
                        
                        
                        (401,536
                        )
                        
                        
                        (228,163
                        )
                        
                        
                        (3,868,498
                        )Provision
      for income taxes
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Net
      loss
                        
                        $
                        (401,536
                        )
                        
                        $
                        (228,163
                        )
                        
                        $
                        (3,868,498
                        )Net
      loss per share basic and diluted
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.01
                        )
                        
                        $
                        (0.17
                        )Weighted
      average per common share
                        
                        
                        36,403,752
                        
                        
                        
                        21,382,891
                        
                        
                        
                        22,701,912





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


4




WATERPURE
INTERNATIONAL, INC.


(A
DEVELOPMENT STAGE COMPANY)


STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIENCY)


FOR THE PERIOD FROM
JULY 22, 2005 (INCEPTION) THROUGH SEPTEMBER 30, 2008




Common
      stock to-be-issued
                                
                                
                                Common
      stock issued and outstanding
                                
                                
                                Additonal
      paid-in-
                                
                                
                                Deficit
      accumulated during the
                                
                                
                                Total
      stockholders'Shares
                                
                                
                                Amount
                                
                                
                                Shares
                                
                                
                                Amount
                                
                                
                                capital
                                
                                
                                development
      stage
                                
                                
                                equity (deficiency)Balance
      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 FROM
JULY 22, 2005 (INCEPTION) THROUGH SEPTEMBER 30, 2008


(continued)




Common
      stock to-be-issued
                            
                            
                            Common
      stock issued and outstanding
                            
                            
                            Additonal
      paid-in-
                            
                            
                            Deficit
      accumulated during the
                            
                            
                            Total
      stockholders'Shares
                            
                            
                            Amount
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            capital
                            
                            
                            development
      stage
                            
                            
                            equity (deficiency)Cancellation
      of common stock to-be-issued (unaudited)
                            
                            
                            (1,750,000
                            )
                            
                            
                            (355,000
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (355,000
                            )Issuance
      of shares (unaudited)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            250,000
                            
                            
                            
                            25
                            
                            
                            
                            24,975
                            
                            
                            
                            -
                            
                            
                            
                            25,000Beneficial
      conversion of loan discount
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            15,000
                            
                            
                            
                            -
                            
                            
                            
                            15,000Issuance
      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
                            
                            
                            
                            -
                            
                            
                            
                            41,550Common
      stock issued for consulting services (unaudited)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            6,502,600
                            
                            
                            
                            650
                            
                            
                            
                            350,566
                            
                            
                            
                            -
                            
                            
                            
                            351,216Net
      loss (unaudited)
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (401,536
                            )
                            
                            
                            (401,536
                            )Balance
      September 30, 2008
                            
                            
                            -
                            
                            
                            $
                            -
                            
                            
                            
                            39,890,587
                            
                            
                            $
                            3,989
                            
                            
                            $
                            3,480,070
                            
                            
                            $
                            (3,868,498
                            )
                            
                            $
                            (384,439
                            )




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 FISCAL YEARS ENDED SEPTEMBER 30, 2008 AND SEPTEMBER 30, 2007 AND FOR THE


PERIODS
FROM JULY 22, 2005 (INCEPTION) THROUGH JUNE 30, 2008


(UNAUDITED)





July
      22, 2005Three
      months
                      
                      
                      Three
      months
                      
                      
                      (inception)ended
                      
                      
                      ended
                      
                      
                      throughSeptember
      30,
                      
                      
                      September
      30,
                      
                      
                      September
      30,2008
                      
                      
                      2007
                      
                      
                      2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                      
                      $
                      (401,536
                      )
                      
                      $
                      (221,163
                      )
                      
                      $
                      (3,868,498
                      )Adjustments
      to reconcile net loss to net cash used in operatingactivities:Accretion
      of accrued royaties
                      
                      
                      (28,509
                      )
                      
                      
                      -
                      
                      
                      
                      3,000Amortization
      of  intangible asset - license
                      
                      
                      13,242
                      
                      
                      
                      
                      
                      
                      
                      51,321Common
      stock issued for consulting services
                      
                      
                      351,216
                      
                      
                      
                      69,688
                      
                      
                      
                      1,843,620Issuance
      of stock options - employee
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      814,237Amortization
      of beneficial conversion discount
                      
                      
                      2,500
                      
                      
                      
                      -
                      
                      
                      
                      21,250Changes
      in operating assets and liabilities(Increase)/Decrease
      in:Accounts
      receivable
                      
                      
                      (19,416
                      )
                      
                      
                      2,894
                      
                      
                      
                      (19,416
                      )Other
      receivables
                      
                      
                      -
                      
                      
                      
                      7,000
                      
                      
                      
                      -Inventories
                      
                      
                      16,780
                      
                      
                      
                      (40,586
                      )
                      
                      
                      (71,177
                      )Increase/(Decrease)
      in:Accounts
      payable and accrued expenses
                      
                      
                      (8,327
                      )
                      
                      
                      28,400
                      
                      
                      
                      241,235Net
      cash used in operating activities
                      
                      
                      (74,050
                      )
                      
                      
                      (153,767
                      )
                      
                      
                      (984,428
                      )CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of license
                      
                      
                      (12,500
                      )
                      
                      
                      -
                      
                      
                      
                      (75,500
                      )Trademark
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (325
                      )Net
      cash used in investing activities
                      
                      
                      (12,500
                      )
                      
                      
                      -
                      
                      
                      
                      (75,825
                      )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
                      
                      
                      -
                      
                      
                      
                      50,000
                      
                      
                      
                      494,313Proceeds
      from notes payable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      50,000Repayment
      of notes payable
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      (25,000
                      )Advances
      from officers
                      
                      
                      3,979
                      
                      
                      
                      47,590
                      
                      
                      
                      102,032Advances
      from stockholders
                      
                      
                      27,150
                      
                      
                      
                      51,253
                      
                      
                      
                      202,463Proceeds
      from convertible debt
                      
                      
                      50,000
                      
                      
                      
                      -
                      
                      
                      
                      100,000Net
      cash provided by financing activities
                      
                      
                      81,129
                      
                      
                      
                      148,843
                      
                      
                      
                      1,060,253NET
      INCREASE/(DECREASE) IN CASH
                      
                      
                      (5,421
                      )
                      
                      
                      (4,924
                      )
                      
                      
                      -CASH,
      beginning of period
                      
                      
                      5,421
                      
                      
                      
                      10,918
                      
                      
                      
                      -CASH,
      end of period
                      
                      $
                      -
                      
                      
                      $
                      5,994
                      
                      
                      $
                      -




Supplemental
      disclosures of cash flow
information:


1The Company recorded a
liability of $341,803 for amounts owed for the license acquisition as described
in Note 3


2The Company recorded accrued
royalties of $604,132, which represents the present value of the guaranteed
minimum payments for the license acquisition as described in Note 3


3The 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 5





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 - BASIS OF PRESENTATION





The
accompanying unaudited 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 interim periods ended
September 30, 2008 and 2007 and cumulative period from inception (July 22, 2005)
to September 30, 2008.





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 - SIGNIFICANT ACCOUNTING POLICIES





NATURE
OF OPERATIONS





WaterPure
International, Inc. (a development stage company) (the “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 September 30,
2008 were devoted primarily to strategic planning, raising capital and
developing revenue-generating opportunities.





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 September 30, 2008 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
September 30, 2008, the Company had an allowance for bad debts of
$5,602.


8
 WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS


NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued)





INVENTORIES





The
Company states inventories at the lower of cost or market.  As of September
30, 2008, 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.




INCOME
TAXES





The
Company accounts
for income taxes in accordance with SFAS 109 and accordingly,
 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 September 30, 2008.





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 September 30, 2008, 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 results,
believes that their accounts receivable, net of reserves, credit risk exposure
is limited.


9
 WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS


NOTE
2 - SIGNIFICANT ACCOUNTING POLICIES (continued)





FAIR
VALUE OF FINANCIAL INSTRUMENTS





SFAS No.
107, Fair Value of Financial
Instruments, requires disclosure of the fair value of financial
instruments for which determination of fair value is practicable. SFAS No. 107
defines the fair value of a financial instrument as the amount at which the
instruments could be exchanged in a current transaction between willing parties.
The carrying amount of cash, accounts receivable, accounts payable and accrued
expenses, due to officers and due to stockholders approximates fair value
because of the immediate or short-term maturity of these financial instruments.
The fair value of the notes payable was estimated by discounting the future cash
flows using current rates offered by lenders for similar borrowings with similar
credit ratings. The fair value of the notes payable approximate their carrying
value. The fair value of the convertible notes is not determinable because of
the lack of any quoted market price or trading activity in the instruments (see
Note 4 for a description of these instruments). The carrying value of the
accrued royalties payable approximate fair value and was estimated by
discounting future cash flows using a 12% discount rate. The Company’s financial
instruments are held for other than trading purposes.





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





The
Company accounts for equity instruments exchanged for services in accordance
with SFAS No. 123(R),“Share-Based Payment.”  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.





RECENT
ACCOUNTING PRONOUNCEMENTS





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




NOTE 3
- GOING CONCERN/MANAGEMENT’S PLAN
 
 The
accompanying 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
$3,868,498, has earned minimal revenues and has a working capital deficit as of
September 30, 2008. 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 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 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 include
prior royalties.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. 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.





10
 WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS





NOTE 4
– INTANGIBLE ASSETS – LICENSE (continued)





The
following table summarizes the various components of the Everest license as of
September 30, 2008:




2008Amended
      value of license described above
                  
                  $
                  1,094,864Less:
      accumulated amortization
                  
                  
                  51,321License,
      net
                  
                  $
                  1,043,543


Total
amortization for the three months ended September 30, 2008 was
$13,242





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 $604,132, which represents the present value of
the minimum royalty payments using a 12% 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
therefore, shown as a currant liability.





NOTE 6
– ADVANCES FROM OFFICERS AND SHAREHOLDERS





Officers
and stockholders of the Company have provided various short-term working capital
advances. During the three months ended September 30, 2008, short-term working
capital advances from officers and stockholders under this borrowing arrangement
totaled $3,979 and $27,150 respectively. During the three months ended September
30, 2007, short-term working capital advances from officers and stockholders
under this borrowing arrangement totaled $51,253 and $47,590
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 three months ended September 30, 2008. 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.


11
 WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS





NOTE 7
– CONVERTIBLE DEBT (continued)





In
accordance with EITF 98-5, during the three months ended September 30, 2008, 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.





NOTE 8
- STOCKHOLDERS’ EQUITY





During
the three-months ended September 30, 2008, the Company sold in private placement
and issued 250,000 shares at $.10 per share for a total of $25,000. 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 three-months ended September 30, 2008, the Company issued 6,502,600 shares
of its common stock for consulting services totaling $351,216.





During
the three-months ended September 30, 2008, 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.





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 $.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. The Company determined that the stock option compensation was
$231,300 and was recognized during the year ended June 30, 2007.





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 price of $.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 year ended June 30,
2008, 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








12
 WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS




NOTE 9
– STOCK OPTIONS (continued)





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.





The
following is a summary of the status of stock option activity for the period
from inception (July 22, 2005) through September 30, 2008:





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 September 30, 2008
                      3,600,000
                      
                      $
                      0.1610





No
options were exercised and no funds were received from the exercise of
options during the three-month period ended September 30, 2008.





The
intrinsic value of the options granted was zero for the three-month period ended
September 30, 2008.




13
 WATERPURE
INTERNATIONAL, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 NOTES
TO FINANCIAL STATEMENTS





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 three-months ended September 30, 2008, the Company received advances, made
repayments, and had amounts due to officers and stockholders as disclosed in
Note 6.





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 September 30,
2008.





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 – 2007
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.


14


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 expressly as a
marketing entity and therefore, we do not engage in the design, development or
manufacturing of products, however, we do intend to manufacture our own licensed
products in the future. 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 an agreement with Everest Water Ltd. for the manufacturing and marketing
rights to advanced models of our product, which was amended on August 4, 2008.
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 three 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 H2O Liquid Air-Florida and another supplier in North Carolina on an
as-needed basis.





We made
efforts to organize the distribution and marketing programs and intend to place
our products into the retail market through distributor
relationships.  On July 5, 2007, we announced the appointment of
Midwest Future Technology, LLC as our master distributor for our atmospheric
water generator products in the Indiana, Ohio and Kentucky region for direct
sales to businesses and consumers in Indiana, Ohio and Kentucky. The
Company has since terminated that distributorship for lack of performance.
Additional distributorships have been established in Greece, Bermuda and the
Cayman islands.




15





Results
of Operations





For
the Period from July 22, 2005 (Inception) through September 30,
2008





Since we were formed on July 22, 2005,
we have earned approximately $120,000 in revenues and have incurred a cumulative
net loss since our inception of $3.9 million through September 30, 2008.
Operations from inception through September 30, 2008 were devoted primarily to
strategic planning, raising capital and developing revenue-generating
opportunities.




Liquidity
and Capital Resources





As of
September 30, 2008, we have a working capital deficit of $510,935, have earned
minimal revenues and have incurred a net loss from our inception through
September 30, 2008 totaling $3,868,498.





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 three months ended September 30, 2008, we received the following
capital infusions: loans from officers and stockholders totaling $24,230 and
$31,350, respectively. In addition, during the three months ended September 30,
2008, in lieu of cash payments, we issued shares of common stock valued at
approximately $351,216 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.





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 $800,000 for general and
administrative expenses and working capital. An additional $100,000 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.





Our
independent auditors have issued a going concern paragraph in their opinion 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. 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.





16





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 September 30, 2008, we had an allowance for bad debts of $5,602. We
actively manage our accounts receivable to minimize our credit risks and believe
that our current allowance for doubtful accounts is fairly stated.





Reliability
of Inventory Values





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.


17







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 September 30, 2008. 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.





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.





(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.





There
were no changes in our internal control over financial reporting that occurred
during the period covered by this Quarterly Report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.


18











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




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 to shares of our common stock at a 30%
discount to the average five-day stock price prior to conversion.




Item
3. Defaults Upon Senior Securities




We are
currently 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





31.1
              Certification
      of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended





31.2
              Certification
      of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a),
      promulgated under the Securities and Exchange Act of 1934, as
      amended





32.1
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Executive
  Officer)





32.2
              Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 (Chief Financial
  Officer)




19









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:  November
      19, 2008
                    By:
                    /s/ PAUL
      S. LIPSCHUTZPaul
      S. LipschutzPresident
      (Principal Executive Officer)




Date:  November
      19, 2008
                By:
                /s/ ROBERT
      F. ORRRobert
      F. OrrChief
      Financial Officer (Principal Financial Officer and Principal Accounting
      Officer)


















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