MagneGas Corporation: Acquisitions Drive Trebling In Revenue
Edison | Aug 21, 2018 03:41AM ET
MagneGas Corp's (NASDAQ:MNGA) Q218 results show the transformative effect of the three acquisitions that were made earlier in the year. Sales trebled year-on-year, but as the annualised revenue run-rate achieved in May has not been maintained, we revise our FY18 estimates downwards.
Record sales in Q218
Total sales increased by 201% year-on-year to $2.9m as a result of the three acquisitions made in Q118 and early Q2. Importantly, revenues from both the Complete Welding and Green Arc acquisitions grew strongly compared with the previous quarter, as management invested in additional sales personnel. Operating costs increased by $0.8m to $4.3m, mainly as a result of the ongoing costs of the acquisitions. Operating losses widened by $0.3m to $3.4m. Net cash reduced from $1.2m at end-Q118 to $0.4m at end-Q218. The use of preferred stock to finance activities is significantly dilutive. During Q218, conversion of Series C preferred stock resulted in the issue of 7.7m new shares of common stock.
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