x

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Nevada	52-2088326
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Large accelerated filer o	Accelerated filer  o
Non-accelerated filer  o  (Do not check if a smaller reporting company)	Smaller reporting company  x

 

 

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

 

		Three months ended								February 18, 1998
		March 31,				March 31,				(inception) to
		2009				2008				March 31, 2009
Net sales		$	—			$	—			$	69,000
Cost of goods sold			—				—				24,120
Gross profit			—				—				44,880
Operating expenses			840,818				760,142				30,767,758
Research and development expenses			246,840				259,670				5,705,433
Non-cash patent settlement cost			—				—				1,610,066
Loss before other income(expense)			(1,087,658	)			(1,019,812	)			(38,038,377	)
Other income(expense)
Other income (loss)			—				200				(1,140	)
Interest income			—				354				16,342
Interest expense			(464,560	)			(327,003	)			(6,418,866	)
Loss on sale of equipment			—				(9,683	)			(14,426	)
Settlement of debt due Morale/Matthews			—				(927,903	)			(927,903	)
Settlement of litigation and debt			—				—				1,089,088
Net loss		$	(1,552,218	)		$	(2,283,847	)		$	(44,295,282	)
Net loss per common share, basic and diluted		$	(0.02	)		$	(0.05	)
Weighted average common shares outstanding, basic and diluted			63,964,895				49,551,981

 

 

 

See notes to condensed consolidated financial statements

4

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

		Price per				Common Stock								Common Stock to be				Additional Paid-in				Deferred				Deficit Accumulated During the Development			Total Stockholders’
		Share				Shares				Amount				Issued				Capital				Compensation				Stage			Deficiency
Balance, February 18, 1998  (date of inception)							—			$	—			$	—			$	—			$	—			$	—		$	—
Issuance of common stock on April 18, 1998			.0015 - .01				10,030,000				10,030				—				14,270				—				—			24,300
Net loss							—				—				—				—				—				(21,307	)		(21,307	)
Balance, December 31, 1998							10,030,000			$	10,030			$	—				14,270			$	—			$	(21,307	)	$	2,993
Issuance of common stock on May 18, 1999			1.00 - 6.40				198,003				198				—				516,738				—				—			516,936
Issuance of common stock for ZEFS on September 14, 1999			.001				5,000,000				5,000				—				—				—				—			5,000
Stock issued for professional services on May 18, 1999			0.88				69,122				69				—				49,444				—				—			49,513
Net loss							—				—				—				—				—				(1,075,264	)		(1,075,264	)
Balance, December 31, 1999							15,297,125			$	15,297			$	—			$	580,452			$	—			$	(1,096,571	)	$	(500,822	)

 

 

(continued)

5

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

	Price per		Common Stock							Common Stock to be			Additional Paid-in			Deferred			Deficit Accumulated During the Development			Total Stockholders’
	Share		Shares				Amount			Issued			Capital			Compensation			Stage			Deficiency
Balance, December 31, 1999				15,297,125			$	15,297		$	—		$	580,452		$	—		$	(1,096,571	)	$	(500,822	)
Issuance of common stock for services	$0.38 - $5.31			305,810				306			—			588,704			—			—			589,010
Stock issued for employee compensation on February 8, 2000	$1.03-$5.31			42,000				42			—			137,378			—			—			137,420
Stock issued for directors fees	$3.38-$4.44			56,000				56			—			195,584			—			—			195,640
Common stock cancelled				(55,000	)			(55	)					(64,245	)								(64,300	)
Net loss				—				—			—			—			—			(1,270,762	)		(1,270,762	)
Balance, December 31, 2000				15,645,935				15,646			—			1,437,873			—			(2,367,333	)		(913,814	)
Issuance of common stock for services	$0.25-$1.65			1,339,912				1,340			—			1,031,231			—			—			1,032,571
Stock issued for directors fees	$0.60-$0.95			1,100,000				1,100						1,008,900									1,010,000
Intrinsic value of options issued to employees														2,600,000			(2,600,000)						—
Fair value of options issued to non-employees														142,318									142,318
Amortization of deferred compensation																	191,667						191,667
Net loss																				(2,735,013	)		(2,735,013	)
Balance, December 31, 2001				18,085,847			$	18,086		$	—		$	6,220,322		$	(2,408,333	)	$	(5,102,346	)	$	(1,272,271	)

 

 

(continued)

6

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

		Price per				Common Stock							Common Stock to be				Additional Paid-in				Deferred				Deficit Accumulated During the Development				Total Stockholders’
		Share				Shares				Amount			Issued				Capital				Compensation				Stage				Deficiency
Balance, December 31, 2001							18,085,847			$	18,086		$	—			$	6,220,322			$	(2,408,333	)		$	(5,102,346	)		$	(1,272,271	)
Stock issued for directors fees			0.40				2,150,000				2,150			—				857,850				—				—				860,000
Common stock sold (2,305,000  shares)			0.15-0.25				—				—			389,875				—				—				—				389,875
Fair value of options issued to non-employees for services							—				—			—				54,909				(54,909	)			—				—
Amortization of deferred compensation							—				—			—				—				891,182				—				891,182
Net loss							—				—			—				—				—				(2,749,199	)			(2,749,199	)
Balance, December 31, 2002							20,235,847				20,236			389,875				7,133,081				(1,572,060)				(7,851,545	)			(1,880,413	)
Common stock issued previously paid for			0.15-0.25				2,305,000				2,305			(433,750	)			431,445				—				—				—
Sale of common stock		$	0.25				9,504,000				9,504							2,366,439				—				—				2,375,943
Issuance of common stock for services		$	0.55				83,414				83			—				45,794				—				—				45,877
Common stock issued for convertible debt		$	0.25				2,000,000				2,000							498,000				—				—				500,000
Finders’ fees related to stock issuances							—				—			43,875				(312,582	)			—				—				(268,707	)
Common stock sold (25,000  shares)			0.25				—				—			6,250				—				—				—				6,250
Amortization of deferred comp							—				—			—				—				863,727				—				863,727
Net loss																										(2,476,063	)			(2,476,063	)
Balance, December 31, 2003							34,128,261			$	34,128		$	6,250			$	10,162,177			$	(708,333	)		$	(10,327,608	)		$	(833,386	)

 

 

(continued)

7

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

		Price per				Common Stock							Common Stock to be			Additional Paid-in				Deferred				Deficit Accumulated During the Development				Total Stockholders’
		Share				Shares				Amount			Issued			Capital				Compensation				Stage				Deficiency
Balance, December 31, 2003							34,128,261			$	34,128		$	6,250		$	10,162,177			$	(708,333	)		$	(10,327,608	)		$	(833,386	)
Common stock issued previously paid for		$	.25				25,000				25			(6,250)			6,225												—
Sale of common stock		$	1.00				1,272,500				1,273			119,000			1,271,227				—				—				1,391,500
Stock issued for services		$	.15-$1.70				1,268,560	1,			1,268						1,388,663												1,389,931
Stock issued for directors fees		$	1.50				50,000				50			—			74,950				—				—				75,000
Common stock issued for convertible debt		$	1.53				60,000				60						91,740				—				—				91,800
Common stock issued upon exercise of warrants and options		$	.20 -$.40				960,500				960			—			193,240				—				—				194,200
Common stock issued for patent settlement		$	1.24				20,000				20						24,780												24,800
Fair value of warrants issued																	1,614,138												1,614,138
Fair value of options issued to employees							—				—			—			248,891				(248,891	)			—				—
Fair value of options issued to non-employees							—				—			—			55,381				(55,381	)			—				—
Amortization of deferred compensation							—				—			—			—				936,537				—				936,537
Finders’ fees related to stock issuances																	(88,384	)
Net loss							—				—			—			—				—				(6,803,280	)			(6,803,280	)
Balance, December 31, 2004							37,784,821			$	37,784		$	119,000		$	15,043,028			$	(76,068	)		$	(17,130,888	)		$	(2,007,144	)

 

 

 

(continued)

8

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

	Price per		Common Stock							Common Stock to be			Additional Paid-in				Deferred				Deficit Accumulated During the Development				Total Stockholders’
	Share		Shares				Amount			Issued			Capital				Compensation				Stage				Deficiency
Balance, December 31, 2004				37,784,821			$	37,784		$	119,000		$	15,043,028			$	(76,068	)		$	(17,130,888	)		$	(2,007,144	)
Common stock issued previously paid for	$1.00			119,000				119			(119,000	)		118,881				—				—				—
Sale of common stock	$1.00			1,530,500				1,530						1,528,970				—				—				1,530,500
Common stock issued upon exercise of warrants	$.40 - $1.00			500				1			—			199				—				—				200
Common stock to be issued for settlement of payables											612,521															612,521
Fair value of options issued for settlement costs														31,500												31,500
Fair value of warrants issued														18,462												18,462
Fair value of warrants issued and intrinsic value of beneficial conversion associated with convertible notes														1,453,181												1,453,181
Fair value of options issued to employees				—				—			—			243,750				(243,750	)			—				—
Amortization of deferred compensation				—				—			—			—				177,631				—				177,631
Finders’ fees related to stock issuances														(109,840	)											(109,840	)
Common stock cancelled				(8,047,403	)			(8,047	)					8,047												—
Net loss				—				—			—			—				—				(3,115,186	)			(3,115,186	)
Balance, December 31, 2005				31,387,418			$	31,387		$	612,521		$	18,336,178			$	(142,187	)		$	(20,246,074	)		$	(1,408,175	)

 

 

(continued)

9

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

	Price per		Common Stock							Common Stock to be			Additional Paid-in				Deferred				Deficit Accumulated During the Development				Total Stockholders’
	Share		Shares				Amount			Issued			Capital				Compensation				Stage				Deficiency
Balance, December 31, 2005				31,387,418			$	31,387		$	612,521		$	18,336,178			$	(142,187)			$	(20,246,074	)		$	(1,408,175	)
Common stock issued previously paid for				846,549				847			(612,521	)		611,674				—				—				—
Sale of common stock	$1.00 - $1.89			1,360,537				1,360			60,000			2,401,048				—				—				2,462,408
Common stock issued upon exercise of warrants	$.50 - $1.50			2,583,533				2,584			—			1,794,944				—				—				1,797,528
Common stock to be issued for convertible debt	$.70			3,416,186				3,417						2,356,449												2,359,866
Common stock to be issued for  out of line of credit	$.55 - $1.22			487,483				487						379,610												380,097
Fair value of options issued to employees				—				—			—			2,253,263								—				2,253,263
Fair value of options issued for settlement costs														31,500												31,500
Fair value of warrants issued for services														463,627												463,627
Fair value of warrants issued and intrinsic value of beneficial conversion associated with convertible notes														1,259.696												1,259,696
Write off of  deferred compensation				—				—			—			(142,187	)			142,187				—				—
Finders’ fees related to stock issuances														(284,579	)											(284,579	)
Fees paid on equity line of credit														(30,402	)											(30,402	)
Net loss				—				—			—			—				—				(10,181,523	)			(10,181,523	)
Balance, December 31, 2006				40,081,757			$	40,082		$	60,000		$	29,430,821			$	—			$	(30,427,597	)		$	(896,694	)

 

 

(continued)

10

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

	Price per		Common Stock								Common Stock to be				Additional Paid-in				Deficit Accumulated During the Development				Total Stockholders’
	Share		Shares				Amount				Issued				Capital				Stage				Deficiency
Balance, December 31, 2006				40,081,757			$	40,082			$	60,000			$	29,430,821			$	(30,427,597	)		$	(896,694
Common stock issued previously paid for				2,597,524				2,598				(60,000	)			57,402				—				—
Common stock to be issued for convertible debt	$.17 - $.53			1,910,711				1,911								524,569								526,480
Common stock  issued for  put of line of credit	$.27 - $.73			1,880,421				1,880								990,175								992,055
Common stock granted for services												4,000												4,000
Fair value of options issued to employees				—				—				—				67,592				—				67,592
Fair value of warrants issued for services																35,340								35,340
Fair value of warrants issued and intrinsic value of beneficial conversion associated with convertible notes																1,253,548								1,253,548
Fees paid on equity line of credit																(79,364	)							(79,364	)
Net loss				—				—				—				—				(6,262,743	)			(6,262,743	)
Balance, December 31, 2007				46,470,413			$	46,471			$	4,000			$	32,280,083			$	(36,690,340	)		$	(4,359,786	)

 

 

 

(continued)

11

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

	Price per		Common Stock								Common Stock to be				Additional Paid-in				Deficit Accumulated During the Development				Total Stockholders’
	Share		Shares				Amount				Issued				Capital				Stage				Deficiency
Balance, December 31, 2007				46,470,413			$	46,471			$	4,000			$	32,280,083			$	(36,690,340	)		$	(4,359,786	)
Common stock issued for convertible debt	$.17 - $.53			5,575,082				5,574				16,500				1,936,171				—				1,958,245
Common stock issued for Morale/ Matthews settlement	$.38			7,421,896				7,422				—				2,776,289				—				2,783,711
Common stock issued for services	$.17 - $.49			2,398,850				2,399				—				516,230				—				518,629
Common stock issued upon exercise of warrants	$.50			1,064,650				1,065				—				531,260				—				532,325
Fair value of options issued as compensations	—			—				—				—				645,745				—				645,745
Fair value of warrants issued and intrinsic value of beneficial conversion associated with convertible notes	—			—				—				—				1,323,077				—				1,323,077
Fair value of warrants issued to PIPE holders	—			—				—				—				116,913				—				116,913
Common stock issued for services	0.17			10,000				10				(4,000	)			3,990				—				—
Net loss	—			—				—				—				—				(6,052,724	)			(6,052,724
Balance, December 31, 2008				62,940,891			$	62,941			$	16,500			$	40,129,758			$	(42,743,064	)		$	(2,533,865	)

 

 

(continued)

12

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SAVE THE WORLD AIR, INC.

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY (continued)

FROM FEBRUARY 18, 1998 (INCEPTION) TO MARCH 31, 2009

 

	Price per		Common Stock								Common Stock to be				Additional Paid-in				Deficit Accumulated During the Development				Total Stockholders’
	Share		Shares				Amount				Issued				Capital				Stage				Deficiency
Balance, December 31, 2008				62,940,891			$	62,941			$	16,500			$	40,129,758			$	(42,743,064	)		$	(2,533,865	)
Common stock issued for convertible debt	0.15-0.50			1,065,588				1,066				(16,500	)			225,763				—				210,329
Common stock issued for services	0.17-0.49			442,355				442				—				151,171				—				151,613
Common stock issued for settlement of accounts payable	0.27			50,000				50								13,450								13,500
Fair value of options issued as compensation	—			—				—				—				22,249				—				22,249
Fair value of warrants issued and intrinsic value of beneficial conversion associated with convertible notes	—			—				—				—				474,820				—				474,820
Net loss	—			—				—				—				—				(1,552,218	)			(1,552,218)
Balance, March 31, 2009				64,498,834			$	64,499			$	—			$	41,017,211			$	(44,295,282	)		$	(3,213,572	)

See notes to consolidated financial statements.

 

13

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SAVE THE WORLD AIR, INC. AND SUBSIDIARY

 (A DEVELOPMENT STAGE ENTERPRISE)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

		Three months ended								February 18, 1998
		March 31,				March 31,				(inception)
		2009				2008				To March 31, 2009
Cash flows from operating activities
Net loss		$	(1,552,218	)		$	(2,283,847	)		$	(44,295,282	)
Adjustments to reconcile net loss to net cash used in operating activities:
Write off of intangible assets			—				—				505,000
Settlement of litigation and debt			—				—				(1,017,208	)
Settlement of debt due Morale/Matthews			—				927,903				927,903
Stock based compensation expense			22,249				21,818				3,637,170
Issuance of common stock for services			151,613				501,037				5,355,844
Issuance of options for legal settlement			—				—				31,500
Issuance of warrants for legal settlement			—				—				4,957
Issuance of warrants for financing fees			—				116,913				152,253
Non-cash increase in convertible notes recorded as expense			—				89,470				163,962
Patent acquisition cost			—				—				1,610,066
Amortization of issuance costs and original issue debt discounts including beneficial conversion feature-part of interest expense			463,367				471,643				6,081,676
Amortization of deferred compensation			—				—				3,060,744
Loss on disposition of assets			—				9,683				14,426