UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
  Washington,
D.C. 20549
  FORM
10-Q
  (Mark
One)
 þ
                  
                  QUARTERLY
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
  For
the quarterly period ended January 31, 2009
  o
                  
                  TRANSITION
      REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934
  OR
  For
the transition period from 
to
  Commission
file number 333-153920
  BIONEUTRAL
GROUP, INC.
 (Exact
name of small business issuer as specified in its charter)
  Nevada
                              
                              26-0745273State
      or other jurisdiction of
                              
                              (IRS
      EmployerIncorporation
      or organization
                              
                              Identification
      Number)211
      Warren  Newark, New Jersey
                              
                              07103(Address
      of principal executive offices)
                              
                              (Zip
      Code)
  (973) 286-2899
 (Issuer’s
telephone number, including area code)
  (Former
name, former address and former fiscal year, if changed)
  
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90
days.                                                                                                                   Yes
R   No
£
 
 Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
 
 Large Accelerated
filer                                       
£                                        
  Accelerated
filer                    
£
 
 Non-accelerated
filer                                           £                                           Smaller
reporting Company  R
 (Do not check if a smaller reporting
company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.)Yes o   No
R
 
 APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
 PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
 
 Indicate by check mark whether the
registrant filed all documents and reports required to be filed by Section 12,
13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a
court.     Yes þ   No
£
 
 
 APPLICABLE
ONLY TO CORPORATE ISSUERS
 
 Indicate the number of shares
outstanding of each of the issuer’s classes of common stock, as of the latest
practicable date.
  62,441,915
common shares outstanding as of March 23, 2009.
 
 
 BIONEUTRAL GROUP, INC.
  TABLE
OF CONTENTS
  PagePart I — Financial
      Information
                      1Item 1 — Financial
      Statements
                      2Balance
      Sheets as of January 31, 2009 (Unaudited) and October 31,
    2008
                      3Unaudited
      Statements of Operations for the Three Months Ended January 31, 2009 and
      January 31, 2008
                      4Unaudited Statements of Cash
      Flows for the Three Months Ended January 31, 2009 and January 31,
      2008.
                      5Notes to Financial
      Statements
                      3Item 2 — Management’s
      Discussion and Analysis or Plan of Operation
                      11Item 3
      — Quantitative and Qualitative Disclosures About Market
    Risk
                      13Item
      4T  — Controls and Procedures
                      13Part II — Other
      InformationItem 1 — Legal
      Proceedings
                      14Item
      1A — Risk Factors
                      14Item 2 — Unregistered Sales
      of Equity Securities and Use of Proceeds
                      14Item 3 — Defaults Upon
      Senior Securities
                      14Item 4 — Submission of
      Matters to a Vote of Security Holders
                      14Item 5 — Other
      Information
                      15Item 6
      —Exhibits
                      15Certification of CEO Pursuant to
      Section 302Certification of CFO Pursuant to
      Section 302Certification of Officers
      Pursuant to Section 906
  
 PART
I — FINANCIAL INFORMATION
  ITEM
1. FINANCIAL STATEMENTS.
  
 Index
to Financial Statements
  BALANCE
      SHEETS
                        2STATEMENTS
      OF OPERATIONS (Unaudited)
                        3STATEMENTS
      OF CASH FLOWS (Unaudited)
                        4NOTES
      TO THE FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JANUARY 31, 2009
      AND 2008 (Unaudited)
                        5
   
 1
  BIONEUTRAL
GROUP, INC.
 (A
DEVELOPMENT STAGE COMPANY)
  BALANCE
SHEETS
  January
      31,
                                2009
                              
                              
                              October 31,
                                2008(Unaudited)
                              
                              
                              (Audited)ASSETSCurrent
      AssetsCash
                              
                              $
                              156
                              
                              
                              $
                              106Prepaid
      Expenses
                              
                              
                              3,260
                              
                              
                              
                              3,260Total
      Current Assets
                              
                              
                              3,416
                              
                              
                              
                              3,366TOTAL ASSETS
                              
                              $
                              3,416
                              
                              
                              $
                              3,366LIABILITIES
      & SHAREHOLDERS’ DEFICITCurrent
      LiabilitiesAccounts
      Payable and Accrued Expenses
                              
                              $
                              11,000
                              
                              
                              $
                              400Related
      Party Payable (Note 4 )
                              
                              
                              4,395
                              
                              
                              
                              3,995Total
      Current Liabilities
                              
                              
                              15,395
                              
                              
                              
                              4,395TOTAL
LIABILITIES
                              
                              
                              15,395
                              
                              
                              
                              4,395Commitments
      & Contingencies (Note 8)Shareholders’
      Deficit (Note 6)Preferred
      Stock, Series A, $.00001 par value; 10,000,000 shares authorized, none
      issued and outstanding at January 31, 2009 and October 31, 2008,
      respectively
                              
                              
                              -
                              
                              
                              
                              -Common
      Stock, $.00001 par value; 200,000,000 shares authorized, 169,065,000
      shares issued and outstanding at January 31, 2009 and October 31, 2008,
      respectively
                              
                              
                              1,690
                              
                              
                              
                              1,690Stock
      Subscription Receivable
                              
                              
                              -
                              
                              
                              
                              (50
                              )Additional
      Paid-in Capital
                              
                              
                              74,050
                              
                              
                              
                              70,950Accumulated
      Deficit
                              
                              
                              (87,719
                              )
                              
                              
                              (73,619
                              )Total
      Shareholders' Deficit
                              
                              
                              (11,979
                              )
                              
                              
                              (1,029
                              )TOTAL LIABILITIES AND
      SHAREHOLDERS' DEFICIT
                              
                              $
                              3,416
                              
                              
                              $
                              3,366
 
  The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 2
    (A
DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS
OF OPERATIONS
 (Unaudited)
 
 Three
      Months Ended
                          January
      31
                        
                        
                        Cumulative
                          Period
      From
                          April
      10, 2007
                          (Inception
      of the
                          Development
      Stage)
                          Through
                          January
      31,2009
                        
                        
                        2008
                        
                        
                        2009Revenues
                        
                        $
                        –
                        
                        
                        $
                        –
                        
                        
                        $
                        -Costs
      of Sales
                        
                        
                        –
                        
                        
                        
                        –
                        
                        
                        
                        -Gross
      Profit
                        
                        
                        –
                        
                        
                        
                        –
                        
                        
                        
                        -Operating
      ExpensesGeneral
      and Administrative
                        
                        
                        11,000
                        
                        
                        
                        31
                        
                        
                        
                        65,579Salaries
                        
                        
                        2,500
                        
                        
                        
                        2500
                        
                        
                        
                        18,033Rent
                        
                        
                        600
                        
                        
                        
                        600
                        
                        
                        
                        4,107Total
      Operating Expenses
                        
                        
                        14,100
                        
                        
                        
                        3,131
                        
                        
                        
                        87,719Loss
      From Operations
                        
                        
                        (14,100
                        )
                        
                        
                        (3,131
                        )
                        
                        
                        (87,719
                        )Net
      Loss Before Income Taxes
                        
                        
                        (14,100
                        )
                        
                        
                        (3,131
                        )
                        
                        
                        (87,719
                        )Provision
      for Income Taxes
                        
                        
                        –
                        
                        
                        
                        –
                        
                        
                        
                        –Net
      Loss
                        
                        $
                        (14,100
                        )
                        
                        $
                        (3,131
                        )
                        
                        $
                        (87,719
                        )Basic
      and Diluted Net Loss Per Common Share
                        
                        $
                        (0.00
                        )
                        
                        $
                        (0.00
                        )Number
      of Common Shares Used to Compute Basic and Diluted Weighted
      Average
                        
                        
                        169,065,000
                        
                        
                        
                        169,065,000
 
  The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 3
 
 
  (A
DEVELOPMENT STAGE COMPANY)
 
 STATEMENTS
OF CASH FLOWS
 (Unaudited)
 Three Months Ended
                              January
      31,
                            
                            
                            Cumulative
                              Period
      From
                              April
      10, 2007
                              (Inception
      of the
                              Development
      Stage)
                              Through
                              January
      31,2009
                            
                            
                            2008
                            
                            
                            2009CASH
      USED IN OPERATING ACTIVITIESNet
      Loss
                            
                            $
                            (14,100
                            )
                            
                            $
                            (3,131
                            )
                            
                            $
                            (87,719
                            )Adjustments
      to Reconcile Net Income to Net Cash Used in Operating
      ActivitiesIn
      Kind Contribution of Office Space
                            
                            
                            600
                            
                            
                            
                            600
                            
                            
                            
                            4,107In
      Kind Contribution of Services
                            
                            
                            2,500
                            
                            
                            
                            2,500
                            
                            
                            
                            18,033Changes
      in Operating Assets and LiabilitiesIncrease
      in Prepaid Expenses
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (3,260
                            )Increase
      in Accounts Payable and Accrued Expenses
                            
                            
                            10,600
                            
                            
                            
                            10,000
                            
                            
                            
                            11,000NET
      CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
                            
                            
                            (400
                            )
                            
                            
                            9,969
                            
                            
                            
                            (57,839
                            )CASH
      PROVIDED BY FINANCING ACTIVITIES:Net
      Proceeds From Issuance of Stock
                            
                            
                            50
                            
                            
                            
                            14,050
                            
                            
                            
                            53,600Proceeds
      From Related Party
                            
                            
                            400
                            
                            
                            
                            -
                            
                            
                            
                            4,395NET CASH PROVIDED BY FINANCING
      ACTIVITIES
                            
                            
                            450
                            
                            
                            
                            14,050
                            
                            
                            
                            57,995NET
      INCREASE IN CASH & CASH EQUIVALENTS
                            
                            
                            50
                            
                            
                            
                            24,019
                            
                            
                            
                            -BEGINNING
      CASH & CASH EQUIVALENTS
                            
                            
                            106
                            
                            
                            
                            39,500
                            
                            
                            
                            156ENDING
      CASH & CASH EQUIVALENTS
                            
                            $
                            156
                            
                            
                            $
                            63,519
                            
                            
                            $
                            156SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCash
      Paid for Interest
                            
                            $
                            –
                            
                            
                            $
                            -Cash
      Paid for Income Taxes
                            
                            $
                            –
                            
                            
                            $
                            –
 
  The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 4
  BIONEUTRAL
GROUP, INC.
 FOOTNOTES
TO THE FINANCIAL STATEMENTS
 FOR THE
THREE MONTHS ENDED JANUARY 31, 2009 AND 2008
  NOTE
1 - NATURE OF BUSINESS
  BioNeutral
Group, Inc. (the "Company") was incorporated under the laws of the State of
Nevada on April 10, 2007 as Moonshine Creations, Inc.  On January 30,
2009, the Company entered into a Share Exchange Agreement with BioNeutral
Laboratories Corporation USA, a Delaware corporation, with BioNeutral
Laboratories Corporation USA being the surviving entity.  The
consolidation and recapitalization of BioNeutral Laboratories Corporation USA
with the Company has not yet been completed.  As a result, these
financial statements do not reflect the activity of BioNeutral Laboratories
Corporation USA for the period from January 30, 2009 through January 31,
2009.  The Company expects to file a “transition report” by April 30,
2009 to disclose the consolidation of the Company and BioNeutral Laboratories
Corporation USA and the results of operations on a consolidated basis through
October 31, 2008.
 
 The
Company is a specialty chemical company attempting to commercialize a novel
combinational chemistry-based technology which can neutralize harmful
environmental contaminants, toxins and dangerous micro-organisms including
bacteria, viruses and spores. The Company’s technology and original inventions
originated in New Zealand during 2002. During 2003, the New Zealand business,
BioNeutral Laboratories Limited (“BLL”) determined it would license its
technology to the Company, which was an independently-owned and operated
business in the United States of America. During 2004, BLL determined it would
be unable to successfully complete its own business plan. BLL began discussions
with the Company which led to the sale of a portion of BLL’s intellectual
property portfolio to the Company. On January 29, 2009, the Company and BLL
completed a transaction such that the Company held all rights to the technology,
know-how and trade secrets originally held by BLL. The Company's fiscal year end
is October 31.
  The
Company’s proprietary platform technology has been proven effective in surface,
water and airborne applications. The products include BioNeutralizers and
ChemoNeutralizers. BioNeutralizers, based on our proprietary YgieneTM platform
formulation, disinfect, decontaminate and sterilize. BLL believes it has the
broadest-based, fastest acting, most effective and safest anti microbial known.
This class of products has important applications for consumers, healthcare and
the military. ChemoNeutralizers, based on the OgieneTM formula, irreversibly bind
chemical contaminants and toxin molecules and render them harmless. Product
applications include industrial pollution, environmental contaminants, and
protection against chemical weapons of mass destruction.
 
 Prior to
the closing of the Share Exchange Agreement on January 30, 2009, Moonshine
Creations, Inc. was organized to create an online craft store focusing on one of
a kind and unique craft items made in the southeastern United
States.
  Control
By Principal Stockholders
  The
directors and executive officers own beneficially and in the aggregate, a
significant portion of the voting power of the outstanding shares of the
Company. Accordingly, the directors, executive officers and their affiliates, if
they voted their shares uniformly, could have the ability to control the
approval of most corporate actions, including increasing the authorized capital
stock of the Company and the dissolution, merger or sale of the Company's assets
or business.
  NOTE
2 – BASIS OF PRESENTATION
  These
condensed interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America (“US GAAP”).
  On
January 30, 2009, we closed a Share Exchange Agreement with Bioneutral
Laboratories Corporation USA.  The consolidation and recapitalization
for the period ended January 31, 2009 between the Company and BioNeutral
Laboratories Corporation USA has not been completed as of the date of this
filing.  Therefore, the financial statements included in this Form
10-Q only relate to Moonshine Creations, Inc without regard to the closing of
the Share Exchange.  Please refer to the Form 8-K filed with the SEC
on February 5, 2009, which included audited consolidated financial statements of
Bioneutral Laboratories Corporation USA as of December 31, 2007 and 2006 and
unaudited consolidated financial statements for the nine months ended September
30, 2008 and 2007.  In addition, by April 30, 2009, we will be filing
a transition report that includes audited consolidated financial statements of
Bioneutral Laboratories Corporation USA as of October 31,
2008.
  The
interim results of operations are not necessarily indicative of the results to
be expected for the fiscal year ending October 31, 2009. The Company’s financial
statements contained herein are unaudited and, in the opinion of management,
contain all adjustments (consisting only of normal recurring accruals) necessary
for a fair presentation of financial position, results of operations and cash
flows for the period presented. The Company’s accounting policies and certain
other disclosures are set forth in the notes to the consolidated financial
statements contained in the Company’s Form 10-K, as amended, for the year ended
October 31, 2008, filed with the Securities and Exchange Commission on January
7, 2009. These financial statements should be read in conjunction with the
Company’s audited financial statements and notes thereto. The preparation of
financial statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
  The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 5
   NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  The
financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America (“US
GAAP”). The financial statements have, in management’s opinion, been properly
prepared within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:
  BioNeutral
Group, Inc. is a development stage company as described by Statements of the
Financial Accounting Standards Board No. 7 (“SFAS 7.”) SFAS states that a
business is considered to be in the development stage if it is devoting
substantially all of its efforts to establishing a new business and either of
the following conditions exists:
  1.
Planned principal operations have not commenced.
  2.
Planned operations have commenced, but there has been no significant revenue
therefrom.
  The
Company’s management believes the Company is a development stage entity as it is
in the process of attempting to develop a new business, and is also exploring
various forms of financing. The Company has considered SFAS 7, paragraph 11,
footnote 7, and has determined that the Company qualifies as a development stage
company, and as such, has determined April 10, 2007, the inception date, to be
the inception date of the development stage.
  Upon the
closing of the Share Exchange Agreement on January 30, 2009, the Company
anticipates it will not be considered a development stage company and the
Company’s financial statements will no longer be presented in accordance with
SFAS 7.
  NOTE
3 – GOING CONCERN
  The
Company’s financial statements have been prepared on a going concern basis,
which contemplates continuity of operations, realization of assets and
liquidation of liabilities in the normal course of business. The Company had
cumulative losses of $(87,719) as of January 31, 2009 and negative cash flows
from operations during the period from November 1, 2008 through January 31, 2009
of $(400). The ability of the Company to operate as a going concern depends upon
its ability to obtain outside sources of working capital. Management is aware of
these requirements and is undertaking specific measures to address these
liquidity concerns. Notwithstanding the foregoing, there can be no assurance
that the Company will be successful in obtaining financing, that it will have
sufficient funds to execute its business plan or that it will generate positive
operating results. The financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result should the
Company be unable to continue as a going concern.
   The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 6
  NOTE 4
– RELATED PARTY PAYABLE
  The table
below details transactions related to the related party payable to a member of
the Company's Board of Directors during the period from October 31, 2008
through January 31, 2009:
  2009Beginning
      Balance Payable
                              
                              $
                              3,995Advances
      From Director
                              
                              
                              400Repayments
      to Director
                              
                              
                              -Ending
      Balance Payable
                              
                              $
                              4,395
 
 All
advances from the Director are non-interest bearing and are expected to be
repaid within a short timeframe.
  NOTE 5
– INCOME TAXES
  The FASB
has issued Statement of Financial Accounting Standards No. 109 (“SFAS
109”), “Accounting for Income Taxes”, which requires the asset and liability
method of accounting for income taxes. Under the asset and liability method,
deferred income taxes are recognized for the tax consequences of “temporary
differences” by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
basis of existing assets and liabilities.
  The
Company's net deferred tax asset as of January 31, 2009 and October 31, 2008
consisted of the following:
  January
      31,
                            2009
                          
                          
                          October
      31,
                            2008Net
      operating loss carry forward
                          
                          $
                          5,800
                          
                          
                          $
                          27,000Valuation
      allowance
                          
                          
                          (5,800
                          )
                          
                          
                          (27,000
                          )Net
      deferred tax asset
                          
                          $
                          -
                          
                          
                          $
                          -
  The net
operating losses generated in the periods ended January 31, 2009 and October 31,
2008 will expire in 2028.
  The
components of current income tax expense for the three months ended January
31, 2009 and January 31, 2008, consisted of the following:
  January
      31,
                          2009
                        
                        
                        January
      31,
                          2008Current
      federal tax expense
                        
                        $
                        —
                        
                        
                        $
                        —Current
      state tax expense
                        
                        
                        —
                        
                        
                        
                        —Change
      in NOL benefits
                        
                        
                        5,800
                        
                        
                        
                        1,300Change
      in valuation allowance
                        
                        
                        (5,800
                        )
                        
                        
                        (1,300
                        )Income
      tax expense
                        
                        $
                        —
                        
                        
                        $
                        —
  The following is a reconciliation of the provision for income taxes at the
United States federal income tax rate to the income taxes reflected in the
Statement of Operations:
  January
      31,
                                  2009
                                
                                January
      31,
                                  2008Tax
      expense (credit) at statutory rate-federal
                                
                                
                                (35
                                %)
                                
                                
                                (35
                                %)State
      tax expense net of federal tax
                                
                                
                                (6
                                %)
                                
                                
                                (6
                                %)Changes
      in valuation allowance
                                
                                
                                41
                                %
                                
                                
                                41
                                %Tax
      expense at actual rate
                                
                                
                                0
                                %
                                
                                
                                0
                                %
 
  The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 7
   NOTE 6
– SHAREHOLDERS' EQUITY
  BioNeutral
Group, Inc. (the "Company") was incorporated under the laws of the State of
Nevada on April 10, 2007. The Company's articles of incorporation provides for
authorized capital stock of 200,000,000 common shares, $0.0001 par value, and
10,000,000 preferred shares, $0.0001 par value. There are no outstanding stock
options, stock awards or warrants to purchase common stock as of January 31,
2009.  The Company does not have a stock option plan, stock award
plan, registration rights agreement or any form of shareholders' agreements in
place as of January 31, 2009.
  NOTE 7
– LOSS PER SHARE
  The
Company utilizes SFAS No. 128, "Earnings per Share" to calculate gain/loss
per share. Basic earnings/loss per share is computed by dividing the
earnings/loss available to common stockholders (as the numerator) by the
weighted-average number of common shares outstanding (as the denominator).
Diluted earnings/loss per share is computed similar to basic earning/loss per
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if all potential
common stock (including common stock equivalents) had all been issued, and if
such additional common shares were dilutive.
  There
were no common stock equivalents which would have had a dilutive effect on the
Company's common stock as of January 31, 2009 and January 31, 2008,
respectively.
  NOTE 8
– COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
  As of the
date of this report, the Company was not aware of any threatened or pending
legal proceedings against it.
  NOTE
9 – SUBSEQUENT EVENTS
  As more
fully described below, on January 30, 2009, we entered into a share exchange
agreement (the “Share Exchange Agreement”) by and among Moonshine Creations,
Inc., a Nevada corporation, the shareholders of Moonshine, BioNeutral
Laboratories Corporation USA, a Delaware company (“BioNeutral”) and the
shareholders of BioNeutral (the “BioNeutral Shareholders”). The closing of the
transaction (the “Closing”) took place on January 30, 2009 (the “Closing
Date”).
 
 As a
condition to closing the Share Exchange Agreement, on December 22, 2008,
pursuant to the majority consent of our board of directors and shareholders, we
approved an amendment to our Articles of Incorporation changing our name to
BioNeutral Group, Inc. Additionally, on December 22, 2008, our Board of
Directors approved a 30-for-1 forward split of our common stock which was
declared effective on January 20, 2009.
 
 As a
further condition to close, on the Closing Date, our corporate officers and
directors who resigned also cancelled 150,000,000 shares of our common stock. We
then issued 42,659,500 shares of our common stock to the BioNeutral
Shareholders, in exchange for a majority of the shares of the issued and
outstanding common stock of BioNeutral. We are still contacting all the
shareholders of Bioneutral and anticipate that they will exchange their shares
of Bioneutral common stock for shares of our stock. We expect Bioneutral to
become a 100% wholly-owned subsidiary as soon as we are successful in locating
all the shareholders of Bioneutral. In addition, Bioneutral Laboratories
Corporation USA had designated a series of preferred shares and issued 799,991
shares of Convertible Series A Preferred Stock. Pursuant to the Share Exchange
Agreement, we have agreed to adopt the same designation of preferred stock and
the preferred shareholders will exchange their preferred shares of Bioneutral
Laboratories Corporation USA with our shares of preferred shares, but as of the
date of filing, the exchange of preferred shares has not occurred.
 
 This transaction is more fully discussed in Item 2 Management’s Discussion and
Analysis of Financial Conditions and Results of Operations. In connection with
the Share Exchange, on January 30 , 2009, at a Special Meeting of Stockholders,
our stockholders approved the 2009 Stock Incentive Plan which had been
previously approved by the Compensation Committee of the Board of Directors,
subject to stockholder approval. The Bioneutral 2009 Stock Incentive Plan
allocates 5,000,000 shares to be issued to officers, employees or consultants to
the Company at the discretion of the Board of Directors.
 
 In December, 2008 and January, 2009,
the Company issued six debentures to various unaffiliated individuals and
entities for $600,000 in gross proceeds.  The debentures carried
interest at 10% per annum and were due in full in 90 days from the issuance
date.  The debentures had a mandatory conversion mechanism such that
when the Company completed a merger, or share exchange transaction between the
Company and a publicly-traded company listed on the OTCBB, and completed a
private placement offering of an aggregate of $500,000 or more, then the
debentures would automatically convert at the per share price as agreed to in
the private placement offering.  On January 30, 2009, $600,000 in
debentures were cancelled upon the issuance of 600,000 shares of the Company’s
common stock.
  The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 8
  
 The
Company hired James Crane as its Chief Financial Officer.  Mr. Crane’s
contract was finalized on March 13, 2009 and is for a term of one year. Mr.
Crane or an entity controlled by Mr. Crane will receive compensation of $60,000
for the term of the contract.  He also received a fully vested stock
award of 75,000 shares of the Company’s common stock and a further stock award
of 75,000 shares of the Company’s common stock which will be subject to a
vesting schedule of one year.  On March 13, 2009, Mr. Crane agreed to
accept 10,000 shares of the Company’s common stock in lieu of cash compensation
for the months of March and April 2009.
  On March
17, 2009, we entered into a consulting agreement with Dorothy Canter,
Ph.D.  She was appointed as BioNeutral Groups’ lead consultant on
Department of Homeland Security and Department of Defense issues. She is the
former EPA's Chief Scientist for Bioterrorism Issues. A copy of the Consulting
Agreement with Dr. Dorothy Canter is attached to this Form 10-Q as Exhibit
10.2.
 
 On March
20, 2009, we entered into a letter of intent with Orient Arts, Inc. to acquire
certain assets.  The final terms and conditions of the transaction
shall be set forth in a formal written agreement to be mutually agreed upon and
executed by the Parties.  A copy of the letter of intent is attached
to this Form 10-Q as Exhibit 10.1. Orient Arts, Inc. is a shareholder of
Bioneutral Group, Inc. owning approximately 5% of our issued and outstanding
common stock. In
connection with the Share Exchange Agreement, the Company anticipates filing a
certificate of designation with the State of Nevada to designate terms and
preferences associated with a series of Convertible Series A Preferred Stock and
anticipates issuing 799,991 shares of the Convertible Series A Preferred Stock,
once the filing with the State of Nevada is completed.  Pursuant to
the Share Exchange Agreement, the Company has agreed to adopt the same
designation of Convertible Series A Preferred Stock Bioneutral had outstanding
prior to the closing of the Share Exchange Agreement.  The Company
anticipates that the shareholders of the BioNeutral Convertible Series A
Preferred Stock will exchange these shares for shares of the Company’s
Convertible Series A Preferred Stock, once the Convertible Series A Preferred
Stock are designated and authorized by the Board of
Directors.
  NOTE
10 - NEW ACCOUNTING PRONOUNCEMENTS
  In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities” (“SFAS 159”) which permits entities
to choose to measure many financial instruments and certain other items at fair
value that are not currently required to be measured at fair value. The adoption
of SFAS No. 159 did not have a significant effect on the Company’s
financial statements.
  In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(“SFAS
157”).  SFAS 157 establishes a common definition for fair value to be
applied to U.S. GAAP guidance requiring use of fair value, establishes a
framework for measuring fair value, and expands disclosure about such fair value
measurements.  SFAS 157 is effective for fiscal years beginning after
November 15, 2007.  In February 2008, the FASB issued a final Staff
Position to allow a one-year deferral of adoption of SFAS 157 for nonfinancial
assets and nonfinancial liabilities that are recognized or disclosed at fair
value in the financial statements on a nonrecurring basis.  The FASB
amended SFAS 157 to exclude FASB Statement No. 13 and its related interpretive
accounting pronouncements that address leasing transactions.   The
adoption of SFAS No. 157 did not have a significant effect on the Company’s
financial statements.
   The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 9
  In June
2007, FASB issued FASB Staff Position No. EITF 07-3, “Accounting for Nonrefundable Advance
Payments for Goods or Services Received for use in Future Research and
Development Activities” (“FSP EITF 07-3”), which addresses whether
nonrefundable advance payments for goods or services that are used or
rendered for research and development activities should be expensed when the
advance payment is made or when the research and development activity has been
performed. FSP EITF 07-3 will be effective for an entity’s financial statements
issued for fiscal years beginning after December 15, 2007. The adoption of EITF
07-3 did not have a significant effect on the Company’s financial
statements.
  In
November 2007, FASB issued EITF 07-1, “Accounting for Collaborative
Arrangements"(“EITF 07-1”).”  EITF 07-1
requires additional disclosures related to collaborative arrangements. EITF 07-1
is effective for fiscal years beginning after December 15, 2008.  The
Company is currently assessing the impact the adoption of EITF 07-1 will have on
the Company’s financial statements.
  In
December 2007, the Financial Accounting Standards Board (“FASB”) released
SFAS No. 141(R), “Business Combinations,”to establish accounting
and reporting standards to improve the relevance, comparability and transparency
of financial information that an acquirer would provide in its  financial
statements from a business combination.  SFAS No. 141(R) is
effective for fiscal years beginning after December 15, 2008.  The
Company is currently assessing the impact the adoption of SFAS
No. 141(R) will have on the Company’s financial position and results
of operations.
  In
December 2007, the FASB also released SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements — an amendment of Accounting Research Bulletin
No. 51,”to improve the
relevance, comparability and transparency of the financial information that a
reporting entity provides in its  financial statements by establishing
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary.  SFAS No. 160
is effective for fiscal years beginning after December 15, 2008.  The
Company is currently assessing the impact the adoption of SFAS No. 160 will
have on the Company’s financial position and results of operations.
  In
February 2008, the FASB issued Financial Staff Positions (“FSP”)
FAS 157-2, Effective
Date of FASB Statement No. 157(“FSP FAS 157-2”),
which delays the effective date of SFAS No. 157, Fair Value Measurement(“SFAS 157”), for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). SFAS 157 establishes a framework for measuring fair
value and expands disclosures about fair value measurements. FSP FAS 157-2
partially defers the effective date of SFAS 157 to fiscal years beginning
after November 15, 2008, and interim periods within those fiscal years for
items within the scope of this FSP. FSP FAS 157-2 is effective for us beginning
January 1, 2009. The Company is currently evaluating the potential impact
of the adoption of those provisions of SFAS 157, for which effectiveness was
delayed by FSP SFAS 157-2, on our financial position and results of
operations.
  In
March 2008, the FASB released SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities.” SFAS No. 161 requires
additional disclosures related to the use of derivative instruments, the
accounting for derivatives and the financial statement impact of
derivatives.  SFAS No. 161 is effective for fiscal years beginning
after November 15, 2008.  The Company is currently assessing the
impact the adoption of SFAS No. 161 will have on the Company’s financial
statements.
  In
May 2008, the FASB released SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.”SFAS No. 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that presented in conformity with generally accepted
accounting principles in the United States of America. SFAS No. 162 will be
effective 60 days following the SEC’s approval of the PCAOB amendments to AU
Section 411, The Meaning
of Present Fairly in Conformity With Generally Accepted Accounting
Principles.  The Company does not believe SFAS 162 will have a
significant impact on the Company’s financial statements.
   The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements
 10
 
  ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS.
 
 The
discussion and financial statements contained herein are for the three months
ended January 31, 2009 and January 31, 2008. The following discussion should be
read in conjunction with our financial statements and notes included
herewith.  On January 30, 2009, we closed a Share Exchange Agreement
with Bioneutral Laboratories Corporation USA.  The consolidation and
recapitalization for the period ended January 31, 2009 between the Company and
BioNeutral Laboratories Corporation USA has not been completed as of the date of
this filing.  Therefore, the financial statements included in this
Form 10-Q only relate to Moonshine Creations, Inc without regard to the closing
of the Share Exchange.  Please refer to the Form 8-K filed with the
SEC on February 5, 2009, which included audited consolidated financial
statements of Bioneutral Laboratories Corporation USA as of December 31, 2007
and 2006 and unaudited consolidated financial statements for the nine months
ended September 30, 2008 and 2007.  In addition, by April 30, 2009, we
will be filing a transition report that includes audited consolidated financial
statements of Bioneutral Laboratories Corporation USA as of October 31,
2008.
  CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
  This
report contains forward-looking statements that involve risks and uncertainties.
We generally use words such as “believe,” “may,” “could,” “will,” “intend,”
“expect,” “anticipate,” “plan,” and similar expressions to identify
forward-looking statements, including statements regarding our ability to
continue to create innovative technology products, our ability to continue to
generate new business based on our sales and marketing efforts, referrals and
existing relationships, our financing strategy and ability to access the capital
markets and other risks discussed in our Risk Factor section included in our
Form 10-K, as amended, for the year ended October 31, 2008, as filed with the
Securities and Exchange Commission on January 7, 2009. Although we believe the
expectations expressed in the forward-looking statements included in this Form
10-Q are based on reasonable assumptions within the bounds of our knowledge of
our business, a number of factors could cause our actual results to differ
materially from those expressed in any forward-looking statements. We cannot
assure you that the results or developments expected or anticipated by us will
be realized or, even if substantially realized, that those results or
developments will result in the expected consequences for us or affect us, our
business or our operations in the way we expect. We caution readers not to place
undue reliance on these forward-looking statements, which speak only as of their
dates. We do not intend to update any of the forward-looking statements after
the date of this document to conform these statements to actual results or to
changes in our expectations, except as required by law.
  Company
Overview
 
 On
January 30, 2009, we entered into a Share Exchange Agremeent with Bioneutral
Laboratories Corporation USA whereby they became our majority controlled
subsidiary.  We currently own approximately 75% of Bioneutral and
expect to eventually acquire 100% of the outstanding shares of
BioNeutral.  However, we are still working with the remaining
shareholders to acquire their shares.  In connection with the Share
Exchange, we changed our name to Bioneutral Group, Inc. and re-focused our
business plan to further Bioneutral’s business interests.
 
 Pursuant
to the Share Exchange Agreement our sole corporate officer and director,
Victoria Callanan, resigned from her positions and agreed to cancel her
150,000,000 shares of our common stock of the 169,065,000 shares outstanding.
Further, as consideration for the exchange of the shares of BioNeutral
Laboratories Corporation USA, we issued a total of 42,649,500 shares to the
shareholders of Bioneutral Laboratories Corporation USA. In addition, Bioneutral
Laboratories Corporation USA had designated a series of preferred shares and
issued 799,991 shares of preferred stock. Pursuant to the Share Exchange
Agreement, we have agreed to adopt the same designation of preferred stock and
we anticipate the preferred shareholders will exchange their preferred shares of
Bioneutral Laboratories Corporation USA with our shares of preferred shares but
as of the date of filing, the exchange of preferred shares has not occurred.
Accordingly, immediately following the Closing Date, there were 62,364,500
shares of common stock outstanding.
 
 As a
result of the closing of the share exchange, BioNeutral became a majority owned
subsidiary. Our shareholders and directors approved the Share Exchange Agreement
and the transactions contemplated under the Share Exchange
Agreement.
 
 BioNeutral
is a specialty chemical company, organized in 2003 to commercialize a novel
combinational chemistry-based technology which can neutralize harmful
environmental contaminants, toxins and dangerous micro-organisms including
bacteria, viruses and spores.
 
 The
formulations, including YgieneTM and OgieneTM, are green and include natural and
common ingredients which are found in baby products and in the foods we eat. We
combine these widely used compounds in unique ways to create enhanced results.
Our proprietary platform technology been proven effective in surface, water and
airborne applications. Our products include BioNeutralizers and
ChemoNeutralizers.
   11
  Plan of
Business
 
 Bioneutral
began operations in 2003 as a privately held company. Activities in recent years
included securing debt and equity-based financing, development, design and
marketing of our cleaning products: (i) the all-purpose cleaner; (ii) Ogiene –
the toxic gas and odor eliminator; and (iii) Ygiene – an antimicrobial. The
Company generated revenues of $2,041,000 in 2004 but has yet to generate
consistent revenue growth or cash flows from operations.
 
 Our
multi-purpose cleaner does not contain any phosphates, abrasives, alkyl phenol
ethoxylates, chlorine or caustic properties. It removes spots and stains
(including, fruits and vegetables, permanent marker, ball point pen ink, animal
fats, dirt and grime, etc.) from surfaces such as countertops, tables, floors,
clothing and vinyl siding. Our Ogiene product is a chemical neutralizer that
eliminates toxic gases and odors. It is water based and ph buffered to
efficiently and effectively eliminate toxic gases. It is effective in
eliminating industrial, institutional, household and animal odors. It is highly
effective against hydrogen sulfide, ammonia, sulfur dioide and formaldehyde. In
addition, Ogiene can reduce the odor from smoke, pet odors, cooking odors and
bathroom odors. Our third product, Ygiene, is a bioneutralizer that fights
against microbials. It is noncorrosive to ferrous metals and is easily
customizable to specific applications. Ygiene can protect against bacteria such
as E.coli, salmonella and anthrax by killing these microorganisms quicker than
conventional antimicrobials. The Ygiene family of products can be used as
sanitzers, disinfectants, cold sterilants, consumer grades, hospital grades,
industrial grades and military grades.
 
 During
2009, we intend to begin to produce and offer for resale our multi-purpose
cleaners. Additionally, we expect to enter into contracts with certain
governmental agencies to utilize our Ogiene product to eliminate odors and toxic
gases in contaminated homes that were affected by Hurricane Katrina. We also
intend to continue to develop and obtain regulatory approval on our Ygiene
products.
 
 We
anticipate the sale and distribution of our initial product offering of our
multi-purpose cleaner will begin during the fiscal year of 2009.
 
 We intend
to deliver brand building messages through several marketing and advertising
vehicles, including television, radio, national print, online marketing and
search engine optimization, and retail store promotions.
 
 Results of
Operations
 
 On
January 30, 2009, we closed a Share Exchange Agreement with Bioneutral
Laboratories Corporation USA.  The consolidation and recapitalization
for the period ended January 31, 2009 between the Company and BioNeutral
Laboratories Corporation USA has not been completed as of the date of this
filing.  Therefore, the financial statements included in this Form
10-Q only relate to Moonshine Creations, Inc without regard to the closing of
the Share Exchange.  Please refer to the Form 8-K filed with the SEC
on February 5, 2009, which included audited consolidated financial statements of
Bioneutral Laboratories Corporation USA as of December 31, 2007 and 2006 and
unaudited consolidated financial statements for the nine months ended September
30, 2008 and 2007.  In addition, by April 30, 2009, we will be filing
a transition report that includes audited consolidated financial statements of
Bioneutral Laboratories Corporation USA as of October 31, 2008.
  Three
      Months Ended
                        January
      31
                      
                      
                      Cumulative
                        Period
      From
                        April
      10, 2007
                        (Inception
      of the
                        Development
      Stage)
                        Through
                        January
      31,2009
                      
                      
                      2008
                      
                      
                      2009Revenues
                      
                      $
                      –
                      
                      
                      $
                      –
                      
                      
                      $
                      -Costs
      of Sales
                      
                      
                      –
                      
                      
                      
                      –
                      
                      
                      
                      -Gross
      Profit
                      
                      
                      –
                      
                      
                      
                      –
                      
                      
                      
                      -Total
      Operating Expenses
                      
                      
                      14,100
                      
                      
                      
                      3,131
                      
                      
                      
                      87,719Loss
      From Operations
                      
                      
                      (14,100
                      )
                      
                      
                      (3,131
                      )
                      
                      
                      (87,719
                      )Net
      Loss
                      
                      $
                      (14,100
                      )
                      
                      $
                      (3,131
                      )
                      
                      $
                      (87,719
                      )
 SALES AND COSTS OF GOODS
SOLD
  Sales and
costs of good sold for the three months ended January 31, 2009 were $0 as
compared to $0 for the three months ended January 31, 2008. The Company was
organized on April 10, 2007 and has yet to generate revenues.  On
January 30, 2009, we ceased operating our business and closed a share exchange
transaction with Bioneutral Laboratories Corporation USA whereby they became our
majority owned subsidiary.  Bioneutral does not generate
revenue.  A consolidated financial transition report will be filed
within 90 days of closing of the Share Exchange.
  OPERATING
EXPENSES
  Operating
expenses for the three months ended January 31, 2009 amounted to $14,100 as
compared to $3,131 for the three months ended January 31, 2008. The Company was
organized on April 10, 2007 and thus had limited operations in
2007.  Operating expenses in 2009 consisted of $11,000 in
professional fees incurred to complete the Company's audit and review of
the Company’s Form 10-K for the year ended October 31, 2008.
  NET LOSS
  Net loss
for the three months ended January 31, 2009 was $14,100 as compared to $3,131
for the three months ended January 31, 2008 due to the reasons set forth
above.
  12
   BASIC AND DILUTED INCOME PER
SHARE
  Our basic
and diluted net loss per share was $(0.00) and $(0.00) for the three months
ended January 31, 2009 and January 31, 2008, respectively.
  LIQUIDITY AND CAPITAL
RESOURCES
  As of
January 31, 2009, our current assets were $3,416 and current liabilities were
$15,395. Cash and cash equivalents totaled $156 as of January 31, 2009. Our
Shareholders' deficit at January 31, 2009 was $87,719. We had a net (usage
of) provide for cash for operating activities for the three months ended
January 31, 2009 and 2008 of ($400) and $9,969, respectively. We had net cash
provided by financing activities of $450 and $14,050 for the three months ended
January 31, 2009 and 2008, respectively.
  We are
operating from a cash flow deficit funded by the issuance of debt and the sale
of equity, including funding provided by the Company's Chief Executive Officer.
Without the continued availability of external funding, we would have to
materially curtail our operations and our current plans for expansion. We intend
to continue funding our operations through the sale of additional equity and/or
issuance of debt, though there can be no guarantee that we will be successful in
our efforts.
  FINANCING
ACTIVITIES
  The
Company’s Director advanced $400 to the Company during the three months ended
January 31, 2009 for working capital needs. Repayments of $0 were made through
January 31, 2009.
 MATERIAL
TRENDS AND UNCERTAINTIES
  We are a
shell company. Should our cash flow shortfalls continue, and should we be
unsuccessful in raising capital, it will have an adverse impact on our business,
which in turn will have an adverse impact on our financial condition and results
of operations. While we are actively assessing our cash flow needs and pursuing
multiple avenues of financing and cash flow generation, there can be no
assurance that our activities will be successful. If our fundraising efforts are
not successful, it is likely that we will not be able to meet our obligations as
they come due.
  ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 Not
required for smaller reporting companies.
  ITEM
4T.  CONTROLS AND PROCEDURES
  a)  
Evaluation of Disclosure
Controls. Our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our disclosure controls and procedures as of the
end of our fiscal quarter ended January 31, 2009 pursuant to Rule 13a-15(b) of
the Securities and Exchange Act. Disclosure controls and procedures are controls
and other procedures that are designed to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Exchange
Act is accumulated and communicated to our management, as appropriate to allow
timely decisions regarding required disclosure. Based on his evaluation, the CEO
concluded that our disclosure controls and procedures were not effective to
ensure that information required to be disclosed by us in the reports we file or
submit under the Exchange Act is recorded, processed, summarized, and reported
within the time periods specified in the Securities and Exchange Commission’s
rules based on the material weakness described below:
 
 1.
              Management's
      conclusion is based on, among other things, the audit adjustments recorded
      for fiscal years 2007 and 2006, and for the lack of segregation of duties
      and responsibilities within the
Organization.
 
 It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the
system are met. In addition, the design of any control system is based in part
upon certain assumptions about the likelihood of future events. Because of these
and other inherent limitations of control systems, there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions.
 
 (b)
  Changes in internal
control over financial reporting.  In order to rectify our
ineffective disclosure controls and procedures, we are developing a plan to
ensure that all information will be recorded, processed, summarized and reported
accurately, and as of the date of this report, we have taken the following steps
to address the above-referenced material weaknesses in our internal control over
financial reporting:
  1.
              We
      will continue to educate our management personnel to comply with the
      disclosure requirements of Securities Exchange Act of 1934 and Regulation
      S-K; and2.
              We
      will increase management oversight of accounting and reporting functions
      in the future.
 
  
 13
  PART
II — OTHER INFORMATION
  ITEM
1. LEGAL PROCEEDINGS.
 
 We may be
involved in litigation, negotiation and settlement matters that may occur in our
day-to-day operations. Management does not believe the implication of this type
of litigation will have a material impact on our financial
statements.
  ITEM
1A.  RISK FACTORS
 
 Not
required for smaller reporting companies.
 
 ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
 
 Pursuant
to the Share Exchange Agreement, on January 30, 2009, we issued 42,649,500
shares of our common stock to the BioNeutral Shareholders in exchange for their
shares of Bioneutral Laboratories Corporation USA.  Such securities were not registered
under the Securities Act of 1933. The issuance of these shares was exempted from
registration pursuant to Section 4(2) of the Securities Act of
1933.
 
 On
January 30, 2009 and as a condition to the Share Exchange, we approved the
conversion of debentures in the aggregate amount of $600,000 into shares of
Common Stock at a conversion rate of $1.00 per share.  The 600,000
shares were issued to six investors who each received 100,000 shares of common
stock that are restricted and do not have registration rights.  Such securities were not registered
under the Securities Act of 1933. The issuance of these shares was exempted from
registration pursuant to Section 4(2) of the Securities Act of
1933.
 
 On March
13, 2009, we issued 77,415 to James Crane as compensation pursuant to the terms
of his consulting agreement.  Such securities were not registered
under the Securities Act of 1933. The issuance of these shares was exempted from
registration pursuant to Section 4(2) of the Securities Act of
1933.
 
 ITEM
3. DEFAULTS UPON SENIOR SECURITIES.
 
 NONE.
 
 ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
 On
January 30, 2009, our security holders approved the Share Exchange Agreement
with Bioneutral Laboratories Corporation USA whereby they became our majority
owned subsidiary.  Currently, we own approximately 75% of Bioneutral
and expect to own 100% once we are successful in contacting all the shareholders
of Bioneutral.
 
 ITEM
5. OTHER INFORMATION.
 
 On
Friday, March 20, 2009, we entered into a letter of intent with Orient Arts,
Inc. to acquire certain assets. The final terms and conditions of the
transaction shall be set forth in a formal written agreement to be mutually
agreed upon and executed by the Parties. A copy of the letter of intent is
attached to this Form 10-Q as Exhibit 10.1. Orient Arts, Inc. is a shareholder
of Bioneutral Group, Inc. owning approximately 5% of our issued and outstanding
common stock.
 On March
17, 2009, we entered into a consulting agreement with Dorothy Canter, Ph.D. She
was appointed as BioNeutral Groups’ lead consultant on Department of Homeland
Security and Department of Defense issues. She is the former EPA's Chief
Scientist for Bioterrorism Issues. A copy of the Consulting Agreement with Dr.
Dorothy Canter is attached to this Form 10-Q as Exhibit 10.2.
 
 Biography of Dr. Dorothy
Canter
 Dr.
Dorothy Canter is a senior professional biophysicist at the Johns Hopkins
University Applied Physics Laboratory. During the past two years, she has been
actively engaged in activities for the protection of critical infrastructure. In
particular, she was a key organizer for the June 2005 Airport Preparedness
Workshop and has worked on airport protection issues since then. She served on
the organizing committee for the two environmental sampling conferences on
biothreat agents and contributed a chapter to the book on the first conference.
Dr. Canter has published widely in the peer-reviewed literature and given
numerous lectures at national and international meetings on anthrax
decontamination, residual risk and preparedness activities.
   14
 
 From
November 2001 through June 2005, she served as the Chief Scientist for
Bioterrorism Issues in the Office of Solid Waste and Emergency Response (OSWER)
of the US Environmental Protection Agency (EPA). She participated in the overall
cleanup process for the Capitol Hill Anthrax Site in 2001. Based upon the
lessons learned from that cleanup, she contributed actively to the
implementation of more stringent criteria for future cleanups and served as
co-chair of the Technical Working Groups for the remediation of two facilities
needing fumigations. Prior to serving as the Chief Scientist for Bioterrorism
Issues, Dr. Canter served as OSWER’s Science Policy Advisor for 15 years. She
was an expert on incineration risk assessment, toxicity of environmental
chemicals and peer review of highly controversial scientific issues. Through her
tenure with the EPA, Dr. Canter developed unique expertise in biothreat agent
decontamination.
 
 Dr.
Canter has also served for ten years as Assistant to the Director of National
Toxicology Program. She also worked for four years at the Consumer Product
Safety Commission, evaluating the toxic effects of chemicals in consumer
products. Dr. Canter received both a B.S. in mathematics and a Ph.D. in
biophysics from The George Washington University.
  As of
March 13, 2009, the Company hired James Crane as its Chief Financial Officer.
Mr. Crane’s contract is for a term of one year. Mr. Crane or an entity
controlled by Mr. Crane will receive compensation of $60,000 for the term of the
contract. He also received a fully vested stock award of 75,000 shares of the
Company’s common stock and a further stock award of 75,000 shares of the
Company’s common stock which will be subject to a vesting schedule of one year.
On March 13, 2009, Mr. Crane agreed to accept 10,000 shares of the Company’s
common stock in lieu of cash compensation for the months of March and April
2009. A copy of his Consulting Agreement is attached as Exhibit
10.3.
 ITEM
6. EXHIBITS.
  Exhibits.No.
                  
                  Description10.1
                  
                  Letter
      of Intent between Bioneutral Group, Inc. and Orient Art,
    Inc.10.2
                  
                  Consulting
      Agreement with Dr. Dorothy Canter10.3
                  
                  Consulting
      Agreement with Dr. James
      Crane31.1
                  
                  Certification
      Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
      filed herewith.32.1
                  
                  Certification
      of Officers pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002, filed
      herewith.
    15
  SIGNATURE
  In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
   BIONEUTRAL
      GROUP, INC.
                    (Registrant)Date:
      March 23, 2009
                  
                  By:
                  
                  /s/
      Stephen BrowandStephen
      Browand
                    Chief
      Executive OfficerDate:
      March 23, 2009
                  
                  By:
                  
                  /s/
      James T. CraneJames
      T. Crane
                    Principal
      Accounting Officer