MagneGas Reports 43% Increase in Revenue for the Second Quarter of 2016

Gross Margins Increased 737 Basis Points

Call to be held on Monday, August 15th at 11:00 a.m. Eastern Time

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Aug 15, 2016, 08:00 ET

TAMPA, Florida, Aug. 15, 2016 /PRNewswire/ -- MagneGas Corporation ("MagneGas" or the "Company") (NASDAQ: MNGA), a technology company that counts among its inventions a patented process that converts renewable and liquid waste into MagneGas2® fuel, today announced financial results and provided a business update for the second quarter ending June 30, 2016.

Second Quarter 2016 Financial Highlights

Revenue for the three months ended June 30, 2016 increased 43% to $837,257 compared to $584,445 for the same period last year;
Revenue for the six months ended June 30, 2016 increased 33% to $1.5 million compared to $1.1 million for the same period last year;
Gross margins increased 737 basis points to 44% from 36% for the three-month period ending June 30, 2016 versus June 30, 2015;
The Company had an ending cash balance of $3,848,292 on June 30, 2016.

Ermanno Santilli, Chief Executive Officer of MagneGas, stated, "We are pleased to report a 43% increase in revenue for the three months ending June 30, 2016 versus the same period last year. Our strong growth was due to a combination of equipment sales and an increase in our industrial gas sales. On the domestic front, we signed a lease to open another facility for our ESSI subsidiary, which will be our fourth such location in Florida. In the second quarter, we also added several new distributors, including a major Southeast distributor with over 20 locations in Georgia, Tennessee, Kentucky, Alabama, Virginia, South Carolina and North Carolina. In June, we signed a distribution agreement with Berger Welding Supply of Indiana. Berger will be the preferred distributor for MagneGas2® for metal cutting in their territory and will supply MagneGas2® to a local Fortune 100 company. We now have distribution coverage in many of the major hubs in the eastern half of the United States. We plan to support our continued expansion through both new plant installation as well as joint ventures."

"Last month we announced that a global auto manufacturing company based in the Midwestern United States chose to switch to MagneGas2® as its sole fuel of choice for metal working at one of its top factories. The company chose MagneGas2® to be its exclusive fuel and to discontinue use of acetylene. We believe MagneGas2® will save them money by reducing downtime on the assembly line, while demonstrating their continued environmental leadership. Independent testing shows that MagneGas2® is a faster, hotter replacement to existing cutting fuels and we believe these initial purchase orders will open the door to other larger opportunities with this customer."

"We are also expanding along the West Coast and internationally. In May we announced that Complete Welding and Cutting Supplies, Inc., with multiple locations in both California and Mexico, will be distributing MagneGas2® and has taken its first fuel orders. As a result of this new distributor relationship, and others already in place, MagneGas2® fuel is now available in most major California metropolitan areas. This is also our first international gas supplier relationship for MagneGas2®. Mexico has grown to be a major manufacturing hub using large amounts of acetylene fuel. We are pleased to offer an alternative that is renewable, cuts faster and has many favorable attributes."

"Another component of our strategy is leveraging our existing distribution channels by adding new gas products. Last month, we announced that we became an authorized distributor for Global Calibration Gasses (GCG). GCG, based in Florida, is a premier supplier of calibration gases and custom specialty gas mixtures. This new relationship with GCG allows us to expand our revenue potential by providing our existing customers with GCG's calibration gases and custom specialty gas mixtures. Through ESSI, we have developed relationships with major clients in the technical rescue, auto manufacturing and utility markets. Now those clients can buy both MagneGas2® and these specialty gases from one source."

"We continue to push forward with our Co-Combustion project as intensive testing continues and we still anticipate independent verification of our results in 2016, using MagneGas® fuel to reduce coal emissions. Additionally, we are continuing with our sterilization project as we have applied to the U.S. Department of Agriculture for a grant to utilize our system on a farm and hope to hear the results of that application in the third quarter of 2016."

"Finally, we continue to look for opportunities to increase equipment sales. In July, we met a key benchmark for system construction as per our original agreement with Green Arc Supply, LLC to manufacture and sell a $775,000 100kw Plasma-Arc Gasification system. To-date, we have received milestone payments totaling $583,750 and expect to receive a final payment of $191,250 in the third quarter of 2016. We believe that this first domestic equipment sale will open the door for additional equipment sales nationwide."

Second Quarter 2016 Financial Results

Revenues for the three months ended June 30, 2016 were $837,257 as compared to $584,445 for the same period last year. Revenue from the industrial gas segment was $643,507 for the second quarter of 2016 compared to $561,112 for the same period last year. This increase was primarily due to additional customers and distributors acquired through ESSI.

Gross margins increased to 44% from 36% for the second quarter ending June 30, 2016 versus June 30, 2015.

Operating expenses increased approximately $820,000 for the second quarter ending June 30, 2016 to $3.1 million from $2.3 million for the same period last year. The increase in our operating expense in 2016 was primarily attributable to the completion of our new headquarters and increased consulting expenses related to research and development, investor relations, public relations and new business development. The Company plans on beginning an aggressive cost cutting campaign aimed at focusing operational expenses on the most promising business opportunities.

As a result of the financing in June of 2016, the Company did incur a derivative liability associated with the Warrants and Debenture from that transaction. This resulted in a non-cash interest expense in the period ending June 30, 2016 of $2,622,084. In addition, the Company took a one-time adjustment of $501,011 as an impairment of our Joint Venture with China. That Joint Venture, although still active, did not produce the operational results expected and as such the Company has chosen to impair its value on the balance sheet.

At the end of June, the Company announced it has closed on $4.0 million of financing out of a possible maximum amount of approximately $10.6 million with a single institutional investor for a registered direct placement and concurrent private placement.

Conference Call

MagneGas' executive management team will host a conference call today, Monday, August 15th at 11:00 a.m. Eastern Time to discuss the company's financial results for the second quarter ending June 30, 2016, as well as the Company's corporate progress and other meaningful developments.

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

A teleconference replay of the conference call will be available approximately one hour following the call, through midnight Thursday, September 15, 2016, and can be accessed by dialing (877) 660-6853 for U.S. callers or +1 (201) 612-7415 for international callers and entering conference ID: 13643254.

About MagneGas Corporation

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

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

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

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

To be added to the MagneGas investor email list, please email [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

	June 30,		December 31,
	2016		2015
	(Unaudited)		(Audited)
Assets
Current Assets
Cash	$	3,848,292	$	5,319,869
Accounts receivable, net of allowance for doubtful accounts of $129,568 and $109,568, respectively		332,243		373,006
Inventory, net		2,370,154		2,362,014
Prepaid and other current assets		597,124		320,431
Total Current Assets		7,147,813		8,375,320

Property, equipment and leasehold improvements, net of accumulated depreciation and amortization of $1,684,869 and $1,467,123, respectively		6,562,120		6,004,990

Intangible assets, net of accumulated amortization of $373,329 and $345,382, respectively		465,069		493,016
Investment in joint ventures, net		253,590		754,601
Security deposits		26,674		24,113
Goodwill		2,108,781		2,108,781
Total Assets	$	16,564,047	$	17,760,821

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	767,975	$	425,294
Accrued expenses		492,501		504,855
Deferred revenue and customer deposits		202,250		412,500
Notes payable, current		9,329		7,891
Derivative liabilities		6,342,332		1,241,841
Total Current Liabilities		7,814,387		2,592,381

Long Term Liabilities
Note payable, net of current maturities		549,981		552,177
Senior convertible debenture, net of debt discount of $1,000,000		-		-
Total Liabilities		8,364,368		3,144,558

Commitments and Contingencies

Stockholders' Equity
Preferred stock: $0.001 par; 10,000,000 authorized; 1,000,000 issued and outstanding		--		--
Series A preferred stock - $0.001 par value 1,000,000 authorized and outstanding		1,000		1,000
Common stock: $0.001 par; 90,000,000 authorized; 46,549,534 and 45,599,534 issued and outstanding, respectively		46,549		45,599
Additional paid-in capital		51,012,330		50,658,216
Accumulated deficit		(42,860,200)		(36,088,552)
Total Stockholders' Equity		8,199,679		14,616,263

Total Liabilities and Stockholders' Equity	$	16,564,047	$	17,760,821

MagneGas Corporation
Condensed Consolidated Statements of Operations
(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015

Revenue:		837,257		584,445	$	1,502,920	$	1,130,093

Cost of Revenues		472,275		372,728		838,038		672,053
Gross Profit		364,982		211,717		664,882		458,040
Operating Expenses:
Selling, general and administration		2,301,085		2,121,854		4,853,989		3,880,802
Research and development		167,963		64,224		329,257		126,650
Impairment of joint venture		501,011		0		501,011		0
Depreciation and amortization		175,490		139,696		329,443		276,619
Total Operating Expenses		3,145,549		2,325,774		6,013,700		4,284,071

Operating (Loss)		(2,780,567)		(2,114,057)		(5,348,818)		(3,826,031)

Other Income and (Expense):
Interest		(8,689)		(5,485)		(19,495)		(10,255)
Non-Cash Interest, derivative liability		(2,622,084)		-		(2,622,084)		-
Loss on sale of property		-		-		-		(483,630)
Other income		20,365		520		21,230		3,342
Change in fair value of derivative liability		240,722		-		1,197,519		-
Total Other Income (Expense)		(2,369,686)		(4,965)		(1,422,830)		(490,543)

Net Loss		(5,150,253)		(2,119,022)	$	(6,771,648)	$	(4,316,574)

Net Loss per share:
Basic and diluted	$	(0.10)	$	(0.05)	$	(0.13)	$	(0.11)
Weighted average common shares:
Basic and diluted		50,575,879		39,143,593		50,437,143		38,148,600