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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 March 31,
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 May 5, 2006, 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.

1

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TABLE OF CONTENTS

|ITEM 1. FINANCIAL
      STATEMENTS                            | 3                                                                                                                                                        
|------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                              | Unaudited, Consolidated Balance Sheet as of March 31, 2007
      and 2006                                                                                
|                                                              | Unaudited, Consolidated Statement of Operations and Comprehensive
      Income (Loss)  for the three months ended March 31, 2007 and March
      31, 2006
|                                                              | Unaudited, Consolidated Statement of Cash Flows for the three
      months ended March 31,  2007 and 2006                                                
|                                                              | Notes to the Unaudited Consolidated Financial Statements                                                                                                 
|ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                  | 4                                                                                                                                                        
|ITEM 3. CONTROLS AND PROCEDURES                               | 13                                                                                                                                                       
|PART II                                                      
|ITEM 1. LEGAL PROCEEDINGS                                     | 14                                                                                                                                                       
|ITEM 2. CHANGES IN SECURITIES                                 | 15                                                                                                                                                       
|ITEM 3. DEFAULTS UPON SENIOR SECURITIES                       | 15                                                                                                                                                       
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS | 15                                                                                                                                                       
|ITEM 5. OTHER INFORMATION                                     | 15                                                                                                                                                       
|ITEM 6. EXHIBITS                                              | 15                                                                                                                                                       
|SIGNATURES                                                    | 16                                                                                                                                                       
|INDEX TO EXHIBITS                                             | 17                                                                                                                                                       

2

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PART I

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

As used herein the terms Hendrx, we, our, and us refer
to Hendrx Corp., a Nevada corporation, unless otherwise indicated. In the
opinion of management, the accompanying unaudited interim consolidated financial
statements included in this Form 10-QSB reflect all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of the results
of operations for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year.

3

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|HENDRX CORP.                                     |   |             |   |   |              |  
|------------------------------------------------ | - | ----------- | - | - | ------------ | -
|Consolidated Balance Sheets                      |   |             |   |   |              |  
|(Expressed in
      US Dollars)                  |   |             |   |   |              |  
|                                                 |   | March 31,   |   |   | December 31, |  
|                                                 |   | 2007        |   |   | 2006         |  
|                                                 |   | (Unaudited  |   |   | (Audited)    |  
|                                                 |   | Prepared by |   |   |              |  
|Assets                                           |   | Management) |   |   |              |  
|Current Assets                                   |   |             |   |   |              |  
|Cash (Note 2)                                    | $ | 42,796      |   | $ | 29,198       |  
|Accounts receivable                              |   | 261,384     |   |   | 340,752      |  
|Value Added Tax Refundable                       |   | 52,449      |   |   | 62,151       |  
|Inventories (Note 4)                             |   | 2,027,212   |   |   | 1,892,506    |  
|Due from related parties (Note 9d)               |   | 73,023      |   |   | 6,353        |  
|Prepaid expenses                                 |   | -           |   |   | -            |  
|Total Current Assets                             |   | 2,456,864   |   |   | 2,330,960    |  
|Property, Plant
      and Equipment-Net (Note 6) |   | 5,688,784   |   |   | 5,826,460    |  
|Other assets                                     |   |             |   |   |              |  
|Long term loan Receivable (Note 16)              |   | 110,075     |   |   | 108,903      |  
|Intangible
      assets-Net (Note 5)             |   | 2,644,620   |   |   | 2,684,427    |  
|Goodwill (Note 3)                                |   | 31,854,137  |   |   | 31,854,137   |  
|Total Other Assets                               |   | 34,608,832  |   |   | 34,647,467   |  
|Total
      assets                               | $ | 42,754,480  |   | $ | 42,804,887   |  
|Liabilities and Stockholders' Equity             |   |             |   |   |              |  
|Current Liabilities                              |   |             |   |   |              |  
|Accounts payable & Accrued liabilities           |   |             |   |   |              |  
|(Note 8)                                         | $ | 1,029,008   |   | $ | 969,635      |  
|                                                 |   | -           |   |   | -            |  
|Accrued wage benefits (Note 11)                  |   | 33,856      |   |   | 35,194       |  
|Short term bank loans (Note 10)                  |   | 2,580,938   |   |   | 2,523,991    |  
|Short term loan                                  |   | 100,000     |   |   |              |  
|Due
      to related parties (Note 9e)           |   | 472,304     |   |   | 281,380      |  
|Total Current
      Liabilities                  |   | 4,216,106   |   |   | 3,810,200    |  
|Contingent LiabilityCommitment
      (Note 12)   |   | 1,000,000   |   |   | 1,000,000    |  
|                                                 |   |             |   |   |              |  
|Total Liabilities                                |   | 5,216,106   |   |   | 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                       |   | 634,450     |   |   | 652,170      |  
|Retained (Deficit) Earnings                      |   | (6,329,380  | ) |   | (5,890,787   | )
|Total
      stockholders equity                 |   | 37,538,374  |   |   | 37,994,687   |  
|                                                 |   |             |   |   |              |  
|Total
      liabilities and stockholders equity | $ | 42,754,480  |   | $ | 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.

F-1

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|HENDRX CORP.                                                                |   |                    |   |   |             |  
|--------------------------------------------------------------------------- | - | ------------------ | - | - | ----------- | -
|Consolidated Statements of Operations and
      Comprehensive Income (Loss) |   |                    |   |  
|(Expressed in
      US Dollars)                                             |   |                    |   |   |             |  
|                                                                            |   | Three Months Ended |  
|                                                                            |   | March 31,          |  
|                                                                            |   | 2007               |   |   | 2006        |  
|                                                                            |   | (Unaudited         |   |   | (Unaudited  |  
|                                                                            |   | Prepared by        |   |   | Prepared by |  
|                                                                            |   | Management)        |   |   | Management) |  
|Revenue                                                                     | $ | 210,156            |   | $ | 324,955     |  
|Cost of Goods Sold                                                          |   | 286,237            |   |   | 334,319     |  
|Gross Profit                                                                |   | (76,081            | ) |   | (9,364      | )
|Selling Expenses                                                            |   | 26,645             |   |   | 70,309      |  
|General and
      administrative expenses                                   |   | 172,896            |   |   | 179,400     |  
|Stock Based Compensation
      Expenses                                     |   | -                  |   |   | -           |  
|Contract
      services                                                     |   | 58,953             |   |   | 55,396      |  
|Salaries and wages                                                          |   | 40,713             |   |   | 81,006      |  
|Total Expenses                                                              |   | 299,207            |   |   | 386,111     |  
|Income (Loss)
      from Operations                                         |   | (375,288           | ) |   | (395,475    | )
|Other Income or ( Expense )                                                 |   |                    |   |   |             |  
|Other expense                                                               |   | (18,212            | ) |   | 2,351       |  
|Interest expenses                                                           |   | (45,093            | ) |   | (43,468     | )
|Impairment Intangible Assets                                                |   | -                  |   |   | -           |  
|Litigation losses                                                           |   | -                  |   |   | -           |  
|Profit (Loss) before Income taxes                                           |   | (438,593           | ) |   | (436,592    | )
|Income taxes                                                                |   | -                  |   |   | (447        | )
|Net profit (loss) for the year                                              | $ | (438,593           | ) | $ | (436,145    | )
|Net (Loss) per common shares Basic
      &                                  |   |                    |   |   |             |  
|Dilutive                                                                    |   | (0.01              | ) |   | (0.01       | )
|Weighted Average Shares Outstanding                                         |   | 37,238,067         |   |   | 37,238,067  |  
|Other Comprehensive Income                                                  |   |                    |   |   |             |  
|Foreign Currency Translation
      Adjustments                              |   | (17,720            | ) |   | (1,595      | )
|Comprehensive
      Income (Loss)                                           | $ | (456,313           | ) | $ | (437,740    | )

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

F-2

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|HENDRX CORP.                                           |   |                    |   |   |             |  
|------------------------------------------------------ | - | ------------------ | - | - | ----------- | -
|Consolidated Statements of Cash Flows                  |   |                    |   |   |             |  
|(Expressed in
      US Dollars)                        |   |                    |   |   |             |  
|                                                       |   | Three Months Ended |  
|                                                       |   | December 31,       |  
|                                                       |   | 2007               |   |   | 2006        |  
|                                                       |   | (Unaudited         |   |   | (Unaudited  |  
|                                                       |   | Prepared by        |   |   | Prepared by |  
|                                                       |   | Management)        |   |   | Management) |  
|Operating
      activities                             |   |                    |   |   |             |  
|Adjustments to reconcile net income (loss) to net cash | $ |                    |   | $ |             |  
|Net losses                                             |   | (438,593           | ) |   | (436,145    | )
|Amortization and depreciation                          |   | 186,065            |   |   | 165,606     |  
|Impairment of intangible
      assets                  |   | -                  |   |   | -           |  
|Changes in operating assets and liabilities            |   |                    |   |   |             |  
|Accounts receivable                                    |   | 79,368             |   |   | (16,501     | )
|VAT Refundable                                         |   | 9,702              |   |   | 36,310      |  
|Inventories                                            |   | (134,706           | ) |   | (35,580     | )
|Prepaid expenses                                       |   | -                  |   |   | (28,500     | )
|Accounts payable                                       |   | 58,035             |   |   | (85,689     | )
|Accrued liabilities                                    |   | -                  |   |   | -           |  
|Contingent liability                                   |   | -                  |   |   | -           |  
|Total funds from
      (used in) operating activities  |   | (240,129           | ) |   | (400,499    | )
|Investing activities                                   |   |                    |   |   |             |  
|Cash paid for note
      receivable                    |   | (1,172             | ) |   | (757        | )
|Cash paid for
      Property, plant and equipment      |   | (8,582             | ) |   | (12,570     | )
|Cash paid for
      Intangible assets                  |   | -                  |   |   | -           |  
|Payment on purchase
      of subsidiary                |   | -                  |   |   | -           |  
|Total funds from
      (used in ) investing activities |   | (9,754             | ) |   | (13,327     | )
|Financing
      activities                             |   |                    |   |   |             |  
|Principal payment on bank loan                         |   | 56,947             |   |   | 119,682     |  
|Advances to related parties                            |   | (66,670            | ) |   | 87,316      |  
|Advances from related parties                          |   | 190,924            |   |   | 12,971      |  
|Cash received from short term loan                     |   | 100,000            |   |   | -           |  
|Stock Issue Cost                                       |   | -                  |   |   | -           |  
|Total funds from (used in) financing activities        |   | 281,201            |   |   | 219,969     |  
|Cash, increase during the year                         |   | 31,318             |   |   | (193,857    | )
|Foreign exchange                                       |   | (17,720            | ) |   | (1,595      | )
|Cash, beginning
      of the year                      |   | 29,198             |   |   | 1,733,580   |  
|                                                       |   |                    |   |   |             |  
|Cash, end of
      the year                            | $ | 42,796             |   | $ | 1,538,128   |  
|                                                       |   |                    |   |   |             |  
|Supplementary cash flow information                    |   |                    |   |   |             |  
|Income taxes
      (refunded) paid                     | $ | -                  |   | $ | (447        | )
|Cash paid for interest                                 | $ | 45,093             |   | $ | 40,619      |  
|Non cash
      financing and investing transactions:   |   |                    |   |   |             |  
|Shares issued for accrued wage benefits                | $ | -                  |   | $ | -           |  
|Stock Based Compensation                               | $ | -                  |   | $ | -           |  
|Other Comprehensive Income                             | $ | (17,720            | ) | $ | (1,595      | )

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

F-3

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

|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 $1,759,242
at March 31, 2007 and a net loss of $438,593 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.

F-4

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

|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.

.

F-5

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

|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.

F-6

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

|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 March 31, 2007 and the year ended December 31, 2006 are $19,545
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.

F-7

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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 March 31, 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 were $2,414 and $3,844 in the first quarters of
2007 and 2006, 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.

F-8

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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.

F-9

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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.

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

Segmented information

The Companys identifiable assets are
all located in China except cash of $27,765 in Canada and cash of $438 in
Switzerland, cash of $835 in Hong Kong and fixed assets of $2,585 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
(Contd)

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

F-10

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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

F-11

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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 ELECTRONICEQUIPMENT 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, manufacture and sale of atmospheric water generators
from a facility on lands leased by the operating company located in 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 Hendrik.
| |     |                                                                                                                                                                                                                                                                                                                   
| | (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                                    

F-12

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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:

F-13

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

| | Assets Acquired                |   |            | 
| | ------------------------------ | - | ---------- | 
| | Current Assets                 | $ | 1,973,259  | 
| | Fixed Assets                   |   | 5,071,568  | 
| | Intangible Assets              |   | 3,069,352  | 
| | Total Assets                   |   | 10,114,179 | 
| | Liabilities Assumed            |   |            | 
| | Current Liabilities            |   | 4,378,116  | 
| | Net Equity                     |   | 5,736,063  | 
| | Consideration 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

| |                 |   | March 31  |  |   | December 31 | 
| | --------------- | - | --------- |  | - | ----------- | 
| |                 |   | 2007      |  |   | 2006        | 
| | Finished goods  | $ | 302,972   |  | $ | 379,674     | 
| | Raw materials   |   | 833,025   |  |   | 815,442     | 
| | Work-in-process |   | 891,215   |  |   | 697,390     | 
| | Total           | $ | 2,027,212 |  | $ | 1,892,506   | 

Note 5. INTANGIBLE ASSETS AND ACCUMULATED AMORTIZATION

| | March 31, 2007  |   |           |  |   | Accumulated  |  |   | Net Book  | 
| | --------------- | - | --------- |  | - | ------------ |  | - | --------- | 
| |                 |   | Cost      |  |   | Amortization |  |   | Figures   | 
| | Land use rights | $ | 1,772,490 |  | $ | 350,884      |  | $ | 1,421,606 | 
| | Patents         |   | 2,065,759 |  |   | 842,745      |  |   | 1,223,014 | 
| | Total           | $ | 3,838,249 |  | $ | 1,193,629    |  | $ | 2,644,620 | 

F-14

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

| | 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 March 31, 2007 and the years ended December 31, 2006 are $46,873 and
$177,787 respectively.

Note 6. PROPERTY, PLANT AND EQUIPMENT

| | March 31, 2007                        |   |           |  |   | Accumulated  |  |   |           | 
| | ------------------------------------- | - | --------- |  | - | ------------ |  | - | --------- | 
| |                                       |   | Cost      |  |   | Depreciation |  |   | Net       | 
| | Buildings                             | $ | 2,961,322 |  | $ | 734,882      |  | $ | 2,226,440 | 
| | Manufacturing machinery and equipment |   | 4,557,219 |  |   | 1,340,619    |  |   | 3,216,600 | 
| | Transportation equipment              |   | 310,721   |  |   | 119,533      |  |   | 191,188   | 
| | Electronic equipment                  |   | 90,529    |  |   | 74,540       |  |   | 15,989    | 
| | Leasehold improvement                 |   | 18,376    |  |   | 3,173        |  |   | 15,203    | 
| | Office equipment                      |   | 79,421    |  |   | 56,057       |  |   | 23,364    | 
| | Construction in progress              |   | -         |  |   | -            |  |   | -         | 
| | Total                                 | $ | 8,017,588 |  | $ | 2,328,804    |  | $ | 5,688,784 | 

| | 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 March 31, 2007 the years ended December 31, 2006 are $19,545 and $79,917,
respectively.

F-15

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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:

| |                                     |   | Three Months Ended |  |   | Year Ended   | 
| | ----------------------------------- | - | ------------------ |  | - | ------------ | 
| |                                     |   | March 31,          |  |   | December 31, | 
| |                                     |   | 2007               |  |   | 2006         | 
| | Numerator-Basic / Diluted           |   |                    |  |   |              | 
| | Net loss available for common stock |   | 438,593            |  |   | 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                               | $ | 0.01               |  | $ | 0.01         | 
| | Diluted                             | $ | 0.01               |  | $ | 0.01         | 

350,000 Stock Options outstanding at
March 31, 2007 are excluded from fully diluted Net Profit (Loss) per share due
to anti-dilution.

Note 7. COMMON STOCK (Contd)

Stock Options / Stock Based
Compensation

Stock options outstanding at March 31,
2007:

| | Options Outstanding |                    |         
| | ------------------- | ------------------ | --------
| |                     | Weighted-          |         
| | Number              | Average            |         
| | Outstanding at      | Remaining          |         
| | March 31,           | Contractual        | Exercise
| | 2007                | Life
      (years) | Price   
| | 350,000             | 3                  | $1.50   

F-16

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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 March 31, 2007.

Note 8. ACCOUNTS PAYABLE

| |                          |   | March 31, |  |   | December 31, | 
| | ------------------------ | - | --------- |  | - | ------------ | 
| |                          |   | 2007      |  |   | 2006         | 
| | Accounts payable - trade | $ | 919,362   |  | $ | 887,609      | 
| | Other payables           |   | 109,646   |  |   | 82,026       | 
| | Total                    | $ | 1,029,008 |  | $ | 969,635      | 

Note 9. RELATED PARTY TRANSACTIONS

(a) During the three months ended March
31, 2007, sales to related parties are as follows:

F-17

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

| |                 |   | Three Months Ended |  |   | Three Months Ended | 
| | --------------- | - | ------------------ |  | - | ------------------ | 
| |                 |   | March 31,          |  |   | March 31,          | 
| | Related Parties |   | 2007               |  |   | 2006               | 
| | Hendrik Tjandra |   | 258                |  |   | 4,230              | 
| | Total           | $ | 258                |  | $ | 4,230              | 

| | (b) | During the three months ended March 31, 2007, purchases
      from related parties are as follows:
| | --- | --------------------------------------------------------------------------------------------------

| |                                                   |   | Three Months Ended |  |   | Three Months Ended | 
| | ------------------------------------------------- | - | ------------------ |  | - | ------------------ | 
| |                                                   |   | December 31,       |  |   | December 31,       | 
| | Related Parties                                   |   | 2007               |  |   | 2006               | 
| | Fuqing Huanyu plastic products Co., Ltd.          |   |                    |  |   |                    | 
| | controlled by sister of Mr. Hendrik
      Tjandra | $ | 11,050             |  | $ | -                  | 
| | Mr. Hendrik Tjandra                               |   | -                  |  |   |                    | 
| | Total                                             | $ | 11,050             |  | $ | -                  | 

| | (c) | During the three months ended March 31, 2007, the Company
      paid or accrued total consulting services of $58,953 to officers and
      directors.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                      
| | (d) | Balances due from related parties, are as
  follows:                                                                                                 

| |                                            |   | March 31, |  |   | December 31, | 
| | ------------------------------------------ | - | --------- |  | - | ------------ | 
| |                                            |   | 2007      |  |   | 2006         | 
| | Fujian Tienyu Steel Products Co.,Ltd.      |   |           |  |   |              | 
| | owned
      by Mr Hendrik Tjandra          |   | 66,603    |  |   | -            | 
| | Fuzhou sales Department                    |   | 1,330     |  |   | 1,316        | 
| | Fuqing Yuongxian Pringting
      Co.,Ltd   |   | 5,090     |  |   | 5,037        | 
| | controlled by sister of Mr Hendrik Tjandra |   |           |  |   |              | 
| | Total                                      | $ | 73,023    |  | $ | 6,353        | 

F-18

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

Note 9. RELATED PARTY TRANSACTIONS (Contd)

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

| |                                                       |   | M arch 31, |  |  | December 31, | 
| | ----------------------------------------------------- | - | ---------- |  |  | ------------ | 
| |                                                       |   | 2007       |  |  | 2006         | 
| | Fujian Tiansheng
      Agricultrual Stock Holding Co. |   | 323,750    |  |  | 155,266      | 
| | Controlled by brother of Mr Hendrik Tjandra           |   |            |  |  |              | 
| | PT.Galakst
      Perkasa                              |   | 12,427     |  |  | 30,430       | 
| | Controlled by Mr Hendrik Tjandra                      |   |            |  |  |              | 
| | Fuqing Huanyu
      Plastic Products. Co.Ltd          |   | 17,627     |  |  | 25,683       | 
| | Controlled by sister of Mr Hendrik Tjandra            |   |            |  |  |              | 
| | George Solymar                                        |   | 105,000    |  |  | 70,000       | 
| | CEO
      & director of the Company                   |   |            |  |  |              | 
| | Nadir Walji                                           |   | 13,500     |  |  |              | 
| | Director of the Company                               |   |            |  |  |              | 
| | Total                                                 | $ | 472,304 $  |  |  | 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:

| |                             |  |                 |  |   | Three Month Ended |  |   | Year Ended  | 
| | --------------------------- |  | --------------- |  | - | ----------------- |  | - | ----------- | 
| |                             |  | Interest Rate   |  |   | March 31          |  |   | December 31 | 
| |                             |  | (Per Year)      |  |   | 2007              |  |   | 2006        | 
| | Agricultural Bank of China, |  |                 |  |   |                   |  |   |             | 
| | Fuqing Branch               |  | 5.55% to 7.344% |  | $ | 2,162,653         |  | $ | 2,139,627   | 
| | XingYie Bank,               |  |                 |  |   |                   |  |   |             | 
| | Fuqing Branch               |  | 7.61%           |  |   | 418,285           |  |   | 384,364     | 
| | Total                       |  |                 |  | $ | 2,580,939         |  | $ | 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 three months ended March 31
2007 and the years ended December 31, 2006 are $45,093 and $183,365,
respectively.

F-19

---

|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

The Company also provides guarantees of
bank loans of, Fujian Tianyu Steel Products Co., Ltd., owned by the Chairman of
Hendrx Corp, in the amount of $4,338,250 (RMB33,500,000) at March 31, 2007 and
December 31, 2006 and $4,292,020.

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

Note 10. SHORT TERM BANK LOANS/GUARANTEES (Contd)

| |                         |  | Bank Loan Payable |  |   | Maximum Amount  | 
| | ----------------------- |  | ----------------- |  | - | --------------- | 
| |                         |  | Balance at        |  |   | of Guarantee at | 
| |                         |  | March 31, 2007    |  |   | March 31, 2007  | 
| |                         |  | RMB               |  |   | US$             | 
| | Fuqing Agriculture Bank |  | 23,500,000        |  | $ | 3,043,250       | 
| | Communication Bank      |  | 10,000,000        |  |   | 1,295,000       | 
| | TOTAL                   |  | 33,500,000        |  | $ | 4,338,250       | 

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 March 31, 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

F-20

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

| |               |  | Three Months Ended |   |  | Three Months Ended | 
| | ------------- |  | ------------------ | - |  | ------------------ | 
| |               |  | March 31, 2007     |   |  | March 31, 2006     | 
| | Countries     |  | $                  |   |  | %                  | 
| | China         |  | 31,066             |   |  | 14.78%             | 
| | Israel        |  | (76,508            | ) |  | -36.41%            | 
| | Lebanon       |  | 76,796             |   |  | 36.54%             | 
| | Saudi Arabia  |  | -                  |   |  | 0.00%              | 
| | United States |  | 1,146              |   |  | 0.55%              | 
| | Malaysia      |  | 120,080            |   |  | 57.14%             | 
| | France        |  | 19,471             |   |  | 9.27%              | 
| | Others        |  | 38,105             |   |  | 18.13%             | 
| | Total         |  | 210,156            |   |  | 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                        | 

F-21

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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
March 31, 2007 and 2006 respectively are as follows:

| |                                  |   | As of    | 
| | -------------------------------- | - | -------- | 
| |                                  |   | March 31 | 
| |                                  |   | 2007     | 
| | Net operating loss carry forward | $ | 0        | 
| | Valuation allowance              | $ | 0        | 
| | Net deferred tax asset           | $ | 0        | 

The components of current income tax
expense as of March 31, 2007 and 2006 respectively are as follows:

| |                               |   | As of December 31 | 
| | ----------------------------- | - | ----------------- | 
| |                               |   | March 31          | 
| |                               |   | 2007              | 
| | Current federal tax expense   | $ | -                 | 
| | Current state tax expense     | $ | -                 | 
| | Change in NOL benefits        | $ | 0                 | 
| | Change in valuation allowance | $ | 0                 | 
| | Income tax expense            | $ | -                 | 

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

Note 15. SALES DISTRIBUTORS

F-22

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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 LONG TERM LOAN RECEIVABLE

As atMarch 31, 2007, a
subsidiary of the Company has a loan of RMB850,000 or US$ 110,075 (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 $2,257 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
or to 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.

F-23

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

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 not been set aside. A final order of default has
not been entered. Hendrx has retained and instructed counsel and is attempting
to have the default judgment vacated or to reopen the case and respond to the
allegations on their merits. 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 in having the default
judgment set aside or the case reopened it will face the cost of litigation and
may ultimately be unsuccessful. The default judgment was not 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

F-24

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|HENDRX CORP.                              
|------------------------------------------
|Notes to Consolidated Financial Statements
|March 31, 2007                            
|(Expressed in US
      Dollars)           

for any potential contingencies that
may arise from these unauthorized 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.

F-25

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

This Management's Discussion and Analysis and other parts of
this report contain forward-looking statements that involve risks and
uncertainties. Forward-looking statements can also be identified by words such
as "anticipates," "expects," "believes," "plans," "predicts," and similar terms.
Forward-looking statements are not guarantees of future performance and our
actual results may differ significantly from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, those discussed in the subsections entitled
"Forward-Looking Statements and Factors That May Affect Future Results and
Financial Condition" and "Risk Factors" below. The following discussion should
be read in conjunction with our consolidated financial statements and notes
thereto included in this report. Our fiscal year end is December 31.

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.

Mission Statement

Our mission is to design and manufacture highly reliable
atmospheric water generators and water-purification appliances at affordable
prices, allowing consumers to obtain high-quality, yet economical, purified
drinking water, regardless of their geographical location or economic
conditions.

Vision Statement

Our vision is for Hendrx to become the premier worldwide
supplier of high-quality, purified drinking water through the use of unique,
revolutionary and innovative technologies, and provide a complete solution to
the worlds drinking water needs.

Goals and Objectives

Our goals and objectives are as follows:

Increase overall market share, remain a Market Leader
in the atmospheric water industry, and attain business plan targets.

Hendrx will implement the following strategies pursuant to this
goal:

|• | Increase revenues through sales;                                                                                                                        
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|• | Increase revenues through higher profit
margins;                                                                                                        
|• | Acquire companies with existing distribution networks and
      healthy revenue stream, thereby immediately owning the
    infrastructure;              
|• | Expand Hendrx horizontally through joint ventures or
      acquisition of companies with unique and/or revolutionary technologies or
      products; and
|• | Implement an aggressive, yet carefully developed and
      well-conceived marketing campaign to create brand and product
      awareness.               

4

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Manufacture defect and trouble free equipment.

An important reason for the failure of many AWG companies is
defects that have continued to plague the industry. The concept of producing
water from the air is not a new one, however, using the water for drinking
purposes is. Typical air conditioning or dehumidification companies have the
ability to manufacture appliances that produce water from the air but they do
not have the expertise and knowhow to purify the water and maintain purity of
the water. On the other hand, some water filtration/purifier appliance
manufacturers have the knowledge to purify and/or filter water, but they do not
have the capability to ensure trouble-free operations of water machines.

At this time, it is crucial for Hendrx to manufacture only
reliable, trouble-free water machines. The ability to have a truly plug and
play machine without service calls and technical problems is crucial to us.

Become financially stable.

Numerous atmospheric water companies have failed because they
ran out of funds, either before they could successfully produce machines or
before they could enter the market. Hendrx must ensure that we have sufficient
funds to move forward in pursuit of our goals and objectives.

Be highly profitable to our shareholders.

We aim to create an extraordinary value to our shareholders
through advanced research and development of new, innovative, safe and highly
effective products that help people around the world live healthier, happier and
longer lives.

Help establish a professional industry image.

One problem which has continuously plagued the infant
atmospheric water industry is the lack of professionalism by the players, most
of which have been small operations attempting to enter into a multi billion
water industry. Often, small companies represented products that were
manufactured by factories with little or no knowledge in building atmospheric
water generators. As a result, many consumers ended up with products that did
not work well if at all.

Our intent is to erase the garage industry mentality from the
atmospheric water industry and build a professional industry image in which the
players value quality, reliability, and place a high emphasis on fostering a
professional relationship with their network of distributors, agents and dealers
by ensuring protection and support necessary to build a lasting and mutually
profitable business.

Reaching Our Goals and Objectives

To reach the above goals and objectives, Hendrx has fully
formulated and has begun implementation of a series of strategies which we refer
to as our 10-Step plan, as follows:

| | 1. | Restructure Corporation and Management                    
| | -- | ----------------------------------------------------------
| | 2. | Improve and Rectify Manufacturing Processes               
| | 3. | Establish Additional Assembly Facility (United
    States)
| | 4. | Establish Research and Development Facility               
| | 5. | Develop and Launch New Products                           
| | 6. | Establish Regional Offices                                
| | 7. | Increase Number of Distributors                           

5

---

| | 8.  | Develop and Implement Support Systems for
    Distributors
| | --- | ----------------------------------------------------------
| | 9.  | Restructure Finances and Debt                             
| | 10. | Consolidate the Industry                                  

Additionally, our marketing strategy, not fully in place at
this time, will focus on the following:

- To determine ideal geographical markets;
- To obtain and sign as many distributors as possible in the selected
  geographical targets;
- To develop as sound marketing plan;
- To increase Hendrxs brand and product awareness;
- To saturate the market;
- To increase revenues through sale and acquisitions; and
- To develop a retail market campaign.

Further, we have begun developing comprehensive national and
international sales campaigns as well as taken steps to improve customer
satisfaction with after sales service.

Quantitative and Qualitative Disclosures of Various
Risks

Historically Hendrx has not been able to generate sufficient
cash flow to expand marketing, manufacturing capacity and fund necessary
research and development. Accordingly, there can be no assurance that our
business strategy will provide sufficient cash flows to accomplish those
objectives defined by management for future 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 current
marketing, manufacturing and research and development objectives. Hendrx can
provide no assurance that such efforts, if necessary, would be successful.

Hendrxs business development 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 which should not be viewed as an
indication of continued growth and a historical record of incurring losses.
Should we be unable to consistently generate revenue and reduce or stabilize
expenses to the point where it can maintain net cash flow, such failure will
have an immediate impact on the its ability to continue its business operations.

The directors of the Company through the financial statements
have become aware of certain actions taken by Hendrik Tjandraand his
management of the affairs of FuJian Yuxin Electronic Equipment Co., Ltd. The CEO
and other directors have made inquiries of Mr. Tjandra concerning the accounting
policies of the subsidiary, the transfer of money to a related parties (see
Auditors note #17) and the subsidiarys compliance with the terms of the share
purchase agreement ( see Auditors notes # 9 and 10). It appears that Mr.Tjandra
has resigned as chairman of the board, at least in part, as a response to these
inquiries.

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 March 31, 2007 and 2006.

6

---

During the period ended March 31, 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 March 31, 2007, Hendrx realized a net
loss of $438,593 from operations.

Three month periods ended March 31, 2007 and
2006

Gross Revenue

Revenue for the three month period ended March 31, 2007 was
$210,156 as compared to $324,955 for the three month period ended March 31,
2006, a decrease of 35%. Revenue in the three 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 three months period ended March 31,
2007 was $286,237 as compared to $334,319 for the three month period ended March
31, 2006, a decrease of 14%. 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. However,
the cost of goods sold remains high as we have not realized maximum production
capacity from our manufacturing facility which negatively impacts our cost for
each unit produced. Hendrx expects that the cost of goods sold will continue to
fluctuate as a percentage of revenue decreasing on a per unit basis relative to
production increases.

Expenses

Selling expenses for the three month period ended March 31,
2007 were $26,645 as compared to $70,309 for the three month period ended March
31, 2006, a decrease of 62%. Hendrx anticipates that selling expenses will
increase over the next twelve months as a comprehensive marketing strategy is
launched to increase sales of our AWG units.

General and administrative expenses for the three month period
ended March 31, 2007 were $272,562 as compared to $315,802 for the three month
period ended March 31, 2006, a decrease of 14%. 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 keep to decrease in future
periods.

Net Losses

Net losses for the three month period ended March 31, 2007
decreased to $438,593 from $436,145 for the comparable three month period ended
March 31, 2006, a decrease of 1%. Net losses in the current three 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

7

---

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 three month period ended
March 31, 2007 was $240,129 as compared to cash flow used for operations of
$400,499 for the three month period ended March 31, 2006. Cash flow used for
operations for the current three 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 three month
period ended March 31, 2007 was $281,201, as compared to cash flow provided by
financing of $219,969 for the three month period ended March 31, 2006. Cash flow
provided by financing activities in the current three 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 three month
period ended March 31, 2007 was $9,754 as compared to the decrease of $13,327
for the three month period ended March 31, 2006. Cash flow used in investing
activities in the current three month period can be primarily attributed to the
purchase of capital assets.

Capital Deficit

Hendrx had a working capital deficit of $1,759,242 as of March
31, 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 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 $2,580,938 are all guaranteed by Fujian
Tienyu Steel Products Co., Ltd., (Tienyu) a company owned by the 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.

The Company entered into 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                    
| | 3. | A security interest secured by the assets of the
      company

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

8

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On Jan. 09, 2007 the company used funds from the credit
facility to supplement a shortfall in profit. To date the company has received
$10,000 from the credit facility.

Under the terms of the Bridge Loan and Representation Agreement
First Capital Invest Corp. agreed to use its best efforts to raise an additional
$3.5 million in financing for the company.

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 March 31, 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 March 31, 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.

9

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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.

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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 on March 30,
2007. But remained as head of operations of the company in China as he has since
1992. 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.

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 do have a
contract with this customer though all of sales to them are made through
purchase orders for OEM product. The loss of this customer, including through an
acquisition, other business combination or their loss of business from their
customers 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 do not sell
products to customers in the quantities anticipated, or if a major customers
reduces or terminates its relationship with us, market perception of our
products and technology, growth prospects, and financial condition and results
of operations 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.

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

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 as
discussed in the following risk factor, may substantially increase our expenses,
including our legal and accounting costs, and make some activities more
time-consuming and costly. As a result, 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 $1,710,742 as of
March 31, 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.

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|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.

(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 March 31, 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 March 31, 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.

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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 to have the default
judgment vacated or to reopen the case and respond to the allegations on their
merits. 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

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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.

|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.

|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.

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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 May, 2007.

| | Hendrx Corp.        
| | --------------------
| |                     
| | */s/ George Solymar*
| | Name:               
| | Title:              
| |                     
| | */s/  Cherry Cai*   
| | 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 (Commision)
        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 Commision 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)   |      | 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)   |      | 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)   |      | 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)   |      | 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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