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UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, 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 quarterly period ended June
30,2007.

[ ] Transition report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from ______ to
______

Commission file number: 0-50546

Hendrx Corp.(Exact
name of small business issuer as specified in its charter)

|Nevada                          | 86-0914052         
|------------------------------- | -------------------
|(State or Other Jurisdiction of | (I.R.S. Employer   
|Incorporation or Organization)  | Identification No.)

2610-1066 West Hastings Street, Vancouver, British
Columbia, Canada, V6E 3X2(Address of Principal Executive
Offices) (Zip Code)

1-888-436-3791(Issuers Telephone Number,
Including Area Code)

Check whether the registrant: (1) filed all reports required to
be filed by Section 13 or 15(d) of the 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

At June 30, 2007, the number of shares outstanding of the
registrant's common stock, $0.001 par value (the only class of voting stock),
was 37,238,067.

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TABLE OF CONTENTS

|ITEM 1.                                                                                                                                            | FINANCIAL STATEMENTS                                        |   
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------- | --
|Unaudited, Consolidated Balance
      Sheet as of June 30, 2007 and 2006                                                                           | 3                                                          
|Unaudited, Consolidated
      Statement of Operations and Comprehensive Income (Loss) for the t months
      ended June 30, 2007 and June 30, 2006 | 4                                                          
|Unaudited, Consolidated Statement
      of Cash Flows for the six months ended June 30, 2007 and 2006                                              | 5                                                          
|Notes to the Unaudited
      Consolidated Financial Statements                                                                                     | 6                                                          
|ITEM 2.                                                                                                                                            | MANAGEMENT'S DISCUSSION AND
      ANALYSIS                  | 27
|ITEM 3.                                                                                                                                            | CONTROLS AND
      PROCEDURES                               | 32
|                                                                                                                                                   |                                                             |   
|PART II                                                                                                                                           
|ITEM 1.                                                                                                                                            | LEGAL PROCEEDINGS                                           | 33
|ITEM 2.                                                                                                                                            | CHANGES IN SECURITIES                                       | 34
|ITEM 3.                                                                                                                                            | DEFAULTS UPON SENIOR SECURITIES                             | 34
|ITEM 4.                                                                                                                                            | SUBMISSION OF
      MATTERS TO A VOTE OF SECURITIES HOLDERS | 34
|ITEM 5.                                                                                                                                            | OTHER INFORMATION                                           | 35
|ITEM 6.                                                                                                                                            | EXHIBITS                                                    | 35
|SIGNATURES                                                                                                                                         | 35                                                         
|INDEX TO EXHIBITS                                                                                                                                  | 36                                                         

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-QSB of Hendrx Corp. (the "Company" or "Hendrx")
contains "forward-looking statements." In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"could", "expects", "plans", "intends", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of such terms and other
comparable terminology. These forward-looking statements include, without
limitation, statements about our market opportunity, our strategies,
competition, expected activities and expenditures as we pursue our business
plan, and the adequacy of our of available cash resources. 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. Actual results may differ materially from the predictions
discussed in these forward-looking statements. The economic environment within
which we operate could materially affect our actual results. Additional factors
that could materially affect these forward-looking statements include, among
other things, the Company's ability to (i) develop and sell products, (ii) raise
sufficient funds to maintain its operations, (iii) the market price for certain
materials which the company needs to build its products, (iv) general economic,
market or business conditions, and (v) other factors discussed in Hendrx is
filings with the Securities and Exchange Commission ("SEC").

Our management has included projections and estimates in this
Form 10 QSB, which are based primarily on management's experience in the
industry, assessments of our results of operations, discussions and negotiations
with third parties and a review of information filed by our competitors with the
SEC or otherwise publicly available. We caution readers not to place undue
reliance on any such forward-looking statements, which speak only as the date
made. We expressly disclaim any obligation subsequently to revise any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.

PART I FINANCIAL INFORMATION

|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

|HENDRX CORP.               
|---------------------------
|INTERIM FINACIAL STATEMENTS
|June 30, 2007              
|(unaudited                 

|BALANCE SHEETS                            
|------------------------------------------
|                                          
|INTERIM STATATEMENTS OF OPERATIONS        
|                                          
|INTERIM STATEMENTS OF STOCKHOLDERS EQUITY
|                                          
|INTERIM STATEMENTS OF CASH FLOWS          
|                                          
|NOTES TO INTERIM FINANCIAL STATEMENTS     

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|HENDRX CORP                                       |   |             |   |   |              |  
|------------------------------------------------- | - | ----------- | - | - | ------------ | -
|Consolidated
      Balance Sheet                  |   |             |   |   |              |  
|(Expressed in
      US Dollars)                   |   |             |   |   |              |  
|                                                  |   | June 30,    |   |   | December 31, |  
|                                                  |   | 2007        |   |   | 2006         |  
|                                                  |   | (Unaudited  |   |   | (Audited)    |  
|                                                  |   | Prepared by |   |   |              |  
|Assets                                            |   | Management) |   |   |              |  
|Current Assets                                    |   |             |   |   |              |  
|Cash (Note)                                       | $ | 71,468      |   | $ | 29,198       |  
|Accounts receivable                               |   | 516,424     |   |   | 340,752      |  
|Value added tax refundable                        |   | 64,519      |   |   | 62,151       |  
|Inventories (Note 4)                              |   | 2,011,433   |   |   | 1,892,506    |  
|Due from related parties (Note 9d)                |   | 6,604       |   |   | 6,353        |  
|Prepaid expenses                                  |   | 23,979      |   |   | -            |  
|Other receivable                                  |   | 111,775     |   |   |              |  
|Total Current
      Assets                        |   | 2,806,201   |   | $ | 2,330,960    |  
|Property, Plant and Equipment-Net (Note 6)        |   | 5,552,610   |   |   | 5,826,460    |  
|Other assets                                      |   |             |   |   |              |  
|Long term loan receivable (Note 16)               |   | -           |   |   | 108,903      |  
|Intangible assets-Net (Note 5)                    |   | 2,597,747   |   |   | 2,684,427    |  
|Goodwill (Note 3)                                 |   | 31,854,137  |   |   | 31,854,137   |  
|Total Other
      Assets                          |   | 34,451,884  |   |   | 34,647,467   |  
|Total Assets                                      | $ | 42,810,696  |   | $ | 42,804,887   |  
|Liabilities and Stockholders' Equity              |   |             |   |   |              |  
|Current Liabilities                               |   |             |   |   |              |  
|Accounts payable & Accrued liabilities            |   | 1,187,967   |   |   | 969,635      |  
|(Note 8)                                          |   |             |   |   |              |  
|Accrued wages benefits (Note 11)                  |   | 37,428      |   |   | 35,194       |  
|Short term bank loans (Note 10)                   |   | 2,756,421   |   |   | 2,523,991    |  
|Short term loan                                   |   |             |   |   | -            |  
|Due to related parties (Note 9e)                  |   | 736,639     |   |   | 281,380      |  
|Total Current
      Liabilities                   |   | 4,718,455   |   |   | 3,810,200    |  
|Contingent LiabilitiesCommitiment
      (Note 12) |   | 1,000,000   |   |   | 1,000,000    |  
|                                                  |   |             |   |   |              |  
|Total Liabilities                                 |   | 5,718,455   |   |   | 4,810,200    |  
|Stockholders'
      Equity                        |   |             |   |   |              |  
|Capital stock (Authorized: 350,000,000)           |   |             |   |   |              |  
|Issued and outstanding: 37,238,067)               |   |             |   |   |              |  
|(December 31,2005: 37,238,067)                    |   |             |   |   |              |  
|Par value $0.001                                  |   | 37,238      |   |   | 37,238       |  
|Additional paid in capital                        |   | 43,196,066  |   |   | 43,196,066   |  
|Other Comprehensive Income                        |   | 614,088     |   |   | 652,170      |  
|Retained (Deficit) Earnings                       |   | (6,755,152  | ) |   | (5,890,787   | )
|Total
      stockholders' equity                  |   | 37,092,241  |   |   | 37,994,687   |  
|                                                  |   |             |   |   |              |  
|Total
      liabilities and stockholders' equity  | $ | 42,810,696  |   | $ | 42,804,887   |  

Commitments: Note 3 and 10; Going Concern: Note 1; Guarantees:
Note 10

The Accompanying Notes are an Integral Part of the Consolidated
Financial Statements

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|HENDRX CORP                                                                |   |                    |   |   |                  |   |   |            |   |   |            |  
|-------------------------------------------------------------------------- | - | ------------------ | - | - | ---------------- | - | - | ---------- | - | - | ---------- | -
|Consolidated Statement of Operations and
      Comprehensive Income (Loss) |   |                    |   |   |                  |   |  
|(Expressed in US Dollars)                                                  |   |                    |   |   |                  |   |   |            |   |   |            |  
|(Unaudited -
      prepared by management)                                 |   |                    |   |   |                  |   |   |            |   |   |            |  
|                                                                           |   | Three Months Ended |   |   | Six Months Ended |  
|                                                                           |   | June 30            |   |   | June 30          |  
|                                                                           |   | 2007               |   |   | 2006             |   |   | 2007       |   |   | 2006       |  
|                                                                           |   |                    |   |   |                  |   |   |            |   |   |            |  
|Revenue                                                                    | $ | 813,815            |   | $ | 883,053          |   | $ | 1,023,971  |   | $ | 1,208,008  |  
|Cost of Goods Sold                                                         |   | 754,837            |   |   | 779,782          |   |   | 1,041,074  |   |   | 1,114,101  |  
|Gross Profit                                                               |   | 58,978             |   |   | 103,271          |   |   | (17,103    | ) |   | 93,907     |  
|Selling Expenses                                                           |   | 48,122             |   |   | 105,800          |   |   | 74,767     |   |   | 176,109    |  
|General and
      administrative expenses                                  |   | 250,744            |   |   | 378,527          |   |   | 423,640    |   |   | 658,056    |  
|Stock Based Compensation
      Expenses                                    |   | -                  |   |   | -                |   |   |            |   |   | -          |  
|Contract
      services                                                    |   | 56,634             |   |   | 59,521           |   |   | 115,587    |   |   | 119,042    |  
|Salaries and wages                                                         |   | 70,242             |   |   | 19,255           |   |   | 110,955    |   |   | 38,509     |  
|Total Expenses                                                             |   | 425,742            |   |   | 563,102          |   |   | 724,949    |   |   | 991,716    |  
|Income (Loss)
      from Operations                                        |   | (366,764           | ) |   | (459,831         | ) |   | (742,052   | ) |   | (897,809   | )
|Other Income (Expense)                                                     |   |                    |   |   |                  |   |   |            |   |   |            |  
|Other income (expense)                                                     |   | 3,261              |   |   | (3,722           | ) |   | (14,951    | ) |   | (1,372     | )
|Interest
      expenses                                                    |   | (62,270            | ) |   | -                |   |   | (107,363   | ) |   | (964       | )
|Impairment Intangible Assets                                               |   | -                  |   |   | -                |   |   |            |   |   | -          |  
|Litigation losses                                                          |   | -                  |   |   | -                |   |   |            |   |   | -          |  
|Profit (Loss) before Income taxes                                          |   | (425,772           | ) |   | (463,553         | ) |   | (864,365   | ) |   | (900,145   | )
|Income Taxes                                                               | $ |                    |   | $ | (447             | ) | $ |            |   | $ | -          |  
|Net profit (loss) for the year                                             |   | (425,772           | ) |   | (464,000         | ) |   | (864,365   | ) |   | (900,145   | )
|Net (loss) per common shares Basic                                         |   |                    |   |   |                  |   |   |            |   |   |            |  
|& Dilutive                                                                 |   | (0.01              | ) |   | (0.01            | ) |   | (0.02      | ) |   | (0.02      | )
|Weighted Average Shares Outstanding                                        |   | 37,238,067         |   |   | 37,238,067       |   |   | 37,238,067 |   |   | 37,238,067 |  
|Other Comprehensive Income                                                 |   |                    |   |   |                  |   |   |            |   |   |            |  
|Foreign Currency Translation
      Adjustments                             |   | 17,720             |   |   | -                |   |   |            |   |   | -          |  
|Comprehensive
      Income (Loss)                                          | $ | (408,052           | ) | $ | (464,000         | ) | $ | (864,365   | ) | $ | (900,145   | )

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|HENDRX CORP                                            |   |                  |   |   |            |  
|------------------------------------------------------ | - | ---------------- | - | - | ---------- | -
|Consolidated Statement of Cash Flows                   |   |                  |   |   |            |  
|(Expressed in US Dollars)                              |   |                  |   |   |            |  
|(Unaudited -
      prepared by management)             |   |                  |   |   |            |  
|                                                       |   | Six Months Ended |  
|                                                       |   | June 30          |  
|                                                       |   | 2007             |   |   | 2006       |  
|                                                       |   |                  |   |   |            |  
|Operating activities                                   |   |                  |   |   |            |  
|Adjustments to reconcile net income (loss) to net Cash | $ |                  |   | $ |            |  
|Net losses                                             |   | (864,365         | ) |   | (900,145   | )
|Amortization and depreciation                          |   | 284,715          |   |   | 354,911    |  
|Impairment of intangible assets                        |   | 86,680           |   |   | -          |  
|Changes in operating
      assets and liabilities      |   |                  |   |   |            |  
|Accounts receivable                                    |   | (175,672         | ) |   | (330,524   | )
|Other receivable                                       |   | (2,872           | ) |   |            |  
|VAT Refundable                                         |   | (2,368           | ) |   | 25,255     |  
|Inventories                                            |   | (118,927         | ) |   | (6,419     | )
|Prepaid expenses                                       |   | (23,979          | ) |   | (7,500     | )
|Accounts payable                                       |   | 220,566          |   |   | 8,896      |  
|Accrued liabilities                                    |   | -                |   |   | 8,000      |  
|Total funds from
      (used in) operating activities  |   | (596,222         | ) |   | (847,526   | )
|Investing activities                                   |   |                  |   |   |            |  
|Cash paid for property,
      plant, and equipment     |   | (10,865          | ) |   | (101,219   | )
|Cash paid for intangible
      assets                  |   |                  |   |   | (322,998   | )
|Total funds from
      (used in) investing activities  |   | (10,865          | ) |   | (424,217   | )
|Financing activities                                   |   |                  |   |   |            |  
|Advances to related
      parties                      |   | (251             | ) |   | -          |  
|Advances
      from related parties                    |   | 455,259          |   |   | 36,991     |  
|Cash received from short
      term loan               |   | 232,430          |   |   | 48,644     |  
|Cash paid for short term
      loan                    |   |                  |   |   | (1,062     | )
|Total funds from
      (used in) financing activities  |   | 687,438          |   |   | 84,573     |  
|Cash, increase during the year                         | $ | 80,351           |   | $ | (1,187,170 | )
|Foreign exchange                                       |   | (38,082          | ) |   | (7,511     | )
|Cash, beginning of the year                            |   | 29,198           |   |   | 1,733,580  |  
|Cash, end of
      the year                            |   | 71,467           |   |   | 538,899    |  
|                                                       |   |                  |   |   |            |  
|Supplementary cash flow information                    |   |                  |   |   |            |  
|Income
      taxes (refunded) paid                     |   | -                |   |   |            |  
|Cash paid for
      interest                           |   | 107,363          |   |   | 93,838     |  
|Non
      cash financing and investing transactions:   |   |                  |   |   |            |  
|Shares issued for accrued wage benefits                |   |                  |   |   |            |  
|Stock Based Compensation                               |   |                  |   |   |            |  
|Other Comprehensive Income                             |   | (38,082          | ) |   | (7,511     | )

The Accompanying Notes are an Integral Part of the Consolidated
Financial Statements

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|***Note
      1.*** | ORGANIZATION AND NATURE OF
      BUSINESS
|------------------- | -----------------------------------------

Organization

HENDRX Corp. (formerly StarSoft Inc.)
(the Company) was incorporated under the laws of the State of Nevada on May 4,
1998 (Inception Date) for the purpose of promoting and carrying on any lawful
business for which a corporation may be incorporated under the laws of the State
of Nevada. The Company operated from May 4, 1998 through approximately October
31, 2000 developing and marketing computer software. The Company had also
planned to offer consulting services for software developers but that aspect of
the Company business never materialized. Since October 31, 2000, the Company
ceased the aforementioned operations and was in the development stage until
December 16, 2004, when it acquired 100% of the issued shares of Eastway Global
Investment Limited, which included the latter companys wholly-owned operating
subsidiary, Fujian Yuxin Electronic Equipment Co., Ltd.

Organization and Nature of Business
of the Wholly Owned Operating Subsidiary

Fujian Yuxin Electronic Equipment Co.,
Ltd. (YuXin) was incorporated under the laws of Peoples Republic of China on
February 18, 1993.

The principal business of YuXin is to
manufacture and distribute water dispenser systems. YuXin owns patents of
atmospheric water generation in China and utilizes patents under license that
are registered in the United States. Its head office and plant facilities are
located in Ron Qiao Economic Development Zone, Fuqing City, Fujian Province,
P.R. China.

Going Concern

These consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
in the United States of America applicable to a going concern which assume that
the Company will realize its assets and discharge its liabilities in the normal
course of business. The Company has a working capital deficiency of $1,912,254
at June 30, 2007 and a net loss of $864,365 for the quarter then ended. The
Company might not have sufficient work capital for the next twelve months and is
dependent on financing to continue operation. These factors create substantial
doubt as to the ability of the Company to continue as a going concern.
Realization values may be substantially different from the carrying values as
shown in these financial statements should the Company be unable to continue as
a going concern. Management is in the process of identifying sources for
additional financing to fund the ongoing development of the Companys
business.

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|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES
|------- | ------------------------------------------------

Principles of consolidation

The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant inter-company transactions and balances have been
eliminated on consolidation.

Basis of presentation

These financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States (USGAAP).

Accounting Method

The Company financial statements are
prepared using the accrual method of accounting. Property, Plant and Equipment
assets are stated at cost. Depreciation and amortization uses the straight-line
method for financial reporting purposes and accelerated methods for income tax
purposes.

Use of estimates

The preparation of financial statements
in conformity with USGAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

Concentration of credit
risk

Financial instruments that potentially
subject the Company to a significant concentration of credit risk consist
primarily of cash that is not collateralized and accounts receivable that are
unsecured. The Company limits its exposure to credit loss by placing its cash
with high credit quality financial institutions.

Cash and cash
equivalents

Cash consists of cash on deposit with
the Companys banks.

.

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|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|------- | ---------------------------------------------------------

Inventories

Inventories consist of the manufacture
of finished goods, raw materials used in production and work-in-process, and are
stated at the weighted average method, on a first-in, first-out (FIFO) basis.

Income taxes

Provisions for income taxes are based
on taxes payable or refundable for the current year and deferred taxes on
temporary differences between the amount of taxable income and pretax financial
income and between the tax bases of assets and liabilities and their reported
amounts in the financial statements. Deferred tax assets and liabilities are
included in the financial statement at currently enacted income tax rates
applicable to the period in which the deferred tax assets and liabilities are
expected to be realized or settled as prescribed in FASB Statement No. 109,
Accounting for Income Taxes. As changes in tax laws or rates are enacted,
deferred tax assets and liabilities are adjusted through the provision for
income taxes.

Compensated absences

Employees of the corporation are
entitled to paid vacations, sick days and other time off depending on job
classification, length of service and other factors and these costs are accrued
on a monthly basis.

Stock based compensation

Effective January 1, 2005, the Company
adopted revised SFAS No.123(R), Share-Based Payment which replaces SFAS No.123
Accounting for Stock-Based Compensation and supersedes APB Opinion No.25,
Accounting for Stock Issued to Employees. This statement, which requires the
cost of all share-based payment transactions be recognized in the financial
statements, establishes fair value as the measurement objective and requires
entities to apply a fair-value-based measurement method in accounting for
share-based payment transaction. The statement applies to all awards granted,
modified repurchased or cancelled after January 1, 2005, and unvested portion of
previously issued and outstanding awards. Stock-based compensation newly issued
in 2005 is expensed in accordance with the fair value based method of
accounting. The fair value of equity instruments issued to employees is measured
on the date of grant and recognized as compensation expense over the applicable
vesting period. The Company estimates the fair value of stock options using the
Black-Scholes option valuation model.

|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|------- | ---------------------------------------------------------

Earnings per Common Share

The Company adopted Financial
Accounting Standards (SFAS) No. 128. Earnings Per Share which simplifies the
computation of earnings per share requiring the restatement of all prior
periods.

Basic earnings per share are computed
on the basis of the weighted average number of common shares outstanding during
each year.

---

Diluted earnings per share are computed
on the basis of the weighted average number of common shares and dilutive
securities outstanding. Dilutive securities having an anti-dilutive 350,000
stocks on diluted earnings per share are excluded from the calculation.

Long-lived assets

The Company adopts SFAS 144 Accounting
for the impairment or disposal of long-lived assets. The Company recognizes an
impairment loss only if the carrying amount of a long-lived asset is not
recoverable from its expected undiscounted cash flows and measures an impairment
loss as the difference between the carrying amount and fair value of the asset.

Capital assets and
depreciation

Capital assets are recorded at cost.
Depreciation is provided on the straight line method based on the following
estimated useful life, with a 10% residual value. Depreciation expense for the
quarter ended June 30, 2007 and the year ended December 31, 2006 are $38,668 and
$79,917, respectively.

| | Buildings                             | 20 years
| | ------------------------------------- | --------
| | Manufacturing machinery and equipment | 10 years
| | Transportation equipment              | 10 years
| | Electronic equipment                  | 5 years 
| | Leasehold Improvement                 | 10 years
| | Office equipment                      | 5 years 

Revenue recognition

Hendrx generates revenue through the
sale of atmospheric water generation units to wholesale distributors or to
individual consumers. Revenues are recognized only when persuasive evidence for
a sales arrangement exists i.e., delivery of the product has occurred; the
product price is fixed or determinable; and collection of the sale is reasonably
assured.

Account Receivables

Accounts receivable are
uncollateralized customer obligations due under normal trade terms. Management
regularly evaluates the need for an allowance for uncollectible accounts by
taking into consideration factors such as the type of clients; governmental
agencies or credit lines of the client. Management has determined that allowance
for bad debt will be based on a percentage of aged receivables. Allowance for
bad debt at June 30, 2007 is estimated to be $0.

|Note 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      (Contd)
|------- | ---------------------------------------------------------

Asset Retirement Obligations

Legal obligations associated with the
retirement of tangible long-lived assets are recorded as liabilities. The
liabilities are calculated using the net present value of the cash flows
required to settle the obligation. A corresponding amount is capitalized to the
related asset. Asset retirement costs are charged to earnings in a manner
consistent with the depreciation, depletion

---

and amortization of the underlying
asset. The liabilities are subject to accretion over time for changes in the
fair value of the liability through charges to accretion which is included in
cost of sales and operating expenses.

It is possible that the Companys
estimates of its ultimate asset retirement obligations could change as a result
of changes in regulations, the extent of environmental remediation required, the
means of reclamation or cost estimates. Changes in estimate are accounted for
prospectively from the period the estimate is revised.

Research and development

Research and development costs, which
include the cost of materials and services consumed and salaries and wages of
personnel directly engaged in research and development, are expensed as
incurred. The costs incurred for the quarter ended June 30, 2007 and the year
ended December 31, 2006 are $11,640 and $21,536 respectively.

Intangible assets and amortization

Land use rights

The subsidiary, Fujian Yuxin
Electronic Equipment Co., Ltd., entered into an agreement on May 15, 1995 for
land use rights with Fujian Fuqing Land Management Bureau for a 50 year period.
These rights are recorded at the appraised value at the date of acquisition and
amortized over a maximum period of 40 years.

Patents

The Company owns patents of
atmospheric water generation (AWG) registered in the Peoples Republic of
China under number P200304823. The subsidiary utilizes patents under licenses
that are registered in the United States under the numbers 5,106,512,
5,149,466, 5,203,989 and 5,366,705.

The patents are recorded at the
appraised value at the date of acquisition and amortized over 15 years.

|**Note 2.** | SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES (Contd)
|----------- | ---------------------------------------------------------

Impairment of Goodwill

The Company periodically reviews the
carrying value of intangible assets not subject to amortization, including
goodwill, to determine whether impairment may exist. FAS-142, Goodwill and
Other Intangible Assets, requires that goodwill and certain intangible
assets be assessed annually for impairment using fair value measurement
techniques.

Specifically, goodwill impairment is
determined using a two-step process.

The first step of the goodwill
impairment test is used to identify potential impairment by comparing the fair
value of Fujian Yuxin Electronic Equipment Co. Ltd (Yuxin), with its carrying
amount, including goodwill. The estimates of fair value of Yuxin, are determined
using various valuation techniques with the primary technique being a discounted
cash flow analysis.

---

A discounted cash flow analysis
requires one to make various judgmental assumptions including assumptions about
future cash flows, growth rates, and discount rates. The assumptions about
future cash flows and growth rates are based on the Companys budget and
long-term plans. These assumptions require significant judgment and actual
results may differ from assumed and estimated amounts. Discount rate assumptions
are based on an assessment of the risk inherent in the Company. If the carrying
amount of Yuxin exceeds its fair value, the second step of the goodwill
impairment test is performed to measure the amount of impairment loss, if
any.

The second step of the goodwill
impairment test compares the implied fair value of Yuxins goodwill with the
carrying amount of that goodwill. If the carrying amount of Yuxins goodwill
exceeds the implied fair value of that goodwill, an impairment loss is
recognized in an amount equal to that excess. The implied fair value of goodwill
is determined in the same manner as the amount of goodwill recognized in a
business combination.

The Board of Directors of the Company
have considered the above factors and believed the implied fair value of Yuxin
to be in excess of its carrying amount, therefore, the goodwill associated with
Yuxin is considered to not be impaired.

Financial instruments

The companys financial instruments
consist of cash, accounts receivable and current liabilities. Unless otherwise
noted, it is managements opinion that the company is not exposed to significant
interest, currency or credit risks arising from these financial instruments. The
fair value of these financial instruments approximates their carrying
values.

Segmented information

The Companys identifiable assets are
all located in China except cash of $36,769 in Canada and cash of $438 in
Switzerland, cash of $801 in Hong Kong and fixed assets of $2,325 in Canada.
Revenue on a geographical basis is disclosed in Note 12, below.

Foreign currency
translation

The Companys functional and reporting
currency is the United States Dollar. The financial statements of the Company
are translated to United States Dollars in accordance with SFAS No.52 Foreign
Currency Translation. Monetary assets and liabilities denominated in foreign
currencies are translated using the exchange rate prevailing at the balance
sheet date. Gains and losses arising on translation or settlement of foreign
currency denominated transactions or balances are included in the determination
of income. Foreign currency transactions are primarily undertaken in RMB.
Foreign Currency Translation Adjustments are included in Other Comprehensive
Income and disclosed as a separate category of Stockholders Equity.

Recent Accounting
Pronouncements

In September 2006, the Financial
Accounting Standards Board (the FASB) issued Statements of Financial
Accounting Standards (SFAS) No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans  an amendment of FASB Statements
No. 87, 88, 106 and 132(R) (SFAS 158). SFAS 158 requires an employer that
sponsors one or more single-employer defined benefit plans to (a) recognize the
overfunded or underfunded status of a benefit plan in its statement of financial
position, (b) recognize as a component of other comprehensive income, net of
tax, the gains or losses and prior service costs or credits that arise

---

during the period but are not
recognized as components of net periodic benefit cost pursuant to SFAS 87,
Employers Accounting for Pensions, or SFAS 106, Employers
Accounting for Postretirement Benefits Other Than Pensions, (c) measure
defined benefit plan assets and obligations as of the date of the employers
fiscal year-end, and (d) disclose in the notes to financial statements
additional information about certain effects on net periodic benefit cost for
the next fiscal year that arise from delayed recognition of the gains or losses,
prior service costs or credits, and transition asset or obligation. SFAS 158 is
effective for the Corporations fiscal

Recent Accounting Pronouncements
(Contd)

year ending 31 December 2007. This
adoption of this statement is not expected to have a significant effect on
Hendrxs future reported financial position or results of operations.

In September 2006, the FASB issued SFAS
No. 157, Fair Value Measurement (SFAS 157). The Statement
provides guidance for using fair value to measure assets and liabilities. The
Statement also expands disclosures about the extent to which companies measure
assets and liabilities at fair value, the information used to measure fair
value, and the effect of fair value measurement on earnings. This Statement
applies under other accounting pronouncements that require or permit fair value
measurements. This Statement does not expand the use of fair value measurements
in any new circumstances. Under this Statement, fair value refers to the price
that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants in the market in which the
entity transacts. SFAS 157 is effective for the Corporation for fair value
measurements and disclosures made by the Corporation in our fiscal year
beginning on 1 January 2008. We are currently reviewing the impact of this
statement.

In March 2006, the Financial Accounting
Standards Board (the FASB) issued Statements of Financial Accounting
Standards (SFAS) No. 156, Accounting for Servicing of Financial
Assets, which amends SFAS No. 140. SFAS No. 156 may be adopted as early as
1 January 2006, for calendar year-end entities, provided that no interim
financial statements have been issued. Those not choosing to early adopt are
required to apply the provisions as of the beginning of the first fiscal year
that begins after 15 September 2006 (e.g. 1 January 2007, for calendar year-end
entities). The intention of the new statement is to simplify accounting for
separately recognized servicing assets and liabilities, such as those common
with mortgage securitization activities, as well as to simplify efforts to
obtain hedge-like accounting. Specifically, the FASB said SFAS No. 156 permits a
service using derivative financial instruments to report both the derivative
financial instrument and related servicing asset or liability by using a
consistent measurement attribute, or fair value. The adoption of SFAS No. 156 is
not expected to have a material impact on our financial position, results of
operations or cash flows.

In February 2006, the FASB issued SFAS
No. 155, Accounting for Certain Hybrid Financial Instruments, an amendment
of FASB Statements No. 133 and 140.This statement permits fair value
re-measurement for any hybrid financial instrument that contains an embedded
derivative that otherwise would require bifurcation. It establishes a
requirement to evaluate interests in securities financial assets to identify
interests that are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring bifurcation. In
addition, SFAS 155 clarifies which interest only strips and principal only
strips are not subject to the requirements Statement 133. It also clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives. SFAS 155 amends Statement 140 to eliminate the prohibition on a
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. This

---

Statement is effective for all
financial instruments acquired or issued after the beginning of an entitys
first fiscal year that begins after September 15, 2006. The adoption of this
standard is not expected to have a material effect on the Hendrxs results of
operations or financial position.

|**Note 3.** | ACQUISITION OF EASTWAY GLOBAL INVESTMENTS LIMITED AND
      ITS **WHOLLY-OWNED OPERATING SUBSIDIARY FUJIAN YUXIN ELECTRONIC
      EQUIPMENT** **CO., LTD.**
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

On December 16, 2004, the Company
acquired from Mr. Hendrik Tjandra, Eastway Global Investment Limited, a
corporation formed under the laws of the British Virgin Islands, a Holding
Company the latter of which owns a Chinese Operating company named FuJian
Yuxin Electronic Equipment Co., Ltd.

The Operating Company carries on the
business of the design, manufactuer, and sale of atmospheric water generators
from a facility on lands leased by the operating company located in Fuqing,
Fujian, China.

The Holding Company was the owner of
all of its registered capital of the Operating company, and Mr. Hendrik Tjandra
(Hendrik) was the owner of all the issued and outstanding shares in the
capital of the Holding Company.

David Tjahjadi, the son of Hendrik
Tjandra, is also a principal to the agreement as he is an officer and director
of the Operating Company.

Hendrik Tjandra and David Tjahjadi are
named the Principals in the agreement.

Terms and conditions of this agreement
are as follows:

| | (a) | a deposit of $300,000 deposited with the solicitors of
      Kirin Capital pursuant to a letter Agreement dated October 29, 2004
      between Kirin Capital Corp., the Principals and the Operating
    Company.                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (b) | The purchase price for the shares is $3,500,000 cash plus
      the market value of purchase price shares, in (d); below, and in future
      earn-out shares as computed in (e), below.                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (c) | The cash purchase price of $3,5000,000, has been
    paid.                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (d) | the issuance on closing of 12,720,000 common shares to
      Hendrik equal to 40% of the issued and outstanding shares of HENDRX Corp.,
      which have been issued, are held in escrow as collateral for the
      acquisition to insure various terms are ultimately completed before
      release to Mr. Tjandra.                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (e) | an earn-out bonus to the Principals, in equal shares, the
      number of shares required to bring the principals aggregate holding of
      shares in the capital of HENDRX Corp. up to 51% within 30 days after the
      release and publication of HENDRX Corp.s audited financial statements for
      the first fiscal year in which the gross revenue, on a consolidated basis,
      exceeds $15,000,000 related to atmospheric water
  generators.

---

|Note 3. | ACQUISITION OF EASTWAY GLOBAL INVESTMENTS LIMITED AND
      ITS **WHOLLY-OWNED OPERATING SUBSIDIARY FUJIAN YUXIN
      ELECTRONIC** **EQUIPMENT CO., LTD. (Contd)**
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (f) | The payment dates in (c)(iii) and (iv), above, shall have
      an additional Grace Period of 60 days to make any such payment. Interest
      shall accrue during the Grace Period for Hendriks benefit on any unpaid
      amount at the rate of 18% per annum, compounded monthly.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                         
| | (g) | A non-compete agreement whereby the Principals agree not
      to compete with the Businesses carried on by HENDRX Corp. and /or the
      Operating company or any affiliates or related companies, anywhere in the
      world, for a period of 2 years from the closing date.        
| |     |                                                                                                                                                                                                                                                                                         
| | (h) | Funding commitment by HENDRX Corp. as follows:                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                         
| |     | (i)                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                         
| |     | (ii)                                                                                                                                                                                                                                                                                    

The market price of 12,720,000 common
shares issued for this acquisition was $2.68 per common share for total stock
consideration of $34,090,200 plus cash payments of $3,500,000 on the terms, as
outlined above, for total consideration of $37,590,200.

---

|Note 3. | ACQUISITION OF EASTWAY GLOBAL INVESTMENTS LIMITED AND
      ITS **WHOLLY-OWNED OPERATING SUBSIDIARY FUJIAN YUXIN
      ELECTRONIC** **EQUIPMENT CO., LTD. (Contd)**
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

There is goodwill on the acquisition,
computed as follows:

| | June 30, 2007                         |   |            | 
| | ------------------------------------- | - | ---------- | 
| | Assets Acquired                       |   |            | 
| | C urrent Assets                       | $ | 1,973,259  | 
| | Fixed Assets                          |   | 5,071,568  | 
| | Intangible Assets                     |   | 3,069,352  | 
| | Total Assets                          |   | 10,114,179 | 
| | Liabilities Assumed                   |   |            | 
| | C urrent Liabilities                  |   | 4,378,116  | 
| | N et Equity                           |   | 5,736,063  | 
| | C
      onsideration issued, as above |   | 37,590,200 | 
| | Goodwill, on
      acquisition        | $ | 31,854,137 | 

The acquisition agreement was signed on
December 16, 2004. Net profit from the operations of the subsidiary of Fujian
Yuxin Electronic Equipment Co., Ltd. is included in these financial statements
from the date of acquisition.

|Note 4. | INVENTORIES
|------- | -----------

| | June 30, 2007      |   | June 30,  |  |   | December 31, | 
| | ------------------ | - | --------- |  | - | ------------ | 
| |                    |   | 2007      |  |   | 2006         | 
| | Finished goods     | $ | 349,441   |  | $ | 379,674      | 
| | Raw materials      |   | 929,988   |  |   | 815,442      | 
| | Working-in-process |   | 732,004   |  |   | 697,390      | 
| | Total              | $ | 2,011,433 |  | $ | 1,892,506    | 

|**Note
    5.** | INTANGIBLE ASSETS AND ACCUMULATED
      AMORTIZATION
|--------------- | ----------------------------------------------------

| | June 30, 2007   |   |           |  |   | Accumulated  |  |   | Net Book  | 
| | --------------- | - | --------- |  | - | ------------ |  | - | --------- | 
| |                 |   | Cost      |  |   | Amortization |  |   | Figures   | 
| | Land use rights | $ | 1,431,593 |  | $ | 19,973       |  | $ | 1,411,620 | 
| | Patents         |   | 1,259,899 |  |   | 73,772       |  |   | 1,186,127 | 
| | Total           | $ | 2,691,492 |  | $ | 93,745       |  | $ | 2,597,747 | 

| | December 31, 2006 |   |           |  |   | Accumulated  |  |   | Net Book  | 
| | ----------------- | - | --------- |  | - | ------------ |  | - | --------- | 
| |                   |   | Cost      |  |   | Amortization |  |   | Figures   | 
| | Land use rights   | $ | 1,788,410 |  | $ | 342,076      |  | $ | 1,446,334 | 
| | Patents           |   | 2,060,759 |  |   | 822,666      |  |   | 1,238,093 | 
| | Total             | $ | 3,849,169 |  | $ | 1,164,742    |  | $ | 2,684,427 | 

---

Amortization expenses for the quarter
ended June 30, 2007 and the year ended December 31, 2006 are $93,745 and
$177,787, respectively.

|Note 6. | PROPERTY, PLANT AND EQUIPMENT
|------- | -----------------------------

| | June 30, 2007                         |   |           |  |   | Accumulated  |  |   |           | 
| | ------------------------------------- | - | --------- |  | - | ------------ |  | - | --------- | 
| |                                       |   | Cost      |  |   | Depreciation |  |   | Net       | 
| | Buildings                             | $ | 2,961,322 |  | $ | 766,194      |  | $ | 2,195,128 | 
| | Manufacturing machinery and equipment |   | 4,558,534 |  |   | 1,438,999    |  |   | 3,119,535 | 
| | Transportation equipment              |   | 310,721   |  |   | 125,042      |  |   | 185,679   | 
| | Electronic equipment                  |   | 90,529    |  |   | 75,647       |  |   | 14,882    | 
| | Leasehold improvement                 |   | 18,377    |  |   | 3,590        |  |   | 14,787    | 
| | O ffice equipment                     |   | 79,185    |  |   | 57,270       |  |   | 21,915    | 
| | Construction in progress              |   | 684       |  |   | -            |  |   | 684       | 
| | Total                                 | $ | 8,019,352 |  | $ | 2,466,742    |  | $ | 5,552,610 | 

| | December 31, 2006                     |   |           |  |   | Accumulated  |  |   |           | 
| | ------------------------------------- | - | --------- |  | - | ------------ |  | - | --------- | 
| |                                       |   | Cost      |  |   | Depreciation |  |   | Net       | 
| | Buildings                             | $ | 3,015,392 |  | $ | 700,834      |  | $ | 2,314,558 | 
| | Manufacturing machinery and equipment |   | 4,413,280 |  |   | 1,232,346    |  |   | 3,180,934 | 
| | Transportation equipment              |   | 302,267   |  |   | 113,548      |  |   | 188,719   | 
| | Electronic equipment                  |   | 96,449    |  |   | 74,884       |  |   | 21,565    | 
| | Leasehold improvement                 |   | 18,377    |  |   | 2,714        |  |   | 15,662    | 
| | Office equipment                      |   | 76,336    |  |   | 54,028       |  |   | 22,309    | 
| | Construction in progress              |   | 82,714    |  |   | -            |  |   | 82,714    | 
| | Total                                 | $ | 8,004,814 |  | $ | 2,178,354    |  | $ | 5,826,460 | 

Depreciation expenses for the quarter
ended June 30, 2007 the years ended December 31, 2006 are $38,668 and $79,917,
respectively.

---

|Note 7. | COMMON STOCK BASED COMPENSATION
|------- | -------------------------------

Authorized

350,000,000 voting common shares at par
value of $0.001 per share

Net Loss Per Share

Basic and diluted weighted average
numbers of shares outstanding for the year ended December 31, 2006 are as
follows:

| |                                     |   | June 30,   |  |   | December 31 | 
| | ----------------------------------- | - | ---------- |  | - | ----------- | 
| |                                     |   | 2007       |  |   | 2006        | 
| | Numerator-Basic / Diluted           |   |            |  |   |             | 
| | Net loss available for common stock | $ | 864,365    |  | $ | 436,145     | 
| | Weighted average number of shares   |   |            |  |   |             | 
| | (after forward split)               |   |            |  |   |             | 
| | Basic                               |   | 37,238,067 |  |   | 37,238,067  | 
| | Diluted                             |   | 37,238,067 |  |   | 37,238,067  | 
| | Net Profit (Loss) per share         |   |            |  |   |             | 
| | Basic                               | $ | 0.02       |  | $ | 0.02        | 
| | Diluted                             | $ | 0.02       |  | $ | 0.02        | 

350,000 Stock Options outstanding at
June 30, 2007 are excluded from fully diluted Net Profit (Loss) per share due to
anti-dilution.

Stock Options / Stock Based
Compensation

Stock options outstanding at June 30,
2007:

| | Options Outstanding |                    |         
| | ------------------- | ------------------ | --------
| |                     | Weighted-          |         
| | Number              | Average            |         
| | Outstanding at      | Remaining          |         
| | June 30             | Contractual        | Exercise
| | 2007                | Life
      (years) | Price   
| | 350,000             | 3                  | $1.50   

The fair value of these options was
determined using the Black-Scholes option pricing model, recognizing forfeitures
as they occur, using the following assumptions:

| | Options outstanding     |   | 350,000 | 
| | ----------------------- | - | ------- | 
| | Stock price             | $ | 5.80    | 
| | Risk free interest rate |   | 4.50%   | 
| | Expected volatility     |   | 745%    | 
| | Expected dividend yield | $ | 0       | 

---

The Black-Scholes option valuation
model was developed for use in estimating the fair value of traded options that
are fully transferable and have no vesting restrictions. The Companys stock
options are not transferable and cannot be traded. The Black-Scholes model also
requires an estimate of expected volatility. The Company uses historical
volatility rates of the Company to arrive at an estimate of expected volatility.
Changes in the subjective input assumptions can materially affect the fair value
estimate, and therefore do not necessarily provide a reliable measure of the
fair value of the Companys stock options.

Stock based compensation expensed for
the year ended December 31, 2005 was $1,764,000 and is also disclosed as
contributed surplus. There were no options granted by June 30, 2007.

|Note 8. | ACCOUNTS PAYABLE
|------- | ----------------

| |                          |   | 30-Jun    |  |   | December 31, | 
| | ------------------------ | - | --------- |  | - | ------------ | 
| |                          |   | 2007      |  |   | 2006         | 
| | Accounts payable - trade | $ | 1,042,127 |  | $ | 887,609      | 
| | Other payables           |   | 145,840   |  |   | 82,026       | 
| | Total                    | $ | 1,187,967 |  | $ | 969,635      | 

|Note 9. | RELATED PARTY TRANSACTIONS
|------- | --------------------------

| | (a) | During the six months ended June 30, 2007,
      sales to related parties are as follows:
| | --- | -----------------------------------------------------------------------------------------

| |                 |   | Six Months Ended |  |   | Six Months Ended | 
| | --------------- | - | ---------------- |  | - | ---------------- | 
| |                 |   | June 31,         |  |   | June 31,         | 
| | Related Parties |   | 2007             |  |   | 2006             | 
| | Hendrik Tjandra | $ | 258              |  | $ | 4,249            | 
| | Total           | $ | 258              |  | $ | 4,249            | 

| | (b) | During the six months ended June 30, 2007, purchases from
      related parties are as follows:
| | --- | -----------------------------------------------------------------------------------------------

| |                                                   |   | Six Months Ended |  |   | Six Months Ended | 
| | ------------------------------------------------- | - | ---------------- |  | - | ---------------- | 
| |                                                   |   | June 30,         |  |   | June 30,         | 
| | Related Parties                                   |   | 2007             |  |   | 2006             | 
| | Fuqing Huanyu plastic products Co., Ltd.          |   |                  |  |   |                  | 
| | controlled by sister of
      Mr. Hendrik Tjandra | $ | 11,263           |  | $ | -                | 
| | Mr. Hendrik
      Tjandra                         |   | -                |  |   |                  | 
| | Total                                             | $ | 11,263           |  | $ | -                | 

| | (c) | During the six months ended June 30, 2007, the Company
      paid total consulting services of $115,587 to officers and
    directors.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                       
| | (d) | Balances due from related parties, are as
  follows:                                                                                  

---

| |                                                  |   | Three Months Ended |  |   | Year Ended | 
| | ------------------------------------------------ | - | ------------------ |  | - | ---------- | 
| |                                                  |   | June 30            |  |   | June 30,   | 
| |                                                  |   | 2007               |  |   | 2006       | 
| | Fujian Tienyu Steel Products Co.,Ltd.            |   |                    |  |   |            | 
| | owned by Mr Hendrik Tjandra                      |   | -                  |  |   | -          | 
| | Fuzhou sales Department                          | $ | 1,391              |  | $ | 1,316      | 
| | Fuqing Yuongxian Pringting Co.,Ltd               |   | 5,214              |  |   | 5,037      | 
| | controlled by sister of
      Mr Hendrik Tjandra |   |                    |  |   |            | 
| | Total                                            | $ | 6,604              |  | $ | 6,353      | 

| | (e) | Balances due to related parties, are as follows
| | --- | -----------------------------------------------

| |                                                       |   | June 30 |  |   | December 31, | 
| | ----------------------------------------------------- | - | ------- |  | - | ------------ | 
| |                                                       |   | 2007    |  |   | 2006         | 
| | Fujian Tiansheng
      Agricultrual Stock Holding Co. | $ | 335,325 |  | $ | 155,266      | 
| | Controlled
      by brother of Mr Hendrik Tjandra     |   |         |  |   |              | 
| | PT.Galakst Perkasa                                    |   | 10,939  |  |   | 30,430       | 
| | Controlled
      by Mr Hendrik Tjandra                |   |         |  |   |              | 
| | Fuqing Huanyu Plastic
      Products. Co.Ltd          |   | 24,018  |  |   | 25,683       | 
| | Controlled
      by sister of Mr Hendrik Tjandra      |   |         |  |   |              | 
| | Fujian Tiansyu Steel
      Products Co., Ltd          |   | 199,356 |  |   |              | 
| | Controlled
      by brother of Mr. Hendrik Tjandra    |   |         |  |   |              | 
| | George Solymar                                        |   | 167,001 |  |   | 70,000       | 
| | CEO of the Company                                    |   |         |  |   |              | 
| | Total                                                 | $ | 736,639 |  | $ | 281,380      | 

---

|Note 10. | SHORT TERM BANK LOANS/GUARANTEES
|-------- | --------------------------------

Short-term loans are borrowing from
banks. The terms of these short term loans are summarized as follows:

| |                             |  | Interest Rate     |  |   | June 31   |  |   | December 31 | 
| | --------------------------- |  | ----------------- |  | - | --------- |  | - | ----------- | 
| |                             |  | (Per Year)        |  |   | 2007      |  |   | 2006        | 
| | Agricultural Bank of China, |  |                   |  |   |           |  |   |             | 
| | Fuqing Branch               |  | 5.55% to 7.344%   |  | $ | 2,196,051 |  | $ | 2,139,627   | 
| | XingYie Bank,               |  |                   |  |   |           |  |   |             | 
| | Fuqing Branch               |  | 7.371 % to 8.541% |  |   | 260,370   |  |   | 384,364     | 
| | First Capital Invest Corp   |  | 7.00%             |  |   | 300,000   |  |   |             | 
| | Total                       |  |                   |  | $ | 2,756,421 |  | $ | 2,523,991   | 

These short-term loans are secured by
the Companys assets and guaranteed by Fujian Tianyu Steel Products Co., Ltd.
owned by Mr Hendrik Tjandra. Bank interests for the six months ended June 30
2007 and the years ended December 31, 2006 are $107,363 and $183,365,
respectively.

The Company also provides guarantees of
bank loans of, Fujian Tianyu Steel Products Co., Ltd., owned by Mr Hendrik
Tjandra, in the amount of $6,127,900 (RMB46,600,000) at June 30, 2007 and
December 31, 2006 and $4,292,020 (RMB33,500,000).

Bank guarantees and bank loans of
Fujian Tianyu Steel Products Co., Ltd., as borrower from the banks, are below:

| |                         |  | Bank Loan Payable |  |   | Maximum Amount  | 
| | ----------------------- |  | ----------------- |  | - | --------------- | 
| |                         |  | Balance at        |  |   | of Guarantee at | 
| |                         |  | June 30, 2007     |  |   | June 30, 2007   | 
| |                         |  | RMB               |  |   | US$             | 
| | Fuqing Agriculture Bank |  | 46,000,000        |  | $ | 5,957,000       | 
| | Communication Bank      |  | 0                 |  |   | 0               | 
| | TOTAL                   |  | 46,000,000        |  | $ | 5,957,000       | 

These loans are secured by general
security on all of the assets of Fujian Tianyu Steel Products Co., Ltd.

| |                         |  | Bank Loan Payable |  |   | Maximum Amount    | 
| | ----------------------- |  | ----------------- |  | - | ----------------- | 
| |                         |  | Balance at        |  |   | of Guarantee at   | 
| |                         |  | December 31, 2006 |  |   | December 31, 2006 | 
| |                         |  | RMB               |  |   | US$               | 
| | Fuqing Agriculture Bank |  | 23,500,000        |  | $ | 3,010,820         | 
| | Communication Bank      |  | 10,000,000        |  |   | 1,281,200         | 
| | TOTAL                   |  | 33,500,000        |  | $ | 4,292,020         | 

These loans are secured by general
security on all of the assets of Fujian Tianyu Steel Products Co., Ltd.

---

|**Note 11.** | PENSION AND EMPLOYMENT LIABILITIES
|------------ | ----------------------------------

The Company does not have any
liabilities as at June 30, 2007, for pension, post-employment benefits or
post-retirement benefits. The Company does not have a pension plan.

|**Note 12.** | GEOGRAPHIC INFORMATION
|------------ | ----------------------

| | (a) | Revenue from customers
| | --- | ----------------------

| |               |  | Six Months Ended |  |  | Six Months Ended | 
| | ------------- |  | ---------------- |  |  | ---------------- | 
| |               |  | June 30, 2007    |  |  | June 30, 2006    | 
| | Countries     |  | **$**            |  |  | %                | 
| | China         |  | 134,683          |  |  | 13.15%           | 
| | Israel        |  | 268,673          |  |  | 26.24%           | 
| | Lebanon       |  | 115,513          |  |  | 11.28%           | 
| | Saudi Arabia  |  | 25,855           |  |  | 2.52%            | 
| | United States |  | 90,943           |  |  | 8.88%            | 
| | Malaysia      |  | 120,722          |  |  | 11.79%           | 
| | Turkey        |  | 68,302           |  |  | 6.67%            | 
| | Austrilia     |  | 66,884           |  |  | 6.53%            | 
| | France        |  | 47,124           |  |  | 4.60%            | 
| | Indonisia     |  | 18,359           |  |  | 1.79%            | 
| | Spain         |  | 60,912           |  |  | 5.95%            | 
| | United Arab   |  |                  |  |  |                  | 
| | Others        |  | 6,003            |  |  | 0.59%            | 
| | Total         |  | 1,023,971        |  |  | 100.00%          | 

|**Note 13.** | PATENTS
|------------ | -------

In 2003, Mr. Hendrik Tjandra
transferred his patents of atmospheric water generation (AWG) to the
wholly-owned subsidiary, Fujian Yuxin Electronic Equipment Co., Ltd. These
patents are registered in the Peoples Republic of China under the number
P200304823. The subsidiary utilizes patents under licenses that are registered
in the United States under the numbers 5,106,512, 5,149,466, 5,203,989 and
5,366,705.

Based on the appraisal report dated May
20, 2003 by Fujian Huayi Assets Appraisal Co., Ltd., these patents are valued at
$2,068,390 (RMB 17,090,000 Yuan) and have been amortized by $324,935 to December
31, 2005.

On December 15, 2006, the Company
received an independent appraisal of the patents. The appraiser gave his opinion
of the value based on a 5 year projected cashflow analysis, and determined the
value to be $1,238,093 (RMB 10,400,000). The net book value was higher than the
fair value at December 31, 2006 and was therefore impaired. The company expensed
$358,350 as an impairment of the patent to bring the book value in line with the
appraisal value.

---

|**Note 13.** | PATENTS (Contd)
|------------ | ----------------

The following table represents the
total estimated amortization of the Patents for the five succeeding years:

| | For the Year Ending December 31 |   | Estimated Amortization Expense | 
| | ------------------------------- | - | ------------------------------ | 
| | 2007                            | $ | 141,118                        | 
| | 2008                            | $ | 141,118                        | 
| | 2009                            | $ | 141,118                        | 
| | 2010                            | $ | 141,118                        | 
| | 2011                            | $ | 141,118                        | 

|**Note 14.** | TAXES
|------------ | -----

The Company has incurred an operating
loss in the year ended December 31, 2006 that may be available to offset future
taxable income. The Company has adopted Financial Accounting Standards No. 109,
which requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between financial statements
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. Temporary differences
between taxable income reported for financial reporting purposes and income tax
purposes are insignificant.

Components of deferred tax assets as of
June 30, 2007 and 2006 respectively are as follows:

| |                                  |   |               |  |   | As of       | 
| | -------------------------------- | - | ------------- |  | - | ----------- | 
| |                                  |   | June
      30 |  |   | December 31 | 
| |                                  |   | 2007          |  |   | 2006        | 
| | Net operating loss carry forward | $ | 0             |  | $ | 0           | 
| | Valuation allowance              | $ | 0             |  | $ | 0           | 
| | Net deferred tax asset           | $ | 0             |  | $ | 0           | 

The components of current income tax
expense as of June 30, 2007 and 2006 respectively are as follows:

| |                               |   | As of December 31 | 
| | ----------------------------- | - | ----------------- | 
| |                               |   | June 30           | 
| |                               |   | 2007              | 
| | Current federal tax expense   | $ | -                 | 
| | Current state tax expense     | $ | -                 | 
| | Change in NOL benefits        | $ |                   | 
| | Change in valuation allowance | $ |                   | 
| | Income tax expense            | $ | -                 | 

---

The Company has operations in China and
Canada, neither of which allow for carry forward of tax losses.

|**Note
    15.** | SALES DISTRIBUTORS
|---------------- | ------------------

The Company has entered into agreements
with a number of entities that will act as sales distributors for the Company.
These parties are either independent third parties or related parties. Terms and
conditions with these sales distributors may vary, but they essentially require
the sales distributor to commit to buy finished products from the Company, to
sell these products to their customers and to provide technical support to their
customers as ongoing follow-up of sales.

|Note 16 | OTHER RECEIVABLE / LONG TERM LOAN
      RECEIVABLE
|------- | --------------------------------------------------

As atJune 30, 2007, a
subsidiary of the Company has a loan of RMB850,000 or US$ 111,775 (as at
December 31, 2004, the loan was RMB950,000 or US$ 114,952) receivable from
Hengxing Trading Company. The loan was arranged in August 2002 by the subsidiary
in China for business development purposes. This amount is unsecured, yields no
interest, with no specific terms of repayment. This loan has been reclassified
as a long-term loan as it has been outstanding since 2002. Management expects
this loan to be paid in full and accordingly; no allowance for doubtful accounts
has been recorded.

|Note 17 | COMMITMENTS AND CONTINGENTS
|------- | ---------------------------

Our principal executive offices are
located at Suite #2610-1066 West Hastings Street in Vancouver, British Columbia,
Canada. The office space is comprised of approximately 1000 square feet for
which we pay $1,528 per month on a two months lease.

Worldwide Water, LLC

Legal proceedings were initiated on
January 18, 2006 by Worldwide Water, LLC (WWL) against a number of defendants,
including Hendrx, in the Superior Court for the County of Los Angeles, State of
California, case no SC088178 for contractual fraud and patent infringement. The
complaint alleges that an agreement between WWL and AirWater Corporation
(AirWater) was contravened when AirWater contracted with Fujian Yuxin
Electronic Equipment Co. Ltd., a wholly owned subsidiary of Hendrx, to
manufacture atmospheric water generators (AWGs), on an original equipment
manufacturer (OEM) basis, that allegedly infringe WWLs patents. WWLs suit
seeks damages of $1,000,000 from the defendants, including Hendrx, in addition
to accrued interest and costs. Hendrx did not enter an appearance in this
action. On March 17, 2006 a default judgment was entered against Hendrx. As at
the date of this filing this judgment has not been set aside. Hendrx is
attempting to retain and instruct counsel to have the default judgment vacated.
Hendrx denies that it is culpable. Hendrx cannot give any assurance that it will
be successful in its opposition to the plaintiffs claim and may be compelled to
pay all or part of any judgment against it. Even if Hendrx is a successful in
having the default judgment set aside or the case reopened it will face the cost
of litigation and may ultimately be unsuccessful. The Company has recorded a
$1,000,000 contingent liability to account for the judgment.

---

Seymour Water, Inc.

Legal proceedings were initiated on
June 2, 2006 by Seymour Water, Inc. (Seymour) against Hendrx, in the Supreme
Court of British Columbia, Vancouver Registry, Action No. S063600 for an alleged
breach of contract purportedly instigated by Yuxin. The complaint alleges that
an agreement between Seymour and Yuxin was contravened when Yuxin delivered
equipment to Seymour that was unfit for the purpose of intended use. Seymours
suit seeks damages of approximately $100,000 from Hendrx in addition to accrued
interest and costs. Hendrx denies any culpability or liability in this matter
and has filed pleadings and motions in response to the complaint that it
believes will ultimately cause Hendrx to succeed in defending this position.

H2O Liquidair of Florida, LLC

Legal proceedings were initiated, and
the Company was served on December 28, 2006 by H2OLiquidair of Florida, LLC, a
Florida LLC, (H2L) against a number of defendants, including Fujian Yuxin
Electronic Equipment Co., Ltd (Yuxin) a wholly owned subsidiary of Hendrix and
Hendrx Corp. in the United States District Court for the Southern District of
Florida, Miami Division, Case No. 06-cv-22591-Seitz, for breach of contract,
defective products and interfering by competing in its territory. The complaint
alleges that several agreements entered between H2L and Yuxin during the years
2001 and 2002 to manufacture atmospheric water generators, on an original
equipment manufacturer basis, that allegedly failed to perform when delivered in
2002. H2Ls suit seeks monetary damages from the defendants, including Hendrx,
in addition to accrued interest and costs.. Hendrx did not enter an appearance
in this action. On January 23, 2007 a default judgment was entered against
Hendrx and its subsidiary Fujian Yuxin Electronic Equipment Co., Ltd. As at the
date of this filing this judgment has been set aside. Yuxin has been removed as
party and Hendrx is pressing to have the action dismissed as against it. Hendrx
denies any culpability or liability in this matter. Hendrx cannot give any
assurance that it will be successful in its opposition to the plaintiffs claim
and may be compelled to pay all or part of any judgment against it. Even if
Hendrx is successful it will face the cost of litigation and may ultimately be
unsuccessful. The claim has not been quantified; therefore, the potential
liability is not estimable. Management believes the amount recorded for
contingencies is adequate for all potential claims.

The Company provides a one-year product
warrantee for service on our product sales. The companys policy regarding
product warrantees is to estimate the liability associated with costs to repair
or replace units received on product warrantees. The companies past history of
costs associated with warrantee repairs or replacements have not been material.
In the future as sales increase, the warrantee liability will become material
and the company will record the proper liability.

During the 2005 and 2006 year,
Mr.Tjandra authorized various lending and borrowing transaction with companies
and individuals who were related to him. These transactions were done without
the approval of the board of directors of Hendrx, Corp. These financial
statements do not account for any potential contingencies that may arise from
these transactions. Also the shares being held in escrow in the name of Mr.
Tjandra from the acquisition of the Fujian Yuxin operation pending various
actions to be performed by Mr. Tjandra, may be compromised due to
non-performance. If these shares are returned to treasury, the recorded value of
goodwill could be virtually eliminated.

---

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS
|------- | ------------------------------------

You should read the following discussion and analysis of our
financial condition and results of operations together with our financial
statements and related notes appearing elsewhere in this Form 10-QSB. This
discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. Our actual results may differ materially from
those anticipated in these forward-looking statements.

Overview

References in this Quarterly Report Form 10-QSB to "Hendrx",
"the Company", "we", "us", and "our" referred to Hendrx Corp., a Nevada
corporation.

Description of Business

Hendrx is engaged in the research and development, manufacture,
marketing and world wide distribution of water generation, filtration,
ionization, desalinization, and purification devices. Our main product lines
include Atmospheric Water Generation (AWG) units, Alkaline Calcium Ionic Water
Dispensers, and Reverse Osmosis (RO) systems.

Quantitative and Qualitative Disclosures of Various
Risks

To date Hendrx has been unable to generate sufficient cash flow
to expand marketing, and fund necessary research and development. There can be
no assurance that our business strategy will provide sufficient cash flows to
accomplish its objectives growth. Should we be unable to generate sufficient
cash flow from the sale of our products, we will be required to seek financing
from alternative sources such as additional sales of our common stock or
incurring additional debt in order to accomplish our objectives. Hendrx can not
provide assurance that these efforts, will be successful.

Hendrxs business strategy is prone to significant risks and
uncertainties which can have an immediate impact on efforts to increase net cash
flow and deter future prospects of revenue growth. Our financial condition and
results of operations depend primarily on revenue generated from the sale of AWG
units and our ability to control expenses. Hendrx has a limited history of
generating revenue that should not be viewed as an indication of continued
growth and a historical record of incurring losses. Should we fail to
consistently generate revenue and manage expenses to the point where it can
maintain net cash flow, such failure will have an immediate impact on the our
ability to continue business operations.

RESULTS OF OPERATIONS

Hendrxs financial statements are stated in U.S. dollars in
accordance with US GAAP and are consolidated with the financial statements of
Eastway and Yuxin for the periods ended June 30, 2007.

During the period ended June 30, 2007, Hendrx was engaged in
the research and development, manufacturing and marketing of AWG units from
Fujian, China. Hendrx expects that during 2007 we will embark on a comprehensive
marketing plan for the sale of AWG units while focusing on innovation through
research and development.

During the period ended June 30, 2007, Hendrx realized a net
loss of $864,365 from operations.

---

Six month periods ended June 30, 2007 and 2006

Gross Revenue

Revenue for the six month period ended June 30, 2007 was
$1,023,971 as compared to $1,208,008 for the six month period ended June 30,
2006, a decrease of 15%. Revenue in the six month periods is based almost
entirely on the sale of AWG units, which sales have dropped off significantly in
the current period due to product complaints and the return of shipped product.
Product modifications are now being tested to address these complaints. Hendrx
expects to increase gross revenue over the next twelve months as we manufacture
an improved product and focus on the implementation of our marketing plan.

Cost of Goods Sold

Cost of goods sold for the six months period ended June 30,
2007 was $1,041,074 as compared to $1,114,101 for the six month period ended
June 30, 2006, a decrease of 7%. Cost of goods sold can be attributed primarily
to the purchase of components used in the AWG units. The decrease in cost of
goods sold reflects the corresponding decrease in revenue over the periods. The
cost of goods sold remains high as we have not realized maximum production
capacity from our manufacturing facility. This increases our cost for each unit
produced. We expect the cost of goods sold will continue to fluctuate based on
fluctuations in production..

Expenses

Selling expenses for the six month period ended June 30, 2007
were $74,767 as compared to $176,109 for the six month period ended June 30
2006, a decrease of 58%. Hendrx anticipates that selling expenses will increase
over the next nine months as a comprehensive marketing strategy is launched to
increase sales of our AWG units.

General and administrative expenses for the six month period
ended June 30, 2007 were $423,640 as compared to $658,056 for the six month
period ended June 30, 2006, a decrease of 36%. General and administrative
expenses include personnel costs, consulting fees, professional advice,
accounting expenses, auditing fees, public reporting and travel. Hendrxanticipates that general and administrative will decrease in future
periods.

Net Losses

Net losses for the six month period ended June 30,, 2007
decreased to $864,365 from $900,145 for the comparable six month period ended
June 30, 2006, a decrease of 4%. Net losses in the current six month period can
be primarily attributed to general and administrative expenses and the decrease
in revenues. Hendrx expects that net losses will continue to decrease in future
periods in relation to anticipated increases in revenue and decreases in both
our general and administrative costs and the cost of goods sold.

Liquidity and Capital Resources

Cash flow used for operations in the six month period ended
June 30, 2007 was $596,222 as compared to cash flow used for operations of
$847,526 for the six month period ended June 30, 2006. Cash flow used for
operations for the current six month period can be primarily attributed to net
losses. Hendrx expects that a decrease in net losses in future periods will
produce cash flow from operations.

---

Cash flow provided by financing activities for the six month
period ended June 30, 2007 was $687,438, as compared to cash flow provided by
financing of $206,998 for the three month period ended June 30, 2006. Cash flow
provided by financing activities in the current six month period can be
attributed to short term bank loans and advances from related parties. Hendrx
expects to produce additional cash flow from financing activities during 2007.

Cash flow used in investing activities for the six month period
ended June 30, 2007 was $10,865 as compared to the decrease of $424,217 for the
three month period ended June 30, 2006. Cash flow used in investing activities
in the current six month period can be primarily attributed to the purchase of
capital assets.

Capital Deficit

Hendrx had a working capital deficit of $1,912,254 as of June
30, 2007 and has funded its cash needs since inception from revenue in
combination with debt and equity financing provided by banks and other related
and unrelated parties. Hendrx anticipates that cash flow from revenues and
anticipated equity placements and loans will be sufficient to fund operations in
2007. However, there can be no assurance that Hendrx will generate sufficient
cash flows from revenue or debt or equity placements to fund current operations.
Since any earnings, if realized, are anticipated to be reinvested in operations,
cash dividends are not expected to be paid in the foreseeable future.
Commitments for future capital expenditures will be primarily funded by future
equity financings.

Loans

Hendrxs bank loans of $2,756,421 are all guaranteed by Fujian
Tienyu Steel Products Co., Ltd., (Tienyu) a company owned by the former
chairman of the board of directors of Hendrx. In return, Hendrx, through its
subsidiary Yuxin, has guaranteed Tienyus bank loans. Based on the financial
results of Tienyu, Hendrx believes that Tienyu will be able repay its loans on a
consistent basis. Nonetheless, Hendrx intends to reduce these mutual guarantees
gradually over time.

Credit Facility

The Company has a financing arrangement with First Capital
Invest Corp., a Swiss Corporation. Pursuant to the terms of the financing
arrangement First Capital Invest Corp. agreed to provide up to $1 million in
exchange for:

| | 1. | a Convertible, Secured, Revolving Promissory
  Note;           
| | -- | ---------------------------------------------------------------
| | 2. | a Bridge Loan and Representation Agreement; and                
| | 3. | a security interest secured by the assets of the
      Company.

The Company may use the credit facility provided under this
financing arrangement to fund its operations while it implements its business
strategy.

On or about June 30, 2007 the Company used funds from the
credit facility to supplement a shortfall in profit. To date the Company has
received $300,000 from the credit facility.

Compensation Plan

Hendrx adopted a Stock Option and Compensation Plan (Plan) on
March 12, 2005. Under the Plan, Hendrx may issue stock, stock appreciation
rights, or grant options to acquire Hendrx's common stock to employees of Hendrx
or its subsidiaries. The board of directors, at its own discretion may also
issue stock, stock appreciation rights or grant options to other individuals,
including consultants or advisors,

---

who render services to Hendrx or its subsidiaries. Hendrx
granted 350,000 options with an exercise price of $1.50 for a period of five
years to all members of the board of directors as of March 12, 2005. As of June
30,, 2007, none of the options had been exercised.

Hendrx, except in respect to the grant of stock options, has no
defined benefit plan or contractual commitment with any of its officers or
directors. However, Hendrx, intends to create a benefit plan and engage in
contractual obligations with its officers and directors.

Equipment and Employees

Hendrx has no current plans to make any significant purchases
of equipment but has plans to make significant changes in the number of
employees as necessary.

Income Tax Expense (Benefit)

Hendrx recognizes deferred tax assets and liabilities for
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. The deferred tax liability associated with any net
earnings will be offset by deferred tax assets related to Hendrxs the net
operating loss carryforwards. A valuation allowance has been recorded for the
remaining amount of net deferred tax asset due to the uncertainty surrounding
its ultimate realization.

Impact of Inflation

Hendrx believes that inflation has had a negligible effect on
operations over the past three years. Hendrx believes that it can offset
inflationary increases in component costs by increasing revenue and improving
operating efficiencies.

Critical Accounting Policies

In Note 2 to the unaudited consolidated financial statements
for the period ended June 30, 2007 and 2006 included in this Form 10-QSB, Hendrx
discusses those accounting policies that are considered to be significant in
determining the results of operations and its financial position. Hendrx
believes that the accounting principles utilized by it conform to accounting
principles generally accepted in the United States of America.

The preparation of financial statements requires management to
make significant estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses. By their nature, these judgments are
subject to an inherent degree of uncertainty. On an on-going basis, management
evaluates these estimates, including those related to bad debts, inventories,
intangible assets, warranty obligations, product liability, revenue, and income
taxes. Hendrx bases its estimates on historical experience and other facts and
circumstances that are believed to be reasonable, and the results form the basis
for making judgments about the carrying value of assets and liabilities. The
actual results may differ from these estimates under different assumptions or
conditions.

Revenue Recognition

Hendrx generates revenue through the sale of AWG, reverse
osmosis, and ionic units and other related products whether to wholesale
distributors or to individual consumers. Revenues are recognized only when (a)
persuasive evidence for a sales arrangement exists, (b) delivery of the product
has occurred, (c) the product fee is fixed or determinable, and (d) collection
of the fee is reasonably assured. Revenue

---

derived from the sale of services is initially recorded as
deferred revenue on the balance sheet. The amount is recognized as income over
the term of the contract.

Forward Looking Statements and Factors That May Affect
Future Results and Financial Condition

The statements contained in sections titled Managements
Discussion and Analysis, with the exception of historical facts, are forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995, which reflect our current expectations and beliefs regarding
our future results of operations, performance, and achievements. These
statements are subject to risks and uncertainties and are based upon assumptions
and beliefs that may or may not materialize. These forward looking statements
include, but are not limited to, statements concerning:

- our anticipated financial performance and business plan;
- the sufficiency of existing capital resources;
- our ability to raise additional capital to fund cash requirements for
  future operations;
- uncertainties related to the acceptance of Hendrxs current and future
  products;
- the ability of Hendrx to achieve and maintain sufficient revenues to fund
  operations;
- the volatility of the stock market and;
- general economic conditions.

We wish to caution readers that our operating results are
subject to various risks and uncertainties that could cause our actual results
to differ materially from those discussed or anticipated, including the factors
set forth in the section entitled Risk Factors below. We also wish to advise
readers not to place any undue reliance on the forward looking statements
contained in this report, which reflect our beliefs and expectations only as of
the date of this report. We assume no obligation to update or revise these
forward looking statements to reflect new events or circumstances or any changes
in our beliefs or expectations, other that is required by law.

Risk Factors

We have a history of significant operating losses and such
losses may continue in the future.

Since our inception in 1998, our expenses have significantly
exceeded our revenue, resulting in continuing losses and an accumulated deficit
of $5,890,787 at December 31, 2006. During fiscal 2006 we recorded a net loss of
$2,974,186. We believe that may continue to incur operating losses until such
time as we realize the benefits of our recently revamped marketing and sales
plans.

Hendrx competes against companies with larger and
better-financed corporations.

Hendrx operates in a highly competitive market with financial
rewards pending on market performance. Some of our competitors are multi-million
enterprises with more resources for research and development as well as
marketing. If any of these competitors focused upon the AWG market, we would be
at a significant disadvantage in reaping our markets financial rewards.

---

Hendrx may fail to adequately manage growth.

The strategic plan being implemented by Hendrx is expected to
yield significant growth. This growth requires infrastructure and personnel, as
well as expanded operations, and needs to be properly managed. Should we fail to
adequately manage our growth potential, our operations could be significantly
impaired.

We are dependent upon key personnel who would be difficult
to replace.

Hendrik Tjandraa director and chairman of the
board of Hendrx since 16 December, 2004 resigned as a director March 30, 2007.
Our continued operation will be largely dependent upon the efforts, knowledge
and abilities of our management team. A loss of managements strategic vision
and the core of the team would be a hindrance to our prospects and success. Our
future success also will depend in large part upon Hendrxs ability to identify,
attract and retain other highly qualified managerial, technical and sales and
marketing personnel. Competition for these individuals is intense. The inability
to identify, attract or retain qualified personnel in the future or delays in
hiring qualified personnel could make it more difficult for us to maintain our
operations and meet key objectives.

Hendrik Tjandra controls the Companys operations in China. Mr.
Tjandras approach to civil actions in the United States and Mr Tjandras
payment of certain loan in China have had a negative impact on the the Company
(see note # 17 to the financial statements). The directors of the Company are
attempting to reach a resolution with Mr. Tjandra that will allow it to
implement its business plan. There can be no assurance that such a resolution
can be reached. If management cannot resolve issues with Mr. Tjandra quickly
then there may be a material negative effect on the financial viability of the
Company.

We have an integral dependence on marketing.

Hendrx has an ambitious vision and has developed a well
conceived plan to reach its objectives. The scope of the plan will require high
profile marketing, including the possibility of joint marketing campaigns with
compatible companies. Failure to initiate and successfully implement excellent
marketing efforts could adversely affect our capacity to execute our plan.

Our business is largely dependent on a limited number of
customers

For the year ended December 31, 2006, one customer, Librex
Group S.A.L., accounted for approximately 33% of our net sales. We have a
contract with this customer, all of sales to them are made through purchase
orders for OEM product. The loss of this customer, by an acquisition, other
business combination or a decline in their business could have a substantial and
adverse effect on our business. We have in the past, and may in the future, lose
our major customers or a substantial portion of our business with one or more
major customers. If we fail to sell products to customers in the quantities
anticipated, or if a major customers reduces or ends our relationship with us,
market perception of our products and technology, our growth prospects, and our
financial condition could be harmed. Any termination of our relationship with,
or significant reduction or modification of the products we manufacture for
Librex would materially reduce our revenue.

The market for our stock is limited and our stock price may
be volatile.

The market for our common stock has been limited due to low
trading volume and the small number of brokerage firms acting as market makers.
The average daily trading volume for our stock has varied significantly from
week to week and from month to month, and the trading volume often varies widely

---

from day to day. The limitations of our market and volatility
of the market price of our stock, may cause investors to face difficulties in
selling shares at attractive prices when they want.

We may incur significant expenses as a result of being
quoted on the Over the Counter Bulletin Board, which may negatively impact our
financial performance.

We incur significant legal, accounting and other expenses as a
result of being listed on the Over the Counter Bulletin Board. The
Sarbanes-Oxley Act of 2002, as well as related rules implemented by the
Commission has required changes in corporate governance practices of public
companies. We expect that compliance with these laws, rules and regulations,
including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, may
substantially increase our expenses, including our legal and accounting costs,
and make some activities more time-consuming and costly. There may be a
substantial increase in legal, accounting and certain other expenses in the
future, which would negatively impact our financial performance and could have a
material adverse effect on our results of operations and financial condition.

Our internal controls over financial reporting may not be
considered effective, which could result in a loss of investor confidence in our
financial reports and in turn have an adverse effect on our stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
beginning with our annual report for the year ending December 31, 2007, we may
be required to furnish a report by our management on our internal controls over
financial reporting. Such report will contain, among other matters, an
assessment of the effectiveness of our internal controls over financial
reporting as of the end of the year, including a statement as to whether or not
our internal controls over financial reporting are effective. This assessment
must include disclosure of any material weaknesses in our internal controls over
financial reporting identified by management. The report will also contain a
statement that our independent registered public accounting firm has issued an
attestation report on management's assessment of internal controls. If we are
unable to assert that our internal controls are effective as of December 31,
2007, or if our independent registered public accounting firm is unable to
attest that our management's report is fairly stated or they are unable to
express an opinion on our management's evaluation or on the effectiveness of our
internal controls, investors could lose confidence in the accuracy and
completeness of our financial reports, which in turn could cause our stock price
to decline.

Going Concern

Hendrxs auditor expressed concern as to Hendrxs ability to
continue as a going concern as a result of recurring losses, limited
revenue-generating activities and working capital deficiency of $1,912,254 as of
June 30, 2007, and may not have sufficient working capital for the next twelve
months. Hendrxs ability to continue as a going concern is subject to the
ability of Hendrx to realize net income and obtain funding from outside sources.
Managements plan to address Hendrxs ability to continue as a going concern,
include: (1) obtaining funding from private placement sources; (2) obtaining
additional funding from the sale of Hendrxs securities; (3) generating
sufficient revenues to sustain operations; and (4) obtaining loans and grants
from various financial institutions, where possible. Although management
believes that it will be able to obtain the necessary funding to allow Hendrx to
remain a going concern through the methods discussed above, there can be no
assurances that such methods will prove successful.

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

Hendrxs chief executive officer and chief financial officer
are responsible for establishing and maintaining disclosure controls and
procedures for the Hendrx.

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(a) 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 Rules 13a-15(e) and 15d-15(e) under the
Exchange Act, as of June 30, 2007. Based on this evaluation, our chief executive
officer and chief financial officer concluded that, as of the end of the period
covered by this report, our disclosure controls and procedures were effective
and adequately designed to ensure that the information required to be disclosed
by us in the reports we submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the applicable
rules and forms and that such information was accumulated and communicated to
our chief executive officer and chief financial officer, in a manner that
allowed for timely decisions regarding disclosure.

(b) Changes in Internal Controls

During the period ended June 30, 2007, there has been no change
in internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect our internal control over financial
reporting.

The Companys management, including the chief executive officer
and chief financial officer, does not expect that its disclosure controls or
internal controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. In
addition, 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 controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.

Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by managements
override of the control. The design of any systems of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of these inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected. Individual persons perform multiple tasks which normally would
be allocated to separate persons and therefore extra diligence must be exercised
during the period these tasks are combined.

PART II

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

Worldwide Water, LLC

Legal proceedings were initiated on January 18, 2006 by
Worldwide Water, LLC (WWL) against a number of defendants, including Hendrx,
in the Superior Court for the County of Los Angeles, State of California, case
no SC088178 for contractual fraud and patent infringement. The complaint alleges
that an agreement between WWL and AirWater Corporation (AirWater) was
contravened when AirWater contracted with Fujian Yuxin Electronic Equipment Co.
Ltd., a wholly owned subsidiary of Hendrx, to manufacture atmospheric water
generators (AWGs), on an original equipment manufacturer (OEM)

---

basis, that allegedly infringe WWLs patents. WWLs suit seeks
damages of $1,000,000 from the defendants, including Hendrx, in addition to
accrued interest and costs. Hendrx did not enter an appearance in this action.
On March 17, 2006 a default judgment was entered against Hendrx. As at the date
of this filing this judgment has not been set aside. Hendrx is attempting to
retain and instruct counsel to have the default judgment vacated or to reopen
the case and respond to the allegations on their merits. Hendrx denies that it
is culpable. Hendrx cannot give any of assurance that it will be successful in
its opposition to the plaintiffs claim and may be compelled to pay all or part
of any judgment against it. . Even if Hendrx is a successful in having the
default judgment set aside or the case reopened it will face the cost of
litigation and may ultimately be unsuccessful.

Seymour Water, Inc.

Legal proceedings were initiated on June 2, 2006 by Seymour
Water, Inc. (Seymour) against Hendrx, in the Supreme Court of British
Columbia, Vancouver Registry, Action No. S063600 for an alleged breach of
contract purportedly instigated by Yuxin. The complaint alleges that an
agreement between Seymour and Yuxin was contravened when Yuxin delivered
equipment to Seymour that was unfit for the purpose of intended use. Seymours
suit seeks damages of approximately $100,000 from Hendrx in addition to accrued
interest and costs. Hendrx denies any culpability or liability in this matter
and has filed pleadings and motions in response to the complaint that it
believes will ultimately cause Hendrx to succeed in defending this position.

H2O Liquidair of Florida, LLC

Legal proceedings were initiated, and the Company was served on
December 28, 2006 by H2OLiquidair of Florida, LLC, a Florida LLC, (H2L)
against a number of defendants, including Fujian Yuxin Electronic Equipment Co.
Ltd. (Yuxin) a wholly owned subsidiary of Hendrx and Hendrx Corp., in the
United States District Court for the Southern District of Florida, Miami
Division, Case No. 06-cv-22591-Seitz, for breach of contract, defective products
and interfering by competing in its territory. The complaint alleges that
several agreements entered between H2L and Yuxin during the years 2001 and 2002
to manufacture atmospheric water generators, on an original equipment
manufacturer basis, that allegedly failed to perform when delivered in 2002.
H2Ls suit seeks monetary damages from the defendants, including Hendrx, in
addition to accrued interest and costs.. Hendrx did not enter an appearance in
this action. On January 23, 2007 a default judgment was entered against Hendrx
and its subsidiary Fujian Yuxin Electronic Equipment Co., Ltd. As at the date of
this filing this judgment has not been set aside. A final order of default has
not been entered. Hendrx has retained and instructed counsel and successfully
reopened the case. Hendrx denies any culpability or liability in this matter.
Hendrx cannot give any assurance that it will be successful in its opposition to
the plaintiffs claim and may be compelled to pay all or part of any judgment
against it. Hendrx has expended money and expects to make futher expenditures on
this case and may ultimately be unsuccessful.

|ITEM 2. | CHANGES IN SECURITIES
|------- | ---------------------

None.

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

None.

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

None.

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

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

Exhibits required to be attached by Item 601 of Regulation S-B
are listed in the Index to Exhibits on page 33 of this Form 10-QSB, and are
incorporated herein by this reference.

SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, this 11thday
of August, 2007.

| | Hendrx Corp.      
| | ------------------
| |                   
| |                   
| | s/s George Solymar
| | Name:             
| | Title:            
| |                   
| |                   
| | s/s/ Susan Liu    
| | Name:             
| | Title:            

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INDEX TO EXHIBITS

|EXHIBIT | PAGE |                                                                                                                                                                                                                           
|------- | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NO.     | NO.  | DESCRIPTION                                                                                                                                                                                                               
|3(i)(a) | *    | Articles of Incorporation
        of Hendrx adopted May 4, 1998 (incorporated by reference to the Form 10-SB
        filed with the Securities and Exchange Commission (Commission)
        on January 12, 2004).       
|3(i)(b) | *    | Amendment to the Articles of
        Incorporation dated March 28, 2005 (incorporated by reference to the Form
        10-KSB filed with Commission on April 15, 2005).                                                   
|3(ii)   | *    | Bylaws of Hendrx
        adopted May 4, 1998 (incorporated by reference to the Form 10-SB filed
        with the Commission on January 12, 2004).                                                                         
|10      | *    | Share Purchase Agreement dated
        December 16, 2004 (incorporated by reference to the Form 8-K filed with
        the Commission on December 20, 2005).                                                              
|31(a)   | 34   | Certification
        of the Chief Executive Officer pursuant to Rule 13a-14 of the Securities
        and Exchange Act of 1934, as amended, as adopted pursuant to Section 302
        of the Sarbanes-Oxley Act of 2002.
|31(b)   | 35   | Certification
        of the Chief Financial Officer pursuant to Rule 13a-14 of the Securities
        and Exchange Act of 1934, as amended, as adopted pursuant to Section 302
        of the Sarbanes-Oxley Act of 2002.
|32(a)   | 36   | Certification
        of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                     
|32(b)   | 37   | Certification
        of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                     
|99      | *    | Stock Option
        Plan adopted March 12, 2005 (incorporated by reference to the Form 10-KSB
        filed with the Commission on April 15, 2005).                                                                      

|* | Incorporated by reference from previous filings of
      Hendrx.
|- | ----------------------------------------------------------------

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