---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarter ended January 31, 2008

OR

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ______________

Commission File Number 000-52393

BIOSHAFT WATER TECHNOLOGY, INC.(Exact name of small business issuer as specified in its
charter)

|Nevada                                                               | 98-0494003                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

Spectrum Technology Centre, 184 Technology Drive, Suite
201, Irvine CA 92618(Address of principal executive offices)

(949) 748-8050(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports
required to be filed by Sectio 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No. [
]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practical date: As of March March 14,
2008: there were 90,000,000 shares of common stock, par value of $0.001
outstanding.

Authorized share capital of the registrant: 300,000,000 common
shares and 25,000,000 preferred shares, par value of $0.001

Transitional Small Business Disclosure Format (Check one): Yes [
] No [X]

1

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

|                                                                                                                                                                                       | Page Number
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|                                                                                                                                                                                       |            
|Balance Sheet as of January 31, 2008 (Unaudited)                                                                                                                                       | 3          
|Statements of Operations for the three month and nine month
        periods ended January 31, 2008, and 2007 and for the period from inception
        to January 31, 2008 (Unaudited) | 4          
|Statement of Stockholders Equity for the period from
        inception to January 31, 2008 (Unaudited)                                                                                | 5          
|Statements of Cash Flows for the six month periods ended
        January 31, 2008 and 2007 and for the period from inception to January
        31, 2008 (Unaudited)                   | 6          
|Notes to the Financial Statements (Unaudited)                                                                                                                                          | 7-10       

2

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|BIOSHAFT WATER TECHNOLOGY, INC.         
|----------------------------------------
|(Formerly Pointstar Entertainment Corp.)
|(A Development Stage Company)           
|BALANCE SHEET AS OF JANUARY 31, 2008    
|(UNAUDITED)                             

|                                                                                                      |   |            |  
|----------------------------------------------------------------------------------------------------- | - | ---------- | -
|ASSETS                                                                                                |   |            |  
|Current assets                                                                                        |   |            |  
|Cash and cash equivalents                                                                             | $ | 344,391    |  
|Non current assets                                                                                    |   |            |  
|Computer  net                                                                                        |   | 3,984      |  
|Patents  net                                                                                         |   | 13,235,009 |  
|Total Non
      current assets                                                                        |   | 13,238,993 |  
|Total assets                                                                                          | $ | 13,583,384 |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                  |   |            |  
|Current liabilities                                                                                   |   |            |  
|Accounts payable and accrued expenses                                                                 | $ | 41,179     |  
|Stockholders equity                                                                                  |   |            |  
|Common stock, $0.001 par value; 300,000,000
      shares authorized, 90,000,000 issued and oustanding |   | 90,000     |  
|Preferred stock, $0.001 par value; 25,000,000 shares
      authorized, none issued and outstanding    |   | -          |  
|Additional paid-in capital                                                                            |   | 15,176,897 |  
|Deficit accumulated during the development stage                                                      |   | (1,724,692 | )
|Total stockholders equity                                                                            |   | 13,542,205 |  
|Total liabilities
      and stockholders' equity                                                      | $ | 13,583,384 |  

3

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|The accompanying notes are an integral part of these
      unaudited financial statements.
|------------------------------------------------------------------------------------------
|                                                                                          
|                                                                                          
|BIOSHAFT WATER TECHNOLOGY, INC.                                                           
|(Formerly Pointstar Entertainment Corp.)                                                  
|(A Development Stage Company)                                                             
|STATEMENTS OF OPERATIONS                                                                  
|(UNAUDITED)                                                                               

|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|----------------------------- | - | ------------ | - | - | ----------- | - | - | ----------- | - | - | ----------- | - | - | ------------- | -
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   | Cumulative    |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   | Amounts From  |  
|                              |   | Three        |   |   | Three       |   |   | Nine        |   |   | Nine        |   |   | Date of       |  
|                              |   | Month        |   |   | Month       |   |   | Month       |   |   | Month       |   |   | Incorporation |  
|                              |   | Period       |   |   | Period      |   |   | Period      |   |   | Period      |   |   | on March 8    |  
|                              |   | Ended        |   |   | Ended       |   |   | Ended       |   |   | Ended       |   |   | 2006 to       |  
|                              |   | January 31,  |   |   | January 31, |   |   | January 31, |   |   | January 31, |   |   | January 31,   |  
|                              |   | 2008         |   |   | 2007        |   |   | 2008        |   |   | 2007        |   |   | 2008          |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|REVENUE                       | $ | -            |   | $ | -           |   | $ | -           |   | $ | -           |   | $ | -             |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|OPERATING EXPENSES            |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Depreciation & amortization   |   | 718,725      |   |   | -           |   |   | 1,015,702   |   |   | -           |   |   | 1,015,879     |  
|General & Administrative      |   | 297,494      |   |   | 14,453      |   |   | 458,780     |   |   | 25,744      |   |   | 498,410       |  
|Stock based compensation      |   | 201,930      |   |   | -           |   |   | 201,930     |   |   | -           |   |   | 201,930       |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Net loss from operations      |   | 1,218,149    |   |   | 14,453      |   |   | 1,676,412   |   |   | 25,744      |   |   | 1,716,219     |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|OTHER INCOME                  |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|(EXPENSES)                    |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Loss on disposal of equipment |   | -            |   |   | -           |   |   | (15,080     | ) |   | -           |   |   | (15,080       | )
|Interest income               |   | 4,026        |   |   | -           |   |   | 6,607       |   |   | -           |   |   | 6,607         |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Total other income (expenses) |   | 4,026        |   |   | -           |   |   | (8,473      | ) |   | -           |   |   | (8,473        | )
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Net loss                      | $ | 1,214,123    |   | $ | 14,453      |   | $ | 1,684,885   |   | $ | 25,744      |   | $ | 1,724,692     |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Basic and diluted loss per    |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Common share                  | $ | (0.00        | ) | $ | (0.00       | ) | $ | (0.01       | ) | $ | (0.00       | ) |   |               |  
|                              |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|Basic & diluted weighted      |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|average number                |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  
|of shares                     |   | 270,000,0000 |   |   | 4,000,0001  |   |   | 162,419,355 |   |   | 4,000,000   |   |   |               |  
|outstanding                   |   |              |   |   |             |   |   |             |   |   |             |   |   |               |  

Weighted average number of dilutive shares has not been
calculated as the dilutive shares will be anti-dilutive

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

4

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|BIOSHAFT WATER TECHNOLOGY, INC.                                      
|---------------------------------------------------------------------
|(Formerly Pointstar Entertainment Corp.)                             
|(A Development Stage Company)                                        
|STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM
      INCEPTION
|TO JANUARY 31, 2008                                                  
|(UNAUDITED)                                                          

|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|--------------------------------- |  | ------------ | - | - | ---------- | - | - | ---------- | - | - | ----------- | - | - | ------------- | -
|                                  |  |              |   |   |            |   |   |            |   |   | Deficit     |   |   |               |  
|                                  |  |              |   |   |            |   |   |            |   |   | Accumulated |   |   |               |  
|                                  |  | Common Stock |   |   | Additional |   |   | During the |   |   | Total       |  
|                                  |  |              |   |   |            |   |   | Paid in    |   |   | Development |   |   | Stockholders' |  
|                                  |  | Shares       |   |   | Amount     |   |   | Capital    |   |   | Stage       |   |   | Equity        |  
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|Inception, March 8, 2006          |  |              |   | $ | -          |   | $ |            |   | $ | -           |   | $ |               |  
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|Initial capitalization            |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|Sale of common stock              |  | 240,000,000  |   |   | 240,000    |   |   | (225,000   | ) |   | -           |   |   | 15,000        |  
|Net loss for the period           |  | -            |   |   | -          |   |   | -          |   |   | (4,077      | ) |   | (4,077        | )
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|Balance, April 30, 2006           |  | 240,000,000  |   |   | 240,000    |   |   | (225,000   | ) |   | (4,077      | ) |   | 10,923        |  
|Sale of common stock              |  | 30,000,000   |   |   | 30,000     |   |   | 20,000     |   |   | -           |   |   | 50,000        |  
|Net loss for year ended April 30, |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|2007                              |  | -            |   |   | -          |   |   | -          |   |   | (35,730     | ) |   | (35,730       | )
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|Balance, April 30, 2007           |  | 270,000,000  |   |   | 270,000    |   |   | (205,000   | ) |   | (39,807     | ) |   | 25,193        |  
|Returned to treasury              |  | (210,000,000 | ) |   | (210,000   | ) |   | 210,000    |   |   | -           |   |   | -             |  
|Shares issued for cash            |  | 3,000,000    |   |   | 3,000      |   |   | 1,496,967  |   |   | -           |   |   | 1,499,967     |  
|Shares issued to purchase of      |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|patent                            |  | 27,000,000   |   |   | 27,000     |   |   | 13,473,000 |   |   | -           |   |   | 13,500,000    |  
|Stock based compensation          |  | -            |   |   | -          |   |   | 201,930    |   |   | -           |   |   | 201,930       |  
|Net loss for the period           |  | -            |   |   | -          |   |   | -          |   |   | (1,684,885  | ) |   | (1,684,885    | )
|                                  |  |              |   |   |            |   |   |            |   |   |             |   |   |               |  
|Balance, January 31, 2008         |  | 90,000,000   |   | $ | 90,000     |   | $ | 15,176,897 |   | $ | (1,724,692  | ) | $ | 13,542,205    |  

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

5

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|BIOSHAFT WATER TECHNOLOGY, INC.                                                         
|----------------------------------------------------------------------------------------
|(Formerly Pointstar Entertainment Corp.)                                                
|(A Development Stage Company)                                                           
|STATEMENT OF CASH FLOWS FOR THE NINE MONTH PERIODS
      ENDED JANUARY 31, 2008 AND 2007
|AND FOR THE PERIOD SINCE INCEPTION TO JANUARY 31,
      2008                            
|(UNAUDITED)                                                                             

|                                                            |   |              |   |   |              |   |   |               |  
|----------------------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------- | -
|                                                            |   |              |   |   |              |   |   | Cumulative    |  
|                                                            |   |              |   |   |              |   |   | Amounts       |  
|                                                            |   |              |   |   |              |   |   | From          |  
|                                                            |   |              |   |   |              |   |   | Date of       |  
|                                                            |   | Nine         |   |   | Nine         |   |   | Incorporation |  
|                                                            |   | Month        |   |   | Month        |   |   | on March 8    |  
|                                                            |   | Period Ended |   |   | Period Ended |   |   | 2006 to       |  
|                                                            |   | January 31,  |   |   | January 31,  |   |   | October 31,   |  
|                                                            |   | 2008         |   |   | 2007         |   |   | 2007          |  
|                                                            |   |              |   |   |              |   |   |               |  
|CASH FLOWS USED IN OPERATING ACTIVITIES                     |   |              |   |   |              |   |   |               |  
|Net loss                                                    | $ | (1,684,885   | ) | $ | (25,744      | ) | $ | (1,724,692    | )
|Adjustments To
      Reconcile Net Loss To Net Cash Used In |   |              |   |   |              |   |   |               |  
|Operating Activities                                        |   |              |   |   |              |   |   |               |  
|Loss on
      disposal of assets                            |   | 15,080       |   |   | -            |   |   | 15,080        |  
|Depreciation
      & amortization                           |   | 1,015,702    |   |   | -            |   |   | 1,015,879     |  
|Stock
      based compensation                              |   | 201,930      |   |   | -            |   |   | 201,930       |  
|                                                            |   |              |   |   |              |   |   |               |  
|Increase
      in accounts payable                          |   | 33,202       |   |   | 700          |   |   | 41,095        |  
|                                                            |   |              |   |   |              |   |   |               |  
|Net cash used in operating activities                       |   | (418,971     | ) |   | (25,044      | ) |   | (450,708      | )
|                                                            |   |              |   |   |              |   |   |               |  
|CASH FLOWS FROM FINANCING ACTIVITY                          |   |              |   |   |              |   |   |               |  
|Proceeds from issuance of
      common stock                |   | 1,500,000    |   |   | 50,000       |   |   | 1,565,000     |  
|                                                            |   |              |   |   |              |   |   |               |  
|CASH FLOWS USED IN INVESTING ACTIVITIES                     |   |              |   |   |              |   |   |               |  
|Purchase of
      equipment                                 |   | (4,346       | ) |   | (9,837       | ) |   | (19,868       | )
|Purchase of patent                                          |   | (750,033     | ) |   | -            |   |   | (750,033      | )
|                                                            |   |              |   |   |              |   |   |               |  
|Net cash used in investing activities                       |   | (754,379     | ) |   | (9,837       | ) |   | (769,901      | )
|                                                            |   |              |   |   |              |   |   |               |  
|Change in cash and cash equivalents during the period       |   | 326,650      |   |   | 15,119       |   |   | 344,391       |  
|                                                            |   |              |   |   |              |   |   |               |  
|Cash and cash equivalents, beginning of the period          |   | 17,741       |   |   | 10,923       |   |   | -             |  
|                                                            |   |              |   |   |              |   |   |               |  
|Cash and cash
      equivalents, end of the period          | $ | 344,391      |   | $ | 26,042       |   | $ | 344,391       |  
|                                                            |   |              |   |   |              |   |   |               |  
|Supplemental disclosure with respect to cash flows:         |   |              |   |   |              |   |   |               |  
|Cash paid
      for income taxes                            | $ | -            |   | $ | -            |   | $ | -             |  
|Cash paid for interest                                      | $ | -            |   | $ | -            |   | $ | -             |  
|                                                            |   |              |   |   |              |   |   |               |  
|Supplemental disclosure for non-cash investing and          |   |              |   |   |              |   |   |               |  
|financing activities:                                       |   |              |   |   |              |   |   |               |  
|Shares issued for
      purchase of patents                 | $ | 13,500,000 $ |   |   | -            |   | $ | 13,500,000    |  

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

6

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|BIOSHAFT WATER TECHNOLOGY, INC.         
|----------------------------------------
|(Formerly Pointstar Entertainment Corp.)
|(A Development Stage Company)           
|NOTES TO FINANCIAL STATEMENTS           
|(UNAUDITED)                             
|                                        
|January 31, 2008                        

NOTE 1. GENERAL ORGANIZATION AND BUSINESS

The Company was originally incorporated under the laws of the
state of Nevada on March 8, 2006. The Company has limited operations and in
accordance with SFAS #7, is considered a development stage company, and has had
no revenues from operations since inception to date.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
PRACTICES

Basis of Presentation and Organization

The accompanying unaudited consolidated financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC") Form 10-QSB and Item 310 of
Regulation S-B, and Generally Accepted Accounting Principles for interim
financial reporting. The consolidated financial statements include the accounts
of the Company. The information furnished herein reflects all adjustments
consisting of normal recurring accruals and adjustments) which are, in the
opinion of management, necessary to fairly present the operating results for the
respective periods. Certain information and footnote disclosures normally
present in annual consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have
been omitted pursuant to such rules and regulations. These consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes for the year ended April 31, 2007 included in
the Company's Annual Report on Form 10-KSB. The results of the six month period
ended October 31, 2007 are not necessarily indicative of the results to be
expected for the full year ending April 30, 2008.

Earnings per Share

In February 1997, the FASB issued SFAS No. 128, Earnings Per
Share, which specifies the computation, presentation and disclosure
requirements for earnings (loss) per share for entities with publicly held
common stock. SFAS No. 128 supersedes the provisions of APB No. 15, and requires
the presentation of basic earnings (loss) per share and diluted earnings (loss)
per share. The Company has adopted the provisions of SFAS No. 128 effective its
inception.

The basic earnings (loss) per share is calculated by dividing
the Companys net income available to common shareholders by the weighted
average number of common shares during the year. The diluted earnings (loss) per
share is calculated by dividing the Companys net income (loss) available to
common shareholders by the diluted weighted average number of shares outstanding
during the year. The diluted weighted average number of shares outstanding is
the basic weighted number of shares adjusted as of the first of the year for any
potentially dilutive debt or equity.

7

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|BIOSHAFT WATER TECHNOLOGY, INC.         
|----------------------------------------
|(Formerly Pointstar Entertainment Corp.)
|(A Development Stage Company)           
|NOTES TO FINANCIAL STATEMENTS           
|(UNAUDITED)                             
|                                        
|January 31, 2008                        

NOTE 2. (continued)

Use of Estimates

The preparation of financial statements in conformity with
generally accepted accounting principles requires management 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 the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Estimates
and assumptions are reviewed periodically and the effects of revisions are
reflected in the financial statements in the period they are determined.

Cash and Cash Equivalents

Cash and cash equivalents include cash in hand and cash in time
deposits, certificates of deposit and all highly liquid debt instruments with
original maturities of three months or less.

Intangible Assets

The Company adopted Statement of Financial Accounting Standards
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS
144), which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
and the accounting and reporting provisions of APB Opinion No. 30, Reporting
the Results of Operations for a Disposal of a Segment of a Business. The
Company periodically evaluates the carrying value of long-lived assets to be
held and used in accordance with SFAS 144. SFAS 144 requires impairment losses
to be recorded on long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets carrying amounts. In that event, a
loss is recognized based on the amount by which the carrying amount exceeds the
fair market value of the long-lived assets. Loss on long-lived assets to be
disposed of is determined in a similar manner, except that fair market values
are reduced for the cost of disposal. Based on its review, the Company believes
that, as of January 31, 2008 there were no significant impairments of its
long-lived assets.

NOTE 3. PATENTS ACQUISITION

The Company acquired certain patents for Waste Water Treatment
Plant and Method in exchange for $750,082 cash and 27,000,000 shares, during the
nine month period ended January 31, 2008. The shares were valued at $13,500,000
which was the fair market value on the date of acquisition. The patents will be
amortized over the useful life of 5 years.

The Company recorded an amortization of $718,360 and $1,015,074
during the three and nine month periods ended January 31, 2008.

8

---

|BIOSHAFT WATER TECHNOLOGY, INC.         
|----------------------------------------
|(Formerly Pointstar Entertainment Corp.)
|(A Development Stage Company)           
|NOTES TO FINANCIAL STATEMENTS           
|(UNAUDITED)                             
|                                        
|January 31, 2008                        

NOTE 4. GOING CONCERN

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has net
losses for the period from inception to January 31, 2008 of $1,706,859. This
condition raises substantial doubt about the Companys ability to continue as a
going concern. The Companys continuation as a going concern is dependent on its
ability to meet its obligations, to obtain additional financing as may be
required and ultimately to attain profitability. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

Management is planning to raise additional funds through an
equity offering. There is no guarantee that the Company will be successful in
these efforts.

NOTE 5. STOCKHOLDERS EQUITY

Authorized

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

Issued and Outstanding

On March 8, 2006 (inception), the Company issued 4,000,000
shares of its common stock to its Directors for cash of $15,000.

On August 22, 2007, the Company issued 3,000,000 shares of its
common stock for cash of $1.5 million. The shares were part of a unit comprising
of one share and two warrants. The warrants have exercise prices of $0.55 and
$0.60.

On August 24, 2007 the Company cancelled 210,000,000 shares of
its common stock and these shares were returned to treasury.

On September 18, 2007, the Company issued 27,000,000 shares of
its common stock in exchange for the rights to the Waste Water Treatment Plant
and Method. These shares have been valued at the fair market value on the date
of acquisition of $0.50 per share for total proceeds of $13,500,000.

9

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|BIOSHAFT WATER TECHNOLOGY, INC.         
|----------------------------------------
|(Formerly Pointstar Entertainment Corp.)
|(A Development Stage Company)           
|NOTES TO FINANCIAL STATEMENTS           
|(UNAUDITED)                             
|                                        
|January 31, 2008                        

NOTE 5. STOCKHOLDERS EQUITY (CONTINUED)

Warrants

The following table outlines warrants outstanding as at
January31, 2008:

|         |  |             |  |  | Weighted  |  |  | Total    |  |  |             |  |  |          |  |  |           | 
|-------- |  | ----------- |  |  | --------- |  |  | -------- |  |  | ----------- |  |  | -------- |  |  | --------- | 
|         |  |             |  |  | Average   |  |  | Weighted |  |  |             |  |  | Weighted |  |  |           | 
|         |  | Total       |  |  | Remaining |  |  | Average  |  |  |             |  |  | Average  |  |  | Aggegrate | 
|Exercise |  | Warrants    |  |  | Life      |  |  | Exercise |  |  | Warrants    |  |  | Exercise |  |  | Intrinsic | 
|Prices   |  | Outstanding |  |  | (Years)   |  |  | Price    |  |  | Exercisable |  |  | Price    |  |  | Value     | 
|         |  |             |  |  |           |  |  |          |  |  |             |  |  |          |  |  |           | 
|         |  |             |  |  |           |  |  |          |  |  |             |  |  |          |  |  |           | 
|$0.55    |  | 1,500,000   |  |  | 1.83      |  |  | $0.55    |  |  | 1,500,000   |  |  | $0.55    |  |  | 1,815,000 | 
|         |  |             |  |  |           |  |  |          |  |  |             |  |  |          |  |  |           | 
|$0.60    |  | 1,500,000   |  |  | 3.83      |  |  | $0.60    |  |  | 1,500,000   |  |  | $0.60    |  |  | 1,740,000 | 

The warrants were valued using the black scholes option pricing
model using the following assumptions: term of 2 and 4 years, dividend yield of
0%, risk free interest rate of 3.125% and 3.335%% and volatility of 53%. The
fair value of the warrants was adjusted against additional paid in capital.

|Stock Options |  |             |  |  |           |  |  |          |  |  |             |  |  |          |  | 
|------------- |  | ----------- |  |  | --------- |  |  | -------- |  |  | ----------- |  |  | -------- |  | 
|              |  |             |  |  | Weighted  |  |  | Total    |  |  |             |  |  |          |  | 
|              |  |             |  |  | Average   |  |  | Weighted |  |  |             |  |  | Weighted |  | 
|              |  | Total       |  |  | Remaining |  |  | Average  |  |  |             |  |  | Average  |  | 
|Exercise      |  | Options     |  |  | Life      |  |  | Exercise |  |  | Options     |  |  | Exercise |  | 
|Prices        |  | Outstanding |  |  | (Years)   |  |  | Price    |  |  | Exercisable |  |  | Price    |  | 
|              |  |             |  |  |           |  |  |          |  |  |             |  |  |          |  | 
|              |  |             |  |  |           |  |  |          |  |  |             |  |  |          |  | 
|$0.50         |  | 250,000     |  |  | 5         |  |  | $0.50    |  |  | 100,000     |  |  | $0.50    |  | 

Stock Based Compensation

The Company granted 100,000 options at an exercise price of
$0.50 to a consultant in exchange for services to be rendered by the consultant.
These options were vested on the date of grant. The Company granted another
150,000 options to another consultant at exercise price of $0.50 which have a
vesting schedule extending over a period of 3 years from the date of grant. The
Company uses the Black-Scholes option valuation model to value stock options
granted. The Black- Scholes model was developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. The model requires management to make estimates, which are
subjective and may not be representative of actual results. Assumptions used to
determine the fair value of the stock based compensation is as follows:

Risk free interest rate
    3.50%Expected dividend yield
    0%Expected stock price volatility
    150%Expected life of options
    5 years


10

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|BIOSHAFT WATER TECHNOLOGY, INC.         
|----------------------------------------
|(Formerly Pointstar Entertainment Corp.)
|(A Development Stage Company)           
|NOTES TO FINANCIAL STATEMENTS           
|(UNAUDITED)                             
|                                        
|January 31, 2008                        

NOTE 5. STOCKHOLDERS EQUITY (CONTINUED)

The grant-date fair value of options granted during the quarter
ended January 31, 2008 was $1.43 and $1.91.

Total stock-based compensation for the quarter ended January
31, 2008 was $201,930.

NOTE 6. RELATED PARTY TRANSACTIONS

On March 8, 2006 (inception), the Company issued 4,000,000
shares of its common stock to its Directors for cash of $15,000.

The Company paid $45,000 and $65,000 in consulting fees to the
president of the Company during the three month and nine month period ended
January 31, 2008. The Company paid $45,000 and $75,000 in consulting fees to the
COO of the Company during the three month and nine month period ended January
31, 2008.The Company also paid $25,500 and $42,500 to the COOs son for
consulting fee during the three month and nine month period ended January 31,
2008.

NOTE 7. OPERATING LEASES AND OTHER
COMMITMENTS:

The Company is obligated to pay the Mr. Hans Badreddine
(President of the Company) a bonus based upon the following terms:

- $750,000 upon the due execution and delivery, within 365 days of closing,
  of contracts for the purchase of the Waste Water Systems in the aggregate
  amount of $6,000,000;
- $1,000,000 upon the due execution and delivery, within 365 days of closing,
  of contracts for the purchase of the Waste Water Systems in the aggregate
  amount of $10,000,000.

The Company also has a rent commitment until February 2011 for
a monthly rent of $4,642.

11

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|ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION
|------- | ---------------------------------------------------------------

Forward Looking Statements

This quarterly report contains forward-looking statements as
that term is defined in section 27A of the United States Securities Act of 1933
(the "1933 Act"), as amended, and section 21E of the United States
Securities Exchange Act of 1934, as amended (the "1934 Act"). These
forward-looking statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking statements by
terminology such as "may", "should", "intends", "expects", "plans",
"anticipates", "believes", "estimates", "predicts", "potential", or "continue"
or the negative of these terms or other comparable terminology. These
forward-looking statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" herein and the risks set out below, any of which may
cause our or our industry's actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.

Forward-looking statements are made based on management's
beliefs, estimates and opinions on the date the statements are made and we
undertake no obligation to updated forward-looking statements if these beliefs,
estimates and opinions or other circumstances should change. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

Our financial statements are stated in United States dollars
and are prepared in accordance with United States generally accepted accounting
principles (the "U.S. GAAP").

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

As used in this quarterly report, the terms "we", "us", "our"
and "Bioshaft" mean Bioshaft Water Technology, Inc., unless the context clearly
requires otherwise.

Introduction

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

Our principal executive offices are located at Spectrum
Technology Centre, 184 Technology Drive, Suite 201, Irvine, CA 92618 and our
telephone number is (949) 748-8050.

Since our incorporation, we had been in the process of
establishing ourselves as a company that seeks to obtain distribution rights for
television programming and movies from film studios, television network
companies, and independent production houses. However, we were not successful in
implementing our business plan and we considered various alternatives to ensure
the viability and solvency of our company.

On August 14, 2007, Imad Kamel Yassine replaced Altaf
Alimohamed as one of our directors. Subsequent to his appointment, Mr. Yassine
focused his efforts on the identification of business alternatives and
additional financing.

On September 18, 2007, we entered into an asset purchase
agreement (the "Asset Purchase Agreement") with Hans Bio Shaft Limited
("HBSL") and Hassan Hans Badreddine ("Dr. Badreddine"), pursuant
to which we acquired from HBSL U.K. Patent GB2390365 titled "WASTE WATER
TREATMENT PLANT AND METHOD" (the "U.K. Patent") and related United States
and European patent applications for the design of a certain waste water
treatment plant system. In consideration for the U.K. Patent and related United
States and European patent

12

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applications, we issued to Dr. Badreddine, the principal
shareholder of HBSL, 27,000,000 restricted common shares of our common stock. In
addition to the common shares, we paid Dr. Badreddine, a cash consideration in
the amount of $750,000.

Furthermore, pursuant to the Asset Purchase Agreement, we
agreed to pay Dr. Badreddine additional amounts of up to $1,750,000 on the
following terms:

| | (a) | $750,000 upon the due execution and delivery, within 365
      days from the closing of the transactions contemplated under the Asset
      Purchase Agreement, of contracts for the purchase of the waste water plant
      system in the aggregate amount of $6,000,000; and        
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                       
| | (b) | $1,000,000 upon the due execution and delivery, within
      365 days from closing of the transactions contemplated under the Asset
      Purchase Agreement, of additional contracts for the purchase of the waste
      water plant system in the aggregate amount of
  $10,000,000.

Pursuant to the Asset Purchase Agreement, on August 2, 2007, we
closed a private placement (the "Private Placement") consisting of
3,000,000 units of our securities at a price of $0.50 per unit for aggregate
proceeds of $1,500,000. Each unit consisted of: (a) one common share; (b) one
common share purchase warrant entitling the holder thereof to purchase one
common share for a period of twenty-four months commencing from the closing of
the Private Placement at an exercise price of $0.55 per common share; and (c)
one common share purchase warrant entitling the holder thereof to purchase one
common share for a period of thirty-six months commencing from the closing of
the Private Placement at an exercise price of $0.60 per common share. We issued
the units to a non-U.S. person (as that term is defined in Regulation S of the
1933 Act) in an offshore transaction relying on Regulation S and/or Section 4(2)
of the 1933 Act.

Furthermore, pursuant to the Asset Purchase Agreement, our
directors passed resolutions, whereby Dr. Badreddine was appointed as our
president and a director and our name was changed from "Pointstar Entertainment
Corp." to "Bioshaft Water Technology, Inc.".

With the completion of the Asset Purchase Agreement to acquire
the U.K. Patent and related United States and European patent applications, we
changed our business to the business of designing and manufacturing domestic
waste water treatment plant system. We are currently engaged in a specific
branch of waste water treatment known as domestic waste or sewage treatment. In
the future, we also plan to expand into the treatment of industrial waste.

Plan of Operation

General Overview

Over the next twelve months ending February 28, 2009, we plan
to:

- penetrate the waste water treatment industry worldwide by stressing the
  cost advantages and space saving capabilities of the Hans BioShaft System;
- build up a network of strategic alliances with several types of companies,
  including contractors that specialize in the construction of water treatment
  plants, engineering firms that work with municipalities and firms that
  specialize in build own operate project utilities;
- form a partnership with a Chinese manufacturer that we can outsource to,
  and fabricate up to 2 Hans BioShaft units per month within the first 3 months;
- implement our pilot project in Southern California where we will setup and
  operate a packaged unit in order to complete the municipal permitting process
  for the California commission on environmental quality; and

13

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- fill the positions of Chief Executive Officer, Chief Financial Officer,
  Vice President of Marketing and three sales engineers.

Cash Requirements

Over the next 12 months ending February 28, 2009, we anticipate
that we will incur the following operating expenses totaling approximately
$3,410,000 in implementing our new business plan of designing and manufacturing
domestic waste water treatment plant system as follows:

|Expenses                          |   | Estimated Cost | 
|--------------------------------- | - | -------------- | 
|Marketing/Promotion               | $ | 350,000        | 
|Officer and Employee Compensation | $ | 1,900,000      | 
|Rent and Utilities                | $ | 310,000        | 
|General and
      Administrative  | $ | 850,000        | 
|Total                             | $ | 3,410,000      | 

In addition to the above estimated expenses, under the Asset
Purchase Agreement that we entered into with HBSL and Dr. Badreddine, we agreed
to pay: (a) $750,000 upon the due execution and delivery, within 90 days from
the closing of the transactions contemplated under the Asset Purchase Agreement,
of contracts for the purchase of the waste water plant system in the aggregate
amount of $6,000,000; and (b) $1,000,000 upon the due execution and delivery,
within 180 days from the closing of the transactions contemplated under the
Asset Purchase Agreement, of contracts for the purchase of the waste water plant
system in the aggregate amount of $10,000,000.

Results of Operations

|Nine Months Summary           |   |                                     |   |   |        | 
|----------------------------- | - | ----------------------------------- | - | - | ------ | 
|                              |   |                                     |   |   |        | 
|                              |   | Nine Months Ended January
      31, |  
|                              |   | 2008                                |   |   | 2007   | 
|Operating Expenses            | $ | 1,676,412                           |   | $ | 25,744 | 
|Interest and Dividend Income  |   | (6,607                              | ) |   | -      | 
|Loss on disposal of equipment |   | 15,080                              |   |   | -      | 
|Net Loss                      | $ | 1,684,885                           |   | $ | 25,744 | 

Revenue

We have not had revenue from inception, and do not anticipate
earning revenues until such time as we enter into an agreement(s) with our
potential customers for the purchase and sale of our products.

|Expenses                         |   |                                     |  |   |        | 
|-------------------------------- | - | ----------------------------------- |  | - | ------ | 
|                                 |   |                                     |  |   |        | 
|                                 |   | Nine Months Ended January
      31, | 
|                                 |   | 2008                                |  |   | 2007   | 
|General and Administrative       | $ | 458,780                             |  | $ | 25,744 | 
|Depreciation and amortization    |   | 1,015,702                           |  |   | -      | 
|Stock based compensation expense |   | 201,930                             |  |   | -      | 
|Net Loss from operations         | $ | 1,676,412                           |  | $ | 25,744 | 

Total operating expenses during the nine months ended January
31, 2008 increased (or decreased) as compared to the comparative period in 2007
because of amortization and deprecation related to the purchase of a patent,
stock based compensation expense and an increase to general and administrative
activity.

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Liquidity and Financial Condition

|Working Capital     |   |                |  |   |        | 
|------------------- | - | -------------- |  | - | ------ | 
|                    |   |                |  |   |        | 
|                    |   | At January 31, | 
|                    |   | 2008           |  |   | 2007   | 
|Current assets      | $ | 344,391        |  | $ | 26,042 | 
|Current liabilities |   | 41,179         |  |   | 700    | 
|Working capital     | $ | 300,212        |  | $ | 25,342 | 

|Cash Flows                                            |   |                                     |   |   |         |  
|----------------------------------------------------- | - | ----------------------------------- | - | - | ------- | -
|                                                      |   |                                     |   |   |         |  
|                                                      |   | Nine Months Ended January
      31, |  
|                                                      |   | 2008                                |   |   | 2007    |  
|Net cash flows used in operating
      activities     | $ | (418,971                            | ) | $ | (25,044 | )
|Net cash flows used in investing activities           |   | (754,379                            | ) |   | (9,837  | )
|Net cash flows provided by financing
      activities |   | 1,500,000                           |   |   | 50,000  |  
|Net increase in cash during period                    | $ | 326,650                             |   | $ | 15,119  |  

Future Financing

Prior to the completion of the Private Placement for $1,500,000
on August 22, 2007, we were insolvent and had no remaining cash. We have not had
revenues from inception and cash on hand is currently our only source of
liquidity. The ability of our company to meet our financial liabilities and
commitments is primarily dependent upon the continued financial support of our
directors and shareholders, the continued issuance of equity to new stockholders
and our ability to achieve and maintain profitable operations.

Management believes that our cash and cash equivalents and cash
provided by operating activities will not be sufficient to meet our working
capital requirements for the next twelve month period. We estimate that we will
require an additional $2,660,000 over the next twelve month period to fund our
operating cash shortfall. We plan to raise the capital required to satisfy our
immediate short-term needs and additional capital required to meet our estimated
funding requirements for the next twelve months primarily through the private
placement of our equity securities. There are no assurances that we will be able
to obtain funds required for our continued operation. There can be no assurance
that additional financing will be available to us when needed or, if available,
that it can be obtained on commercially reasonable terms. If we are not able to
obtain the additional financing on a timely basis, we will not be able to meet
our other obligations as they become due and we will be forced to scale down or
perhaps even cease the operation of our business.

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

Capital Expenditures

Other than as required under the terms of the Asset Purchase
Agreement with HBSL and Dr. Badreddine, as of March 14, 2008, we do not have any
material commitments for capital expenditures and management does not anticipate
that we will spend additional material amounts on capital expenditures in the
near future.

Employees

We plan to employ a number of executive officers including a
Chief Executive Officer, a Chief Financial Officer, vice president of marketing
and three sales engineers. We anticipate that we may spend up to $1,650,000 to
hire officers and employees and up to $250,000 in payroll taxes.

15

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Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.

Application of Critical Accounting Estimates

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

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

Risk Factors

In addition to other information in this quarterly report, the
following risk factors should be carefully considered in evaluating our business
because such factors may have a significant impact on our business, operating
results, liquidity and financial condition. As a result of the risk factors set
forth below, actual results could differ materially from those projected in any
forward-looking statements. Additional risks and uncertainties not presently
known to us, or that we currently consider to be immaterial, may also impact our
business, operating results, liquidity and financial condition. If any such
risks occur, our business, operating results, liquidity and financial condition
could be materially affected in an adverse manner. Under such circumstances, the
trading price of our securities could decline, and you may lose all or part of
your investment.

Risks Related to Our Business

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

From inception to January 31, 2008, we have incurred aggregate
net losses of $1,724,692 from operations. We can offer no assurance that we will
ever operate profitably or that we will generate positive cash flow in the
future. In addition, our operating results in the future may be subject to
significant fluctuations due to many factors not within our control, such as the
unpredictability of when customers will order products, the size of customers'
orders, the demand for our products, and the level of competition and general
economic conditions.

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

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

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

16

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

To date, we have had negative cash flows from operations and
have depended on sales of our equity securities and debt financing to meet our
cash requirements. We may continue to have negative cash flows. We have
estimated that we will require approximately $3,410,000 to carry out our
business plan for the next twelve months. There is no assurance that actual cash
requirements will not exceed our estimates. We will require additional financing
to finance working capital and pay for operating expenses and capital
requirements until we achieve a positive cash flow.

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

- support our planned growth and carry out our business plan;
- protect our intellectual property;
- hire top quality personnel for all areas of our business;
- address competing technological and market developments; and
- market and develop our technologies.

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

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

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

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

As we proceed with the commercialization of our products,
technologies and the expansion of our marketing and commercialization efforts
internationally, we expect to experience significant growth in the scope and
complexity of our business. We will need to add staff to market our services,
manage operations, handle sales and marketing

17

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efforts and perform finance and accounting functions. We
anticipate that we will be required to hire a broad range of additional
personnel in order to successfully advance our operations. This growth is likely
to place a strain on our management and operational resources. The failure to
develop and implement effective systems, or to hire and retain sufficient
personnel for the performance of all of the functions necessary to effectively
service and manage our potential business, or the failure to manage growth
effectively, could have a material adverse effect on our business and financial
condition.

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

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

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

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

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

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

Our success and ability to compete depends to a significant
degree on our proprietary technology. If any of our competitors copy or
otherwise gain access to our proprietary technology or develop similar
technologies independently, we may not be able to compete as effectively. The
measures we have implemented to protect our proprietary technology and other
intellectual property rights are currently based upon a combination of a patent,
patent applications and trade secrets. These measures, however, may not be
adequate to prevent the unauthorized use of our proprietary technology and our
other intellectual property rights. Our pending patent applications may not
result in the issuance of any patents or any issued patents that will offer
protection against competitors with similar technology. Further, the laws of
foreign countries may provide inadequate protection of such intellectual
property rights. We may need to bring legal claims to enforce or protect such
intellectual property rights. Any litigation, whether successful or
unsuccessful, may result in substantial costs and a diversion of our company's
resources. In addition, notwithstanding our rights to our intellectual property,
other persons may bring claims

18

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against us alleging that we have infringed on their
intellectual property rights or claims that our intellectual property rights are
not valid. Any claims against us, with or without merit, could be time consuming
and costly to defend or litigate, divert our attention and resources, result in
the loss of goodwill associated with our business or require us to make changes
to our technology.

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

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

- incur substantial monetary damages;
- encounter significant delays in marketing our waste water treatment plant
  system;
- be unable to conduct or participate in the manufacture, use or sale of our
  waste water treatment plant system;
- lose patent protection for our inventions and products; or
- find that our patents are unenforceable, invalid, or have a reduced scope
  of protection.

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

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

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

Market acceptance of our products and services will depend in
large part upon our ability to demonstrate the technical and operational
advantages and cost effectiveness of our products and services as compared to
alternative, competing products and services, and our ability to train customers
concerning the proper use and application of our products. There can be no
assurance that our products and services will achieve a level of market
acceptance that will be profitable for us.

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

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

- be difficult or overly expensive to produce;

19

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- fail to achieve performance levels expected by customers;
- have a price level that is unacceptable in our targeted industries; or
- be precluded from commercialization by the proprietary rights of others or
  other competitive forces.

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

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

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

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

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

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

- decreased demand for our products;
- injury to our reputation;
- costs of related litigation;
- substantial monetary awards to plaintiffs;
- loss of revenues; and
- the inability to commercialize our technologies.

We currently carry no product liability insurance. Although we
expect to obtain product liability insurance coverage in connection with the
commercialization of our products, such insurance may not be available on
commercially

20

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reasonable terms or at all, or such insurance, even if
obtained, may not adequately cover any product liability claim. A product
liability or other claim with respect to uninsured liabilities or in excess of
insured liabilities could have a material adverse effect on our business and
prospects.

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

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

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

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

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

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

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

Our by-laws contain provisions with respect to the
indemnification of our officers and directors against all expenses, liability
and loss (including attorneys' fees, judgments, fines and amounts paid or to be
paid in settlement) reasonably incurred or suffered by him or her in connection
with any action, suit or proceeding to which they were made parties by reason of
his or her being or having been one of our directors or officers.

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

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

21

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Risks Related to Our Common Stock

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

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

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

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

Trading of our stock may be restricted by the Securities
Exchange Commission's penny stock regulations, which may limit a stockholder's
ability to buy and sell our stock.

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

FINRA sales practice requirements may also limit a
stockholder's ability to buy and sell our stock.

In addition to the "penny stock" rules described above, the
Financial Industry Regulatory Authority (FINRA), formerly the National
Association of Securities Dealers or NASD, has adopted rules that require that
in recommending an investment to a customer, a broker-dealer must have
reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their
non-

22

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institutional customers, broker-dealers must make reasonable
efforts to obtain information about the customer's financial status, tax status,
investment objectives and other information. Under interpretations of these
rules, the FINRA believes that there is a high probability that speculative low
priced securities will not be suitable for at least some customers. The FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.

|ITEM 3. | CONTROLS AND PROCEDURES
|------- | -----------------------

Evaluation of Effectiveness of Disclosure Controls and
Procedures

As required by Rule 13a-15 under the 1934 Act, as of the end of
the period covered by this quarterly report, being the fiscal quarter ended
January 31, 2008, we have carried out an evaluation of the effectiveness of the
design and operation of our disclosure controls and procedures. This evaluation
was carried out under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer.
Based upon the results of that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of the period covered by
this quarterly report, our disclosure controls and procedures were effective and
provide reasonable assurance that material information related to our company is
recorded, processed and reported in a timely manner.

Our management, with the participation of our Chief Executive
Officer and Chief Financial Officer, is responsible for the design of internal
controls over financial reporting. The fundamental issue is to ensure all
transactions are properly authorized and identified and entered into a
well-designed, robust and clearly understood system on a timely basis to
minimize risk of inaccuracy, failure to fairly reflect transactions, failure to
fairly record transactions necessary to present financial statements in
accordance with the U.S. GAAP, unauthorized receipts and expenditures or the
inability to provide assurance that unauthorized acquisitions or dispositions of
assets can be detected. The small size of our company makes the identification
and authorization process relatively simple and efficient and a process for
reviewing internal controls over financial reporting has been developed. To the
extent possible given our company's small size, the internal control procedures
provide for separation of duties for handling, approving and coding invoices,
entering transactions into the accounts, writing cheques and requests for wire
transfers and also require two signatures on significant payments. As of January
31, 2008, our Chief Executive Officer and Chief Financial Officer conclude that
our system of internal controls is adequate and comparable to those of issuers
of a similar size and nature. There were no significant changes to our internal
controls or in other factors that could significantly affect these controls
during the most recent quarter ended January 31, 2008, including any significant
deficiencies or material weaknesses of internal controls that would require
corrective action.

Management's Report on Internal Controls over Financial
Reporting

Management is responsible for establishing and maintaining
adequate internal control over our financial reporting. In order to evaluate the
effectiveness of internal control over financial reporting, as required by
Section 404 of the Sarbanes-Oxley Act, management has conducted an assessment,
including testing, using the criteria in Internal Control  Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO"). Our system of internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with the U.S. GAAP. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Inherent Limitations of Internal Controls

Our internal control over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with the U.S. GAAP. Our internal control over financial reporting includes those
policies and procedures that:

23

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- pertain to the maintenance of records that, in reasonable detail,
  accurately and fairly reflect the transactions and dispositions of our assets;
- provide reasonable assurance that transactions are recorded as necessary to
  permit preparation of financial statements in accordance with the U.S. GAAP,
  and that our receipts and expenditures are being made only in accordance with
  authorizations of our management and directors; and
- provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use, or disposition of our assets that could have a
  material effect on the financial statements.

Management does not expect that our internal controls will
prevent or detect all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that
the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of internal controls
can provide absolute assurance that all control issues and instances of fraud,
if any, have been detected. Also, any evaluation of the effectiveness of
controls in future periods are subject to the risk that those internal controls
may become inadequate because of changes in business conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There were no significant changes to our internal controls
during the quarter ended January 31, 2008, that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.

PART II  OTHER INFORMATION

|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

None.

|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND
      USE OF PROCEEDS
|------- | -----------------------------------------------------------------

None.

|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None.

|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
|------- | ---------------------------------------------------------

None.

|ITEM 5. | OTHER INFORMATION
|------- | -----------------

On October 24, 2007, our board of directors adopted a stock
option plan (the Plan). The purpose of the Plan is: (a) to retain the
services of our key employees and consultants and such other person as the Plan
Administrator (as defined in the Plan) may select in accordance with the terms
of the Plan; (b) to serve as an aid and inducement in the hiring of new
employees; and (c) to provide an equity incentive to employees, consultants and
other persons selected by the Plan Administrator. The Plan provides for the
granting to our employees or to employees of our Related Corporation (as defined
in the Plan) and to such other persons as the Plan Administrator shall select,
of stock options to acquire up to a total of 10% of the issued and outstanding
shares in our common stock from time to time. Please refer to a copy of the Plan
attached hereto as Exhibit 10.5 for details regarding the other terms of the
Plan.

24

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|ITEM 6. | EXHIBITS
|------- | --------

Pursuant to Rule 601 of Regulation SB, the following exhibits
are included herein or incorporated by reference.

|Exhibit | Description                                                                                                                                                                                                                                       
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |                                                                                                                                                                                                                                                   
|(3)     | Articles of
        Incorporation and Bylaws                                                                                                                                                                                                      
|3.1     | Articles of Incorporation (incorporated
        by reference from our Registration Statement on Form SB-2 filed on June
        13, 2006)                                                                                                         
|3.2     | By-laws (incorporated
        by reference from our Registration Statement on Form SB-2 filed on June
        13, 2006)                                                                                                                           
|3.3     | Certificate of Amendment (incorporated
        by reference from our Current Report on Form 8-K filed on August 6, 2007)                                                                                                                          
|3.4     | Articles of Merger
        filed with the Secretary of State of Nevada on September 24, 2007 and
        which is effective September 28, 2007 (incorporated by reference from
        our Current Report on Form 8-K filed on September 28, 2007)
|(10)    | Material Contracts                                                                                                                                                                                                                                
|10.1    | Form of Subscription
        Agreement (incorporated by reference from our Current Report on Form 8-K
        filed on August 24, 2007).                                                                                                          
|10.2    | Affiliate Stock Purchase Agreement
        dated August 20, 2007 between Imad Yassine, Altaf Alimohamed and Rafeh
        Hulays (incorporated by reference from Schedule 13D filed on August 24,
        2007)                                   
|10.3    | Asset Purchase
        Agreement dated September 18, 2007 between Hans Bio Shaft Limited, Hassan
        Hans Badreddine and our company (incorporated by reference from our Current
        Report on Form 8-K filed on September 24, 2007)      
|10.4    | Patent Assignment Agreement dated
        September 18, 2007 between Hans Bio Shaft Limited and our company (incorporated
        by reference from our Current Report on Form 8-K filed on September 24,
        2007)                           
|10.5*   | Stock
        Option Plan of the Company dated December 15, 2007                                                                                                                                                                                  
|(31)    | Section 302 Certification                                                                                                                                                                                                                         
|31.1*   | Section
        302 Certification under Sarbanes-Oxley Act of 2002 of Hassan Hans Badreddine                                                                                                                                                      
|31.2*   | Section
        302 Certification under Sarbanes-Oxley Act of 2002 of Rafeh Hulays                                                                                                                                                                
|(32)    | Section 906
        Certification                                                                                                                                                                                                                 
|32.1*   | Section
        906 Certification under Sarbanes-Oxley Act of 2002 of Hassan Hans Badreddine                                                                                                                                                      
|32.2*   | Section
        906 Certification under Sarbanes-Oxley Act of 2002 of Rafeh Hulays                                                                                                                                                                

*filed herewith

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this
14thday of March, 2008.

|                     | BIOSHAFT WATER TECHNOLOGY, INC.                                     
|-------------------- | --------------------------------------------------------------------
|                     |                                                                     
|                     |                                                                     
|                     |                                                                     
|Date: March 14, 2008 | By: /s/ Hassan Hans Badreddine                                      
|                     | Name: Hassan Hans Badreddine                                        
|                     | Title: President and Chief Executive Officer                        
|                     | (Principal
      Executive Officer)                                 
|                     |                                                                     
|                     |                                                                     
|Date: March 14, 2008 | By: /s/ Rafeh Hulays                                                
|                     | Name: Rafeh Hulays                                                  
|                     | Title: Chief Financial Officer, Secretary and
      Treasurer       
|                     | (Principal
      Financial Officer and Principal Accounting Officer)

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