Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-207928
PROSPECTUS
SUPPLEMENT
(To
Prospectus dated June 15, 2016)
21,800,000
shares of Common Stock
Pursuant to this prospectus
supplement and the accompanying prospectus, we are offering up to 21,800,000 shares of our common stock (the “Common
Stock”). The shares of Common Stock are being sold directly to certain institutional accredited investor(s) pursuant to
a securities purchase agreement dated October 11, 2018. The 21,800,000 shares of Common Stock are being sold at
a purchase price of $0.23 per share.
In a concurrent private
placement, we are also selling to investors warrants to purchase 21,800,000 shares of our Common Stock for each
share purchased for cash in this offering, exercisable at a price of $0.3654 per warrant share (the “Warrants”).
The Warrants will be exercisable beginning on the earlier of the date the Company obtains the approval of its stockholders to
the issuance of the shares of Common Stock underlying the Warrants (the “Warrant Shares”) or the six-month anniversary
of the date of issuance (the “Initial Exercise Date”).
The Warrants and the Warrant Shares are
not
being
registered under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to the registration statement
of which this prospectus supplement and the accompanying prospectus form a part and are
not
being offered pursuant to this
prospectus supplement and the accompanying prospectus. The Warrants are being offered pursuant to an exemption from the registration
requirements of the Securities Act provided by Section 4(a)(2).
Maxim Group LLC acted
as a placement agent for the offering and is entitled to a fee equal to 6% of the gross proceeds raised in the offering of the
Common Stock and the concurrent private offering of the Warrants.
The proceeds to us before
expenses in this offering will be $5,014,000. We estimate the total expenses of this offering will be $425,840.
Our Common Stock is quoted
on The Nasdaq Capital Market under the symbol “MNGA.” On October 10, 2018, the last reported sales price for
our Common Stock on The Nasdaq Capital Market was $0.3654 per share.
The aggregate market value
of our outstanding Common Stock held by non-affiliates pursuant to General Instruction I.B.6 of Form S-3 was approximately $46,435,259.4
based on 109,466,638.61 shares of Common Stock outstanding on October 10, 2018, of which 207,204 shares were
held by non-affiliates, and a last reported sale price on The Nasdaq Capital Market of $0.425 per share on October 3,
2018. Other than our sale of 25,000,000 shares of Common Stock for an aggregate purchase price of $3,750,000 on August 28, 2018
and our sale of shares of Series F Convertible Preferred Stock for an aggregate offering price of $556,016 on June 27, 2018, we
have not offered any securities pursuant to General Instruction I.B.6. of Form S-3 during the prior 12 calendar month period that
ends on and includes the date hereof.
We have engaged Maxim
Group LLC as our sole placement agent for this offering (the “Placement Agent”). The Placement Agent is not purchasing
or selling any Common Stock offered by this prospectus supplement and the accompanying prospectus but will use its reasonable
best efforts to arrange for the sale of the Common Stock offered. See “Plan of Distribution.” This offering is expected
to close on or about October 15, 2018, subject to customary closing conditions, without further notice to you. We have
not arranged to place the funds from the investors in an escrow, trust or similar account.
We ceased to be
an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as amended, as of December 31, 2017
.
Investing
in our securities involves a high degree of risk. Please read “Risk Factors” beginning on page S-5 of this prospectus
supplement and in the documents incorporated by reference into this prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or
determined if this prospectus supplement or the accompanying prospectus are truthful or complete. Any representation to the contrary
is a criminal offense.
|
|
|
Per Share of
Common
Stock
|
|
|
Total
|
|
|
Public offering price
|
|
$
|
0.23
|
|
|
$
|
5,014,000
|
|
|
Placement
agent fee
(1)
|
|
$
|
0.0138
|
|
|
$
|
300,840
|
|
|
Proceeds
to us, before expenses
(2)
|
|
$
|
0.2162
|
|
|
$
|
4,713,160
|
|
|
(1)
|
We
have agreed to pay the Placement Agent an aggregate cash fee equal to 6.0% of the gross proceeds in this offering from sales
arranged by the Placement Agent. We also have agreed to pay certain expenses of the Placement Agent, as discussed under “Plan
of Distribution” in this prospectus supplement.
|
|
(2)
|
Does
not include additional compensation received by the Placement Agent, including reimbursement of legal fees and out of pocket
expenses, as further discussed under the heading “Plan of Distribution” herein.
|
Sole
Placement Agent
Maxim
Group LLC
Prospectus
Supplement dated October 11, 2018.
TABLE
OF CONTENTS
You
should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying
prospectus and in any free writing prospectus that we have authorized for use in connection with this offering. We have not authorized
anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information in this prospectus supplement, the accompanying prospectus, the documents incorporated
by reference in this prospectus supplement and the accompanying prospectus, and in any free writing prospectus that we have authorized
for use in connection with this offering, is accurate only as of the date of those respective documents. Our business, financial
condition, results of operations and prospects may have changed since those dates. You should read this prospectus supplement,
the accompanying prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying prospectus,
and any free writing prospectus that we have authorized for use in connection with this offering, in their entirety before making
an investment decision. You should also read and consider the information in the documents to which we have referred you in the
sections of this prospectus supplement entitled “Information Incorporated by Reference” and “Where You Can Find
More Information.”
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus form part of a registration statement on Form S-3 that we filed with the
Securities and Exchange Commission, or SEC, using a “shelf” registration process. This document contains two parts.
The first part consists of this prospectus supplement, which provides you with specific information about this offering. The second
part, the accompanying prospectus, provides more general information, some of which may not apply to this offering. Generally,
when we refer only to the “prospectus,” we are referring to both parts combined. This prospectus supplement may add,
update or change information contained in the accompanying prospectus. To the extent that any statement we make in this prospectus
supplement is inconsistent with statements made in the accompanying prospectus or any documents incorporated by reference herein
or therein, the statements made in this prospectus supplement will be deemed to modify or supersede those made in the accompanying
prospectus and such documents incorporated by reference herein and therein.
Unless
the context otherwise requires, all references to the terms “we,” “us,” “our,” and the “company”
throughout this prospectus supplement mean MagneGas Applied Technology Solutions, Inc. and its subsidiaries.
All
references in this prospectus supplement to our financial statements include, unless the context indicates otherwise, the related
notes.
The
industry and market data and other statistical information contained in the documents we incorporate by reference are based on
management’s own estimates, independent publications, government publications, reports by market research firms or other
published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe these
sources are reliable, we have not independently verified the information.
The
information contained in this prospectus supplement or the accompanying prospectus is accurate only as of the date of this prospectus
supplement or the accompanying prospectus, regardless of the time of delivery of this prospectus supplement, the accompanying
prospectus or of any sale of the securities. We further note that the representations, warranties and covenants made by us in
any agreement that is filed as an exhibit to any document that is incorporated by reference in this prospectus supplement or the
accompanying prospectus were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose
of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant
to you. Moreover, such representations, warranties and covenants should not be relied on as accurately representing the current
state of our affairs.
PROSPECTUS
SUPPLEMENT SUMMARY
The
following summary of our business highlights some of the information contained elsewhere in or incorporated by reference into
this prospectus supplement. Because this is only a summary, however, it does not contain all of the information that may be important
to you. You should carefully read this prospectus supplement and the accompanying prospectus, including the documents incorporated
by reference, which are described under “Information Incorporated by Reference” and “Where You Can Find More
Information” in this prospectus supplement. You should also carefully consider the matters discussed in the section entitled
“Risk Factors” in this prospectus supplement, in the accompanying prospectus and in other periodic reports incorporated
herein by reference.
Our
Company
MagneGas
Applied Technology Solutions, Inc. (the “Company”) is an alternative energy company that has developed a proprietary
plasma arc system (“Plasma Arc Flow Units” or “Plasma Arc Flow System”) which generates hydrogen based
synthetic gases through the gasification of various types of liquid feedstocks. The Company’s synthetic gas – MagneGas2®
- is bottled in cylinders and is distributed to the metalworking market as an alternative cutting fuel to acetylene and propane.
Through the course of its business development, the Company has established a retail and wholesale platform and a network of brokers
to sell its MagneGas2® for use in the metalworking and manufacturing industries throughout the world. Additionally, the Company
is in the process of developing ancillary uses of MagneGas2® for additional end-user applications. The Company’s Plasma
Arc Flow Units include various commercial applications, most notably the sterilization of liquid waste, which has resulted in
the Company’s marketing and sale of Plasma Arc Flow Units for third-party commercial use.
In
the second quarter of 2014 the Company began implementing an acquisition-focused growth strategy that was highlighted by the October
2014 purchase of Equipment Sales and Services, Inc. (“ESSI”). ESSI is a full line seller of industrial gases and equipment
for the welding and metal cutting industries. Since acquiring ESSI, the Company has opened four retail locations and distributes
MagneGas2® as a metal cutting fuel as well as other gases and welding supplies. Additional acquisitions and the success of
ESSI has allowed the Company to augment its acquisition growth model with significant organic growth. In January 2018, the Company
acquired all of the assets of GGNG Enterprises, Inc. and began doing business in southern California under the name “Complete
Welding San Diego”. In February 2018, the company acquired all of the assets of Green Arc Supply, L.L.C. and began doing
business in Texas and Louisiana under the name “Green Arc Supply”. On April 3, 2018, the Company acquired all of the
capital stock of Trico Welding Supplies, Inc. and began doing business in Northern California under the name “Trico Welding
Supplies”.
Between
February and March of 2017, the Company formed five wholly owned subsidiaries in the State of Delaware respectively called MagneGas
Energy Solutions, LLC, MagneGas Welding Supply, LLC, MagneGas Real Estate Holdings, LLC, MagneGas IP, LLC and MagneGas Production,
LLC. The Company formed these entities to hold the various types of Company assets their names indicate. On June 29, 2018, the
Company organized MagneGas Limited under the laws of the United Kingdom and commenced business operations in greater Europe. On
September 25, 2018, the Company changed its name from “MagneGas Corporation” to “MagneGas Applied Technology
Solutions, Inc.”.
Corporate
Information
MagneGas
Applied Technology Solutions, Inc. was organized under the laws of the State of Delaware on December 9, 2005. Our principal
office is located at 11885 44th Street North, Clearwater, Florida 33762 and its telephone number is (727) 934-3448.
We
file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other items with the Securities
and Exchange Commission, or the SEC. We provide access free of charge to all of these SEC filings, as soon as reasonably practicable
after filing, on our internet site located at www.magnegas.com. The information on our website is not incorporated by reference
into this prospectus supplement or the accompanying prospectus and should not be considered to be part of this prospectus supplement
or the accompanying prospectus.
The
Offering
|
Common
Stock offered by MagneGas:
|
|
21,800,000 shares of Common Stock.
Each share of Common Stock has a purchase price of $0.23 per share.
|
|
|
|
|
Common
Stock to be outstanding
after this offering:
|
|
131,266,638 shares, if all the shares of
Common Stock are purchased in the offering.
|
|
|
|
|
|
Use
of proceeds:
|
|
We
intend to use the proceeds from this offering for working capital and general
corporate purposes. See “Use of Proceeds” on page S-8 of this prospectus
supplement.
|
|
|
|
|
|
Nasdaq
Capital Market (“Nasdaq”) Symbol:
|
|
MNGA
|
|
|
|
|
|
Concurrent
Private Placement:
|
|
In a concurrent private placement,
we are selling to purchasers of our Common Stock in this offering Warrants to
purchase 21,800,000 shares of our Common Stock
for
each share purchased for cash in this offering. The Warrants will be exercisable
beginning on the Initial Exercise Date at an exercise price of $0.3654 per share
and will expire 42 months following the closing of this offering.
The
Warrants and the Warrant Shares are not being registered under the Securities Act pursuant
to the registration statement of which this prospectus supplement and the accompanying
prospectus form a part and are not being offered pursuant to this prospectus supplement
and the accompanying prospectus
. The Warrants are being offered pursuant to an exemption
from the registration requirements of the Securities Act provided by Section 4(a)(2).
|
|
|
|
Risk
factors:
|
|
This
investment involves a high degree of risk. See the information contained in or incorporated by reference under “Risk Factors”
beginning on page S-5 of this prospectus supplement and in the documents incorporated by reference into this prospectus supplement.
|
The number of shares of
Common Stock to be outstanding immediately after this offering is based on 109,466,638.61 shares outstanding on October
10, 2018 and excludes as of that date:
|
|
●
|
206,084 shares issuable upon the exercise of options;
|
|
|
|
|
|
|
●
|
2,916,667 shares of Common Stock that are issuable upon
the exercise of common stock warrants issued in the June 2017 Private Placement;
|
|
|
|
|
|
|
●
|
27,778 shares of Common Stock that are issuable upon the
exercise of placement agent warrants issued in the June 2017 Private Placement;
|
|
|
|
|
|
|
●
|
25,000,000 shares of Common Stock that are issuable upon
the exercise of common stock warrants issued in the July 2018 Warrant Offering; and
|
|
|
|
|
|
|
●
|
Shares of common stock that are issuable upon (a) the exercise
of 2,530 Series C Convertible Preferred Warrants outstanding into 2,530 shares of Series C Preferred Stock and the subsequent
conversion of said Series C Preferred Stock to common stock and (b) the conversion of 36,765 outstanding shares of Series
E Convertible Preferred Stock to common stock.
|
RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should carefully
consider the risks discussed under the Section captioned “Risk Factors” contained in our Annual Report on Form 10-K
for the year ended December 31, 2017 and in our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission
subsequent to the Form 10-K, and in other documents that we subsequently file with the Securities and Exchange Commission, all
of which are incorporated by reference in this prospectus supplement and the accompanying prospectus in their entirety, together
with other information in this prospectus supplement, the accompanying prospectus, the information and documents incorporated
by reference herein and therein, and in any free writing prospectus that we have authorized for use in connection with this offering.
If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be seriously
harmed. This could cause the trading price of our Common Stock to decline, resulting in a loss of all or part of your investment.
Risks
Relating to this Offering
If
you purchase securities in this offering, you may experience immediate and substantial dilution.
You
may incur immediate and substantial dilution in the pro forma net tangible book value per share of Common Stock from the
price per share that you pay for the securities in this offering. If the holders of outstanding options or warrants or other outstanding
convertible securities exercise or convert those options or warrants or other outstanding convertible securities at prices below
the public offering price, you will incur dilution. See the section entitled “Dilution” below for a more detailed
discussion of the dilution associated with this offering.
We
have broad discretion to determine how to use the proceeds raised in this offering, and we may not use the proceeds effectively.
Our
management will have broad discretion over the use of proceeds from this offering, and we could spend the proceeds from this offering
in ways with which you may not agree or that do not yield a favorable return. We intend to use the net proceeds from this offering
for working capital and other general corporate purposes. As of the date of this prospectus supplement, we cannot specify
with certainty all of the particular uses of the proceeds from this offering. Accordingly, we will retain broad discretion over
the use of such proceeds. If we do not invest or apply the proceeds of this offering in ways that improve our operating results,
we may fail to achieve expected financial results, which could cause our stock price to decline.
We
can provide no assurance that our Common Stock will continue to meet Nasdaq listing requirements, which may cause our shares of
Common Stock to trade at a discount and may make it difficult for you to sell your shares.
On
May 7, 2018, we received a notice from Nasdaq indicating that the Common Stock was subject to potential delisting from Nasdaq
because for a period of 30 consecutive business days, the bid price of the Common Stock had closed below the minimum $1.00 per
share requirement for continued inclusion under Nasdaq Marketplace Rule 5550(a)(2) (the “Bid Price Rule”). The notification
had no immediate effect on the listing or trading of the Common Stock on Nasdaq. Nasdaq stated in its letter that in accordance
with the Nasdaq listing requirements, the Company has been provided an initial period of 180 calendar days, or until November
5, 2018, to regain compliance. The letter states that the Nasdaq Staff will provide written notification that the Company has
achieved compliance with the minimum bid price listing requirement if at any time before November 5, 2018, the bid price of the
Common Stock closes at $1.00 per share or more for a minimum of ten consecutive business days.
If
the Company is unable to regain compliance by November 5, 2018, the Company may be eligible for an additional 180 calendar day
compliance period to demonstrate compliance with the bid price requirement. To qualify, the Company will be required to meet the
continued listing requirement for market value of publicly held shares set forth in Market Place Rule 5550(a) and all other initial
listing standards for the Nasdaq Capital Market set forth in Marketplace Rule 5505, with the exception of the bid price requirement,
and will need to provide written notice to Nasdaq of its intention to cure the deficiency during the second compliance period,
by effecting a reverse stock split, if necessary. If the Company does not qualify for the second compliance period or fails to
regain compliance during the second 180-day period, then Nasdaq will notify the Company of its determination to delist the Company’s
Common Stock, at which point the Company would have an opportunity to appeal the delisting determination to a Hearings Panel.
If
we are unable to meet these requirements, our Common Stock could be delisted from Nasdaq. If our Common Stock were to be delisted
from Nasdaq, our Common Stock could continue to trade on the OTCQB or similar marketplace following any delisting from Nasdaq.
Any such delisting of our Common Stock could have an adverse effect on the market price of, and the efficiency of the trading
market for, our Common Stock, not only in terms of the number of shares that can be bought and sold at a given price, but also
through delays in the timing of transactions and less coverage of us by securities analysts, if any. Also, if in the future we
were to determine that we need to seek additional equity capital, it could have an adverse effect on our ability to raise capital
in the public or private equity markets. Any of these changes could cause the value of your investment to decline.
Risks
Relating to Our Business
We
have a significant amount of goodwill and other intangible assets on our balance sheet that are subject to periodic impairment
evaluations; an impairment of our goodwill or other intangible assets may have a material adverse impact on our financial condition
and results of operations.
As
of June 30, 2018, we had goodwill and other intangible assets of $5,614,098, which represented approximately 28.7% of our total
assets. Accounting standards require us to test goodwill for impairment annually, and more frequently when events or changes in
circumstances indicate impairment may exist. There can be no assurance that reviews of our goodwill and other intangible assets
will not result in impairment charges. Although it does not affect cash flow, an impairment charge does have the effect of decreasing
our earnings, assets and shareholders’ equity. Factors that could indicate our goodwill or intangible assets are impaired
include a decline in our stock price and market capitalization or lower than projected operating results and cash flows. Our stock
price historically has shown volatility and often fluctuates significantly in response to market and other factors. Declines in
our stock price or lower operating results could increase the risk of impairment. If we determine that further impairment exists,
it may result in a significant non-cash charge to earnings and lower stockholders’ equity.
Pending
and future litigation may have a material adverse impact on our financial condition and results of operations.
From
time to time, we have been subject to litigation. On July 9, 2018, one of our shareholders filed a lawsuit,
Henry Moon v. MagneGas
Corporation and Ermanno Santilli
, case number 1:18-cv-04462-MLB, U.S. District Court for the Northern District of Georgia,
Atlanta Division, against us and our Chief Executive Officer seeking an unspecified amount of damages. The lawsuit alleges that
the plaintiff sustained losses due to a drop in the Company’s share price that resulted from our disclosure of the number
of shares available under our amended and restated equity compensation plan. Plaintiff alleges he was misled about the number
of shares that would be available under the plan and that because he held his shares instead of selling them he sustained a loss.
We believe that the plaintiff’s allegations are without merit and intend to vigorously defend against the claims.
In
addition, we may be a party to litigation matters involving our business, which operates within a highly regulated industry. On
September 4, 2018, we received notice that a law firm representing the estate of an individual who sustained life-ending injuries
while working for an end user of our products had made a claim to our insurance carrier. The matter is under investigation by
the U.S. Department of Transportation and the Occupational Health and Safety Administration. The Company is still investigating
the cause of the accident and there have been no conclusive findings as of this time. It is unknown whether the final cause of
the accident will be determined and whether those findings will negatively impact Company operations or sales. The Company continues
to be fully operational and transparent with all regulatory agencies.
For
more information regarding pending litigation, please see the Sections captioned “
Item 3. Legal Proceedings
”
contained in our Annual Report on Form 10-K for the year ended December 31, 2017 and “
Item 1. Legal Proceedings
”
contained in our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission subsequent to the Form 10-K.
Cautionary
Note Regarding Forward-Looking Statements
This
prospectus supplement (including any documents incorporated by reference herein) contains statements with respect to us which
constitute ‘‘forward-looking statements’’ within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the ‘‘safe
harbor’’ created by those sections. Forward-looking statements, which are based on certain assumptions and reflect
our plans, estimates and beliefs, can generally be identified by the use of forward-looking terms such as “believes,”
“expects,” “may,” “will,” “should,” “could,” “seek,” “intends,”
“plans,” “estimates,” “anticipates” or other comparable terms. These forward-looking statements
include, but are not limited to, statements concerning future events, our future financial performance, business strategy and
plans and objectives of management for future operations. Our actual results could differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to these differences include those discussed in “Risk
Factors” in this prospectus supplement and the documents incorporated by reference herein.
We
caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are
made. We disclaim any obligation, except as specifically required by law and the rules of the Securities and Exchange Commission,
to publicly update or revise any such statements to reflect any change in company expectations or in events, conditions or circumstances
on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth
in the forward-looking statements.
You
should read this prospectus supplement, the accompanying prospectus, and the documents that we incorporate by reference herein
and therein and have filed as exhibits to the registration statement of which this prospectus supplement is part, completely and
with the understanding that our actual future results may be materially different from what we expect. You should assume that
the information appearing in this prospectus supplement is accurate as of the date on the cover of this prospectus supplement
only. Our business, financial condition, results of operations and prospects may change. We may not update these forward-looking
statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to
update and disclose material developments related to previously disclosed information. We qualify all of the information presented
in this prospectus supplement, and particularly our forward-looking statements, by these cautionary statements.
USE
OF PROCEEDS
The
proceeds to us before expenses will be $5,014,000. We estimate the total expenses of this offering will be $425,840.
We intend to use the net proceeds from this offering for working capital and general corporate purposes.
DESCRIPTION
OF SECURITIES WE ARE OFFERING
Pursuant to this prospectus
supplement and the accompanying prospectus, we are offering 21,800,000 shares of our common stock (“Common Stock”)
par value $0.001 per share. The shares of Common Stock are being sold directly to certain institutional accredited investor(s)
pursuant to a securities purchase agreement dated October 11, 2018. The shares of Common Stock are being sold at a purchase
price of $0.23 per share.
As of October 10,
2018, our authorized capital stock consisted of 190,000,000 shares of Common Stock, of which 109,466,638.61 shares
were issued and outstanding, and 10,000,000 shares of preferred stock, par value $0.001 per share, of which 1,036,765 shares were
issued and outstanding. In addition, as of October 10, 2018, there were issued and outstanding options to purchase 206,084
shares of Common Stock and warrants to purchase 27,944,445 shares of our Common Stock. The authorized and unissued shares
of Common Stock and preferred stock are available for issuance without further action by our stockholders, unless such action
is required by applicable law or the rules of any stock exchange on which our securities may be listed. Unless approval of our
stockholders is so required, our board of directors will not seek stockholder approval for the issuance and sale of our Common
Stock.
Common
Stock
Holders
of our Common Stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Our Common Stock does
not have cumulative voting rights. Holders of our Common Stock representing a majority of the voting power of our capital stock
issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting
of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to our certificate of incorporation. Although there are no provisions
in our charter or by-laws that may delay, defer or prevent a change in control, the board of directors is authorized, without
stockholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.
Holders of Common Stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally
available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over the common stock. Holders of our Common Stock have no pre-emptive rights, no conversion rights and there are no redemption
provisions applicable to our Common Stock.
All
of our outstanding shares of Common Stock are, and the shares of Common Stock to be issued in this offering will be, fully paid
and nonassessable.
Preferred
Stock
As of October 10,
2018, we have two series of preferred stock outstanding, consisting of 1,000,000 shares of Series A Preferred Stock, 2,530
shares of Series C Convertible Preferred Warrants exercisable into 2,530 Series C Convertible Preferred shares, and 36,765
shares of Series E Preferred Stock.
Series
A Preferred Stock
The
Company has designated 1,000,000 shares of Series A Preferred Stock, par value $0.001 per share, and 1,000,000 shares are issued
and outstanding. The Series A Preferred Stock does not have any conversion provision or provides for cumulative dividends and
each share of Series A Preferred Stock has voting rights equal to 667 shares of common stock. The Series A Preferred Stock has
no redemption provision at the option of the holder.
Series
C Preferred Stock
The
Company has designated 250,000 shares of Series C Preferred Stock, par value $0.001 per share, and 0 shares are issued and outstanding.
As of the date hereof, there are 2,560 Series C Convertible Preferred Warrants outstanding which are exercisable into 2,560 shares
of Series C Preferred Stock at an exercise price of $900 per share. The shares of Series C Preferred Stock have a stated value
of $1,000 and each share is initially convertible into common stock at a conversion price of $3.00 per share, subject to adjustment
as set forth below. The holders of shares of Series C Preferred Stock are entitled to receive dividends, when and as declared
by the Board and after the occurrence of a triggering event. Until such time as all triggering events then outstanding are cured,
the holders shall be entitled to receive dividends at a rate of 18.0% per annum.
At
any time the holder may, at its option, convert any shares of Series C Preferred Shares at an alternate conversion price as follows:
The
lower of (A) the applicable conversion price as then in effect and (B) the greater of (x) $0.09 and (y) the lowest of (i) 85%
of the Value Weighted Average Price (“VWAP”) of the common stock as of the trading day immediately preceding the delivery
or deemed delivery of the applicable conversion notice, (ii) 85% of the VWAP of the common stock as of the trading day of the
delivery or deemed delivery of the applicable conversion notice and (iii) 85% of the price computed as the quotient of (I) the
sum of the VWAP of the common stock for each of the ten (10) trading days with the lowest VWAP of the common stock during the
twenty (20) consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery
of the applicable conversion notice, divided by (II) ten (10).
In
lieu of conversion, upon a triggering event, the holder may require the Company to redeem all or any of the Preferred Shares at
a price equal to the greater of (i) the product of (A) the conversion amount of the Preferred Shares to be redeemed multiplied
by (B) a redemption premium of 115% and (ii) the product of (X) the conversion rate with respect to the conversion amount in effect
at such time of redemption multiplied by (Y) the product of (1) a redemption premium of 115% multiplied by (2) the greatest closing
sale price of the common stock on any trading day during the period commencing on the date immediately preceding such Triggering
Event and ending on the date the Company makes the entire redemption payment.
The
Company may, at its option following notice to each holder, redeem such amount of Preferred Shares by paying to each holder the
corresponding installment amount in cash. The applicable installment conversion price with respect to a particular date of determination,
shall be equal to the lower of (A) the conversion price then in effect and (B) the greater of (x) $0.09 and (y) the lower of (i)
85% of the VWAP of the common stock as of the trading day immediately preceding the applicable Installment Date and (ii) 85% of
the quotient of (A) the sum of the VWAP of the common stock for each of the ten (10) trading days with the lowest VWAP of the
common stock during the twenty (20) consecutive trading day period ending and including the trading day immediately prior to the
applicable Installment Date, divided by (B) ten (10).
If
the Company elects to effect an installment redemption in lieu of an installment conversion, in whole or in part, such Preferred
Shares shall be redeemed by the Company in cash on the applicable Installment Date in an amount equal to 103% of the applicable
installment redemption amount.
Series
E Preferred Stock
The
Company has designated 455,882 shares of Series E Preferred Stock, par value $0.001 per share, and 36,765 shares of Series E Preferred
Stock are issued and outstanding. The holders of shares of Series E Preferred Stock are entitled to receive dividends, when and
as declared by the Board. The shares of Series E Preferred Stock have a stated value of $1.36 per share. The initial conversion
price of these preferred shares to common stock will be $1.36. In addition, under the Series E Convertible Preferred Stock designation,
holders representing at 65% of the aggregate stated value amount of the Series E Convertible Preferred Stock then outstanding
shall be required for any change, waiver or amendment to the certificate of designations provided, that 65% must include the holders
as long as they beneficially own any preferred shares.
Upon
the occurrence of a triggering event as disclosed in the Series E Convertible Preferred Stock designation until such time as all
triggering events then outstanding are cured, the holders shall be entitled to receive dividends at a rate of 18.0% per annum.
At
any time the holder may, at its option, convert the Series E Convertible Preferred Stock under an alternate conversion price which
is the lower of the applicable conversion price in effect on the applicable conversion date of the applicable alternate conversion
and the greater of the following:
|
a)
|
the
floor price and the lowest of 75% of the closing bid price of the common Stock as of the trading day immediately preceding
the delivery or deemed delivery of the applicable conversion notice,
|
|
|
|
|
b)
|
75%
of the variable weighted average price of the common stock as defined in the preferred designation
|
In
lieu of conversion, upon a triggering event, the holder may require the Company to redeem all or any of the shares of Series E
Preferred Stock at a price equal to the greater of calculations as defined in the preferred designation.
If
the holders of outstanding options or warrants or other outstanding convertible securities exercise or convert those options or
warrants or other outstanding convertible securities at prices below the public offering price, you will incur dilution. In addition,
we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient
funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or
convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.
CAPITALIZATION
The
following table sets forth our consolidated capitalization as of June 30, 2018 and our capitalization as of June 30, 2018 on a
pro forma basis, based on a public offering price of $0.23 per share of Common Stock. You should read the following table
in conjunction with “Use of Proceeds” in this prospectus supplement and our consolidated financial statements and
the notes thereto incorporated by reference in this prospectus supplement and the accompanying prospectus
.
|
|
|
As
of June 30, 2018
(unaudited)
|
|
|
Pro
Forma (assuming $5,014,000 in Common Stock sold in the Offering
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,147,522
|
|
|
$
|
6,161,522
|
|
|
Long
term debt
|
|
|
|
|
|
|
|
|
|
Note
payable
|
|
$
|
763,613
|
|
|
$
|
763,613
|
|
|
Capital
leases, net of current
|
|
$
|
69,748
|
|
|
$
|
69,748
|
|
|
Total
long term debt
|
|
$
|
833,361
|
|
|
$
|
833,361
|
|
|
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
|
|
|
Common
stock: $0.001 par; 190,000,000 shares authorized; 23,609,814 shares issued and outstanding at June 30, 2018
|
|
$
|
23,610
|
|
|
$
|
45,410
|
|
|
Additional
paid-in-capital
|
|
$
|
85,499,209
|
|
|
$
|
90,491,409
|
|
|
Accumulated
deficit
|
|
$
|
(71,097,370
|
)
|
|
$
|
(71,097,370
|
)
|
|
Total
stockholders’ equity
|
|
$
|
14,426,449
|
|
|
$
|
19,394,039
|
|
|
Total
Capitalization
|
|
$
|
15,259,810
|
|
|
$
|
20,227,400
|
|
PLAN
OF DISTRIBUTION
Pursuant
to this prospectus supplement and the accompanying prospectus, we are offering 21,800,000 shares of our Common Stock at
a purchase price of $0.23 per share. The public offering price of the shares of Common Stock offered by this prospectus
supplement and the accompanying base prospectus has been determined based upon arm’s-length negotiations between the purchasers
and us.
The
shares of Common Stock are being sold directly to certain institutional accredited investor(s)
pursuant to a securities purchase agreement dated October 11, 2018. The securities
purchase agreement provides the investors with certain representations, warranties and
covenants, including indemnifications, from us. Our obligation to issue and sell the
shares of Common Stock to the investors who are party to the securities purchase agreement
is subject to the closing conditions set forth in the securities purchase agreement,
including the absence of any material adverse change in our business and the receipt
of certain opinions, letters and certificates from us or our counsel, which may be waived
by the respective parties. All of the Common Stock will be sold at the price specified
in this prospectus supplement and, we expect, at a single closing. We currently anticipate
that the initial closing of the sale of the shares of Common Stock will take place on
or about October 15, 2018.
Placement
Agent
The
securities were offered to the investors by the Placement Agent on a “reasonable best efforts” basis. We have agreed
to pay the Placement Agent an aggregate cash placement fee equal to 6.0% of the gross proceeds in this offering from sales arranged
for by the Placement Agent. Subject to certain conditions, we also have agreed to reimburse all reasonable travel and other out-of-pocket
expenses of the Placement Agent in connection with this offering, including but not limited to the reasonable fees of legal counsel,
not to exceed $50,000.
We
have agreed to indemnify the Placement Agent against certain liabilities, including liabilities under the Securities Act, and
liabilities arising from breaches of representations and warranties contained in the placement agency agreement, or to contribute
to payments that the Placement Agent may be required to make in respect of those liabilities.
The
Placement Agent and its affiliates have engaged, and may in the future engage, in investment banking transactions and other commercial
dealings in the ordinary course of business with us or our affiliates. The Placement Agent has received, or may in the future
receive, customary fees and commissions for these transactions. As of the date hereof, the Placement Agent holds warrants to purchase
up to 27,778 shares of common stock at an exercise price of $49.50 per share, which are exercisable until June 15, 2022. We
also entered into a settlement agreement with the Placement Agent on June 27, 2018, pursuant to which we issued to the Placement
Agent 817,670 shares of Series F Preferred Stock that the Placement Agent subsequently converted into 817,670 shares of our common
stock and sold.
The
transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc. The transfer agent’s address is 3200
Cherry Creek South Drive, Suite 430, Denver, CO 80209, and its telephone number is (303) 282-4800.
Our
common stock is listed on The Nasdaq Capital Market under the symbol “MNGA.”
LEGAL
MATTERS
The
validity of the securities offered hereby will be passed upon for us by Tyler B. Wilson, Esq. our General Counsel. Harter
Secrest & Emery LLP, Rochester, NY, acted as counsel for the Placement Agent in this offering.
EXPERTS
The
consolidated financial statements of the Company as of December 31, 2016 and for the year ended December
31, 2017 incorporated in this prospectus supplement by reference to our Annual Report on Form 10-K for the year ended December
31, 2017, have been so incorporated in reliance on the report (which contains an explanatory paragraph relating to our ability
to continue as a going concern as described in the notes to the consolidated financial statements) of Marcum LLP, an independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
Where
You Can Find More Information
This
prospectus supplement is part of a registration statement on Form S-3 that we filed with the SEC under the Securities Act of 1933,
as amended, and does not contain all the information set forth in the registration statement. Whenever a reference is made in
this prospectus supplement to any of our contracts, agreements or other documents, the reference may not be complete, and you
should refer to the exhibits that are a part of the registration statement of which this prospectus supplement is a part, or the
exhibits to the reports or other documents incorporated by reference in this prospectus supplement for a copy of such contract,
agreement or other document.
Because
we are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, we file annual,
quarterly and special reports, and other information with the SEC. Our SEC filings are available to the public over the Internet
at the SEC’s website at http://www.sec.gov or on our website at http://www.magnegas.com.
The
website addresses referenced herein are not intended to function as hyperlinks, and the information contained in our website and
in the SEC’s website is not incorporated by reference into this prospectus supplement and should not be considered to be
part of this prospectus supplement.
In
addition, the public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street,
N.E., Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330.
INFORMATION
INCORPORATED BY REFERENCE
The
SEC allows us to incorporate by reference into this prospectus supplement the information contained in other documents we file
with the SEC, which means that we can disclose important information to you by referring you to those documents. Any statement
contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded,
for purposes of this prospectus supplement, to the extent that a statement contained in or omitted from this prospectus supplement,
or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute
a part of this prospectus supplement. This prospectus supplement incorporates by reference our documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until all of the securities are
sold:
|
|
●
|
Our
Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on April 16, 2018.
|
|
|
|
|
|
|
●
|
Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 15, 2018.
|
|
|
|
|
|
|
●
|
Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, filed with the SEC on August 14, 2018.
|
|
|
|
|
|
|
●
|
Our
Current Reports on Form 8-K and Form 8-K/A, filed with the SEC on January 4, 2018, January 17, 2018, January 23, 2018, February
6, 2018 (two on this date), February 14, 2018, February 16, 2018, February 21, 2018 (two on this date), February 27, 2018,
March 1, 2018, March 7, 2018, March 8, 2018 (Film No. 18676499 only), March 15, 2018, March 16, 2018, March 19, 2018, March
20, 2018, March 22, 2018, March 26, 2018, April 2, 2018, April 4, 2018, April 9, 2018, April 16, 2018, April 17, 2018 (Film
No.’s 18757522 and 18759463 only), April 24, 2018, May 2, 2018, May 9, 2018, May 10, 2018, May 11, 2018, May 23, 2018,
June 4, 2018, June 5, 2018, June 12, 2018, June 14, 2018, June 18, 2018, June 20, 2018, June 28, 2018, July 2, 2018, July
5, 2018, July 30, 2018, August 9, 2018, August 20, 2018, August 29, 2018, August 31, 2018, September 4, 2018 (two on this
date), September 13, 2018, September 17, 2018, September 19, 2018, October 1, 2018, October 4, 2018 and October
9, 2018.
|
|
|
|
|
|
|
●
|
Our
definitive information statement on Schedule 14C filed with the SEC on January 29, 2018.
|
|
|
|
|
|
|
●
|
Our
definitive information statement on Schedule 14C filed with the SEC on July 10, 2018.
|
|
|
|
|
|
|
●
|
Our
definitive information statement on Schedule 14C filed with the SEC on September 10, 2018.
|
Notwithstanding
the foregoing, we are not incorporating any document or portion thereof or information deemed to have been furnished and not filed
in accordance with SEC rules.
You
may request a free copy of the above-mentioned filings or any subsequent filings we incorporate by reference to this prospectus
supplement by writing or telephoning us at the following address: MagneGas Applied Technology Solutions, Inc., 11885 44th
Street North, Clearwater, FL 33762, (727) 934-3448.
PROSPECTUS
MagneGas
Corporation
$50,000,000
Common
Stock, Preferred Stock,
Warrants,
Rights, Units
We
may offer and sell up to $50,000,000 in the aggregate of the securities identified above from time to time in one or more offerings.
This prospectus provides you with a general description of the securities.
Each
time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the
offering and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained
in this prospectus with respect to that offering. You should carefully read this prospectus and the applicable prospectus supplement
before you invest in any of our securities.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents
are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount
arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus
supplement. See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution”
for more information. No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing
the method and terms of the offering of such securities.
INVESTING
IN OUR SECURITIES INVOLVES RISKS. SEE THE “RISK FACTORS” ON PAGE 11 OF THIS PROSPECTUS AND ANY SIMILAR SECTION CONTAINED
IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “MNGA.” On June 8, 2016, the last reported sale
price of our common stock on the NASDAQ Capital Market was $0.85 per share.
The
aggregate market value of our outstanding common stock held by non-affiliates is $44,443,469 based on 45,899,534 shares of outstanding
common stock, of which 40,403,154 are held by non-affiliates, and a per share price of $1.10 based on the closing sale price of
our common stock on April 14, 2016. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell our common stock
in a public primary offering with a value exceeding more than one-third of our public float in any 12-month period so long as
our public float remains below $75,000,000. We have not offered any securities pursuant to General Instruction I.B.6. of Form
S-3 during the prior 12 calendar month period that ends on and includes the date of this prospectus.
We
are an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is June 15, 2016.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the SEC, using a “shelf” registration process. By
using a shelf registration statement, we may sell securities from time to time and in one or more offerings up to a total dollar
amount of $50,000,000 as described in this prospectus. Each time that we offer and sell securities, we will provide a prospectus
supplement to this prospectus that contains specific information about the securities being offered and sold and the specific
terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus with
respect to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus
supplement, you should rely on the prospectus supplement. Before purchasing any securities, you should carefully read both this
prospectus and the applicable prospectus supplement, together with the additional information described under the heading “Where
You Can Find More Information; Incorporation by Reference.”
We
have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We will not make an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement
to this prospectus is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate
only as of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition,
results of operations and prospects may have changed since those dates.
As
used throughout this prospectus and the prospectus supplement, the terms “MagneGas,” the “Company,” “we,”
“us,” and “our” refer to MagneGas Corporation. When we refer to “you,” we mean the holders
of the applicable series of securities.
MagneGas®,
MagneGas2®, and other trademarks or service marks of MagneGas Corporation appearing in this prospectus are the property of
MagneGas Corporation. Trade names, trademarks and service marks of other companies appearing in this registration statement are
the property of the respective owners. Solely for convenience, some of our trademarks and service marks referred to in this prospectus
may appear without the ® symbol, but those references are not intended to indicate, in any way, that we will not assert, to
the fullest extent under applicable law, our rights, or the rights of the applicable licensor to these trade names, trademarks
and service marks.
WHERE
YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available
Information
We
file reports, information statements, and other information with the SEC. Information filed with the SEC by us can be inspected
and copied at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain
copies of this information by mail from the Public Reference Section of the SEC at prescribed rates. Further information on the
operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The
SEC also maintains a website that contains reports, proxy and information statements and other information about issuers, such
as us, who file electronically with the SEC. The address of that website is
http://www.sec.gov
.
Our
website address is
www.magnegas.com
. The information on our website, however, is not, and should not be deemed to be, a
part of this prospectus. We have included our website address as an inactive textual reference only.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all
of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided
below. Forms of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration
statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is
qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more
complete description of the relevant matters. You may inspect a copy of the registration statement at the SEC’s Public Reference
Room in Washington, D.C. or through the SEC’s website, as provided above.
Incorporation
by Reference
The
SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can
disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically
update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be
deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
modifies or replaces that statement.
We
incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus,
between the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are
not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the
future, that are not deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02 or 7.01
of Form 8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously
been filed with the SEC:
|
|
●
|
our
Annual Report on Form 10-K and Form 10-K/A for the year ended December 31, 2015, filed with the SEC on, respectively, March
23, 2016 and May 16, 2016;
|
|
|
|
|
|
|
●
|
our
Quarterly Report on Form 10-Q for the period ended March 31, 2016, filed with the SEC on May 16, 2016;
|
|
|
|
|
|
|
●
|
our
Current Reports on Form 8-K filed with the SEC on May 18, 2016 and June 6, 2016;
|
|
|
|
|
|
|
●
|
our
Definitive Information Statement on Schedule 14C filed with the SEC on June 3, 2016; and
|
|
|
|
|
|
|
●
|
the
description of our common stock contained in our registration statement on Form 8-A filed with the SEC on August 14, 2012,
under Section 12(b) of the Exchange Act, including any amendments or reports filed for the purpose of updating such description.
|
All
reports and other documents we subsequently file pursuant to Section 13(a), 14 or 15(d) of the Exchange Act prior to the termination
of this offering, including all such documents we may file with the SEC after the date of the initial Registration Statement and
prior to the effectiveness of the Registration Statement, but excluding any information furnished to, rather than filed with,
the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of
the filing of such reports and documents.
You
may request a free copy of any of the documents incorporated by reference in this prospectus (other than exhibits, unless they
are specifically incorporated by reference in the documents) by writing or telephoning us at the following address:
MagneGas
Corporation
11885
44th Street North
Clearwater,
FL 33762
(727)
934-3448
Attention:
Corporate Secretary
Exhibits
to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus
and any accompanying prospectus supplement.
OUR
COMPANY
Overview
We
were organized in the state of Delaware on December 9, 2005. We were originally organized under the name 4307, Inc., for the purpose
of locating and negotiating with a business entity for a combination. On April 2, 2007 all the issued and outstanding shares of
4307, Inc. were purchased and our name was changed to MagneGas Corporation.
Our
principal executive offices are located at 11885 44th Street North, Clearwater, FL 33762 and our telephone number is (727) 934-3448.
Our website address is www.magnegas.com. The information on our website, however, is not, and should not be deemed to be, a part
of this prospectus. We have included our website address as an inactive textual reference only.
Our
Products
We
currently have three products: the fuel called MagneGas2® for the metal working industry, the equipment primarily known in
the firefighting industry, known as MagneTote, and the machines that produce MagneGas2®, known as Plasma Arc Flow® refineries.
In addition, the Company sells metal cutting fuels and ancillary products through its wholly owned subsidiary, Equipment Sales
and Service, Inc. (“ESSI”), a Florida corporation.
While
our original fuel for the metal working industry was known as MagneGas®, we started selling MagneGas2® in July 2014 and
stopped selling MagneGas® in March 2015.
Fuel
In
the United States, we currently produce MagneGas2®, which is comprised primarily of hydrogen. The fuel can be used as an alternative
to natural gas to power industrial equipment, automobiles and for metal cutting. The fuel is stored in hydrogen cylinders which
are then sold to market on a rotating basis. Independent tests have confirmed that it cuts 38% faster than acetylene. The fuel
has similar properties as acetylene making it easier for end users to adopt with limited training.
MagneTote
is a storage and transport system that can be used by firefighters, military and first responders which allows quicker access
to fuel. The system has been designed to be used in emergency extraction situations.
Equipment
The
Plasma Arc Flow® System can gasify many forms of liquids and liquid waste such as used vegetable oils, ethylene glycol and
sewage and sludge. Plasma Arc Flow® refineries have been configured in various sizes ranging from 50kw to 500kw depending
on the application. Plasma Arc Flow® refineries range in price from $500,000 to $5 Million.
The
Company is pursuing three major market segments:
|
|
●
|
Industrial
Gas Sales
|
|
|
●
|
Equipment
Sales for Liquid Waste Processing
|
|
|
●
|
Use
of MagneGas2® for the Co-Combustion of Hydro-Carbon Fuels to Reduce Emissions
|
|
|
|
|
|
|
|
The
Company’s Research and Development focuses on the following:
|
|
|
|
|
|
|
●
|
High
volume processing of oil
|
|
|
●
|
Combustion
of MagneGas2® with hydrocarbon fuels, such as coal, to reduce emission
|
|
|
●
|
Third
party verification of fuel and equipment safety and performance results
|
Sales
Industrial
Gas Sales
ESSI
is being used as a launching platform to accelerate MagneGas2® fuel sales into the Florida market by allowing the Company
access to a variety of goods and services for the metal working market and access to acetylene customers for potential conversion
into MagneGas2®. In 2015, ESSI had sales of $2,383,981 which includes MagneGas2® fuel sales.
ESSI
operates a business of sales and distribution of industrial gases and related equipment from its headquarters in Pinellas Park,
Florida.
Additionally,
we intend to acquire other gas distribution businesses in order to become a larger distributor of MagneGas2®, other industrial
gases and related equipment.
The
Company has a strategy of selling fuel to the military, the first responder market and major marquee customers in the electric
utility and waste to energy industry. The fuel is sourced through ESSI or through local distributor relationships in various states.
To that end it has received initial fuel orders from several major customers including utility companies, a transportation company,
the U.S. Navy, the Fire Department of New York and several others. All of these sales have long sales cycles as initial orders
have been received and filled and the Company is in various stages of the procurement process for additional penetration and recurring
orders. The ramp of period for these customers can range from several weeks to several months. In addition, the Company has signed
an exclusive distribution agreement with a Florida company to distribute fuel and MagneTote to the first responder market throughout
the Southeastern United States.
Equipment
Sales
The
Company is pursuing international equipment sales in strategic areas of the world through social media, industry events and a
network of independent brokers. The Company also retained two experienced consultants for this market, one with substantial experience
in waste-water and hazardous waste remediation and the other with international access to funding and partners through the United
Nations.
On
November 11, 2015, the Company executed agreements with Green Arc Supply of Louisiana for the sale of a MagneGas2® gasification
system for $765,000. A deposit of $382,500 was received at the execution of the agreements with $191,500 due and payable when
the system construction is 75% complete, balance due and payable upon the completion of the system construction. The Company has
until August 2016 to complete the manufacture of the system.
MagneGas2
®
for the Co-Combustion of Hydro-Carbon Fuels to Reduce Emissions
The
Company has completed internal testing both in the United States and Australia of the effect of combusting MagneGas2® with
hydrocarbon fuel exhaust and has demonstrated reduced hydrocarbon emission and increased heat with the co-combustion of coal and
other hydrocarbon fuels and MagneGas2®.
On
September 13, 2014 the Company and FuturEnergy PTY, LTD of Australia signed a term sheet in order to form a Joint Venture (“JV
LLC Australia”) for the purposes of pursuing the co-combustion of MagneGas2® fuel with hydrocarbon fuels to reduce emissions.
Under the terms of the agreement, each owner of JV LLC Australia controls 50% of the rights to all hydrocarbon fuel emission reductions
through co-combustion of MagneGas2® fuel including diesel, gasoline and coal.
On
March 20, 2015, the Company and FuturEnergy PTY, LTD finalized a term sheet (the “March 2015 Term Sheet”) with a confidential
party from Michigan for a tri-party joint venture implemented through a Delaware limited liability company (the “JV LLC”).
Each party owns one-third of the JV LLC which is engaged in the worldwide testing, development, and pursuit of the co-combustion
of MagneGas2® with coal and coal by-products in the electric power plant industry. The March 2015 Term Sheet was due to expire
on December 31, 2015 unless the three parties agreed to extend the term. During the week of December 14, 2015, the JV LLC successfully
tested the co-combustion technology internally. On December 26, 2015, the parties agreed to extend the March 2015 Term Sheet until
December 31, 2016. The extension allows the parties to attain verification by an independent agency of the co-combustion technology
by December 31, 2016.
A
major research center in the United States associated with a large utility company is currently conducting third party testing
and validation. The accident at the Company headquarters on April 16, 2015 (please see below under the heading “Accident
at Company Facility”) has delayed the supply of fuel for this testing. In late 2015 we began production again of the fuel
needed for the co-combustion testing. It is now anticipated that this validation report will be received in 2016. There are, however,
many variables associated with the timing of this report. In late 2015, the Company identified the specific fuel characteristics
needed to optimize combustion, which is a significant development for this project.
Research
and Development
Increased
System Efficiency for Greater Fuel Output
The
Company has begun working with an advanced power system to test another method of delivering power to the arc within the MagneGas
system. Initially analysis has shown that using a more efficient power delivery method could increase fuel output per kilowatt.
This testing started in May 2016 and is ongoing.
Sterilization
System for Agricultural Use
In
early 2015, the Company completed a new generation of mobile systems for use with the sterilization of manures and sewage waste.
It has developed a new 50kw Venturi System which was tested at a major hog farm in Indiana. The Company has conducted multiple
successful tests at the farm with increasing flow and efficiency rates.
The
pilot plant achieved what was expected, namely it achieved full sterilization of manures processed through the 50kw pilot system.
The Company made a presentation to officials at the United States Department of Agriculture in early 2016. The officials indicated
that there are grant programs available for these types of projects and the Company has retained a consultant to assist through
the grant application process which was submitted May 10, 2016. A decision on the grant application is anticipated to arrive in
September 2016.
Facilities
In
March 2016, the Company moved into its new headquarters 18855 44th Street North, Clearwater, Florida. This new facility is 18,
000 square feet and has the capacity for three MagneGas systems to run simultaneously for multiple shifts. The Company is in the
process of installing all three systems while we continue to produce fuel in our old location
Intellectual
Property
The
Plasma Arc Flow® refinery forces a high volume flow of liquid waste through an electric arc between carbon electrodes. The
benefit of this from a competitive perspective is that it sterilizes the bio-contaminants within the waste without the need to
add any chemical disinfecting agents. In addition, while sterilizing the liquid, a clean burning fuel is produced. In addition
to the patents list below, the Company has several patents pending.
MagneGas
Corporation has patent ownership on the technology in the United States and is exploring filing patents under the Patent Cooperation
Treaty in other areas of the world as needed. MagneGas Corporation has a 20% ownership interest in MagneGas entities that control
the intellectual property in Europe, Africa and China. MagneGas Corporation owns the following U. S. patents:
U.
S. Patent No. 6,926,872 –
issued August 9, 2005, expires June 29, 2018, titled “Apparatus and Method for Producing
a Clean Burning Combustible Gas With Long Life Electrodes and Multiple Plasma-Arc-Flows;”
U.
S. Patent No. 6,972,118
– issued December 6, 2005, expires November 13, 2022, titled “Apparatus and Method for
Processing Hydrogen, Oxygen and Other Gases;”
U.
S. Patent No. 7,780,924
– issued August 24, 2010, expires June 7, 2029, titled “Plasma-arc-flow apparatus for submerged
long lasting electric arcs operating under high power, pressure and temperature conditions to produce a combustible gas;”
U.
S. Patent No. 8,236,150
– issued August 7, 2012, expires September 17, 2030, titled, “Plasma-Arc-Through Apparatus
and Process for Submerged Electric Arcs;”
U.S.
Patent No. 6,183,604
– issued February 6, 2001, expires August 11, 2019, titled “Durable and efficient equipment
for the production of a combustible and non-pollutant gas from underwater arcs and method therefor;”
U.S.
Patent No. 6,540,966
– issued April 1, 2003, expires June 29, 2018, titled “Apparatus and Method for Recycling
Contaminated Liquids;”
U.S.
Patent No. 6,673,322
– issued January 6, 2004, expires June 29, 2018, titled “Apparatus for Making a Highly Efficient,
Oxygen Rich Fuels;” and
U.S.
Patent No.
6,663,752
– issued December 16, 2003, expires July 9, 2022, titled “Clean Burning Liquid Fuel Produced
Via a Self -Sustaining Processing of Liquid Feedstock.”
In
addition to the above-listed utility patents, Magnegas Corporation is the assignee of multiple pending provisional applications
and non-provisional utility patent applications. Furthermore, Magnegas Corporation is the owner of record for the registered trademark
MAGNEGAS in both the United States and Mexico.
Accident
at Company Facility
On
April 16, 2015, there was an accident at the Company’s facilities which occurred during the gas filling process. As a result
of the accident, one employee was killed and one was injured but has recovered and has returned to work. Although the Company
has Workers Compensation Insurance and General Liability Insurance, the financial impact of the accident is unknown at this time.
No customers have terminated their relationship with the Company as a result of the accident. On October 14, 2015 the Company
received their final report from the Occupational and Safety Hazard Administration (“OSHA”) related to the accident
at the Company headquarters on April 16, 2015. The OSHA report included findings, many of which were already resolved and a proposed
citation. The Company was not cited for any willful misconduct and no final determination was made as to the cause of the accident.
The Company received citations related to various operational matters with a total fine of $52,000. The Company has also been
informed by the U.S. Department of Transportation that it has closed its preliminary investigation with no findings or citations
to the Company. The U.S. Department of Transportation has the right to re-open the investigation should new information become
available.
The
Company is still investigating the cause of the accident and there have been no conclusive findings as of this time. It is unknown
whether the final cause of the accident will be determined and whether those findings will negatively impact Company operations
or sales. The Company continues to be fully operational and transparent with all regulatory agencies.
Employees
We
presently have forty one full-time employees. We occasionally have leased employees and independent technicians perform production
and other duties, as required. We consider our relationship with our employees to be excellent.
RISK
FACTORS
Investment
in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. You should carefully
consider the risk factors incorporated by reference to our most recent Annual Report on Form 10-K and any subsequent Quarterly
Reports on Form 10-Q or Current Reports on Form 8-K we file after the date of this prospectus, and all other information contained
or incorporated by reference into this prospectus, as updated by our subsequent filings under the Exchange Act, and the risk factors
and other information contained in the applicable prospectus supplement before acquiring any of such securities. The occurrence
of any of these risks might cause you to lose all or part of your investment in the offered securities.
SPECIAL
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve risks and uncertainties, principally in the sections entitled “Risk
Factors.” All statements other than statements of historical fact contained in this prospectus, including statements regarding
future events, our future financial performance, business strategy and plans and objectives of management for future operations,
are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,”
or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking
statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are
only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk
Factors” or elsewhere in this prospectus, which may cause our or our industry’s actual results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements. These factors include:
|
|
●
|
our
limited financial resources and our ability to obtain additional financing;
|
|
|
|
|
|
|
●
|
the
development and successful commercial acceptance of our products;
|
|
|
|
|
|
|
●
|
the
cost of compliance with government regulations;
|
|
|
|
|
|
|
●
|
that
our technology is unproven on a large-scale industrial basis;
|
|
|
|
|
|
|
●
|
our
dependence on our management team;
|
|
|
|
|
|
|
●
|
risks
of product liability;
|
|
|
|
|
|
|
●
|
our
competition, including from significantly larger alternative fuel companies;
|
|
|
|
|
|
|
●
|
a
slow pace of industry adoption of MagneGas2®; and
|
|
|
|
|
|
|
●
|
protection
of our intellectual property.
|
Moreover,
we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for
us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor,
or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements.
All forward-looking statements included in this document are based on information available to us on the date hereof, and we assumes
no obligation to update any such forward-looking statements.
You
should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this prospectus.
Before you invest in our shares, you should be aware that the occurrence of the events described in the section entitled “Risk
Factors” and elsewhere in this prospectus could negatively affect our business, operating results, financial condition and
stock price. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements
after the date of this prospectus to conform our statements to actual results or changed expectations.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement accompanying this prospectus, we intend to use the net proceeds of this offering
for working capital and other general corporate purposes. Such purposes may include research and development expenditures and
capital expenditures. As of the date of this prospectus, we cannot specify with certainty all of the particular uses of the proceeds
from this offering. We will set forth in the applicable prospectus supplement our intended use for the net proceeds received from
the sale of the related securities. Accordingly, we will retain broad discretion over the use of such proceeds. Pending use of
the net proceeds, we intend to invest the net proceeds in interest-bearing, investment-grade securities.
DESCRIPTION
OF CAPITAL STOCK
General
Our
amended certificate of incorporation authorizes 90,000,000 shares of common stock, $0.001 par value per share, and 10,000,000
shares of preferred stock, $0.001 par value per share. As of June 7, 2016, there were 45,899,534shares of our common stock outstanding
and 1,000,000 shares of preferred stock outstanding.
Common
Stock
Holders
of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Our common stock does
not have cumulative voting rights. Holders of our common stock representing a majority of the voting power of our capital stock
issued and outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting
of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental
corporate changes such as liquidation, merger or an amendment to our certificate of incorporation. Although there are no provisions
in our charter or by-laws that may delay, defer or prevent a change in control, the board of directors is authorized, without
stockholder approval, to issue shares of preferred stock that may contain rights or restrictions that could have this effect.
Holders of common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally
available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate
pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference
over the common stock. Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption
provisions applicable to our common stock.
All
of our outstanding shares of common stock are, and the shares of common stock to be issued in this offering will be, fully paid
and nonassessable.
Preferred
Stock
Our
certificate of incorporation provides that we are authorized to issue up to 10,000,000 shares of preferred stock with a par value
of $0.001 per share. Our board of directors has the authority, without further action by the stockholders, to issue from time
to time the preferred stock in one or more series for such consideration and with such relative rights, privileges, preferences
and restrictions that the board may determine. The preferences, powers, rights and restrictions of different series of preferred
stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption
provisions, sinking fund provisions and purchase funds and other matters. Each series of preferred stock is to be issued under
our certificate of incorporation and a certificate of designation to be approved by the board of directors of the Company or a
committee thereof and filed with the Secretary of State of the State of Delaware in accordance with the General Corporation Law
of the State of Delaware, including statutory and reported decisional law thereunder. The issuance of preferred stock could adversely
affect the voting power or other rights of the holders of common stock.
Of
the 10,000,000 shares authorized of preferred stock at a par value of $0.001, 1,000,000 shares have been designated and issued
as Series A Preferred Stock, 2,141.1328 shares have been designated and issued as Series B Convertible Preferred Stock,2,100.5
shares have been designated and issued as Series C Convertible Preferred Stock, 1,060 shares have been designated and issued as
Series D-1 Convertible Preferred Stock, and 940 shares have been designated and issued as Series D-2 Convertible Preferred Stock.
As of June 7, 2016, only the 1,000,000 shares of Series A Preferred Stock is outstanding. All of the Series B, C, D-1, and D-2
shares previously issued have been converted into shares of Common Stock.
Series
A Preferred Stock has liquidation and dividend rights over common stock, which is not in excess of its par value. The preferred
stock has no conversion rights or mandatory redemption features. There have been 1,000,000 shares of Preferred Stock issued to
an entity controlled by Dr. Ruggero Santilli, Ermanno Santilli, President and CEO, Luisa Ingargiola, CFO and Carla Santilli, Director.
Ermanno Santilli and Luisa Ingargiola have no equity interest, only voting control. Each share of Preferred Stock is entitled
to 100,000 votes.
Election
of Directors
The
holders of shares of common stock and the equivalent Series A Preferred Stock, voting together, shall appoint the members of our
board of directors. Each share of common stock is entitled to one vote.
Options
and Warrants
During
the twelve month period ended December 31, 2015, there were 5,486,481 shares of common stock issued in connection with exercises
of warrants for gross proceeds to the Company of $6,672,207: 2,326,416 shares (warrants with $1.11 exercise price originally issued
during the January 2014 financing), 3,100,000 shares (warrants with $1.31 exercise price originally issued during the October
2014 financing), 21,389 shares (warrants with $1.35 exercise price originally issued during the June 2013 financing), and 38,676
shares (141,465 warrants with $1.35 exercise price originally issued during the June 2013 financing that were exercised on a cashless
basis).
During
the twelve month period ended December 31, 2015, a consultant exercised, via a cashless exercise, the option to purchase 50,000
shares of common stock at an exercise price of $1.17. The cashless exercise resulted in the consultant receiving 47,500 shares.
During
the twelve month period ended December 31, 2015, a non-executive employee exercised, via a cashless exercise, the option to purchase
10,000 shares of common stock at an exercise price of $0.75. The cashless exercise resulted in the non-executive employee receiving
4,565 shares.
In
February 2015, the Board granted to three executive employees (including two members of the Board) the option to purchase, in
the aggregate, 350,000 shares of common stock at an exercise price of $0.72 (the closing price on February 13, 2015). The vesting
schedule of the options was to be determined by the Board based on the Company’s achievement of pre-determined performance
criteria. In August 2015, the Board signed resolutions whereby they agreed that the Company had achieved 55% of the pre-determined
performance criteria and that the three executive employees should immediately vest in 55% of the options. This meant that the
three executive employees had vested in the option to purchase, in the aggregate, 192,500 shares. In February 2016, the Board
signed resolutions whereby they agreed that the Company had achieved another 45% of the pre-determined performance criteria and
that the three executive employees should immediately vest in another 45% of the options. This meant that the three executive
employees had vested in the option to purchase, in the aggregate, 332,500 shares. All such options, when exercised, will result
in shares being issued with a restrictive legend unless the options are exercised in conjunction with a Rule 144 opinion.
In
June 2015, the Board granted to thirty six non-executive employees the option to purchase, in the aggregate, 250,000 shares of
common stock at an exercise price of $1.16 (the closing price on June 15, 2015). These options vest according to the following
schedule: 50% on the year 1 grant anniversary; and 25% on each of the year 2 and year 3 grant anniversaries. All such options,
when exercised, will result in shares being issued with a restrictive legend unless the options are exercised in conjunction with
a Rule 144 opinion.
In
June 2015, the Board granted to one executive employee and one non-executive employee the option to purchase, in the aggregate,
80,000 shares of common stock at an exercise price of $1.16 (the closing price on June 15, 2015). These options vest according
to the following schedule: 50% on the year 1 grant anniversary; and 25% on each of the year 2 and year 3 grant anniversaries.
All such options, when exercised, will result in shares being issued with a restrictive legend unless the options are exercised
in conjunction with a Rule 144 opinion.
On
February 1, 2016, the Board granted to a consultant the option to purchase 50,000 shares of common stock at an exercise price
of $1.29 (the closing price on January 29, 2015). These options vested immediately. All such options, when exercised, will result
in shares being issued with a restrictive legend unless the options are exercised in conjunction with a Rule 144 opinion.
The
following is a summary of outstanding options and warrants as of March 31, 2016:
|
|
|
Options
&
|
|
|
|
|
|
Weighted
Average
|
|
|
|
|
|
|
|
Warrants
|
|
|
Options
|
|
|
Intrinsic
|
|
|
Exercise
|
|
|
Remaining
|
|
|
|
|
Outstanding
|
|
|
Vested
|
|
|
Value
|
|
|
Price
|
|
|
Term
|
|
|
December
31, 2014
|
|
|
16,169,675
|
|
|
|
3,217,500
|
|
|
$
|
2.27
|
|
|
$
|
1.41
|
|
|
|
2.8
years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
680,000
|
|
|
|
|
|
|
|
1.20
|
|
|
|
1.72
|
|
|
|
|
|
|
Exercised
|
|
|
(5,538,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
105,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2015
|
|
|
11,802,819
|
|
|
|
3,435,000
|
|
|
$
|
2.12
|
|
|
$
|
1.32
|
|
|
|
2.4
years
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2016
|
|
|
11,802,819
|
|
|
|
3,332,500
|
|
|
|
2.12
|
|
|
|
1.32
|
|
|
|
2.1
years
|
|
Dividends
Since
inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the
foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth
of our business, our board of directors will have the discretion to declare and pay dividends in the future. Payment of dividends
in the future will depend upon our earnings, capital requirements, and other factors, which our board of directors may deem relevant.
Anti-Takeover
Effects of Provisions of the Delaware General Corporation Law and our Certificate of Incorporation and Bylaws
Provisions
of the Delaware General Corporation Law (the “DGCL”) and our certificate of incorporation and bylaws could make it
more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors.
These provisions, summarized below, are expected to discourage certain types of coercive takeover practices and takeover bids
that our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate
with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition
proposals because, among other things, negotiation of these proposals could result in improved terms for our stockholders.
Delaware
Anti-Takeover Statute.
We are subject to Section 203 of the DGCL. Subject to certain exceptions, Section 203 prohibits a publicly
held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for
three years following the date the person became an interested stockholder, unless the interested stockholder attained such status
with the approval of our board of directors or unless the business combination is approved in a prescribed manner.
Section
203 of the DGCL generally defines a “business combination” to include, among other things, any merger or consolidation
involving us and the interested stockholder and the sale of more than 10% of our assets.
In
general, an “interested stockholder” is any entity or person beneficially owning 15% or more of our voting stock or
any entity or person associated or affiliated with or controlling or controlled by such entity or person. The restrictions contained
in Section 203 are not applicable to any of our existing stockholders that owned 15% or more of our outstanding voting stock upon
the closing of our initial public offering.
Amendments
to Our Certificate of Incorporation.
Under the DGCL, the affirmative vote of a majority of the outstanding shares entitled
to vote thereon and a majority of the outstanding stock of each class entitled to vote thereon is required to amend a corporation’s
certificate of incorporation. Under the DGCL, the holders of the outstanding shares of a class of our capital stock shall be entitled
to vote as a class upon a proposed amendment, whether or not entitled to vote thereon by the certificate of incorporation, if
the amendment would:
|
●
|
increase
or decrease the aggregate number of authorized shares of such class;
|
|
●
|
increase
or decrease the par value of the shares of such class; or
|
|
●
|
alter
or change the powers, preferences or special rights of the shares of such class so as to affect them adversely.
|
If
any proposed amendment would alter or change the powers, preferences or special rights of one or more series of any class of our
capital stock so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so
affected by the amendment shall be considered a separate class for the purposes of this provision.
Vacancies
in the board of directors.
Our bylaws provide that, subject to limitations, any vacancy occurring in our board of directors
for any reason may be filled by a majority of the remaining members of our board of directors then in office, even if such majority
is less than a quorum. Each director so elected shall hold office until the expiration of the term of the other directors. Each
such directors shall hold office until his or her successor is elected and qualified, or until the earlier of his or her death,
resignation or removal.
Special
Meetings of Stockholders.
Under our bylaws, special meetings of stockholders may be called at any time by our President whenever
so directed in writing by a majority of the entire board of directors. Special meetings can also be called whenever one-third
of the number of shares of our capital stock entitled to vote at such meeting shall, in writing, request one. Under the DGCL,
written notice of any special meeting must be given not less than 10 nor more than 60 days before the date of the special meeting
to each stockholder entitled to vote at such meeting.
No
Cumulative Voting.
The DGCL provides that stockholders are denied the right to cumulate votes in the election of directors
unless our certificate of incorporation provides otherwise. Our amended and restated certificate of incorporation does not provide
for cumulative voting.
The
NASDAQ Capital Market Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol “MNGA.”
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Corporate Stock Transfer, Inc. The transfer agent’s address is 3200
Cherry Creek South Drive, Suite 430, Denver, CO 80209, and its telephone number is (303) 282-4800.
DESCRIPTION
OF WARRANTS
General
We
may issue warrants to purchase shares of our common stock and preferred stock in one or more series together with other securities
or separately, as described in the applicable prospectus supplement. Below is a description of certain general terms and provisions
of the warrants that we may offer. Particular terms of the warrants will be described in the warrant agreements to be entered
into by the Company, a warrant agent to be named by the Company, and the holders from time to time of the warrants and the prospectus
supplement relating to the warrants. Copies of the form agreement for each warrant and the warrant certificate, if any, reflecting
the provisions to be included in such agreements that will be entered into with respect to a particular offering of each type
of warrant, will be filed with the SEC and incorporated by reference as exhibits to the registration statement of which this prospectus
is a part. You should read the applicable warrant agreement for additional information before you purchase any of our warrants.
The
prospectus supplement relating to any warrants we offer will describe the specific terms relating to the offering. These terms
may include some or all of the following:
|
|
●
|
the
specific designation and aggregate number of, and the price at which we will issue, the warrants;
|
|
|
|
|
|
|
●
|
the
currency or currency units in which the offering price, if any, and the exercise price are payable;
|
|
|
|
|
|
|
●
|
the
designation, amount and terms of the securities purchasable upon exercise of the warrants;
|
|
|
|
|
|
|
●
|
if
applicable, the exercise price for shares of our common stock and the number of shares of common stock to be received upon
exercise of the warrants;
|
|
|
|
|
|
|
●
|
if
applicable, the exercise price for shares of our preferred stock, the number of shares of preferred stock to be received upon
exercise, and a description of that series of our preferred stock;
|
|
|
|
|
|
|
●
|
the
date on which the right to exercise the warrants will begin and the date on which that right will expire or, if you may not
continuously exercise the warrants throughout that period, the specific date or dates on which you may exercise the warrants;
|
|
|
|
|
|
|
●
|
whether
the warrants will be issued in fully registered form or bearer form, in definitive or global form or in any combination of
these forms, although, in any case, the form of a warrant included in a unit will correspond to the form of the unit and of
any security included in that unit;
|
|
|
|
|
|
|
●
|
any
applicable material U.S. federal income tax consequences;
|
|
|
|
|
|
|
●
|
the
identity of the warrant agent for the warrants and of any other depositaries, execution or paying agents, transfer agents,
registrars or other agents;
|
|
|
|
|
|
|
●
|
the
proposed listing, if any, of the warrants or any securities purchasable upon exercise of the warrants on any securities exchange;
|
|
|
|
|
|
|
●
|
if
applicable, the date from and after which the warrants and the common stock and preferred stock will be separately transferable;
|
|
|
|
|
|
|
●
|
if
applicable, the minimum or maximum amount of the warrants that may be exercised at any one time;
|
|
|
|
|
|
|
●
|
the
procedures and conditions relating to the exercise of the warrants;
|
|
|
|
|
|
|
●
|
information
with respect to book-entry procedures, if any;
|
|
|
|
|
|
|
●
|
the
triggering event and the terms upon which the exercise price and the number of underlying securities that the warrants are
exercisable into may be adjusted;
|
|
|
|
|
|
|
●
|
the
anti-dilution provisions of the warrants, if any;
|
|
|
|
|
|
|
●
|
any
redemption or call provisions;
|
|
|
|
|
|
|
●
|
whether
the warrants may be sold separately or with other securities as parts of units; and
|
|
|
|
|
|
|
●
|
any
additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the
warrants.
|
Until
the warrants are exercised, holders of the warrants will not have any rights of holders of the underlying securities.
Outstanding
Warrants
As
of March 31, 2016 we had outstanding warrants to purchase 7,702,819 shares of common stock with the following exercise prices
and expiration dates:
|
Number of Shares
|
|
Exercise Price
|
|
|
Expiration Date
|
|
2,150,000
|
|
$
|
1.31
|
|
|
October 2019
|
|
608,142
|
|
$
|
1.35
|
|
|
June 2018
|
|
1,896,552
|
|
$
|
2.15
|
|
|
March 2019
|
|
1,980,438
|
|
$
|
3.00
|
|
|
October 2016
|
|
1,067,687
|
|
$
|
4.00
|
|
|
March 2017
|
|
7,702,819
|
|
|
|
|
|
|
The
exercise prices of the warrants are subject to adjustment upon certain events, such as stock splits, combinations, dividends,
distributions, reclassifications, or other corporate changes.
DESCRIPTION
OF RIGHTS
We
may issue rights to our stockholders to purchase shares of our common stock or preferred stock described in this prospectus. We
may offer rights separately or together with one or more additional rights, preferred stock, common stock, warrants or any combination
of those securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be
issued under a separate rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights
agent for any rights we offer will be set forth in the applicable prospectus supplement. The rights agent will act solely as our
agent in connection with the certificates relating to the rights of the series of certificates and will not assume any obligation
or relationship of agency or trust for or with any holders of rights certificates or beneficial owners of rights. The following
description sets forth certain general terms and provisions of the rights to which any prospectus supplement may relate. The particular
terms of the rights to which any prospectus supplement may relate and the extent, if any, to which the general provisions may
apply to the rights so offered will be described in the applicable prospectus supplement. To the extent that any particular terms
of the rights, rights agreement or rights certificates described in a prospectus supplement differ from any of the terms described
below, then the terms described below will be deemed to have been superseded by that prospectus supplement. We encourage you to
read the applicable rights agreement and rights certificate for additional information before you decide whether to purchase any
of our rights.
The
prospectus supplement relating to any rights that we offer will include specific terms relating to the offering, including, among
other matters:
|
|
●
|
the
date of determining the stockholders entitled to the rights distribution;
|
|
|
|
|
|
|
●
|
the
aggregate number of shares of common stock, preferred stock or other securities purchasable upon exercise of the rights;
|
|
|
|
|
|
|
●
|
the
exercise price;
|
|
|
|
|
|
|
●
|
the
aggregate number of rights issued;
|
|
|
|
|
|
|
●
|
whether
the rights are transferrable and the date, if any, on and after which the rights may be separately transferred;
|
|
|
|
|
|
|
●
|
the
date on which the right to exercise the rights will commence, and the date on which the right to exercise the rights will
expire;
|
|
|
●
|
the
method by which holders of rights will be entitled to exercise;
|
|
|
|
|
|
|
●
|
the
conditions to the completion of the offering;
|
|
|
|
|
|
|
●
|
the
withdrawal, termination and cancellation rights;
|
|
|
|
|
|
|
●
|
whether
there are any backstop or standby purchaser or purchasers and the terms of their commitment;
|
|
|
|
|
|
|
●
|
whether
stockholders are entitled to oversubscription right;
|
|
|
|
|
|
|
●
|
any
U.S. federal income tax considerations; and
|
|
|
|
|
|
|
●
|
any
other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise
of the rights.
|
If
less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to
persons other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including
pursuant to standby arrangements, as described in the applicable prospectus supplement. In connection with any rights offering,
we may enter into a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which
such underwriters or other persons would purchase any offered securities remaining unsubscribed for after such rights offering.
DESCRIPTION
OF UNITS
We
may, from time to time, issue units comprised of one or more of the other securities described in this prospectus in any combination.
A prospectus supplement will describe the specific terms of the units offered under that prospectus supplement, and any special
considerations, including tax considerations, applicable to investing in those units. You must look at the applicable prospectus
supplement and any applicable unit agreement for a full understanding of the specific terms of any units. We will incorporate
by reference into the registration statement of which this prospectus is a part the form of unit agreement, including a form of
unit certificate, if any, that describes the terms of the series of units we are offering before the issuance of the related series
of units. While the terms we have summarized below will generally apply to any future units that we may offer under this prospectus,
we will describe the particular terms of any series of units that we may offer in more detail in the applicable prospectus supplement
and incorporated documents. The terms of any units offered under a prospectus supplement may differ from the terms described below.
General
We
may issue units consisting of common stock, preferred stock, rights, warrants or any combination thereof. Each unit will be issued
so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have
the rights and obligations of a holder of each included security. The unit agreement to be entered into by the Company and the
unit agent named therein under which a unit is issued may provide that the securities included in the unit may not be held or
transferred separately, at any time, or at any time before a specified date.
We
will describe in the applicable prospectus supplement and any incorporated documents the terms of the series of units, including
the following:
|
|
●
|
the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
|
|
|
|
|
|
|
●
|
any
provisions of the governing unit agreement that differ from those described below; and
|
|
|
|
|
|
|
●
|
any
provisions for the issuance, payment, settlement, transfer, or exchange of the units or of the securities comprising the units.
|
The
provisions described in this section, as well as those described under “Description of Capital Stock – Common Stock,”
“Description of Capital Stock – Preferred Stock,” “Description of Rights,” and “Description
of Warrants” will apply to each unit and to any common stock, preferred stock, warrant or right included in each unit, respectively.
Issuance
in Series
We
may issue units in such amounts and in such numerous distinct series as we determine.
Enforceability
of Rights by Holders of Units
Each
unit agent will act solely as our agent under the applicable unit agreement and will not assume any obligation or relationship
of agency or trust with any holder of any unit. A single bank or trust company may act as unit agent for more than one series
of units. A unit agent will have no duty or responsibility in case of any default by us under the applicable unit agreement or
unit, including any duty or responsibility to initiate any proceedings at law or otherwise, or to make any demand upon us. Any
holder of a unit, without the consent of the related unit agent or the holder of any other unit, may enforce by appropriate legal
action its rights as holder under any security included in the unit.
Title
We,
the unit agent, and any of their agents may treat the registered holder of any unit certificate as an absolute owner of the units
evidenced by that certificate for any purposes and as the person entitled to exercise the rights attaching to the units so requested,
despite any notice to the contrary.
PLAN
OF DISTRIBUTION
We
may sell the securities described in this prospectus from time to time pursuant to underwritten public offerings, negotiated transactions,
block trades or a combination of these methods. We may sell the securities separately or together:
|
|
●
|
directly
to investors, including through a specific bidding, auction, or other process;
|
|
|
●
|
to
investors through agents;
|
|
|
●
|
directly
to agents;
|
|
|
●
|
to
or through brokers or dealers;
|
|
|
●
|
to
the public through underwriting syndicates led by one or more managing underwriters;
|
|
|
●
|
in
privately negotiated transactions;
|
|
|
●
|
directly
to agents;
|
|
|
●
|
to
one or more underwriters acting alone for resale to investors or to the public;
|
|
|
●
|
in
a registered direct offering; or
|
|
|
●
|
through
a combination of any such methods of sale.
|
Our
common stock or preferred stock may be issued upon conversion of convertible preferred. Securities may also be issued upon exercise
of warrants or rights and division of units and we reserve the right to sell securities directly to investors on their own behalf
in those jurisdictions where they are authorized to do so.
If
we sell securities to a dealer acting as principal, the dealer may resell such securities at varying prices to be determined by
such dealer in its discretion at the time of resale without consulting with us and such resale prices may not be disclosed in
the applicable prospectus supplement.
Any
underwritten offering may be on a best efforts or a firm commitment basis. We may also offer securities through subscription rights
distributed to our stockholders on a pro rata basis, which may or may not be transferable. In any distribution of subscription
rights to stockholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed securities
directly to third parties or may engage the services of one or more underwriters, dealers or agents, including standby underwriters,
to sell the unsubscribed securities to third parties.
We
may distribute the securities from time to time in one or more transactions:
|
|
●
|
at
a fixed price or prices, which may be changed;
|
|
|
●
|
at
market prices prevailing at the time of sale;
|
|
|
●
|
at
prices related to such prevailing market prices;
|
|
|
●
|
at
varying prices determined at the time of sale; or
|
|
|
●
|
at
negotiated prices.
|
Any
of the prices may represent a discount from the then prevailing market prices.
We
may determine the price or other terms of the securities offered under this prospectus by use of an electronic auction. We will
describe in the applicable prospectus supplement how any auction will be conducted to determine the price or any other terms of
the securities, how potential investors may participate in the auction and, where applicable, the nature of the underwriters’
obligations with respect to the auction.
We
may solicit directly offers to purchase the securities being offered by this prospectus. We may also designate agents to solicit
offers to purchase the securities from time to time. We will name in a prospectus supplement any agent involved in the offer or
sale of the securities.
If
we utilize an underwriter in the sale of the securities being offered by this prospectus, we will execute an underwriting agreement
with the underwriter at the time of sale and we will provide the name of any underwriter in the prospectus supplement that the
underwriter will use to make resales of the securities to the public. Any underwritten offering may be on a best efforts or firm
commitment basis. In connection with the sale of the securities, we or the purchasers of the securities for whom the underwriter
may act as agent may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter may sell
the securities to or through dealers, and the underwriter may compensate those dealers in the form of discounts, concessions or
commissions.
We,
our underwriters, dealers or agents may facilitate the marketing of an offering online directly or through one of their affiliates.
In those cases, prospective investors may view offering terms and a prospectus online and, depending upon the particular underwriter,
dealer or agent, place orders online or through their financial advisors.
We
will provide in the applicable prospectus supplement (i) the identity of any underwriter, dealer or agent, (ii) any compensation
we will pay to underwriters, dealers or agents in connection with the offering of the securities, (iii) any discounts, concessions
or commissions allowed by underwriters to participating dealers, (iv) the amounts underwritten; and (v) the nature of the underwriter’s
or underwriters’ obligation to take the securities. Underwriters, dealers and agents participating in the distribution of
the securities may be deemed to be underwriters within the meaning of the Securities Act, and any discounts and commissions received
by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions.
We may enter into agreements to indemnify underwriters, dealers and agents against civil liabilities, including liabilities under
the Securities Act, or to contribute to payments they may be required to make in respect thereof.
Unless
otherwise specified in the related prospectus supplement, each series of securities will be a new issue with no established trading
market, other than shares of common stock, which are listed on the NASDAQ Capital Market, subject to official notice of issue.
Any common stock sold pursuant to a prospectus supplement will be eligible for listing and trading on the NASDAQ Capital Market.
We may elect to list any series of preferred stock, warrants, rights, debt securities, or units on an exchange, but we are not
obligated to do so. It is possible that one or more underwriters may make a market in the securities, but such underwriters will
not be obligated to do so and may discontinue any market making at any time without notice. No assurance can be given as to the
liquidity of, or the trading market for, any offered securities.
To
facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities, which
involve the sale by persons participating in the offering of more securities than we sold to them. In these circumstances, these
persons would cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment
option. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing the securities
in the open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may
be reclaimed if the securities sold by them are repurchased in connection with stabilization transactions. The effect of these
transactions may be to stabilize or maintain the market price of the securities at a level above that which might otherwise prevail
in the open market. These transactions may be discontinued at any time.
We
do not make any representation or prediction as to the direction or magnitude of any effect that the transactions described above
might have on the price of the securities. In addition, we do not make any representation that underwriters will engage in such
transactions or that such transactions, once commenced, will not be discontinued without notice.
We
may authorize underwriters, dealers or agents to solicit offers by certain purchasers to purchase the securities at the public
offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery
on a specified date in the future. The contracts will be subject only to those conditions set forth in the prospectus supplement,
and the prospectus supplement will set forth any commissions we pay for solicitation of these contracts.
We
may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives,
the parties may sell securities covered by this prospectus and the applicable prospectus supplement, including short sale transactions.
If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any
related open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any
related open borrowings of stock. If the third party is or may be deemed to be an underwriter under the Securities Act, it will
be identified in the applicable prospectus supplement. In addition, we may otherwise loan or pledge securities to a financial
institution or other third party that in turn may sell the securities short using this prospectus. Such financial institution
or other third party may transfer its economic short position to investors in our securities or in connection with a concurrent
offering of other securities.
To
comply with applicable state securities laws, the securities offered by this prospectus will be sold, if necessary, in such jurisdictions
only through registered or licensed brokers or dealers. In addition, securities may not be sold in some states unless they have
been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business.
LEGAL
MATTERS
Lucosky
Brookman LLP will pass upon certain legal matters relating to the issuance and sale of the securities offered hereby on behalf
of MagneGas Corporation. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel
that we will name in the applicable prospectus supplement.
EXPERTS
Stevenson
& Company CPAS LLC, independent registered public accounting firm, has audited our financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2015, as set forth in their report which is incorporated by reference in this
prospectus and elsewhere in the registration statement.
Our
financial statements are incorporated by reference in reliance on Stevenson & Company CPAS LLC’s report, given on their
authority as experts in accounting and auditing.
[ ]
Shares of Common Stock
PROSPECTUS
SUPPLEMENT
October [__], 2018
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
