U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
or
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-19260
RENTECH, INC.
(Exact name of registrant in its charter)
| Colorado |
84-0957421 | |
| (State or other jurisdiction of |
(I.R.S. Employer |
1331 17th Street, Suite 720
Denver, Colorado 80202
(Address of principal executive offices)
(303) 298-8008
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x. No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨. No x.
The number of shares outstanding of each of the issuers classes of common equity, as of May 14, 2003: common stock—72,549,630.
Form 10-Q Quarterly Report—Second Quarter of Fiscal 2003
Table of Contents
| Part I—Financial Information (Unaudited) |
||||
| Item 1. |
Consolidated Financial Statements: |
|||
| Consolidated Balance Sheets as of March 31, 2003 and September 30, 2002 (Audited) |
4 | |||
| Consolidated Statements of Operations for the three and six months ended March 31, 2003 and 2002 |
6 | |||
| Consolidated Statement of Stockholders’ Equity for the six months ended March 31, 2003 |
7 | |||
| Consolidated Statements of Cash Flows for the six months ended March 31, 2003 and 2002 |
8 | |||
| 10 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
34 | ||
| Item 3. |
50 | |||
| Item 4. |
50 | |||
| Part II—Other Information |
||||
| Item 1. |
50 | |||
| Item 2. |
51 | |||
| Item 3. |
51 | |||
| Item 4. |
51 | |||
| Item 5. |
51 | |||
| Item 6. |
52 | |||
| (a) Exhibits |
||||
| (b) Form 8-K |
||||
| 56 | ||||
| 57 | ||||
2
Forward-Looking Statements
Information in this document that is not historical includes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, we or our representatives have made or may make forward-looking statements orally or in writing. These statements are made based on our current views and assumptions regarding our technology, financing, markets, growth and earnings expectations. All of these forward-looking statements involve a number of risks and uncertainties. Certain important factors that can cause actual results to differ materially from the forward-looking statements. These include, without limitation, our ability to obtain necessary capital for continuing operations and carrying out our plans, the performance of our gas-to-liquids technology in commercial size plants, the costs of constructing and operating these plants, the financing of the plants, economic competitiveness of our gas-to-liquids technology, anticipated revenues from our gas-to-liquids business and from our subsidiaries, and other factors discussed from time to time in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, and holders of our securities are specifically referred to those documents with regard to factors and conditions that may affect future results. We undertake no obligation to update these statements to reflect ensuing events or circumstances, or subsequent actual results.
As used in this Quarterly Report on Form 10-Q, the terms we, our and us mean Rentech, Inc., a Colorado corporation and its subsidiaries, unless the context indicates otherwise.
3
RENTECH, INC.
| March 31, 2003 |
September 30, 2002 | |||||
| (Unaudited) |
||||||
| Assets |
||||||
| Current assets |
||||||
| Cash |
$ |
67,703 |
$ |
1,032,920 | ||
| Restricted cash |
|
500,000 |
|
500,000 | ||
| Accounts receivable, net of $17,500 (2003) and $12,000 (2002) allowance for doubtful accounts |
|
1,077,421 |
|
1,436,886 | ||
| Costs and estimated earnings in excess of billings (Note 10) |
|
555,032 |
|
788,727 | ||
| Stock subscription receivable |
|
— |
|
76,186 | ||
| Other receivables |
|
37,279 |
|
65,494 | ||
| Receivable from related party (Note 4) |
|
19,922 |
|
17,966 | ||
| Inventories (Note 2) |
|
828,360 |
|
757,393 | ||
| Prepaid expenses and other current assets |
|
356,719 |
|
253,646 | ||
| Total current assets |
|
3,442,436 |
|
4,929,218 | ||
| Property and equipment, net of accumulated depreciation and amortization of $1,507,662 (2003) and $1,300,598 (2002) |
|
3,940,908 |
|
4,120,915 | ||
| Other assets |
||||||
| Licensed technology, net of accumulated amortization of $2,191,919 (2003) and $2,077,528 (2002) |
|
1,239,230 |
|
1,353,621 | ||
| Capitalized software costs, net of accumulated amortization of $710,364 (2003) and $552,386 (2002) |
|
237,328 |
|
395,306 | ||
| Goodwill, net of accumulated amortization of $400,599 (Note 11) |
|
1,281,807 |
|
1,281,807 | ||
| Non-compete agreement, net of accumulated amortization of $55,033 (2003) and $38,500 (2002) |
|
107,468 |
|
124,001 | ||
| Investment in INICA, Inc. (Note 3) |
|
3,079,107 |
|
3,079,107 | ||
| Technology rights, net of accumulated amortization of $158,260 (2003) and $143,873 (2002) |
|
129,486 |
|
143,873 | ||
| Note and other receivable from related party |
|
574,507 |
|
571,394 | ||
| Deposits and other assets |
|
242,403 |
|
163,986 | ||
| Total other assets |
|
6,891,336 |
|
7,113,095 | ||
| $ |
14,274,680 |
$ |
16,163,228 | |||
(Continued on following page.)
See notes to consolidated financial statements.
4
RENTECH, INC.
Consolidated Balance Sheets
(Continued from previous page.)
| March 31, 2003 |
September 30, 2002 |
|||||||
| (Unaudited) |
||||||||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ |
989,753 |
|
$ |
886,254 |
| ||
| Billings in excess of costs and estimated earnings (Note 10) |
|
8,642 |
|
|
144,785 |
| ||
| Accrued payroll and benefits |
|
259,235 |
|
|
201,191 |
| ||
| Deferred compensation (Note 9) |
|
399,179 |
|
|
419,036 |
| ||
| Accrued liabilities |
|
367,491 |
|
|
508,276 |
| ||
| Other liability (Note 9) |
|
225,000 |
|
|
326,000 |
| ||
| Notes payable to related parties (Note 6) |
|
245,254 |
|
|
— |
| ||
| Lines of credit payable (Note 7) |
|
1,438,462 |
|
|
1,493,839 |
| ||
| Current portion of long-term debt |
|
114,684 |
|
|
127,103 |
| ||
| Current portion of long-term convertible debt to stockholders (Note 5) |
|
716,919 |
|
|
47,048 |
| ||
| Total current liabilities |
|
4,764,619 |
|
|
4,153,532 |
| ||
| Long-term liabilities |
||||||||
| Long-term debt, net of current portion |
|
1,047,666 |
|
|
1,078,403 |
| ||
| Long-term convertible debt to stockholders, net of current portion (Note 5) |
|
2,092,725 |
|
|
2,177,292 |
| ||
| Lessee deposits |
|
7,485 |
|
|
7,485 |
| ||
| Investment in Sand Creek (Note 4) |
|
2,895 |
|
|
5,864 |
| ||
| Total long-term liabilities |
|
3,150,771 |
|
|
3,269,044 |
| ||
| Total liabilities |
|
7,915,390 |
|
|
7,422,576 |
| ||
| Minority interest |
|
211,973 |
|
|
296,710 |
| ||
| Commitments and contingencies (Notes 1, 4, 9 and 13) |
||||||||
| Stockholders’ equity (Note 8) |
||||||||
| Series A convertible preferred stock—$10 par value; 200,000 shares authorized; 200,000 shares issued and no shares outstanding; $10 per share liquidation value |
|
— |
|
|
— |
| ||
| Series B convertible preferred stock—$10 par value; 800,000 shares authorized; 691,664 shares issued and no shares outstanding; $10 per share liquidation value |
|
— |
|
|
— |
| ||
| Series C participating cumulative preferred stock—$10 par value; 500,000 shares authorized; no shares issued and outstanding |
|
— |
|
|
— |
| ||
| Common stock—$.01 par value; 100,000,000 shares authorized; 72,315,179 and 71,790,667 shares issued and outstanding |
|
723,152 |
|
|
717,907 |
| ||
| Additional paid-in capital |
|
38,952,035 |
|
|
38,629,676 |
| ||
| Accumulated deficit |
|
(33,527,870 |
) |
|
(30,903,641 |
) | ||
| Total stockholders’ equity |
|
6,147,317 |
|
|
8,443,942 |
| ||
| $ |
14,274,680 |
|
$ |
16,163,228 |
| |||
See notes to consolidated financial statements.
5
RENTECH, INC.
Consolidated Statements of Operations
| Three Months Ended March 31, |
Six Months Ended March 31, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Revenues (Note 12) |
||||||||||||||||
| Product sales |
$ |
441,882 |
|
$ |
419,534 |
|
$ |
749,082 |
|
$ |
809,199 |
| ||||
| Service revenues |
|
1,633,113 |
|
|
1,881,571 |
|
|
3,258,125 |
|
|
3,943,360 |
| ||||
| Royalty income |
|
40,000 |
|
|
60,000 |
|
|
100,000 |
|
|
120,000 |
| ||||
| Total revenues |
|
2,114,995 |
|
|
2,361,105 |
|
|
4,107,207 |
|
|
4,872,559 |
| ||||
| Cost of sales |
||||||||||||||||
| Product sales |
|
190,253 |
|
|
214,700 |
|
|
346,025 |
|
|
419,337 |
| ||||
| Service costs |
|
1,033,242 |
|
|
1,159,081 |
|
|
2,109,972 |
|
|
2,148,799 |
| ||||
| Research and development contract costs (Note 13) |
|
— |
|
|
— |
|
|
— |
|
|
125,000 |
| ||||
| Total cost of sales |
|
1,223,495 |
|
|
1,373,781 |
|
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