Florida
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20-3217152
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
(Do
not check if a smaller reporting company)
|
INDEX
|
|||
PART
I.
|
FINANCIAL
INFORMATION
|
||
ITEM
1.
|
Financial
Statements
|
||
Balance
sheets as of December 31, 2008 (unaudited) and June 30,
2008
|
3
|
||
Statements
of operations for the three month and six month periods ended December 31,
2008 and 2007, and cumulative from July 22, 2005 (inception) through
December 31, 2008 (unaudited)
|
4
|
||
Statements
of changes in stockholders’ equity (deficiency) for the period from July
22, 2005 (inception) through December 31, 2008 (unaudited)
|
5
|
||
Statements
of cash flows for the six month periods ended December 31, 2008 and 2007,
and cumulative from July 22, 2005 (inception) through December 31,
2008 (unaudited)
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7
|
||
Notes
to financial statements (unaudited)
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8-15
|
||
ITEM
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
16-18
|
|
ITEM
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
19
|
|
ITEM
4T.
|
Controls
and Procedures
|
19
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|
PART
II.
|
OTHER
INFORMATION
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||
ITEM
1.
|
Legal
Proceedings
|
20
|
|
ITEM
1A.
|
Risk
Factors
|
20
|
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
|
ITEM
3.
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Defaults
Upon Senior Securities
|
20
|
|
ITEM
4.
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Submission
of Matters to a Vote of Security Holders
|
20
|
|
ITEM
5.
|
Other
Information
|
20
|
|
ITEM
6.
|
Exhibits
|
20
|
|
SIGNATURES
|
21
|
December
31,
|
June
30,
|
|||||||
2008
|
2008
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Cash
|
$ | - | $ | 5,421 | ||||
Accounts
receivable - net of allowance ($16,297 at December 31, 2008
and $2,762 at June 30, 2008)
|
1,800 | - | ||||||
Inventories
|
53,635 | 87,957 | ||||||
Other
current assets
|
6,000 | - | ||||||
Total
current assets
|
61,435 | 93,378 | ||||||
Trademark
|
325 | 325 | ||||||
Intangible
asset - license, net of accumulated amortization
|
1,027,202 | 1,056,785 | ||||||
Total
assets
|
$ | 1,088,962 | $ | 1,150,488 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIENCY)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 116,119 | $ | 122,641 | ||||
Accrued
expenses
|
189,931 | 133,921 | ||||||
Accrued
royalties payable - current
|
50,000 | - | ||||||
Licensing
fees payable - current
|
82,500 | 230,000 | ||||||
Notes
payable
|
25,000 | 25,000 | ||||||
Convertible
debt
|
94,688 | 50,000 | ||||||
Due
to officers
|
74,403 | 98,053 | ||||||
Due
to stockholders
|
90,119 | 105,169 | ||||||
Total
current liabilities
|
722,760 | 764,784 | ||||||
Accrued
royalties payable - net of current portion
|
700,442 | 496,373 | ||||||
Licensing
fees - net of current portion
|
255,463 | - | ||||||
STOCKHOLDERS'
EQUITY (DEFICIENCY)
|
||||||||
Common
stock, par value $.0001 per share; 100,000,000 authorized
|
5,354 | 3,147 | ||||||
Common
stock to-be-issued
|
10,000 | 355,000 | ||||||
Additional
paid-in-capital
|
3,639,206 | 2,998,146 | ||||||
Deficit
accumulated during the development stage
|
(4,244,263 | ) | (3,466,962 | ) | ||||
Total
stockholders' deficiency
|
(589,703 | ) | (110,669 | ) | ||||
Total
liabilities and stockholders' equity (deficiency)
|
$ | 1,088,962 | $ | 1,150,488 |
July
22, 2005
|
||||||||||||||||||||
Three
months
|
Three
months
|
Six
months
|
Six
months
|
(inception)
|
||||||||||||||||
ended
|
ended
|
ended
|
ended
|
through
|
||||||||||||||||
December
31,
|
December
31,
|
December
31,
|
December
31,
|
December
31,
|
||||||||||||||||
2008
|
2007
|
2008
|
2007
|
2008
|
||||||||||||||||
REVENUES
|
$ | 35,120 | $ | 4,168 | $ | 83,132 | $ | 21,347 | $ | 155,062 | ||||||||||
COST
OF GOODS SOLD
|
20,077 | 4,825 | 51,165 | 19,481 | 122,232 | |||||||||||||||
Gross
profit
|
15,043 | (657 | ) | 31,967 | 1,866 | 32,830 | ||||||||||||||
EXPENSES
|
||||||||||||||||||||
General
and administrative expenses
|
299,671 | 200,661 | 728,648 | 428,347 | 4,096,545 | |||||||||||||||
LOSS
FROM OPERATIONS
|
(284,628 | ) | (201,318 | ) | (696,681 | ) | (426,481 | ) | (4,063,715 | ) | ||||||||||
Interest
expense
|
4,067 | 3,445 | 6,317 | 6,445 | 36,657 | |||||||||||||||
Accretion
of accrued royalties
|
9,023 | - | 37,532 | - | 69,041 | |||||||||||||||
Amortization
expense
|
21,029 | 5,397 | 36,771 | 5,397 | 74,850 | |||||||||||||||
Loss
before provision for income taxes
|
(318,747 | ) | (210,160 | ) | (777,301 | ) | (438,323 | ) | (4,244,263 | ) | ||||||||||
Provision
for income taxes
|
- | - | - | - | - | |||||||||||||||
Net
loss
|
$ | (318,747 | ) | $ | (210,160 | ) | $ | (777,301 | ) | $ | (438,323 | ) | $ | (4,244,263 | ) | |||||
Net
loss per share basic and diluted
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.18 | ) | |||||
Weighted
average per common share
|
43,849,283 | 22,412,125 | 40,126,518 | 21,897,508 | 24,221,880 |
Common
stock to-be-issued
|
Common
stock issued and outstanding
|
Additonal
paid-in-capital
|
Deficit
accumulated during the development stage
|
Total
stockholders' equity (deficiency)
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance
July 22, 2005 (inception)
|
- | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Common
stock to be issued in connection with Incorporation (July 22,
2005)
|
4,000,000 | 10,000 | - | - | - | - | 10,000 | |||||||||||||||||||||
Common
stock to be issued for consulting services
|
16,150,000 | 40,375 | - | - | - | - | 40,375 | |||||||||||||||||||||
Common
stock issued - private placement, net of issuance costs of
$58,255
|
461,750 | 126,445 | - | - | - | - | 126,445 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (64,361 | ) | (64,361 | ) | |||||||||||||||||||
Balance
June 30, 2006
|
20,611,750 | 176,820 | - | - | - | (64,361 | ) | 112,459 | ||||||||||||||||||||
Issuance
of shares
|
(20,611,750 | ) | (176,820 | ) | 20,611,750 | 2,061 | 174,759 | - | - | |||||||||||||||||||
Beneficial
conversion of loan discount
|
- | - | - | - | 18,750 | - | 18,750 | |||||||||||||||||||||
Common
stock issued for consulting services
|
- | - | 660,000 | 66 | 622,334 | - | 622,400 | |||||||||||||||||||||
Issuance
of options for compensation
|
- | - | - | - | 231,300 | - | 231,300 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (1,113,231 | ) | (1,113,231 | ) | |||||||||||||||||||
Balance
June 30, 2007
|
- | - | 21,271,750 | 2,127 | 1,047,143 | (1,177,592 | ) | (128,322 | ) | |||||||||||||||||||
Common
stock to-be-issued
|
1,750,000 | 355,000 | - | - | - | - | 355,000 | |||||||||||||||||||||
Issuance
of shares
|
- | - | 4,330,000 | 433 | 468,567 | - | 469,000 | |||||||||||||||||||||
Issuance
of shares as repayment of amount due to stockholders
|
- | - | 467,626 | 47 | 70,097 | - | 70,144 | |||||||||||||||||||||
Common
stock issued for consulting services
|
- | - | 5,277,500 | 528 | 829,101 | - | 829,629 | |||||||||||||||||||||
Issuance
of options for compensation
|
- | - | - | - | 582,937 | - | 582,937 | |||||||||||||||||||||
Exercise
of options
|
- | - | 125,000 | 12 | 301 | - | 313 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (2,289,370 | ) | (2,289,370 | ) | |||||||||||||||||||
Balance
June 30, 2008
|
1,750,000 | 355,000 | 31,471,876 | 3,147 | 2,998,146 | (3,466,962 | ) | (110,669 | ) |
Common
stock to-be-issued
|
Common
stock issued and outstanding
|
Additonal
paid-in-capital
|
Deficit
accumulated during the development stage
|
Total
stockholders' equity (deficiency)
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Cancellation
of common stock to-be-issued (unaudited)
|
(1,500,000 | ) | (330,000 | ) | - | - | - | - | (330,000 | ) | ||||||||||||||||||
Issuance
of shares (unaudited)
|
(250,000 | ) | (25,000 | ) | 250,000 | 25 | 24,975 | - | - | |||||||||||||||||||
Issuance
of shares as repayment of amount due to
officers (unaudited)
|
- | - | 1,000,000 | 100 | 49,900 | - | 50,000 | |||||||||||||||||||||
Issuance
of shares as repayment of amount due to stockholders
(unaudited)
|
- | - | 666,111 | 67 | 41,483 | - | 41,550 | |||||||||||||||||||||
Beneficial
conversion of debt discounts (unaudited)
|
- | - | - | - | 22,500 | - | 22,500 | |||||||||||||||||||||
Common
stock issued for consulting services (unaudited)
|
- | - | 20,152,600 | 2,015 | 502,202 | - | 504,217 | |||||||||||||||||||||
Common
stock to-be-issued (unaudited)
|
1,000,000 | 10,000 | - | - | - | - | 10,000 | |||||||||||||||||||||
Net
loss (unaudited)
|
- | - | - | - | - | (777,301 | ) | (777,301 | ) | |||||||||||||||||||
Balance
December 31, 2008 (unaudited)
|
1,000,000 | $ | 10,000 | 53,540,587 | $ | 5,354 | $ | 3,639,206 | $ | (4,244,263 | ) | $ | (589,703 | ) |
July
22, 2005
|
||||||||||||
Six
months
|
Six
months
|
(inception)
|
||||||||||
ended
|
ended
|
through
|
||||||||||
December
31,
|
December
31,
|
December
31,
|
||||||||||
2008
|
2007
|
2008
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (777,301 | ) | $ | (438,323 | ) | $ | (4,244,263 | ) | |||
Adjustments
to reconcile net loss to net cash used in operating
|
||||||||||||
activities:
|
||||||||||||
Accretion
of accrued royalties and licensing fees
|
37,532 | - | 69,041 | |||||||||
Amortization
of intangible asset - license
|
29,583 | 5,397 | 67,662 | |||||||||
Common
stock issued for consulting services
|
504,217 | 164,187 | 1,996,621 | |||||||||
Issuance
of stock options - employee
|
- | - | 814,237 | |||||||||
Amortization
of beneficial conversion discount
|
7,188 | - | 25,938 | |||||||||
Changes
in operating assets and liabilities
|
||||||||||||
(Increase)/Decrease
in:
|
||||||||||||
Accounts
receivable
|
(1,800 | ) | 6,904 | (1,800 | ) | |||||||
Other
receivables
|
- | 7,000 | - | |||||||||
Other
current assets
|
(6,000 | ) | (30 | ) | (6,000 | ) | ||||||
Inventories
|
34,322 | (47,154 | ) | (53,635 | ) | |||||||
Increase/(Decrease)
in:
|
||||||||||||
Accounts
payable and accrued expenses
|
56,488 | 13,411 | 306,050 | |||||||||
Net
cash used in operating activities
|
(115,771 | ) | (288,608 | ) | (1,026,149 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase
of license
|
(12,500 | ) | (50,000 | ) | (75,500 | ) | ||||||
Trademark
|
- | - | (325 | ) | ||||||||
Net
cash used in investing activities
|
(12,500 | ) | (50,000 | ) | (75,825 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Net
proceeds from private placement
|
- | - | 126,445 | |||||||||
Proceeds
from sale of founders shares
|
- | - | 10,000 | |||||||||
Net
proceeds from sale of stock and exercise of stock options
|
10,000 | 202,313 | 504,313 | |||||||||
Proceeds
from notes payable
|
- | - | 50,000 | |||||||||
Repayment
of notes payable
|
- | (20,000 | ) | (25,000 | ) | |||||||
Advances
from officers
|
26,350 | 65,898 | 124,403 | |||||||||
Advances
from stockholders
|
26,500 | 109,033 | 201,813 | |||||||||
Proceeds
from convertible debt
|
60,000 | - | 110,000 | |||||||||
Net
cash provided by financing activities
|
122,850 | 357,244 | 1,101,974 | |||||||||
NET
INCREASE/(DECREASE) IN CASH
|
(5,421 | ) | 18,636 | - | ||||||||
CASH,
beginning of period
|
5,421 | 10,918 | - | |||||||||
CASH,
end of period
|
$ | - | $ | 29,554 | $ | - |
Supplemental
disclosures of cash flow
information:
|
December
31, 2008
|
June
30, 2008
|
|||||||
Amended
value of license described above
|
$ | 1,094,864 | $ | 1,094,864 | ||||
Less:
accumulated amortization
|
67,662 | 38,079 | ||||||
License,
net
|
$ | 1,027,202 | $ | 1,056,785 |
Issue
date
|
June
30, 2007
|
January
1, 2008
|
June
30, 2008
|
Options
issued
|
500,000
|
3,000,000
|
100,000
|
Risk-free
interest rate
|
5%
|
3%
|
3%
|
Expected
option life
|
5
years
|
5
years
|
5
years
|
Dividend
yield
|
0%
|
0%
|
0%
|
Volatility
|
120%
|
157%
|
194%
|
Exercise
price
|
$0.55
|
$0.10
|
$0.07
|
·
|
The
risk free interest rate for the period within the contractual life of the
option is based on the 5-year U.S. Treasury yield at the time of the
grant.
|
·
|
The
expected term of the options granted represents the period of time that
the options granted are expected to be
outstanding.
|
·
|
Historically,
the Company has not paid a dividend on its common shares and does not
expect to do so in the future.
|
·
|
The
volatility assumption represents an expectation of the volatility of the
price of the underlying shares for the expected term of the option,
considering factors such as historical stock price and stock volatility of
other companies within the
industry.
|
Options
|
Weighted
Average Exercise Price
|
||||
Outstanding
as of July 22, 2005 (inception)
|
-
|
$
|
-
|
||
Granted
|
125,000
|
0.0025
|
|||
Exercised
|
-
|
-
|
|||
Forfeited
|
-
|
-
|
|||
Expired
|
-
|
-
|
|||
Outstanding
as of June 30, 2006
|
125,000
|
$
|
0.0025
|
||
Granted
|
500,000
|
0.5500
|
|||
Exercised
|
-
|
-
|
|||
Forfeited
|
-
|
-
|
|||
Expired
|
-
|
-
|
|||
Outstanding
as of June 30, 2007
|
625,000
|
$
|
0.4400
|
||
Granted
|
3,100,000
|
0.0990
|
|||
Exercised
|
125,000
|
0.0025
|
|||
Forfeited
|
-
|
-
|
|||
Expired
|
-
|
-
|
|||
Outstanding
as of June 30, 2008
|
3,600,000
|
$
|
0.1610
|
||
Granted
|
-
|
-
|
|||
Exercised
|
-
|
-
|
|||
Forfeited
|
-
|
-
|
|||
Expired
|
-
|
-
|
|||
Outstanding
as of December 31, 2008
|
3,600,000
|
$
|
0.1610
|
·
|
The
founder of Eco Green Development, an environmentally based business
support company, is leading our efforts by adding qualified local,
regional and master distributors;
|
·
|
We
hired a veteran marketing specialist, as our major accounts representative
calling on Big Box retailers and other large volume
prospects;
|
·
|
A
consulting chemical engineer is assisting us in our research and
development efforts including strategic product development and innovative
methods of improving performance of our Atmospheric Water
Generators;
|
·
|
We
hired a Project Manager for the development of our new Water Cycle AWG. He
gained his knowledge and experience with water purification and
desalination processes and refrigeration systems during his tenure with
the US Navy; and
|
·
|
A
senior partner of the Referral Institute and executive director of
BNI-Business Network International in Fort Lauderdale has joined the
Company as a marketing consultant.
|
31.1
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
31.2
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d 14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
WATERPURE INTERNATIONAL, INC. | |||
Date: February
23, 2009
|
By:
|
/s/ PAUL S. LIPSCHUTZ | |
Paul
S. Lipschutz
|
|||
President
(Principal Executive Officer)
|
|||
Date: February
23, 2009
|
By:
|
/s/ ROBERT F. ORR | |
Robert
F. Orr
|
|||
Chief
Financial Officer (Principal Financial Officer and Principal Accounting
Officer)
|
|||