Edgar Filing: MAGNEGAS CORP

Supplemental disclosure of cash flow information and non cash

investing and financing activities:

As a result of the transfer of ownership, effective April 2, 2007, the company issued 67,052,000 shares of common stock and 2,000 shares of preferred stock 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 by the par value of the stock.

f10qa10607_magnegas.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

Amendment No. 1

FORM 10-QSB

______________

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

For the quarterly period ended June 30, 2007

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 Highway 19 North, #311 Palm Harbor, Florida	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)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes o No 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 August 17, 2007: 67,427,000 shares of common stock.

Transitional Small Business Disclosure Format (check one): Yes o No x

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Item 1. Unaudited financial statements
Item 2. Management’s Discussion and Analysis or Plan of Operation
Item 3. 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 and Reports of Form 8-K.

SIGNATURES

Form 10-QSB/A

Amendment No.1

Explanatory Note

The purpose of this amendment No.1 on Form 10-QSB (this “Amendment”) of MagneGas Corporation is to amend the Quarterly Report on Form 10-QSB (the “Original Report”) for the period ended June 30, 2007, which was originally filed with the Securities and Exchange Commission on August 20, 2007. We are filing this amendment to restate the treatment of the initial recording of the acquisition transaction. Additionally we also clarify the terms of a license agreement and the issuance of stock to founders as disclosed in footnote 7 and 8 to the financial statements, as well as the voting rights of the preferred and common shareholders as disclosed in footnote 7 to the financial statements. Certain significant accounting polices were updated in footnote 4 to the financial statements. Except for the change to the financial statements, and the amended language in footnotes 4, 7 and 8 referred above, no other information in the Original Report is amended by this Amendment.

This Amendment sets forth the Original Report in its entirety. Accordingly, other than the items indicated above, this Amendment does not reflect events occurring after the filing of the Original Report or modify or update those disclosures. Information not affected by the restatement is unchanged and reflects the disclosure made at the time of the original filing of the Form 10-QSB with the Securities and Exchange Commission. Accordingly, this Amendment should be read in conjunction with the Company's filings made with the Securities and Exchange Commission subsequent to the filing of the Original Report. The following items have been amended as a result of the restatement:

·	Part I, Item 1: Unaudited Financial Statements

·	Part I, Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations;

·	Part II, Item 6: Exhibits and Reports of Form 8-K

Pursuant to Exchange Act Rule 12b-15, the Company is also including currently dated Sarbanes Oxley Act Section 302 and Section 906 certifications of the principal executive and financial officers, which certifications are attached to this Amendment No. 1. This Amendment No. 1 speaks as of the original date of the filing date of this Report, except for certifications, which speak as of their respective dates and the filing date of this Amendment No.1. Concurrently with the filing of this Amendment No.1, we are filing an Amendment No. 1 on Form 10-QSB/A to our Quarterly Report on Form 10-QSB for the quarters ended March 31, 2007 and September 30, 2007.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Financial Statements

MagneGas Corporation

(A Development Stage Enterprise)

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

MagneGas Corporation

(A Development Stage Enterprise)

Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

Contents

Financial Statements:

Balance Sheet (unaudited)	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 Unaudited Financial Statements (unaudited)	F-12 through F-17

MagneGas Corporation
(A Development Stage Enterprise)
BALANCE SHEET

As of June 30, 2007 (unaudited)


ASSETS

Cash	$	24,063

TOTAL ASSETS	$	24,063

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accrued Expenses	$	6,000

TOTAL LIABILITIES	$	6,000


STOCKHOLDERS' EQUITY

Preferred Stock - Par value $0.001;
Authorized: 10,000,000
2,000 issued and outstanding	$	2
Common Stock - Par value $0.001;
Authorized: 100,000,000
Issued and Outstanding: 67,427,000		67,325
Additional Paid-In Capital		210,171
Accumulated Deficit during development stage		(259,537	)

Total Stockholders' Equity	$	18,063

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	24,063

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

F-1

MagneGas Corporation.

(A Development Stage Enterprise)

STATEMENT OF OPERATIONS

For the three and six months ended June 30, 2007 and 2006

And for the period December 9, 2005 (date of inception) to June 30, 2007

(unaudited)



	3 Months						6 Months						Inception
	6/30/2007 RESTATED			6/30/2006			6/30/2007 RESTATED			6/30/2006			through 6/30/2007 RESTATED


REVENUE	$	-		$	-		$	-		$	-		$	-

COST OF SERVICES		-			-			-			-			-

GROSS PROFIT OR (LOSS)		-			-			-			-			-

GENERAL AND ADMINSITRATIVE
EXPENSES		256,937			250			257,687			550			259,537

NET LOSS	$	(256,937	)	$	(250	)	$	(257,687	)	$	(550	)	$	(259,537	)


Loss per share, basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.01	)	$	(0.01	)	$	(0.04	)

Basic and diluted weighted average number
of common shares		37,976,501			100,000			19,038,249			100,000			6,101,558

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

F-2

MagneGas Corporation
(A Development Stage Enterprise)
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For the period December 9, 2005 (date of inception) to June 30, 2007
RESTATED

												Accumulated
									Additional			Deficit During
	Preferred				Common				Paid in			Development			Total
	Shares		Amount		Shares		Amount		Capital			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 (unaudited)										2,500						2,500

Issuance of preferred stock to founders, valued at par, April 2, 2007 (unaudited)		2,000		2						(2	)					-

Issuance of common stock to founders, valued at par, May 12, 2007 (unaudited)						67,052,000		67,052		(67,052	)					-

Issuance of stock for services, valued at $1 per share, May 12, 2007 (unaudited)						245,000		245		244,755						245,000

Stock issued for cash:
June 12, 2007; $1 per share						30,000		30		29,970						30,000
Net loss, through June 30, 2007 (unaudited)													(257,687	)		(257,687	)

Balance at June 30, 2007 (unaudited)		2,000	$	2		67,427,000	$	67,427	$	210,171		$	(259,537	)	$	18,063

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

F-3

MagneGas Corporation

(A Development Stage Enterprise)

STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2007 and 2006,

And for the period December 9, 2005 (date of inception) to June 30, 2007

(unaudited)


	6 months						Inception to
	06/30/2007 RESTATED			06/30/2006			06/30/2007 RESTATED
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(257,687	)	$	(550	)	$	(259,537	)

Adjustments to reconcile net loss to cash used in operating activities
Stock compensation		245,000			-			245,100

Changes in operating assets:
Increase in Accrued Expenses		4,250			550			6,000
Total adjustments to net loss		249,250			550			251,100
Net cash provided by (used in) operating activities		(8,437	)		-			(8,437	)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of reporting entity		-			-			-

Net cash flows (used in) investing activities		-			-			-

CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions; liability payment at acquisition		2,500						2,500
Proceeds from issuance of common stock		30,000						30,000
Net cash flows provided by investing activities		32,500			-			32,500


Net increase in cash		24,063			-			24,063

Cash - beginning balance		-			-			-

CASH BALANCE - END OF PERIOD	$	24,063			-		$	24,063

Supplemental disclosure of cash flow information and non cash

investing and financing activities:

As a result of the transfer of ownership, effective April 2, 2007, the company issued 67,052,000 shares of common stock and 2,000 shares of preferred stock 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 by the par value of the stock.

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

F-4

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

RESTATEMENT OF HISTORICAL FINANCIAL STATEMENTS

The restated financial statements reflect the effects on the financial statement, resulting from the change in accounting treatment of the acquisition transaction (see Note 1). The transaction was originally recorded using "push-down" method of accounting. Management believes that the acquisition more properly reflects the event as a private equity transaction. Effectively, the restated financial statements reflect decreases in goodwill and stockholders' equity, in the amount of $30,000 from the original report.

F-5

MagneGas Corporation
(A Development Stage Enterprise)
BALANCE SHEET
As of June 30, 2007
(unaudited)

	As Reported			Adjustments			Restated
ASSETS
Current Assets:
Cash	$	24,063		$	-		$	24,063
Total Current Assets		24,063			-			24,063

Goodwill		30,000			(30,000	)		-

TOTAL ASSETS	$	54,063		$	(30,000	)	$	24,063

LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accrued Expenses	$	6,000		$	-		$	6,000

TOTAL LIABILITIES		6,000			-			6,000

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: 67,427,000		67,325			102			67,427
Additional Paid-In Capital		237,673			(27,502	)		210,171
Accumulated Deficit during development stage		(256,937	)		(2,600	)		(259,537	)

TOTAL STOCKHOLDERS' EQUITY		48,063			(30,000	)		18,063

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	54,063		$	(30,000	)	$	24,063

F-6

MagneGas Corporation
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(unaudited)

	For the Three Months Ended June 30, 2007
	As Reported			Adjustments		Restated

Revenue	$	-		$	-	$	-

Cost of Services		-			-		-

Gross Profit or (Loss)		-			-		-

General and Administrative Expesens		256,937					256,937

Net Loss	$	(256,937	)	$	-	$	(256,937	)


Loss per share, basic and diluted	$	(0.01	)			$	(0.01	)

Basic and diluted weighted average number
of common shares		37,976,501					37,976,501

F-7

MagneGas Corporation
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(unaudited)

	For the Six Months Ended June 30, 2007
	As Reported			Adjustments		Restated

Revenue	$	-		$	-	$	-

Cost of Services		-			-		-

Gross Profit or (Loss)		-			-		-

General and Administrative Expesens		257,687					257,687

Net Loss	$	(257,687	)	$	-	$	(257,687	)


Loss per share, basic and diluted	$	(0.01	)			$	(0.01	)

Basic and diluted weighted average number
number of common shares		19,038,249					19,038,249

F-8

MagneGas Corporation
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(unaudited)

	December 9, 2005 (date of inception)
	through June 30, 2007
	As Reported			Adjustments		Restated

Revenue	$	-		$	-	$	-

Cost of Services		-			-		-

Gross Profit or (Loss)		-			-		-

General and Administrative Expesens		259,537					259,537

Net Loss	$	(259,537	)	$	-	$	(259,537	)


Loss per share, basic and diluted	$	(0.04	)			$	(0.04	)

Basic and diluted weighted average number
number of common shares		6,101,558					6,101,558

F-9

MagneGas Corporation
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(unaudited)

	For the Six Months Ended June 30, 2007
	As Reported			Adjustments		Restated

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(257,687	)	$	-	$	(257,687	)

Adjustments to reconcile net loss to cash used in operating activities
Stock compensation		245,000					245,000

Changes in operating assets:
Increase in Accrued Expenses		4,250					4,250
Total adjustments to net loss		249,250			-		249,250
Net cash (used in) operating activities		(8,437	)		-		(8,437	)

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash flows (used in) investing activities		-			-		-


CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions; liability payment at acquisition		2,500					2,500
Proceeds from capital contributions		30,000					30,000
Net cash flows provided by investing activities		32,500			-		32,500

Net increase in cash		24,063			-		24,063

Cash - beginning balance		-					-

CASH BALANCE - END OF PERIOD	$	24,063		$	-	$	24,063

Supplemental disclosure of cash flow information and non cash

investing and financing activities:

F-10

MagneGas Corporation
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(unaudited)

	December 9, 2005 (date of inception)
	through June 30, 2007
	As Reported			Adjustments		Restated

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	(259,537	)	$	-	$	(259,537	)

Adjustments to reconcile net loss to cash used in operating activities
Stock compensation		245,100					245,100

Changes in operating assets:
Increase in Accrued Expenses		6,000					6,000
Total adjustments to net loss		251,100			-		251,100
Net cash (used in) operating activities		(8,437	)		-		(8,437	)

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash flows (used in) investing activities		-			-		-


CASH FLOWS FROM FINANCING ACTIVITIES
Capital contributions; liability payment at acquisition		2,500					2,500
Proceeds from capital contributions		30,000					30,000
Net cash flows provided by investing activities		32,500			-		32,500

Net increase in cash		24,063			-		24,063

Cash - beginning balance		-					-

CASH BALANCE - END OF PERIOD	$	24,063		$	-	$	24,063

F-11

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Unaudited Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

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 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 biogas source. The technology related to this process has been licensed in perpetuity from a Company related by common management (see note 8).

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 in the 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 $256,937, $257,687 and $259,537 for the three and six months ended June 30, 2007 and for the period December 9, 2005 (date of inception) through the period ended June 30, 2007, respectively. As of June 30, 2007, the Company had approximately $24,000 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 key employees to build and manufacture such proprietary machines to provide services. There may be other risks and circumstances that management may be unable to predict.

F-12

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Unaudited Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

3. Going Concern (continued)

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 and six month periods ended June 30, 2007, 2006 and the period December 9, 2005 (date of inception) through June 30, 2007; (b) the financial position at June 30, 2007, and (c) cash flows for the six month periods ended June 30, 2007 and 2006 and the period December 9, 2005 (date of inception) through June 30, 2007, 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 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, 2006 and 2005 and notes thereto in the Company’s annual report on Form 10KSB for the year ended December 31, 2006, filed with the Securities and Exchange Commission on March 19, 2007. Operating results for the three and six months ended June 30, 2007 and 2006 and for the period December 9, 2005 (date of inception) to June 30, 2007 is not necessarily indicative of the results that may be expected for the entire year.

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 three months or less to be cash equivalents.

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

F-13

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Unaudited Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

4. Summary of Significant Accounting Policies (continued)

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. For the three and six month periods ended June 30, 2007, 2006 and for the period December 9, 2005 (date of inception) through June 30, 2007, the Company recognized $245,000, $0, and $245,100 in consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. All stock issued during 2007 to consultants was for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions as of June 30, 2007.

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-14

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Unaudited Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

5. Recently Issued Accounting Pronouncements

In March 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 156, “Accounting for Servicing of Financial Assets - an amendment of FASB No. 140” (SFAS 156”). SFAS 156 requires an entity to recognize a servicing asset or liability each time it undertakes an obligation to service a financial asset by entering into a servicing contract in specified situations, such servicing assets or liabilities would be initially measured at fair value, if practicable and subsequently measured at amortized value or fair value based upon an election of the reporting entity. SFAS 156 also specifies certain financial statement presentation and disclosures in connection with servicing assets and liabilities. SFAS 156 is effective for fiscal years beginning after September 15, 2006 and may be adopted earlier but only if the adoption is in the first quarter of the fiscal year. The Company does not expect the adoption of SFAS No. 156 to have a material impact on its financial condition or results of its operations.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements.” SFAS No. 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair hierarchy. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of SFAS No. 157 to have a material impact on its financial condition or results of its operations.

In February 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of SFAS No. 159 to have a material impact on its financial condition or results of its operations.

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Current Year Misstatements.” SAB No. 108 requires analysis of misstatements using both an income statement (rollover) approach and a balance sheet (iron curtain) approach in assessing materiality and provides a one-time cumulative effect transition adjustment. SAB No. 108 is effective for our 2006 annual financial statements. The adoption of SAB No. 108 has not had a material impact on the financial statements.

In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, which is an interpretation of SFAS No. 109, Accounting for Income Taxes. FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. In addition, FIN 48 clearly scopes out income taxes from Financial Accounting Standards Board Statement No. 5, Accounting for Contingencies. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 on January 1, 2007. There was no material impact on the overall results of operations, cash flows, or financial position from the adoption of FIN 48.

F-15

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Unaudited Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

6. Income Tax

The Company has not recognized an income tax benefit for its operating 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.

7. Equity

The company has two classifications of stock:

Preferred Stock includes 10,000,000 shares authorized at a par value of $0.001, of which 2,000 are issued or outstanding at June 30, 2007. 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 100,000,000 shares authorized at a par value of $0.001, of which 67,427,000 are issued and outstanding at June 30, 2007. 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 and six month periods ended June 30, 2007, the company issued 245,000 common shares to various consultants. The Company valued the shares at one dollar per share based on other third-party cash sales of the Company's common stock.

On June 12, 2007 the Company issued 30,000 shares of common stock at one dollar per share, via a private placement offering, for a total of $30,000.

F-16

MagneGas Corporation

(A Development Stage Enterprise)

Notes to Unaudited Financial Statements

As of June 30, 2007

and for the Three and Six Months Ended June 30, 2007 and 2006 and

for the period December 9, 2005 (date of inception) through June 30, 2007

8. Related Party Transactions

The Company has had limited need for use of office space or equipment. Any use of office space or equipment supplied by related parties has, thus far, been immaterial. There has been no charge or cost accrual for any usage by the Company as of June 30, 2007.

In April 2007 the Company reached a tentative agreement with a company, Hyfuels, Inc., which will secure intellectual property licensing for North, South, Central America and all Caribbean Islands ("the Territories"), effective upon funding. Dr. Ruggero Santilli, is the Chief Executive Officer, Chairman of the Board and Chief Scientist of MagneGas Corporation, and 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 will become effective upon the Company's issuance of 100,000 shares of common stock, which is expected to occur in 2008. 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 will trigger a 5 year consulting agreement with Dr. Santilli, who is an executive for both MagneGas and Hyfuels, Inc., terms to be defined, with the inventor and owner of the intellectual property. The terms of the consulting agreement will be determined within a reasonable period of time after the issuance of the above shares of stock. The company will have the right to exercise a purchase option to acquire the intellectual property, within 5 years of the funding, at a defined purchase price of $30,000,000, which was determined by mutual consent.

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.

9. Commitments and 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-17

Item 2. Management’s Discussion and Analysis 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 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 demonstration centers. One will be installed in a municipal sewage treatment facility to process sludge, one will be installed in a dairy or hog farm to process manure and one will be installed at a bio-diesel refinery to convert glycerin into biogas. These demonstration centers will be used to promote our core business and provide proof of principal for the feasibility of our technology. In addition, during the next twelve months, we will close our Private Placement Offering, file our SB2 report and pursue equity financing through a public offering.

Third Quarter 2007

We will complete construction of a Plasma Arc Flow demonstration center for the city of Dunedin Florida. We will also identify a dairy or hog farmer that will partner with us for a grant application to the state of Florida to convert animal waste to biogas and we will identify a bio-diesel refinery that will partner with us to convert glycerin to biogas. We will attend various industry conferences to promote our technology and design a marketing strategy that will be implemented jointly within the installation of our Dunedin project. We will complete our Private Placement Offering. We believe this strategy will be an important part of our early growth.

Fourth Quarter 2007

We will complete testing and installation of our Plasma Arc Flow demonstration center for the city of Dunedin Florida. We will also begin construction of our Plasma Arc Flow demonstration center to convert farm animal waste to biogas and our Plasma Arc Flow demonstration center to convert glycerin to biogas. We will launch our new marketing plan, which will fully leverage our new Dunedin Florida demonstration center. We intend to raise additional funds through debt or equity financing and government grants to support our efforts.

First Quarter 2008

We will begin operation of our Plasma Arc Flow demonstration center in Dunedin Florida. We will also complete construction and testing of our Plasma Arc Flow demonstration center for farm animal waste and glycerin. We will aggressively pursue our marketing and sales plan to fully leverage our Dunedin Florida demonstration center and will begin our funding through a public offering to finance ongoing projects and provide working capital. We expect to complete our first sales and service transactions during this quarter and will begin earning income from our Dunedin Florida project. We intend to actively recruit new board members with appropriate experience and hire a corporate staff including a new chief financial officer with public accounting experience. We will seek a broker-dealer partner.

Second Quarter 2008

We will install our Plasma Arc Flow demonstration centers to process farm animal waste and glycerin and will continue operation of our Dunedin facility. We will continue generating revenues from the city of Dunedin and anticipate additional revenue as a result of sales transactions and our new demonstration centers. We will continue to pursue additional equity financing through our public offering. We will aggressively pursue sales 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.

The foregoing represents our best estimate of our current planning, and is based on a reasonable assessment of funds we expect to 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 may 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.

Results of Operations

For the three and six months ended June 30, 2007 and 2006 and for the period December 9, 2005 (date of inception) through June30, 2007.

Revenues

For the three and six months ended June 30, 2007 and 2006 we generated no income from operations. The only operating source of funds was a raise of $30,000 from the sale of 30,000 shares of common stock.

General and Administrative Expenses

General and administrative costs were incurred, primarily for professional expenses, in the amount of $256,937, $257,687 and $259,537 for the three and six months ended June 30, 2007 and for the period December 9, 2005 (date of inception) through June 30, 2007, respectively. This compared unfavorably to $250 and $550 for the three and six months ended June 30, 2006, respectively. The change of $256,687 and $257,137 for the three and six month periods was due to an increase of professional expenses, primarily the recognition of stock compensation in the amount of $245,000 included in the current periods presented.

Net Loss

The general and administrative costs that were incurred resulted in the net loss in the amount of $256,937, $257,687 and $259,537 for the three and six months ended June 30, 2007 and for the period December 9, 2005 (date of inception) through June 30, 2007, respectively. This compared unfavorably to the net loss of $250 and $550 for the three and six months ended June 30, 2006, respectively. No revenue was recognized for the period to offset the costs incurred. Net loss was negatively impacted by the recognition of $245,000 of stock compensation for professional services. At this time, normal costs of public filing will continue and it is not known when the revenues, if any, will occur.

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 consulting 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 $259,537 and have a negative cash flow from operations of $8,437 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 June 30, 2007 the Company had approximately $24,000 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 commence.

In regards to the technology license, the company has no obligation to purchase the intellectual property patents. However, in the event such a purchase becomes advantageous MagneGas Corporation will solely negotiate the purchase via payment entirely in authorized common stock. The company has no need to purchase said intellectual property at this time. Liquidity has not been impacted in any way prior to the agreement and there is no liquidity impact upon the signing of the license agreement.

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

Recent Accounting Pronouncements

Critical Accounting Policies

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. 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. All stock issued during 2007 to consultants was for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions as of June 30, 2007.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. 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) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2007. 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 were 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 is a reporting shell with limited resources. As a result, a material weakness in financial reporting currently exists.

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 June 30, 2007 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 a party to any pending legal proceedings and no such actions by, or to the best of our knowledge, against us have been threatened.

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

In May 2007, we issued 67,052,000 shares to founding contributors. The founding shares were issued based on verbal agreement to persons or corporations who assisted in the development of the technology and the shares were valued at par value. These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act of 1933 and such shares are restricted pursuant to Rule 144 of the 1933 Securities Act.

In May 2007 we issued 245,000 shares of our common stock to the seven shareholders for services rendered. These shares were valued at $1.00 per shares for a total of $245,000. Such shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933 and such shares are restricted pursuant to Rule 144 of the 1933 Securities Act.

In June 2007, we received $30,000 for 30,000 common shares of stock to one shareholder, issued under a Regulation D Rule 506 offering.

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 June 30, 2007, 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)	Reports on Form 8-K and Form 8K-A -
	On April 5, 2007 we filed an 8k for Change in Control.
	On May 7, 2007 we filed an 8K for Change in Auditor, which was amended on May 9, 2007
	On June 25, 2007 we filed an 8k for the Election of Officers and Directors.

(b)	Exhibits

	Exhibit Number	Exhibit Title

	3.1	Certificate of Incorporation*

	3.3	By-Laws *

	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 906 of the Sarbanes-Oxley Act of 2002.

		*Incorporated by reference to our registration statement on Form 10-SB filed on April 3, 2006 (File no: 000-51883)

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 Chief Financial Officer

Dated: September 19, 2008