Fuel technology specialist (NASDAQ: MNGA) has landed a new deal with Green Arc Supply, which, it says, signifies a "new era" in its expansion strategy.
Under the terms of a "gasifier agreement", will manufacture and sell to Green Arc a 100kw Plasma-Arc system for US$775,000 to distribute 2 fuel for the metal cutting market as a replacement to acetylene.
The fuel can be used as a replacement to natural gas or for metal cutting.
Under the distribution deal, will receive royalty payments of around 6% of gross sales.
Green Arc will have exclusive distribution rights for parts of Louisiana and Texas with non-exclusive distribution rights in remaining regions of Louisiana and Texas and all of Arkansas, Mississippi and Oklahoma.
Green Arc also has the right to expand their exclusivity in those states with the purchase of additional systems.
Green Arc says it plans to expand aggressively with the purchase of several additional systems in the coming months and so has already begun expanding its manufacturing capability.
chief executive Ermanno Santilli told investors: "We are excited to be joining forces with Green Arc Supply to expand availability into the South.
"We are executing on our plan to expand fuel sales nationally with this, the first equipment sale in Company history in the United States.
"We believe this agreement serves as a turning point for the Company strategy as we begin our rapid expansion plans. We believe there are many more to come as we increase our fuel sales across the United States.."
"Multiple tests have shown that cuts cleaner, faster and is more economical than acetylene which is ideal for this area where productivity is key to success. We look forward to expanding into multiple regions of the South," added Rafe Dean, vide president of operations at Green Arc Supply.
Yesterday, the company said revenue for the three months to end September had risen 326% to US$623,893 from US$146,400 for the same period last year, while gross margins were lifted to 35% from 33% in the same quarter in 2014.
The shares fluctuated on Friday and were last flat at C$1.14 at 12:49 p.m. in Toronto. The stock has risen 68% so far this year.