Item 1.

Business

This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. 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 these forward-looking statements.

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. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares in our capital stock.

As used in this annual report, the terms “we”, “us”, “our company”, mean Bioshaft Water Technology, Inc. a Nevada corporation, unless otherwise indicated.

Corporate History

We were incorporated on March 8, 2006, under the laws of the State of Nevada as "Pointstar Entertainment Corp." Effective September 28, 2007, we completed a merger with our subsidiary, "Bioshaft Water Technology, Inc.", also a Nevada corporation. As a result, we changed our name from "Pointstar Entertainment Corp." to "Bioshaft Water Technology, Inc." Our stock symbol is "BSHF".

Our principal executive offices are located at 1 Orchard Drive, Suite 220, Lake Forest, CA 92630 and our telephone number is (949) 748-8050.

We do not have any subsidiaries.

Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

Our Current Business

We are currently engaged in treating both Industrial wastewater and Domestic waste water or sewage treatment.

On September 18, 2007, we entered into an asset purchase agreement with Hans Bio Shaft Limited and Hassan Hans Badreddine, pursuant to which we acquired from Hans Bio Shaft U.K. Patent GB2390365 titled "Waste Water Treatment Plant and Method" and related United States and European patent applications for the design of a certain waste water treatment plant system. In consideration for the U.K. patent and related United States and European patent applications.

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Effective September 28, 2007, we changed our name from "Pointstar Entertainment Corp." to "Bioshaft Water Technology, Inc.".

With the completion of the asset purchase agreement, we changed our business to the business of designing and manufacturing domestic waste water treatment plant systems, using our patented Hans BioShaft unit – the Hans BioShaft System.

Details of these activities were as follows:

·

Bioshaft sold a containerized 15m3/day (3,963 GPD) to Kobelco-Eco, for testing at an industrial application in Kobe, Japan. The plant was installed and has been treating medium/ high strength wastewater utilizing the Bioshaft Pilot Turbo MBBR for several months with exceptional results. Bioshaft received a much larger request for quote from the same Kobelco-Eco for another industrial application in Japan.

·

Bioshaft is proud to announce it completed the installation of its first plant for industrial application for a new brewery in Texas, USA. The 36m3/day (9,600 GPD) containerized plant is now ready to treat the influent from the brewery as soon as it reaches its planned capacity.

·

A contract was signed with a Development and Construction Management Company based in Colorado, USA, for a major refurbishment and capacity increase of WWTP for the ANA Hospital, A USA military hospital, in Kabul, Afghanistan. Bioshaft received approval from USACOE for the design and installation. Currently, Bioshaft is finishing the installation and will be commissioning the system during the third quarter of 2012.

·

As of May 1, 2012, Bioshaft and Zuhier A. Zahran (ZAZ) agreed to modify the implementation of the Teaming projects. It was agreed that ZAZ would sign the contract with the clients and then issue a Purchase Order for the turnkey project to Bioshaft.  Bioshaft then would manage the financial accounting, engineering, and implement the project according to the contract.

·

The continued marketing efforts in the Middle East resulted in Bioshaft being awarded contracts for the WETICO/ MODA project in Saudi Arabia and the DELMON project in Bahrain.

·

BioShaft received a Purchase Order for a 14,000 M3/DAY (3,700,000 GPD) Domestic waste water treatment plant for the Ministry of Defense in Saudi Arabia and is located at the Saudi Arabian Military City near Hafr ElBaten.  Procurement and fabrication was started and completion is anticipated during the third quarter of 2012.

·

A  Purchase Order was received for a 400 M3/DAY (105,715 GPD) WWTP for the DELMON Poultry in Bahrain. Construction was started and completion is anticipated during the September 2012.

On March 06, 2010 we signed a teaming agreement with Zuheir Zahran & Co, a development company based in Jeddah, Saudi Arabia. The agreement provided our company with an experienced and established business developer to immediately pursue and implement our business plan in the Saudi Arabian and the gulf market. This teaming agreement boosted sales orders and qualified BioShaft to bid for large size plants and provided the recognition of BioShaft technology by government agencies and design engineering firms. Some of these highlights are:

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May, 2010 we installed a 50 m3/day (13,210 GPD) plant at a residential complex in Jeddah, Saudi Arabia. Tests results were consistent and satisfactory for over a year of operation with superior effluent quality and no sludge production or extraction.

·

BioShaft Technology was approved for a 2,000 m3/day (528,400 GPD) plant from the City of Jazan, Saudi Arabia, ministry of water and electricity. Several other approvals are being formalized for high rise tower projects in Jeddah, Saudi Arabia where minimum footprint is a great advantage.

·

A 60 m3/day (15,852 GPD) plant is under construction in a Jeddah commercial center. Another 60 m3/day (15,852 GPD) was approved on February 21, 2011 serving Al-Rai pharmaceutical industrial plant at Jeddah's industrial area.

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·

Our company completed the sales and installation of a 30 m3/ day (7,920 GPD) plant in Jeddah –Saudi Arabia through the appointed distributor Water Masters. Two other plants serving residential facilities were sold to Water Masters. A 30m3/day (7.920 GPD) on November 3, 2010 and a 15m3/day (3,960 GPD) on February 12, 2010. Both plants are under construction.  Both plants are awaiting delivery to their corresponding site and installation.  

·

Four more plants were sold to Water Masters, Jeddah, SA for residential complex applications in the Kingdom of Saudi Arabia. A 500 m3/day (134,000 GPD) concrete above ground plant is under construction. A 200 m3/day (52,800 GPD) packaged steel plant was fully installed on site and is awaiting client’s approval for startup after their completion of the residential development. Another 170 m3/day (44,900 GPD) packaged container plant was received from vendor and is being prepared for shipment to the site for installation. Also, a 100 m3/day (26,400 GPD) domestic container above ground plant was installed and is in process of being released to the end user.

On August 1, 2011, we entered into a stock option agreement with Walter Zurawick for an option to acquire 200,000 shares of common stock of our company at an exercise price of $0.15 per share for a period of five years. The option shall vest at 8,333 shares per month over 24 months on each monthly anniversary of the stock option agreement.

Effective February 23, 2012, we entered into an assignment of debt wherein we have agreed to accept US$250,000 as consideration for the assignment of obligations under a loan agreement with Pedernales Brewing Company, LLC and Lee Hereford.  Pursuant to the terms of the assignment of debt, we have agreed to absolutely and unconditionally assign, transfer and set over all of our right, title and interest in and to the loan.  Further to the terms, we have the right to repurchase the loan for the remaining principal balance plus unpaid interest.

Also on February 23, 2012, we entered into an amending agreement to a loan agreement and promissory note to modify the loan agreement and promissory note we originally entered into with Premier Financial Marketing Co. Ltd.  The parties have agreement to amend the loan agreement to provide for a conversion feature.  Pursuant to the amending agreement, any amounts outstanding under the loan are convertible at the price of $0.025 per share of common stock upon the provision of seven days notice by the lender.

Effective February 24, 2012, we entered into an employment agreement, dated February 1, 2012, with Walter J. Zurawick Jr. whereby Mr. Zurawick has agreed to perform executive duties and responsibilities as president and chief executive officer of our company for a period of 24 months.  The employment agreement became effective upon the resignation of Mr. Zurawick’s predecessor, Hassan Hans Badreddine.  As compensation, we have agreed to pay Mr. Zurwick a base salary at an annual rate of US$210,000, pro-rated on a monthly basis.

As of April 30, 2012 our company agreed to a settlement with Imad A. Yassine, our chief operating officer, chief financial officer, secretary, treasurer and director, regarding his consulting fees for the period from May 1, 2011 through April 30, 2012. Mr. Yassine is to receive a monthly consulting fee of $15,000. The total consulting fees accrued during that period amount to $180,000 and are to be paid in accordance with a mutually agreed upon schedule and terms.

Furthermore, our company agreed to the payment of the following in settlement with Imad a Yassine:

1.

The balance for the loan taken by Imad A. Yassine in October 2011 of $215,000.

2.

The balance of the expense charges paid on behalf of our company by Mr. Yassine of $12,402.82.

3.

The total of the Geico auto insurance for Imad Yassine of $2,423.35.

4.

Our company agreed to sell the 2005 BMW company car for a net price of $6,000.

Effective May 1, 2012, we entered into a consulting agreement with Sustainable Water Corp., a company operated as Chief Executive Officer by Imad Yassine.  Under the terms of the consulting agreement Sustainable Water Corp. will receive a monthly consulting fee of $15,000.

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Effective July 1, 2012 we entered into a consulting agreement with SRA Real Estate Services Inc. to assist the company in its organization and preparation corporate finance, administrative and management matters. For its services, SRA received compensation of $10,000 on execution of the consulting agreement and will receive $10,000 every 30 days afterward. The term of the agreement is until December 31, 2012.

Principal Products

Our principal product is a domestic waste water treatment plant system. To date, there are currently 30 domestic waste water plants in use worldwide that use the BioShaft technology. This system is made using our patented Hans BioShaft unit. Hans BioShaft unit works by emulating and accelerating a natural process found in rivers. The waste water treatment plant system for which we use our Hans BioShaft unit is called the "Hans BioShaft System". The Hans BioShaft System comprises four treatment phases with Hans BioShaft unit being used in the second treatment phase. The four treatment phases are:

Figure 1

The Hans BioShaft System is an attached growth process for the biological treatment of the human (domestic) waste water. It is known that conventional suspended growth process requires large aeration and sedimentation volumes. These volumes can be reduced significantly with use of biomass carriers which have a high specific surface area.

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The application of a large number of biomass carriers instead of sedimentation by surface aeration has a positive effect on the efficiency and size of the required equipment.

The waste water enters the Hans BioShaft unit (see Figure 2) where it flows through the biological aeration filter chamber which contains the hollow plastic media (biomass carriers). Anoxic decomposition takes place on the inner surface (hollow area) of the biomass carrier, while on the outside, corrugated surface, the process is aerobic. This ensures a high level of sewage purification at fast speed.

The oxygen demand for the decomposition process is provided by the central air lift aerator. The air is supplied by a compressor and is dispersed by a special maintenance free membrane diffuser providing an enormous number of micro bubbles which saturate the sewage with oxygen and simultaneously force the sewage up to the surface. This oxygen rich fluid then passes back down through the aeration chamber in intimate contact with the carriers. Because the biomass carriers have a relative density less than unity they will always try to rise toward the surface, but are constantly forced downward under the pressure of the aerated sewage. These two forces ensure that there is constant upward and downward motion of the carriers within the aeration chamber.

Collision between the carriers will occur which will remove the excess microbial biomass by means of down current. This self-cleaning feature will protect the biological filter against any possible clogging, and makes the unit virtually maintenance free.

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Treated water flows to final sedimentation compartment in the Hans BioShaft unit where suspended particles sink down to the bottom of the tank. This active biomass is then transferred back to the balance tank at periodic intervals by the airlift system which eliminates the need for sludge pumps.

Purified water rises up the outer compartment of the Hans BioShaft unit to the outlet and flows to the clarifier tank for final settlement and polishing before discharge. Any remaining biomass will settle to the bottom of the clarifier tank and will be periodically airlifted back to the balance tank.

Odors are eliminated due to the absorption of large quantities of oxygen in the system which converts odorous gases into dissolved chemicals.

On January 7, 2008, we launched a new product line of packaged domestic wastewater treatment systems ideal for emergency situations such as sewage overflow, system failure, natural disasters and military uses.

The new Turbo – MBBR BioShaft Packaged system is mobile and delivered ready for immediate installation. It is a pre-engineered, standard, packaged system designed as a complete domestic wastewater solution. The T-MBBR BioShaft Packaged System is a compact and economic alternative that provides customers with a quick means of installation and commissioning in the event of a sewage emergency situation. The United States has many aging and overburdened sewage systems which result in regular sewage overflows and the Hans BioShaft Packaged System was designed for these emergency situations and can handle from 5000 up to 30,000 gallons per day.

As of the date hereof, we have not announced any new products or services which have not been disclosed herein.

According to the Environmental Protection Agency’s own numbers, annual sewer overflows are staggering. For combined sewer systems, EPA estimates that 850 billion gallons of raw or partially treated sewage is discharged annually into local waters.

For separate sanitary sewer systems, the EPA estimates that between 23,000 and 75,000 sanitary sewage overflows occur per year in the United States, discharging a total volume of three to ten billion gallons per year. These discharges, laden with potentially harmful chemicals, pathogens, viruses, and bacteria, often wind up in local rivers and streams, city streets, parks, or in unfortunate cases, directly into peoples’ homes.

The Market

Our market for the T-MBBR BioShaft System encompasses both the municipal and Industrial sector,made up primarily of Food & Beverage opportunities worldwide. We will make direct sales calls to private contractors and industrial companies. For municipal projects, it will be necessary to assign a local agent or who is familiar with the market and the environmental government entities. This effort will also be supported with trade shows, sales brochures, website and online marketing.

The potential market segments are:

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Middle East;

·

United States;

·

Central and Eastern Europe; and

·

Asia.

Middle East Market Segment

Initially, we will target waste water operators of municipalities, land developers, and private enterprises in the Middle East and then move into international markets. Currently the countries in the Middle East are encountering severe water shortages, resulting from population growth caused by rapid economic development. We believe that,

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as water demand increases in the region, water efficiency will need to be improved in all sectors, including the agriculture sector, which is a major consumer of water in the Middle East.

United States Market Segment

We are headquartered in Lake Forest, California and we plan to focus on the United States market.

We believe the market trends in the United States favor us, particularly in the Food & Beverage environment. Our competitive advantage is the number one priority by minimizing the total cost of ownership while maintaining flexible offering. We deliver world-class capabilities to meet the challenge faced by the Food & Beverage industry.

We have many qualities that differentiate us from the competition, such as rapid manufacturing fast commissioning, short ramp-up time, lower total cost of ownership, quick return on investment, continuous process through innovative service & support to ensure manufacturing quality through completely integrated production.

We believe the high costs for fresh water and tough discharge standards in the United States are forcing industries to seek cost effective methods to treat waste water and reuse it.

Central and Eastern European Market Segment

We plan to target the Central and Eastern European market segment. One of the biggest drivers in this steadily growing market is the European Union directive for candidate countries. European Union funding aims at assisting new member and candidate countries to improve the waste water infrastructure in their regions.

We believe that this market is very price sensitive, giving us a competitive advantage. The choice of treatment processes is often based on price. Price is more important in this market then the long term benefits of advanced treatment systems. Furthermore the low price equipment vendors in South Eastern Europe are offering stiff competition to suppliers coming in from the mature western markets. The key to success here is to adopt innovative pricing strategies such as Build Own Operate. The Build Own Operate method is expected to allow us to create cash flows for many years and secure positive income for our company.

We also plan to establish local partnerships and concentrate on niche regional markets such as treatment plants for smaller communities.

Asian Market Segment

We are currently working in both the industrial & domestic sector in Malaysia, China and the Philippines.

In the Philippines market, we believe there is a large market for water and waste water treatment products and equipment and we expect it to grow over the next few years. We believe the best opportunities for U.S. exporters are products for municipal water systems.

The Philippine water and waste water problems can be attributed to staggering population growth and industrialization. The result of this is a booming market for water and waste water treatment products and equipment.

There are no restrictions on imports waste water treatment products and equipment. Tariff rates imposed on most waste water equipment range from 5% to 10%.

The other major market in Asia is the Chinese market. Currently, the percentage of foreign capital in the waste water treatment industry in China is low because of low level of Chinese government investment, lack of sewage standards, lack of sewage drainage networks, low sewage treatment prices.

However, in the coming years we expect the Chinese market to evolve and we believe that we can compete in this growing market due to the size of the market and close proximity of our manufacturing facilities, which are expected to be near Shanghai.

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Competition

We believe the driving forces in the waste water treatment industry to be technology and the overall cost of the treatment system. Some important industry trends that we are currently well positioned for are a shift toward nonchemical and multi-barrier treatment and the use of package plants for smaller communities.

While there are many competitors providing waste water treatment systems, our major competitors are Zenon and Smith & Loveless. Smith & Loveless, in particular, has a technology called the membrane bio reactor. Even though there are many alternative technologies for sewage treatment, two major competing technologies for our Hans BioShaft System are the traditional technologies such as activated sludge and membrane reactor treatments.

We expect competition to become increasingly intensified in the future and there is no assurance that we can keep pace with the intense competition in this market. Many of our competitors have significantly greater brand recognition, customer bases, operating histories and financial and other resources. In addition, many companies have expanded the size of their operations by acquiring other complementary companies to form advantageous strategic alliances. Many of our competitors offer less effective but similar services at less cost than us and have the financial resources to create more attractive pricing.

The system we bring to the market has not been introduced previously. Because engineering professionals are generally cautious about recommending new products to the market if not familiar with them, we may have difficulties in gaining market share.

Dependence on One or a Few Major Customers

Our revenues are not dependent on one or a few major customers.

Raw Materials

We are not dependent on any one supplier for our raw materials.

Sales and Marketing

Initially, we intend to target waste water operators of municipalities, land developers, and private enterprises in the Middle East and then move into international markets. We will attempt to reach these segments through traditional marketing methodologies. These methodologies include attendance at business specific conferences, direct mailings of brochures, warm and cold calling, website and e-commerce approaches and advertisements in trade publications.

Besides direct sales effort to large users of our products, a major element of our marketing efforts will be to develop a network of 4 strategic alliances with several types of companies, including:

·

contractors that specialize in the construction of water treatment plants;

·

engineering firms that work with municipalities;

·

firms that specialize in Build Own Operate project utilities;

·

Chinese manufacturers that we can outsource to.

Our marketing strategy will be to position ourselves as differentiated sewage treatment system provider. The primary goal of all marketing efforts will be to communicate these potential benefits to potential customers.

The sales strategy is to focus first on meeting the increased demand from our Middle East clients with whom Dr. Badreddine has established relationships for larger orders. These clients are critical to our ability to acquire additional accounts. Secondly we will focus on increasing the volume to the Middle East market. When we have reached maximum sales to existing channels we can then shift the majority of our focus to securing additional

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regions using our innovative contract pricing techniques such as Build Own Operate. This sales strategy is to concentrate on that segment of the market that can be most easily captured by our company.

Government Regulation

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the sale and use of our product in the jurisdictions where our products are sold.

In the United States, the sale and provision of on-site commercial and domestic waste water treatment devices is regulated at the state level through product registration, advertising restrictions, water testing, product disclosure and other regulations specific to the water treatment industry. In addition, municipal governments such as cities and counties frequently can require more stringent regulation. The United States Environmental Protection Agency is generally not involved in the regulation of waste water treatment devices with flow rates less than 1,000 gallons per day. In some cases, industrial, municipal, and other facilities must obtain certain permits from governmental authorities.

Federal agencies such as the United States Environmental Protection Agency, state agencies such as the Department of Health Services of various states, and local agencies such as regional pollution control boards, all have an interest in the quality of water discharged from sanitary sewer treatment plants. At a minimum, sewer treatment plants must protect the health and welfare of the local population by ensuring that raw or primary treated waste water does not contaminate the local potable water supply. At a maximum, some agencies must treat all inflows to tertiary standards, and then pump all treated water out of the drainage basin so that no effluent ever drains to a water supply.

Regulating agencies can compel sewer treatment enterprises to construct improvements to their plants by requiring higher standards in effluent quality. If not in compliance with regulations, sewer enterprises may be subject to heavy fines. Regulation is therefore often the driving force behind increasing sewer treatment costs in the United States,

Intellectual Property

We own the inventions covered by United Kingdom Patent GB2390365 titled "WASTE WATER TREATMENT PLANT AND METHOD". On February 10, 2009, we received our United States Patent from the United States Patent and Trademark Office for our wastewater treatment plant and method. The patent number is 7,488,413. We also acquired the following related patent applications from Hans Bio Shaft Limited under the Asset Purchase Agreement and the Patent Assignment Agreement:

·

PCT international patent application PCT/GB04/00002 (publication WO2005066081);

·

European patent application EP20040700280 (publication EP1711440)

however, although related, these patent applications are not linked by priority to our U.K. patent.

We intend to require our customers to enter into confidentiality and nondisclosure agreements before we disclose any sensitive aspects of our technologies or strategic plans, and we intend in the future to enter into proprietary information agreements with employees and consultants. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. It is difficult to monitor unauthorized use of technology, particularly in foreign countries where the laws may not protect our proprietary rights as fully as laws in the United States and the United Kingdom. In addition, our competitors may independently develop technology similar to ours. Our precautions may not prevent misappropriation or infringement of our intellectual property.

No assurance can be given that any patents based on pending patent applications or any future patent applications by us, or any future licensors, will be issued, that the scope of any patent protection will exclude competitors or provide competitive advantages to us, that any of the provisional patent applications that have been or may be issued to us or our licensors will be held valid if subsequently challenged or that others will not claim rights in or ownership of the provisional patent applications and other proprietary rights held or licensed by us. Furthermore, there can be no

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assurance that others have not developed or will not develop similar products, duplicate any of our technology or design around our patent or any patents that may be issued to us or our licensors.

Our success will also depend in part on our ability to commercialize our technology without infringing the proprietary rights of others. We have not conducted freedom of use patent searches and no assurance can be given that patents do not exist or could not be filed which would have an adverse affect on our ability to market our technology or maintain our competitive position with respect to our technology. If our technologies or subject matter are claimed under other existing United States or foreign patents or are otherwise protected by third party proprietary rights, we may be subject to infringement actions. In such event, we may challenge the validity of such patents or other proprietary rights or we may be required to obtain licenses from such companies in order to develop, manufacture or market our technology. There can be no assurances that we will be able to obtain such licenses or that such licenses, if available, may be obtained on commercially reasonable terms. Furthermore, the failure to either develop a commercially viable alternative or obtain such licenses may result in delays in marketing our technology or the inability to proceed with the development, manufacture or sale of products requiring such licenses, which may have a material adverse effect on our business, financial condition and results of operations. If we are required to defend ourselves against charges of patent infringement or to protect our proprietary rights against third parties, substantial costs will be incurred regardless of whether we are successful. Such proceedings are typically protracted with no certainty of success. An adverse outcome could subject us to significant liabilities to third parties and force us to curtail or cease our development and commercialization of our technology.

Employees

Our company has retained 6 consultants including our President, Chief Operating Officer and Vice President of Operations.

We plan to employ a number of executive officers including a vice president of marketing and three sales engineers. We anticipate that we may spend up to $1,080,000 to employee officers and employees and up to $50,000 in payroll taxes.

Research and Development

We have not spent any amounts on which has been classified as research and development activities in our financial statements during the last two fiscal years.

Going Concern

We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing.

Subsidiaries

We do not have any subsidiaries.

REPORTS TO SECURITY HOLDERS

Item 1A.

Risk Factors

Much of the information included in this annual report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”.

Risks Related to Our Business

We have a history of losses and no revenues, which raise substantial doubt about our ability to continue as a going concern.

From inception to April 30, 2012, we have incurred aggregate net losses of $21,447,003. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of when customers will order products, the size of customers’ orders, the demand for our products, and the level of competition and general economic conditions.

Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. No assurance can be given that we may be able to operate on a profitable basis.

Due to the nature of our business and the early stage of our development, our securities must be considered highly speculative. We have not realized a profit from our operations to date and there is little likelihood that we will realize any profits in the short or medium term. Any profitability in the future from our business will be dependent upon the successful commercialization or licensing of our core products, which themselves are subject to numerous risk factors as set forth below.

We expect to continue to incur development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flows until our products gain market acceptance sufficient to generate a commercially viable and sustainable level of sales, and/or additional products are developed and commercially released and sales of such products made so that we are operating in a profitable manner. Our history of losses and no revenues raise substantial doubt about our ability to continue as a going concern.

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We have had negative cash flows from operations since inception. We will require significant additional financing, the availability of which cannot be assured, and if our company is unable to obtain such financing, our business may fail.

To date, we have had negative cash flows from operations and have depended on sales of our equity securities and debt financing to meet our cash requirements. We may continue to have negative cash flows. We have estimated that we will require approximately $500,000 to carry out our business plan for the next twelve months. There is no assurance that actual cash requirements will not exceed our estimates. We will require additional financing to finance working capital and pay for operating expenses and capital requirements until we achieve a positive cash flow.

Our ability to market and sell our waste water treatment plant system will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, we will not be able to fully develop our business. Specifically, we will need to raise additional funds to:

·

support our planned growth and carry out our business plan;

·

protect our intellectual property;

·

hire top quality personnel for all areas of our business;

·

address competing technological and market developments; and

·

market and develop our technologies.

We may not be able to obtain additional equity or debt financing on acceptable terms as required. Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements. Any additional equity financing may involve substantial dilution to our then existing shareholders. If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results and compete effectively. More importantly, if we are unable to raise further financing when required, we may be forced to scale down our operations and our ability to generate revenues may be negatively affected.

We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.

We have no history of revenues from operations and have no significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. We have only recently completed our acquisition of the U.K. patent in respect to the Hans BioShaft System and our company has limited operating history in the business of designing and manufacturing domestic waste water treatment plant system. Accordingly, we must be considered in the development stage. Our success is significantly dependent on a successful commercialization of our waste water treatment plant system. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to develop a useful waste water treatment system or achieve commercial acceptance of our waste water treatment plant system or operate on a profitable basis. We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.

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If we fail to effectively manage the growth of our company and the commercialization of our products and technology, our future business results could be harmed and our managerial and operational resources may be strained.

As we proceed with the commercialization of our products, technologies and the expansion of our marketing and commercialization efforts internationally, we expect to experience significant growth in the scope and complexity of our business. We will need to add staff to market our services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We anticipate that we will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a material adverse effect on our business and financial condition.

We do not have the ability to manufacture our product on a commercial scale and will need to rely on third-party manufacturers and other third parties for production of our products, and our dependence on these manufacturers may impair the development of our product candidates.

Currently, we do not have the ability to internally manufacture our product on a commercial scale. We are in the process of identifying manufacturers for long-term supply contracts of components and subassemblies of our product. There are several potential manufacturers capable of manufacturing components and subassemblies for our waste water treatment plant system. There can be no assurance that we will be able to successfully negotiate long-term agreements with any of such potential manufacturers at a reasonable price and on other acceptable terms.

If our third-party manufacturers fail to deliver our products on a timely basis, with sufficient quality, and at commercially reasonable prices, we may be required to delay, suspend or otherwise discontinue development and production of our product. While we may be able to identify replacement third-party manufacturers or develop our own manufacturing capabilities for our product, this process would likely cause a delay in the availability of our product and an increase in costs. We may also be required to enter into long-term manufacturing agreements that contain exclusivity provisions and/or substantial termination penalties. In addition, third-party manufacturers may have a limited number of facilities in which our product can be produced, and any interruption of the operation of those facilities due to events such as equipment malfunction or failure or damage to the facility by natural disasters could result in the cancellation of shipments, loss of product in the manufacturing process or a shortfall in available product.

We depend upon a number of third party suppliers for component parts for our products, and any disruption from such suppliers could prevent us from delivering our products to our customers within required timeframes or at scheduled prices, which could result in order cancellations and a decline in sales.

We assemble our products using materials and components procured from a number of third-party suppliers. If we fail to maintain our relationships with these suppliers, we may be unable to assemble our products or our products may be available only at a higher cost or after a long delay. We may be unable to obtain comparable materials and components from alternative suppliers. Our failure to obtain components that meet our quality, quantity, technological and cost requirements in a timely manner may interrupt or impair our ability to assemble our products or it may increase our manufacturing cost. We may be unable to identify new suppliers or qualify their products for use on our production lines in a timely manner and on commercially reasonable terms. Any of these factors could prevent us from delivering our products to our customers within required timeframes, and we may experience order cancellations which would adversely affect our business operations.

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We may lose our competitiveness if we are not able to protect our proprietary technology and intellectual property rights against infringement, and any related litigation may be time-consuming and costly.

Our success and ability to compete depends to a significant degree on our proprietary technology. If any of our competitors copy or otherwise gain access to our proprietary technology or develop similar technologies independently, we may not be able to compete as effectively. The measures we have implemented to protect our proprietary technology and other intellectual property rights are currently based upon a combination of a patent, patent applications and trade secrets. These measures, however, may not be adequate to prevent the unauthorized use of our proprietary technology and our other intellectual property rights. Our pending patent applications may not result in the issuance of any patents or any issued patents that will offer protection against competitors with similar technology. Further, the laws of foreign countries may provide inadequate protection of such intellectual property rights. We may need to bring legal claims to enforce or protect such intellectual property rights. Any litigation, whether successful or unsuccessful, may result in substantial costs and a diversion of our company’s resources. In addition, notwithstanding our rights to our intellectual property, other persons may bring claims against us alleging that we have infringed on their intellectual property rights or claims that our intellectual property rights are not valid. Any claims against us, with or without merit, could be time consuming and costly to defend or litigate, divert our attention and resources, result in the loss of goodwill associated with our business or require us to make changes to our technology.

The manufacture, use or sale of our waste water treatment plant system may infringe on the patent rights of others, and we may be forced to litigate if an intellectual property dispute arises.

If we infringe or are alleged to have infringed another party’s patent rights, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, do not successfully defend an infringement action or are unable to have infringed patents declared invalid, we may:

·

incur substantial monetary damages;

·

encounter significant delays in marketing our waste water treatment plant system;

·

be unable to conduct or participate in the manufacture, use or sale of our waste water treatment plant system;

·

lose patent protection for our inventions and products; or

·

find that our patents are unenforceable, invalid, or have a reduced scope of protection.

Parties making such claims may be able to obtain injunctive relief that could effectively block our ability to further develop or commercialize our waste water treatment plant system in United States, Central and Eastern Europe, Asia and Middle East and could result in the award of substantial damages. Defense of any lawsuit or failure to obtain any such license could substantially harm our company. Litigation, regardless of outcome, could result in substantial cost to and a diversion of efforts by our company.

Because our waste water treatment plant system has not been accepted as a recognized form of waste water treatment, we face significant barriers to acceptance of our services.

Our waste water treatment plant system has not been fully utilized in any particular market. The use of equipment such as ours is a relatively new form of waste water treatment. Traditionally, these services are provided through other treatment methodologies, such as chemicals or other aeration methods. Accordingly, we face significant barriers to overcome the consumer preferences of traditionally used treatment programs for the type of waste water treatment products and services that we offer.

Market acceptance of our products and services will depend in large part upon our ability to demonstrate the technical and operational advantages and cost effectiveness of our products and services as compared to alternative,

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competing products and services, and our ability to train customers concerning the proper use and application of our products. There can be no assurance that our products and services will achieve a level of market acceptance that will be profitable for us.

Our waste water treatment plant system may not achieve market acceptance at a level necessary for us to operate successfully.

Our waste water treatment plant system may not achieve market acceptance at a level necessary to enable production at a reasonable cost, to support the required sales and marketing effort, to effectively service and maintain, and to support continuing research and development costs. In addition, our waste water treatment plant system may:

·

be difficult or overly expensive to produce;

·

fail to achieve performance levels expected by customers;

·

have a price level that is unacceptable in our targeted industries; or

·

be precluded from commercialization by the proprietary rights of others or other competitive forces.

We cannot assure you that we will be able to successfully manufacture and market our waste water treatment plant system on a timely basis, achieve anticipated performance levels or throughputs, gain and maintain industry acceptance of our waste water treatment plant system or develop a profitable business. The failure to achieve any of these objectives would have a material adverse effect on our business, financial condition and results of operations.

Because we face intense competition from larger and better-established companies that have more resources than we do, we may be unable to implement our business plan or increase our revenues.

The market for our waste water treatment products and services is intensely competitive and highly fragmented. Many of these competitors may have longer operating histories, greater financial, technical and marketing resources, and enjoy existing name recognition and customer bases. New competitors may emerge and rapidly acquire significant market share. In addition, new technologies likely will increase the competitive pressures we face. Competitors may be able to respond more quickly to technological change, competitive pressures, or changes in consumer demand. As a result of their advantages, our competitors may be able to limit or curtail our ability to compete successfully.

In addition, many of our large competitors may offer customers a broader or superior range of services and technologies. Some of our competitors may conduct more extensive promotional activities and offer lower commercialization and licensing costs to customers than we do, which could allow them to gain greater market share or prevent us from establishing and increasing our market share. Increased competition may result in significant price competition, reduced profit margins or loss of market share, any of which may have a material adverse effect on our ability to generate revenues and successfully operate our business. Our competitors may develop technologies superior to those that our company currently possess. In the future, we may need to decrease our prices if our competitors lower their prices. Our competitors may be able to respond more quickly to new or changing opportunities, technologies and customer requirements. Such competition will potentially affect our chances of achieving profitability, and ultimately affect our ability to continue as a going concern.

If product liability lawsuits are successfully brought against us, we will incur substantial liabilities and may be required to limit commercialization of our products.

We face an inherent business risk of exposure to product liability claims in the event that an individual is harmed because of the failure of our products to function properly. If we cannot successfully defend ourselves against the product liability claim, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

·

decreased demand for our products;

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·

injury to our reputation;

·

costs of related litigation;

·

substantial monetary awards to plaintiffs;

·

loss of revenues; and

·

the inability to commercialize our technologies.

We currently carry no product liability insurance. Although we expect to obtain product liability insurance coverage in connection with the commercialization of our products, such insurance may not be available on commercially reasonable terms or at all, or such insurance, even if obtained, may not adequately cover any product liability claim. A product liability or other claim with respect to uninsured liabilities or in excess of insured liabilities could have a material adverse effect on our business and prospects.

Products which incorporate our waste water treatment technology will be subject to extensive regulation, which can be costly and time-consuming and could subject us to unanticipated delays or prevent us from obtaining the required approvals to commercialize our products.

Before we can market and sell products which incorporate our waste water treatment technology in the United States and abroad, extensive regulatory testing, inspection and approvals may be required. The regulatory process can be costly and time consuming. Our products which incorporate the waste water treatment technology may not receive necessary regulatory approval. Even if these products receive approval, the approval process might delay marketing and sale of our products, which may lead to a failure to meet our sales projections.

We will be subject to laws, regulations and other procedures with respect to government procurement.

Because we plan to sell some of our products to government agencies, we will be subject to laws, regulations and other procedures that govern procurement and contract implementation by those agencies. These agencies are likely to impose vendor qualification requirements, such as requirements with respect to financial condition, insurance and history. We have limited experience with government procurement and cannot assure you that we will be able to meet existing or future procurements laws, regulations and procedures or that we will be able to qualify as a vendor.

Substantially all of our assets and a majority of our directors and officers are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our directors or officers.

Although we are organized under the laws of the State of Nevada, United States, a majority of our directors and our officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce judgments against us that are obtained in the United States in any action, including actions predicated upon civil liability provisions of federal securities laws. In addition, as the majority of our assets are located outside of the United States, it may be difficult to enforce United States bankruptcy proceedings against us. Under bankruptcy laws in the United States, courts typically have jurisdiction over a debtor’s property, wherever it is located, including property situated in other countries. Courts outside of the United States may not recognize the United States bankruptcy court’s jurisdiction. Accordingly, you may have trouble administering a United States bankruptcy case involving a Nevada company as debtor with most of its property located outside the United States. Any orders or judgments of a bankruptcy court obtained by you in the United States may not be enforceable.

Our by-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our by-laws contain provisions with respect to the indemnification of our officers and directors against all expenses, liability and loss (including attorneys’ fees, judgments, fines and amounts paid or to be paid in settlement)

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reasonably incurred or suffered by him or her in connection with any action, suit or proceeding to which they were made parties by reason of his or her being or having been one of our directors or officers.

Currency translation and transaction risk may negatively affect our net sales, cost of sales and gross margins, and could result in exchange losses.

Although our reporting currency is the United States dollar, we intend to conduct our business and incur costs in the local currency of the other countries in which we intend to operate. Changes in exchange rates between foreign currencies and the United States dollar could affect our net sales and cost of sales figures, and could result in exchange losses. In addition, we incur currency transaction risk whenever we enter into either a purchase or a sales transaction using a dollar currency other than the United States.

Risks Related to Our Common Stock

A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

We are authorized to issue up to 300,000,000 shares of common stock and 25,000,000 preferred shares with a par value of $0.001. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our company.

Trading on the OTC Bulletin Board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTC Bulletin Board service of the Financial Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like NASDAQ or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of their shares.

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Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The Financial Industry Regulatory Authority requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

OTHER RISKS

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most significant risks to our business, but 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. Investors should carefully consider all of such risk factors before making an investment decision with respect to our common stock.

Item 1B.

Unresolved Staff Comments

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2.

Properties

We do not own any real property. Our principal business offices are located at 1 Orchard, Suite 220, Lake Forest CA 92630. We currently lease our space at an annual cost of $27,124. We believe that our current lease arrangements provide adequate space for our foreseeable future needs.

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Item 3.

Legal Proceedings

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.

Item 4.

Mine Safety Disclosures

Not applicable.

PART II

Item 5.

Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

The high and low bid prices of our common stock for the periods indicated below are as follows:

⁽¹⁾ Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

Our common shares are issued in registered form. Nevada Agency and Transfer Company, 50 West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone: 775-322-0626; Facsimile: 775-322-5623) is the registrar and transfer agent for our common shares

On August 10, 2012, the list of stockholders for our shares of common stock showed 29 registered stockholders and 104,383,000 shares of common stock outstanding.

Dividends

We have not declared any dividends on our common stock since the inception of our company on March 8, 2006. There is no restriction in our Articles of Incorporation and Bylaws that will limit our ability to pay dividends on our common stock. However, we do not anticipate declaring and paying dividends to our shareholders in the near future.

Equity Compensation Plan Information

On December 15, 2007 we adopted a stock option plan. This plan has not been approved by our security holders. Under the terms of the plan, our company can issue, in aggregate, up to a total of 10% of the issued and outstanding shares of common stock.

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The following table provides a summary of the securities authorized for issuance under Equity Compensation Plans, the weighted average price and number of securities remaining available for issuance, all as at April 30, 2012.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during the year ended April 30, 2012.

Recent Sales of Unregistered Securities

On September 27, 2011, the Company issued 666,333 shares of common stock at $0.15 per share for total proceeds of $99,950.On February 23, 2012, we issued the 10,000,000 share purchase warrants to one (1) non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933), in an offshore transaction relying on Regulation S of the Securities Act of 1933.

 On April 9, 2012, we issued 1,600,000 shares of common stock at $0.15 per share for total proceeds of $240,000. These shares were issued to one non-US person (as that term is defined in Regulation S of the Securities Act of 1933) relying on Regulation S of the Securities Act of 1933.

On April 10, 2012, we issued 666,667 shares of common stock at $0.15 per share for total proceeds of $100,000. These shares were issued to one non-US person (as that term is defined in Regulation S of the Securities Act of 1933) relying on Regulation S of the Securities Act of 1933.

On April 11, 2012, we issued 400,000 shares of common stock for services rendered to a related party and shareholder. The shares were valued at $60,000. These shares were issued to one non-US person (as that term is defined in Regulation S of the Securities Act of 1933) relying on Regulation S of the Securities Act of 1933.

Item 6.

Selected Financial Data

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our audited financial statements and the related notes for the years ended April 30, 2012 and April 30, 2011 that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this registration statement, particularly in the section entitled "Risk Factors" beginning on page 14 of this annual report.

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Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Plan of Operation

During the next twelve month period, we intend to:

Not accounting for our working capital deficit of $3,705,286, we require additional funds of approximately $1,000,000 at a minimum to proceed with our plan of operation over the next twelve months. As we do not have the funds necessary to cover our projected operating expenses for the next twelve month period, we will be required to raise additional funds through the issuance of equity securities, through loans or through debt financing. There can be no assurance that we will be successful in raising the required capital or that actual cash requirements will not exceed our estimates. We intend to fulfill any additional cash requirement through the sale of our equity securities.

If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to scale down or perhaps even cease the operation of our business.

Capital Expenditures

We do not intend to invest in capital expenditures during the twelve-month period ending April 30, 2013.

General and Administrative Expenses

We expect to spend $1,000,000 during the twelve-month period ending April 30, 2013 on general and administrative expenses including legal and auditing fees, rent, office equipment and other administrative related expenses.

Product Research and Development

We do not anticipate expending any funds on research and development, manufacturing and engineering over the twelve months ending April 30, 2013.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the twelve months ending April 30, 2013.

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Personnel Plan

We plan to employ a number of executive officers including a vice president of marketing and three sales engineers. We anticipate that we may spend up to $780,000 to employee officers and employees and up to $50,000 in payroll taxes. We do and will continue to outsource contract employment as needed.

Results of Operations for the Years Ended April 30, 2012 and 2011

The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended April 30, 2012 and 2011.

Our operating results for the years ended April 30, 2012 and 201 are summarized as follows:

Revenues

Our revenues for the year ended April 30, 2012 were $638,386, compared to our revenue for the year ended April 30, 2011, which were $16,000, representing an increase of $622,386 resulting from our securing  and completing contracts throughout the year.

Cost of Sales

Our cost of sales for the year ended April 30, 2012 were $470,027 (74% of revenues), compared to our cost of sales for the year ended April 30, 2011, which were $0. We expect that our cost of sales will increase over the next twelve months, mainly due to increased in sales activity.

Future cost of sales may be impacted by the effects of inflation and changing prices from our suppliers and fluctuations in foreign currency rates as certain costs are incurred in foreign currencies.

Operating Expenses

Our operating expenses for the year ended April 30, 2012 and April 30, 2011 are outlined in the table below:

The increase in operating expenses for the year ended April 30, 2012, compared to the same period in fiscal 2011, was mainly due to an overall increase in activity in our company in the attempt to secure contracts for our product.

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Liquidity and Financial Condition

As of April 30, 2012, our total current assets were $348,099 and our total current liabilities were $4,053,385 and we had a working capital deficit of $3,705,286. Our financial statements report a net loss of $3,877,249 for the year ended April 30, 2012, and a net loss of $21,447,003 for the period from March 8, 2006 (date of inception) to April 30, 2012.

We have suffered recurring losses from operations. The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed. In this regard we have raised additional capital through equity offerings and loan transactions.

Cash Flows

We had cash in the amount of $308,568 as of April 30, 2012 as compared to $611,729 as of April 30, 2011. We had a working capital deficit of $3,705,286 as of April 30, 2012 compared to working capital deficit of $684,189 as of April 30, 2011.

Our principal sources of funds have been from sales of our common stock.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Going Concern

The audited financial statements included with this annual report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the audited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

Off-Balance Sheet Arrangements

We have no 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 is material to stockholders.

Application of Critical Accounting Policies

Our audited financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.

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Basis of Accounting

The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and are presented in U.S. dollars.  Our company is currently a development stage enterprise.  All losses accumulated since the inception of the business have been considered as part of its development stage activities.  

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

Reclassifications

Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. Our company did not have any cash equivalents on hand at April 30, 2012 and 2011.

Accounts Receivable

Accounts receivable is generated from contracts for projects. An allowance for doubtful accounts is provided against accounts receivable for amounts management believes may be uncollectible. Our company determines the adequacy of this allowance by regularly evaluating the customer receivables. As of April 30, 2012 and 2011, our company had an accounts receivable balance of $80,000 and $0, respectively, and an allowance for doubtful accounts of $80,000 and $0, respectively, leaving a net accounts receivable balance of $0 and $0, respectively. The bad debt expense recognized was $80,000 and $0 for the years ended April 30, 2012 and 2011.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.  Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows:

Intangible Assets

Our company adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144” or “ASC 360”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” Our company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the

25

assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Revenue Recognition

Our company recognizes revenues from contracts on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract. That method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period. No profit is recognized on change orders until they have been approved by the customer.

The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts”, represents billings in excess of revenues recognized.

Fair Value of Financial Instruments

Our company's financial instrument consists of prepaid expenses, deposits, investments, customer deposits, accounts payable and accrued expenses, accrued interest, loans payable and loans payable to a related party.

It is management's opinion that our company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed.  

Our company follows guidance issued by the FASB on “Fair Value Measurements” for assets and liabilities measured at fair value on a recurring basis. This guidance establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

The FASB defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the FASB requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

These inputs are prioritized below:

Our company discloses the estimated fair value for all financial instruments for which it is practicable to estimate fair value. As of April 30, 2012, the fair value of short-term financial instruments including cash overdraft, accounts receivable, accounts payable and accrued expenses, approximates book value due to their short-term maturity. The fair value of property and equipment is estimated to approximate its net book value. The fair value of debt

26

obligations, other than convertible debt obligations, approximates their face values due to their short-term maturities and/or the variable rates of interest associated with the underlying obligations.

The fair value of our company’s convertible debt is measured on a recurring basis (see Note 8).

The following table presents fair value measurements for major categories of our company’s financial liabilities measured at fair value on a recurring basis:

In addition, the FASB issued, “The Fair Value Option for Financial Assets and Financial Liabilities”. This guidance expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. Our company did not elect the fair value option for any of its qualifying financial instruments.

Stock-Based Compensation

Our company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. During the year ended April 30, 2012, our company issued 400,000 shares for compensation and 11,200,000 options vesting over periods ranging from immediate to two years. Stock-based compensation expense recognized during the years ended April 30, 2012 and 2011 totaled $205,018 and $68,528, respectively. Unrecognized expense of $44,531 remains to be recognized over the next two years.

Our company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to our company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

Income Taxes

Our company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.  No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of our company to utilize the loss carry-forward.

27

Basic and Diluted Earnings (Loss) Per Share

Earnings (loss) per share is calculated in accordance with FASB ASC Topic No. 260 “Earnings per share”. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted loss per share were $0.04 and $0.01 for the years ended April 30, 2012 and 2011, respectively.

Concentration of Credit Risk

Financial instruments that potentially subject our company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. Our company places its cash in what it believes to be credit-worthy financial institutions. Our company has a diversified customer base. Our company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. Our company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

New Authoritative Accounting Guidance

On May 12, 2011, the FASB issued ASU 2011-04. The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework. Thus, there are a few differences between the ASU and its international counterpart, IFRS 13. This ASU is largely consistent with existing fair value measurement principles in U.S. GAAP; however, it expands ASC 820’s existing disclosure requirements for fair value measurements and makes other amendments. The ASU is effective for interim and annual periods beginning after December 15, 2011. Our company does not expect the provisions of ASU 2011-04 to have a material effect on the financial position, results of operations or cash flows of our company.

On June 16, 2011, the FASB issued ASU 2011-05, which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements.  The ASU does not change the items that must be reported in other comprehensive income. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Our company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of our company.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying financial statements.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 8.

Financial Statements and Supplementary Data

Our audited financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

28

The following audited financial statements are filed as part of this annual report:

29

Silberstein Ungar, PLLC CPAs and Business Advisors                         

Phone (248) 203-0080

Fax (248) 281-0940

30600 Telegraph Road, Suite 2175

Bingham Farms, MI 48025-4586

www.sucpas.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Bioshaft Water Technology, Inc.

Lake Forest, California

We have audited the accompanying balance sheets of Bioshaft Water Technology, Inc., as of April 30, 2012 and 2011, and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.  

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Bioshaft Water Technology, Inc., as of April 30, 2012 and 2011 and the results of their operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that Bioshaft Water Technology, Inc. will continue as a going concern.  As discussed in Note 8 to the financial statements, the Company has incurred losses from operations, has negative working capital and is in need of additional capital to grow its operations so that it can become profitable.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans with regard to these matters are described in Note 8. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Silberstein Ungar, PLLC

Silberstein Ungar, PLLC

Bingham Farms, Michigan

August 10, 2012

F-1

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

F-2

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

F-3

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

F-4

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

F-5

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

The Company was originally incorporated under the laws of the state of Nevada on March 8, 2006.   The Company owns worldwide patented technology and is in the business of designing, manufacturing and installing wastewater (sewage) treatment plants using its technology.

NOTE  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and are presented in U.S. dollars.  The Company is currently a development stage enterprise.  All losses accumulated since the inception of the business have been considered as part of its development stage activities.  

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.

Reclassifications

Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company did not have any cash equivalents on hand at April 30, 2012 and 2011.

Accounts Receivable

Accounts receivable is generated from contracts for projects. An allowance for doubtful accounts is provided against accounts receivable for amounts management believes may be uncollectible. The Company determines the adequacy of this allowance by regularly evaluating the customer receivables. As of April 30, 2012 and 2011, the Company had an accounts receivable balance of $80,000 and $0, respectively, and an allowance for doubtful accounts of $80,000 and $0, respectively, leaving a net accounts receivable balance of $0 and $0, respectively. The bad debt expense recognized was $80,000 and $0 for the years ended April 30, 2012 and 2011.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation.  Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows:

F-6

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE  2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

Intangible Assets

The Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144” or “ASC 360”), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations for a Disposal of a Segment of a Business.” The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144. SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Revenue Recognition

The Company recognizes revenues from contracts on the percentage-of-completion method, measured by the percentage of cost incurred to date to estimated total cost for each contract. That method is used because management considers total cost to be the best available measure of progress on contracts. Because of inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change within the near term.

Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation. Selling, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability may result in revisions to costs and income, which are recognized in the period in which the revisions are determined. Changes in estimated job profitability resulting from job performance, job conditions, contract penalty provisions, claims, change orders, and settlements, are accounted for as changes in estimates in the current period. No profit is recognized on change orders until they have been approved by the customer.

The liability, “Billings in excess of costs and estimated earnings on uncompleted contracts”, represents billings in excess of revenues recognized.

Fair Value of Financial Instruments

The Company's financial instrument consists of prepaid expenses, deposits, investments, customer deposits, accounts payable and accrued expenses, accrued interest, loans payable and loans payable to a related party.

It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed.  

The Company follows guidance issued by the FASB on “Fair Value Measurements” for assets and liabilities measured at fair value on a recurring basis. This guidance establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

F-7

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE  2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

Fair Value of Financial Instruments (continued)

The FASB defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, the FASB requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

These inputs are prioritized below:

The Company discloses the estimated fair value for all financial instruments for which it is practicable to estimate fair value. As of April 30, 2012, the fair value of short-term financial instruments including cash overdraft, accounts receivable, accounts payable and accrued expenses, approximates book value due to their short-term maturity. The fair value of property and equipment is estimated to approximate its net book value. The fair value of debt obligations, other than convertible debt obligations, approximates their face values due to their short-term maturities and/or the variable rates of interest associated with the underlying obligations.

The fair value of the Company’s convertible debt is measured on a recurring basis (see Note 8).

The following table presents fair value measurements for major categories of the Company’s financial liabilities measured at fair value on a recurring basis:

In addition, the FASB issued, “The Fair Value Option for Financial Assets and Financial Liabilities”. This guidance expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value option for any of its qualifying financial instruments.

F-8

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE  2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

Stock-Based Compensation

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. During the year ended April 30, 2012, the Company issued 400,000 shares for compensation and 11,200,000 options vesting over periods ranging from immediate to two years. Stock-based compensation expense recognized during the years ended April 30, 2012 and 2011 totaled $205,018 and $68,528, respectively. Unrecognized expense of $44,531 remains to be recognized over the next two years.

The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered.

Income Taxes

The Company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.  No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward.

Basic and Diluted Earnings (Loss) Per Share

Earnings (loss) per share is calculated in accordance with FASB ASC Topic No. 260 “Earnings per share”. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted loss per share were $0.04 and $0.01 for the years ended April 30, 2012 and 2011, respectively.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

F-9

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE  2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (CONTINUED)

New Authoritative Accounting Guidance

On May 12, 2011, the FASB issued ASU 2011-04. The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework. Thus, there are a few differences between the ASU and its international counterpart, IFRS 13. This ASU is largely consistent with existing fair value measurement principles in U.S. GAAP; however, it expands ASC 820’s existing disclosure requirements for fair value measurements and makes other amendments. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company does not expect the provisions of ASU 2011-04 to have a material effect on the financial position, results of operations or cash flows of the Company.

On June 16, 2011, the FASB issued ASU 2011-05, which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements.  The ASU does not change the items that must be reported in other comprehensive income. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of the Company.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying financial statements.

NOTE 3. INVESTMENT

During the year ended April 30, 2009, the Company entered into a contract with a third party whereby it agreed to split the cost of producing a waste water treatment plant. The third party is responsible for and will incur all costs and risks to do with the operations and maintenance of the plant while the Company is responsible for technology support and engineering of the plant. In addition, the third party agrees to market and sell the plant and profit will be split at the time the plant is sold to end-user. Costs for the project are split evenly between the two parties and treated as capital contribution to the joint venture. As of April 30, 2010, the company had recorded $50,000 in investment.  During the year ended April 30, 2011, the water treatment device was determined to be no longer usable and has been fully impaired.  As of April 30, 2011, the investment carrying cost is $0.

NOTE 4. NOTE RECEIVABLE

On August 1, 2011, the Company issued a note receivable to a client for products received in the amount of $300,000 accruing 18% interest per annum. An initial payment of $50,000 was made on August 1, 2011 and the remaining $250,000 was to be repaid in 40 monthly installments ranging from $2,076 to $22,000 starting March 1, 2012 and ending May 1, 2015.

On February 23, 2012, the Company sold the note receivable to a third party for $250,000 cash and issued 10,000,000 warrants at an exercise price of $0.025 for a period of five years in connection with the sale of the note. Based on the fair value of the warrants on the issue date ($854,354), $193,406 was allocated to the warrants (see Note 9) and $25,397 was recognized as interest income, leaving a total loss on the sale of the note of $218,803.

F-10

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at April 30:

Depreciation expense was $4,756 and $22,257 for the years ended April 30, 2012 and 2011. During the year ended April 30, 2012, the Company sold equipment for a net loss of $9,166.

NOTE 6. LOANS PAYABLE

On August 11, 2008, the Company secured a loan payable of $500,000 accruing interest at 15%, secured by the assets of the company, subject to a 3% financing fee and repayable on the one year anniversary date of the agreement.  The term of this loan has been extended to August 11, 2012. Accrued interest related to this loan is $291,019 as of April 30, 2012. On February 13, 2012, the terms of the loan were changed to reflect a conversion feature. The loan is convertible into shares of the Company’s common stock, up to 20,000,000, at a price of $0.025 per share.

The Company accounts for the fair value of the conversion feature in accordance with ASC 815-15 “Derivatives and Hedging; Embedded Derivatives” which requires the Company to bifurcate and separately account for the conversion features as an embedded derivative contained in the Company’s convertible debt. The Company is required to carry the embedded derivative on its balance sheet at fair value and account for any unrealized change in fair value as a component of results of operations. The Company valued the embedded derivative using the Black-Scholes pricing model. The fair value of the conversion feature was recorded as a derivative liability and a discount to the convertible debt of $1,363,664 and $500,000, respectively. Amortization of the debt discount amounted to $250,000 for the year ended April 30, 2012. The derivative liability is revalued each reporting period using the Black-Scholes model. For the year ended April 30, 2012, the Company recorded an unrealized loss from the change in the fair value of the derivative liability of $1,350,269. Convertible debt as of April 30, 2012 is shown net of debt discount in the amount of $250,000.

Assumptions used to determine the fair value of the conversion feature as of the grant date is as follows:

On March 6, 2009, the Company secured a loan payable of $25,000 accruing interest at 15%, due March 6, 2010 and secured by the assets of the company.  The term of this loan has been extended to September 6, 2012. Accrued interest related to this loan is $11,882 as of April 30, 2012.

Total interest expense on the above loans was $78,750 for the year ended April 30, 2012.

F-11

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 7. STOCKHOLDERS’ DEFICIT

Authorized

The Company is authorized to issue 300,000,000 shares of $0.001 par value common stock and 25,000,000 shares of $0.001 par value preferred stock. All common stock shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. The preferred shares may be issued in series, with the powers, rights and limitations of the preferred shares to be determined by the Board.

On June 14, 2007, the Nevada Secretary of State accepted for filing a Certificate of Amendment increasing the Company’s authorized common stock from 25,000,000 with a par value of $0.001 to 300,000,000 with a par value of $0.001. The amendment was approved by the shareholders and directors on May 21, 2007.

On July 10, 2007, the Board of Directors approved a 60 for one (1) forward stock split of issued and outstanding shares of common stock. In connection with the forward stock split, the issued and outstanding shares increased from 4,500,000 to 270,000,000.

Issued and Outstanding

On August 10, 2010, the Company issued 3,400,000 shares of common stock at $0.15 per share for total proceeds of $510,000.

On January 6, 2011, the Company issued 2,000,000 shares of common stock at $0.15 per share for total proceeds of $300,000.

On January 18, 2011, the Company issued 2,000,000 shares of common stock at $0.15 per share for total proceeds of $300,000.

On March 31, 2011, the Company issued 150,000 shares of common stock at $0.15 per share for total proceeds of $300,000.

On September 27, 2011, the Company issued 666,333 shares of common stock at $0.15 per share for total proceeds of $99,950.

On April 9, 2012, the Company issued 1,600,000 shares of common stock at $0.15 per share for total proceeds of $240,000.

On April 10, 2012, the Company issued 666,667 shares of common stock at $0.15 per share for total proceeds of $100,000.

On April 11, 2012, the Company issued 400,000 shares of common stock for services rendered to a related party and shareholder. The shares were valued at $60,000.

Stock Options and Stock-Based Compensation

On September 15, 2010, the Company issued 2,000,000 stock options to an employee. The options were valued at $81,025 using the Black-Scholes model. Stock-based compensation of $40,513 and $25,320 was recognized during the years ended April 30, 2012 and 2011, respectively. Unrecognized expense of $15,193 and $55,705 will be recognized over the remainder of the 24 month vesting period for years ended April 30, 2012 and 2011, respectively.

F-12

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 7. STOCKHOLDERS’ DEFICIT (CONTINUED)

Stock Options and Stock-Based Compensation (continued)

On September 15, 2010, the Company issued 4,000,000 stock options to two consultants.  2,000,000 of the options were valued at $81,025 using the Black-Scholes model, and were expensed during the year ended April 30, 2011, as they immediately vested.  The remaining 2,000,000 options were valued at $81,025 using the Black-Scholes model, and are being expensed over the term of the consulting agreements. Stock-based compensation of $40,513 and $25,320 was recognized during the years ended April 30, 2012 and 2011, respectively. The remaining $15,193 and $55,705 was recorded as prepaid consulting fees as of April 30, 2012 and 2011, respectively, and is being amortized over the remaining contract term. The term of both consulting agreements is 24 months.

On January 10, 2011, the Company granted 450,000 stock options with an exercise price of $0.15, valued at $22,146 using the Black-Scholes model to two consultants for management and marketing services.  The options are being expensed over the terms of the consulting agreements. Stock-based compensation of $11,073 and $3,691 was recognized during the years ended April 30, 2012 and 2011, respectively. The remaining $7,382 and $18,455 was recorded as prepaid consulting fees as of April 30, 2012 and 2011, respectively, and is being amortized over the remaining contract term. The term of both agreements is 24 months.

On August 1, 2011, the Company issued 200,000 stock options to an employee, which were valued at $13,513 using the Black-Scholes model, and are being expensed over two years. Stock-based compensation totalling $5,067 was recognized in the current fiscal year. Unrecognized expense of $8,446 will be recognized over the remainder of the 24 month vesting period.

On August 15, 2011, the Company issued 1,000,000 stock options to a consultant, which were valued at $67,557 using the Black-Scholes model, and are being expensed over a one year period. Stock-based compensation totalling $47,853 was recognized in the current fiscal year. Unrecognized expense of $19,704 will be recognized over the remainder of the 12 month vesting period.

On February 23, 2012, the Company issued a warrant to purchase 10,000,000 shares of common stock at an exercise price of $0.025 for a period of five years which were valued at $193,406 using the Black-Scholes model. The warrants were issued in connections with the sale of a note receivable. See Note 4.

The Company uses the Black-Scholes option valuation model to value stock options and warrants granted. The Black- Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. The model requires management to make estimates, which are subjective and may not be representative of actual results. Assumptions used to determine the fair value of the stock-based compensation is as follows:

F-13

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 8. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has an accumulated deficit of $21,447,003 as of April 30, 2012 and has negative working capital. This condition raises substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional financing as may be required and ultimately to attain profitability. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  Management is planning to raise additional funds through an equity offering. There is no guarantee that the Company will be successful in these efforts.

NOTE 9.  RELATED PARTY TRANSACTIONS

During the years ended April 30, 2012 and 2011, the Company negotiated the forgiveness of accrued expenses totaling $23,106 and $64,623, respectively, with two related parties.

During the year ended April 30, 2012, the Company had consulting agreements with four related parties amounting to $380,000 in consulting expenses.

A consultant and shareholder is due $206,000 for consulting expenses since inception which is included in accrued expenses as of April 30, 2012.

Another consultant, shareholder and officer of the Company is due a net $171,966, which is comprised of accounts receivable of $55,826 and accrued expenses of $227,792.

As of April 30, 2012, the Company had a net amount due to a related party of $24,120. The amount was comprised of accounts receivable of $55,630 and accounts payable of $79,750. The Company recognized net revenue of $17,960 from the related party during the year ended April 30, 2012. The amount is comprised of $79,610 in revenues and $61,650 in expenses.

As of April 30, 2012, the Company had accounts receivable of $80,000 due from a related party that has been fully reserved.

As of April 30, 2012, the Company had accounts payable of $77,274 due to a related party. The Company incurred expenses of $95,984 with the related party during the year ended April 30, 2012.

During the year ended April 30, 2012, the Company sold equipment with a net book value of $25,166 for $10,000 to a related party resulting in a net loss of $15,166. The Company also sold a vehicle to an officer with a net book value of $0 for $6,000 resulting in a net gain of $6,000.

NOTE 10. FORGIVENESS OF DEBT

During the year ended April 30, 2011, the Company negotiated the forgiveness of accrued expenses totaling $94,759. Of that amount, $64,623 had been due to a related party. See Note 9.

During the year ended April 30, 2012, the Company negotiated the forgiveness of accrued expenses totaling $23,106 that was due to a related party. See Note 9.

F-14

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 11. COMMITMENT

Operating Leases

In April 2009, Company entered into a lease for a new facility, commencing May 5, 2009. The lease expires on May 4, 2013 and carries a base rent of $24,692 per year.

The Company has the following rent commitment for the twelve months ended April 30:

NOTE 12. INCOME TAXES

For the year ended April 30, 2012, the Company incurred a net loss of approximately $3,877,000 and therefore has no tax liability.  The cumulative loss of approximately $21,447,000 will be carried forward and can be used through the year 2032 to offset future taxable income. In the future, the cumulative net operating loss carry-forward for income tax purposes may differ from the cumulative financial statement loss due to timing differences between book and tax reporting.

The provision for Federal income tax consists of the following for the years ended April 30:

 The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of April 30:

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $21,447,000 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.

F-15

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2012

NOTE 13. SUBSEQUENT EVENTS

Bioshaft and Canadian Enviromental Designers Inc. ("CED"), a related party, signed a consulting agreement, an NDA, and a Stock Option Agreement to be effective as of July 1, 2012. As such, these agreements replace all further actions stipulated in the corresponding previously signed agreements between Bioshaft Water Technology, Inc. and Bashar Amin and CED related to these subjects, as of July 1, 2012.

Bioshaft signed a new consulting agreement with SRA Real Estate Services, Inc., a related party, with modified responsibilities effective July 1, 2012. In addition, Bioshaft signed a new consulting agreement with Hydro E Plus, Inc., a related party, commencing on July 1, 2012.  

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to April 30, 2012 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than those discussed above.

F-16

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods.

Item 9A.

Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, our management evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2012.

Our management, with the participation of our president (our principal executive officer) and our chief financial officer (principal accounting officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, our president (our principal executive officer) and our chief financial officer (principal accounting officer and principal financial officer) have concluded that, as of the end of such period, our disclosure controls and procedures were effective to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our president (our principal executive officer) and our chief financial officer (principal accounting officer and principal financial officer), as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer) and our chief financial officer (principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has conducted, with the participation of our president (our principal executive officer) and our chief financial officer (principal accounting officer and principal financial officer), an evaluation of the effectiveness of our internal control over financial reporting as of April 30, 2012 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control — Integrated Framework. Based on this assessment, management concluded that as of April 30, 2011, our company’s internal control over financial reporting was effective.

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Change in Internal Control Over Financial Reporting

We made some changes in our internal control over financial reporting that occurred during our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We contracted with with SRA Real Estate Services, Inc. represented by its president Sam Ariss, who is acting as our vice president of finance since October, 2010, to institute an internal financial management system and standardize the financial reporting and controls.

Item 9B.

Other Information

Effective February 24, 2012, Hassan Hans Badreddine resigned as president, chief executive officer and as director our company.  Mr. Badreddine’s resignation was not the result of any disagreements with our company regarding our operations, policies, practices or otherwise.

Concurrently with Mr. Badreddine’s resignation, we appointed Walter J. Zurawick Jr. as president, chief executive officer and director of our company to fill the ensuing vacancy, effective February 24, 2012.

Effective July 16, 2012, we appointed Bashar Amin and Zuhier Ahmed Zahran as directors of our company.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

All of the directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. Our officers are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:

Business Experience

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person's principal occupation during the period, and the name and principal business of the organization by which he was employed.

Imad Kamel Yassine - Chief Operating Officer, Secretary, Treasurer and Director

Imad Kamel Yassine was appointed as Chief Operating Officer on September 18, 2007, as a director of our company on August 14, 2007 and as Chief Financial Officer, Secretary and Treasurer of our company on September 10, 2008.

Mr. Yassine received a B.S.C. degree in Mechanical Engineering from Alexandria University and is a member of the International Desalination Association. He has been involved in the water and waste water treatment industry for

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over thirty five years, with extensive experience in waste water recycling and desalination technologies. He has extensive experience in management, finance, international trade, manufacturing relating to the waste water treatment industry in addition to extensive knowledge of the U.S. and the international market.

In 2003 Mr. Yassine established Enviromatch Inc. and served as its CEO. Enviromatch is a water and waste water treatment consulting company. In 2005 he served as a director of Bauer International Corporation, which designs and manufactures water and waste water treatment systems. In 2005 he worked with Hussey, Gay, Bell & Deyoung Inc. Consulting Engineers. He provided business development and marketing services to identify and qualify potential clients for Hussey, Gay, Bell & Deyoung for water & waste water treatment and desalination. In 2007 he co-founded and served as a director for Enviromatch Co. Ltd. Enviromatch Co. Ltd. is a company specializing in the design and supply of standard and custom water and waste water treatment equipment and solutions. Enviromatch Co. Ltd combines the experience and reputation of American technology and the low cost of Chinese manufacturing and sales knowledge of the Asian market.

Walter J. Zurawick, Jr., President, Chief Executive Officer and Director

Walter J. Zurawick Jr. is an executive with over 25 years expertise in water desalination, water and wastewater treatment, zero liquid discharge, recycle/reuse applications, energy integration/high strength wastewater treatment, engineering economics, financial evaluation with extensive technical expertise and strong global business development management capability, with the last 15 years in sales, upper management, marketing and business development.

Walter has worked at a corporate level with Waterlink, Zenon/GE, and Ecovation, Inc. and is experienced in identifying and capturing new business opportunities.  Expertise includes entrepreneurial and strategic planning, in all facets of project life cycle, from initial viability analysis and conceptual design to documentation and implementation.

Mr. Zurawick has a BS degree in Biology & Chemistry from Kent State University and currently resides in Venice, Florida.

Bashar Amin, Director

Bashar Amin earned his Master of Science in Environmental Engineering at California State University in Fresno, California. He is currently a self employed environmental engineer providing water and wastewater engineering and operations services to clients around the world with his main focus in the Middle East region.

Mr. Amin also provides management services for cooperation agreements between international companies and their Middle Eastern agents or partners.  These services include technical support, proposals, preparation, project management, operation and maintenance, sales and marketing and financial reporting.

Mr. Amin is also a University graduate in Environmental Engineering, Masters of Science in Environmental Engineering, Fresno State University, CA , USA.

Zuhier Ahmed Zahran, Director

Zuhier Ahmed Zahran earned his Bachelor of Science in Civil Engineering from Nottingham University, England. Since 1987 he has been president of Zuhier Ahmed Zahran & Co., a contracting company and president of the Aluminum Manufacturers & Technicians Factory (Alumatec). From 1980 to 1987 he worked with Fast Contracting Company in various position including project engineer (1980 - 1981); project manager (1982 - 1983), Riyadh area manager (1984 - 1985) and construction manager (1985 - 1987).

Mr. Zahran is also a partner in the Jordanian Saudi Food Services Company, Jordan, Newtek, an electromechanical company in Saudi Arabia, Aluminum Company Ltd. S.A.R.L. in Lebanon, Team Time Company, a labor recruitment company in Saudi Arabia and Chairman of Square Meter Company, a property development company in Saudi Arabia.

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There have been no other transactions between our company and Mr. Amin or Mr. Zahran since the beginning of our last fiscal year or any currently proposed transactions, in which we are, or plan to be, a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.

Family Relationships

There are no family relationships among our directors or officers.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:

1.

been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

2.

had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;

3.

been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;

4.

been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

5.

been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

6.

been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended April 30, 2010, all filing requirements applicable to its officers, directors and greater than 10% percent beneficial owners were complied with, with the exception of the following:

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Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.

Code of Ethics

We have adopted a Code of Ethics that apples to, among other persons, our company’s principal executive officers and senior financial executives, as well as persons performing similar functions. As adopted, our Code of Ethics sets forth written to promote:

·

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

·

full, fair, accurate, timely and understandable disclosure in all reports and documents that the Corporation files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Corporation that are within the Senior Officer’s area of responsibility;

·

compliance with applicable governmental laws, rules and regulations;

·

the prompt internal reporting of violations of the Code; and

·

accountability for adherence to the Code.

Our Code of Ethics and Business Conduct was filed with the Securities and Exchange Commission as Exhibit 14.1 to our annual report on Form 10-KSB/A on August 14, 2008. We will provide a copy of the Code of Ethics and Business Conduct to any person without charge, upon request. Requests can be sent to: Bioshaft Water Technology, Inc., 1 Orchard Drive, Suite 220, Lake Forest, CA 92630.

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Item 11.

Executive Compensation

The particulars of the compensation paid to the following persons:

·

our principal executive officer;

·

each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended April 30, 2012 and 2011; and

·

up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended April 30, 2012 and 2012,

who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:

Stock Options/SAR Grants

On February 23, 2012 we issued 5,000,000 options to Walter J. Zurawick at a price of $0.15 per share vesting over 5 years.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Values

There were no options exercised during our fiscal year ended April 30, 2012 or April 30, 2011 by any officer or director of our company.

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Outstanding Equity Awards at Fiscal Year End

No equity awards were outstanding as of the year ended April 30, 2012.

Compensation of Directors

We reimburse our directors for expenses incurred in connection with attending board meetings. We have not paid any director’s fees or other cash compensation for services rendered as a director since our inception to April 30, 2012.

We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.

Employment Contracts and Termination of Employment and Change in Control Arrangements

We have not entered into any employment agreement or consulting agreement with our directors and executive officers.

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our board of directors.

We have no plans or arrangements with respect to remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth, as of August 10, 2012, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.

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Changes in Control

We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.

Item 13.

 Certain Relationships and Related Transactions, and Director Independence

Except as disclosed herein, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.

The promoters of our company are our directors and officers.

Director Independence

We currently act with four directors, consisting of Imad Kamel Yassine, Walter J. Zurawick, Jr. Bashar Amin and Zuhier Ahmed Zahran. We have determined that none of our directors are “independent directors” as defined in NASDAQ Marketplace Rule 4200(a)(15).

We do not have a standing audit, compensation or nominating committee, but our entire board of directors act in such capacity. We believe that our directors are capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our directors do not believe that it is necessary to have an audit committee because we believe that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining additional independent directors who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.

Item 14.

Principal Accountants Fees and Services

The aggregate fees billed for the most recently completed fiscal year ended April 30, 2012 and for fiscal year ended April 30, 2011 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

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Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.

PART IV

Item 15.

Exhibits, Financial Statement Schedules

(a)

Financial Statements

(1)

Financial statements for our company are listed in the index under Item 8 of this document.

(2)

All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto.

(b)

Exhibits

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