Press Releases

MagneGas Reports 66% Increase in Revenue for the Third Quarter of 2016

TAMPA, Florida, November 14, 2016 /PRNewswire/ --

MagneGas2® Fuel Driving Revenue Growth 

Gross Margins Increased 411 Basis Points 

Call to be held on Monday, November 14th at 10:00 a.m. Eastern Time 

MagneGas Corporation ("MagneGas" or the "Company") (NASDAQ: MNGA), a leading clean technology company that counts among its inventions a patented process that converts renewable and liquid waste into MagneGas2® fuel, today announced financial results and provided a business update for the third quarter ending September 30, 2016.

Third Quarter 2016 Financial Highlights  

  • Revenue for the three months ended September 30, 2016 increased 66% to $1.0 million compared to $623,893 for the same period last year;
  • Revenue for the nine months ended September 30, 2016 increased 45% to $2.5 million compared to $1.8 million for the same period last year;
  • Gross margins increased 411 basis points to 39% from 35% for the three-month period ending September 30, 2016 versus September 30, 2015.

Recent Business Highlights 

  • A Letter of Intent was signed for the purchase of a coal combustion technology company with revenue in excess of $14 million;
  • A Letter of Intent with deposit was signed with a German company to purchase $2.65 million in MagneGas equipment and fuel;
  • Thousands additional fuel cylinders were purchased to keep up with increasing demand for MagneGas2® fuel;
  • A leading industrial gas distributor in the Southeast began distributing MagneGas2® fuel for metal cutting as an alternative to acetylene;
  • The Company announced the opening of two new retail locations for the sale of MagneGas2® and industrial gases and supplies for the welding industry;
  • A Fortune 100 auto manufacturing company selected MagneGas2® for metal cutting at two factories in the United States;
  • The Company completed construction of its gasification system for sale to Green Arc Supply from Louisiana.

Ermanno Santilli, Chief Executive Officer of MagneGas, stated, "We continue to grow our industrial gas sales and we are pleased to report a 66% increase in revenue for the three months ending September 30, 2016 versus the same period last year. We have benefitted from our MagneGas2® product line, which enables us to drive better value for our clients in an otherwise commoditized price competitive landscape. We are gaining market share at an accelerated pace in our addressable markets."

"As a whole, our industrial gas segment, which not only includes MagneGas2® but also welding supplies and other gases, has increased at nearly a 20% annualized growth rate, compared to an estimated 2% growth rate for our welding supply peers. We attribute our continued growth quarter after quarter to our strong marketing efforts and the addition of customers and distributors, including those we obtained through our welding supply business, ESSI. We believe that MagneGas2® is an excellent door opener, and customers quickly see the value-added benefits of switching to MagneGas2®, which is a safer, hotter and faster cutting alternative to what they are using now."

"Given the growing demand for MagneGas2®, which has allowed us to build our backlog, we completed the purchase of thousands of additional fuel cylinders per the previously announced purchase order. The demand we are experiencing is a direct result of our sales penetration into key vertical market segments including utilities, demolition companies, first responder markets and major manufacturing companies.  Several existing customers have expanded their use of MagneGas2® into additional facilities and we have other large potential customers currently testing MagneGas2®."

"We continue to grow our industrial gas segment through new partnerships within the gas market. We signed a distributor agreement with Holston Gases of Tennessee, one of the largest independent distributors of industrial, propane, medical and beverage gases in the United States as a preferred distributor for the Southeast with 27 locations in 7 states. Holston will be distributing MagneGas2® for metal cutting as an alternative to acetylene.  We feel that this new strategic relationship further validates the market's growing acceptance of our MagenGas2® product offering."

"We are also expanding the use of MagneGas2® along the East Coast and nationwide. The marketing program we implemented with our distribution partner, AWISCO Corporation, attracted new customers including the NYC Department of Transportation, which selected MagneGas2® for metal cutting and repairs, as well as the New York Iron Workers Joint Apprentice Training Facility, which added MagneGas2® to its training program for new iron workers."

"In September, we announced that MagneGas2® fuel was chosen by one of the nation's largest recycling and waste disposal companies for maintenance and repair of the company's fleet of trucks, its dumpsters and related machinery. Our fuel will initially be used in six locations in one state with plans to expand into eight more neighboring states in the region in the coming months."

"We have been successful in demonstrating MagneGas2® in the automotive industry.  We recently announced that a Fortune 100 global auto manufacturer based in the mid-western United States successfully completed the MagneGas2® rollout at their first factory and has begun the procurement process at a second factory. Following successful demonstrations in the second factory, the automaker has indicated an interest in continuing expansion into other factories as part of a larger rollout program. This global auto manufacturer chose MagneGas2® to be its exclusive fuel and to discontinue using acetylene for metal cutting due to its faster cutting speed and hotter flame temperature compared to existing cutting fuels. We believe that reducing costs as well as reducing down time on the assembly line, will lead to other larger opportunities with this global customer and others in the auto manufacturing sector."

"We continue to look for opportunities to increase equipment sales. In September, we successfully completed construction of a 100kw Plasma-Arc Gasification system as part of last year's purchase by Green Arc Supply, expanding our presence into the Gulf Coast region. The Company has already received milestone payments totaling $583,750 as a result of this Green Arc Supply sale and will receive a final payment of $191,250 after the expected delivery of the system by us by the end of 2016. We believe that this domestic equipment sale will open the door to additional equipment sales nationwide."

"Last month, we signed a letter of intent for a $2.65 million sale of our proprietary gasification and sterilization system, MagnesGas2® fuel and cylinders to a company based in Germany. This transaction represents the largest sale in our company's history. The LOI calls for exclusive distribution rights in Germany, with an option to purchase the rights to other countries as well as future unit purchase requirements and royalties on gas sales. The sterilization system will be used in small service contracts with the goal of entering the agriculture and municipal wastewater treatment markets in Germany. We believe this transaction sets the stage for our expansion across Europe and globally."

"Our co-combustion project suffered a setback with the death of our operational partner due to an undiagnosed medical condition. We are saddened by the loss of our dear friend who was instrumental in the day to day management of our project in Michigan. Our joint venture partners are taking the opportunity to re-examine our project structure and will likely move it to Florida, closer to our gas production and support teams. We expect to restart testing in January."

"Finally, we announced that we signed a non-binding letter of intent to purchase all of the outstanding capital stock of a privately held coal combustion environmental technology company that had revenue in excess of $14 million in 2015. The coal combustion company has historically generated consistent revenue growth with meaningful profitability and has been in business for more than 20 years.  The company services some of the largest utility companies in the United States, and has benefitted from very high customer loyalty. They are working with strategic partners to grow the technology platform globally and are developing international markets. We believe that the acquisition of this coal combustion technology company will bring significant value to MagneGas through their product offerings, common marquee customers, and real world combustion expertise with power companies.  This acquisition, if closed, will be a major milestone for MagneGas in terms of revenue and growth potential that will bring significant shareholder value."

Third Quarter 2016 Financial Results 

Revenues for the three months ended September 30, 2016 were $1,037,688 as compared to $623,893 for the same period last year. For the three months ended September 30, 2016 and 2015, we generated revenues from the industrial gas segment of $676,518 compared to $623,893 last year. This increase was primarily due to additional customers and distributors acquired through ESSI and the results of marketing our Company.

Gross margins increased to 39% from 35% for the third quarter ending September 30, 2016 versus September 30, 2015.  This improvement was in part due to increased sales of our higher-margin offerings, including MagenGas2® and our proprietary equipment sales.

Operating expenses increased approximately $580,000 for the third quarter ending September 30, 2016 to $3.0 million from $2.4 million for the same period last year. The increase in our operating expense in 2016 was primarily attributable to the completion of our new headquarters and increased consulting expenses related to research and development, investor relations, public relations and new business development.

Conference Call 

MagneGas' executive management team will host a conference call today, Monday, November 14th at 10:00 a.m. Eastern Time to discuss the company's financial results for the third quarter ending September 30, 2016, as well as the Company's corporate progress and other meaningful developments.

Interested parties can access the conference call by dialing (877) 407-8031 for U.S. callers or +1 (201) 689-8031 for international callers.

A teleconference replay of the conference call will be available approximately one hour following the call, through midnight December 14, 2016, and can be accessed by dialing (877) 481-4010 for U.S. callers or +1 (919) 882-2331 for international callers and entering conference ID: 10151.

About MagneGas Corporation    

MagneGas® Corporation (MNGA) owns a patented process that converts various renewables and liquid wastes into MagneGas fuels. These fuels can be used as an alternative to natural gas or for metal cutting. The Company's testing has shown that its metal cutting fuel "MagneGas2®" is faster, cleaner and more productive than other alternatives on the market. It is also cost effective and safe to use with little changeover costs.  The Company currently sells MagneGas2® into the metal working market as a replacement to acetylene.

The Company also sells equipment for the sterilization of bio-contaminated liquid waste for various industrial and agricultural markets. In addition, the Company is developing a variety of ancillary uses for MagneGas® fuels utilizing its high flame temperature for co-combustion of hydrocarbon fuels and other advanced applications.  For more information on MagneGas®, please visit the Company's website at http://www.MagneGas.com.

The Company distributes MagneGas2® through Independent Distributors in the U.S and through its wholly owned distributor, ESSI (Equipment Sales and Services, Inc.). ESSI has four locations in Florida and distributes MagneGas2®, industrial gases and welding supplies. For more information on ESSI, please visit the company's website at http://www.weldingsupplytampa.com.

The MagneGas IR App is now available for free in Apple's App Store for the iPhone or iPad http://bit.ly/AfLYww and at Google Play http://bit.ly/Km2iyk for Android mobile devices.

To be added to the MagneGas investor email list, please email pcarlson@kcsa.com with MNGA in the subject line.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements relate to future events, including our ability to raise capital, or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission. Our public filings with the SEC are available from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov .

        (tables follow)



MagneGas Corporation 
Condensed Consolidated Balance Sheets
   
                                                     September 30,          December 31,
                                                          2016                  2015
                                                       (Unaudited)             (Audited)
                     Assets
    Current Assets
    Cash                                       $        1,182,456     $       5,319,869
    Accounts receivable, net of allowance
    for doubtful accounts of $135,931 and
    $109,568, respectively                                405,126               373,006
    Inventory, net                                      2,211,158             2,362,014
    Prepaid and other current assets                      534,077               320,431
    Total Current Assets                                4,332,817             8,375,320

    Property, equipment and leasehold
    improvements, net of accumulated
    depreciation and amortization of                    
    $1,848,452 and $1,467,123, respectively             6,652,672             6,004,990

    Intangible assets, net of accumulated
    amortization of $387,303 and $345,382,
    respectively                                          451,095               493,016
    Investment in joint ventures, net                     278,590               754,601
    Security deposits                                      26,655                24,113
    Goodwill                                            2,108,781             2,108,781
    Total Assets                               $       13,850,610     $      17,760,821

      Liabilities and Stockholders' Equity
    Current Liabilities
    Accounts payable                           $          389,234     $         425,294
    Accrued expenses                                      321,915               504,855
    Deferred revenue and customer deposits                 28,850               412,500
    Notes payable, current                                  9,328                 7,891
                      Derivative liabilities            5,150,078             1,241,841
    Total Current Liabilities                           5,899,405             2,592,381

    Long Term Liabilities
    Note payable, net of current maturities               547,649               552,177
    Senior convertible debenture, net of
    debt discount of $950,000                              50,000                     -
    Total Liabilities                                   6,497,054             3,144,558

    Commitments and Contingencies

    Stockholders' Equity
    Preferred stock: $0.001 par; 10,000,000
    authorized; 1,000,000 issued and
    outstanding                                                --                    --
    Series A preferred stock - $0.001 par
    value 1,000,000 authorized and
    outstanding                                             1,000                 1,000
    Common stock: $0.001 par; 90,000,000
    authorized; 51,939,304 and 45,599,534
    issued and outstanding, respectively                   51,939                45,599
    Additional paid-in capital                         54,228,495            50,658,216,
    Accumulated deficit                               (46,927,878)          (36,088,552)
    Total Stockholders' Equity                          7,353,556            14,616,263

    Total Liabilities and Stockholders'                 
    Equity                                     $       13,850,610     $      17,760,821

 



MagneGas Corporation 
Condensed Consolidated Statements of Operations
(Unaudited)    

                             Three Months Ended                   Nine Months Ended
                               September 30,                        September 30,
                         2016                2015          2016                    2015

    Revenue:        1,037,668             623,893   $ 2,540,588             $ 1,753,986

    Cost of           
    Revenues          632,531             405,979     1,470,569               1,078,032
    Gross Profit      405,137             217,914     1,070,019                 675,954
    Operating
    Expenses:
    Selling,
    general and
    administration  2,690,495           2,183,924     7,544,484                6,064,726
    Research and      
    development       143,072             104,968       472,329                  231,618
    Impairment
    of joint                                        
    venture                 -                   -       501,011                        -
    Depreciation
    and               
    amortization      177,557             141,848       507,000                  418,467
    Total
    Operating        
    Expenses        3,011,124           2,430,740     9,024,824                6,714,811

    Operating         
    (Loss)         (2,605,987 )        (2,212,826 )  (7,954,805 )             (6,038,857 )

    Other Income
    and
    (Expense):
    Interest          (47,734 )           (10,815 )     (67,233 )                (21,070 )
    Non-Cash
    Interest,
    derivative                                      
    liability              -                    -    (2,622,080 )                      -
    Non-cash
    Interest,
    amortization
    of debt         
    discount         (50,000 )                  -       (50,000 )                      -
    Loss on sale       
    of property            -                    -             -                 (483,630 )
    Other income      40,533                8,421        61,763                   11,763
    Change in
    fair value
    of
    derivative     
    liability     (1,404,490 )                  -      (206,971 )                      -
    Total Other
    Income            
    (Expense)     (1,461,691 )             (2,394 )  (2,884,521 )               (492,937 )
    Net Loss     $(4,067,678 )        $(2,215,220 )$(10,839,326 )           $ (6,531,794 )

    Net Loss per
    share:
    Basic and
    diluted        $   (0.08 )        $     (0.05 )   $   (0.23 )           $      (0.17 )
    Weighted
    average
    common
    shares:
    Basic and   
    diluted       50,361,516           41,181,102    47,235,587               39,170,542

Investor Contacts:
KCSA Strategic Communications
Philip Carlson
+1-212-896-1233
pcarlson@kcsa.com


SOURCE MagneGas Corporation