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

**WASHINGTON,      D.C.  20549**

**FORM      10-QSB**

**HYDROFLO,      INC.**

| x | QUARTERLY                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|---|-----------------------------------------------------------------------------------------------------------------|

**For      the quarterly period ended September 30, 2005**

|  ̈ | TRANSITION                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|--------|------------------------------------------------------------------------------------------------------------------|

**For      the transition period from ___________ to _____________**

| **North                Carolina**           |   | **333-100099**                                          |   | **56-2171767**                        |
|---------------------------------------------|--------|---------------------------------------------------------|--------|---------------------------------------|
| (State                or other jurisdiction |   | (Commission                File Number)                 |   | (IRS                Employer          |
| of                Incorporation)            |   |                                                    |   | Identification                Number) |
|                                        |   |                                                    |   |                                  |
|                                        |   | **2501                Reliance Ave.**                   |   |                                  |
|                                        |   | **Apex,                North Carolina 27599**           |   |                                  |
|                                        |   | (Address                of principal executive offices) |   |                                  |
|                                        |   |                                                    |   |                                  |
|                                        |   | **(919)                355-1220**                       |   |                                  |
|                                        |   | (Issuer’s                Telephone Number)        |   |                                  |

** **
** **

**APPLICABLE      ONLY TO ISSUERS INVOLVED IN BANKRUPTCY**

**PROCEEDINGS      DURING THE PRECEDING FIVE YEARS**

**APPLICABLE      ONLY TO CORPORATE ISSUERS**

**37,456,564**

**No**

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**HydroFlo,      Inc.**

**INDEX      TO FORM 10-Q**

| PART                I.  | FINANCIAL                INFORMATION                                                                                                                       |   |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                    |                                                                                                                                                       |   |
| Item                1.  | Financial                Statements                                                                                                                        |   |
|                    |                                                                                                                                                       |   |
|                    | Balance                Sheets as of September 30, 2005 (unaudited) and June                30, 2005 (audited)                                              | 4      |
|                    |                                                                                                                                                       |   |
|                    | Unaudited                Statements of Operations for the three months ended                September 30, 2005 and 2004                                    | 5      |
|                    |                                                                                                                                                       |   |
|                    | Unaudited                Statements of Cash Flows for the three months ended                September 30, 2005 and 2004                                    | 6      |
|                    |                                                                                                                                                       |   |
|                    | Notes                to Unaudited Financial                Statements                                                                                 | 7      |
|                    |                                                                                                                                                       |   |
| Item                2.  | Management’s                Discussion and Analysis of Financial Condition and                Results of Operations (including cautionary statement) | 10     |
|                    |                                                                                                                                                       |   |
| Item                3.  | Quantitative                and Qualitative Disclosure About Market                Risk                                                                    | 12     |
|                    |                                                                                                                                                       |   |
| Item                4.  | Controls                and Procedures                                                                                                                     | 13     |
|                    |                                                                                                                                                       |   |
| PART                II. | OTHER                INFORMATION                                                                                                                           |   |
|                    |                                                                                                                                                       |   |
| Item                1.  | Legal                Proceedings                                                                                                                           | 13     |
| Item                2.  | Changes                in Securities                                                                                                                       | 13     |
| Item                3.  | Defaults                Upon Senior Securities                                                                                                             | 13     |
| Item                4.  | Submission                of Matters to a Vote of Securities                Holders                                                                        | 13     |
| Item                5.  | Other                Information                                                                                                                           | 14     |
| Item                6.  | Exhibits                and Reports on Form 8-K                                                                                                            | 14     |
|                    |                                                                                                                                                       |   |
| Signatures         | 16                                                                                                                                                         |

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*Index*

**PART      I**

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*Index*

**HydroFlo,      Inc.**

**BALANCE      SHEETS**

|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|------------|--------|---------------------------------------|--------|
|                                                                                                                                                                                                                                                             |   | September                30, 2005(Unaudited) |       |   | June                30, 2005(Audited) |   |
| **ASSETS**                                                                                                                                                                                                                                                       |   |                                         |       |   |                                  |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |
| **INVESTMENTS                IN AND ADVANCES TO CONTROLLED COMPANIES**                                                                                                                                                                                           |   | $                                            | 5,012,125  |   |                                  | $      | 25,153,200 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **CURRENT                ASSETS:**                                                                                                                                                                                                                               |   |                                         |       |   |                                  |   |   |   |
| Cash                and Cash equivalents                                                                                                                                                                                                                         |   |                                         | 396,607    |   |                                  |   | 2,557 |   |
| Note                Receivable                                                                                                                                                                                                                                   |   |                                         | 50,000     |   |                                  |   | 50,000 |   |
| Prepaid                Expense                                                                                                                                                                                                                                   |   |                                         | 617        |   |                                  |   | 855 |   |
| Property                and Equipment, net                                                                                                                                                                                                                       |   |                                         | 24,299     |   |                                  |   | 11,482 |   |
| Deposits                                                                                                                                                                                                                                                         |   |                                         | 4,490      |   |                                  |   | 4,455 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **TOTAL                ASSETS**                                                                                                                                                                                                                                  |   | $                                            | 5,488,138  |   |                                  | $      | 25,222,549 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                    |   |                                         |       |   |                                  |   |   |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **CURRENT                LIABILITIES:**                                                                                                                                                                                                                          |   |                                         |       |   |                                  |   |   |   |
| Accounts                payable and accrued liabilities                                                                                                                                                                                                          |   | $                                            | 90,641     |   |                                  | $      | 27,251 |   |
| Due                to Free Harbor, LLC (related party)                                                                                                                                                                                                           |   |                                         | 2,102,330  |   |                                  |   | 2,102,329 |   |
| Shareholder                Loan                                                                                                                                                                                                                                  |   |                                         | -          |   |                                  |   | 25,000 |   |
| Total                current liabilities                                                                                                                                                                                                                         |   |                                         | 2,192,971  |   |                                  |   | 2,154,580 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **COMMITMENTS                AND CONTINGENCIES**                                                                                                                                                                                                                 |   |                                         |       |   |                                  |   |   |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **STOCKHOLDERS’                EQUITY:**                                                                                                                                                                                                                   |   |                                         |       |   |                                  |   |   |   |
| Convertible                preferred stock, $.001 par value, 5,000,000 shares authorized, no                liquidation value, 3,800,000 and 4,000,000 shares issued and outstanding                at September 30, 2005 and June 30, 2005 respectively         |   |                                         | 3,800      |   |                                  |   | 4,000 |   |
| Common                  stock, $.01 par value, 500,000,000 shares authorized; 46,105,057                  and                  37,456,763 shares issued and outstanding, at September 30, 2005                  and June                  30, 2005 respectively. |   |                                         | 461,051    |   |                                  |   | 374,568 |   |
| Additional                paid-in capital                                                                                                                                                                                                                        |   |                                         | 5,493,416  |   |                                  |   | 4,478,557 |   |
| Stock                subscription receivable                                                                                                                                                                                                                     |   |                                         | (216,905   | )      |                                  |   | (235,000 | ) |
| Stock                purchase warrants                                                                                                                                                                                                                           |   |                                         | 147,834    |   |                                  |   | 147,834 |   |
| Retained                earnings / (deficit)                                                                                                                                                                                                                     |   |                                         | (2,594,029 | )      |                                  |   | 18,298,010 |   |
| **Total                stockholders’ equity**                                                                                                                                                                                                              |   |                                         | 3,295,167  |   |                                  |   | 23,067,969 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **TOTAL**                                                                                                                                                                                                                                                        |   | $                                            | 5,488,138  |   |                                  | $      | 25,222,549 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |
| **NET                ASSET VALUE PER SHARE**                                                                                                                                                                                                                     |   | $                                            | 0.07       |   |                                  | $      | 0.62 |   |
|                                                                                                                                                                                                                                                             |   |                                         |       |   |                                  |   |   |   |

| See                notes to condensed financial                statements. |
|----------------------------------------------------------------------------|

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*Index*

**HydroFlo,      Inc.**

**STATEMENTS      OF OPERATIONS**

|                                                                                                     |   |                                                                   |        |   |                                                                   |   |
|----------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|-------------|--------|------------------------------------------------------------------------|--------|
|                                                                                                     |   | For                the three months ended September 30, 2005 |        |   | For                the three months ended September 30, 2004 |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |
| **REVENUE**                                                                                              |   | $                                                                      | -           |   |                                                                   | $      | - |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **COST                OF GOODS SOLD**                                                                    |   |                                                                   | -           |   |                                                                   |   | - |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **GROSS                MARGIN**                                                                          |   |                                                                   | -           |   |                                                                   |   | - |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **OPERATING                EXPENSES:**                                                                   |   |                                                                   |        |   |                                                                   |   |   |   |
| Employee                compensation and benefits                                                        |   |                                                                   | 17,850      |   |                                                                   |   | 450 |   |
| Management                fees – related party                                                     |   |                                                                   | 13,800      |   |                                                                   |   | 13,800 |   |
| General                and administrative expenses                                                       |   |                                                                   | 97,498      |   |                                                                   |   | 140,608 |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **OPERATING                LOSS**                                                                        |   |                                                                   | 129,148     |   |                                                                   |   | 154,858 |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **OTHER                INCOME AND (EXPENSE)**                                                            |   |                                                                   |        |   |                                                                   |   |   |   |
| Interest                Income                                                                           |   |                                                                   | 329         |   |                                                                   |   | 1,746 |   |
| Interest                expense                                                                          |   |                                                                   | (46,427     | )      |                                                                   |   | - |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **Total                other income (expense), net**                                                     |   |                                                                   | (46,098     | )      |                                                                   |   | 1,746 |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **NET                UNREALIZED LOSS ON INVESTMENTS**                                                    |   |                                                                   | 20,716,792  |   |                                                                   |   | 14,170 |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **NET                LOSS**                                                                              |   | $                                                                      | (20,892,038 | )      |                                                                   | $      | (167,282 | ) |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **WEIGHTED                AVERAGE NUMBER OF SHARES OUTSTANDING –**Basic and                Diluted |   |                                                                   | 54,232,577  |   |                                                                   |   | 30,441,800 |   |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |
| **NET                LOSS PER SHARE  **- Basic and Diluted                                     |   | $                                                                      | (0.49       | )      |                                                                   | $      | (0.01 | ) |
|                                                                                                     |   |                                                                   |        |   |                                                                   |   |   |   |

----

*Index*

**HydroFlo,      Inc.**

**STATEMENTS      OF CASH FLOWS**

|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|-------------|--------|--------------------------------------------------------------------------------------|--------|
|                                                                                                      |   | For                the threemonths ended September                30, 2005 |        |   | For                the three months endedSeptember                30, 2004 |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES:**                                                  |   |                                                                                 |        |   |                                                                                 |   |
| Net                loss                                                                                   |   | $                                                                                    | (21,622,392 | )      |                                                                                 | $      | (167,282 | ) |
| Adjustments                to reconcile net loss to net cash used by operating                activities: |   |                                                                                 |        |   |                                                                                 |   |   |   |
| Depreciation                expense                                                                       |   |                                                                                 | 1,221       |   |                                                                                 |   | 1,483 |   |
| Change                in fair value of investments                                                        |   |                                                                                 | 21,447,146  |   |                                                                                 |   | - |   |
| Change                in accounts payable and accrued liabilities                                         |   |                                                                                 | 63,390      |   |                                                                                 |   | 21,324 |   |
| Change                in prepaid expenses and deposits                                                    |   |                                                                                 | 203         |   |                                                                                 |   | - |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   | - |   |
| **NET                CASH USED BY OPERATING ACTIVITIES**                                                  |   |                                                                                 | (110,635    | )      |                                                                                 |   | (144,475 | ) |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES:**                                                  |   |                                                                                 |        |   |                                                                                 |   |   |   |
| Investment                in controlled companies                                                         |   |                                                                                 | (575,717    | )      |                                                                                 |   | (129,000 | ) |
| Purchases                of property and equipment                                                        |   |                                                                                 | (14,037     | )      |                                                                                 |   | (1,655 | ) |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **NET                CASH USED IN INVESTING ACTIVITIES**                                                  |   |                                                                                 | (589,754    | )      |                                                                                 |   | (130,655 | ) |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES-**                                                  |   |                                                                                 |        |   |                                                                                 |   |   |   |
| Proceeds                from sale of common stock                                                         |   |                                                                                 | 1,119,437   |   |                                                                                 |   | 228,000 |   |
| Payments                on related party debt                                                             |   |                                                                                 | (24,999     | )      |                                                                                 |   | - |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **NET                CASH PROVIDED BY FINANCING ACTIVITIES**                                              |   |                                                                                 | 1,094,438   |   |                                                                                 |   | 228,000 |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **NET                INCREASE (DECREASE) IN CASH**                                                        |   |                                                                                 | 394,049     |   |                                                                                 |   | (47,130 | ) |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **CASH                AND EQUIVALENTS AT BEGINNING OF YEAR**                                              |   |                                                                                 | 2,557       |   |                                                                                 |   | 406,762 |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **CASH                AND EQUIVALENTS AT END OF YEAR**                                                    |   | $                                                                                    | 396,607     |   |                                                                                 | $      | 359,632 |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:**                                      |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| Income                taxes paid                                                                          |   | $                                                                                    | -           |   |                                                                                 | $      | - |   |
| Interest                paid                                                                              |   | $                                                                                    | -           |   |                                                                                 | $      | - |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| **SUPPLEMENTAL                DISCLOSURE OF CASH NON-CASH INANCING ACTIVITES:**                           |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |
| Commons                stock issued to acquire investment                                                 |   | $                                                                                    | -           |   |                                                                                 | $      | 480,000 |   |
|                                                                                                      |   |                                                                                 |        |   |                                                                                 |   |   |   |

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*Index*

**HydroFlo,      Inc.**

**NOTES      TO FINANCIAL STATEMENTS**

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**Note      A - Summary of Significant Accounting Policies**

----

*Index*

|   | - | Total                  amount of the Company's actual investment ("AI"). This amount shall                  include all loans, purchase price of securities, and fair value                  of                  securities given at the time of                  exchange. |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Total                  revenues for the preceding twelve months                  ("R"). |
|--------|---|-----------------------------------------------------------------------------------------|

|   | - | Earnings                  before interest, taxes and depreciation                  ("EBITD") |
|--------|---|----------------------------------------------------------------------------------------------|

----

*Index*

|   | - | Estimate                  of likely sale price of investment                  ("ESP") |
|--------|---|---------------------------------------------------------------------------------------|

|   | - | Net                  assets of investment ("NA") |
|--------|---|--------------------------------------------------|

|   | - | Likelihood                  of investment generating positive returns (going                  concern). |
|--------|---|---------------------------------------------------------------------------------------------------------|

|   | - | Where                  no or limited revenues or earnings are present, then the value                  shall be                  the  greater  of the investment's a) net assets, b)                  estimated sales price, or c)                  total  amount  of  actual  investment. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Where  revenues  and/or  earnings  are  present,  then                  the value shall be the greater of one time (1x) revenues or three                  times                  (3x) earnings, plus the greater                  of  the  net  assets  of  the  investment  or  the  total  amount  of                  the actual investment. |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Under  both  scenarios,                  the value of the investment shall be adjusted down if                  there  is  a  reasonable expectation that                  the Company will not be able to recoup its  investment or if                  there is reasonable doubt about the investee’s ability to                  continue  as  a  going  concern. |
|--------|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Note        B – Acquisition of Portfolio Company**

**Note        C – Stockholders’ Equity**

**Note        D – Subsequent Events**

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*Index*

**Item        2. MANAGEMENT'S DISCUSSION AND PLAN OF        OPERATIONS**

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*Index*

**THREE        MONTHS ENDED SEPTEMBER 30, 2005**

**THREE        MONTHS ENDED SEPTEMBER 30, 2004**

**FINANCIAL        CONDITION, LIQUIDITY AND CAPITAL RESOURCES**

----

*Index*

| **Name                  of Company**                          |   | **Nature                  of its Principal Business** |   | **Approximate                  Cost** |   | **Fair                  Value** |
|---------------------------------------------------------------|--------|-------------------------------------------------------|--------|---------------------------------------|--------|---------------------------------|
|                                                          |   |                                                  |   |                                  |   |                            |
| HydroFlo                  Water Treatment, Inc.               |   | Waste                  water treatment solutions      |   | $2,523,299                            |   | $1,888,000                      |
|                                                          |   |                                                  |   |                                  |   |                            |
| Metal                  & Arsenic Removal Technology, Inc. |   | Arsenic                  removal technology           |   | $1,122,710                            |   | $2,349,000                      |
|                                                          |   |                                                  |   |                                  |   |                            |
| Safety  Scan                  Technologies, Inc.    |   | High                  Frequency Scanning              |   | $752,121                              |   | $752,121                        |
|                                                          |   |                                                  |   |                                  |   |                            |
| Ultra                  Choice Water, Inc.                     |   | POU                  Water Filtration Systems         |   | $22,692                               |   | $22,879                         |
|                                                          |   |                                                  |   |                                  |   |                            |
| Advance                  Water Recycle, Inc                   |   | Research                  and Development             |   | $125                                  |   | $125                            |

**ITEM        3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET        RISK**

----

*Index*

**Impact        of Inflation**

**ITEM        4 CONTROLS AND PROCEDURES**

**Disclosure        Controls and Procedures**

**Changes        in Internal Controls**

**PART        II - OTHER INFORMATION**

**ITEM        1.   LEGAL PROCEEDINGS**

**ITEM        2 CHANGES        IN SECURITIES AND USE OF PROCEEDS**

**ITEM        3.   DEFAULTS UPON SENIOR        SECURITIES**

**ITEM        4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY        HOLDERS**

----

*Index*

**ITEM        5.   OTHER INFORMATION**

**ITEM        6.   EXHIBITS AND REPORTS ON FORM        8-K**

| **Exhibit                  No.** |   | **Description**                                                                                                                                                              |
|----------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                             |   |                                                                                                                                                                         |
| 31.1                             |   | Certification                  pursuant to Rule 13a-14(a)                                                                                                                    |
|                             |   |                                                                                                                                                                         |
| 32.1                             |   | Certification                  of pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section                  906                  of the Sarbanes-Oxley Act of 2002. |

NAT

|   | HydroFlo,                  Inc.           |
|--------|-------------------------------------------|
|   |                                      |
|   | /s/                  GEORGE A. MOORE, III |
|   | ___________________________               |
|   | George                  A. Moore, III     |
|   | Chief                  Executive Officer  |

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