UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM
10-Q


(Mark
One)


x  QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
quarterly period ended June 30, 2009





o  TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934


For the
transition period from __________ to __________





Commission
file number: 000-50370




HYBRID
      DYNAMICS CORPORATION(Exact
      name of small business issuer in its charter)Nevada
              
              33-1041835(State
      or other jurisdiction of  incorporation or
      organization)
              
              (I.R.S.
      Employer Identification No.)52-66
      Iowa Avenue, Paterson, NJ 07503(Address
      of principal executive offices)(973)
      279-3261(Issuer's
      telephone number)____________________________________________________________(Former
      name, former address and former fiscal year, if changed since last
      report)





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 preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.     Yes x    
No o





Large
      accelerated filer
              o
              Accelerated
      filer
              oNon-accelerated
      filer
              o(Do not check if a
      smaller reporting company)
              Smaller
      reporting company
              x





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





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:





13,009,086
shares outstanding as of June 30, 2009.


1





HYBRID
DYNAMICS CORPORATION





INDEX








PagePART I
                                      FINANCIAL INFORMATION
                                      3Item 1.
                                      Financial Statements
                                      3Condensed Consolidated Balance Sheets
      (Unaudited)
                                      3Condensed Consolidated Statements of Operations
      (Unaudited)
                                      4Condensed Consolidated Statements of Cash Flows
      (Unaudited)
                                      5Condensed
      Consolidated Statements ofShareholder’s
      Deficit
                                      7Notes to the Condensed Consolidated Financial Statements
      (Unaudited)
                                      8Item 2.
                                      Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
                                      17Item 3.
                                      Quantitative and Qualitative Disclosures About Market
      Risk
                                      19Item 4T.
                                      Controls and Procedures
                                      19PART II
                                      OTHER INFORMATION
                                      19Item 1.
                                      Legal Proceedings
                                      19Item 2.
                                      Unregistered Sales of Equity Securities and Use of
      Proceeds
                                      20Item 3.
                                      Defaults Upon Senior Securities
                                      20Item 4.
                                      Submission of matters to a Vote of Security
      Holders
                                      21Item 5.
                                      Other Information
                                      21Item 6.
                                      Exhibits
                                      21Signatures
                                      21







2
 Table of Contents


PART I – FINANCIAL INFORMATION




Item 1.       Consolidated Financial
Statements






HYBRID
DYNAMICS CORPORATION and Subsidiaries


Condensed
Consolidated Balance Sheets


(Unaudited)




June
      30
                                            
                                            
                                            December
      312009
                                            
                                            
                                            2008(Unaudited)
                                            
                                            
                                            (Audited)ASSETSCurrent
      Assets:Cash
                                            
                                            $
                                            5,477
                                            
                                            
                                            $
                                            65,954Accounts
      Receivable
                                            
                                            
                                            607
                                            
                                            
                                            
                                            244Prepaid
      Expenses
                                            
                                            
                                            -
                                            
                                            
                                            
                                            2,250Inventory
                                            
                                            
                                            89,830
                                            
                                            
                                            
                                            85,749Total
      Current Assets
                                            
                                            
                                            95,914
                                            
                                            
                                            
                                            154,197Equipment
                                            
                                            
                                            69,415
                                            
                                            
                                            
                                            69,415Less:  Accumulated
      Depreciation
                                            
                                            
                                            (39,830
                                            )
                                            
                                            
                                            (32,519
                                            )Total
      Equipment
                                            
                                            
                                            29,585
                                            
                                            
                                            
                                            36,896Total
      Assets
                                            
                                            $
                                            125,499
                                            
                                            
                                            $
                                            191,093LIABILITIES
      & STOCKHOLDERS' DEFICITCurrent
      LiabilitiesAccounts
      Payable
                                            
                                            $
                                            320,516
                                            
                                            
                                            $
                                            331,009Accrued
      Payroll Taxes Payable
                                            
                                            
                                            58,130
                                            
                                            
                                            
                                            42,575Accrued
      Wages & Accounts Payable Officers
                                            
                                            
                                            132,381
                                            
                                            
                                            
                                            71,618Promissory
      Notes Payable
                                            
                                            
                                            50,301
                                            
                                            
                                            
                                            185,511Current
      Portion of Long Term Notes Payable
                                            
                                            
                                            4,560
                                            
                                            
                                            
                                            17,136Total
      Current Liabilities
                                            
                                            
                                            565,888
                                            
                                            
                                            
                                            647,849Long
      Term Notes Payable
                                            
                                            
                                            56,762
                                            
                                            
                                            
                                            57,570Total
      Liabilities
                                            
                                            
                                            622,650
                                            
                                            
                                            
                                            705,419Stockholders'
      DeficitPreferred
      Stock - $0.0001 par value, 338,000 sharesauthorized
      no shares issued and outstanding
                                            
                                            $
                                            -
                                            
                                            
                                            $
                                            -Series
      A Preferred Stock - $5 stated value, 660,000 sharesauthorized
      60,000 shares issued and outstanding
                                            
                                            
                                            300,000
                                            
                                            
                                            
                                            300,000Series
      B Preferred Stock - $500 stated value, 2,000 sharesauthorized
      20 shares issued and outstanding
                                            
                                            
                                            10,000
                                            
                                            
                                            
                                            -Common
      Stock - $.00015 par value, 99,000,000 sharesauthorized,
      13,009,086 shares issued and outstanding
                                            
                                            
                                            1,951
                                            
                                            
                                            
                                            1,699Additional
      Paid-In Capital
                                            
                                            
                                            1,633,049
                                            
                                            
                                            
                                            1,472,619Accumulated
      Deficit
                                            
                                            
                                            (2,442,151
                                            )
                                            
                                            
                                            (2,288,644
                                            )Total
      Stockholders' (Deficit)
                                            
                                            
                                            (497,151
                                            )
                                            
                                            
                                            (514,326
                                            )Total
      Liabilities and Stockholders' Deficit
                                            
                                            $
                                            125,499
                                            
                                            
                                            $
                                            191,093








The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements


3
 Table of Contents


HYBRID
DYNAMICS CORPORATION and Subsidiaries


Condensed
Consolidated Statements of Operations


(Unaudited)




For
      the Three Month Period
                                      
                                      
                                      For
      the Six Month PeriodEnding
      June 30,
                                      
                                      
                                      Ending
      June 30,2009
                                      
                                      
                                      2008
                                      
                                      
                                      2009
                                      
                                      
                                      2008(Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)
                                      
                                      
                                      (Unaudited)Revenues
                                      
                                      $
                                      30,264
                                      
                                      
                                      $
                                      4,473
                                      
                                      
                                      $
                                      35,838
                                      
                                      
                                      $
                                      4,473Cost
      of Goods Sold
                                      
                                      
                                      16,426
                                      
                                      
                                      
                                      6,971
                                      
                                      
                                      
                                      18,952
                                      
                                      
                                      
                                      6,971Gross
      Profit
                                      
                                      
                                      13,838
                                      
                                      
                                      
                                      (2,498
                                      )
                                      
                                      
                                      16,886
                                      
                                      
                                      
                                      (2,498
                                      )Operating
      ExpensesGeneral
      and Administrative
                                      
                                      
                                      76,116
                                      
                                      
                                      
                                      286,496
                                      
                                      
                                      
                                      148,021
                                      
                                      
                                      
                                      413,371Stock
      based compensation
                                      
                                      
                                      -
                                      
                                      
                                      
                                      110,333
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      177,333Depreciation
      and amortization
                                      
                                      
                                      3,314
                                      
                                      
                                      
                                      3,014
                                      
                                      
                                      
                                      7,311
                                      
                                      
                                      
                                      3,014Total
      Operating Expenses
                                      
                                      
                                      79,430
                                      
                                      
                                      
                                      399,843
                                      
                                      
                                      
                                      155,332
                                      
                                      
                                      
                                      593,718Other
      ExpensesGain
      on Sale of Equipment
                                      
                                      
                                      -
                                      
                                      
                                      
                                      309
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      309Loss
      on repurchase of royalty agreement
                                      
                                      
                                      (6,250
                                      )
                                      
                                      
                                      
                                      
                                      
                                      
                                      (6,250
                                      )Interest
      expense
                                      
                                      
                                      (4,095
                                      )
                                      
                                      
                                      (1,654
                                      )
                                      
                                      
                                      (8,811
                                      )
                                      
                                      
                                      (4,486
                                      )Total
      Other Expenses
                                      
                                      
                                      (10,345
                                      )
                                      
                                      
                                      (1,345
                                      )
                                      
                                      
                                      (15,061
                                      )
                                      
                                      
                                      (4,177
                                      )Net  (Loss)
                                      
                                      $
                                      (75,937
                                      )
                                      
                                      $
                                      (403,686
                                      )
                                      
                                      $
                                      (153,507
                                      )
                                      
                                      $
                                      (600,393
                                      )Net
      (Loss) Per Common Share
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.05
                                      )
                                      
                                      $
                                      (0.01
                                      )
                                      
                                      $
                                      (0.09
                                      )Weighted
      average shares outstanding
                                      
                                      
                                      12,012,245
                                      
                                      
                                      
                                      8,269,653
                                      
                                      
                                      
                                      12,012,245
                                      
                                      
                                      
                                      6,808,977
























The
accompanying notes are an integral part of these unaudited consolidated
financial statements


4
 Table of Contents


HYBRID
DYNAMICS CORPORATION and Subsidiaries


Condensed
Consolidated Statements of Cash Flows


(Unaudited)




For
      the Six Month PeriodEnding
      June 302009
                              
                              
                              2008(Unaudited)
                              
                              
                              (Unaudited)Cash
      Flows from Operating ActivitiesNet
      (Loss)
                              
                              $
                              (153,507
                              )
                              
                              $
                              (600,393
                              )Adjustments
      to reconcile net loss to net cash provided by operating
      activities:Depreciation
      & amortization
                              
                              
                              7,311
                              
                              
                              
                              3,014Stock
      based issued for expenses
                              
                              
                              6,250
                              
                              
                              
                              67,000Incentive
      stock options
                              
                              
                              -
                              
                              
                              
                              110,333Officer
      compensation contributed to capital
                              
                              
                              50,882
                              
                              
                              
                              -Non-Cash
      expenses
                              
                              
                              -
                              
                              
                              
                              667(Gain)
      on sale of asset
                              
                              
                              -
                              
                              
                              
                              (309
                              )Changes
      in assets and liabilities:Accounts
      receivable
                              
                              
                              (363
                              )
                              
                              
                              -Allowance
      for doubtful accounts
                              
                              
                              -
                              
                              
                              
                              -Prepaid
      expenses
                              
                              
                              2,250
                              
                              
                              
                              -Inventory
                              
                              
                              (4,081
                              )
                              
                              
                              (22,816
                              )Accounts
      payable vendors
                              
                              
                              (159,087
                              )
                              
                              
                              (41,290
                              )Accrued
      payroll taxes
                              
                              
                              15,555
                              
                              
                              
                              -Notes
      payable
                              
                              
                              -
                              
                              
                              
                              58,310Accrued
      wages
                              
                              
                              60,763
                              
                              
                              
                              118,666Net
      Cash Used in Operating Activities
                              
                              
                              (174,027
                              )
                              
                              
                              (306,818
                              )Cash
      Flows Used in Investing Activities:Proceeds
      from sale of assets
                              
                              
                              -
                              
                              
                              
                              4,000Proceeds
      from subsidiary acquisition
                              
                              
                              -
                              
                              
                              
                              151,178Purchase
      of fixed assets
                              
                              
                              -
                              
                              
                              
                              (5,000
                              )Cash
      Flows Used in Investing Activities
                              
                              
                              -
                              
                              
                              
                              150,178Cash
      Flows From Financing Activities:Sale
      of securities for cash, net
                              
                              
                              10,000
                              
                              
                              
                              231,959Payment
      on notes payable
                              
                              
                              -
                              
                              
                              
                              (1,165
                              )Payment
      of officer advances
                              
                              
                              
                              
                              
                              
                              (5,598
                              )Conversion
      of Notes Payable
                              
                              
                              103,551
                              
                              
                              
                              -Cash
      acquired in acquisition
                              
                              
                              -
                              
                              
                              
                              -Net
      Cash From Financing Activities
                              
                              
                              113,551
                              
                              
                              
                              225,196Net
      (Decrease) Increase in Cash
                              
                              $
                              (60,476
                              )
                              
                              $
                              68,556Cash
      at Beginning of Period
                              
                              
                              65,954
                              
                              
                              
                              4Cash
      at End of Period
                              
                              $
                              5,478
                              
                              
                              $
                              68,560
   5
 Table of Contents
  Six
      Months Ended June 30,Supplemental
      disclosure of cash flow information:
                                  2009
                                  
                                  
                                  2008Cash
      paid for:Interest
                                  
                                  $
                                  2,380
                                  
                                  
                                  $
                                  683Taxes
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Supplemental
      schedule of non-cash investing and financing activities:Officers
      compensation contributed to capital
                                  
                                  $
                                  50,882
                                  
                                  
                                  $
                                  -Shares
      isssued for payment of indebtedness
                                  
                                  $
                                  103,551
                                  
                                  
                                  $
                                  53,811Shares
      issued for services
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  67,000Warrants
      issued for services
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  20,025Shares
      issued for acquisition of subsidiary
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  140,166Incentive
      stock options issued for services
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  110,333











































The
accompanying notes are an integral part of these unaudited consolidated
financial statements


6
 Table of Contents


HYBRID
DYNAMICS CORPORATION and Subsidiaries


Condensed
Consolidated Statements of Shareholder’s Deficit


(Unaudited)




Preferred
      Stock
                                            
                                            
                                            Class
      A Preferred
                                            
                                            
                                            Class
      B Preferred
                                            
                                            
                                            Common
      Stock
                                            
                                            
                                            Additional
                                            
                                            
                                            Accumulated
                                            
                                            
                                            TotalNumber
      of
                                            
                                            
                                            Number
      of
                                            
                                            
                                            Number
      of
                                            
                                            
                                            Number
      of
                                            
                                            
                                            
                                            
                                            
                                            Paid-in
                                            
                                            
                                            Retained
                                            
                                            
                                            Stockholders'Shares
                                            
                                            
                                            Amount
                                            
                                            
                                            Shares
                                            
                                            
                                            Amount
                                            
                                            
                                            Shares
                                            
                                            
                                            Amount
                                            
                                            
                                            Shares
                                            
                                            
                                            Amount
                                            
                                            
                                            Capital
                                            
                                            
                                            (Deficit)
                                            
                                            
                                            (Deficit)Balance,
      December 31, 2007 (Audited)
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            
                                            5,187,285
                                            
                                            
                                            $
                                            778
                                            
                                            
                                            $
                                            1,092,338
                                            
                                            
                                            $
                                            (1,536,496
                                            )
                                            
                                            $
                                            (443,380
                                            )Shares
      issued for services
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            200,000
                                            
                                            
                                            
                                            30
                                            
                                            
                                            
                                            66,970
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            67,000Shares
      issued on conversion of note
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            358,722
                                            
                                            
                                            
                                            54
                                            
                                            
                                            
                                            53,757
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            53,811Shares
      issued for cash:Shares
      of Series A preferred stock
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            60,000
                                            
                                            
                                            
                                            300,000
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            300,000Series
      A preferred stock discount
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (283,439
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (283,439
                                            )Shares
      of common stock
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            150,000
                                            
                                            
                                            
                                            23
                                            
                                            
                                            
                                            26,858
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            26,880Class
      A warrants
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            106,800
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            106,800Selling
      agent warrants
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            20,025
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            20,025Shares
      issued for acquisition
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            4,500,000
                                            
                                            
                                            
                                            675
                                            
                                            
                                            
                                            139,491
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            140,166Share
      Based Compensation
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            82,167
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            82,167Incentive
      stock options granted
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            110,333
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            110,333Shares
      received on settlement agreement
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2,109,873
                                            )
                                            
                                            
                                            (316
                                            )
                                            
                                            
                                            (84,079
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (84,395
                                            )Shares
      issued for executive services
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,109,873
                                            
                                            
                                            
                                            316
                                            
                                            
                                            
                                            84,079
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            84,395Shares
      issued in payment of indebtedness
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            200,000
                                            
                                            
                                            
                                            30
                                            
                                            
                                            
                                            43,778
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            43,808Shares
      issued as bonus interest on notes
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            105,000
                                            
                                            
                                            
                                            16
                                            
                                            
                                            
                                            8,234
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            8,250Shares
      issued for late registration penalty
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            108,000
                                            
                                            
                                            
                                            16
                                            
                                            
                                            
                                            5,384
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            5,400Shares
      issued for anti-dilution agreement
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            516,640
                                            
                                            
                                            
                                            77
                                            
                                            
                                            
                                            (77
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            0Net
      loss
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (752,148
                                            )
                                            
                                            
                                            (752,148
                                            )Balance,
      December 31, 2008 (Audited)
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            
                                            60,000
                                            
                                            
                                            $
                                            300,000
                                            
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            
                                            11,325,647
                                            
                                            
                                            $
                                            1,699
                                            
                                            
                                            $
                                            1,472,619
                                            
                                            
                                            $
                                            (2,288,644
                                            )
                                            
                                            $
                                            (514,326
                                            )Officer's
      compensation contributed to capital
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            50,882
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            50,882Shares
      issued in payment of indebtedness
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            1,433,039
                                            
                                            
                                            
                                            215
                                            
                                            
                                            
                                            103,336
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            103,551Shares
      issued for repurchase of royalty agreement
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            250,000
                                            
                                            
                                            
                                            38
                                            
                                            
                                            
                                            6,213
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            6,250Shares
      issued for cash:Shares
      of Series B preferred stock
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            20
                                            
                                            
                                            
                                            10,000
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            10,000Series
      B preferred stock discount
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2,000
                                            )
                                            
                                            
                                            
                                            
                                            
                                            
                                            (2,000
                                            )Shares
      of common stock
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            400
                                            
                                            
                                            
                                            0
                                            
                                            
                                            
                                            2,000
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            2,000Class
      B warrants
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            -Net
      loss
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            (153,507
                                            )
                                            
                                            
                                            (153,507
                                            )Balance,
      March 31, 2009 (Unaudited)
                                            
                                            
                                            -
                                            
                                            
                                            $
                                            -
                                            
                                            
                                            
                                            60,000
                                            
                                            
                                            $
                                            300,000
                                            
                                            
                                            
                                            20
                                            
                                            
                                            $
                                            10,000
                                            
                                            
                                            
                                            13,009,086
                                            
                                            
                                            $
                                            1,951
                                            
                                            
                                            $
                                            1,633,049
                                            
                                            
                                            $
                                            (2,442,151
                                            )
                                            
                                            $
                                            (497,150
                                            )










The
accompanying notes are an integral part of these unaudited consolidated
financial statements


7
 Table of Contents


Notes to the Condensed Consolidated Financial
Statements


For the
Six Months ended June 30, 2009


(Unaudited)





Note 1 -
Unaudited Financial Information





The
unaudited financial information included for the six-month interim periods ended
June 30, 2009 and 2008 were taken from the books and records without audit.
However, such information reflects all adjustments (consisting only of normal
recurring adjustments), which are of the opinion of management, necessary to
reflect properly the results of operations for the interim period presented. The
results of operations for the six-month period ended June 31, 2009 are not
necessarily indicative of the results expected for the fiscal year ending
December 31, 2009.





Note 2 -
Financial Statements and Basis of Presentation





Management
has elected to omit substantially all footnotes relating to the condensed
consolidated financial statements of the Company included in this
report.  For a complete set of footnotes, reference is made to the
Company's Current Report on Form 10-K for the year ending December 31, 2008 as
filed with the Securities and Exchange Commission and the audited financial
statements included therein.





The
accompanying unaudited financial statements include the accounts of the Company,
the accounts of its wholly owned subsidiary Pukka USA, Inc. (as the accounting
parent of the consolidated group), and the accounts of Pukka’s wholly owned
subsidiaries, Red Iron Group LLC, Fire Ant Corporation, and Infomac Corporation
for all periods presented and the accounts of Delaware American Motors, Inc.
(“DAM”) and its wholly owned subsidiary Delaware American Motors LLC (“DAMLLC”)
for the period from its date of acquisition, May 13, 2008.





Note 3 –
Going Concern





The
accompanying financial statements contemplate continuation of the Company as a
going concern. The Company incurred a net loss of $153,507 and $752,148 for the
six months ended June 30, 2009 and the year ended December 31, 2008,
respectively, and as of June 30, 2009 the Company has an accumulated deficit of $2,442,151 and
a working capital deficit of $469,974.





Further
losses are anticipated in the development of the Company’s business and there
can be no assurance that the Company will be able to achieve or maintain
profitability. The continuing operations of the Company and the recoverability
of the carrying value of the assets is dependent upon the ability of the Company
to obtain necessary financing to fund its working capital requirements, and upon
future profitable operations.  The accompanying financial statements
do not include any adjustments relative to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.





We do not
currently have any commitments for financing.  Our present operations
depend upon the continued support of our shareholders and executive officers,
and our continuation as a going concern is dependent upon continued financial
support from these parties.





There can
be no assurance that capital will be available as necessary to meet our working
capital requirements or, if the capital is available, that it will be on
reasonable terms acceptable us.  The issuances of additional equity
securities by the Company may result in dilution in the equity


8
 Table of Contents


interests
of our current stockholders. Obtaining commercial loans, assuming those loans
would be available, will increase our liabilities and future cash commitments.
If we are unable to obtain financing in the amounts and on terms deemed
acceptable, the business and future success may be adversely affected.
Management intends to finance operating costs over the next twelve months with
loans from related parties, commercial loans and/or private placement of capital
stock.





Note 4 –
Acquisition





On May
13, 2008 the Company issued 4,500,000 shares of Common Stock as the sole
consideration paid in exchange for 100% of the issued shares of common stock of
DAM.





Note 5 -
Inventory





Inventories
are stated at the lower of cost or market. Cost is determined using the
first-in, first-out method (“FIFO”).  Inventory is stated at cost and
reserves are recorded to state the inventory at net realizable
value.  Inventory at June 30, 2009 consists of the
following:





June
      30, 2009Motorcycles
      prototypes
                                                
                                                $
                                                82,814Parts
      and supplies
                                                
                                                
                                                24,914Valuation
      allowance
                                                
                                                
                                                (17,898
                                                )$
                                                89,830





Note 6 –
Property, Plant and Equipment





Property,
plant and equipment at June 30, 2009 consist of the following:





June
      30, 2009Machinery,
      office furniture and equipment
                    
                    $
                    69,415Accumulated
      depreciation
                    
                    
                    (39,830
                    )$
                    29,585





Depreciation
expense was $7,311 and 3,014 for the six months ended June 30, 2009 and 2008,
respectively.





Note 7 –
Accounts Payable





The
Company had outstanding accounts payable of $320,514 and $331,009 as of June 30,
2009 and December 31, 2008, respectively.  Accounts payable also
include amounts owed on credit cards used for the payment of goods and services
with annual interest rates from 7.99% to 17.99%.





Note 8 –
Accrued Wages





The
Company has a Key Employee Agreement with its President.  The terms of
the agreement provides that the executive is employed on an “at will” basis at
an annual rate of compensation of $96,000, having an initial term of two
years.  The agreement also provides that any intellectual property
originated by the executive during his term of the agreement shall be the
property of the Company.  The accompanying financial statements
include an aggregate of $94,927 and $82,353 of executive
officer compensation expense for the six months ending June 30, 2009 and 2008
respectively.


9
 Table of Contents




The
Company’s financial resources are not sufficient to permit the payment of
employee compensation on a current basis and the Company has accrued unpaid
compensation owing to its sole executive officer, its previous chief executive
offer and one administrative employee.  The Company’s aggregate
accrued and unpaid wages is $132,381 and $71,618 as of
June 30, 2009
and December 31, 2008, respectively.





Note 9
–Notes Payable





The
Company had outstanding commercial notes payable of $23,225 as of June 30,
2009.  Commercial notes payable consist of: (i) a Term Loan secured
with the Company’s transport vehicle, this loan is dated April 2006, is for an
initial term of 60 months payable $430.81 per month at an annual rate of
interest of 5.95%; (ii) a Line of Credit Loan from a bank with a maximum loan
amount of $15,000 and payable interest only monthly at a variable annual rate,
the annual rate at June, 2009 was 5.5%; and The Company’s president (the former
sole owner and founder of DAMLLC) is personally obligated on the Term Loan and
the Line of Credit Loan loans.





Pukka,
the Company’s wholly-owned subsidiary has an unsecured promissory note payable
to a shareholder in the principal amount of $20,000.  The note bears
interest at the rate of 20% per annum and was due on June 30,
2008.  Pukka is in default on the payment of this note.  The
accompanying financial statements include $1,471 and $1,058 of interest expense
for the six months ended June 30, 2009 and 2008, respectively and there is total
current liability due as of June 30, 2009 of $30,646.





Secured
Convertible Promissory Notes




The
Company has a $5,000 10% Convertible Secured Promissory Note (the “10% Secured
Note”).  The 10% Secured Note is due on May 12, 2009 and bears an
annual rate of interest of ten percent (10%).  The 10% Secured Note is
secured by assignment of a motorcycle engine.  The 10% Secured Note
may be converted by the holder into shares of the Company’s common stock at a
price equal to seventy-five percent (75%) of the market price of the Company’s
shares on the date of conversion limited to not more than 300,000 shares. The
Company also paid 5,000 shares of common stock as bonus interest at a fair value
of $250.  At the date of issuance, the Company determined that the
fair value of the beneficial conversion feature in respect of this 10% Secured
Note on the date the note was issued to be equal to $4,054 using the
Black-Scholes model which amount has been recorded as a debt discount and is
being amortized over the term of the note.  The accompanying financial
statements include $246 of interest expense and $2,027 of additional in respect
of the beneficial conversion feature for the six months ending June 30, 2009
with a total balance due as of June 30, 2009 of $5,312.





On May
30, 2009 the Company agreed to issue 1,433,039 shares of common stock to a note
holder in full conversion of a secured promissory in the principal amount of
$100,000 originally issued on December 17, 2008.  The Company also
agreed to issue to the note holder additional shares of common stock in an amount such that
shareholder will own no less than an amount of shares equal to 11.29% of the
issued and outstanding common stock of the stock upon the issuance of additional
shares, if any, in respect of the conversion of other existing debt or shares
that may be issued to the Corporations President at any time prior to September
30, 2009.  The accompanying financial statements include $1,293and
$3,265 of interest expense for the three months and six months ending June 30,
2009 respectively.


10
 Table of Contents




Unsecured
Convertible Promissory Notes





The
Company has four (4) unsecured 6% Convertible Promissory Notes payable in the
aggregate amount of $50,000 (the “Convertible Notes”).  The
Convertible Notes bear interest at the rate of 6% per annum and are due on dates
ranging from August 8, 2010 through September 8, 2010.  The
Convertible Notes may be converted into shares of the Company’s common stock at
the election of the holder at any time prior to the maturity date at the rate of
fifteen cents ($0.15) per share.  Interest may, at the election of the
Company, be paid in shares of the Company’s common stock at the rate of fifty
cents ($0.50) per share.  The accompanying financial statements
include $739 and $1,479 of interest expense for the three months and six months
ending June 30, 2009 respectively with a total aggregate balance due on June 30,
2009 of $52,434.





In
accordance with Emerging Issues Task Force (“EITF”) No.00-27, “Application of EITF Issue
No. 98-5, ‘Accounting for Convertible Securities with Beneficial Conversion
Features or Contingently Adjustable Conversion Rates’, to Certain Convertible
Instruments.”  We determined
there to be no value attributable to the beneficial conversion feature of the
Convertible Notes in that the effective conversion price of those shares was
greater than the FMV price of our common stock.





Note 10 –
Commitments and Contingencies





Facilities
Lease





The
Company rents 8,300 sq. ft. of office, garage and storage space in a single
facility located in Paterson, New Jersey.  The lease is for an initial term
of 60 months from April, 2006 at $2,500 per month and includes 2 five year
renewal terms at an increase in monthly payments to $3,100 per month and $3,600
per month, respectively. The accompanying financial statements include rent
expense of $12,500 for the six months ended June 30, 2009.





The
following table summarizes the future annual rentals for all periods including
renewal periods:





AmountAnnual
      Rent for the period July to December, 2009
                                  
                                  $
                                  15,000Annual
      Rent for the year 2010
                                  
                                  
                                  30,000Annual
      Rent for the year 2011
                                  
                                  
                                  7,500Annual
      Rent for the year 2012
                                  
                                  
                                  -Thereafter
                                  
                                  
                                  -Total
      Aggregate Rent
                                  
                                  $
                                  52,500





Note 11 –
Capital Stock





Reverse
Stock Split





On May
15, 2009 the shareholders of the Company approved a reverse stock split of 200
old shares of Common Stock for 1 new share of Common Stock.  The
effective date of the split will be determined by the Board of Directors of the
Company but will in no event be earlier than the


11
 Table of Contents


twentieth
day following the date the Company filed its definitive information statement
with the Securities & Exchange Commission which was filed on June 26,
2009.  As of the date of this report the Board of Directors had not
determined an effective date.  Unless otherwise stated all per shares
of Common Stock presented in this report are presented on a pre-split basis and
without adjustment.





Private
Placement Unit Offering





The
Company closed on the sale of $10,000 of investment units (the
“Units”).  The Units were sold for $10,000 and included 20 shares of
Series B Convertible Preferred Stock, 400 shares of Common Stock on a
post-reverse split basis and 400 Class B Warrants entitling the holders to
purchase 400 shares of Common Stock on a post-split basis.  This
issuance was made in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act (or Regulation D promulgated thereunder) for
transactions by an issuer not involving a public offering. The securities issued
are deemed restricted securities for the purposes of the Securities Act. The
Company received a total of $10,000.  The sold Units are part of Unit
offering of up to 1,500 shares of Series B Convertible Preferred Stock, 30,000
shares of Common Stock on a post-reverse split basis and 30,000 Class B Warrants
entitling the holders to purchase 30,000 shares of Common Stock on a post-split
basis.





In
accordance with Emerging Issues Task Force (“EITF”) No.00-27, “Application of
EITF Issue No. 98-5, ‘Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Rates’, to Certain
Convertible Instruments”, a portion of the proceeds were allocated to the shares
of Common Stock which totaled $2,000.  The fair value of the shares of
Common Stock was determined to be the last trade price on the date of issuance.
The fair value of the Class B Warrants and of the beneficial conversion feature
of the shares of the Series B Preferred Stock was determined to be zero using
using the Black-Scholes model.





The
assumptions used in the Black-Scholes model are as follows: (1) dividend yield
of 0%; (2) expected volatility of 12.4%, (3) risk-free interest rate of 4.0%,
(4) expected life 5 years and (5) estimated fair value of our common stock of
$0.025 per share.





Preferred
Stock





The
Company has 338,000 shares of $0.0001 par value shares of preferred stock
authorized with no shares issued and outstanding.  This stock, if
issued, will carry liquidation preferences and other rights, as determined by
the Board of Directors.





Series A
8% Convertible Preferred Stock





The
Company has 660,000 shares of “Series A 8% Convertible Preferred Stock”
authorized with 60,000 shares issued and outstanding as of the date of this
report.  Each share of Series A Preferred Stock (a) has a stated value
of $5.00 per share (“Stated Value”), (b) is non-voting, (c) includes a dividend
of 8% per annum paid annually, (d) may be redeemed at any time for an amount
equal to the Stated Value plus all accumulated and unpaid dividends, (e) may be
converted into 10 shares of $0.00015 par value common stock, and has a (f)
liquidation preference of $5.00 per share plus all accumulated and unpaid
dividends.





The terms
of these shares have been adjusted pursuant to an Anti-Dilution Agreement with
the purchasers such that the purchasers may now convert their shares of Series A
Preferred Stock into 2,666,640 shares of the Company’s common stock at an
exercise conversion ratio of one (1) share of
Preferred Stock to 44.44 shares of Common Stock.  This adjustment does
not affect the terms of the remaining authorized but unissued shares of Series A
Preferred Stock.


12
 Table of Contents




Series B
8% Convertible Preferred Stock





The
Series B 8% Convertible Preferred Stock consists of 2,000 shares of preferred
stock (the “Series B Preferred Stock”).  Each share of Series B
Preferred Stock has an initial issue price or face value of $500.00 (the
“Original Issue Price”) and may be converted into shares of the Company’s
$0.00015 par value common stock (the “Common Stock”) at any time at the election
of the holder.  The Series B Preferred Stock may also be redeemed by
the Company upon the cash payment per share of $500.00 plus any unpaid dividends
thereon.  The Series B Preferred Stock is non-voting.





Shares of
Series B Convertible Preferred Stock may be converted into fully paid and
nonassessable shares of Common Stock of the Company at a price (the "Conversion
Price") equal to 50% of the Market Price per share of Common Stock on the date
of conversion (but the Conversion Price shall not be less than $5.00 per share
(the "Minimum Price") or greater than $25.00 per share (the "Maximum Price")
with respect to the Stated Value of each share of Series B Convertible Preferred
Stock and on the basis of the post-reverse split shares of Common Stock. 
Such option may be exercised by any holder on an all or none basis on or after
July 1, 2010.  The Market Price per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices for the 10
consecutive trading days commencing 12 trading days before the day in
question.





Common
Stock





The
Company has authorized 99,000,000 shares of common stock $.00015 par value per
share (the “Common Stock”).  As of June 30, 2009, the Company has
13,009,086 shares of Common Stock issued and outstanding.  The
Company’s shares of Common Stock are traded on the Over the Counter Bulletin
Board (“OTCBB”) electronic quotation system, the trading symbol is
HBDY.





On May 8,
2009 the Company entered into an agreement with the members of Garden Rise
Investments LTD LLC for the termination of a Royalty Agreement dated August 31,
2006 in exchange for our issuance to them of 250,000 shares of our common
stock.  We also agreed to an anti-dilution provision whereby we will
issue them additional shares in the event we convert any of our existing debt to
shares of common stock or issue shares of common stock to our president at any
time prior to September 30, 2009 such that their aggregate number of shares will
be no less than 2.2% of the total issued and outstanding shares of our common
stock.  The accompanying financial statements include $6,250 of
repurchase expense for the three months and six months ending June 30, 2009
related to the repurchase of the royalty agreement.





Common
Stock Reserved For Future Issuance





The
Company has reserved 7,541,934 shares of common stock for future issuance
pursuant to the terms of our outstanding convertible promissory notes, shares of
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Class A Warrants, Class B Warrants and selling agent warrants as of the date of
this report as follows:






13
 Table of Contents





Exercise
      orShares
                                              
                                              
                                              ConversionReserved
      (1)
                                              
                                              
                                              AmountConvertible
      Unsecured Promissory Notes
                                              
                                              
                                              258,517
                                              
                                              
                                              $
                                              51,704Convertible
      Secured Promissory Notes
                                              
                                              
                                              1,450,645
                                              
                                              
                                              
                                              107,469Convertible
      Series A Preferred Stock
                                              
                                              
                                              2,666,640
                                              
                                              
                                              
                                              300,000Convertible
      Series B Preferred Stock
                                              
                                              
                                              2,000,000
                                              
                                              
                                              
                                              10,000Class
      A Warrants
                                              
                                              
                                              2,666,640
                                              
                                              
                                              
                                              599,994Class
      B Warrants
                                              
                                              
                                              8,000
                                              
                                              
                                              
                                              10,000Selling
      Agent Warrant
                                              
                                              
                                              499,492
                                              
                                              
                                              
                                              134,863Total
      shares of common stock reserved for
      future issuance
                                              
                                              
                                              9,549,934
                                              
                                              
                                              $
                                              1,214,030


(1)
                            All
      share numbers are stated in pre-reverse split equivalent common
      shares.





Class A
Warrants





The
Company has 600,000 Class A Warrants issued and outstanding as of the date of
this report.  The Class A Warrant Agreement provides for the issuance
of up to 6,600,000 Class A Warrants for the purchase of up to 6,600,000 shares
of Common Stock at an exercise price of $1.00 per share.  The Class A
Warrants (a) may be exercised at any time before expiration or redemption, (b)
may be called for redemption at a redemption price of $0.01 per warrant and (c)
expire on December 31, 2012. The Company may call the Class A Warrants at any
time after the Common Stock has traded above $1.50 for 10 consecutive trading
days.





The terms
of these Warrants have been adjusted pursuant to the Anti-Dilution Agreement
with the purchasers such that the purchasers may purchase 2,666,640 shares of
the Company’s common stock at an exercise price of $0.225 per share at any time
prior to December 31, 2012 the date of expiration of the Class A
Warrants.  This adjustment does not affect the terms of the remaining
authorized but unissued Class A Warrants.





Class B
Warrants





Each
Class B Warrant (the “Warrant”) entitles the holder during the exercise period
to purchase one (1) share of Common Stock at the Exercise Price of $25.00 per
share on the basis of the post-reverse split shares of Common
Stock.  The Warrants may be exercised at any time prior to the
Expiration Date of June 30, 2014.  Thereafter, the holders of the
Warrants will have no further rights to exercise such Warrants.  At
any time the Company may call the Warrants for redemption prior to the Warrant
Expiration Date, at a redemption price of one cent ($0.01) per Warrant (the
“Redemption Price”).  As of June 30, 2009 there are 400 Class B
Warrants issued and outstanding.





Selling
Agent Warrants





The
Company granted a selling agent rights to purchase 499,492 shares of the
Company’s common stock at an exercise price of twenty-seven ($0.27) cents per
share at anytime prior to the date of expiration of January 31,
2013.





2006
Qualified Incentive Stock Option Plan





The 2006
Qualified Incentive Stock Option Plan (the “Qualified Plan”) provides for the
issuance of options for the purchase of up to 1,000,000 shares of the Company’s
restricted $0.00015 shares of Common Stock at a price to be no less than the
fair value of the Company’s shares of common stock on the date of
grant.  Awards under the Plan may only be made to employees of the
Company and the Qualified Plan provides for termination of the options granted
upon the termination of


14
 Table of Contents


employment.  The
Qualified Plan stock options and the common stock which may be issued pursuant
to the Plan are not registered securities, and the Company has no obligation to
register such securities.  As of the date of this report there are no
options granted under this Qualified Plan.





2007
Consultant’s Stock Plan





The 2007
Consultant’s Stock Plan provides for the issuance of up to 1,000,000 shares of
Company’s $0.00015 shares of Common Stock at a price to be no less than the fair
value of the Company’s shares of common stock on the date of
grant.  On August 21, 2007 the Company filed SEC Form S-8 in
registration of shares to be issued pursuant to this plan.  As of the
date of this report all shares have been issued and there are no shares unissued
and there are no options granted or outstanding.





Summary
of Warrants and Options Outstanding





A summary
of the status of warrants and options granted at June 30, 2009 and December 31,
2008 and changes during the periods then ended is presented below:





For
      the Six Months
                    
                    
                    For
      the Twelve MonthsEnded
      June 30, 2009
                    
                    
                    Ended
      December 31, 2008Shares
                    
                    
                    Weighted
      Average Exercise Price
                    
                    
                    Shares
                    
                    
                    Weighted
      Average Exercise PriceOutstanding
      at beginning of period
                    
                    
                    3,166,132
                    
                    
                    $
                    0.232
                    
                    
                    
                    -
                    
                    
                    $
                    -Granted
                    
                    
                    8,000
                    
                    
                    
                    0.125
                    
                    
                    
                    3,516,132
                    
                    
                    
                    0.239Exercised
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Forfeited
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Expired
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    350,000
                    
                    
                    
                    0.300Outstanding
      at end of period
                    
                    
                    3,174,132
                    
                    
                    $
                    0.229
                    
                    
                    
                    3,166,132
                    
                    
                    $
                    0.232Weighted
      average fair value of warrants granted during the period
                    
                    
                    3,174,132
                    
                    
                    $
                    0.229
                    
                    
                    
                    3,166,132
                    
                    
                    $
                    0.232


(1)
                  All
      share numbers are stated in pre-reverse split equivalent common
      shares.





A summary
of the status of the warrants outstanding at June 30, 2009 is presented
below:





Warrants
      Outstanding
                  
                  
                  Warrants
      ExercisableExercise
      Prices
                  
                  
                  Number
      Outstanding
                  
                  
                  Weighted-Average
      Remaining Contractual Life
                  
                  
                  Weighted
      Average Exercise Price
                  
                  
                  Number
      Exercisable
                  
                  
                  Weighted-Average
      Exercise Price0.225
                  
                  
                  
                  2,666,640
                  
                  
                  
                  3.75
                  
                  
                  
                  0.225
                  
                  
                  
                  2,666,640
                  
                  
                  
                  0.2250.270
                  
                  
                  
                  499,492
                  
                  
                  
                  3.80
                  
                  
                  
                  0.270
                  
                  
                  
                  499,492
                  
                  
                  
                  0.2700.125
                  
                  
                  
                  8,000
                  
                  
                  
                  5.00
                  
                  
                  
                  0.125
                  
                  
                  
                  8,000
                  
                  
                  
                  0.125


(1)
                  All
      share numbers are stated in pre-reverse split equivalent common
      shares.








15
 Table of Contents




Preferred
Stock




The Company has
340,000 shares of $0.0001 par value shares of undesignated preferred stock
authorized with no shares issued and outstanding.  This stock, if
issued, will carry liquidation preferences and other rights, as determined by
the Board of Directors.





Series A
8% Convertible Preferred Stock





The
Company has 660,000 shares of its preferred stock designated as “Series A 8%
Convertible Preferred Stock.” Each share of Series A Preferred Stock (a) has a
stated value of $5.00 per share (“Stated Value”), (b) is non-voting, (c)
includes a dividend of 8% per annum paid annually, (d) may be redeemed at any
time for an amount equal to the Stated Value plus all accumulated and unpaid
dividends, (e) may be converted into 10 shares of $0.00015 par value common
stock, and has a (f) liquidation preference of $5.00 per share plus all declared
accumulated and unpaid dividends.  There are 60,000 shares of Series A
8% Convertible Preferred Stock issued and outstanding as of June 30, 2009 and
December 31, 2008.  No dividends have been declared or paid as of June
30, 2009.





Note 12 –
Material Subsequent Events and Contingencies




The
Company has evaluated subsequent events through the time August 13,
2009. Form 10Q was filed with the Securities and Exchange Commission on
August 13, 2009, which is the date the condensed consolidated financial
statements were issued.  No events have occurred subsequent to August 13,
2009, that require disclosure or recognition in these financial
statements.























16
 Table of Contents


Item 2.    Management's
Discussion and Analysis or Plan of Operation





The
following discussion of our plan of operations should be read in conjunction
with the financial statements and the related notes thereto included elsewhere
in this quarterly report.





Forward
Looking Statements





Because
the Company intends to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, the Company cautions readers
regarding forward looking statements found in the following discussion and
elsewhere in this report and in any other statement made by, or on the behalf of
the Company, whether or not in future filings with the Securities and Exchange
Commission. Forward-looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other developments. Forward looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond the Company's control and many of which, with respect to future business
decisions, are subject to change. These uncertainties and contingencies can
affect actual results and could cause actual results to differ materially from
those expressed in any forward-looking statements made by or on behalf of the
Company. The Company disclaims any obligation to update forward-looking
statements.





Overview,
Plan of Operations and Outlook


Overview





Net
Loss





The
company had a net loss of $67,687 for the three months ended June 30, 2009
compared to a net loss of $403,686 for the same period in 2008. The 2009 loss
was due primarily to expenditures for salaries, consulting and professional fee
expenses associated with the Company’s high performance motorcycle manufacturing
subsidiary Delaware American Motors LLC.




Liquidity
and Capital Resources





Since our
inception, we have funded our operations primarily through private sales of
equity securities, the use of short and long-term debt and credit from our
vendors, shareholders and executive officers.  As of June 30, 2009, we
had $5,477 of cash on hand, $89,830 in inventory, and $565,886 in current
liabilities of which $132,381 is accrued and unpaid wages.





Net cash
used by operating activities for the six months ended June 30, 2009 was $174,029
which was primarily the result of the net loss of $147,257.  This compared
to net cash used by operating activities of $306,818 with a net loss of $600,393
for the six months ended June 30, 2008.   We have met our operating
expenses and current public reporting obligations principally from credit
provided by our vendors.  Further vendor credit may not be available
to us in the future.





We will
require additional cash resources of approximately $600,000 to meet our
operating needs for the next twelve months plus an additional approximately
$37,000 to pay our short term promissory notes which are due in default with
approximately $55,000 to pay our long term promissory notes which are due in
2010 (if not otherwise extended or converted to shares of common stock) and
$511,027 to pay our current obligations.






17
 Table of Contents




Plan
of Operations





The
current economic environment in the U.S. and abroad continues to
deteriorate.  The effect of this continuing deterioration on the
Company is expected to be significant.  The Company is a young company
with a new brand and a high dollar value luxury product. Over the next twelve
months we intend to build our brand name “Delaware American Motors” based upon
the introduction of the Tech
Twin American 13C Series and Tech Twin American Signature
Series of high-performance heavy weight
motorcycles.  Competition in the heavyweight motorcycle market is
based upon a number of factors, including price, quality, reliability, styling,
product features, customer preference and warranties. In the U.S., suggested
retail prices for the Company’s motorcycles range from being comparable to
higher than suggested retail prices for comparable motorcycles available in the
market.





We
believe the Tech Twin engine and our design and styling are significant brand
advantages which distinguishes our motorcycles from those of other
manufacturers.  Our Tech Twin American 13C model
titled the Pennsylvania
won the 2008 Sturgis AMD World Championship competition’s first place award in
the Production Manufacture class.  In addition we are limiting the number
of bikes in the American 13C and American Signature model to 13 (one
each for the original 13 colonies) and 56 (one each for the signers of the
Declaration of Independence) respectively and serializing each model with an
individual name and number.





The
Company believes that its larger-displacement products can command a premium
price. The Company will be emphasizing quality, reliability and styling with a
limited warranty generally consistent with industry wide standards for similar
motorcycles. The Company’s products are new to the market and will have no
established resale values we may reduce the opportunity for customers to obtain
suitable financing to purchase our bikes which may reduce the number of
available customers.  We anticipate that our selling efforts will
initially be carried out by the Company in intensive one-on-one selling directly
to the buyer of our motorcycles.




In the
U.S., the Company expects that its products will compete in the custom segment
of the heavyweight motorcycle market. According to the Motorcycle Industry
Council, the touring and custom segments accounted for approximately 84%, 80%
and 79% of total heavyweight retail unit registrations in the U.S. during 2008,
2007 and 2006, respectively. The larger-displacement custom and touring
motorcycle segments are dominated by large well capitalized companies such as
Harley-Davidson and BMW.  In addition, there are many smaller U.S.
custom builders who are better known with large volumes of used bikes in
circulation.





Establishing
our brand name, we believe, will require us to invest in media and event
attendance centered on upscale high income motorcycle
enthusiasts.  The market for this buyer is intensely competitive and
marketing to this demographic is obtained through the use of product and
advertising placements in high end publications and media events.  We
presently do not have the resources to undertake selling efforts at this level
and will require substantial additional capital in order to carry out our brand
introduction and product marketing plans.





Our plan
of operation for the coming quarter is to focus on obtaining the financing
necessary to undertake our goals of: (i) the development of our Tech Twin American 13C Series
and Tech Twin American
Signatures Series of motorcycles, (ii) undertake selling efforts of these
products and (iii) undertake the introduction of our brand.  We
anticipate the capital needed to carry out our goals to be approximately
$2,600,000.





18
 Table of Contents




Outlook





We have
no commitments for financing and we do not have sufficient funds to continue to
operate at current levels.  To continue operations for the next twelve
months and remain current in our public reporting obligations we require
additional financing in the amount of $600,000.  To carry out our
product and brand goals we require additional financing in the amount of
$2,000,000.  We are exploring various methods for obtaining additional
capital including short-term borrowing and the issuance of our equity or debt
securities.





The price
of our common stock has declined from $0.95 on May 13, 2008, the date we
acquired DAM to $0.03 on June 30, 2009.  This decline has had an
adverse impact on our ability to raise additional cash from the sale of our
equity securities.  In addition, the holders of our derivative
securities have the right to convert or purchase up to 7,541,934 shares of our
common stock at prices ranging from seven cents ($0.07) to twenty-seven cents
($0.27).  These rights have the effect of further depressing the price
of our equity securities and restricting our ability to raise additional
financing.





There can
be no assurance that capital will be available as necessary to meet our working
capital requirements or, if the capital is available, that it will be on
reasonable terms acceptable us.  The issuances of additional equity
securities by the Company may result in dilution in the equity interests of our
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments. If we are
unable to obtain financing in the amounts and on terms deemed acceptable, the
business and our future success may be adversely affected. Management intends to
finance operating costs over the next twelve months with loans from related
parties, commercial loans, or through private placements of capital stock.





Item 3.     Quantitative and
Qualitative Disclosures About Market Risk





The
Company has no market risk sensitive instruments.




Item 4T.    Controls and
Procedures





The
Company maintains a system of disclosure controls and procedures that is
designed to provide reasonable assurance that information, which is required to
be disclosed by the Company in the reports that it files or submits under the
Securities and Exchange Act of 1934, as amended, is accumulated and communicated
to management in a timely manner. The Company's principal executive officer and
principal financial officer have evaluated this system of disclosure controls
and procedures as of the end of the period covered by this quarterly report, and
believe that the system is operating effectively to ensure appropriate
disclosure.





Other
than as described hereinabove, there has been no change in the Company’s
internal control over financial reporting that occurred during the last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Company’s internal control over financial reporting.





PART II– OTHER INFORMATION





Item 1.       Legal
Proceedings





None.





19
 Table of Contents




Item 2.     Unregistered Sales of
Equity Securities and Use of Proceeds





On May 8,
2009 the Company entered into an agreement with the members of Garden Rise
Investments LTD LLC for the termination of a Royalty Agreement dated August 31,
2006 in exchange for our issuance to them of 250,000 shares of our common
stock.  This issuance was made in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act (or Regulation D
promulgated thereunder) for transactions by an issuer not involving a public
offering. The securities issued are deemed restricted securities for the
purposes of the Securities Act.





On May
30, 2009 the Company agreed to issue 1,433,039 shares of common stock to a note
holder in full conversion of a secured promissory in the principal amount of
$100,000 originally issued on December 17, 2008.  This issuance was
made in reliance upon the exemption from registration provided by Section 4(2)
of the Securities Act (or Regulation D promulgated thereunder) for transactions
by an issuer not involving a public offering. The securities issued are deemed
restricted securities for the purposes of the Securities Act.





The
Company closed on the sale of $10,000 of investment units (the
“Units”).  The Units were sold for $10,000 and included 20 shares of
Series B Convertible Preferred Stock, 400 shares of Common Stock and 400 Class B
Warrants.  This issuance was made in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act (or Regulation D
promulgated thereunder) for transactions by an issuer not involving a public
offering. The securities issued are deemed restricted securities for the
purposes of the Securities Act.





Limitations
on the Payments of Dividends





The
holders of Series A and Series B Preferred Stock shall be entitled to receive
dividends at a rate of eight percent (8%) per annum of the Original Issue Price
which shall be prior and in preference to any declaration or payment of any
dividend (payable other than in shares of Common Stock) or other distribution on
the Common Stock of the Corporation. The dividends on the Series A Preferred Stock
shall accrue from the date of issuance of each share and shall be payable
annually on December 31 of each year (each a "Dividend Date") commencing on
December 31, 2008, except that if any such date is a Saturday, Sunday or legal
holiday (a "Non-Business Day") then such dividend shall be payable on the next
day that is not a Non-Business Day on which banks in the State of Nevada are
permitted to be closed (a "Business Day") to holders of record as they appear on
the stock books of the Corporation on the applicable record date, which shall be
not more than 60 nor less than 10 days preceding the payment date for such
dividends, as fixed by the Board of Directors (the "Record Date"). The dividends
on the Series A Preferred Stock shall be payable only when, as and if declared
by the Board of Directors out of funds legally available therefore, or in shares
of the Company’s Common Stock at a value equal to the greater of (i) the average
closing bid price for the 20 trading days immediately preceding the date the
dividend is declared or (ii) twenty-five cents ($0.25).  Any dividends
on the Series A Preferred Stock which have accrued but have not been paid, shall
be accumulated and shall be payable only when, as and if declared by the Board
of Directors as provided in the preceding sentence.





Item 3.       Defaults Upon Senior
Securities





None.





20
 Table of Contents




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





None.





Item 5.       Other
Information





None.





Item 6.      Exhibits




Exhibit
      No.
                  Exhibit3.0*
                  Certification of Designation for the Series B 8%
      Convertible Preferred Stock4.9.1*
                  Form of Series B Preferred Stock Unit Purchase
      Agreement4.9.2*
                  Form of Series B 8% Convertible Preferred Stock
      Sample Share Certificate4.9.3*
                  Form of Class B Warrant
    Agreement10.1.1
                  Agreement
      for Conversion of Promissory Note by and between the Company and David Lee
      dated May 30, 2009. (1)10.1.2
                  Termination
      and Release Agreement by and between the Company and Garden Rise
      Investments LTD LLC dated May 8, 2009 (2)31*
                  Rule 13a-14(a)/15d-14(a) Certification of
      Principal Executive Officer and Principal Financial & Accounting
      Officer32 *
                  Certification Pursuant to 18 U.S.C. Section 1350,
      as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of
      Principal Executive Officer and Principal Accounting
      Officer*
      Filed herewith.(1)
      – Filed with SEC Form 8-K on June 5, 2009.(2)
      – Filed with SEC Form 8-K on May 14,
2009








SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.








Hybrid
      Dynamics CorporationDate:
                        August
      12, 2009
                        
                        /s/
      MARK S. KLEINMark
      S. Klein, PresidentPrincipal
      Executive Officer and Principal Accounting Officer











21