UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C. 20549

                                FORM 10-K

[X]  Annual Report under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 for the fiscal year ended June 30, 2008.

[ ]  Transition Report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 for the transition period from _____ to _____.

                     Commission File Number 333-152052
                                            ----------

                             Hydrodynex, Inc.
      -----------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)

               Nevada                                   20-4903071
    -------------------------------                ----------------------
    (State or other jurisdiction of                (I.R.S. employer
     incorporation or organization)                identification number)

                230 Bethany Rd., Ste. 128, Burbank, CA 91504
            -----------------------------------------------------
            (Address of principal executive offices and zip code)

                              (702) 884-2150
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value

   Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act.  Yes  [ ]  No  [X]

   Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ]  No [X]

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

   Indicate by check mark if there disclosure of delinquent filers in
response to Item 405 of Regulation S-K is not contained in this herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

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

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

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

   The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant, as of June 30, 2008 is $77,500 based on
the sale price of the shares in a private placement that closed on September
30, 2007 of $0.10 per share.  The shares of our company are not currently
listed on an exchange.

   Number of shares outstanding of the issuer's common stock as of
September 28, 2008: 1,500,000 shares.


<PAGE>





<TABLE>
<CAPTION>

                            TABLE OF CONTENTS


                                                                         Page
<S>                                                                      <C>
PART I
   Item 1.     Business                                                     2
   Item 1A.    Risk Factors                                                12
   Item 2.     Properties                                                  32
   Item 3.     Legal Proceedings                                           32
   Item 4.     Submission of Matters to a Vote of Security Holders         32
PART II                                                                    33
   Item 5.     Market for Registrant's Common Equity, Related
               Stockholder Matters and Issuer Purchases of
               Equity Securities                                           33
   Item 6.     Selected Financial Data                                     33
   Item 7.     Management's Discussion and Analysis of Financial
               Condition and Results of Operations                         33
   Item 7A.    Quantitative and Qualitative Disclosures About
               Market Risk                                                 38
   Item 8.     Financial Statements and Supplementary Data                 38
   Item 9.     Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure                         38
   Item 9A.    Controls and Procedures                                     38
   Item 9B.    Other Information                                           39
PART III                                                                   40
   Item 10.    Directors, Executive Officers of the Registrant             40
   Item 11.    Executive Compensation                                      42
   Item 12.    Security Ownership of Certain Beneficial Owners and
               Management and Related Stockholder Matters                  43
   Item 13.    Certain Relationships and Related Transactions, and
               Director Independence                                       45
   Item 14.    Principal Accountant Fees and Services                      45
   Item 15.    Exhibits and Financial Statement Schedules                  45
SIGNATURES                                                                 46
FINANCIALS                                                                 47
EXHIBIT INDEX                                                              63
</TABLE>

<PAGE>



                        FORWARD LOOKING STATEMENTS

   This Report on Form 10-K and the documents incorporated by reference
include "forward-looking statements". To the extent that the information
presented in this Report on Form 10-K discusses financial projections,
information or expectations about our business plans, results of operations,
products or markets, or otherwise makes statements about future events, such
statements are forward-looking. Such forward-looking statements can be
identified by the use of words such as "intends", "anticipates", "believes",
"estimates", "projects", "forecasts", "expects", "plans" and "proposes".
Although we believe that the expectations reflected in these forward-looking
statements are based on reasonable assumptions, there are a number of risks
and uncertainties that could cause actual results to differ materially from
such forward-looking statements. These include, among others, the cautionary
statements in the "Risk Factors" and "Management's Discussion and Analysis or
Plan of Operation" sections of this Report on Form 10-K. These cautionary
statements identify important factors that could cause actual results to
differ materially from those described in the forward-looking statements.
When considering forward-looking statements in this prospectus, you should
keep in mind the cautionary statements in the "Risk Factors" and
"Management's Discussion and Analysis or Plan of Operation" sections below,
and other sections of this Report on Form 10-K.

   The statements contained in this Report on Form 10-K that are not purely
historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, including, without limitation, statements regarding our
expectations, objectives, anticipations, plans, hopes, beliefs, intentions or
strategies regarding the future. All forward-looking statements included in
this document are based on information available to us on the date hereof,
and we assume no obligation to update any such forward-looking statements. It
is important to note that our actual results could differ materially from
those included in such forward-looking statements. There are many factors
that could cause actual results to differ materially from the forward looking
statements. For a detailed explanation of such risks, please see the section
entitled "Risk Factors" beginning on page 12 of this Report on Form 10-K.
Such risks, as well as such other risks and uncertainties as are detailed in
our SEC reports and filings for a discussion of the factors that could cause
actual results to differ materially from the forward- looking statements.
Given these uncertainties, readers are cautioned not to place undue reliance
on the forward-looking statements.

   The following discussion should be read in conjunction with the audited
consolidated financial statements and the notes included in this Report on
Form 10-K and the section entitled "Management's Discussion and Analysis or
Plan of Operation" included in this Report on Form 10-K.


                                      1
<PAGE>


                                   PART I

Item 1.   Business.

TABLE OF CONTENTS

A.   Hydrodynex - Introduction and Business Strategy
B.   Hydrodynex Products
C.   Description of Proprietary Technology
D.   Hydrodynex' Exclusive Technology License Agreement
E.   Market Analysis and Competition
G.   Marketing and Sales
H.   Patents, Trademarks, and Copyrights
I.   Employees

A.   Hydrodynex, Inc. - Introduction and Business Strategy

   Hydrodynex, Inc., a Nevada Corporation, was founded on May 12, 2006, for
the purpose of acquiring an exclusive North American license for the
marketing and distribution rights of an anodic oxidation water disinfection
product commonly referred to as the AO-System(R) technology. The primary
objective of our company is to commercialize this technology in North America
initially through direct sales in order to gain a substantial market
penetration.  Hydrodynex has developed a strategic business plan to introduce
and market the AO-Systems(R) in North America.  Hydrodynex believes that
due to the innovative technology, the AO-Systems(R) will fill an open market
gap in the water disinfection and treatment market.

   As a result of the research and development work beginning in 1985 and
conducted by Hydrosystemtechnik GmbH, from whom we have been granted an
exclusive license for the anodic oxidation water disinfection product,
substantial technological discoveries were made and a mechanized water
disinfection unit was developed and improved which is collectively referred
to as the AO-System(R).  Hydrosystemtechnik GmbH has developed and
commercialized this innovative water purification and disinfection system and
has been selling these units in the European market for the last 16 years.
Within the last few years, advancements to include warm water systems have
been developed by Hydrosystemtechnik GmbH.  Two U.S. patents have been
granted to Hydrosystemtechnik GmbH covering the apparatus design of a water
sterilization unit that uses the principals of anodic oxidation without
adding chlorine compounds.  Hydrosystemtechnik GmbH had, as of the end of
2007, sold and installed over 160 AO-Systems(R) units of 11 different models
for projects in Europe and approximately 15 other countries worldwide.  No
system has yet been sold or is installed in the U.S., Canada or Mexico, and
no system can be sold in the U.S. without approval of the U.S. EPA.

B.   Hydrodynex' Exclusive Technology License Agreement

   We entered into a Marketing, Distribution and License Agreement with
Hydrosystemtechnik GmbH September 3, 2007.  On August 30, 2008, we entered
into an Amended Marketing, Distribution and License Agreement, or amended
license agreement, with Hydrosystemtechnik, which has the same effective date
as the original license agreement, September 3, 2007, supersedes the original
license agreement.  Under the amended license agreement, we were granted the

                                    2
<PAGE>
right to sell water disinfection systems based on the AO-System(R) technology
in all markets (except the dental market) in Canada, the United States, and
Mexico on an exclusive basis for a period of three years after the effective
date of the license agreement.  The license remains exclusive subject to
Hydrodynex (a) leasing or purchasing an AO-System(R) prior to November 3,
2008, and (b) obtaining, within 30 months of the effective date of the
license agreement, verification and certification of the AO-System(R)
technology by the U.S. EPA necessary for commercialization and selling water
disinfection systems in whole or in part within the United States.  We plan
to undertake to secure technology verification from NSF International, an
independent third party testing laboratory, accredited by the EPA, to legally
sell AO-Systems(R) in the United States, but the process has not yet begun
because of the non-completion of the construction of the test reactor by the
Licensor.  In addition, in order to maintain the exclusivity of the license,
we are obligated to (a) make application to six states in the Western U.S.
for certification of the AO-System(R) technology within 90 days after
receiving the NSF and EPA verification, (b) sell, deliver and install at
least one AO-System(R) in the U.S. in the two year exclusivity period
following technology verification, and (c) we are required to demonstrate
financial responsibility in the form of a bank credit line or equity funding
of not less than $500,000 to accomplish the objectives necessary to retain
the exclusivity of the license.

   We are also required, beginning year three after the effective date, or
September 3, 2009, to meet certain minimum annual sales targets, based on net
purchase value, for sales of AO-System(R) products in the North American
territory, which increase from EUR 30,000 in year three to EUR 500,000 in
year six and thereafter, in order to maintain the exclusivity of the license.
If we fail to meet the minimum annual sales targets at the end of any
business year, the licensor, Hydrosystemtechnik GmbH, shall have the option
to revert the license agreement to a non-exclusive marketing agreement.  We
have paid a non-refundable license fee in the amount of EUR 10,000, and we
were previously obligated to make a second non-refundable license fee in the
amount of EUR 20,000 on June 1, 2008.  Under the terms of the amended license
agreement, Hydrosystemtechnik has agreed in writing to an extension of the
due date for the second license payment from June 1, 2008 to November 30,
2008.  A third license fee in the amount of EUR 20,000 will be due upon
certification and approval of the AO-Systems(R) by the US Environmental
Protection Agency for commercial sales in the United States.  We are also
required to attain and maintain minimum annual sales volume of EUR 500,000 in
order to have the right to manufacture water disinfection systems based on
the AO-System(R) technology and sell them in the licensed territory.  If
after year five after the effective date we do not maintain minimum annual
sales volume of EUR 500,000 in any two consecutive years, the right to
manufacture will expire automatically in the subsequent year.  We are
obligated to pay a royalty on the products actually assembled or manufactured
and sold to third parties in the amount of 10% of the net selling price on
all AO-Systems(R).  We are not obligated to pay a royalty on finished AO-
Systems(R) purchased from Hydrosystemtechnik and resold.  We are also
obligated to pay fifty percent of the direct costs related to preparing and
prosecution of patents and patent applications in the U.S., Canada or
Mexico,, including legal fees, filing fees maintenance fees and transaction
costs, so long as the license agreement remains in effect.

                                     3
<PAGE>


   The license agreement terminates after ten years, with an option by us to
extend the license for an additional ten years on an exclusive basis, as long
as the minimum annual sales volume of is maintained.  The licensor,
Hydrosystemtechnik GmbH, has the right to terminate the license agreement,
after a notice and cure period, if we are in default of any obligation in the
agreement, are adjudged bankrupt, become insolvent or similar events, or if
we do not maintain minimum annual sales volume of EUR 100,000 in each
business year subsequent to the third year after the effective date (which
means meeting the EUR 100,000 minimum annual sales volume for each year
beginning September 3, 2010).

   We plan to market, sell, install, and maintain specialized AO-Systems(R)
on a retail basis pursuant to the license.  Stationary-type systems will be
sold and installed in facilities such as hospitals, hotels, water cooling
towers, swimming pools, etc.  Transportable AO-Systems(R) and packaging units
will be marketed to the U.S. military and other associations involved in the
use of portable water treatment systems for emergency and non-emergency
markets.  Hydrodynex will purchase components on a wholesale basis from
Hydrosystemtechnik to make, use, and sell specific water disinfection systems
on a custom basis for its customers.  Hydrodynex has the option to engage in
future manufacturing of the AO-Systems(R) when it is deemed necessary and
financially justifiable.

   Activities to date have been limited primarily to organization, initial
capitalization, business and product research, producing marketing materials
and a website, securing a marketing agreement, preparing a comprehensive
business and operating plan, evaluating the regulatory requirements to sell
water treatment systems in the U.S., Canada and Mexico, and undertaking a
marketing feasibility study.   Extensive research has been done on competing
technologies and the water contaminants that most adversely affect water
systems at the present time.  Legionella bacteria protection is the strongest
market Hydrodynex has identified because of its wide prevalence and the high
percentage of death resulting from infection.

   Our company is structured expressly as a marketing entity and therefore we
do not currently engage in the design, development or manufacturing of
products.  In phase one of our multiphase marketing plan. Subject to receipt
of approval from the EPA, of which there is no assurance, we intend to
market and sell the AO-System(R), a device that disinfects potable water
systems and industrial water systems, under an OEM arrangement with our
Licensor Hydrosystemtechnik, GmbH.  To date, we have no revenues from
operations. Our expenses consist of marketing and management activities and
personnel costs.  We intend to accomplish the following:

  o  Establish effective marketing channels for our products through a
     network of distributors or dealers in selected markets.
  o  Support revenue generation in these channels by effectively educating
     the end user and promoting the use of AO-Systems(R) as a means of
     assuring the delivery of safe, healthy water at low costs and
     eliminating the Legionella bacteria from existing buildings.
  o  We intend to have Hydrosystemtechnik GmbH provide the AO-Systems(R)
     under a brand label to be determined.
  o  We intend to register Hydrodynex as a company registered trademark.

                                      4
<PAGE>

   In addition to the risk factors set forth herein, additional obstacles,
which we may encounter in launching our business model, are as follows:

1.  If we do launch planned marketing initiatives, our target market may not
    be receptive to our business and may not purchase our products.
2.  Potential customers may not be willing to pay the price for our products.
3.  Distributors and dealers may not continue to carry our products if we
    fail to meet their standards pursuant to our agreements with them.
4.  We may be unable to establish new distributors or dealers in the balance
    of our marketing territory if our performance with those channels during
    our initial launch does not demonstrate a level of opportunity consistent
    with their standards.

   The water treatment industry is a rapidly growing sector and a primary
component of the world's basic needs market.  With over 20 large target
industrial business areas benefiting from clean water and with an ever-
present threat of water-borne diseases, other biohazard and inorganic aquatic
health threats, including mechanical corrosion issues, the clean water
industry is paramount in importance to the U.S. and the rest of North
America.  Certain competing technologies are arising, but none that utilize
the same superior and patented technological properties as advanced Anodic
Oxidation.  Lawsuits filed against facilities such as hospitals, hotels,
retirement homes and cooling towers because of their substandard water system
cleanliness are very prevalent and on the rise in the U.S.  This system gives
these places a strong tool to protect themselves with and the ability to
fight accusations of negligence in lawsuits.  Too many human deaths arise
from unsanitary remote water sources and disaster induced contamination as
well.

   Water treatment and purification systems with increasing complexity and
effectiveness have been put into operation worldwide for a number of years.
However, conventional mechanical and chemical purification processes have
proven to be insufficient in preventing the distribution of diseases through
this essential nutritional element that water represents. Recognizing that
special disinfection methods had to be developed to eliminate micro-organisms
such as bacteria and viruses, heavy chlorination and other chemical
treatments, and more recently UV and Ozone treatments, have been introduced.
These processes, however, include significant disadvantages to the AO-
System(R) and among other things, are hazardous, or provide a bad odor and/or
taste, or only have a short-term residual cleaning effect on the water.

   We have seen several outbreaks of water-borne illnesses in recent years in
municipal, residential and rural water systems, including outbreaks of
Cryptosporidium, E. coli, Pseudomonas, Norovirus, Echovirus, methicillin-
resistant Staphylococcus aureus, Giardia intestinalis, Shigella sonnei, etc.
An estimated 1400 people in the U.S. die each year from Pseudomonas in
hospital water systems.  An estimated 18,000 people each year in the U.S. are
infected with water-borne Legionella bacteria, 25% of those estimated from
Healthcare environments.


                                      5
<PAGE>


   A particularly dangerous disease is Legionnaires' disease, caused by
Legionella bacteria, has already caused significant lawsuits against
hospitals since the disinfection processes used by them were not sufficient
to prevent death to immune-suppressed patients. The AO-System(R) is the only
existing system known to Hydrodynex which permanently eliminates micro-
organisms in water systems through its short and long-term oxidative effects,
including the biofilm inside pipe walls that harbors Legionella.  The AO-
System(R) has proven to be a solution to provide partial or complete
"healing" to existing and previously infected water systems in closed
circuits such as hot water systems in hospitals.  However, there exists many
other commercial applications in facilities such as cooling towers and food
processing plants that are in dire need of this process to provide protection
as well as prevention from expensive shut-down periods for cleaning.  Being a
new technical solution with more than 160 systems installed in 15 countries
so far, the AO-System(R) are rapidly gaining a respect in the water treatment
industry on a global basis.

STRATEGY

   Our plan of operation for the next 12 months will be the execution of our
strategic business plan.   Hydrodynex intends to operate in three phases as
follows:

Phase 1: Finalization of the Strategic Marketing Plan, complete current audit
of Hydrodynex, initial start-up capital realization through a second private
stock offering, securing EPA  and State certification,  making application
for Hydrodynex to be publicly traded on the OTC-BB, and hiring/training sales
and technical personnel.

Phase 2: Initiation of marketing and sales activities in selected markets in
North America (U.S., Canada, and Mexico).  Full scale commercialization of
the AO-System(R), including industrialization and after-sale service
agreements, for the markets covered by Hydrodynex.  As part of its effort to
commercialize the AO-System(R), Hydrodynex plans to offer mobile systems
which may use a film pouch packaging system.

Phase 3:  Set-up manufacturing in the U.S. when it becomes a viable, profit-
increasing option.

The objectives are:

   (a) establish our product as the un-paralleled leader in water
       disinfection systems,
   (b) enter and cover all market segments in the U.S., Canada, and Mexico,0
   (c) get the AO-System(R) required and mandated by local, state, and
       national insurance agencies and governments.


                                      6
<PAGE>


C.   Hydrodynex Products

   The AO-System(R) units that Hydrodynex plans to sell are fully developed
and utilize a novel and patented advanced technology broadly known as Anodic
Oxidation.  The AO-System(R) delivers this technology with 11 different
reactor unit models to a wide range of applicable markets and water volume
parameters.  This particular generation of AO-System(R) is advanced and does
not use brine water and does not contain technical characteristics similar to
other older AO technology.  Improved metal electrodes, design configurations,
and process tuning make this generation of AO-System(R) far superior to other
out-dated AO technologies.  We feel that research we have done on other
current competing technologies shows the AO-System(R) offers higher
disinfection standards and we have found various shortcomings for competing
technologies.  When treating water for Legionella bacteria, conventional
methods consisting of hyper-chlorination and super heat-flushing are
inadequate.  The AO-System(R) provides a viable technical solution related to
killing Legionella bacteria.

   Initially, Hydrodynex will not produce any products or components; it will
act as an exclusive master distributor of AO-Systems(R) I in Canada, the
United States and Mexico.  When the volume of sales warrants the setup of an
assembly and manufacturing facility in North America, we will enter Phase II
of our business plan and take on the responsibility of assembling and
manufacturing the units by Hydrodynex or outsource the manufacturing to a
reliable subcontractor here in the U.S. or another foreign country.

D.    Description of Proprietary Technology

   The AO-System(R) is generally installed as a point-of-entry device on warm
and/or cold water systems.  Water passes through a reactor chamber of the
unit which contains specially engineered electrodes that produce oxidizing
effects in the water as an electrical current is generated to pass from the
cathodes to the anodes.  Instrument observed water flow determines the amount
of electrical current generated and the computer unit automatically controls
the system.  The system can bypass itself for regularly scheduled back-wash
cleanings which prevent build-up on the electrodes and thereby increase the
longevity of the system and its components.

   Advanced AO is an electrochemical in-situ sterilization process which
produces deactivating (microbiocidal) oxidants directly from the water being
treated. No chemical additives are necessary for the treatment. The water
flows into the reactor from the bottom then up through the spaces between the
electrodes, serving directly as an electrolyte. The deactivation (killing) of
microorganisms such as bacteria, fungi, algae & viruses occurs predominantly
through oxidation in the anode boundary layer (due to short life absorbed
oxidants), ultimately being optimized for maximum effectiveness. In operation
with neutral pH, two dominant anode mechanisms can be verified:


                                      7
<PAGE>


E.   Market Analysis and Competition

   Hydrodynex' management believes that Hydrodynex' main competitiveness is
expected to be based on technological superiority and efficacy, rather than
price.  Hydrodynex will be competing against companies with products it
believes are less efficient and less expensive than the AO-System(R),
however, these companies have sufficiently more financial resources than our
company.  The main currently used disinfection systems are based on
chlorination (most common), and more recently, UV and Ozone systems.

   In the last few years, several companies have introduced a Copper/Silver
Ionization process which was installed for testing in at least 16 hospitals
in 5 states.   This shows that there is indeed a viable market for more
efficient disinfection systems. Copper/Silver ionization has not entered the
retail market for drinking water systems and most likely will not be allowed
in this market due to its release of heavy metals into the treated water.  It
should be noted that while that system is simpler than conventional systems,
it has numerous deficiencies when compared to the AO-System(R).  Chlorine
Dioxide is the other major competitor to our technology, but also has several
deficiencies when compared with advanced Anodic Oxidation.  Examples would be
such things as harmful carcinogenic byproducts, large amounts of dangerous
chemical dosing and inefficient Legionella eradication.  .

   In management's opinion, at this point in time, there is no similar
technology available in the United States.  However, the market resistance
against new products and new technical solutions has to be overcome in order
for the company to become successful and there is no assurance that this will
happen.  The need is immense, and so are the advantages.  Electrolytic
chlorinators have been seen entering the market recently, but the statistical
effects of it on Legionella have not shown perfect results, and other
negatives have been found with this process.  Very recently, two more
competing companies have marketed "photo-oxidation" and "RECOR(R)", but
information on these systems is limited and the validity of these systems is
yet to be seen.

   Other benefits of the AO-System(R) include lowered energy consumption by
the facility by not having to raise its warm water network above 55 degrees
Celsius.  Many places raise their water temperature up to 70 or even 80
degrees Celsius at night to combat problems they encounter.  This results in
danger of scorching to consumers, highly increased pipe corrosion, and
dramatically increased energy consumption.  The AO-System(R) also partially
softens water by increasing the solubility of common precipitates and
removing solutes within the reactor.  It also cleans existing pipe corrosion
and breaks down scaling deposits.  The cost of replacing a piping system in a
building is a very expensive, lengthy, and invasive process.


                                      8
<PAGE>


   As far as the portable system is concerned, there are many competing
systems of different sizes on the market, but the long-term disinfection
effect of advanced AO-System(R) is a benefit that is not matched by the
majority of these systems.  Hydrodynex believes it may be able to establish a
niche market.

   We have entered into a Memorandum of Understanding with IMF, under which
we will have access to the design parameter and manufacturing right which
integrates a unique water packaging system with the AO-System(R).  The
packaging system utilized in the mobile unit uses a proprietary tri-layer
foil in the packaging.  This material keeps the water quality unchanged over
many years.

   The competitive situation may adversely affect Hydrodynex sales or
capacity to retain or increase clientele or business.  There are no
assurances Hydrodynex will be able to successfully compete against these
other competitors based on these factors.  In order to compete with these
other companies, Hydrodynex plans to attempt competitive pricing, above
average customer service, high quality products and provide independent
research and testing that will provide conclusive evidence that the AO-
System(R) is the leading and best technology available.  In addition to the
technological advantages of the AO-System(R), this system is very competitive
when it comes to operation and maintenance costs and treatment cost per
gallon of water.

   These facts lead to the belief that the Hydrodynex AO-System(R) process
has the potential to replace most of the competing processes.  However, the
replacement will be gradual due to the fragmentation of the industry.  No
company has a market penetration of more than a couple of percent, but we
believe that the AO-System(R) has the potential to be the market leader.

G.   Marketing and Sales

   Once certification has been granted by the EPA, we intend to focus its
sales and marketing program directly toward certain targets of opportunity.
The most important targets are those where water safety is paramount; in
facilities and industries where unhealthy people are exposed to additional
disease and lives are being lost, where expensive and reputation tarnishing
lawsuits are in abundance, and where other competing products are failing to
properly address these issues.  Four primary markets have been researched and
evaluated by the Company's management.  These four areas are hospitals,
hotels, military applications and applications for mobile disaster relief.
Secondary marketing targets are water cooling towers, food processing
facilities, retirement homes, spas, schools, industrial plants, public
fountains, pools, water slide parks, cruise ships, etc.



                                      9
<PAGE>


   The organism that is causing the greatest problems is the Legionella
bacteria, the most dangerous and most prevalent water bio-contaminant in the
market.  Hydrodynex has learned of hundreds of outbreaks in the U.S. and
subsequent litigation resulting from outbreaks.  It is estimated that 50-95%
of building water systems are inhabited by this often fatal bacteria which
kills around 35% of the people that are infected.  As many as 18,000 are
estimated to be infected by Legionella in the U.S. per year, about 5,000 of
them in hospitals, this is the number one focus of Hydrodynex at this time.
The primary reason that hospitals have such a high degree of mortality is
because many of the individuals in the hospitals have their immune systems
compromised due to medication, surgery, chemotherapy, etc.  This phenomenon
is also seen in retirement homes.

   We will attend trade shows and undertake a direct marketing program to key
hospitals in the southwestern section of the U.S. Marketing efforts will
initially be concentrated in the states of Nevada, Arizona, and California.
Prospective customers and marketing targets include Good Samaritan hospital
in Los Angeles, which recently weathered a Legionnaires ' disease lawsuit
involving two deaths.  The company is developing a comprehensive marketing
brochure to define the differences between the AO-Systems(R) and other
competing water treatment systems now available on the market.  We have
already created a website to begin educating the market about the AO-
System(R)- www.HydroDynex.com.

   Hydrodynex will also deploy a multi-channel Internet marketing strategy
with the primary intention of building brand recognition, educating the
consumer of the Hydrodynex value propositions, generating leads and
increasing sales through the following tactics:

  o  Web Presence Development: the Hydrodynex primary website and its
     supporting network websites will engage in a host of Web marketing
     strategies. Such strategies will include but are not limited to: Search
     Engine Optimization (SEO); consistent creation of unique, relevant
     content that target specific key phrases Hydrodynex consumers are
     searching for; optimized page TITLE and Meta tags, ALT tags, H1/2/3
     headers, URLS, etc.; link building through various web directory
     submissions and Web presence campaigns such as article submissions,
     press releases, etc.
  o  Monthly Email Newsletter and Lead Cultivation: as prospects are added to
     the Hydrodynex sales pipeline-and in addition to traditional
     sales/marketing follow up and cultivation tactics-a monthly newsletter
     will be sent to cultivate prospective clients through value-added
     messaging, helpful information and sales/marketing information,
  o  Online Joint Venture Marketing Partnership: Hydrodynex will identify
     complimentary businesses which support the Hydrodynex model and seek out
     online marketing partnerships to expand Web presence and sales/marketing
     objectives.


                                      10
<PAGE>


   Subject to receiving the necessary regulatory approvals from the EPA, we
will develop all the appropriate technical brochures, presentations,
marketing materials, upgrade of our website, and develop a sales team, we
will initiate meeting with potential customers and attend key trade shows.
We intend to use an integrated plan that includes a robust and informative
web site, target advertising, trade shows and personal contact to
establishments that have a reported history of problems related to
Legionella.  The identification of potential customer will be determined by a
comprehensive analysis of the existing market.  Hydrodynex plans to attend
and/or participate in trade shows and do direct mailings and call on to
potential clients as its marketing strategy.  Relationships with scientists,
organizations, associations, insurance companies, government agencies and
media will help in marketing the product.

   Each target customer will receive comprehensive marketing communications
that address the benefits from the purchase and use of the AO-System(R).  The
marketing mission will be focused on educating the potential customer and
providing information  that relates to how the system is a unique technical
solution that will eliminate the deadly virus of Legionella in hospitals,
hotels, military applications, mobile disaster relief units, water cooling
towers, food processing facilities, retirement homes, spas, schools,
industrial plants, public fountains, pools, water slide parks, cruise ships,
carwashes, auto plants using water cooling machinery, fountains, ice rinks,
air-scrubbing plants, health-club showers, public pools, mines, schools,
industrial air-cleaners, prisons, stadiums, homes, cruise ships, etc.

   Hydrodynex will also look to present to building construction companies
such as Ellerbe Becket and McCarthy Builders and invite them to infuse our
systems into their new and old projects.  Builders want their projects to be
problem free and safe to the tenants, so an approach such as this should
prove profitable.

H.   Patents, Trademarks, and Copyrights

   We are substantially dependent on the ability of Hydrosystemtechnik to
obtain and maintain patents and proprietary rights for our product, and to
avoid infringing the proprietary rights of others. We have interests in two
patents issued by the United States Patent and Trademark Office.  Additional
patent applications may be forthcoming from ongoing research and development.

   On September 3, 2007, we obtained an exclusive license in Canada, the
United States and Mexico from Meinolf Schoeberl and Hydrosystemtechnik to any
proprietary technology being developed by Hydrosystemtechnik involving
advanced Anodic Oxidation water disinfection units in any markets but the
dental market.



                                      11
<PAGE>


   Hydrosystemtechnik GmbH, is the owner of two U.S. patents, numbers
5,395,492 granted on March 7, 1995, and 5,439,576, granted August 8, 1995,
both entitled "Apparatus for the Sterilization of Water".  Both patents
describe innovative methods of sterilization of water using anodic oxidation.
Anodic oxidation is a process of using anodes and cathodes inside a reactor
chamber for the purpose of conducting high electrical current, which
generates over-voltage with respect to oxygen generation, and generates
chlorine equivalent oxidants.  The reactor creates a significant amount of
oxidants to sterilize the water, but does so in a way without adding
chlorine.

   We have not filed for any copyright or trademark protection to date.

I.   Employees

   Our President and Chief Executive Officer of Hydrodynex, Jerod Edington,
performs employee like services for our company on a part time basis.  Mr.
Edington works approximately 25 hours per week for the benefit of Hydrodynex
and is paid $2,500 per month.  Employee-like services provided by the other
officers and directors of Hydrodynex are compensated to them at the rate of
$50.00 per hour.  These individuals have other employment and
responsibilities outside of Hydrodynex.

Item 1A.  Risk Factors

   Investing in our securities involves a high degree of risk. In addition to
other information contained in this registration statement, prospective
purchasers of the securities offered herby should consider carefully the
following factors in evaluating Hydrodynex and its business.

   The securities we are offering through this registration statement are
speculative by nature and involve an extremely high degree of risk and should
be purchased only by persons who can afford to lose their entire investment.
We also caution prospective investors that the following risk factors could
cause our actual future operating results to differ materially from those
expressed in any forward looking statements, oral, written, made by or on
behalf of us. In assessing these risks, we suggest that you also refer to
other information contained in this registration statement, including our
financial statements and related notes.


                                      12
<PAGE>


RISKS RELATED TO OUR COMPANY AND OUR INDUSTRY

We must raise additional capital to make required license payments under
our license agreement to our licensor.

   Under our original license agreement with our licensor Hydrosystemtechnik,
we were required to make a non-refundable license payment of EUR 20,000 on
June 1, 2008, but pursuant to the amended license agreement dated August 30,
2008, our licensor agreed to extend the due date for the second license
payment to November 30, 2008.  We do not currently have sufficient cash
resources to make the second license payment and we will need to raise
additional capital by selling equity or incurring debt in order to make this
license payment.  Our licensor could find us in default under the license
agreement and terminate the agreement if we do not make timely payment by the
extended due date.  Under the license agreement unpaid balances bear interest
at a rate of 2% above the prime rate as quoted in the U.S. edition of the
Wall Street Journal.


If we are unable to meet our milestone and minimum annual sales obligations
under the Marketing, Distribution and License Agreement we will lose the
exclusivity of the license and the licensor could terminate the license
agreement.

   Under our license agreement with our licensor Hydrosystemtechnik we are
required to meet a number of specific milestones by certain dates, which, if
we fail to achieve the required milestones, our license agreement will become
non-exclusive, damaging our competitive situation, or the licensor could
decide to terminate the agreement.  We have currently not met any of our
milestone obligations.  In addition, we are required to meet certain minimum
annual sales volumes based on net purchase value of sales for calendar years
beginning in 2010.  If we are unable to meet those minimum annual sales
volumes our license will become non-exclusive and in addition, our licensor
could terminate the agreement.


If we are unable to obtain approval from the Environmental Protection Agency
to commercially sell the anodic oxidation water treatment/disinfection
systems in the United States by March 3, 2010, our license can revert to a
non-exclusive license and our licensor could terminate the license agreement.

   Under the terms of our license agreement with our licensor
Hydrosystemtechnik we are required to gain approval from the Environmental
Protection Agency by March 3, 2010, thirty months after the effective date of
our license agreement.  The verification and certification process leading to
such approval involves extensive testing and is an expensive process.  We


                                      13
<PAGE>


will have to raise additional capital to pay for the independent verification
and certification process leading to approval.  We have made contact with
staff at ,the NSF, gotten price quotes, and met with NSF representatives in
person.  We are currently awaiting completion of the test reactor that we
have ordered from our licensor so that we can begin the testing process with
NSF.  If we fail to meet the deadline for approval from the EPA for the AO
System water disinfection technology, we will not be able to commercially
sell it in the United States, our license will become non-exclusive and our
licensor could terminate the amended license agreement.

FOREIGN EXCHANGE RISK - fees to licensor, minimum annual sales targets and
purchases from Licensor are all in Euros.  Further weakening of the dollar
could significantly increase our cost of goods, our fees payable under the
license agreement as well as the minimum annual sales targets we are required
to meet.


If we are able to secure approval from the Environmental Protection Agency,
we may not be able to establish sufficient sales and marketing capabilities
in the U.S. or enter into agreements with third parties to sell and market
any products due to our lack of experience in these areas, we may not be able
to generate product revenue.

   We do not currently have an organization for the sales, marketing and
distribution of our product. In order to market any products, we must build
our sales, marketing, managerial and other non-technical capabilities or make
arrangements with third parties to perform these services.  In addition, we
have no experience in developing, training or managing a sales force and will
incur substantial additional expenses in doing so. The cost of establishing
and maintaining a sales force may exceed its cost effectiveness.
Furthermore, we will compete with many companies that currently have
extensive and well-funded marketing and sales operations.  Our marketing and
sales efforts may be unable to compete successfully against these companies.
If we are unable to establish adequate sales, marketing and distribution
capabilities, whether independently or with third parties, we may not be able
to generate product revenue and may not become profitable.


We are initially dependent on third-party manufacturers, over whom we have
limited control.

   The manufacturing process of the AO-Systems(R) and any other ancillary
replacement components has initially been outsourced to the Licensor,
pursuant to the terms of the existing License Agreement between Hydrodynex
and Hydrosystemtechnik GmbH.  The Licensor is dependant upon many third party
vendors in Germany and other European countries to supply essential
components, which are assembled and tested in the Licensor's manufacturing


                                      14
<PAGE>


facility in Germany.  We do not have any manufacturing facilities and expect
to rely upon Hydrosystemtechnik to properly manufacture our products.  Our
dependence upon a third party for the manufacture of our proposed products
may adversely affect our profit margins and our ability to develop and
deliver proposed products on a timely and competitive basis.  Any delays in
manufacturing and distribution will have an adverse impact on the price of
our Company's shares.


We may be subject to product liability claims.

   The sale of the AO-Systems(R) may expose us to the risk of significant
losses resulting from product liability.  Although we intend to obtain and
maintain product liability insurance to offset some of this risk, we may be
unable to secure such insurance or it may not cover certain potential claims
against us.

   We may not be able to afford to obtain insurance due to rising costs in
insurance premiums in recent years.  If we are able to secure insurance
coverage, we may be faced with a successful claim against us in excess of our
product liability coverage that could result in a material adverse impact on
our business.  If insurance coverage is too expensive or is unavailable to
us, we may be forced to self-insure against product-related claims.  Without
insurance coverage, a successful claim against us and any defense costs
incurred in defending ourselves may have a material adverse impact on our
operations.


As a result of our limited operating history, we may not be able to correctly
estimate our future operating expenses, which could lead to cash shortfalls.

   We have only a limited operating history from which to evaluate our
business.  We have not generated revenue to date. Accordingly, our prospects
must be considered in light of the risks, expenses, and difficulties
frequently encountered by companies in an early stage of development.  We may
not be successful in addressing such risks, and the failure to do so could
have a material adverse effect on our business, operating results and
financial condition.

   Because of this limited operating history and because of the emerging
nature of the markets in which we compete, our historical financial data is
of limited value in estimating future operating expenses.  Our budgeted
expense levels are based in part on our expectations concerning future
revenues.  However, our ability to generate revenues depends largely on
purchase orders generated from hospitals, hotels, retirement homes,
government buildings, and cooling tower installations.


                                     15
<PAGE>


   Moreover, if we generate orders from hospitals, hotels, retirement homes,
government buildings, and cooling tower installations, the size of any future
revenues depends on the choices and demand of individual consumers, which are
difficult to forecast accurately.  We may be unable to adjust our operations
in a timely manner to compensate for any unexpected shortfall in revenues.
Accordingly, a significant shortfall in demand for our products could have an
immediate and material adverse effect on our business, results of operations,
and financial condition.

   Our operating results may fluctuate as a result of a number of factors,
many of which are outside of our control.  For these reasons, comparing our
operating results on a period-to-period basis may not be meaningful, and you
should not rely on our past results as any indication of our future
performance.  Our quarterly and annual expenses are likely to increase
substantially over the next several years, and revenues from the sale of the
AO-Systems(R) may not meet our expectations. Our operating results in future
quarters may fall below expectations.  Any of these events could adversely
impact our business prospects and make it more difficult to raise additional
equity capital at an acceptable price per share.  Each of the risk factors
listed in this "Risk Factors" section may affect our operating results.


Our business, the technology and the water treatment industry are
constantly changing and evolving over time.  Furthermore, we compete in an
unpredictable industry and regulatory environment.  Our ability to succeed
depends on our ability to receive approval from the Environmental Protection
Agency and being able to successfully compete in the water treatment market.
As such, our actual operating results may differ substantially from our
projections.

Hydrodynex has never earned a profit and is currently operating under a net
loss. There is no guarantee that we will ever earn a profit.

   From our inception on May 12, 2006 to the accounting period ended on
June 30, 2008, Hydrodynex has not generated any revenue.  Rather, Hydrodynex
operates under a net loss, and has an accumulated deficit of $72,123 as of
the period ended June 30, 2008.  Hydrodynex does not currently have any
revenue producing operations. Hydrodynex is not currently operating
profitably, and it should be anticipated that it will operate at a loss at
least until such time when the production stage is achieved, if production
is, in fact, ever achieved.



                                      16
<PAGE>


If we are unable to obtain financing in the amounts and on terms and dates
acceptable to us, we may not be able to expand or continue our operations and
development and so may be forced to scale back or cease operations or
discontinue our business. You could lose your entire investment.

   We will need to obtain additional financing in order to complete our
business plan.  We currently do not have any operations and we have no
income.  We are an early stage company and we have not realized any revenues
to date. We do not have sufficient capital to enable us to commence,
implement and complete our business plan and based on our current operating
plan, we do not expect to generate revenue that is sufficient to cover our
expenses for at least the next twelve months.  We will require financing in
order to get regulatory approval and initiate operations described in the
section entitled, "Business of the Issuer." We need to raise a minimum of
$400,000 to implement and complete the first phase of our business plan.
There will be an addition requirement of $2,000,000 to complete the second
phase of our business plan.,   There is no assurance that we will be
successful in raising these funds and in the event were are successful, there
is no assurance that the terms and conditions of these funds will be in the
best interest of our company or our shareholders.  We do not have any
arrangements for financing and we may not be able to find such financing if
required.  We will need to obtain additional financing to operate our
business for the next twelve months, and if we do not, our business will
fail.  We will raise the capital necessary to fund our business through a
Prospectus and private offering of our common stock or units consisting of
common stock and stock purchase warrants.  Obtaining additional financing
would be subject to a number of factors, including investor acceptance of
Company's business strategy, its technology and investor sentiment.  These
factors may adversely affect the timing, amount, terms, or conditions of any
financing that we may obtain or make any additional financing unavailable to
us.

We do not currently have any arrangements for financing and we can provide no
assurance to investors we will be able to find such financing when such
funding is required.  Obtaining additional financing would be subject to a
number of factors, including investor acceptance of our product and our
business model.  Furthermore, there is no assurance that we will not incur
further debt in the future, that we will have sufficient funds to repay our
future indebtedness, or that we will not default on our future debts, thereby
jeopardizing our business viability. Finally, we may not be able to borrow or
raise additional capital in the future to meet our needs or to otherwise
provide the capital necessary to maintain our operations, which might result
in the loss of some or all of your investment in our common stock.


                                      17
<PAGE>


Our company anticipates that the funds that were raised from private
placements by way of subscription agreements and funds advanced from
directors will not be sufficient to satisfy our cash requirements for the
next twelve month period.  Also, there is no assurance that actual cash
requirements will not exceed our estimates.  In particular, additional
capital may be required in the event that:

  1. we incur unexpected costs in our independent testing programs;
  2. we are unable to create a substantial market for our products;
  3. we incur any significant unanticipated expenses; and
  4. we find that we need to spend additional funds to educated the market
     and promote the new technology.


The occurrence of any of the aforementioned events could prevent us from
pursuing our business plan, expanding our business operations and ultimately
achieving a profitable level of operations.

   We depend almost exclusively on outside capital to pay for the continued
development of our business and the marketing of our products.  Such outside
capital may include the sale of additional stock, shareholder and director
advances and/or commercial borrowing.  There can be no assurance that capital
will continue to be available if necessary to meet these continuing
development costs or, if the capital is available, that it will be on terms
acceptable to us. The issuance of additional equity securities by us will
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.


If we are unable to obtain financing in the amounts and on terms deemed
acceptable to us, we may not be able to expand or continue sales of the AO-
Systems(R)  for the treatment of water and so may be forced to scale back or
cease operations or discontinue business and you could lose your entire
investment

   Our company was recently formed, and we have not proven that we can
generate a profit. If we fail to generate income and achieve profitability
investment in our securities may be worthless.


We have no operating history and have not proved we can operate successfully.
We face all of the risks inherent in a new business.  If we fail, your
investment in our common stock will become worthless.  From inception of May
12, 2006 to the audited period ended on December 31, 2007 and the audited
period through June 30, 2008, we incurred a net loss of $(17,588) and
$(72,123) respectively and did not earn any revenue. Hydrodynex does not
currently have any revenue producing operations.


                                      18
<PAGE>


Arbitrary offering price means we have no information to support the price of
our shares.

   The shares being registered hereby will be sold at the prevailing market
price if and when the shares are traded in the open market.  Since the
selling price bears no relationship to assets, book value, net worth,
earnings, actual results of operations or any other established investment
criteria, the price set forth in the cover page of this prospectus should
not, therefore, be considered an indication of actual value of our
securities.


We rely on our senior management and will be harmed if any or all of them
leave.

   Our success is dependent on the efforts, experience and relationships of
Jerod Edington.  If this individual were unable to continue in his role, the
business would be adversely affected as to its business prospects and
earnings potential.  We do not currently carry any insurance to compensate
for any such loss.  Mr. Edington's decisions and choices may not take into
account standard engineering or managerial approaches marketing companies in
the water treatment industry commonly use.  Consequently, our operations,
earnings, and ultimate financial success could suffer irreparable harm due to
management's lack of experience in this industry.


We may find it very difficult or impossible for Hydrodynex to find suitable
employees in the future or to find third party consultants to assist
Hydrodynex.

   Hydrodynex currently relies heavily upon the services and expertise of
Jerod Edington and Blaine Davidson.  In order to implement the business plan
of Hydrodynex, management recognizes that additional management will be
required at some point in the future.  However, on a near term basis,
Hydrodynex will outsource most services and utilize independent consultants
as much as possible.  The group of three directors, which includes the two
officers, are the only personnel at the outset of operations.  The three
officers can manage the office functions until Hydrodynex can generate enough
revenues to hire additional employees.


Because a small number of existing shareholders own a large percentage of our
voting stock, you will have minimal influence over shareholder decisions.

   Certain individuals have significant stock ownership in our Company and
will retain significant control of Hydrodynex in the future.  Immediately
following this offering, we anticipate that our founders, executive officers,



                                      19
<PAGE>


directors, employees and early-stage investors will together own 100% of the
voting power of our outstanding capital stock.  As a result of such ownership
concentration, this group will have significant influence over the management
and affairs of our business.  They will also exert considerable, ongoing
influence over matters subject to stockholder approval, including the
election of directors and significant corporate transactions, such as a
merger, sale of assets or other business combination or sale of our business.
This concentration of ownership may have the effect of delaying, deferring,
or preventing a change in control, impeding a merger, consolidation, takeover
or other business combination involving us, or discouraging a potential
acquirer from making a tender offer or otherwise attempting to obtain control
of our business, even if such a transaction would benefit other shareholders.


There are many competitors in our market and we may not be able to
effectively compete against them.

   The business of marketing water disinfection systems is highly
competitive. This market segment includes numerous technologies,
manufacturers, distributors, marketers and retailers that actively compete
for the business of commercial water treatment in North America.  In
addition, the market is highly sensitive to the introduction of new products
and technologies that may rapidly capture a significant share of the market.
As a result, our ability to remain competitive depends in part upon its
successful introduction and end user acceptance of a new product.


We are a development stage company, which means our operations may not be
successful.

   We were incorporated on May 12, 2006 and although we have certain assets,
we have not executed our business model and are considered to be in the
development stage. Our ability to maintain and achieve profitability is
dependent on the execution of our business plan to generate cash flow to fund
future growth. There can be no assurance that our results of operations or
marketing strategy will prove successful.


RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS MODEL

We have no public trading market for our securities.

   Although we intend to complete a public registration of our securities,
there is currently no public market for our securities. We have never been
nor are we currently subject to the periodic filing and reporting
requirements of the Securities Exchange Act of 1934. Accordingly, prospective
investors are cautioned that there is no available public information about
our financial status and operations.


                                      20
<PAGE>


If we are unable to obtain additional capital, we may have to curtail or
cease operations.

   We expect that we will need to raise funds by the end of the third quarter
of 2008 in order to meet our working capital requirements.  At present, we
believe that we can continue operations for a period of approximately four
months based upon our present monthly use of funds that were raised from
shareholders in a private placement or funds that could be provided as loans
by the officers, directors and shareholders.  We may not be able to obtain
additional financing on terms favorable to us, if at all. If adequate funds
are not available to us, we may have to curtail or cease operations after the
end of the third quarter, which would materially harm our business and
financial results. To the extent we raise additional funds through further
issuances of equity or convertible debt or equity securities, our existing
stockholders could suffer significant dilution, and any new equity securities
we issue could have rights, preferences and privileges superior to those of
holders of our common stock. Furthermore, any debt financing secured by us in
the future could involve restrictive covenants relating to our capital
raising activities and other financial and operational matters, which may
make it more difficult for us to obtain additional capital and to pursue
business opportunities.


We have no operating history that makes an evaluation of our business
difficult.

   Our lack of operating history makes it difficult to evaluate our current
business and prospects or to accurately predict our future revenues or
results of operations. Our business model, and accordingly our revenue and
income potential, is new and unproven. In addition, early-stage companies are
subject to risks and difficulties frequently encountered in new and rapidly
evolving markets.


We have a new and unproven business model, a new technology and may not
generate sufficient revenues for our business to survive or be successful.

   Our business model is based on the commercial viability of a new patented
technology and products not sold previously in North America.  In order for
our business to be successful, we must not only develop viable marketing
channels that directly generate revenues, but also provide educational
content to end users to create demand for our products and technology.  Our
business model assumes that end users in many markets will see the value of
our technology and products and we will be able to generate revenues through
sales to end users.  Each of these assumptions is unproven, and if any of the
assumptions are incorrect, we may be unable to generate sufficient revenues
to sustain our business or to obtain profitability.  At the present time, we
have no contracts, arrangements or agreements with either end users or
distributors.


                                      21
<PAGE>


Because of our limited resources and the speculative nature of our business,
there is substantial doubt as to our ability to operate as a going concern.

   The report of our independent auditors, on our audited financial
statements for the audited period ended June 30, 2008 indicates that there
are a number of factors that raise substantial doubt about our ability to
continue as a going concern.  Our continued operations are dependent on our
ability to obtain financing and upon our ability to achieve future profitable
operations from the development of our business model.  If we are not able to
continue as a going concern, it is likely investors will lose their
investment.


We have no operating history and expect to incur losses in the future.

   We have no operating history and have generated no revenues. We have not
achieved profitability and expect to incur losses for the foreseeable future.
We expect those losses to increase as we continue to incur expenses to
develop our products and services. We believe that our business depends on
our ability to significantly increase revenues and to limit our operating
expenses. If our revenues fail to grow at anticipated rates or our operating
expenses increase without a commensurate increase in our revenues, or we fail
to adjust operating expense levels appropriately, we may never be able to
achieve profitability.


Our future operating results are likely to be volatile and may cause our
equity value to fluctuate.

   Our future revenues and operating results, if any, are likely to vary from
quarter to quarter due to a number of factors, many of which are outside of
our control. Factors, which may cause our revenues and operating results to
fluctuate, include the following:

  o  the willingness of  distributors to market our products;
  o  market acceptance of our technology and AO Systems;
  o  the timing and uncertainty of sales cycles;
  o  new products and services offered by current or future competitors; and
  o  general economic conditions, as well as economic conditions specific
     to the water treatment industry.



                                     22
<PAGE>


We are subject to all of the risks and uncertainties associated with the
water treatment industry, all of which may have an adverse impact on our
business and results of operations.

   Our future operating results will depend upon numerous factors beyond our
control, including the acceptability of our products and technology by end
users, national, regional and local economic conditions, changes in
demographics, the availability of alternative forms of water treatment,
critical reviews and existing competition, which change rapidly and cannot be
predicted.  If we are unable to successfully anticipate and respond to
changes in attitude by end users, our business and operating results will be
adversely affected.


Current or future government regulations may add to our operating costs.

   We may face unanticipated operating costs because of potential changes in
governmental regulations related to water treatment standards.   We have no
assurance that the independent testing to be undertaken by NSF International
will result in favorable data that will be accepted by the Environmental
Protection Agency.  Laws and regulations may be introduced and court
decisions reached that affect the water treatment standards or other
characteristics of water deemed to be disinfected.  Complying with new
regulations could increase our operating costs. Furthermore, we may be
subject to the laws of various jurisdictions where we actually conduct
business. Our failure to qualify to do business in a jurisdiction that
requires us to do so could subject us to fines or penalties and could have a
material adverse impact on our business and operations.


If we fail to attract end users, distributors or professional sales personnel
for our products may have an adverse impact on our business.

   Our success depends upon our ability to attract capable distributors and
as well as in-house sales representatives to enter into arrangements with us
to sell our products to end users.  If we do not continually augment and
improve our marketing channels, we will not be able to sustain a sales level
that will support our operations without the infusion of additional capital.




                                      23
<PAGE>


If we do not effectively educate end users on the benefits of the AO-
Systems(R), we will not have sufficient demand for our products.

   Our business plan is predicated on our company attracting active and loyal
support from end users interested in the disinfection of water, principally
hospitals.  Our target market will be end users that have a specific need in
having the safest, purest and healthiest water possible for consumption or
utilization in their commercial business. There can be no assurance that
there will be significant support from our efforts to educate end users on
this new technology of disinfection of water.  Failure to achieve recognition
and acceptance of this new technology by hospital and other commercial end-
users in a timely fashion will have a material adverse effect on the sales
cycle and may require us to incur unexpected incremental marketing expenses
to educate and inform the market place.


Delivery of our products may be interrupted due to international political
situations, natural disasters or other causes.

   Our products are manufactured in Europe and delivery can be a problem.  We
are subject to the risk that delivery of our products may be interrupted as a
result of natural disasters such as earthquakes and fires or capacity
constraints with our vendors' or suppliers' hardware.  Any such interruptions
may lead to a loss of customers or distributors and, accordingly, may
adversely affect our business and results of operations.


RISKS RELATED TO THIS OFFERING AND OUR STOCK

There is no market for our Common Stock and the stock is not currently listed
on any exchange, which limits our shareholders ability to resell their shares
or pledge them as collateral.

   There is currently no public market for our shares, and we cannot assure
you that a market for our stock will develop.  Consequently, investors may
not be able to use their shares for collateral or loans and may not be able
to liquidate at a suitable price in the event of an emergency.  In addition,
investors may not be able to resell their shares at or above the price they
paid for them or may not be able to sell their shares at all.  Our company is
not currently listed on any stock exchange.  However, if Hydrodynex should
become listed, of which there is no assurance, we will be subject to the
"penny stock" rules, the level of trading activity in our stock may be
reduced which may make it difficult for investors to sell their shares. Our
common stock is penny stock as defined by the Exchange Act.  Broker-dealer
practices in connection with transactions in "penny stocks" are regulated by
certain penny stock rules adopted by the Securities and Exchange Commission.
Penny stocks, like shares of our common stock, generally are equity
securities with a price of less than $5.00, other than securities registered



                                      24
<PAGE>


on certain national securities exchanges or quoted on NASDAQ.  The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock
not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the
nature and level of risks in the penny stock market.  The broker-dealer also
must provide the customer with current bid and offer quotations for the penny
stock, the compensation of the broker-dealer and its salesperson in the
transaction, and, if the broker-dealer is the sole market maker, the broker-
dealer must disclose this fact and the broker-dealer's presumed control over
the market, and monthly account statements showing the market value of each
penny stock held in the customer's account. In addition, broker-dealers who
sell these securities to persons other than established customers and
"accredited investors" must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction.  The reluctance of
institutional investors to trade penny stocks and the additional burdens
imposed upon stockbrokers by these requirements discourages stockbrokers from
effecting transactions in our common stock, which may limit the market
liquidity and the ability of investors to trade our common stock.  The lack
of volume and transactions, if and when it becomes listed on an exchange, in
our stock may reduce the overall market value of the common stock.


Electing reporting status under the '34 Act will result in a delay in the
registration of our common stock sold in the Offering.

   There are no assurances that the SEC will deem a registration statement
effective or that any subsequent planned registration statements to register
for resale common stock or common stock underlying warrants that maybe issued
in the future, will be approved.


The Offering Price and other terms of this Offering have been arbitrarily
determined.

   The Offering Price was not established in a competitive market.  Rather,
the Offering Price was arbitrarily determined by us.  The Offering Price
bears no relationship to our assets, book value, historical results of
operations, or any other established criterion of value, and may not be
indicative of the fair value of the common stock.  The trading price, if any,
of the common stock that will prevail in any market that may develop in the
future may be higher or lower than the price you pay in this Offering.
The Offering Price may not be indicative of future market prices.


                                       25
<PAGE>


   The public market may not agree with or accept our determination of the
Offering Price, in which case investors may not be able to sell their Shares
at or above the Offering Price, thereby resulting in losses on sale.  The
market price of the common stock will likely fluctuate significantly in
response to factors, some of which are beyond our control, such as: the
announcement of new products or product enhancements by us or our
competitors; developments concerning intellectual property rights and
regulatory approvals; quarterly variations in results of operations; changes
in earnings estimates or recommendations by securities analysts; developments
in our industry; and general market conditions and other factors, including
factors unrelated to our own operating performance.

   Further, the stock market in general, and securities of small-cap
companies in particular, has recently experienced extreme price and volume
fluctuations.  Continued market fluctuations could result in extreme
volatility in the price of our common stock, which could cause a decline in
the value of our common stock.  You should also be aware that price
volatility might be worse if the trading volume of our common shares is low.


There is not now, and there may not ever be, an active market for our common
stock.

   There currently is no market for our common stock.  Further, although the
common stock of Hydrodynex may become quoted on the OTC Bulletin Board,
trading of its common stock may be extremely sporadic.  For example, several
days may pass before any shares are traded.  There can be no assurance that
following the listing on an exchange,  a more active market for such common
stock would develop.  Accordingly, investors must therefore bear the economic
risk of an investment in the Shares for an indefinite period of time.


There are restrictions on the transferability of the securities comprising
this Offering.

   The securities being offered have not been, nor will they be, registered
pursuant to the Securities Act except pursuant to the registration rights
granted pursuant to the terms of this Offering.  If we desire, we may permit
the transfer of the securities out of a purchaser's name only when its
request for transfer is accompanied by an opinion of counsel reasonably
satisfactory to us that neither the sale nor the proposed transfer results in
a violation of the Securities Act or any applicable state securities or "Blue
Sky" laws, and a written agreement by any subsequent transferee that such
party agrees to be bound by the terms of the Subscription Agreement.



                                     26
<PAGE>


Following the approval of our Registration Statement,  we will become subject
to the reporting requirements of federal securities laws, which can be
expensive.

   As a result of filing a registration statement to become a reporting
public company, Hydrodynex will be subject to the information and reporting
requirements of the Securities Exchange Act of 1934 and other federal
securities laws, including compliance with the Sarbanes-Oxley Act.  The costs
of preparing and filing annual and quarterly reports, proxy statements and
other information with the SEC and furnishing audited reports to stockholders
would cause our expenses to be higher than they would be if we remained a
privately-held Company.  In addition, we will incur substantial expenses in
connection with the preparation of the Registration Statement and related
documents with respect to the registration of the shares of common stock and
the reporting that is required once Hydrodynex becomes a reporting company.


Compliance with the Sarbanes-Oxley Act and SEC rules concerning internal
controls may be time consuming, difficult, and costly.

   Hydrodynex has never operated as a publicly-traded company.  It may be
time consuming, difficult, and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley
Act.  We may need to hire additional staff in order to develop and implement
appropriate internal controls and reporting procedures.  If we are unable to
comply with the internal controls requirements of the Sarbanes-Oxley Act, we
may not be able to obtain the independent accountant certifications that the
Sarbanes-Oxley Act requires publicly?-traded companies to obtain.


Upon the effective time of the Registration Statement, there will be a
significant number of shares of common stock eligible for sale, which could
depress the market price of such stock, assuming the Stock of Hydrodynex
becomes listed on an exchange, of which there is no assurance.

   Following the effective date of the Registration Statement, a large number
of shares of common stock would become available for sale in the public
market, which could harm the market price of the stock.  Given the relatively
liquid market, it is likely that the sale of a significant amount of our
stock would have a substantial negative impact on the market price of our
stock due to supply and demand economic principles.  Further, shares may be
offered from time to time in the open market pursuant to Rule 144, and these
sales may have a depressive effect on the market for the common stock.  In
general, a person who has held restricted shares for a period of one year
may, upon filing with the SEC a notification on Form 144, sell into the
market common stock in an amount equal to the greater of 1% of the
outstanding shares.


                                      27
<PAGE>


We cannot assure you that, even following the approval of the registration
statement by the SEC and our election to be a reporting company under the '33
Act, the common stock will become listed on the American Stock Exchange,
NASDAQ, OTC-BB or any other securities exchange.

   Following the approval of the registration statement and as soon as
practical, we plan to apply for listing our common stock on a recognized
Stock Exchange.  However, we cannot assure you that Hydrodynex will be able
to meet the initial listing standards of any stock exchange, or that it will
be able to maintain a listing of the common stock on any other stock
exchange.  After the Registration Statement is approved, we expect that the
common stock would be eligible to trade on the OTC Bulletin Board, another
over-the-counter quotation system, or on the "pink sheets," where an investor
may find it difficult to dispose of shares or obtain accurate quotations as
to the market value of the common stock.  In addition, we would be subject to
an SEC rule that, if we failed to meet the criteria set forth in such rule,
imposes various requirements on broker-dealers who sell securities governed
by the rule to persons other than established customers and accredited
investors.  Consequently, such rule may deter broker-dealers from
recommending or selling the common stock, which may further affect its
liquidity.


If you purchase shares you will experience immediate and substantial
dilution.

   If you purchase shares, you will incur immediate and substantial dilution
in pro forma net tangible book value.  If Hydrodynex sell additional shares
of common stock or issues warrants in the future and these holders of
outstanding options and warrants exercise those options and warrants, you
will incur further dilution.  In the event we obtain any additional funding,
such financings are likely to have a dilutive effect on the holders of our
securities. In addition, we have adopted an employee stock option plan under
which officers, directors, consultants and employees will be eligible to
receive stock options exercisable for our securities at exercise prices that
may be lower than the Offering Price.  Such stock option grants, if any, may
dilute the value of the securities.


If the selling shareholders all elect to sell their shares of our common
stock at the same time, the market price of our shares may decrease.

   It is possible that the selling shareholders will offer all of the shares
for sale. Further, because it is possible that a significant number of shares
could be sold at the same time, the sales, or the possibility thereof, may
have a depressive effect on the future market price of our common stock.


                                      28
<PAGE>


If our stock trades at a relatively small volume, shareholders may not be
able to sell their shares without depressing the market price of the shares.

   If a market for our common stock is established, it may be possible that a
relatively small volume of shares will trade on a daily basis. A small volume
is indicative of an illiquid market. In the event there is a relatively small
volume of shares being traded on a daily basis, shareholders may be unable to
sell their shares without causing a depressive effect on the price of our
common stock.


Our stock is a penny stock.  Trading of our stock may be restricted by the
SEC's penny stock regulations and the NASD's sales practice requirements,
which may limit a stockholder's ability to buy and sell our stock.

   Hydrodynex' common shares may be deemed to be "penny stock" as that term
is defined in Regulation Section "240.3a51-1" of the Securities and Exchange
Commission (the "SEC").  Penny stocks are stocks: (a) with a price of less
than U.S. $5.00 per share; (b) that are not traded on a "recognized" national
exchange; (c) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ - where listed stocks must still meet requirement (a) above);
or (d) in issuers with net tangible assets of less than U.S. $2,000,000 (if
the issuer has been in continuous operation for at least three years) or U.S.
$5,000,000 (if in continuous operation for less than three years), or with
average revenues of less than U.S. $6,000,000 for the last three years.

   Section "15(g)" of the United States Securities Exchange Act of 1934, as
amended, and Regulation Section "240.15g(c)2" of the SEC require broker
dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account.  Potential investors in Hydrodynex'
common shares are urged to obtain and read such disclosure carefully before
purchasing any common shares that are deemed to be "penny stock".

   Moreover, Regulation Section "240.15g-9" of the SEC requires broker
dealers in penny stocks to approve the account of any investor for
transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker dealer to: (a) obtain from the investor
information concerning his or her financial situation, investment experience
and investment objectives; (b) reasonably determine, based on that
information, that transactions in penny stocks are suitable for the investor
and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (c)
provide the investor with a written statement setting forth the basis on
which the broker dealer made the determination in (ii) above; and (d) receive
a signed and dated copy of such statement from the investor confirming that

                                      29
<PAGE>


it accurately reflects the investor's financial situation, investment
experience and investment objectives. Compliance with these requirements may
make it more difficult for investors in Hydrodynex' common shares to resell
their common shares to third parties or to otherwise dispose of them.
Stockholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, dated April 17, 1991, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse. Such
patterns include:

(i)   control of the market for the security by one or a few broker-dealers
      that are often related to the promoter or issuer

(ii)  manipulation of prices through prearranged matching of purchases and
      sales and false and misleading press releases

(iii) boiler room practices involving high-pressure sales tactics and
      unrealistic price projections by inexperienced sales persons

(iv)  excessive and undisclosed bid-ask differential and markups by selling
      broker-dealers

(v)   the wholesale dumping of the same securities by promoters and broker-
      dealers after prices have been manipulated to a desired level, along
      with the resulting inevitable collapse of those prices and with
      consequent investor losses

   Our management is aware of the abuses that have occurred historically in
the penny stock market. Although we do not expect to be in a position to
dictate the behavior of the market or of broker-dealers who participate in
the market, management will strive within the confines of practical
limitations to prevent the described patterns from being established with
respect to our securities.

RISKS RELATED TO OUR INTELLECTUAL PROPERTY

Our intellectual property rights are valuable, and our inability to
protect them could reduce the value of our products, services and brand.

   We do not own any patents or intellectual property.  We have an exclusive
license agreement with Hydrosystemtechnik GmbH, which initially grants us the
right to market the AO-Systems(R) in North America and in the future, we have
an option to manufacture and assemble the AO-Systems(R) here in the US or by
utilizing a subcontract manufacturer in other countries.  The patents issued
in the U.S. were granted in 1995.  U.S. trademarks, trade secrets, copyrights
and other intellectual property rights are owned by the licensor, which we
have access to by virtue of the terms and conditions of the exclusive License
Agreement.  This intellectual Property is currently outside of our direct
control and could jeopardize our ability to implement our business plan.  In
addition, the efforts made by Hydrosystemtechnik, GmbH, to protect the
intellectual property rights may not be sufficient or effective.  Any
significant impairment of the intellectual property rights could harm our
business indirectly or our ability to compete.  Protecting the intellectual

                                    30
<PAGE>


property rights is costly and time consuming, and the unauthorized use of the
intellectual property could cause these costs to rise significantly and
materially affect our operating results.  We are required to pay 50% of the
direct costs related to preparing and prosecution of patents and patent
applications, including legal fees, filing fees maintenance fees and
transaction costs within the licensed territory, so long as our license
agreement with Hydrosystemtechnik GmbH remains in effect.

   While the goal of Hydrosystemtechnik GmbH is to obtain patent protection
for their innovations, they may not be patentable or they may choose not to
protect certain innovations that later turn out to be important for our
business.  Even if Hydrosystemtechnik GmbH does obtain protection for its
innovations, the scope of protection gained may be insufficient or a patent
issued may be deemed invalid or unenforceable, as the issuance of a patent is
not conclusive as to its validity or as to the enforceable scope of the
claims of the patent.  The patenting process, enforcement of issued patents,
and defense against claims of infringement are inherently costly and risky.
Hydrosystemtechnik GmbH may not have the financial resources to defend its
patents, thereby reducing our competitive position and our business
prospects.  Specific risks associated with the patent process include the
following:

  o  The United States Patent and Trademark Office  may not grant patents of
     meaningful scope based on the applications already filed and those that
     may be filed in the future.  If the current patents do not adequately
     protect the technology and the industrial applications, then we will not
     be able to prevent imitation and the product may not be
     commercially viable.
  o  Changes in or different interpretations of patent laws in the United
     States may permit others to use our discoveries or to develop and
     commercialize our technology and products without providing any
     compensation to us.
  o  Although we try to avoid infringement, there is the risk that we will
     use a patented technology owned by another person or entity and/or be
     sued for infringement.  For example, U.S. patent applications are
     confidential while pending in the Patent and Trademark Office, and
     patent offices in foreign countries often publish patent applications
     for the first time six months or more after filing.  Further, we may not
     be aware of published or granted conflicting patent rights.  Any
     conflicts resulting from patent applications and patents of others could
     significantly reduce the coverage of the patents and limit our ability
     to obtain meaningful patent protection.  In addition, defending or
     indemnifying a third party against a claim of infringement can involve
     lengthy and costly legal actions, and there can be no guarantee of a
     successful outcome.


                                     31
<PAGE>


Item 2.   Properties.

   Our executive office is currently located at 230 Bethany Rd., Ste. #128,
Burbank, CA 91504. The 150 square foot office is provided by Jerod Edington,
the President of Hydrodynex at no cost to Hydrodynex.  We believe our current
premises are adequate for our current operations and we do not anticipate
that we will require any additional premises until such time as Hydrodynex
raises additional capital.


Item 3.   Legal Proceedings.

   We are not involved in any legal proceedings, and there are no material
pending legal proceedings of which we are aware.


Item 4.   Submission of Matters to a Vote of Security Holders

   Hydrodynex did not submit any matters to a vote of its stockholders in our
fiscal year ending June 30, 2008.






                                      32
<PAGE>


                                  PART II

Item 5.   Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.

   Our common stock is not trading and has never traded on any stock
exchanges.

   The transfer agent of Hydrodynex is Nevada Agency and Trust Company,
50 West Liberty Street, Suite 880, Reno, Nevada 89501.

   As of June 30, 2008, there were 41 holders of record of Hydrodynex' common
stock, of which 1,500,000 were issued and outstanding.

   As of June 30, 2008, there were no outstanding stock options or warrants.

   We have never paid cash dividends on our common stock. We presently intend
to retain future earnings, if any, to finance the expansion of our business
and we do not anticipate that any cash dividends will be paid in the
foreseeable future. Our future dividend policy will depend on our earnings,
capital requirements, expansion plans, financial condition and other relevant
factors.


Item 6.   Selected Financial Data

   Not applicable.

Item 7.   Management's Discussion and Analysis of Financial Condition and
Results of Operations.

THE FOLLOWING PLAN OF OPERATIONS SECTION SHOULD BE READ IN CONJUNCTION WITH
OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ON PAGES 47 THROUGH
62 FOLLOWING THE SIGNATURE PAGES OF THIS ANNUAL REPORT ON FORM 10-K. ALL
STATEMENTS IN THIS ANNUAL REPORT RELATED TO HYDRODYNEX' CHANGING FINANCIAL
OPERATIONS AND EXPECTED FUTURE OPERATIONAL PLANS CONSTITUTE FORWARD-LOOKING
STATEMENTS. THE ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE ANTICIPATED
OR EXPRESSED IN SUCH STATEMENTS.

A.   General.

   Hydrodynex, Inc. was organized under the laws of the state of Nevada on
May 12, 2006 and is doing business as a marketer of the AO-Systems(R) water
treatment units.  We are structured expressly as a marketing entity and
therefore we do not engage in the design, development or manufacturing of
products.  We intend to operate only in North America under the terms of our
License agreement with Hydrosystemtechnik GmbH.  Since commencement of
operations in 2006, our efforts to date have been principally devoted to and


                                     33
<PAGE>


limited primarily to organization, initial capitalization, business and
product research, producing marketing materials and a website, securing a
marketing agreement, preparing a comprehensive business and operating plan,
evaluating the regulatory requirements to sell water treatment systems in the
U.S., Canada and Mexico, and undertaking a marketing feasibility study.
Extensive research has been done on competing technologies and the water
contaminants that most adversely affect water systems at the present time.
Legionella protection is the strongest market  opportunity identified by
Hydrodynex to date.  We will make Legionella our primary target market
because of its wide prevalence and the high percentage of death resulting
from infection.

   Under our license agreement with our licensor Hydrosystemtechnik, we paid
a non-refundable license fee creditable to royalty payments in the amount of
10,000 Euros in 2007.  We were required, under the original license agreement
with our licensor, to make a non-refundable license payment of 20,000 Euros
on June 1, 2008.  Hydrosystemtechnik agreed in writing to an extension of the
due date for the second license payment from June 1, 2008 to August 31, 2008.
Under the terms of the amended license agreement dated August 30, 2008, the
due date for the second license payment was extended to November 30, 2008.
We do not currently have sufficient funds to make this license payment and we
will have to raise additional capital by selling equity or incurring debt in
order to make this license payment.  A third license fee in the amount of
20,000 Euros will be due upon certification and approval of the AO-Systems(R)
by the US Environmental Protection Agency for commercial sales in the United
States

   We are currently organizing our distribution/dealer and direct marketing
programs, which consists of placing our product in commercial buildings,
retirement homes, cooling towers, and military installations. Our primary
focus will be on establishing the defined sales channels and supporting them
with meaningful marketing programs to the extent that funds are available.
We have not sold any product to date and have generated no revenues from
operations.

   Since we are a marketing company and not engaged in the manufacture of our
products, we have not been required to invest in assets dedicated to product
design and manufacturing activities.  Instead, we intend to purchase finished
products on an as sold basis from the manufacture based on receipt of an
order from an end user or a distributor/dealer.

   We do not intend to conduct any other additional product research and
development nor do we intend to purchase any additional significant equipment
at this time.



                                     34
<PAGE>


   Our plan of operation for the next 12 months will be the execution of our
strategic business plan.   Hydrodynex intends to operate in three phases as
follows:

Phase 1: Finalization of the Strategic Marketing Plan, complete the current
audit of Hydrodynex, initial start-up capital realization through a second
private stock offering, undertaking independent testing, securing EPA and
State certification, making application to have Hydrodynex  be publicly
traded on the OTC-BB  and hiring/training sales and technical personnel.

Phase 2: Initiation of marketing and sales activities in selected markets in
North America (U.S., Canada, and Mexico).  Full scale commercialization of
the AO-System(R), including industrialization and after-sale service
agreements, for the markets covered by Hydrodynex.  As part of its effort to
commercialize the AO-System(R), Hydrodynex plans to offer mobile systems
which may use a film pouch packaging system.

Phase 3:  Set-up manufacturing in the U.S. when it becomes a viable, profit-
increasing option.

   We need to raise a minimum of $400,000 to complete the first phase of our
plan of operations and $2,000,000 to complete the second phase, for a total
of $2,400,000 to implement both phases of our business plan.  In August 2008,
we raised $12,000 and issued a convertible promissory note in that amount and
12,000 three year warrants exercisable at $1 per share to three investors as
part of a $50,000 bridge loan.  The convertible promissory note earns
interest at a rate of 8% per annum and matures one year from the issue date.
It converts automatically into common shares at $0.50 per share upon the
closing of an equity financing of at least $400,000 (including funds received
under the bridge loan) prior to the maturity date.  If such a financing does
not close prior to the maturity date of the convertible promissory note, the
holders may convert their notes into common stock at $0.25 per share on the
maturity date.  We anticipate completing the bridge loan financing in the
fourth quarter of 2008.

   Subject to raising additional capital, our projected monthly rate of
expenditure is estimated at $6,000 for General and Administrative costs.  We
anticipate that supporting our operations and implementing Phase I of our
business plan for the next 12 months will require a minimum of $400,000.
This includes approximately $30,000 for accounting, legal and auditing fees.
The balance of the funds would be utilized for independent testing, purchase
of equipment for testing, marketing materials, advertising, insurance,
employee training, travel, office lease, licenses, shipping and import costs,
employee salary, and other budget costs.



                                      35
<PAGE>


RESULTS OF OPERATIONS

   Since Hydrodynex was formed on May 12, 2006, it has not earned any
revenues and has incurred a net loss since its inception of $72,123 through
June 30, 2008.

   For the twelve months ended June 30, 2008, our total expenses were $70,290
as compared to $1,296 for the twelve month period ending June 30, 2007.  The
increase in expenses was due to an increase in travel expenses, professional
(legal and accounting) fees and general and administrative fees.


C.   Liquidity and Capital Resources.

   We are currently financing our operations from the proceeds from sales of
common stock offered pursuant to our private placement, which was closed on
September 30, 2007.  As of June 30, 2008, we had cash in the amount of $518.
We will need to raise additional capital or generate revenue by the third
quarter of 2008 or curtail our operations.  As mentioned above, in July and
August 2008, we raised $12,000 and issued a convertible promissory note in
that amount and 12,000 three year warrants exercisable at $1 per share to
three investors as part of a $50,000 bridge loan.  We intend to complete the
$50,000 bridge loan and sell additional shares of common stock or units
consisting of common stock and stock purchase warrants to secure additional
capital to fund Phase I of our strategic plan.  The amount we would like to
raise is $750,000.  We raised a total of $100,000 pursuant to Rule 504 of
Regulation D of the Securities Act of 1933 in December 2007.

   As of June 30th, 2008, we had $518 in cash and cash equivalents. We do not
have any available lines of credit. Since inception we have financed our
operations from private placements of equity securities and loans from
shareholders.

   Net cash used in operating activities during the fiscal year ended
June 30, 2008 was $98,210 resulting in a net loss of $70,290.

   Net cash from financing activities for the fiscal year ended June 30, 2008
was $100,000 from sale of common stock at $.10 per share. This funding came
from 40 investors in an offering that ended on September 30, 2007.

   We plan to finance our needs principally from the following:

  o  Issuance of additional convertible promissory notes and warrants as part
     of a $50,000 bridge loan

  o  A private placement stock offering for shares in the company.


                                     36
<PAGE>


   We do not have sufficient capital to carry on operations past September
2008, but we plan to complete our $50,000 bridge loan and raise additional
capital in a private stock offering to secure funds needed to finance our
plan of operation for at least the next twelve months. However, this is a
forward-looking statement, and there may be changes that could consume
available resources before such time. Our long term capital requirements and
the adequacy of our available funds will depend on many factors, including
the eventual reporting company costs, public relations fees, technology
verification costs, among others.

   We are pursuing potential equity financing, sub-licensing and other
collaborative arrangements that may generate additional capital for us.  We
cannot assure you that we will generate sufficient additional capital or
revenues, if any, to fund our operations beyond September  2008, that any
future equity financings will be successful, or that other potential
financings through bank borrowings, debt or equity offerings, or otherwise,
will be available on acceptable terms or at all.


D.   Critical Accounting Policies and Estimates.

   This discussion and analysis of our financial condition and results of
operations are based on our financial statements that have been prepared
under accounting principles generally accepted in the United States of
America. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires our management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could materially differ from those estimates. We have disclosed all
significant accounting policies in Note 2 to the financial statements
included in this Form 10-K.  Our critical accounting policies are:

   Revenue Recognition : Royalties will be recognized as revenue when the
amounts are contractually earned, fixed and determinable, and there is
substantial probability of collection.

   Estimates. The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
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 date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

   Intangible Assets. Hydrodynex' intangible asset is composed of a license
from Hydrosystemtechnik GmbH.


                                     37
<PAGE>


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

   Not applicable.


Item 8.   Financial Statements and Supplementary Data

   The Audited Financial Statements for this Form 10-K appear on pages 47
through 62 following the signature pages below.


Item 9.   Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.

   None.


ITEM 9A  Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

   In connection with the preparation of this annual report on Form 10-K, an
evaluation was carried out by the Company's management, with the
participation of the Chief Executive Officer and the Chief Financial Officer,
of the effectiveness of the Company's disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934 ("Exchange Act")) as of June 30, 2008.  Disclosure controls and
procedures are designed to ensure that information required to be disclosed
in reports filed or submitted under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC rules
and forms and that such information is accumulated and communicated to
management, including the Chief Executive Officer and the Chief Financial
Officer, to allow timely decisions regarding required disclosures.

   Based on that evaluation, the Company's management concluded, as of the
end of the period covered by this report, that the Company's disclosure
controls and procedures were effective in recording, processing, summarizing,
and reporting information required to be disclosed, within the time periods
specified in the Securities and Exchange Commission's rules and forms.


MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

   This annual report does not include a report of management's assessment
regarding internal control over financial reporting or an attestation report
of the Company's registered public accounting firm due to a transition period
established by rules of the Securities and Exchange Commission for newly
public companies.


                                      38
<PAGE>


CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

   As of the end of the period covered by this report, there have been no
changes in internal control over financial reporting (as defined in Rule 13a-
15(f) of the Exchange Act) during the quarter ended June 30, 2008, that
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.


Item 9B   Other Information

   None.





                                  39
<PAGE>



                                PART III

Item 10.   Directors and Executive Officers of the Registrant

A. Directors, Executive Officers, Promoters and Control Persons

   The current executive officers, directors and significant employees of
Hydrodynex are as follows:

Name                   Age  Position
---------------------  ---  ------------------------------------------------
Jerod C. Edington       30  President & Chief Executive Officer,
                            Director

Blaine C. Davidson      30  Chief Financial Officer, Secretary,
                            Treasurer, Director

Peter Schmid            52  Vice President, Director


   Each director is elected to hold office for a one year term or until the
next annual meeting of stockholders and until his successor is elected and
qualified. The officers of Hydrodynex serve at the pleasure of Hydrodynex'
Board of Directors.

   The following sets forth certain biographical information with respect to
the directors and executive officers of Hydrodynex.

   Jerod Edington, Founder, President and Director.  Mr. Edington attended
the University of Washington in Seattle, Washington.  He earned a B.S. in
Zoology in 2000.  He did radiation cancer and tumor research at the
University of Washington Medical center's Radiation Oncology Dept. for two
years, receiving the coveted Mary Gate's Endowment award for undergraduate
research and co-authored a front-cover research report for "Biotechniques"
magazine.  He has also been working in the TV/Film Production business for
the past 5 years as President of Naked Lumberjack Productions where he
oversaw production of commercials, feature films, music videos, etc.  He is
also a professional actor in the Screen Actors Guild and American Federation
of TV and Radio Artists Unions.

   Peter Schmid, Vice President and Director.  Mr. Schmid was trained as a
foreign sales businessman and received a marketing diploma from the
Volkshochshule in Munich, Germany, in 1975.  In 1993 he founded Investment
Management Financial Services, located in Aying, Germany, and acts as
President and an investment manager for the company through present day.


                                      40
<PAGE>


   Blaine Davidson, Chief Financial Officer, Treasurer, Secretary and
Director.  Mr. Davidson attended the University of Washington in Seattle,
Washington.  He earned a B.A. in English in 2000.  He was employed by
HouseValues, Inc. from October 2001- September 2006-- a real estate
technology and marketing company--where he was Marketing Manager. In October
2006, Mr. Davidson started his own real estate sales business. He also
consults brokerages and trains brokers, setting up systems and processes to
help agents get streamlined with technology.


B. Section 16(a) Beneficial Ownership Reporting Compliance.

   Hydrodynex was not subject to Section 16(a) during its fiscal year ended
June 30, 2008 as it did not have a class of equity securities registered
pursuant to section 12 of the Exchange Act.


Code of Ethics

   As of June 30, 2008, we had not adopted a code of ethics that applies to
our President and CEO (principal executive officer), or our Chief Financial
Officer (principal accounting officer). As we plan in the future to become a
publicly traded company under SEC rules, we have subsequently dealt with this
issue and adopted a Code of Business Conduct and Ethics for Directors,
Officers and Employees and a Code of Ethics for the Chief Executive Officer
and Senior Financial Officers on August 15, 2008.  Both are exhibits to this
Report on Form 10-K.


Audit Committee and Audit Committee Financial Expert

   We are not a publicly traded company under SEC rules and are therefore not
required to have an audit committee comprised of independent directors.  As
we are a development stage company with minimal revenues from operations, few
employees, and relatively simple financial statements, as of June 30, 2008 we
had not constituted any board committees, including an audit committee.  On
August 15, 2008, we adopted charters for an Audit Committee, a Compensation
Committee, and a Corporate Governance and Directors Nominating Committee, but
will not have these committees until we have the resources to do so.  We do
not have an audit committee financial expert who is an outside director. As
our business grows and our financial statements become more complicated, we
intend to seek an outside director who can qualify as an audit committee
financial expert.


                                      41
<PAGE>


Item 11.   Executive Compensation.

A.   Summary Compensation Table

   The table below sets forth the aggregate annual and long-term compensation
paid by us during our last two fiscal years ended June 30, 2007 and June 30,
2008 to our Chief Executive Officer (the "Named Executive Officer"). Other
than as set forth below, no executive officer's salary and bonus exceeded
$100,000 for the fiscal year 2008.


                                                          Non-
                                              Non-Equity Qualified All
                                              Incentive  Deferred other
                                                 Plan     Compen- Com-
Name and                           Stock  Option Compen-  sation  pens-
Principal            Salary Bonus  Awards Awards sation  Earnings ation Total
Position        Year   ($)   ($)    ($)     ($)    ($)     ($)     ($)   ($)
--------------- ---- ------ ----- ------- ------ ------- -------- ---- ------
Jerod Edington
Pres. & CEO,    2008 22,500     0       0  1,250       0        0    0 23,750
Dir.            2007      0     0       0      0       0        0    0      0


B. Narrative Disclosure to Summary Compensation Table

   Jerod Edington has not entered into formal written employment agreement
with HydroDynex.  Jerod Edington has been employed on an at will basis with a
base salary of $2,500 per month beginning October 2007 but with any bonus or
option compensation at the discretion of the uninterested members of the
board of directors.  Jerod Edington was not paid his entire salary for June
2008, and such wage shortfalls shall be accrued and paid later.  On July 31,
2008, Jerod Edington was granted a non-statutory stock option to purchase
25,000 shares of common stock at $0.25 per share with all of the options
vesting immediately for services performed during the fiscal year ended June
30, 2008.  Those options were valued at $1,250.


C. Outstanding Equity Awards at Fiscal Year End

   Jerod Edington had not been granted any equity compensation, including
option grants as of June 30, 2008.

D. Compensation of Directors

   No compensation was paid to directors for their director services during
the fiscal year ending June 30, 2008.


                                     42
<PAGE>



Item 12.   Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.

   The following table sets forth, as of September 15, 2008 certain
information with respect to the beneficial ownership of our common stock by
each stockholder known by us to be the beneficial owner of more than 5% of
our common stock and by each of our current directors and executive officers.
The percentage of shares beneficially owned is based on 1,500,000 shares of
common stock outstanding as of September 15, 2008.  Shares of common stock
subject to stock options and warrants that are currently exercisable or
exercisable within 60 days of April 4, 2008 are deemed to be outstanding for
the purpose of computing the percentage ownership of that person but are not
treated as outstanding for the purpose of computing the percentage ownership
of any other person.  Each person has sole voting and investment power with
respect to the shares of common stock, except as otherwise indicated.
Beneficial ownership consists of a direct interest in the shares of common
stock, except as otherwise indicated.  Except as otherwise listed below, the
address of each person is 230 Bethany Rd., Ste. 128, Burbank, CA 91504.


Name and Address of                        Amount and Nature of  Percentage
Beneficial Owner                           Beneficial Ownership  of Class(1)
-----------------------------------------  --------------------  -----------
Jerod Edington, Pres. & CEO(1)                 525,000 shares       34.4%

Peter Schmid, V.P., Dir. (2)                   140,000 shares       9.24%

Blaine Davidson, CFO, Treas, Sec, Dir. (3)     115,000 shares        7.6%

Steven Espey
358 E. 69th St., New York, NY 10021            100,000 shares       6.66%

Thomas Keller
4533 Lower Thomas Ranch Rd., Miranda, CA 95553 100,000 shares       6.66%

Karsten Behrens
Rue de L'Union 16, 1800 Vevey, Switzerland     100,000 shares       6.66%

Frank Cholaj
707 Edenderry Ct., Spokane, WA 99223            75,000 shares        5.0%

Alexander H. Gregg
177 Maine Street, Apt. 322, Fort Lee, NJ 07024  75,000 shares        5.0%

Alex Gregg
758 Riverdale Rd., Riverdale, NJ 07675          75,000 shares        5.0%

Executive officers and directors as a group
3 persons (4)                                  780,000             50.16%

                                      43
<PAGE>


 (1) Jerod Edington, President and Chief Executive Officer, director.  The
holdings of Jerod Edington include 500,000 shares of common stock and options
to purchase 25,000 shares at $0.25 per share that are exercisable currently
or within 60 days of September 15, 2008.

 (2) Peter Schmid, Vice President, director. The holdings of Mr. Schmid
include 100,000 shares of common stock and options common stock and options
to purchase 15,000 shares at $0.25 per share that are exercisable currently
or within 60 days of September 15, 2008.

 (3) Blaine Davidson, Chief Financial Officer, Treasurer, Secretary,
director.  The holdings of Mr. Davidson include 100,000 shares of common
stock and options common stock and options to purchase 15,000 shares at $0.25
per share that are exercisable currently or within 60 days of September 15,
2008.

 (4) The holdings of the executive officers and directors as a group include
an aggregate of 725,000 shares of common stock, and 55,000 option shares
exercisable currently or within 60 days of September 15, 2008.


Equity Compensation Plan Information

   The following table sets forth information about the common stock
available for issuance under compensatory plans and arrangements as of
June 30, 2008.

                                   (a)            (b)             (c)
                                                                Number
                                                             of securities
                                Number of                 remaining available
                                securities      Weighted      for future
                                  to be         average        issuance
                               issued upon      exercise      under equity
                               exercise of      price of   compensation plans
                               outstanding     outstanding     (excluding
                                 options         options       securities
                                 warrants        warrants      reflected
Plan Category                   and rights      and rights    in column a))
----------------------------  --------------  --------------  --------------
Equity compensation plan
approved by security holders
(1)                                  0              $0           1,000,000

Equity compensation plan
not approved by security holders     0              $0

Total                                0              $0           1,000,000


                                      44
<PAGE>


(1)  On May 19, 2006 the shareholders of Hydrodynex adopted the 2006 Non-
     Qualified Stock Option and Stock Appreciation Rights Plan with 1,000,000
     shares of common stock reserved for issuance under the Plan under which
     the board of directors may grant incentive or non-statutory stock
     options to officers, directors, employees, consultants and advisors
     of Hydrodynex.


Item 13.   Certain Relationships and Related Transactions and Director
Independence.

   None.

Director Independence

   The Board of Directors has determined that none of its three members are
currently "independent directors" as that term is defined in Rule 4200(a)
(15) of the Marketplace Rules of the National Association of Securities
Dealers.


Item 14.     Principal Accounting Fees and Services.

   Audit Fees. Aggregate fees billed for professional services rendered by
Williams & Webster, P.S. in connection with its audit of Hydrodynex'
financial statements as of and for the years ended December 31, 2007, and
June 30, 2008, which included its reviews of Hydrodynex' unaudited condensed
consolidated interim financial statements, and for SEC consultations and
filings were $10,744.75 and $5,383.75 thus far, respectively.

Audit-Related Fees -  None.

Tax Fees - None

All Other Fees - None


Item 15.   Exhibits

(a)   Exhibits specified by item 601 of Regulation S-B.

See Exhibit Index.



                                   45
<PAGE>



                                 SIGNATURES

   In accordance with Section 13 or 15(d) of the Exchange Act of 1934, as
amended, the registrant caused this Annual Report on Form 10-K to be signed
on its behalf by the undersigned, thereunto duly authorized, in Burbank, CA
on this 28th day of  September, 2008.


                                       HYDRODYNEX, INC.


                                       By:  /s/Jerod C. Edington
                                            --------------------
                                            Jerod C. Edington
                                            President & Chief
                                            Executive Officer

   In accordance with Section 13 or 15(d) of the Exchange Act of 1934, as
amended, this Annual Report on Form 10-K has been signed below by the
following persons on behalf of the registrant in the capacities indicated
below on this 28th day of September, 2008.


Signature                 Title
------------------------  ---------------------------------------------------
/s/ Jerod C. Edington     Director, President & Chief Executive Officer
Jerod C. Edington         (Principal Executive Officer)

/s/ Blaine C. Davidson    Director, Chief Financial Officer,
Blaine C. Davidson        Secretary, Treasurer
                          (Principal Financial and Accounting Officer)

/s/ Peter Schmid          Director, Vice President
Peter Schmid



                                     46
<PAGE>


                             HYDRODYNEX, INC.
                       INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm                   48

Balance Sheets for June 30, 2007 and June 30, 2008                        49

Statements of Operations for twelve months ended June 30, 2008            50

Statement of Stockholder's Equity as of June 30, 2008                     51

Statements of Cash Flows for twelve months ended June 30, 2008            52

Notes to Financial Statements for period ended June 30, 2008              53



                                   47
<PAGE>



To the Board of Directors and
Stockholders of HydroDyneX, Inc.
Burbank, California

          REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
          -------------------------------------------------------

We have audited the accompanying balance sheet of HydroDyneX, Inc as of
June 30, 2008 and 2007, and the related statements of operations,
stockholders' equity and cash flows for the years then ended.  These
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of HydroDyneX, Inc. as of June
30, 2008 and 2007 and the results of its operations, stockholders equity and
its cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 2 to the
financial statements, the Company's significant and ongoing operating losses
raise substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.




Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
September 26, 2008




                                     48
<PAGE>


                            Hydrodynex, Inc.
                     (A Development Stage Company)
                            Balance Sheets

<TABLE>
<CAPTION>

Balance Sheets

                                                   June 30,    June 30,
                                                     2008         2007
                                                  -----------  -----------
<S>                                               <C>          <C>
Assets
Current Assets
  Cash                                            $      518   $       16
  Pre-paid Expenses                                      750
  Trade Deposits                                      26,990            0
                                                  -----------  -----------
Total Current Assets                                  28,258           16
                                                  -----------  -----------

Property and Equipment
  Property Plant and Equipment (Net)                   1,288            0
  Less: Accumulated Depreciation                         (49)           0
                                                  -----------  -----------
Total Property and Equipment                           1,239            0

Other Assets
  Pre-paid Royalty                                    21,889        6,997
                                                  -----------  -----------
Total Other Assets                                    21,889        6,997

Total Assets                                          51,386        7,013
                                                  ===========  ===========

Liabilities and Stockholders Equity
  Accounts payable                                $   16,467   $        0
  Accrued expenses                                        42            0
  Notes Payable-Related party                          2,000        3,846
                                                  -----------  -----------
Total Current Liabilities                             18,509        3,846
                                                  -----------  -----------
Commitments and contingencies                     $        0   $        0
                                                  -----------  -----------

Stockholders Equity

Preferred stock, $.001 par value, 5,000,000
shares authorized; no shares issued or outstanding         0            0
Common stock, $.001 par value, 70,000,000 shares
authorized, 1,500,000, and 500,000 issued and
outstanding, respectively                              1,500          500
Additional Paid-In Capital                           107,750        4,500
Deficit accumulated during development stage         (76,373)      (1,832)
                                                  -----------  -----------
Total Stockholder's Equity                        $   32,877   $    3,168
                                                  -----------  -----------
Total Liabilities and Stockholder's Equity        $   51,386   $    7,013
                                                  ===========  ===========
</TABLE>

  The accompanying notes are an integral part of these financial statements

                                     49
<PAGE>


                             Hydrodynex, Inc.
                       (A Development Stage Company)
                         Statements of Operations

<TABLE>
<CAPTION>

Statements of Operations

                                                             Period from May
                                                             12, 2006(Date of
                    Twelve Months Ended  Twelve Months Ended   Inception) to
                       June 30, 2008        June 30, 2007      June 30, 2008
                    -------------------  -------------------  ---------------
<S>                 <C>                  <C>                  <C>
Revenue             $                0   $                0   $            0
                    -------------------  -------------------  ---------------

Expenses

Consulting fees                 23,500                    0           23,500
Board of Directors
  fees                           2,750                                 2,750
General and
  Administrative                10,685                1,241           12,463
Legal and accounting            27,012                    0           27,012
Travel                          10,513                    0           10,513
Interest expense                    80                   55              135
                    -------------------  -------------------  ---------------
Total Expenses      $           74,540   $            1,296   $       76,373

Net Income (Loss)
  From Operations   $          (74,540)  $           (1,296)  $      (76,373)
                    ===================  ===================  ===============

Basic and fully
  diluted loss per
  share             $            (0.05)  $              nil   $        (0.05)
                    ===================  ===================  ===============

Basic and fully
  diluted weighted
  average shares
  outstanding                1,500,000              500,000        1,500,000
                    ===================  ===================  ===============
</TABLE>

                                      50
<PAGE>


                               Hydrodynex, Inc.
                        (A Development Stage Company)
                     Statements of Stockholder's Equity

<TABLE>
<CAPTION>

Statements of Stockholder's Equity


                             Common Stock
                           ----------------  Additional
                                       Par      Paid   Accumulated
                             Shares   Value  In Capital  Deficit     Total
                           ---------  ------  --------  ---------  ---------
<S>                        <C>        <C>     <C>       <C>        <C>
Balance - May 12, 2006
 (Date of Inception)               -  $    -  $      -  $      -   $      -

Shares issued to President
 (Note 5)                    200,000     200     1,800                2,000

Net loss for the period                                     (536)      (536)
                           ---------  ------  --------  ---------  ---------

Balance - June 30, 2006      200,000  $  200  $  1,800  $   (536)  $  1,464

Shares issued to President
 (Note 5)                    300,000     300     2,700                3,000

Net loss for the year                                     (1,296)    (1,296)
                           ---------  ------  --------  ---------  ---------

Balance - June 30, 2007      500,000  $  500  $  4,500  $ (1,832)  $  3,168

Shares issued               1,000,000   1,000    99,000              100,000
Options issued for
 director fees                                    2,750
Options issued for
 services                                         1,500

Net loss for period                                      (74,540)   (74,540)
                           ---------  ------  --------  ---------  ---------

Balance-June 30, 2008      1,500,000  $1,500  $107,750  $(76,372)  $ 32,878
                           =========  ======  ========  =========  =========
</TABLE>

                                      51
<PAGE>


                              Hydrodynex, Inc.
                        (A Development Stage Company)
                           Statements of Cash Flows

<TABLE>
<CAPTION>

Statements of Cash Flows

                                                             Period from May
                                                             12, 2006(Date of
                    Twelve Months Ended  Twelve Months Ended   Inception) to
                       June 30, 2008        June 30, 2007      June 30, 2008
                    -------------------  -------------------  ---------------
<S>                 <C>                  <C>                  <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:

Net Loss            $          (74,540)  $           (1,296)  $      (76,373)

 Depreciation and
  Amortization Expense              49                    0                0
 Stock options issued
  for director fees              2,750                    0            2,750
 Stock options issued
  for services                   1,500                    0            1,500
 Decrease (Increase)
  Trade Deposits               (26,990)                   0          (26,991)
 Decrease (Increase)
  Prepaid Expenses             (15,642)              (6,997)         (22,639)
 Increase (Decrease)
  Accounts Payable and
  Accrued Liabilities           16,509                    0           16,510
 Increase (Decrease)
  Due to related Party          (1,846)               3,518            2,000
                    -------------------  -------------------  ---------------
  Net Cash (Used)
  Provided by Operating
  Activities        $          (98,210)  $           (4,775)  $     (103,243)

CASH FLOWS FROM
INVESTING ACTIVITIES:

Investment in property,
plant and equipment             (1,288)                   0           (1,239)
                    -------------------  -------------------  ---------------
  Net Cash (Used)
  Provided by Investing
  Activities                    (1,288)                   0           (1,239)
                    -------------------  -------------------  ---------------

CASH FLOWS FROM
FINANCING ACTIVITIES:

Proceeds from sale of
common stock                   100,000                    0          105,000
Increase (Decrease) stock
subscription receivable              0                3,000                0
                    -------------------  -------------------  ---------------
  Net Cash (Used in)
  used in Financing
  Activities        $          100,000   $            3,000   $      105,000
                    -------------------  -------------------  ---------------

Net change in cash                 502               (1,775)             518
Cash, Beginning of
Period                              16                1,792                0
                    -------------------  -------------------  ---------------
Cash, End of Period $              519   $               17   $          518
                    ===================  ===================  ===============

Supplement Cash Flow
Information
  Interest Expense
  Paid              $              135   $                0   $          135
                    ===================  ===================  ===============
</TABLE>


                                     52
<PAGE>


NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

Hydrodynex, Inc. (hereinafter "the Company") was incorporated May 12, 2006
under the laws of the State of Nevada.  The primary business is to market and
sell, under an exclusive North-American license, AO-System (Anodic Oxidation)
water treatment units.  The water treatment systems are developed and
manufactured by Hydrosystemtechnik, GmbH based in Germany.

The Company is in the development stage.

The Company's fiscal year end is June 30.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies is presented to assist in
understanding the financial statements.  The financial statements and notes
are representations of the Company's management, which is responsible for
their integrity and objectivity.  These accounting policies conform to
accounting principles generally accepted in the United States of America and
have been consistently applied in the preparation of the financial
statements.

Accounting Method

The Company uses the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America.

Use of Estimates

The process of preparing the financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the use of estimates and assumptions regarding certain types of
assets, liabilities, revenues, and expenses.  Such estimates primarily relate
to unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ from
estimated amounts.

Cash and Cash Equivalents

Cash and cash equivalents consists of cash on deposit and term deposits with
a maturity of less than three months from the date of purchase.


                                     53
<PAGE>


Organizational costs

Costs of startup activities, including organizational and incorporation costs
are expensed as incurred.

Fair Value of Financial Instruments

The carrying value of cash, and accounts payable and accrued liabilities
approximate their fair value because of there short maturity of these
instruments.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting
pursuant to SFAS No. 109 "Accounting for Income Taxes."  Under this approach,
deferred income taxes are recorded to reflect the tax consequences on future
years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each year end.  A valuation allowance is
recorded against deferred tax assets if management does not believe the
Company has met the "more likely than not" standard imposed by SFAS No. 109
to allow recognition of such an asset.

Basic and Diluted Loss Per Share

Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period.  The weighted average number
of shares was calculated by taking the number of shares outstanding and
weighting them by the amount of time that they were outstanding.  Basic and
diluted loss per share was the same, as there were no common stock
equivalents outstanding.


Going Concern

As shown in the accompanying financial statements, the Company has no
revenues, has incurred a net loss of $ 70,290 for the period ended June 30,
2008 and has an accumulated deficit of $ 72,123.  These factors indicate that
the Company may be unable to continue in existence.  The financial statements
do not include any adjustments related to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue
in existence.


                                     54
<PAGE>


The Company's management believes that the company will have sufficient
resources to execute the current plan of operations, and meet the budget.
Although the company currently only has $518 in cash, a bridge loan and a
second private stock offering are planned to be implemented to raise
sufficient operating capital to continue operations.

Recent Accounting Pronouncements

In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial
Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60."
SFAS 163 requires that an insurance enterprise recognize a claim liability
prior to an event of default (insured event) when there is evidence that
credit deterioration has occurred in an insured financial obligation.  This
Statement also clarifies how Statement 60 applies to financial guarantee
insurance contracts, including the recognition and measurement to be used to
account for premium revenue and claim liabilities. Those clarifications will
increase comparability in financial reporting of financial guarantee
insurance contracts by insurance enterprises. This Statement requires
expanded disclosures about financial guarantee insurance contracts. The
accounting and disclosure requirements of the Statement will improve the
quality of information provided to users of financial statements.  SFAS 163
will be effective for financial statements issued for fiscal years beginning
after December 15, 2008.  The Company does not expect the adoption of SFAS
163 will have a material impact on its financial condition or results of
operation.

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally
Accepted Accounting Principles."  SFAS 162 will provide framework for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles (GAAP) for nongovernmental entities.  SFAS 162 will be effective
60 days following the Securities and Exchange Commission's approval of the
Public Company Accounting Oversight Board (PCAOB) amendments to AU Section
411.  The Company does not expect the adoption of SFAS 162 will have a
material impact on its financial condition or results of operation.

In March 2008, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 161, "Disclosures about Derivative
Instruments and Hedging Activities - an amendment of FASB Statement No. 133"
(FAS 161).  FAS 161 amends and expands disclosures about derivative
instruments and hedging activities. FAS 161 required qualitative disclosures
about the objectives and strategies of derivative instruments, quantitative
disclosures about the fair value amounts of and gains and losses on
derivative instruments, and disclosures of credit-risk-related contingent
features in hedging activities. FAS 161 is effective for fiscal years


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beginning after November 15, 2008 and will be effective for the Company in
fiscal year 2010. Early adoption is prohibited; however, presentation and
disclosure requirements must be retrospectively applied to comparative
financial statements. The Company has not yet determined the effect, if any,
that the adoption of this standard will have on its financial position or
results of operations.

In December 2007, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 160, "Non-controlling Interests in
Consolidated Financial Statements" ("FAS 160") which amends ARB 51 to
establish accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. It clarifies
that a non-controlling interest in a subsidiary is an ownership interest in
the consolidated entity that should be reported as equity in the consolidated
financial statements. In addition to the amendments to ARB 51, this Statement
amends FASB Statement No. 128, Earnings per Share; so that earnings-per-share
data will continue to be calculated the same way those data were calculated
before this Statement was issued. This Statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company is currently evaluating the impact, if any, of
adopting FAS 160 on its financial position and results of operations.

In December 2007, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 141R, "Business Combinations" ("FAS
141R") which replaces FAS No. 141 and establishes principles and requirements
for how the acquirer of a business recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquire. FAS 141R also provides guidance for
recognizing and measuring the goodwill acquired in the business combination
and determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This Statement applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the first
annual reporting period beginning on or after December 15, 2008. Early
adoption of FAS 141R is prohibited. The Company is currently evaluating the
impact, if any, of adopting FAS 141R on its financial position and results of
operations.

In February, 2007, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an amendment of FASB
Statement No. 115" (hereinafter SFAS No. 159"). This statement permits
entities to choose to measure many financial instruments and certain other
items at fair value. The objective is to improve financial reporting by
providing entities with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently


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without having to apply complex hedge accounting provisions. This Statement
is expected to expand the use of fair value measurement, which is consistent
with the Board's long-term measurement objectives for accounting for
financial instruments. This statement is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007, although
earlier adoption is permitted. Management has not determined the effect that
adopting this statement would have on the Company's financial condition or
results of operation.

NOTE 3 - PROPERTY AND EQUIPMENT

The company records all purchases of property and equipment at cost which is
presumed to be fair value at the time.  Assets will be depreciated over the
straight-line method over the expected useful life of the asset.  The Company
has purchased a computer

The useful lives of property, plant and equipment for purposes of computing
depreciation are three to thirty-one and one half years.  The following is a
summary of equipment and accumulated depreciation at June 30, 2008 and 2007:

                                        June 30, 2008  June 30, 2007
                                        -------------  -------------
Equipment                               $      1,288              -
Less: accumulated depreciation                   (49)             -
                                        -------------  -------------
Property, Plant & Equipment, net        $      1,239              -

Depreciation expense was $ 49 for the year ended June 30, 2008 and $ 0 for
the year ended June 30, 2007.

The Company evaluates the recoverability of property and equipment when
events and circumstances indicate that such assets might be impaired.  The
Company determines impairment by comparing the undiscounted cash flows
estimated to be generated by these assets as compared to the carrying
amounts.

The costs associated with maintenance will be expensed, and replacements and
betterments will be capitalized.   The cost and related reserves of assets
sold or retired are removed from the accounts, and resulting gain or loss is
reflected in results of operations.

NOTE 4 - RELATED PARTY

The president of the Company loaned the company $ 2,500 with 6% per annum
interest on February 5, 2007, to be repaid before December 31, 2007.   The
note was fully satisfied on December 31, 2007.


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<PAGE>


The president of the Company loaned the company $ 2,000 without interest on
June 12, 2008,to be repaid before December 31, 2008.   The note was fully
satisfied on July 24, 2008.

NOTE 5 - EXCLUSIVE TECHNOLOGY LICENSES

On September 3, 2007, the Company acquired an exclusive technology license
for North America to market the AO-System water treatment system (AO - Anodic
Oxidation) from Hydrosystemtechnik, GmbH, based in Germany.   The Company has
agreed to pay a licensing fee in the amount 50,000 Euros and has already paid
one installment of three in the amount of 10,000 Euros.  A second installment
in the amount of 20,000 Euros is due on November 30th.  These license fee
payments may be applied as pre-paid royalties with Hydrosystemtechnik in the
event the Company decides to exercise its right to manufacture AO-Systems.
The Company does have the opportunity under the license to manufacture and
assemble the AO-System in the United States for resell, after purchasing
specified parts from Hydrosystemtechnik as outlined in the license
agreement..  In the event the Company decides to enter into manufacturing of
AO-Systems, the Company is to pay royalties to Hydrosystemtechnik in the
amount of 10% of the gross sale on each AO-System that the Company
manufactures and sells, and will be paid out of pre-paid royalties first when
the Company begins to sell the units within the United States.  In the event
the Company decides not to manufacture, the license fees will no longer be
considered pre-paid royalties.

NOTE 6 - INCOME TAXES

Income taxes are provided based upon the liability method of accounting
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" (hereinafter "SFAS No. 109").  Under this approach,
deferred income taxes are recorded to reflect the tax consequences in future
years of differences between the tax basis of assets and liabilities and
their financial reporting amounts at each year-end.  A valuation allowance is
recorded against deferred tax assets if management does not believe the
Company has met the "more likely than not" standard imposed by SFAS No. 109
to allow recognition of such an asset.

Effective December 1, 2007, the Company adopted the Financial Accounting
Standards Board ("FASB") Interpretation No. 48, Accounting for Uncertainty in
Income Taxes-an interpretation of FASB Statement No. 109 ("FIN 48"). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 prescribes a recognition threshold and
measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return.


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<PAGE>


Additionally, FIN 48 provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The adoption of FIN 48 did not have a material impact on the
Company's financial position, results of operation or liquidity. The current
Company policy classifies any interest recognized on an underpayment of
income taxes as interest expense and classifies any statutory penalties
recognized on a tax position taken as selling, general and administrative
expense.

The Company has not taken a tax position that, if challenged, would have a
material effect on the financial statements for the fiscal year ended June
30, 2008, or during the prior three years applicable under FIN 48.

As a result of the adoption of FIN 48, we did not recognize any adjustment to
the liability for uncertain tax position and therefore did not record any
adjustment to the beginning balance of accumulated deficit on the
consolidated balance sheet.

At June 30, 2008, the Company had deferred tax assets of approximately $
2,310 principally arising from net operating loss carry forwards for income
tax purposes calculated at an expected rate of 34%.  As management of the
Company cannot determine that it is more likely than not that the Company
will realize the benefit of the deferred tax assets, a valuation allowance
equal to the deferred tax assets was present at June 30, 2008.

The Company's deferred tax assets are estimated as follows:

                                        June 30, 2008  June 30, 2007
                                        -------------  -------------
Net operating loss carry forward        $     71,500   $      1,832

Deferred tax asset                      $     24,310   $        623
                                        -------------  -------------
Deferred tax asset valuation allowance      ($24,310)         ($623)

Net deferred tax asset                             -              -

At June 30, 2008 the Company has net operating loss carryforwards of
approximately $ 71,500 which expires in the years 2026 through 2028.  The
Company recognized $ 4,250 in stock options expense that cannot be deducted
for tax purposes, and are not included in the above calculation of deferred
tax assets.  The change in the allowance account from June 30, 2007 to June
30, 2008 was $ 23,687.


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<PAGE>


NOTE 7 - PREFERRED AND COMMON STOCK

The Company is authorized to issue 5,000,000 shares of $ 0.001 par value
preferred stock.  All shares have equal voting rights, are non-assessable and
have one vote per share.  Voting rights are not cumulative and, therefore,
the holders of more than 50% of the preferred stock could, if they choose to
do so, elect all of the directors of the Company.  There are no preferred
shares issued.

The Company is authorized to issue 70,000,000 shares of $ 0.001 par value
common stock.  All shares have equal voting rights, are non-assessable and
have one vote per share.  Voting rights are not cumulative and, therefore,
the holders of more than 50% of the common stock could, if they choose to do
so, elect all of the directors of the Company.

The company sold 200,000 shares of common stock to the president for $ 2,000
in May of 2006, and then another 300,000 shares were sold during fiscal year
2006 for $ 3,000.

During the fiscal year end June 30, 2008, the Company has sold 1,000,000
shares of common stock at a price of $ 0.10 per a share which raised $100,000
in cash.

NOTE 8 - STOCK OPTION PLAN

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation" (hereinafter SFAS No. 123), defines a fair value-based
method of accounting for stock options and other equity instruments. The
Company has adopted this method, which measures compensation costs based on
the estimated fair value of the award and recognizes that cost over the
service period.

The Company's board of directors approved the adoption of the "2006 Non-
Qualified Stock Option and Stock Appreciation Rights Plan" by unanimous
consent on May 19, 2006.  This plan was initiated to encourage and enable
officers, directors, consultants, advisors and other key employees of the
Company to acquire and retain a proprietary interest in the Company by
ownership of its common stock.  A total of 1,000,000 of the authorized shares
of the Company's common stock may be subject to, or issued pursuant to, the
terms of the plan.


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<PAGE>


For the year ended June 30, 2008, the Board of Director's approved and
granted the issuance of 85,000 non-statutory stock options granted from the
Company's 2006 Non-Qualified Stock Option Plan.  These options expire on July
31, 2013 and vested entirely upon issue date.  The options are exercisable at
the price of $.25/share.  The purpose of granting the stock options was to
encourage and enable officers, directors, consultants, advisors, other key
employees and related parties of the Company to acquire and retain a
proprietary interest in the Company by ownership of its common stock.

The following is a summary of stock option activity:

                                                           Weighted Average
                                         Number of Shares   Exercise Price
                                         ----------------  ----------------
Outstanding at June 30, 2006                           -   $             -

Granted                                                -                 -
Exercised                                              -                 -
                                         ----------------  ----------------
Outstanding at June 30, 2007                           -   $             -
                                         ================  ================
Granted                                                -                 -
Exercised                                              -                 -
Outstanding at June 30, 2008                      85,000   $           .25
Options exercisable at June 30, 2008              85,000   $           .25
Fair Market Value Per Share of
  Options Granted in 2008                              -   $           .25
                                                           ---------------

The options were valued using the Black-Scholes option pricing model using
the following assumptions as required under SFAS No. 123): risk-free interest
rate of 3.3750%; volatility of 85%; no dividends; an expected life of no more
than 5 years; and an expected exercise price of $0.25. The Company determined
that the stock option compensation was $4,250 and was recognized during the
year ended June 30, 2008.

                                                          Year Ended 2008
                                                          ---------------
Risk-free interest rate                                       3.3750%
Expected option life                                          5 years
Dividend yield                                                   0%
Volatility                                                      85%
Exercise price                                                 $0.25


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<PAGE>


These assumptions were determined as follows:
   The risk free interest rate for the period within the contractual life of
the option is based on the 5-year U.S Treasury yield at the time of the grant

   The expected term of the options granted represents the period of time
that the options granted are expected to be outstanding

   Historically, the Company has not paid a dividend on its common shares and
does not expect to do so in the future

   The volatility assumption represents an expectation of the volatility of
the price of the underlying shares for the expected term of the option,
considering factors such as historical stock price and stock volatility of
other companies within the industry.


NOTE 9 - CONTINGENCIES

As of June 30, 2008 management wasn't aware of any contingencies that needed
to be included in the financial statements.

NOTE 10 - SUBSEQUENT EVENTS

The Company has amended its license agreement with Hydrosystemtechnik, GmbH a
German company.  A license payment of 20,000 Euros is due to
Hydrosystemtechnik on November 30, 2008.

The Company is working on bridge financing of up to $50,000 from individuals
or entities.  $12,000 of bridge funding has been received since the June 30
year end.  The promissory notes are convertible into common stock, and also
have warrants attached.   The notes are due within one year, and include
simple interest at 8%.

The Company has amended its Articles of Incorporation to increase the number
of authorized Common Shares to 75,000,000.

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<PAGE>



HYDRODYNEX, INC.

                             INDEX TO EXHIBITS


Exhibits      Description of Document

3.1           Articles of Incorporation of Registrant(1)

3.2           Bylaws of Registrant(1)

10.1          Exclusive North American license between Hydrodynex, Inc. and
              Hydrosystemtechnik, GmbH (1)

10.2          2006 Non-Qualified Stock Option and Stock Appreciation Rights
              Plan Dated May 19, 2006 (1)

10.3          Corporate Governance Guidelines (2)

10.4          Corporate Governance and Director's Nominating
              Committee Charter (2)

10.5          Compensation Committee Charter (2)

10.6          Audit Committee Charter (2)

10.7          Promissory Note between Jerod Edington and HydroDynex
              dated June 12, 2008 (2)(3)

14.1          Code of Business Conduct and Ethics (2)

14.2          Code of Ethics for the CEO and Senior Financial Officers (2)

31.1          Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
              Officer (2)

31.2          Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
              Officer (2)

32.1          Section 1350 Certifications (2)

(1) Filed with the Securities and Exchange Commission on June 30, 2008 as an
    exhibit, numbered as indicated above, to the Registrant's registration
    statement on Form S-1 (file no. 333-152052), which exhibit is
    incorporated herein by reference.
(2) Filed herewith.
(3) Promissory note was paid in full on July 24, 2008


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