The company has an aggressive plan to expand the sales of its promising hydrogen-based fuel, which is looking to make waves in the industry as a greener natural gas alternative that has lower emissions than any fossil fuel currently on the market.
It has invented a process to convert liquid waste into its hydrogen-based fuel, known as MagneGas, which involves the flow of carbon-rich liquid feedstock through a 10,000 degree Fahrenheit electric arc between two carbon electrodes. The patented process sterilizes the liquid waste, which can include anything from manure or sludge to medical waste, and produces the hydrogen-based fuel, which also contains carbon and trace gases.
The Florida-based company's path to growth is clear, as it continues to implement its three-pronged strategy aimed at bringingMagneGas to exit 2015 at a break-even run rate. This includes industrial gas sales for the metal working market, equipment sales for liquid waste processing and the use of MagneGas for the co-combustion of hydro-carbon fuels to reduce emissions.
The green energy company is working with several tech partners worldwide to commercialize the co-combustion process, with partners in the US, Australia and Italy so far.
"The third quarter of 2014 was marked by solid progress towards our objectives," said chief executive officer, Ermanno Santilli.
"We continued to obtain third party verification of our processes including receiving confirmation by the EPA that our system achieves Class A manure treatment requirements.
"We also worked with several stakeholders to establish platforms to test, process, and market liquid waste sterilization systems. We launched our new MagneGas2 fuel made from renewable waste and we signed an agreement to purchase a gas distribution company in Florida.
The first part of the company's business strategy involves the expansion of fuel sales through key partnerships with domestic gas distributors in Alabama, Michigan, Pennsylvania and Florida. It has already signed on about a dozen distributors in the US and just recently acquired Equipment Sales and Service Inc (OTC:ESSI), a small distribution company in Clearwater, Florida, givingMagneGas a tangible platform to increase its market penetration at an even faster rate. The local Florida gas distributor is also expected to generate $2 million in revenues in 2014.
The company's target market is the $5 billion metal cutting industry, where MagneGas is seeking to replace acetylene, claiming its home-grown, US patented hydrogen-based gas is cheaper, uses less oxygen and also cuts faster and better.
MagneGas dissipates into the air unlike acetylene, which pools on the ground and creates a major risk for an explosion. This is why the product is deemed safer by the company and has piqued the interest of even fire departments, which currently use acetylene. The New York Fire Department is in the final stages of testing MagneGas to replace acetylene.
"Overall, I am pleased that we advanced all facets of our strategy while controlling costs and increasing revenues," Santilli said.
For the first nine months of the year, revenues jumped to $516,331 from $319,698, while operating expenses, excluding non-cash items, declined 3.6 percent to $2.86 million. The company had a cash balance of $5.1 million at the end of September.
MagneGas said revenue from metal cutting sales increased due to the addition of new customers and a shift in focus to fabrication industries. The company recorded a narrower operating loss of $4.5 million for the nine months to September 30.