U.S.
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 FORM
10-K
  (Mark
One)
 x
              ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For
Fiscal Year Ended: June 30, 2009
 OR
  ̈
              TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 For the
transition period from __________________
to __________________
 
 Commission file number
                333-127703
 
 NANODYNAMICS HOLDINGS,
  INC.(Exact
      name of small business issuer as specified in its
  charter)
 
 Nevada
                
                20-3061907(State
      or other jurisdiction of
                  incorporation
      or organization)
                
                (I.R.S.
      Employer
                  Identification
      No.)1640
      Terrace Way, Walnut Creek, CA
                
                94597(Address
      of principal executive offices)
                
                (Zip
      Code)
  Registrant’s
telephone number:  (925)
930-0100
  Securities
registered under Section 12(b) of the Act:  None
  Securities
registered under Section 12(g) of the Act:  None
  Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.  Yes ̈Nox
 Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Exchange Act.  YesxNo ̈
  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.  YesxNo ̈
  Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained 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.   ̈
  Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  See the
definitions of the “large accelerated filer,” “accelerate 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(Do
      not check if a smaller reporting company)
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes x
  No  ̈
  As of
September 15, 2009, there were 7,747,374 shares of the registrant’s common
equity outstanding.  The aggregate market value of the common equity
on December 31, 2008 held by non-affiliates computed by reference to the closing
bid price of the issuer’s Common Stock on that date, was $3,232,006 based upon
the closing bid price ($1.01) multiplied by the 3,200,006 shares of the issuer’s
Common Stock held by non-affiliates.
  DOCUMENTS
INCORPORATED BY REFERENCE
  Not
Applicable
  
  TABLE
OF CONTENTS
 Item
      Number and Caption
                                                                                              
                                                                                              PageForward-Looking
      Statements
                                                                                              
                                                                                              3PART
      I
                                                                                              
                                                                                              
                                                                                              41.
                                                                                              Business
                                                                                              
                                                                                              41A.
                                                                                              Risk
      Factors
                                                                                              
                                                                                              61B.
                                                                                              Unresolved
      Staff Comments
                                                                                              
                                                                                              62.
                                                                                              Properties
                                                                                              
                                                                                              63.
                                                                                              Legal
      Proceedings
                                                                                              
                                                                                              64.
                                                                                              SubmissionOf
      Matters To A Vote Of Security Holders
                                                                                              
                                                                                              6PART
      II
                                                                                              
                                                                                              
                                                                                              65.
                                                                                              Market
      For Registrant’s
      Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity
      Securities
                                                                                              
                                                                                              66.
                                                                                              Selected
      Financial Data
                                                                                              
                                                                                              87.
                                                                                              Management’s
      Discussion and Analysis of Financial Condition
      and Results of Operations
                                                                                              
                                                                                              88.
                                                                                              Financial
      Statements and Supplemental Data
                                                                                              
                                                                                              99A.[T]
                                                                                              Controls
      And Procedures
                                                                                              
                                                                                              99B.
                                                                                              Other
      Information
                                                                                              
                                                                                              11PART
      III
                                                                                              
                                                                                              
                                                                                              1210.
                                                                                              Directors,
      Executive Officers, and Corporate Governance
                                                                                              
                                                                                              1211.
                                                                                              Executive
      Compensation
                                                                                              
                                                                                              1412.
                                                                                              Security
      Ownership Of Certain Beneficial Owners And Management And Related
      Stockholder Matters
                                                                                              
                                                                                              1513.
                                                                                              Certain
      Relationships And Related Transactions and Director
      Independence
                                                                                              
                                                                                              1614.
                                                                                              Principal
      Accountant Fees And Services
                                                                                              
                                                                                              16PART IV
                                                                                              
                                                                                              
                                                                                              1815.
                                                                                              Exhibitsand
      Financial Statement Schedules
                                                                                              
                                                                                              18
  2
  FORWARD-LOOKING
STATEMENTS
 
 Except
for historical information, this report contains forward-looking
statements.  Such forward-looking statements involve risks and
uncertainties, including, among other things, statements regarding our business
strategy, future revenues and anticipated costs and expenses.  Such
forward-looking statements include, among others, those statements including the
words “expects,” “anticipates,” “intends,” “believes” and similar
language.  Our actual results may differ significantly from those
projected in the forward-looking statements.  Factors that might cause
or contribute to such differences include, but are not limited to, those
discussed in the sections “Business” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”  You should
carefully review the risks described in this Annual Report and in other
documents we file from time to time with the Securities and Exchange Commission
(the “SEC”).  You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this
report.  We undertake no obligation to publicly release any revisions
to the forward-looking statements or reflect events or circumstances after the
date of this document.
 
 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.
 
 All
references in this Form 10-K to the “Company,” “we,” “us” or “our” are to
NanoDynamics Holdings, Inc.
  3
  PART
I
 
 ITEM
1.    BUSINESS
 
 Recent
Events
 
 We were
incorporated on June 24, 2005, and we were in the business of manufacturing,
marketing and distributing soy-blend scented candles and oils. Our primary
retail outlets were art markets, gift shops and outdoor markets. We tried to
compete largely by offering vegetable based products, rather than those produced
from petroleum byproducts. We determined that we could not continue with our
business operations as outlined in our original business plan because of a lack
of financial results and resources; therefore, although we may return to our
intended business operations at a later date, we have redirected our focus
towards identifying and pursuing options regarding the development of a new
business plan and direction. We intend to explore various business opportunities
that have the potential to generate positive revenue, profits and cash flow in
order to financially accommodate the costs of being a publicly held company.
However, we cannot assure you that there will be any other business
opportunities available nor the nature of the business opportunity, nor
indication of the financial resources required of any possible business
opportunity.
 
 We were
recently engaged in discussions with NanoDynamics, Inc., a Delaware corporation
(“Nanodynamics), regarding a possible business combination involving
NanoDynamics and us.  With the permission of NanoDynamics, we changed
our name to NanoDynamics Holdings, Inc. to facilitate these discussions. We have
determined not to proceed with the business combination with Nanodynamics and,
as a result, we expect to change our name to Mystica Holdings, Inc.
 
 On July
11, 2008, we filed a Certificate of Amendment to our Articles of Incorporation
(the “Articles”) with the Secretary of State of the State of Nevada which, (i)
changed our name from Mystica Candle Corp. to NanoDynamics Holdings, Inc., and
(ii) increased our authorized capital stock from 75,000,000 shares of common
stock, par value $0.001, to 290,000,000 shares of common stock, par value
$0.001, and 10,000,000 shares of preferred stock, par value $0.001. The shares
of Preferred Stock may be issued from time to time in one or more classes or
series, each of which class or series shall have such distinctive designation or
title as shall be fixed by the Board of Directors of the Corporation or any
committee thereof established by resolution of the Board of Directors pursuant
to the By-Laws prior to the issuance of any shares thereof; each such class or
series of Preferred Stock shall have such voting powers, full or limited, or no
voting powers, and such preferences and relative, participating, optional or
other special rights and such qualifications, limitations or restrictions
thereof, as shall be stated in such resolution or resolutions providing for the
issue of such class or series of Preferred Stock as may be adopted from time to
time by the Board of Directors prior to the issuance of any shares thereof
pursuant to the authority vested in it, all in accordance with the laws of the
State of Nevada.
 
 On July
11, 2008, our Board of Directors also declared a 3.031578-for-1 forward stock
split in the form of a dividend. The record date for the stock dividend was July
21, 2008, and the effective date was July 29, 2008.
  4
  General
 
 We have
minimal operating costs and expenses at the present time due to our limited
business activities. We may, however, be required to raise additional capital
over the next twelve months to meet our current administrative expenses, and we
may do so in connection with or in anticipation of possible acquisition
transactions. This financing may take the form of additional sales of our equity
securities and/or loans from our directors. There is no assurance that
additional financing will be available, if required, or on terms favorable to
us.
 
 We are
not currently engaging in any product research and development and have no plans
to do so in the foreseeable future. We have no present plans to purchase or sell
any plant or significant equipment. We also have no present plans to add
employees although we may do so in the future if we engage in any merger or
acquisition transactions
 
 Private
Placement
 
 On June
5, 2008, we issued a promissory note (the “2008 Note”) to one investor in
exchange for a working capital loan of $50,000 to us. The 2008 Note carries an
8% annual interest rate and was originally due and payable no later than June 5,
2009.  The maturity date of the 2008 Note has been extended to June 5,
2010. The 2008 Note was issued in a private placement exempt from registration
under the federal securities laws pursuant to Section 4(2) of the Securities Act
of 1933, as amended.
 
 On May 8,
2009, we issued a promissory note (the “2009 Note”) to one investor in exchange
for a working capital loan of $45,000 to us. The 2009 Note carries an 8.25%
annual interest rate and principal and interest are due and payable no later
than November 8, 2010. The note holder has a right to convert any portion of the
outstanding and unpaid principal and interest balance into the Company’s common
shares at a conversion price to be mutually determined by the Company and the
note holder.
  The 2009
Note was issued in a private placement exempt from registration under the
federal securities laws pursuant to Section 4(2) of the Securities Act of 1933,
as amended.
 
 Employees;
Identification of Certain Significant Employees.
 
 We are a
development stage company and currently have no employees, other than our sole
officer and director. We will hire additional employees on an as needed
basis.
 
 Offices
 
 Our
offices are 1640 Terrace Way, Walnut Creek, CA 94597.  Our telephone
number is (925) 930-0100.  This is an office leased to our president,
David Rector.  Mr. Rector allows us to use the office for our
operations.
  5
  Research
and Development
 
 We have
not spent any amounts on research and development activities during either of
the last two fiscal years.
 
 ITEM
1A.  RISK FACTORS
 
 Because
we are a “smaller reporting company” as that term is defined by the SEC, we are
not required to present risk factors at this time.
 
 ITEM
1B.  UNRESOLVED STAFF COMMENTS
 
 None.
  ITEM
2.     PROPERTIES
 
 We do not
own any property. We maintain our statutory registered agent's office at 101
Convention Center Drive, Suite 700, Las Vegas, Nevada 89109 and our business
office is 1640 Terrace Way, Walnut Creek, CA 94597. Our telephone number is
(925) 930-0100. This is the office of our President, David Rector.
 
 ITEM
3.     LEGAL PROCEEDINGS
 
 No legal
or governmental proceedings are presently pending or, to our knowledge,
threatened, to which we are a party.
 
 ITEM
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
 
 No
matters were submitted to a vote of security holders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year covered by
this report.
  PART
II
 
 ITEM 5.
              MARKET
      FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
 
 Market
Information
 
 Since
July 1, 2006 our Common Stock has been listed for quotation on the
Over-the-Counter Bulletin Board, originally under the symbol
“MYTC”.  Our symbol changed to “NNDY” in connection with our name
change to NanoDynamics Holdings, Inc.
 
 The
following table sets forth the high and low closing bid prices for our Common
Stock for the fiscal quarters indicated as reported on the OTCBB by the Nasdaq
Composite Feed or other qualified interdealer quotation medium. The quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
  6
 
 Fiscal Quarter
                    
                    High Bid
                    
                    
                    Low Bid2009Fourth
      Quarter 04-01-09 to 06-30-09
                    
                    $
                    0.06
                    
                    
                    $
                    0.05Third
      Quarter 01-02-09 to 3-31-09
                    
                    $
                    1.01
                    
                    
                    $
                    0.05Second
      Quarter 10-01-08 to 12-31-08
                    
                    $
                    1.01
                    
                    
                    $
                    1.01First
      Quarter 07-29-08 to 09-30-08*
                    
                    $
                    1.01
                    
                    
                    $
                    1.01First
      Quarter 07-01-08 to 07-28-08
                    
                    $
                    1.50
                    
                    
                    $
                    1.152008Fourth
      Quarter 04-01-08 to 06-30-08
                    
                    $
                    1.15
                    
                    
                    $
                    1.15Third
      Quarter 01-02-08 to 03-31-08
                    
                    $
                    1.15
                    
                    
                    $
                    1.15Second
      Quarter 10-01-07 to 12-31-07
                    
                    $
                    1.15
                    
                    
                    $
                    1.05First
      Quarter 07-01-07 to 09-28-07
                    
                    $
                    1.05
                    
                    
                    $
                    1.05







* After a
3.031578 for 1 forward stock split.




Holders




Of the
7,747,374 shares of common stock outstanding as of September 15, 2009 held by
five shareholders of record, - 0 - shares are owned by our officers and
directors.





Dividends





There are
no restrictions in our articles of incorporation or bylaws that prevent us from
declaring dividends.  The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:





1.
            we
      would not be able to pay our debts as they become due in
      the  usual course of business;
or





2
              our
      total assets would be less than the sum of our total liabilities plus the
      amount that would be needed to satisfy the rights of shareholders who have
      preferential rights superior to those receiving the
      distribution.





We have
not declared any dividends, and we do not plan to declare any dividend in the
foreseeable future.





Securities
Authorized For Issuance Under Equity Compensation Plans





We do not
have any equity compensation plans and accordingly we have no securities
authorized for issuance under any such plans.





7





ITEM
6.    SELECTED FINANCIAL DATA





Not
applicable.





ITEM
7.    MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





The
following discussion highlights the principal factors that have affected our
financial condition and results of operations as well as our liquidity and
capital resources for the periods described. This discussion contains
forward-looking statements. Please see “Forward-Looking Statements” for a
discussion of the uncertainties, risks and assumptions associated with these
forward-looking statements.




The
following discussion and analysis of the Company’s financial condition and
results of operations are based on the preparation of our financial statements
in accordance with U.S. generally accepted accounting principles. You
should read the discussion and analysis together with such financial statements
and the related notes thereto.




Results
of Operations





Fiscal
year Ended June 30, 2009 and 2008





We are
still in our exploration stage and have generated no revenues to
date.




We
incurred total operating expenses of $63,364 and $95,371 for the years ended
June 30, 2009 and 2008, respectively. Administrative and professional expenses
decreased to $63,364 in the fiscal year ended June 30, 2009 from $95,371 in the
fiscal year ended June 30, 2008.  These expenses in the fiscal year
ended June 30, 2009 consisted primarily of accounting and legal costs relating
to the preparation and filing of our periodic reports.




Our net
losses for years ended June 30, 2009 and 2008 were $(67,905) and $(95,656),
respectively.




We have
generated no revenues and our net operating loss from inception through June 30,
2009 was $(193,710).




Liquidity
and Capital Resources





Our cash
and cash equivalents balance as of June 30, 2009 was $9,703.




We are a
development stage company and currently have no operations.





We do not
have sufficient funds on hand to pursue our business objectives for the near
future or to commence operations without seeking additional funding. We
currently do not have a specific plan of how we will obtain such
funding.





8





We have
minimal operating costs and expenses at the present time due to our limited
business activities.  We will, however, be required to raise
additional capital over the next twelve months to meet our current
administrative expenses, and, additionally, we may do so in connection with or
in anticipation of possible acquisition transactions. This financing may take
the form of additional sales of our equity or debt securities or loans from our
sole officer or directors.  There is no assurance that additional
financing will be available, or, if available, that it will be on terms
favorable to us.





Our
auditors have included an explanatory paragraph in their report on our financial
statements relating to the uncertainty of our business as a going concern, due
to our limited operating history, our lack of historical profitability, and our
limited funds. We believe that we will be able to raise the required funds for
operations and to achieve our business plan.





Off-Balance
Sheet Arrangements





We have
no off-balance sheet arrangements.





ITEM
8.   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA





Our
audited financial statements are included beginning immediately following the
signature page to this report.  See Item 15 for a list of the
financial statements included herein.





ITEM
9A.[T]  CONTROLS AND PROCEDURES





Disclosure
Controls and Procedures





Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Exchange Act of 1934 (the “Exchange
Act”) is accumulated and communicated to the issuer's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how
remote.  Under the supervision and with the participation of our
management, including our Chief Executive and Financial Officer, we have
evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, our Chief Executive and Financial Officer
has concluded that our disclosure controls and procedures were not
effective.





9





Management’s
Annual Report on Internal Control over Financial Reporting





The
management of NanoDynamics Holdings, Inc. is responsible for establishing and
maintaining an adequate system of internal control over financial reporting (as
defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)).  Under the supervision and with the
participation of our senior management, consisting of David Rector, our chief
executive officer and financial officer, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act
as of the end of the period covered by this report (the “Evaluation Date”).
Based on this evaluation, our chief executive officer and financial officer
concluded, as of the Evaluation Date, that our disclosure controls and
procedures were not effective because of the identification of what might be
deemed a material weakness in our internal control over financial reporting
which is identified below.




Our
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes of accounting
principles generally accepted in the United States.  Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements.  Therefore, even those systems determined to
be effective can provide only reasonable assurance of achieving their control
objectives.  In evaluating the effectiveness of our internal control
over financial reporting, our management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) inInternal
Control—Integrated
Framework.  Based
on thisevaluation,our sole officer concluded that, during the period covered by this annual
report, our internal controls over financial reporting were not operating
effectively. Management did not identify any material weaknesses in our internal
control over financial reporting as of June 30, 2009; however, it has identified
the following deficiencies that, when aggregated, may possibly be viewed as a
material weakness in our internal control over financial reporting as of that
date:




1.
            We
      do not have an audit committee. While we are not currently obligated to
      have an audit committee, including a member who is an “audit committee
      financial expert,” as defined in Item 407 of Regulation S-K, under
      applicable regulations or listing standards; however, it is management’s
      view that such a committee is an important internal control over financial
      reporting, the lack of which may result in ineffective oversight in the
      establishment and monitoring of internal controls and
      procedures.




2.
            We
      did not maintain proper segregation of duties for the preparation of our
      financial statements. We currently only have one officer overseeing all
      transactions. This has resulted in several deficiencies including the lack
      of control over preparation of financial statements, and proper
      application of accounting policies:




This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission (the “SEC”) that permit us to provide only management’s report in
this annual report





10





Changes
in Internal Control over Financial Reporting





There
were no changes in our internal control over financial reporting during the year
ended June 30, 2009 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.





Officers’
Certifications





Appearing
as exhibits to this Annual Report are “Certifications” of our Chief Executive
Officer and Chief Financial Officer.  The Certifications are required
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302
Certifications”).  This section of the Annual Report contains
information concerning the Controls Evaluation referred to in the Section 302
Certification.  This information should be read in conjunction with
the Section 302 Certifications for a more complete understanding of the topics
presented.





ITEM
9B.    OTHER INFORMATION





Not
applicable.





11





PART
III





ITEM
10.     DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE





The
following table sets forth certain information, as of September 15, 2009, with
respect to our directors and executive officers.




Directors
serve until the next annual meeting of the stockholders; until their successors
are elected or appointed and qualified, or until their prior resignation or
removal.  Officers serve for such terms as determined by our board of
directors.  Each officer holds office until such officer’s successor
is elected or appointed and qualified or until such officer’s earlier
resignation or removal.  No family relationships exist between any of
our present directors and officers.




Name
                
                Positions Held
                
                Age
                
                Date of Election
                  or Appointment
                  as DirectorDavid
      Rector
                
                President,
      Chief Executive Officer,
      Chief Financial OfficerTreasurer, Secretary and
      Director
                
                62
                
                June
      6, 2008





The
following is a brief account of the business experience during the past five
years or more of each of our director and executive officer.




Mr.
Rector joined our board of directors on June 6, 2008. Mr. Rector served as the
Chief Executive Officer, Chief Financial Officer, President, Secretary,
Treasurer, and Director of Nevada Gold Holdings, Inc. (formerly known as Nano
Holdings International, Inc.) from April 19, 2004 through December 31,
2008.  He has served as the Chief Executive Officer, Chief Financial
Officer, President, Secretary, Treasurer, and Director of Standard Drilling,
Inc. since November 2007, and of Federal Sports & Entertainment, Inc. since
September 30, 2008.  Mr. Rector previously served as President, Chief
Executive Officer and Chief Operating Officer of Nanoscience from June 2004 to
December 2006, when he resigned as an officer and Director of
Nanoscience.  Mr. Rector also served as President, Chief Executive
Officer, Chief Financial Officer and Treasurer of California Gold Corp. (f/k/a
US Uranium, Inc.) from June 15, 2007 to July 11, 2007 and again from August 8,
2007 to November 12, 2007.  Since June 1985, Mr. Rector has been the
principal of the David Stephen Group, which provides enterprise consulting
services to emerging and developing companies in a variety of industries. From
January 1995 until June 1995, Mr. Rector served as the General Manager of the
Consumer Products Division of Bemis-Jason Corporation. Mr. Rector was employed
by Sunset Designs Inc., a manufacturer and marketer of consumer product craft
kits from June 1980 until June 1985. From June 1983 until June 1985, Mr. Rector
served as President and General Manager of Sunset, from August 1981 until May
1985, Mr. Rector served as an Administrative and International Director of
Sunset, and from June 1980 until August 1981, Mr. Rector served as Group Product
Manager for Sunset.




12





Additionally,
Mr. Rector currently serves on the Board of Directors of the following public
companies:




Name
              
              Director SinceSenesco
      Technologies, Inc. (AMEX:SNT)
              
              February
      2002Dallas
      Gold & Silver Exchange (AMEX:DSG)
              
              May
      2003California
      Gold Corp. (OTCBB:CLGL)
              
              June 2007Standard
      Drilling, Inc.(STDR.PK)
              
              November
      2007Federal
      Sports & Entertainment, Inc. (OTCBB:FEDS)
              
              September  2008




As a
result, the amount of time that Mr. Rector has to devote to our activities may
be limited.




Mr.
Rector obtained his Bachelor’s Degree in Business Administration from Murray
State University in 1969.




Board
of Directors





Our Board
of Directors may designate from among its members an executive committee and one
or more other committees.  No such committees have been appointed to
date, due in part to the fact that we presently have only one
director.  Accordingly, we do not have an audit committee or an audit
committee financial expert.  We are presently not required to have an
audit committee financial expert and do not believe we otherwise need one at
this time due to our lack of material business operations.  Similarly,
we do not have a nominating committee or a committee performing similar
functions.  Our sole director, David Rector, serves the functions of
an audit committee and a nominating committee.  We have not
implemented procedures by which our security holders may recommend board
nominees to us but expect to do so in the future, when and if we engage in
material business operations.





Shareholder
Communications





Currently,
we do not have a policy with regard to the consideration of any director
candidates recommended by security holders.  To date, no security
holders have made any such recommendations.





Code
of Ethics




We have
adopted a Code of Ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions.  A copy of our Code of Ethics
will be provided to any person requesting same without charge.  To
request a copy of our Code of Ethics please make written request to our
President /co NanoDynamics Holdings, Inc. at Terrace Way, Walnut Creek, CA
94597.  We believe our code of ethics is reasonably designed to deter
wrongdoing and promote honest and ethical conduct; provide full, fair, accurate,
timely and understandable disclosure in public reports; comply with applicable
laws; ensure prompt internal reporting of code violations; and provide
accountability for adherence to the code.




13





Compliance
with Section 16(a) of the Exchange Act





Our
common stock is not registered pursuant to Section 12 of the Exchange
Act.  Accordingly, our officers, directors and principal shareholders
are not subject to the beneficial ownership reporting requirements of Section
16(a) of the Exchange Act.





ITEM
11.   EXECUTIVE COMPENSATION





The
following table sets forth information concerning the total compensation paid or
accrued by us during the last two fiscal years ended June 30, 2009 to (i) all
individuals that served as our principal executive officer or acted in a similar
capacity for us at any time during the fiscal year ended June 30, 2009; (ii) all
individuals that served as our principal financial officer or acted in a similar
capacity for us at any time during the fiscal year ended June 30, 2009; and
(iii) all individuals that served as executive officers of ours at any time
during the fiscal year ended June 30, 2009 that received annual compensation
during the fiscal year ended June 30, 2009 in excess of $100,000.





Executive
Officer Compensation Table


Non-
                              
                              
                              NonqualifiedEquity
                              
                              
                              Deferred
                              
                              
                              AllName
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              Incentive
                              
                              
                              Compensa-
                              
                              
                              Otherand
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              Stock
                              
                              
                              Option
                              
                              
                              Plan
                              
                              
                              tion
                              
                              
                              Compen-Principal
                              
                              
                              
                              Salary
                              
                              
                              Bonus
                              
                              
                              Awards
                              
                              
                              Awards
                              
                              
                              Compensation
                              
                              
                              Earnings
                              
                              
                              sation
                              
                              
                              TotalPosition
                              
                              Year
                              
                              (US$)
                              
                              
                              (US$)
                              
                              
                              (US$)
                              
                              
                              (US$)
                              
                              
                              (US$)
                              
                              
                              (US$)
                              
                              
                              (US$)
                              
                              
                              (US$)(a)
                              
                              (b)
                              
                              (c)
                              
                              
                              (d)
                              
                              
                              (e)
                              
                              
                              (f)
                              
                              
                              (g)
                              
                              
                              (h)
                              
                              
                              (i)
                              
                              
                              (j)David
      Rector (1)
                              
                              2009
                              
                              
                              6,000
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              6,000President
                              
                              2008
                              
                              
                              500
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              500John
      Suk (2)
                              
                              2009
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0President
                              
                              2008
                              
                              
                              6,000
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              0
                              
                              
                              
                              6,000





(1) Mr.
Rector was appointed as our President and Chief Executive Officer effective as
of June 6, 2008.


(2) Mr.
Suk resigned his positions as our President and Chief Executive Officer
effective as of June 6, 2008.





We have
no employment agreement with our sole officer.  We do not contemplate
entering into any employment agreements until such time as we begin profitable
operations.





The
compensation discussed herein addresses all compensation awarded to, earned by,
or paid to our named executive officers.





There are
no other stock option plans, retirement, pension, or profit sharing plans for
the benefit of our officers and directors other than as described
herein.





14




Compensation
of Directors




Our
former sole officer and director, Jon Suk, received $1,000 per month in
remuneration for acting as such.  Mr. Rector, our current sole officer
and director receives $500 per month in remuneration for his
services.  Directors may also be reimbursed their expenses, if any,
for attendance at meetings of the Board of Directors.  During the
fiscal years ended June 30, 2009 and 2008 there were no other arrangements
between us and our directors that resulted in our making payments to any of our
directors for any services provided to us by them as directors.




ITEM
      12.
            SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS





The
following table sets forth information with respect to the beneficial ownership
of our common stock known by us as of September 15, 2009 by




·
            each
      person or entity known by us to be the beneficial owner of more than 5% of
      our common stock,




·
            each
      of our directors,




·
            each
      of our executive officers, and




·
            all
      of our directors and executive officers as a
  group.




The
percentages in the table have been calculated on the basis of treating as
outstanding for a particular person, all shares of our common stock outstanding
on such date and all shares of our common stock issuable to such holder in the
event of exercise of outstanding options, warrants, rights or conversion
privileges owned by such person at said date which are exercisable within
60 days of such date.  Except as otherwise indicated, the persons
listed below have sole voting and investment power with respect to all shares of
our common stock owned by them, except to the extent such power may be shared
with a spouse.




Name and Address
                          
                          Number of
                          
                          
                          Percentage ofBeneficial Owner [1]
                          
                          Shares
                          
                          
                          Ownership [2]David
      Rector
                            1640
      Terrace Way
                            Walnut
      Creek, CA 94597
                          
                          
                          - 0
      -
                          
                          
                          
                          0.00
                          %All
      officers and directors as a
      group (1 person)
                          
                          
                          -
      0 -
                          
                          
                          
                          0.00
                          %Jon
      Suk
                            136
      Bradley Road
                            Salt
      Spring Island  BC  V8K 1J5
                            Canada
                          
                          
                          2,273,684
                          
                          
                          
                          29.35
                          %Candace
      Sikorski
                            136
      Bradley Road
                              Salt
      Spring Island  BC  V8K 1J5
                              Canada
                          
                          
                          2,273,684
                          
                          
                          
                          29.35
                          %




15




[1]
            Beneficial
      Ownership is determined in accordance with the rules of the SEC and
      generally includes voting or investment power with respect to
      securities.





[2]
            Percentage
      based upon 7,747,374 shares of common stock outstanding as of September
      15, 2009.





Changes
in Control




Not
Applicable.




Securities
Authorized for Issuance Under Equity Compensation Plans




Not
Applicable.




ITEM
      13.
            CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, ANDDIRECTOR
      INDEPENDENCE





Director
Independence





We are
not currently subject to listing requirements of any national securities
exchange or inter-dealer quotation system which has requirements that a majority
of the board of directors be “independent” and, as a result, we are not at this
time required to (and we do not) have our Board of Directors comprised of a
majority of “Independent Directors.”





ITEM
      14.
            PRINCIPAL
      ACCOUNTANT FEES AND SERVICES





Audit
Fees.




The
aggregate fees billed to us by our principal accountant for services rendered
during the fiscal years ended June 30, 2009 and 2008 are set forth in the table
below:





Fee Category
                                    
                                    Fiscal year ended June 30, 2009
                                    
                                    
                                    Fiscal year ended June 30, 2008Audit
      fees (1)
                                    
                                    $
                                    10,000
                                    
                                    
                                    $
                                    8,500Audit-related
      fees (2)Tax
      fees (3)All
      other fees (4)Total
      fees
                                    
                                    $
                                    10,000
                                    
                                    
                                    $
                                    8,500





(1)
            Audit
      fees consists of fees incurred for professional services rendered for the
      audit of financial statements, for reviews of our interim financial
      statements included in our quarterly reports on Form 10-Q and for services
      that are normally provided in connection with statutory or regulatory
      filings or engagements.





(2)
            Audit-related
      fees consists of fees billed for professional services that are reasonably
      related to the performance of the audit or review of our financial
      statements, but are not reported under “Audit
  fees.”




16




(3)
            Tax
      fees consists of fees billed for professional services relating to tax
      compliance, tax planning, and tax
advice.





(4)
            All
      other fees consists of fees billed for all other
  services.





Audit Committee’s
Pre-Approval Practice.




We do not
have an audit committee.  Our board of directors performs the function
of an audit committee.  Section 10A(i) of the Securities Exchange Act
of 1934, as amended, prohibits our auditors from performing audit services for
us as well as any services not considered to be audit services unless such
services are pre-approved by our audit committee or, in cases where no such
committee exists, by our board of directors (in lieu of an audit committee) or
unless the services meet certain de minimis standards.




17


PART
IV





ITEM
      15.
            EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES





Financial
Statement Schedules





The
financial statements of NanoDynamics Holdings, Inc. are listed on the Index to
Financial Statements on this annual report on Form 10-K beginning on page
F-1.





Exhibits





The
following Exhibits are being filed with this Annual Report on Form
10-K:




Exhibit
                No.
            
            SEC
      Report
                Reference
      Number
            
            Description3.1
            
            3.1
            
            Articles
      of Incorporation of Registrant as filed with the Nevada Secretary of State
      on June 24, 2005 (1)3.2
            
            3.1
            
            Amendment
      to Articles of Incorporation of Registrant dated July 11, 2008
      (2)3.3
            
            3.2
            
            By-Laws
      of Registrant (1)14
            
            14
            
            Code
      of Ethics (3)21
            
            *
            
            List
      of Subsidiaries31.1/31.2
            
            *
            
            Certification
      of Principal Executive and Financial Officer, pursuant to SEC
      Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302
      of the Sarbanes-Oxley Act of 200232.1/32.2
            
            *
            
            Certification
      of Chief Executive and Financial Officer, pursuant to 18 U.S.C.
      Section 1350, adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002**99.1
            
            99.1
            
            Subscription
      Agreement (1)





* Filed
herewith.




** This
certification is being furnished and shall not be deemed “filed” with the SEC
for purposes of Section 18 of the Exchange Act, or otherwise subject to the
liability of that section, and shall not be deemed to be incorporated by
reference into any filing under the Securities Act or the Exchange Act, except
to the extent that the Registrant specifically incorporates it by
reference.





18




(1)
            Filed
      with the Securities and Exchange Commission on August 19, 2005 as an
      exhibit, numbered as indicated above, to the Registrant’s registration
      statement (SEC File No. 333-127703) on Form SB-2, which exhibit is
      incorporated herein by reference.




(2)
            Filed
      with the Securities and Exchange Commission on July 29, 2008 as an
      exhibit, numbered as indicated above, to the Registrant’s current report
      (SEC File No. 333-127703) on Form 8-K, which exhibit is incorporated
      herein by reference




(3)
            Filed
      with the Securities and Exchange Commission on September 25, 2008 as an
      exhibit, numbered as indicated above, to the Registrant’s annual report
      (SEC File No. 333-127703) on Form 10-KSB, which exhibit is incorporated
      herein by reference




In
reviewing the agreements included as exhibits and incorporated by reference to
this Annual Report on Form 10-K, please remember that they are included to
provide you with information regarding their terms and are not intended to
provide any other factual or disclosure information about the Company or the
other parties to the agreements. The agreements may contain representations and
warranties by each of the parties to the applicable agreement. These
representations and warranties have been made solely for the benefit of the
parties to the applicable agreement and:





·
                should not in all
      instances be treated as categorical statements of fact, but rather as a
      way of allocating the risk to one of the parties if those statements prove
      to be inaccurate;





·
                have been qualified
      by disclosures that were made to the other party in connection with the
      negotiation of the applicable agreement, which disclosures are not
      necessarily reflected in the
agreement;





·
                may
      apply standards of materiality in a way that is different from what may be
      viewed as material to you or other investors;
  and





·
                were made only as of
      the date of the applicable agreement or such other date or dates as may be
      specified in the agreement and are subject to more recent
      developments.





Accordingly,
these representations and warranties may not describe the actual state of
affairs as of the date they were made or at any other time. Additional
information about the Company may be found elsewhere in this Annual Report on
Form 10-K and the Company’s other public filings, which are available without
charge through the SEC’s website at http://www.sec.gov.




19


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.





NANODYNAMICS HOLDINGS,
      INC.Dated:  September
      25, 2009
              By:
              /s/ David RectorDavid
      Rector, President, Chief Executive
                Officer
      and Chief Financial Officer





In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





SIGNATURE
            
            TITLE
            
            DATE/s/ David Rector
            
            Director
            
            September
      25, 2009David
      Rector





20


PART
IV – FINANCIAL INFORMATION




ITEM
15. FINANCIAL STATEMENTS





PageReport
      of Independent Registered Public Accounting Firm
                                
                                F-2Balance
      Sheets as of June 30, 2009 and 2008
                                
                                F-3Statements
      of Operations for the years ended June 30, 2009 and 2008 and for the
      Period from June 24, 2005 (inception) through June 30,
2009
                                
                                F-4Statements
      of Changes in Stockholders’ Equity (Deficit) for the period from June 24,
      2005 (inception) to June 30, 2009
                                
                                F-5Statements
      of Cash Flows for the years ended June 30, 2009 and 2008 and for the
      Period from June 24, 2005 (inception) through June 30,
2009
                                
                                F-6Notes
      to Financial Statements
                                
                                F-7
      –
F-16




F-1




Chang
      G. Park, CPA, Ph. D.
                  t 2667 CAMINO DEL RIO S.
      SUITE B t SAN DIEGO t CALIFORNIA
      92108 t
                    t TELEPHONE
      (858)722-5953 t FAX (858)
      761-0341  t FAX (858)
      764-5480
                    tE-MAILchanggpark@gmail.comt
 
  Report of
Independent Registered Public Accounting Firm
 
 
 To the
Board of Directors and Stockholders
 NanoDynamics
Holdings, Inc.
 (Formerly
Mystica Candle Corp.)
 (A
Development Stage company)
 
 We have
audited the accompanying balance sheets of NanoDynamics Holdings, Inc. (formerly
Mystica Candle Corp. (A Development Stage “Company”)) as of June 30, 2009 and
2008 and the related statements of operation, changes in shareholders’ equity
and cash flows for the years then ended and for the period from June 24, 2005
(inception) to June 30, 2009. 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 NanoDynamics Holdings, Inc.
(formerly Mystica Candle Corp.) as of June 30, 2009 and 2008, and the results of
its operation and its cash flows for the years then ended and for the period
from June 24, 2005 (inception) to June 30, 2009 in conformity with U.S.
generally accepted accounting principles.
 
 The
financial statements have been prepared assuming that the Company will continue
as a going concern.  As discussed in Note 3 to the financial
statements, the Company’s losses from operations 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.
 
 
  /s/Chang
G.
Park
  CHANG G.
PARK, CPA
 
 September
2, 2009
 San
Diego, CA. 92108
 
  {00106509.1
/ 0904-001}Member of the California Society of Certified Public
Accountants
 Registered
with the Public Company Accounting Oversight Board


F-2





NANODYNAMICS
HOLDINGS, INC.


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


Balance
Sheets





As
      of
                                          
                                          
                                          As
      ofJune
      30,
                                          
                                          
                                          June
      30,2009
                                          
                                          
                                          2008(Unaudited)
                                          
                                          
                                          (Audited)ASSETSCurrent
      AssetsCash
                                          
                                          $
                                          9,703
                                          
                                          
                                          $
                                          24,800Total
      Current Assets
                                          
                                          
                                          9,703
                                          
                                          
                                          
                                          24,800Net
      fixed Assets
                                          
                                          
                                          7,845
                                          
                                          
                                          
                                          11,745Total
      Assets
                                          
                                          $
                                          17,548
                                          
                                          
                                          $
                                          36,54525,393LIABILITIES
      & STOCKHOLDERS' EQUITY (DEFICIT)Current
      LiabilitiesAccounts
      Payable
                                          
                                          $
                                          3,921
                                          
                                          
                                          $
                                          4,565Loan
      Payable
                                          
                                          
                                          95,000
                                          
                                          
                                          
                                          50,000Accrued
      Expenses
                                          
                                          
                                          4,837
                                          
                                          
                                          
                                          285Total
      Current Liabilities
                                          
                                          
                                          103,758
                                          
                                          
                                          
                                          54,850109,700Total
      Liabilities
                                          
                                          
                                          103,758
                                          
                                          
                                          
                                          54,850Stockholders'
      Equity (Deficit)Common
      stock, ($0.001 par value, 290,000,000 authorized; 7,747,374 shares issued
      and outstanding as of March 31,2009 and June 30, 2008
      respectively
                                          
                                          
                                          7,747
                                          
                                          
                                          
                                          7,747Preferred
      stock, ($0.001 par value,10,000,000 authorized; none issued as of June 30,
      2009 and 2008 respectivelyAdditional
      paid-in capital
                                          
                                          
                                          99,753
                                          
                                          
                                          
                                          99,753Deficit
      accumulated during development stage
                                          
                                          
                                          (193,710
                                          )
                                          
                                          
                                          (125,805
                                          )Total
      Stockholders' Equity (Deficit)
                                          
                                          
                                          (86,210
                                          )
                                          
                                          
                                          (18,305
                                          )TOTAL
      LIABILITIES &STOCKHOLDERS' EQUITY
      (DEFICIT)
                                          
                                          $
                                          17,548
                                          
                                          
                                          $
                                          36,545





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


F-3





NANODYNAMICS
HOLDINGS, INC.


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


Statements
of Operations


For the
Years Ended June 30, 2009 and 2008 and


For the
Period from June 24, 2005 (Inception) through June 30, 2009





June 24, 2005Year
                            
                            
                            Year
                            
                            
                            (Inception)Ended
                            
                            
                            Ended
                            
                            
                            ThroughJune 30, 2009
                            
                            
                            June 30, 2008
                            
                            
                            June 30, 2009RevenuesRevenues
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            2,278Total
      Revenues
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            2,278Cost
      of Goods SoldPurchases
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,182Total
      Costs Goods Sold
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,182Gross
      Profit
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            1,096Operating
      ExpensesWrite off inventory
                            
                            
                            
                            
                            
                            
                            1,469
                            
                            
                            
                            1,469Administrative
      Expenses
                            
                            
                            17,531
                            
                            
                            
                            34,005
                            
                            
                            
                            70,423Professional
      fees
                            
                            
                            45,833
                            
                            
                            
                            59,897
                            
                            
                            
                            118,088Total
      Operating Expenses
                            
                            
                            (63,364
                            )
                            
                            
                            (95,371
                            )
                            
                            
                            (189,980
                            )0Other
      income (expenses)Interest
      Income
                            
                            
                            11
                            
                            
                            
                            -
                            
                            
                            
                            11Interest expense
                            
                            
                            (4,552
                            )
                            
                            
                            (285
                            )
                            
                            
                            (4,837
                            )Total
      other expenses
                            
                            
                            (4,541
                            )
                            
                            
                            (285
                            )
                            
                            
                            (4,826
                            )Net
      Income (Loss)
                            
                            $
                            (67,905
                            )
                            
                            $
                            (95,656
                            )
                            
                            $
                            193,710Basic
      and diluted earnings (loss) per share
                            
                            $
                            (0.01
                            )
                            
                            $
                            (0.01
                            )Weighted
      average number ofcommon shares
      outstanding
                            
                            
                            7,747,374
                            
                            
                            
                            7,645,677




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


F-4


NANODYNAMICS
HOLDINGS, INC.


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


Statements
of Stockholders’ Equity


From June
24, 2005 (Inception) through June 30, 2009





DeficitAccumulatedCommon
                                                
                                                
                                                Additional
                                                
                                                
                                                DuringCommon
                                                
                                                
                                                Stock
                                                
                                                
                                                Paid-in
                                                
                                                
                                                DevelopmentStock
                                                
                                                
                                                Amount
                                                
                                                
                                                Capital
                                                
                                                
                                                Stage
                                                
                                                
                                                TotalBalance,
      June 24, 2005
                                                
                                                
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                $
                                                -
                                                
                                                
                                                
                                                -
                                                
                                                
                                                $
                                                -Stock
      issued for cash on June 24, 2005 @ $0.001649 per share
                                                
                                                
                                                2,273,685
                                                
                                                
                                                
                                                2,274
                                                
                                                
                                                
                                                1,476
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                3,750Stock
      issued for cash on June 24, 2005 @ $0.001649 per share
                                                
                                                
                                                2,273,685
                                                
                                                
                                                
                                                2,274
                                                
                                                
                                                
                                                1,476
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                3,750Net
      loss,  June 30, 2005
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                -Balance,
      June 30, 2005
                                                
                                                
                                                4,547,371
                                                
                                                
                                                
                                                4,548
                                                
                                                
                                                
                                                2,952
                                                
                                                
                                                
                                                -
                                                
                                                
                                                
                                                7,500Stock
      issued for cash on March 14, 2006  @ $0.001649 per
      share
                                                
                                                
                                                3,031,581
                                                
                                                
                                                
                                                3,031
                                                
                                                
                                                
                                                46,969
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                50,000Net
      loss,  June 30, 2006
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (14,068
                                                )
                                                
                                                
                                                (14,068
                                                )Balance,
      June 30, 2006
                                                
                                                
                                                7,578,952
                                                
                                                
                                                
                                                7,579
                                                
                                                
                                                
                                                49,921
                                                
                                                
                                                
                                                (14,068
                                                )
                                                
                                                
                                                43,432Net
      loss,  June 30, 2007
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (16,081
                                                )
                                                
                                                
                                                (16,081
                                                )Balance,
      June 30, 2007
                                                
                                                
                                                7,578,952
                                                
                                                
                                                
                                                7,579
                                                
                                                
                                                
                                                49,921
                                                
                                                
                                                
                                                (30,149
                                                )
                                                
                                                
                                                27,351Stock
      issued for cash on February 7, 2008  @ $.296873 per
      share
                                                
                                                
                                                168,422
                                                
                                                
                                                
                                                168
                                                
                                                
                                                
                                                49,832
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                50,000Net
      loss, June 30, 2008
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (95,656
                                                )
                                                
                                                
                                                (95,656
                                                )Balance,
      June 30, 2008
                                                
                                                
                                                7,747,374
                                                
                                                
                                                
                                                7,747
                                                
                                                
                                                
                                                99,753
                                                
                                                
                                                
                                                (125,805
                                                )
                                                
                                                
                                                (18,305
                                                )Net
      loss June 30, 2009
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                
                                                (67,905
                                                )
                                                
                                                
                                                (67,905
                                                )Balance
      June 30 , 2009 (Unaudited)
                                                
                                                
                                                7,747,374
                                                
                                                
                                                
                                                7,747
                                                
                                                
                                                
                                                99,753
                                                
                                                
                                                
                                                (193,710
                                                )
                                                
                                                
                                                (86,210
                                                )
 
 *
All outstanding share amounts have been retroactively restated to reflect the
Company's 3.031578 stock split





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


F-5





NANODYNAMICS
HOLDINGS, INC.


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


Statements
of Stockholders’ Equity


From June
24, 2005 (Inception) through June 30, 2009





June 24, 2005Year
                                                  
                                                  
                                                  Year
                                                  
                                                  
                                                  (Inception)Ended
                                                  
                                                  
                                                  Ended
                                                  
                                                  
                                                  ThroughJune 30, 2009
                                                  
                                                  
                                                  June 30, 2008
                                                  
                                                  
                                                  June 30, 2009CASH FLOWS FROM OPERATING
      ACTIVITIESNet
      income (loss)
                                                  
                                                  $
                                                  (67,905
                                                  )
                                                  
                                                  $
                                                  (95,656
                                                  )
                                                  
                                                  $
                                                  (193,710
                                                  )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Depreciation
                                                  
                                                  
                                                  3,900
                                                  
                                                  
                                                  
                                                  3,900
                                                  
                                                  
                                                  
                                                  11,655Write
      off inventory
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  1,469
                                                  
                                                  
                                                  
                                                  1,469Changes
      in operating assets and liabilities:Decrease
      (increase) in inventory
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (1,469
                                                  )Increase
      in (decrease) in accounts payable
                                                  
                                                  
                                                  (644
                                                  )
                                                  
                                                  
                                                  4,565
                                                  
                                                  
                                                  
                                                  3,921Increase
      in accrued expenses
                                                  
                                                  
                                                  4,552
                                                  
                                                  
                                                  
                                                  285
                                                  
                                                  
                                                  
                                                  4,837Net
      cash provided by (used in) operating activities
                                                  
                                                  
                                                  (60,097
                                                  )
                                                  
                                                  
                                                  (85,437
                                                  )
                                                  
                                                  
                                                  (173,297
                                                  )CASH FLOWS FROM INVESTING
      ACTIVITIESAcquisition
      of equipment
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (9,500
                                                  )Increase
      in leasehold improvement
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (10,000
                                                  )-Net
      cash provided by (used in) investing activities
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (19,500
                                                  )CASH FLOWS FROM FINANCING
      ACTIVITIESIncrease
      in loan payable
                                                  
                                                  
                                                  45,000
                                                  
                                                  
                                                  
                                                  50,000
                                                  
                                                  
                                                  
                                                  95,000Proceeds
      from issuance of common stock
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  50,000
                                                  
                                                  
                                                  
                                                  107,500Net
      cash provided by (used in) financing activities
                                                  
                                                  
                                                  45,000
                                                  
                                                  
                                                  
                                                  100,000
                                                  
                                                  
                                                  
                                                  202,500RoundingNet
      increase (decrease) in cash
                                                  
                                                  
                                                  (15,097
                                                  )
                                                  
                                                  
                                                  14,563
                                                  
                                                  
                                                  
                                                  9,703Cash
      at beginning of period
                                                  
                                                  
                                                  24,800
                                                  
                                                  
                                                  
                                                  10,237
                                                  
                                                  
                                                  
                                                  -Cash
      at end of period
                                                  
                                                  $
                                                  9,703
                                                  
                                                  
                                                  $
                                                  24,800
                                                  
                                                  
                                                  $
                                                  9,703SUPPLEMENTAL DISCLOSURES OF CASH FLOW
      INFORMATIONCash
      paid during period for :Interest
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -Income
      Taxes
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -





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


F-6




NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009





NOTE
1.   ORGANIZATION AND DESCRIPTION OF BUSINESS




NanoDynamics
Holdings, Inc. (the “Company”) was incorporated under the laws of the State of
Nevada on June 24, 2005.  The Company’s principal products have been
soy-blend wax candles. The Company’s primary retail outlets were art markets,
gift shops and outdoor markets.  The Company tried to compete largely by
offering vegetable based products, rather than those produced from petroleum
by-products.




The
Company is in the development stage. Its activities to date have been limited to
capital formation, organization, and development of its business plan and a
target customer market.




The
Company determined that it could not continue with its business operations as
outlined in its original business plan because of a lack of financial results
and resources; therefore, although the Company may return to its intended
business operations at a later date, it has redirected its focus towards
identifying and pursuing options regarding the development of a new business
plan and direction.  The Company intends to explore various business
opportunities that have the potential to generate positive revenue, profits and
cash flow in order to financially accommodate the costs of being a publicly held
company.





The
Company was recently engaged in discussions with NanoDynamics, Inc., a Delaware
corporation (“NanoDynamics”), regarding a possible business combination
involving the two companies. With the permission of NanoDynamics, the Company
has changed its name to NanoDynamics Holdings, Inc. to facilitate these
discussions.  The Company has determined not to proceed with the business
combination but has retained the name change.




NOTE
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




a.   Basis of
Accounting




The
Company’s financial statements are prepared using the accrual method of
accounting.  The Company has elected a year end of June 30th.




b.   Cash
Equivalents




The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.




c.  
Inventory





Inventories
are stated at the lower of cost or market with cost determined using the total
weighted average.


F-7


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




d.  Property and
Equipment




Property
and equipment are stated at cost. Equipment and fixtures are being depreciated
using the straight-line method over the estimated asset lives ranging from 3 to
7 years.




e.
Revenue
Recognition




The
Company recognizes revenue in accordance with SEC Staff Accounting Bulletin
No. 104, “Revenue Recognition” (“SAB 104”). The Company generates revenue
from the sale of candles. SAB 104 requires that four basic criteria must be
met before revenue can be recognized: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services rendered;
(3) the seller’s price to the buyer is fixed and determinable; and
(4) collectability is reasonably assured. Amounts billed or received from
customers in advance of performance are recorded as deferred
revenue.




f.   Income
Taxes




Income
taxes are provided in accordance with Statement of Financial Accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes.  A deferred
tax asset or liability is recorded for all temporary differences between
financial and tax reporting and net operating loss
carry-forwards.  Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.




Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.




g.   Basic Earnings per
Share




In
February 1997, the FASB issued SFAS No. 128, “Earnings Per Share”, which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock.  SFAS
No. 128 supersedes the provisions of APB No. 15, and requires the presentation
of basic earnings (loss) per share and diluted earnings (loss) per
share.  The Company has adopted the provisions of SFAS No. 128
effective June 24, 2005 (inception).




Basic net
loss per share amounts is computed by dividing the net loss by the weighted
average number of common shares outstanding.  Diluted earnings per
share are the same as basic earnings per share due to the lack of dilutive items
in the Company.


F-8


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




h.  Use of Estimates and
Assumptions




The
preparation of financial statements in conformity with generally accepted
accounting principles 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. In accordance with FASB 16 all
adjustments are normal and recurring.




i.  Recent
Accounting Pronouncements




In June
2009, FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles – a replacement of
FASB Statement No. 162” (“SFAS No. 168”).  SFAS No. 168 establishes
the FASB Accounting Standards Codification (the “Codification”) as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with US GAAP.  Rules and interpretive releases of the SEC
under authority of federal securities laws are also sources of authoritative US
GAAP for SEC registrants.  SFAS No. 168 will be effective for
financial statements issued for fiscal periods (interim and annual) ending after
September 15, 2009.  On the effective date of SFAS No. 168, all
then-existing non-SEC accounting and reporting standards are superseded, with
the exception of certain promulgations listed in SFAS No. 168.  The
Company currently does not expect adoption of this statement to have a material
effect on its financial statements as the purpose of the Codification is not to
create new accounting and reporting guidance.  Rather, the
Codification is meant to simplify user access to all authoritative US
GAAP.  References to US GAAP in our published financial statements
will be updated, as appropriate, to cite the Codification following the
effective date of SFAS No. 168.





In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets — an amendment of FASB Statement No. 140” (SFAS No. 166).  SFAS
No. 166 clarifies the information that an entity must provide in its financial
statements surrounding a transfer of financial assets and the effect of the
transfer on its financial position, financial performance, and cash
flows.  The statement eliminates the concept of a qualifying
special-purpose entity and changes the requirements for the recognition of
financial assets.  SFAS No. 166 is effective for fiscal years
beginning after November 15, 2009.




The
Company is currently evaluating the impact adoption of this statement could have
in its financial statements.


F-9


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009





NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




In April
2009, the FASB issued FASB Staff Position (“FSP”) No. SFAS 157-4, “Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP
SFAS 157-4”).  FSP SFAS 157-4 provides guidance on estimating fair
value when market activity has decreased and on identifying transactions that
are not orderly.  Additionally, entities are required to disclose in
interim and annual periods the inputs and valuation techniques used to measure
fair value.  This FSP is effective for all periods ending after June
15, 2009.  The Company is currently evaluating the impact adoption of
this statement could have on its financial statements.





In
November 2008, the FASB ratified EITF No. 08-7 “Accounting for Defensive
Intangible Assets” (“EITF 08-7”).  EITF 08-7 clarifies the definition
and accounting for defensive intangible assets acquired in a business
combination or an asset acquisition and states that, upon acquisition, an
intangible asset must be recognized at fair value in accordance with SFAS No.
157, regardless of how the acquiring entity intends to use the
asset.  The intangible asset should be amortized over a useful life
approximated by the period over which it is expected to provide direct and
indirect cash flows benefits resulting from the limitation against others to use
the intangible asset.  EITF 08-7 is effective for financial statements
issued for fiscal years beginning on or after December 15, 2008.  The
Company is currently evaluating the impact adoption of this statement could have
on its financial statements.





In
October, 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset Is Not Active” (“FSP FAS
157-3”).  FSP FAS 157-3 clarifies the application of SFAS No. 157 in a
market that is not active and addresses application issues such as the use of
internal assumptions when relevant observable data does not exist, the use of
observable market information when the market is not active, and the use of
market quotes when assessing the relevance of observable and unobservable
data.  FSP 157-3 was effective upon issue for all periods presented in
accordance with SFAS No. 157.  The adoption of FSP 157-3 did not have
any material effect on the Company’s financial statements.





In June
2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments
Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP
EITF 03-6-1”).  FSP EITF 03-6-1 provides that unvested share-based
payment awards that contain non-forfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and shall be
included in the computation of earnings per share pursuant to the two-class
method.  FSP EITF 03-6-1 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and interim periods within
those years.  Upon adoption, a company is required to retrospectively
adjust its earnings per share data (including any amounts related to interim
periods, summaries of earnings and selected  financial data) to
conform with the provisions of FSP EITF 03-6-1.  The Company is
currently evaluating the impact adoption of this statement could have on its
financial statements.


F-10


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





In June
2008, the FASB ratified EITF No. 08-4, “Transition Guidance for Conforming
changes to Issue No. 98-5” (“EITF 08-4”).  EITF 08-4 specifically
identifies the portions of EITF No. 98-5 that were nullified by EITF No. 00-27
and clarifies that instruments within the scope of SFAS No. 150 are no longer
within the scope of EITF No. 98-5.  EITF 08-4 is effective for
financial statements issued for fiscal years ending after December 15, 2008,
earlier application is permitted.  The effect, if any, of applying the
conforming changes shall be presented retrospectively with the cumulative-effect
of the change being reported in retained earnings in the statement of financial
position as of the beginning of the first period presented.  The
adoption of EITF 08-4 did not have any material effect on the Company’s
financial statements.





In June
2008, the FASB ratified EITF No. 07-5, “Determining Whether an Instrument (or an
Embedded Feature) Is Indexed to an Entity’s Own Stock” (“EITF
07-5”).  EITF 07-5 provides that an entity should use a two step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instrument’s
contingent exercise and settlement provisions.  It also clarifies the
impact that foreign currency denominated strike prices and market-based employee
stock option valuation instruments have on the evaluation.  EITF 07-5
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those years.  The
Company is currently evaluating the impact adoption of this statement could have
on its financial statements.





In
May 2008, the Financial Accounting Standards Board (“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 when there is evidence that
credit deterioration has occurred in an insured financial obligation. It 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, and requires expanded disclosures about financial
guarantee insurance contracts. It is effective for financial statements issued
for fiscal years beginning after December 15, 2008, except for some disclosures
about the insurance enterprise’s risk-management activities. SFAS 163 requires
that disclosures about the risk-management activities of the insurance
enterprise be effective for the first period beginning after
issuance.





Except
for those disclosures, earlier application is not permitted.  The
adoption of this statement is not expected to have a material effect on the
Company’s financial statements.




In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States.  It is effective 60 days following the SEC’s approval
of the Public Company Accounting Oversight Board amendments to AU Section 411,
“The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles”. The
adoption of this statement is not expected to have a material effect on the
Company’s financial statements.


F-11


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009





NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




In March
2008, FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment to FASB Statement No.
133”. SFAS No. 161 is intended to improve financial standards for
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. Entities are required to
provide enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows.  It is effective for
financial statements issued for fiscal years beginning after November 15, 2008,
with early adoption encouraged.




The
Company is currently evaluating the impact of SFAS No. 161 on its financial
statements, and the adoption of this statement is not expected to have a
material effect on the Company’s financial statements.




In
December 2007, the FASB issued SFAS No. 141R, “Business
Combinations”.  This statement replaces SFAS 141 and defines
the acquirer in a business combination as the entity that obtains control of one
or more businesses in a business combination and establishes the acquisition
date as the date that the acquirer achieves control. SFAS 141R requires an
acquirer to recognize the assets acquired, the liabilities assumed, and any
non-controlling interest in the acquired at the acquisition date, measured at
their fair values as of that date. SFAS 141R also requires the acquirer to
recognize contingent consideration at the acquisition date, measured at its fair
value at that date. This statement is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008.
Earlier adoption is prohibited. The adoption of this statement is not expected
to have a material effect on the Company's financial statements.




In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements Liabilities –an Amendment of ARB No.
51”.  This statement amends ARB 51 to establish accounting and
reporting standards for the Non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. This statement is effective for fiscal years,
and interim periods within those fiscal years, beginning on or after December
15, 2008. Earlier adoption is prohibited. The adoption of this statement is not
expected to have a material effect on the Company's financial
statements.




Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the Company’s financial statements
upon adoption.


F-12


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
3.   GOING CONCERN




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company generated net losses of
$193,710 during the period from June 24, 2005 (inception) through June 30,
2009.




This
condition raises substantial doubt about the Company’s ability to continue as a
going concern. The Company’s continuation as a going concern is dependent on its
ability to meet its obligations, to obtain additional financing as may be
required and ultimately to attain profitability.  The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.




NOTE
4.   WARRANTS AND OPTIONS




There are
no warrants or options outstanding to acquire any additional shares of
common.




NOTE
5.  PROPERTY AND EQUIPMENT




Property
and equipment consists of the following:




June
      30, 2009
                  
                  
                  June
      30, 2008Equipment
                  
                  $
                  19,195
                  
                  
                  $
                  19,195Total
      Fixed Assets
                  
                  
                  19,195
                  
                  
                  
                  19,195Less:
      Accumulated Depreciation
                  
                  
                  (11,350
                  )
                  
                  
                  (7,450
                  )Net
      Fixed Assets
                  
                  $
                  7,845
                  
                  
                  $
                  11,745




Depreciation
expenses for the year ended June 30, 2009 and June 30, 2008 were $3,900 and
$3,900, respectively.


F-13


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
6.   RELATED PARTY TRANSACTION




The
Company neither owns nor leases any real or personal
property.  Beginning August 1, 2005 the Company has paid Jon Suk, a
director, $100 per month for use of office space and services.  This
rent agreement was terminated in August, 2007. The officers and directors of the
Company are involved in other business activities and may, in the future, become
involved in other business opportunities as they become available, such persons
may face a conflict in selecting between the Company and their other business
interests.  The Company has not formulated a policy for the resolution
of such conflicts.





NOTE
7.  NET OPERATING LOSSES





As of
June 30, 2009 the Company has a net operating loss carry-forward of
approximately $193,710. Net operating loss carry-forward, expires twenty years
from the date the loss was incurred.





NOTE
8.  INCOME TAXES





As
      of June 30,
                            2009
                          
                          
                          As
      of June 30,
                            2008Deferred
      tax assets:Net
      operating tax carry-forwards
                          
                          $
                          29,059
                          
                          
                          $
                          18,871Other
                          
                          
                          -0-
                          
                          
                          
                          -0-Gross
      deferred tax assets
                          
                          
                          (29,059
                          )
                          
                          
                          (18,871
                          )Valuation
      allowanceNet
      deferred tax assets
                          
                          $
                          -0-
                          
                          
                          $
                          -0-





Realization
of deferred tax assets is dependent upon sufficient future taxable income during
the period that deductible temporary differences and carry-forwards are expected
to be available to reduce taxable income.  As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.




NOTE
9.  STOCK TRANSACTIONS




Transactions,
other than employees’ stock issuance, are in accordance with paragraph 8 of SFAS
123. Thus issuances shall be accounted for based on the fair value of the
consideration received.  Transactions with employees’ stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.


F-14


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
9.  STOCK TRANSACTIONS (Continued)




On June
4, 2005 the Company issued 2,273,685 shares of common stock to a director for
cash valued at $0.001649 per share.




On June
24, 2005 the Company issued 2,273,685 shares of common stock to a director for
cash valued at $0.001649 per share.




On March
14, 2006 the Company issued 3,031,581 shares of common stock for cash valued at
$0.01649 per share.




On
February 7, 2008 the Company issued 168,422 shares of common stock for cash
valued at $0.296873 per share for a total consideration of $50,000.




On July
11, 2008, the Company declared a 3.031578 for 1 forward stock split on each
share of its common stock issued and outstanding at the close of business on
July 21, 2008, in the form of a stock dividend. After stock split, total issued
and outstanding shares are 7,747,374. All share amounts have been retroactively
adjusted for all periods presented.




As of
June 30, 2009   the Company had 7,747,374 shares of common stock
issued and outstanding.




NOTE
10.  STOCKHOLDERS’ EQUITY




The
stockholders’ equity section of the Company contains the following classes of
capital stock as of June 30, 2009.




Common
stock, $ 0.001 par value: 290,000,000 shares authorized; 7,747,374 shares issued
and outstanding.


Preferred
stock, $ 0.001 par value: 10,000,000 shares authorized; none
issued.





NOTE
11.  LOANS PAYABLE





The
Company issued a $50,000 Promissory Note dated June 5, 2008 (the”2008 Note”) to
Milestone Enhanced Fund Ltd. (“Milestone”) in connection with Milestone’s
$50,000 working capital loan to the Company, and the terms and conditions of
2008 Note allow for prepayment of the principal and accrued interest anytime
without penalty. Interest rate is 8% per annum and maturity date was May, 2009.
The total interest accrued at June 30, 2009   is $
4,298.  The maturity date of the 2008 Note has been extended to June
5, 2010.




The
Company issued a Convertible Promissory Note dated April 30, 2009, bearing an
interest rate of 8.25% per annum, in aggregate amount of $45,000, payable on
November 8, 2010 (the Maturity Date) to Milestone Enhanced Fund,
Ltd.  The total interest accrued at June 30, 2009 is
$539.


F-15


NANODYNAMICS
HOLDINGS, INC..


(fka
Mystica Candle Corp.)


(A
Development Stage Company)


NOTES TO
FINANCIAL STATEMENTS


June 30,
2009




NOTE
11.  LOANS PAYABLE (Continued)




The note
holder has a right to convert any portion of the outstanding and unpaid
principal and interest balance into the Company’s common shares at a conversion
price to be mutually determined by the Company and the note
holder.


F-16