UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________

For the quarterly period ended ~~December~~June 3130, ~~2015~~2016

For the transition period from ____________ to____________

Commission File No. 333-176256

MEGANET CORPORATION

(Exact name of Registrant as specified in its charter)


Nevada	80-0376822
(State or Other Jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

2510 E. Sunset Rd. Unit 5-777

Las Vegas, NV 89120

(Address of Principal Executive Offices)

(702) 987-0087

(Registrant’'s telephone number, including area code)

N/A

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “"Exchange Act”") during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “"large accelerated filer,”" “"accelerated filer”" and “"smaller reporting company”" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

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

Yes [ ] No [X ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Not applicable.

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant’'s classes of common stock, as of the latest practicable date: ~~February~~August 1815, 2016 – 100,000,000 shares of common stock, $0.001 par value.

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MEGANET CORPORATION

Table of Contents

Page PART I – FINANCIAL INFORMATION 3 Item 1 Financial Statements 3 Item 2 Management’'s Discussion and Analysis of Financial Condition and Results of Operations 97 Item 3 Quantitative and Qualitative Disclosures About Market Risk 1211 Item 4 Controls and Procedures 1211 PART II – OTHER INFORMATION 12 Item 1 Legal Proceedings 12 Item 1A Risk Factors 12 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 12 Item 3 Defaults Upon Senior Securities 12 Item 4 Mine Safety Disclosures 12 Item 5 Other Information 12 Item 6 Exhibits 1312 SIGNATURES 13

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PART I

Item 1. Financial Statements

The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.

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MEGANET CORPORATION

BALANCE SHEETS

ASSETS	~~December~~June 3130,			March 31,
	2015			2015
	2016			2016
	(Unaudited)
Current assets:
Cash	$	~~124~~123		$	941,627
Total current assets		~~124~~123			941,627
Property and equipment, net		2713,~~307~~900			5618,~~510~~104
Total assets	$	2714,~~431~~023		$	5619,~~604~~731
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	1,~~049~~205,~~873~~559		$	~~929~~1,~~077~~139,767
Deferred revenue		-			40,000
Officer loan		761,498			760,285
Officer advances		753,835			666,045
Total current liabilities		1,967,057			1,900,052
Total current liabilities		1,803,708			1,635,122
Total liabilities		1,967,057			1,900,052
Total liabilities		1,803,708			1,635,122
Stockholders' equity (deficit):
Common stock; $0.001 par value, 100,000,000 shares authorized and
100,000,000 and 100,000,000 shares issued and outstanding, respectively		100,000			100,000
Additional paid-in capital		2,~~906~~944,~~391~~560			2,~~853~~925,~~131~~555
Accumulated deficit		(4,~~782~~997,~~668~~594	)		(4,~~531~~905,~~649~~876	)
Total stockholders' equity (deficit)		(1,776,277	)		(1,578,518	)
Total stockholders' deficit		(1,953,034	)		(1,880,321	)
Total liabilities and stockholders' equity (deficit)	$	27,431		$	56,604
Total liabilities and stockholders' deficit	$	14,023		$	19,731

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

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MEGANET CORPORATION

STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months Ended December 31,						For the Nine Months Ended December 31,
	For the Three Months Ended June 30,
	2015			2014			2015			2014
	2016			2015
Revenues	$	~~486~~120		$	~~982~~81,083		$	~~82,620~~		$	~~12,289~~
Cost of revenues		--			--			--			~~5,500~~
Gross profit		~~486~~120			~~982~~81,083			~~82,620~~			~~6,789~~
Operating expenses:
General and administrative		78,~~172~~617			2519,~~556~~008			~~66,067~~			~~40,360~~
Depreciation		114,~~208~~204			1110,~~049~~898			~~33,178~~			~~35,667~~
Compensation and related payroll taxes		30,~~049~~012			3138,~~228~~108			~~98,262~~			~~91,228~~
Rent		30,000			30,~~000~~131			~~90,131~~			~~90,000~~
Total operating expenses		7872,~~429~~833			9798,~~833~~145			~~287,638~~			~~257,255~~
Loss before other expenses		(7772,~~943~~713	)		(9617,~~851~~062	)		~~(205,018~~	)		~~(250,466~~	)
Other income (expenses)
Bitcoin mining income		--			182,~~664~~385			~~7,867~~			~~18,664~~
Bitcoin mining expense		--			(133,688	)		(608	)		(133,688	)
Interest expense		(19,005	)		(15,839	)
Interest expense		(20,859	)		(15,805	)		(53,260	)		(43,641	)
Total other income (expenses)		(19,005	)		(13,454	)
Total other income (expenses)		(20,859	)		(130,829	)		(46,001	)		(158,665	)
Loss before income taxes		(91,718	)		(30,516	)
Loss before income taxes		(98,802	)		(227,680	)		(251,019	)		(409,131	)
Provision for income taxes		-			-
Provision for income taxes		-			-			-			-
Net loss	$	(91,718	)	$	(30,516	)
Net loss	$	(98,802	)	$	(227,680	)	$	(251,019	)	$	(409,131	)
Basic loss per common share	$	(0.00	)	$	(0.00	)
Basic loss per common share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic weighted average common
Basic weighted average common
shares outstanding		100,000,000			100,000,000
shares outstanding		100,000,000			100,000,000			100,000,000			100,000,000

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

~~- 5 -~~4

MEGANET CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended December 31,
	For the Three Months Ended June 30,
	2015			2014
	2016			2015
Cash flows from operating activities:
Net loss	$	(~~251~~91,~~019~~718	)	$	(~~409~~30,~~131~~516	)
Adjustments to reconcile net loss to net
cash (used) provided by operating activities:
Depreciation		334,~~178~~204			3510,~~667~~898
Imputed interest on officer advance		5319,~~260~~005			4315,~~641~~839
Changes in operating assets and liabilities:
Increase in accounts payable and accrued expenses		~~120~~65,~~796~~792			~~173~~74,~~092~~523
Decrease in deferred revenue		(40,000	)		-
Increase (decrease) in deferred revenue		-			(40,000	)
Net cash used in operating activities		(832,~~785~~717	)		~~(156~~30,~~731~~744	)
Cash flows from investing activities:
Purchase of fixed assets		(3,975	)		-
Net cash used by investing activities		(3,975	)		-
Cash flows from financing activities:
Advances from officer		~~129~~3,~~575~~597			~~177,734~~550
Repayment of officer advances		(412,~~785~~384	)		(1031,~~092~~215	)
Net cash provided by financing activities		871,~~790~~213			~~167~~(30,~~642~~665	)
Net change in cash		30(1,504	)		~~10,911~~79
Cash, beginning of period		941,627			~~131~~94
Cash, end of period	$	~~124~~123		$	~~11,042~~173
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	-
Cash paid for taxes	$	-		$	-

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

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~~MEGANET~~1. ~~CORPORATION~~DESCRIPTION OF BUSINESS AND HISTORY

~~NOTES~~Meganet TOCorporation ~~FINANCIAL~~was ~~STATEMENTS~~incorporated in Nevada on March 26, 2009 (the "Company" or "Meganet"). Prior to the formation of the current entity, a now dissolved entity under the name Meganet Corporation was incorporated in California with common ownership and similar business objectives. The integration of the Company's operations from the now dissolved California company to the Nevada company is considered a recapitalization due to the common ownership resulting in the assets and liabilities being recorded at a carryover basis as determined under accounting principles generally accepted in the United States of America. The former entity had been dissolved before incorporation on March 26, 2009.

~~(Unaudited)~~ Meganet is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company's data security solutions include a patented encryption algorithm which enhances security exponentially. The Company out-sources the manufacture of its counter-IED products, including bomb jammers, dismounted backpack portable jammers and facility jammers. The Company also develops and sells cell phone, satellite and wireless interceptors. Other data security solutions include encrypted cell phones, land lines, fax, PDA, radio, and satellites. Intelligence and counter-intelligence solutions include the development of SPY and RAT phones and devices for intelligence gathering. Counter-intelligence solutions include bugs, bug detectors, bomb sniffers, miniature cameras and digital video recorders. The Company maintains technology development, executive and sales offices in Las Vegas, Nevada.

1The accompanying unaudited condensed consolidated financial statements have been prepared by Meganet pursuant to the rules and regulations of the Securities and Exchange Commission. Certain ~~ORGANIZATION~~information ~~AND~~and ~~SIGNIFICANT~~footnote ~~ACCOUNTING~~disclosures ~~POLICIES~~normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with Meganet's most recent audited financial statements. Operating results for the three months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending March 31, 2017.

Meganet Corporation was incorporated in Nevada on March 26, 2009 (the “Company” or “Meganet”). Prior to the formation of the current entity, a now dissolved entity under the name Meganet Corporation was incorporated in California with common ownership and similar business objectives. The integration of the Company’s operations from the now dissolved California company to the Nevada company is considered a recapitalization due to the common ownership resulting in the assets and liabilities being recorded at a carryover basis as determined under accounting principles generally accepted in the United States of America. The former entity had been dissolved before incorporation on March 26, 2009.

Meganet is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company’s data security solutions include a patented encryption algorithm which enhances security exponentially. The Company out-sources the manufacture of its counter-IED products, including bomb jammers, dismounted backpack portable jammers and facility jammers. The Company also develops and sells cell phone, satellite and wireless interceptors. Other data security solutions include encrypted cell phones, land lines, fax, PDA, radio, and satellites. Intelligence and counter-intelligence solutions include the development of SPY and RAT phones and devices for intelligence gathering. Counter-intelligence solutions include bugs, bug detectors, bomb sniffers, miniature cameras and digital video recorders. The Company maintains technology development, executive and sales offices in Las Vegas, Nevada.

The accompanying unaudited condensed consolidated financial statements have been prepared by Meganet pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim consolidated financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with Meganet’s most recent audited financial statements. Operating results for the nine months ended December 31, 2015 are not necessarily indicative of the results that may be expected for the year ending March 31, 2016.

2.	GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception and has an accumulated deficit of $4,~~782~~997,~~668~~594 as of ~~December~~June 3130, ~~2015~~2016. The Company requires capital for its contemplated operational and marketing activities. The Company’'s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’'s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’'s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

Management anticipates that that there will be sales sufficient to cover the next 12 months of cash operating expenses; however, there can be no surety that anticipated sales will materialize. In order to mitigate the risk related with this uncertainty, the CEO has agreed to contribute additional amounts to capital as needed to cover operating expenses.

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MEGANET CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

3.	RELATED PARTY TRANSACTIONS

Officer loan – During the ~~nine~~three month period ending ~~December~~June 3130, ~~2015~~2016, the Company received ~~net~~ cash advances from ~~the~~its president in the amount of $873,~~790~~597 and repaid $2,384. All amounts advanced to the Company are unsecured, non-interest bearing and due upon demand by the president. The balance of advances due at June 30, 2016 and March 31, 2016 was $761,498 and $760,285, respectively.

In accordance with FASB ASC 835-30 “"Imputation of Interest”", interest has been imputed on all advances made to Company by the president. During the ~~nine~~three month period ending ~~December~~June 3130, ~~2015~~2016 and ~~2014~~2015, interest has been imputed and charged to additional paid-in capital in the amount of $5319,~~260~~005 and $4315,~~641~~839, respectively.

Employment agreements – as of ~~December~~June 3130, ~~2015~~2016 the Company had only one employment agreement which was with the President and majority shareholder. The employment agreement stipulates that the President is to receive a base salary of $120,000 per annum. The agreement also contains a provision allowing for a commission to be paid equal to 10% of gross sales achieved by the President. The total expense related to this agreement was $9830,~~262~~012 and $9138,~~228~~108 for the ~~nine~~three month period ending ~~December~~June 3130, ~~2015~~2016 and ~~2014~~2015, respectively. As of ~~December~~June 30, 2016 and March 31, ~~2015~~2016, $~~753~~901,~~835~~329 and $871,317 of total compensation was unpaid and accrued in current liabilities, respectively.

~~The Company has accrued for unpaid payroll taxes related to these payroll expenses which amount to $73,714 and $73,714 as of December 31, 2015 and 2014, respectively~~4. ~~These~~SUBSEQUENT accruals include $1,649 in interest or penalties related to the late status of these payments. Nonetheless, the Company anticipates that it will reasonably be able to negotiate the total past due amount of payroll taxes in order to effectively eliminate penalties and interest.EVENTS

-Subsequent 8to the balance sheet date the Company received cash advances from its president in the amount of $1,900 in order to cover certain obligations that were due and repaid $6,235. All amounts advanced to the Company are unsecured, non-interest bearing and due upon demand by the president.

~~Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations.~~6

Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “"may,”" “"would,”" “"could,”" “"should,”" “"expects,”" “"projects,”" “"anticipates,”" “"believes,”" “"estimates,”" “"plans,”" “"intends,”" “"targets”" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Business Operations

Meganet is focused on the development of data security solutions for enterprise, large organizations and corporations around the globe, including the U.S. Department of Defense, Military Intelligence and the Federal Government. The Company has developed and does develop products that it believes are attractive and important to these markets.

Working with government in a business capacity can be a long and arduous process. Governments and their agencies have constant budget restraints and lengthy product procurement processes. In many if not in most cases, a bidding process is required before an order for goods can be placed with a private supplier. Before products can be sold to the U.S. Government or to any of its agencies, the product and/or its supplier must be certified by the U.S. Government, which certification is not easy to obtain. From the time a product is developed until the time it is actually shipped to an agency in return for payment can be months if not years.

The financial statements that form part of this ~~quarterly~~annual report have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Our independent accountants that audited the financial statements observed that the Company requires capital for its contemplated operational and marketing activities and that the Company’'s ability to raise additional capital through the future issuances of common stock is unknown and that the obtainment of additional financing, the successful development of the Company’'s contemplated plan of operations, and its transition to the attainment of profitable operations are necessary for the Company to continue operations. The independent accountants concluded that the ability to successfully resolve these factors raise substantial doubt about the Company’'s ability to continue as a going concern.

Our management has been with Meganet from its inception and has in the past shepherded all software products from the development stage through the government procurement process to final delivery and payment. Management believes that despite the Company’'s current illiquid position, the Company is in a ~~good~~ position ~~with~~to ~~respect~~receive tosignificant income in the upcoming 18 to 24 months offrom ~~operations~~the ~~estimating~~sale ~~Meganet has more than $10,000,000~~ of ~~potential~~products ~~product sales~~ in the so-called product pipeline. Being in the pipeline does not mean that product has necessarily been bought, sold or ordered. It does mean that products are somewhere in the bidding and/or procurement process and in management’'s opinion have a reasonable chance of becoming orders, having a portion of those orders delivered and thereby producing collected revenues for the Company in material amounts within the next 18 to 24 months. Management reasonably expects 50% of the potential product sales in its pipeline to produce revenue. At the present time Meganet has confirmed sales to two third world countries, one in the amount of $30,000,000 and one in the amount of $25,000,000. However, Meganet has not received the up-front cash deposit for either order that it requires before Meganet will begin filling the order. It is the potential of these two orders that account for much of the $10,000,000 pipeline estimate set forth earlier in this paragraph. These two orders have been delayed due to budgetary issues within the respective countries.

The cash deposit necessary to begin the implementation of each sale is $5,000,000. With regard to the $30,000,000 sale, the implementation will take 18 months. The product for this sale will not be delivered and accepted until approximately 18 months after Meganet receives the cash deposit to begin work. Accordingly, revenue for this sale will not be booked for 18 months after receipt of the initial deposit. With regard to the $25,000,000 sale, implementation will take approximately 14 months. In this case, product will be produced and delivered from time to time during the 14 month period. The initial product delivery valued at more than $5,000,000 will take place approximately six months after the receipt of the $5,000,000 deposit. Accordingly, the initial deposit of $5,000,000 will be booked as revenue upon the acceptance of that initial product shipment. It should be noted that when the initial deposits are made is under the sole control of the countries to whom the sales have been made.

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The confirmed sales to the two third world countries are for defense/security type products and were originally slated to be procured by the countries out of their respective defense budgets for the 2012 fiscal year. However, in each case, the 2012 defense funds were spent by the countries on other priorities and the purchase of Meganet’s products have now been delayed until 2016. Meganet has been told by each country that monies allocated in their 2016 defense budgets will be allocated to the purchase and the installation of Meganet’s products. It should be noted that Company management will make every effort to finalize these two sales through and including receipt of all payment and believes based upon information it has at this time that it will be successful. However, until payment is actually received, there can be no guarantee that management will be successful in these efforts.

Liquidity

At ~~December~~June 3130, ~~2015~~2016, the Company had cash in the amount of $~~124~~123 compared to $1,~~803~~967,~~708~~057 in current liabilities. On a monthly basis the Company has fixed expenditures including without limitation rent and salary in the approximate amount of $2520,000. This $2520,000 includes the $10,000 monthly salary of our CEO which he does not take but rather accrues if money is not available for payment of the salary. Taking this into consideration, the Company needs $15,000 per month which equals $180,000 for 12 months to sustain operations and estimates it will need $180,000 in additional capital to sustain business operations over the next twelve months. Our CEO will lend the full $180,000 to Meganet, if cash is not otherwise available within the Company. Two thirds or 67% of this amount will pay rent, approximately 13% will pay property taxes, approximately 5% will pay utilities, 10% will pay salary and the remaining 5% will pay for maintenance and miscellaneous office expenses such as mail and shipping expense and office supplies. During the three months ended June 30, 2016, our CEO advanced to the Company $3,597 and was repaid $2,384 to meet the financial needs of the Company.

It is common for companies to resolve illiquid positions by attempting to raise additional working capital through the sale of equity capital or short term borrowing from third parties. However, our management does not believe this will be necessary. Rather management believes there will be sales sufficient to cover the next 18 to 24 months of cash operating expenses; however, there can be no surety that anticipated sales will materialize. Also, in the event that sales anticipated during the next 18 to 24 months are funded in the later end of the 18 to 24 month period, it will be necessary for the Company to procure additional operating capital during the early months of the next 18 to 24 month period. In order to provide for this potential situation, our CEO has agreed to contribute additional amounts to capital as needed to cover operating expenses. ~~However, there is no written agreement between our CEO and the Company for him to provide this funding and therefore his agreement to do so is non-binding upon him.~~

Background to Understanding the Financial Results for the Past Three Years

To understand Meganet’'s financial results for the past three years, it is necessary to understand its sales cycle which is different from traditional companies that may have sales on a daily, weekly and/or monthly basis. Meganet’'s sales cycle is highly sporadic as a result of its product lines and its customer mix.

Product Lines

Meganet is a technology company supplying world markets with products primarily instrumental in military defense, personal protection, data protection, home land security and other intelligence and counter-intelligence uses. Examples of products for these uses are bomb jammers and cell phone interceptors.

This product base lends itself to sporadic sales cycles for the following reasons. In times of war which can come upon a country quickly, a country will have immediate need of products for military defense uses such as bomb jammers. In times of peace, bomb jammers may not be needed for many years. To the contrary, as a country develops and implements a long term homeland security strategy, it may put out bids for certain types of intelligence and counter-intelligence products that it may leave out to bid for one to two years. To participate in such a bidding process, Meganet must maintain protectable state of the art technologies over a lengthy bidding process that it can deliver in quick fashion in the event it is awarded the bid for a particular product.

Customer Mix

Meganet’'s focus is on government and military markets which has advantages and disadvantages. Advantages include the fact that governments have deep pockets and when they really need a product they can procure it and pay for it. Also, when a company such as Meganet has a technology that a government really needs, the product can sustain a large margin in the sales price. In addition, technology is often scalable. Once developed, products based upon a technology can bring close to a 100% return.

Disadvantages in selling to governments and militaries include the fact that there is fierce competition for these lucrative markets and large suppliers are notorious for using underhanded methods. Also, governments are subject to budgetary issues and budgetary crises and ever changing priorities for fixed budgeted funds. Governments have bidding requirements. This can be good and bad. Bidding does allow for companies such as Meganet to bid against the large suppliers. However, it makes for lengthy and unwieldy sales cycles that make it difficult to predict and sustain cash flow.

~~- 10 -~~9

Examples Illustrative of Meganet’'s Sales Cycle

A good way to understand Meganet’'s sales cycle is to see examples of past sales. Meganet obtained its product base and its business plan from a company called Meganet Corporation, a California corporation (“"Meganet California”"). In 2002, Meganet California made a sale to the U.S. Department of Labor. After soliciting the U.S. ~~Dept~~Department of Labor for over a year, Meganet California received a software order for $4,200,000. Development costs of the software had been expensed as they were incurred and since it was software it had no production cost. Therefore the sale was virtually 100% profit to the company at the time it was realized. However, in the 12 months leading to this sale, total sales were only $100,000.

Another example is Meganet California’'s sale to the U.S. Department of Transportation (the “"DOT”") in 2005. After pursuing a sale for only three months which would typically be just the beginning of a solicitation cycle, an internal security breach at the DOT heightened security concerns and it issued Meganet California a $10,000,000 contract immediately. In the 12 months prior to the sale, Meganet California had sales of under $1,000,000 dollars total.

A third example is a sale to the U.S. Department of Veteran Affairs (the “"DVA”") in 2007. Meganet California had been soliciting the DVA’'s business for three years trying to sell a biometric USB storage device without success. One day without prior notice, Meganet California was selected as the sole source provider of biometric USB storage devices nationwide to over 5,000 facilities. Like before, sales for the prior 12 months had been under $1,000,000.

~~The~~For ~~Company’s revenue consists primarily of revenue from~~ the ~~sale~~past oftwo ~~jamming and interceptor hardware and data security software. The Company recognizes revenue when persuasive evidence of an arrangement exists~~years, ~~delivery~~Meganet has ~~occurred, the sales price is fixed or determinable, and collection is probable. Product is considered delivered to the customer once it has~~ been ~~shipped~~working ~~and~~hard ~~title~~toward ~~and~~securing ~~risk~~some oflarge ~~loss have been transferred. For most of the Company’s product~~ sales, ~~these~~which ~~criteria~~it ~~are~~believes ~~met~~will atmaterialize ~~the~~in ~~time~~ the ~~product~~near ~~is shipped~~future. ~~The~~However, ~~Company recognizes revenue from~~ the ~~sale~~financial ofstatements ~~hardware products (e.g., jammers and cell phone interceptors) and software~~ included ~~with hardware that is essential to the functionality of the hardware,~~ in ~~accordance~~this ~~with~~annual ~~general~~report ~~revenue~~show ~~recognition~~sales ~~accounting~~minimal ~~guidance~~sales. However, ~~The~~this ~~software~~pattern ~~inherent to the functionality~~ of ~~the~~sporadic ~~hardware~~sales is ~~inseparable~~typical ~~from~~for ~~the~~this ~~hardware component and does not have a standalone fair market value~~Company.

~~The~~Our ~~Company~~sporadic ~~has~~sales nocycle ~~continuing~~is ~~obligations,~~not ~~such~~the asonly ~~providing~~reason ~~software~~for ~~updates,~~the ~~subsequent~~lack toof ~~the~~sales ~~delivery~~in ofthe ~~its~~prior ~~products~~two years. ~~This~~The isglobal ~~true~~economic crisis has made many of ~~software~~our ~~products~~customers asput ~~well~~purchases ason ofhold. ~~hardware~~The ~~products~~U.S. ~~for~~government ~~which~~in ~~software~~particular ishas ahad ~~component.~~many ~~Accordingly~~departments put projects on hold, ~~revenue~~cancel ~~recognition~~some ~~takes~~existing ~~place~~projects ~~pursuant~~and toin ~~the~~many ~~guidelines~~cases simply run out of budget for new products. Also in the ~~preceding~~private ~~paragraph~~sector, ~~without~~the ~~any~~economic ~~adjustments~~downturn ~~that~~has ~~would~~made ~~otherwise~~the bepurchase ~~required~~of ~~because~~products oflike anours ~~ongoing~~not ~~obligation~~a topossibility ~~maintain~~at ~~software~~this time.

InMeganet ~~addition~~is toa ~~the~~company ~~software essential to the hardware~~ that isgoes ~~sold,~~from ~~the~~one ~~Company~~large ~~sells~~sale ~~off the shelf software~~ to ~~customers that is not related to~~ the ~~hardware~~next ~~that~~with islow ~~sold.~~or ~~The~~quite ~~Company~~periods ~~recognizes revenue~~ in ~~accordance with industry specific software accounting guidance for the following types of sales transactions: (i) standalone sales of software and (ii) sales of software upgrades~~between.

~~Generally,~~Comparison ~~the Company requires customers to deposit 50%~~ of the ~~gross~~Fiscal ~~sales~~Quarters ~~price~~Ended ~~upon~~June ~~execution~~30, of2016 aand ~~formal intent to sell with the remaining 50% due upon delivery of the product. The Company records deferred revenue when it receives payments in advance of the delivery of products.~~2015

~~Comparison~~Operating results for the fiscal quarters ended June 30, 2016 and 2015 yielded gross profit of $120 and $81,083 respectively, operating expenses of $72,833 and $98,145 respectively and net loss of $91,718 and $30,516 respectively. Non-cash depreciation expense was $4,204 for the ~~Fiscal~~quarter ~~Quarters~~ended ~~Ended~~June ~~December~~30, 312016 and $10,898 for the quarter ended June 30, 2015, and ~~2014~~was responsible for some of the net loss for both three month periods.

Operating results for the fiscal quarters ended December 31, 2015 and 2014 yielded gross profit of $486 and $982 respectively, operating expenses of $78,429 and $97,833 respectively and net loss of $98,802 and $227,980 respectively. Non-cash depreciation expense was $11,208 for the quarter ended December 31, 2015 and $11,049 for the quarter ended December 31, 2014, and was responsible for only 14% of the operating expense and net loss for the quarter ended December 31, 2015.

Comparison of the Nine Month Periods Ended December 31, 2015 and 2014

Operating results for the nine month periods ended December 31, 2015 and 2014 yielded gross profit of $82,620 and $6,789 respectively, operating expenses of $287,638 and $257,255 respectively and net loss of $251,019 and $409,131 respectively. Non-cash depreciation expense was $33,178 for the nine month period ended December 31, 2015 and $35,667 for the nine month period ended December 31, 2014, and was responsible for some of the net loss for the two nine month periods.

Contractual Obligations

The Company has no long-term debt obligations, capital lease obligations, purchase obligations or other long-term liabilities. The Company pays rent of $10,000 per month for its office and shop space on a month to month basis.

Off-balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

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No Undisclosed Material Trends or Events

There are no trends, events or developments that occurred during the fiscal quarter ended ~~December~~June 3130, ~~2015~~2016, or from ~~December~~June 3130, ~~2015~~2016 through the date of this quarterly report that would indicate or would be a material departure from the financial information set forth in this quarterly report. Furthermore, there are no other undisclosed events or events likely to occur, of which management is aware, that would materially affect the business and/or financial information set forth in this quarterly report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company qualifies as a “"smaller reporting company”" as defined in 17 C.F.R. §229.10(f)(1), and is not required to provide information by this item.

Item 4. Controls and Procedures.

Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management including our chief executive officer and chief financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “"Exchange Act”")) as of the end of the period covered by this report. Based upon that evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding disclosure, and (iii) is not subject to effective duel control allowing for appropriate segregation of duties.

Changes in internal control over financial reporting

Our management, with the participation of the chief executive officer and chief financial officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None

Item 1A. Risk Factors.

The Company qualifies as a “"smaller reporting company”" as defined in 17 C.F.R. §229.10(f)(1), and is not required to provide information by this item.

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

None

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~In October, 2015, a market maker submitted to FINRA on our behalf an application on Form 211 for purposes of obtaining a trading symbol so our stock can be listed on the OTCQB of the OTC Market System~~None. ~~In January, 2016, FINRA assigned the Company the trading symbol MGNT.~~

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Item 6. Exhibits.

Exhibit No.	Identification of Exhibit
3.1	Articles of Incorporation (1)
3.2	Bylaws (1)
31	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act.
32	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive Data Files

Exhibit No. Identification of Exhibit


3.1 3.2 31 32	Articles of Incorporation (1) Bylaws (1) Certification Pursuant to Section 302 of the Sarbanes-Oxley Act. Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101	Interactive Data Files

(1)	Attached as an exhibit to Form S-1 filed on August 12, 2011.

SIGNATURES

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

MEGANET CORPORATION

Date:	~~February~~August 2215, 2016	By:	/s/Saul Backal
			Saul Backal, CEO
			Saul Backal, CEO and CFO

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