**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**


(Mark
      One)


**x**
            **ANNUAL
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934**





**For
      Fiscal Year Ended: June 30, 2008**





**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**
              **North
                Carolina**
            
            **94597**(Address
                of principal executive offices)
            
            (Zip
                Code)





**(925)
                930-0100**(Registrant’s
                telephone number, including area
                code)





Securities
      registered under Section 12(b) of the Exchange Act: **None**


Name
      of
      each Exchange on Which Registered: **None**


Securities
      registered under Section 12(g) of the Exchange Act: **None**








Check
      whether the issuer is not required to file reports pursuant to Section 13 or
      15(d) of the Exchange Act. x




Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the issuer was required to file such reports), and (2) has been subject
      to
      such filing requirements for the past 90 days. Yes x No
o




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of issuer’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB. x




Indicate
      by check mark whether the issuer is a shell company (as defined in Rule 12b-2
      of
      the Exchange Act) Yes x No
o




State
      issuer’s revenues for its most recent fiscal year. None




State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity as of a specified
      date within the past 60 days.




As
      of
      September 22, 2008 there were 3,199,665 issued and outstanding shares of our
      common stock, $.001 par value, held by non-affiliates. The aggregate value
      of
      the securities held by non-affiliates on September 22, 2008 was approximately
      $3,231,662 based on the closing bid price of our common stock on September
      22,
      2008, which was $1.01 per share.




State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: 7,747,374 shares of common stock, $0.001
      par
      value, as of September 22, 2008.




Transitional
      Small Business Disclosure Format (check one): Yes o No
x




**DOCUMENTS
      INCORPORATED BY REFERENCE**




Not
      Applicable





**TABLE
      OF CONTENTS**




Item
                Number and Caption
            
            PageForward
                Looking Statements
            
            3PART
                1Item
                1. Description of Business
            
            3Item
                2. Description of Property
            
            5Item
                3. Legal Proceedings
            
            5Item
                4. Submission of Matters to Vote of Security Holders
            
            5PART
                IIItem
                5. Market for Common Equity and Related Stockholders
            
            5Item
                6. Plan of Operation
            
            6Item
                7. Financial Statements
            
            9Item
                8. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure
            
            23Item
                8A. Controls and Procedure
            
            23Item
                8B. Other Information
            
            23PART
                IIIItem
                9. Directors, Executive Officers, Promoters, Control Persons and
                Corporate
                Governance; Compliance with Section 16(a) of the Exchange Act
            
            24Item
                10. Executive Compensation
            
            25Item
                11. Security Ownership of Certain Beneficial Owners and
                Management
            
            27Item
                12. Certain Relationships and Related Transactions , and Director
                Independence
            
            27Item
                13. Exhibits
            
            28Item
                14. Principal Accountant Fees and Services
            
            29


-2-





**FORWARD-LOOKING
      STATEMENTS**




*Except
      for historical information, this report contains forward-looking statements
      within the meaning of Section 21E of the Securities Exchange Act of 1934. 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 “Plan of Operation” and “Description of
      Business”. 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 taking place after the date of this
      document.*





**PART
      I**





**ITEM
              1.**
            **BUSINESS**





**Recent
      Events**





We
      were
      incorporated on June 24, 2005. Since that date, we have been in the business
      of
      manufacturing, marketing and distributing soy-blend scented candles and oils.
      Our primary retail outlets have been art markets, gift shops and outdoor
      markets. We have tried to compete largely by offering vegetable based products,
      rather than those produced from petroleum byproducts. We have determined that
      we
      cannot 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
      are
      currently engaged in discussions with NanoDynamics, Inc., a Delaware corporation
      (“NanoDynamics”), regarding a possible business combination involving the two
      companies At this stage, no definitive terms have been agreed to, and neither
      party is currently bound to proceed with the transaction. With the permission
      of
      NanoDynamics, we have changed our name to NanoDynamics Holdings, Inc. to
      facilitate these discussions. If the parties determine not to proceed with
      the
      business combination, we will change our name back to Mystica Candle Corp.
      or
      adopt another name.


-3-


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.





**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 “Note”) to one investor in exchange
      for a working capital loan of $50,000 to us. The Note is due and payable no
      later than one year from its date of issuance and carries an 8% annual interest
      rate. The 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. There was no other cash provided to us by financing activities
      for the three months ended June 30, 2008.





**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.


-4-


**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.





**ITEM
              2.**
            **DESCRIPTION
                OF PROPERTY**





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**





We
      are
      not presently a party to any litigation.





**ITEM4.**
            **SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY
                HOLDERS**





During
      the fourth quarter, there were no matters submitted to a vote of our
      shareholders.





**PART
      II**





**ITEM5.**
            **MARKET
                FOR COMMON STOCK AND RELATED STOCKHOLDER
                MATTERS**





A
      limited
      market exists for our securities, but there is no assurance that a regular
      trading market will develop, or if developed, that it will be sustained. A
      shareholder in all likelihood, therefore, will be unable to resell the
      securities referred to herein should he or she desire to do so. Furthermore,
      it
      is unlikely that a lending institution will accept our securities as pledged
      collateral for loans unless a regular trading market develops





Quotes
      for our Common Stock have been listed on the Over the Counter Bulletin Board
      (the “OTCBB”) under the symbol “MYTC.” In connection with our name change and
      the stock split, the trading symbol for our common stock on the OTCBB was
      changed to “NNDY.OB”. A summary of the closing high and low bids by quarter for
      the 2008 and 2007 fiscal years is as follows:


**Fiscal
                  Quarter**
              
              **High
                  Bid**
              
              **Low
                  Bid****2008**Fourth
                  Quarter 04-01-08 to 06-30-08
              
              $
              1.15
              
              $
              1.15Third
                  Quarter 01-02-08 to 3-30-08
              
              $
              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**2007**Fourth
                  Quarter 04-01-07 to 06-30-07
              
              $
              1.05
              
              $
              1.05Third
                  Quarter 01-02-07 to 03-30-07
              
              $
              1.05
              
              $
              1.05Second
                  Quarter 10-01-06 to 12-31-06
              
              
              None
              
              
              NoneFirst
                  Quarter 07-01-06 to 09-29-06
              
              
              None
              
              
              None


-5-


Of
      the
      7,747,374 shares of common stock outstanding as of September 22, 2008, - 0
      -
      shares are owned by our officers and directors.





At
      September 22, 2008, there were six holders of record.





**Dividends**




We
      have
      not declared any cash dividends, nor do we intend to do so. We are not subject
      to any legal restrictions respecting the payment of dividends, except that
      they
      may not be paid to render us insolvent. Dividend policy will be based on our
      cash resources and needs and it is anticipated that all available cash will
      be
      needed for our operations 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 thereunder.





**ITEM
              6.**
            **PLAN
                OF OPERATION**




We
      were
      incorporated on June 24, 2005. Since that date, we have been in the business
      of
      manufacturing, marketing and distributing soy-blend scented candles and oils.
      Our primary retail outlets have been art markets, gift shops and outdoor
      markets. We have tried to compete largely by offering vegetable based products,
      rather than those produced from petroleum byproducts.





We
      have
      determined that we cannot 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
      are
      currently engaged in discussions with NanoDynamics regarding a possible business
      combination involving NanoDynamics and us. At this stage, no definitive terms
      have been agreed to, and neither party is currently bound to proceed with the
      transaction.





We
      have
      minimal operating costs and expenses at the present time due to our limited
      business activities. To meet our current needs for cash we completed a private
      placement on June 5, 2008 and raised $50,000 through the sale of the Note.
      We
      believe that the $50,000 we raised will be sufficient to meet our administrative
      expenses for the next six to 12 months. 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 debt or equity securities and/or loans from our director.
      There is no assurance that additional financing, if required, will be available,
      or available on terms favorable to us.


-6-


**Recent
      Accounting Pronouncements**





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.





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 noncontrolling interest in the
      acquiree 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.


-7-


In
      December 2007, the FASB issued SFAS No. 160, “ *Noncontrolling
      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
      Noncontrolling 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.





In
      February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      159, “The Fair Value Option for Financial Assets and Financial Liabilities
*–* Including an Amendment of FASB Statement No. 115”. This statement
      permits entities to choose to measure many financial instruments and certain
      other items at fair value. Most of the provisions of SFAS No. 159 apply only
      to
      entities that elect the fair value option. However, the amendment to SFAS No.
      115 “Accounting for Certain Investments in Debt and Equity Securities” applies
      to all entities with available-for-sale and trading securities. SFAS No. 159
      is
      effective as of the beginning of an entity’s first fiscal year that begins after
      November 15, 2007. Early adoption is permitted as of the beginning of a fiscal
      year that begins on or before November 15, 2007, provided the entity also elects
      to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption
      of this statement is not expected to have a material effect on the Company's
      financial statements.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      objective of SFAS 157 is to increase consistency and comparability in fair
      value
      measurements and to expand disclosures about fair value measurements. SFAS
      157
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS 157 applies under other accounting pronouncements
      that
      require or permit fair value measurements and does not require any new fair
      value measurements. The provisions of SFAS No. 157 are effective for fair value
      measurements made in fiscal years beginning after November 15, 2007. The
      adoption of this statement is not expected to have a material effect on the
      Company's future reported financial position or results of
      operations.


-8-


**PART
      III**





**ITEM
              7.**
            **FINANCIAL
                STATEMENTS.**





Index
      to
      Financial Statements





PageReport
                of Independent Registered Public Accounting Firm.
            10Balance
                Sheets as of June 30, 2008 and June 30, 2007
            11Statements
                of Operations for the years ended June 30, 2008 and June 30, 2007
                and for
                the period from June 24, 2005 (inception) through June 30, 2008
            12Statement
                of Stockholders’ Deficit
            13Statement
                of Cash Flows for the years ended June 30, 2008 and June 30, 2007
                and for
                the period from June 24, 2005 (inception) through June 30, 2008
            14Notes
                to Financial Statements
            15


-9-


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,
      2008 and 2007 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, 2008. 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, 2008 and 2007, 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, 2008 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
      8, 2008**




**San
      Diego, CA. 91910**




-10-




NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(a
      development stage company)





**Balance
      Sheets**





**ASSETS**





**As
                of**
            
            **As
                of****June
                30,**
            
            **June
                30,****2008**
            
            **2007****Current
                Assets**Cash
            
            $
            24,800
            
            $
            10,237Inventory
            
            
            -
            
            
            1,469**Total
                Current Assets**
            
            
            24,800
            
            
            11,706**Net
                fixed Assets**
            
            
            11,745
            
            
            15,645**Total
                Assets**
            
            $
            **36,545**
            
            $
            **27,351****LIABILITIES
                & STOCKHOLDERS' EQUITY (DEFICIT)****Current
                Liabilities**Accounts
                Payable
            
            $
            4,565
            
            $
            -Accrued
                expense
            
            
            285
            
            
            -Loan
                Payable
            
            
            50,000
            
            
            -**Total
                Current Liabilities**
            
            
            54,850
            
            
            -**Total
                Liabilities**
            
            
            54,850
            
            
            -**Stockholders'
                Equity (Deficit)**Common
                stock, ($0.001 par value, 75,000,000 shares authorized; 2,555,556
                shares
                issued and outstanding as of June 30, 2008 and 2007)
            
            
            2,556
            
            
            2,500Additional
                paid-in capital
            
            
            104,944
            
            
            55,000Deficit
                accumulated during development stage
            
            
            (125,805
            )
            
            (30,149
            )**Total
                Stockholders' Equity (Deficit)**
            
            
            (18,305
            )
            
            27,351**TOTAL
                  LIABILITIES &STOCKHOLDERS' EQUITY
                  (DEFICIT)**
            
            $
            **36,545**
            
            $
            **27,351**


-11-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(a
      development stage company)





**Statements
      of Operations**





**June 24, 2005****(inception)****Year Ended**
            
            **Year Ended**
            
            **through****June 30,**
            
            **June 30,**
            
            **June 30,****2008**
            
            **2007**
            
            **2008****Revenues**Revenues
            
            $
            -
            
            $
            2,005
            
            $
            2,278**Total
                Revenues**
            
            
            -
            
            
            2,005
            
            
            2,278**Cost
                of Goods Sold**Purchases
            
            
            -
            
            
            560
            
            
            1,182**Total
                Costs Goods Sold**
            
            
            -
            
            
            560
            
            
            1,182**Gross
                Profit**
            
            
            -
            
            
            1,445
            
            
            1,096**Operating
                Expenses**Write
                off inventory
            
            
            1,469
            
            
            -
            
            
            1,469Administrative
                Expenses
            
            
            34,005
            
            
            9,668
            
            
            52,892Professional
                fees
            
            
            59,897
            
            
            7,858
            
            
            72,255**Total
                Operating Expenses**
            
            
            95,371
            
            
            17,526
            
            
            126,616**Other
                income (expenses)**Interest
                expense
            
            
            (285
            )
            
            
            
            
            (285
            )**Total
                other expenses**
            
            
            (285
            )
            
            
            
            
            (285
            )**Net
                Income (Loss)**
            
            $
            (95,656
            )
            $
            (16,081
            )
            $
            (125,805
            )**Basic
                and diluted earnings (loss) per share**
            
            $
            (0.04
            )
            $
            (0.01
            )**Weighted
                average number of common shares outstanding**
            
            
            2,500,000
            
            
            2,500,000


-12-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(a
      development stage company)


**Statement
      of Stockholders’ Equity (Deficit)**


**From
      June 24, 2005 (Inception) through June 30, 2008**


**Deficit****Accumulated****Common**
              
              **Additional**
              
              **During****Common**
              
              **Stock**
              
              **Paid-in**
              
              **Development****Stock**
              
              **Amount**
              
              **Capital**
              
              **Stage**
              
              **Total****Balance,
                  June 24, 2005**
              
              
              **-**
              
              **$**
              **-**
              
              **$**
              **-**
              
              
              **-**
              
              **$**
              **-**Stock
                  issued for cash on June 24, 2005 @ $0.005 per share
              
              
              750,000
              
              
              750
              
              
              3,000
              
              
              
              
              
              3,750Stock
                  issued for cash on June 24, 2005 @ $0.005 per share
              
              
              750,000
              
              
              750
              
              
              3,000
              
              
              
              
              
              3,750Net
                  loss, June 30, 2005
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              -**Balance,
                  June 30, 2005**
              
              
              **1,500,000**
              
              
              **1,500**
              
              
              **6,000**
              
              
              **-**
              
              
              **7,500**Stock
                  issued for cash on March 14, 2006
              
              
              1,000,000
              
              
              1,000
              
              
              49,000
              
              
              
              
              
              50,000Net
                  loss, June 30, 2006
              
              
              
              
              
              
              
              
              
              
              
              (14,068
              )
              
              (14,068
              )**Balance,
                  June 30, 2006**
              
              
              **2,500,000**
              
              
              **2,500**
              
              
              **55,000**
              
              
              **(14,068**
              **)**
              
              **43,432**Net
                  loss, June 30, 2007
              
              
              
              
              
              
              
              
              
              
              
              (16,081
              )
              
              (16,081
              )**Balance,
                  June 30, 2007**
              
              
              **2,500,000**
              
              
              **2,500**
              
              
              **55,000**
              
              
              **(30,149**
              **)**
              
              **27,351**Stock
                  issued for cash on February 7, 2008
              
              
              55,556
              
              
              56
              
              
              49,944
              
              
              
              
              
              50,000Net
                  loss, June 30, 2008
              
              
              
              
              
              
              
              
              
              
              
              (95,656
              )
              
              (95,656
              )**Balance,
                  June 30, 2008**
              
              
              **2,555,556**
              
              **$**
              **2,556**
              
              **$**
              **104,944**
              
              
              **(125,805**
              **)**
              
              **(18,305**
              **)**


-13-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(a
      development stage company)





**Statement
      of Cash Flows**





**June 24, 2005****(inception)****Year Ended**
            
            **Year Ended**
            
            **through****June 30,**
            
            **June 30,**
            
            **June 30,****2008**
            
            **2007**
            
            **2008****CASH
                FLOWS FROM OPERATING ACTIVITIES**Net
                income (loss)
            
            $
            (95,656
            )
            $
            (16,081
            )
            $
            (125,805
            )Adjustments
                to reconcile net loss to net cash provided by (used in) operating
                activities:Depreciation
            
            
            3,900
            
            
            3,549
            
            
            7,755Write
                off inventory
            
            
            1,469
            
            
            -
            
            
            1,469Changes
                in operating assets and liabilities:Decrease
                (increase) in inventory
            
            
            -
            
            
            180
            
            
            (1,469
            )Increase
                in (decrease) in accounts payable
            
            
            4,565
            
            
            (90
            )
            
            4,565Increase
                in accrued expenses
            
            
            285
            
            
            
            
            
            285***Net
                cash provided by (used in) operating
                activities***
            
            
            **(85,437**
            **)**
            
            **(12,442**
            **)**
            
            **(113,200**
            **)****CASH
                FLOWS FROM INVESTING ACTIVITIES**Acquisition
                of equipment
            
            
            -
            
            
            (9,500
            )
            
            (9,500
            )Increase
                in leasehold improvement
            
            
            -
            
            
            
            
            
            (10,000
            )***Net
                cash provided by (used in) investing
                activities***
            
            
            **-**
            
            
            **(9,500**
            **)**
            
            **(19,500**
            **)****CASH
                FLOWS FROM FINANCING ACTIVITIES**Increase
                in loan payable
            
            
            50,000
            
            
            
            
            
            50,000Proceeds
                from issuance of common stock
            
            
            50,000
            
            
            -
            
            
            107,500***Net
                cash provided by (used in) financing
                activities***
            
            
            **100,000**
            
            
            **-**
            
            
            **157,500*****Net
                increase (decrease) in cash***
            
            
            **14,563**
            
            
            **(21,942**
            **)**
            
            **24,800*****Cash
                at beginning of period***
            
            
            10,237
            
            
            32,179
            
            
            **-*****Cash
                at end of period***
            
            $
            **24,800**
            
            $
            **10,237**
            
            $
            **24,800****SUPPLEMENTAL
                DISCLOSURES OF CASH FLOW INFORMATION**Cash
                paid during year for :Interest
            
            $
            -
            
            $
            -
            
            $
            -Income
                Taxes
            
            $
            -
            
            $
            -
            
            $
            -


-14-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**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 byproducts.





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 is currently engaged in discussions with NanoDynamics, Inc., a Delaware
      corporation (“NanoDynamics”), regarding a possible business combination
      involving the two companies At this stage, no definitive terms have been agreed
      to, and neither party is currently bound to proceed with the transaction. With
      the permission of NanoDynamics, the Company has changed its name to NanoDynamics
      Holdings, Inc. to facilitate these discussions. If the parties determine not
      to
      proceed with the business combination, the Company will change its name back
      to
      Mystica Candle Corp. or adopt another name.





**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 30 th .





**b.** **Cash
      Equivalents** ****





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


-15-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**NOTE
      2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**





**c.** **Inventory** ****





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





**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) collectibility 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 carryforwards. 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.


-16-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**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
      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.


-17-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008




**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 noncontrolling interest in the
      acquiree 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, “ *Noncontrolling
      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
      Noncontrolling 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.





In
      February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
      No.
      159, “The Fair Value Option for Financial Assets and Financial
      Liabilities – Including an Amendment of FASB Statement No. 115”. This
      statement permits entities to choose to measure many financial instruments
      and
      certain other items at fair value. Most of the provisions of SFAS No. 159 apply
      only to entities that elect the fair value option. However, the amendment to
      SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities”
applies to all entities with available-for-sale and trading securities. SFAS
      No.
      159 is effective as of the beginning of an entity’s first fiscal year that
      begins after November 15, 2007. Early adoption is permitted as of the beginning
      of a fiscal year that begins on or before November 15, 2007, provided the entity
      also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”.
      The adoption of this statement is not expected to have a material effect on
      the
      Company's financial statements.


-18-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**NOTE
      2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
      objective of SFAS 157 is to increase consistency and comparability in fair
      value
      measurements and to expand disclosures about fair value measurements. SFAS
      157
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles, and expands disclosures about fair
      value measurements. SFAS 157 applies under other accounting pronouncements
      that
      require or permit fair value measurements and does not require any new fair
      value measurements. The provisions of SFAS No. 157 are effective for fair value
      measurements made in fiscal years beginning after November 15, 2007. The
      adoption of this statement is not expected to have a material effect on the
      Company's future reported financial position or results of
      operations.





**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 $125,805
      during the period from June 24, 2005 (inception) through June 30, 2008. 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.


-19-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**NOTE
      5. PROPERTY AND EQUIPMENT**





Property
      and equipment consists of the following:






**June 30, 2008**
            
            **June 30, 2007**Equipment
            
            $
            19,500
            
            $
            19,500Total
                Fixed Assets
            
            
            19,500
            
            
            19,500***Less:
                Accumulated Depreciation***
            
            
            (7,755
            )
            
            (3,855
            )Net
                Fixed Assets
            
            $
            11,745
            
            $
            15,645




Depreciation
      expenses for the years ended June 30, 2008 and 2007 were $3,900 and $3,549,
      respectively.





**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, 2008 the Company has a net operating loss carryforwards of
      approximately $125,805. Net operating loss carryforward, expires twenty years
      from the date the loss was incurred.


-20-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**NOTE
      8. INCOME TAXES**





**As of June 30,**
              **2008**
            
            **As of June 30,**
              **2007**Deferred
                tax assets:Net
                operating tax carryforwards
            
            $
            18,871
            
            $
            4,522Other
            
            
            -0-
            
            
            -0-Gross
                deferred tax assets
            
            
            18,871
            
            
            4,522Valuation
                allowance
            
            
            (18,871
            )
            
            (4,522
            )Net
                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 carryforwards 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.





On
      June
      4, 2005 the Company issued 750,000 shares of common stock to a director for
      cash
      valued at $0.005 per share.





On
      June
      24, 2005 the Company issued 750,000 shares of common stock to a director for
      cash valued at $0.005 per share.





On
      March
      14, 2006 the Company issued 1,000,000 shares of common stock for cash valued
      at
      $0.05 per share.





On
      February 7, 2008 the Company issued 55,556 shares of common stock for cash
      valued at $0.90 per share for a total consideration of $50,000.





As
      of
      June 30, 2008 the Company had 2,555,556 shares of common stock issued and
      outstanding.


-21-


NANODYNAMICS
      HOLDINGS, INC.


(Formerly
      Mystica Candle Corp.)


(A
      Development Stage Company)





NOTES
      TO
      THE FINANCIAL STATEMENTS


June
      30,
      2008





**NOTE
      10. STOCKHOLDERS’ EQUITY**





The
      stockholders’ equity section of the Company contains the following classes of
      capital stock as of June 30, 2008:





Common
      stock, $0.001 par value: 75,000,000 shares authorized; 2,555,556 shares issued
      and outstanding.





**NOTE
      11. LOANS PAYABLE**





The
      Company issued a $50,000 Promissory Note dated June 5, 2008 (the ”Note”) to one
      investor in connection with that investor’s $50,000 working capital loan to the
      Company, and the terms and conditions of such Note allow for prepayment of
      the
      principal and accrued interest anytime without penalty. Interest rate is 8%
      per
      annum and maturity date is May, 2009. The Company accrued interest $285 for
      the
      year ended June 30, 2008.





**NOTE
      12. SUBSEQUENT EVENTS**





On
      July,
      11 2008, the Company amended its Articles of Incorporation to include a name
      change from Mystica Candle Corp., to NanoDynamics Holdings, Inc along with
      a
      change in Director; and, further increased its numbers of shares of Common
      Stock
      to 290,000,000 at $0.001 par value and 10,000,000 shares of Preferred Stock
      at
      $0.001 par value; and, further 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.


-22-




**ITEM 8.**
            **CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE**.





Not
      applicable.





**ITEM 8A.**
            **CONTROLS
                AND PROCEDURES**.





(a) *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
      chief 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 chief financial officer concluded, as of the
      Evaluation Date, that our disclosure controls and procedures are effective
      such
      that the information relating to us required to be disclosed in our Securities
      and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized
      and reported within the time periods specified in SEC rules and forms, and
      (ii)
      is accumulated and communicated to our management, including our chief executive
      officer and chief financial officer, as appropriate to allow timely decisions
      regarding required disclosure.




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) in *Internal
      Control—Integrated Framework* . Based
      on
      this evaluation, our management concluded that, as of June 30, 2008, our
      internal control over financial reporting was effective based on those
      criteria.  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 that permit us to provide only management’s report in this annual
      report.




(b) *Changes
      in Internal Control over Financial Reporting* .
      There
      were no changes in our internal control over financial reporting that occurred
      during the last fiscal quarter of the period covered by this report that have
      materially affected or are reasonably likely to materially affect our internal
      control over financial reporting.





**ITEM 8B.**
            **OTHER
                INFORMATION**





Not
      applicable.




-23-





**ITEM 9.**
            **DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION
                16(a) OF THE EXCHANGE ACT.**





The
      members of our board of directors serve until their successors are elected
      and
      qualified. Our officers are elected by the board of directors to a term of
      one
      (1) year and serve until their successors are duly elected and qualified, or
      until they are removed from office. The board of directors has no audit,
      nominating or compensation committees.





The
      name,
      age and position of our present officer and director are set forth
      below:





**Name**
            
            **Age**
            
            **Position(s)**David
                Rector
            
            61
            
            president,
                treasurer, chief executive officer, chief financial officer and
                director





The
      persons named above have held their offices/positions since inception of our
      company and are expected to hold their offices/positions until the next annual
      meeting of our stockholders.





**Background
      of officers and directors**





Since
      1985, Mr. Rector has been the Principal of The David Stephen Group, which
      provides enterprise consulting and due diligence services to emerging and
      developing companies in a variety of industries. He has also been on the board
      of directors of US Uranium, Inc. since June 15, 2007. Since September 2008,
      Mr.
      Rector has been the sole officer and director of Federal Sports &
Entertainment, Inc. In addition, from 2004 until 2005, Mr. Rector was the
      President and Chief Executive Officer of Nanoscience Technologies, Inc., a
      development stage company engaged in the development of DNA nanotechnology,
      and
      from 2005 until 2006, Mr. Rector served as its Chief Operating Officer. From
      1983 until 1985, Mr. Rector served as President and General Manager of Sunset
      Designs, Inc., a domestic and international manufacturer and marketer of
      consumer products, and a wholly-owned subsidiary of Reckitt & Coleman N.A.
      From 198 0 until
      1983, Mr. Rector served in Marketing and International positions with that
      company. From 1972 until 1980, Mr. Rector served in various roles in both the
      financial and product marketing departments of Crown Zellerbach Corporation,
      a
      multi-billion dollar Fortune 100 company in the  pulp
      and
      paper industry. Mr. Rector also serves as a director of Dallas Gold & Silver
      Exchange, Inc. (DGSE), RxElite, Inc. (REXI) and Senesco Technologies, Inc.
      (SNT).  Mr. Rector received a Bachelor of Science degree in
      business/finance from Murray State University.





**Involvement
      in Certain Legal Proceedings**





Not
      applicable.





**Board
      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. 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.




-24-





**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 c/o 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 of
      Ethics.





**Section
      16(a) of the Securities Exchange Act of 1934**





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
              10.**
            **EXECUTIVE
                COMPENSATION**





The
      following table sets forth information concerning the total compensation paid
      or
      accrued by us during the two fiscal years ended June 30, 2008 to (i) all
      individuals that served as our chief executive officer or acted in a similar
      capacity for us at any time during the fiscal year ended June 30, 2008 and
      (ii) all individuals that served as executive officers of ours at any time
      during the fiscal year ended June 30, 2008 that received annual compensation
      during the fiscal year ended June 30, 2008 in excess of $100,000.




**Executive
      Officer Compensation Table**




**Non-**
            
            **Nonqualified****Equity**
            
            **Deferred**
            
            **All****Name**
            
            
            
            
            
            
            
            
            
            
            
            **Incentive**
            
            **Compensa-**
            
            **Other****and**
            
            
            
            
            
            
            
            **Stock**
            
            **Option**
            
            **Plan**
            
            **tion**
            
            **Compen-****Principal**
            
            
            
            **Salary**
            
            **Bonus**
            
            **Awards**
            
            **Awards**
            
            **Compensation**
            
            **Earnings**
            
            **sation**
            
            **Total****Position**
            
            **Year**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)**
            
            **(US$)****(a)**
            
            **(b)**
            
            **(c)**
            
            **(d)**
            
            **(e)**
            
            **(f)**
            
            **(g)**
            
            **(h)**
            
            **(i)**
            
            **(j)**David
                Rector (1)
            
            2008
            
            
            500
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            500PresidentJohn
                Suk (2)
            
            2008
            
            
            6,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            6,000President
            
            2007
            
            
            12,000
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            0
            
            
            12,000




-25-


_______________________


(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.





**Compensation
      of Directors**





The
      members of our board of directors are not compensated for their services as
      directors. The board has not implemented a plan to award options to any
      directors. There are no contractual arrangements with any member of the board
      of
      directors. We have no director's service contracts.





**Long-Term
      Incentive Plan Awards**





We
      do not
      have any long-term incentive plans that provide compensation intended to serve
      as incentive for performance.





-26-





**ITEM
              11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT**





The
      following table sets forth, as of the date of this report, the total number
      of
      shares owned beneficially by each of our directors, officers and key employees,
      individually and as a group, and the present owners of 5% or more of our total
      outstanding shares. The stockholders listed below have direct ownership of
      their
      shares and possess sole voting and dispositive power with respect to the shares.





**Name and Address**
            
            **Number of**
            
            **Percentage of****Beneficial Owner [1]**
            
            **Shares**
            
            **Ownership [2]**David
                Rector
            
            
            -
                0
                -
            
            
            0.00
            %Jon
                Suk
            
            
            2,273,684
            
            
            29.35
            %Candace
                Sikorski
            
            
            2,273,684
            
            
            29.35
            %**All
                officers and directors as a group (1 person)**
            
            
            **-
                0 -**
            
            
            **0.00**
            **%**





[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
                22, 2008.





**Changes
      in Control**





There
      are
      no arrangements which may result in a change of control of NanoDynamics
      Holdings, Inc.





**ITEM
              12.**
            **CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS**





**Director
      Independence**





We
      are
      not 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 have our Board comprised of a majority of “Independent Directors.”





-27-


**PART
      IV**





**ITEM
              13.**
            **EXHIBITS**





**Exhibits**





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




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
            
            *
            
            Code
                of Ethics21
            
            *
            
            List
                of Subsidiaries31.1/31.2
            
            *
            
            Rule
                13(a) – 14(a)/15(d) – 14(a) Certification of Principal Executive and
                Financial Officer32.1/32.2
            
            *
            
            Rule
                1350 Certification of Chief Executive and Financial
                Officer99.1
            
            99.1
            
            Subscription
                Agreement (1)




_______________________


*
      Filed
      herewith.




(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




-28-


**ITEM
              14.**
            **PRINCIPAL
                ACCOUNTING 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, 2008 and June 30, 2007 are set forth
      in
      the table below:





Fee
                Category
            
            Fiscal year ended June 30, 2008
            
            Fiscal year ended June 30, 2007Audit
                fees (1)
            
            $
            8,500
            
            $
            6,400Audit-related
                fees (2)
            
            
            0
            
            
            0Tax
                fees (3)
            
            
            0
            
            
            600All
                other fees (4)
            
            
            0
            
            
            0Total
                fees
            
            $
            8,500
            
            $
            7,000





(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-QSB 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.”





(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 .





Insomuch
      as we do not have an audit committee, our board of directors performs the
      functions of an audit committee. Section 10A(i) of the Exchange Act 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 the
      board of directors (in lieu of the audit committee) or unless the services
      meet
      certain de minimis standards.


-29-


**SIGNATURES**





Pursuant
      to the requirements of the Securities Act of 1933, the registrant certifies
      that
      it has reasonable grounds to believe that it meets all of the requirements
      for
      filing of this Form 10-KSB and has duly caused this report to be signed on
      its
      behalf by the undersigned, thereunto duly authorized, in Chapel Hill, North
      Carolina, on this 24 day of September, 2008.





NANODYNAMICS
                HOLDINGS, INC.By:
            /s/
                David RectorDavid
                RectorPresident,
                Principal Executive Officer, Treasurer, Principal Financial Officer,
                Principal Accounting Officer and sole member of the Board of
                Directors




-30-