The following discussion should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-K/A. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

We completed a share exchange transaction with Purio Environmental Water Source, Inc., a private Nevada corporation incorporated on November 16, 1999 ("Purio"), and the shareholders of Purio that resulted in Purio becoming our wholly-owned subsidiary and our new operating business as of February 13, 2008. The closing of the share exchange transaction resulted in a change of control of our company. The share exchange transaction was accounted for as a reverse acquisition and, as a result, our consolidated financial statements are, in substance, those of Purio, with our assets, liabilities, revenues and expenses included effective from the date of the closing of the share exchange transaction.

Results of Operations

Revenues

We have limited operational history. From our inception on November 16, 1999 to December 31, 2008 we generated revenues of $5,113. For the year ended December 31, 2008 we generated revenues of $3,394. As of December 31, 2008 we had total assets of $226,112 and total liabilities of $328,417. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months is uncertain.

Expenses

From our inception on November 16, 1999 to December 31, 2008 we incurred total expenses of $1,118,025, including $346,521 in professional fees, $430,698 in consulting fees, $40,345 in marketing expenses, $31,050 in depreciation expenses, $22,219 in exploration costs and expenses, $21,879 in occupancy costs, $42,894 in administration expenses and $178,945 in general and administrative expenses. Our general and administrative expenses consisted of travel, meals and entertainment, office maintenance, communication expenses (cellular, internet, fax and telephone), office supplies, web development and courier and postage costs. Our professional fees consisted of legal, accounting and auditing fees.

For the year ended December 31, 2008 we incurred total expenses of $357,985, including $75,382 in professional fees, $40,865 in consulting fees, $5,126 in depreciation, $40,345 in marketing expenses, $28,532 in occupancy costs, $37,490 in administration expenses and $128,212 in other general and administrative expenses. For the year ended December 31, 2007 we incurred total expenses of $641,640, including $240,924 in professional fees, $372,981 in consulting fees, $4,316 in depreciation and $23,419 in other general and administrative expenses.

Net Loss

From our inception on November 16, 1999 to December 31, 2008 we incurred a net loss of $1,118,025. For the year ended December 31, 2008 we incurred a net loss of $332,454. For the year ended December 31, 2007 we incurred a net loss of $641,640.

Liquidity and Capital Resources

As of December 31, 2008 we had $36,409 in cash, $58,503 in total current assets, $328,417 in total current liabilities and a working capital deficit of $269,914. As of December 31, 2008 we had an accumulated deficit of $1,090,904.

We are dependent on the funds raised through our equity financing. Our net loss of $1,118,025 from our inception on November 16, 1999 to December 31, 2008 was funded by our equity financing. Since our inception on November 16, 1999, we have raised gross proceeds of $564,768 in cash from the sale of our common stock.

From our inception on November 16, 1999 to December 31, 2008 we spent $423,762 on operating activities. For the year ended December 31, 2008 we spent $115,533 on operating activities. For the year ended December 31, 2007 we spent $506,527 on operating activities.

From our inception on November 16, 1999 to December 31, 2008 we spent $198,659 on investing activities related to our technology. For the year ended December 31, 2008 we spent $38,388 on investing activities. For the year ended December 31, 2007 we spent $15,748 on investing activities.

From our inception on November 16, 1999 to December 31, 2008 we received $631,320 from financing activities. For the year ended December 31, 2008 we spent $29,162 on financing activities. For the year ended December 31, 2007 we received $741,816 from financing activities.

The decrease in cash for the year ended December 31, 2008 of $183,083 was due to our operating, investing and financing activities.

During the next 12 months we intend to identify and establish markets for our products and arrange for the construction, delivery and commissioning of equipment to satisfy those markets. We anticipate that we will not be able to satisfy our cash requirements for the next 12 months and that we will have to raise additional funds of approximately $963,600 (a total of $1,000,000 less our approximately $36,400 in cash as of December 31, 2008) for the following:

                                                           Potential    Estimated
                      Description                       Completion Date Expenses
                                                                           ($)
Construction or purchase of purification equipment         12 months      500,000
Marketing expenses                                         12 months      300,000
Research and development                                   12 months       50,000
Professional fees (legal, accounting and auditing fees)    12 months      100,000
General and administrative expenses                        12 months       50,000
Total                                                                   1,000,000

We will require additional funds to implement our growth strategy and develop our water clarification and water reclamation business. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution to the equity ownership of our common stock. There is no assurance that we will be able to maintain our operations at a level sufficient for an investor to obtain a return on his or her investment in our common stock. Further, we may be unprofitable.

We intend to design and build purification equipment based on contracted orders, and we plan to conduct marketing via demonstrations, participation in trade shows, advertising in electronic and print media and by developing a global representative and dealer network. We will continue to spend money on research and development in order to develop Purio's technology for a broader range of applications.

We cannot provide a guarantee that we will be able to obtain the funds required to continue our operations. We intend to pursue various financing alternatives to meet our immediate and long-term financial requirements, but there is no assurance that additional financing will be available to us when we need it or that we will be able to obtain it on commercially reasonable terms. If we are not able to obtain additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Going Concern

We have generated limited revenues to date and depend on obtaining outside financing to carry out our operations. If we are unable to raise equity or secure alternative financing, we may not be able to continue our operations and our business plan may fail.

If our operations and cash flow improve, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or an improvement in our liquidity situation. The threat of our ability to continue as a going concern will cease to exist only when our revenues have reached a level able to sustain our business operations.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 1 of the notes to our financial statements . We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

Principles of Consolidation

The consolidated financial statements include the accounts of Purio Inc. and Purio Evironmental Water Source, Inc., a wholly owned subsidiary. Significant inter-company transactions have been eliminated.

Patent

The patent is United States Patent 5904855 granted May 18, 1999 for a "Closed Chemically Advanced Treatment System". The invention described in the patent is used by the Company in the water purification equipment which is under development. The patent is not in use to protect marketed products and is therefore not amortized. There has been no change in circumstances that would warrant impairment per an evaluation under SFAS No. 121.