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 December 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 incorporation or organization) |
(I.R.S. Employer Identification No.) |
1331 17th Street, Suite 720
Denver, Colorado 80202
(Address of principal executive offices)
(303) 298-8008
(Registrant’s 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 the Registrant’s common stock outstanding as of February 9, 2004 was 86,114,113.
RENTECH, INC.
Form 10-Q
First Quarter ended December 31, 2003
| Part I – Financial Information |
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| Item 1. |
Consolidated Financial Statements (Unaudited): | |||
| Consolidated Balance Sheets as of December 31, 2003 and September 30, 2003 (Audited) | 3 | |||
| Consolidated Statements of Operations for the three months ended December 31, 2003 and 2002 | 5 | |||
| Consolidated Statement of Stockholders’ Equity for the three months ended December 31, 2003 | 6 | |||
| Consolidated Statements of Cash Flows for the three months ended December 31, 2003 and 2002 | 7 | |||
| Notes to the Consolidated Financial Statements | 9 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | ||
| Item 3. |
Quantitative and Qualitative Disclosures about Market Risk | 37 | ||
| Item 4. |
Controls and Procedures | 37 | ||
| Part II – Other Information |
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| Item 1. |
Legal Proceedings | 37 | ||
| Item 2. |
Changes in Securities and Use of Proceeds | 37 | ||
| Item 6. |
Exhibits and Reports on Form 8-K | 38 | ||
| (a) Exhibits |
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| (b) Reports on Form 8-K |
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| Signatures | 41 | |||
| Certifications | ||||
2
PART I. FINANCIAL INFORMATION
| ITEM 1. | CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |
RENTECH, INC.
| December 31, (Unaudited) |
September 30, 2003 | |||||
| Assets | ||||||
| Current assets |
||||||
| Cash |
$ | 314,412 | $ | 315,763 | ||
| Restricted cash |
500,000 | 500,000 | ||||
| Accounts receivable, net of $17,500 allowance for doubtful accounts |
1,063,404 | 1,143,813 | ||||
| Costs and estimated earnings in excess of billings |
124,248 | 482,070 | ||||
| Stock subscription receivable |
25,000 | — | ||||
| Other receivables |
21,684 | 23,757 | ||||
| Receivable from related party |
24,180 | 30,097 | ||||
| Inventories (Note 3) |
553,114 | 535,782 | ||||
| Prepaid expenses and other current assets |
421,126 | 178,720 | ||||
| Total current assets |
3,047,168 | 3,210,002 | ||||
| Property and equipment, net of accumulated depreciation of $1,795,404 and $1,702,548 |
4,223,982 | 4,217,953 | ||||
| Other assets |
||||||
| Licensed technology, net of accumulated amortization of $2,363,504 and $2,306,308 |
1,067,645 | 1,124,841 | ||||
| Capitalized software costs, net of accumulated amortization of $72,061 and $868,343 |
24,020 | 32,027 | ||||
| Goodwill, net of accumulated amortization of $400,599 |
1,006,554 | 1,006,554 | ||||
| Non-compete agreement, net of accumulated amortization of $79,832 and $71,567 |
82,668 | 90,934 | ||||
| Investment in advanced technology companies (Note 4) |
1,200,000 | 1,200,000 | ||||
| Technology rights, net of accumulated amortization of $179,841 and $172,648 |
107,905 | 115,098 | ||||
| Deposits and other assets |
127,517 | 189,705 | ||||
| Total other assets |
3,616,309 | 3,759,159 | ||||
| $ | 10,887,459 | $ | 11,187,114 | |||
(Continued on following page)
See notes to consolidated financial statements.
3
(Continued from previous page)
RENTECH, INC.
Consolidated Balance Sheets
| December 31, (Unaudited) |
September 30, 2003 |
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| Liabilities And Stockholders’ Equity | ||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 829,018 | $ | 960,561 | ||||
| Billings in excess of costs and estimated earnings |
85,289 | 6,300 | ||||||
| Accrued payroll and benefits |
439,060 | 526,899 | ||||||
| Deferred compensation |
455,652 | 437,958 | ||||||
| Accrued liabilities |
400,217 | 473,265 | ||||||
| Other liability |
100,500 | 142,000 | ||||||
| Notes payable to related parties (Note 6) |
263,133 | 87,899 | ||||||
| Lines of credit payable (Note 7) |
1,318,770 | 1,428,072 | ||||||
| Current portion of long-term debt |
196,733 | 86,531 | ||||||
| Current portion of long-term convertible debt to stockholders (Note 5) |
450,678 | 632,435 | ||||||
| Total current liabilities |
4,539,050 | 4,781,740 | ||||||
| Long-term liabilities |
||||||||
| Long-term debt, net of current portion |
1,073,218 | 1,054,183 | ||||||
| Long-term convertible debt to stockholders, net of current portion (Note 5) |
2,315,512 | 2,147,256 | ||||||
| Lessee deposits |
7,486 | 7,485 | ||||||
| Investment in Sand Creek |
28,543 | 15,070 | ||||||
| Total long-term liabilities |
3,424,759 | 3,223,994 | ||||||
| Total liabilities |
7,963,809 | 8,005,734 | ||||||
| Minority interest |
62,369 | 154,269 | ||||||
| Commitments and contingencies |
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| Stockholders’ equity (Note 8) |
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| Convertible preferred stock – $10 par value; 1,000,000 shares authorized and no shares outstanding |
— | — | ||||||
| Common stock – $.01 par value; 100,000,000 shares authorized; 82,128,675 and 79,336,585 shares issued and outstanding |
821,287 | 793,366 | ||||||
| Additional paid-in capital |
44,396,683 | 42,672,791 | ||||||
| Accumulated deficit |
(42,356,689 | ) | (40,439,046 | ) | ||||
| Total stockholders’ equity |
2,861,281 | 3,027,111 | ||||||
| $ | 10,887,459 | $ | 11,187,114 | |||||
See notes to consolidated financial statements.
4
RENTECH, INC.
Consolidated Statements of Operations
| Three Months Ended December 31, |
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| 2003 |
2002 |
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| Revenues |
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| Product sales |
$ | 376,837 | $ | 307,200 | ||||
| Service revenues |
1,268,828 | 1,625,012 | ||||||
| Royalty income |
— | 60,000 | ||||||
| Total revenues |
1,645,665 | 1,992,212 | ||||||
| Cost of sales |
||||||||
| Product sales |
220,341 | 155,772 | ||||||
| Service costs |
913,835 | 1,076,730 | ||||||
| Total cost of sales |
1,134,176 | 1,232,502 | ||||||
| Gross profit |
511,489 | 759,710 | ||||||
| Operating expenses |
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| General and administrative expense |
1,791,916 | 1,750,233 | ||||||
| Depreciation and amortization |
154,950 | 199,976 | ||||||
| Research and development |
172,549 | 85,268 | ||||||
| Total operating expenses |
2,119,415 | 2,035,477 | ||||||
| Loss from operations |
(1,607,926 | ) | (1,275,767 | ) | ||||
| Other income (expenses) |
||||||||
| Equity in loss of investee |
(48,242 | ) | (56,423 | ) | ||||
| Interest income |
2,845 | 5,300 | ||||||
| Interest expense |
(352,580 | ) | (99,636 | ) | ||||
| Loss on disposal of fixed assets |
(3,640 | ) | — | |||||
| Total other income (expense) |
(401,617 | ) | (150,759 | ) | ||||
| Minority interest in subsidiary’s net loss |
91,900 | 35,355 | ||||||
| Net loss applicable to common stockholders |
$ | (1,917,643 | ) | $ | (1,391,171 | ) | ||
| Basic and diluted loss per common share |
$ | (0.02 | ) | $ | (0.02 | ) | ||
| Basic and diluted weighted-average number of common shares outstanding |
80,522,553 | 72,000,689 | ||||||
See notes to consolidated financial statements.
5
RENTECH, INC.
Consolidated Statement of Stockholders’ Equity
(Unaudited)
| Convertible Preferred Stock |
Additional Paid-in Capital |
Unearned Compensation |
Accumulated Deficit |
Total Stockholders’ Equity |
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| Series A |
Series B |
Common Stock |
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| Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
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| Balance, September 30, 2003 (audited) |
— | $ | — | — | $ | — | 79,336,585 | $ | 793,366 | $ | 42,672,791 | $ | — | $ | (40,439,046 | ) | $ | 3,027,111 | |||||||||||
| Common stock issued for cash, net of offering costs of $95,600 |
— | — | — | — | 986,665 | 9,867 | 338,533 | 348,400 | |||||||||||||||||||||
| Common stock issued for options and warrants exercised |
— | — | — | — | 890,000 | 8,900 | 608,726 | 617,626 | |||||||||||||||||||||
| Common stock issued for conversion of convertible notes |
— | — | — | — | 915,425 | 9,154 | 441,111 | 450,265 | |||||||||||||||||||||
| Stock options granted for services |
— | — | — | — | 28,522 | 28,522 | |||||||||||||||||||||||
| Offering costs of convertible notes |
— | — | — | — | 307,000 | 307,000 | |||||||||||||||||||||||
| Net loss for the three months ended December 31, 2003 |
— | — | — | — | (1,917,643 | ) | (1,917,643 | ) | |||||||||||||||||||||
| Balance, December 31, 2003 |
— | $ | — | — | $ | — | 82,128,675 | $ | 821,287 | $ | 44,396,683 | $ | — | $ | (42,356,689 | ) | $ | 2,861,281 | |||||||||||
See notes to consolidated financial statements.
6
RENTECH, INC.
Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended | ||||||||