x
|
QUARTERLY
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.)
|
150 Rainville
Rd
Tarpon
Springs, FL 34689
|
34689
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(Former name, former address, if
changed since last
report)
|
Tel:
(727) 934-9593
|
(Registrant’s
telephone number)
|
Large
accelerated filer o
|
Non-accelerated
filer o
|
Accelerated
filer o (do not
check if smaller reporting company)
|
Smaller
reporting company x
|
PART
I - FINANCIAL INFORMATION
|
||
Item
1.
|
Financial
Statements
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
|
Item
4.
|
Controls
and Procedures
|
|
PART
II -OTHER INFORMATION
|
||
Item
1.
|
Legal
Proceedings.
|
|
Item
1A.
|
Risk
Factors
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds.
|
|
Item
3.
|
Defaults
Upon Senior Securities.
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders.
|
|
Item
5.
|
Other
Information.
|
|
Item
6.
|
Exhibits
|
|
SIGNATURES
|
Financial
Statements:
|
|
Balance
Sheets June 30, 2009 (unaudited) and December 31, 2008
(audited)
|
5
|
Statements
of Operations (unaudited)
|
6
|
Statements
of Changes in Stockholders’ Equity (unaudited)
|
7
|
Statements
of Cash Flows (unaudited)
|
9
|
Notes
to Financial Statements (unaudited)
|
10
through 17
|
MagneGas
Corporation
|
||||||||
(A
Development Stage Enterprise)
|
||||||||
Balance
Sheets
|
||||||||
June
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
(audited)
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 45,948 | $ | 160 | ||||
Accounts
receivable, net of allowance for doubtful accounts of
$1,500
|
1,153 | 2,398 | ||||||
Inventory,
at cost
|
4,976 | 4,860 | ||||||
Total
Current Assets
|
52,077 | 7,418 | ||||||
Intangible
assets, net of accumulated amortization
|
696,655 | 720,889 | ||||||
TOTAL
ASSETS
|
$ | 748,732 | $ | 728,307 | ||||
LIABILITIES
AND STOCKHOLDER'S DEFICIT
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
46,423 | $ | 109,739 | |||||
Accrued
expenses
|
11,039 | 15,000 | ||||||
Deferred
revenue
|
100,000 | - | ||||||
Due
to affiliate
|
10,000 | 10,000 | ||||||
Note
payable to related party
|
163,287 | 89,978 | ||||||
TOTAL
LIABILITIES
|
330,749 | 224,717 | ||||||
Stockholders'
Deficit
|
||||||||
Preferred
stock: $0.001 par; 10,000,000 authorized; 2,000 issued and
outstanding
|
2 | 2 | ||||||
Common
stock: $0.001 par; 900,000,000 authorized; 102,345,596 issued
and outstanding
|
102,346 | 99,445 | ||||||
Additional
paid-in capital
|
2,216,020 | 1,892,373 | ||||||
Unearned
stock compensation
|
(78,333 | ) | (88,333 | ) | ||||
Accumulated
deficit during development stage
|
(1,822,052 | ) | (1,399,897 | ) | ||||
TOTAL
STOCKHOLDERS' EQUITY
|
417,983 | 503,590 | ||||||
TOTAL
LIABILITIES AND EQUITY
|
$ | 748,732 | $ | 728,307 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
MagneGas
Corporation
|
||||||||||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||||||||||
STATEMENTS
OF OPERATIONS
|
||||||||||||||||||||
For
the Three and Six Months Ended June 30, 2009 and 2008
|
||||||||||||||||||||
And
for the period December 9, 2005 (date of inception) to June 30,
2009
|
||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Inception
|
||||||||||||||||||||
Three
Months Ended
|
Six
months ended
|
through
|
||||||||||||||||||
June
30,
|
June
30,
|
June
30,
|
||||||||||||||||||
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||
Revenue
|
$ | 2,585 | $ | 7,297 | $ | 4,051 | $ | 8,079 | $ | 16,276 | ||||||||||
Cost
of Sales
|
2,289 | 7,319 | 3,548 | 8,044 | 13,896 | |||||||||||||||
Gross
Profit
|
296 | (22 | ) | 503 | 35 | 2,380 | ||||||||||||||
Operating
Expenses:
|
||||||||||||||||||||
Advertising
|
24,397 | 1,385 | 34,772 | 2,885 | 42,775 | |||||||||||||||
Selling
|
24,572 | - | 29,640 | 23,003 | 60,935 | |||||||||||||||
Technicians
|
8,893 | 28,265 | 11,519 | 35,680 | 99,214 | |||||||||||||||
Legal
and accounting
|
40,510 | 20,208 | 41,599 | 64,802 | 371,413 | |||||||||||||||
Rent
and overhead
|
5,163 | 6,823 | 25,223 | 8,480 | 71,274 | |||||||||||||||
Office
and admin
|
4,088 | 504 | 5,059 | 507 | 26,750 | |||||||||||||||
Investor
Relations
|
1,633 | - | 5,683 | - | 10,098 | |||||||||||||||
Stock-based
Comp
|
123,608 | 1,667 | 226,328 | 146,667 | ,084,495 | |||||||||||||||
Research
Development
|
15,153 | 2,000 | 15,153 | 2,000 | 18,544 | |||||||||||||||
Total
Operating Expenses
|
248,017 | 60,852 | 394,976 | 284,024 | 1,785,498 | |||||||||||||||
Operating
Loss
|
(247,721 | ) | (60,874 | ) | (394,473 | ) | (283,989 | ) | (1,783,118 | ) | ||||||||||
Other
(Income) and Expense:
|
||||||||||||||||||||
Interest
expense
|
1,945 | 300 | 3,448 | 510 | 5,139 | |||||||||||||||
Depreciation
& Amortization
|
12,117 | 3,038 | 24,234 | 3,298 | 31,038 | |||||||||||||||
Sale
of Asset(s)
|
- | 2,757 | - | 2,757 | 2,757 | |||||||||||||||
Total
Other Expenses
|
14,062 | 6,095 | 27,682 | 6,565 | 38,934 | |||||||||||||||
Net
Loss
|
$ | (261,783 | ) | $ | (66,969 | ) | $ | (422,155 | ) | $ | (290,554 | ) | $ | (1,822,052 | ) | |||||
Loss
per share, basic and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
Basic
and diluted weighted average number of common shares
|
101,726,394 | 67,921,423 | 100,719,712 | 67,841,872 | ||||||||||||||||
The
accompanying notes are an integral part of these financial
statements.
|
MagneGas
Corporation
|
||||||||||||||||||||||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||||||||||||||||||||||
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
|
||||||||||||||||||||||||||||||||
For
the Period Ended June 30, 2009 and for each of the years from
December
9, 2005 (date of inception) to June 30, 2009
|
||||||||||||||||||||||||||||||||
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; $1 per share
|
145,000 | 145 | 144,855 | 145,000 | ||||||||||||||||||||||||||||
July
28, 2009; $1 per share
|
400,000 | 400 | 399,600 | 400,000 | ||||||||||||||||||||||||||||
October
3, 2008; $.02 per share
|
595,000 | 595 | 22,855 | 23,450 | ||||||||||||||||||||||||||||
October
21, 2008; $.02 per share
|
15,000 | 15 | 285 | 300 | ||||||||||||||||||||||||||||
Stock
issued for cash:
|
||||||||||||||||||||||||||||||||
November
4, 2008; $.15 per share
|
105,000 | 105 | 15,645 | 15,750 | ||||||||||||||||||||||||||||
December
3, 2008; $.06 per share
|
283,333 | 283 | 16,717 | 17,000 | ||||||||||||||||||||||||||||
Issued
stock for patent:
|
||||||||||||||||||||||||||||||||
December
28, 2008; $.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 | ||||||||||||||||||||||||||||
Waiver
of related party expense
|
11,220 | 11,220 | ||||||||||||||||||||||||||||||
Net
loss, through December 31, 2008
|
11,220 | (977,426 | ) | (977,426 | ) | |||||||||||||||||||||||||||
Balance
at December 31, 2008
|
2,000 | $ | 2 | 99,444,833 | $ | 99,445 | $ | 1,892,373 | $ | (88,333 | ) | $ | (1,399,897 | ) | $ | 503,590 | ||||||||||||||||
Compensation
recognized under consulting agreement dated May 31,
2008
|
10,000 | 10,000 | ||||||||||||||||||||||||||||||
Waiver
of related party expense (unaudited)
|
11,220 | 11,220 | ||||||||||||||||||||||||||||||
Stock
issued for cash:
|
||||||||||||||||||||||||||||||||
March
17, 2009 ($.05 per share)
|
200,000 | 200 | 9,800 | 10,000 | ||||||||||||||||||||||||||||
May
6, 2009 ($.08 per share)
|
275,000 | 275 | 21,725 | 22,000 | ||||||||||||||||||||||||||||
May18,
2009 ($.15 per share)
|
167,000 | 167 | 24,833 | 25,000 | ||||||||||||||||||||||||||||
June
5, 2009 ($.21 per share)
|
154,763 | 155 | 31,845 | 32,000 | ||||||||||||||||||||||||||||
June
22, 2009 ($.26 per share)
|
38,500 | 39 | 9,961 | 10,000 | ||||||||||||||||||||||||||||
Issuance
of stock for services, valued at fair market value:
|
||||||||||||||||||||||||||||||||
January
21, 2009 ($.04 per share)
|
199,000 | 199 | 7,761 | 7,960 | ||||||||||||||||||||||||||||
March
26, 2009 ($.068 per share)
|
1,320,000 | 1,320 | 88,840 | 89,760 | ||||||||||||||||||||||||||||
April
1, 2009 ($.08 per share)
|
101,500 | 101 | 27,399 | 27,500 | ||||||||||||||||||||||||||||
May
26, 2009 ($.020 per share)
|
445,000 | 445 | 88,550 | 89,000 | ||||||||||||||||||||||||||||
Options
issued for services:
|
2,108 | 2,108 | ||||||||||||||||||||||||||||||
Net
loss through June 30, 2009 (unaudited)
|
(422,155 | ) | (422,155 | ) | ||||||||||||||||||||||||||||
Balance
at June 30, 2009
|
2,000 | $ | 2 | 102,345,596 | $ | 102,396 | $ | 2,216,020 | $ | (78,333 | ) | $ | (1,822,052 | ) | $ | 417,983 |
MagneGas
Corporation
|
||||||||||||
(A
Development Stage Enterprise)
|
||||||||||||
STATEMENTS
OF CASH FLOWS
|
||||||||||||
For
the Three and Six Months Ended June 30, 2009 and 2008,
|
||||||||||||
And
for the period December 9, 2005 (date of inception) to June 30,
2009
|
||||||||||||
Six
Months Ended
|
Inceptionto
|
|||||||||||
June
30, 2009
|
June
30, 2008
|
June
30, 2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
loss
|
$ | (422,155 | ) | $ | (290,554 | ) | $ | (1,822,052 | ) | |||
Adjustments
to reconcile net loss to cash used in operating
activities:
|
||||||||||||
Depreciation
and amortization
|
24,234 | 3,298 | 31,018 | |||||||||
Stock
compensation
|
226,328 | 146,667 | 1,169,595 | |||||||||
Waiver
of related party expenses
|
11,220 | - | 22,440 | |||||||||
Loss
on sale of asset
|
- | 2,757 | 2,757 | |||||||||
Bad
debts
|
1,500 | - | 1,500 | |||||||||
Changes
in operating assets:
|
||||||||||||
Accounts
Receivable
|
(255 | ) | (2,649 | ) | (2,633 | ) | ||||||
Inventory
|
(116 | ) | (1,232 | ) | (4,976 | ) | ||||||
Prepaid
& other current assets
|
- | - | - | |||||||||
Accounts
Payable
|
(63,316 | ) | 38,792 | 46,423 | ||||||||
Accrued
Expenses
|
(3,961 | ) | 434 | 11,039 | ||||||||
Deferred
revenue
|
100,000 | - | 100,000 | |||||||||
Total
adjustments to net income
|
295,634 | 188,067 | 1,377,163 | |||||||||
Net
cash (used in) operating activities
|
(126,521 | ) | (102,487 | ) | (444,889 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Acquisition
of equipment
|
- | - | (5,200 | ) | ||||||||
Acquisition
of licenses and patents
|
- | - | - | |||||||||
Proceeds
from sale of asset
|
- | 1,750 | 1,750 | |||||||||
Net
cash flows (used in) investing activities
|
- | 1,750 | (3,450 | ) | ||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Capital
contribution; pay down of liabilities at acquisition
|
- | - | 2,500 | |||||||||
Advance
from affiliate
|
- | - | 10,000 | |||||||||
Advances
from related party
|
3,348 | - | 3,348 | |||||||||
Proceeds
from note payable to related party
|
105,000 | 30,000 | 193,287 | |||||||||
Repayments
on notes payable from related party
|
(30,000 | ) | - | (30,000 | ) | |||||||
Interest
accrued on affiliate notes and advances
|
(5,039 | ) | 510 | (3,348 | ) | |||||||
Proceeds
from issuance of common stock
|
99,000 | 12,000 | 318,500 | |||||||||
Net
cash flows provided by investing activities
|
172,309 | 42,510 | 494,287 | |||||||||
Net
increase (decrease) in cash
|
45,788 | (58,227 | ) | 45,948 | ||||||||
Cash
- beginning balance
|
160 | 76,232 | - | |||||||||
CASH
BALANCE - END OF PERIOD
|
$ | 45,948 | $ | 18,005 | $ | 45,948 | ||||||
Supplemental
disclosure of cash flow information and non cash investing and financing
activities:
|
||||||||||||
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
Taxes
paid
|
$ | - | $ | - | $ | - |
|
June
30, 2009
|
December
31, 2008
|
||||||
Equipment
|
$
|
-
|
$
|
5,200
|
||||
Less
accumulated depreciation
|
-
|
173
|
||||||
Property
and equipment, net
|
$
|
-
|
$
|
5,027
|
Dividend
rate
|
0.000%
|
Risk-free
interest rate
|
1.440%
|
Expected
lives
|
2.0
|
Expected
price volatility
|
110.862%
|
Forfeiture
Rate
|
0.000%
|
1.
|
12.5%
equity shares of Jeruz Magnegas Pvt, Limited in the existing issued and
paid up capital of Jeruz Magnegas Pvt.
Limited;
|
2.
|
5%
royalties on sales of Magnegas equipment made by Jeruz Magnegas Pvt.
Limited.
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of Operation or
Plan of Operation.
|
Selected Historical Data
|
||||||||
June
30,
|
Dec.
31,
|
|||||||
2009
|
2008
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Total
Assets
|
$ | 748,732 | $ | 728,307 | ||||
Total
Liabilities
|
330,749 | 224,717 | ||||||
Total
Stockholders' Equity
|
417,983 | 503,590 | ||||||
Net
Working Capital
|
(278,672 | ) | (217,299 | ) | ||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues
|
$ | 2,585 | $ | Q7,297 | $ | 4,051 | $ | 8,079 | ||||||||
Gross
Profit
|
296 | (22 | ) | 503 | 35 | |||||||||||
Operating
Expenses
|
248,017 | 60,852 | 394,976 | 284,024 | ||||||||||||
Net
Loss
|
(261,783 | ) | (66,969 | ) | (422,155 | ) | (290,554 | ) |
1.
|
12.5%
equity shares of Jeruz Magnegas Pvt, Limited in the existing issued and
paid up capital of Jeruz Magnegas Pvt.
Limited;
|
2.
|
5%
royalties on sales of Magnegas equipment made by Jeruz Magnegas Pvt.
Limited.
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
Item
4.
|
Controls
and Procedures.
|
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.
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MagneGas
Corporation
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By:
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/s/ Dr. Ruggero Maria Santilli
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Dr. Ruggero Maria Santilli
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Chief
Executive Officer
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Dated:
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August
13, 2009
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