SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 ___________________
  FORM
10-KSB/A
 AMENDMENT
NO. 1
  (Mark
One)
 
 x
              ANNUAL
      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
 
 For The
Fiscal Year Ended December 31, 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.  001-51883
 
 MagneGas
      Corporation(Exact
      name of 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)
  Registrant’s
      telephone number, including area code: (727)
      934-9593Securities
      registered under Section 12(b) of the Exchange Act:
              None.Securities
      registered under Section 12(g) of the Exchange Act:
              Common
      stock, par value $0.001 per share.(Title
      of class)
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yesx  Noo
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  x
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yeso  Nox
 
 State
issuer’s revenues for its most recent fiscal year:  $0.
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of
December 31, 2007: N/A.
 
 Number of
the issuer’s Common Stock outstanding as of March 31, 2008:
67,884,500
 
 Documents
incorporated by reference: None.
 
 Transitional
Small Business Disclosure Format (Check One): Yeso  Nox
    
  TABLE
OF CONTENTS
  Item
      1
              Description
      of Business
              1Item
      2
              Description
      of Property
              1Item
      3
              Legal
      Proceedings
              1Item
      4
              Submission
      of Matters to a Vote of Security Holders
              1Item
      5
              Market
      for Common Equity and Related Stockholder Matters
              2Item
      6
              Management’s
      Discussion and Analysis or Plan of Operation
              2Item
      7
              Financial
      Statements
              FItem
      8
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              7Item
      8A
              Controls
      and Procedures
              7Item
      8B
              Other
      Information
              7Item
      9
              Directors
      and Executive Officers of the Registrant
              8Item
      10
              Executive
      Compensation
              9Item
      11
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              11Item
      12
              Certain
      Relationships and Related Transactions
              11Item
      13
              Exhibits
              12Item
      14
              Principal
      Accountant and Fees and Services
              12
  Form
10-KSB/A
 Amendment
No.1
 Explanatory
Note
 
 The
purpose of this amendment No.1 on Form 10-KSB/A (this “Amendment”) of MagneGas
Corporation is to amend the Annual Report on Form 10-KSB (the “Original Report”)
for the year ended December 31, 2007, which was originally filed with the
Securities and Exchange Commission on March 31, 2008.  We are filing
this amendment to clarify the terms of a license agreement as disclosed in
footnote 9 to the financial statements, as well as the voting rights of the
preferred and common shareholders as disclosed in footnote 8 to the financial
statements.  Except for this amended language in footnotes 8 and 9
referred above, no other information in the Original Report is amended by this
Amendment.
  
  PART
I
  Item
1. Description of
Business.
  Company
Overview
  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 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
required and minimal liabilities were assumed.  On May 12, 2007,
subsequent to the date of purchase, the company effected a recapitalization,
whereby 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.
  Business
Operations
 
 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.   We have licensed the technology for this process from a
Company effectively controlled by the father of the majority shareholder (see
Note 9 to the financial statements).
  Employees
 
 We
presently have no full-time employees and one part-time employee.
 
 Item
2. Description of
Property.
  We
presently lease on a month-to-month basis our principal offices at 35246 US
Highway 19 North, #311 Palm Harbor, Florida, 34684 and the telephone number is
(727) 934-9593.   The property is a small warehouse with attached office.
 We are currently seeking to  lease space in our local area that
will be sufficient for our manufacturing needs and to operate our current
business. We have not yet entered into a lease.
  Item
3. Legal
Proceedings.
  We are not engaged
in any litigation, and we are unaware of any claims or complaints that could
result in future litigation.  We will seek to minimize disputes with
our customers but recognize the inevitability of legal action in today’s
business environment as an unfortunate price of conducting
business.
  Item
4. Submission of Matters
to a Vote of Security Holders.
  None.
 
 1
  PART
II
  Item
5. Market for Common
Equity and Related Stockholder Matters.
  No Public
Market for Common Stock
  There is
presently no public market for our common stock. We anticipate applying for
trading of our common stock on the Over the Counter Bulletin Board upon the
effectiveness of our registration statement. However, we can provide no
assurance that our shares will be traded on the Bulletin Board or, if traded,
that a public market will materialize.
  Holders
of Our Common Stock
  As of the
date of this annual report, we have 140 registered shareholders.
  Recent
Sales of Unregistered Securities
  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.
  On
October 15, 2007, we completed a Regulation D Rule 506 offering.  From
June 2007 through October 15, 2007 we sold 157,500 shares of our common stock to
seventy shareholders pursuant to an offering at $1.00 per share for a total of
$157,500.  The Common Stock issued in our Regulation D, Rule 506
Offering was issued in a transaction not involving a public offering in reliance
upon an exemption from registration provided by Rule 506 of Regulation D of the
Securities Act of 1933.
  On
October 1, 2007, we issued 40,000 shares to Jerry Paul, 20,000 shares to Robert
Wilson and 25,000 shares to Melvin MCollister III for services
rendered.  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.
  Item
6. Management’s
Discussion and Analysis or Plan of Operation.
  SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
  The
information contained in the filing 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.
   2
  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 built and used as a mobile refinery
for the metal cutting market. These demonstration centers will be used to
promote our core business strategy.  In addition, during the next
twelve months, we intend to pursue equity financing using our shares of common
stock and to pursue several state grants for these types of
projects.
 
 First
Quarter 2008
 
 We have
engineering design drawings of our PlasmaArcFlow module and have begun
construction of our PlasmaArcFlow mobile center that will be used in the metal
cutting market.  We will operate a prototype Plasma Arc Flow
demonstration center to produce MagneGas to sell as a metal cutting biogas. We
will file our SB2/A registration statement and upon completion of same we intend
to raise additional funds through debt or equity financing and government grants
to support our efforts.
  Second Quarter
2008
 
 We will
begin construction of a PlasmaArcFlow demonstration center to process sludge at
a local municipality.  We will complete construction of our
Plasma Arc Flow demonstration center for the metal cutting market and we will
begin selling biogas to the Metal Cutting market.  We intend to
actively recruit new board members with appropriate experience and hire a
corporate staff.
  Third
Quarter 2008
 
 We will
further promote and sell the benefits of MagneGas for the metal cutting market
and expect to sign at least six new customers for the purchase of our metal
cutting biogas.  We will install our Plasma Arc Flow demonstration
center at a local Florida sewage treatment facility to process human sludge and
will begin demonstrations of our mobile refinery for the metal cutting biogas
market. We will also begin construction of a PlasmaArcFlow refinery that will be
placed at a local megafarm to process manure. 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.
 
 Fourth
Quarter 2008
 
 By the
fourth quarter of 2008, we will be actively selling MagneGas in Florida for
metal cutting; we will be fully operational at a local Florida sewage treatment
facility and processing city sludge and creating biogas.  We will
complete construction of our PlasmaArcFlow refinery that will be placed on a
local farm to process manure and will we will continue demonstrations using our
mobile refinery for 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 potential new
sales.
   3
   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 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.
 
 Liquidity and Capital
Resources
 
 We are
currently financing our 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,
respectively.  However, management plans to begin generating 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.  Even without significant revenues in the next twelve
months, we anticipate that proceeds received from our securities sales and the
subsequent attainment of proceeds from debt financing will enable MagneGas to
continue with the plan of operations until the revenues will support operations
and expansion.
 
 In the
event we are not successful in reaching our initial anticipated revenue targets,
additional funds may be required, and we would 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 audited financial statements, we are in the development stage,
and have an accumulated deficit from inception of $422,471 and have negative
cash used in operations of $88,568 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 audited financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
 
 At
December 31, 2007 the Company had approximately $76,232 in cash 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.
 
 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. Efforts will be made to raise additional capital,
through offerings of its securities and its abilities to secure debt financing.
Management believes that through stock sale and financing efforts the company
believes that it has raised sufficient capital to achieve the initial
anticipated targets of the operating plan.
 
 Results of
Operations
 
 For
the years ended December 31, 2007 and 2006 and for the period December 9, 2005
(date of inception) through December 31, 2007.
 
 Revenues
 
 For the
twelve month period ended December 31, 2007 and 2006 we generated no income from
operations.   The only operating source of funds during the
recent year was a raise of $157,500 from the sale of 157,500 shares of common
stock.
  General and Administrative
Expenses
 
 General
and administrative costs were incurred, primarily for professional expenses, in
the amount of $420,621 and $422,471 for the year ended December 31, 2007 and for
the period ended December 9, 2005 (date of inception) through December 31, 2007,
respectively.  This compared to $1,450 and $1,450 for the year ended
December 31, 2006 and for the period December 9, 2005 (date of inception)
through December 31, 2006, respectively.   The change was due to
the implementation of our business plan resulting in an increase in professional
expenses, primarily the recognition of stock compensation in the amount of
$330,000 included in the period ended December 31, 2007.
 
 Net Loss
 
 The
general and administrative costs that were incurred resulted in the net loss in
the amount of $420,621, and $422,471 for the year ended December 31, 2007 and
for the period December 9, 2005 (date of inception) through December 31, 2007,
respectively.   This compared to the net loss of $1,450 for the
year ended December 31, 2006.  No revenues were generated for the
periods to offset the costs incurred.  The increase in the period over
period net loss was related to the recognition of $330,000 of stock compensation
for professional services.
 
  4
   Subsequent
Events
 
 In effort
to achieve revenue plans, subsequent to December 31, 2007, we have sold MagneGas
as a metal cutting biogas. We have received firm orders from four entities for
the biogas produced from waste.  We have additional non-binding
letters of intent to process liquid waste based on proposals and our
demonstrations.  The non-binding letters of intent include a defined
time and place with resulting revenue earning structure.  To fund this
sale, the firm orders, and existing non-binding letters of intent, the Company
has raised $157,500 in cash proceeds via sales of common stock during 2007, and
raised an additional $30,000 in cash proceeds from a shareholder loan subsequent
to December 31, 2007.Additionally, to deliver on these orders we have the
commitment of three persons dedicated to the fulfillment of orders and it is
headed by a well known industry consultant, whom we have attained 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
Biogas:Sales commenced on March 6, 2008.  From that
date we have sold 27 bottles of metal cutting biogas for approximately
$900.  Marketing efforts are being concentrated on industry
wholesalers to utilize their established customer base and distribution
channels.  Our current operations in new facilities (entered into
temporary month to month agreement, which will be formalized into a long-term
agreement) have been set up for expansion.  We estimate current
operations 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.
 
 Letter of
Intent: Anon-bindingletter of intent was agreed, in
principal with a local municipality's water treatment
facility.   The agreement calls for a 12 month testing period to
process 1/3 of the City's bio-solids waste flow.  Our existing
prototype equipment is being modified for the specifics required for this
project.   Revenue will be generated at the defined price of
$.0171 per gallon processed, as determined by the City's flow
meters.  At this time we are unable to accurately estimate the volume
that will be processed.   Upon completion of the 12 month test
the contract will be evaluated and subject to renegotiation. No date has been determined when this
project is to commence.
 
 Contractual
Obligation
 
 None.
  Recent Accounting
Pronouncements
 
 In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141(R), Business
Combinations.  SFAS No. 141(R) changes the way that companies account
for business combinations.  More assets and liabilities assumed will
be measured at fair value as of the acquisition date; liabilites related to
contingent consideration will be remeasured at fair value in each subsequent
reproting period; and an acquirer will expense acquisition-related costs as
opposed to capitalizing them.  SFAS No. 141(R) is effective for
business combinations consumated in fiscal years beginning subsequent to
December 15, 2008 with no early adoption permitted.  The Company does
not expect the adoption of SFAS No. 141(R) 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.  We do 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.  We
do not  expect the adoption of SFAS No. 159 to have a material impact
on our financial condition or results of our operations.
 
 In July
2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, effective for
fiscal years beginning after December 15, 2006.  FIN 48 requires a
two-step approach to determine how to recognize tax benefits in the financial
statements where recognition and measurement of a tax benefit must be evaluated
separately.  A tax benefit will be recognized only if it meets a
"more-likely-than-not" recognition threshold.  For tax provisions that
meet this threshold, the tax benefit recognized is based on the largest amount
of tax benefit that is greater than 50 percent likely of being realized upon
ultimate settlement with the taxing authority.  There was no material
impact on our overall results of operations, cash flows or financial position
from FIN 48.
   5
 Critical Accounting
Policies
  We
prepare our 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.
 
 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).  We had no common stock options or common stock equivalents
granted or outstanding for all periods presented.
 
 We issue
restricted stock to consultants for various services.  For these
transactions, we follow 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 periods ended December 31, 2007, 2006 and for
the period December 9, 2005 (date of inception) through December 31, 2007, the
Company recognized $330,000, $0, and $330,100 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 December
31, 2007.
  Off-Balance Sheet
Arrangements
  We have
no off-balance sheet arrangements.
 
 
 6
  Item
7. Financial
Statements.
  Financial
Statements
 
 MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
2007
 
 
 Contents
 
  Financial
      Statements:Report
      of Independent Registered Public Accounting Firm
                F-1Balance
      Sheet
                F-2Statements
      of Operations
                F-3Statements
      of Changes in Stockholders’ Equity
                F-4Statements
      of Cash Flows
                F-5Notes
      to Audited Financial Statements
                F-6
      through F-11
 
   
   Report
of Independent Registered Public Accounting Firm
  Board of
Directors
 MagneGas
Corporation
 Palm
Harbor, Florida
 
 We have
audited the accompanying balance sheet of MagneGas Corporation (a
development stage enterprise) as of December 31, 2007and the related statements
of operations, stockholders’ equity, and cash flows for the year ended December
31, 2007and for the period December 9, 2005 (date of inception) through December
31, 2007.  These financial statements are the responsibility of the
Company’s management.  Our responsibility is to express an opinion on these
financial statements based on our audit.  The financial statements as
of December 31, 2006 and for the year then ended and for the period December 9,
2005 (date of inception) through December 31, 2006 were audited by other
auditors whose report dated March 15, 2007 included an unqualified opinion with
an explanatory paragraph regarding substantial doubt about the Company's ability
to continue as a going concern.  The financial statements for the
period December 9, 2005 (date of inception) through December 31, 2006 included a
net loss of $1,850.  Our opinion on the statement of operations,
changes in stockholders' deficit and cash flows for the period December 9, 2005
(date of inception) through December 31, 2007, insofar as it relates to amounts
for the periods through December 31, 2006 is based solely on the report of other
auditors.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  The Company is not
required at this time, to have, nor were we engaged to perform, an audit of its
internal control over financial reporting.  Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company's
internal controls over financial reporting.   Accordingly, we
express no such opinion.An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audit provided a reasonable basis for our opinion.
 
 In our
opinion, based on our audit and the report of other auditors, the financial
statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2007 and the results of its
operations and its cash flows for the year ended December 31, 2007 and for the
period December 9, 2005 (date of inception) through December 31, 2007 in
conformity with accounting principles generally accepted in the United States of
America.
 
 As
discussed in Note 5 to the financial statements, the Company adopted FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
interpretation of FASB 109", effective January 1, 2007 .
  The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note  3 to the financial
statements, the Company incurred a net loss of $420,621 for the year ended
December 31, 2007 and a net loss of $422,471 for the period December 9,
2005 (date of inception) through December 31, 2007. As of December 31,
2007, the Company had $76,232 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 financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
  
 Pender
Newkirk & Company, LLP
 Certified
Public Accountants
 Tampa,
Florida
 March 21,
2008
  Except
for the first paragraph of footnote 9, for which the date is April 8,
2008
  F-1
  
   MagneGas
      Corporation(A
      Development Stage Enterprise)BALANCE
      SHEETAs
      of December 31, 2007ASSETSCurrent
      Assets:Cash
                
                $
                76,232Prepaid
      Expense
                
                
                2,000Total
      current assets
                
                
                78,232Equipment,
      net of accumulated depreciation of $173
                
                
                5,027TOTAL
      ASSETS
                
                $
                83,259LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccrued Expense
                
                $
                5,630Due
      to Affiliate
                
                
                10,000Total
      Current Liabilities
                
                $
                15,630STOCKHOLDERS’
      EQUITYPreferred
      Stock - Par value $0.001;Authorized: 10,000,0002,000 issued and outstanding
                
                $
                2Common
      Stock - Par value $0.001;Authorized: 100,000,000Issued and Outstanding: 67,639,500
                
                
                67,640Additional
      Paid-In Capital
                
                
                422,458Accumulated
      Deficit during development stage
                
                $
                (422,471
                )Total
      Stockholders’ Equity
                
                
                67,629TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                83,259
  The
accompanying notes are an integral part of these audited financial
statements.
  F-2
  
 
 MagneGas
      Corporation.(A
      Development Stage Enterprise)STATEMENT
      OF OPERATIONSFor
      the Years ended December 31, 2007 and 2006And
      for the period December 9, 2005 (date of inception) to December 31,
      2007Inception
      to2007
                
                
                2006
                
                
                12/31/07REVENUE
                
                $
                -
                
                
                $
                -
                
                
                $
                -COST
      OF SERVICES
                
                
                -
                
                
                
                -
                
                
                
                -GROSS
      PROFIT OR (LOSS)
                
                
                -
                
                
                
                -
                
                
                
                -GENERAL
      AND ADMINISTRATIVE EXPENSES
                
                
                420,621
                
                
                
                1,450
                
                
                
                422,471NET
      LOSS
                
                $
                (420,621
                )
                
                $
                (1,450
                )
                
                $
                (422,471
                )Loss
      per share, basic and diluted
                
                $
                (0.01
                )
                
                $
                (0.01
                )
                
                $
                (0.02
                )Basic
      and diluted weighted average number of common shares
      outstanding
                
                
                44,165,700
                
                
                
                100,000
                
                
                
                22,980,692
  The
accompanying notes are an integral part of these audited financial
statements.
    F-3
   MagneGas
      Corporation(A
      Development Stage Enterprise)STATEMENT
      OF CHANGES IN STOCKHOLDERS’ EQUITYFor
      the period December 9, 2005 (date of inception) to December 31,
      2007AccumulatedAdditional
                  
                  
                  Deficit
      DuringPreferred
                  
                  
                  Common
                  
                  
                  Paid
      in
                  
                  
                  Development
                  
                  
                  TotalShares
                  
                  
                  Amount
                  
                  
                  Shares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Stage
                  
                  
                  EquityStock
      issued on acceptance of incorporation  expenses,December 9,
      2005
                  
                  
                  
                  
                  
                  
                  
                  
                  100,000
                  
                  
                  $
                  100
                  
                  
                  
                  
                  
                  
                  
                  
                  $
                  100Net
      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
                  
                  
                  
                  
                  
                  
                  
                  2,500Recapitalization:
                    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
                  
                  
                  
                  
                  
                  
                  
                  245,000Stock
      issued for cash:June 12, 2007; $1 per share
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  30,000
                  
                  
                  
                  30
                  
                  
                  
                  29,970
                  
                  
                  
                  
                  
                  
                  
                  30,000August
      28, 2007; $1  per share
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  13,000
                  
                  
                  
                  13
                  
                  
                  
                  12,987
                  
                  
                  
                  
                  
                  
                  
                  13,000September 17,2007; $1 per share
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  54,000
                  
                  
                  
                  54
                  
                  
                  
                  53,946
                  
                  
                  
                  
                  
                  
                  
                  54,000October
      11, 2007; $1  per share
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  60,500
                  
                  
                  
                  61
                  
                  
                  
                  60,439
                  
                  
                  
                  
                  
                  
                  
                  60,500Issuance
      of stock for services, valued at $1 per share, October 11,
      2007
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  
                  85,000
                  
                  
                  
                  85
                  
                  
                  
                  84,915
                  
                  
                  
                  
                  
                  
                  
                  85,000Net
      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
  The
accompanying notes are an integral part of these audited financial
statements.
  F-4
  MagneGas
      Corporation(A
      Development Stage Enterprise)STATEMENTS
      OF CASH FLOWSFor
      the Years Ended December 31, 2007 and 2006,And
      for the period December 9, 2005 (date of inception) to December 31,
      2007Inception
      to Date2007
                
                
                2006
                
                
                12/31/07CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                
                $
                (420,621
                )
                
                $
                (1,450
                )
                
                $
                (422,471
                )Adjustments
      to reconcile net loss to cash used in operating
      activities:Stock
      compensation
                
                
                330,000
                
                
                
                
                
                
                
                330,100Depreciation
                
                
                173
                
                
                
                
                
                
                
                173Changes
      in operating assets:Increase  in
      Prepaid Expenses
                
                
                (2,000
                )
                
                
                
                
                
                
                (2,000
                )Increase
      in Accrued Expenses
                
                
                3,880
                
                
                
                1,450
                
                
                
                5,630Total
      adjustments to net income
                
                
                332,053
                
                
                
                1,450
                
                
                
                333,903Net
      cash used in operating activities
                
                
                (88,568
                )
                
                
                -
                
                
                
                (88,568
                )CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of equipment
                
                
                (5,200
                )
                
                
                -
                
                
                
                (5,200
                )Net
      cash flows used in investing activities
                
                
                (5,200
                )
                
                
                -
                
                
                
                (5,200
                )CASH
      FLOWS FROM FINANCING ACTIVITIESAdvance from affiliate
                
                
                10,000
                
                
                
                
                
                
                
                10,000Capital
      contribution; liability payment at acquisition
                
                
                2,500
                
                
                
                -
                
                
                
                2,500Proceeds
      from issuance of common stock
                
                
                157,500
                
                
                
                -
                
                
                
                157,500Net
      cash flows provided by investing activities
                
                
                170,000
                
                
                
                -
                
                
                
                170,000Net
      increase in cash
                
                
                76,232
                
                
                
                -
                
                
                
                76,232Cash
      - beginning balanceCASH
      BALANCE - END OF PERIOD
                
                $
                76,232
                
                
                $
                -
                
                
                $
                76,232
  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
effected a recapitalization, whereby 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 audited financial
statements.
   F-5
   MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 Notes
to Financial Statements
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
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
required and minimal liabilities were assumed.  On May 12, 2007,
subsequent to the date of purchase, the company effected a recapitalization,
whereby 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 effectively controlled by the father of the
majority shareholder (see note 9).
 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.
 
 
 F-6
 
 MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 Notes
to Financial Statements
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
2007
  3.           Going
Concern
 
 The
accompanying audited financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
assumes the realization of assets and satisfaction of liabilities in the normal
course of business.
 
 The
Company incurred a net loss of $420,621 and $1,850 for the years ended
December 31, 2007 and December 31, 2006, and a net loss of $422,471
for the period December 9, 2005 (date of inception) through December 31,
2007. As of December 31, 2007, the Company has $76,232 of cash with which
to satisfy any future cash requirements. 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.
 
 The
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:
  The
Company prepares its financial statements in conformity with generally accepted
accounting principles in the United States of America. These principles 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
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.
 
 Equipment
is stated at cost.  Depreciation is computed by the straight-line method
over estimated useful lives.   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 property and
equipment exists at December 31, 2007.
  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-7
 
 
 
 MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 Notes
to Financial Statements
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
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 periods ended
December 31, 2007, 2006 and for the period December 9, 2005 (date of inception)
through December 31, 2007, the Company recognized $330,000, $0, and $330,100 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 December 31, 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 costs
of advertising are expensed as incurred.  Advertising expense was $432, $0,
and $432 for the years ending December 31, 2007, 2006 and for the period
December 9, 2005 (date of inception) through December 31, 2007,
respectively.
 
 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 period. Diluted earnings (loss)
per share calculations are determined by dividing net income (loss) by the
weighted average number of shares plus the effect of the dilutive potential
common shares outstanding during the period using the treasury stock method.
There are no share equivalents for any periods presented and, thus,
anti-dilution issues are not applicable.
  5.           Recently
Issued Accounting Pronouncements
  In
December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141(R), Business
Combinations.  SFAS No. 141(R) changes the way that companies account
for business combinations.  More assets and liabilities assumed will
be measured at fair value as of the acquisition date; liabilities related to
contingent consideration will be remeasured at fair value in each subsequent
reporting period; and an acquirer will expense acquisition-related costs as
opposed to capitalizing them.  SFAS No. 141(R) is effective for
business combinations consummated in fiscal years beginning subsequent to
December 15, 2008 with no early adoption permitted.  The Company does
not expect the adoption of SFAS No. 141(R) 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.
 
 
 F-8
 
 MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 Notes
to Financial Statements
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
2007
   5.           Recently
Issued Accounting Pronouncements (continued)
  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 July
2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
No. 48 (“FIN 48”), Accounting for Uncertainty in Income Taxes, effective for
fiscal years beginning after December 15, 2006.  The Company adopted FIN
48 on January 1, 2007 .  FIN 48 requires a two-step approach to
determine how to recognize tax benefits in the financial statements where
recognition and measurement of a tax benefit must be evaluated
separately.  A tax benefit will be recognized only if it meets a
"more-likely-than-not" recognition threshold.  For tax provisions that
meet this threshold, the tax benefit recognized is based on the largest amount
of tax benefit that is greater than 50 percent likely of being realized upon
ultimate settlement with the taxing authority.  There was no material
impact on the overall results of operations, cash flows or financial position
from FIN 48.
 6.      Equipment
 
 Property
and equipment, as of  consists of:
  12/31/2007
                
                
                12/31/2006Equipment
                
                $
                5,200
                
                
                $
                -Less
      accumulated depreciation and amortization
                
                
                173
                
                
                
                -Property
      and equipment, net
                
                $
                5,027
                
                
                $
                -
  Depreciation
and amortization of property and equipment was $173 and $0 for the periods ended
December 31, 2007 and 2006, respectively.
  7.           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, 2007, 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.
 
 
 
 F-9
 
  MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 Notes
to Financial Statements
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
2007
 
  
 7.           Income
Tax (continued)
  The
provision for income taxes is different from that which would be obtained by
applying the statutory federal income tax rate to income before taxes. The
items causing this difference are as follows:
  from
      inception12/31/2007
                
                
                12/31/2006
                
                
                12/31/2007Income
      tax provision (benefit) at statutory rate
                
                $
                (143,000
                )
                
                $
                -
                
                
                $
                (143,000
                )Stock
      Compensation,
      not deductible
                
                
                112,200
                
                
                
                
                
                
                
                112,200State
      income tax expense (benefit), net of federal benefit
                
                
                (3,300
                )
                
                
                
                
                
                
                (3,300
                )Valuation
      Allowance
                
                
                34,100
                
                
                
                
                
                
                
                34,100$
                -
                
                
                $
                -
                
                
                $
                -Net
      deferred tax assets and liabilities were comprised of the
      following:Deferred
      tax asset (liability):Capitalized
      start-up costs
                
                $
                34,100Valuation
      Allowance
                
                
                (34,100
                )$
                -
  
 8.           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.   Preferred Stock has been
issued as Series A Preferred Stock.  Preferred Stock has liquidation
and dividend rights over Common Stock, which are 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
67,639,500 are issued and outstanding.  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 period ended December 31, 2007, the company issued 330,000 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.
 
 During
2007 the Company issued 157,500 shares of common stock at one dollar per share,
via a private placement offering, for a total of $157,500.
  
 F-10
 
 
 
 MagneGas
Corporation
 (A
Development Stage Enterprise)
 
 Notes
to Financial Statements
 
 As
of December 31, 2007
 and
for the Years Ended December 31, 2007 and 2006 and
 for
the period December 9, 2005 (date of inception) through December 31,
2007
  9.           Related
Party Transactions and
Subsequent Events
  The
Company entered into an agreement with a company, effectively controlled by the
father of the majority shareholder, which will secure intellectual property
licensing for North, South, Central America and all Caribbean Islands
("the Territories"), effective upon funding.  This intellectual
property consists of all relevantpatents, 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 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
an internal valuation by the Company.
  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.
 
 In
February 2008 the Company issued an additional 245,000 common shares for
services.  The shares issued for services were valued at one dollar
($1.00) per share which was the last price shares were issued for
cash.
 
 In
January 2008, the Company secured financing of $30,000 through loan from a
stockholder.  The loan is unsecured, has no periodic payment terms,
accrues interest at 4% and the note plus accrued interest is payable upon
demand.
 
 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.
  10.          Commitments
and Contingencies
  Effective
December 15, 2007, the Company entered into an agreement with a consultant to
provide certain marketing and sales services.  The agreement is for
three months from the above effective date.  The intention of the
Company is to renew the agreement based on the performance of the
consultant.  The Company will pay the consultant $3,000 in cash per
month payable on the first of each month.  Additionally, the Company
will issue the consultant 100,000 shares of common stock for each of the first
five customers signed to use the Company's biogas.
  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
8. Changes in and
Disagreements with Accountants on Accounting and Financial
Disclosure.
  On May 1,
2007 we ended our relationship with our former auditors, Gately &
Associates, LLC, Certified Public Accountants, of Altamonte Springs, Florida and
hired Pender Newkirk & Company LLP of Tampa, Florida, Certified Public
Accountants, as our principal accountants. In connection with the audit of our
financial statements for the fiscal year ended December 31, 2006, we did not
have any disagreements with Gately & Associates, LLC on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures which, if not resolved to their satisfaction, would have
caused them to make reference to the disagreement in connection with their
report. The report of Gately and Associates, LLC for the fiscal year ended
December 31, 2006 did not contain an adverse opinion or a disclaimer of opinion
and was not qualified or modified as to audit scope or accounting principles,
however was modified for uncertainty to continue as a going concern. The
decision to change independent auditors from Gately and Associates, LLC to
Pender Newkirk & Company LLP was approved by our Board of
Directors.
  Item
8A.         Controls and
Procedures
  Evaluation of Disclosure
Controls and Procedures
  The
Company’s Chief Executive Officer and acting Chief Financial Officer has
evaluated the effectiveness of the Company’s disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the
fiscal period ending December 31, 2007 covered by this Annual Report
on Form 10-KSB. Based upon such evaluation, the Chief Executive Officer and
acting Chief Financial Officer has concluded that, as of the end of such period,
the Company’s disclosure controls and procedures were not effective as required
under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by
the Company’s Chief Executive Officer and acting Chief Financial
Officer does not relate to reporting periods after December 31,
2007.
  Management’s Report on
Internal Control Over Financial Reporting
  Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange
Act) of the Company. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States of
America.
  The
Company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the financial
statements.
  Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
  Management,
under the supervision of the Company’s Chief Executive Officer and acting Chief
Financial Officer, conducted an evaluation of the effectiveness of internal
control over financial reporting based on the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management concluded that the
Company’s internal control over financial reporting was not effective as of
December 31, 2007 under the criteria set forth in the in Internal Control—Integrated
Framework.
  A
material weakness is a deficiency, 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 material weaknesses exist
due to a lack of segregation of duties, resulting from the Company's limited
resources.
  This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management’s report in this Annual Report on Form 10-KSB.
  Changes in Internal Control
Over Financial Reporting
  No change
in the Company’s internal control over financial reporting occurred during the
quarter ended December 31, 2007, that materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
  Item
8B.          Other
Information.
 
 On
October 26, 2007 and December 11, 2007, we filed our Form SB-2 and SB-2/A
registration statements (file No. 000-51883) with the Securities and Exchange
Commission.  We received letters from the staff of the SEC's Division
of Corporation Finance (the "SEC Staff") on November 19, 2007 and January 2,
2008, commenting on the above registration statements and requesting that we
answer their questions and provide additional information.
 
 As of the
date of this annual report on Form 10-KSB, there are still outstanding
accounting comments on the above registration statements that we believe could
be material, therefore, we have, in consultation with outside counsel, addressed
these questions, and are in the process of providing the SEC Staff with our
answers.  We believe that the SEC Staff will concur with our
assessment.  However there is no assurance that the SEC Staff will
concur with this assessment.
     7
   PART
III
  Item
9. Directors and
Executive Officers of the Registrant.
  Our
executive officers and directors and their ages as of March 31, 2008 is as
follows:
  NAME
              AGE
              POSITIONDr. Ruggero Maria Santilli
              72
              Chairman
      Of the Board, Chief Executive OfficerBo Linton
              37
              President,
      DirectorLuisa Ingargiola
              40
              Chief
      Financial Officer, Secretary, DirectorCarla Santilli
              67
              Director
  Set forth
below is a brief description of the background and business experience of our
executive officers and directors for the past five years.
 
 Dr.RuggeroMariaSantilli, Chairman of the Board, Chief
Executive Officer.  Dr. Santilli was born and educated in Italy
where he achieved his Ph.D., in mathematics and physics, as well as a chair in
nuclear physics at the Avogadro Institute in Turin, Italy. In 1967 Santilli was
invited by the University of Miami in Florida to conduct research for NASA and
he moved with his family to the U.S.A. where he subsequently became a U.S.
citizen. In 1968 he joined the faculty of Boston University, under partial
support from the U.S. Air Force, where he taught physics and applied mathematics
from prep courses to seminar post-PhD. courses. In 1975-1977 he went to MIT and
from 1978 to 1983 he was a member of Harvard University faculty where he
received five grants from the U. S. Department of Energy to study a
generalization of quantum mechanics and chemistry needed for new clean energies
and fuels. Since 1984 he has been the President of the Institute for Basic
Research, originally located in a Victorian inside Harvard University
grounds and moved to Florida in 1990.  Since his time at
Harvard University he studied new clean energies and related
chemistry.
 
 Dr. Santilli
is the author of over 250 technical articles and 18 post Ph.D. level monographs
in mathematics, physics, cosmology, superconductivity, chemistry and biology
published the world over. He is the founding editor of three journals in
mathematics and physics and editor of several others.
  Dr. Santilli
is also internationally known for the discovery of the basic science and for the
industrial development of the "Santilli MagneGas Technology" of which he remains
the chief scientist with associate scientists from some developed
nations.
 
 Dr.
Santilli is the recipient of various honors, including: his nomination by the
Estonia Academy of Sciences among the most illustrious applied mathematicians of
all times; two gold metals for scientific merits; the listing as "Santilli Hall"
of a class room at an Australian research center; and nominations for the Nobel
Prize in physics as well as in chemistry from scientists the world over. A
scientific meeting was organized in June 2005 at the University of Karlstad,
Sweden, to honor Prof. Santilli on his 70th birthday with participation of
scientists from 50 countries.
 
 BoLinton,
President and Director. Mr. Linton has served as President and Director
since April 2007. On May 7, 2007 Mr. Linton presented the MagneGas
Technology at the United Nations in New York City as an invited guest speaker.
Prior to MagneGas Corporation’s incorporation in Delaware, Mr. Linton led
the development of the business plan.
 
 In
November 2005 Mr. Linton founded Carbon Jungle and served as President and
CEO of the public company Carbon Jungle, Inc. Mr. Linton created this
environmentally green company with the vision of improving the environment by
planting trees while developing business with renewable resource energies.
During 2006 Mr. Linton was a co-executive producer of the feature film
“Living Luminaries” a spiritual docudrama shown in theaters in 2007. In 2005
Mr. Linton served as the President of Seamless Skyyfi, Inc., a wholly owned
subsidiary of the public company Seamless Wi-Fi, Inc. In 2001 Mr. Linton
founded Berserker Entertainment, Inc. Mr. Linton served as Chairman of the Board
for this production, distribution, and HD post-production facility until 2004.
In 2001 he produced his first feature film which he was the
writer/director/producer and lead actor of this feature entitled, "Ronny Camaro
and Seven Angry Women." Time Warner and Pay-Per-View In Demand where amongst
those that licensed this “one of the first” HD movies.
   8
 
  In 1998,
Mr. Linton founded International Capital Group, Inc. and created a highly
successful mergers and acquisitions firm. Under his leadership as President and
CEO, the company completed numerous mergers and acquisitions with private and
publicly traded companies. Mr. Linton received his Bachelor's degree from
Louisiana State University in the spring of 1994. Some of his studies
included: Economics, Finance, Environmental Science, Theater, Business Law, Real
Estate, Speech, and Theater.
 
 LuisaIngargiola,
Chief Financial Officer, Secretary and Director and daughter of
Dr. Ruggero Maria Santilli. Luisa Ingargiola graduated in
1989 from Boston University with a Bachelor Degree in Business
Administration and a concentration in Finance.  In 1996 she received
her Master's Degree in Business Administration from the University of South
Florida.  In 1990 she joined Boston Capital Partners as an Investment
Advisor in their Limited Partnership Division.  In this capacity, she
worked with investors and partners to report investment results, file tax forms
and recommend investments.
 
 In 1992
she joined MetLife Insurance Company as a Budget and Expense
Manager.  In this capacity she managed a $30 million dollar annual
budget.  Her responsibilities included budget implementation, expense
and variance analysis and financial reporting.  In 2007 she began work
on the MagneGas Corporation business plan in preparation for her new role as
CFO.
 
 CarlaSantilli,
Director and spouse of
Dr. Ruggero Maria Santilli.  Carla Santilli holds
a Master Degree in Human Services Administration from the School of Social
Work of Boston University. She held positions of Clinical Social Worker and
Community Programs Coordinator for the State of Massachusetts.  Since
the late 1980's Mrs. Santilli has been employed as President and Chief
Executive Officer of Hadronic Press, Inc, a physics and mathematics academic
publishing company.  In this capacity, Mrs. Santilli has directed
the growth of this company from start-up to become one of the world's leading
physics and mathematics publishing companies. Books and journals published by
Hadronic Press can be found in all of the leading University libraries across
the world.  Mrs. Santilli has been involved in the private sector
as grant administrator and public relations specialist in the fields of academic
publishing and environmental sciences.
 
 Term of
Office
  Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the board.
  Section
16(a) Beneficial Ownership Reporting Compliance
  Under
Section 16(a) of the Exchange Act, our directors and certain of our officers,
and persons holding more than 10 percent of our common stock are required to
file forms reporting their beneficial ownership of our common stock and
subsequent changes in that ownership with the United States Securities and
Exchange Commission.  Such persons are also required to furnish
MagneGas with copies of all forms so filed.
  Based
solely upon a review of copies of such forms filed on Forms 3, 4, and 5, and
amendments thereto furnished to us, we believe that as of the date of this
report, our executive officers, directors and greater than 10 percent beneficial
owners complied on a timely basis with all Section 16(a) filing
requirements.
  Item
10. Executive
Compensation.
 
 Summary
Compensation Table
  The table
below summarizes all compensation awarded to, earned by, or paid to our
executive officers by any person for all services rendered in all capacities to
us from December 9, 2005 (date of our inception) through December 31,
2007.
 
   9
  SUMMARY
COMPENSATION TABLE
   Annual
      CompensationName
      and Principal Position
              Year
              Salary
              Bonus
              Stock
                Awards
                ($)
              Option
      Awards
                ($)
              Non-Equity Incentive Plan
      Compensation ($)
              Non-Qualified
      Deferred Compensation Earnings
                ($)
              All
      Other Compensation
                ($)
              Totals
                ($)Dr. Ruggero Maria Santilli,
      Chairman of the Board(1)2007
              $0
              $0
              $0
              $0
              $0
              $0
              $0
              $0Bo Linton,
      President (2)
              2007
              $0
              $0
              $0
              $0
              $0
              $0
              $0
              $0Michael Raleigh,
      Former President, CEO, CFO, Chairman of the Board, and Secretary (3)
              2006
              $0
              $0
              $0
              $0
              $0
              $0
              $0
              $02007
              $0
              $0
              $0
              $0
              $0
              $0
              $0
              $0Luisa Ingargiola,
                CFO(4)
              2007
              $0
              $0
              $0
              $0
              $0
              $0
              $0
              $0Carla Santilli,
      Director
              2007
              $0
              $0
              $0
              $0
              $0
              $0
              $0
              $0
  (1)
              Dr. Santilli
      was appointed as CEO and Chairman of the Board on April 2,
      2007.(2)
              Bo Linton
      was appointed as President on April 2, 2007.(3)
              Mr. Raleigh
      served as President and CEO from December 9, 2005 until Mr. Linton’s
      and Dr. Santilli’s appointment on April 2, 2007.(4)
              Luisa Ingargiola
      was appointed CFO and Director on May 4,
2007.
  Stock
Option Grants
  We have
not granted any stock options to our executive officers since our
incorporation.
 
 Employment
Agreements
  We do not
have an employment or consultant agreement with any of our
officers.
  Director
Compensation
 
 We have
provided no compensation to our directors for services provided as
directors.
   10
 
  Item
11. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters.
  The
following table provides the names and addresses of each person known to us to
own more than 5% of our outstanding common stock as of March 31, 2008, and by
the officers and directors, individually and as a group. Except as otherwise
indicated, all shares are owned directly.
  Title
      of Class
              Name
      and Address
                  of
      Beneficial Owner
              Amount
      and Nature
                  of
      Beneficial Owner
              Percent
      of ClassCommon
      Stock
              Global
      Alpha LLC
                90
      Eastwinds Ct
                Palm
      Harbor, FL 34683
              31,000,000
              46%Common
      Stock
              Global
      Beta LLC
                90
      Eastwinds Ct
                Palm
      Harbor, FL 34683
              10,000,000
              15%Common
      Stock
              Eric
      Gregory Holdings, Inc.
                502
      East John Street
                Carson
      City, NV 89706
              10,000,000
              15%Common
      Stock
              Luisa Ingargiola (1)
                4826
      Blue Jay Circle
                Palm
      Harbor FL 34683
              51,130,000
              76%Common
      Stock
              Dr. Ruggero Maria Santilli (2)
                90
      Eastwinds Ct
                Palm
      Harbor FL 34683
              130,000
              *%Common
      Stock
              Carla Santilli (3)
                90
      Eastwinds Ct
                Palm
      Harbor FL 34683
              130,000
              *%Common
      Stock
              Bo Linton (4)
                520
      The Village #411
                Redondo
      Beach, CA. 90277
              10,000,000
              15%Common
      Stock
              All
      executive officers and directors as a group (4 in number)
              64,130,000
              95%
 
 *   Less
than one (1%) percent.
  (1)
                Luisa
      Ingargiola and Ermanno Santilli’s shares  shares are held as
      follows: as sole members of Global Alpha LLC, they beneficially own
      31,000,000 shares, as sole members of Global Beta they beneficially owns
      10,000,000 shares, as shareholders of Clean Energies Tech Co. they
      beneficially own 130,000 shares and Luisa Ingargiola owns 10,000,000
      shares individually.(2)
                Dr. Santilli
      beneficially owns 130,000 shares as a shareholder of Clean Energies Tech
      Co.(3)
                Carla Santilli
      beneficially owns 130,000 shares as a shareholder of Clean Energies Tech
      Co.(4)
                Bo Linton
      beneficially owns 10,000,000 shares as the principal of Eric Gregory
      Holdings, Inc.
  The
percent of class is based on 67,884,500 shares of common stock issued and
outstanding as of March 31, 2008.
  Item
12. Certain Relationships
and Related Transactions.
  The
Company entered into an agreement with a company, effectively controlled by the
father of the majority shareholder, which will secure intellectual property
licensing for North, South, Central America and all Caribbean Islands ("the
Territories"), effective upon funding.  This intellectual property
consists of all relevantpatents, 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 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 an
internal valuation by the Company.
  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.
 
 11
  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.
 
 Item
13. Exhibits.
  (a)
              Reports on Form 8-K and Form 8K-A  - 8K Change in Auditor,
      etc.(b)
              ExhibitsExhibit
      Number
              Exhibit
      Title3.1
              Certificate
      of Incorporation*3.2
              By-Laws
      *10.1
              Licensing
      Agreement Addendum14
              Code
      of Ethics31.1
              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. Ruggero 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.*Incorporated
      by reference to Exhibit 3.2 to our registration statement on Form 10-SB
      filed on April 3, 2006 (File no:
000-51883)
  Item
14.  Principal Accountant
Fees and Services.
  Audit
Fees
  The
aggregate fees billed by Pender Newkirk & Company LLP for professional
services rendered for the audit of the Company’s financial statements for the
fiscal years ended December 31, 2007 for the review of the Company’s
financial statements for the periods ended March 31,
2007, June 30, 2007 and September 30, 2007.   2006
and 2005 represent fees for review and audits performed by prior auditors Gately
& Associates.   Audit fees by year were:
  2007
              
              $
              24,7612006
              
              $
              1,4502005
              
              $
              400
  Audit Related
Fees
  For our
fiscal years ended December 31, 2007 and 2006 we did not incur any audit related
fees.
  Tax
Fees
  For our
fiscal years ended December 31, 2007 and 2006, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.
  All Other
Fees
  We did
not incur any other fees related to services rendered by our principal
accountant for the fiscal years ended December 31, 2007 and 2006.
 
 Audit and Non-Audit Service
Pre-Approval Policy
 
 In
accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules
and regulations promulgated thereunder, the Audit Committee has adopted an
informal approval policy that it believes will result in an effective and
efficient procedure to pre-approve services performed by the independent
registered public accounting firm.
   12
  Audit Services.Audit services
include the annual financial statement audit (including quarterly reviews) and
other procedures required to be performed by the independent registered public
accounting firm to be able to form an opinion on our financial statements. The
Audit Committee pre-approves specified annual audit services engagement terms
and fees and other specified audit fees. All other audit services must be
specifically pre-approved by the Audit Committee. The Audit Committee monitors
the audit services engagement and may approve, if necessary, any changes in
terms, conditions and fees resulting from changes in audit scope or other
items.
 
 Audit-Related Services.Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of our financial
statements which historically have been provided to us by the independent
registered public accounting firm and are consistent with the SEC’s rules on
auditor independence. The Audit Committee pre-approves specified audit-related
services within pre-approved fee levels. All other audit-related services must
be pre-approved by the Audit Committee.
 
 Tax Services.The Audit
Committee pre-approves specified tax services that the Audit Committee believes
would not impair the independence of the independent registered public
accounting firm and that are consistent with SEC rules and guidance. The Audit
Committee must specifically approve all other tax services.
 
 All Other Services.Other
services are services provided by the independent registered public accounting
firm that do not fall within the established audit, audit-related and tax
services categories. The Audit Committee pre-approves specified other services
that do not fall within any of the specified prohibited categories of
services.
 
 Procedures.All proposals for
services to be provided by the independent registered public accounting firm,
which must include a detailed description of the services to be rendered and the
amount of corresponding fees, are submitted to the Chairman of the Audit
Committee and the Chief Financial Officer. The Chief Financial Officer
authorizes services that have been pre-approved by the Audit Committee. If there
is any question as to whether a proposed service fits within a pre-approved
service, the Audit Committee chair is consulted for a determination. The Chief
Financial Officer submits requests or applications to provide services that have
not been pre-approved by the Audit Committee, which must include an affirmation
by the Chief Financial Officer and the independent registered public accounting
firm that the request or application is consistent with the SEC’s rules on
auditor independence, to the Audit Committee (or its Chair or any of its other
members pursuant to delegated authority) for approval.
   13
     SIGNATURES
  In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this Annual Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
 
 MagneGas
      CorporationBy:
              /s/Dr.RuggeroMariaSantilliDr. Ruggero Maria Santilli
                Chief
      Executive OfficerDated:
              April
      9 , 2008
 
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