10-Q 1 ozone-10q_093008.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2008 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number 000-09908 THE OZONE MAN, INC. ________________________________________________________________________________ (Exact name of registrant as specified in its charter) Florida 59-1947988 ________________________________________________________________________________ (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 9454 Wilshire Blvd., Penthouse, Beverly Hills, CA 90212 ________________________________________________________________________________ (Address of principal executive offices) (Zip Code) (800) 525-1698 ________________________________________________________________________________ (Registrant's telephone number, including area code) Not Applicable ________________________________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] 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 [ ] Accelerated filer [ ] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of November 10, 2008 the registrant had 32,474,515 shares of common stock outstanding. 1 TABLE OF CONTENTS PART I: FINANCIAL INFORMATION Item 1. Financial Statements 2 Unaudited Condensed Consolidated Balance Sheet 4 Unaudited Condensed Consolidated Statement of Operations 5 Unaudited Condensed Consolidated Statement of Stockholders' Equity 6 Unaudited Condensed Consolidated Statement of Cash Flows 7 Notes to Unaudited Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis or Plan of Operation 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Item 4. Controls and Procedures 14 PART II: OTHER INFORMATION Item 1. Legal Proceedings 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits 15 Signatures 15 2 PART I: FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The financial information set forth below with respect to our statements of operations for the three and nine month period ended September 30, 2008 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the periods presented and are not necessarily indicative of results to be expected for any subsequent period. UNAUDITED INFORMATION The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year. 3 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited) September 30, 2008 December 31, 2007 ------------------ ----------------- ASSETS ------ Current Assets: --------------- Cash and Cash Equivalents $ 534,734 $ 3,095 Accounts Receivable 884 - Prepaid Insurance 3,284 - ------------------ ----------------- Total Current Assets 538,902 3,095 ------------------ ----------------- Property and Equipment - net 223,268 - ------------------ ----------------- Other Assets: ------------- Indefinite-Life Intangible Assets 111,100 - Security Deposits 4,540 - ------------------ ----------------- Total Other Assets 115,640 - ------------------ ----------------- TOTAL ASSETS $ 877,810 $ 3,095 ================== ================= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- Current Liabilities: -------------------- Accounts Payable and Accrued Expenses $ 152,982 $ 6,857 Current Portion of Long-Term Debt 12,701 - Convertible Note Payable - net of discount of $0 as of September 30, 2008 and $14,444 as of December 31, 2007 25,000 10,556 ------------------ ----------------- Total Current Liabilities 190,683 27,413 ------------------ ----------------- Long-Term Debt. Net of Current Portion 38,379 - ------------------ ----------------- Total Liabilities 229,062 27,413 ------------------ ----------------- COMMITMENTS AND CONTINGENCIES Stockholders' Equity (Deficit): ------------------------------- Preferred Stock, $25 par value; 1,000,000 shares authorized, none issued and outstanding - - Common Stock, $.01 par value, 75,000,000 shares authorized; 32,252,295 and 34,940,437 shares issued and outstanding, at September 30, 2008 and December 31, 2007, respectively. 322,523 349,404 Additional Paid-in Capital 2,251,182 29,900 Accumulated Deficit (370,762) (370,762) Accumulated Deficit During the Development Stage (1,554,195) (32,860) ------------------ ----------------- Total Stockholders' Equity (Deficit) 648,748 (24,318) ------------------ ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 877,810 $ 3,095 ================== =================

The accompanying notes are an integral part of these financial statements. 4 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

For the For the Three For the Nine For the Period Period Months Months September 5, September 5, Ended Ended 2007 2007 (Inception) September September (Inception) to to Sept 30, 2007 30, 2008 30, 2008 Sept 30, 2008 ---------------- ---------------- ---------------- ---------------- Net Revenues: $ - $ 3,086 $ 3,086 $ 3,086 ------------- ---------------- ---------------- ---------------- ---------------- Costs and Expenses: ------------------- Professional and Consulting Fees - 886,489 1,047,065 1,060,940 Merger Expense - - - 25,000 Other General and Administrative Expenses - 172,993 461,803 470,232 ---------------- ---------------- ---------------- ---------------- Total Costs and Expenses - 1,059,482 1,508,868 1,556,172 ---------------- ---------------- ---------------- ---------------- Loss from Operations - (1,056,396) (1,505,782) (1,553,086) ---------------- ---------------- ---------------- ---------------- Other Income (Expenses): ------------------------ Financing Costs - - (14,444) (25,000) Forgiveness of Debt - - - 25,000 Interest (Expense) - (1,109) (1,109) (1,109) ---------------- ---------------- ---------------- ---------------- Total Other Income (Expenses) - (1,109) (15,553) (1,109) ---------------- ---------------- ---------------- ---------------- Net Loss $ - $ (1,057,505) $ (1,521,335) (1,554,195) ================ ================ ================ ================ Net Loss per Common Share - Basic and Diluted $ - $ (0.03) $ (0.05) ================ ================ ================ Basic Weighted Average Common Shares Outstanding 680,153 31,509,607 32,462,702 ================ ================ ================

The accompanying notes are an integral part of these financial statements. 5 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD SEPTEMBER 5, 2007 (INCEPTION) TO SEPTEMBER 30, 2008

DEFICIT ACCUMULATED PREFERRED STOCK COMMON STOCK ADDITIONAL IN THE --------------- ----------------------- PAID-IN ACCUMULATED DEVELOPMENT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT STAGE TOTAL ------ ------ ------------ --------- ----------- ----------- ------------ ------------- Balance - September 5, 2007 $ - 680,437 $ 6,804 $ 312,500 $ - $ - $ 319,304 Sale of Common Stock to Founders of Ozone - NV 30,000,000 3,000 27,000 30,000 Issuance of Common Stock in Connection with Reverse Acquisition 34,250,000 342,500 (342,500) - Effect of Recapitalization (30,000,000) (3,000) 3,000 (370,762) (370,762) Issuance of Common Stock for Services @ $.50 per share 10,000 100 4,900 5,000 Beneficial Conversion Feature 25,000 25,000 Net Loss for the Period September 5, 2007 (Inception) to December 31, 2007 (32,860) (32,860) ------ ------ ------------ --------- ----------- ----------- ------------ ------------- Balance - December 31, 2007 - - 34,940,437 349,404 29,900 (370,762) (32,860) (24,318) ------ ------ ------------ --------- ----------- ----------- ------------ ------------- Return of Common Stock in Connection with Reverse Acquisition (Unaudited) (42,475) (425) 425 - Issuance of Common Stock Pursuant to a Private Placement @ $.20 per share - (Unaudited) 2,750,000 27,500 522,500 550,000 Issuance of Common Stock Pursuant to a Private Placement @ $.50 per share - (Unaudited) 100,000 1,000 49,000 50,000 Issuance of Common Stock Pursuant to a Private Placement @ $.90 per share - (Unaudited) 749,333 7,493 666,907 674,400 Issuance of Common Stock Pursuant to a Private Placement @ $1.00 per share - (Unaudited) 25,000 250 24,750 25,000 Issuance of Common Stock for Services Rendered @ $.20 per share - (Unaudited) 310,000 3,100 58,900 62,000 Issuance of Common Stock for Services Rendered @ $2.00 per share - (Unaudited) 420,000 4,200 835,800 840,000 Repurchase and Retirement of Common Stock @ $.001 per share - (Unaudited) (7,000,000) (70,000) 63,000 (7,000) Net Loss for the Period January 1, 2008 to September 30, 2008 (Unaudited) (1,521,335) (1,521,335) ------ ------ ------------ --------- ----------- ----------- ------------ ------------- Balance - September 30, 2008 - (Unaudited) - $ - 32,252,295 $322,523 $2,251,182 $ (370,762) $(1,554,195) $ 648,749 ====== ====== ============ ========= =========== =========== ============ =============

The accompanying notes are an integral part of these financial statements. 6 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

For the Period For the Nine September 5, 2007 Months Ended (Inception) to September 30, 2008 September 30, 2008 ------------------ ------------------- OPERATING ACTIVITIES Net (Loss) $ (1,521,335) $ (1,554,195) Adjustments to reconcile net (loss) to net cash (used) by operating activities: Depreciation 22,272 22,272 Amortization of Debt Discount 14,444 25,000 Common Stock Issued for Services 902,000 907,000 Debt Forgiveness - (25,000) Changes in Operating Assets and Liabilities: (Increase) in Security Deposits (4,540) (4,540) (Increase) in Accounts Receivable (884) (884) (Increase) in Prepaid Insurance (3,284) (3,284) Increase in Accounts Payable and Accrued Expenses 146,125 151,524 ------------------ ------------------- Net Cash Used by Operating Activities (445,203) (482,108) ------------------ ------------------- INVESTING ACTIVITIES Capital Expenditures (245,540) (245,540) Purchase of Indefinite-Life Intangible Assets (111,100) (111,100) ------------------ ------------------- Net Cash Used in Investing activities (356,640) (356,640) ------------------ ------------------- FINANCING ACTIVITIES Proceeds from the Sale of Common Stock 1,299,401 1,329,401 Purchase of Cancelled Common Stock (7,000) (7,000) Proceeds of Note Payable - Other 51,080 51,080 Payment of Other Payable (10,000) - ------------------ ------------------- Net cash provided by financing activities 1,333,481 1,373,481 ------------------ ------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 531,639 534,734 ------------------ ------------------- CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 3,095 - ------------------ ------------------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 534,734 $ 534,734 ================== =================== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Interest (Expense) $ (1,109) $ (1,109) ================== =================== Income taxes $ - $ - ================== =================== Supplemental Disclosures of Cash Flow Information: Non Cash Financing Activities: Issuance of Note Payable - Related Party as payment of Accounts Payable $ - $ 25,000 ================== =================== Issuance of 34,250,000 shares of Common Stock in Connection with Reverse Acquisition (Recapitalization) $ - $ 342,500 ================== =================== Discount on Convertible Debt $ - $ 25,000 ================== =================== Return of Common Stock Related to Recapitalization $ 425 $ - ================== ===================

The accompanying notes are an integral part of these financial statements. 7 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - Organization and Basis of Presentation The Ozone Man, Inc. ("Ozone-FL") was originally incorporated in the state of Florida in 1979 as Dauphin, Inc. ("Dauphin"). On June 27, 1994 Dauphin, through an exchange agreement, acquired 100% of the outstanding common stock of RPS Executive Limousines, Ltd., a privately held New York Corporation ("RPS Limo"). On July 19, 1994, Dauphin changed its name to RPS Enterprises, Ltd. and effected a one-for-three reverse split of its common stock. In addition, the Certificate of Incorporation was amended to (a) increase the number of authorized common shares, $.01 par value, from 10,000,000 shares to 20,000,000 shares and (b) to create 1,000,000 shares of a new class of cumulative convertible $25.00 preferred stock, with semi-annual dividends of $2.00 per share. The acquisition resulted in the RPS Limo shareholder emerging with a larger portion of voting rights of the combined company. Accordingly, the transaction was treated for accounting purposes as a reverse acquisition. In August 2002, certain investors purchased the majority of prior management's stock and changed the name from RPS Enterprises Ltd. to RPS Group, Inc. ("RPS Group"). In October 2002 RPS Group sold back the operating subsidiary (RPS Limo) to prior management. RPS Group has been a shell company with no significant assets or operations since 2002. On September 5, 2007, The Ozone Man, Inc. was incorporated in the State of Nevada ("Ozone-NV"). On October 15, 2007, RPS Group, Inc filed with the State of Florida, an amendment to its Articles of Incorporation changing its name to The Ozone Man, Inc. ("Ozone-FL") and increasing it's authorized common shares from 20,000,000 to 75,000,000 shares. In addition Ozone-FL executed a 1:20 stock split. On October 17, 2007, pursuant to a Definitive Agreement and Plan of Reorganization, Ozone-FL acquired 100% of the issued and outstanding common shares of Ozone-NV in exchange for 34,250,000 shares of Ozone-FL's common stock (as amended) and $25,000 cash consideration. The combination of the two companies is recorded as a recapitalization of Ozone-NV pursuant to which Ozone-NV is treated as the continuing entity although Ozone-FL is the legal acquirer. Accordingly, the Company's historical financial statements are those of Ozone-NV. Ozone-FL and Ozone-NV are hereafter collectively referred to as "the Company". The accompanying condensed consolidated financial statements included the accounts of The Ozone Man, Inc. (a Florida Corporation) (Parent) and its wholly owned subsidiary The Ozone Man, Inc. (a Nevada Corporation). All significant intercompany accounts and transactions have been eliminated in consolidation. The Company is engaged in home inspection, air quality testing and ozone indoor decontamination cleaning through its trained and certified field technicians and a fleet of specially equipped vehicles. The Company has not yet generated any material revenues from planned principal operations and is considered a development stage company as defined in Statement of Financial Accounting Standards ("SFAS") No. 7. In the opinion of the Company's management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the information set forth therein. These financial statements are condensed and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's 2007 Annual Report on Form 10-KSB. 8 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - Organization and Basis of Presentation (Continued) Results of operations for interim periods are not necessarily indicative of the results of operations for a full year. The Company utilizes the accrual method of accounting. For revenue from the sale of products and services, the Company will recognize revenue in accordance with Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB No. 104), which superseded Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB No. 101). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management's judgment regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments (if any) will be provided for in the same period the related sales are recorded. NOTE 2 - Going Concern The Company has incurred losses of $1,057,505 and $1,521,335 and for the three and nine months ended September 30, 2008, respectively, and $1,554,195 for the period September 5, 2007 (inception) to September 30, 2008. These factors raise substantial doubt about the Company's ability to continue as a going concern. There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing stockholders. The Company's existence is dependent on management's ability to develop profitable operations and resolve its liquidity problems. In October 2007 RPS Group and Ozone Nevada effected a reverse acquisition with Ozone Nevada being the surviving entity for accounting purposes. Management is attempting to attain profitable operations for Ozone Nevada, however, there is no assurance that the Company will achieve such profitable operations. The Company is also attempting to address its lack of liquidity by raising additional funds, either in the form of debt or equity or some combination thereof. During the nine months ended September 30, 2008 the Company sold 3,624,333 shares of common stock for gross proceeds of approximately $1,300,000. There can be no assurances that the Company will be able to continue to raise the additional funds it requires. The accompanying financial statements do not include any adjustments related to the recoverability or classification of asset-carrying amounts or the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern. 9 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - Property and Equipment Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Property and equipment at September 30, 2008 is summarized as follows: Estimated Useful Lives ---------------- Vehicles $ 88,687 5 Years Furniture and Fixtures 10,634 3 Years Machinery and Equipment 146,219 5 Years ---------- 245,540 Less: Accumulated Depreciation 22,272 ---------- $ 223,268 =========== Depreciation expense was $10,085 and $22,272 for the three and nine months ended September 30, 2008, respectively. NOTE 4 - Indefinite-Life Intangible Assets On February 23, 2008 the Company purchased from S.C.O. Medallion Healthy Homes LTD all intellectual property for the Medallion methodology system for $60,000. On April 18, 2008 the Company purchased from Air Testing and Design, Inc. intellectual property for $50,000. The property purchased includes patents, trademarks, literature, drawings, schematics, vendor lists and rights to purchase and resell equipment and other proprietary & intellectual property associated with the ozone generators manufactured by the seller. These indefinite-life intangible assets are not amortized but will be tested for impairment annually or if certain circumstances indicate a possible impairment may exist. NOTE 5 - Convertible Note Payable Convertible note payable consists of the following: September 30, 2008 December 31, 2007 ------------------ ----------------- Convertible note payable net of unamortized discount of $14,444 at December 31, 2007. The note was fully amortized at June 30, 2008. $ 25,000 $ 10,556 ======== ======== On October 17, 2007 a convertible promissory note in the amount of $25,000 was issued to one individual who is a stockholder, legal counsel and former officer of Ozone-FL as payment of accounts payable owed by the Company to him for legal services. The note is non- interest bearing and convertible into 2,000,000 shares of the Company's common stock at the Holder's option provided the Maker was not in default. In July 2008 the Holder was paid in full by a third party. At that time the Company's obligation to pay the note was assigned to an unrelated third party. In connection with the convertible debt, the Company recorded a deferred debt discount in the amount of $25,000 to reflect the beneficial conversion feature of the convertible debt. The beneficial conversion feature was recorded pursuant to Emerging Issues Task Force ("EITF") 00-27: "Application of EITF No. 98-5, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios, to Certain Convertible Instruments". In accordance with EITF 00-27, the Company evaluated the value of the beneficial conversion feature and recorded the amount of $25,000 as a reduction to the carrying amount of the convertible debt and as an addition to paid-in capital. 10 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - Convertible Note Payable - Related Party (Continued) The Company amortized the discount over the term of the debt. As such there was no amortization expense in the three months ended September 30, 2008. Amortization of the debt discount for the nine months ended September 30, 2008 was and $14,444 and is reported as financing costs. NOTE 6 - Long-Term Debt Long-term debt at September 30, 2008 consists of the following: Notes payable, collateralized by specific delivery equipment; bearing interest at 10.75% per annum and payable in monthly installments of $1,464 including principal and interest and due March, 2012. $ 51,080 Less: Current Portion 12,701 -------- Long Term Portion $ 38,379 ======== Annual scheduled payments of long-term debt are as follows: Twelve Month Period Ending September 30, ------------- 2009 $ 12,701 2010 14,131 2011 15,727 2012 8,521 -------- $ 51,080 ======== NOTE 7 - Common Stock In September 2007 Ozone-NV issued 30,000,000 shares of common stock for $30,000 to the three founders of Ozone-NV. On October 15, 2007 Ozone-FL amended its Articles of Incorporation increasing the authorized shares from 20,000,000 shares to 75,000,000 shares. The par value remained $.01 per share. On October 17, 2007 Ozone-FL implemented a 1:20 reverse stock split affecting the pre-reorganization shareholders. All share and pre-share data have been retroactively adjusted to reflect these recapitalizations. On October 17, 2007, pursuant to the aforementioned Definitive Agreement and Plan of Reorganization the founders of Ozone- NV exchanged 100% of their outstanding shares of Ozone-NV in return for 34,250,000 shares of Ozone-FL's common stock (see Note 1). On November 1, 2007, the Company issued 10,000 shares of common stock for the payment of professional fees in the amount of $5,000. During the nine months ended September 30, 2008 the Company sold 3,624,333 shares of common stock in a private offering for gross proceeds of $1,299,400. In addition, during that period, the Company issued 730,000 shares of common stock in return for consulting services valued at $902,000. Also, during the nine month period ended September 30, 2008 the Company repurchased and retired 7,000,000 shares of its common stock for $7,000 including 5,500,000 from a Richard Johnson who serves as a director and corporate counsel for the Company. 11 THE OZONE MAN, INC. AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY) NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 - Preferred Stock The Company's Board of Directors may, without further action by the Company's stockholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up of the Company before any payment is made to the holders of the common stock. Furthermore, the board of directors could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of the common stock. NOTE 9 - Forgiveness of Debt In October 2007 a stockholder and former legal counsel and officer of Ozone-FL waived payment of the Company's accounts payable to him for past due legal services performed in the amount of $25,000. Accordingly, the Company recorded debt forgiveness income in the amount of $25,000. NOTE 10 - Subsequent Events In October 2008 the Company sold an additional 222,220 shares of common stock for gross proceeds of $200,000. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION In this report references to "Ozone Man," "we," "us," and "our" refer to The Ozone Man, Inc. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS The Securities and Exchange Commission ("SEC") encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as "may," "will," "expect," "believe," "anticipate," "estimate," "project," or "continue" or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Results of Operations for the nine months ended September 30, 2008: Ozone Man (FL) has had no business operations since 2002. Ozone Man (NV), acquired in October 2007 was incorporated in September 2007 and is a development stage company that has not yet generated material revenues from planned operations. We have incurred expenses such as professional, consulting regulatory fees and merger expenses. In addition we have incurred expenses to develop and train our technicians and promote our services. Those expenses totaled $1,505,782 for the nine month period ended September 30, 2008. Those expenses included $902,000 of consulting and professional fees that we paid using our common stock in lieu of cash. We issued 730,00 shares of common stock at an average fair market value of $1.24 per share to pay for those services. We also incurred financing costs during that period of $14,444 related to amortization of debt discount. As such we also recorded a net loss of $1,521,335 for the nine month period ended September 30, 2008. Results of Operations for the quarter ended September 30, 2008: We incurred professional, consulting, operating and regulatory fees and expenses totaling $1,059,482 for the three month period ended September 30, 2008. $840,000 of those expenses were for professional and consulting services which were paid for with our common stock. A total of 420,000 shares were issued as payment with a fair market value of $2.00 per share. As a result we recorded a net loss for the quarter ended September 30, 2008 of $1,057,505. Liquidity and Capital Resources: Our business plan is to engage in the home inspection, air quality testing and ozone indoor cleaning business through its trained and certified field technicians and a fleet of specially equipped vehicles. We have very limited sources of capital as we have not yet generated any material revenues from operations. At September 30, 2008, we had $534,734 in cash, total liabilities of $229,063 and working capital of $348,218. We are currently engaged in a private placement pursuant to Regulation D, Rule 505, and have raised approximately $1,300,000 from the sale of 3,624,333 shares of common stock in the first nine months of 2008. We raised an additional $200,000 in October 2008 through additional sales of our common stock. We believe these additional funds should be sufficient to implement our business plan through the end of 2008 and into the first quarter of 2009. There is no assurance additional private placement funds will actually be raised or that we will succeed in implementing our business plan. The Company is a development stage company and has not fully commenced planned principal operations. The Company had no material revenues and incurred a net loss of $1,057,505 and $1,521,335 for the three and nine months ended September 30, 2008, respectively, and a net loss of $1,554,195 for the period September 5, 2007 (inception) to September 30, 2008. These factors raise substantial doubt about the Company's ability to continue as a going concern. 13 There can be no assurance that sufficient funds will be generated during the next year or thereafter from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital could force the Company to curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on the Company's existing stockholders. Off-Balance Sheet Arrangements None. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. None. ITEM 4. CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated and communicated to our executive officers to allow timely decisions regarding required disclosure. Our President, who acts in the capacity of principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, he concluded that our disclosure controls and procedures were effective. Also, he determined that there were no changes made in our internal controls over financial reporting during the first quarter of 2008 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. In addition to the sales set forth in Part I, Item 2 above, the Company sold an additional 222,220 common shares for a total of $200,000 in October 2008. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. 14 ITEM 6. EXHIBITS Part I Exhibits 31.1 Principal Executive Officer Certification 31.2 Principal Financial Officer Certification 32.1 Section 1350 Certification Part II Exhibits None. SIGNATURES Pursuant to the requirements 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. THE OZONE MAN, INC. Date: November 13, 2008 By: /s/ Halden Shane ------------------------------------------------ Halden Shane Principal Executive Officer Principal Financial and Accounting Officer 15