TAMPA, Fla., April 1, 2013 /PRNewswire/ -- MagneGas Corporation ("MagneGas" or the "Company") (NASDAQ: MNGA), the developer of a technology that converts liquid waste into a hydrogen-based metal working fuel, today announced its financial results for the year ending December 31, 2012. During the year, the Company focused its domestic business development strategy on selling fuel to large metal recycling facilities and demolition companies and expanding its retail gas sales capabilities. Internationally, the Company pursued the sale of equipment for liquid sterilization and fuel production. Additionally MagneGas invested much of its effort in preparing its operations for future sales of fuel and equipment.
The sales results for metal cutting fuel were less than anticipated, primarily due to a sharp reduction in steel pricing during 2012, which negatively impacted demand for fuel from the metal recycling and demolition industries. The Company has since begun selling fuel to industries that benefit from low steel prices, such as fabrication and manufacturing companies. To supplement sales in these markets, the Company has become a full service provider of metal working fuel and hard goods, expanding its ability to service these industries. In addition, the Company continues to focus its efforts on developing key strategic relationships, while selling gasification systems internationally. During 2012 the Company signed a preliminary purchase order agreement with a company from Mexico for the sale of a gasification system for $2.7 million plus royalties. The definitive agreements for this sale were signed in March of 2013 and the initial deposit was received.
2012 Financial Highlights:
- Total revenues of $677,529 for 2012 which is an increase of 178% as compared to $381,892 for the prior year;
- Metal cutting revenues increased 423% to $584,197 in 2012 as compared to $138,560 for 2011 and;
- Ending year cash balance of $1.47 million as compared to $1.43 million for the same period December 31, 2011.
2012 Business Highlights:
- A $2.7 m contract with Clear Sky Energy from Mexico was initiated;
- Metal cutting sales increased over 400%;
- Strategic partnerships with General Motors, US Navy and a large University progressed;
- Three Plasma Arc Gasification units were deployed in Florida and Michigan;
- Two manufacturing facilities were purchased one for the production of fuel and one for the production of gasification systems;
"2012 was a year of significant development for MagneGas Corporation," stated Ermanno Santilli, Chief Executive Officer of MagneGas. "We quadrupled our customer base for metal cutting fuel versus 2011, expanded into Michigan, made good progress with several large strategic partners and initiated the $2.7m sale in Mexico. We are committed to staying focused on our business plan as we expand our metal cutting fuel market reach and ramp up equipment sales."
"We also deepened our relations with General Motors and the US Navy beyond metal cutting and commenced discussions with a large University to establish a demonstration and testing center to showcase the MagneGas technology to agricultural and industrial customers from around the world. MagneGas Corporation is in the enviable position of having a revolutionary technology with new applications in several industries, the support of world class partners and is debt free. We believe that the developments made in 2012 have provided the foundation for success which through continued focus will bear fruit in 2013 and for years to come," Santilli concluded.
2012 Financial Results
For the year ending December 31, 2012, total revenues were $677,529, an increase of $295,637 or 178%, from revenues of $381,892 for 2011.
Metal cutting revenues were $584,197 for 2012, a 423% increase over metal cutting revenues of $138,560 for the prior year. Metal cutting revenues as a percentage of total revenue for 2012 were 86% versus 36% for the prior year. Licensing fees were $93,332 for 2012, the same as for the prior year.
Operating expenses were $6,812,518 for 2012 increasing 208% from operating expenses of $3,275,665 for the prior year, primarily due to the opening of new facilities, the addition of executives and staff to manage sales and production efforts, and investments in research & development. The Company had an operating loss in 2012 of $6,680,762 compared to an operating loss of $2,936,719 for the prior year. Stock based compensation, included in Operating Expenses was $2,053,090 in 2012 versus $787,990 the prior year.
The Company recorded a net loss of $7,136,942 or $0.32 per basic and diluted share, for 2012, as compared to a net loss of $2,937,062 or $0.20 per basic and diluted share, 2011.
The Company recently entered into commercial testing and discussion with a select group of leading U.S. strategic industrial companies and military contractors which, after conducting preliminary reviews of MagneGas™, are now seeking further testing or have agreed to purchase MagneGas fuel.
- The US Navy continues to be interested in MagneGas fuel for metal cutting applications such as in the decommissioning of ships. The Navy is also now reviewing the Plasma Arc Flow technology for applications such as treating used oils and other liquid wastes at forward bases. The National Center for Manufacturing Sciences completed testing of MagneGas™ as an environmentally-friendly alternative for major metal cutting projects, particularly to reduce emissions during the breakup and recycling of retiring vessels for the Navy. The Company has received preliminary positive laboratory test results and received verbal confirmation that it has been selected to test MagneGas fuel onsite with a military end user. In addition, the military is exploring the gasification of liquid waste to produce fuels with the MagneGas system.
- The Company has been working with General Motors which has completed testing of MagneGas as an alternative to acetylene, has provided verbal confirmation that the fuel has been approved for use and is now purchasing MagneGas for use in select factories. In addition, the Company is working with General Motors to test various liquid wastes for processing and conversion to MagneGas in order to fuel several possible internal projects not related to metal cutting.
- The Company is working with a large University to develop a testing and demonstration center for the MagneGas technology with an initial focus on agricultural waste to fuel processing. The University has applied for two state grants for this project. This partnership will allow third party testing of the technology for these markets through governmental and university alliances.
- The Company is working with two major metropolitan fire departments to test MagneGas as a replacement to acetylene and other cutting systems used by firefighters. Most vehicles used by fire departments in the United States are equipped with acetylene gas to use with demolition and extraction emergencies. MagneGas is stored in cylinders that are much lighter than acetylene, making it easier to handle. In addition, MagneGas has a much smaller heat affected zone which can be critical to continued life in the event of human extraction from a vehicle or dwelling.
- MagneGas forged alliances with a major industrial gas supplier and a hard good supplier to become a full service provider of metal cutting fuels, such as oxygen, argon and other gases while also selling hard goods such as tips, torches and other metal working products. This has allowed the Company to become a full service provider to metal cutting customers, expanding its ability to service these industries. These two alliances were signed early 2013.
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About MagneGas Corporation
Founded in 2007, Tampa-based MagneGas Corporation (NASDAQ: MNGA) is the producer of MagneGas™, a natural gas alternative and metal working fuel that can be made from certain industrial, municipal, agricultural and military liquid wastes following the receipt of appropriate governmental permits.
The Company's patented Plasma Arc Flow™ process gasifies liquid waste, creating a clean burning hydrogen based fuel that is essentially interchangeable with natural gas. MagneGas™ can be used for metal working, cooking, heating, powering bi fuel automobiles and more. For more information on MagneGas, please visit the Company's website at www.MagneGas.com.
This press release contains forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future events, including our ability to raise capital, or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The Company is currently using new ethylene glycol to produce fuel until proper permits to process used liquid waste have been obtained.
For a discussion of these risks and uncertainties, please see our filings with the Securities and Exchange Commission. Our public filings with the SEC are available from commercial document retrieval services and at the website maintained by the SEC at http://www.sec.gov.
Audited Balance Sheets
Accounts receivable, net of allowance for doubtful accounts of $61,792 and $0, respectively
Inventory (including units for resale), at cost
Prepaid and other current assets
Total Current Assets
Property and equipment, net of accumulated depreciation of $448,302 and $44,538, respectively
Deferred tax asset
Intangible assets, net of accumulated amortization of $199,978 and $151,511, respectively
Investment in joint ventures
Liabilities and Stockholders' Equity
Deferred revenue and customer deposits
Due to stockholder
Due to related parties
Total Current Liabilities
Preferred stock: $0.001 par; 10,000,000 authorized; 1,000,000 issued and outstanding, respectively
Common stock: $0.001 par; 900,000,000 authorized; 20,042,616
and 15,438,930 1 issued and outstanding, respectively
Additional paid-in capital
Issued and unearned stock compensation
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
The audit report and accompanying notes are an integral part of these financial statements.
Audited Statements of Operations
Year Ended December 31,
Professional: legal and accounting
Rent and overhead
Office and administration
Research and development
Depreciation and amortization
Total Operating Expenses
Operating Income (Loss)
Other Income and (Expense)
Total Other (Income) Expense
Net Income (Loss) before tax provision
Provision for Income Taxes
Net Income (Loss)
Loss per share:
Weighted average common shares:
The audit report and accompanying notes are an integral part of these financial statements.
SOURCE MagneGas Corporation
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