UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


______________





FORM
10-K


______________




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




For
the fiscal year ended December 31, 2008




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




For
the transition period from ______________ to ______________




Commission File No. 000-51883





MagneGas
Corporation


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




Delaware
            26-0250418(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer Identification No.)35246
      US 19 #311
                Palm
      Harbor, FL
            34684(Address
      of principal executive offices)
            (Zip
      Code)




(Former name, former address, if
      changed since last report)




Tel: 
      (727) 934-9593(Issuer’s
      telephone number)




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2)has been subject to such filing requirements for the past 90
days. Yes þ No
o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) 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-K
or any amendment to this Form 10-K.    þ





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





Large
      accelerated filer.        o
            Accelerated
      filer.                       oNon-accelerated
      filer.          o
              (Do
      not check if a smaller reporting company)
            Smaller
      reporting company.      þ




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).  Yes  o  Noþ





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 the
last business day of the registrant’s most recently completed second fiscal
quarter, June 30, 2008: N/A.





Number of
the issuer’s Common Stock outstanding as of March 26,
2009:  99,643,833





Documents
incorporated by reference: None.





Transitional
Small Business Disclosure Format (Check One): Yeso  Noþ













TABLE
OF CONTENTS







PagePart
      IItem
      1
              Business
              1Item
      1A
              Risk
      Factors
              1Item
      1B
              Unresolved
      Staff Comments
              4Item
      2
              Properties
              4Item
      3
              Legal
      Proceedings
              4Item
      4
              Submission
      of Matters to a Vote of Security Holders
              4Part
      IIItem
      5
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities.
              5Item
      6
              Selected
      Financial Data.
              5Item
      7
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
              5Item
      7A
              Quantitative
      and Qualitative Disclosures about Market Risk
              10Item
      8
              Financial
      Statements and Supplementary Data
              11Item
      9
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
              12Item
      9A
              Controls
      and Procedures
              12Item
      9B
              Other
      Information
              12Part
      IIIItem
      10
              Directors
      and Executive Officers and Corporate Governance.
              13Item
      11
              Executive
      Compensation
              14Item
      12
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
              15Item
      13
              Certain
      Relationships and Related Transactions, and Director
      Independence.
              16Item
      14
              Principal
      Accounting Fees and Services
              17Part
      IVItem
      15
              Exhibits,
      Financial Statement Schedules
              18Signatures
              
              19
















PART
I




ITEM
1.BUSINESS





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
acquired and minimal liabilities were assumed.  On May 12, 2007,
subsequent to the date of purchase, 67,052,000 shares of common stock were
issued to founding members of the organization.   As the company
determined that the shares had no value, stock and additional paid in capital
were increased and decreased by the par value of the stock issued.




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.  The patented proprietary technology is owned by the
Company.





Business
Development





To meet
our need for cash we raised money from a regulation D 506 Offering for U.S.
citizens and Regulation S for non-U.S. citizens.   The company has received
a loan of $100,000 from a large shareholder subsequent to the year end for
working capital purposes.  We believe we will have sufficient working
capital to meet our basic operational needs for the next twelve
months.  In order to achieve our full operational expansion plan, we
will need to raise additional capital.  We have retained the services
of a Investment firm for this purpose and are seeking to raise up to $10 million
in various stages of private equity funding. In addition, we will aggressively
pursue funding through federal and state grant programs being made available as
a result of the federal stimulus program.  If we are unable to
generate meaningful revenues during the next twelve months, or if we are unable
to make a reasonable profit after twelve months, we may have to raise additional
capital or cease operations.  If we need additional cash and cannot raise
it we will either have to suspend operations until we do raise the cash, or
cease operations entirely.


Employees





We
presently have no full-time employees and one part-time
employee.   We currently have leased employees and independent
technicians perform production and other duties, as required.





Dr.
Santilli, our Chief Scientist and key employee, has provided services in
exchange for stock.  Dr. Santilli declined to take any salary until
the Company generated meaningful revenue and profits.





Richard
Connolly, our President, has provided services under consulting
contract.  Additionally, he has received compensation in the form of
stock.





We
currently have no other key employees.





ITEM 1A.   RISK
FACTORS




We have a
limited operating history that can be used to evaluate us, and the likelihood of
our success must be considered in light of the problems, expenses, difficulties,
complications and delays that we may encounter because we are a small business.
As a result, we may not be profitable and we may not be able to generate
sufficient revenue to develop as we have planned.




Our
ability to achieve and maintain profitability and positive cash flow will be
dependent upon:





·
            Management’s
      ability to maintain the technology skills for our conversion
      services;


·
            The
      Company’s ability to keep abreast of the changes by the government
      agencies and law;






-1-






·
            Our
      ability to attract customers who require the services we offer;
      and


·
            Our
      ability to generate revenues through the sale of our services to potential
      clients who need our services.





Based
upon current plans, we expect to incur operating losses in future periods
because we will be incurring expenses and not generating sufficient revenues to
cover our expenses.  We cannot be sure that we will be successful in
generating revenues in the future.  Failure to generate sufficient revenues
will cause us to go out of business and any investment in our Company would be
lost.




Managing
a small public company involves a high degree of risk. Few small public
companies ever reach market stability and we will be subject to oversight from
governing bodies and regulations that will be costly to meet.  Our present
officers and directors do not have any experience in managing a fully reporting
public company so we may be forced to obtain outside consultants to assist with
our meeting these requirements.  These outside consultants are expensive
and can have a direct impact on our ability to be profitable. This will make an
investment in our Company a highly speculative and risky investment.




While the
Company is attempting to disclose all of the potential risks associated with an
investment in the Company, there can be no assurance that all of the risks are
visible to management.  Events occurring in the future may be additional
risks to an investment in the Company which are currently
unforeseen.





We
will require financing to achieve our current business strategy and our
inability to obtain such financing could prohibit us from executing our business
plan and cause us to slow down our expansion of operations.


We will
need to raise additional funds through public or private debt or sale of equity
to achieve our current plan of operations. Such financing may not be available
when needed. Even if such financing is available, it may be on terms that are
materially adverse to your interests with respect to dilution of book value,
dividend preferences, liquidation preferences, or other terms.  We will
require additional funds estimated at approximately $10,000,000 in order to
significantly expand our business as set forth in our plan of operations. These
funds may not be available or, if available, will be on commercially reasonable
terms satisfactory to us. We may not be able to obtain financing if and when it
is needed on terms we deem acceptable.   The additional funds would be
utilized for the manufacturing of additional PlasmaArcFlow processors, which
byproducts would be marketed to the target market end
users.


If we are
unable to obtain financing on reasonable terms, we could be forced to delay or
scale back our plans for expansion. In addition, such inability to obtain
financing on reasonable terms may delay the execution of our plan to expand our
operations.


We
have a limited operating history that you can use to evaluate us, and the
likelihood of our success must be considered in light of the problems, expenses,
difficulties, complications and delays that we may encounter because we are a
small development stage enterprise.  As a result, we may not be
profitable and we may not be able to generate sufficient revenue to develop as
we have planned.


We were
incorporated in Delaware in December of 2005. We have no significant assets or
financial resources. The likelihood of our success must be considered in light
of the expenses and difficulties in converting liquid wastes into a clean
biogas, recruiting and keeping clients and obtaining financing to meet the needs
of our plan of operations. Since we have a limited operating history we may
not be profitable and we may not be able to generate sufficient revenues to meet
our expenses and support our anticipated activities.


Failure
to comply with government regulations will severely limit our sales
opportunities and future revenue


Failure
to obtain operating permits, or otherwise to comply with federal and state
regulatory and environmental requirements, could affect our abilities to market
and sell the PlasmaArcFlow system and could substantially reduce the value of
your investment and the market price of our common stock.


We and
our customers may be required to comply with a number of federal, state and
local laws and regulations in the areas of safety, health and environmental
controls.  In as much as we intend to market the PlasmaArcFlow system
internationally, we will be required to comply with laws and regulations and,
when applicable, obtain permits in those other countries.


We can
not be certain that required permits and approvals will be obtained; that new
environmental regulations will not be enacted or that if they are enacted, our
customers and we can meet stricter standards of operation or obtain additional
operating permits or approvals.


Our
patented technology is unproven on a large-scale industrial basis and could fail
to perform in an industrial production environment.
  -2-


The
technologies which we are pursuing for Magnegas production from liquid waste
have never been utilized on a large-scale industrial basis. All of the tests
which we have conducted to date with respect to our technologies have been
performed on limited quantities, and we cannot assure you that the same or
similar results could be obtained on a large-scale industrial basis. We have
never utilized these Magnegas technologies under the conditions or in the
volumes that will be required on a large scale and cannot predict all of the
difficulties that may arise.  In addition, our technology has never
operated at a volume level required to be profitable.  As our product
is an alternative to Natural Gas, the unstable price of Natural Gas will impact
our ability to become profitable and to sell cost competitive
fuel.  It is possible that the technologies, when used, may require
further research, development, design and testing prior to implementation of a
larger-scale commercial application. Accordingly, we cannot assure you that
these technologies will perform successfully on a large-scale commercial basis
or that they will be profitable to us or that our fuel will be cost
competitive in the market.


Our
future success is dependent, in part, on the performance and continued service
of Rich Connelly, our President, and Dr. Ruggero Maria Santilli, our CEO.
Without their continued service, we may be forced to interrupt or eventually
cease our operations.


We are
presently dependent to a great extent upon the experience, abilities and
continued services of Rich Connelly, our President and Dr. Ruggero Maria
Santilli, our CEO. We currently only have an employment agreement with Dr.
Santilli and do not have an employment agreement with other officers and
directors. The loss of either of their services would delay our business
operations substantially.


The
success of our business depends, in part, upon proprietary technologies and
information which may be difficult to protect and may be perceived to infringe
on the intellectual property rights of third parties.


We
believe that the identification, acquisition and development of proprietary
technologies are key drivers of our business. Our success depends, in part, on
our ability to obtain patents, maintain the secrecy of our proprietary
technology and information, and operate without infringing on the proprietary
rights of third parties. We cannot assure you that the patents of others will
not have an adverse effect on our ability to conduct our business, that the
patents that provide us with competitive advantages or will not be challenged by
third parties, that we will develop additional proprietary technology that is
patentable or that any patents issued to us will provide us with competitive
advantages or will not be challenged by third parties. Further, we cannot assure
you that others will not independently develop similar or superior technologies,
duplicate elements of our biomass technology or design around it.


In order
to successfully commercialize our proprietary technologies, it is possible that
we may need to acquire licenses to, or to contest the validity of, issued or
pending patents or claims of third parties. We cannot assure you that any
license acquired under such patents would be made available to us on acceptable
terms, if at all, or that we would prevail in any such contest. In addition, we
could incur substantial costs in defending ourselves in suits brought against us
for alleged infringement of another party's patents or in defending the validity
or enforceability of our patents, or in bringing patent infringement suits
against other parties based on our patents.


In
addition to the protection afforded by patents, we also rely on trade secrets,
proprietary know-how and technology that we seek to protect, in part, by
confidentiality agreements with our prospective joint venture partners,
employees and consultants. We cannot assure you that these agreements will not
be breached, that we will have adequate remedies for any such breach, or that
our trade secrets and proprietary know-how will not otherwise become known or be
independently discovered by others.


We
have the potential risk of product liability which may subject us to litigation
and related costs


Our
PlasmaArcFlow system will be utilized in a variety of industrial and other
settings, and will be used to handle materials resulting from the user's
generation of liquid waste. The equipment will therefore be subject to
risks of breakdowns and malfunctions, and it is possible that claims for
personal injury and business losses arising out of these breakdowns and
malfunctions will be made against us.  Our insurance may be
insufficient to provide coverage against all claims, and claims may be made
against us even if covered by our insurance policy for amounts substantially in
excess of applicable policy limits. Such an event could have a material adverse
effect on our business, financial condition and results of
operations.


Because
we are smaller and have fewer financial and other resources than many
alternative fuel companies, we may not be able to successfully compete in the
very competitive alternative fuel industry.


Fuel is a
commodity. There is significant competition among existing fuel producers. Our
business faces competition from a number of producers that can produce
significantly greater volumes of fuel than we can or expect to produce,
producers that can produce a wider range of products than we can, and producers
that have the financial and other resources that would enable them to expand
their production rapidly if they chose to. These producers may be able to
achieve substantial economies of scale and scope, thereby substantially reducing
their fixed production costs and their marginal productions costs. If these
producers are able to substantially reduce their marginal production costs, the
market price of fuel may decline and we may be not be able to produce biogas at
a cost that allows us to operate profitably. Even if we are able to operate
profitably, these other producers may be substantially more profitable than us,
which may make it more difficult for us to raise any financing necessary for us
to achieve our business plan and may have a materially adverse effect on the
market price of our common stock.
   -3-


Costs
of compliance with burdensome or changing environmental and operational safety
regulations could cause our focus to be diverted away from our business and our
results of operations to suffer.


Liquid
waste disposal and fuel production involves the discharge of potential
contaminants into the water and air.  As a result, we are subject to
complicated environmental regulations of the U.S. Environmental Protection
Agency and regulations and permitting requirements of the various states. These
regulations are subject to change and such changes may require additional
capital expenditures or increased operating costs. Consequently, considerable
resources may be required to comply with future environmental
regulations. We did not incur any capital expenditures for
environmental control in 2007 or 2008 and we do not currently expect to incur
material capital expenditures for environmental controls in this or the
succeeding fiscal year  In addition, our production plants could be
subject to environmental nuisance or related claims by employees, property
owners or residents near the plants arising from air or water discharges
Environmental and public nuisance claims, or tort claims based on emissions, or
increased environmental compliance costs could significantly increase our
operating costs.


ITEM 1B.UNRESOLVED STAFF COMMENTS





None.




ITEM 2.PROPERTIES




We
presently lease on a month-to-month basis our principal offices at 150 Rainville
Rd, Tarpon Springs, FL 34689 and the telephone number is (727) 934-3448.
  The property is a commercial property for our production facility with
attached office.




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.SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY
HOLDERS





None.





-4-








PART
II





ITEM 5.MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED
STOCKHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES







Price Range of Common
Stock




The
Company’s common stock is listed on the Over the Counter Bulletin Board ("OTC:
BB") under the symbol “MNGA”.   The Company received its "Notice
of Effectiveness" on October 1, 2008.    The Company's stock
has commenced trading on the exchange in the fourth quarter of
2008.





High
                
                
                LowFiscal
      Year 2008Fourth
      quarter ended December 31, 2008
                
                $
                1.01
                
                
                $
                .001




Approximate Number of Equity
Security Holders




On March
2, 2009 the Company's common stock had a closing price quotation of
$.07.   As of June 29, 2008, there were approximately 187
certificate holders of record of the Company’s common stock.




Dividends




We have
not declared or paid cash dividends on our common stock.




Stock
Option Grants





To date,
we have not granted any stock options.





Registration
Rights





We have
not granted registration rights to the selling shareholders or to any other
persons.




ITEM
6.      SELECTED FINANCIAL
DATA






The
following financial data is derived from, and should be read in conjunction
with, the “Financial Statements” and notes thereto. Information concerning
significant trends in the financial condition and results of operations is
contained in “Management’s Discussion and Analysis of Financial Condition and
Results of Operations.”




Selected Historical DataDecember
      31,2008
                  
                  
                  2007Total
      Assets
                  
                  $
                  728,307
                  
                  
                  $
                  83,259Total
      Liabilities
                  
                  
                  224,717
                  
                  
                  
                  15,630Total
      Stockholders' Equity
                  
                  
                  503,590
                  
                  
                  
                  67,629Net
      Working Capital
                  
                  
                  (217,299
                  )
                  
                  
                  62,602Revenues
                  
                  
                  12,225
                  
                  
                  
                  -Operating
      Expenses
                  
                  
                  968,224
                  
                  
                  
                  268,455Net
      Loss
                  
                  
                  (977,426
                  )
                  
                  
                  (268,455
                  )





ITEM
7.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





Cautionary Notice Regarding
Forward Looking Statements





The
information contained in Item 7 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.




-5-




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





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




Plan of
Operations




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





Overall
Plan





Our
overall plan of operation for the next twelve months is to install three Plasma
Arc Flow Industrial demonstration centers strategically located throughout the
United States.  One will be installed in a municipal sewage treatment
facility to process sewage or sludge, one will be built and used by the company
as a refinery for the metal cutting fuel market and one will be installed as a
pilot plant converting Wind Power to fuel.  We have been in
negotiations with a municipality and have received a general letter of
commitment, without a defined start date.  These refineries will be
used to promote our core business strategy.  During the next twelve
months, we intend to pursue private equity financing of $10 million in various
phases using our shares of common stock.  In addition, we will
aggressively pursue funding through federal and state grant programs being made
available as a result of  the federal stimulus
program.  We will pursue the acquisition of a metal cutting and
welding fuel distribution company to accelerate our market
penetration.  In addition, we will conduct research and development
for the catalytic liquefaction of Magnegas, the industrial membrane separation
of hydrogen, the use of Magnegas as an additive to clean coal exhaust and we
will complete our analysis of the automotive market and the financial and
regulatory requirements for us to sell fuel for bi-fuel cars.  We will
also pursue all needed federal, state and local regulatory permits necessary to
implement our operational plan.  Our plan is crucially dependent on
our ability to raise capital, if we are not able to raise capital, it will not
be possible for us to achieve our operational plan.  If we raise only
a portion of our required capital, we will only be in a position to implement a
portion of our plan.
 
 First
Quarter 2009
 
 We will
continue our efforts in selling MagneGas in the metal cutting
market.  We will use established relationships with existing metal
cutting fuel wholesalers to distribute MagneGas for this market.  We
will fulfill fuel orders from our Atlanta distributor and will pursue agreements
with additional metal cutting fuel distributors throughout the United
States.  We will aggressively pursue equity financing and grants
to obtain sufficient capital to allow us to purchase a fuel distributor in our
market, construct refineries and conduct research and development.  We
intend to actively recruit new board members, corporate and manufacturing staff
with appropriate experience.




Second
Quarter 2009





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







-6-




Third
Quarter 2009





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




Fourth
Quarter 2009





By the
fourth quarter of 2009, we anticipate being fully operational with three
refineries located in various regions of the United States.  We will
continue sales of MagneGas in the metal cutting market.  We will
aggressively pursue our marketing and sales plan to fully leverage our
demonstration centers.  We expect to obtain several service contracts
during this quarter as potential customers view first hand the operation of our
equipment at an industrial level. We will continue to hire operational
staff and manufacturing staff in anticipation of new sales.





Summary





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





The
current state of the financial market and the economy has negatively impacted
our ability to raise capital, to generate sales and to achieve our operational
plan.   There is no guarantee that these market forces will
change in 2009 and despite management’s best effort we may not be able to raise
capital or increase our fuel sales until the economy and the financial markets
improve.





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





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




As
reflected in the financial statements, we are in the development stage, and have
an accumulated deficit from inception of $1,399,897 and have a negative cash
flow from operations of $229,800 from inception. This raises substantial doubt
about the 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 financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.





At
December 30, 2008 the Company had negative of capital resources in order to meet
current obligations.  The Company may rely upon the issuance of common
stock and additional capital contributions from shareholders to fund
administrative expenses until operations generate cash flows sufficient to
support the on-going business.





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




In effort
to achieve revenue plans we have sold MagneGas as a metal cutting MagneGas. We
have received firm orders from four entities for the Magnegas produced from
non-hazardous waste.  We have an additional non-binding letter of
intent to process liquid waste based on proposals and our
demonstrations.  The non-binding letter of intent includes 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 $219,500 in cash proceeds via sales of common stock to date and
raised an additional $70,100 in cash proceeds from a shareholder loans during
2008.  Additionally, to deliver on these orders we have the commitment
of six persons dedicated to the fulfillment of orders and it is headed by a well
known industry consultant, whom we have attained to help develop operating
guidelines as well as being instrumental in the marketing and development of our
brand offering.






-7-




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





Metal Cutting
Magnegas:Sales commenced on March 2008.  Marketing
efforts are being concentrated on industry wholesalers to utilize their
established customer base and distribution channels.  Our current
operations in new facilities (previously disclosed month to month agreement)
have been set up for expansion.  We estimate current facilities have
capacity for 400-500 bottles to be processed per week.  Our new
facilities allow us the flexibility to ramp up for greater volume, as market
interest is anticipated to increase.  In the quarter ended December
31, 2008, the company entered into a material definitive agreement with a
regional supplier of metal cutting and welding market.  The agreement
defined terms, location and minimum purchase amounts, which should yield a
minimum of $36,000 in the first year.





Letter of Intent: A
non-binding letter of intent was agreed, in principal with a local
municipality's water treatment facility to conduct a six-month plant scale test
of our equipment.  Once we have raised sufficient capital, our
existing prototype equipment will be modified for the specifics required for
this project.   The initial fuel generated from this project will
be sold in the metal cutting market and tested for various uses by the
city. At this time we are unable to accurately estimate the volume that
will be processed, nor are we able to accuratey predict whether this plant scale
test will be successful.   No date has been determined when this
project is to commence and funding will be required to implement this project as
per our plan of operations.




Results of
Operations





For
the twelve months ended December 31, 2008, 2007 and for the period December 9,
2005 (date of inception) through December 31, 2008.





Revenues





For the
twelve months ended December 31, 2008, 2007 and for period December 9, 2005
(date of inception) through December 31, 2008 we generated revenues of $12,225,
$0, and $12,225, respectively from our metal cutting fuel sales
operations.   The increase was due to the commencement of our
operations.  We have fulfilled our initial orders and are currently
processing and receiving orders from multiple customers.  To attract and
attain new customers we have performed demonstrations and sent samples to
prospective accounts.  We have completed our set up of our new facilities
to fulfill future anticipated orders.





Operating
Expenses





Operating
costs were incurred in the amount of $968,224, $420,448 and $1,390,522 for the
twelve months ended December 31, 2008, 2007 and for the period December 9,
2005 (date of inception) through December 31, 2008,
respectively.   The increase was attributable to the issuance of
common stock for services valued in the amount of $858,167 in 2008 compared to
$245,000 in 2007.  Additionally, due to public filing
requirements, there was an increase in professional fees of approximately
$148,000 in 2008 from 2007.





Net Loss





Net
losses incurred in all periods presented have been primarily due to the
operating costs.  The Company incurred net losses of $973,624,
$420,621 and $1,399,897 for the twelve months ended December 31, 2008, 2007 and
for the period December 9, 2005 (date of inception) through December 31, 2008,
respectively.  The increase in the year over year net loss was due
primarily from general and administrative expenses, described above in the
operating expense discussion, particularly professional services and stock-based
compensation.  At this time, normal costs of   public
filing will continue and it is not known when significant revenues will occur to
off-set these expenses.




Liquidity and Capital
Resources




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




-8-




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




As
reflected in the financial statements, we are in the development stage, and have
an accumulated deficit from inception of $1,399,897 and have a negative cash
flow from operations of $318,368 from inception. This raises substantial doubt
about it’s’ 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 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, 2008 the Company had minimal cash and negative working capital
resources to meet current obligations.  Subsequent to year end the company
received a loan for $100,000 for working capital purposes from a majority
shareholder.  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





Off-Balance Sheet
Arrangements





We have
no off-balance sheet arrangements.





Management Consideration of
Alternative Business Strategies





In order
to continue to protect and increase shareholder value management believes that
it may, from time to time, consider alternative management strategies to create
value for the company or additional revenues.  Strategies to be
reviewed may include acquisitions; roll-ups; strategic alliances; joint ventures
on large projects; and/or mergers.





Management
will only consider these options where it believes the result would be to
increase shareholder value while continuing the viability of the
company.





Critical Accounting
Policies




The
Company’s significant accounting policies are presented in the Company’s notes
to financial statements for the period ended December 31, 2008 and 2007, which
are contained in this filing, the Company’s 2008 Annual Report on Form 10-K. The
significant accounting policies that are most critical and aid in fully
understanding and evaluating the reported financial results include the
following:





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




The
Company issues restricted stock to consultants for various
services.  For these transactions the Company follows the guidance in
EITF 96-18 "Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring or in Conjunction with Selling Goods or
Services".  Cost for these transactions are measured at the fair value
of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.  The value of the
common stock is measured at the earlier of (i) the date at which a firm
commitment for performance by the counterparty to earn the equity instruments is
reached or (ii) the date at which the counterparty's performance is
complete.




-9-




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





Recent Accounting
Pronouncements





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




ITEM
7A.   QUANTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET
RISK





We do not
hold any derivative instruments and do not engage in any hedging
activities.











-10-










ITEM
8.      FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA





Financial
Statements





MagneGas
Corporation


(A
Development Stage Enterprise)





As
of December 31, 2008 and December 31, 2007


And
for the Years Ended December 31, 2008, 2007 and


for
the period December 9, 2005 (date of inception) through December 31,
2008









-11-








Contents




Financial
      Statements:Report
      of Independent Registered Public Accounting Firm
            F-2Balance
      Sheets
            F-3Statements
      of Operations
            F-4Statements
      of Changes in Stockholders’ Equity
            F-5Statements
      of Cash Flows
            F-6/F-7Notes
      to Financial Statements
            F-8through
      F-14










F-1




Randall
N. Drake, C.P.A., P.A.


1981
Promenade Way


Clearwater,
FL  33760


727.536.4863


Randall@RDrakeCPA.com





Report of Independent
Registered Public Accounting Firm





Board of
Directors


MagneGas
Corporation


Palm
Harbor, Florida





We have
audited the accompanying balance sheets of MagneGas Corporation (a
development stage enterprise) as of December 31, 2008 and 2007 and the related
statements of operations, stockholders’ equity, and cash flows for the year
ended December 31, 2008 and 2007and for the period December 9, 2005 (date of
inception) through December 31, 2008.  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.





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, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 2008 and 2007 and the results of its operations and its cash flows
for the year ended December, 2008, 2007 and for the period December 9, 2005
(date of inception) through December 31, 2008 in conformity with accounting
principles generally accepted in the United States of America





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in footnote 3 to the
financial statements, the Company has generated nominal revenue and has not
established operations which raise substantial doubt about its ability to
continue as a going concern.  Management’s plans concerning these matters
are also described in Note 3.  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.








/s/
Randall N. Drake, CPA PA


Clearwater,
Florida


March 26,
2009





F-2





MagneGas
      Corporation(A
      Development Stage Enterprise)BALANCE
      SHEETDecember
      31,2008
                
                
                2007ASSETSCurrent
      Assets:Cash
                
                $
                160
                
                
                $
                76,232Accounts
      Receivable
                
                
                2,398
                
                
                
                -Inventory
                
                
                4,860
                
                
                
                -Prepaid
      Expenses
                
                
                -
                
                
                
                2,000Total
      current assets
                
                
                7,418
                
                
                
                78,232Equipment,
      net of accumulated depreciation of $0 and $173
      respectively
                
                
                -
                
                
                
                5,027Intangibles,
      net of amortization of $6,111 and $0 respectively
                
                
                720,889
                
                
                
                -TOTAL
      ASSETS
                
                $
                728,307
                
                
                $
                83,259LIABILITIES
      AND STOCKHOLDERS’ EQUITYCURRENT
      LIABILITIESAccounts
      Payable
                
                $
                109,739
                
                
                $
                -Accrued Expense
                
                
                15,000
                
                
                
                5,630Advances from Related Party
                
                
                10,000
                
                
                
                10,000Note
      Payable, Related Party
                
                
                89,978
                
                
                
                -TOTAL
      CURRENT LIABILITIES
                
                $
                224,717
                
                
                $
                15,630STOCKHOLDERS’
      EQUITYPreferred
      Stock - Par value $0.001;Authorized: 10,000,0002,000 issued and outstanding
                
                $
                2
                
                
                $
                2Common
      Stock - Par value $0.001;Authorized: 100,000,000Issued and Outstanding: 99,444,833 and 67,639,500 at December 31,
      2008
                  and
      December 31, 2007, respectively
                
                
                99,445
                
                
                
                67,640Additional
      Paid-In Capital
                
                
                1,892,373
                
                
                
                422,458Prepaid
      Consulting Services Paid with Common Stock
                
                
                (88,333
                )Accumulated
      Deficit during development stage
                
                
                (1,399,897
                )
                
                
                (422,471
                )Total
      Stockholders’ Equity
                
                
                503,590
                
                
                $
                67,629TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                $
                728,307
                
                
                $
                83,259




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




F-3









MagneGas
      Corporation.(A
      Development Stage Enterprise)STATEMENT
      OF OPERATIONSFor
      the Years Ended December 31, 2008 and 2007And
      for the period December 9, 2005 (date of inception) to December 31,
      2008For
      the Year Ended
                      December
      31,
                    
                    
                    Inception
      to
                      December
      31,2008
                    
                    2007
                    
                    
                    2008REVENUE
                    $
                    12,225
                    
                    $
                    -
                    
                    
                    $
                    12,225COST
      OF SERVICES
                    
                    10,348
                    
                    
                    -
                    
                    
                    
                    10,348GROSS
      (LOSS) OR PROFIT
                    
                    1,877
                    
                    
                    -
                    
                    
                    
                    1,877OPERATING
      EXPENSES:Advertising
                    
                    8,003
                    
                    
                    
                    
                    
                    
                    8,003Selling
                    
                    31,295
                    
                    
                    
                    
                    
                    
                    31,295Professional
      - technical
                    
                    64,765
                    
                    
                    22,930
                    
                    
                    
                    87,695Professional
      – legal and accounting
                    
                    195,636
                    
                    
                    47,328
                    
                    
                    
                    329,814Rent
      and overhead
                    
                    46,051
                    
                    
                    
                    
                    
                    
                    46,051Office
      and administration
                    
                    5,916
                    
                    
                    20,190
                    
                    
                    
                    26,106Services,
      stock-based compensation
                    
                    613,167
                    
                    
                    330,000
                    
                    
                    
                    858,167Research
      and development
                    
                    3,391
                    
                    
                    
                    
                    
                    
                    3,391Total
      Operating Expenses
                    
                    968,224
                    
                    
                    420,448
                    
                    
                    
                    1,390,522OTHER
      (INCOME) EXPENSEInterest
      expense
                    
                    1,691
                    
                    
                    -
                    
                    
                    
                    1,691Depreciation
      and amortization
                    
                    6,631
                    
                    
                    173
                    
                    
                    
                    6,804Loss
      on sale of equipment
                    
                    2,757
                    
                    
                    -
                    
                    
                    
                    2,757Total
      Other (Income) Expense
                    
                    11,079
                    
                    
                    173
                    
                    
                    
                    11,252NET
      LOSS
                    $
                    (
      977,426
                    )
                    $
                    (
      420,621
                    )
                    
                    $
                    (1,399,897
                    )Loss
      per share, basic and diluted
                    $
                    (0.01
                    )
                    $
                    (0.01
                    )
                    
                    $
                    (0.04
                    )Basic
      and diluted weighted average number of common shares
                    68,455,979
                    
                    
                    36,257,864
                    
                    
                    
                    37,867,950




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




F-4




MagneGas
      Corporation(A
      Development Stage Enterprise)STATEMENT
      OF CHANGES IN STOCKHOLDERS’ EQUITYFor
      the Years Ended December 31, 2008 and for each of the years
      from
                          December
      9, 2005 (date of inception) to December 31, 2008Preferred
                        
                        
                        Common
                        Additional
      Paid in
                        
                        Prepaid
      Consulting Services Paid with Common
                        
                        Accumulated
      Deficit During Development
                        
                        TotalShares
                        
                        
                        Amount
                        
                        
                        Shares
                        
                        Amount
                        Capital
                        
                        Stock
                        
                        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
                        )
                        $
                        67,629Issuance
      of stock for license, valued at $1 per share, February 15,
      2008
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        100,000
                        
                        
                        100
                        
                        99,900
                        
                        
                        
                        
                        
                        
                        
                        100,000Issuance
      of stock in execution of five year consulting agreement, valued at $1 per
      share, May 31, 2008
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        100,000
                        
                        
                        100
                        
                        99,900
                        
                        (100,000
                        )
                        
                        
                        
                        
                        -Amortization
      of prepaid consulting services paid with common stock, December 31,
      2008
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        11,667
                        
                        
                        
                        
                        
                        11,667Issuance
      of stock for services:February
      15, 2008, valued at $1 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        145,000
                        
                        
                        145
                        
                        144,855
                        
                        
                        
                        
                        
                        
                        
                        145,000July
      28, 2009, valued at $1 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        400,000
                        
                        
                        400
                        
                        399,600
                        
                        
                        
                        
                        
                        
                        
                        400,000October
      3, 2008 valued at $.02 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        595,000
                        
                        
                        595
                        
                        22,855
                        
                        
                        
                        
                        
                        
                        
                        23,450October
      21, 2008 valued at $.02 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        15,000
                        
                        
                        15
                        
                        285
                        
                        
                        
                        
                        
                        
                        
                        300Stock
      issued for cash:November
      4, 2008 valued at $.15 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        105,000
                        
                        
                        105
                        
                        15,645
                        
                        
                        
                        
                        
                        
                        
                        15,750December
      3, 2008 valued at $.06 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        283,333
                        
                        
                        283
                        
                        16,717
                        
                        
                        
                        
                        
                        
                        
                        17,000Issued
      stock for patent:December
      28, 2008 valued at $.021 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        30,000,000
                        
                        
                        30,000
                        
                        597,000
                        
                        
                        
                        
                        
                        
                        
                        627,000Stock
      issued for cash:May
      31, 2008; $1 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        12,000
                        
                        
                        12
                        
                        11,988
                        
                        
                        
                        
                        
                        
                        
                        12,000September
      4, 2008; $1 per share
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        50,000
                        
                        
                        50
                        
                        49,950
                        
                        
                        
                        
                        
                        
                        
                        50,000Net
      loss, through December 31, 2008
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (977,426
                        )
                        
                        (977,426
                        )Waiver
      of related party expense
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        11,220
                        
                        
                        
                        
                        
                        
                        
                        11,220Balance
      at December 31, 2008
                        
                        
                        2,000
                        
                        
                        $
                        2
                        
                        
                        
                        99,444,833
                        
                        $
                        99,445
                        $
                        1,892,373
                        $
                        (83,333)
                        
                        $
                        (1,399,897
                        )
                        $
                        503,590




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




F-5




MagneGas
      Corporation(A
      Development Stage Enterprise)STATEMENTS
      OF CASH FLOWSFor
      the Years Ended December 31, 2008 and 2007,And
      for the period December 9, 2005 (date of inception) to December 31,
      2008Years
      Ended
                December
      31,
              
              
              Inception
      Date to
                December
      31,2008
              
              
              2007
              
              
              2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (977,426
              )
              
              $
              (420,621
              )
              
              $
              (1,399,897
              )Adjustments
      to reconcile net loss to cash used in operating
      activities:Stock
      compensation
              
              
              613,167
              
              
              
              330,000
              
              
              
              943,267Wavier
      of related party expenses
              
              
              11,220
              
              
              
              
              
              
              
              11,220Depreciation
      and Amortization
              
              
              6,611
              
              
              
              173
              
              
              
              6,804Loss
      on disposal of equipment
              
              
              2,757
              
              
              
              
              
              
              
              2,757Changes
      in operating assets:Increase
      in Accounts Receivable
              
              
              (2,398
              )
              
              
              
              
              
              
              (2,398
              )Increase  in
      Inventory
              
              
              (4,860
              )
              
              
              
              
              
              
              (4,860
              )Increase  in
      Prepaid Expenses
              
              
              2,000
              
              
              
              (2,000
              )
              
              
              -Increase
      in Accounts Payable
              
              
              109,739
              
              
              
              
              
              
              
              109,739Increase  in
      Accrued Expenses
              
              
              9.370
              
              
              
              3,880
              
              
              
              15,000Total
      adjustments to net loss
              
              
              747,626
              
              
              
              332,053
              
              
              
              1,081,529Net
      cash (used in) operating activities
              
              
              (229,800
              )
              
              
              (88,568
              )
              
              
              (318,368
              )CASH
      FLOWS FROM INVESTING ACTIVITIESAcquisition
      of reporting entity
              
              
              -
              
              
              
              (5,200
              )
              
              
              (5,200
              )Gross
      proceeds from sale of equipment
              
              
              1,750
              
              
              
              
              
              
              
              1,750Net
      cash flows (used in) investing activities
              
              
              1,750
              
              
              
              (5,200
              )
              
              
              (3,450
              )CASH FLOWS FROM FINANCING
      ACTIVITIESAdvances
      from Related Party
              
              
              -
              
              
              
              10,000
              
              
              
              10,000Proceeds
      from Note Payable to Related Party
              
              
              88,287
              
              
              
              -
              
              
              
              88,287Accrued
      interest on note payable from related party
              
              
              1,691
              
              
              
              
              
              
              
              1,691Capital
      contribution; liability payment at acquisition
              
              
              -
              
              
              
              2,500
              
              
              
              2,500Proceeds
      from issuance of common stock
              
              
              62,000
              
              
              
              157,500
              
              
              
              219,500Net
      cash flows provided by investing activities
              
              
              151,978
              
              
              
              101,500
              
              
              
              321,978Net
      increase in cash
              
              
              (76,072
              )
              
              
              76,232
              
              
              
              160Cash
      - beginning balance
              
              
              76,232
              
              
              
              -CASH
      BALANCE - END OF PERIOD
              
              $
              160
              
              
              $
              76,232
              
              
              $
              160Supplemental
      disclosure of cash flow information and non cash investing and financing
      activities:Interest
      paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -Taxes
      paid
              
              $
              -
              
              
              $
              -
              
              
              $
              -







F-6





As a
result of the transfer of ownership, effective April 2, 2007, the company
issued   67,052,000 shares of common stock and 2,000 shares of
preferred stock to founding members of the organization.   As the
company determined that the common shares had no value, common stock and
additional paid in capital were increased and decreased by the par value of the
common stock.





In
February 2008, the Company issued 100,000 shares of common stock, valued at $1
per share, as consideration for exclusive rights of an intangible
license.   The intangible license triggered a consulting
agreement and consideration included 100,000 shares of common stock issued at $1
per share.





December
28, 2008, the Company issued 30,000,000 shares of common stock, valued at $.021
per share, as consideration for the purchase of intellectual property
rights.




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








F-7






MagneGas
Corporation


(A
Development Stage Enterprise)





Notes
to Financial Statements




Three
and Years Ended December 31, 2008, 2007 and


for
the period December 9, 2005 (date of inception) through December 31,
2008




1.        Background
Information




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





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





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





Since the
acquisition, the Company has adopted the operating plan and mission which is to
provide services in cleaning and converting contaminated waste. A process has
been developed which transforms contaminated waste through a proprietary
incandescent machine. The result of the product is to carbonize waste for normal
disposal. A by product of this process will produce an alternative MagneGas
source.  The technology related to this process has been acquired from
a Company, related by common management (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 above. The Company expects to continue to incur
significant operating losses and to generate negative cash flow from operating
activities while it develops its customer base and establishes itself in the
marketplace.  The Company's ability to eliminate operating losses and
to generate positive cash flow from operations in the future will depend upon a
variety of factors, many of which it is unable to control.  If the
Company is unable to implement its business plan successfully, it may not be
able to eliminate operating losses, generate positive cash flow, or achieve or
sustain profitability, which would materially adversely affect its business,
operations, and financial results, as well as its ability to make payments on
any obligations it may incur.




3.         Going
Concern





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





The
Company incurred a net loss of $977,426 and $1,399,897 for the year ended
December 31, 2008 and for the period December 9, 2005 (date of inception)
through the period ended December 31, 2008, respectively.  As of
December 31, 2008 the Company had $160 of cash with which to satisfy any future
cash requirements. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern. The Company depends upon capital to be
derived from future financing activities such as subsequent offerings of its
common stock or debt financing in order to operate and grow the
business.  There can be no assurance that the Company will be
successful in raising such capital.  The key factors that are not
within the Company's control and that may have a direct bearing on operating
results include, but are not limited to, acceptance of the Company's business
plan, the ability to raise capital in the future, the ability to expand its
customer base, and the ability to hire key employees to build and manufacture
such proprietary machines to provide services.  There may be other
risks and circumstances that management may be unable to predict.




F-8





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:




In the
opinion of management, all adjustments consisting of normal recurring
adjustments necessary for a fair statement of (a) the result of operations for
the twelve month periods ended December 31, 2008, 2007 and the period December
9, 2005 (date of inception) through December 31, 2008; (b) the financial
position at December 31, 2008, and (c) cash flows for the twelve month periods
ended December 31, 2008, 2007 and the period December 9, 2005 (date of
inception) through December 31, 2008, have been made.





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





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





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





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





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





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




F-9




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




During
2008, the Company recorded an intangible license for a total of $727,000 related
to the Company's acquisition of intellectual property secured from a company
related by common management (see Note 9).  The Company valued the
license based on the value of the stock issued, as the Company believes that
this is the more reliable measurement.  The intellectual property
consists primarily of patents and patent applications, which the Company has
estimated has a useful life of ten years.  The estimated amortization
expense for the intangible license is expected to be $48,467 annually over the
next five years and $478,556 in total thereafter.





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




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





The
Company issues restricted stock to consultants for various
services.  For these transactions the Company follows the guidance in
EITF 96-18 "Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring or in Conjunction with Selling Goods or
Services".  Cost for these transactions are measured at the fair value
of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.  The value of the
common stock is measured at the earlier of (i) the date at which a firm
commitment for performance by the counterparty to earn the equity instruments is
reached or (ii) the date at which the counterparty's performance is
complete.   The Company recognized consulting expenses and a
corresponding increase to additional paid-in-capital related to stock issued for
services.  Stock compensation for the twelve months ended December 31,
2008 and 2007 were issued to consultants for past services provided,
accordingly, all shares issued are fully vested, and there is no unrecognized
compensation associated with these transactions.  For the twelve
months ended December 31, 2008, the Company entered into a consulting agreement
(see note 9) for services to be rendered over a five year period.  The
consulting expense is to be recognized ratably over the requisite service
period.





The
Company invoices it’s customers for the cost of shipping biogas cylinders for
the metal cutting market.  Shipping costs are included in the cost of
sales.




The costs
of advertising are expensed as incurred.  Advertising expense was $8,003
and $0 and $8,003 for the years ended December 31, 2008, 2007 and for the period
December 9, 2005 (date of inception) through December 31, 2008,
respectively.  Advertising expenses are included in the Company’s
operating expenses.





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





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




F-10




5.         Recently
Issued Accounting Pronouncements





In
December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141(revised 2007),
Business Combinations,
which replaces SFAS No. 141.  The statement retains the purchase
method of accounting for acquisitions, but requires a number of changes,
including changes in the way assets and liabilities are recognized in the
purchase accounting.  It also changes the recognition of assets
acquired and liabilities assumed arising from contingencies, requires the
capitalization of in-process research and development at fair value, and
requires the expensing of acquisition-related costs as incurred.  SFAS
No. 141(R) is effective for the Company beginning January 1, 2009 and will apply
prospectively to business combinations completed on or after that
date.





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 adoption of SFAS No. 157 did not have a material impact
on the Company's financial condition or results of its operations.





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





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





In March
2008, the Financial Accounting Standards Board issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities.  SFAS No. 161 requires
additional disclosures related to the use of derivative instruments, the
accounting for derivatives and the financial statement impact of
derivatives.  SFAS No. 161 is effective for fiscal years beginning
after November 15, 2008.  The adoption of SFAS No. 161 will not impact
the Company's financial statements.





In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles” (“SFAS 162”). SFAS 162 identifies the
sources of accounting principles and the framework for selecting the principles
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles (the
GAAP hierarchy). SFAS 162 will become effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board amendments to
AU Section 411, “The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles.” The Company does not currently expect
the adoption of SFAS 162 to have a material effect on our results of
operations and financial condition.





In
May 2008, the FASB issued FSP Accounting Principles Board (“APB”) 14-1
“Accounting for Convertible Debt instruments That May Be Settled in Cash upon
Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP
APB 14-1 requires the issuer of certain convertible debt instruments that
may be settled in cash (or other assets) on conversion to separately account for
the liability (debt) and equity (conversion option) components of the
instrument in a manner that reflects the issuer’s non-convertible debt borrowing
rate. FSP APB 14-1 is effective for fiscal years beginning after
December 15, 2008 on a retroactive basis. As we do not have convertible
debt at this time, we currently believe the adoption of FSP APB 14-1 will
have no effect on our results of operations and financial
condition.




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






F-11




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




6.         Equipment





Equipment consists
of:




December
      31,2008
                
                
                2007Equipment
                
                $
                -
                
                
                $
                5,200Less accumulated depreciation
                
                
                -
                
                
                
                173Property
      and equipment, net
                
                $
                -
                
                
                $
                5,027




Equipment
sold in the quarter ended June 30, 2008 resulted in a loss of
$2,757.  Depreciation of equipment was $520, $173 and $693 for the
years ended December 31, 2008, 2007 and for the period December 9, 2005 (date of
inception) through December 31, 2008, respectively.





Additionally,
the Company owns intellectual property, which it is amortizing on a
straight-line basis over the assets useful life.  The Company assesses
fair market value for any impairment to the carrying values.  As of
December 31, 2008 management concluded that there is no impairment to the
intangible assets  Amortization of the intangible assets was $6,111,
$0 and $6,111 for the years ended December 31, 2008, 2007 and for the period
December 9, 2005 (date of inception) through December 31, 2008,
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, 2008, the Company incurred
start-up losses of approximately $454,800.  These losses are
capitalized as start up costs for tax purposes, to be amortized when the Company
commences business operations.





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
      inception12/31/2008
                
                
                12/31/2007
                
                
                12/31/2008Income
      tax provision (benefit) at statutory rate
                
                $
                (332,300
                )
                
                $
                (143,000
                )
                
                $
                (475,300
                )Stock
      Compensation, not deductible
                
                
                208,500
                
                
                
                112,200
                
                
                
                320,700State
      income tax expense (benefit), net of federal benefit
                
                
                (13,400
                )
                
                
                (3,300
                
                
                
                (16,700
                )Valuation
      Allowance
                
                
                137,200
                
                
                
                34,100
                
                
                
                171,300$
                -
                
                
                $
                -
                
                
                $
                -Net
      deferred tax assets and liabilities were comprised of the
      following:Deferred
      tax asset (liability):Capitalized
      start-up costs
                
                $
                137,200Valuation
      Allowance
                
                
                (137,200
                )$
                -






F-12




8          Equity





The
company has two classifications of stock:




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




Common
Stock includes 900,000,000 shares authorized at a par value of
$0.001.  The number of authorized shares reflects an amendment to the
Articles of Incorporation, increasing the authorized shares from 100,000,000 to
900,000,000.   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
year ended December 31, 2008, the company issued 1,543,333 common shares to
various consultants.  The Company also issued 727,000 common shares to
secure intellectual property rights and 100,000 common shares under a consulting
agreement, as discussed in footnote 9.  During the year ending
December 31, 2008, the Company sold 62,000 common shares at $1.00 per share for
cash.  The Company valued all the above shares at the fair market
value per share.  From December 9, 2005 (date of inception) through
December 31, 2008, the Company sold 219,500 common shares at $1.00 per share for
cash.





The use
of an initial small production refinery has been contributed by
Dr. Ruggero Santilli, Chief Executive Officer, Chief Scientist, and
Chairman of the Board.  The computed fair value of this month to month
rental agreement is $1,870 per month and has been charged to equipment rental
expense in the operating expenses.  To reflect the contributed value,
the corresponding entry has been charged to additional paid in capital, and
is included in the statement of stockholders’ equity.  Total
contributed value was $11,220 for the year ended December 31, 2008 and for the
period December 9, 2005 (date of inception) through December 31,
2008.




9.         Related
Party Transactions




The
Company entered into an agreement with a company, Hyfuels, Inc., which secures
intellectual property licensing for North, South, Central America and all
Caribbean Islands ("the
Territories"),. Dr. Ruggero Santilli, Chief Executive Officer,
Chairman of the Board and Chief Scientist of MagneGas Corporation, is also the
Chief Executive Officer, Chief Scientist and President of Hyfuels, Inc so as to
expedite the patent work on behalf of both MagneGas Corporation and Hyfuels,
Inc.  It should be noted that Dr. Santilli is not and never has
been a stockholder of Hyfuels, Inc. and is lending his knowledge and expertise
for the mutually beneficial advancement of this technology.   This
intellectual property consists of all relevant patents, patent applications,
trademarks and domain names.  The agreement became effective February
2008, when the Company issued 100,000 shares of common stock valued at $1.00 per
share.  The term of the license agreement is in perpetuity for the
above territories with the exception of (i) bankruptcy or insolvency of the
Company (ii) the filing of the Company of a petition for bankruptcy (iii) the
making by the Company of the assignment of the license for the benefit of
creditors (iv) the appointment of a receiver of the Company or any of its assets
which appointment shall not be vacated within 60 days thereafter (v) the filing
of any other petition for the relief from creditors based upon the alleged
bankruptcy or insolvency of the Company which shall not be dismissed within 60
days thereafter. Additionally, the agreement triggered a 5 year consulting
agreement with Dr. Santilli, whose knowledge and expertise of the
technology is essential in the development of the MagneGas product.
  The terms of the consulting agreement consist of issuance of common
stock (100,000 shares) and payment of $5,000 per month to Dr. Santilli,
upon the determination by the Board of Directors of MagneGas Corporation of
achieving adequate funding.  On December 28, 2008, the company
exercised its’ option to acquire the relevant patents and intellectual property
for the Magnegas Technology for the United States which includes all related
domain names and the Magnegas Trademark.  The Company issued
30,000,000 shares of common stock, valued at the fair market trading value of
the stock at the time of purchase, in exchange for the intellectual
property. The Company continues to operate in the remaining countries of
North, South and Central America and the Carribbean Islands under the
intellectual property license with HyFuels, Inc.





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





At
various times during 2008, the Company received advances from a shareholder for
an unsecured promissory note.  The total of funds amounted to
approximately $60,000.  All funds are at the same terms of the
original shareholder note.  These promissory notes have no repayment
date; however it is payable within 30 days of written demand.  Payment
is to include accrued simple interest at 4%.




F-13




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





The use
of an initial small production refinery has been contributed by
Dr. Ruggero Santilli, Chief Executive Officer, Chief Scientist, and
Chairman of the Board.  The computed fair value of this month to month
rental agreement is $1,870 per month and has been charged to equipment rental
expense in the operating expenses, beginning in July 2008.  To reflect
the contributed value, the corresponding entry has been charged to additional
paid in capital, and is included in the statement of stockholders’
equity.   Total contributed value was $11,220 for the year ended
December 31, 2008 and for the period December 9, 2005 (date of inception)
through December 31, 2008.





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.       Contingencies
and Subsequent Events




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.




During
the first quarter of 2009, the Company received advances from a shareholder for
an unsecured promissory note.  The total of funds amounted to
approximately $100,000.  All funds are at the same terms of the
original shareholder note.  These promissory notes have no repayment
date; however it is payable within 30 days of written demand.  Payment
is to include accrued simple interest at 4%.








F-14






ITEM
9.      CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE





On
October 3, 2008 the Company filed, on Form 8-K notice of change in our principal
auditor.  There have been no disagreements with our successor or
predecessor auditor regarding accounting and financial disclosure.





ITEM
9A.   CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures




Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.





Management's
Annual Report on Internal Control Over Financial Reporting.





The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company.  Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but 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.





Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 3008.  The framework used by
management in making that assessment was the criteria set forth in the document
entitled “ Internal Control – Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that assessment,
our management has determined that as of December 31, 3008, the Company’s
internal control over financial reporting was effective for the purposes for
which it is intended.





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 the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.




Changes
in Internal Control over Financial Reporting





No change
in our system of internal control over financial reporting occurred during the
period covered by this report, fourth quarter of the fiscal year ended December
31, 3008 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.





ITEM
9B.    OTHER INFORMATION





None.





-12-




PART
III





ITEM
10.     DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE


Our
executive officers and directors and their ages as of March 13, 2009 is as
follows:




NAME
              AGE
              POSITIONDr. Ruggero Maria Santilli
              73
              Chairman
      Of the Board, Chief Executive OfficerRichard
      Connelly
              63
              President,
      DirectorLuisa Ingargiola
              41
              Chief
      Financial Officer, Secretary, DirectorCarla Santilli
              69
              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. Ruggero Maria Santilli, 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.  In January 2009, Dr. Santilli was
awarded the Italian Premio Meditteraneo for science and technology following a
cycle of lectures and presentations in Italy.





Richard
Connelly, President.  Proven experience in the management,
distribution, sales and marketing of specialty gases including welding gas,
medical/specialty gases and industrial products. Additionally, Richard has
expertise in the heavy metal working industrial sector and related engineering
and process management.





Primary
corporate experience includes the position of President and CEO of Connelly and
Becker, Inc an industrial, welding and specialty gas distribution company from
2001-2007. Experience also includes National Sales Manager for ABICOR Binzel
Corporation from 1987-2001 where responsibility included the management of
profit centers in 16 regions in 50 states with a $16.5 million budget and $19
million in sales revenue.  Responsibilities included managing Regional
Sales Managers, Customer Service Staff and the Engineering Department. Richard
has directed the CBI network for the Distribution of Specialty Welding Process
and Products managing up to 25 Independent Sales Reps.  Mr. Connelly
received numerous awards including Man of the Year for exceeding a 25% sales
increase in 5 consecutive years and is a lifetime AWS Member.





Richard
holds a Bachelors of Business Management, graduating from Bridgeport University
in 1993.  Richard’s is also an AWS Certified Welding
Instructor.




-13-




Luisa Ingargiola,
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 MBA in Health 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.





Carla Santilli,
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 the 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.




Code
of Ethics






We have
adopted a code of ethics as of April 4, 2007 that applies to our principal
executive officer, principal financial officer, and principal accounting officer
as well as our employees.  Our standards are in writing and are to be
posted on our website at a future time.   The following is a summation of
the key points of the Code of Ethics we adopted:




·
            Honest
      and ethical conduct, including ethical handling of actual or apparent
      conflicts of interest between personal and professional
      relationships;


·
            Full,
      fair, accurate, timely, and understandable disclosure reports and
      documents that a small business issuer files with, or submits to, the
      Commission and in other public communications made by our
      Company;


·
            Full
      compliance with applicable government laws, rules and
      regulations;


·
            The
      prompt internal reporting of violations of the code to an appropriate
      person or persons identified in the code;
and


·
            Accountability
      for adherence to the code.





Corporate
Governance




We are a
small reporting company, not subject to the reporting requirements of Section
13(a) or 15(d) of the Exchange Act respecting any director.  We have
conducted special Board of Director meetings almost every month since inception.
 Each of our directors has attended all meetings either in person or via
telephone conference. We have no standing committees regarding audit,
compensation or other nominating committees.   In addition to the
contact information in private placement memorandum, each shareholder will be
given specific information on how he/she can direct communications to the
officers and directors of the corporation at our annual shareholders meetings.
 All communications from shareholders are relayed to the members of the
Board of Directors.




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
Coastline Corporate Services, Inc. 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
11.     EXECUTIVE COMPENSATION


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 the date of our inception until the fiscal year ended December 31, 2008
and 2007.






-14-





The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the years
ended December 31, 2008, and 2007 in all capacities for the accounts of our
executives, including the Chief Executive Officer (CEO) and Chief Financial
Officer (CFO):





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)2008
                2007
              $0
                $0
              $0
                $0
              $100,000
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $100,000
                $0Richard
      Connelly, President (2)
              2008
                2007
              $29,000
                $0
              $0
                $0
              $364,250
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $393,250
                $0Luisa Ingargiola,
                CFO
      (3)
              2008
                2007
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0Carla Santilli,
      Director
              2008
                2007
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0
              $0
                $0




(1)
            Dr. Santilli
      was appointed as CEO and Chairman of the Board on April 2,
      2007.(2)
            Richard
      Connolly was appointed as President on July 3, 2008.(3)
            Luisa Ingargiola
      was appointed CFO and Director on May 4,
2007.




Additional
Compensation of Directors


All of
our directors are unpaid. Compensation for the future will be determined when
and if additional funding is obtained.




Board
of Directors and Committees




Currently,
our Board of Directors consists of Dr. Ruggero Maria Santilli, Carla Santilli,
and Luisa Ingargiola.  We are actively seeking additional board
members.




Employment
Agreements




Currently,
we have no employment agreements with any of our Directors or
Officers.




Director
Compensation




We have
provided no compensation to our directors for services provided as
directors.




Stock
Option Grants




We have
not granted any stock options to our executive officers since our
incorporation.





ITEM
12.     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 December 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
            Ermanno
      Santilli
              90
      Eastwinds Ct
              Palm
      Harbor, FL 34683
            5,000,000
            5%   -15-
   Common
      Stock
            Luisa Ingargiola (1)
              4826
      Blue Jay Circle
              Palm
      Harbor FL 34683
            15,500,000
            16%Common
      Stock
            Dr. Ruggero Maria Santilli (2)
              90
      Eastwinds Ct
              Palm
      Harbor FL 34683
            45,590,480
            46%Common
      Stock
            Carla Santilli (3)
              90
      Eastwinds Ct
              Palm
      Harbor FL 34683
            42,990,480
            43%Common
      Stock
            Richard
      Connelly (4)
              170
      Countrytyme Lane
              Iron
      Station, NC 28080
            1,530,000
            2%Common
      Stock
            All
      executive officers and directors as a group (4 in number)
            52,620,480
            53%





*   Less
than one (1%) percent.




The
percent of class is based on 99,444,833 shares of common stock issued and
outstanding as of March 5, 2008.





The
following table sets forth all individuals known by the Company to beneficially
own 5% or more of the Company’s common stock, and all officers and directors of
the registrant, with the amount and percentage of stock beneficially owned, as
of December 31, 2008.





ITEM
13.    CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS,
AND DIRECTOR INDEPENDENCE.





The
Company has had limited need for use of office space or
equipment.  Any use of office space or equipment supplied by related
parties has, thus far, been immaterial.





There
have been no other material related party transactions.






-16-





ITEM
14.     PRINCIPAL ACCOUNTING FEES AND
SERVICES





Audit
Fees




The
aggregate fees billed by Pender Newkirk & Company, LLP and Randall N. Drake,
CPA, PA for professional services rendered for the audit of the Company’s
financial statements for the fiscal years ended December 31, 2008, 2007 and for
the period December 9, 2005 (date of inception) through December 31, 2007 for
the review of the Company’s financial statements for the periods ended March 31,
2008, June 30, 2008, and September 30, 2008.   2006
represent fees for review and audits performed by prior auditors Gately &
Associates. Audit fees by year were:





Total
              
              
              Pender
      Newkirk
              
              
              Randall
      N. Drake
              
              
              Gately2008
              
              $
              63,608
              
              
              
              57,608
              
              
              
              6,0002007
              
              $
              24,761
              
              
              
              24,7612006
              
              $
              1,450
              
              
              
              
              
              
              
              
              
              
              
              1,450




Audit Related
Fees





There
were no fees for audit related services for the years ended December 31, 2008
and 2007.





Tax Fees




For the
Company’s fiscal years ended December 31, 2008 and 2007, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.




All Other
Fees




The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended December 31, 2008 and
2007.




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.





Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require
that before our auditor is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:





-approved
by our audit committee; or





-entered
into pursuant to pre-approval policies and procedures established by the audit
committee, provided the policies and procedures are detailed as to the
particular  service,  the  audit committee is
informed of each service, and such policies and procedures do not include
delegation of the audit committee's responsibilities to management.





We do not
have an audit committee.  Our entire board of directors pre-approves
all services provided by our independent auditors.





The
pre-approval process has just been implemented in response to the new rules.
Therefore, our board of directors does  not have  records
of  what percentage of the above fees were
pre-approved.  However, all of the above services and fees were
reviewed and approved by the entire board of directors either before or after
the respective services were rendered.




-17-





PART
IV





ITEM
15.     EXHIBITS, FINANCIAL STATEMENT
SCHEDULES





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




(a)
            During
      the quarter ending December 31, 2008, the Company filed the following
      Exhibits and Form 8Ks:
              ·October
      3, 2008, the Company filed a form 8K for change in auditor.
              ·October
      30, 2008, the Company filed an 8K for a material agreement.
              ·December
      30, 2008, the Company filed an 8K for a material agreement.
              ·December
      30, 2008, the Company filed an DEF 14C for Amendment of the Articles of
      Incorporation(b)
            ExhibitsExhibit
      Number
            Exhibit
      Title31.1
            Certification
      of Dr. Ruggero Santilli pursuant to 18 U.S.C. Section 1350 as
      adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
      2002.31.2
            Certification
      of Luisa Ingargiola, pursuant to 18 U.S.C. Section 1350 as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.32.1
            Certification
      of Dr. Rugerro Maria Santilli pursuant to 18 U.S.C. Section
      1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.32.2
            Certification
      of Luisa Ingargiola, pursuant to 18 U.S.C. Section 1350 as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of
  2002.







-18-





SIGNATURES




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




MagneGas
      CorporationBy:
            /s/ Dr. Ruggero Maria SantilliDr. Ruggero Maria SantilliChief
      Executive OfficerDated:
            March
      26, 2009







In
accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.




Name
                                        Title
                                        Date/s/Ruggero Maria Santilli
                                        Chief
      Executive Officer, Chairman of the Board
                                        March
      26, 2009Ruggero
      Maria Santilli/s/ Luisa Ingargiola
                                        Treasurer,
      Chief Financial Officer
                                        March
      26, 2009Luisa
      Ingargiola/s/ Carla Santilli
                                        Director
                                        March
      26, 2009Carla
      Santilli/s/ Richard Connolly
                                        President,
                                        March
      26, 2009Richard
      Connolly