BBHC, INC. - Quarter Report: 2009 March (Form 10-Q)

f10q0309_magnegas.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

FORM 10-Q

______________

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

For the quarterly period ended March 31, 2009

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

For the transition period from ______________ to ______________

Commission File No. 000-51883

______________

MagneGas Corporation

(Exact name of small business issuer as specified in its charter)

______________

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)

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 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Non-accelerated filer o

Accelerated filer o (do not check if smaller reporting company)	Smaller reporting company x

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 14, 2009: 101,163,833 shares of common stock.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Unaudited financial statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation or Plan of Operation
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4T.	Controls and Procedures

PART II -OTHER INFORMATION
Item 1.	Legal Proceedings.
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

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Financial Statements

MagneGas Corporation

(A Development Stage Enterprise)

As of March 31, 2009 (unaudited) and December 31, 2008

And for the Three Months Ended March 31, 2009 (unaudited), 2008 (unaudited) and

for the period December 9, 2005 (date of inception) through March 31, 2009 (unaudited)

Contents

Financial Statements:

Balance Sheets March 31, 2009 (unaudited) and December 31, 2008 (audited)	F-1
Statements of Operations (unaudited)	F-2
Statements of Changes in Stockholders’ Equity (unaudited)	F-3
Statements of Cash Flows (unaudited)	F-4
Notes to Financial Statements (unaudited)	F-5 through F-11

MagneGas Corporation

(A Development Stage Enterprise)

BALANCE SHEETS

	March 31, 2009 (unaudited)			December 31, 2008 (audited)
ASSETS
CURRENT ASSETS
Cash	$	17,403		$	160
Accounts Receivable		2,973			2,398
Inventory, at cost		4,221			4,860
Total Current Assets		24,597			7,418
Intangible Assets		708,772			720,889
TOTAL ASSETS	$	733,369		$	728,307


LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts Payable	$	62,340		$	109,739
Accrued Expenses		3,000			15,000
Due to Affiliate		10,000			10,000
Note Payable to Related Party		196,481			89,978
TOTAL LIABILITIES		271,821			224,717


STOCKHOLDERS' EQUITY
Preferred Stock: Par $0.001; 900,000,000 authorized; 2,000 issued and outstanding		2			2
Common Stock: Par $0.001; 900,000,000 authorized; 102,163,833 issued and outstanding		101,164			99,445
Additional Paid-In Capital		2,003,984			1,892,373
Deferred Compensation		(83,333	)		(88,333	)
Accumulated Deficit		(1,560,269	)		(1,399,897	)
TOTAL STOCKHOLDERS' EQUITY		461,548			503,590

TOTAL LIABILITIES AND EQUITY	$	733,369		$	728,307

The accompanying notes are an integral part of these financial statements.

F-1

MagneGas Corporation.

(A Development Stage Enterprise)

STATEMENTS OF OPERATIONS

For the three months ended March 31, 2009 and 2008

And for the period December 9, 2005 (date of inception) to March 31, 2009

(unaudited)

	Three months ended						(inception) to
	Mar 31, '09			Mar 31, '08			Mar 31, '09

REVENUE	$	1,466		$	782		$	13,691

COST OF GOODS		1,259			725			11,607

GROSS PROFIT		207			57			2,085

OPERATING EXPENSES:
Advertising		10,375			1,500			18,378
Selling, other		5,068			9,158			36,364
Professional - technical		2,626			8,184			90,321
Professional - legal and accounting		1,089			44,009			330,903
Rent and overhead		20,060			8,364			66,111
Office and administration		971			6,957			22,662
Investor Relations		4,050			-			8,465
Stock-based compensation		102,720			145,000			960,887
Research and development		-			-			3,391
Total Operating Expenses		146,959			223,172			1,537,482

OPERATING LOSS		(146,752	)		(223,115	)		(1,535,397	)

OTHER (INCOME) EXPENSE:
Interest expense		1,503			210			3,194
Depreciation and Amortization		12,117			260			18,921
Sale of Asset(s)		-			-			2,757
Total Other (Income) Expenses		13,620			470			24,872

NET LOSS	$	(160,372	)	$	(223,585	)	$	(1,560,269	)

Loss per share, basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.04	)
Basic and diluted weighted average number of common shares		99,723,613			67,760,654			42,476,633

The accompanying notes are an integral part of these financial statements.

F-2

MagneGas Corporation (A Development Stage Enterprise) STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY For the three months ended March 31, 2009 and for each of the years from December 9, 2005 (date of inception) to March 31, 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, 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	$	(88,333)		$	(1,399,897	)	$	503,590
Compensation recognized under consulting agreement dated May 31, 2008											5,000						5,000
Waiver of related party expense (unaudited)									5,610								5,610
Stock issued for cash:
March 17, 2009 ($.05 per share)					200,000		200		9,800								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
Net loss through March 31, 2009 (unaudited)														(160,372	)		(160,372	)

Balance at December 31, 2008		2,000	$	2	101,163,833	$	101,164	$	2,003,984	$	(83,333)		$	(1,560,269	)	$	461,548

The accompanying notes are an integral part of these financial statements.

F-3

MagneGas Corporation

(A Development Stage Enterprise)

STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2009 and 2008,

And for the period December 9, 2005 (date of inception) to March 31, 2009

	Three Months						Inception to
	Mar 31, '09			Mar 31, '08			Mar 31, '09
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(160,372	)	$	(223,585	)	$	(1,560,269	)

Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		12,117			260			18,921
Stock compensation		102,720			145,000			1,045,987
Waiver of related party expenses		5,610			-			16,830
Loss on sale of asset		-			-			2,757
Changes in operating assets:
Accounts Receivable		(575	)		(787	)		(2,973	)
Inventory		639						(4,221	)
Accounts Payable		(47,399	)		5,834			62,340
Accrued Expenses		(12,000	)		28,141			3,000
Total adjustments to net income		61,112			178,448			1,142,641
Net cash (used in) operating activities		(99,260	)		(45,137	)		(417,628	)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment		-						(5,200	)
Proceeds from sale of asset		-						1,750
Net cash flows (used in) investing activities		-			-			(3,450	)

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contribution; pay down of liabilities at acquisition								2,500
Advance from affiliate								10,000
Proceeds from note payable to related party		105,000			30,210			193,287
Interest accrued on affiliate notes and advances		1,503						3,194
Proceeds from issuance of common stock		10,000						229,500
Net cash flows provided by investing activities		116,503			30,210			438,481

Net increase (decrease) in cash		17,243			(14,927	)		17,403

Cash - beginning balance		160			76,232			-

CASH BALANCE - END OF PERIOD	$	17,403		$	61,305		$	17,403

Supplemental disclosure of cash flow information and non cash investing and financing activities:

Interest paid

Taxes paid

The accompanying notes are an integral part of these financial statements.

F-4

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Financial Statements

(unaudited)

Three Months Ended March 31, 2009, 2008 and

for the period December 9, 2005 (date of inception) through March 31, 2009

1. Background Information

MagneGas Corporation (the “Company”), formerly 4307, Inc., was organized in the state of Delaware on December 9, 2005 for the purpose of locating and negotiating with a business entity for a combination.

On April 2, 2007 (the "Effective Date"), pursuant to the terms of a Stock Purchase Agreement, Clean Energies Tech Co. purchased a total of 100,000 shares (100%) of the issued and outstanding common stock of the Company from Michael Raleigh, the sole officer, director and shareholder of the Company, for an aggregate of $30,000 in cash and the assumption of liabilities ($2,500). The total of 100,000 shares represented all of the shares of outstanding common stock of the Company at the time of transfer.

Prior to the above transaction, Clean Energies Tech Co and the Company were essentially shell companies that were unrelated, with no assets, minimal liabilities, and no operations. As a result, the 100% change in control was recorded as a private equity transaction, and no goodwill was recorded, as no assets were acquired and minimal liabilities were assumed. On May 12, 2007, subsequent to the date of purchase, 67,052,000 shares of common stock were issued to founding members of the organization. As the company determined that the shares had no value, stock and additional paid in capital were increased and decreased, respectively, by the par value of the stock issued.

Since the acquisition, the Company has adopted the operating plan and mission which is to provide services in cleaning and converting contaminated waste. A process has been developed which transforms contaminated waste through a proprietary incandescent machine. The result of the product is to carbonize waste for normal disposal. A by product of this process will produce an alternative MagneGas source. The technology related to this process has been licensed in perpetuity from a Company, related by common management (see note 10).

2. Development Stage Enterprise

The Company has been in the development stage since its formation on December 9, 2005. It has primarily engaged in raising capital to carry out its business plan, as described above. The Company expects to continue to incur significant operating losses and to generate negative cash flow from operating activities while it develops its customer base and establishes itself in the marketplace. The Company's ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend upon a variety of factors, many of which it is unable to control. If the Company is unable to implement its business plan successfully, it may not be able to eliminate operating losses, generate positive cash flow, or achieve or sustain profitability, which would materially adversely affect its business, operations, and financial results, as well as its ability to make payments on any obligations it may incur.

3. Going Concern

The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.

The Company incurred a net loss of $160,372 and $1,560,269 for the three months ended March 31, 2009 and for the period December 9, 2005 (date of inception) through the period ended March 31, 2009, respectively. As of March 31, 2009 the Company had $17,403 of cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company depends upon capital to be derived from future financing activities such as subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital. The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company's business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability to hire and retain key employees, the ability to build and manufacture such proprietary machines to provide services and the ability to obtain regulatory permits as needed. There may be other risks and circumstances that management may be unable to predict.

F-5

The unaudited financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

4. Summary of Significant Accounting Policies

The significant accounting policies followed are:

In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three month period ended March 31, 2009, 2008 and the period December 9, 2005 (date of inception) through March 31, 2009; (b) the financial position at March 31, 2009, and (c) cash flows for the three month period ended March 31, 2009, 2008 and the period December 9, 2005 (date of inception) through March 31, 2009, have been made.

The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.

The unaudited financial statement and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principals generally accepted in the United States of America have been omitted. The accompanying unaudited financial statements should be read in conjunction with the financial statements for the years ended December 31, 2008 and 2007 and notes thereto in the Company’s annual report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission. Operating results for the three months ended March 31, 2009 and 2008 and for the period December 9, 2005 (date of inception) to March 31, 2009 are not necessarily indicative of the results that may be expected for the entire year.

FIN No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”) addresses the consolidation of entities to which the usual condition (ownership of a majority voting interest) of consolidation does not apply. This interpretation focuses on controlling financial interests that may be achieved through arrangements that do not involve voting interest. If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary is generally required to consolidate assets, liabilities and non-controlling interests at fair value (or at historical cost if the entity is a related party) and subsequently account for the variable interest as if it were consolidated based on a majority voting interest. The Company has investments in joint ventures that are in development of the MagneGas technology, however the Company is not identified as a primary beneficiary; therefore no consolidation is required and the investments are listed at their cost.

The Company’s balance sheets include the following financial instruments: cash, accounts receivable, inventory, accounts payable and note payable to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying values of the note payable to stockholder approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.

The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of six months or less to be cash equivalents.

Accounts receivable consist of amounts due for the delivery of MagneGas sales to customers. Revenue for metal-cutting fuel is recognized when shipments are made to customers. The Company recognizes a sale when the product has been shipped and risk of loss has passed to the customer. An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company’s customer credit worthiness, and current economic trends. Based on management’s review of accounts receivable, no allowance for doubtful accounts was considered necessary. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables.

Inventories are stated at the lower of standard cost or market, which approximates actual cost. Cost is determined using the first-in, first-out method. Inventory is comprised of filled cylinders of MagneGas and accessories (regulators and tips) available for sale.

F-6

Equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives (five years for equipment). The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of equipment existed at December 31, 2008.

During 2008, the Company recorded an intangible license for $727,000 related to the Company's acquisition of patent rights and certain other intellectual property, secured from a company related by common management (see Note 10). The Company valued the license based on the value of the stock issued, as the Company believes that this is the more reliable measurement. The intellectual property consists primarily of patents and patent applications, which the Company has estimated has a useful life of fifteen years. The estimated amortization expense for the intangible license is expected to be $48,467 annually over each of the next five years and $466,439 in total thereafter.

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses for any periods presented.

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Accounting Standards (SFAS) No. 123 (Revised 2004), “Share-Based Payment” (SFAS 123R). SFAS 123R requires all share-based payments to employees, including grants of employee stock options to be recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company had no common stock options or common stock equivalents granted or outstanding for all periods presented

The Company issues restricted stock to consultants for various services. For these transactions the Company follows the guidance in EITF 96-18 "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling Goods or Services". Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable (see Note 8). The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. Stock compensation for the three months ended March 31, 2009 and 2008, were issued to consultants for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions. For the three months ended March 31, 2009, the Company entered into a consulting agreement (see note 10) for services to be rendered over a five year period. The consulting expense is to be recognized ratably over the requisite service period.

The Company includes shipping costs and freight-in costs in cost of goods sold. Total freight-in included in cost of goods sold expense was $280, $0, and $280 for the three months ended March 31, 2009, 2008 and for the period December 9, 2005 (date of inception) through March 31, 2009, respectively..

The costs of advertising are expensed as incurred. Advertising expense was $10,375, $1,500, and $18,378 for the three months ended March 31, 2009, 2008 and for the period December 9, 2005 (date of inception) through March 31, 2009, respectively. Advertising expenses are included in the Company’s operating expenses.

In accordance with SFAS No. 2, “Accounting for Research and Development Costs”, the Company expenses research and development costs when incurred. Indirect costs related to research and developments are allocated based on percentage usage to the research and development.

The Company accounts for income taxes under SFAS No. 109, “Accounting for Income Taxes,” which requires use of the liability method. SFAS No. 109 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

The Company follows SFAS No. 128, “Earnings Per Share.” Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. There are no share equivalents and, thus, anti-dilution issues are not applicable.

F-7

5. Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 160; Noncontrolling Interest in Consolidated Financial Statements, and amendment of ARB 51, which changes the accounting and reporting for minority interest. Minority interest will be recharacterized as noncontrolling interest and will be reported as component of equity separate from the parent's equity, and purchases or sales of equity interests that do not result in change in control will be accounted for as equity transactions. In addition, net income attributable to the noncontrolling interest will be included in consolidated net income on the date of the income statement and, upon a loss of control, the interest sold, as well as any interest retained, will be recorded at fair value with any gain or loss recognized in earnings. SFAS No. 160 is effective for the Company beginning January 1, 2009 and will apply prospectively, except for the presentation and disclosure requirements, which will apply retrospectively. The Company is not part of a consolidating group and currently is not affected by this pronouncement.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the Useful Life of Intangible Assets (“FSP FAS 142-3”). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”). The intent of FSP FAS 142-3 is to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not anticipate that the adoption of FSP FAS 142-3 will have an impact on its results of operations or financial condition.

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“FSP EITF 03-6-1”), which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the computation of earnings per share under the two-class method described in SFAS No. 128, Earnings per Share. FSP EITF 03-6-1 is effective retrospectively for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The adoption of FSP EITF 03-6-1 will not materially impact the Company’s financial condition and results of operations.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (“FSP 157-3”), to clarify the application of the provisions of SFAS 157 in an inactive market and how an entity would determine fair value in an inactive market. FSP 157-3 was effective upon issuance and applies to the Company’s current financial statements. The application of the provisions of FSP 157-3 did not materially affect the Company’s results of operations or financial condition for the period ended March 31, 2009.

In June 2008, the FASB issued EITF No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock, effective for financial statements issued for fiscal periods and interim periods beginning after December 15, 2008. EITF No.07-5 provides guidance for determining whether an equity-linked financial instrument (or embedded feature) is indexed to an entity’s own stock. The adoption of EITF No. 07-5 did not have a material effect on the Company’s financial statements.

In December 2008, the FASB issued FSP SFAS 132(R)-1, Employers’ Disclosures about Postretirement Benefit Plan Assets. FSP SFAS 132(R)-1 requires an employer to provide certain disclosures about the assets held by its defined benefit pension or other postretirement plans. The required disclosures include the investment policies and strategies of the plans, the fair value of the major categories of plan assets, the inputs and valuation techniques used to develop fair value measurements and a description of significant concentrations of risk in plan assets. FSP SFAS 132(R)-1 is effective for fiscal years ending after December 15, 2009. The Company does not expect the adoption of FSP SFAS 132(R)-1 to have a material impact on its Financial Statements.

In April 2009, the FASB issued FSP SFAS No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. Under FSP SFAS No. 157-4, transactions or quoted prices may not accurately reflect fair value if an entity determines that there has been a significant decrease in the volume and level of activity for the asset or the liability in relation to the normal market activity for the asset or liability (or similar assets or liabilities). In addition, if there is evidence that the transaction for the asset or liability is not orderly, the entity shall place little, if any weight on that transaction price as an indicator of fair value. FSP SFAS No. 157-4 is effective for periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009 subject to the early adoption of FSP SFAS No. 115-2 and SFAS No. 124-2. The Company did not elect to early adopt FSP SFAS No. 157-4; however, it does not expect the adoption to have a material impact on its Financial Statements.

In April 2009, the FASB issued FSP SFAS No. 115-2 and SFAS No. 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP SFAS No. 115-2”). FSP SFAS No. 115-2 provides new guidance on the recognition and presentation of other-than-temporary impairments (“OTTI”) for fixed maturity securities that are classified as available-for-sale and held-to-maturity if management does not intend to sell the impaired security and it is more likely than not it will not be required to sell the impaired security before the recovery of its amortized cost basis. The Company does not have investments in fixed maturity securities and, accordingly, expects no impact from adoption of this pronouncement.

F-8

In April 2009, the FASB issued FSP SFAS No. 107-1 and Accounting Principles Board (“APB”) No. 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP SFAS No. 107-1”). FSP SFAS No. 107-1 amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments to require fair value of financial instrument disclosure in interim financial statements and amends APB No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements. The provisions of FSP SFAS No. 107-1 are effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company did not elect to early adopt FSP SFAS No. 107-1; however, it does not expect the adoption to have a material impact on its Financial Statements.

6. Equipment

Equipment consists of:

	March 31, 2009		December 31, 2008
Equipment	$	-	$	5,200

Less accumulated depreciation		-		173

Property and equipment, net	$	-	$	5,027

Equipment sold in the quarter ended June 30, 2008 resulted in a loss of $2,757. Depreciation of equipment was $0, $520 and $693 for the three months ended March 31, 2009, 2008 and for the period December 9, 2005 (date of inception) through March 31, 2009, respectively.

7. Related Party Transactions

The Company entered into an agreement with a company, Hyfuels, Inc., which secures intellectual property licensing for North, South, Central America and all Caribbean Islands ("the Territories"),. Dr. Ruggero Santilli, Chief Executive Officer, Chairman of the Board and Chief Scientist of MagneGas Corporation, is also the Chief Executive Officer, Chief Scientist and President of Hyfuels, Inc so as to expedite the patent work on behalf of both MagneGas Corporation and Hyfuels, Inc. It should be noted that Dr. Santilli is not and never has been a stockholder of Hyfuels, Inc. and is lending his knowledge and expertise for the mutually beneficial advancement of this technology. This intellectual property consists of all relevant patents, patent applications, trademarks and domain names. The agreement became effective February 2008, when the Company issued 100,000 shares of common stock valued at $1.00 per share. The term of the license agreement is in perpetuity for the above territories with the exception of (i) bankruptcy or insolvency of the Company (ii) the filing of the Company of a petition for bankruptcy (iii) the making by the Company of the assignment of the license for the benefit of creditors (iv) the appointment of a receiver of the Company or any of its assets which appointment shall not be vacated within 60 days thereafter (v) the filing of any other petition for the relief from creditors based upon the alleged bankruptcy or insolvency of the Company which shall not be dismissed within 60 days thereafter. Additionally, the agreement triggered a 5 year consulting agreement with Dr. Santilli, whose knowledge and expertise of the technology is essential in the development of the MagneGas product. The terms of the consulting agreement consist of issuance of common stock (100,000 shares) and payment of $5,000 per month to Dr. Santilli, upon the determination by the Board of Directors of MagneGas Corporation of achieving adequate funding. On December 29, 2008 the company exercised their purchase option to acquire the intellectual property which includes all possible inventions, discoveries and intellectual right of the MagneGas Technology, for 30,000,000 common shares with a market value of $627,000 at the time of the purchase option.

In 2007 an advance in the amount of $10,000 was made by a company owned by a shareholder, for initial deposit for services. There are no repayment terms to this advance and the amount is payable upon demand.

In January 2008, the Company received $30,000 from a shareholder in exchange for an unsecured promissory note to a shareholder. During 2008 additional funds were contributed for the purposes of operating capital, under the same terms of the original shareholder note. The total of these notes were $191,100 plus accrued interest. These promissory notes have no repayment date; however it is payable within 30 days of written demand. Payment is to include accrued simple interest at 4%.

Beginning April 2008 the Company entered into a month-to-month lease, at a monthly rate of $2,500 per month for facilities to occupy approximately 3,000 square feet of a 6,000 square foot building and the use of certain equipment and utilities, as needed. The facility allows for expansion needs. The lease is held by a Company that is effectively controlled by Dr. Santilli.

F-9

The use of an initial small production refinery has been contributed by Dr. Ruggero Santilli, Chief Executive Officer, Chief Scientist, and Chairman of the Board. The computed fair value of this month to month rental agreement is $1,870 per month and has been charged to equipment rental expense in the operating expenses. To reflect the contributed value, the corresponding entry has been charged to additional paid in capital, and is included in the statement of stockholders’ equity. Total contributed value was $5,610 for the three months ended March 31, 2009 and $16,830 for the period December 9, 2005 (date of inception) through March 31, 2009.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

8. Income Tax

The Company has not recognized an income tax benefit for its operating start-up losses generated since inception based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. As of December 31, 2008, the Company incurred start-up losses of approximately $90,600. These losses are capitalized as start-up costs for tax purposes, to be amortized when the Company commences business operations.

9. Equity

The company has two classifications of stock:

Preferred Stock includes 10,000,000 shares authorized at a par value of $0.001. Preferred Stock has been issued as Series A Preferred Stock. Preferred Stock has liquidation and dividend rights over Common Stock, which is not in excess of its par value. The preferred stock has no conversion rights or mandatory redemption features. Each share of Preferred Stock is entitled to 100,000 votes.

Common Stock includes 900,000,000 shares authorized at a par value of $0.001. The holders of Common Stock and the equivalent Preferred Stock, voting together, shall appoint the members of the Board of the Directors. Each share of Common Stock is entitled to one vote.

Founding contributors were issued 67,052,000 shares during 2007. As management determined that the Company had negligible value, no value was attributed to the founders’ shares.

During the three-month period ended March 31, 2009, the company issued 1,519,000 common shares to various consultants. The Company also issued 100,000 common shares under a consulting agreement, as discussed in footnote 10. During the three month period ending March 31, 2009, the Company sold 200,000 common shares at the prevailing market quotation ($.05) per share for cash.

10. Subsequent Events

The Company is currently in negotiations with companies to expanded territories in the development of the MagneGas technologies. As of March 31, 2008, there are agreements in principle, with completion upon transfer of title.

Jeruz Magnegas Pvt. Limited:

On March 26, 2009 the Company entered into contract with HyFuels, Inc to permanently transfer to Magnegas Corporation in its totality and irrevocably the entirety of the assets owned by HyFuels, Inc in Jeruz Magnegas Pvt. Limited. Jeruz Magnegas Pvt. Limited is an India based corporation (located at 8/A, Ground Floor"KARP House", Lal Darwaja, Surat: 395 008, India) that owns all Intellectual Property rights (patents, patent applications, trademark, domain names and technical know-how) for the Magnegas Technology for India, Pakistan, Bangladesh and Sri Lanka only. The assets transferred from HyFuels, Inc to Magnegas Corporation are as follows:

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.

The consideration to be paid for the Purchased Assets the Purchaser, MagneGas, is 1,000,000 (one million) restricted shares of common stock. The acquisition will be valued at the closing value of the common shares issued at the time of the agreement ($100,000). The company is currently renegotiating the royalty terms currently in place with Jeruz Magnegas Pvt. Limited and as a result the transaction has not been completed. It is anticipated that the fulfillment of the terms of this agreement will be completed within a reasonable time, at which time the Company will recognize an investment in the venture.

F-10

Magnegas Israel LLC

In May 2009, subsequent to the period, Magnegas Israel LLC issued Magnegas Corp a minority share interest of 20% of their issued and outstanding stock. We have no common directors or officers in this company and are unrelated. Magnegas Israel LLC owns the intellectual property rights for Magnegas for Israel. Magnegas Israel LLC has no assets or cash at this time.

We currently have no written agreement with this company and it is intended that MagneGas, in exchange for the 20% interest, will advise the Israel Company and additionally provide manufacturing support.

11. Contingencies

From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

F-11

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operation or Plan of Operation.

Cautionary Notice Regarding Forward Looking Statements

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-KSB/A and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Plan of Operations

During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations:

Overall Plan

Our overall plan of operation for the next twelve months is to install three Plasma Arc Flow Industrial demonstration centers strategically located throughout the United States. One will be installed in a municipal sewage treatment facility to process sludge, one will be built and used as a refinery for the metal cutting fuel market and one will be developed for the automotive market. These refineries will be used to promote our core business strategy. During the next twelve months, we intend to pursue private equity funding of $10 million in various phases using a combination of equity financing through our shares of common stock and grant funding through the various federal and state grant programs available for new energy technologies. We will pursue the acquisition of a metal cutting and welding fuel, distribution company to accelerate our market penetration. In addition, we will conduct research and development for the catalytic liquefaction of Magnegas, the industrial membrane separation of hydrogen, the use of Magnegas as an additive to clean coal exhaust and the installation of a pilot refinery utilizing the synergies of wind power to produce fuel with our technology. We will also pursue all needed federal, state and local regulatory permits necessary to implement our operational plan.

Second Quarter 2009

We will continue our efforts in selling MagneGas in the metal cutting market. We will use established relationships with existing metal cutting fuel wholesalers to distribute MagneGas for this market. We will fulfill fuel orders from our Atlanta and Tampa distributor and will pursue agreements with additional metal cutting fuel distributors throughout the United States. We will aggressively pursue equity financing to obtain sufficient capital to allow us to purchase a fuel distributor in our market, construct refineries and conduct research and development. We intend to actively recruit new board members, corporate and manufacturing staff with appropriate experience.

-1-

Third Quarter 2009

We will begin construction of two PlasmaArcFlow demonstration centers, one to process sludge or sewage at a local municipality and one for the metal cutting and welding fuel market. We will continue to aggressively pursue MagneGas sales for the metal cutting market through wholesalers, trade events and from our marketing and sales consultants. We intend to continue to actively recruit new board members with appropriate experience and hire a corporate and operational staff. We expect to complete our capital raise and to identify potential acquisitions in our market. We will conduct additional research and development as outlined above.

Fourth Quarter 2009

We will install our Plasma Arc Flow demonstration center at a local Florida sewage treatment facility to process human sludge. We anticipate that we can complete construction of our metal cutting fuel refinery and will begin construction of a third refinery with a location to be determined. We will aggressively pursue MagneGas sales for the metal cutting market through a marketing plan that fully leverages our demonstration centers and we will hire additional operational staff and manufacturing staff in anticipation of new sales and will expand our current facility to accommodate our space needs. We will continue our research and development efforts.

First Quarter 2010

By the first quarter of 2010, we anticipate being fully operational with three refineries located in various regions of the United States. We will continue sales of MagneGas in the metal cutting market. We will aggressively pursue our marketing and sales plan to fully leverage our demonstration centers. We expect to obtain several service contracts during this quarter as potential customers view first hand the operation of our equipment at an industrial level. We will continue to hire operational staff and manufacturing staff in anticipation of new sales.

The foregoing represents our best estimate of our current planning, and is based on a reasonable assessment of funds we expect to become available. However, our plans may vary significantly depending upon the amount of funds raised and status of our business plan. In the event we are not successful in reaching our initial revenue targets, additional funds will be required and we would then not be able to proceed with our business plan as anticipated. Should this occur, we would likely seek additional financing to support the continued operation of our business. The current economic climate has negatively impacted our ability to raise funds, sell gas and attract customers and this has impacted our ability to complete our operational plan as planned

The Company has financed its operations primarily through cash generated by the sale of stock through a private offering. We believe we can not currently satisfy our cash requirements for the next twelve months with our current cash and expected revenues from our private placement and sales. However, management plans to increase revenue and obtain additional financing in order to sustain operations for at least the next twelve months. We have already sold shares to support our continued operations. However, completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. In the absence of our projected revenues, we may be unable to proceed with our plan of operations. Even without significant revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we will require financing to potentially achieve our goal of profit, revenue and growth.

In the event we are not successful in reaching our initial revenue targets, additional funds will be required, and we would then not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we would likely seek additional financing to support the continued operation of our business. We anticipate that depending on market conditions and our plan of operations, we would incur operating losses in the foreseeable future. We base this expectation, in part, on the fact that we may not be able to generate enough gross profit from our services to cover our operating expenses. Consequently, there is substantial doubt about the Company’s ability to continue to operate as a going concern.

As reflected in the unaudited financial statements, we are in the development stage, and have an accumulated deficit from inception of $1,560,269 and have a negative cash flow from operations of $417,628 from inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At March 31, 2009 the Company had $17,403 of capital resources to meet current obligations. The Company may rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses until operations generate cash flows sufficient to support the on-going business.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern. We anticipate that we will require approximately $10,000,000 to fund our plan of operations.

-2-

In effort to achieve revenue plans we have been concentrating on selling MagneGas as a metal cutting fuel. We have two metal cutting gas distributors for the Magnegas produced from non-hazardous waste. We have an additional non-binding letter of intent to process liquid waste. This letter is from the city of Dunedin in Florida to conduct a 6 month plant scale test converting human sludge to Magnegas..

To fund the gas sales,and overall operations, the Company has raised $229,500 in cash proceeds via sales of common stock to date and raised an additional $105,000 in cash proceeds from a shareholder loans during 2009. In order to fund the plant scale test at the city of Dunedin, a minimum of an additional $500,000 is required Additionally, to deliver on these orders we have the commitment of six persons dedicated to the fulfillment of orders and it is headed by a well known industry consultant, whom we have named as president to help develop operating guidelines as well as being instrumental in the marketing and development of our brand offering

To expand understanding of our efforts and progress in generating revenue:

Metal Cutting Magnegas: Sales commenced on March 6, 2008. Marketing efforts are being concentrated on industry wholesalers to utilize their established customer base and distribution channels. Our current operations in new facilities (previously disclosed month to month agreement) have been set up for expansion. We estimate current facilities have capacity for 400-500 bottles to be processed per week. Our new facilities allow us the flexibility to ramp up for greater volume, as market interest is anticipated to increase. In 2008, the company entered into a material definitive agreement with a regional supplier of metal cutting and welding market. The agreement defined terms, location and minimum purchase amounts, which should yield a minimum of $36,000 in the first year. In March of 2009, the company began distributing Magnegas for metal cutting through a Tampa based gas distributor who has ordered Magnegas to stock their four locations

Letter of Intent: A non-binding letter of intent was agreed, in principal with a local municipality's water treatment facility. Our existing prototype equipment is being modified for the specifics required for this project. The initial fuel generated from this project will be sold in the metal cutting market. At this time we are unable to accurately estimate the volume that will be processed. Upon completion of the 6 month test the contract will be evaluated and subject to renegotiation. No date has been determined when this project is to commence and funding will be required to implement this project as per our plan of operations.

Selected Historical Data

	March 31,			December 31,
	2009			2008
Total Assets	$	733,369		$	728,307
Total Liabilities		271,821			224,717
Total Stockholders' Equity		461,548			503,590
Net Working Capital		(247,224	)		(217,299	)

	As of March 31,
	2009			2008
Revenues		1,466			782
Operating Expenses		146,959			223,172
Net Loss		(160,372	)		(223,585	)

Results of Operations

For the three months ended March 31, 2009, 2008 and for the period December 9, 2005 (date of inception) through March 31, 2009.

Revenues

For the three months ended March 31, 2009, 2008 and for period December 9, 2005 (date of inception) through March 31, 2009 we generated revenues of $1,466, $782 and $13,691, respectively from our metal cutting fuel sales operations. The increase was due to greater consistency of orders.

Operating Expenses

Operating costs were incurred in the amount of $146,959 and $223,172 for the three months ended March 31, 2009 and 2008. The decrease was attributable to the issuance of common stock for services valued in the amount of $145,000 and professional fees increasing due to public filing requirements. The major expenses incurred have been for professional and non-cash stock based compensation and account for the variances in costs from comparative prior year costs.

-3-

Net Loss

Net losses incurred in all periods presented have been primarily due to the operating costs. These expenses resulted in the net losses in the amount of $160,372 and $223,585 for the three months end March 31, 2009 and 2008 respectively. The Company incurred net losses of $1,560,269 for the period December 9, 2005 (date of inception) through March 31, 2009, respectively. The increase in the year over year net loss was due primarily from general and administrative expenses, particularly professional services and stock-based compensation. At this time, normal costs of public filing will continue and it is not known when significant revenues will occur to off-set these expenses.

Liquidity and Capital Resources

The Company is currently financing its operations primarily through cash generated by the sale of stock through a private offering. We believe we can not currently satisfy our cash requirements for the next twelve months with our current cash and expected revenues from our private placement and sales. However, management plans to increase revenue and obtain additional financing in order to sustain operations for at least the next twelve months. We have already sold shares to support our continued operations. However, completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. In the absence of our projected revenues, we may be unable to proceed with our plan of operations. Even without significant revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we may require financing to potentially achieve our goal of profit, revenue and growth.

In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we would then not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we would likely seek additional financing to support the continued operation of our business. We anticipate that depending on market conditions and our plan of operations, we would incur operating losses in the foreseeable future. We base this expectation, in part, on the fact that we may not be able to generate enough gross profit from our services to cover our operating expenses. Consequently, there is substantial doubt about the Company’s ability to continue to operate as a going concern.

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern

Subsequent Events

We currently have no written agreement with this company and it is intended that MagneGas will advise the Israel company from time to time, in exchange for the 20% interest and additionally provide manufacturing support.

Recent Accounting Pronouncements

The Financial Accounting Standards Board and other standard-setting bodies issued new or modifications to, or interpretations of, existing accounting standards during the year. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term.

Critical Accounting Policies

The Company’s significant accounting policies are presented in the Company’s notes to financial statements for the period ended March 31, 2009 and fiscal year ended December 30, 2008, which are contained in the Company’s 2008 Annual Report on Form 10-K. The significant accounting policies that are most critical and aid in fully understanding and evaluating the reported financial results include the following:

-4-

In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets," long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4T.

Controls and Procedures.

Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of March 31, 2009. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as of the end of such periods are not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure

The company has limited resources and as a result, a material weakness in financial reporting currently exists. Those weaknesses include:

Lack of Effective Corporate Governance Policies and Procedures. We do not have effective policies regarding the independence of or directors and do not have independent directors. The lack of independent directors means that there is no effective review, authorization, or oversight of management or management’s actions by persons that were not involved in approving or executing those actions. We have no conflicts of interest policies and there is no provision for the review and approval of transactions between the Company and interested members of management.

Lack of Effective Policies Regarding the General Accounting System. We do not have any documented processes for the input, accumulation, or testing of financial data that would provide assurance that all transactions are accurately and timely recorded or that the financial reports will be prepared on a periodic basis.

Management has determined that the Company does not have the financial resources or personnel to address any of the material weaknesses identified or to conduct a more robust evaluation of its controls. As resources become available, management will develop and implement remedial actions to address the material weaknesses it has identified.

-5-

A material weakness is a deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB auditing standard 5) or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that a material weakness exists due to a lack of segregation of duties, resulting from the Company's limited resources.

The Company’s management, including the President (Principal Executive Officer), Director, and Chief Financial Officer (Principal Accounting and Financial Officer), confirm that there was no change in the Company’s internal control over financial reporting during the quarter ended March 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

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

No matter was submitted during the quarter ending March 31, 2009, covered by this report to a vote of our shareholders, through the solicitation of proxies or otherwise.

Item 5. Other Information.

None

Item 6. Exhibits and Reports of Form 8-K.

(a)	During the quarter ending March 31, 2009, the Company did not file any Form 8Ks.

(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.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

		MagneGas Corporation

		By:	/s/ Dr. Ruggero Maria Santilli
			Dr. Ruggero Maria Santilli
			Chief Executive Officer

Dated:	May 14, 2009

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