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 ~~March~~September 3130, 2009

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

For the Transition Period from _________ to _________

Commission file number: 333-135783

WATERPURE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Florida	20-3217152	~~20-3217152~~
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)	~~(I.R.S. 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ o No ¨. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

As of ~~May~~ 18November 13, 2009, there were 79112,~~623~~173,986 shares of registrant’s common stock outstanding.

WATERPURE INTERNATIONAL, INC.

INDEX
PART I.	FINANCIAL INFORMATION
	ITEM 1.	Financial Statements
	ITEM 1	Financial Statements
	.	Balance sheets as of March 31, 2009 (unaudited) and June 30, 2008	3
		Balance sheets as of September 30, 2009 (unaudited) and June 30, 2009	3
		Statements of operations for the three and nine months ended March 31, 2009 and 2008, and cumulative from July 22, 2005 (inception) through March 31, 2009 (unaudited)	4
		Statements of operations for the three month periods ended September 30, 2009 and 2008, and cumulative from July 22, 2005 (inception) through September 30, 2009 (unaudited)	4
		Statements of changes in stockholders’ equity (deficiency) for the period from July 22, 2005 (inception) through March 31, 2009 (unaudited)	5
		Statement of changes in stockholders’ equity (deficiency) for the period from July 22, 2005 (inception) through September 30, 2009 (unaudited)	5
		Statements of cash flows for the nine month ended March 31, 2009 and 2008, and cumulative from July 22, 2005 (inception) through March 31, 2009 (unaudited)	7
		Statements of cash flows for the three month periods ended September 30, 2009 and 2008, and cumulative from July 22, 2005 (inception) through September 30, 2009 (unaudited)	7
		Notes to financial statements (unaudited)	8-1516
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617-1819
	ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	1819
	ITEM 4.	Controls and Procedures	1820
PART II.	OTHER INFORMATION
	ITEM 1.	Legal Proceedings	2021
	ITEM 1A.	Risk Factors	2021
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2021
	ITEM 3.	Defaults Upon Senior Securities	2021
	ITEM 4.	Submission of Matters to a Vote of Security Holders	2021
	ITEM 5.	Other Information	2021
	ITEM 6.	Exhibits	2021
	SIGNATURES		2122

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

	March 31,
	September 30,
	2009			June 30,
	(Unaudited)			~~2008~~2009
ASSETS
Cash	$	23,~~876~~531		$	~~5,421~~-
Accounts receivable - net of allowance ($22,759 at March 31, 2009 and $2,762 at June 30, 2008)		-			-
Accounts receivable - net of allowance ($26,059 at September 30, 2009 and $22,759 at June 30, 2009)		-			-
Inventories		3510,~~613~~133			8715,~~957~~960
Other current assets		6,000			-
Total current assets		13,664			15,960
Total current assets		44,489			93,378
Trademark		325			325
Intangible asset - license, net of accumulated amortization		1975,~~010,861~~738			1992,~~056,785~~221
Total assets	$	1989,~~055,675~~727		$	1,~~150~~008,~~488~~506
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable	$	~~100~~116,~~045~~360		$	~~122~~120,~~641~~888
Accrued expenses		~~230~~333,~~981~~240			~~133~~282,~~921~~532
Accrued royalties payable - current		50110,000			-50,000
Licensing fees - current		92232,000			~~230~~167,000
Deferred revenue		49,800			-
Deferred revenue - current		-			1,800
Deposits		21,800			-
Notes payable		25,000			25,000
Convertible debt		~~100~~101,~~313~~563			50105,~~000~~938
Due to officers		87,~~493~~664			98103,~~053~~229
Due to stockholders		7786,~~624~~124			~~105~~87,~~169~~124
Total current liabilities		~~813~~1,~~256~~113,751			~~764~~943,~~784~~511
Accrued royalties payable - non current		~~717~~692,~~601~~929			~~496~~735,~~373~~053
Licensing fees - non current		~~248~~128,~~217~~662			-185,983
Deferred revenue - non current		135,900			98,400
Total Liabilities		2,071,242			1,962,947
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock, par value $.0001 per share; 250,000,000 authorized		7,098			3,147
Common stock, par value $.0001 per share; 100,000,000 authorized		10,372			9,242
Preferred stock, par value $.001 per share; 1,000,000 authorized		-			-
Common stock to-be-issued		-			2,500
Common stock to-be-issued		30,000			355,000
Additional paid-in-capital		3,986,544			3,924,174
Additional paid-in-capital		3,770,762			2,998,146
Deficit accumulated during the development stage		(5,078,431	)		(4,890,357	)
Deficit accumulated during the development stage		(4,531,259	)		(3,466,962	)
Total stockholders' deficiency		(1,081,515	)		(954,441	)
Total stockholders' deficiency		(723,399	)		(110,669	)
Total liabilities and stockholders' equity (deficiency)	$	989,727		$	1,008,506
Total liabilities and stockholders' equity (deficiency)	$	1,055,675		$	1,150,488

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ~~AND NINE MONTHS~~ ENDED ~~MARCH 31~~SEPTEMBER 30, 2009 AND ~~MARCH~~SEPTEMBER 3130, 2008 AND ~~CUMULATIVE~~FOR THE PERIOD FROM JULY 22, 2005 (INCEPTION) THROUGH ~~MARCH~~SEPTEMBER 3130, 2009

(Unaudited)

							July 22, 2005						~~July 22, 2005~~
	Three months			Three months			~~Nine Months~~(inception)			~~Nine Months~~			~~(inception)~~
	ended			ended			~~ended~~through			~~ended~~			~~through~~
	March 31,			March 31,			March 31,			March 31,			March 31,
	September 30,			September 30,			September 30,
	2009			2008			2009			~~2008~~			~~2009~~
REVENUES	$	815,~~349~~906		$	4048,~~896~~012		$	91208,~~481~~208		$	~~62,243~~		$	~~163,411~~
COST OF GOODS SOLD		911,~~415~~070			3631,~~205~~088			60172,~~580~~615			~~55,686~~			~~131,647~~
Gross profit/(loss)		(1,066	)		4,691			30,901			6,557			31,764
Gross profit	$	4,836		$	16,924		$	35,593
EXPENSES
General and administrative expenses		~~230~~139,~~501~~713			1428,~~196,327~~977			~~959~~4,~~149~~764,317			~~1,624,674~~			~~4,327,046~~
LOSS FROM OPERATIONS		(~~231~~134,~~567~~877	)		(1412,~~191,636~~053	)		(~~928~~4,~~248~~728,724	)		~~(1,618,117~~	)		~~(4,295,282~~	)
Interest expense		3,~~550~~034			42,~~078~~250			946,~~867~~791			~~10,523~~			~~40,207~~
Accretion of accrued royalties		2930,~~913~~555			1728,~~865~~509			67162,~~445~~227			~~17,865~~			~~98,954~~
Amortization expense		2119,~~966~~608			1615,~~341~~742			58140,~~737~~689			~~21,738~~			~~96,816~~
Loss before provision for income taxes		(~~286~~188,~~996~~074	)		(1458,~~229,920~~554	)		(15,~~064~~078,~~297~~431	)		~~(1,668,243~~	)		~~(4,531,259~~	)
Provision for income taxes		-			-			-			-			-
Net loss	$	(~~286~~188,~~996~~074	)	$	(1458,~~229,920~~554	)	$	(15,~~064~~078,~~297~~431	)	$	~~(1,668,243~~	)	$	~~(4,531,259~~	)
Net loss per share basic and diluted	nil			$	(0.0501	)	$	(0.0215	)	$	~~(0.07~~	)	$	~~(0.17~~	)
Weighted average per common share		60,269,994			26,004,997			47,125,299			23,256,714			26,666,466
Weighted average shares outstanding		93,277,959			36,403,752			33,805,685

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIENCY)

FOR THE PERIOD FROM JULY 22, 2005 (INCEPTION) THROUGH ~~MARCH 31~~ SEPTEMBER 30, 2009

	Common stock to-be-issued						Common stock issued and outstanding				Additonal paid-in-capital		Deficit accumulated during the development stage			Total stockholders' equity (deficiency)
	Shares			Amount			Shares		Amount

Balance July 22, 2005 (inception)		-		$	-			-	$	-	$	-	$	-		$	-

Common stock to be issued in connection with Incorporation (July 22, 2005)		4,000,000			10,000			-		-		-		-			10,000

Common stock to be issued for consulting services		16,150,000			40,375			-		-		-		-			40,375

Common stock issued - private placement, net of issuance costs of $58,255		461,750			126,445			-		-		-		-			126,445

Net loss		-			-			-		-		-		(64,361	)		(64,361	)

Balance June 30, 2006		20,611,750			176,820			-		-		-		(64,361	)		112,459

Issuance of shares		(20,611,750	)		(176,820	)		20,611,750		2,061		174,759		-			-

Beneficial conversion of loan discount		-			-			-		-		18,750		-			18,750

Common stock issued for consulting services		-			-			660,000		66		622,334		-			622,400

Issuance of options for compensation		-			-			-		-		231,300		-			231,300

Net 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			-		-		-		-			355,000

Issuance of shares		-			-			4,330,000		433		468,567		-			469,000

Issuance of shares as repayment of amount due to stockholders		-			-			467,626		47		70,097		-			70,144

Common stock issued for consulting services		-			-			5,277,500		528		829,101		-			829,629

Issuance of options for compensation		-			-			-		-		582,937		-			582,937

Exercise of options		-			-			125,000		12		301		-			313

Net 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.

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY(DEFICIENCY)

FOR THE PERIOD FROM JULY 22, 2005 (INCEPTION) THROUGH ~~MARCH 31~~ SEPTEMBER 30, 2009

(continued)

	Common stock to-be-issued						Common stock issued and outstanding				Additonal paid-in-capital		Deficit accumulated during the development stage			Total stockholders' equity (deficiency)
	Shares			Amount			Shares		Amount
Cancellation of common stock to-be-issued (unaudited)		(1,500,000	)		(330,000	)		-		-		-		-			(330,000	)
Cancellation of common stock to-be-issued		(1,500,000	)	$	(330,000	)		-	$	-	$	-	$	-		$	(330,000	)
Issuance of shares (unaudited)		(250,000	)		(25,000	)		6,749,999		675		66,825		-			42,500
Issuance of shares		(250,000	)		(25,000	)		20,849,999		2,085		113,615		-			90,700
Issuance of shares as repayment of amount due to officers (unaudited)		-			-			1,000,000		100		49,900		-			50,000
Issuance of shares as repayment of amount due to officers		-			-			1,000,000		100		49,900		-			50,000
Issuance of shares as repayment of amount due to stockholders (unaudited)		-			-			666,111		67		41,483		-			41,550
Issuance of shares as repayment of amount due to stockholders		-			-			666,111		67		41,483		-			41,550
Beneficial conversion of loan discount (unaudited)		-			-			-		-		22,500		-			22,500
Beneficial conversion of loan discount		-			-			-		-		22,500		-			22,500
Common stock issued for consulting services (unaudited)		-			-			31,092,600		3,109		591,908		-			595,017
Common stock issued for consulting services		-			-			38,436,000		3,843		697,038		-			700,881
Common stock to-be-issued (unaudited)		6,000,000			30,000			-		-		-		-			30,000
Issuance of options as compensation		-			-			-		-		1,492		-			1,492
Net loss (unaudited)		-			-			-		-		-		(1,064,297	)		(1,064,297	)
Common stock to-be-issued		500,000			2,500			-		-		-		-			2,500
Balance March 31, 2009		6,000,000		$	30,000			70,980,586	$	7,098	$	3,770,762	$	(4,531,259	)	$	(723,399	)
Net loss		-			-			-		-		-		(1,423,395	)		(1,423,395	)
Balance June 30, 2009		500,000			2,500			92,423,986		9,242		3,924,174		(4,890,357	)		(954,441	)
Issuance of shares (unaudited)		(500,000	)		(2,500	)		10,500,000		1,050		51,450		-			50,000
Common stock issued for consulting services (unaudited)		-			-			800,000		80		10,920		-			11,000
Net loss (unaudited)		-			-			-		-		-		(188,074	)		(188,074	)
Balance September 30, 2009		-		$	-			103,723,986	$	10,372	$	3,986,544	$	(5,078,431	)	$	(1,081,515	)

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~MARCH~~SEPTEMBER 3130, 2009 AND ~~MARCH~~SEPTEMBER 3130, 2008 AND FOR THE

~~CUMULATIVE~~PERIODS FROM JULY 22, 2005 (INCEPTION) THROUGH ~~MARCH~~SEPTEMBER 3130, 2009

(UNAUDITED)

							July 22, 2005
	Nine months			Nine months			(inception)
	Three months			Three months			(inception)
	ended			ended			through
	March 31,			March 31,			March 31,
	September 30,			September 30,			September 30,
	2009			2008			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1188,~~064,297~~074	)	$	(1458,~~668,243~~554	)	$	(45,~~531~~078,~~259~~431	)
Adjustments to reconcile net loss to net cash used in operating
activities:
Accretion of accrued royalties		6730,~~445~~555			1728,~~865~~509			98162,~~954~~227
Amortization of intangible asset - license		4516,~~924~~483			2113,~~738~~242			84119,~~003~~126
Common stock issued for consulting services		~~595~~11,~~017~~000			~~519~~351,~~687~~216			2,~~087~~204,~~421~~285
Issuance of stock options - employee		-			~~576,092~~-			~~814~~815,~~237~~729
Amortization of beneficial conversion discount		123,~~813~~125			-2,500			3140,~~563~~313
Changes in operating assets and liabilities
(Increase)/Decrease in:
Accounts receivable		-			(19,~~324~~416	)		-
Other receivables		-			7,000			-
Inventories		5,827			16,780			(10,133	)
Other current assets		(6,000	)		(10,900	)		(6,000	)
Inventories		52,344			(17,719	)		(35,613	)
Increase/(Decrease) in:
Accounts payable and accrued expenses		8146,~~464~~180			59(8,~~279~~327	)		~~331~~449,~~026~~600
Accrued royalties and licensing fees payable		(23,000	)		(60,000	)		(86,000	)
Accured royalties and licensing fee payable		(5,000	)		(12,500	)		(93,500	)
Deferred revenue		4957,~~800~~500			-			49157,~~800~~700
Net cash used in operating activities		(~~188~~22,~~490~~404	)		(~~574~~86,~~525~~550	)		(1,~~161~~233,~~868~~084	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Trademark		-			-			(325	)
Net cash used in investing activities		-			-			(325	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from private placement		-			-			126,445
Proceeds from sale of founders shares		-			-			10,000
Net proceeds from sale of stock and exercise of stock options		7250,~~500~~000			~~450,813~~-			~~566~~637,~~813~~513
Proceeds from notes payable		-			-			50,000
Repayment of notes payable		-			~~(25,000~~-	)		(25,000	)
Advances from officers		39,440			52,753			137,493
(Repayments)/advances from officers		(15,565	)		3,979			137,664
Advances from stockholders		14,005			89,698			189,318
(Repayments)/advances from stockholders		(1,000	)		27,150			197,818
Proceeds from convertible debt		~~60,000~~-			-50,000			110,000
Net cash provided by financing activities		185,945			568,264			1,165,069
Repayment of convertible debt		(7,500	)		-			(7,500	)
NET INCREASE/(DECREASE) IN CASH		(2,545	)		(6,261	)		2,876
Net cash provided by financing activities		25,935			81,129			1,236,940
CASH, beginning of period		5,421			10,918			-
NET INCREASE/(DECREASE) IN CASH		3,531			(5,421	)		3,531
CASH, end of period	$	2,876		$	4,657		$	2,876
CASH, beginning of period		-			5,421			-
CASH, end of period	$	3,531		$	-		$	3,531

Supplemental disclosures of cash flow information:

1) The Company ~~issued~~recorded ~~1,666,111 shares~~a liability of ~~common stock valued at~~ $91341,~~550~~803 asfor ~~repayment~~amounts ofowed ~~amounts~~for ~~due~~the tolicense ~~stockholders~~acquisition ~~and officers~~ as described in Note 64 for the three months ended September 30, 2008.

2) The Company ~~issued~~recorded ~~100~~accrued royalties of $604,~~000~~132, which represents the present ~~shares~~value of ~~common~~the ~~stock~~guaranteed ~~valued~~minimum atpayments ~~$7,000~~for asthe ~~repayment~~license ofacquisition ~~accounts~~as ~~payable~~described in Note 4 for the three months ended September 30, 2008.

3) The Company ~~recorded~~issued ~~a liability~~1,666,111 shares of common stock valued at $~~340~~91,~~217~~550 ~~for~~as repayment of amounts ~~owed~~due to stockholders and officers as adescribed ~~licensing~~in ~~fee~~Note 6 for the ~~license~~three ~~acquisition~~months asended ~~described~~September in30, ~~Note 4~~2008.

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

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

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - NATURE OF OPERATIONS ~~AND BASIS OF PRESENTATION~~

NATURE OF OPERATIONS

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

DEVELOPMENT STAGE COMPANY

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

BASIS OF PRESENTATION

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. In the Company’s opinion, the unaudited interim financial statements and accompanying notes reflect all adjustments, consisting of normal and recurring adjustments, that are necessary for a fair presentation of its financial position and operating results for the three ~~and nine~~ month ~~interim~~ interim periods ended ~~March~~September 3130, 2009 and 2008 and cumulative period from ~~inception~~ inception (July 22, 2005) to ~~March~~September 3130, 2009.

The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire fiscal year. This Form 10-Q should be read in conjunction with the audited financial statements and notes there to included in the Company’s Form 10-K as of June 30, ~~2008~~2009 and for the period commencing from inception (July 22, 2005) through June 30, ~~2008~~2009.

NOTE 2 - GOING CONCERN/MANAGEMENT’S PLAN

The accompanying unaudited interim financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has incurred a net loss since its inception totaling $45,~~531~~078,~~259~~431, has earned minimal revenues and has a working capital deficit of $~~768~~1,~~767~~100,087, as of ~~March~~September 3130, 2009. These matters raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include adjustments that might result from the outcome of this uncertainty. In order to generate revenues and provide the working capital needed to continue and expand operations, the Company’s management has committed to a plan for increasing retail distribution channels for its products and raising additional capital. There can be no assurances, however, that the Company will be able to obtain the necessary funding to finance their operations or grow revenue in sufficient amounts to fund their operations.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

DEVELOPMENT STAGE COMPANY

The Company is considered a development stage company as ~~defined by Statement of Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by Development Stage Enterprises,” as~~ it has no principal operations and minimal revenue. Operations from the Company’s inception through September ~~March 31~~30, 2009 were devoted primarily to strategic planning, raising capital and developing revenue-generating opportunities.

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

RECLASSIFICATION

Certain amounts on the financial statements at September 30, 2008 have been reclassified to conform to the current period presentation.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

The Company considers financial instruments with a maturity date of three months or less from the date of purchase to be cash equivalents. The Company had no cash equivalents at ~~March~~September 3130, 2009 and June 30, ~~2008~~2009.

ACCOUNTS ~~RECIEVABLE~~RECEIVABLE

The Company makes judgments about the collectibility of accounts receivable to be able to present them at their net realizable value on the balance sheet. Such judgments require careful analysis of the aging of customer accounts, consideration of why accounts have not been paid, and review of historical bad debt issues. From this analysis, the Company determines an estimated allowance for receivables that will ultimately become uncollectible. As of ~~March~~September 3130, 2009 and June 30, 2009, the Company had an allowance for bad debts of of $26,059 and $22,759 respectively.

INVENTORIES

The Company states inventories at the lower of cost or market. As of ~~March~~September 30, 312009 and June 30, 2009, inventories consisted of purchased finished goods, plus directly attributable acquisition costs. Cost of inventory is determined using the weighted average cost method. The Company assesses the need to establish inventory reserves for excess, obsolete or slow-moving inventory based on changes in customer demand, technology developments and other factors.

LONG-LIVED ASSETS AND OTHER INTANGIBLE ASSETS

The Company ~~accounts~~amortizes ~~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. There were no such impairment losses as of September 30, 2009 and June 30, 2009 respectively.

CONVERTIBLE DEBT

The Company accounts for its convertible debt inby ~~accordance~~requiring ~~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~~ beneficial conversion features present in its convertible securities to 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 inbased ~~accordance~~on ~~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.

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

DEFERRED REVENUE

The Company has entered into a four separate Master Distributorship ~~Agreement~~Agreements with a third-~~party~~ parties whereby the third-~~party~~parties will market and sell WaterPure branded machines to customers and resellers. ~~The~~These third-~~party~~parties ~~has~~have entered into a purchase ~~commitment~~ commitments for 12,~~000~~750 units and ~~has~~have deposited $50137,~~000~~500, which the Company will apply in $50 increments towards each WaterPure atmospheric water machine sold and delivered within twenty-four ~~month~~months of the execution of the agreement. The Company has recorded the deposit as deferred revenue, and recognizes the revenue as each machine is sold. The Company has sold 32 of these machines and recognized $400 in revenue for the three months ended September 30, 2009 and $1,200 in revenue for the year ended June 30, 2009.

SHIPPING & HANDLING COSTS

Outbound shipping and handling costs are included in cost of goods sold in the accompanying statements of operations. These transactions costs were $58 and $419 for the three months ended September 30, 2009 and 2008, respectively.

INCOME TAXES

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Differences between the financial statement and tax basis of assets, liabilities, and other transactions did not result in a provision for current or deferred income taxes for the periods from July 22, 2005 (inception) through ~~March~~September 3130, 2009.

CONCENTRATIONS OF CREDIT RISK

The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. The Company places its cash with a high credit quality institution. At ~~March~~September 3130, 2009, the Company’s cash balance on deposit did not exceed federal depository insurance limits. The Company routinely assesses the financial strengths of its customers and, as a result, believes that their accounts receivable, net of reserves, credit risk exposure is limited.

FAIR VALUE ~~MEASURMENT~~MEASUREMENT

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

NET LOSS PER COMMON SHARE

The Company presents basic ~~earnings (~~loss) per share and, if applicable, diluted earnings per share ~~pursuant to the provisions of SFAS No~~. ~~128, “Earnings per Share”.~~ Basic earnings (loss) per share are calculated by dividing net income or loss by the weighted average number of common shares outstanding during each period. The effect of computing the diluted income (loss) per share is antidilutive and as such, basic and diluted earnings (loss) per share are the same for the three month period ended September 30, 2009.

STOCK BASED COMPENSATION AND PAYMENTS

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued)

RECENT ACCOUNTING PRONOUNCEMENTS

~~There~~In June 2009, the Financial Accounting Standards Board (“FASB”), launched the FASB Accounting Standards Codification (“ASC”) as the single source of authoritative U.S. GAAP recognized by the FASB. The ASC reorganizes various U.S. GAAP pronouncements into accounting topics and displays them using a consistent structure. All existing accounting standards documents are superseded as nodescribed in Statement of Financial Accounting Standard (“SFAS”) No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. All of the contents of the ASC carry the same level of authority, effectively superseding SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, which identified and ranked the sources of accounting ~~pronouncements~~principles ~~not~~and ~~yet~~the ~~adopted~~framework for selecting the principles used in preparing financial statements in conformity with U.S. GAAP. Also included in the ASC are rules and interpretive releases of the SEC, under authority of federal securities laws that are ~~expected~~also tosources ~~have~~of aauthoritative U.S. GAAP for SEC ~~significant~~registrants. The ASC is effective for interim and annual periods ending after September 15, 2009. The adoption of the ASC as of July 1, 2009 will have no impact on our financial statements other than changing the ~~Company~~way specific accounting standards are referenced in our financial statements.

Effective July 1, 2009 the Company adopted Statement of Financial Accounting No. 157, Fair Value Measurements, (“SFAS No. 157”), which is now codified within ASC 820 Fair Value Measurements and Disclosures, for nonfinancial assets and liabilities that are measured at fair value on a non-recurring basis. Previous to July 1, 2009, SFAS No. 157 did not apply to such assets and liabilities. The adoption of SFAS No. 157 on July 1, 2009 for such assets and liabilities did not have an impact on our financial statements,

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS No. 165”), which is now codified within ASC 855 Subsequent Events. ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The adoption of this standard on July 1, 2009 required us to disclose the date through which we have evaluated subsequent events and whether that date is the date the financials were issued.

NOTE 4 – INTANGIBLE ASSETS - LICENSE

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

The following table summarizes the various components of the Everest license as of ~~March~~September 3130, 2009 and June 30, 2009:

	March 31,		June 30,
	September 30,		June 30,
	2009		~~2008~~2009
Amended value of license described above	$	1,094,864	$	1,094,864
Cost of license described above	$	1,094,864	$	1,094,864
Less: accumulated amortization		84119,~~003~~126		38102,~~079~~643
License, net	$	1975,~~010,861~~738	$	1992,~~056,785~~221

Total amortization for the ~~nine~~three months ended ~~March~~September 3130, 2009 and 2008 was $4516,~~924 and~~483 and $2113,~~738~~242, respectively.

Contingencies - Royalties

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

NOTE 5 – NOTES PAYABLE

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

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 4 – INTANGIBLE ASSETS – LICENSE (continued)

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 $802,929, which represents the present value of the minimum royalty payments using the effective discount rate.

The Company has accounted for the modifications of the licensing agreement as a troubled debt restructuring, and has reflected the net carrying amount of the modified debt consistent with the carrying amount of the original troubled debt.

NOTE 5 – NOTES PAYABLE

The Company has a note payable with an accredited investor which accrues interest at 12% per annum and was originally due November 21, 2007. On November 15, 2007, the terms of the note were extended for an additional six months. This note is currently in default.

NOTE 6 – ADVANCES FROM OFFICERS AND SHAREHOLDERS

Officers and stockholders of the Company have provided various short-term working capital advances. During the ~~nine~~three months ended ~~March~~September 3130, 2009, ~~short-term~~repayments ~~working~~to ~~capital advances from~~ officers and stockholders under ~~this~~these borrowing ~~arrangement~~ arrangements totaled $3915,~~440~~565 and $141,~~005~~000, respectively. During the ~~nine~~three months ended ~~March 31~~September 30, 2008, short-term working capital advances from officers and stockholders under this borrowing arrangement totaled $523,~~753~~979 and $8927,~~698~~150, respectively. The ~~Company~~ issued 666,111 shares of common stock as repayment for $41,550 of the amount due to stockholders and issued 1,000,000 shares of common stock as repayment for $50,000 of the amount due to officers during the nine months ended March 31, 2009. The Company does not intend to pay interest on the principal borrowed from officers and stockholders as the advances are intended to be short-term.

NOTE 7 – CONVERTIBLE DEBT

The Company entered into a Securities Purchase Agreement with accredited investors on May 21, 2007 for the issuance of an aggregate of $50,000 of convertible notes. The convertible notes accrue interest at 12% per annum and are due two years from the date of the note. The note holder has the option to convert any unpaid note principal to the Company’s common stock at a rate of $0.25 per share. InDuring ~~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. InDuring ~~accordance with EITF 98-5, during~~ the ~~nine~~year ~~months~~ ended ~~March~~June 3130, 2009, the Company recorded a debt discount of $15,000 on the debt, representing the intrinsic value of the beneficial conversion features based upon the difference between the fair value of the underlying common stock at the commitment date and the effective conversion price embedded in the debt. The Company determined the commitment date of the loans to be the date of the agreement.

The Company entered into a Securities Purchase Agreement with accredited investors on November 18, 2008 for the issuance of an aggregate of $10,000 of convertible notes. The convertible notes accrue interest at 12% per annum and are due one year from the date of the note. The note holder has the option to convert any unpaid note principal to the Company’s common stock at a rate of $0.005 per share. InDuring ~~accordance with EITF 98-5, during~~ the ~~nine~~year ~~months~~ ended ~~March~~ 31June 30, 2009, the Company recorded a debt discount of $7,500 on the debt, representing the intrinsic value of the beneficial conversion features based upon the difference between the fair value of the underlying common stock at the commitment date and the effective conversion price embedded in the debt. The Company determined the commitment date of the loans to be the date of the agreement.

NOTE 8 - STOCKHOLDERS’ EQUITY

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

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

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

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

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 8 - STOCKHOLDERS’ EQUITY

During the three months ended September 30, 2009, the Company sold 10,000,000 shares in private placements of its common stock for a total of $50,000. 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, 2009, the Company issued 800,000 shares of its common stock for consulting services totaling $11,000.

NOTE 9 – STOCK OPTIONS

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

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

During the year ended June 30, 2008, the Company issued 100,000 options to purchase its common shares 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 purchase its common shares to one of its executive officers. The exercise price was $0.10, which iswas a discount to the price of the Company’s common stock of $0.20 on the grant date. The options are immediately exercisable and expire five years from the grant date. The fair value of the options was estimated at the date of grant using the Black-Scholes option price model. The Company determined that the stock option compensation was $576,092 and was ~~recognized~~ recognized during the year ended June 30, 2008.

ToDuring ~~determine~~ the ~~fair~~year ~~value~~ended ofJune 30, 2009, the Company issued 100,000 options ~~granted~~to ~~during~~purchase ~~the~~its common ~~years~~shares ~~ended~~to ~~June~~one 30of its executive officers. The exercise price is $0.015, ~~2008~~which ~~and~~was ~~2007,~~the price of the Company’s ~~used~~common stock on the ~~following~~grant date. The ~~assumptions~~options inare ~~its~~immediately exercisable and expire five years from the grant date. The fair values of the options were estimated at the date of grant using the Black-Scholes option -price ~~calculation:~~model. The Company determined that the stock option compensation was $1,492 and was recognized during the year ended June 30, 2009.

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

To determine the fair value of the options granted, the Company used the following assumptions in its Black-Scholes option-price calculations:

Issue date	June 30, 2007			January 1, 2008			June 30, 2008			June 30, 2009
Options issued		500,000			3,000,000			100,000			100,000
Risk-free interest rate		5	%		3	%		3	%		3	%
Expected option life	5 years			5 years			5 years			5 years
Dividend yield		0	%		0	%		0	%		0	%
Volatility		120	%		157	%		194	%		290	%
Exercise price	$	0.55		$	0.10		$	0.07		$	0.015

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

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.

13The following is a summary of the status of stock option activity for the period from inception (July 22, 2005) through September 30, 2009:

	Options		Weighted Average Exercise Price
Outstanding as of July 22, 2005 (inception)		-	$	-
Granted		125,000		0.0025
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding as of June 30, 2006		125,000	$	0.0025
Granted		500,000		0.5500
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding as of June 30, 2007		625,000	$	0.4400
Granted		3,100,000		0.0990
Exercised		125,000		0.0025
Forfeited		-		-
Expired		-		-
Outstanding as of June 30, 2008		3,600,000	$	0.1610
Granted		100,000		.0150
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding as of June 30, 2009		3,700,000	$	0.1577
Granted		-		-
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding as of September 30, 2009		3,700,000	$	0.1577

125,000 options were exercised and $313 was received from the exercise of options for the year ended June 30, 2008.

No options were exercised and no funds were received from the exercise of options during the three-month period ended September 30, 2009 and 2008 respectively.

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 9 – STOCK OPTIONS (continued)

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

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

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

NOTE 10 - RELATED PARTY TRANSACTIONS

LEASE

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

DUE TO OFFICERS AND STOCKHOLDERS

During the ~~nine~~three-months ended ~~March~~September 3130, 2009 and September 30, 2008, the Company received advances, made repayments, and had amounts due to officers and stockholders as disclosed in Note 6.

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS - CONTINUED

NOTE 11 - INCOME TAXES

The Company ~~adopted~~recognizes 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~~The ~~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~~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~~as ~~No.~~of 48September ~~both on July 1~~30, ~~2007 (adoption) and on March 31,~~ 2009.

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

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

NOTE 12 – COMMITMENTS

The Company’s executive offices are located is located in Plymouth Meeting, PA. The rent for the office space is $500 a month, and the Company rents the space on a month-to-month basis.

In June 2007, the Company opened a regional operations center in Florida to accommodate administrative, sales and customer relations’ personnel. The Company entered into a month-to-month lease for $ 543 per month.

The Company owes Everest $430,000 to be paid over 33 months starting September 1, 2008, and 8% royalty payments with guarantee minimum payments as follows: $50,000 year one, $60,000 year two, $70,000 year three, $90,000 year four and $100,000 each year after.

NOTE 13 – SUBQUENT EVENTS

The Company has evaluated subsequent events through November 16, 2009, which is the date the accompanying financial statements were issued.

On October 1, 2009, the Company received a $40,000 deposit for the exclusive rights to sell the WaterPure Atmospheric Water Generators in the Country of Mexico.

On October 5, 2009, the Company received a $10,000 deposit for the exclusive rights to sell the WaterPure Atmospheric Water Generators in the Country of Mexico.

WATERPURE INTERNATIONAL, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 13 – SUBQUENT EVENTS (continued)

On October 22, 2009, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Mayim Tahor, LLC (“Mayim”) providing for the sale by the Company to Mayim of up to 100 shares of the Company’s series A convertible preferred stock (the “Series A Preferred Stock”) at a price of $2,500 per share of Series A Preferred Stock. Mayim purchased 30 shares of Series A Preferred Stock on October 22, 2009 for $75,000. The Company has the right to require Mayim to purchase up to an additional 70 shares of Series A Preferred Stock at any time at a price of $2,500 per share, with a maximum of 20 shares of Series A Preferred Stock per put notice from the Company to Mayim.

Each share of Series A Preferred Stock has a stated value of $2,500 (the “Stated Value”), is entitled to a cumulative dividend of six percent (6%) of the Stated Value per annum, payable semi-annually. In addition, each share of Series A Preferred Stock is entitled to receive a royalty payment of $0.16 for each atmospheric water generator sold by the Company.

Mayim may convert, at any time, shares of Series A Preferred Stock into the number of shares of common stock of the Company obtained by dividing the Stated Value by the Conversion Price then in effect. The conversion price is $0.01, subject to adjustment.

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 ofand ~~the~~manufacturer ~~WaterPure~~of Atmospheric ~~Water~~ ~~Generator~~Water Generators (“AWG”)~~, a branded product of ours~~. WeThough ~~are~~originally structured as a marketing entity, ~~however,~~ we have ~~are~~now ~~currently~~become ~~engaged~~a inmanufacturer ~~the~~of ~~design~~AWGs ~~and~~after ~~development~~licensing ofpatents from Everest ~~products~~Corp. ~~may~~and bedeveloping ~~involved~~our ~~with~~own ~~manufacturing~~new ~~products~~line inof ~~the~~AWGs ~~future.~~under Wethose ~~intend~~patents. toThis ~~introduce~~strategic ~~our~~decision ~~first~~has ~~manufactured~~led ~~licensed~~to ~~products~~sales influctuations ~~June~~due ~~2009.~~to Weallocation ~~intend~~of toresources ~~operate~~to inresearch ~~North America, South America~~ and ~~the~~development ~~Caribbean~~in ~~providing~~some ~~various versions~~ of our ~~devices,~~previous ~~which produce drinking water from ambient~~operating ~~air~~periods.

We are a ~~developing~~development stage company, ~~currently~~until ~~selling~~the ~~our~~sale of these new products ~~through~~lead ~~our~~to ~~distribution~~recognition ~~and~~of ~~marketing~~significant ~~programs,~~revenue. ~~which~~We ~~consists~~want ofto ~~placing~~be ~~our~~identified ~~product~~as inan ~~retail~~environmentally ~~establishments~~sustainable ~~and~~business. ~~through~~Clean ~~distributors.~~drinking Inwater ~~December~~is ~~2007,~~becoming wea ~~entered~~scarce ~~into~~commodity ~~two~~as ~~worldwide~~our ~~license~~population ~~agreements~~increases. ~~(amended August 4~~Additionally, ~~2008)~~it ~~with~~is ~~Everest Water~~our ~~Ltd.~~goal, ~~for~~to utilize the ~~manufacturing~~intellectual ~~and~~property ~~marketing~~from ~~rights~~Everest Corp. to ~~advanced~~become ~~models~~a ofleading ~~our~~worldwide ~~product.~~manufacturer ~~Our~~of ~~primary~~AWGs ~~focus~~based ~~will~~on bethe onquality ~~strengthening~~of ~~the~~our ~~defined~~machines ~~sales~~and ~~channels~~our choice of distributors and ~~supporting~~marketing ~~them~~channels. ~~with~~Our ~~meaningful~~future ~~marketing~~results ~~programs~~are tohighly dependent upon the ~~extent~~success ~~that~~of ~~funds are~~our ~~available.~~efforts Weto ~~have~~manufacture ~~sold~~and market our ~~first~~products ~~units~~and having the ability to attain and ~~have~~attract ~~generated~~qualified ~~minimal~~personnel ~~revenues~~and adequate ~~from~~working ~~operations~~capital.

~~We want~~ In toDecember be2007, ~~identified~~we asentered aninto ~~environmentally~~two ~~sustainable~~worldwide ~~business.~~license ~~Clean~~agreements ~~drinking~~with Everest ~~water~~Water isLtd. ~~becoming~~for athe ~~scarce~~manufacturing ~~commodity~~and asmarketing ~~our~~rights ~~population~~to ~~increases.~~advanced ~~Pollution~~models ~~from~~of ~~sewage,~~AWGs. ~~industry,~~One ~~agriculture~~license ~~and~~is ~~acid~~a ~~rain~~non-exclusive ~~has~~license ~~destroyed~~for ~~surface~~a stand-alone water ~~reservoirs~~ generator and ~~aquifers.~~the ~~Water~~second ~~generation~~license ~~treatment~~is ~~and~~an ~~filtration~~exclusive islicense ~~poised~~for toa mineral additive water begenerator anprocess ~~important~~that ~~humanitarian~~will ~~industry~~permit asthe weaddition ~~learn~~of ~~more~~organic ~~about~~minerals, ~~global~~flavors and ~~warming~~other additives to the water produced by the AWGs.

~~Our~~We ~~product~~previously ~~line~~purchased ~~consists~~our ofproducts ~~two~~from ~~AWGs~~a ~~suitable~~manufacturer ~~for~~in ~~home~~South ~~and~~Korea ~~small~~under ~~office use and for~~an ~~higher~~Original ~~volume~~Equipment ~~office~~Manufacturer ~~or commercial use~~arrangement. ~~In December 2007~~However, we ~~entered~~have ~~into~~chosen ~~two~~to ~~worldwide~~discontinue ~~license~~our ~~agreements~~supply relationship with ~~Everest~~the ~~Water~~Korean ~~Ltd.~~manufacturer, ~~for~~but ~~the~~we ~~manufacturing and~~may ~~marketing~~reestablish ~~rights~~the torelationship ~~advanced~~at ~~models~~any ~~of AWGs~~time. Currently, ~~One~~we ~~license is a non-exclusive~~are ~~license~~selling ~~for~~ a ~~stand-alone~~unit ~~water generator and the second license is an exclusive license for a mineral additive water generator process~~ that ~~will~~we ~~permit~~are ~~the addition~~manufacturing ofourselves ~~organic~~in ~~minerals, flavors and other additives to the water produced by the machine.~~Florida

WeCurrently ~~previously~~we ~~purchased~~have focused on completion of our ~~products~~final ~~from~~production amodel ~~manufacturer~~of inour ~~South~~new ~~Korea~~AWG, ~~under~~the WaterCycletm. anWe ~~Original~~have ~~Equipment~~leased ~~Manufacturer~~a ~~arrangement~~1,000 sq. ~~However~~ft, asfacility ain ~~result~~Margate, ofFlorida athat ~~lack~~is ofin close ~~financing~~proximity to ~~purchase~~our ~~AWGs~~supplier ~~and~~of ~~uncertainty~~sheet ~~regarding~~metal used to build the ~~manufacturer’s~~new ~~ability~~units. Our efforts to ~~deliver~~market inthe ~~accordance~~units ~~with~~after ~~orders,~~production we have ~~chosen~~led ~~not~~ to ~~continue~~the ~~our~~signing ~~supply~~of ~~relationship~~contracts with ~~the~~distributors ~~Korean~~in ~~manufacturer~~Florida, ~~but~~France, weUnited ~~may~~Arab ~~reestablish~~Emirates, the Cayman ~~relationship~~Islands atand ~~any~~parts ~~time~~of Mexico. ~~Currently~~Also, werights ~~are~~of ~~selling~~first ~~the~~refusal ~~remaining~~have ~~inventory~~been ~~from~~granted for ~~our~~Illinois, ~~original~~Venezuela ~~purchases from the Korean manufacturer~~ and ~~purchasing additional AWGs from a supplier in North Carolina on an as-needed basis~~Colombia.

16We have been engaged in the development of a new AWG “the WatercycleTM”, in connection with the patent license we acquired from Everest Water Ltd. This new device utilizes ozone to eliminate microorganisms, increases water producing ability, has a more attractive appearance and uses fewer parts than the machines we are currently marketing. One model of the new AWG will also include an optional feature that will permit the user to add flavors and natural herbal additives, such as green tea. We have been marketing three models of AWGs from our existing inventory as well as new purchases from Liquid Air-Florida and have generated minimal revenues from operations.

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

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

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

Results of Operations

For the Period from July 22, 2005 (Inception) through ~~March~~September 3130, 2009

Since we were formed on July 22, 2005, we have earned approximately $~~163~~208,000 in revenues and have incurred a cumulative net loss since our inception of approximately $45,~~531~~072,000 through ~~March~~September 3130, 2009. Operations from inception through ~~March~~September 3130, 2009 were devoted primarily to strategic planning, raising capital and developing revenue-generating opportunities.

Liquidity and Capital Resources

AsTo ofdate, ~~March~~we ~~31,~~have ~~2009,~~generated weminimal revenues and have aincurred ~~working~~operating ~~capital~~losses ~~deficit~~in ofevery quarter. ~~$768~~We are a development stage company,~~767,~~ have ~~earned minimal~~not generated significant revenues from operations and have incurred asignificant ~~net~~losses ~~loss~~since ~~from~~inception. These factors among others raise substantial doubt about our ~~inception~~ability ~~through~~to ~~March~~continue ~~31,~~as ~~2009~~a ~~totaling~~going ~~$4,531,259~~concern.

WeAs ~~have financed our losses through the sale~~ of ~~our common stock, issuance of common~~ ~~stock~~September ~~for services in lieu of cash~~30, ~~and loans from officers and stockholders. During the nine months ended March 31,~~ 2009, we ~~received~~had ~~the~~a ~~following~~working capital ~~infusions:~~ ~~$72,500~~deficiency ~~from the sale~~ of ~~12,499,999 shares of our common stock and loans from officers and stockholders totaling~~ $391,~~440 and $14~~100,~~005, respectively~~087. In ~~addition,~~For ~~during~~ the three ~~nine~~ months ended ~~March~~September 3130, 2009, inwe ~~lieu~~had ofnet cash ~~payments,~~ weoutflow ~~issued~~from ~~31,092,600~~operating activities ~~shares~~ of ~~common stock valued at~~ $~~595~~22,~~017 for services rendered~~404. We ~~issued~~Cash ~~1,000,000~~provided ~~and~~by ~~666,111~~financing ~~shares~~activities oftotaled ~~our common stock to repay~~ $5025,~~000~~935 ~~and $41,550 in advances from officers and~~for ~~stockholders, respectively. We do not intend to pay interest on~~ the ~~advances borrowed~~three ~~from~~months ~~officers~~ended ~~and~~September ~~stockholders~~30, ~~as the advances are intended to be short-term~~2009.

OnWe ~~July~~do not ~~30,~~have ~~2008,~~enough wecapital ~~entered~~to ~~into~~support aoperations ~~Securities~~for ~~Purchase~~the ~~Agreement~~next ~~with~~12 ~~accredited~~months. We anticipate ~~investors~~we ~~for~~will ~~the~~need ~~issuance~~approximately of$2 anmillion, ~~aggregate~~consisting of approximately $50900,000 offor manufacturing, ~~convertible~~$200,000 ~~notes.~~for ~~The~~sales and marketing and $600,000 for general and ~~convertible~~administrative ~~notes~~expenses ~~accrue~~and ~~interest~~working atcapital. 8%An ~~per~~additional ~~annum~~$300,000 would be utilized for the production and execution of our marketing support program. We are ~~due~~currently ~~one~~seeking ~~year~~joint ~~from~~venture ~~the~~partners and equity financing to fund these ~~date~~expenditures, ofalthough ~~the~~we ~~convertible~~do ~~notes~~not have any contracts or commitments for either at this time. ~~The~~ ~~note~~We ~~holders~~will have ~~the~~to ~~option~~raise additional funds to continue manufacturing our ~~convert~~AWGs ~~any~~and, ~~unpaid~~while ~~note~~we ~~principal~~have been successful in ~~shares~~doing ofso ~~our~~in ~~common~~the ~~stock~~past, atthere acan ~~30%~~be no ~~discount~~assurance that we will be able to do so in the ~~average~~future. ~~five~~Our ~~day~~continuation ~~stock~~as ~~price~~a going ~~prior~~concern for a period longer than the current fiscal year is dependent upon our ability to ~~conversion~~obtain necessary additional funds to continue operations and the attainment of profitable operations.

OnBy ~~November~~adjusting ~~18,~~our ~~2008,~~operations weto ~~entered~~the ~~into~~level aof ~~Securities~~capitalization, ~~Purchase~~and ~~Agreement~~through ~~with~~short term ~~accredited~~loans ~~investors~~from ~~for~~officers ~~the~~we ~~issuance~~believe ofwe anwill ~~aggregate~~have ofsufficient ~~$10,000~~capital ofresources ~~convertible~~to meet ~~notes.~~projected ~~The~~cash ~~convertible~~flow ~~notes~~deficits ~~accrue~~in ~~interest~~the atnear ~~12%~~term. ~~per~~However, ~~annum~~if ~~and~~during ~~are~~that ~~due one~~period, ~~year~~or ~~from~~thereafter, ~~the~~we ~~date~~are ofnot ~~the~~successful ~~convertible~~in ~~notes. The~~generating ~~note~~sufficient ~~holders~~liquidity ~~have~~from ~~the~~operations ~~option~~or toin ~~convert~~raising ~~any~~sufficient ~~unpaid~~capital ~~note~~resources, ~~principal~~on toterms ~~shares~~acceptable ofto us, ~~our~~this ~~common~~could ~~stock~~have at a ~~price~~material adverse effect on our business, results of operations, ~~$.005~~liquidity ~~per~~and ~~share~~financial condition.

We presently do not have ~~enough~~any ~~capital~~available tocredit, ~~support~~bank ~~operations~~financing ~~for~~or ~~the~~other ~~next~~external sources 12of ~~months~~liquidity. WeDue ~~anticipate we~~to ~~will~~our ~~need~~brief ~~approximately~~history $2and ~~million,~~historical ~~consisting~~operating oflosses, our ~~approximately~~operations ~~$900,000~~have ~~for manufacturing,~~not ~~$200,000~~been ~~for~~a ~~sales~~source ~~and~~of ~~marketing~~liquidity. ~~and~~We ~~$600,000~~will ~~for~~need ~~general~~to ~~and~~obtain ~~administrative~~additional ~~expenses~~capital in order to expand operations and ~~working~~become ~~capital~~profitable. AnIn ~~additional~~order to ~~$300~~obtain capital,~~000~~ ~~would~~we ~~be utilized~~may ~~for~~need ~~the~~to ~~production~~sell ~~and~~additional ~~execution~~shares of our ~~marketing~~common ~~support~~stock ~~program. We~~or ~~currently~~borrow dofunds ~~not~~from ~~have~~private ~~any~~lenders. ~~commitments~~There ~~for~~can ~~additional~~be ~~capital, and have~~ no ~~assurances~~ assurance that ~~capital~~we will be successful ~~available~~in onobtaining ~~terms~~additional ~~acceptable to us, or at all~~funding.

17We will still need additional capital in order to continue operations until we are able to achieve positive operating cash flow. Additional capital is being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Our independent registered public accounting firm has issued a going concern paragraph in their Report of Independent Registered Public Accounting Firm on our consolidated financial statements for the fiscal year ended June 30, 2008 that states there is substantial doubt about our ability to continue as a going concern. The conditions that led to the going concern continue to exist as of March 31, 2009. Our ability to continue as a going concern is dependent on our ability to access capital through debt and equity funding as well as market and sell our various products.18

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, 2009, we received the following capital infusions: $50,000 from the sale of 10,000,000 shares of our common stock and loans from officers and stockholders totaling $4,433 and $0, respectively. In addition, during the three months ended September 30, 2009, in lieu of cash payments, we issued 800,000 shares of common stock valued at $11,000 for services rendered. We do not intend to pay interest on the advances borrowed from officers and stockholders as the advances are intended to be short-term.

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

Critical Accounting Policies

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

Revenue Recognition

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

Accounts Receivable

We must make judgments about the collectibility of our accounts receivable to be able to present them at their net realizable value on the balance sheet. To do this, we carefully analyze the aging of our customer accounts, try to understand why accounts have not been paid, and review historical bad debt problems. From this analysis, we record an estimated allowance for receivables that we believe will ultimately become uncollectible. As of ~~March 31~~September 30, 2009, we had an allowance for bad debts of $2226,~~759~~059. We actively manage our accounts receivable to minimize our credit risks and believe that our current allowance for doubtful accounts is fairly stated.

Inventory Valuation

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

Recent Accounting Pronouncements

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

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

~~ITEM 4T - CONTROLS AND PROCEDURES~~19

ITEM 4. CONTROLS AND PROCEDURES

a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of ~~March~~September 3130, 2009. In designing and evaluating the disclosure controls ~~and~~ and procedures, management recognizes that any controls and procedures, no ~~matter~~ 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.

18Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as a result of the material weaknesses described below, our disclosure controls and procedures are not designed at a reasonable assurance level and are ineffective 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 not accumulated nor communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:

~~Based on our~~a) ~~evaluation,~~We ~~our~~did ~~Chief~~not ~~Executive~~have ~~Officer~~sufficient ~~and~~personnel ~~Chief~~in ~~Financial Officer concluded that~~ our ~~disclosure~~accounting ~~controls~~ and ~~procedures~~financial ~~are~~reporting ~~designed~~functions. atAs a ~~reasonable~~ ~~assurance~~result, ~~level~~we ~~and~~were ~~are~~not ~~effective~~able to ~~provide~~achieve ~~reasonable~~adequate ~~assurance that~~segregation ~~information~~of weduties ~~are~~and ~~required~~were tonot ~~disclose~~able into ~~reports~~provide ~~that~~for weadequate ~~file~~reviewing orof ~~submit under~~ the ~~Exchange~~financial ~~Act~~statements. isThis ~~recorded,~~control ~~processed~~deficiency, ~~summarized~~which ~~and~~is ~~reported~~pervasive ~~within the~~in ~~time~~nature, ~~periods~~results ~~specified~~ in ~~Securities~~a ~~and~~reasonable ~~Exchange~~possibility ~~Commission rules and forms, and~~ that ~~such~~material ~~information~~misstatements isof ~~accumulated~~the ~~and~~financial ~~communicated~~statements towill ~~our management,~~not ~~including~~be ~~our~~prevented ~~Chief~~or ~~Executive~~detected ~~Officer~~on ~~and~~a ~~Chief Financial Officer, as appropriate, to allow~~ timely ~~decisions regarding required disclosure.~~basis;

Ab) ~~control system,~~We nodid ~~matter~~not ~~how~~maintain ~~well~~sufficient ~~conceived~~personnel ~~and~~with ~~operated,~~an ~~can~~appropriate ~~provide~~level ~~only~~of ~~reasonable~~technical accounting knowledge, ~~not~~ ~~absolute~~experience, ~~assurance~~and ~~that~~training in the ~~objectives~~application of ~~the control system are met~~U. ~~Further,~~S. ~~the~~GAAP ~~design~~commensurate ofwith aour ~~control~~complexity ~~system~~and ~~must~~our ~~reflect~~financial ~~the~~accounting ~~fact that there are resource constraints,~~ and ~~the~~reporting ~~benefits of controls must be considered relative to their costs~~requirements. ~~Because~~This ofcontrol ~~the~~deficiency ~~inherent~~is ~~limitations~~pervasive in ~~all~~nature. ~~control systems~~Further, ~~no evaluation~~there ofis ~~controls~~a ~~can~~reasonable ~~provide~~possibility ~~absolute assurance~~ that ~~all~~material ~~control~~misstatements ~~issues and~~of ~~instances~~the offinancial ~~fraud,~~statements ifincluding ~~any,~~disclosures ~~within~~will ~~our~~not ~~company~~be ~~have~~prevented ~~been~~or detected. ~~Because of~~on ~~the~~a ~~inherent~~timely ~~limitations~~basis inas a ~~cost-effective~~result; ~~control system, misstatements due to error or fraud may occur~~ and ~~not be detected.~~

c) We did not document or test our key controls over financial reporting in accordance with Section 404 of the Sarbanes Oxley Act of 2002. As a result, we cannot provide proper recording of the framework for our internal controls nor the results of such controls. There is a reasonable possibility that material misstatements of the financial statements including disclosures will not be prevented or detected on a timely basis without the ability to determine if our testing was properly conducted.

We are committed to improving our financial organization. As part of this commitment, we will create a segregation of duties consistent with control objectives and will look to increase our personnel resources and technical accounting expertise within the accounting function by the end of fiscal 2010 to resolve non-routine or complex accounting matters. In addition, when funds are available to the Company, which we expect to occur by the end of fiscal 2010, we will take the following action to enhance our internal controls: Hiring additional knowledgeable personnel with technical accounting expertise to further support the current accounting personnel at the Company, which management estimates will cost approximately $75,000 per annum. We will engage outside consultants in the future as necessary in order to ensure proper treatment of non-routine or complex accounting matters. In addition, management is working to establish written procedures to document and test the key controls over financial reporting in accordance with Section 404 of the Sarbanes Oxley Act of 2002.

Management believes that hiring additional knowledgeable personnel with technical accounting expertise will remedy the following material weaknesses: (A) lack of sufficient personnel in our accounting and financial reporting functions to achieve adequate segregation of duties; and (B) insufficient personnel with an appropriate level of technical accounting knowledge, experience, and training in the application of US GAAP commensurate with our complexity and our financial accounting and reporting requirements.

Management believes that the hiring of additional personnel who have the technical expertise and knowledge with the non-routine or technical issues we have encountered in the past will result in both proper recording of these transactions and a much more knowledgeable finance department as a whole. Due to the fact that our accounting staff consists of a Chief Financial Officer and an accounting clerk, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turnover issues within the department occur. We believe this will greatly decrease any control and procedure issues we may encounter in the future.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

(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.

WeThere ~~determined~~were onno ~~February~~changes ~~13,~~in ~~2009~~our ~~that~~internal acontrol ~~restatement~~over ~~of our~~ financial ~~statements for~~reporting ~~the~~identified ~~quarter ended September 30, 2008 was necessary due to certain clerical~~in ~~errors.~~connection ~~The~~with ~~restatement~~the ~~was~~evaluation required toby ~~properly~~paragraph ~~reflect~~(d) ~~our~~of ~~financial~~Rule ~~results for~~13a-15 ~~certain~~or ~~accounting related to accrued royalties and licensing fees. The~~Rule ~~amended~~15d-15 ~~quarterly~~that ~~report~~materially onaffected, ~~Form~~or ~~10-Q/A~~is ~~was~~reasonably ~~filed~~likely ~~with~~to ~~the~~materially ~~Securities and~~affect, ~~Exchange~~our ~~Commission~~internal oncontrol ~~February~~over ~~20,~~financial ~~2009~~reporting.

We believe that the issues surrounding the restatement of the 10-Q for the quarter ended September 30, 2008, mainly the internal controls related to the financial closing, review, and analysis process has been addressed and we have taken additional steps to avoid the reoccurrence of this condition by instituting a policy requiring the Chief Financial Officer, at the end of each quarter, to review our current licensing agreements to ensure that all royalty and licensing fees have been properly recorded and that appropriate adjustments to previously accrued royalties and licensing fees are recorded, if necessary. We believe that these additional efforts taken by management to strengthen our internal controls are currently effective.20

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 1A. Risk Factors

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

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

During the ~~nine~~three months ended ~~March~~September 3130, 2009, we sold 1210,~~499~~000,~~999~~000 shares of our ~~common~~ common stock to accredited investors for aggregate proceeds of $7250,~~500~~000.

During the ~~nine~~three months ended ~~March~~September 3130, 2009, in lieu of cash payments, we issued 31800,~~092,600~~000 shares of common stock valued at approximately $~~595~~11,~~017~~000 for services rendered.

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

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

Item 3. Defaults Upon Senior Securities

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

We are currently is in default on a $50,000 note, which was originally due May 25, 2009 and amended to July 1, 2009.

We are currently is in default on a $50,000 note, which was due July 30, 2009.

We are currently is in default on a $15,000 note, which was due August 15, 2009.

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

None.

Item 5. Other Information.

None.

Item 6. Exhibits

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

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

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

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SIGNATURES

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

WATERPURE INTERNATIONAL, INC.

Date: May 19, 2009	By: /s/ PAUL S. LIPSCHUTZ
Date: November 16, 2009	By: /s/ PAUL S. LIPSCHUTZ
	Paul S. Lipschutz
	President (Principal Executive Officer)
Date: May 19, 2009	By: /s/ ROBERT F. ORR
Date: November 16, 2009	By: /s/ ROBERT F. ORR
	Robert F. Orr
	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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