U.S.
SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





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




For the
quarterly period ended December 31, 2008


OR


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




For the
transition period from ______ to ________





Commission
File Number 333-127703





NANODYNAMICS
HOLDINGS, INC.


(Exact
Name of Small Business Issuer as Specified in its Charter)





Nevada
              3990
              20-3061907(State
      of incorporation)
              (Primary
      SIC Number)
              (IRS
      Employer ID Number)





1640
Terrace Way


Walnut
Creek, CA


(925)930-0100


(Address
and telephone number of principal executive offices)





131
Bradley Road


Salt
Spring Island


British
Columbia V8K 1J5 Canada


(Former
address of principal executive offices)





Indicate
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 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
 ̈





Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check
One):





Large
      accelerated filer  ̈
              Accelerated
      filer  ̈
              Non-accelerated
      filer  ̈
              Smaller
      reporting company þ(Do
      not check if a smaller
                Reporting
      company)





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





There
were 7,747,374 shares of Common Stock outstanding as of February __,
2009.










NANODYNAMICS
HOLDINGS, INC.




TABLE
OF CONTENTS




PagePart
      I Financial Information
                1Item
      1
                Financial
      Statements
                1Condensed
      Balance Sheet (unaudited)
                1Condensed
      Statements of Operations (unaudited)
                2Statements
      of Changes in Shareholders’ Equity
                3Condensed
      Statements of Cash Flows (unaudited)
                4Notes
      to the Unaudited Condensed Financial Statements
                5Item
      2
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                12Item
      4T
                Controls
      and Procedures
                14Part
      II Other Information
                14Item
      6
                Exhibits
                14SignaturesExhibit
      – Certification of Principal  Executive Officer and Principal
      Financial OfficerExhibit
      – Certification of Chief Executive Officer and Chief Financial
      Officer





-ii-





PART
I – FINANCIAL INFORMATION





Item
1.  Financial Statements





NANODYNAMICS
HOLDINGS, INC.


(FORMERLY
MYSTICA CANDLE, CORP.)


(A
Development Stage Company)


Balance
Sheets







ASSETSAs
      of
                                                                                                          
                                                                                                          
                                                                                                          As
      ofDecember
      31,
                                                                                                          
                                                                                                          
                                                                                                          June
      30,2008
                                                                                                          
                                                                                                          
                                                                                                          2008(Unaudited)
                                                                                                          
                                                                                                          
                                                                                                          (Audited)Current
      AssetsCash
                                                                                                          
                                                                                                          $
                                                                                                          131
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          24,800Prepaid
      expenses
                                                                                                          
                                                                                                          
                                                                                                          3
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          -Total
      Current Assets
                                                                                                          
                                                                                                          
                                                                                                          134
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          24,800Net
      fixed Assets
                                                                                                          
                                                                                                          
                                                                                                          9,795
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          11,745Total
      Assets
                                                                                                          
                                                                                                          $
                                                                                                          9,929
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          36,545LIABILITIES
      & STOCKHOLDERS' EQUITY (DEFICIT)Current
      LiabilitiesAccounts
      Payable
                                                                                                          
                                                                                                          $
                                                                                                          3,789
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          4,565Loan
      Payable
                                                                                                          
                                                                                                          
                                                                                                          50,000
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          50,000Accrued
      Expenses
                                                                                                          
                                                                                                          
                                                                                                          2,287
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          285Total
      Current Liabilities
                                                                                                          
                                                                                                          
                                                                                                          56,076
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          54,850Total
      Liabilities
                                                                                                          
                                                                                                          
                                                                                                          56,076
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          54,850Stockholders'
      Equity (Deficit)Common
      stock, ($0.001 par value, 290,000,000authorized;
      7,747,374 shares issued and outstanding
                                                                                                          
                                                                                                          
                                                                                                          7,747
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          7,747Preferred
      stock, ($0.001 par value,10,000,000 authorized;none
      issued as
      of December 31, and June 30, 2008Additional
      paid-in capital
                                                                                                          
                                                                                                          
                                                                                                          99,753
                                                                                                          
                                                                                                          
                                                                                                          
                                                                                                          99,753Deficit
      accumulated during development stage
                                                                                                          
                                                                                                          
                                                                                                          (153,647
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          (125,805
                                                                                                          )Total
      Stockholders' Equity (Deficit)
                                                                                                          
                                                                                                          
                                                                                                          (46,147
                                                                                                          )
                                                                                                          
                                                                                                          
                                                                                                          (18,305
                                                                                                          )TOTAL
      LIABILITIES &STOCKHOLDERS'
      EQUITY (DEFICIT)
                                                                                                          
                                                                                                          $
                                                                                                          9,929
                                                                                                          
                                                                                                          
                                                                                                          $
                                                                                                          36,545


See
Notes to Financial Statements





1





NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)


Statement
of Operations (Unaudited)




June
      24, 2005ThreeMonths
                                                                              
                                                                              
                                                                              Three
      Months
                                                                              
                                                                              
                                                                              Six
      Months
                                                                              
                                                                              
                                                                              Six
      Months
                                                                              
                                                                              
                                                                              (Inception)Ended
                                                                              
                                                                              
                                                                              Ended
                                                                              
                                                                              
                                                                              Ended
                                                                              
                                                                              
                                                                              Ended
                                                                              
                                                                              
                                                                              ThroughDecember
      31, 2008
                                                                              
                                                                              
                                                                              December
      31, 2007
                                                                              
                                                                              
                                                                              December
      31, 2008
                                                                              
                                                                              
                                                                              December
      31, 2007
                                                                              
                                                                              
                                                                              December
      31, 2008RevenuesRevenues
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              -
                                                                              
                                                                              
                                                                              $
                                                                              2,278Total
      Revenues
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              2,278Cost
      of Goods SoldPurchases
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              1,182Total
      Costs Goods Sold
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              1,182Gross
      Profit
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              1,096Operating
      ExpensesWrite
      off inventory
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              
                                                                              1,469Administrative
      Expenses
                                                                              
                                                                              
                                                                              6,493
                                                                              
                                                                              
                                                                              
                                                                              1,318
                                                                              
                                                                              
                                                                              
                                                                              8,968
                                                                              
                                                                              
                                                                              
                                                                              2,399
                                                                              
                                                                              
                                                                              
                                                                              63,268Professional
      fees
                                                                              
                                                                              
                                                                              3,200
                                                                              
                                                                              
                                                                              
                                                                              17,190
                                                                              
                                                                              
                                                                              
                                                                              16,885
                                                                              
                                                                              
                                                                              
                                                                              20,868
                                                                              
                                                                              
                                                                              
                                                                              87,732Total
      Operating Expenses
                                                                              
                                                                              
                                                                              9,693
                                                                              
                                                                              
                                                                              
                                                                              18,508
                                                                              
                                                                              
                                                                              
                                                                              25,853
                                                                              
                                                                              
                                                                              
                                                                              23,267
                                                                              
                                                                              
                                                                              
                                                                              152,469Other
      income (expenses)Interest
      Income
                                                                              
                                                                              
                                                                              11
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              13
                                                                              
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              13Interest
      expense
                                                                              
                                                                              
                                                                              (1,002
                                                                              )
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (2,002
                                                                              )
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (2,287
                                                                              )Total
      other expenses
                                                                              
                                                                              
                                                                              (991
                                                                              )
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (1,989
                                                                              )
                                                                              
                                                                              
                                                                              -
                                                                              
                                                                              
                                                                              
                                                                              (2,274
                                                                              )Net
      Income (Loss)
                                                                              
                                                                              $
                                                                              (10,684
                                                                              )
                                                                              
                                                                              $
                                                                              (18,508
                                                                              )
                                                                              
                                                                              $
                                                                              (27,842
                                                                              )
                                                                              
                                                                              $
                                                                              (23,267
                                                                              )
                                                                              
                                                                              $
                                                                              (153,647
                                                                              )Basic
      and diluted earnings (loss) per share
                                                                              
                                                                              $
                                                                              (0.00
                                                                              )
                                                                              
                                                                              $
                                                                              (0.00
                                                                              )
                                                                              
                                                                              $
                                                                              (0.00
                                                                              )
                                                                              
                                                                              $
                                                                              (0.00
                                                                              )Weighted
      average number ofcommon
      shares outstanding
                                                                              
                                                                              
                                                                              7,747,374
                                                                              
                                                                              
                                                                              
                                                                              7,578,952
                                                                              
                                                                              
                                                                              
                                                                              7,747,374
                                                                              
                                                                              
                                                                              
                                                                              7,578,952




*All
outstanding share amounts have been retroactively restated to reflect the
Company's 3.031578 stock split.
   See
Notes to Financial Statements


2





NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)


Statement
of Changes in Stockholders' Equity


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




DeficitCommon
                                              
                                              
                                              Common
                                              
                                              
                                              Additional
                                              
                                              
                                              AccumulatedStock
                                              
                                              
                                              Stock
                                              
                                              
                                              Paid-in
                                              
                                              
                                              During
                                              
                                              
                                              TotalAmount
                                              
                                              
                                              Capital
                                              
                                              
                                              DevelopmentStageBalance,
      June 24, 2005
                                              
                                              
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              $
                                              -Stock
      issued for cash on June 24, 2005 @ $0.001649 per
      share
                                              
                                              
                                              2,273,685
                                              
                                              
                                              
                                              2,274
                                              
                                              
                                              
                                              1,476
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              3,750Stock
      issued for cash on June 24, 2005@ $0.001649 per
      share
                                              
                                              
                                              2,273,685
                                              
                                              
                                              
                                              2,274
                                              
                                              
                                              
                                              1,476
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              3,750Net
      loss,  June 30, 2005
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              -Balance,
      June 30, 2005
                                              
                                              
                                              4,547,371
                                              
                                              
                                              
                                              4,548
                                              
                                              
                                              
                                              2,952
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              7,500Stock
      issued for cash on March 14, 2006 @ $0.001649 per share
                                              
                                              
                                              3,031,581
                                              
                                              
                                              
                                              3,031
                                              
                                              
                                              
                                              46,969
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              50,000Net
      loss,  June 30, 2006
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (14,068
                                              )
                                              
                                              
                                              (14,068
                                              )Balance,
      June 30, 2006
                                              
                                              
                                              7,578,952
                                              
                                              
                                              
                                              7,579
                                              
                                              
                                              
                                              49,921
                                              
                                              
                                              
                                              (14,068
                                              )
                                              
                                              
                                              43,432Net
      loss,  June 30, 2007
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (16,081
                                              )
                                              
                                              
                                              (16,081
                                              )Balance,
      June 30, 2007
                                              
                                              
                                              7,578,952
                                              
                                              
                                              
                                              7,579
                                              
                                              
                                              
                                              49,921
                                              
                                              
                                              
                                              (30,149
                                              )
                                              
                                              
                                              27,351Stock
      issued for cash on February 7, 2008 @ $.296873 per share
                                              
                                              
                                              168,422
                                              
                                              
                                              
                                              168
                                              
                                              
                                              
                                              49,832
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              50,000Net
      loss, June 30, 2008
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (95,656
                                              )
                                              
                                              
                                              (95,656
                                              )Balance,
      June 30, 2008
                                              
                                              
                                              7,747,374
                                              
                                              
                                              
                                              7,747
                                              
                                              
                                              
                                              99,753
                                              
                                              
                                              
                                              (125,805
                                              )
                                              
                                              
                                              (18,305
                                              )Net
      loss December 31, 2008
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              (27,842
                                              )
                                              
                                              
                                              (27,842
                                              )Balance,
      December 31, 2008 (unaudited)
                                              
                                              
                                              7,747,374
                                              
                                              
                                              
                                              7,747
                                              
                                              
                                              
                                              99,753
                                              
                                              
                                              
                                              (153,647
                                              )
                                              
                                              
                                              (46,147
                                              )
  *
All outstanding share amounts have been retroactively restated to reflect the
Company's 3.031578 stock split






See
Notes to Financial Statements





3


NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A Development Stage
Company)
 Statement
of Cash Flows (unaudited)







June
      24, 2005Three
      Months
                                                                            
                                                                            
                                                                            Three
      Months
                                                                            
                                                                            
                                                                            Six
      Months
                                                                            
                                                                            
                                                                            Six
      Months
                                                                            
                                                                            
                                                                            (Inception)Ended
                                                                            
                                                                            
                                                                            Ended
                                                                            
                                                                            
                                                                            Ended
                                                                            
                                                                            
                                                                            Ended
                                                                            
                                                                            
                                                                            ThroughDecember
      31, 2008
                                                                            
                                                                            
                                                                            December
      31, 2007
                                                                            
                                                                            
                                                                            December
      31, 2008
                                                                            
                                                                            
                                                                            December
      31, 2007
                                                                            
                                                                            
                                                                            December
      31, 2008CASH FLOWS FROM OPERATING
      ACTIVITIESNet
      income (loss)
                                                                            
                                                                            $
                                                                            (10,684
                                                                            )
                                                                            
                                                                            $
                                                                            (18,508
                                                                            )
                                                                            
                                                                            $
                                                                            (27,842
                                                                            )
                                                                            
                                                                            $
                                                                            (23,267
                                                                            )
                                                                            
                                                                            $
                                                                            (151,647
                                                                            )Adjustments
      to reconcile net loss to net cashprovided
      by (used in) operating activities:Prepaid
      Expenses
                                                                            
                                                                            
                                                                            (3
                                                                            )
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (3
                                                                            )
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (3
                                                                            )Depreciation
                                                                            
                                                                            
                                                                            975
                                                                            
                                                                            
                                                                            
                                                                            975
                                                                            
                                                                            
                                                                            
                                                                            1,950
                                                                            
                                                                            
                                                                            
                                                                            1,950
                                                                            
                                                                            
                                                                            
                                                                            9,705Write
      off inventory
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            1,469Changes
      in operating assets and liabilities:Decrease
      (increase) in inventory
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            (1,469
                                                                            )Increase
      in (decrease) in accounts payable
                                                                            
                                                                            
                                                                            2,381
                                                                            
                                                                            
                                                                            
                                                                            7,513
                                                                            
                                                                            
                                                                            
                                                                            (776
                                                                            )
                                                                            
                                                                            
                                                                            11,191
                                                                            
                                                                            
                                                                            
                                                                            1,789Increase
      in accrued expenses
                                                                            
                                                                            
                                                                            1,002
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            2,002
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            2,287Net
      cash provided by (used in) operating activities
                                                                            
                                                                            
                                                                            (6,329
                                                                            )
                                                                            
                                                                            
                                                                            (10,020
                                                                            )
                                                                            
                                                                            
                                                                            (24,669
                                                                            )
                                                                            
                                                                            
                                                                            (10,126
                                                                            )
                                                                            
                                                                            
                                                                            (137,869
                                                                            )CASH FLOWS FROM INVESTING
      ACTIVITIESAcquisition
      of equipment
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (9,500
                                                                            )Increase
      in leasehold improvement
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            
                                                                            (10,000
                                                                            )Net
      cash provided by (used in) investing activities
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            (19,500
                                                                            )CASH FLOWS FROM FINANCING
      ACTIVITIESIncrease
      in loan payable
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            50,000Proceeds
      from issuance of common stock
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            107,500Net
      cash provided by (used in) financing activities
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            -
                                                                            
                                                                            
                                                                            
                                                                            157,500Net
      increase (decrease) in cash
                                                                            
                                                                            
                                                                            (6,329
                                                                            )
                                                                            
                                                                            
                                                                            (10,020
                                                                            )
                                                                            
                                                                            
                                                                            (24,669
                                                                            )
                                                                            
                                                                            
                                                                            (10,126
                                                                            )
                                                                            
                                                                            
                                                                            131Cash
      at beginning of period
                                                                            
                                                                            
                                                                            6,460
                                                                            
                                                                            
                                                                            
                                                                            10,131
                                                                            
                                                                            
                                                                            
                                                                            24,800
                                                                            
                                                                            
                                                                            
                                                                            10,237
                                                                            
                                                                            
                                                                            
                                                                            -Cash
      at end of period
                                                                            
                                                                            $
                                                                            131
                                                                            
                                                                            
                                                                            $
                                                                            111
                                                                            
                                                                            
                                                                            $
                                                                            131
                                                                            
                                                                            
                                                                            $
                                                                            111
                                                                            
                                                                            
                                                                            $
                                                                            131SUPPLEMENTAL DISCLOSURES OF CASH FLOW
      INFORMATIONCash
      paid during year for :Interest
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -Income
      Taxes
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -
                                                                            
                                                                            
                                                                            $
                                                                            -




See
Notes to Financial Statements





4




NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)


NOTE
1.   ORGANIZATION AND DESCRIPTION OF BUSINESS




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





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





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




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




NOTE
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




a.   Basis of
Accounting




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




b.   Cash
Equivalents




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





5


NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)


NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




c.  Inventory





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




d.  Property and
Equipment




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





e. 
Revenue
Recognition




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




f.   Income
Taxes




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




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




g.  Basic Earnings per
Share




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




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





6


NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)


NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




h.  Use of Estimates and
Assumptions




The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In accordance with FASB 16 all
adjustments are normal and recurring.




i. 
 Recent Accounting Pronouncements




In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial
Guarantee Insurance Contracts – An interpretation of FASB Statement No.
60”.  SFAS 163 requires that an insurance enterprise recognize
a claim liability prior to an event of default when there is evidence that
credit deterioration has occurred in an insured financial obligation. It also
clarifies how Statement 60 applies to financial guarantee insurance contracts,
including the recognition and measurement to be used to account for premium
revenue and claim liabilities, and requires expanded disclosures about financial
guarantee insurance contracts. It is effective for financial statements issued
for fiscal years beginning after December 15, 2008, except for some disclosures
about the insurance enterprise’s risk-management activities. SFAS 163 requires
that disclosures about the risk-management activities of the insurance
enterprise be effective for the first period beginning after issuance. Except
for those disclosures, earlier application is not permitted.  The
adoption of this statement is not expected to have a material effect on the
Company’s financial statements.





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





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





7


NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)


NOTE
2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)





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





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





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







8


NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)




NOTE
3.   GOING CONCERN




The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  The Company generated net losses of
$153,647 during the period from June 24, 2005 (inception) through December 31,
2008.  This condition raises substantial doubt about the Company’s
ability to continue as a going concern. The Company’s continuation as a going
concern is dependent on its ability to meet its obligations, to obtain
additional financing as may be required and ultimately to attain
profitability.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.




NOTE
4.   WARRANTS AND OPTIONS




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




NOTE
5.  PROPERTY AND EQUIPMENT




Property
and equipment consists of the following:




Dec.
      31, 2008
                          
                          
                          June
      30, 2008Equipment
                          
                          $
                          19,195
                          
                          
                          $
                          19,195Total
      Fixed Assets
                          
                          
                          19,195
                          
                          
                          
                          19,195Less:
      Accumulated Depreciation
                          
                          
                          (9,399
                          )
                          
                          
                          (7,450
                          )Net
      Fixed Assets
                          
                          $
                          9,795
                          
                          
                          $
                          11,745




Depreciation
expenses for the three month period ended December 31, 2008 and 2007 were $975
and $975, respectively.


9




NANODYNAMICS
HOLDINGS, INC.
 (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)


NOTE
6.   RELATED PARTY TRANSACTION




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




NOTE
7.  NET OPERATING LOSSES





As of
December 31, 2008 the Company has a net operating loss carry-forward of
approximately $153,647.  Net operating loss carry-forward, expires
twenty years from the date the loss was incurred.




NOTE
8.  INCOME TAXES





As of Dec 31,
                        2008
                      
                      
                      As of June 30,
                        2008Deferred
      tax assetsNet
      operating tax carry-forwards
                      
                      $
                      23,047
                      
                      
                      $
                      18,871Other
                      
                      
                      -0-
                      
                      
                      
                      -0-Gross
      deferred tax assets
                      
                      
                      (23,047
                      )
                      
                      
                      (18,871
                      )Valuation
      allowanceNet
      deferred tax assets
                      
                      $
                      -0-
                      
                      
                      $
                      -0-





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


10




NANODYNAMICS
HOLDINGS, INC. (FORMERLY
MYSTICA CANDLE, CORP.)
 (A
Development Stage Company)
 Notes
to Financial Statements
 December
31, 2008
 (Unaudited)


NOTE
9.  STOCK TRANSACTIONS




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




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




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




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




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




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




As of
December 31, 2008 the Company had 7,747,368 shares of common stock issued and
outstanding.




NOTE
10.  STOCKHOLDERS’ EQUITY





The
stockholders’ equity section of the Company contains the following classes of
capital stock as of December 31, 2008.
 
 Common
stock, $ 0.001 par value: 290,000,000 shares authorized; 7,747,368 shares issued
and outstanding.
  Preferred
stock, $ 0.001 par value: 10,000,000 shares authorized; none
issued.




NOTE
11.  LOANS PAYABLE





The
Company issued a $50,000 Promissory Note dated June 5, 2008 (the”Note”) to
Milestone Enhanced Fund Ltd. (“Milestone”) in connection with Milestone’s
$50,000 working capital loan to the Corporation, and the terms and conditions of
such Note allow for prepayment of the principal and accrued interest anytime
without penalty. Interest rate is 8% per annum and maturity date is May, 2009.
The total interest accrued at December 31, 2008 is $2,287.




11


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





This
section of the report includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance.  Forward-looking statements are often identified by words
like believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future
events.  You should not place undue certainty on these forward-looking
statements, which apply only as of the date of this report.  These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical results or our
predictions.





Plan
of Operation





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





We have
determined that we cannot continue with our business operations as outlined in
our original business plan because of a lack of financial results and resources;
therefore, although we may return to our intended business operations at a later
date, we have redirected our focus towards identifying and pursuing options
regarding the development of a new business plan and direction. We intend to
explore various business opportunities that have the potential to generate
positive revenue, profits and cash flow in order to financially accommodate the
costs of being a publicly held company. However, we cannot assure you that there
will be any other business opportunities available nor the nature of the
business opportunity, nor indication of the financial resources required of any
possible business opportunity.





We were
recently engaged in discussions with NanoDynamics, Inc., a Delaware corporation
(“Nanodynamics), regarding a possible business combination involving
NanoDynamics and us.  With the permission of NanoDynamics, we changed
our name to NanoDynamics Holdings, Inc. to facilitate these discussions. We have
determined not to proceed with the business combination with nanodynamics and,
as a result, we will change our name to Mystica Holdings, Inc.





Results
of Operations





We are a
development stage company and have generated minimal revenues from operations to
date.


12





We
incurred operating expenses of $7,693 and $18,508 for the three month periods
ended December 31, 2008 and 2007, respectively, and $23,870 and $23,267 for the
six month periods ended December 31, 2008 and 2007,
respectively.  These expenses consisted of administrative expenses and
professional fees incurred in connection with the day to day operation of our
business and the preparation and filing of our periodic reports.





We
generated revenues of $nil for each of the three and six month periods ended
September 30, 2008 and 2007, respectively.  Our net loss for the three
months ended September 30, 2008 and 2007 was $(8,684) and $(18,508),
respectively, and for the six months ended September 30, 2008 and 2007 was
$(25,859) and $(23,267), respectively.





Our
external auditors have issued an opinion that raises substantial doubt about our
ability to continue as a going concern given our current financial
position.  See Note 3 to the financial statements.





Liquidity
and Capital Resources





At
December 31, 2008, we had cash in the bank of $131.





We have
minimal operating costs and expenses at the present time due to our limited
business activities. To meet our recent needs for cash, we completed a private
placement on June 5, 2008 and raised $50,000 through the sale of an 8%
promissory note. The $50,000 we raised was sufficient to meet our administrative
expenses for the last six months, but we will need to raise additional funds to
meet our limited expenses for the next three months and thereafter. We will be
required to raise additional capital over the next twelve months to meet our
current administrative expenses, and we may do so additionally, in connection
with or in anticipation of possible acquisition transactions. This financing may
take the form of additional sales of debt or equity securities and/or loans from
our director or other sources. There is no assurance that additional financing,
if required, will be available, or available on terms favorable to
us.





Off-Balance
Sheet Arrangements





We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to
investors.


13


Item
4T.  Controls and Procedures





Evaluation
of Disclosure Controls and Procedures





Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we evaluated the
effectiveness of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period
covered by this report.  Based on this evaluation, our principal
executive officer and principal financial officer concluded as of the evaluation
date that our disclosure controls and procedures were effective in providing
reasonable assurance that material information required to be disclosed in the
reports we file pursuant to the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms relating
to our company, particularly during the period when this report was being
prepared.





Additionally,
there were no changes in our internal controls over financial reporting that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.  We have not identified any significant deficiencies or
material weaknesses in our internal controls, and therefore there were no
corrective actions taken.





PART
II – OTHER INFORMATION





Item
6.  Exhibits





Exhibit No.
                
                Description31.1/31.2
                
                Certification
      of Principal Executive Officer and Principal Financial Officer, pursuant
      to SEC Rules 13a-14(a) and 15d-14(a), adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 200232.1/32.2
                
                Certification
      of Chief Executive Officer and Chief Financial Officer, pursuant to 18
      U.S.C. Section 1350, adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of
2002*








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


14


SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Date:  February
      17, 2009
                  NANODYNAMICS
      HOLDINGS, INC.By:
                  
                  /s/
      David RectorName:
                  David
      RectorTitle:
                  Principal
      Executive Officer and
                    Principal
      Financial
Officer