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 September 30, 2006.

[  ]      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(State or other jurisdiction of incorporation or organization) | 86-0914052(IRS Employer Identification Number)
|-------------------------------------------------------------------- | ----------------------------------------------

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

(604) 682-4379(Issuers telephone number)

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.

YesX          No

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

Yes          NoX

At November 7, 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.

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TABLE OF CONTENTS



|                  |                                                             |                                                                                                                                                  |    |      |   | 
|----------------- | ----------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | -- | ---- | - | 
|                  |                                                             |                                                                                                                                                  |    | Page
|                  |                                                             |                                                                                                                                                  |    |     
|PART I.           |                                                             |                                                                                                                                                  |    |     
|                  | ITEM 1. FINANCIAL STATEMENTS                                |                                                                                                                                                  |    | 3    |  
|                  |                                                             | Unaudited, Consolidated Balance Sheet as of September 30, 2006 and December 31, 2005                                                             |    |      | 4 | 
|                  |                                                             | Unaudited, Consolidated  Statement of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2006 and 2005 |    |      | 5 | 
|                  |                                                             | Unaudited, Consolidated  Statement of Changes in Stockholders Equity for the period from Inception to September 30, 2006                         |    |      | 6 | 
|                  |                                                             | Unaudited, Consolidated Statement of Cash Flows for the three and nine months ended September 30, 2006 and 2005                                  |    |      | 8 | 
|                  |                                                             | Notes to Unaudited Consolidated Financial Statements                                                                                             |    |      | 9 | 
|                  |                                                             |                                                                                                                                                  |    |      |   | 
|                  |                                                             |                                                                                                                                                  |    |      |   | 
|                  |                                                             |                                                                                                                                                  |    |      |   | 
|                  | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS                |                                                                                                                                                  |    | 23   |  
|                  | ITEM 3. CONTROLS AND PROCEDURES                             |                                                                                                                                                  |    | 33   |  
|PART II.          |                                                             |                                                                                                                                                  |    |     
|                  | ITEM 1. LEGAL PROCEEDINGS                                   |                                                                                                                                                  |    | 34   |  
|                  | ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES             |                                                                                                                                                  |    | 34   |  
|                  | ITEM 3. DEFAULTS UPON SENIOR SECURITIES                     |                                                                                                                                                  |    | 34   |  
|                  | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |                                                                                                                                                  |    | 34   |  
|                  | ITEM 5. OTHER INFORMATION                                   |                                                                                                                                                  |    | 34   |  
|                  | ITEM 6. EXHIBITS                                            |                                                                                                                                                  |    | 34   |  
|                  | SIGNATURES                                                  |                                                                                                                                                  |    | 35   |  
|INDEX TO EXHIBITS |                                                             |                                                                                                                                                  | 36 |     

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PART I

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.

---

`HENDRX CORP.
Consolidated Balance Sheets
(Expressed in US Dollars)
---------------------------------------------------------------------- --- ---------------- --- ---------------------
                                                                           ----------------
                                                                            September 30,           December 31,
                                                                                2006                    2005
                                                                             (Unaudited              (Audited)
                                                                            -Prepared by
Assets                                                                       management)
 Current Assets
          Cash (Note 2)                                                $            76,179  $              1,733,580
          Accounts receivable                                                      403,022                   344,877
          Value Added Tax Refundable                                                98,167                   131,692
          Inventories (Note 3)                                                   1,910,988                 1,828,845
          Due from related parties (Note 8)                                          9,354                    20,784
          Prepaid expenses                                                               0                     2,500
                                                      --- -- -- --- --
-------------------------------------------------- --                  --- ---------------- --- ---------------------
 Total Current Assets                                                            2,497,710                 4,062,278
 Long term loan (Note 13)                                                          107,515                   105,284
 Property, Plant and Equipment-Net (Note 5)                                      5,778,286                 5,885,734
 Intangible assets-Net (Note 4)                                                  3,090,300                 2,898,744
 Goodwill                                                                       31,854,137                31,854,137
-------------------------------------------------- -- --- -- -- --- -- --- ---------------- --- ---------------------
 Total assets                                                          $        43,327,948  $             44,806,177
----------------------------------- -------------- -- --- -- -- --- -- --- ---------------- --- ---------------------

Liabilities and Stockholders' Equity
 Current Liabilities
          Accounts payable  (Note 7)                                   $           812,792   $               872,209
          Short term bank loans (Note 9)                                         2,577,822                 2,593,734
          Due to related parties (Note 8)                                          382,875                   680,111
         -------------------------------------------- --- -- -- --- --
--------------------------------------------------                     --- ---------------- --- ---------------------
 Total Current Liabilities                                                       3,773,489                 4,146,054
-------------------------------------------------- -- --- -- -- --- -- --- ---------------- --- ---------------------

 Stockholders' Equity
          Capital stock (Authorized: 350,000,000)
          (Issued and outstanding 37,238,067:
          (December 31, 2005:   37,238,067))
                   Par value                                                        37,238                    37,238
                   Additional paid in capital                                   43,196,066                43,196,066
          Other Comprehensive Income                                               276,154                   343,420
          Retained Earnings (Deficit)                                          (3,954,999)               (2,916,601)
                                                   -- --- -- -- --- --
--------------------------------------------------                     --- ---------------- --- ---------------------
 Total stockholders' equity                                                     39,554,459                40,660,123
-------------------------------------------------- -- --- -- -- --- -- --- ---------------- --- ---------------------
-----------------------------------------------------
 Total liabilities and stockholders' equity                            $        43,327,948   $            44,806,177
----------------------------------------------------- --- -- -- --- -- --- ---------------- --- ---------------------



                                   Commitment: Note 3, 9, Going Concern: Note 1, Guarantees: Note 9

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

---

`HENDRX CORP.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in US Dollars)
(Unaudited - prepared by management)
------------------------------------------------------------- ---- --------------- ---- -------------- --- ----------------
                                                    Three Months Ended                          Nine Months Ended
                                                            September 30                           September 30
                                                    ------------------------------      -----------------------------------
                                                    ------------ ---- ------------
                                                       2006              2005               2006                2005
                                                    ------------      ------------      --------------     ----------------
                                                    ------------

Revenue                                         $       611,988   $       991,330   $       1,819,996  $         3,752,392
      Cost of Goods Sold                                574,684           908,254           1,688,785            3,019,453
      --------------------------------- --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
---------------------------------------
Gross Profit                                             37,304            83,076             131,211              732,939
--------------------------------------- --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
      Selling Expenses                                   56,647           123,750             232,756  `           261,767

      General and administrative  expenses              117,733           413,359             934,304            1,175,921
         Stock Based Compensation                             -                 -                   -            1,764,000
--------------------------------------- --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
Total Expenses                                          174,380           537,109           1,167,060            3,201,688
--------------------------------------- --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
                                                      (137,076)         (454,033)         (1,035,849)          (2,468,749)
Loss before other income
      Other expenses                                    (1,177)                 -             (2,549)                    -
----- ------------------------------------- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
------------------------------------------- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
Loss before Income taxes                              (138,253)         (454,033)         (1,038,398)          (2,468,749)
      Income (recovery) taxes                                 -               538                   -             (30,473)
----- --------------------------------- --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
--------------------------------------- --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
Net loss for the period                         $     (138,253)   $     (454,571)   $     (1,038,398)  $       (2,499,222)
                                        --- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
------------------------------------------- --- --- ------------ ---- ------------ ---- -------------- --- ----------------
Comprehensive Loss                              $     (138,253)  $      (454,571)   $     (1,038,398)  $       (2,499,222)
------------------------------------------- --- --- ------------ ---- ------------ ---- -------------- --- ----------------





















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

---

`HENDRX CORP.
Consolidated Statement of Stockholders' Equity
From Date of Inception on May 4, 1998 to September 30, 2006
(Expressed in US Dollars)
(Unaudited - Prepared by Management)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
                                                                              Par Value        Additional         Retained            Other
                                                              Common          @ $0.001          Paid-in           Earnings        Comprehensive      Stockholders'
                                                              Shares          Per Share         Capital          (Deficit)           Income              Equity
                                                           -------------     ------------     -------------     -------------    ----------------    ---------------
Balance, May 4, 1998                                                     $                $                 $                 $                   $
Stock issued                                                  1,000,000            1,000             9,000                                                   10,000
Net income (loss) - 1998                                                                                            (10,000)                               (10,000)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance December 31, 1998                                     1,000,000            1,000             9,000          (10,000)                                      -
Stock issued - 504                                            1,220,000            1,220            59,780                                                   61,000
Net income (loss) - 1999                                                                                            (61,046)                               (61,046)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance December 31, 1999                                     2,220,000            2,220            68,780          (71,046)                                   (46)
Stock Cancelled October 24, 2000                              (100,000)            (100)               100                                                        -
Net income (loss) - 2000                                                                                               (454)                                  (454)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance December 31, 2000                                     2,120,000            2,120            68,880          (71,500)                                  (500)
Net income (loss) - 2001                                                                                               (167)                                  (167)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance December 31, 2001                                     2,120,000            2,120            68,880          (71,667)                                  (667)
Net income (loss) - 2002                                                                                               (341)                                  (341)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance December 31, 2002                                     2,120,000            2,120            68,880          (72,008)                                (1,008)
Net income (loss) - 2003                                                                                               (252)                                  (252)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance December 31, 2003                                     2,120,000   $        2,120   $        68,880   $      (72,260)  $                   $         (1,260)



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

---

`HENDRX CORP.
Consolidated Statement of Stockholders' Equity
From Date of Inception on May 4, 1998 to September 30, 2006
(Expressed in US Dollars)
(Unaudited - Prepared by Management)
------------------------------------------------------------------------ --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
                                                                              Par Value        Additional         Retained            Other
                                                              Common          @ $0.001          Paid-in           Earnings        Comprehensive      Stockholders'
                                                              Shares          Per Share         Capital          (Deficit)           Income              Equity
                                                           -------------     ------------     -------------     -------------    ----------------    ---------------
                                                           -------------     ------------     -------------     -------------    ----------------    ---------------
Balance forwarded December 31, 2003                           2,120,000   $        2,120   $        68,880   $      (72,260)  $                   $         (1,260)
2004 Forward stock split and reorganization of stock         16,960,000           16,960          (16,960)                                                        -
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
                                                                                  19,080            51,920          (72,260)                                (1,260)
                                                             19,080,000
Issuance of shares for acquisition of

     wholly-owned subsidiary                                 12,720,000           12,720        34,077,480                                               34,090,200
Net profit for year ended December 31, 2004                                                                          106,214                                106,214
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------

Balance, December 31, 2004                                   31,800,000           31,800        34,129,400            33,954                             34,195,154
Shares issued for cash                                        5,303,667            5,304         7,958,946                                                7,964,250
Shares issued for employees for
     past service wage costs                                    134,400              134           517,306                                                  517,440
Stock issue cost                                                                               (1,173,586)                                              (1,173,586)
Foreign currency translation adjustment                                                                                                  343,420            343,420
Stock-based compensation                                                                         1,764,000                                                1,764,000
Net loss for year ended December 31, 2005                                                                        (2,950,555)                            (2,950,555)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance, December 31, 2005                                                        37,238                                                 343,420         40,660,123
                                                             37,238,067                         43,196,066       (2,916,601)
Foreign currency translation adjustment                                                                                                 (67,266)           (67,266)
Net loss for the period ended Sept 30, 2006                                                                      (1,038,398)                            (1,038,398)
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------
Balance, September 30, 2006                                                       37,238                                                 276,154         39,554,459
                                                             37,238,067  $                $     43,196,066  $    (3,954,999)  $                   $
------------------------------------------------------ --- ------------- --- ------------ --- ------------- --- ------------- -- ---------------- -- ---------------

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

---

`HENDRX CORP.
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
(Unaudited - Prepared by management)
------------------------------------------------------ -- --------------- ----- --------- -- --------------------- --- -----
                                                                Three months ended                 Nine months ended
                                                                  September 30,                      September 30,
                                                          -------------------------------    -------------------------------
                                                          --------------    -------------
                                                              2006              2005             2006              2005
                                                          --------------    -------------    --------------    -------------
----- ----------------------------------- ------------ -- --------------    -------------
       Operating activities
         Adjustments to reconcile net loss to net
         cash                                          $      (138,253)  $     (454,571)  $    (1,038,398)  $   (2,499,222)
               Amortization - tangible assets                   140,327          119,766           408,759          322,494
               Amortization - intangible assets                  44,963           42,469           131,442          126,730
               Stock-based compensation                                                -                 -        1,764,000
          Changes in operating assets and liabilities of
               Accounts receivable                              272,379         (65,522)           (58,145)       (660,711)
               VAT Refundable                                     8,270        (255,407)            33,525        (514,799)
               Inventories                                     (75,724)          (2,388)          (82,143)         (66,236)
               Prepaid expenses                                  10,000                -             2,500           62,671
               Accounts payable and accrued liabilities        (76,313)        (136,053)          (59,417)          235,544
------------------------------------------------------ -- -------------- -- ------------- -- -------------- -- -------------
 Total funds from (used in) operating activities                185,649        (474,600)         (661,877)      (1,229,529)
------------------------------------------------------ -- -------------- -- ------------- -- -------------- -- -------------
       Financing activities

          Short term bank loans                                (64,556)         (19,122)          (15,912)        (751,418)
          Advances from related parties                       (322,797)                -         (285,806)        (300,000)
          Long term loan                                        (1,169)                -           (2,231)                -
          Share capital issued for cash                               -        (131,133)                 -        6,790,664
------------------------------------------------------ -- -------------- -- ------------- -- -------------- -- -------------
 Total funds from(used in) financing activities               (388,522)        (150,255)         (303,949)        5,739,246
------------------------------------------------------ -- -------------- -- ------------- -- -------------- -- -------------

       Investing activities
          Property, plant and equipment                       (200,092)       (222,967))         (301,311)        (844,598)
          Intangible assets                                           -                -         (322,998)                -
          Payment on purchase of subsidiary                           -                -                 -      (2,000,000)
----- -- --------------------------------------------- --
------------------------------------------------------ -- -------------- -- ------------- -- -------------- -- -------------
 Total funds used in investing activities                     (200,092)       (222,967))         (624,309)      (2,844,598)
------------------------------------------------------ -- -------------- -- ------------- -- -------------- -- -------------
------------------------------------------------------ --
Effect of exchange rate                                        (59,755)           19,483          (67,266)          19,483-
 Cash, decrease during the period                             (402,965)        (828,339)       (1,590,135)        1,684,602
 Cash, beginning of the period                                  538,899        3,020,618         1,733,580          507,677
----------------------------------------- ------------ -- -------------- -- ------------- -- -------------- -- -------------
----- -- ---- ---------- ---------------- ------------ -- -------------- -- ------------- -- -------------- -- -------------

 Cash, end of the period                               $         76,179  $     2,192,279  $         76,179  $     2,192,279
----------------------------------------- ------------ -- -------------- -- ------------- -- -------------- -- -------------

 Supplementary cash flow information                                                                     -
       Non cash items
          Shares issued for accrued wage benefits      $              -  $             -  $              -  $       517,440
          Stock Based Compensation                     $              -  $             -  $              -  $     1,764,000
          Other Comprehensive Income                   $       (59,755)  $             -  $       (67,266)  $             -
       Income taxes (refunded) paid                    $              -  $             -  $              -  $             -
       Interest paid                                   $         76,179  $             -  $         93,838  $             -



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

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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

Organization

| | HENDRX Corp. (formerly StarSoft Inc.) (the Company) was incorporated under the laws of the State of Nevada on May 4, 1998 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 for 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 working deficiency of $1,275,779 at September 30, 2006, and had a net loss of $1,038,398 for the nine months ended September 30, 2006 and might not have sufficient work capital for the next twelve months. These factors create doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing to fund the ongoing development of the Companys business.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

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. Fixed 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 and cash equivalents that are not collateralized and accounts receivable that are unsecured. The Company limits its exposure to credit loss by placing its cash and cash equivalents with high credit quality financial institutions.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents

| | Cash and cash equivalents consist of cash on deposit and highly liquid short-term interest bearing securities with the maturity at the date of purchase of three months or less.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Selling expenses and general and administrative expenses

These expenses are recorded as incurred.

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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

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. It is impractical to estimate the amount of compensation for future absences, and accordingly, no liability has been recorded in the accompanying financial statements. The corporations policy is to recognize the costs of compensated absences when paid to employees.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Stock based compensation

| | Effective January 1, 2005, the Company adopted revised SFAS No. 123, 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

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 effect on diluted earnings per share are excluded from the calculation.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Long-lived assets

| | Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset in question may not be recoverable.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Property, Plant and Equipment, and depreciation

| | Property, Plant and Equipment are recorded at cost. Depreciation is provided on the straight line method based on the following estimated useful life, with a 10% residual value:
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Buildings                                                           20 years

Transportation equipment                                  10 years

Electronic equipment                                           5 years

Office equipment                                                 5 years

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 40 year period, and recorded at the appraisal value at the date of acquisition and amortized over 40 years.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | PatentsThe Company owns patents of atmospheric water generation (AWG) registered in the Peoples Republic of China under number P200304823. The subsidiary utilizes patents under license 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 appraisal value at the date of acquisition and amortized over 15 years.

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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

Recognition criteria

| | Gains are recognized when realized. Expenses and losses are recognized when an expenditure or previously recognized asset does not have future economic benefit. Expenses that are not linked with specific revenues are related to a period on the basis of transactions or events occurring in that period or by allocation to the periods to which they apply. The cost of assets that benefit more than one period is normally allocated over the periods benefited.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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 fee is fixed or determinable; and collection of the sale is reasonably assured.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Financial instruments

| | The companys financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, short term loans payable and other 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 approximate their carrying values.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Segmented information

| | The Companys identifiable assets are all located in China except cash of $27,887 in Canada and cash of $28,449 in Switzerland. Revenue on a geographical basis is disclosed in note 13, below.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

Foreign currency translation

| | The reporting currency of the Company is the United States Dollar. The accounts of other currencies are translated into US Dollars on the following basis:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

o Monetary assets and liabilities are translated at the current rate of exchange.

o The weighted average exchange rate for the period is used to translate revenue, expenses, and gains or losses from the functional currency to the reporting currency.

o Gains or losses on remeasurement from the recording currency are recognized in current net income.

o Gains or losses from foreign currency transactions are recognized in current net income.

o Fixed assets are measured at historical exchange rates that existed at the time of the transaction.

o Depreciation is measured at historical exchange rates that existed at the time the underlying related asset was acquired.

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.
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| | 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.
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| | 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.
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HENDRX CORP.

Notes to the Interim Consolidated Financial Statements

September 30, 2006

(Expressed in US Dollars)

(Unaudited)

Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)



| | Since 2005 is the first year of operation since Yuxin became a wholly owned subsidiary of the Company, the Board of Directors of the Company considers the implied fair value of Yuxin to be in excess of its carrying amount, the goodwill associated with Yuxin is considered not impaired and the second step of the impairment test is unnecessary.
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Recent Accounting Pronouncements

| | In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140, to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to permit fair value remeasurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, Accounting for the Impairment or Disposal of Long-Lived Assets, to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entitys first fiscal year
that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on the Companys future reported financial position or results of operations.
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| | In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct
write-downs. SFAS No. 156 is effective for an entitys first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on the Companys future reported financial position or results of operations.
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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 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:

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

Hendrx will implement the following strategies pursuant to this goal:

o Increase revenues through sales;

o Focus on operating efficiencies to increase product profit margins;

o Identify companies for acquisition with existing distribution networks and healthy revenue streams;

o Expand Hendrx horizontally through joint ventures or the acquisition of companies with unique and/or revolutionary technologies or products; and

o Implement an aggressive marketing campaign to create brand and product awareness.

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B.     Manufacture defect and trouble free equipment.

An important reason for the failure of many AWG companies is the presence of product defects that have continued to plague the industry. The concept of producing water from the air is not new; however, using that water for drinking is new. 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 know-how to purify the water and maintain the purity of the water. On the other hand, some water filtration and purifier appliance manufacturers have the knowledge to purify and/or filter water, but they do not have the capability to ensure the trouble-free operations of water machines. Hendrx is committed to the manufacture of trouble-free water machines. A truly plug and play machine without the hassle of service calls and technical problems is crucial to the development of our business.

C.     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 is not financially independent, so we continue to devote time and resources to ensuring that we have sufficient funds to move forward our business objectives.

D.     Be highly profitable to our shareholders.

We aim to create value for our shareholders with the development of new, innovative, safe and effective products that help people around the world live healthier, happier and longer lives.

E.     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

8.     Develop and Implement Support Systems for Distributors

9.     Restructure Finances and Debt

10.     Consolidate the Industry

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

o Determine ideal geographical markets;

o Identify and obtain as many distributors as possible in the selected geographical targets;

o Build a sound marketing plan;

o Expand Hendrxs brand and product awareness;

o Saturate the market;

o Increase revenues through sale and acquisitions; and

o Develop a retail market campaign.

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

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 September 30, 2006 and 2005.

During the nine month period ended September 30, 2006, Hendrx was engaged in the research and development, manufacturing and marketing of AWG units from Fujian, China. Hendrx expects that during 2006 we will embark on a comprehensive marketing plan for the sale of AWG units while focusing on innovation through research and development.

During the nine month period ended September 30, 2006, Hendrx realized a net loss of $1,038,398 from operations.

Three and nine month periods ended September 30, 2006 and 2005

Revenue

Revenue for the three month period ended September 30, 2006 was $611,988 as compared to $991,330 for the three month period ended September 30, 2005, a decrease of 38%. Revenue for the nine months period ended September 30, 2006 was $1,819,996 as compared to $3,752,392 for the nine month period ended September 30, 2005, a decrease of 51%. Revenue in the current three and nine month periods is based almost entirely on the sale of AWG units, which sales have dropped off significantly due to product complaints and the return of shipped product. Product modifications have been, and are continually being, tested to address these complaints. Revenue may continue to decline over the next twelve months unless product complaints decrease and marketing efforts increase.

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Cost of Goods Sold

Cost of goods sold for the three months period ended September 30, 2006 was $574,684 as compared to $908,254 for the three month period ended September 30, 2005, a decrease of 37%. Cost of goods sold for the nine month period ended September 30, 2006 was $1,688,785 as compared to $3,019,453 for the nine month period ended September 30, 2005, a decrease of 44%. 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 September 30, 2006 were $56,647 as compared to $123,750 for the three month period ended September 30, 2005, a decrease of 54%. Selling expenses for the nine month period ended September 30, 2006 were $232,756 as compared to $261,767 for the comparable period ended September 30, 2005, a decrease of 11%. Hendrx expects to increase selling expenses over the next twelve months as a marketing strategy is implemented to increase sales of improved AWG units.

General and administrative expenses for the three month period ended September 30, 2006 were $117,733 as compared to $413,359 for the three month period ended September 30, 2005, a decrease of 72%. General and administrative expenses for the nine month period ended September 30, 2006 were $934,304 as compared to $1,175,921 of the comparable period ended September 30, 2005, a decrease of 21%. General and administrative expenses include personnel costs, consulting fees, professional advice, accounting expenses, auditing fees, public reporting and travel. Hendrx anticipates that general and administrative may increase in future periods.

Stock-based compensation was $0 for the three month periods ended September 30, 2006 and 2005.

Stock-based compensation was $0 for the nine month period ended September 30, 2006 as compared to $1,764,000 for the nine month period ended September 30, 2005.

Net Losses

Net losses for the three month period ended September 30, 2006 decreased to $138,253 from $454,571 for the comparable three month period ended September 30, 2005, a decrease of 70%. Net losses for the nine month period ended September 30, 2006 decreased to $1,038,398 from $2,499,222 for the comparable nine month period ended September 30, 2005, a decrease of 58%. The decrease in net losses over the comparative three month periods can be primarily attributed to a decreasing ratio of both selling expenses and general and administrative expenses as compared to revenue. The decrease in net losses over the comparative nine month periods is attributable to stock based compensation realized in the prior nine month period. Hendrx expects that net losses will decrease in future periods in relation to anticipated increases in revenue.

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Liquidity and Capital Resources

Cash flow provided by operations in the three month period ended September 30, 2006 was $185,649 as compared to cash flow used in operations of $474,600 for the three month period ended September 30, 2005. Cash flow used in operations in the nine month period ended September 30, 2006 was $661,877 as compared to cash flow used in operations of $1,229,529 for the comparable nine month period ended September 30, 2005. The turn around to cash flow from operations for the current three month period can be primarily attributed to the decrease in net loss and amounts payable in addition to an increase in amounts payable. The decrease in cash flow used in operations for the current nine month period can be primarily attributed to the decrease in net losses over the comparative periods. Hendrx expects net losses may increase in future periods until such time as revenues increase.

Cash flow used in financing activities for the three month period ended September 30, 2006 was $388,522, as compared to $150,255 for the three month period ended September 30, 2005. Cash flow used in financing activities was $303,949 for the nine months ended September 30, 2006 as compared to cash flow provided by financing activities of $5,739,246 for the nine month period ended September 30, 2005. Cash flow used for financing activities in the current three and nine month periods can be primarily attributed to partial repayments on short term bank loans and advances from related parties. Hendrx expects to produce additional cash flow from financing activities during 2006.

Cash flow used for investing activities for the three month period ended September 30, 2006 was $200,092 as compared to $222,967 for the three month period ended September 30, 2005. Cash flow used for investing activities for the nine month period ended September 30, 2006 was $624,309 as compared to cash flows from investing activities of $2,844,598 for the nine months ended September 30, 2005. Cash flow used for investing activities in the current three month period can be attributed to purchase of equipment and software. Cash flow used in investing activities in the current nine month period can be attributed to the purchase of equipment, software and certain intangible assets.

Capital Deficit

Hendrx had a working capital deficit of $1,275,779 as of September 30, 2006 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 debt or equity placements will be sufficient to fund operations in 2006. However, there can be no assurance that Hendrx will generate sufficient cash flows from revenue, 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. Any commitments for future capital expenditures will be primarily funded by future equity financings.

Loans

Hendrxs bank loans of $2,577,822 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, Fujian Yuxin Electronic Equipment Co. Ltd., a wholly owned subsidiary of Hendrx, 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.

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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 September 30, 2006, none of the options had been exercised.

Hendrx, except for the Plan, has no other defined benefit plan or contractual commitment with any of its officers or directors.

Equipment and Employees

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

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 our 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 September 30, 2006 and 2005 included in this Form 10-QSB, Hendrx discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. Hendrx believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States of America.

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

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Revenue Recognition

Hendrx generates revenue through the sale of AWG, reverse osmosis, and ionic units 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.

Recent Accounting Pronouncements

In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140, to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, to permit fair value remeasurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, Accounting for the Impairment or Disposal of Long-Lived Assets, to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entitys first fiscal year that begins
after September 15, 2006, with earlier application allowed. This standard is not expected to have a significant effect on Hendrxs future reported financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs.
SFAS No. 156 is effective for an entitys first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected to have a significant effect on Hendrxs future reported financial position or results of operations.

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

The statements contained in the section titled Managements Discussion and Analysis, with the exception of historical facts, are forward looking statements within the meaning of Section 27A of the Securities Act. A safe-harbor provision may not be applicable to the forward looking statements made in this Form 10-QSB due to certain exclusions under Section 27A(b). Forward looking statements 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 statements include, but are not limited to, statements concerning:



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o our anticipated financial performance and business plan;

o the sufficiency of existing capital resources;

o our ability to raise additional capital to fund cash requirements for future operations;

o uncertainties related to the acceptance of Hendrx's current and future products;

o the ability of Hendrx to achieve and maintain sufficient revenues to fund operations;

o the volatility of the stock market and;

o 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

Our future operating results are highly uncertain. Before deciding to invest in us or to maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in this annual report. If any of these risks actually occur, our business, financial condition or results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose all or part of your investment.

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

Since our inception in 1998, our expenses have significantly exceeded our revenue resulting in continuing losses. During the nine month period ended September 30, 2006, we recorded a net loss of $1,038,398. We believe that we may continue to incur operating losses until such time as we realize the benefits of our recently revamped marketing and sales plans.

We have been unable to generate sufficient cash flow to carry out our business plan.

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.

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Our business plan is prone to significant risks.

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 we can maintain net cash flow, such failure will have an immediate impact on our ability to continue our business operations.

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.

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 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 marketing efforts will adversely affect our capacity to execute our plan.

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Our business is largely dependent on a limited number of customers.

One customer, Librex Group S.A.L. (Librex), accounts for a significant portion of our net sales. We have a contract with Librex, 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.

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, 2008, 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, 2008, 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.

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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 $1,275,779 as of September 30, 2006, 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.

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 September 30, 2006. 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 September 30, 2006, 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.

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PART II

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, for breach of contract 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. (Yuxin) a wholly owned subsidiary of Hendrx, to manufacture atmospheric water generators, on an original equipment manufacturer 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 denies any culpability or liability in this matter.

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, 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 motions in response to the complaint that it believes will ultimately cause Hendrx to succeed in defending this position.

None.

None.

None.

None.

Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits on page 36 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 10th day of November, 2006.

Hendrx Corp.

/s/ George Solymar

Name: George Solymar

Title: Chief Executive Officer

/s/ Cherry Cai

Name: Cherry Cai

Title: Chief Financial Officer and Principal Accounting Officer

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### INDEX TO EXHIBITS

|Exhibit No. | Page No. | Description                                                                                                                                                                                            
|----------- | -------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3(i)(a)     | *        | Articles of Incorporation of Hendrx adopted May 4, 1998 (incorporated by reference to the Form 10-SB filed with the Securities and Exchange Commission ("Commission") on January 12, 2004).            
|3(i)(b)     | *        | Amendment to the Articles of Incorporation dated March 28, 2005 (incorporated by reference to the Form 10-KSB filed with 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)       | Attached | Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Commissionurities and Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|31(b)       | Attached | Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Commissionurities and Exchange Act of 1934 as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|32(a)       | Attached | 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)       | Attached | 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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