UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~

~~_________________~~SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~_________________~~☒ Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act Of 1934

~~X QUARTERLY REPORT~~For ~~PURSUANT~~the TOquarterly ~~SECTION~~period ended 13December OR31, ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~2011

~~For~~☐ Transition Report Under Section 13 or 15(d) of the ~~quarterly~~Securities ~~period~~Exchange ~~ended: December~~Act ~~31,~~Of ~~2010~~1934

orFor the transition period from ______________ to ______________

~~TRANSITION REPORT~~Commission ~~PURSUANT~~File ~~TO SECTION 13 OR 15(d)~~Number: ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~000-49955

For the transition period from: _____________ to _____________

_________________

WATAIR INC.

(formerly Wataire International , Inc.)

(Exact name of registrant as specified in its charter)

_________________

Washington

91-2060082

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

Washington	000-49955	91-2060082
(State or Other Jurisdiction	(Commission	(I.R.S. Employer
of Incorporation or Organization)	File Number)	Identification No.)

#134-9663 Santa Monica Blvd.,

~~#134-9663 Santa Monica Blvd.,~~ Beverly Hills, CA ~~90210~~ ~~(Address of Principal Executive Offices) (Zip Code)~~90210

~~877-602-8985~~ (~~Registrant’s~~Address ~~telephone~~of ~~number~~principal executive offices, including ~~area~~Zip ~~code~~Code)

~~N/A (Former name or former address and former fiscal year, if changed since last report)~~877-602-8985

~~_________________~~(Issuer’s telephone number, including area code)

~~Indicate~~Not 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 applicable

~~Indicate~~(Former byname ~~check~~or ~~mark whether~~former ~~the~~address ~~registrant has submitted electronically and posted on its corporate Web site,~~ if ~~any,~~changed ~~every~~since ~~Interactive~~last ~~Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter~~report) ~~during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No~~

~~Indicate~~Securities byregistered ~~check~~pursuant ~~mark~~to ~~whether~~Section ~~the~~12(b) ~~registrant~~of isthe ~~a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.~~Act:

~~Large~~Title ~~accelerated~~of ~~filer~~each ~~Accelerated~~class ~~filer~~Trading ~~Non-accelerated~~Symbol(s) ~~filer~~Name ~~Smaller~~of ~~reporting~~each ~~company~~exchange Xon which registered None N/A N/A

Indicate by check ~~mark~~ mark whether the registrant is(1) ahas ~~shell~~filed ~~company~~all ~~(as~~reports ~~defined~~required into ~~Rule~~be ~~12b-2~~filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 ~~NO X~~ ☒ No ☐

~~APPLICABLE~~Indicate ~~ONLY~~by TOcheck mark ~~CORPORATE~~whether ~~ISSUERS~~the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the ~~number~~registrant ofis ~~shares outstanding~~a oflarge ~~each~~accelerated offiler, ~~the~~an ~~issuer’s~~accelerated ~~classes~~filer, ofa ~~common~~non-accelerated ~~stock~~filer, asa ofsmaller reporting company or an emerging growth company. See the ~~latest~~definitions ~~practicable~~of ~~date:~~“large ~~129~~accelerated filer,~~716,886~~” ~~shares~~“accelerated offiler,” ~~$0.0001~~“non-accelerated ~~par~~filer,” ~~value~~“smaller ~~common~~reporting ~~stock~~company” ~~issued~~and as“emerging growth company” in Rule 12b-2 of ~~May 15,~~the ~~2011~~Exchange Act.

1Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

~~WATAIR~~If ~~INC~~an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

~~FORM~~Indicate 10by check mark whether the registrant is a shell company (as defined in Rule 12b-Q2 of the Exchange Act). Yes ☐ No ☒

~~For~~State the ~~Period~~number ~~Ended~~of shares ~~September~~outstanding 30of each of the issuer’s classes of common equity, ~~2010~~as of the latest practicable date: 129,716,886 shares of common stock as of May 15, 2011.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements	F-1
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operation	4
Item 3	Quantitative and Qualitative Disclosures About Market Risk	6
Item 4	Controls and Procedures	6

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	7
Item 1A	Risk Factors	7
Item 2	Unregistered Sales of equity Securities and Use of Proceeds	7
Item 3	Defaults Upon Senior Securities	7
Item 4	Mine Safety Disclosures	7
Item 5	Other Information	7
Item 6	Exhibits	8
Item 7	Signatures	9

Item 1. Financial Statements. 3-14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 15-17

Item 3. Quantitative and Qualitative Disclosures About Market Risk. 17

Item 4. Controls and Procedures. 17

PART II — OTHER INFORMATION

Item 1. Legal Proceedings. 18

Item 1A. Risk Factors. 18-21

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 22

Item 3. Defaults Upon Senior Securities. 22

Item 4. Submission of Matters to a Vote of Security Holders. 22

Item 5. Other Information. 22

Item 6. Exhibits and Certifications. 23

~~WATAIR~~Cautionary Note ~~INC.~~Regarding Forward Looking Statements

~~(formerly~~This ~~Wataire~~quarterly ~~International~~report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” ~~Inc~~“expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue, “and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements.) These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements.

(AImportant ~~Development~~factors ~~Stage~~that may ~~Company)~~cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:

~~Consolidated~~● ~~Balance~~risk ~~Sheets~~that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures; ● risk that we fail to meet the requirements of the agreements under which we acquired our business interests, including any cash payments to the business operations, which could result in the loss of our right to continue to operate or develop the specific businesses described in the agreements; ● risk that we will be unable to secure additional financing in the near future in order to commence and sustain our planned development and growth plans; ● risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations; ● risks and uncertainties relating to the various industries and operations we are currently engaged in; ● results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future growth, development or expansion will not be consistent with our expectations; ● risks related to the inherent uncertainty of business operations including profit, cost of goods, production costs and cost estimates and the potential for unexpected costs and expenses; ● risks related to commodity price fluctuations; ● the uncertainty of profitability based upon our history of losses; ● risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned development projects; ● risks related to environmental regulation and liability; ● risks related to tax assessments; ● other risks and uncertainties related to our prospects, properties and business strategy.

	December 31,			March 31,
	2010			2010
	(Unaudited)
ASSETS
Current Assets
Cash	$	43		$	57
Accounts receivable		1,167			9,000
Prepaid expenses		-			456
Sales deposit		-			10,000
Advance on marketing agreements		-			250,000
Advance on Inventory		-			-
Inventory		352,946			249,506
Total Current Assets		354,156			519,019
Capital assets		1			1
Patents and trademarks		36,488			31,434
Acquisitions of intangible assets		2,547,161			2,546,062
Total Assets	$	2,937,806		$	3,096,516
LIABILITIES
Current Liabilities
Accounts payable	$	151,175		$	472,896
Provision and accrued liabilities		507,500			9,255
Advances payable		25,000			—
Due to related parties		2,308			84,140
Deferred revenue		100,776			154,924
Total Current Liabilities		786,759			721,215
Derivative liability		—			197,158
Convertible Debentures		128,000			90,888
Convertible debenture, net		—			33,403
Total Liabilities		914,759			1,042,664
STOCKHOLDERS’ EQUITY
Preferred shares, $0.0001 par value, redeemable at $0.005,
20,000,000 shares authorized; 27,501 shares issued and outstanding		3			3
Common shares, $0.0001 par value, 500,000,000 shares authorized,
129,716,886 and 98,710,123 shares issued and outstanding at
December 30 and March 31, 2010 respectively		12,972			9,871
Additional paid-in capital		13,452,313			13,145,346
Deferred stock-based compensation		—			(50,667	)
Deficit accumulated during the development stage		(11,442,241	)		(11,050,701	)
Total Equity		2,023,047			2,053,852
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,937,806		$	3,096,516

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any of the forward-looking statements to conform these statements to actual results, whether as a result of new information, future events or otherwise.

~~The~~As ~~accompanying~~used ~~notes~~in ~~are~~this anquarterly report, ~~integral~~“Watair ~~part of~~Inc,” the ~~financial~~“Company,” ~~statements~~“we,” “us,” or “our” refer to Watair Inc formerly Wataire International Inc., unless otherwise indicated.

WATAIR INC.

(formerly Wataire International , Inc.)

(ADECEMBER ~~Development~~31, ~~Stage Company)~~2011

~~Consolidated~~FORM ~~Income Statements~~10-Q

~~(Unaudited)~~INDEX

														August 17, 2000
	Page
		For the Three Months Ended						For the Nine Months Ended						(Inception)
PART I- FINANCIAL INFORMATION	F-1
		December 31,						December 31,						to December 31,
ITEM 1. Financial Statements	F-1
		2010			2009			2010			2009			2010
Consolidated Balance Sheets as of December 31, 2011 (Unaudited) and March 31, 2011	F-2
Sales		$	227,269		$	—		$	230,591		$	—		$	733,693
Consolidated Statements of Operations for the Nine months ended December 31, 2011 and 2010 (Unaudited)	F-3
Cost of sales			151,570			—			167,811			—			562,103
Consolidated Statements of Stockholders’ Deficiency for the Nine months ended December 31, 2011 and 2010 (Unaudited)	F-4
Gross margin			75,699			—			62,780			—			171,590
Consolidated Statements of Cash Flows for the Nine months ended December 31, 2011 and 2010 (Unaudited)	F-5
Other income Expenses
Notes to Consolidated Financial Statements (Unaudited)	F-6
Advances written off			—			—			—			—			234,542
Amortization			—			77			—			231			71,049
Amortization of notes discount			-			28,505			(28,505	)		28,505			—
Bad debt written off			—			—			—			—			2,800
Donated services			—			—			—			—			11,250
Foreign exchange (gain)/loss			—			—			—			—			(42,356	)
General and administrative			24,919			38,176			64,764			64,236			957,626
Incorporation costs			—			—			—			—			2,005
Management fees			45,000			45,000			135,000			135,000			916,883
Marketing and promotion			217,591			19,500			243,591			32,500			462,308
Professional fees			748			36,742			33,815			94,199			537,033
Research & Development			5,655			—			5,655			—			207,798
Settlement of accounts payable			—			—			—			—			(3,250	)
Stock-based compensation			—			94,242			—			94,242			8,154,292
Total Expenses			293,913			262,242			454,320			448,913			11,511,980
Loss from operation			(218,214	)		(262,242	)		(391,540	)		(448,913	)		(11,340,390	)
Other income			—			—			—			—			9,500
Loss from continuing operations			(218,214	)		(262,242	)		(391,540	)		(448,913	)		(11,330,890	)
Loss from discontinued operations			—			3,640			—			3,640			(111,351	)
Net loss		$	(218,214	)	$	(258,602	)	$	(391,540	)	$	(445,273	)	$	(11,442,241	)
Net loss per share, basic and diluted			(0.00	)		(0.00	)		(0.00	)		(0.00	)
Weighted average shares outstanding
Basic and diluted			129,717,886			96,231,862			129,717,886			93,225,970

~~The accompanying notes are an integral part of the financial statements~~F-1

4PART I- FINANCIAL INFORMATION

~~WATAIR~~ITEM ~~INC~~1. FINANCIAL STATEMENTS

~~(formerly~~WATAIR ~~Wataire International, Inc.)~~INC

(Aformerly ~~Development~~Wataire ~~Stage~~International ~~Company~~, Inc.)

~~Consolidated~~CONSOLIDATED ~~Cash~~BALANCE ~~Flow Statements~~SHEETS

December 31, 2011 (~~Unaudited~~unaudited) and March 31, 2011

							August 17, 2000
	December 31, 2011			March 31, 2011
	For the nine months ended						(Inception) to
	(Unaudited)			(Audited)
	December 31,			December 31,			Dec 31,
ASSETS
	2010			2009			2010
CURRENT ASSETS
Operating Activities
Cash	$	523		$	87
Loss from continuing operations	$	(391,540	)	$	(445,273	)	$	(11,442,241	)
Inventory		39,129			42,500
Adjustments to reconcile loss to cash used
Total current assets		39,652			42,587
in operating activities :
OTHER ASSETS
Amortization		—			231			71,049
Capital assets		1,098			1,098
Amortization of notes discounts		(28,505	)		28,505			—
Patents and trademarks		-			40,082
Donated services		—			—			11,250
Acquisitions of intangible assets		2,164,152			2,546,062
Website development costs written off		—			—			8,700
Total assets	$	2,204,902		$	2,629,829
Shares issued for services		—			—			454,070
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Stock-based compensation		50,667			157,575			8,154,293
CURRENT LIABILITIES
Advances written off		—			—			199,542
Accounts payable	$	121,599		$	152,450
Change in non-cash working capital items :
Provision and accrued liabilities		300,000			540,000
Accounts receivable		7,833			—			(1,167)
Notes payable		158,650			128,000
Prepaid expenses and retainers		10,456			8,361			-
Convertible notes payable		125,000			-
Deferred revenue		(54,148	)		(28,143	)		100,776
Total current liabilities and total liabilities		705,249			820,450
Advance on marketing agreements		250,000			—			-
STOCKHOLDERS’ (DEFICIENCY)
Advance on inventory purchase		(89,580	)		—			(89,580	)
Common shares, $0.0001 par value, 100,000,000 shares authorized, 379,716,886 and 129,716,886 shares issued and outstanding at December 31 and March 31, 2010 respectively.		37,972			12,972
Inventory		(13,859	)		—			(408,811	)
Preferred stock; $0.0001 par value, redeemable at $0.005, 20,000,000 shares authorized, 27,501 shares issued and outstanding		3			3
Accounts payable and accrued liabilities		131,523			143,923			608,674
Additional paid-in capital		13,677,313			13,358,071
Net cash used in operating activities		(127,153	)		(134,821	)		(2,333,445	)
Deferred stock-based compensation		-			94,242
Investing Activities
Accumulated deficit		(12,215,635	)		(11,655,909	)
Patents and trademarks		(5,054	)		—			(5,054	)
Total stockholders’ (deficiency)		1,499,653			1,809,379
License payment advanced		—			—			(50,000	)
Total liabilities and stockholders’ (deficiency)	$	2,204,902		$	2,629,829
Capital assets		—			—			(922	)
Advanced to subsidiaries		—			—			(115,091	)
Acquisition of intangibles-net		(1,099	)		—			(1,468,723	)
Website development costs		—			—			(8,700	)
Proceeds from disposition of subsidiaries		—			—			100
Net cash used in investing activities		(6,153	)		—			(1,648,390	)
Financing Activities		-			-			-
Bank indebtedness		—			—			—
Advances from customers		25,000			—			25,000
Shareholder loan and interest		—			18,411			—
Due to related parties		(36,832	)		46,013			2,308
Proceeds from convertible debentures		128,000			74,625			128,000
Debentures converted to shares		(292,944	)					—
Shares issued for cash		—			—			2,937,189
Shares issued for debt		310,068			-			889,381
Net cash provided by financing activities		133,292			139,049			3,981,878
Increase (decrease) in cash		(14)			4,228			43
Cash, beginning		57			35			—
Cash, ending		43			4,263			43

5The accompanying notes are an integral part of these consolidated financial statements.

Supplemental Disclosure of Cash Flow Information
Cash paid for interest	—	—	—
Cash paid for income taxes	—	—	—
Supplemental Disclosure of Non-Cash Items:
Shares issued for Debt	310,068	172,000	889,381
Deferred stock-based compensation	50,667	(88,667)	8,154,293
Shares issued for Promissory Notes	—	—	365,087
Shares issued for intangible assets	—	—	960,000
Exchange of shareholder loan for
convertible debt	-	125,000	125,000

F-2

~~The~~WATAIR ~~accompanying notes are an integral part of the financial statements~~INC

6(formerly Wataire International , Inc.)

~~WATAIR~~CONSOLIDATED ~~INC.~~STATEMENTS OF OPERATIONS

~~(formerly~~Nine ~~Wataire~~Months ~~International~~Ended December 31, ~~Inc.~~2011 and 2010 (Unaudited)

(A Nine ~~Development~~Months ~~Stage~~Ended ~~Company)~~Dec 31, Three Months Ended Dec 31

Statement of Stockholders’ Equity (Deficit)

	2011	2010	2011			2010
	(Unaudited)	(Unaudited)	(Unaudited)			(Unaudited)
Revenue:
Sales	4,336	230,591		766			227,269
Total revenue	4,336	230,591		766			227,269

Cost of sales	3,372	167,811		766			151,570
Gross profit (loss)	964	62,780		-			75,699

Operating Expenses:
Amortization	381,909	-		127,303			-
General and administrative	122,250	64,764		62,917			24,919
Impairment of assets	40,082	-		-			-
Management fees	10,000	135,000		-			45,000
Marketing and promotion	-	243,591		-			217,591
Consulting fees	-	-		-			-
Research & Development	2,361	5,655		2,361			5,655
Professional fees	4,088	33,815		572			748
Total operating expenses	560,690	482,825		193,153			293,913

Income (loss) from operations	(559,726)	(420,045)		(193,153)			(218,214	)

Other income (expenses):
Interest expense	-	-		-			-
Amortization of notes discounts	-	28,505		-			-
Total other income (expenses)	-	28,505		-			-

Income (loss) before provision for income taxes	(559,726)	(391,540)		(193,153	)		(218,214	)
Provision for income taxes	-	-		-			-

Net loss	$ (559,726)	$ (391,540)	$	(193,153	)	$	(218,214	)

Basic and diluted income (loss) per common share	$ (0.00)	(0.00)	$	(0.00	)	$	(0.00	)
Weighted average common shares outstanding-basic and diluted	379,716,886	129,716,886		379,716,886			129,716,886

~~For~~The ~~the~~accompanying ~~period~~notes ~~August~~are ~~17,~~an ~~2000 (Inception)~~integral topart ~~December~~of ~~31,~~these ~~2010~~consolidated financial statements.

~~(Unaudited)~~ F-3

							Share Subscription							Additional			Deferred Stock Based				Total
	Common Shares			Amount			Received			Preferred Shares		Amount		Paid-in Capital			Compensation	Accumulated Deficit			Stockholders’Equity
Common shares issued		200			—										10						10
Share subscriptions								150,280													150,280
Net loss for the period																			(216,896	)	(216,896)
Balance Sept 30, 2001		200			—			150,280			—		—		10				(216,896	)	(66,606)
Share subscriptions								76,105													76,105
Net loss for the year																			(29,313	)	(29,313)
Balance Sept 30, 2002		200			—			226,385			—		—		10				(246,209	)	(19,814)
Share subscriptions								5,000													5,000
Common shares issued		80,160			8			(231,385	)						232,542						1,165
Adjustment to number
of shares outstanding as
a result of the acquisition
of Millennium Business
Group USA, Inc.
Millennium Business
Group USA, Inc.		(80,360	)		(8	)									(232,552	)			232,560		-
Cimbix Corporation		170,240			17										232,543				(232,560	)	-
Fair value of shares
issued in connection
with the acquisition
of Millennium Business
Group USA, Inc.		80,360			8						2,501		1		(9	)					-
Net asset deficiency
of legal parent at date
of reserve take-over
transaction																			(20,167	)	(20,167)
Common shares issued		2,772													13,810						13,810
Common shares issued		1,000													7,500						7,500
Donated services															2,250						2,250
Net loss for the year																			(98,849	)	(98,849)
Balance Sept 30, 2003		254,372			25						2,501		1		256,094				(365,225	)	(109,105)
Common shares issued		5,000			1										49,999						50,000

WATAIR INC

7(formerly Wataire International , Inc.)

~~Share~~CONSOLIDATED ~~Subscription Additional Deferred~~STATEMENTS ~~Stock~~OF Based Total Common Shares Amount Received Preferred Shares Amount Paid-in Capital Compensation Accumulated Deficit StockholdersSTOCKHOLDERS’~~Equity~~ ~~Common~~EQUITY ~~shares issued 600,000 60 29,940 30,000 Net loss for the year~~ (~~227,180~~DEFICIENCY) (227,180) Balance Sept 30, 2004 859,372 86 2,501 1 336,033 (592.405) (256,285) Common shares issued 160,000 16 484 500 Common shares issued 36,000,000 3,600 86,400 90,000 Common shares issued 8,960,000 896 94,304 95,200 Common shares issued 2,440,000 244 121,756 122,000 Common shares issued 250,000 25 11,225 11,250 Disposal of MBG (140,949) (140,929) Net loss for the year (79,243) (79,243) Balance Sept 30, 2005 48,669,372 4,867 2,501 1 509,253 (671,648) (157,527) Common shares issued 336,000 34 15,086 15,120 Common shares issued 10,000,000 1,000 619,000 620,000 Common shares issued 440,000 44 109,956 110,000 Common shares issued 1,000,000 100 559,900 560,000 Inventory donated 9,945 9,945 Net loss for the year (297,661) (297,661) Balance Sept 30, 2006 60,445,372 6,045 2,501 1 1,823,140 (969,309) 859,877 Common shares issued 272,536 27 204,375 204,402 Common shares issued 1,834,045 183 880,157 880,340 Common shares issued 1,000,000 100 409,900 410,000 Common shares issued 4,800,000 480 959,520 960,000 Stock-based compensation 8,010,050 8,010,050 Net loss for the year (8,430,656) (8,430,656) Balance Sept 30, 2007 68,351,953 6,835 2,501 1 12,287,142 (9,399,965) 2,894,013 Common shares issued 2,058,823 205 349,795 350,000 Common shares issued 588,235 60 99,940 100,000 Common shares issued 4,400,000 440 219,560 220,000 Shares cancelled (1,000,000) (100) (409,900) (410,000) Preferred shares issued 25,000 2 4,998 5,000 Net loss for the year (337,560) (337,560) Balance March 31, 2008 74,399,011 7,440 27,501 3 12,551,535 (9,737,525) 2,821,453 Common shares issued 1,600,000 160 79,840 80,000 Common shares issued 1,111,112 111 99,889 100,000 Common shares issued 1,000,000 100 59,900 60,000 Common shares issued 1,000,000 100 49,900 50,000 Common shares issued 8,000,000 800 39,200 40,000 Net loss for the year (714,182) (714,182) Balance March 31, 2009 87,110,123 8,711 27,501 3 12,880,264 (10,451,707) 2,437,271 Common shares issued 4,000,000 400 19,600 20,000 Common shares issued for service 7,600,000 760 151,240 (152,000) Amortization of stock based compensation 101,333 101,333 Warrants issued for compensation 94,242 94,242 Net loss for the year (598,994) (598,994) Balance March 31, 2010 98,710,123 9,871 27,501 3 13,145,346 (50,667) (11,050,701) 2,0533,852 Common shares issued for converted debentures 31,006,763 3,101 306,967 310,068 Amortization of stock based compensation 50,667 50,667 Net loss for the period (391,540) (391,540) Balance Dec 31, 2010 129,716,886 12,972 27,501 3 13,452,313 — (11,442,241) 2,023,047

8For the Nine Months Ended December 31, 2011 and 2010 (Unaudited)

WATAIR INC.


	Series A Preferred								Additional
	stock				Common Stock				Paid in		Accumulated
For the three months ended	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Dec 31, 2010:
Balances at March 31, 2010		98,710,123	$	9,871		27,501	$	3	$	13,145,346	$	(11,050,701	)	$	(2,053,852	)


Net loss for the Nine months ended Dec 31, 2010												(111,914)			(	)
Balances at Dec 31, 2010			$			27,501	$	3	$		$			$

For the three months ended Dec 31, 2011:

Balances at March 31, 2011		129,716,886	$	12,972		27,501	$	3	$	13,358,071	$	(11,655,909	)	$	1,809,379
Additional Capital		250,000,000		25,000				-		225,000		-			250,000

Net loss for the Nine months ended Dec 31, 2011		-		-		-		-		-		(559,726)			(559,726)

Balances at Dec 31, 2011		379,716,886	$	37,972		27,501	$	3	$	13,583,071	$	(12,215,635)		$	1,499,653

~~(formerly~~The ~~Wataire~~accompanying ~~International,~~notes ~~Inc~~are an integral part of these financial statements.)

~~(A Development Stage Company)~~F-4

WATAIR INC

(formerly Wataire International , Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended December 30, 2011 and 2010 (Unaudited)

Nine Months Ended December 31,

	2011			2010
	(Unaudited)
OPERATING ACTIVITIES
Net income (loss)	$	(559,726	)	$	(391,540	)
Adjustments to reconcile net income (loss) to net cash provided (used) in operating activities:
Amortization		381,909			(28,505)
Impairment of assets		40,082			-
Stock-based compensation		-			50,667
Changes in operating assets and liabilities:
Accounts receivable		-			7,833
Prepaid expenses & others		-			116,728
Inventory		3,371			(13,859)
Accounts payable and accrued liabilities		(270,850)			131,523
Net cash used in operating activities		(405,214)			(127,153)

INVESTING ACTIVITIES
Acquisition of Intangibles-net		-			(1,099)
License, patents & trademarks payment advanced		-			(5,054)
Net cash used in investing activities		-			(6,153)

FINANCING ACTIVITIES
Due to related parties		-			(36,832)
Advances from customers		-			25,000
Notes payable		30,650			-
Proceeds from convertible debentures		-			128,000
Shares issued for cash		-			(292,944)
Shares issued for debt		250,000			310,068
Convertible notes payable		125,000			-
Net cash provided by financing activities		405,650			133,292

NET INCREASE (DECREASE) IN CASH		436			(14)

CASH BALANCE, BEGINNING OF PERIOD		87			57

CASH BALANCE, END OF PERIOD	$	523		$	43

Supplemental Disclosures of Cash Flow Information:
Interest paid	$	-		$	-
Income tax paid	$	-		$	-

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

F-5

WATAIR INC

(formerly Wataire International , Inc.)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~December~~For 31the Nine Month Ended December, 2011 and 2010

(Stated in US Dollars)

(Unaudited)

~~Note~~NOTE 1.A ~~General~~– ~~Organization~~NATURE ~~and~~OF ~~Business~~OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~The~~Nature ~~Company was incorporated on August 17, 2000 in the State~~ of Washington, USA and the Company's common shares are publicly traded on the OTC Bulletin Board. On September 26, 2006, the Company approved a name change from Cimbix Corporation to Wataire International, Inc. On March 11, 2010, the Company approved a name change from Wataire International, Inc. to Watair Inc.Operations

Watair, Inc. (the “Company”) was incorporated in August 17, 2000 in the State of Washington, USA and the Company’s common shares are publicly traded on the OTC Bulletin Board. On September 26, 2006, the Company approved a name change from Cimbix Corporation to Wataire International, Inc. On March 11, 2010, the Company approved a name change from Wataire International, Inc. to Watair Inc.

The Company markets and distributes atmospheric water generator machines. It also owns all of the intellectual property relating to a water treatment process and devices for water-from-air machines. Management plans to further evaluate, develop and manage the commercialization, sub-license and/or commercial sale of these products.

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At ~~December~~September 3130, ~~2010~~2011, the Company had not yet achieved profitable operations, has accumulated losses of $1112,~~442~~022,~~241~~ 482 since its inception and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Company's ability to continue as a going concern.

The Company's ability to continue as a going concern is dependent upon future profitable operations and/or the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has obtained additional funds by related party advances, however there is no assurance that this additional funding is adequate and further funding may be necessary.

~~Note~~The 2unaudited consolidated financial statements have been prepared by Watair, Inc. ~~Significant~~formerly ~~Accounting~~known ~~Policies~~as Wataire International Inc., pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K. The results for the six months ended September 30, 2011, are not necessarily indicative of the results to be expected for the full year ending March 31, 2012.

The unaudited consolidated financial statements have been prepared by Watair, Inc. formerly known as Wataire International Inc., pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K. The results for the nine months ended December 31, 2010, are not necessarily indicative of the results to be expected for the full year ending March 31, 2011.

The financial statements have, in management's opinion, been properly prepared within the framework of the significant accounting policies summarized below :

(a) Development Stage Company

The Company is a development stage company as defined in the Statements of Financial Accounting Standards (“SFAS”) No. 7. The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. All losses accumulated since inception has been considered as part of the Company’s development stage activities.

(b) Financial Instruments

The carrying values of cash, accounts receivable, accounts payable, promissory notes payable and due to related parties approximate fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Inventory, which consists of finished goods, is valued at the lower of cost and net realizable value using the first in first out (FIFO) method.

(d) Website Development Costs

Under the provisions of Statement of Position No. 98-1 "Accounting for the Costs of Computer Software Development or Obtained for Internal Use," the Company previously capitalized costs of design, configuration, coding, installation and testing of the Company's website up to its initial implementation. Costs are amortized to expense over an estimated useful life of three years using the straight-line method. Ongoing website post-implementation cost of operations, including training and application, are expensed as incurred. The Company evaluates the recoverability of website development costs in accordance with Financial Accounting Standards No. 121 "Accounting of the Impairment of Long Lived Assets."

(e) Intangible Assets and Amortization

The Company has adopted SFAS No. 142 "Goodwill and Other Intangible Assets", which requires that goodwill not be amortized, but that goodwill and other intangible assets be tested annually for impairment. Intangible assets with a finite life will be amortized over the estimated useful life of the asset. The Company's operational policy for the assessment and measurement of any impairment in the intangible assets, which primarily relates to contract-based intangibles such as license agreements and extensions, is to evaluate annually, the recoverability and remaining life of its intangible assets to determine the fair value of these assets.

(f) Revenue Recognition

The Company receives revenues from the sale of water generator machines. The Company recognizes revenues when persuasive evidence of an arrangement exists, the product is delivered and collection is reasonably assured. A one-year warranty is provided by the Company on all its products.

(g) Income Taxes

The Company accounts for income tax using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

(h) Basic and Diluted Loss Per Share

Basic loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per common share is computed in the same way as basic loss per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive.

outstanding if all potential common shares had been issued and if the additional common shares were dilutive.

(i) Stock-based Compensation

The Company adopted ASC 718, Compensation – Stock-Based Compensation, to account for its stock options and similar equity instruments issued. Accordingly, ~~compensation~~ compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.

(j) Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830, Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

(k) Reclassifications

Certain items in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation in the current period's presentation. These reclassifications have no effect to the previously reported income (loss).

(l) Change in Reporting Year

The Company adopted March 31 as its fiscal year end from September 30 in 2008.

(m) Recently Issued Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements, which amends the ASC Topic 820, Fair Value Measurements and Disclosures. ASU No. 2010-06 amends the ASC to require disclosure of transfers into and out of Level 1 and Level 2 fair value measurements, and also requires more detailed disclosure about the activity within Level 3 fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures concerning purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of this amendment is not expected to have a material effect of the Company’s financial statements.

~~Note 3. Related Party Transactions~~F-6

~~During~~WATAIR ~~the nine months ended December 31, 2010, directors of the company charged the Company with Management fees of $135,000.~~INC

On(formerly ~~November~~Wataire ~~15,~~International ~~2010~~, ~~in exchange for debt, the Company issued a Convertible Debenture in the amount of $38,000 to the President and CEO of the Company~~Inc. The Convertible Debenture is non-dilutive and has a due date of November 30, 2012. The holder has the right to convert the outstanding principal and accrued interest into common shares of the Company at a price of $0.01 per share.)

OnNOTES ~~July~~TO ~~27,~~THE ~~2010,~~CONSOLIDATED ~~the~~FINANCIAL ~~Company issued 12,500,000 shares of common stock to the Company’s Chief Executive Officer and Director in the conversion of $125,000 subordinated convertible debenture.~~ STATEMENTS

~~Note~~For 4.the ~~Common~~Nine ~~Stock~~Months Ended December 31, 2011 and 2010

~~For the Year Ended March 31, 2009~~(Unaudited)

~~Share~~NOTE ~~Subscriptions~~A – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

11Interim Financial Statements

OnThe ~~April~~interim 8,financial ~~2008~~statements as of December 31, 2011 are unaudited and have been prepared by the Company ~~entered~~pursuant ~~into~~to anthe ~~agreement~~rules toand ~~issued 1,600,000~~regulations ~~units~~of atthe $0Securities and Exchange Commission.05 ~~per~~These ~~unit~~statements ~~with~~reflect ~~Darfield~~all ~~Financial~~normal ~~Corp.~~and ~~for~~recurring anadjustments ~~aggregate~~that, ~~amount~~ in the opinion of ~~$80~~management,~~000.~~ ~~Each~~are ~~unit~~necessary ~~consists~~for a fair presentation of ~~one~~the ~~common~~information ~~share~~contained ~~and~~herein. ~~one~~Operating ~~half~~results ~~warrant~~for ~~exercisable~~the Nine months ended December 31, 2011 are not atnecessarily ~~$0.05~~indicative ~~per~~of ~~share~~results onthat ormay ~~before~~be ~~April~~expected 7for the year ending March 31, ~~2011~~2012.

OnCertain ~~May~~information ~~30,~~and ~~2008~~finance ~~the~~disclosures normally ~~Company~~included ~~entered~~in ~~into~~financial astatements ~~private~~prepared ~~placement~~in ~~agreement~~accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to ~~issue~~the ~~1,111,112~~Securities ~~common~~and ~~stock~~Exchange atCommission’s $0rules and regulations.09 ~~per~~These ~~share~~unaudited financial ~~for~~statements ~~proceeds~~should ofbe ~~$100,000 to~~read ~~two~~in ~~accredited~~conjunction ~~investors~~with our audited financial statements and tonotes ~~issue~~for ~~555~~the year ended March 31,~~556~~ 2012 ~~common~~as ~~stock~~included toin ~~each~~our ~~investor~~report on Form 10-K.

~~Share~~Cash ~~For~~and ~~Debt~~Cash ~~Settlements~~Equivalents

OnInvestments ~~June~~having ~~17,~~an ~~2008,~~original ~~the~~maturity ~~Company approved the issuance~~ of ~~1,000,000~~ ~~units~~90 atdays ~~$0.06~~or ~~per~~less ~~share~~that toare ~~settle~~readily ~~amounts~~convertible ~~due~~into tocash aare ~~director~~considered ofto ~~the~~be ~~Company~~cash ~~totaling $60,000~~equivalents. ~~Each~~For ~~unit~~the ~~contain~~periods ~~one~~presented, ~~common~~the ~~share and one share warrant exercisable~~Company athad ~~$0.06~~no ~~per~~in ~~share~~cash ~~on or before June 16, 2011~~equivalents.

OnNotes ~~July 8, 2008, the Company approved the issuance of 1,000,000 units at $0.05 per share to settle amounts due to a director of the Company totaling $50,000. Each unit contain one common share~~ and ~~one~~Accounts ~~share warrant exercisable at $0.05 per share on or before July 7, 2011.~~Receivable

OnThe ~~January~~Company 9,maintains ~~2009,~~an allowance for doubtful accounts for estimated losses from the failure of its customers to make required payments for products and other consideration delivered. The Company ~~approved~~estimates this allowance based on the ~~issuance~~age of 8the related receivable,~~000,000~~ knowledge of the financial condition ~~common~~of ~~shares~~customers, atreview ~~$0.005~~of ~~per~~historical ~~share~~receivables toand ~~settle~~reserve ~~amounts~~trends ~~due~~and toother apertinent ~~director~~information. If the financial condition of customers deteriorates or an unfavorable trend in receivable collections is experienced in the ~~Company~~future, additional allowances may ~~totaling~~be ~~$40~~required. Historically,~~000~~ the Company’s reserves have approximated actual experience.

OnIncome ~~February 26, 2009, the Company have signed agreement with existing warrant options holders to cancel all existing warrant options available to the Company.~~Taxes

~~For~~In ~~the~~accordance ~~Year~~with ~~Ended~~Accounting ~~March~~Standards 31Codification (ASC) 740 - Income Taxes, ~~2010~~the provision for income taxes is computed using the asset and liability method. The asset and liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.

~~Shares~~We expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For ~~Debt~~tax positions meeting a “more-likely-than-not” threshold, the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of December 31, 2011, we had no uncertain tax positions. We recognize interest and ~~Service~~penalties, ~~Settlements~~if any, related to uncertain tax positions as general and administrative expenses. We currently have no foreign federal or state tax examinations nor have we had any foreign federal or state examinations since our inception. To date, we have not incurred any interest or tax penalties.

OnUse ~~April 22, 2009, the Company approved the issuance~~ of ~~4,000,000 common shares at $0.005 per share to settle amounts due to a debtor of the Company totaling $20,000.~~Estimates

OnThe ~~July~~preparation ~~31,~~of ~~2009,~~financial ~~the~~statements ~~Company~~in conformity ~~approved~~with accounting principles generally accepted in the ~~issuance~~United States of ~~7,600,000~~America requires management to make estimates ~~common~~and ~~shares~~assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at ~~$0.02~~the ~~per~~date ~~share~~of ~~for~~the ~~services~~financial ~~provided~~statements byand ~~several~~reported ~~professionals~~amounts ~~for~~of arevenue 12and ~~months~~expenses ~~period~~during ~~totaling~~the ~~$152,000~~reporting periods. Actual results could differ from those estimates.

OnFinancial ~~September~~Instruments ~~14, 2009, the Company entered into a definitive agreement with the Chief Executive Officer~~ and ~~director~~Fair ofValue ~~the Company for the issuance~~ of ~~share purchase warrants for executive compensation,~~ ~~with~~Financial a term of five years expiring September 14, 2014, exercisable at $0.01 per share, for 7,500,000 shares of common stock with a cashless exercise provision. The Company recognized $94,242 in stock based compensation expense for the issuance of these warrants.Instruments

~~For~~We ~~the~~follow ~~Nine~~ASC ~~Months~~Topic ~~Ended~~820, ~~December~~Fair 31Value Measurements and Disclosures, ~~2010~~for assets and liabilities measured at fair value on a recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

OnASC ~~November~~820 8,defines ~~2010,~~fair invalue ~~exchange~~as ~~for~~the ~~cash~~price ~~proceeds,~~that ~~the~~would ~~Company~~be ~~issued~~received ato ~~Convertible~~sell ~~Debenture~~an inasset ~~the~~or ~~amount~~paid ~~of $65,000~~ to antransfer ~~accredited~~a ~~investor~~liability ~~under~~in ~~Regulation~~an Sorderly ~~rules.~~transaction ~~The~~between ~~Convertible Debenture~~market isparticipants ~~non-dilutive~~at ~~and~~the measurement ~~has a due~~ date. ~~of November 30~~Additionally, ~~2012.~~ASC ~~The~~Topic ~~holder~~820 ~~has~~requires the ~~right~~use toof ~~convert~~valuation ~~the~~techniques ~~outstanding~~that ~~principal and~~maximize ~~accrued~~the ~~interest~~use ~~into~~of ~~common~~observable ~~shares~~inputs and ofminimize the ~~Company~~use atof aunobservable ~~price~~inputs. ofThese ~~$0.01~~inputs ~~per~~are ~~share.~~prioritized below:

On July 27, 2010, the Company issued 31,006,763 shares of common stock in the conversion of $304,534 principal amount of convertible subordinated debentures. 30,453,400 of these shares were issued in conversion of the principal amount of the debentures and 553,363 shares were issued in conversion of accrued interest thereon of $5,533.63.F-7

OnWATAIR June 21, 2010, in exchange for cash proceeds of $25,000, the Company issued a Convertible Debenture to an accredited investor. The Convertible Debenture has a due date of October 31, 2011. The holder has the right to convert the outstanding principal and accrued interest into common shares of the Company at a price of $0.01 per share.INC

12(formerly Wataire International , Inc.)

~~Note~~NOTES 5.TO ~~Warrants~~THE CONSOLIDATED FINANCIAL STATEMENTS

~~During~~For ~~February 2009,~~ the ~~Company~~Nine ~~received~~Months ~~signed~~Ended ~~consent~~December ~~agreements with all existing warrant holders that cancel the entire balance of 7~~31,~~058,823~~ ~~outstanding~~2011 and ~~warrants as of February 2009.~~2010

~~Note 6. Stock Options and Stock Based Compensation~~(Unaudited)

~~During~~NOTE ~~2006,~~A ~~the~~– ~~Company~~NATURE ~~authorized~~OF aOPERATIONS ~~share option plan under which~~AND ~~employees~~SUMMARY ~~were~~OF ~~granted~~SIGNIFICANT ~~options~~ACCOUNTING toPOLICIES purchase shares of authorized but unissued common shares. During the years ended March 31, 2010 and 2009, all options issued in this plan were either forfeited as options went unexercised due to employee terminations or cancelled via signed consent agreements with all remaining option holders.(continued)

There was no compensation charge associated with stock options included in the statement of operations for the nine months ended December 31, 2010 and the year ended March 31, 2010.

Level 1:		Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:		Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:		Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

~~Note~~The 7carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. ~~Contingencies~~ Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. Except for derivative liabilities, we had no financial assets or liabilities carried and measured on a recurring or nonrecurring basis during the reporting periods.

~~Agreement~~ Derivative Liabilities

OnWe ~~December~~evaluate ~~11,~~convertible ~~2006~~notes ~~and December 12~~payable, ~~2006, the Company entered into~~stock ~~two marketing agreements in which the Company would pay $1~~options,~~000,000~~ ~~and~~stock ~~issue~~warrants ~~1,000,000~~or ~~common~~other ~~shares.~~contracts ~~During~~to ~~the~~determine ~~year~~if ~~ended~~those ~~March 31,~~contracts ~~2008,~~or ~~the~~embedded ~~Company~~components ~~paid $250,000 in respect to the cash portion~~ of ~~the~~those ~~agreements~~contracts ~~and~~qualify ~~had issued 1,000,000 common shares of~~as ~~the~~derivatives ~~Company. The 1,000,000 shares issued were not released~~ to ~~the~~be ~~marketing~~separately ~~company~~accounted asfor itunder ~~has not commenced its branding and marketing efforts and~~ the ~~contract~~relevant ~~has~~sections ~~expired.~~of ~~The~~ASC ~~1,000,000~~Topic ~~shares have been returned back to treasury. The $250~~815-40,~~000~~ isDerivative ~~classified~~Instruments asand anHedging: ~~Advance~~Contracts onin ~~Marketing~~Entity’s ~~Agreements~~Own ~~on the balance sheet~~Equity. ~~The Company is currently re-negotiating new terms on this agreement.~~

~~Legal~~The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.

Aquaduct International. LLC v. Wataire International, Inc. et. AI. This litigation was commenced on December 11, 2008 by the Company's former distributor over the alleged purchase of certain atmospheric water machines. On July 20, 2009, the Company answered the lawsuit and filed a crossLong-~~complaint~~lived against the plaintiff for Breach of Contract and Intentional Interference. On February 2, 2010 a confidential settlement agreement and release was effectuated between the parties. The Complaint and cross complaint have been dismissed by the parties with prejudice.Assets

~~Note~~Long-lived 8assets such as property and equipment and intangible assets are periodically reviewed for impairment. ~~Inventory~~We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

~~At December 31, 2010 and March 31, 2010, inventories are comprised of finished water~~F-~~from-air machines totaling $352,946, and $249,506, respectively.~~8

~~Note~~WATAIR ~~9. Intangibles~~ INC

~~On April 25, 2007, the Company entered into an agreement to acquire all of the intellectual property~~ (~~"IP")~~formerly ~~relating to a water treatment process and related devices for water-from-air machines from~~ Wataire ~~Industries~~International ~~Inc.~~, ~~Canadian Dew Technologies~~ Inc.~~, Terrence Nylander and Roland Wahlgren. Mr. Nylander was at the time of signing the agreement and currently, the President of the Company. Consideration for the~~)

13NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

~~purchase~~For of the IPNine ~~was~~Months ~~$476,190~~Ended ~~(CAD~~December ~~$500,000), which was paid on March~~ 31, ~~2007,the issuance of 4,800,000 shares of common stock of the Company,~~2011 ~~the agreement by the Company to pay a royalty equal to 5% of the gross profits from the sales of all apparatus or products relating to the IP for a period of 30 years from April 25, 2007~~ and a royalty equal to 5% of gross licensing revenues on the IP. This consideration is in addition to the 11,000,000 shares of common stock previously issued for the license rights as disclosed in the Company's annual September 30, 2006 audited consolidated financial statements. The IP acquisition was completed in July 2007.2010

The IP acquired by the Company includes all copyrights, patent rights, trade secret rights, trade names, trademark rights, process information, technical information, contract rights and obligations, designs, drawings, inventions and all other intellectual and industrial property rights of any sort related to or associated with the invention.(Unaudited)

~~The~~NOTE ~~intangibles~~A ~~consist~~– ofNATURE ~~patents~~OF ~~and~~OPERATIONS ~~trademark applications of~~AND ~~$36,488~~SUMMARY ~~and~~OF ~~the~~SIGNIFICANT ~~cost~~ACCOUNTING ofPOLICIES ~~the acquisition of IP Technology of $2,547,161 as described above.~~(continued)

Patents, Trademark applications	$36,488
4,800,000 shares issued to wataire Ecosafe and
Canadian Dew Technologies	$960,000
Cash Consideration	$476,190
Remaining license rights including 11,000,000 shares
issued to Wataire Ecosafe	$1,109,872
	$2,546,062

Equity Instruments Issued to Non-Employees for Acquiring Goods or Services

~~Note~~Issuances 10of our common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. ~~Deferred~~The measurement date for the fair value of the equity instruments issued to consultants ~~Revenue~~ or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete.

AsAlthough ofsituations ~~December~~may 31arise in which counter performance may be required over a period of time, ~~2010~~the equity award granted to the party performing the service may be fully vested and ~~March~~non-forfeitable ~~31,~~on ~~2010~~the date of the agreement. As a result, in this situation in which vesting periods do not exist if the instruments ~~deferred~~are ~~revenue~~fully ~~totaled~~vested ~~$100~~on the date of agreement,~~776~~ we determine such date to be the measurement date and ~~$154,924,~~will ~~spectively,~~record ~~consisting~~the estimated fair market value of ~~cash~~the ~~payments~~instruments ~~made~~granted byas ~~customers~~a inprepaid ~~advance~~expense ofand ~~product shipment~~amortize such amount to expense over the contract period. ~~Revenue~~When it ~~will~~is beappropriate ~~recognized~~for ~~when~~us ~~finished~~to ~~goods~~recognize ~~are~~the ~~shipped~~cost of a transaction during financial reporting periods prior to the ~~customer~~measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values.

~~Note~~Related ~~11. Subsequent Events~~Parties

OnA ~~May~~party 18is considered to be related to us if the ~~Company~~party ~~accepted~~directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with us. Related parties also include our principal owners, our management, members of the ~~resignation~~immediate families of ~~Thomas~~our ~~Braid~~principal owners asand our management and other parties with which we may deal if one party controls or can significantly influence the management ~~director~~or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and ~~officer~~can significantly influence the other to an extent that one or more of the ~~Company~~transacting parties might be prevented from fully pursuing its own separate interests, is also a related party.

~~Note~~During ~~12.~~the ~~Income~~Nine ~~Taxes~~months ended December 31, 2011, directors of the company charged the Company with Management fees of $10,000.

~~The~~During ~~Company~~the ~~has~~Nine ~~losses~~months ~~for~~ended ~~tax~~December ~~purposes totaling $11~~31,~~442,241~~ ~~which~~2011, ~~may be applied against future taxable income. These losses begin to expire in 2027.~~ The ~~potential tax benefit arising from these losses has not been recorded in the consolidated financial statements. The~~ Company ~~evaluates~~issued ~~its~~additional ~~valuation~~capital ~~allowance~~of ~~requirements on~~common anshares ~~annual~~of ~~basis~~250,000,000 ~~based~~Common onstock ~~projected~~at ~~future operations. When circumstances change and this causes~~ a ~~change~~price ~~in management’s judgement about the realizability~~ of ~~deferred~~$0.01 ~~tax~~per ~~assets, the impact of the change on the valuation allowance is reflected in current operations~~share.

14F-9

~~PART~~WATAIR IINC

~~This~~(formerly ~~Interim~~Wataire ~~Report~~International ~~on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of Section 27A of the Securities Act of 1933~~, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995 and concern matters that involve risks and uncertainties that could cause actual results to differ materially from historical results or from those projected in the forward-looking statementsInc. Discussions containing forward-looking statements may be found in the material set forth under “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Form 10-Q. Words such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable as of the date of this Report, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this Interim Report on Form 10-Q. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations. )

~~Readers~~NOTES ~~should~~TO ~~carefully~~THE ~~review~~CONSOLIDATED ~~and~~FINANCIAL consider the various disclosures made by us in this Report, set forth in detail in Part I, under the heading “Risk Factors,” as well as those additional risks described in other documents we file from time to time with the Securities and Exchange Commission, which attempt to advise interested parties of the risks, uncertainties, and other factors that affect our business. We undertake no obligation to publicly release the results of any revisions to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements.STATEMENTS

~~Item~~For 2.the ~~Management’s~~Nine ~~Discussion~~Months ~~and~~Ended ~~Analysis~~December of31, ~~Financial Condition~~ 2011 and ~~Results of Operations.~~2010

~~General~~ (Unaudited)

~~Watair~~NOTE ~~Inc.~~A is– aNATURE ~~Washington~~OF ~~corporation~~OPERATIONS ~~incorporated~~AND onSUMMARY ~~August~~OF ~~17,~~SIGNIFICANT ~~2000. Watair~~ACCOUNTING isPOLICIES currently in the development stage and has completed its acquisition of all of the intellectual property relating a water treatment process and devices for water-from-air machines. The agreements previously executed between the Company and Ecosafe have been terminated and cancelled and forms part of the current agreement. To this end, the Company’s future results of operation will be highly dependent upon the success of its efforts to sell and market its products and technologies. The Company plans to sell its products to distributors and also through multiple indirect channels, such as resellers.(continued)

~~Results~~Revenue ~~of Operations for the six months periods ended December 31, 2010 and 2009.~~Recognition

~~The~~Revenue ~~operating results and cash flows are presented for the nine months periods ended December 31, 2010 and 2009 and for the period of inception to December 31, 2010.~~ recognition:

~~For~~The ~~the~~Company ~~nine~~adopted ~~months~~Accounting ~~period~~Standards ~~ended~~Codification Topic ~~December~~606, 31“Revenue from Contracts with Customers” (“ASC 606”) on January 1, 2018. In accordance with ASC ~~2010~~606, werevenue ~~had~~is ~~total~~recognized ~~revenue~~when ofpromised ~~$230,591,~~goods ~~compared~~or services are transferred to ~~Nil~~customers ~~for~~in an amount that reflects the ~~nine~~consideration to ~~month~~which ~~period~~the ~~ended~~Company ~~December~~expects ~~31,~~to ~~2009,~~be anentitled ~~increase~~in ofexchange ~~$230~~for those goods or services,~~591 from~~ ~~our~~in ~~sales~~accordance ofwith ~~products.~~the following five-step process:

~~For~~● Identify the ~~nine~~contract(s) ~~month~~with ~~period~~a ~~ended~~customer ~~December~~● ~~31, 2010,~~Identify wethe ~~had~~performance ~~total~~obligations ~~operating~~● ~~expenses~~Determine ofthe ~~$454,320,~~transaction ~~compared~~price to● ~~$448,913~~Allocate ~~for~~ the ~~nine~~transaction ~~month~~price ~~period~~● ~~ended~~Recognize ~~December~~revenue ~~31,~~when ~~2009,~~the anperformance ~~increase of~~obligations ~~$5,407.~~are met

15During the periods presented, all revenue was from sales of water generator machines. The Company has determined the sole performance obligation to be the delivery of the purchased goods to the customers, and as such, recognizes revenue at the time the customer takes possession.

~~For~~Loss ~~the~~per ~~nine month periods ended December 31, 2010 and 2009, we had the same amount of management fees of $135,000.~~Share

~~For~~We ~~the~~compute ~~nine~~net ~~month~~loss ~~period~~per ~~ended~~share ~~December~~in ~~31,~~accordance ~~2010,~~with weFASB ~~had~~ASC ~~professional~~260. ~~fees~~The ofASC ~~$33,815~~specifies ~~compared~~the ~~to $94~~computation,~~199~~ ~~for~~presentation ~~the~~and ~~nine~~disclosure ~~month~~requirements ~~period~~for ~~ended~~loss ~~December~~per ~~31,~~share ~~2009,~~for aentities with ~~decrease~~publicly ~~of $60,384~~held common stock.

~~The~~Basic loss per share amounts is computed by dividing the net loss ~~for~~by the ~~nine~~weighted ~~month~~average ~~period~~number ~~ended~~of common shares outstanding. Diluted net loss per common share is computed ~~December~~on 31the basis of the weighted average number of common shares and dilutive securities (such as stock options, ~~2010~~warrants ~~was~~and ~~$391~~convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted net loss per share are excluded from the calculation. For the periods presented,~~540~~ ~~compared~~the Company excluded --------- shares relating to ~~$445~~the Series A Convertible Preferred Stock (see Note H),~~273~~ shares relating to convertible notes payable to third parties (Please see NOTE E - NOTES PAYABLE TO THIRD PARTIES for ~~the~~further ~~nine~~information) ~~month~~and ~~period~~shares ~~ended~~relating ~~December~~to ~~31,~~outstanding ~~2009,~~warrants an(Please ~~decrease~~see NOTE G - CAPITAL STOCK AND WARRANTS for further information) from the calculation of ~~$53,733~~diluted shares outstanding as the effect of their inclusion would be anti-dilutive.

~~Plan of Operation~~ F-10

WeWATAIR currently have minimal cash reserves. Accordingly, our ability to pursue our plan of operations is contingent on our being able to obtain funding for the development, marketing and commercialization of our products and services. Management plans, as soon as finances permit, to hire additional management and staff for its US-based operations especially in the areas of finance, sales, marketing, and investor/public relations. The Company may also choose to outsource some of its marketing requirements by utilizing a series of independent contractors based on the projected size of the market and the compensation necessary to retain qualified employees. INC

To(formerly ~~achieve~~Wataire ~~our~~International ~~new operational plan~~, ~~we will need to raise substantial additional capital for our operations through licensing fees and product sales, sale of equity securities and/or debt financing~~Inc. We have no cash to fund our operations at this time, so we plan to sell licenses and products, offer common stock in private placements as well as seeking debt financing during the next 12 months to raise up to $2,000,000. We believe the proceeds from such efforts will enable us to expand our operations, buy inventory and start our marketing campaign. )

~~Due~~NOTES toTO ~~the~~THE ~~"start~~CONSOLIDATED ~~up"~~FINANCIAL nature of the Company's business, the Company expects to incur losses as the Company conducts its ongoing research, product and systems development programs. We will require additional funding to continue our operations, for marketing expenses, to pursue regulatory approvals for our products, for any possible acquisitions or new technologies, and we may require additional funding to establish manufacturing capabilities in the future. We may seek to access the public or private equity markets whenever conditions are favorable. We may also seek additional funding through strategic alliances or collaborate with others. We cannot assure you that adequate funding will be available on terms acceptable to us, if at all. Because we are presently in the early stages of development and promotional stages of our business, we can provide no assurance that we will be successful with our efforts to establish any revenue. In order to pursue our existing operational plan, we are dependent upon the continuing sales and financial support of creditors and stockholders until such time when we are successful in raising debt/equity capital to finance the operations and capital requirements of the Company or until such time that we can generate sufficient revenue from our various divisions.STATEMENTS

~~Liquidity~~For ~~and~~the ~~Financial~~Nine ~~Resources~~Months Ended December 31, 2011 and 2010

The Company remains in the development stage since inception. Operations were financed through proceeds from sales and the issuance of equity and loans from directors. The directors have also advanced funds into the Company to cover cash flow deficiencies. The advances have no stated repayment terms. These funds were used to pay inventory, services, legal and accounting expenses along with several other miscellaneous operational infrastructure costs. (Unaudited)

~~The~~NOTE ~~Company's financial~~A ~~statements~~– ~~are~~NATURE ~~presented~~OF onOPERATIONS ~~a going concern basis, which contemplates the realization of assets and the~~AND ~~satisfaction~~SUMMARY ofOF ~~liabilities~~SIGNIFICANT inACCOUNTING ~~the~~POLICIES ~~normal course of business. At December 31, 2010, we have been unsuccessful in our efforts to raise additional~~(continued)

16Recently Enacted Accounting Standards

~~capital~~In toAugust ~~meet~~2020, the ~~our~~FASB ~~plan~~issued ofASU ~~operations.~~2020-06, ~~Our~~“Debt ~~cash~~– ~~position~~Debt aswith ofConversion ~~December~~and ~~31,~~Other ~~2010~~Options ~~was~~(Subtopic ~~$43.~~470-20) ~~Since~~and Derivatives and Hedging ~~inception,~~– weContracts ~~have~~in ~~recognized~~Entity’s noOwn ~~significant~~Equity ~~revenue~~(Subtopic 815-40)”. WeThis ~~have~~ASU ~~accumulated~~reduces ~~operating~~the ~~losses~~number of ~~$11,442,241. At~~accounting ~~the~~models for convertible ~~present~~debt ~~time,~~instruments and ~~over~~convertible preferred stock. As well as amend the ~~next~~guidance ~~twelve~~for ~~months,~~the ~~our~~derivatives ~~primary~~scope ~~focus~~exception ~~will~~for becontracts in an entity’s own equity to ~~develop~~reduce ~~our~~form-over-substance-based ~~marketing~~accounting ~~plan~~conclusions. In addition, ~~new~~this ~~initiatives~~ASU improves and ~~operational~~amends ~~plan~~the torelated ~~establish~~EPS ~~sales~~guidance. ~~and~~This tostandard ~~explore~~is ~~various~~effective ~~methods~~ for ~~raising~~us ~~additional~~on ~~funds~~July 1, 2024, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently evaluating the impact of the adoption of ASU 2020-06 on our financial statements.

~~Critical~~In June 2016, the Financial Accounting ~~Policies~~Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). Financial Instruments—Credit Losses (Topic 326) amends guideline on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently evaluating the impact of the adoption of ASU 2016-13 on our financial statements.

~~The~~Other ~~Company's~~standards ~~discussion~~not ~~and~~presented ~~analysis of its financial condition and results of operations~~ are ~~based~~not ~~upon the Company's financial statements, which have been prepared in accordance~~deemed ~~with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires the Company~~ to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be ~~reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources~~material. ~~Actual results may differ from these estimates under different assumptions or conditions.~~

~~Item 3. Quantitative and Qualitative Disclosures about Market Risk.~~F-11

WeWATAIR ~~are primarily exposed to foreign currency risk, interest rate risk and credit risk.~~INC

~~Foreign~~(formerly ~~Currency~~Wataire ~~Risk~~International ~~- We import products from foreign countries into the United States and market our products in North America. As a result~~, our financial results could be affected by factors such as changes in foreign currency exchange rates or, if we initiate our planned international operations, weak economic conditions in foreign marketsInc. Because our revenues are currently denominated in U.S. dollars, a strengthening of the dollar could make our products less competitive in foreign markets that we plan to enter. We have not hedged foreign currency exposures related to transactions denominated in currencies other than U.S. dollars. We do not engage in financial transactions for trading or speculative purposes. Interest Rate Risk - Interest rate risk refers to fluctuations in the value of a security resulting from changes in the general level of interest rates. Investments that are classified as cash and cash equivalents have original maturities of three months or less. Our interest income is sensitive to changes in the general level of U.S. interest rates. We do not have significant short-term investments, and due to the short-term nature of our investments, we believe that there is not a material risk exposure.)

~~Credit~~NOTES ~~Risk~~TO -THE ~~Our~~CONSOLIDATED ~~accounts~~FINANCIAL receivables are subject, in the normal course of business, to collection risks. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of collection risks. As a result we do not anticipate any material losses in this area.STATEMENTS

~~Item~~For 4.the ~~Controls~~Nine Months Ended December 31, 2011 and ~~Procedures.~~2010

The Company's Chief Executive Officer and its Chief Financial Officer are primarily responsible for the accuracy of the financial information that is presented in this quarterly Report. These officers have as of the close of the period covered by this Quarterly Report, evaluated the Company's disclosure controls and procedures (as defined in Rules 13a-4c and 15d-14c promulgated under the Securities Exchange Act of 1934 and determined that such controls and procedures were effective in ensuring that material information relating to the Company was made known to them during the period covered by this Quarterly Report. There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(fUnaudited) and 15d-15(f) under the Exchange Act) during the third quarter of our 2009 fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

17NOTE B - GOING CONCERN

~~PART~~Under IIASC 205-40, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future obligations as they become due within one year after the date the financial statements are issued. As required by this standard, our evaluation shall initially not take into consideration the potential mitigating effects of our plans that have not been fully implemented as of the date the financial statements are issued.

~~Item~~In 1performing the first step of this assessment, we concluded that the following conditions raise substantial doubt about our ability to meet our financial obligations as they become due. ~~Legal~~As ~~Proceedings~~of December 31, 2011, the Company had cash of $523, total current liabilities of $705,249, and negative working capital of $665,597. For the Nine months ended December 31, 2011, we incurred a net loss of $559,726 and used $(405,214) cash from operating activities. We expect to continue to incur negative cash flows until such time as our business generates sufficient cash inflows to finance our operations and debt service requirements.

~~The~~In ~~Company~~performing ~~received~~the ansecond ~~alleged~~step ~~claim~~of inthis ~~January~~assessment, ~~2009~~we ~~from~~are ~~one~~required ofto ~~its~~evaluate ~~former~~whether ~~distributors~~our ~~for~~plans ~~failing~~ to ~~deliver~~mitigate ~~merchandise~~the ~~ordered~~conditions ~~and~~above ~~paid~~alleviate ~~for by~~ the ~~Plaintiff.~~substantial ~~The~~doubt ~~Company has~~about ~~subsequently~~our ~~filed a motion~~ ability to ~~dismiss~~meet ~~the~~our ~~claim~~obligations ~~and~~as isthey ~~considering~~become ~~separate~~due ~~legal~~within ~~recourse.~~one Onyear ~~July~~after ~~20, 2009,~~ the ~~Company filed~~date athat ~~cross-complaint~~the ~~for~~financial ~~breach~~statements ofare ~~contract,~~issued. ~~intentional~~Our ~~interference with contractual relationship, intentional interference~~future ~~with~~plans ~~prospective~~include ~~economic~~securing ~~relationship~~additional ~~and~~funding ~~accounting~~sources.

OnThere ~~February~~is 2,no ~~2010~~assurance athat ~~confidential~~sufficient ~~settlement~~funds ~~agreement~~required ~~and~~during ~~release~~the ~~was~~next ~~effectuated~~year ~~between~~or ~~the~~thereafter ~~parties~~will be generated from operations or that funds will be available through external sources. The ~~Complaint~~lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and ~~cross~~would, ~~complaint~~therefore, have ~~been~~a ~~dismissed~~material effect byon the ~~parties~~business. Furthermore, there can be no assurance that any such required funds, if available, will be available on ~~with~~attractive ~~prejudice~~terms or that they will not have a significant dilutive effect on the Company’s existing shareholders. We have therefore concluded there is substantial doubt about our ability to continue as a going concern through March 2012.

~~Item~~The 1Aaccompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. ~~Risk~~The ~~Factors~~accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of the uncertainty related to our ability to continue as a going concern.

~~We have sought to identify what we believe to be the most~~F-12

~~significant~~WATAIR ~~risks to our business. However, we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.~~ INC

We(formerly ~~are~~Wataire ~~dependent~~International on, ~~external financing~~Inc. )

ItNOTES isTO ~~imperative~~THE ~~that~~CONSOLIDATED weFINANCIAL raise additional capital to complete our operational plan to promote and commercialize our newly acquired business combinations and activities. We will also require funds to sustain our business operations if we are not successful in earning revenues from our product sales and sub-licensing. We estimate that we would require additional funding of $2,000,000 to pursue our business strategy. If we are unable to obtain equity financing upon terms that our management deems sufficiently favorable, or at all, it would have a material adverse impact upon our ability to expand our current operational plan. Any sale of share capital will result in dilution to existing shareholders.STATEMENTS

ToFor date, we have generated some revenues from sales but not enough to sustain our business operations. The success of our business depends on us receiving inventory and advertising materials from our suppliers and manufacturers. The exact amount of our current and future capital requirements will depend on numerous factors, some of which are not within our control, including the ~~progress~~Nine ofMonths ~~our~~Ended ~~development~~December ~~efforts~~31, ~~the costs~~2011 ~~of testing, supply of our products, demand of our products~~ and changes in governmental regulation. Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our Common Stock. If we are unable to raise additional funds when we need them, we may have to curtail or discontinue our operations, in which case you could lose the entire amount of your investment in the Company.2010

~~We are in our early stages of development and face a risk of business failure.~~ (Unaudited)

WeNOTE ~~are~~H in- ~~our~~INCOME early stages of development. We have no way to evaluate the likelihood that we will be able to operate our business successfully. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the technology and sales industries. We recognize that if we are unable to generate significant revenues from our sales, we will not be able to earn profits or continue operations. There is only a limited history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any additional operating revenues or ever achieve profitable operations from our current business initiatives. If we are unsuccessful in addressing these risks, our business will most likely fail.TAXES

WeThe Company accounts for income tax using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are ~~competing~~recognized ~~against~~for ~~larger~~the expected future tax consequences of temporary differences between the financial reporting and ~~better-financed~~tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities ~~companies~~are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

F-18

WeWATAIR operate in a highly competitive market with financial rewards pending on market performance. Some of our competitors are multi-million dollar enterprises with more resources for marketing, distribution and development. We may be in a disadvantage if any of our competitors focused on similar products we sell. Because we don’t have the infrastructure and personnel in place to adequately implement our business plans and operations, our business may fail.INC

~~Our~~(formerly ~~business~~Wataire ~~and~~International ~~the~~, ~~success of our products could be harmed if we are unable to maintain our brand image~~Inc. )

~~Our~~NOTES ~~success~~TO isTHE ~~heavily~~CONSOLIDATED ~~dependent~~FINANCIAL upon the market acceptance of our Watair branded lines of atmospheric water generators. If we are unable to timely and appropriately respond to changing consumer demand, the brand Watair distributes may be impaired. Even if we react appropriately to changes in consumer preferences, consumers may consider those brand images to be outdated. Lack of acceptance of our brands will have a material impact on the performance of the Company.STATEMENTS

~~Dependence~~For onthe ~~our~~Nine ~~suppliers~~Months Ended December 31, 2011 and 2010

Our success is highly dependent upon the continued support and services of suppliers. We are solely dependent on their support to provide enough inventories to meet our purchase orders. If our suppliers are not able to manufacture enough products to meet the demands of our purchase orders, our business will most likely fail.(Unaudited)

~~Demand~~NOTE ~~for~~I ~~our~~– ~~products~~SUBSEQUENT ~~and services may fail to materialize~~ EVENTS

~~Our~~The ~~growth~~Company ~~and~~has ~~success~~evaluated ~~will~~subsequent ~~depend on our success~~events inthrough ~~introducing~~the ~~and~~date ~~selling our products. The market for~~ the ~~products~~financial ~~and~~statements ~~services~~were weavailable ~~plan~~ to ~~offer is relatively new and there is little hard data to validate market demand or predict how this demand will~~ be ~~segmented~~issued. ~~There~~ ~~could~~On beMay ~~much lower demand than believed~~18, orthe ~~interest~~Company inaccepted ~~our~~the ~~products~~resignation ~~and~~of ~~services~~Thomas Braid ~~could~~as ~~decline~~Director orand ~~die~~officer ~~out,~~of ~~which~~the ~~could adversely affect our ability to sustain our operations~~Company.

~~There is substantial doubt as to our ability to continue as a going concern~~ F-19

~~Our~~ITEM ~~financial results for the quarter ended December 31, 2010 show substantial losses~~2. ~~The~~MANAGEMENT’S ~~accompanying~~DISCUSSION ~~financial~~AND ~~statements~~ANALYSIS ~~have~~OF ~~been~~FINANCIAL ~~prepared~~CONDITION inAND ~~conformity~~RESULTS ~~with the~~OF generally accepted accounting principles in the United States of American which contemplates the Company as a going concern. The Company has sought out additional investment to raise additional funds. However, there are no assurances that the Company will continue as a going concern without the successful completion of additional funding. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.OPERATIONS

~~Our independent auditors, Gruber &~~ Company ~~LLC,~~ have expressed substantial doubt about our ability to continue as a going concern given our recurring losses from operations and net stockholder's deficit. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise.Overview

~~Dependence~~Watair Inc. is a Washington corporation incorporated on ~~key~~August ~~management~~17, 2000. Watair is currently in the development stage and ~~personnel~~has completed its acquisition of all of the intellectual property relating a water treatment process and devices for water-from-air machines. The agreements previously executed between the Company and Ecosafe have been terminated and cancelled and forms part of the current agreement. To this end, the Company’s future results of operation will be highly dependent upon the success of its efforts to sell and market its products and technologies. The Company plans to sell its products to distributors and also through multiple indirect channels, such as resellers.

Our success is highly dependent upon the continued services of Robert Rosner, our Chief Executive Officer. If he were to leave us this could have a materially adverse effect upon our business and operations. We anticipate entering into employment contract with Mr. Rosner but can provide no assurance that we will come to terms for such employment agreement. 4

~~Our~~Results business also requires additional staff in all areas to successfully bring our products to market. Our success depends on our ability to attract and retain technical and management personnel with expertise and experience in the technology field. If we are unable to attract and retain qualified technical and management personnel, we will suffer diminished chances of ~~future success.~~operations

19The Company’s revenue for the Nine months ended December 31, 2011 decreased to $4,336 from $230,591 for the same period ended 2010.

WeOur ~~may~~operating beexpenses ~~subject~~in tothe ~~product~~Nine ~~liability~~months orended ~~breach~~December of31, ~~contract~~2011 ~~claim~~increased ifto ~~our~~$560,690, ~~products~~from do$482,825 ~~not~~for ~~work~~the assame ~~promised~~period ~~from~~in ~~our~~2010. ~~Inventor(s)~~Major operating expenses include management fees of $10,000, amortization expense, professional fees and ~~predecessor~~consulting fees.

The ~~atmospheric~~increase ~~water~~is ~~generators~~mainly ~~are~~due ~~designed to~~from ~~facilitate potable safe drinking water. If~~ the ~~technology fails to work as manufactured by our inventor(s) and predecessor,~~amortization ~~customers~~& ~~may~~impairment ~~bring~~of ~~claims~~assets ~~against~~from ~~us. Despite limitations on such claims~~$381,909 ~~such~~& ~~claims can be costly and time consuming which could have a material adverse effect on our operations~~$40,082 ~~even if we are found not~~ to ~~have~~$0 ~~been~~& at$0 ~~fault. We~~respectively ~~currently~~for ~~do not have liability insurance and anticipate that we will seek some coverage in~~ the ~~future~~nine ifmonths ~~such~~ended ~~coverage~~December is31, ~~available at a reasonable~~2011 ~~cost~~and 2010.

~~Significant~~Our ~~repair~~net ~~and/or~~loss ~~replacement~~for ~~with respect~~the tonine ~~product~~months ~~warranty~~ended ~~claims~~December 31, or2011, ~~product~~was ~~recalls~~$559,726 ~~could~~as ~~have~~compared ato ~~material~~the ~~adverse~~net ~~impact~~loss onof $391,540 during the ~~results~~same ofperiod ~~operations.~~in 2010.

WeLiquidity ~~provide~~and aCapital ~~limited warranty for our products for a period of one year. Significant warranty claims could have a material adverse effect on our results of operations.~~Resources

~~Government~~We ~~Regulation~~had $523 cash at December 31, 2011, compared to $87 cash at March 31, 2011.

~~Regulation~~At byDecember ~~government~~31, ~~authorities in the United States~~2011, ~~Canada~~we ~~and~~had ~~foreign countries may be a factor in the development~~$125,000 ~~manufacture and marketing of our products and~~ in convertible ~~our~~notes ~~research~~payable ~~and~~compared ~~product~~to ~~development~~$nil ~~activities.~~at ~~The~~March ~~process~~31, ~~of obtaining these approvals and the subsequent compliance may require time and financial resources~~2011.

~~Limited~~The ~~experience~~following totable ~~market~~provides ~~our~~detailed ~~products~~information about our net cash flows for the nine months ended December 31, 2011 and 2010.

Even if we are able to develop our products and obtain the necessary regulatory approvals, we have limited experience or capabilities in marketing or commercializing our products. We currently have some sales and just engaged a marketing agency. We do not have a distribution infrastructure in place. Accordingly, we are dependent on our ability to find collaborative marketing partners or contract sales companies for commercial sale of any of our products. Even if we find a potential marketing partner, we may not be able to negotiate an advertising and/or licensing contract on favorable terms to justify our investment or achieve adequate revenues.

	Dec. 31, 2011			Dec. 31, 2010
Net cash used in operating activities	$	(405,214	)	$	(127,153)
Net cash used in investing activities		-			(6,153)
Net cash provided by financing activities		405,650			133,292
Net increase / (decrease) in cash	$	436			(14)

~~Our~~Critical ~~business~~Accounting isPolicies ~~subject~~and ~~to risks associated with offshore manufacturing.~~ Estimates

WeThe ~~import~~SEC ~~some~~issued ofFinancial ~~our~~Reporting ~~products~~Release No. ~~into~~60, ~~the~~“Cautionary ~~United~~Advice Regarding Disclosure About Critical Accounting Policies” suggesting that companies provide ~~States~~additional disclosure and ~~Canada~~commentary ~~from~~on ~~foreign~~their ~~countries~~most ~~for~~critical ~~resale~~accounting policies. ~~All~~In ofFinancial ~~our~~Reporting ~~import~~Release ~~operations~~No. ~~are~~60, ~~subject~~the toSEC has ~~tariffs~~defined ~~and~~the ~~quotas~~most ~~set~~critical byaccounting policies as the ~~U.S.~~ ~~and~~ones ~~other~~that ~~countries~~are most important to the portrayal of a company’s ~~governments~~financial condition ~~through~~and ~~mutual~~operating ~~agreements~~results orand ~~bilateral~~require ~~actions.~~management ~~Adverse~~to ~~changes~~make inits ~~these~~most ~~import~~difficult ~~costs~~ and ~~restrictions~~subjective judgments, oroften ~~our~~as ~~suppliers’~~a ~~failure~~result of the need to ~~comply~~make ~~with~~estimates ~~customs~~of ~~regulations~~matters orthat ~~similar~~are ~~laws~~inherently uncertain. Based on this definition, ~~could~~we ~~harm~~have ~~our~~identified ~~business.~~the following ~~Our~~significant ~~operations~~policies ~~are~~as ~~also~~critical ~~subject~~ to the ~~effects~~understanding of ~~international~~our ~~trade~~financial ~~agreements~~statements. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make a variety of estimates and ~~regulations~~assumptions ~~such~~that asaffect (i) the ~~North~~reported ~~American~~amounts ~~Free Trade~~of ~~Agreement,~~assets ~~the~~and ~~Caribbean~~liabilities ~~Basin~~and ~~Initiative~~disclosure of contingent assets and liabilities as of the ~~European~~date ~~Economic~~of ~~Area~~the ~~Agreement,~~financial statements and (ii) the ~~activities~~reported amounts of revenues and ~~regulations~~expenses of during the ~~World~~reporting ~~Trade~~periods ~~Organization.~~covered ~~Trade~~by ~~agreements~~the ~~can~~financial ~~also~~statements. Our ~~impose~~management ~~requirements~~expects ~~that~~to ~~adversely~~make ~~affects~~judgments ~~our~~and ~~business,~~estimates ~~such~~about asthe ~~setting quotas~~effect onof ~~products~~matters that ~~may~~are beinherently ~~imported~~uncertain. ~~from~~As athe ~~particular~~number of ~~country~~variables ~~into~~and ~~our~~assumptions ~~key~~affecting ~~market,~~ the ~~United~~future ~~States.~~resolution Inof ~~fact~~the uncertainties increase, ~~some~~these ~~trade~~judgments ~~agreements~~become even more subjective ~~can~~and ~~provide~~complex. ~~our~~Although ~~competitors~~we ~~with~~believe anthat ~~advantage~~our ~~over~~estimates usand assumptions are reasonable, oractual ~~increase~~results ~~our~~may ~~costs,~~differ ~~either~~significantly offrom these ~~which~~estimates. ~~could~~Changes in estimates and assumptions based upon actual results may have ana ~~adverse~~material ~~effect~~impact on our ~~business~~ ~~and financial condition~~results.

In addition, the recent elimination of quotas on World Trade Organization member countries by 2005 could result in increased competition from developing countries which historically have lower labor costs, including China. This increased competition, including from competitors who can quickly create cost and sourcing advantages from these changes in trade arrangements, could have an adverse effect on our business and financial condition.5

~~Our ability to import products in a timely and cost~~Off-~~effective~~Balance ~~manner~~Sheet may also be affected by problems at ports or issues that otherwise affect transportation and warehousing providers, such as labor disputes or increased U.S. homeland security requirements. These issues could delay importation of products or require us to locate alternative ports or warehousing providers to avoid disruption to our customers. These alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on our business and financial condition.Arrangements

20We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

~~Our~~ITEM ~~international~~3. ~~operations~~QUANTITATIVE ~~expose~~AND usQUALITATIVE ~~to political,~~DISCLOSURES ~~economic~~ABOUT ~~and~~MARKET ~~currency risks.~~RISK

~~All of our products came from sources outside of the United States.~~ As a ~~result,~~“smaller reporting company,” we are ~~subject~~not required to ~~the~~provide ~~risks~~this ~~of doing business abroad, including:~~information.

~~- Currency~~ITEM ~~fluctuations;~~4. CONTROLS AND PROCEDURES

- Management is responsible ~~Changes~~for establishing and maintaining adequate internal control over financial reporting. As defined in ~~tariffs~~Rules 13a-15(f) under the Exchange Act, internal control over financial reporting is a process designed by, or under the supervision of, Robert Rosner, the Company’s Chief Executive Officer and ~~taxes;~~Chief Financial Officer (principal executive, financial and accounting officer), and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

- The Company’s ~~Political~~internal control over financial reporting includes those policies and ~~economic~~procedures ~~instability~~that (1) pertain to the maintenance of records, that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

- Because of its inherent ~~Disruptions~~limitations, internal control over financial reporting may not prevent or ~~delays~~detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in ~~shipments~~conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in ~~currency~~Internal exchange rates may affect the relative prices at which we are able to manufacture products and may affect the cost of certain items required in our operation, thus possibly adversely affecting our profitability.Controls

~~There~~During ~~are~~the ~~inherent~~period ~~risks~~ended ofDecember ~~conducting business internationally. Language barriers~~31, ~~foreign laws and customs and duties issues all have a potential negative effect on our ability~~2011, tothere ~~transact~~was ~~business~~no change in ~~the~~internal ~~United~~control ~~States.~~over Wefinancial ~~may~~reporting bethat ~~subject~~has tomaterially ~~the~~affected ~~jurisdiction of the government and/~~or ~~private~~is ~~litigants~~reasonably ~~in foreign~~likely ~~countries where we transact business, and we may be forced~~ to ~~expend funds to contest legal matters in those countries~~materially inaffect ~~disputes~~our ~~with~~internal ~~those~~control ~~governments~~over orfinancial ~~with customers or suppliers~~reporting.

~~We may suffer from infringements or piracy of our trademarks, designs, brands or products.~~ 6

WePART ~~may~~II- ~~suffer~~OTHER from infringements or piracy of our trademarks, designs, brands or products in the U.S. or globally. Some jurisdictions may not honor our claims to our intellectual properties. In addition, we may not have sufficient legal resources to police or enforce our rights in such circumstances. INFORMATION

~~Unfair~~ITEM ~~trade practices or government subsidization may impact our ability to compete profitably~~1. LEGAL PROCEEDINGS

InThe anCompany ~~effort~~received toan ~~penetrate~~alleged ~~markets~~claim in January ~~which~~2009 ~~the~~from ~~Company~~one ~~competes,~~of ~~some~~its ~~competitors~~former ~~may~~distributors ~~sell~~for ~~products~~failing atto ~~very~~deliver ~~low~~merchandise ~~margins,~~ordered orand ~~below~~paid ~~cost,~~ for ~~sustained~~by ~~periods~~the ofPlaintiff. ~~time~~The Company inhas ~~order~~subsequently filed a motion to ~~gain~~dismiss ~~market~~the ~~share~~claim and ~~sales. Additionally,~~is ~~some~~considering ~~competitors~~separate ~~may~~legal ~~enjoy~~recourse. ~~certain~~On ~~governmental~~July ~~subsidies~~20, ~~that~~2009, ~~allow~~the Company ~~them~~filed toa ~~compete~~cross-complaint atfor ~~substantially~~breach ~~lower~~of ~~prices. These~~contract, ~~events~~intentional ~~could~~interference ~~substantially~~with ~~impact~~contractual ~~our~~relationship, ~~ability~~intentional tointerference with ~~sell~~prospective ~~our~~economic ~~product~~relationship ~~at profitable~~and ~~prices~~accounting.

IfOn weFebruary ~~market and sell our products in international markets~~2, we2010 will be subject to additional regulations relating to export requirements, environmental and safety matters, and marketing of the products and distributorships, and we will be subject to the effects of currency fluctuations in those markets, all of which could increase the cost of selling products and substantially impair the ability to achieve profitability in foreign markets. As a ~~part~~confidential ~~of our marketing strategy, we plan to market and sell our products internationally. In addition to regulation by~~settlement ~~the~~agreement ~~U.S. government, those products will be subject to environmental~~ and ~~safety~~release ~~regulations~~was ineffected ~~each~~between ~~country in which we market and sell. Regulations will vary from country to country and will vary from those of~~ the ~~United States~~parties. The ~~difference~~Complaint ~~in regulations under U.S. law~~ and ~~the~~cross ~~laws~~complaint ofhave ~~foreign~~been ~~countries~~dismissed ~~may~~by ~~be significant and, in order to comply with~~ the ~~laws~~parties ~~of these foreign countries,~~with ~~we may have to implement manufacturing changes or alter product design or marketing efforts~~prejudice. ~~Any changes in our business practices or products will require response to the laws of foreign countries and will result in additional expense to the Company.~~

~~Additionally,~~ITEM ~~we may be required to obtain certifications or approvals by foreign governments to market and sell the products in foreign countries~~1A. WeRISK may also be required to obtain approval from the U.S. government to export the products. If we are delayed in receiving, or are unable to obtain import or export clearances, or if we are unable to comply with foreign regulatory requirements, we will be unable to execute our complete marketing strategy.FACTORS

21We have sought to identify what we believe to be the most significant risks to our business. However, we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.

~~Item~~We 2.are ~~Unregistered~~dependent ~~Sales~~on ofexternal ~~Equity Securities and Use of Proceeds~~financing.

~~Not~~It ~~Applicable~~is imperative that we raise additional capital to complete our operational plan to promote and commercialize our newly acquired business combinations and activities. We will also require funds to sustain our business operations if we are not successful in earning revenues from our product sales and sub-licensing. We estimate that we would require additional funding of $2,000,000 to pursue our business strategy. If we are unable to obtain equity financing upon terms that our management deems sufficiently favorable, or at all, it would have a material adverse impact upon our ability to expand our current operational plan. Any sale of share capital will result in dilution to existing shareholders.

~~Item~~To 3date, we have generated some revenues from sales but not enough to sustain our business operations. The ~~Defaults~~success ~~Upon~~of ~~Senior~~our ~~Securities~~business depends on us receiving inventory and advertising materials from our suppliers and manufacturers. The exact amount of our current and future capital requirements will depend on numerous factors, some of which are not within our control, including the progress of our development efforts, the costs of testing, supply of our products, demand of our products and changes in governmental regulation. Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our Common Stock. If we are unable to raise additional funds when we need them, we may have to curtail or discontinue our operations, in which case you could lose the entire amount of your investment in the Company.

~~Not~~We ~~Applicable~~are in our early stages of development and face a risk of business failure.

~~Item~~We 4are in our early stages of development. We ~~Submission~~have no way to evaluate the likelihood that we will be able to operate our business successfully. The likelihood of ~~Matters~~success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the technology and sales industries. We recognize that if we are unable to generate significant revenues from our sales, we will not be able to earn profits or continue operations. There is only a ~~Vote~~limited ofhistory ~~Security~~upon ~~Holders~~which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any additional operating revenues or ever achieve profitable operations from our current business initiatives. If we are unsuccessful in addressing these risks, our business will most likely fail.

~~Not~~We ~~Applicable~~are competing against larger and better-financed companies.

~~Item~~We 5operate in a highly competitive market with financial rewards pending on market performance. ~~Other~~Some ~~Information~~of our competitors are multi-million dollar enterprises with more resources for marketing, distribution and development. We may be in a disadvantage if any of our competitors focused on similar products we sell. Because we don’t have the infrastructure and personnel in place to adequately implement our business plans and operations, our business may fail.

~~None~~Our business and the success of our products could be harmed if we are unable to maintain our brand image.

22Our success is heavily dependent upon the market acceptance of our Watair branded lines of atmospheric water generators. If we are unable to timely and appropriately respond to changing consumer demand, the brand Watair distributes may be impaired. Even if we react appropriately to changes in consumer preferences, consumers may consider those brand images to be outdated. Lack of acceptance of our brands will have a material impact on the performance of the Company.

~~Item~~Dependence 6.on ~~Exhibits~~our suppliers

~~(a)~~Our ~~Exhibits~~success is highly dependent upon the continued support and services of suppliers. We are solely dependent on their support to provide enough inventories to meet our purchase orders. If our suppliers are not able to manufacture enough products to meet the demands of our purchase orders, our business will most likely fail.

~~31 Certification~~Demand offor ~~Chief~~our ~~Executive~~products and ~~Chief~~services ~~Financial~~may ~~Officer pursuant~~ fail to Section 302 of the Sarbanes- Oxley Act of 2002. *materialize

32 Our growth and success will depend on our success ~~Certification~~in ofintroducing ~~Chief~~and ~~Executive~~selling our products. The market for the products and ~~Chief~~services ~~Financial~~we ~~Officer~~plan ~~pursuant~~to offer is relatively new and there is little hard data to ~~Section~~validate ~~906~~market ofdemand ~~the~~or ~~Sarbanes-~~predict ~~Oxley~~how ~~Act~~this ofdemand ~~2002~~will be segmented. There could be much lower demand than believed, 18or interest in our products and services could decline or die out, which could adversely affect our ability ~~U.S.C.~~to ~~Section~~sustain ~~1350.~~our *operations.

* FiledThere ~~herewith.~~is substantial doubt as to our ability to continue as a going concern

~~SIGNATURES~~Our financial results for the period ended September 30, 2011 show substantial losses. The accompanying financial statements have been prepared in conformity with the generally accepted accounting principles in the United States of American which contemplates the Company as a going concern. The Company has sought out additional investment to raise additional funds. However, there are no assurances that the Company will continue as a going concern without the successful completion of additional funding. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

InOur ~~accordance~~independent ~~with~~auditors, ~~the~~Gruber ~~Securities~~& ~~Exchange~~Company LLC, ~~Act~~have ofexpressed ~~1934,~~substantial ~~this~~doubt ~~report has~~about ~~been~~our ~~signed~~ability ~~below~~to bycontinue ~~the~~as ~~following~~a ~~persons~~going onconcern ~~behalf~~given ofour ~~the~~recurring ~~registrant~~losses from operations and innet ~~the~~stockholder's ~~capacities~~deficit. This ~~and~~opinion oncould ~~the~~materially ~~dates~~limit ~~indicated~~our ability to raise additional funds by issuing new debt or equity securities or otherwise.

~~Dated:~~Dependence ~~June~~on 7,key ~~2011~~management and personnel

~~WATAIR~~Our ~~INC~~success is highly dependent upon the continued services of Robert Rosner, our Chief Executive Officer. If he were to leave us this could have a materially adverse effect upon our business and operations. We anticipate entering into employment contract with Mr. Rosner but can provide no assurance that we will come to terms for such employment agreement.

~~(Registrant)~~Our business also requires additional staff in all areas to successfully bring our products to market. Our success depends on our ability to attract and retain technical and management personnel with expertise and experience in the technology field. If we are unable to attract and retain qualified technical and management personnel, we will suffer diminished chances of future success.

~~By:~~We ~~/S/~~may ~~“Robert~~be ~~Rosner”~~subject to product liability or breach of contract claim if our products do not work as promised from our Inventor(s) and predecessor

~~Robert~~The ~~Rosner~~atmospheric water generators are designed to facilitate potable safe drinking water. If the technology fails to work as manufactured by our inventor(s) and predecessor, customers may bring claims against us. Despite limitations on such claims, such claims can be costly and time consuming which could have a material adverse effect on our operations, even if we are found not to have been at fault. We currently do not have liability insurance and anticipate that we will seek some coverage in the future if such coverage is available at a reasonable cost.

~~President,~~Significant ~~Chief~~repair ~~Executive~~ and/or ~~Chief~~replacement ~~Financial~~with respect ~~Officer~~ to product warranty claims or product recalls could have a material adverse impact on the results of operations.

We provide a limited warranty for our products for a period of one year. Significant warranty claims could have a material adverse effect on our results of operations.

Government Regulation

Regulation by government authorities in the United States, Canada and foreign countries may be a factor in the development, manufacture and marketing of our products and in our research and product development activities. The process of obtaining these approvals and the subsequent compliance may require time and financial resources.

Limited experience to market our products

Our business is subject to risks associated with offshore manufacturing.

We import some of our products into the United States and Canada from foreign countries for resale. All of our import operations are subject to tariffs and quotas set by the U.S. and other countries’ governments through mutual agreements or bilateral actions. Adverse changes in these import costs and restrictions, or our suppliers’ failure to comply with customs regulations or similar laws, could harm our business. Our operations are also subject to the effects of international trade agreements and regulations such as the North American Free Trade Agreement, the Caribbean Basin Initiative and the European Economic Area Agreement, and the activities and regulations of the World Trade Organization. Trade agreements can also impose requirements which adversely affect our business, such as setting quotas on products that may be imported from a particular country into our key market, the United States. In fact, some trade agreements can provide our competitors with an advantage over us, or increase our costs, either of which could have an adverse effect on our business and financial condition.

Our ability to import products in a timely and cost-effective manner may also be affected by problems at ports or issues that otherwise affect transportation and warehousing providers, such as labor disputes or increased U.S. homeland security requirements. These issues could delay importation of products or require us to locate alternative ports or warehousing providers to avoid disruption to our customers. These alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on our business and financial condition.

Our international operations expose us to political, economic and currency risks.

All of our products came from sources outside of the United States. As a result, we are subject to the risks of doing business abroad, including:

Currency fluctuations;

Changes in tariffs and taxes;

Political and economic instability; and

Disruptions or delays in shipments.

Changes in currency exchange rates may affect the relative prices at which we are able to manufacture products and may affect the cost of certain items required in our operation, thus possibly adversely affecting our profitability.

There are inherent risks of conducting business internationally. Language barriers, foreign laws and customs and duties issues all have a potential negative effect on our ability to transact business in the United States. We may be subject to the jurisdiction of the government and/or private litigants in foreign countries where we transact business, and we may be forced to expend funds to contest legal matters in those countries in disputes with those governments or with customers or suppliers.

We may suffer from infringements or piracy of our trademarks, designs, brands or products.

We may suffer from infringements or piracy of our trademarks, designs, brands or products in the U.S. or globally. Some jurisdictions may not honor our claims to our intellectual properties. In addition, we may not have sufficient legal resources to police or enforce our rights in such circumstances.

Unfair trade practices or government subsidization may impact our ability to compete profitably.

In an effort to penetrate markets in which the Company competes, some competitors may sell products at very low margins, or below cost, for sustained periods of time in order to gain market share and sales. Additionally, some competitors may enjoy certain governmental subsidies that allow them to compete at substantially lower prices. These events could substantially impact our ability to sell our product at profitable prices.

If we market and sell our products in international markets, we will be subject to additional regulations relating to export requirements, environmental and safety matters, and marketing of the products and distributorships, and we will be subject to the effects of currency fluctuations in those markets, all of which could increase the cost of selling products and substantially impair the ability to achieve profitability in foreign markets. As a part of our marketing strategy, we plan to market and sell our products internationally. In addition to regulation by the U.S. government, those products will be subject to environmental and safety regulations in each country in which we market and sell. Regulations will vary from country to country and will vary from those of the United States. The difference in regulations under U.S. law and the laws of foreign countries may be significant and, in order to comply with the laws of these foreign countries, we may have to implement manufacturing changes or alter product design or marketing efforts. Any changes in our business practices or products will require response to the laws of foreign countries and will result in additional expense to the Company.

Additionally, we may be required to obtain certifications or approvals by foreign governments to market and sell the products in foreign countries. We may also be required to obtain approval from the U.S. government to export the products. If we are delayed in receiving, or are unable to obtain import or export clearances, or if we are unable to comply with foreign regulatory requirements, we will be unable to execute our complete marketing strategy.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit No.		Description
31.1		Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).
31.2		Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

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 hereunto duly authorized.

	On behalf of: WATAIR, INC.

January 26, 2024	/s/ David Hill
	Chief Executive Officer, Vyre Network
	(Principal executive officer).

Filing Compare · CABO VERDE CAPITAL INC.