PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Our unaudited interim financial statements for the three and six month periods ended October 31, 2015 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

3

BIOSHAFT WATER TECHNOLOGY, INC.

CONDENSED BALANCE SHEETS

(unaudited)

See accompanying notes to condensed financial statements.

F-1

BIOSHAFT WATER TECHNOLOGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(unaudited)

See accompanying notes to condensed financial statements.

F-2

BIOSHAFT WATER TECHNOLOGY, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

See accompanying notes to condensed financial statements.

F-3

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

NOTE 1 - GENERAL ORGANIZATION AND BUSINESS

Bioshaft Water Technology, Inc. (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.

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. The Company has used cash flows from operations and incurred net losses of approximately $23 million since inception.  The Company currently has limited liquidity, and does not yet have sufficient revenues to cover operating costs over an extended period of time.  If the Company is unable to obtain adequate capital, it could be forced to cease operations. These factors cause significant doubt regarding the Company to continue as a going concern.

Management anticipates that the Company will be dependent, for the foreseeable future, on additional investment capital through notes payable or sales of common stock to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

Basis of Presentation

The accounting policies of the Company are in accordance with the accounting principles generally accepted in the United States of America and are presented in United States dollars (“USD”).  Outlined below are those policies considered particularly significant. The accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position of the Company as of October 31, 2015, and the results of its operations and cash flows for the three and six months ended October 31, 2015. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission. The Company believes that the disclosures in the unaudited financial statements are adequate to make the information presented not misleading.  The operating results of the Company on a quarterly basis may not be indicative of operating results for the full year.  For further information, refer to the financial statements and notes included in the Company’s Form 10-K for the year ended April 30, 2015.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.  

F-4

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO  CONDENSED FINANCIAL STATEMENTS

(unaudited)

Fair Value of Financial Instruments

The Company follows accounting guidance issued by the Financial Accounting Standards Board (“FASB”) on “Fair Value Measurements” for assets and liabilities measured at fair value on a recurring basis.  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.

The guidance also establishes a fair value hierarchy for measurements of fair value as follows:

The Company discloses the estimated fair value for all financial instruments for which it is practicable to estimate fair value. As of October 31, 2015 and April 30, 2015, the fair value of short-term financial instruments including cash, accounts receivable, accounts payable and accrued expenses, costs in excess of billings on uncompleted projects, billings in excess of costs and estimated earnings on uncompleted projects, and accrued interest 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 approximates their face values due to their short-term maturities and/or the rates of interest associated with the underlying obligation.

Basic Loss per Common Share

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.  Under the treasury stock method, the exercise price of an award, if any, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when an award is settled are assumed to be used to repurchase shares in the current period.  

The Company excluded 32,100,000 and 6,100,000 common stock equivalents outstanding as of October 31, 2015 and 2014, respectively, as their exercise prices were in excess of the average closing market price of the Company’s common stock, causing their effects to be anti-dilutive using the treasury stock method.

Revenue Recognition

For contracts in which the Company can reasonably estimate the costs, the percent complete and are responsible for the overall project administration, the Company recognizes revenues based 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.

F-5

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

For contracts in which the Company cannot reasonably estimate the costs and the percent complete, the Company recognizes revenues using the completed contract method. Typically, these contracts are isolated to international contracts whereby the Company is providing equipment and limited installation. Under the completed contract basis, contract costs are recorded to a deferred asset account and billings and/or cash received are recorded to a deferred revenue liability account during the periods of construction. All revenues, costs, and profits are recognized in operations upon completion of the contract. A contract is considered completed when all costs except insignificant items have been incurred and the equipment is accepted by the end user.

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 asset, deferred costs of goods sold, represents costs incurred on current projects which have not been allocated to the particular project or the contract has not been completed and typically relate to deposits paid or incurred to third party vendors in which the services and or equipment has not been provided. The liability, deferred revenue, represents billings in excess of revenues recognized or amounts in which the Company has received in connection with contracts being recognized under the completed contract method. Contract retentions are included in accounts receivable. As of April 30, 2015, $22,302 was included within deferred revenues in which related to contracts being accounted for under the percent completion method. This amount was recognized during the six months ended October 31, 2015.

New Accounting Pronouncements

The FASB issues Accounting Standard Updates (“ASUs”) to amend the authoritative literature in the Accounting Standards Codification (“ASC”). There have been a number of ASUs to date that amend the original text of ASC. The Company believes those issued to date, other than noted below, either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to the Company or (iv) are not expected to have a significant impact on the Company.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, "Presentation of Financial Statements - Going Concern", which requires management to evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date the financial statements are issued and provide related disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods thereafter. Early application is permitted. Management is still in the process of assessing the impact of ASU 2014-15 on the Company’s consolidated financial statements.

F-6

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

NOTE 3 - LOANS PAYABLE

$1,047,390 Note Payable

On August 21, 2014, the Company was notified that the $60,000 advance, $500,000 convertible note payable and $25,000 secured note payable and accrued interest of $487,799 on such was sold by the holder to a related entity of the holder. On August 21, 2014, the Company entered into a note agreement for $1,047,390. Under the terms of the agreement, the note incurs interest at 7.5% per annum, the holder received 5,000,000 bonus shares of common stock and is due July 7, 2015. In addition, if the Company does not raise $5.0 million in equity capital by July 7, 2015, which was not the case, the holder will receive 30,000,000 warrants to purchase shares of the Company's common stock at $0.025 per share. The required capital was not raised prior to July 7, 2015, thus the 30,000,000 warrants  are considered outstanding. In connection with the new agreement, the $500,000 convertible note and accrued interest on such is no longer convertible into common stock and warrants to purchase 10,000,000 shares of common stock held by the current holder, which were received in connection with a previous transaction, were cancelled. The Company accounted for the transaction as an extinguishment due to the significant change in the future expected cash flows, which was in excess of 10%, due to the change in interest rate, removal of the conversion feature, cancelation of warrants and issuance of 5,000,000 shares of common stock. The total loss recorded in connection with this extinguishment was $474,142. In determining the loss on extinguishment the Company determined the fair market value of the beneficial conversion feature, warrants and shares of common stock on August 21, 2014. Although, the issuance of the 30,000,000 million warrants was contingent upon a future event, the value was taken into consideration in the loss calculation as the holder didn't have a performance commitment to receive such shares and the Company viewed the raising of capital as a market condition to receiving such. As of October 31, 2015, accrued interest on the note payable was approximately $100,506.

$100,000 Note Payable

On December 24, 2014, the Company secured a $100,000 note payable with the same party as discussed above, accruing interest at 7.5% per annum being due December 24, 2015. The proceeds were used for operating purposes.

$50,000 Note Payable

On June 9, 2015, the Company secured a $50,000 note payable with the same party as discussed above, accruing interest at 7.5% per annum being due June 9, 2016. The proceeds were used for operating purposes.

$25,000 Notes Payable

On September 22, 2015 and October 28, 2015, the Company secured two $25,000 notes payable with the same party as discussed above, accruing interest at 7.5% per annum being due September 22, 2016 and October 28, 2015, respectively. The proceeds were used for operating purposes.

NOTE 4 - STOCKHOLDERS’ DEFICIT

Stock Issued for Cash

In July 2014, the Company sold 1,500,000 shares of common stock at $0.07 per share resulting in proceeds of $105,000.

In August 2014, the Company sold 2,200,000 shares of common stock to a member of the board of directors at $0.068 per share resulting in proceeds of $150,000.

F-7

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

NOTE 5 - RELATED PARTY TRANSACTIONS

Consulting Contracts

As of October 31, 2015, the Company has consulting contracts with three related parties for total annual compensation of $393,600. Total amounts due to these related parties, including reimbursable expenses, as of October 31, 2015 and April 30, 2015 were $611, 305 and $453,617, respectively. The amounts are included in accounts payable and accrued expenses - related parties on the accompanying balance sheets.

As of October 31, 2015 and April 30, 2015, a former officer and current shareholder of the Company is due $206,000 for prior consulting services performed which is included in accounts payable and accrued expenses - related parties on the accompanying balance sheets.  There were no payments made on this obligation during the six months ended October 31, 2015.

As of October 31, 2015 and April 30, 2015, another consultant, shareholder and officer of the Company is due a net $171,966 which is included within accounts payable and accrued expenses - related parties on the accompanying balance sheets. There were no payments made on this obligation during the six months ended October 31, 2015.

Revenues

From time to time, the Company enters into contracts with an entity controlled by a board member to provide waste water plants. These contracts are typically for waste water plants located in the middle east in which the board member's company has operations. Under these contracts, the Company supplies completed waste water treatment units and the customer performs the installation. As of October 31, 2015 and April 30, 2015, the Company capitalized costs of $0 and $478,814 respectively, related to these contracts in which expenditures had been made but the equipment had not been delivered or accepted by the end customer.  As of October 31, 2015 and April 30, 2015, the Company has recorded within deferred revenues - related party $0 and $497,713, respectively. These amount represents amounts in which have been received from the related party but the revenue has not been recognized as the equipment has not been delivered or accepted.  During the six months ended October 31, 2015, the Company completed two related party contracts and recognized costs and revenues of $482,514 and $630,652, respectively.  As of October 31, 2015 and April 30, 2015, the Company had $0 and $11,600, respectively, due from the related party recorded in accounts receivable. The Company typically records revenues and expenses in connection with these contracts using the completed contract method as their services primarily relate to the sale of equipment to the related party. The related party is typically responsible for the installation and management of the project. The Company recognizes revenues and costs when acceptance of the waste water plants are received.

Loans Payable

In July 2014, the Company entered into a promissory note for $65,000 with an entity controlled by a significant shareholder and a member of the board of directors. The promissory note incurs interest at 15% per annum, compounding monthly, with principal and interest due July 25, 2015.  Subsequent to this agreement and at various times, an additional $7,800 has been provided to the Company, bringing the total due to the related party as of October 31, 2015 and April 30, 2015 to $72,800 and $67,000, respectively. The proceeds were used to fund operations. The promissory note is technically in default although no demands for repayment have been made.

Sales of Common Stock

See Note 4 for discussion regarding sales of common stock to a related party.

F-8

BIOSHAFT WATER TECHNOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(unaudited)

NOTE 6 - SUBSEQUENT EVENTS

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to October 31, 2015 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 the following.

In November 2015, the Company became aware of complaint filed in Los Angeles Superior Court by a vendor related to the non-payment of amounts outstanding. As of October 31, 2015, the Company has accounted for all known amounts due to the vendor within accounts payable. As of the date of this filing, the Company hasn't been formally served.

F-9

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

Forward Looking Statements

This quarterly 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 and are prepared in accordance with United States generally accepted accounting principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report, the terms "Bioshaft", "we", "us", "our" and "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 222 West 6th Street, #400, San Pedro, CA 90731 and our telephone number is (310) 707-2553.

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 waste-water, primarily from the food and beverage sector and domestic waste-water where containerized/modular plants can be deployed on a permanent or temporary basis along with our technology’s ability to provide expansion (upgrade/retrofit) to existing domestic activated sludge wastewater plants worldwide.

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.

4

With the completion of the asset purchase agreement, we changed our business to the business of designing and manufacturing both industrial and domestic waste water treatment plant systems, using our patented Bioshaft unit, the Bioshaft System, along with the development of our modular anoxic anaerobic digester (“MAAD”) technology used to treat the primarily high strength industrial wastewater.

On August 6, 2008, we entered into a loan agreement with Premier Financial and Marketing Co. Ltd., in respect of a loan in the amount of $500,000 at the rate of interest of 15% per annum payable in full on August 6, 2009. The loan was used for general working capital purposes. The loan bears interest at the rate of 15% per annum with interest to be paid monthly in arrears on the last business day of each month, commencing August 31, 2008. The principal and all accrued and unpaid interest was due to be paid in full on August 11, 2009. On March 6, 2013, Premier agreed to extend the loan agreement until August 11, 2013. On August 21, 2014, the convertible loan was sold by the holder and the terms of the note were amended.

On March 6, 2009, we entered a loan agreement with Premier pursuant to which Premier loaned our company $25,000 for the purposes of working capital. The loan bears interest at the rate of 15% per annum with interest to be paid monthly in arrears on the last business day of each month, commencing March 6, 2010. The principal and accrued interest were due on March 6, 2010. On September 6, 2011, Premier agreed to extend the loan agreement until September 6, 2012. On March 6, 2013, Premier agreed to further extend the loan until March 6, 2014. On August 21, 2014, the convertible loan was sold by the holder and the terms of the note were amended.

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 on August 6, 2008. The parties have agreed 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.

In June 2014, Premier advanced an additional $60,000 to our company, pursuant to which formal terms were not been established. On August 21, 2014, the convertible loan was sold by the holder and the terms of the note were amended.

On August 21, 2014, we entered into an assignment agreement with Premier and Six Capital Ltd. with an effective date of July 7, 2014, wherein Premier sold the $60,000 advance, $500,000 convertible note payable and $25,000 secured note payable and accrued interest (totaling $585,000) to Six Capital. Pursuant to this assignment our company is no longer required to convert the principal debt into shares.

Also on August 21, 2014, we entered into a loan agreement and general security agreement with Six Capital with an effective date of July 7, 2014, pursuant to which Six Capital will lend our company the principal sum of $1,047,390 which represents the outstanding note balances and accrued interest as of July 7, 2014. The loan agreement with Six Capital matures on July 7, 2015, the proceeds of which will be used for working capital. The loan bears an interest rate of 7.5% per annum calculated and compounded monthly. The principal may be prepaid at any time in whole or in part without penalty, together with all interest accrued and unpaid to the date of such prepayment.

Additional terms to the loan agreement include the following:

1.

Our company issued 5,000,000 bonus common shares to Six Capital on closing date of July 7, 2014;

2.

In the event that our company is unable to raise $5,000,000 through the issuance of our common shares within 12 months of the date of the loan agreement, our company will grant to Six Capital 30,000,000 share purchase warrants, dated July 7, 2015 with each warrant entitling Six Capital to purchase one common share of our company at an exercise price of $0.025 per share for a period of five years from the date of issuance.

3.

10,000,000 warrants in our company held by Six Capital for the purchase of 10,000,000 shares of our common stock at a price of $0.025 per share have been cancelled.

4.

Six Capital also purchased the ability to convert $500,000 of the debt at $0.025 per share from Premier which would grant Six Capital the ability to receive an additional 20,000,000 shares being the original conversion feature of the debt. This conversion feature has been cancelled.

5

Effective February 23, 2012, we entered into an assignment of debt wherein we have agreed to accept $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 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.

On October 15, 2012, we entered into an international distributor agreement with Zuhier Ahmad Zahran & Co. (“ZAZCo”), a company operated by our director, Zuhier Ahmad Zahran. Under the distributor agreement ZAZCo will assist our company in the promotion, sale, marketing and distribution of our products in the Kingdom of Saudi Arabia and any other mutually agreed upon countries for a period of two years, which is currently still in effect on a month to month basis. The purchase prices for our products shall be in response to specific project requirements. The difference between ZAZCo’s purchase price and ZAZCo’s selling price to its customers shall be ZAZCo’s sole remuneration for sale of our products. ZAZCo shall be free to determine the resale prices of our products and shall, in good faith, use its commercially reasonable efforts to reasonably price our products so as to be competitive in the territory in respect of other competitive or similar products offered in the territory.

On July 1, 2013, we entered into a consulting agreement with Canadian Environmental Designers Inc., a company operated by our director, Bashir Amin, to assist our company in marketing, sales and business development. Under the terms of the consulting agreement, Canadian Environmental Designers Inc. shall be paid by our company as per direct costs to the projects being worked on. Additionally special pre-approved expenses are invoiced and paid by our company within 30 days. The term of the consulting agreement was through June 30, 2014 and our company is currently engaged with Canadian Environmental Designers Inc. on a month to month basis.

On July 1, 2013, we entered into a consulting agreement with Hydro E+, LLC to assist our company in corporate finance, marketing and business development matters. For its services, Hydro E+ received compensation of $7,000 on execution of the consulting agreement and will receive $7,000 every 30 days afterward. The term of the agreement was until June 30, 2014 and our company is currently engaged with Hydro E+ on a month to month basis.

Effective February 1, 2014, we entered into a consulting agreement with Sustainable Water Corp., a company operated by our officer and director, Imad K. Yassine in his capacity as a consultant, and as chief operating officer and chief financial officer of our company. Under the terms of the consulting agreement, Sustainable Water Corp. will receive a monthly consulting fee of $15,000. The term of this agreement is for a period of two years, expiring on January 31, 2016.

In July 2014, we entered into two promissory notes totaling $65,000 with Sustainable Water Corp., a company operated by our officer and director, Imad K. Yassine. The promissory note incurs interest at 15% per annum, compounding monthly, with principal and interest due July 25, 2015. An additional $2,000 was advanced to our company and thus the total amounts outstanding as of October 31, 2015 are $67,000. The proceeds were used to fund operations.

On December 24, 2014, our company secured a $100,000 promissory note with Six Capital, accruing interest at 7.5% per annum and maturing on December 24, 2015. The note does not bear any conversion feature. The proceeds were used for operating purposes.

On June 9, 2015, our company secured a $50,000 note payable with Six Capital, accruing interest at 7.5% per annum being due June 9, 2016. The note does not bear any conversion feature. The proceeds were used for operating purposes.

On September 22, 2015 and October 28, 2015, our company secured two $25,000 notes payable with Six Capital, accruing interest at 7.5% per annum being due September 22, 2016 and October 28, 2015, respectively. The proceeds were used for operating purposes.

6

Results of Operations

Three Months Summary

Six Months Summary

Revenues

During the three months ended we earned revenues of $633,652, an increase of $522,401, compared to $111,251 for the prior year's comparable period. The increase in revenues for the three months ended October 31, 2015 is directly related to our company recognizing revenues under the completed contract method. During the three months ended October 31, 2015, we delivered the equipment for two projects and thus the revenues and costs were recognized on these dates. In the prior year, we primarily accounted for our projects, as they were primarily domestically based and we had an involvement in the construction and management of the process, under the percentage of completion method. We expect to have variability within the recognition of revenue until a consistent project stream can be obtained. In addition, 100% of revenues recorded within the three months ended October 31, 2015, were with an entity in which is a board of director has an interest in.

During the six months ended we earned revenues of $647,416, an increase of $418,785, compared to $228,631 for the prior year's comparable period. The increase in revenues for the three months ended October 31, 2015 is directly related to our company recognizing revenues under the completed contract method. During the three months ended October 31, 2015, we delivered the equipment for two projects and thus the revenues and costs were recognized on these dates. In the prior year, we primarily accounted for our projects, as they were primarily domestically based and we had an involvement in the construction and management of the process, under the percentage of completion method. We expect to have variability within the recognition of revenue until a consistent project stream can be obtained.  In addition, $633,652 of revenues recorded within the six months ended October 31, 2015, were with an entity in which is a board of director has an interest in.

As of October 31, 2015, our company has deferred revenues of $402,041 and deferred costs of $232,675 in connection with two projects being accounted for under the completed contract method. Our company expects to record the revenues and costs related to these projects in Q3 or Q4 of fiscal 2016. Our company's revenues will continue to be inconsistent until a pipeline of such contacts is established.

7

Cost of Revenues

Cost of revenues increased to $494,583, an increase of $442,842 during the three months ended October 31, 2015 from $51,741 during the three months ended October 31, 2014. The increase was due to two projects being completed during the three months ended October 31, 2015. These contracts were accounted for using the completed contract method and thus all costs were recognized upon delivery and acceptance of the equipment provided.

Cost of revenues increased to $494,583, an increase of $311,460 during the six months ended October 31, 2015 from $183,123 during the six months ended October 31, 2014. The increase was due to two projects being completed during the six months ended October 31, 2015. These contracts were accounted for using the completed contract method and thus all costs were recognized upon delivery and acceptance of the equipment provided.

Expenses

Total operating expenses during the three and six months ended October 31, 2015 decreased as compared to the comparative period in 2014 primarily due to decreases in selling, general and administrative expenses, consulting fees and depreciation. The decrease in operating loss during the three and six months ended October 31, 2015 was primarily due to the Company's emphasis on reducing general and administrative costs and consulting fees. The comparable prior period includes salary paid to one additional consultant for which services were discontinued in the middle of fiscal 2015.

Liquidity and Financial Condition

Working Capital

As of October 31, 2015, our total current assets were $316,467 and our total current liabilities were $3,296,395 and we had a working capital deficit of $2,979,928.

8

Cash Flows

The decrease in cash used in operating activities primarily relates to our decreased net loss from operations.  In addition, management continues to accrue amounts due to them rather due to the lack of capital. The decrease in cash flow from financing activities is a direct result of proceeds from notes payable, proceeds from related party notes payable and the sales of common stock to fund operations in the prior year. During the current period, we are trying to conserve capital and reduce our borrowings.

Future Financing

We have recently had significant increases in revenues and accounts receivable, however, the continuance of such cannot be assured. If revenues were to decrease, we would have significant difficulty sustaining our operations without additional support. The ability of our company to meet our financial liabilities and commitments is primarily dependent upon the continued financial support of our directors and shareholders, the continued issuance of equity to new stockholders and our ability to maintain profitable operations.

Management believes that our cash on hand, cash equivalents, and any cash revenue provided by our operating activities will be insufficient to meet our working capital requirements for the next twelve month period. We estimate that we will require an additional $2,770,000 over the next twelve month period to fund our operating cash shortfall. We plan to raise the capital required to satisfy our immediate short-term needs and additional capital required to meet our estimated funding requirements for the next twelve months primarily through the private placement of our equity securities. There are no assurances that we will be able to obtain funds required for our continued operation. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease the operation of our business.

There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further long-term financing, successful and sufficient market acceptance of our products and achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Plan of Operation

During the next twelve month period, we intend to:

(a)

penetrate the waste water treatment industry worldwide by stressing the cost advantages and space saving capabilities of the BioShaft System.

(b)

build up a network of strategic alliances with several types of companies, including contractors that specialize in the construction of water treatment plants, engineering firms that work with municipalities and firms that specialize in “build own operate” project utilities.

(c)

form a partnership with a Chinese manufacturer that we can outsource to, and fabricate up to two BioShaft units per month within the first three months.

9

(d)

implement our pilot project in Southern California where we will setup and operate a packaged unit in order to complete the municipal permitting process for the California commission on environmental quality.

(e)

the small footprint and default generation of biogas gives BioShaft the unique ability among competitors to take on very high organic contaminant loads. Typically 400% to 500% of the maximum competitors quote.

(f)

BioShaft offering is most superior in:

i.

brewery wastewater;

ii.

dairy wastewater;

iii.

dairy processing wastewater - cheese, yogurt, etc.

(g)

fill the positions of vice president of marketing and three sales engineers.

Not accounting for our working capital deficit of $2,979,928, we have estimated that we will require an additional $2,770,000 based on our projected cash flow from existing and future revenues to carry out our business plan for the next twelve months. In the event we do not have the funds necessary to cover our projected operating expenses for the next twelve month period, we may 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 any 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 have any material commitments for capital expenditures and management does not anticipate that we will spend additional material amounts on capital expenditures in the near future.

Employees

We plan to employ a number of executive officers including a vice president of marketing and three sales engineers as soon as cash flows from operations is sufficient to fund these positions. We anticipate that we may spend up to $108,000 per month to employee officers and employees and up to $50,000 in payroll taxes. We do and will continue to outsource contract employment as needed. These plans are dependent upon either obtaining operations or capital to achieve such.

Off-Balance Sheet Arrangements

There are 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 investors.

Critical Accounting Policies

Our financial statements have been prepared in accordance with the U.S. GAAP. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.

The financial statements have, in management's opinion, been properly prepared within reasonable limits of materiality and within the framework of significant accounting policies.

10

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

For contracts in which our company can reasonably estimate the costs and the percent complete, our company recognizes revenues based 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.

For contracts in which our company can't reasonably estimate the costs and the percent complete, our company recognizes revenues using the completed contract method. Typically, these contracts are isolated to international contracts whereby our company is providing equipment and limited installation. Under the completed contract basis, contract costs are recorded to a deferred asset account and billings and/or cash received are recorded to a deferred revenue liability account during the periods of construction. All revenues, costs, and profits are recognized in operations upon completion of the contract. A contract is considered completed when all costs except insignificant items have been incurred and the equipment is delivered to the end user.

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.

Recent Accounting Pronouncements

The FASB issues Accounting Standard Updates (“ASUs”) to amend the authoritative literature in the Accounting Standards Codification (“ASC”). There have been a number of ASUs to date that amend the original text of ASC. Our company believes those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to our company or (iv) are not expected to have a significant impact on our company.

Item 3.  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 4.  Controls and Procedures

Management's Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

11

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Changes in Internal Control over Financial Reporting

During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, 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 beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A.  Risk Factors

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

None.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

None.

Item 6.  Exhibits

12

13

*  Filed herewith.

14

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

15