<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
----------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
COMMISSION FILE NUMBER: 0-29185
SAVE THE WORLD AIR INC
(Exact Name of Small Business Issuer as Specified in Its Charter)
----------------
Nevada 52-2088326
------ ----------
(State of incorporation) (I.R.S. Employer Identification No.)
................................................................................
1285 Avenue of the Americas, 35th Floor
New York, NY 10019-6028
(Address of principal executive offices)
Phone 212 - 554 4197
(Issuer's telephone number)
................................................................................
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE.
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
----------------
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the numbers of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Transitional Small Business Disclosure Format (Check one):
Yes No
--- ---
================================================================================
<PAGE>
TABLE OF CONTENTS PAGE
----------------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Independent Auditors' Report 2
(b) Balance Sheet 3
(c) Statement of Operations 4
(d) Statement of Changes in Stockholders' Equity 5
(e) Statement of Cashflows 6
(f) Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
Item 3. Risks
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults On Senior Securities
Item 4. Submission of Items to a Vote
Item 5. Other Information
Item 6.
(a) Exhibits
(b) Reports on Form 8K
SIGNATURES 12
FINANCIAL DATA SCHEDULE
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
INDEPENDENT AUDITORS REPORT
The Board of Directors
Save the World Air, Inc.
1285 Ave of the Americas, 35th Flr,
New York
NEW YORK 10019-6028
We have audited the accompanying balance sheet of Save the World Air, Inc as at
June 30, 2000 and the related statements of operations, stockholder's equity and
cash flows for the period January 1, 2000 to June 30, 2000. 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 audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. 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 provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Save the World Air, Inc. as of
June 30, 2000 and the results of its operations and its cash flows for the
period January 1, 2000 to June 30, 2000, in conformity with generally accepted
principles.
/s/ Kevin Hoiberg
------------------------------------
AUDITOR
August 5, 2000
2
<PAGE>
SAVE THE WORLD AIR, INC.
BALANCE SHEET
AS AT JUNE 30 2000
Jun-30 Dec-31
2000 1999
---------- ----------
ASSETS
CURRENT ASSETS
Cash at Bank - 595
---------- ----------
- 595
FIXED ASSETS
Marketing and Manufacturing Rights
Zero Pollution Fuel Device 5,000 5,000
---------- ----------
TOTAL ASSETS $ 5,000 $ 5,595
========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Loan - J & L Muller 187,902 -
STOCKHOLDERS EQUITY
Common Stock 200,000,000 shares authorised
at $.001 par value. 15,623,433 issued
and outstanding 15,623 15,297
Capital in excess of par 14,270 14,270
Accumulated Deficit (212,795) (23,972)
---------- ----------
TOTAL LIABILITY AND STOCKHOLDERS EQUITY $ 5,000 $ 5,595
========== ==========
Approved by the Board
The accompanying notes are an integral part of these financial accounts
3
<PAGE>
SAVE THE WORLD AIR INC
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2000
Jun-30 Dec-31
2000 1999
---------- ----------
INCOME
Sale of Licences for Distributorships - 125,000
Consultancy Fees 9,980 -
---------- ----------
9,980 125,000
========== ==========
GENERAL AND ADMINISTRATIVE EXPENSES
Accommodation 40,811 -
Accounting fees 4,875 -
Bank Charges 873 144
Car Hire 4,865 -
Computer Services 2,597 -
Consulting Fees 65,027 3,867
Filing Fees 1,581 -
Internet Services 3,337 -
Mineral Claims Written Off 1,955 -
Postage Fees 74 -
Printing & stationery 147 1,053
Professional Fees 1,021 62,500
Radio and PR Fees 13,594 -
Rent 1,216 -
Secretarial Fees 866 11,164
Telephone Costs 4,393 -
Transfer Agents Fees 13,018 -
Travel Costs 40,508 46,982
---------- ----------
TOTAL COSTS 198,803 127,665
---------- ----------
PROFIT (LOSS) FOR PERIOD $(188,823) $ (2,665)
========== ==========
Loss per Common Share
Primary $ 0 $ 0
========== ==========
The accompanying notes are an integral part of these financial accounts
4
<PAGE>
SAVE THE WORLD AIR, INC
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
DATE OF INCEPTION TO JUNE 30, 2000
Common stock Capital in Accumulated
in Shares Excess of Deficit
Par Value
Balance February 18, 1998
(Date of Inception)
Issuance of Common Stock
Cash at $0.015 March 3 1998 4,000,000 2,000 -
Issuance of Common Stock
Cash at $0.003 March 5 1998 6,000,000 12,000
Issuance of Common Stock
Cash at $0.01 per Share 30,000 270
Issuance of Common Stock for
services rendered at $0.001 267,125
Issuance of Common Stock for
exchange of marketing rights 5,000,000
Issuance of Common Stock for
services rendered at $0.001
for the period 1 January to 31
Mar-00 120,000
Issuance of Common Stock for
services rendered at June 2000
at $.001 206,308
Net Accumulated Losses to
30-Jun-00 (212,795)
---------------------------------------------
BALANCE AS AT JUNE 30 2000 15,623,433 $ 14,270 $(212,795)
=============================================
The accompanying notes are an integral part of these financial accounts
5
<PAGE>
SAVE THE WORLD AIR, INC.
STATEMENT OF CASHFLOWS
JANUARY 1, 2000 TO JUNE 30, 2000
Jun-30 Dec-31
2000 1999
--------- ---------
CASHFLOWS FROM OPERATING ACTIVITIES
Cashflow arising from trading activities (188,823) (2,665)
Adjustments to reconcile net loss to net
cash provided by operating activities:
* Write off of Mineral Claims 1,955 -
* Consultancy Fees paid in Shares 326 267
--------- ---------
NET CASH PROVIDED BY OPERATIONS (188,497) (443)
CASHFLOWS FROM INVESTING ACTIVITIES
CASHFLOWS FROM FINANCING ACTIVITIES
Loan J & L Muller 187,902 -
NET INCREASE IN CASH (595) (443)
CASH AT BEGINNING OF PERIOD 595 38
CASH AT END OF PERIOD 0 (405)
The accompanying notes are an integral part of these financial accounts
6
<PAGE>
SAVE THE WORLD AIR, INC.
NOTES TO THE FINANCIAL STATEMENTS
June 30 2000
1. DESCRIPTION OF THE BUSINESS
The Company was incorporated under the Corporate Charter issued by the
Secretary of State of Nevada in the United States on February 18, 1998.
The company holds the rights to manufacture and market a device that
decreases among other things, the carbon monoxide output on internal
combustion engines.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements have been prepared in accordance with
accounting principles generally accepted and include the following
accounting principles.
(a) BASIS OF PRESENTATION - GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realisation of assets and
satisfaction of liabilities in the normal course of business. The
company has been engaged in the identification and development of its
product known as the zero emission fuel saving device. The Company's
ability to meet its obligations and successfully develop its project
and, ultimately, to attain profitable operations is dependent upon
further developing and marketing the device and obtaining additional
financing from either third parties or its present shareholders.
(b) ACCOUNTING METHODS
The Company recognises income and expenses based on the accrual method
of accounting.
7
<PAGE>
SAVE THE WORLD AIR, INC.
NOTES TO THE FINANCIAL STATEMENTS
June 30 2000
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
(c) DIVIDEND POLICY
The Company has not yet adopted any policy regarding the payment of
dividends.
(d) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid instruments purchased with a
maturity, at the time of purchase, of less than three months, to be
cash equivalents.
(e) LOSS PER SHARE
Primary loss per share amount is computed based on the weighted average
number of shares actually outstanding during the period reported on.
Fully diluted loss per share is computed under the same basis since
there are not warrants or share subscriptions outstanding.
(f) INCOME TAXES
For the period ended June 30 2000 (the date of these financial
statements), the Company's operating expenditure exceeded income by
$188,823. The tax benefits from the loss carried forward is offset by a
valuation reserve because the future tax benefit is indeterminable.
The net operating loss carryover will expire beginning in the year 2000
through 2013.
8
<PAGE>
SAVE THE WORLD AIR, INC.
NOTES TO THE FINANCIAL STATEMENTS
June 30 2000
2. SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
(g) FOREIGN CURRENCY TRANSLATION
The translations of the Company completed in foreign dollars have been
translated to US dollars. Assets and liabilities are translated at the
year end exchange rates and the income and expenses at the average
rates of exchange prevailing during the period reported on. Any gains
or loss resulting from the translations would be shown in the Statement
of Operations.
(h) FINANCIAL INSTRUMENTS
For cash, deposit and accounts payable and accrued liabilities, the
carrying amount of these financial instruments approximates their fair
value due to their short-term maturity capacity of prompt liquidation
or settlement. The account payable does not bear any interest thereon.
(i) OPTIONS ISSUED
The company has issued options over 5 million shares to Mr and Mrs
Muller.
9
<PAGE>
SAVE THE WORLD AIR INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: ALL FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE COVERED BY AND TO
QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THE SHAREHOLDERS AND PROSPECTIVE SHAREHOLDERS
SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING
STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN.
THESE FORWARD - LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT
FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS
AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE
FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE
TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF
WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD - LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD -
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL
EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S
RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH STATEMENT
SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON
THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.
The Company was incorporated in February 1998 and the sole purpose of the
Company is the manufacture and distribution of the device commonly referred to
as the Zero Emission Fuel Saving Device ("ZEFS").
The Company has yet to make a profit and the Board of Directors believe that the
Company will not make a profit in the immediate future.
The purpose of the Company is to develop the technology and then to sell
Country, Regional and Area licences world wide for the distribution of the
device. At the same time, the Company continues to research and develop the
product for increasing technological efficiency. It is also examining the market
capabilities of other new environmentally friendly technologies.
The Company does not have the liquidity nor the funding surplus to continue
either its research and development or its day to day operations. These costs
are being met from the personal resources of the majority shareholder. Once the
Company reaches a level of profitability, the shareholder's loans will be
expected to be repaid by the Company together with any deferred compensation due
to the shareholder.
This shareholder has not placed an upper limit on the Company expenditure, but
the Company anticipates that its reliance on this shareholder will diminish
within the next two fiscal quarters as distribution licences are sold within
mainland America and other countries.
The comparison of the second quarter and first six months of 2000 with the
second quarter and first six months of 1999 indicates that the Company has
increased its level of spending on company operations. Marketing efforts will be
stepped up as finances allow.
Item 3. RISKS
The Company will continue in its efforts to raise capital. There can be no
assurance that the Company will be able to obtain capital.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings NONE
Item 2. Changes in securities and use of proceeds NONE
Item 3. Defaults on senior securities NONE
Item 4. Submission of items to a vote NONE
Item 5. Other information NONE
Item 6.
a) Exhibits NONE
b) Reports on 8K NONE
11
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
SAVE THE WORLD AIR, INC.
(REGISTRANT)
Signature Title Date
--------- ----- ----
/s/ Jeffrey A. Muller Chairman and President August 20, 2000
---------------------------
(Jeffrey A. Muller)
12
