TAMPA, Florida, May 15, 2017 /PRNewswire/ --

Reduces operating expenses by 40% versus the fourth quarter in 2016 

Investor Call to be held on Tuesday, May 16th at 11:00 a.m. Eastern Time 

MagneGas Corporation ("MagneGas" or the "Company") (NASDAQ: MNGA), a leading clean technology company in the renewable resources and environmental solutions industries, today announced financial results and provided a business update for the first quarter ending March 31, 2017.

Recent Highlights:

• Revenue increased 31% in the first quarter of 2017 versus the same period last year;
• Operating expenses decreased $1.9 million, or 40% for the three months ending March 31, 2017 as compared to the three months ending December 31, 2016;
• Significant reduction in production cost of MagneGas2®;
• Aggressive cost reduction program initiated;
• Completed $1 million bridge financing and warrant exchange to improve capital structure.

Ermanno Santilli, Chief Executive Officer of MagneGas, stated, "We continue to leverage MagneGas 2® to grow our industrial gas sales and are pleased to report a 31% increase in revenue for the three months ending March 31, 2017 versus the same period last year. At the same time, we have been streamlining our operations-reducing our operating expenses by 40% versus the fourth quarter in 2016. While our SG&A was down sequentially from the fourth quarter of 2016, we expect the true impact of our recent and future cost reductions to be reflected in future quarters. We also identified a more cost-effective feedstock for MagnegGas2®, which has significantly enhanced our gross margins and productivity. Given the fixed cost nature of our business, we see a clear path to profitability through organic growth and careful management of our expenses."

"In addition to organic growth, we are focused on acquiring accretive companies in the industrial gas market, as a means to rapidly scale the business and maximize profitability. In addition to potential acquisitions in Florida and Indiana, where the Company already has a strong presence and existing sales force, we are also seeking to penetrate new markets in the U.S. with a strong industrial base, and have identified a number of potential high-quality targets."

"In March, we announced that we successfully installed a Plasma-Arc Gasification system at Green Arc Supply, LLC in Louisiana which makes it the first unit operating outside of MagneGas headquarters in the U.S.A. Pursuant to the terms of the Gasifier Purchase Agreement, MagneGas received a total of $775,000 in addition to recurring royalty payments. We are excited to have our first operating system at a customer location and look forward to replicating this business model of upfront payments plus long-term, high margin royalties at additional locations."

"With continued sale growth, a 40% reduction in our operating expenses versus the fourth quarter of 2016, a significant reduction in our production costs of MagneGas 2® and several acquisition candidates in the pipeline, we are confident that we are on the right path to profitability in 2017."

Scott Mahoney, Chief Financial Officer of MagneGas, commented, "Last week, we announced that we completed a $1 million bridge financing and warrant exchange. The bridge financing provides us additional working capital for general corporate purposes at favorable terms and the warrant exchange will help to dramatically enhance our capital structure. By simplifying our capital structure we now have greater financial flexibility, which we believe will ultimately enhance value for shareholders as we execute our corporate restructuring and new growth initiatives."

"We significantly reduced the overall cost of operations in the first quarter of 2017. One of our top priorities coming into this year was to quickly address our cost structure and cash burn rate. We have cut our overall operating expenses by 40% in the first quarter of 2017 versus the fourth quarter of 2016 and we believe there is room for meaningful further improvements. We initiated a comprehensive review of our staffing model and began to make changes beginning in March. We expect the majority of our staffing changes to take place in the second quarter of 2017, further reducing our payroll and related compensation costs going forward. Our focus thereafter will be to primarily drive revenue growth, enabling our growing gross profit to cover ongoing cash operating expenses. Our goal remains to produce a stable, cash flow positive business model as quickly as possible, ideally no later than the end of 2017."

First Quarter 2017 Financial Results 

Revenues for the three months ended March 31, 2017 were $871,788 as compared to $665,663 for the same period last year. This increase was primarily due to additional customers and distributors acquired through ESSI. Gross profit increased to $368,400 from $299,900 for the first quarter ending March 31, 2017 versus March 31, 2016.

Operating expenses for the first quarter ending March 31, 2017 were $2.9 million, unchanged from $2.9 million for the same period last year. Operating expenses decreased $1.9 million, or 39.9% for the three months ending March 31, 2017 as compared to the three months ending December 31, 2016. The primary cause for the decrease was a focus on vendor rationalization, reduction in consulting and third party services, and overall cost control efforts.

The Company has also taken additional cost cutting measures related to personnel. The Company has conducted a full review of the previous staffing model and has begun to eliminate redundant and non-essential positions. This has reduced compensation expense from approximately $3.8 million on an annualized basis to approximately $2.7 million. The Company continues to evaluate its costs structure, and may seek to reduce costs further throughout the remainder of 2017.

Conference Call 

MagneGas' executive management team will host a conference call, Tuesday, May 16th at 11:00 a.m. Eastern Time to discuss the company's financial results for the first quarter ending March 31, 2017, as well as the Company's corporate progress and other meaningful developments.

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

A teleconference replay of the conference call will be available approximately one hour following the call, through midnight June 15, 2017, and can be accessed by dialing (877)-481-4010 for U.S. callers or +1-(919) 882-2331 for international callers and entering conference ID: 10394.

About MagneGas Corporation

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

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

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

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

To be added to the MagneGas investor email list, please email [email protected] with MNGA in the subject line.

FORWARD-LOOKING STATEMENTS

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

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

        (tables follow)

MagneGas Corporation 

Condensed Consolidated Balance Sheets

   
                                                    March 31,             December 31,
                                                        2017                    2016
                                                     (Unaudited)
                   Assets
    Current Assets
    Cash                                   $            53,578     $         1,616,410
    Accounts receivable, net of
    allowance
    for doubtful accounts of $195,931
    and
    $145,931, respectively                             460,466                 442,555
    Inventory, net                                   1,724,035               1,615,933
    Prepaid and other current assets                   358,132                 226,305
    Total Current Assets                             2,596,211               3,901,203

    Property and equipment, net of
    accumulated
    depreciation and amortization of
    $1,592,114
    and $1,474,944, respectively                     6,285,012               6,402,931

    Intangible assets, net of
    accumulated
    amortization of $415,250 and
    $401,277,
    respectively                                       423,148                 437,121
    Security deposits                                   26,636                  26,636
    Goodwill                                         2,108,781               2,108,781
                                                                   
    Total Assets                          $         11,439,788       $      12,876,672              

             Liabilities and Stockholders' Equity
   

    Current Liabilities
    Accounts payable                       $           941,869     $           416,247
    Accrued expenses                                   387,746                 276,630
    Deferred revenue and customer
    deposits                                            25,000                  25,000
    Capital leases, current                             10,029                   9,328
    Derivative liabilities                           6,441,579               7,700,585
    Total Current Liabilities                        7,806,223               8,427,790

    Long Term Liabilities
    Note payable                                       520,000                 520,000
   
    Capital leases, net of current                      23,302                  25,317
    Senior convertible debenture, net of
    debt discount of $709,000                          121,080                  75,000
  
    Total Liabilities                                8,470,605               9,048,107

    Commitments and Contingencies

    Stockholders' Equity
    Preferred stock: $0.001 par;
    10,000,000
    shares authorized; 1,000,000 shares
    issued
    and outstanding at March 31, 2017
    and December 31, 2016                                1,000                   1,000
   
    Common stock: $0.001 par; 90,000,000
    shares
    authorized; 59,597,531 shares issued
    and outstanding at March 31, 2017 and
    58,040,267 shares issued and outstanding at
    December 31, 2016                                    59,597                  58,040
                                                                   
    Additional paid-in capital                        58,317,493              57,328,005
                                                                  
     Accumulated deficit                             (55,408,907)             (53,558,480)
    Total Stockholders' Equity                        2,969,183                3,828,565

    Total Liabilities and Stockholders'
    Equity                                        $  11,439,788            $   12,876,672

MagneGas Corporation 

Condensed Consolidated Statements of Operations 

(Unaudited) 

   
                                                             Three Months Ended
                                                                  March 31,
                                                         2017                   2016

                                                       $871,788               $665,663
    Revenue:                                                                    

    Cost of                                             503,388                365,763
    Revenues                                                                       
                                                        368,400                299,900
    Gross Profit                                                                   
    Operating
    Expenses:
   

    Selling,
    general and
    administration                                    2,607,766                2,552,904

    Research and                                         98,141                  161,294
    development   
    Depreciation and                                    167,338                  153,953
    amortization                                                                   
   
    Total
    Operating
    Expenses                                          2,873,345                2,868,151

                                                                        
    Operating
    Loss                                            (2,504,945)               (2,568,251)

                                                                  
    Other Income
    and
    (Expense):
                                                                                  
    Interest                                              -                     (10,806)

    Amortization
    of debt
    discount                                          (103,080)                       -

      Other income                                        (4,536)                     865
                                                                     
    Change in
    fair value
    of
    derivative
    liability                                          762,134                   956,797

    Total Other
    Income                                             654,518                   946,856
    (Expense)                                                                      

    Net Loss                                    $  (1,850,427)           $  (1,62 1,395)

    Net Loss per
    share:
    Basic and
    diluted                                         $   (0.03)               $   (0.04)
    Weighted
    average
    common
    shares:
    Basic and                                            59,17                    45,68
    diluted                                              9,672                    5,248

Investor Contacts:
Crescendo Communications
T: +1-844-589-8760
[email protected]

SOURCE MagneGas Corporation