SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended December 31, 2004
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 x No ¨
The number of shares of the Registrant’s common stock outstanding as of February 7, 2005 was 92,797,607.
Form 10-Q
First Quarter ended December 31, 2004
Table of Contents
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RENTECH, INC.
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| December 31, (Unaudited) |
September 30, 2004 | |||||
| Assets | ||||||
| Current assets |
||||||
| Cash |
$ | 1,312,978 | $ | 255,417 | ||
| Accounts receivable, net of $143,255 and $143,255 allowance for doubtful accounts |
1,354,521 | 1,172,140 | ||||
| Costs and estimated earnings in excess of billings |
24,788 | 177,010 | ||||
| Other receivables |
85,899 | 78,133 | ||||
| Receivable from related party |
22,482 | 18,868 | ||||
| Inventories (Note 3) |
554,099 | 505,918 | ||||
| Prepaid expenses and other current assets |
546,623 | 33,656 | ||||
| Total current assets |
3,901,390 | 2,241,142 | ||||
| Property and equipment, net of accumulated depreciation of $2,191,869 and $2,088,664 |
3,737,326 | 3,720,084 | ||||
| Other assets |
||||||
| Licensed technology, net of accumulated amortization of $2,592,285 and $2,535,089 |
838,864 | 896,059 | ||||
| Goodwill, net of accumulated amortization of $400,599 |
1,006,554 | 1,006,554 | ||||
| Investment in advanced technology companies (Note 4) |
611,500 | 611,500 | ||||
| Technology rights, net of accumulated amortization of $208,616 and $201,422 |
79,130 | 86,324 | ||||
| Deferred acquisition costs |
1,203,061 | 413,944 | ||||
| Debt issuance costs |
346,449 | 322,469 | ||||
| Deposits and other assets |
105,208 | 81,212 | ||||
| Total other assets |
4,190,766 | 3,418,062 | ||||
| Total assets |
$ | 11,829,482 | $ | 9,379,288 | ||
(Continued on following page)
See notes to consolidated financial statements.
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RENTECH, INC.
Consolidated Balance Sheets
(Continued from previous page)
| December 31, (Unaudited) |
September 30, 2004 |
|||||||
| Liabilities And Stockholders’ Equity | ||||||||
| Current liabilities |
||||||||
| Accounts payable |
$ | 1,196,724 | $ | 700,301 | ||||
| Billings in excess of costs and estimated earnings |
— | 115,080 | ||||||
| Accrued payroll and benefits |
607,345 | 444,338 | ||||||
| Deferred compensation |
452,340 | 434,646 | ||||||
| Accrued liabilities |
219,416 | 286,538 | ||||||
| Convertible notes payable to related parties (Note 8) |
188,682 | 185,166 | ||||||
| Lines of credit payable (Note 7) |
1,937,863 | 1,185,114 | ||||||
| Current portion of long-term debt (Note 5) |
1,973,250 | 100,879 | ||||||
| Current portion of long-term convertible debt to stockholders (Note 6) |
15,560 | 55,733 | ||||||
| Total current liabilities |
6,591,180 | 3,507,795 | ||||||
| Long-term liabilities |
||||||||
| Long-term debt, net of current portion |
1,417,853 | 1,079,498 | ||||||
| Long-term convertible debt to stockholders, net of current portion (Note 6) |
817,876 | 1,657,210 | ||||||
| Lessee deposits |
7,485 | 7,485 | ||||||
| Investment in Sand Creek |
23,002 | 18,911 | ||||||
| Investment in FT Solutions, LLC |
35,566 | 70,525 | ||||||
| Total long-term liabilities |
2,301,782 | 2,833,629 | ||||||
| Total liabilities |
8,892,962 | 6,341,424 | ||||||
| Minority interest |
— | — | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ equity (Note 9) |
||||||||
| Convertible preferred stock - $10 par value; 1,000,000 shares authorized and no shares outstanding |
— | — | ||||||
| Common stock - $.01 par value; 150,000,000 shares authorized; 92,025,441 and 89,708,509 shares issued and outstanding |
920,254 | 897,085 | ||||||
| Additional paid-in capital |
51,917,570 | 49,790,518 | ||||||
| Accumulated deficit |
(49,901,304 | ) | (47,649,739 | ) | ||||
| Total stockholders’ equity |
2,936,520 | 3,037,864 | ||||||
| Total liabilities and stockholders’ equity |
$ | 11,829,482 | $ | 9,379,288 | ||||
See notes to consolidated financial statements.
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Consolidated Statements of Operations
(Unaudited)
| Three Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues |
||||||||
| Product sales |
$ | 496,428 | $ | 376,837 | ||||
| Service revenues |
1,827,303 | 1,268,828 | ||||||
| Total revenues |
2,323,731 | 1,645,665 | ||||||
| Cost of sales |
||||||||
| Product sales |
256,354 | 220,341 | ||||||
| Service costs |
1,490,032 | 913,835 | ||||||
| Total cost of sales |
1,746,386 | 1,134,176 | ||||||
| Gross profit |
577,345 | 511,489 | ||||||
| Operating expenses |
||||||||
| General and administrative expense |
1,682,956 | 1,791,916 | ||||||
| Depreciation and amortization |
113,153 | 154,950 | ||||||
| Research and development |
174,675 | 172,549 | ||||||
| Total operating expenses |
1,970,784 | 2,119,415 | ||||||
| Loss from operations |
(1,393,439 | ) | (1,607,926 | ) | ||||
| Other income (expenses) |
||||||||
| Equity in loss of investee |
(171,153 | ) | (48,242 | ) | ||||
| Interest income |
897 | 2,845 | ||||||
| Interest expense |
(689,123 | ) | (352,580 | ) | ||||
| Gain/(loss) on disposal of fixed assets |
1,253 | (3,640 | ) | |||||
| Total other income (expense) |
(858,126 | ) | (401,617 | ) | ||||
| Minority interest in subsidiary’s net loss |
— | 91,900 | ||||||
| Net loss applicable to common stockholders |
$ | (2,251,565 | ) | $ | (1,917,643 | ) | ||
| Basic and diluted loss per common share |
$ | (0.025 | ) | $ | (0.024 | ) | ||
| Basic and diluted weighted-average number of common shares outstanding |
90,027,009 | 80,522,553 | ||||||
See notes to consolidated financial statements.
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Consolidated Statement of Stockholders’ Equity
(Unaudited)
| Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ Equity |
||||||||||||||||||||||
| Series A |
Series B |
Shares |
Amount |
|||||||||||||||||||||||
| Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||
| Balance, September 30, 2004 (audited) |
— | $ | — | — | $ | — | 89,708,509 | $ | 897,085 | $ | 49,790,518 | $ | (47,649,739 | ) | $ | 3,037,864 | ||||||||||
| Common stock issued for options and warrants exercised |
— | — | — | — | 490,408 | 4,904 | 405,254 | — | 410,158 | |||||||||||||||||
| Common stock issued for conversion of convertible notes |
— | — | — | — | 1,819,945 | 18,199 | 891,773 | — | 909,972 | |||||||||||||||||
| Stock options granted for stand-still agreement |
— | — | — | — | — | — | 178,766 | — | 178,766 | |||||||||||||||||
| Warrants issued in conjunction with bridge loans |
— | — | 641,566 | — | 641,566 | |||||||||||||||||||||
| Common stock issued for services |
— | — | — | — | 6,579 | 66 | 9,693 | — | 9,759 | |||||||||||||||||
| Net loss for the three months ended December 31, 2004 |
— | — | — | — | — | — | — | (2,251,565 | ) | (2,251,565 | ) | |||||||||||||||
| Balance, December 31, 2004 |
— | $ | — | — | $ | — | 92,025,441 | $ | 920,254 | $ | 51,917,570 | $ | (49,901,304 | ) | $ | 2,936,520 | ||||||||||
See notes to consolidated financial statements.
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Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended December 31, |
||||||||
| 2004 |
2003 |
|||||||
| Cash flows from operating activities |
||||||||
| Net loss |
$ | (2,251,565 | ) | $ | (1,917,643 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities |
||||||||
| Depreciation |
105,067 | 110,918 | ||||||
| Amortization |
||||||||