MagneGas Corporation (“MagneGas” or the “Company”) (NASDAQ:
MNGA), a leading clean technology company in the renewable
resources and environmental solutions industries, today announced
financial results and provided a business update for the second
quarter ended June 30, 2018.
Ermanno Santilli, Chief Executive Officer of MagneGas, stated,
“The strong momentum MagneGas gained from reaching higher revenues
in first quarter of 2018 continued on into the second quarter. With
each strategic acquisition and subsequent expansion, more customers
and potential partners are recognizing the way our MagneGas2® is
transforming their industries in a positive and
environmentally-focused way. Revenue for the second quarter,
ended June 30, 2018 increased 201% to $2.9 million, largely driven
by our sales expansion brought on by the Trico Welding acquisition
in April.
We continued to make significant progress as we evolve our
environmental technology business especially given the progress
we’ve made under the US Department of Agriculture grant-funded
project in agricultural sterilization. Following a demonstration
earlier this year, MagneGas was invited by the USDA to present
findings at the Soil and Water Conservation Society’s 73rd
International Annual Conference on Culture, Climate and
Conservation. These results prove that our technology can play a
real and impactful role on water conservation, water purification
and the elimination of harmful contaminants that impact the safety
and quality of fresh water resources around the world.
MagneGas has also identified two European Commission-sponsored
grants for our waste-to-energy and agricultural sterilization
programs. Based on our research, we believe these two grants
would be a strong fit to advance our fourth generation gasification
project. Under this project, we would redesign our current
third generation plasma arc model revealing a fourth generation
that dramatically increases the surface area of our plasma arc and
potentially reducing costs of the generated gas by up to 90%.”
Scott Mahoney, Chief Financial Officer of MagneGas, added, “The
MagneGas team is proud of our operational advancements so far this
year and also on our clear focus on cost control. It is also
important to note that the Company took a series of steps to
further improve profitability in June of this year. We made a
series of staffing changes, including at the board level, that in
total save the Company more than $50,000 per month in cash expenses
starting in July.
Another area where we expect to see significant financial
performance improvement is in two of our acquired operations.
Implementing our strategy of boosting staffing resources to enable
the business to scale quickly led to sales increasing by over 33%
during the quarter, and over 50% since we acquired the business in
February. Most importantly, the operation improved their
operating profits by over $84,000 per month during the
quarter.
I am pleased to report that since the end of the second quarter,
we have further improved our balance sheet. We have paid down
over $1,000,000 in short term liabilities while maintaining over
$1,000,000 in cash on hand at all times.
In the current year, we have three overall business
objectives. First, we want to scale our US industrial gas
revenues so that we are financial self-sufficient. Second, we
want to unlock the growth potential of the European markets.
Lastly, we want to explore new and complementary technology
opportunities, leveraging both our existing technologies as wells
as through partnerships or other technology additions to our patent
portfolio.”
Second Quarter 2018 Financial ResultsRevenue
for the second quarter ended June 30, 2018 increase to $2.9
million, compared to $966,204 in the same period last year. The
201% increase in revenue was due primarily to our acquisition of
Trico Welding Supplies in Northern California which generated
$1,392,757. Only $568,000 of the growth in revenue was
outside of the Trico acquisition and it was largely due to
MagneGas’ expansion into the East Texas, Louisiana, and San Diego
markets via two acquisitions made in the first quarter.
For the three months ended June 30, 2018 and 2017, the Company
generated a gross profit of $935,126 compared to $433,547. Gross
margins for the three months ended June 30, 2018 and 2017 were 32%
and 45%, respectively. The decline in gross margins was due to
acquisition accounting treatment of the acquired inventory values.
The Company recorded $331,061 in additional cost of goods sold
during the second quarter due to acquisition accounting. If this
amount were excluded, gross margins would have been 44%. The
Company anticipates that margins will improve as all acquired
inventory is sold and our cost basis for replacement inventory is
reflected in our future cost of goods sold. Partially offsetting
this increase in cost of goods sold, the Company has achieved
better pricing and terms on select products as it achieves
economies of scale and greater buying power. In addition, MagneGas
is currently in the process of installing a bulk industrial gas
fill plant at its Clearwater facilities. These facilities are
estimated to further improve combined gross margins by 3 to 5
percentage points as the Company expects to improve its gas margins
in Florida.
Operating costs for the three months ended June 30, 2018 and
2017 were $4.3 million and $3.5 million, respectively. The increase
in operating costs in 2018 was primarily attributable to its April
acquisition of Trico Welding Supplies, and significant capital
markets activity during the period.
The Company spent $90,000 on consulting related to the Trico
acquisition. During the three months ended June 30, 2018 the
Company recognized a non-cash charge of $18,599 in stock-based
compensation for employees, compared to $1,779,350 in the
comparable three months ended June 30, 2017. Other non-cash
operating expenses were due to depreciation and amortization
charges of $211,930 for the three-month period ended June 30, 2018,
compared to $193,230 for the three months ended June 30, 2017.
Conference CallMagneGas management will host a
conference on Tuesday, August 14th at 1:00pm Eastern Time and
provide an update on recent developments, including details of
recent acquisitions and other corporate updates. To participate in
the call, please dial 1-877-407-0312 (toll-free) in the U.S. and
Canada. The conference ID number for both the call and webcast is
13682528.
A live audio webcast of the conference call will also be
available on the investor relations page of MagneGas’ corporate
website at www.magnegas.com.
About MagneGas CorporationMagneGas 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 safer and cleaner alternative 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 distributors,
ESSI, Green Arc Supply, Trico Welding Supply and Complete Welding
of San Diego. ESSI has 4 locations in Florida, Green Arc 2
locations in Texas and one location in Louisiana, Trico has two
locations in northern California, and Complete Welding has one
location in southern California.
Forward-Looking StatementsThis 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.
|
|
MagneGas Corporation |
|
Condensed Consolidated Balance
Sheets |
|
|
|
|
|
June 30,2018 |
|
|
December 31,2017 |
|
|
|
(Unaudited) |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
|
$ |
1,147,522 |
|
|
$ |
586,824 |
|
Accounts receivable,
net of allowance for doubtful accounts of $116,794 and $101,063,
respectively |
|
|
1,140,209 |
|
|
|
389,652 |
|
Inventory, net of slow
moving inventory allowance of $170,445 and $0, respectively |
|
|
1,964,331 |
|
|
|
738,950 |
|
Prepaid and other
current assets |
|
|
426,297 |
|
|
|
198,056 |
|
Total Current
Assets |
|
|
4,678,359 |
|
|
|
1,913,482 |
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net of accumulated depreciation and amortization of $2,357,325 and
$2,032,265, respectively |
|
|
9,134,228 |
|
|
|
6,865,389 |
|
Deposits on
acquisition |
|
|
- |
|
|
|
325,000 |
|
Intangible assets, net
of accumulated amortization of $705,963 and $457,171,
respectively |
|
|
2,270,818 |
|
|
|
412,331 |
|
Security deposits |
|
|
96,871 |
|
|
|
27,127 |
|
Goodwill |
|
|
3,343,280 |
|
|
|
2,108,781 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
19,523,556 |
|
|
$ |
11,652,110 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,202,730 |
|
|
$ |
1,716,661 |
|
Accrued expenses |
|
|
960,504 |
|
|
|
909,562 |
|
Deferred revenue and
customer deposits |
|
|
- |
|
|
|
44,095 |
|
Capital leases,
current |
|
|
27,460 |
|
|
|
27,460 |
|
Note payable, net of
debt discount of $66,868 and $184,204, respectively |
|
|
205,840 |
|
|
|
451,754 |
|
Promissory notes
payable - related party |
|
|
46,250 |
|
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
Total Current
Liabilities |
|
|
3,442,784 |
|
|
|
3,249,532 |
|
|
|
|
|
|
|
|
|
|
Long Term
Liabilities |
|
|
|
|
|
|
|
|
Note payable |
|
|
763,613 |
|
|
|
520,000 |
|
Capital leases, net of
current |
|
|
69,748 |
|
|
|
63,839 |
|
Total
Liabilities |
|
|
4,276,145 |
|
|
|
3,833,371 |
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series C Preferred
stock: 25,000 shares designated; 352 and 115 shares issued and
outstanding with a liquidation preference of approximately $404,800
at June 30, 2018 |
|
|
352,000 |
|
|
|
115,000 |
|
Series E Preferred
stock: 455,882 shares designated; 36,765 and 316,875 shares issued
and outstanding with a liquidation preference of approximately
$57,500 at June 30, 2018 |
|
|
50,000 |
|
|
|
430,950 |
|
Series F Preferred
Stock: 817,670 shares designated; 616,120 and 0 shares issued and
outstanding with a liquidation preference of approximately $418,962
at June 30, 2018 |
|
|
418,963 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
|
|
Preferred stock: $0.001
par; 10,000,000 shares authorized |
|
|
|
|
|
|
|
|
Series A Preferred
stock: 1,000,000 shares authorized; 1,000,000 shares issued and
outstanding with no liquidation preference at June 30, 2018 |
|
|
1,000 |
|
|
|
1,000 |
|
Series B Preferred
stock: 2,700 shares designated; 0 shares issued and outstanding at
June 30, 2018 and December 31, 2017 |
|
|
- |
|
|
|
- |
|
Common stock: $0.001
par; 190,000,000 shares authorized; 23,609,814 shares issued and
outstanding at June 30, 2018 and 1,782,864 shares issued and
outstanding at December 31, 2017 |
|
|
23,610 |
|
|
|
1,783 |
|
Additional
paid-in-capital |
|
|
85,499,209 |
|
|
|
71,852,874 |
|
Accumulated
deficit |
|
|
(71,097,370 |
) |
|
|
(64,582,868 |
) |
|
|
|
|
|
|
|
|
|
Total
Stockholders’ Equity |
|
|
14,426,449 |
|
|
|
7,272,789 |
|
|
|
|
|
|
|
|
|
|
Total
Liabilities, Temporary Equity and Stockholders’
Equity |
|
$ |
19,523,558 |
|
|
$ |
11,652,110 |
|
|
|
|
|
|
|
|
|
|
|
|
MagneGas Corporation |
|
Condensed Consolidated Statements of
Operations |
|
(Unaudited) |
|
|
|
|
|
For the three months ended |
|
|
For the six months ended |
|
|
|
Jun. 30,2018 |
|
|
Jun. 30,2017 |
|
|
Jun. 30,2018 |
|
|
Jun. 30,2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
$ |
2,907,712 |
|
|
$ |
966,204 |
|
|
$ |
4,079,464 |
|
|
$ |
1,837,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenues |
|
|
1,972,586 |
|
|
|
532,657 |
|
|
|
2,730,459 |
|
|
|
1,036,045 |
|
Gross Profit |
|
|
935,126 |
|
|
|
433,547 |
|
|
|
1,349,005 |
|
|
|
801,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administration |
|
|
4,099,899 |
|
|
|
3,305,578 |
|
|
|
7,253,892 |
|
|
|
5,913,444 |
|
Research and
development |
|
|
2,440 |
|
|
|
26,114 |
|
|
|
3,592 |
|
|
|
124,255 |
|
Depreciation and
amortization |
|
|
211,929 |
|
|
|
193,230 |
|
|
|
371,141 |
|
|
|
360,568 |
|
Total Operating
Expenses |
|
|
4,314,268 |
|
|
|
3,524,922 |
|
|
|
7,628,625 |
|
|
|
6,398,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss |
|
|
(3,379,142 |
) |
|
|
(3,091,375 |
) |
|
|
(6,279,620 |
) |
|
|
(5,596,320 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
and (Expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest |
|
|
(23,011 |
) |
|
|
(18,909 |
) |
|
|
(96,015 |
) |
|
|
(18,909 |
) |
Amortization of debt
discount |
|
|
(70,754 |
) |
|
|
(43,677 |
) |
|
|
(116,711 |
) |
|
|
(146,757 |
) |
Other (expense)
income |
|
|
19,542 |
|
|
|
2,007 |
|
|
|
19,542 |
|
|
|
(2,547 |
) |
Extinguishment of
debt |
|
|
- |
|
|
|
(513,725 |
) |
|
|
- |
|
|
|
(513,725 |
) |
Change in fair value of
derivative liability |
|
|
- |
|
|
|
1,423,902 |
|
|
|
- |
|
|
|
2,255,322 |
|
Loss on settlement of
liabilities |
|
|
(41,696 |
) |
|
|
- |
|
|
|
(41,696 |
) |
|
|
- |
|
Total Other
Income (Expense) |
|
|
(115,919 |
) |
|
|
849,598 |
|
|
|
(234,880 |
) |
|
|
1,573,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
|
(3,495,060 |
) |
|
|
(2,241,777 |
) |
|
|
(6,514,500 |
) |
|
|
(4,022,936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividend |
|
|
314,100 |
|
|
|
75,000 |
|
|
|
1,244,400 |
|
|
|
75,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common shareholders |
|
$ |
(3,809,160 |
) |
|
$ |
(2,316,777 |
) |
|
$ |
(7,758,900 |
) |
|
$ |
(4,097,936 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share:
Basic and Diluted |
|
$ |
(0.24 |
) |
|
$ |
(0.33 |
) |
|
$ |
(0.69 |
) |
|
$ |
(0.63 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares: Basic and Diluted |
|
|
15,972,166 |
|
|
|
7,026,075 |
|
|
|
11,188,009 |
|
|
|
6,475,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investor Contacts:Tirth PatelEdison AdvisorsT:
646-653-7035tpatel@edisongroup.com
Magnegas Applied Technlgy Sol (MM) (NASDAQ:MNGA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Magnegas Applied Technlgy Sol (MM) (NASDAQ:MNGA)
Historical Stock Chart
From Apr 2023 to Apr 2024