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 April 30, 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.  YesR
   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   NoR





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 £
   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.




As of
June 24, 2009, 62,314,500 common shares issued and outstanding.















BIONEUTRAL
GROUP, INC.




TABLE
OF CONTENTS




PagePart
      I — Financial Information
              1Item 1
      — Financial Statements
              1Consolidated
      Balance Sheets as of April 30, 2009 (Unaudited) and October 31,
      2008
              1Unaudited
      Consolidated Statements of Operations for the Three and Six Months Ended
      April 30, 2009 and April 30, 2008
              2Unaudited
      Consolidated Statements of Cash Flows for the Six Months Ended April 30,
      2009 and April 30, 2008
              3Notes
      to Consolidated Financial Statements
              4Item 2
      — Management’s Discussion and Analysis or Plan of
Operation
              12Item 3
      — Quantitative and Qualitative Disclosures About Market
    Risk
              15Item
      4T  — Controls and Procedures
              15Part
      II — Other Information
              16Item 1
      — Legal Proceedings
              16Item
      1A — Risk Factors
              16Item 2
      — Unregistered Sales of Equity Securities and Use of
    Proceeds
              16Item 3
      — Defaults Upon Senior Securities
              16Item 4
      — Submission of Matters to a Vote of Security Holders
              16Item 5
      — Other Information
              16Item 6
      —Exhibits
              16


















PART I — FINANCIAL INFORMATION






ITEM
1. FINANCIAL STATEMENTS




BIONEUTRAL
GROUP, INC.


CONSOLIDATED
BALANCE SHEETS




April
      30,
                          2009
                          (Unaudited)
                        
                        
                        October
      31,
                          2008ASSETSCurrent
      AssetsCash
                        
                        $
                        70,776
                        
                        
                        $
                        85,938Total
      Current Assets
                        
                        
                        70,776
                        
                        
                        
                        85,938Property
      & Equipment (Note 4)
                        
                        
                        1,259
                        
                        
                        
                        1,457Patents
      (Note 5)
                        
                        
                        11,748,637
                        
                        
                        
                        7,228,792Other
      Assets
                        
                        
                        1,250
                        
                        
                        
                        1,250TOTAL
      ASSETS
                        
                        $
                        11,821,922
                        
                        
                        $
                        7,317,437LIABILITIES & SHAREHOLDERS’
      EQUITYCurrent
      LiabilitiesAccounts
      Payable and Accrued Expenses (Note 6)
                        
                        $
                        611,385
                        
                        
                        $
                        481,981Warrant
      Liability (Note 8)
                        
                        
                        -
                        
                        
                        
                        1,069,750Related
      Party Payable (Note 7)
                        
                        
                        63,013
                        
                        
                        
                        88,416Total
      Current Liabilities
                        
                        
                        674,398
                        
                        
                        
                        1,640,147TOTAL
      LIABILITIES
                        
                        
                        674,398
                        
                        
                        
                        1,640,147Minority
      Interest in Consolidated Subsidiaries (Note 11)
                        
                        
                        1,426,539
                        
                        
                        
                        1,024,751Commitments
      & Contingencies (Note 12)Shareholders’
      Equity (Note 9)Preferred
      Stock, $.00001 par value; 10,000,000 shares authorized, 0 and 279,991
      shares issued and outstanding at April 30, 2009 and October 31, 2008,
      respectively
                        
                        
                        -
                        
                        
                        
                        3Common
      Stock, $.00001 par value; 200,000,000 shares authorized, 62,314,500 and
      22,841,415shares
      issued and outstanding at April 30, 2009 and October 31, 2008,
      respectively
                        
                        
                        623
                        
                        
                        
                        228Deferred
      Stock Based Compensation
                        
                        
                        (10,411,371
                        )
                        
                        
                        -Shares
      to be Issued
                        
                        
                        25
                        
                        
                        
                        6Additional
      Paid-in Capital
                        
                        
                        92,579,932
                        
                        
                        
                        74,097,713Accumulated
      Deficit
                        
                        
                        (72,448,224
                        )
                        
                        
                        (69,445,411
                        )Total
      Shareholders' Equity
                        
                        
                        9,720,985
                        
                        
                        
                        4,652,539TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
                        
                        $
                        11,821,922
                        
                        
                        $
                        7,317,437




The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements




-1-









BIONEUTRAL
GROUP, INC.


STATEMENTS
OF OPERATIONS


(Unaudited)





Three Months Ended
                        April
      30,
                      
                      
                      Six
      Months Ended
                        April 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Net
      Sales
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Cost
      of Sales
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Gross
      Profit (Loss)
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Operating
      ExpensesStock
      Based Compensation
                      
                      
                      1,002,084
                      
                      
                      
                      104,022
                      
                      
                      
                      2,711,999
                      
                      
                      
                      689,369Depreciation
      and Amortization
                      
                      
                      167,829
                      
                      
                      
                      137,445
                      
                      
                      
                      316,530
                      
                      
                      
                      287,855Consulting
      Fees
                      
                      
                      114,637
                      
                      
                      
                      3,000
                      
                      
                      
                      331,247
                      
                      
                      
                      38,400Other
      Operating Expenses
                      
                      
                      136,550
                      
                      
                      
                      9,875
                      
                      
                      
                      304,612
                      
                      
                      
                      42,118Total
      Operating Expenses
                      
                      
                      1,421,100
                      
                      
                      
                      254,342
                      
                      
                      
                      3,664,388
                      
                      
                      
                      1,057,742Loss
      From Operations
                      
                      
                      (1,421,100
                      )
                      
                      
                      (254,342
                      )
                      
                      
                      (3,664,388
                      )
                      
                      
                      (1,057,742
                      )Other
      Income and Expenses
                      
                      
                      (925
                      )
                      
                      
                      (6,827
                      )
                      
                      
                      186
                      
                      
                      
                      (26,270
                      )Loss
      From Operations Before Minority Interest
                      
                      
                      (1,422,025
                      )
                      
                      
                      (261,169
                      )
                      
                      
                      (3,664,202
                      )
                      
                      
                      (1,084,012
                      )Minority
      Interest in Subsidiary Net Loss
                      
                      
                      256,676
                      
                      
                      
                      47,141
                      
                      
                      
                      661,389
                      
                      
                      
                      195,664Net
      Loss
                      
                      $
                      (1,165,349
                      )
                      
                      $
                      (214,028
                      )
                      
                      $
                      (3,002,813
                      )
                      
                      $
                      (888,348
                      )Loss
      Per Common ShareBasic
      and Diluted
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.03
                      )
                      
                      $
                      (0.05
                      )Weighted
      Average Shares Used to Compute Basic and Diluted Loss Per Common
      Share
                      
                      
                      62,314,500
                      
                      
                      
                      17,721,415
                      
                      
                      
                      115,984,641
                      
                      
                      
                      17,621,359




The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements




-2-




BIONEUTRAL
GROUP, INC.


STATEMENTS
OF CASH FLOWS


FOR
THE SIX MONTHS ENDED APRIL 30, 2009 AND 2008


(Unaudited)




2009
                        
                        
                        2008CASH
      USED IN OPERATING ACTIVITIESNet
      Loss
                        
                        $
                        (3,002,813
                        )
                        
                        $
                        (888,348
                        )Adjustments
      to Reconcile Net Loss to Net Cash Used in Operating
    ActivitiesStock
      Based Compensation
                        
                        
                        2,711,999
                        
                        
                        
                        689,369Depreciation
      and Amortization
                        
                        
                        316,530
                        
                        
                        
                        287,855Minority
      Interest in Subsidiary Loss
                        
                        
                        (661,389
                        )
                        
                        
                        (195,664
                        )Loss
      on Sale of Marketable Securities
                        
                        
                        -
                        
                        
                        
                        30,804Changes
      in Operating Assets and LiabilitiesDecrease
      in Other Current Assets
                        
                        
                        -
                        
                        
                        
                        354Increase
      in Accounts Payable and Accrued Expenses
                        
                        
                        129,404
                        
                        
                        
                        431,300NET
      CASH USED IN OPERATING ACTIVITIES
                        
                        
                        (506,269
                        )
                        
                        
                        355,670CASH
      USED IN INVESTING ACTIVITIES:Expenditures
      for Patentable Technology and Associated Patent Costs
                        
                        
                        (105,927
                        )
                        
                        
                        (386,220
                        )NET
      CASH USED IN FINANCING ACTIVITIES
                        
                        
                        (105,927
                        )
                        
                        
                        (386,220
                        )CASH
      PROVIDED BY FINANCING ACTIVITIES:Net
      Proceeds From Issuance of Stock
                        
                        
                        600,000
                        
                        
                        
                        -Proceeds
      From Related Party Payables
                        
                        
                        -
                        
                        
                        
                        31,065Repayment
      of Related Party Payables
                        
                        
                        (2,966
                        )
                        
                        
                        -NET
      CASH PROVIDED BY FINANCING ACTIVITIES
                        
                        
                        597,034
                        
                        
                        
                        31,065NET
      (DECREASE) INCREASE IN CASH
                        
                        
                        (15,162
                        )
                        
                        
                        515BEGINNING
      CASH
                        
                        
                        85,938
                        
                        
                        
                        1,046ENDING
      CASH
                        
                        $
                        70,776
                        
                        
                        $
                        1,561SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONCash
      Paid for Interest
                        
                        $
                        –
                        
                        
                        $
                        -Cash
      Paid for Income Taxes
                        
                        $
                        –
                        
                        
                        $
                        –SUPPLEMENTAL
      DISCLOSURE OF NONCASH INFORMATIONIssuance
      of Common Stock to Cancel Promissory Note Debt
                        
                        $
                        20,000
                        
                        
                        $
                        -Issuance
      of Common Stock and Preferred Stock in Exchange for Intellectual Property
      Rights
                        
                        $
                        4,730,250
                        
                        
                        $
                        -




The
Accompanying Notes Are an Integral Part of these Consolidated Financial
Statements




-3-







BIONEUTRAL
GROUP, INC.


FOOTNOTES
TO THE FINANCIAL STATEMENTS


FOR
THE SIX MONTHS ENDED APRIL 30, 2009 AND 2008






NOTE
1 - NATURE OF BUSINESS





BioNeutral
Group, Inc. (the "Company") is a specialty chemical company, organized 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 include
natural and common ingredients which are found in traditional food products. The
Company combines these widely-used compounds in various ways to create unique
chemical formulations. 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 the proprietary YgieneTM platform formulation, disinfect, decontaminate
and sterilize. The Company 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.





Financial
Statements Presented





On
January 30, 2009, the Company entered into a Share Exchange Agreement and agreed
to issue 45,000,000 shares of its common stock in exchange for 81.95% of the
outstanding common stock and Series A Convertible Preferred Stock, on a combined
basis, of Bioneutral Laboratories Corporation USA (“Bioneutral
Laboratories”).  This transaction was accounted for as a reverse
acquisition. Bioneutral Group, Inc., formerly known as Moonshine Creations, did
not have any operations and majority-voting control was transferred to
Bioneutral Laboratories.  The transaction also requires a
recapitalization of Bioneutral Laboratories. Since Bioneutral Laboratories
acquired a controlling voting interest; it was deemed the accounting acquirer,
while Bioneutral Group, Inc. was deemed the legal acquirer.
 
 Since the
transaction is considered a reverse acquisition and recapitalization, the
guidance in SFAS No. 141 does not apply for purposes of presenting pro-forma
financial information.
 
 In
connection with the reverse acquisition and recapitalization, all share and per
share amounts will be retroactively restated.
 
 The
historical financial statements of the Company will be those of Bioneutral
Laboratories, and of the consolidated entities from January 30, 2009, the date
of merger, and subsequent.  The consolidated financial statements for
the Company for the six months ended March 31, 2009 and March 31, 2008, include
the financial statements of Bioneutral Group, Inc., its 81.95% owned subsidiary,
Bioneutral Laboratories, and its two wholly owned subsidiaries, Advanced
Bio-Fiber Treatments Corporation and Environmental Commercial Technology
Corporation. Intercompany transactions and balances are eliminated in
consolidation.
 
 The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
(“GAAP”) for interim financial information and with the instructions to Form
10-Q.  They do not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America for a
complete financial presentation. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, considered necessary for a fair
presentation, have been included in the accompanying unaudited financial
statements.  Operating results for the periods presented are not
necessarily indicative of the results that may be expected for the full
year.  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 Annual Report on Form 10-K for the year ended October 31, 2008 as
filed with the United States Securities and Exchange Commission on June 22,
2009. These financial statements should be read in conjunction with the
Company’s audited consolidated 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.







-4-






NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Principles
of Consolidation




The
consolidated financial statements, prepared in accordance with generally
accepted accounting principles (“GAAP”) in the United States of America, include
the assets, liabilities, revenues, expenses and cash flows of the Company and
all its subsidiaries. The accompanying consolidated financial statements reflect
necessary adjustments not recorded in the books and records of the Company’s
subsidiaries to present them in conformity with GAAP.




Subsidiaries
                              State
      and Countries Registered In
                              Percentage of
                                OwnershipBioneutral
      Laboratories Corporation USA
                              
                              Delaware,
      United
      States of America
                              
                              81.95
                              %Advanced
      Bio-Fiber Treatments Corporation
                              
                              Nevada,
      United
      States of America
                              
                              100.00
                              %Environmental
      Commercial Technology Corporation
                              
                              Delaware,
      United
      States of America
                              
                              100.00
                              %





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 $(72,448,224) as of April 30, 2009 and negative cash flows
from operations during the six months ended April 30, 2009 of $(506,269). 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




NOTE
4 - PROPERTY AND EQUIPMENT





Property
and equipment consisted of the following:




April
      30,
                                2009Computer
      Hardware
                              
                              $
                              4,233Furniture
      and Fixtures
                              
                              
                              1,493Less:
      Accumulated Depreciation and Amortization
                              
                              
                              (4,467
                              )$
                              1,259





NOTE
5 - PATENTS





The
Company has several patents pending on proprietary chemical formulations capable
of neutralizing noxious chemicals and eliminating harmful
microbes.  The Company capitalized the costs of acquired technology,
know-how and trade secrets and identifiable costs incurred to develop, file and
defend the Company’s patents and new patent or provisional patent
applications.  Patent costs incurred by the Company to date are as
follows:






-5-






April
      30,
                                2009Valuation of Stock Issued for Patent
      Rights
                              
                              $
                              50,186,989Direct
      Labor and Contract Services for Testing and Support
                              
                              
                              1,309,535Cost
      of Equipment and Component Materials
                              
                              
                              83,198Professional
      Fees
                              
                              
                              305,787Cash
      Paid for Patent Rights
                              
                              
                              100,000Overhead
      Allocated
                              
                              
                              41,135Travel
                              
                              
                              25,000Liabilities
      Forgiven
                              
                              
                              (386,817
                              )Total
      Cost
                              
                              
                              51,664,827Impairment
      Loss Previously Recorded on December 31, 2006
                              
                              
                              (35,068,000
                              )Cost,
      October 31, 2008
                              
                              
                              16,596,827Accumulated
      Amortization
                              
                              
                              (4,848,190
                              )Net
      Cost, October 31, 2008
                              
                              $
                              11,748,637




The
Company follows SFAS 142 and amortizes the costs of its patents over the
specific useful life of the patents, or 20 years. Amortization expense was
$316,332 for the six months ended April 30, 2009.





NOTE
6 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES





Accounts
payable and accrued expenses consisted of the following as of April 30,
2009:




April
      30,
                            2009Accrued
      Compensation
                          
                          $
                          324,500Other
      Liabilities
                          
                          
                          286,885$
                          611,385





NOTE
7 – RELATED PARTY TRANSACTIONS





The
Company issued 20,000 shares of the Company’s common stock to a former member of
the Company’s Board of Directors to cancel outstanding loans of $20,000 owed to
him.  In connection with the stock issuance, the individual also
agreed to forgive interest on the loan of approximately $2,200.





NOTE
8 – WARRANT LIABILITY





On
January 29, 2009, the Company and Bioneutral Laboratories Limited (“BLL”),
an unaffiliated entity, agreed to terminate the September 14, 2005 agreement
between the Company and BLL.  The Company and BLL further agreed that
the Company would be granted all remaining rights held by BLL to manufacture,
market, distribute and sell products and applications utilizing the Company’s
technology, know-how and trade secrets in specific geographic locations within
Asia, Australasia and the Pacific Islands.  To consummate the
transaction, BLL agreed to cancel warrants to purchase 1,500,000 shares of the
Company’s common stock, which are classified as warrant liability in the balance
sheets and valued at $1,069,750.  Concurrently, the Company issued BLL
600,000 shares of the Company’s common stock valued at $600,000 and 520,000
shares of Convertible Series A Preferred Stock valued at
$5,200,000.






-6-





NOTE
9 –
STOCKHOLDERS’ EQUITY





The
Company is authorized to issue 210,000,000 shares, in aggregate, consisting
of 200,000,000 shares of common stock, $0.00001 par value, and 10,000,000 shares
of preferred stock, $0.00001 par value. The Company's current Certificate of
Incorporation authorizes the Board of Directors (the “Board”) to determine the
preferences, limitations and relative rights of any class or series of preferred
stock prior to issuance.  Each such class or series must be given
distinguishable designated rights prior to issuance. As of April 30, 2009, 0
shares of the Company’s Preferred Stock and 62,314,500 shares of the Company’s
common stock were issued and outstanding.





Stock Based
Compensation





During
the six months ended April 30, 2009, the Company issued 13,123,370 of the
Company’s common stock, valued at $13,123,370 for compensation to consultants,
member of the Company’s board of directors, and officers of the Company for
services provided to the Company.





NOTE
10 – TAXES





United
States of America





Since the
Company has had operating losses since inception, there is no provision for
corporate income taxes in the United States of America. Therefore, there are no
deferred tax amounts as of April 30, 2009 and October 31, 2008, respectively.





Nevada





The
Company is incorporated in Nevada but does not conduct business
in Nevada. Therefore, the Company is not subject to corporate income
tax.




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 is not in discussions with any tax authorities whereby any settlements
over past due taxes are in progress.




The
Company's net deferred tax asset as of April 30, 2009 consisted of the
following:




April
      30,
                              2009Net
      operating loss carry forward
                            
                            $
                            26,587,000Valuation
      allowance
                            
                            
                            (26,587,000
                            )Net
      deferred tax asset
                            
                            $
                            ––




The net
operating losses generated in the six months ended April 30, 2009 will begin to
expire in 2028.  The Company has recorded a full allowance against its
deferred tax assets due to the fact that the likelihood of any benefit being
derived by the Company in future years is indeterminable as of the date of these
consolidated financial statements.




The
components of current income tax expense for the six months ended April 30,
2009, consisted of the following:




April
      30,
                      2009Current
      federal tax expense
                    
                    $
                    ––Current
      state tax expense
                    
                    
                    ––Change
      in NOL benefits
                    
                    
                    304,000Change
      in valuation allowance
                    
                    
                    (304,000
                    )Income
      tax expense
                    
                    $
                    ––






-7-






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:




April
      30,
                          2009Tax
      expense (credit) at statutory rate-federal
                        
                        
                        (35%)State
      tax expense net of federal tax
                        
                        
                        (6%)Changes
      in valuation allowance
                        
                        
                        41%Tax
      expense at actual rate
                        
                        
                        0%





NOTE
11 – MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES





Minority
interest represents the minority stockholders’ proportionate share of 18.05%
(2008 – 18.05%) of the equity of Bioneutral Laboratories Corporation USA.
The Company’s 81.95% controlling interest requires that Bioneutral Laboratories
Corporation USA’s operations be included in the Consolidated Financial
Statements. The 18.05% (2008 – 18.05%) equity interest of Bioneutral
Laboratories that is not owned by the Company is shown as “Minority interests in
consolidated subsidiaries” in the financial statements is shown as $1,426,539
and $1,024,751, respectively.





April
      30,
                      2009
                    
                    
                    October
      31,
                      2008Minority
      Interest in Consolidated Subsidiaries
                    
                    $
                    1,426,539
                    
                    
                    $
                    1,024,751







NOTE 12 – COMMITMENTS &
CONTINGENCIES





Operating
Leases




On August
1, 2008, the Company entered into a twelve month lease agreement for its office
space in Newark, New Jersey. The following table summarizes the Company’s future
minimum lease payments under operating lease agreements for the five years
subsequent to April 30, 2009:




Twelve
      Months Ended:April
      30, 2010
                            
                            
                            7,948$
                            7,948




Litigation




We may be
involved from time to time in ordinary litigation that will not have a material
effect on our operations or finances. We are not aware of any pending or
threatened litigation against the Company or our officers and directors in their
capacity as such that could have a material impact on our operations or
finances.




Searchhelp, Inc. Royalty
Rights




On
February 3, 2004, the Company’s subsidiary, ECT, entered into an agreement with
Searchhelp, Inc. (“Searchhelp”).  Searchhelp paid cash and issued
shares of its common stock and stock warrants to the Company and ECT in order to
acquire a royalty equal to 5% of the gross sales of a product ECT was
developing.  The product, which has not been commercially released and
has not been approved by the Environmental Protection Agency ("EPA") in the USA,
was intended to prevent the growth of mold and fungus.  The agreement
with Searchhelp was for a 5 1⁄2 year term.  The Company cannot currently
estimate any liability it may have with regard to
Searchhelp.  However, should this product eventually be released, the
Company would fulfill its obligations under the February 3, 2004
agreement.






-8-






Contingent Share
Issuance




­           The
Company has an outstanding verbal commitment to its Chief Scientist such that if
and when the Company gains approval from the EPA for a product or application
which utilizes its patented chemical formulations, the Chief Scientist will
immediately be awarded 555,822 shares of the Company’s common
stock.  The Company cannot be sure beyond a reasonable doubt that
these shares of common stock will ever be awarded.  As such, the
Company will not record stock based compensation expense until the issuance of
these shares of common stock are actually earned.  The value of such
stock based compensation would be measurable on the date the shares of common
stock are earned.




NOTE
13 – SUBSEQUENT EVENTS




On March
24, 2009, the Company's subsidiary, Advanced Bio-Fiber Treatments Corp. entered
into a non-binding letter of intent to acquire Orient Arts, Inc., a manufacturer
of fibers, textiles and finished goods.  As of June 22, 2009, the
Company is still in the process of negotiating terms with Orient Arts, Inc. and
is unsure whether or not this acquisition will be consummated.





On May
20, 2009, the Company and its Chief Financial Officer renegotiated the Chief
Financial Officer's consulting agreement.  The Chief Financial Officer
previously received a total of 82,585 shares of the Company's common stock and
was entitled to annual cash compensation of $60,000.  Under the terms
of the new consulting agreement, the Chief Financial Officer agreed to accept
all compensation solely in the form of the Company's common stock.  A
total of 300,000 shares of the Company's common stock valued at $105,000 was
vested immediately on May 20, 2009.  In the next twelve months, the
Chief Financial Officer can earn an additional 480,000 shares of the Company's
common stock, of which 300,000 shares are subject to a twelve month vesting term
and an additional 180,000 shares of the Company's common stock are subject to
certain contingent events, namely the successful filing of the Company's
quarterly and annual reports with the SEC.





On May
27, 2009, the Company received proceeds of $250,000 upon the issuance of
1,000,000 shares of the Company’s common stock from an individual
investor.





NOTE
14 –
RECENTLY ISSUED ACCOUNTING STANDARDS





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which
clarifies the principle that fair value should be based on the assumptions that
market participants would use when pricing an asset or liability.  It
also defines fair value and established a hierarchy that prioritizes the
information used to develop assumptions.  SFAS No. 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007.  The adoption of SFAS No. 157 did not have a material effect on
its financial position, results of operations or cash flows.





On
February 15, 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities — Including an Amendment of FASB
Statement No. 115” (“SFAS 159”). This standard permits an entity to measure
financial instruments and certain other items at estimated fair value. Most of
the provisions of SFAS No. 159 are elective; however, the amendment to FASB No.
115, “Accounting for Certain Investments in Debt and Equity Securities,” applies
to all entities that own trading and available-for-sale securities. The fair
value option created by SFAS 159 permits an entity to measure eligible items at
fair value as of specified election dates. The fair value option (a) may
generally be applied instrument by instrument, (b) is irrevocable unless a new
election date occurs, and (c) must be applied to the entire instrument and not
to only a portion of the instrument. SFAS 159 is effective as of the beginning
of the first fiscal year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of the previous fiscal year provided that the
entity (i) makes that choice in the first 120 days of that year, (ii) has not
yet issued financial statements for any interim period of such year, and (iii)
elects to apply the provisions of FASB 157. Management is currently evaluating
the impact of SFAS 159, if any, on the Company’s financial statements. The
adoption of SFAS No. 159 did not have a material effect on its financial
position, results of operations or cash flows.




In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No 51” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for
ownership interests in subsidiaries held by parties other than the parent,
changes in a parent’s ownership of a noncontrolling interest, calculation and
disclosure of the consolidated net income attributable to the parent and the
noncontrolling interest, changes in a parent’s ownership interest while the
parent retains its controlling financial interest and fair value measurement of
any retained noncontrolling equity investment. SFAS 160 is effective for
financial statements issued for fiscal years beginning after December 15, 2008,
and interim periods within those fiscal years. Early adoption is prohibited. The
adoption of SFAS No. 160 is not expected to have a material effect on the
Company’s financial position, results of operations or cash flows.






-9-







In
December 2007, the FASB issued SFAS 141R, “Business Combinations” (“SFAS 141R”),
which replaces FASB SFAS 141, “Business Combinations”.  This Statement
retains the fundamental requirements in SFAS 141 that the acquisition method of
accounting be used for all business combinations and for an acquirer to be
identified for each business combination. SFAS 141R defines the acquirer as the
entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control.  SFAS 141R will require an entity to record
separately from the business combination the direct costs, where previously
these costs were included in the total allocated cost of the
acquisition.  SFAS 141R will require an entity to recognize the assets
acquired, liabilities assumed, and any non-controlling interest in the acquired
at the acquisition date, at their fair values as of that date.  This
compares to the cost allocation method previously required by SFAS No.
141.  SFAS 141R will require an entity to recognize as an asset or
liability at fair value for certain contingencies, either contractual or
non-contractual, if certain criteria are met.  Finally, SFAS 141R will
require an entity to recognize contingent consideration at the date of
acquisition, based on the fair value at that date.  This Statement
will be effective for business combinations completed on or after the first
annual reporting period beginning on or after December 15,
2008.  Early adoption of this standard is not permitted and the
standards are to be applied prospectively only.  Upon adoption of this
standard, there would be no impact to the Company’s results of operations and
financial condition for acquisitions previously completed.  The
adoption of SFAS No. 141R is not expected to have a material effect on the
Company’s financial position, results of operations or cash flows.





In
January 2008, the SEC released SAB No. 110, which amends SAB No. 107 which
provided a simplified approach for estimating the expected term of a “plain
vanilla” option, which is required for application of the Black-Scholes option
pricing model (and other models) for valuing share options. At the time, the
Staff acknowledged that, for companies choosing not to rely on their own
historical option exercise data (i.e., because such data did not provide a
reasonable basis for estimating the term), information about exercise patterns
with respect to plain vanilla options granted by other companies might not be
available in the near term; accordingly, in SAB No. 107, the Staff permitted use
of a simplified approach for estimating the term of plain vanilla options
granted on or before December 31, 2007. The information concerning exercise
behavior that the Staff contemplated would be available by such date has not
materialized for many companies. Thus, in SAB No. 110, the Staff continues to
allow use of the simplified rule for estimating the expected term of plain
vanilla options until such time as the relevant data becomes widely available.
The Company does not expect its adoption of SAB No. 110 to have a material
impact on its financial position, results of operations or cash
flows.





In March
2008, the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and
Hedging Activities—An Amendment of FASB Statement No. 133.” (“SFAS 161”). SFAS
161 establishes the disclosure requirements for derivative instruments and for
hedging activities with the intent to provide financial statement users with an
enhanced understanding of the entity’s use of derivative instruments, the
accounting of derivative instruments and related hedged items under Statement
133 and its related interpretations, and the effects of these instruments on the
entity’s financial position, financial performance, and cash flows. This
statement is effective for financial statements issued for fiscal years
beginning after November 15, 2008. The Company does not expect its adoption of
SFAS 161 to have a material impact on its financial position, results of
operations or cash flows.





In April
2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 142-3, “Determination
of the Useful Life of Intangible Assets”. This FSP amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under FASB Statement
No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). The intent of this
FSP is to improve the consistency between the useful life of a recognized
intangible asset under SFAS 142 and the period of expected cash flows used to
measure the fair value of the asset under SFAS 141R, and other GAAP. This FSP is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early adoption
is prohibited. The Company is currently evaluating the impact of SFAS FSP 142-3,
but does not expect the adoption of this pronouncement will have a material
impact on its financial position, results of operations or cash
flows.






-10-






In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”).  SFAS 162 identifies the sources
of accounting principles and the framework for selecting principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States.  This statement is effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board’s amendments to
AU section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles.  The Company is currently evaluating
the impact of SFAS 162, but does not expect the adoption of this pronouncement
will have a material impact on its financial position, results of operations or
cash flows.





In
October 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value of a
Financial Asset When the Market For That Asset Is Not Active” (“FSP FAS 157-3”),
with an immediate effective date, including prior periods for which financial
statements have not been issued.  FSP FAS 157-3 amends FAS 157 to
clarify the application of fair value in inactive markets and allows for the use
of management’s internal assumptions about future cash flows with appropriately
risk-adjusted discount rates when relevant observable market data does not
exist.  The objective of FAS 157 has not changed and continues to be
the determination of the price that would be received in an orderly transaction
that is not a forced liquidation or distressed sale at the measurement
date.  The adoption of FSP FAS 157-3 is not expected to have a
material effect on the Company’s financial position, results of operations or
cash flows.




In
November 2008, the Emerging Issues Task Force (EITF) reached consensus on Issue
No. 08-6, Equity Method
Investment Accounting Considerations (EITF 08-6), which clarifies the
accounting for certain transactions and impairment considerations involving
equity method investments. The intent of EITF 08-6 is to provide guidance on
(i) determining the initial carrying value of an equity method investment,
(ii) performing an impairment assessment of an underlying indefinite-lived
intangible asset of an equity method investment, (iii) accounting for an
equity method investee’s issuance of shares, and (iv) accounting for a
change in an investment from the equity method to the cost method. EITF 08-6 is effective on January 1, 2009, and is to be
applied prospectively. The adoption of EITF 08-6 is not expected to have a
material impact on the Company’s financial position or results of
operations.
 
 In
December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities
(Enterprises) About Transfers of Financial Assets and Interest in Variable
Interest Entities (FSP 140-4). FSP 140-4 requires additional
disclosure about transfers of financial assets and an enterprise’s involvement
with variable interest entities. FSP 140-4 was effective for the first
reporting period ending after December 15, 2008. The adoption of
FSP 140-4 did not have a significant impact on the Company’s consolidated
financial statements and disclosures.
 
 In April
2009, the FASB issued FASB Staff Position (“FSP”) No. FAS 141(R)-1 (“FAS
141(R)-1”),Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies. FAS 141(R)-1 amends and clarifies FASB Statement No. 141
(revised 2007), Business
Combinations, to address application issues on initial recognition and
measurement, subsequent measurement and accounting, and disclosure of assets and
liabilities arising from contingencies in a business combination. This FSP is
effective for assets or liabilities arising from contingencies in business
combination for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2008.
Management of the Company can not determine at this time what effect the
adoption of FAS 141(R)-1 will have on its future consolidated results of
operations and financial condition.




Other
accounting standards have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date and
are not expected to have a material impact on the financial statements upon
adoption.






-11-




ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OR RESULTS OF
OPERATIONS.





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 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





Company
Structure





We
operate our business through our subsidiary, Bioneutral Laboratories Corporation
USA (“Bioneutral Laboratories”). Bioneutral Laboratories 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.





On
January 30, 2009, we entered into a Share Exchange Agreement with Bioneutral
Laboratories, and the shareholders of BioNeutral Laboratories. This transaction
was accounted for as a reverse acquisition. Bioneutral Group, Inc., formerly
known as Moonshine Creations, did not have any operations and majority-voting
control was transferred to Bioneutral Laboratories.  The transaction
also requires a recapitalization of Bioneutral Laboratories. Since Bioneutral
Laboratories acquired a controlling voting interest; it was deemed the
accounting acquirer, while Bioneutral Group, Inc. was deemed the legal
acquirer.
 
 Since the
transaction is considered a reverse acquisition and recapitalization, the
guidance in SFAS No. 141 does not apply for purposes of presenting pro-forma
financial information.
 
 In
connection with the reverse acquisition and recapitalization, all share and per
share amounts will be retroactively restated.
 
 The
historical financial statements of the Company will be those of Bioneutral
Laboratories, and of the consolidated entities from January 30, 2009, the date
of merger, and subsequent.  The consolidated financial statements for
the Company for the six months ended March 31, 2009 and March 31, 2008, include
the financial statements of Bioneutral Group, Inc., its 81.95% owned subsidiary,
Bioneutral Laboratories, and its two wholly owned subsidiaries, Advanced
Bio-Fiber Treatments Corporation and Environmental Commercial Technology
Corporation. Intercompany transactions and balances are eliminated in
consolidation.
 
 Pursuant
to the Share Exchange Agreement, we agreed to issue to the shareholders of
BioNeutral Laboratories 45,000,000 shares of its common stock. As of the Closing
Date, we issued 42,649,500 shares to the shareholders of Bioneutral
Laboratories.  The remaining 2,350,500 shares were issued to the
preferred shareholders of Bioneutral Laboratories within 30 days of the Closing
Date pursuant to a mandatory conversion feature of the preferred
shares.  Additionally, at Closing, we issued 600,000 shares to six
investors who purchased debentures in Bioneutral Laboratories and agreed to
convert those debentures into shares of common stock per the terms of the Share
Exchange Agreement.  Additionally, we issued 50,000 shares of common
stock to Anslow & Jaclin, LLP as partial compensation for legal
services.


-12-








Our
consolidated financial statements for the six months ended April 30, 2009 and
April 30, 2008, include the financial statements of us, Bioneutral Laboratories,
and two wholly owned subsidiaries of Bioneutral Laboratories, Advanced Bio-Fiber
Treatments Corporation and Environmental Commercial Technology
Corporation. Intercompany transactions and balances are eliminated in
consolidation.





Business
Overview





We began
operations in 2003 as a privately held company. We combine widely used
compounds, including YgieneTM and OgieneTM, in unique ways to create enhanced
results. 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. Our proprietary platform technology has been proven effective in
surface, water and airborne applications. Our products include BioNeutralizers
and ChemoNeutralizers.




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.





The
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. The 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.





Plan
of Operations





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.






-13-





Results
of Operations





The
following tables set forth key components of our results of operations for the
periods indicated, in dollars, and key components of our revenue for the period
indicated, in dollars.




Six
      months Ended
                    April
      302009
                  
                  
                  2008Revenues
                  
                  $
                  –
                  
                  
                  $
                  –Costs
      of Sales
                  
                  
                  –
                  
                  
                  
                  –Gross
      Profit
                  
                  
                  –
                  
                  
                  
                  –Total
      Operating Expenses
                  
                  
                  3,664,388
                  
                  
                  
                  1,057,742Loss
      From Operations
                  
                  
                  (3,664,202
                  )
                  
                  
                  (1,084,012
                  )Net
      Loss
                  
                  $
                  (3,002,813
                  )
                  
                  $
                  (888,348
                  )




For
the Six Months Ended April 30, 2009 Compared to the Six Months Ended April
2008





SALES AND COSTS
OF GOODS SOLD:Sales and costs of good sold for the six months ended April 30, 2009 were
$0 as compared to $0 for the six months ended April 30, 2008. We did not
generate any sales in 2009 or 2008, respectively.




OPERATING
EXPENSES:Operating expenses for the six months ended April 30, 2009 amounted to
$3,664,388 as compared to $1,057,742 for the six months ended April 30, 2008.
Operating expenses in 2009 consisted of $2,711,999 in stock based
compensation, $316,530 in depreciation and amortization of patent costs and
$331,247 in consulting fees, among others.  Operating expenses in 2008
consisted of $689,369 in stock based compensation, $287,855 in depreciation and
amortization of patent costs and $38,400 in consulting fees, among
others.  The Company does not have a significant amount of
cash.  As a result, management expects to continue to provide
compensation in the form of shares of common stock until our cash flows or cash
balances are sufficient to sustain operations.  Amortization related
to patent costs should remain consistent over time and will likely increase
slightly each month as additional costs are incurred to develop and protect our
patents and any new potential patentable claims. Consulting fees may continue to
be incurred but payment could possibly be deferred until such time as we have
cash or cash flow to sustain operations.




NET LOSS:Net loss for the six months ended April 30, 2009 was $3,002,813 as
compared to $888,348 for the six months ended April 30, 2008 due to the reasons
set forth above.  Additionally, the minority interest portion of the
Company’s subsidiary losses totaled $661,389 and $195,664 for the six months
ended April 30, 2009 and 2008, respectively, and is treated as a reduction of
the Company’s net loss for each period presented.




BASIC AND DILUTED
INCOME PER SHARE:Our basic and diluted net loss per share was $(0.03) and $(0.05) for the
six months ended April 30, 2009 and April 30, 2008, respectively.






-14-






LIQUIDITY
AND CAPITAL RESOURCES




As of
April 30, 2009, our current assets were $70,776 and current liabilities were
$674,398. Cash and cash equivalents totaled $70,776 as of April 30, 2009. Our
Shareholders' deficit at April 30, 2009 was $72,448,224. We had cash (used in)
provided by operating activities for the six months ended April 30, 2009 and
2008 of ($506,269) and $355,670, respectively. We had net cash used in investing
activities of $105,927 and $386,220 for the six months ended April 30, 2009 and
2008, respectively. We had net cash provided by financing activities of $597,034
and $31,065 for the six months ended April 30, 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 Board of Directors, as
necessary. 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.




MATERIAL
TRENDS AND UNCERTAINTIES




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 April 30, 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.








-15-







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.   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.





The
remaining 2,350,500 shares were issued to the preferred shareholders of
Bioneutral Laboratories within 30 days of the closing of the Share Exchange
Agreement  pursuant to a mandatory conversion feature of the preferred
shares. 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 and June 8, 2009, we issued 82,585 and 450,000 shares of common stock
to James Crane as compensation pursuant to the terms of consulting
agreements.  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.





None.





ITEM
5. OTHER INFORMATION.





None.




ITEM
6. EXHIBITS.




Exhibits.No.
            
            Description31.1
            
            Certification
      of Stephen Browand pursuant to Section 302 of the Sarbanes-Oxley Act
      of 200231.2
            
            Certification
      of James T. Crane pursuant to Section 302 of the Sarbanes-Oxley Act
      of 200232.1
            
            Certification
      of Stephen Browand  pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      200232.2
            
            Certification
      of James T. Crane pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002






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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:
      June 24, 2009
            
            By:
            
            /s/
      Stephen BrowandStephen
      Browand
              Chief
      Executive OfficerDate:
      June 24, 2009
            
            By:
            
            /s/
      James T. CraneJames
      T. Crane
              Principal
      Accounting Officer












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