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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-QSB
(Mark One)
        [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
              EXCHANGE ACT OF 1934

               For the quarterly period ended: September 30, 2003 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: 000-50355

                                 **HydroFlo, Inc.**
                 (Name of small business issuer in our charter)

       **North Carolina                  333-100099             56-2171767**
(State or other jurisdiction of     (Commission File         (I.R.S. Employer
 incorporation or organization)         Number)          Identification  Number)

                     **3721 Junction Blvd., Raleigh, NC 27603
               (Address of principal executive offices) (Zip Code)

(Address of principal place of business or intended principal place of business)

                   Registrant's telephone number: 919-772-9925

                                       N/A
                              ---------------------
         (Former name, former address and former fiscal year, if changed
                               since last report)

  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the 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 [ ]

                                       1

   APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
  Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
                                                                  Yes [ ] No [ ]

               APPLICABLE ONLY TO CORPORATE ISSUERS:
  Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
  ***
  November 10, 2003 - 15,897,550

                                 HYDROFLO, INC.

                                Table of Contents

PART I - FINANCIAL INFORMATION.................................................3

Item 1. Unaudited Financial Statements.........................................3

Item 2. Management's Discussion and Plan of Operation.........................10

Item 3. Controls and Procedures...............................................13

PART II - OTHER INFORMATION...................................................14

Item 1.  Legal Proceedings....................................................14

Item 2.  Changes in Securities................................................14

Item 3. Defaults upon Senior Securities.......................................14

Item 4. Submission of Matters to a Vote of Security Holders...................14

Item 5. Other Information.....................................................15

Item 6. Exhibits..............................................................15

                         **PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements**

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial reporting
and pursuant to the rules and regulations of the Securities and Exchange
Commission ("Commission"). While these statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary for fair
presentation of the results of the interim period, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. For further information, refer to
the financial statements and footnotes thereto, which are included in the
Company's Annual Report on Form 10-KSB previously filed with the Commission on
September 19, 2003.

                                       2
**HydroFlo, Inc.
                       Balance Sheet - September 30, 2003**
--------------------------------------------------------------------------------

                                     **Assets**
                                                                  September 30,
                                                                      2003
                                                                    (Unaudited)
                                                                  -------------

**Current assets:**
    Cash                                                          $         639
    Accounts receivable                                                  78,178
    Inventory                                                            59,727
    Prepaid expenses                                                      2,510
                                                                  -------------
                      Total current assets                        $     141,054

**Property and equipment:**
    Office equipment                                                     18,555
    Office furniture                                                      6,601
    Testing equipment                                                    87,111
    Display equipment                                                     6,550
    Computer Software                                                       803
        Less - Accumulated depreciation                                 (28,700)
                                                                  -------------
                        Total property and equipment              $      90,920

**Patent costs, net**                                                        30,269
**Deposits**                                                                    754
                                                                  -------------                                                                                                 $  262,997
                                                                  $     262,997
                                                                  =============
                      **Liabilities and Shareholders' Equity**Current liabilities:
    Accounts payable and accrued expenses                         $     119,329
    Customer deposits                                                     3,500
    Deferred revenue                                                        417
    Accounts payable and accrued expenses - related parties (Note C)     19,380
                                                                  -------------
                        Total current liabilities                       142,626
                                                                  -------------
    Note payable - related party                                        170,000
                                                                  -------------
**Commitments and contingencies (Notes C, D and F)
Shareholders' equity:**
    Common stock, $0.01 par value, authorized 20,000,000 shares,
        issued and outstanding 15,851,050 shares as of
        September 30, 2003                                              158,511
    Preferred stock, $0.01 par value, authorized 5,000,000 shares,
        issued and outstanding 0 shares as of September 30, 2003              0
    Additional paid-in-capital                                        3,110,946
    Stock subscriptions receivable                                       (6,959)
    Stock purchase warrants                                             147,834
    Deferred compensation                                              (627,050)
    Deficit accumulated during development stage                     (2,832,911)
                                                                  -------------
                        Total shareholders' equity                     (49,629)
                                                                  -------------
                                                                  $     262,997
                                                                  =============

 The accompanying notes are an integral part of these unaudited fiancial statements.

                                      F-1

**Statements of Operations
             For the Three Months Ended September 30, 2003 and 2002
--------------------------------------------------------------------------------

                                          September 30,    September 30,
                                              2003             2002
                                          (Unaudited)       (Unaudited)
                                         ---------------  ---------------

**Revenues**                                 $        68,818  $        22,500
**Cost of goods sold**                                16,798            1,418
                                         ---------------  ---------------
**Gross margin**                                      52,020           21,082
                                         ---------------  ---------------
**Expenses:
    Employee compensation                       242,129           219,657
    Management fee                               13,800            13,800
    Research and development                        470             4,812
    License fee                                       0             6,250
    Rent                                          4,728             4,175
    Marketing                                     2,087            12,100
    Contribution                                      0             5,400
    Selling, general and administrative         190,736            70,554
                                         --------------   ---------------
                      Operating expenses        453,950           336,748
                                         ---------------  ---------------
**Operating loss**                                 (401,930)         (315,666)
**Interest income**                                     278               988
                                         ---------------  ---------------
**Net loss**                                 $      (401,652) $     (314,678)
                                         ===============  ===============
**Weighted average shares outstanding**          15,811,485        15,639,251
**Basic and diluted loss per share**         $        (0.03)  $         (0.02)
                                         ===============  ===============

The accompanying notes are an integral part of these unaudited fiancial statements.

                                      F-2

            Statements of Changes in Shareholders' Equity (Deficit)
                    For the Quarter Ended September 30, 2003
------------------------------------------------------------------------------------------------------------------------------

                                                   Additional     Stock        Stock
                              Common Stock           Paid in   Subscriptions Purchase     Deferred     Accumulated
                           Shares       Amount       Capital    Receivable   Warrants    Compensation    Deficit     Total
**Balance,
June 30, 2003**           -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
                         15,811,050  $   158,111  $ 2,330,471  $    (6,959) $   147,834  $   (50,062) $(2,431,259) $   148,136
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
**Common stock issued
for services
provided**                     40,000          400       67,600            0            0      (68,000)           0            0
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
**Services provided                 0            0            0            0            0        8,450            0        8,450
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
**Stock options granted**            0            0      681,000            0            0     (681,000)           0            0
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
**Stock options vested**             0            0            0            0            0      163,562            0      163,562
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
**Stock Payable                    0            0       31,875            0            0            0            0       31,875
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
Net loss                         0            0            0            0            0            0     (401,652)    (401,652)
                        -----------  -----------  -----------  -----------  -----------  -----------  -----------  -----------
**Balance, September
30, 2003                 15,851,050  $   158,511  $ 3,110,946  $    (6,959) $   147,834  $  (627,050) $(2,832,911) $   (49,629)
                        ===========  ===========  ===========  ===========  ===========  ===========  ===========  ============

The accompanying notes are an integral part of these unaudited fiancial statements.

                                      F-3

**Statements of Cash Flows
             For the Three Months Ended September 30, 2003 and 2002
--------------------------------------------------------------------------------

                                                    September 30,    September 30,
                                                        2003             2002
                                                     (Unaudited)      (Unaudited)
                                                   --------------  ----------------

**Cash flows from operating activities:
    Net loss                                       $     (401,652) $       (314,678)
    Adjustments to reconcile net loss to net cash
       used in operating activities:
           Depreciation                                     5,562             3,387
           Amortization of patent costs                       140               140
           Loss on impairment of patent costs               5,949                 0
           Deferred compensation amortization             163,562           131,437
           Common stock to be issued for services
              provided                                     31,875                 0
           Common stock earned for administrative
              services                                      8,450                 0
           (Increase) decrease in accounts receivable     (53,735)            1,000
           Increase in inventory, net                     (27,682)          (22,983)
           Decrease in prepaid expenses                    74,483               490
           Increase in accounts payable and accrued
              expenses                                     64,583            33,425
           Increase in deferred revenue                       417                 0
                                                   --------------  ----------------
                      Net cash used in operating
                         activities                      (128,048)         (167,782)
                                                   --------------  ----------------

**Cash flows from investing activities: purchase
    of property and equipment                          (2,686)          (37,009)
                                                   --------------  ----------------
**Cash flows from financing activities:
    Issuance of common stock                                    0           471,000
    Stock subscription receipts                                 0           140,300
                                                   --------------  ----------------
                      Net cash provided by
                         financing activities                   0           611,300
                                                   --------------  ----------------
**Net (decrease) increase in cash**                          (130,734)          406,509
**Cash, beginning of quarter**                                131,373            58,876
                                                   --------------  ----------------
**Cash, end of quarter**                               $          639  $        465,385
                                                   ==============  ================
**Supplemental disclosure of non-cash financing activities:**
    Issuance of common stock in exchange for       --------------  ----------------
       administrative services                     $       68,000  $              0
                                                   --------------  ----------------

The accompanying notes are an integral part of these unaudited fiancial statements.

                                      F-4

**Note A - Basis of Presentation

In the opinion of management of HydroFlo, Inc. (the Company), all adjustments
necessary for fair statement of the results of operations for the three-month
periods ended September 30, 2003 and 2002 are reflected in the interim financial
statements presented. These adjustments are of a normal recurring nature.

**Note B - Summary of Significant Accounting Policies**Organization and Liquidity**

HydroFlo, Inc. was incorporated in North Carolina on December 8, 1999, to design
and distribute aeration and oxygen mixing equipment specifically designed for
municipalities and industry requiring improved dissolved oxygen in water.

From inception to June 30, 2002, the Company focused primarily on developing and
patenting this new technology for the sewage treatment industry. Beginning July
1, 2002, the Company emerged from the development stage and focused on marketing
and selling their technology to this industry.

The Company has recognized net losses and negative operating cash flow since its
inception. For the quarter ended September 30, 2003, the Company had a net loss
of $401,652 and a net shareholders' deficit of $49,629. Cash used in operations
during the quarter ended September 30, 2003 totaled $128,048 and an additional
$2,686 was used in acquiring additional property and equipment. Until such time
that the Company can generate sustained profitable operations, the Company will
require additional funding to further develop, market and distribute its
products.

While management believes the Company will be successful in raising additional
capital, there are no assurances that the Company will be successful in
obtaining capital or that such financing will be on terms favorable or
acceptable to the Company and that the Company will be able to achieve
profitable operations over the long term.

If the Company does not generate any additional net revenues from sales,
including collection of outstanding accounts receivable, or proceeds from the
sale of securities before November 30, 2003, it will likely be unable to
continue operations thereafter. If this were to occur, the Company would most
likely have to find a buyer for the business or file for protection under
bankruptcy laws. As of this date, however, the Company has taken no action with
respect to either of these options.

The accompanying financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might result should the Company be unable
to continue as a going concern.

                                      F-5

**Use of Estimates**

Preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statement and the reported amounts of revenues and
expenses during the reporting period. Accordingly, actual results may differ
from those estimates.

**Earnings Per Share

In accordance with the provisions of SFAS No. 128, "Earnings Per Share," basic
earnings per share is computed by dividing net income by the number of
weighted-average common shares outstanding during the year. Diluted earnings per
share is computed by dividing net income by the number of weighted average
common shares outstanding adjusted to include the number of additional common
shares that would have been outstanding if the dilutive potential common shares
resulting from options granted had been issued. The effect of options and
warrants outstanding were not included in the computation of diluted earnings
per share because the effect on net loss per share would have been antidilutive.

**Revenue Recognition

Revenue in the accompanying statements of operations consists of direct sales or
leases to customers and paid demonstrations of the Company's product. Sales are
recognized when products are shipped to the customers, with provisions for
discounts and rebates to customers and returns and other adjustments, if any,
provided for in the period the related sales are recorded. Rental income is
recognized over the period the related equipment is provided to the customer.

**Stock Based Compensation**

At September 30, 2003, the Company has a stock-based employee compensation plan,
which is described more fully in Note E. The Company accounts for that plan
under the recognition and measurement principles of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. No
stock-based employee compensation cost is reflected in net income, as all
options granted under the plan had an exercise price equal to the market value
of the underlying common stock on the date of grant. The following table
illustrates the effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS No. 123:

                                                2004          2003
                                           ------------   ------------
Net loss, as reported                      $    401,652   $    314,678
Increased compensation expense                    3,100          3,624
Pro forma net loss                         ------------   ------------
                                           $    404,752   $    318,302
                                           ============   ============

Because the SFAS No. 123 method of accounting has not been applied to options
granted, the resulting pro forma compensation cost may not be representative of
that to be expected in future years. The Company used the Black-Scholes Option
Pricing Model to estimate the fair value of stock options granted in fiscal 2004
and 2003 with the following assumptions:

                                                2004          2003
                                           ------------   ------------
Expected dividend yield                            0.00%          0.00%
Volatility                                       263.59%          0.00%
Risk-free interest rates                           3.24%          2.76%

                                      F-6

**Note C - Related-party Transactions**

Effective December 30, 1999, 13,500,000 shares of the Company's common stock
were acquired by Capital Access, Inc. in exchange for a stock subscription of
$30,000. The subscription balance at September 30, 2003 and 2002 was $6,959. A
director of the Company is a significant stockholder of Capital Access.

At September 30, 2003, and September 30, 2002, the Company had amounts payable
of $184,300 and $129,100, respectively, due to Free Harbor LLC for management
services. A director of the Company is the managing partner of Free Harbor LLC.
Expenses incurred under this arrangement totaled $13,800 for each of the
quarters ended September 30, 2003 and 2002. As of June 30, 2003, $170,000 of the
payable balance due was transferred to a non-interest bearing note payable with
payments of $5,000 per month beginning October 1, 2004, and continuing until
paid in full. Future management fees are not payable by the Company until
profitability is reached on a cash basis by the Company.

At September 30, 2003, the Company also had accounts payable balances of $5,080,
due to two directors of the Company for expenses incurred by those directors.

**Note D - Shareholders' Equity

The Company announced a three-for-two stock split effective July 8, 2002, with
the issuance of 5,179,344 shares of common stock and the transfer of $51,794
from additional paid-in capital to the common stock account. All share amounts
in the accompanying financial statements reflect the stock split.

The Company has entered into a stock subscription whereby the Company issued
stock in exchange for the investors' promise to fund their aggregate purchase
price of the stock. As of September 30, 2003 the subscription totaled $6,959.

The Company has entered into an agreement with its external legal counsel,
whereby said legal counsel provides certain legal services over a two-year
period beginning in June 2003 in exchange for 125,000 shares of the Company's
common stock. The shares are to be granted pro-rata over those two years and
recorded as expense, valued at the fair value of the shares on the issuance
date. For the three months ended September 30, 2003, the Company recorded
$31,875 of expenses, included in general and administrative in the accompanying
statement of operations, for stock that has been earned and is to be issued to
the legal counsel. As the stock has not been issued prior to September 30, 2003,
the Company recorded the $31,875 as Additional Paid In Capital in the
accompanying balance sheet.

The Company entered into an agreement with an unrelated party during July 2003
whereby that party would act as an advisor to the Board of Directors of the
Company for a period of two years. In exchange for these services, the Company
issued 40,000 shares of its common stock to the party in September 2003. Such
amounts were originally recorded as deferred compensation in the accompanying
balance sheet. The Company recorded $8,450 of expense related to this agreement
during the three months ended September 30, 2003.

                                      F-7

**Note E - Common Stock Options**

The Company has granted options to purchase shares of common stock in
conjunction with an employment agreement entered into during fiscal 2001. The
options vest one year from the date of each grant. All options issued to date
have an exercise price of $0.22 per share. The weighted average fair value of
the options is $2.06 per share for options granted during fiscal 2004. The
weighted average remaining contractual lives of granted options are
approximately 4 years. Stock option compensation expense recorded during the
three months ended September 30, 2003 and 2002 was $163,562 and $131,437,
respectively. The summary of stock option activity is shown below:

                                                                   Weighted
                                                 Options           Average
                                               Outstanding      Exercise Price
                                              -------------     -------------
Outstanding at July 1, 2003                    1,012,500            0.22
Options granted during fiscal 2004               337,500            0.22
                                              -------------     ------------
Outstanding at September 30, 2003              1,350,000            0.22
                                              -------------     ------------
Options exercisable at September 30, 2003      1,012,500            0.22

**Note F - Commitments and Contingencies**

In connection with the management agreement with Free Harbor LLC (discussed in
Note C), the Company has agreed to pay Free Harbor LLC 10% of pretax profits as
long as the management agreement is in effect. Additionally, in connection with
one employment agreement, the Company has agreed to pay that employee 5% of
pretax profits so long as he remains an employee of the Company.

**Note G - Subsequent Event

In October 2003, the Company commenced a private placement of shares of its
common stock, and as of November 10, 2003, the company has sold 46,500
restricted shares and warrants to purchase an additional 46,500 shares of common
stock and received proceeds of $36,850. The private placement consists of a
package of one share of common stock for a price of one half of best bid on the
day of purchase and one warrant to be purchased for $2.00 at a time from one
year to five years after the date of transaction. The Company is offering a
maximum of 2,000,000 shares of its common stock and warrants to purchase an
additional 2,000,000 shares of common stock in this private placement.

                                      F-8

**Item 2. Management's Discussion and Plan of Operation

Forward-Looking Statements

This Quarterly Report contains forward-looking statements about HydroFlo, Inc.'s
business, financial condition and prospects that reflect management's
assumptions and beliefs based on information currently available. We can give no
assurance that the expectations indicated by such forward-looking statements
will be realized. If any of our management's assumptions should prove incorrect,
or if any of the risks and uncertainties underlying such expectations should
materialize, HydroFlo, Inc.'s actual results may differ materially from those
indicated by the forward-looking statements.

     The key factors that are not within our control and that may have a direct
bearing on operating results include, but are not limited to, acceptance of our
services, our ability to expand our customer base, managements' ability to raise
capital in the future, the retention of key employees and changes in the
regulation of our industry.

     There may be other risks and circumstances that management may be unable to
predict.  When used in this Quarterly Report, words such as, "believes,"
"expects,"  "intends," "plans," "anticipates," "estimates" and similar
expressions are intended to identify forward-looking statements, as defined in
Section 21E of the Securities Exchange Act of 1934, although there may be
certain forward-looking statements not accompanied by such expressions.

     The safe harbors of forward-looking statements provided by Section 21E of
the Exchange Act are unavailable to issuers of penny stock.  As we issued
securities at a price below $5.00 per share, our shares are considered penny
stock and such safe harbors set forth under the Reform Act are unavailable to us.

Overview

HydroFlo, Inc. was incorporated in North Carolina on December 8, 1999, to design
and distribute aeration and oxygen mixing equipment specifically designed for
municipalities and industry requiring improved dissolved oxygen in water. Since
inception, we have focused primarily on developing and patenting this new
technology for the sewage treatment industry. During the current year, we
continue to focus on marketing and selling our technology and related products
and services to this industry.

Our aggregate revenues for the three month period ended September 30, 2003
totaled $68,818, versus revenues of $22,500 during the same three month period
of the previous year. Our revenues during the three month period ended September
30, 2003 consisted of the sale of an aeration unit in North Carolina, and the
rental of a unit to North Carolina State University for their testing of usage
with animal waste.

                                       3

In the three month period ended September 30, 2003, we generated a negative
operating cash flow of $128,048.  We had net working capital of $(1,572) at
September 30, 2003.

Results of Operations - Quarter Ended September 30, 2003 vs. Quarter Ended September 30, 2002

Employee compensation  increased by $22,472 or 10.2% to $242,129 for the quarter
ended September 30, 2003 from $219,657 for the quarter ended September 30, 2002.
This  increase  was caused  primarily  by the  issuance of stock  options to Mr.
Barbee  during  2003  with an  exercise  price  below  the  market  value of the
underlying common stock.

Management fees (related-party) remained stable at $13,800 for the quarter ended
September 30, 2003 compared to $13,800 for the quarter ended September 30, 2002.

Research and development costs decreased by $4,342 or 90.2% to $470 for the
quarter ended September 30, 2003 from $4,812 for the quarter ended September 30,
2002. This decrease was the result of a shift in management focus to sales and
marketing rather than research and development of products.

License Fees decreased by $6,250 to $0 for the quarter ended September 30, 2003
from $6,250 for the quarter ended September 30, 2002. This decrease was due to
the termination of the licensing agreement for the aeration basin technology.

Rent costs increased by $553 or 13.2% to $4,728 for the quarter ended September
30, 2003 from $4,175 for the quarter ended September 30, 2002. This increase was
caused by the rental of additional storage space for equipment and inventory.

Marketing costs decreased by $10,013 or 82.8% to $2,087 for the quarter ended
September 30, 2003 from $12,100 for the quarter ended September 30, 2002. This
decrease was caused by decreased trade show advertising expenses.

Contributions decreased by $5,400 to $0 for the quarter ended September 30, 2003
compared to $5,400 for the quarter ended September 30, 2002. Contributions have
been halted until profitability is achieved.

General and administrative costs increased by $120,182 or 170.3% to $190,736 for
the quarter ended September 30, 2003 from $70,554 for the quarter ended
September 30, 2002. This increase was primarily caused by agreements with a
vendor and a legal professional to issue common stock in exchange for services.
The shares issued under these arrangements were valued at the fair value on the
date of grant. Expense recognition coincides with the periods that the related
services are provided.

Liquidity and Capital Resources

For the quarter ended September 30, 2003, we had a net loss of $401,652 and had
a net shareholders' deficit of $49,629 at September 30, 2003. Net cash used in
operating activities for the period from July 1, 2003 to September 30, 2003 was
$128,048. The cash used in operations was primarily due to employee compensation
and other costs associated with generating sales and revenue for the company.

Cash at September 30, 2003 amounted to $639, a decrease of $130,734 since June
30, 2003. Our current assets for the fiscal quarter ended September 30, 2003 are
lower than our current liabilities by $1,572.

                                       4

We have recently commenced a private placement of common stock and warrants and
as of November 11, 2003, have raised $44,725 through this placement. We continue
to sell securities under this placement. As of November 11, 2003, we have $5,392
cash and $73,262 in accounts receivable. These resources are sufficient for us
to continue operations through November 30, 2003.

If we do not generate any additional net revenues from sales, including
collection of outstanding accounts receivable, or proceeds from the sale of
securities before November 30, 2003, we will be unable to continue operations
thereafter. If this were to occur, we would most likely have to find a buyer
for our business or file for protection under bankruptcy laws. In such event we
would cease our reporting obligations and not become a shell company to be used
as a vehicle for a reverse acquisition. As of this date, however, we have taken
no action with respect to either of these options. We currently have a contract
in place with an industrial client in the form of a rental unit at $2,600 per
month for one unit, with payments anticipated to be received commencing in
November. We have no other plan in place that will eliminate this risk.

**Item 3. Controls and Procedures

Disclosure Controls and Procedures**

         The Corporation maintains disclosure controls and procedures designed
to ensure that information required to be disclosed in reports filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the specified time periods. As of the end of the period
covered by this report, the Corporation's Chief Executive Officer and Chief
Financial Officer evaluated the effectiveness of the Corporation's disclosure
controls and procedures. Based on the evaluation, the Corporation's Chief
Executive Officer and Chief Financial Officer concluded that, except as noted
below under "Changes in Internal Controls," the Corporation's disclosure
controls and procedures are effective as of the end of the period covered by
this report.

**Changes in Internal Controls

         There has been no change in the Corporation's internal control over
financial reporting that occurred during the Corporation's most recent fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, the Corporation's internal control over financial reporting. However, we
intend to continue to refine our internal controls on an ongoing basis with a
view towards continuous improvements. Grant Thornton LLP ("GT"), our independent
accountants, have reported to our Board of Directors certain matters involving
internal controls that GT considers to be material weaknesses under standards
established by the American Institute of Certified Public Accountants. The
identified material weaknesses relate to a lack of segregation of duties within
our accounting and financial management functions and inadequate dedication of
resources to the financial review and analysis functions. Due to the size of our
organization, the early stage of our operations and significant financial
constraints, the Corporation has not been able to employ the necessary resources
for proper internal financial review and analysis.

Given the material weaknesses identified above, management devoted additional
resources to resolving questions that arose during the quarterly reporting
cycle. Significant adjustments were necessary to convert management's internal
financial records to the final reported amounts in the Form 10-QSB. As a result,
management is confident that its financial statements for the three months ended
September 30, 2003 fairly present, in all material respects, the financial
condition and results of operations of the Company.

The material weaknesses have been discussed in detail among our Board of
Directors and GT. We have assigned high priority to the correction of these
material weaknesses, and we are committed to addressing and resolving them
fully. As the Corporation continues its growth and strives to achieve financial
stability, management intends to devote additional resources to further develop
its financial accounting, analysis and reporting functions.

                                       5
**PART II - OTHER INFORMATION

Item 1.  Legal Proceedings**

     None

**Item 2.  Changes in Securities

     The Company entered into an agreement with Mr. Ross Smith, an unrelated
party during July 2003 whereby that party would act as an advisor to the Board
of Directors of the Company for a period of two years.  In exchange for these
services, the Company issued 40,000 shares of its common stock to the party in
September 2003.  The Company recorded $8,450 of expense related to this
agreement during the three months ended September 30, 2003 based upon trading
price at date of transaction.

**Item 3. Defaults upon Senior Securities.

None

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

None

**Item 5. Other Information.

None

**Item 6. Exhibits**

Exhibit                   Name and/or Identification of Exhibit
 Number

  31                     Certification

  32                     Certification

Reports on Form 8-K

8-K Current report, item 5 - August 4, 2003

                                       6
**SIGNATURES

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

                                                            HydroFlo, Inc.
                                                   ------------------------------
                                                             (Registrant)

By: /s/ Dennis Mast
   -----------------------
       Dennis Mast
       CEO, Principal Financial Officer and Principal
       Accounting Officer

Date: November 12, 2003**************************************************
```