Cautionary Notice Regarding Forward Looking Statements

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

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

Readers should not place undue reliance on these forward-looking statements, which are based on management's current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-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

Due to the current state of the economy and financial markets, it is been difficult for the Company to achieve its Plan of Operation, primarily due to lack of capital to finance the Plan. As a result, the Company is extending the Plan to cover a 24 month period. During the next twenty four 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 twenty four months is to aggressively seek revenue through the sale of Magnegas for metal working, hydrogen for various industrial uses and equipment sales for the processing of liquid waste. We will pursue worldwide distributors of equipment sales and fuel (with the exception of Europe). In addition, the plan is to install several Plasma Arc Flow Industrial demonstration centers strategically located throughout the United States. These centers will be used to produce fuel to sell to market and to promote equipment sales. One will be installed in a municipal sewage treatment facility to process sludge or sewage, one will be built and used as a refinery for the metal cutting fuel market, one will be developed for converting solar or wind power to hydrogen and several will be built and used to produce fuel for the automotive market. These refineries will be used to promote our core business strategy. During the next twenty four months, we intend to pursue private equity financing in combination with federal and state grant funding, for up to $10 million in various phases using our shares of common stock and through federal and state funds available for renewable energy as part of the 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 the installation of a pilot refinery utilizing the synergies of wind power or solar power to produce fuel with our technology. We will also pursue all needed federal, state and local regulatory permits necessary to implement our operational plan.

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 Pennsylvania, Kentucky and Tampa distributors and will pursue agreements with additional metal cutting fuel distributors throughout the United States. We will aggressively pursue equity and grant financing to obtain sufficient capital to allow us to purchase a fuel distributor in our market, construct refineries and conduct research and development. We intend to actively recruit new board members, corporate and manufacturing staff with appropriate experience. In addition, we will attempt to aggressively expand our world-wide market reach (excluding Europe) through new and existing relationships with fuel distributors, liquid waste and environmental companies.

We anticipate the commencement of our manufacturing of our first MagneGas PlasmaArcFlow for commercial installation, in fulfillment of our Philippines contract after receipt of the next installment payment due.

First Quarter 2010

We plan to begin construction of one PlasmaArcFlow demonstration center to process sludge or sewage at a local municipality. 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 the first phase of our capital raise and to identify potential acquisitions in our market. We will conduct additional research and development as outlined above. We plan to conduct a demonstration at a local car dealership, turning a car dealer into a fuel producer by using automotive liquid waste to produce fuel on site.

We expect the work in process of our Philippines PlasmaArcFlow to be completed and in quality control testing. Delivery and installation is anticipated for the fourth quarter 2009 or first quarter 2010.

We plan to install our Plasma Arc Flow demonstration center at a local Florida sewage treatment facility to process human sludge or sewage. We plan to begin construction of our refinery for the metal working market. We plan to 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.

Third Quarter 2010

We anticipate that we can complete construction of our metal cutting fuel refinery and will begin construction of a third refinery converting solar or wind power to hydrogen with a location to be determined. By the second quarter of 2010, we anticipate being fully operational with two refineries located in the United States and we will begin distribution of fuel through our Philippine distributor. We plan to 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 firsthand the operation of our equipment at an industrial level. We plan to continue to hire operational staff and manufacturing staff in anticipation of new sales.

Fourth Quarter 2010 through Fourth Quarter 2011

We plan to complete construction of the refinery converting solar or wind power to fuel and intend to complete several additional refineries converting liquid waste to fuel for the automotive market. The plan of the Company is to launch the automotive market by turning car dealers into fuel producers. Each car dealer disposes of large volumes of liquid waste in the form of used motor oil, used antifreeze and other waste. This waste can be used to produce fuel, and that fuel can be sold for use in bi-fuel automobiles. Several refineries will be built for these markets and will be strategically placed at car dealers throughout the United States.

The current state of the economy and financial markets has made it difficult for us to achieve our past operational plans and the Company can make no assurance that we will achieve our operational plan in the future.

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 Company has financed its operations primarily through cash generated by the sale of stock through a private offering. We believe we can not currently satisfy our cash requirements for the next twelve months with our current cash and expected revenues from our private placement and sales. However, management plans to increase revenue and obtain additional financing in order to sustain operations for at least the next twelve months. We have already sold shares to support our continued operations. However, completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated.

In the absence of our projected revenues, we may be unable to proceed with our plan of operations. Even without significant revenues within the next twelve months, we still anticipate being able to continue with our present activities, but we will require financing to potentially achieve our goal of profit, revenue and growth.

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

As reflected in the unaudited financial statements, we are in the development stage, and have an accumulated deficit from inception of $2,317,538 and have a negative cash flow from operations of $507,307 from inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At September 30, 2009 the Company had minimal cash resources to meet current obligations. The Company may rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses until operations generate cash flows sufficient to support the on-going business.

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

In effort to achieve revenue plans we have been concentrating on selling MagneGas as a metal cutting fuel. We have received firm orders from several 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 the installation of a plant scale test at a local sewage treatment facility processing sludge. To fund operations, the Company has raised $377,500, since inception, in cash proceeds via sales of common stock to date and raised an additional $197,100 in cash proceeds from a shareholder loans since inception. Additionally, to deliver on the metal cutting gas orders we have the commitment of six persons dedicated to the fulfillment of orders and it is headed by a well known industry consultant, whom we have named as president to help develop operating guidelines as well as being instrumental in the marketing and development of our brand offering.

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

Metal Cutting Magnegas: 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 April of 2009, the Company established a relationship with Crumpton Welding Supply in Florida to distribute Magnegas at each of their four locations. In order to better support this relationship, the Company hired an outside sales representative as an independent contractor to partner with Crumpton to generate sales in their territory. In addition, the Company has a relationship with a small distributor, Boca Industries in Atlanta, Georgia. Boca Industries has closed their Atlanta location and is in the process of relocating to North Carolina and as a result will no longer be distributing fuel to the Atlanta based market. The Company will revisit the relationship with Boca after they have moved to their new location. The Company also established a relationship with York Welding Supply in Pennsylvania and Holston Gas Company in Kentucky to distribute fuel. The Company has identified two additional independent sales representatives to support these relationships

Letter of Intent: A non-binding letter of intent was agreed, in principal with a local municipality's water treatment facility. Our existing prototype equipment is being modified for the specifics required for this project. The initial fuel generated from this project will be sold in the metal cutting market. At this time we are unable to accurately estimate the volume that will be processed. Upon completion of the 12 month test the contract will be evaluated and subject to renegotiation. No date has been determined when this project is to commence and funding will be required to implement this project as per our plan of operations.

Results of Operations

For the three and nine months ended September 30, 2009, 2008 and for the period December 9, 2005 (date of inception) through September 30, 2009.

Selected Historical Data

                        Three Months Ended             Nine Months Ended
                           September 30,                 September 30,
                        2009           2008           2009           2008
Revenues             $    1,300     $    1,072     $    5,351     $    9,151
Gross Profit                412            (30 )          915              5
Operating Expenses      494,531        489,918        913,741        777,240
Net Loss             $ (495,486 )   $ (490,421 )   $ (917,641 )   $ (780,975 )

Revenues

For the three and nine months ended September 30, 2009 and 2008 we generated revenues of $1,300, $1,072, $5,351, and $9,151, respectively from our metal cutting fuel sales operations. The year-to-date decrease was due to the general economic conditions as it affects almost all production and construction areas, creating inconsistent orders. The results of our marketing have not generated the revenue we had anticipated, believed to be due to the economy and the target market channels inability to commit funds for new technology and capital expenditures.

Operating Expenses

Operating costs were incurred in the amount of $494,531, $489,918, $913,741 and $777,240 for the three and nine months ended September 30, 2009 and 2009. The increase was attributable to the issuance of common stock for services. The Company has been allocating resources, primarily through the issuance of stock in payment, for advertising and promotion of the technology. Professional fees also remain a significant portion of the operating expenses due to public filing requirements. The major expenses incurred have been for professional and non-cash stock based compensation and account for the variances in costs from comparative prior year costs.

Net Loss

Net losses incurred in all periods presented have been primarily due to the operating costs. These expenses resulted in the net losses in the amount of $495,486, $490,421, $917,641 and $780,975 for the three and nine months end September 30, 2009 and 2008 respectively. The Company incurred net losses of $2,317,538 for the period December 9, 2005 (date of inception) through September 30, 2009, respectively. The increase in the year over year net loss was due primarily from general and administrative expenses, particularly professional services and stock-based payments for advertising. At this time, normal costs of public filing will continue and it is not known when significant revenues will occur to off-set these expenses.

Liquidity and Capital Resources

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

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

As reflected in the unaudited financial statements, we are in the development stage, and have an accumulated deficit from inception of $2,317,538 and have a negative cash flow from operations of $507,307 from inception. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and implement its business plan. The unaudited financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At September 30, 2009 the Company had minimal cash to meet current obligations. The Company may rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses until operations 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

Subsequent Events

The Company is currently in negotiations with companies to expanded territories in the development of the MagneGas technologies. As of September 30, 2009, there are agreements in principle, with completion upon transfer of title.

The events subsequent to the date of our report are detailed in the notes to the unaudited financial statements.

Recent Accounting Pronouncements

We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. 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. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. Those standards have been addressed in the notes to the unaudited financial statement and in our Annual Report, filed on Form 10-K for the period ended December 31, 2008.

Critical Accounting Policies

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

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. 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.

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did not recognize any impairment losses for any periods presented.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.