MagneGas Corp. is an alternative energy company that has developed and commercialized a patented plasma arc technology platform, Plasma Arc Flow®, which converts certain renewables and liquid wastes into hydrogen-based fuels. Using its proprietary technology, the Company has created MagneGas™, a clean-burning fuel that lends itself to a wide range of applications. In particular, the Company is currently taking a specific oil-based feedstock and gasifying it into MagneGas2®, which it sells to the industrial gas market.
MagneGas owns and licenses the intellectual property for its technology for the territories of North, South, and Central America. The Company’s patents cover its Plasma Arc Flow® platform, the MagneGas™ fuel, and the use of MagneGas™ for different applications. To the Company’s knowledge, MagneGas2® is the only renewable source gas fuel produced entirely in the U.S. and the company believes is the only renewable source cutting gas in the world.
MagneGas is focused on the commercialization of its plasma arc technology and MagneGas™ fuels within three different industries: (1) the industrial gas market, where the Company currently sells MagneGas2® into the metal working market as a replacement to acetylene; (2) the wastewater treatment market, where MagneGas develops equipment for the sterilization of bio-contaminated liquid waste for various industrial and agricultural markets; and (3) the electric and power utility market, where the Company is capitalizing on the high flame temperature of MagneGas™ for co-combustion of hydrocarbon fuels and other advanced applications.
According to the Company, Plasma Arc Flow® technology has three main advantages over other plasma systems currently used to treat waste products: (1) its ability to treat liquid waste; (2) its small size; and (3) its lower capital expenditure.
The Company’s patented, advanced computerized electronic control panel takes the submerged electric arch and stabilizes it, allowing the use of plasma arc technology in liquid feedstock. The Company believes this provides a key competitive advantage since traditionally plasma arc technology has only been used for the treatment of solid waste.
Through the processing of a specific food bean oil-based feedstock utilizing its proprietary plasma technology, the Company creates MagneGas2®, which it then sells into the metal working market as a replacement to acetylene. Tests conducted by MagneGas have shown that the use of MagneGas2® results in significant advantages in terms of flame temperature, cutting speed, productivity, safety, environmental impact, and costs against other metal cutting fuel alternatives.
MagneGas has focused on independent verification of its technology and product claims. Such tests have demonstrated that MagneGas2® displays a top flame temperature in the 10,500°F range (higher than any other industrial gas), and have also shown a significant advantage for MagneGas2® in terms of cutting speed and oxygen consumption over both acetylene and propane, with MagneGas2® cutting 2-inch steel 38% faster than acetylene and 44% faster than propane.
Through its commercialization of MagneGas2®, the Company has penetrated key vertical market segments. These efforts have resulted in a list of customers and partners that include the U.S. military, several fire departments, several of the largest utilities in the U.S., and one of the world’s largest auto manufacturers. In addition, the Company’s fuel is currently being used in multiple infrastructure projects and high-profile construction projects, including metal work at the National Aeronautics and Space Administration’s (NASA) Kennedy Space Center build-out, and in two major amusement parks in Florida.
The Company plans to achieve further market expansion by focusing on three key sales channels: (1) its distribution network, both independent and wholly owned distributors; (2) equipment sales, which encompass licensing of its technology; and (3) special market segments, such as military markets and first responders.
MagneGas has been focusing on the expansion of its distribution network, which includes over a dozen independent gas distributors throughout the U.S., as well as its wholly owned distributor, Equipment Sales and Services, Inc. (ESSI). According to the Company, ESSI operations have shown that the use of MagneGas2® as a differentiator can increase a distributor’s sales by 20%, and lead to new client acquisition. The Company plans to continue its acquisition of distributors, increasing its geographic footprint and facilitating the expansion of its products and services.
MagneGas plans to conduct sales and licensing of its proprietary Plasma Arc Flow® technology to certain distributors, which the Company believes have the appropriate infrastructure and market potential to launch the technology. The first such effort is the sale of a $775,000 plasma arc gasification system to Green Arc Supply, LLC, a Louisiana-based gas distributor. The unit, which is expected to be delivered in the fourth quarter 2016, will allow Green Arc to produce and distribute MagneGas2® on location, resulting in royalty payments of approximately 6% of gross sales to MagneGas. The Company expects its licensing and equipment sale initiative to be a key factor for its geographic expansion and revenue growth plans.
The Company’s second equipment sale initiative is the Letter of Intent (LOI) the Company signed on October 2016 to manufacture and deliver certain equipment and supplies to a company based in Germany. MagneGas is expected to receive $2.65 million for its proprietary gasification and sterilization systems. The sale is part of the continued efforts by the Company to expand the availability of its technology and MagneGas2® fuel across the European continent.
The Company aims to penetrate additional specialty markets, such as the military and first responders, through direct sales efforts. The U.S. Navy has been working with the Company to explore the use of MagneGas2® for metal working and the use of the Plasma Arc Flow® System for liquid waste processing. In addition, many emergency management teams and fire and rescue organizations have adopted or are in the process of testing MagneGas2® for metal cutting in rescue operations, including the Fire Department of New York City and Florida’s Pinellas County Fire Department.
MagneGas’ second target market is wastewater treatment, where the Company plans to utilize its Plasma Arc Flow® technology to sanitize biologically active liquid waste. MagneGas is assessing the use of its patented technology to treat liquid manure or waste, converting it into sterilized biosolids for agricultural use. Independent verification of the test results conducted at one of the largest privately owned hog farms in the U.S indicated that the use of MagneGas’ sterilization technology to treat hog manure resulted in a material that met EPA standards for unrestricted use as a fertilizer.
The third business line that the Company is pursuing is the use of MagneGas™ fuels co-combustion capabilities in the electric and power utility markets, based on the fuel’s extremely high flame temperature. Reigniting of coal flue gas or smoke exhaust generated from coal processing using MagneGas™ fuels as the co-combustion agent has resulted in enhanced combustion efficiency, reduction of harmful hydrocarbon emissions, and increased heat, which could lead to a greater energy creation.
Through the work with its partners in Australia and the U.S., MagneGas was able to identify a specific engineered fuel whose characteristics lead to optimized combustion and superior co-combustion results. The Company has filed provisional patents related to this fuel and its applications.
In April 2016, the Company moved into its new Company headquarters, an 18,000-square-foot facility located in Clearwater, Florida. The facility provides increased space for MagneGas2® production—allowing the Company to bring three gas production units online, doubling its current capacity—as well as areas for research and development and product demonstrations. MagneGas currently has 39 full-time employees.
As of June 30, 2016, the Company reported cash and cash equivalents of approximately $3.8 million.