x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
26-0250418
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
35246
US 19 #311
Palm
Harbor, FL
|
34684
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(Former name, former address, if
changed since last report)
|
Tel:
(727) 934-9593
|
(Issuer’s
telephone number)
|
Large
accelerated filer. o
|
Accelerated
filer. o
|
Non-accelerated
filer. o
(Do
not check if a smaller reporting company)
|
Smaller
reporting company. þ
|
Page
|
||
Part
I
|
||
Item
1
|
Business
|
1 |
Item
1A
|
Risk
Factors
|
1 |
Item
1B
|
Unresolved
Staff Comments
|
4 |
Item
2
|
Properties
|
4 |
Item
3
|
Legal
Proceedings
|
4 |
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
4 |
Part
II
|
||
Item
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
5 |
Item
6
|
Selected
Financial Data.
|
5 |
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
5 |
Item
7A
|
Quantitative
and Qualitative Disclosures about Market Risk
|
10 |
Item
8
|
Financial
Statements and Supplementary Data
|
11 |
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
12 |
Item
9A
|
Controls
and Procedures
|
12 |
Item
9B
|
Other
Information
|
12 |
Part
III
|
||
Item
10
|
Directors
and Executive Officers and Corporate Governance.
|
13 |
Item
11
|
Executive
Compensation
|
14 |
Item
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
15 |
Item
13
|
Certain
Relationships and Related Transactions, and Director
Independence.
|
16 |
Item
14
|
Principal
Accounting Fees and Services
|
17 |
Part
IV
|
||
Item
15
|
Exhibits,
Financial Statement Schedules
|
18 |
Signatures
|
19 |
·
|
Management’s
ability to maintain the technology skills for our conversion
services;
|
·
|
The
Company’s ability to keep abreast of the changes by the government
agencies and law;
|
·
|
Our
ability to attract customers who require the services we offer;
and
|
·
|
Our
ability to generate revenues through the sale of our services to potential
clients who need our services.
|
High
|
Low
|
|||||||
Fiscal
Year 2008
|
||||||||
Fourth
quarter ended December 31, 2008
|
$ | 1.01 | $ | .001 |
Selected Historical Data
|
||||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
Total
Assets
|
$ | 728,307 | $ | 83,259 | ||||
Total
Liabilities
|
224,717 | 15,630 | ||||||
Total
Stockholders' Equity
|
503,590 | 67,629 | ||||||
Net
Working Capital
|
(217,299 | ) | 62,602 | |||||
Revenues
|
12,225 | - | ||||||
Operating
Expenses
|
968,224 | 268,455 | ||||||
Net
Loss
|
(977,426 | ) | (268,455 | ) |
Financial
Statements:
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Balance
Sheets
|
F-3
|
Statements
of Operations
|
F-4
|
Statements
of Changes in Stockholders’ Equity
|
F-5
|
Statements
of Cash Flows
|
F-6/F-7
|
Notes
to Financial Statements
|
F-8 through
F-14
|
MagneGas
Corporation
|
||||||||
(A
Development Stage Enterprise)
|
||||||||
BALANCE
SHEET
|
||||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$
|
160
|
$
|
76,232
|
||||
Accounts
Receivable
|
2,398
|
-
|
||||||
Inventory
|
4,860
|
-
|
||||||
Prepaid
Expenses
|
-
|
2,000
|
||||||
Total
current assets
|
7,418
|
78,232
|
||||||
Equipment,
net of accumulated depreciation of $0 and $173
respectively
|
-
|
5,027
|
||||||
Intangibles,
net of amortization of $6,111 and $0 respectively
|
720,889
|
-
|
||||||
TOTAL
ASSETS
|
$
|
728,307
|
$
|
83,259
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
Payable
|
$
|
109,739
|
$
|
-
|
||||
Accrued Expense
|
15,000
|
5,630
|
||||||
Advances from Related Party
|
10,000
|
10,000
|
||||||
Note
Payable, Related Party
|
89,978
|
-
|
||||||
TOTAL
CURRENT LIABILITIES
|
$
|
224,717
|
$
|
15,630
|
||||
STOCKHOLDERS’
EQUITY
|
||||||||
Preferred
Stock - Par value $0.001;
|
||||||||
Authorized: 10,000,000
|
||||||||
2,000 issued and outstanding
|
$
|
2
|
$
|
2
|
||||
Common
Stock - Par value $0.001;
|
||||||||
Authorized: 100,000,000
|
||||||||
Issued and Outstanding: 99,444,833 and 67,639,500 at December 31,
2008
and
December 31, 2007, respectively
|
99,445
|
67,640
|
||||||
Additional
Paid-In Capital
|
1,892,373
|
422,458
|
||||||
Prepaid
Consulting Services Paid with Common Stock
|
(88,333
|
)
|
||||||
Accumulated
Deficit during development stage
|
(1,399,897
|
)
|
(422,471
|
)
|
||||
Total
Stockholders’ Equity
|
503,590
|
$
|
67,629
|
|||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
728,307
|
$
|
83,259
|
||||
MagneGas
Corporation.
|
||||||||||
(A
Development Stage Enterprise)
|
||||||||||
STATEMENT
OF OPERATIONS
|
||||||||||
For
the Years Ended December 31, 2008 and 2007
|
||||||||||
And
for the period December 9, 2005 (date of inception) to December 31,
2008
|
||||||||||
For
the Year Ended
December
31,
|
Inception
to
December
31,
|
|||||||||
2008
|
2007
|
2008
|
||||||||
REVENUE
|
$
|
12,225
|
$
|
-
|
$
|
12,225
|
||||
COST
OF SERVICES
|
10,348
|
-
|
10,348
|
|||||||
GROSS
(LOSS) OR PROFIT
|
1,877
|
-
|
1,877
|
|||||||
OPERATING
EXPENSES:
|
||||||||||
Advertising
|
8,003
|
8,003
|
||||||||
Selling
|
31,295
|
31,295
|
||||||||
Professional
- technical
|
64,765
|
22,930
|
87,695
|
|||||||
Professional
– legal and accounting
|
195,636
|
47,328
|
329,814
|
|||||||
Rent
and overhead
|
46,051
|
46,051
|
||||||||
Office
and administration
|
5,916
|
20,190
|
26,106
|
|||||||
Services,
stock-based compensation
|
613,167
|
330,000
|
858,167
|
|||||||
Research
and development
|
3,391
|
3,391
|
||||||||
Total
Operating Expenses
|
968,224
|
420,448
|
1,390,522
|
|||||||
OTHER
(INCOME) EXPENSE
|
||||||||||
Interest
expense
|
1,691
|
-
|
1,691
|
|||||||
Depreciation
and amortization
|
6,631
|
173
|
6,804
|
|||||||
Loss
on sale of equipment
|
2,757
|
-
|
2,757
|
|||||||
Total
Other (Income) Expense
|
11,079
|
173
|
11,252
|
|||||||
NET
LOSS
|
$
|
(
977,426
|
)
|
$
|
(
420,621
|
)
|
$
|
(1,399,897
|
)
|
|
Loss
per share, basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.04
|
)
|
|
Basic
and diluted weighted average number of common shares
|
68,455,979
|
36,257,864
|
37,867,950
|
|||||||
MagneGas
Corporation
|
|||||||||||||||||||||||||
(A
Development Stage Enterprise)
|
|||||||||||||||||||||||||
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
|
|||||||||||||||||||||||||
For
the Years Ended December 31, 2008 and for each of the years
from
December
9, 2005 (date of inception) to December 31, 2008
|
|||||||||||||||||||||||||
Preferred
|
Common
|
Additional
Paid in
|
Prepaid
Consulting Services Paid with Common
|
Accumulated
Deficit During Development
|
Total
|
||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stock
|
Stage
|
Equity
|
||||||||||||||||||
Stock
issued on acceptance of incorporation expenses, December 9,
2005
|
100,000
|
$
|
100
|
$
|
100
|
||||||||||||||||||||
Net
loss
|
(400
|
)
|
(400
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2005
|
-
|
-
|
100,000
|
100
|
-
|
(400
|
)
|
(300
|
)
|
||||||||||||||||
Net
loss
|
(1,450
|
)
|
(1,450
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2006
|
-
|
-
|
100,000
|
100
|
-
|
(1,850
|
)
|
(1,750
|
)
|
||||||||||||||||
Acquisition
of controlling interest, payment of liabilities
|
2,500
|
2,500
|
|||||||||||||||||||||||
Recapitalization:
Issuance
of preferred stock to founders, valued at par, April 2,
2007
|
2,000
|
2
|
(2
|
)
|
-
|
||||||||||||||||||||
Recapitalization:
Issuance
of common stock to founders, valued at par, May 12,
2007
|
67,052,000
|
67,052
|
(67,052
|
)
|
-
|
||||||||||||||||||||
Issuance
of stock for services, valued at $1 per share, May 12,
2007
|
245,000
|
245
|
244,755
|
245,000
|
|||||||||||||||||||||
Stock
issued for cash:
|
|||||||||||||||||||||||||
June 12, 2007; $1 per share
|
30,000
|
30
|
29,970
|
30,000
|
|||||||||||||||||||||
August
28, 2007; $1 per share
|
13,000
|
13
|
12,987
|
13,000
|
|||||||||||||||||||||
September 17,2007; $1 per share
|
54,000
|
54
|
53,946
|
54,000
|
|||||||||||||||||||||
October
11, 2007; $1 per share
|
60,500
|
61
|
60,439
|
60,500
|
|||||||||||||||||||||
Issuance
of stock for services, valued at $1 per share, October 11,
2007
|
85,000
|
85
|
84,915
|
85,000
|
|||||||||||||||||||||
Net
loss, through December 31, 2007
|
(420,621
|
)
|
(420,621
|
)
|
|||||||||||||||||||||
Balance
at December 31, 2007
|
2,000
|
$
|
2
|
67,639,500
|
$
|
67,640
|
$
|
422,458
|
-
|
$
|
(422,471
|
)
|
$
|
67,629
|
|||||||||||
Issuance
of stock for license, valued at $1 per share, February 15,
2008
|
100,000
|
100
|
99,900
|
100,000
|
|||||||||||||||||||||
Issuance
of stock in execution of five year consulting agreement, valued at $1 per
share, May 31, 2008
|
100,000
|
100
|
99,900
|
(100,000
|
)
|
-
|
|||||||||||||||||||
Amortization
of prepaid consulting services paid with common stock, December 31,
2008
|
11,667
|
11,667
|
|||||||||||||||||||||||
Issuance
of stock for services:
|
|||||||||||||||||||||||||
February
15, 2008, valued at $1 per share
|
145,000
|
145
|
144,855
|
145,000
|
|||||||||||||||||||||
July
28, 2009, valued at $1 per share
|
400,000
|
400
|
399,600
|
400,000
|
|||||||||||||||||||||
October
3, 2008 valued at $.02 per share
|
595,000
|
595
|
22,855
|
23,450
|
|||||||||||||||||||||
October
21, 2008 valued at $.02 per share
|
15,000
|
15
|
285
|
300
|
|||||||||||||||||||||
Stock
issued for cash:
|
|||||||||||||||||||||||||
November
4, 2008 valued at $.15 per share
|
105,000
|
105
|
15,645
|
15,750
|
|||||||||||||||||||||
December
3, 2008 valued at $.06 per share
|
283,333
|
283
|
16,717
|
17,000
|
|||||||||||||||||||||
Issued
stock for patent:
|
|||||||||||||||||||||||||
December
28, 2008 valued at $.021 per share
|
30,000,000
|
30,000
|
597,000
|
627,000
|
|||||||||||||||||||||
Stock
issued for cash:
|
|||||||||||||||||||||||||
May
31, 2008; $1 per share
|
12,000
|
12
|
11,988
|
12,000
|
|||||||||||||||||||||
September
4, 2008; $1 per share
|
50,000
|
50
|
49,950
|
50,000
|
|||||||||||||||||||||
Net
loss, through December 31, 2008
|
(977,426
|
)
|
(977,426
|
)
|
|||||||||||||||||||||
Waiver
of related party expense
|
11,220
|
11,220
|
|||||||||||||||||||||||
Balance
at December 31, 2008
|
2,000
|
$
|
2
|
99,444,833
|
$
|
99,445
|
$
|
1,892,373
|
$
|
(83,333)
|
$
|
(1,399,897
|
)
|
$
|
503,590
|
MagneGas
Corporation
|
||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||
STATEMENTS
OF CASH FLOWS
|
||||||||||||
For
the Years Ended December 31, 2008 and 2007,
|
||||||||||||
And
for the period December 9, 2005 (date of inception) to December 31,
2008
|
||||||||||||
Years
Ended
December
31,
|
Inception
Date to
December
31,
|
|||||||||||
2008
|
2007
|
2008
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
loss
|
$
|
(977,426
|
)
|
$
|
(420,621
|
)
|
$
|
(1,399,897
|
)
|
|||
Adjustments
to reconcile net loss to cash used in operating
activities:
|
||||||||||||
Stock
compensation
|
613,167
|
330,000
|
943,267
|
|||||||||
Wavier
of related party expenses
|
11,220
|
11,220
|
||||||||||
Depreciation
and Amortization
|
6,611
|
173
|
6,804
|
|||||||||
Loss
on disposal of equipment
|
2,757
|
2,757
|
||||||||||
Changes
in operating assets:
|
||||||||||||
Increase
in Accounts Receivable
|
(2,398
|
)
|
(2,398
|
)
|
||||||||
Increase in
Inventory
|
(4,860
|
)
|
(4,860
|
)
|
||||||||
Increase in
Prepaid Expenses
|
2,000
|
(2,000
|
)
|
-
|
||||||||
Increase
in Accounts Payable
|
109,739
|
109,739
|
||||||||||
Increase in
Accrued Expenses
|
9.370
|
3,880
|
15,000
|
|||||||||
Total
adjustments to net loss
|
747,626
|
332,053
|
1,081,529
|
|||||||||
Net
cash (used in) operating activities
|
(229,800
|
)
|
(88,568
|
)
|
(318,368
|
)
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Acquisition
of reporting entity
|
-
|
(5,200
|
)
|
(5,200
|
)
|
|||||||
Gross
proceeds from sale of equipment
|
1,750
|
1,750
|
||||||||||
Net
cash flows (used in) investing activities
|
1,750
|
(5,200
|
)
|
(3,450
|
)
|
|||||||
CASH FLOWS FROM FINANCING
ACTIVITIES
|
||||||||||||
Advances
from Related Party
|
-
|
10,000
|
10,000
|
|||||||||
Proceeds
from Note Payable to Related Party
|
88,287
|
-
|
88,287
|
|||||||||
Accrued
interest on note payable from related party
|
1,691
|
1,691
|
||||||||||
Capital
contribution; liability payment at acquisition
|
-
|
2,500
|
2,500
|
|||||||||
Proceeds
from issuance of common stock
|
62,000
|
157,500
|
219,500
|
|||||||||
Net
cash flows provided by investing activities
|
151,978
|
101,500
|
321,978
|
|||||||||
Net
increase in cash
|
(76,072
|
)
|
76,232
|
160
|
||||||||
Cash
- beginning balance
|
76,232
|
-
|
||||||||||
CASH
BALANCE - END OF PERIOD
|
$
|
160
|
$
|
76,232
|
$
|
160
|
||||||
Supplemental
disclosure of cash flow information and non cash investing and financing
activities:
|
||||||||||||
Interest
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Taxes
paid
|
$
|
-
|
$
|
-
|
$
|
-
|
December
31,
|
||||||||
|
2008
|
2007
|
||||||
Equipment
|
$
|
-
|
$
|
5,200
|
||||
Less accumulated depreciation
|
-
|
173
|
||||||
Property
and equipment, net
|
$
|
-
|
$
|
5,027
|
|
||||||||||||
from
inception
|
||||||||||||
12/31/2008
|
12/31/2007
|
12/31/2008
|
||||||||||
Income
tax provision (benefit) at statutory rate
|
$
|
(332,300
|
)
|
$
|
(143,000
|
)
|
$
|
(475,300
|
)
|
|||
Stock
Compensation, not deductible
|
208,500
|
112,200
|
320,700
|
|||||||||
State
income tax expense (benefit), net of federal benefit
|
(13,400
|
)
|
(3,300
|
(16,700
|
)
|
|||||||
Valuation
Allowance
|
137,200
|
34,100
|
171,300
|
|||||||||
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Net
deferred tax assets and liabilities were comprised of the
following:
|
||||||||||||
Deferred
tax asset (liability):
|
||||||||||||
Capitalized
start-up costs
|
$
|
137,200
|
||||||||||
Valuation
Allowance
|
(137,200
|
)
|
||||||||||
$
|
-
|
|||||||||||
NAME
|
AGE
|
POSITION
|
Dr. Ruggero Maria Santilli
|
73
|
Chairman
Of the Board, Chief Executive Officer
|
Richard
Connelly
|
63
|
President,
Director
|
Luisa Ingargiola
|
41
|
Chief
Financial Officer, Secretary, Director
|
Carla Santilli
|
69
|
Director
|
·
|
Honest
and ethical conduct, including ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
·
|
Full,
fair, accurate, timely, and understandable disclosure reports and
documents that a small business issuer files with, or submits to, the
Commission and in other public communications made by our
Company;
|
·
|
Full
compliance with applicable government laws, rules and
regulations;
|
·
|
The
prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code;
and
|
·
|
Accountability
for adherence to the code.
|
Annual
Compensation
|
|||||||||
Name
and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity Incentive Plan
Compensation ($)
|
Non-Qualified
Deferred Compensation Earnings
($)
|
All
Other Compensation
($)
|
Totals
($)
|
Dr. Ruggero Maria Santilli,
Chairman of the Board(1)
|
|||||||||
2008
2007
|
$0
$0
|
$0
$0
|
$100,000
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$100,000
$0
|
|
Richard
Connelly, President (2)
|
2008
2007
|
$29,000
$0
|
$0
$0
|
$364,250
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$393,250
$0
|
Luisa Ingargiola,
CFO
(3)
|
2008
2007
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
Carla Santilli,
Director
|
2008
2007
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
$0
$0
|
(1)
|
Dr. Santilli
was appointed as CEO and Chairman of the Board on April 2,
2007.
|
(2)
|
Richard
Connolly was appointed as President on July 3, 2008.
|
(3)
|
Luisa Ingargiola
was appointed CFO and Director on May 4,
2007.
|
Title
of Class
|
Name
and Address
of
Beneficial Owner
|
Amount
and Nature
of
Beneficial Owner
|
Percent
of Class
|
Common
Stock
|
Ermanno
Santilli
90
Eastwinds Ct
Palm
Harbor, FL 34683
|
5,000,000
|
5%
|
Common
Stock
|
Luisa Ingargiola (1)
4826
Blue Jay Circle
Palm
Harbor FL 34683
|
15,500,000
|
16%
|
Common
Stock
|
Dr. Ruggero Maria Santilli (2)
90
Eastwinds Ct
Palm
Harbor FL 34683
|
45,590,480
|
46%
|
Common
Stock
|
Carla Santilli (3)
90
Eastwinds Ct
Palm
Harbor FL 34683
|
42,990,480
|
43%
|
Common
Stock
|
Richard
Connelly (4)
170
Countrytyme Lane
Iron
Station, NC 28080
|
1,530,000
|
2%
|
Common
Stock
|
All
executive officers and directors as a group (4 in number)
|
52,620,480
|
53%
|
Total
|
Pender
Newkirk
|
Randall
N. Drake
|
Gately
|
|||||||||||||
2008
|
$ | 63,608 | 57,608 | 6,000 | ||||||||||||
2007
|
$ | 24,761 | 24,761 | |||||||||||||
2006
|
$ | 1,450 | 1,450 |
(a)
|
During
the quarter ending December 31, 2008, the Company filed the following
Exhibits and Form 8Ks:
· October
3, 2008, the Company filed a form 8K for change in auditor.
· October
30, 2008, the Company filed an 8K for a material agreement.
· December
30, 2008, the Company filed an 8K for a material agreement.
· December
30, 2008, the Company filed an DEF 14C for Amendment of the Articles of
Incorporation
|
|
(b)
|
Exhibits
|
|
Exhibit
Number
|
Exhibit
Title
|
|
31.1
|
Certification
of Dr. Ruggero Santilli pursuant to 18 U.S.C. Section 1350 as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Luisa Ingargiola, pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of Dr. Rugerro Maria Santilli pursuant to 18 U.S.C. Section
1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
32.2
|
Certification
of Luisa Ingargiola, pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
MagneGas
Corporation
|
||||
By:
|
/s/ Dr. Ruggero Maria Santilli
|
|||
Dr. Ruggero Maria Santilli
|
||||
Chief
Executive Officer
|
||||
Dated:
|
March
26, 2009
|
Name
|
Title
|
Date
|
/s/Ruggero Maria Santilli
|
Chief
Executive Officer, Chairman of the Board
|
March
26, 2009
|
Ruggero Maria Santilli | ||
/s/ Luisa Ingargiola
|
Treasurer,
Chief Financial Officer
|
March
26, 2009
|
Luisa Ingargiola | ||
/s/ Carla Santilli
|
Director
|
March
26, 2009
|
Carla Santilli | ||
/s/ Richard Connolly
|
President,
|
March
26, 2009
|
Richard
Connolly
|