**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-QSB**


**(Mark
      One)**




**þ**
            **Quarterly
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934.**




**For
      the quarterly period ended November 30, 2006.**


**or**




**o**
            **Transition
                Report Pursuant to Section 13 or 15(d) of the Securities Exchange
                Act of
                1934.**




**For
      the transition period from ______to______.**




**Commission
      file number 333-130858**




**BYWATER
      RESOURCES INC.**


(Exact
      name of registrant as specified in its charter)


**Delaware**(State
                or other jurisdiction of
            (I.R.S.
                Employer Identification No.)incorporation
                or organization)




**300
                Park Avenue, Suite 1700, New York, NY**
            **10022**(Address
                of principal executive offices)
            (Zip
                Code)




**(212)
      572-6395**


(Registrant’s
      telephone number, including area code)




(Former
      name, former address and former fiscal year, if changed since last
      report)




Check
      whether the issuer (1) has filed all reports required to be filed by Section
      13
      or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
      period that the issuer was required to file such reports), and (2) has been
      subject to such filing requirements for the past 90 days.


Yes þ
      No o




Indicate
      by check mark whether the registrant is a shell company as defined in Rule
      12b-2
      of the Exchange Act.


Yes þ
      No o





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of January 12, 2007: 16,000,000 shares of common stock.












**BYWATER
      RESOURCES INC.**


**FINANCIAL
      STATEMENTS**




**INDEX**




**PART
      I-- FINANCIAL INFORMATION**




Item
                1.
            Financial
                StatementsItem
                2.
            Management’s
                Discussion and Analysis of Financial ConditionItem
                3.
            Control
                and Procedures




**PART
      II-- OTHER INFORMATION**




Item
                1.
            Legal
                ProceedingsItem
                2.
            Changes
                in SecuritiesItem
                3.
            Defaults
                Upon Senior SecuritiesItem
                4.
            Submission
                of Matters to a Vote of Security HoldersItem
                5.
            Other
                InformationItem
                6.
            Exhibits
                and Reports on Form 8-K





**SIGNATURE**







**Item
      1. Financial Information**




BASIS
      OF
      PRESENTATION




The
      accompanying reviewed financial statements are presented in accordance with
      generally accepted accounting principles for interim financial information
      and
      the instructions to Form 10-QSB and item 310 under subpart A of Regulation
      S-B.
      Accordingly, they do not include all of the information and footnotes required
      by generally accepted accounting principles for complete financial statements.
      In the opinion of management, all adjustments (consisting only of normal
      occurring accruals) considered necessary in order to make the financial
      statements not misleading, have been included. Operating results for the six
      months ended November 30, 2006 are not necessarily indicative of results that
      may be expected for the year ending May 31, 2007. The financial statements
      are
      presented on the accrual basis.











**BYWATER
        RESOURCES, INC.**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **FINANCIAL
        STATEMENTS**
 **AS
        OF NOVEMBER 30, 2006**
 **(UNAUDITED)**
   
  
 
 
 
 
 **BYWATER
        RESOURCES, INC.**
 **(AN
        EXPLORATION STAGE COMPANY)**
 
 
 
 **CONTENTS**
 
 
 PAGE
              1
              CONDENSED
                  BALANCE SHEET AS OF NOVEMBER 30, 2006 (UNAUDITED)PAGE
              2
              CONDENSED
                  STATEMENT OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED NOVEMBER
                  30,
                  2006 AND FOR THE PERIOD FROM JANUARY 11, 2006 (INCEPTION) TO
                  NOVEMBER 30, 2006 (UNAUDITED)PAGES
              3
              CONDENSED
                  STATEMENT OF STOCKHOLDERS’ EQUITY FOR THE PERIOD FROM JANUARY 11, 2006
                  (INCEPTION) TO NOVEMBER 30, 2006 (UNAUDITED)PAGE
              4
              CONDENSED
                  STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED NOVEMBER 30,
                  2006 AND
                  FOR THE PERIOD FROM JANUARY 11, 2006 (INCEPTION) TO NOVEMBER 30,
                  2006
                  (UNAUDITED)PAGES
              5
                  -
                  9
              NOTES
                  TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 
 
  
   
 **BYWATER
          RESOURCES, INC.**
 **(AN
          EXPLORATION STAGE COMPANY)**
 **CONDENSED
          BALANCE SHEET**
 **AS
          OF NOVEMBER 30, 2006**
 **(UNAUDITED)**
  **ASSETS****CURRENT
                      ASSETS**Cash
                  $
                  27,433**TOTAL
                      ASSETS**
                  $
                  27,433**LIABILITIES
                      AND STOCKHOLDERS’ EQUITY****CURRENT
                      LIABILITIES**Accrued
                      expenses
                  $
                  3,075**TOTAL
                      LIABILITIES**
                  
                  3,075**STOCKHOLDERS’
                      EQUITY**Preferred
                      stock, $0.0001 par value, 50,000,000 shares authorized, none issued
                      and outstanding
                  
                  -Common
                      stock, $0.0001 par value, 100,000,000 shares authorized, 16,000,000
                      shares
                      issued and outstanding
                  
                  1,600Additional
                      paid in capital
                  
                  79,600Accumulated
                      deficit during exploration stage
                  
                  (56,842
                  )Total
                      Stockholders’ Equity
                  
                  24,358**TOTAL
                      LIABILITIES AND STOCKHOLDERS’ EQUITY**
                  $
                  27,433
   See
            accompanying notes to condensed financial statements.
     F-1
    **BYWATER
            RESOURCES, INC.**
 **(AN
            EXPLORATION STAGE COMPANY)**
 **CONDENSED
            STATEMENTS OF OPERATIONS**
 **(UNAUDITED)**
   For
                      the Three Months Ended November 30, 2006
                  
                  For
                      the Six Months Ended November 30, 2006
                  
                  For
                      the Period From
                    January
                      11, 2006 (Inception) to November 30, 2006**REVENUE**
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  -**OPERATING
                      EXPENSES**General
                      and administrative
                  
                  
                  2,903
                  
                  
                  10,636
                  
                  
                  16,842Exploration
                      costs
                  
                  
                  -
                  
                  
                  -
                  
                  
                  40,000Total
                      Operating Expenses
                  
                  
                  2,903
                  
                  
                  10,636
                  
                  
                  56,842**LOSS
                      FROM OPERATIONS**
                  
                  
                  (2,903
                  )
                  
                  (10,636
                  )
                  
                  (56,842
                  )Provision
                      for Income Taxes
                  
                  
                  -
                  
                  
                  -
                  
                  
                  -**NET
                      LOSS**
                  
                  $
                  (2,903
                  )
                  $
                  (10,636
                  )
                  $
                  (56,842
                  )Net
                      loss per share - basic and diluted
                  
                  $
                  -
                  
                  $
                  -
                  
                  $
                  (0.004
                  )Weighted
                      average number of shares outstanding during the period -
                      basic and diluted
                  
                  
                  16,000,000
                  
                  
                  16,000,000
                  
                  
                  15,465,944







See
        accompanying notes to condensed financial statements.




F-2





**BYWATER
        RESOURCES, INC.**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **CONDENSED
        STATEMENT OF STOCKHOLDERS’ EQUITY**
 **FOR
        THE PERIOD FROM JANUARY 11, 2006 (INCEPTION) TO NOVEMBER 30,
        2006**
 **(UNAUDITED)**




Preferred
                  Stock
              
              Common
                  Stock
              
              Additional
                  Paid-In
              
              Accumulated
                  Deficit During ExplorationShares
              
              Amount
              
              Shares
              
              Amount
              
              Capital
              
              Stage
              
              TotalCommon stock issued as compensation upon Company inception on
                  January 11, 2006 ($0.0001 per share)
              
              
              -
              
              $
              -
              
              
              12,000,000
              
              $
              1,200
              
              $
              -
              
              $
              -
              
              $
              1,200Common stock issued for cash on February 16, 2006 on private placement
                  ($0.02 per share)
              
              
              -
              
              
              -
              
              
              2,100,000
              
              
              210
              
              
              41,790
              
              
              -
              
              
              42,000Common stock issued for cash on March 3, 2006 on private placement
                  ($0.02 per share)
              
              
              -
              
              
              -
              
              
              1,900,000
              
              
              190
              
              
              37,810
              
              
              -
              
              
              38,000Net loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (46,206
              )
              
              (46,206
              )Balance, May 31, 2006
              
              
              -
              
              
              -
              
              
              16,000,000
              
              
              1,600
              
              
              79,600
              
              
              (46,206
              )
              
              34,994Net loss
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (10,636
              )
              
              (10,636
              )**BALANCE, NOVEMBER 30, 2006**
              
              
              -
              
              $
              -
              
              
              16,000,000
              
              $
              1,600
              
              $
              79,600
              
              $
              (56,842
              )
              $
              24,358






See
        accompanying notes to condensed financial statements.








F-3




**BYWATER
        RESOURCES, INC.**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **CONDENSED**  **STATEMENTS
        OF CASH FLOWS**
 **(UNAUDITED)**






For
                  the Six Months Ended November 30, 2006
              
              For
                  the Period From
                January
                  11, 2006 (Inception) to November 30, 2006**CASH
                  FLOWS FROM OPERATING ACTIVITIES:**Net
                  loss
              
              $
              (10,636
              )
              $
              (56,842
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Compensation
                  in the form of stock
              
              
              -
              
              
              1,200Changes
                  in operating assets and liabilities:Increase
                  (decrease) in accrued expenses
              
              
              (1,875
              )
              
              3,075Net
                  Cash Used In Operating Activities
              
              
              (12,511
              )
              
              (52,567
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**
              
              
              -
              
              
              -**CASH
                  FLOWS FROM FINANCING ACTIVITIES:**Proceeds
                  from issuance of common stock
              
              
              -
              
              
              80,000Net
                  Cash Provided By Financing Activities
              
              
              -
              
              
              80,000NET
                  INCREASE (DECREASE) IN CASH
              
              
              (12,511
              )
              
              27,433CASH
                  AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
              
              
              39,944
              
              
              -CASH
                  AND CASH EQUIVALENTS AT END OF PERIOD
              
              $
              27,433
              
              $
              27,433








See
        accompanying notes to condensed financial statements.






F-4




**BYWATER
        RESOURCES, INC.**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS**
 **AS
        OF NOVEMBER 30, 2006**
 **(UNAUDITED)**




**NOTE
                  1**
              **SUMMARY
                  OF SIGNIFICANT ACCOUNTING POLICIES AND
                  ORGANIZATION**
 
 ***(A)
        Basis of Presentation***
 
 The
        accompanying unaudited financial statements have been prepared in accordance
        with accounting principles generally accepted in the United States of America
        and the rules and regulations of the Securities and Exchange Commission for
        interim financial information. Accordingly, they do not include all the
        information necessary for a comprehensive presentation of financial position
        and
        results if operations.
 
 It
        is
        management’s opinion however, that all material adjustments (consisting of
        normal recurring adjustments) have been made which are necessary for a fair
        financial statements presentation. The results for the interim period are
        not
        necessarily indicative of the results to be expected for the year.
 
 ***(B)
        Organization***
 
 Bywater
        Resources Inc. (an exploration stage company) (the “Company”) was incorporated
        on January 11, 2006 in the State of Delaware. The Company is an exploration
        stage mining company. On February 6, 2006, the Company became actively engaged
        in acquiring mineral properties, raising capital, and preparing properties
        for
        production. The Company did not have any significant mining operations or
        activities from inception, and accordingly is deemed to be an exploration
        stage
        company.
 
 The
        fiscal year-end of the Company is May 31.
 
 ***(C)
        Revenue and Cost Recognition***
 
 The
        Company uses the accrual basis of accounting for financial statement reporting.
        Revenues and expenses are recognized in accordance with Generally Accepted
        Accounting Principles for the industry. Certain period expenses are recorded
        when obligations are incurred.
 
 ***(D)
        Use of Estimates***
  In
        preparing financial statements in conformity with generally accepted accounting
        principles, management is required to make estimates and assumptions that
        affect
        the reported amounts of assets and liabilities and the disclosure of contingent
        assets and liabilities at the date of the financial statements and revenues
        and
        expenses during the reported period. Actual results could differ from those
        estimates.






F-5




**BYWATER
          RESOURCES, INC.**
 **(AN
          EXPLORATION STAGE COMPANY)**
 **NOTES
          TO CONDENSED FINANCIAL STATEMENTS**
 **AS
          OF NOVEMBER 30, 2006**
 **(UNAUDITED)**
  ***(E)
            Non-Mining Property and Equipment***
 
 Property
            and equipment purchased by the Company are recorded at cost. Depreciation
            is
            computed by the straight-line method based upon the estimated useful
            lives of
            the respective assets. Expenditures for repairs and maintenance are charged
            to
            expense as incurred as are any items purchased which are below the Company's
            capitalization threshold of $1,000.
 
 For
            assets sold or otherwise disposed of, the cost and related accumulated
            depreciation are removed from accounts, and any related gain or loss
            is
            reflected in income for the period.
 
 ***(F)
            Income Taxes***
 
 The
            Company accounts for income taxes using the liability method, which requires
            recognition of deferred tax liabilities and assets for the expected future
            tax
            consequences of events that have been included in the financial statements
            or
            tax returns. Deferred tax assets and liabilities are determined based
            on the
            difference between the financial statements and tax basis of assets and
            liabilities using enacted tax rates in effect for the year in which the
            differences are expected to reverse.
 
 The
            Company's management determines if a valuation allowance is necessary
            to reduce
            any tax benefits when the available benefits are more likely than not
            to expire
            before they can be used.
 
 ***(G)
            Stock Based Compensation***
 
 In
            October 1995, the Financial Accounting Standards Board issued Statement
            of
            Financial Accounting Standards No. 123, "Accounting for Stock-Based
            Compensation," (SFAS 123), which is effective for periods beginning after
            December 15, 1995. SFAS 123 was revised by SFAS 123 (R) which the Company
            has
            adopted to account for stock based compensation.
 
 ***(H)
            Cash and Cash Equivalents and Credit Risk***
 
 For
            purposes of reporting cash flows, the Company considers all cash accounts
            with
            maturities of 90 days or less and which are not subject to withdrawal
            restrictions or penalties, as cash and cash equivalents in the accompanying
            balance sheet.
 
 The
            portion of deposits in a financial institution that insures its deposits
            with
            the FDIC up to $100,000 per depositor in excess of such insured amounts
            are not
            subject to insurance and represent a credit risk to the
            Company.






F-6




**BYWATER
        RESOURCES, INC.**
 **(AN
        EXPLORATION STAGE COMPANY)**
 **NOTES
        TO CONDENSED FINANCIAL STATEMENTS**
 **AS
        OF NOVEMBER 30, 2006**
 **(UNAUDITED)**




***(I)
        Foreign Currency Translation and Transactions***
 
 The
        Company's functional currency is the US dollar. No material translations
        or
        transactions have occurred. Upon the occurrence of such material transactions
        or
        the need for translation adjustments, the Company will adopt Financial
        Accounting Standard No. 52 and other methods in conformity with Generally
        Accepted Accounting Principles.
 
 ***(J)
        Earnings Per Share***
 
 Basic
        and
        diluted net loss per common share is computed based upon the weighted average
        common shares outstanding as defined by Financial Accounting Standards No.
        128,
“Earnings Per Share.” As of November 30, 2006, there were no dilutive securities
        outstanding.
  **NOTE
        2**          **GOING
        CONCERN**
 
 The
        accompanying financial statements have been prepared assuming that the company
        will continue as a going concern. As discussed in the notes to the financial
        statements, the Company has experienced losses from inception. The Company’s
        financial position and operating results raise substantial doubt about its
        ability to continue as a going concern. The financial statements do not include
        any adjustments that might result from the outcome of this
        uncertainty.
 
 The
        Company lacks an operating history and has losses which we expect to continue
        into the future.
 
 The
        Company was incorporated in January 2006 and has not started the proposed
        business operations or realized any revenues. The Company has no operating
        history upon which an evaluation of our future success or failure can be
        made.
        The ability to achieve and maintain profitability and positive cash flow
        is
        dependent upon the Company’s ability to locate a profitable mineral property,
        generate revenues and raise the capital necessary to continue exploration
        of the
        property.
 
 Based
        upon current plans, the Company expects to incur operating losses in future
        periods. This will happen because there are expenses associated with the
        research and exploration of mineral properties. The Company cannot guarantee
        that it will be successful in generating revenues in the future. Failure
        to
        generate revenues may cause the Company to go out of business.
 
 The
        Company intends to generate additional capital from the public markets to
        increase its ability to locate profitable mineral property and generate
        revenues. The Company may also consider public or private debt transactions
        and/or private placement, but has no such actions in place at this
        time.






F-7






**BYWATER
          RESOURCES, INC.**
 **(AN
          EXPLORATION STAGE COMPANY)**
 **NOTES
          TO CONDENSED FINANCIAL STATEMENTS**
 **AS
          OF NOVEMBER 30, 2006**
 **(UNAUDITED)**




**NOTE
                  3**
              **AFFILIATES
                  AND RELATED PARTIES**
 
 Significant
        relationships with (1) companies affiliated through common ownership and/or
        management, and (2) other related parties are as follows:
 
 The
        Company has compensated officers of the Company with compensation in the
        form of
        stock as described in the equity footnote.
 
 **NOTE
                  4**
              **STOCKHOLDERS’
                  EQUITY**
 
 ***(A)
        Preferred Stock***
 
 The
        Company has authorized fifty million (50,000,000) shares of preferred stock
        with
        a par value of $.0001, none of which have been issued.
 
 ***(B)
        Common Stock***
 
 The
        Company has authorized one hundred million (100,000,000) shares of common
        stock
        with a par value of $.0001. The Company has 16,000,000 shares of common stock
        issued and outstanding.
 
 On
        January 11, 2006 the Company issued 12,000,000 shares of common stock to
        the
        Company President, Rolf Harms, as compensation for the formation of the
        corporation and services rendered for a value of $1,200 or $0.0001 per
        share.
 
 On
        February 16, 2006 the Company issued 2,100,000 shares of common stock at
        a price
        of $.02 per share in an offering exempt from registration at Section 4(2)
        of the
        Securities Act of 1933 for a total value of $42,000.
 
 On
        March
        3, 2006 the Company issued 1,900,000 shares of common stock at a price of
        $.02
        per share in an offering exempt from registration at Section 4(2) of the
        Securities Act of 1933 for a total value of $38,000.








F-8




**BYWATER
          RESOURCES, INC.**
 **(AN
          EXPLORATION STAGE COMPANY)**
 **NOTES
          TO CONDENSED FINANCIAL STATEMENTS**
 **AS
          OF NOVEMBER 30, 2006**
 **(UNAUDITED)**




**NOTE
        5**  **COMMITMENTS
        AND CONTINGENCIES**
 
 The
        Company entered into an agreement on February 6, 2006 with Ms. Gillian Wells
        (“Wells”) to purchase a 100% interest in the CARTER 1 claim located
        approximately 8 kilometers west of the Town of Port Alice, British Columbia
        for
        a total of $40,000. In addition, the Company gave Wells a 21⁄2% Net Smelter
        Royalty and received an option to repurchase 11⁄2% of the Net Smelter Royalty for
        $1.0 million within 12 months from commencement of commercial production.
        Advance minimum annual royalties of $25,000 are payable commencing 48 months
        from February 28, 2006. If the Company defaults on the royalty payments,
        the
        agreement calls for the Company to return its 100% interest in the claim
        to
        Wells and forfeits all future claims and royalty rights to the
        claim.
 
 Management
        is not aware of any contingent matters that could have a material adverse
        effect
        on the Company’s financial condition, results of operations, or
        liquidity.
 
 **NOTE
        6**  **LITIGATION,
        CLAIMS AND ASSESSMENTS**
 
 From
        time
        to time in the normal course of business the Company may be involved in
        litigation. The Company’s management has determined any asserted or unasserted
        claims to be immaterial to the financial statements.









F-9




**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**




GENERAL




**Organization**




We
      were
      organized as a Delaware Corporation on January 11, 2006 for the purpose of
      locating and developing copper-gold exploration properties in British
      Columbia.




**Overview**




Pursuant
      to our business plan we searched for available copper-gold mineral exploration
      properties in Vancouver Island British Columbia. In February 2006, we entered
      into an option agreement with Gillian Wells to acquire a 100% interest in the
      CARTER 1 claim. Our mineral claim is located 8 kilometres west of Port Alice,
      British Columbia on Vancouver Island. The property has been acquired from Wells
      by paying her a purchase payment of $40,000.




Upon
      commercial production, the property will be subject to a 21⁄2% Net Smelter Return
      (“NSR”) of which 1 1/2% can be purchased for $1,000,000. However,
      if we are unable to delineate commercial quantities of copper-gold on the CARTER
      1 claim we may have to cease operations on the CARTER 1 claim. We would seek
      out
      other properties with mineral potential to carry out exploration programs to
      replace the CARTER 1 claim.




Our
      ability to execute our growth strategy depends in part on our ability to
      identify and acquire desirable acquisition candidates consisting of suitable
      exploration properties. Initially we will seek exploration properties held
      by
      individuals or small private corporations. We need to diversify our property
      holdings to improve the likelihood that we secure a property that can be
      developed into a mine. There can be no assurance that we will finalize and
      close
      any transactions or be able to identify suitable acquisition candidates or,
      to
      negotiate their acquisition at prices or on terms and conditions favorable
      to
      us.





**Property
      Payments**




Pursuant
      to our agreement, we are required to pay Ms. Wells a single payment and
      then annual Advance Royalties of $25,000 commencing February 6, 2010 to keep
      our
      agreement in good standing. We paid $40,000 in February 2006 and we are in
      good
      standing until the commencement of the advance royalties on or before February
      6, 2010.




Exploration
      stage expenses from inception through November 30, 2006 were $40,000 for general
      exploration costs related to the mineral rights of the exploration property
      and
      $16,842 of general and administrative costs for a total expense of $56,842
      as
      captioned in the financial statement’s statement of operations. Fees were
      incurred in the start-up costs of our company as well as the fees to prepare
      our
      audited financial statements and this registration statement. These fees were
      included in the general and administrative expense as discussed in this
      paragraph.




Our
      plan
      of operations for the next twelve months is to continue exploration activities
      on the property. We are planning to spend $8,000 on further exploration on
      the
      property. If we are successful in raising sufficient capital we hope to carry
      out most or all of the work described under Further Exploration in the CARTER
      1
      claim section of this prospectus in the next twelve months. We are current
      in
      all of our obligations.







The
      following is a 12 month budget:




Exploration
                and site work (samples)
            
            
            8,000General
                and administrative
            
            
            17,400Total
            
            $
            25,400




At
      present, we have sufficient cash on hand to complete the filing of this
      prospectus and meeting our exploration, general and administration expenses
      and
      we must raise more capital by the summer of 2007 to carry out further
      exploration programs to maintain our interest in the CARTER 1 claim. If we
      are
      unable to raise sufficient capital to meet our obligations we could lose our
      interest in the properties or a portion thereof. We intend to pursue financing
      activities in the spring of 2007.




We
      plan
      to raise a minimum of $45,000 to continue minimum exploration of our properties
      during the next 12 months through a private placement of debt, convertible
      securities, or common equity. If we are successful in raising the necessary
      capital, we may have to significantly dilute the current shareholders. We plan
      to initially offer the debt or equity to our current shareholders and
      management. If we are not successful in raising the required capital, we will
      offer our debt or equity to new investors. At present, we have no specific
      plans
      regarding a debt or equity offering, but intend to actively commence raising
      the
      required capital during the spring of 2007. As an alternative to raising capital
      through the selling of debt or equity, we will attempt to negotiate a joint
      venture with an industry partner. If the company is required to enter into
      a
      joint venture, we could end up with a minority interest in our properties.
      We
      have not contacted another party in the industry regarding a joint venture.
      There is no assurance we will raise the necessary capital, therefore there
      is a
      significant risk that the company may have to abandon or reduce the size of
      our
      property.




Liquidity
      and Capital Resources




At
          present, we have sufficient cash on hand to complete the filing of this
          prospectus and meeting our exploration, general and administration expenses
          for
          the next twelve months. However, we must raise more capital by the summer
          of
          2007 to carry out further exploration programs to maintain our interest
          in the
          CARTER 1 claim. If we are unable to raise sufficient capital to meet our
          obligations we could lose our interest in the properties or a portion thereof.
          We intend to pursue financing activities in the spring of 2007.
 
 The
          accompanying financial statements have been prepared assuming that we will
          continue as a going concern. As discussed in the notes to the financial
          statements, we have experienced losses from inception. Our financial position
          and operating results raise substantial doubt about our ability to continue
          as a
          going concern. The financial statements do not include any adjustments
          that
          might result from the outcome of this uncertainty. We lack an operating
          history
          and has losses which we expect to continue into the future.
 
 
 Based
          upon current plans, we expect to incur operating losses in future periods.
          This
          will happen because there are expenses associated with the research and
          exploration of mineral properties. We cannot guarantee that we will be
          successful in generating revenues in the future. Failure to generate revenues
          may cause usto go out of business.
 
 We
          intend
          to generate additional capital from the public markets to increase our
          ability
          to locate profitable mineral property and generate revenues. We may also
          consider public or private debt transactions and/or private placement,
          but has
          no such actions in place at this time.




Critical
      Accounting Policies




Bywater’s
      financial statements and related public financial information are based on
      the
      application of accounting principles generally accepted in the United States
      (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
      subjective interpretations of accounting principles that have an impact on
      the
      assets, liabilities, revenue and expense amounts reported. These estimates
      can
      also affect supplemental information contained in our external disclosures
      including information regarding contingencies, risk and financial condition.
      We
      believe our use if estimates and underlying accounting assumptions adhere to
      GAAP and are consistently and conservatively applied. We base our estimates
      on
      historical experience and on various other assumptions that we believe to be
      reasonable under the circumstances. Actual results may differ materially from
      these estimates under different assumptions or conditions. We continue to
      monitor significant estimates made during the preparation of our financial
      statements.




Our
      significant accounting policies are summarized in Note 1 of our financial
      statements. While all these significant accounting policies impact its financial
      condition and results of operations, Bywater views certain of these policies
      as
      critical. Policies determined to be critical are those policies that have the
      most significant impact on Bywater’s financial statements and require management
      to use a greater degree of judgment and estimates. Actual results may differ
      from those estimates. Our management believes that given current facts and
      circumstances, it is unlikely that applying any other reasonable judgments
      or
      estimate methodologies would cause effect on our results of operations,
      financial position or liquidity for the periods presented in this
      report.







**Item
      3. Controls and Procedures**




Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and principal financial officer, we conducted an
      evaluation of our disclosure controls and procedures, as such term is defined
      under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
      Exchange Act of 1934, as amended (Exchange Act), as of November 30, 2006. Based
      on this evaluation, our principal executive officer and principal financial
      officer have concluded that our disclosure controls and procedures are 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 and forms and that our disclosure and controls 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 accumulated and communicated to our
      management, including our principal executive officer and principal financial
      officer, or persons performing similar functions, as appropriate to allow timely
      decisions regarding required disclosure.




There
      were no changes (including corrective actions with regard to significant
      deficiencies or material weaknesses) in our internal controls over financial
      reporting that occurred during the second quarter of fiscal 2006 that has
      materially affected, or is reasonably likely to materially affect, our internal
      control over financial reporting.
















**PART
      II - OTHER INFORMATION**




**Item
      1. Legal Proceedings.**




The
      Company is currently not a party to any pending legal proceedings and no such
      action by, or to the best of its knowledge, against the Company has been
      threatened.




**Item
      2. Changes in Securities.**




None




**Item
      3. Defaults Upon Senior Securities.**




None




**Item
      4. Submission of Matters to a Vote of Security Holders.**




No
      matter
      was submitted during the quarter ending November 30, 2006, covered by this
      report to a vote of the Company’s shareholders, through the solicitation of
      proxies or otherwise.




**Item
      5. Other Information.**




None




**Item
      6. Exhibits and Reports of Form 8-K.**






(a)     Exhibits





31.1
      Certification pursuant to Section 302 of Sarbanes Oxley Act of
      2002


32.1
      Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002




(b)     Reports
      of Form 8-K




None




















**SIGNATURES**




In
      accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
      this report to be signed on its behalf by the undersigned, there unto duly
      authorized.





**BYWATER
      RESOURCES INC.**


Registrant




Date:
      January 12, 2007     By: */s/**Rolf
      Harms*


Rolf
      Harms


President,
      Chief Executive Officer,


Chairman
      of Board of Directors