OVERVIEW

Wataire International, Inc. ("Wataire," the "Company," "us," or "we") was incorporated under the laws of the State of Washington on August 17, 2000 and has been a reporting issuer with the United States Securities and Exchange Commission (the "SEC") since November 2000.

On October 3, 2006, the Company changed its name to Wataire International, Inc. Previously, on August 26, 2003, the Company had changed its name from Corporate Development and Innovation, Inc. to Cimbix Corporation. The Company now trades under the ticker symbol "WTAR" on the Over-the-Counter Bulletin Board.

The Company's business is still in its early developmental and promotional stages and to date, the Company's primary activities have involved significant re-structuring and re-organization. The Company sold its wholly owned subsidiaries, Millennium Business Group (USA) Inc. ("MBG USA") and Advanced Dental Technologies Inc. ("ADT"), to The Triple 8 Holding Trust ("Triple 8"). Since then, the Company entered into an exclusive world-wide licensing agreement with On4 Communications, Inc. ("On4"), formerly Petsmobility Networks (Canada) Inc., to market and distribute the PetsCell technology and the "PetsMobility" brand products and services. As of January 30, 2006, On4 and the Company re-negotiated the license agreement. The original license agreement was rescinded and the parties entered into an Asset Purchase Agreement pursuant to which the Company purchased the intellectual property rights relating to four established Web sites that promote the PetsMobility products, and we retained the non-exclusive worldwide right to market and distribute the PetsCell and the PetsMobility brand products. The purchase price for the assets acquired from On4 was $300,000 and consisted of $50,000 cash previously paid to On4 and 1,923,077 shares of the Company's common stock. The agreement was mutually terminated on July 17, 2006 by both the Company and On4, and the 1,923,077 shares were not issued.

We hired consultants to address the viability, research, development and market of our then, exclusive worldwide license agreement with On4. Our objective was to exploit our license agreement through product development for sales and sub-licensing of our license to earn royalty revenue streams. Since the license agreement was mutually rescinded and a new asset purchase agreement was entered into, we had to re-organize the Company's initiatives. Only two of the consultants provided very services, and we decided to terminate the consulting agreements. Each consultant was provided written notice to terminate the consulting arrangements. The Company cancelled 7,414,000 of the 8,000,000 common shares issued to the consultants for the On4 license.

On or about July 10, 2006 the Company entered into an exclusive license agreement with Wataire Industries Inc. (“WII”) to market and distribute their commercial water generation machines. The Company issued 10,000,000 common shares for an exclusive license of five years with an optional renewal period for an additional five years. As part of the terms and conditions of the agreement, WII can nominate up to five individuals to be directors of Company.

On or around September 12, 2006, the Company entered into another exclusive license agreement with WII to market and distribute their home/office water generation machines. The Company issued 1,000,000 common shares for an exclusive license arrangement of five years with an optional renewal period for an additional five years. On October 19, 2006, the Company and WII amended both exclusive license agreements to provide for a 15-year initial term with an optional period for an additional 10 years.

On September 21, 2006, the Company executed an agreement granting P204 Enterprises Ltd. (“P204”) the rights to sell atmospheric water generators under a private label brand. The agreement provides that a minimum purchase of five containers of the home/office units as well as two 2,500 liter per day commercial units are to be ordered by P204 within 45 days of the signing of the agreement. The contract is performance based and has a term of five years with an option to renew for a further five years. P204 is in default and the agreement has not been consummated.

BUSINESS

The focus of our business is to fully exploit our exclusive license agreement with WII by marketing and distributing their commercial and home/office water generation machines as well as their under-the-counter/over-the-counter units, their water-producing greenhouse, and any future products developed by WII using WII’s trade name and trademark.

WII is the manufacturer of atmospheric water generators and filtration systems. The atmospheric water generator produces purified water from the atmosphere by using a condensing surface and a special filtration system that removes dust, airborne particles and bacteria to generate clean drinking water and, at the same time, simultaneously cleaning the air. This method of extracting water vapor has been in use for many years. Some similar applications include air conditioners and dehumidifiers. The actual water production and cost per gallon varies with the humidity and temperature of the atmosphere of the specific site in which the unit is employed.

The water generation equipment is a water-from-air technology system developed by a team of specialized technicians incorporating patent pending technologies that control bacterial contamination. As of the date of this Annual Report, the Company sells two types of atmospheric units. One is the small-scale home/office units which include a full-sized upright model and a countertop model. These units can produce between four to seven gallons of water per day depending on humidity and temperature levels of the location of the unit. The capacity of the home/office units is designed to replace bottled water dispensers, eliminating the need for replenishment and storage of plastic bottles. These units are intended for usage in residences, schools, offices, hospitals and restaurants. They can serve as a personal disaster relief unit for consumers in circumstances such as hurricane Katrina where residents in the affected area had no drinking water. The second type is the commercial/industrial unit. These units are capable of producing more than 5,000 liters (675 gallons) of safe drinking water each day. Industrial units are intended for use in military camps, industrial applications such as factories, commercial applications such as hotels, humanitarian and disaster relief applications where fresh drinking water is scarce.

The water generating units are equipped with an electronic control system that turns the machine on and off when full and can circulate the water to maintain clean drinking water 24 hours a day, 365 days in a year. It has a dynamic display to allow for monitoring the machine's operation. It tells you when a new filter(s) is required. The machine requires 750 watts of energy when producing water and has many applications globally. There is a countertop and stand-alone model for the home or office use, and larger models for commercial and industrial use such as hotels, factories, institutions, facilities, etc. The technology is a very attractive alternative to the logistics and expense of bottled water. Water generated from the machines meets World Health Organization drinking water standards.

The system provides an independent, sustainable safe water source for a wide variety of possible circumstances and scenarios such as mining and petroleum exploration camps, bottled water and beverage manufacturers, food manufacturers, military camps, non-government organizations, humanitarian assistance organizations, emergency and disaster relief situations. According to field trials recently held in Belize and Thailand, the system performed well in a tropical environment producing the design projected volume of water and achieving the desired water quality standards. The unit is economically viable in temperate climates. Even though this revolutionary technology is adaptable to many kinds of environmental conditions, the commercial/industrial water harvesting equipment works best in the tropics due to the humidity levels, which will produce the highest rate of water production at the lowest cost per gallon.

The patent pending water treatment system is comprised of a three stage water treatment design that cleans water to meet World Health Organization guidelines. The unit consists of a filtration system, a food grade dehumidifier water producing module, and a water treatment module. The water treatment process is proprietary and may be subject of various patent applications already filed by WII or through WII’s strategic alliance with Canadian Dew Technologies Inc.

The process basically involves taking filtered moist air from the atmosphere and dehumidifying it for treatment by the water treatment module. This produced water is then processed through sediment filters, ultra-fine filters, activated charcoal filters and ultraviolet light treatment that eliminates virtually all biological contaminants including bacteria, viruses, and pollutants that are in the air. Atmospheric water vapor is an abundant resource that can be used with virtually no negative environmental impacts. The machine should be situated in a space that can provide fresh flowing air to the machine intake as it dehumidifies the space. The water-from-air technology has received broad acceptance around the world as a new and sustainable source of potable water.

Our target markets for the water-from-air systems are businesses, governments, and people who are situated in the humid tropics. To date, WII has sold various units of their atmospheric water generator in over 30 different countries and has received positive response from system users. The Company has just begun its marketing launch. So far, the Company has sold some of the home/office units and received purchase orders from the US Navy and from other sales contracts for its commercial/industrial units.

COMPETITION

Water purification and bottled water industries are highly competitive. According to WII’s internal research, there are possibly nine entities experimenting with the technology of water generation, of which two or three are direct active competitors. Some of those companies have limited or no business activities while others have entered into strategic alliances with one another. The relatively high energy cost associated with changing water from its vapor phase in the air to the liquid phase appears to be an obstacle to making sales for a number of these competitors. Control of bacteria and viruses in the field of atmospheric water generation creates a technological challenge that WII’s patent pending water treatment module has resolved. This is a substantial barrier to entering this field by others. The atmospheric water generator and filtration system industry is new, rapidly evolving and can compete with more traditional water treatment systems that rely on surface and ground water supplies. We expect competition to intensify in the future. In the future, our competitors can and may duplicate many of the products or services offered by our licensor, WII.

We believe a robust market opportunity exists for the atmospheric water generators and filtration systems. These technologies can provide an alternative solution to the world’s shortage of fresh water and provide clean, safe drinking water in various geographical settings. Today, governments and health professionals are starting to realize and understand the negative health effects of pollution, chemicals used to disinfect water supplies, and residual salt in desalinated water, and how they affect human bodies.

We want to be identified as an environmentally sustainable business. Clean drinking water is becoming a scarce commodity as our population increases. Pollution from sewage, industry, agriculture and acid rain has destroyed surface water reservoirs and aquifers. Water generation treatment and filtration is poised to be an important humanitarian industry as we learn more about global warming.

MARKET ANALYSIS AND STRATEGY

Our development is still in its early stages, however we anticipate having an outline of our marketing strategy in the spring of 2007. , In December 2006, the Company retained Cucoloris Films Inc. (“Cucoloris”), a Los Angeles based multimedia and marketing company to help us with our marketing needs. Cucoloris is specialized in launching and handling large corporate brands for global marketing campaigns. They have a long history of work with many non-profit organizations, government agencies and foundations including work for the Natural Resources Defense Council and produced many Public Service campaigns. They have produced commercials all over the world and known for producing product launch and corporate image campaigns. Some of their campaigns include Coca Cola, Kodak, American Airlines, Visa, Sprint, AT & T, Boeing as well as banks, insurance companies, automobiles and global Fortune 500 companies. They have received over hundred awards and nominated as production company of the year by the California Film Commission. Their “Farm Aid” commercial has been selected for the permanent collection at the Museum of Modern Art in New York.

We believe that with their specialized consultancy division in branding content, social messaging and viral marketing that their services will enhance the awareness of global warming and how our business can be identified as a very proactive, environmentally friendly company.

REGULATORY ENVIRONMENT

The manufacturing, processing, testing, packaging, labeling and advertising of the products that we sell may be subject to regulation by one or more U.S. federal agencies, including the Food and Drug Administration, the Federal Trade Commission, the CSA and UL in North America, the United States Department of Agriculture, the Environmental Protection Agency, the standards provided by the United States Public Health authority and the World Health Organization for Drinking Water. These activities may also be regulated by various agencies of the states, localities and foreign countries in which consumers reside.

The Company cannot predict the nature of any future U.S. laws, regulations, interpretations or applications, nor can it determine what effect additional governmental regulations or administrative orders, when and if promulgated, would have on its business in the future. Although the regulation of water is less restrictive than that of drugs and food additives, the Company cannot assure you that the current statutory scheme and regulations applicable to water will remain less restrictive. Further, we cannot assure you that, under existing laws and regulations, or if more stringent statutes are enacted, regulations are promulgated or enforcement policies are adopted, it is or will be in compliance with these existing or new statutes, regulations or enforcement policies without incurring material expenses or adjusting its business strategy. Any laws, regulations, enforcement policies, interpretations or applications applicable to our business could require the reformulation of certain products to meet new standards, the recall or discontinuance of certain products not capable of reformulation, additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling or scientific substantiation.

CERTIFICATION AND TESTING

All the products that we sell and plan to sell will go through stringent testing that will have the appropriate UL, CE or CSA certifications on the products. The CSA Mark is an internationally recognized mark that appears on over one billion products worldwide. CSA International is a leader in standards development, certification and testing, and quality management registration. The CSA International marks are accepted by many electrical inspectors, gas inspectors, building inspectors and other governmental authorities that approve projects and products that are sold in Canada, the United States and all over the world. The Company uses the services of CSA International because they test, certify and ensure that products comply with applicable safety and/or performance standards applicable to the products for the sale in that country. These standards include UL, CSA, ANSI (American National Standards Institute), ASTM, NSF, OSHA (Occupational Safety and Health Administration under the US Department of Labor), NVLAP (National Voluntary Laboratory Accreditation Program), SCC (Standards Council of Canada), IAS (International Accreditation Service Inc.) and others.

Some of the products that CSA International tests and certifies include information technology equipment, laboratory equipment, test and measurement equipment, scientific equipment, medical equipment, HVAC equipment, hazardous location equipment, gas-fired products, lighting products, plumbing products, electronic products, fuel cells and many more. Other applications include EMC (electromagnetic compatibility) emissions, safety of machines, voltage, pressure, gas appliances and medical devices.

At this time, the products carry the markings of CE and we are currently seeking CSA markings for Canada and UL markings the United States. These markings on the products indicate to governmental officials and consumers that the products may be legally placed on the market in the country for sale. It also indicates that the products met all safety requirements and tests, and such products are in conformity with the applicable standards.

Independent companies are engaged to test the water quality produced by the atmospheric water generators and filtration systems. These companies test for heavy metals, trace metals, microorganisms, color, temperature, PH levels, alkalinity, heterotrophic plate counts and others. To date, many tests have been conducted and met all APHA and US EPA Standards. Copies of test results are available upon request.

RESEARCH AND DEVELOPMENTS

The Company does not have its own research and development department and will rely on WII to furnish the Company with new technology and improvements on its existing applications, efficiency and theories of the underlying atmospheric water generators and filtration systems. WII have already conducted and will conduct further laboratory tests to determine the viability, safety and efficiency of the technologies. They will test all the prototypes, products and systems to ensure they meet various manufacturing and regulatory standards. The Company may further test the water produced by the atmospheric generators and filtration systems to ensure that it is in conformity and meets EPA standards. The Company cannot assure that it will develop products that will be approved by any regulatory or safety agency for commercial distribution.

DEVELOPMENTS AND CONTEMPLATED ACTIVITIES

We currently have minimal cash reserves and a significant working capital deficit. 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 management 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. The Company recently engaged Cucoloris to handle all the Company’s branding, marketing, advertising, media and public relations for the upcoming 2007 North American launch of its consumer product line of atmospheric water generators. The term of the engagement is for one year, and the Company will pay Cucoloris $1,000,000 and 1,000,000 shares of common stock to be registered on Form S-8 for their services.

To achieve our new operational plan, we will need to raise substantial additional capital for our operations through the sale of equity securities. We have no cash to fund our operations at this time, so we plan to offer common stock in private placements during the next 12 months to raise minimum proceeds of $4,000,000. We believe the proceeds from such private placements will enable us to expand our operations, buy inventory and start our marketing campaign. If we are able to raise the additional funding of $4,000,000 in private placement transactions over the next 12 months to cover our minimum cash requirements to persons who are "accredited investors", it would be allocated as follows:

•$1,000,000 for Cucoloris Films to handle our marketing, branding, media, public relations and advertising;

•$850,000 to purchase start-up inventory;

•$600,000 for management salaries and wages;

•$600,000 to hire additional managers and staff in the sales, administration, Web development and investor relations departments for our US offices;

•$300,000 for professional services and filing requirements;

•$150,000 for travel and vehicles costs;

•$100,000 for operational infrastructure costs including rent, communications, and consumable supplies,

•$100,000 for miscellaneous promotion and tradeshows;

•$300,000 for general working capital;

Due to the "start up" 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 financial support of creditors and stockholders until such time when we are successful in raising equity capital to finance the operations and capital requirements of the Company or until such time that we can generate our own revenue from our various divisions.

In the process of carrying out its business plan, the Company may determine that it cannot raise sufficient capital to support any of its business divisions on acceptable terms, or at all. The Company's board of directors has a fiduciary duty to act in the best interests of the corporation and its shareholders. The board of directors may decide that it is in the best interests of the corporation and its shareholders to liquidate the business, enter into a new line of business or engage in a business combination with another business.

The Company is not currently a party to any contracts, letters of intent, commitments or agreements and is not currently engaged in active negotiations with respect to any acquisitions other than disclosed elsewhere in this Annual Report. The Company continues to seek business opportunities to either complement or accentuate its current business initiatives.

EMPLOYEES

The Company currently has no employees. The Company anticipates entering into an employment contract with Robert Rosner, our Chief Executive Officer, but can provide no assurance that we will come to terms for such employment agreement. The Company looks to its directors and officers for their combined entrepreneurial skills and talents, and to outside subcontracted consultants. Management plans to use consultants, attorneys and accountants as necessary until the Company has sufficient funds to execute strategies for the Company. The Company’s performance and success is dependent on management’s ability to raise the necessary funds required to develop and promote the sale of its products. The Company currently has two license agreements with WII, which includes the provision of management, technical and administration support by WII for the water atmospheric generators.

PATENTS AND TRADEMAKS

We currently do not have any patents or trademarks; all patents and trademarks relating to our products are held by WII, the licensor.