As filed with the Securities and Exchange Commission on March 4, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
Registration Statement Under
THE SECURITIES ACT OF 1933
RENTECH, INC.
(Exact name of Registrant as specified in charter)
Colorado 84-0957421
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1331 17th Street, Suite 720, Denver, Colorado 80202 (303) 298-8008
(Address, including zip code and telephone number, including area code,
of Registrant's principal executive offices and intended principal place
of business)
Dennis L. Yakobson, President
1331 17th St. Suite 720
Denver, Colorado 80202 (303) 298-8008
(Name, address and telephone number of agent for service)
Copy to: Loren L. Mall, Esq.
Brega & Winters P.C.
1700 Lincoln Street, Suite 2222
Denver, Colorado 80203
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement,
as the selling shareholders shall determine.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box.
/X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number
of the earlier effective registration statement for the same
offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
PAGE 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Shares Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered(1) Offering Price Aggregate Offering Registration
per Unit(2) Price(1) Fee
- ---------------- ------------- ---------------- ---------------- ------------
<S> <C> <C> <C> <C>
Common Stock 2,044,550 $1.1875 $ 2,427,903.13 $ 716.23
Common Stock Under- 575,909 $1.1875 $ 683,891.94 $ 201.75
lying Stock Purchase
Warrants
Common Stock Under- 1,880,301 $1.1875 $ 2,232,857.44 $ 658.69
lying Convertible
Notes
Common Stock Under- 2,666,667 $1.1875 $ 3,166,667.06 $ 934.17
lying Series 1998-A
Preferred Stock
Common Stock Under- 10,666,667 $1.1875 $12,666,667.06 $3,736.67
lying Warrants to
Purchase Series
1998-B Preferred
Stock
Total 17,834,094 $21,177,986.63 $6,247.51
<FN>
<F1> Subject to adjustment pursuant to the anti-dilution provisions of the securities being
registered on this Form, as allowed by Rule 416.
<F2> Based on average of the closing bid and asked prices as quoted on NASDAQ within five
days of the respective filing dates, pursuant to Rule 457(c). Estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457(c).
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date or dates as
the Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
PAGE 3
P R O S P E C T U S
Subject to Completion, Dated March 4, 1998
RENTECH, INC.
17,834,094 Shares Common Stock ($.01 par value)
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
SEE RISK FACTORS BEGINNING AT PAGE 8
This Prospectus relates to the offer and sale by the Selling
Shareholders (see "Selling Shareholders" of up to 17,834,094 shares
(the "Shares") of common stock, $.01 par value per share (the "Common
Stock") of Rentech, Inc. ("Rentech" or the "Company") issuable upon
(i) conversion of convertible promissory notes of the Company (the
"Convertible Notes") into up to 1,880,301 shares of Common Stock;
(ii) exercise of warrants to purchase up to 575,909 shares of Common
Stock (the "Warrants"); (iii) conversion of $2,000,000 aggregate
principal amount of the Company's Series 1998-A Preferred Stock
convertible into Common Stock ("Series A Preferred Stock"); (iv)
exercise of warrants to purchase up to $8,000,000 aggregate principal
amount of the Company's Series 1998-B Preferred Stock convertible into
Common Stock ("Series B Preferred Stock"); (v) together with 2,044,550
shares of Common Stock previously issued to Selling Shareholders.
The number of Shares to be offered by those Selling Shareholders
who own Series 1998-A Preferred Stock and warrants to purchase Series
1998-B Preferred Stock depends upon the price at which the preferred
stock is converted into Common Stock. See "SUMMARY-Recent
Developments." For purposes of determining the number of Shares to be
offered by such Selling Shareholders, the number of Shares calculated
to be issuable upon conversion of the preferred stock is based on a low
conversion price. That conversion price, which is used merely for the
purposes of setting forth a number for this Prospectus, is 75% of the
average closing bid price for the Common Stock over the five
consecutive trading days preceding the first sale of preferred stock on
January 26, 1998. That average price was $1.00. The conversion price
used for this Prospectus is therefore $.75. The number of Shares of
Common Stock issuable upon conversion of the preferred stock is subject
to adjustment depending on the market price on the date of conversion
and could be materially less or more than the number estimated in this
Prospectus. The exact number depends on future events that cannot be
predicted by the Company. The unknown factors include the amount of
the preferred stock that is converted and the future market price of
the Common Stock, and whether dividends on the preferred stock are paid
in Shares of Common Stock or cash.
The Selling Shareholders are identified in this Prospectus under
the heading "Selling Shareholders." The Shares may be offered by
Selling Shareholders, their pledgees, donees, transferees or other
successors in interest from time to time: (i) in transactions in the
over-the-counter market, on the automated inter-dealer system on which
shares of Common Stock of the Company are then listed, in negotiated
transactions, or a combination of such methods of sale, and (ii) at
<PAGE>
PAGE 4
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. The Selling
Shareholders may effect such transactions by selling the Shares to or
through securities broker-dealers. Such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from
the Selling Shareholders and/or the purchasers of the Shares for whom
such broker-dealers may act as agent or to whom they sell as principal,
or both (which compensation as to a particular broker-dealer might be
in excess of customary commissions). See "Selling Shareholders" and
"Plan of Distribution." Selling Shareholders may also sell such shares
pursuant to Rule 144 or Rule 144A under the Securities Act of 1933 if
the requirements for the availability of such rules have been
satisfied.
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has received
net proceeds in the amount of approximately $2,220,000 from the
purchase price paid for the issued Shares, Convertible Notes
Series 1998-A Preferred Stock and the warrants to purchase Series
1998-B Preferred Stock. The Company will receive the purchase price
paid upon exercise of the Warrants and conversion of Series 1998-A and
1998-B Preferred Stock. See "USE OF PROCEEDS."
The Company has agreed to bear all expenses (other than
underwriting discounts, selling commissions and underwriter expense
allowance, and fees and expenses of counsel and other advisers to the
Selling Shareholders) in connection with the registration and sale of
the Shares being offered by the Selling Shareholders. The Company has
agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
The Common Stock of the Company is listed and traded on NASDAQ on
the SmallCap Market under the symbol "RNTK." On February 27, 1998, the
closing sale price of the Common Stock, as reported by the NASDAQ
SmallCap Market, was $1.1875 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
---------------
<PAGE> PAGE 5
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith, files reports and other information with the Securities and
Exchange Commission (the "Commission"). Proxy statements, reports and
other information concerning the Company can be inspected and copied at
Room 1024 of the Commission's office at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the Commission's Regional Offices in Denver
(Suite 4800, 1801 California Street, Denver, Colorado 80202), New York
(Room 1228, 75 Park Place, New York, New York 10007), and Chicago
(Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60621-2511), and copies of such material can be
obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. This
Prospectus does not contain all information set forth in the
Registration Statement of which this Prospectus forms a part and
exhibits thereto which the Company has filed with the Commission under
the Securities Act and to which reference is hereby made.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will provide, without charge, to each person to whom a
copy of this Prospectus is delivered, including any beneficial owner,
upon the written or oral request of such person, a copy of any or all
of the documents incorporated by reference herein (other than exhibits
to such documents, unless such exhibits are specifically incorporated
by reference into the information that the Prospectus incorporates).
Requests should be directed to:
Rentech, Inc.
1331 17th Street, Suite 720
Denver, Colorado 80202
Telephone number: (303) 298-8008
Attention: James P. Samuels, Chief Financial Officer
The following documents filed with the Commission by the Company
(File Number 0-19260) are hereby incorporated by reference into this
Prospectus:
(i) The Company's Annual Report on Form 10-KSB dated December 29,
1997 for the 12-month period ended September 30, 1997, as amended by
its Form 10-KSB/A dated January 15, 1998.
(ii) The Company's Quarterly Report on Form 10-QSB dated February
13, 1998 for the quarter ended December 31, 1997.
(iii) The Company's Current Report on Form 8-K dated March 2,
1998.
All documents filed with the Commission by the Company pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to
the date of this Prospectus and prior to the termination of the
offering registered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of
the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to
<PAGE>
PAGE 6
the extent that a statement contained herein or in any subsequently
filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus. The following
summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information contained herein and in
the consolidated financial statements, including the notes thereto,
incorporated by reference into this Prospectus. The documents
incorporated in this Prospectus contain forward looking statements,
which are inherently uncertain. Actual results may differ from those
discussed in such forward looking statements for the reasons, among
others, discussed in "RISK FACTORS."
SUMMARY
The Company
Rentech, Inc. ("Rentech" or the "Company") was organized as a
Colorado corporation in 1981 to develop and exploit processes for the
conversion of natural gas and other low-value carbon-bearing gases and
solids into valuable liquid hydrocarbons, including premium diesel
fuel, naphthas and waxes. The gas-to-liquids technology developed by
the Company ("Rentech Process Technology" or "Technology") is protected
by a series of patents issued by the U.S. Patent Office. The ability
of the Technology to convert carbon-bearing gases into valuable liquid
hydrocarbons has been validated in two pilot plants operated
periodically between 1982 and 1989, in a 235 barrel per day commercial
scale facility in 1992 and 1993, and in a third pilot plant presently
being operated in Rentech's test facility at Pueblo, Colorado.
Rentech's gas-to-liquids Technology has been licensed for use in India
in a 360 barrel per day plant that the licensee is now beginning to
construct.
During March 1997, the Company entered into the business of
manufacturing and selling water-based stains, sealers and coatings by
purchasing the assets of Okon, Inc. ("Okon"). The Company is
continuing and expanding the 20-year old business of Okon as a
wholly-owned subsidiary. Okon sells environmentally clean, water
repellant sealers, coatings and stains for wood, concrete and masonry.
The customers are the construction industry and architects. Okon
presently provides Rentech's primary source of revenues.
During July 1997, Rentech and ITN Energy Systems, Inc., a
privately-owned Colorado corporation formed a Colorado limited
liability company called ITN/ES LLC. On February 20, 1998 the Company
contributed capital to ITN/ES LLC, consisting of $200,000 in cash and
1,200,000 shares of the Company's Common Stock for its 10% interest in
ITN/ES LLC. ITN/ES LLC is entering into a new business called ITN
Electronic Substrates LLC. Rentech owns 50% of ITN Electronic
Substrates LLC. ITN Electronic Substrates LLC intends to engage in the
manufacture and sale of several types of flexible thin-film on which it
has electronically deposited metals with unique properties, such as
copper and molybdenum, that provide conductive paths to which computer
chips may be attached. The new business intends to begin its first
activities and begin production in 1998. The customers are expected to
be contract manufacturers in the computer, aerospace and medical
instrument industries, as well as large end-users which use the
substrates to manufacture their own products.
<PAGE>
PAGE 7
The Company's long-term plan is to diversify into three industry
groups centered around its three present lines of business. Rentech
plans to continue licensing its gas-to-liquids Technology in a
petrochemical group, to establish an environmental and industrial
products group that includes products such as the stains, sealers,
repellants and other coatings produced by Okon, and to develop an
advanced technology group with such technologies as the new business of
ITN Electronic Substrates LLC.
The Company is continuing its original business of licensing its
gas-to-liquids Technology, including sale of its proprietary catalyst
used in the conversion process. Licenses are granted in exchange for
license fees and ongoing royalties on the production of liquid
hydrocarbons from conversion plants that use the Technology and are
constructed and owned by licensees. Rentech has licensed its
Technology for use in India for a plant now under construction by its
Indian licensee at Arunachal Pradesh, India. Rentech is providing its
Indian licensee engineering design and technical services under
contract, and will provide such services to subsequent licensees for
their use in constructing their plants, together with engineering
services and startup operational support services on a fee basis for
licensed plants. In addition, Rentech may reserve the right to
contract for the engineering and supply the synthesis gas conversion
reactor modules that are essential to use of its Technology in
conversion plants. Rentech is not now receiving significant revenues
from its gas-to-liquids Technology.
The Rentech Technology uses as feedstock natural gas from gas
wells that are not producing or that flare gas, or synthesis gas, a
mixture of hydrogen and carbon monoxide gases, produced by gasification
of coal and other carbonaceous materials. These sources of fuel are in
abundant supply worldwide. A potential feedstock of growing importance
is the heavy, high sulphur fuels at refineries commonly known as
refinery bottoms. Other sources of feedstock include methane, a gas
collected from coal beds, as well as industrial off gases. The
Technology can provide a means of utilizing gas resources that are
currently unmarketable due to their remote locations or because of the
presence of diluents such as carbon dioxide or nitrogen.
The diesel fuel produced by using the Technology has been tested
to have a sulphur content below detectable limits and to have improved
combustion characteristics when compared to commercial No. 2 diesel
fuel. These qualities make it less polluting than presently available
diesel fuel, and, unlike alternative fuels such as methanol or
compressed natural gas, does not require any engine or vehicle
modifications for use. Based upon prices of crude oil at about $16 per
barrel, and commercial No. 2 diesel fuel at approximately $.50 per
gallon, management believes the diesel fuel can be produced and sold at
competitive prices and, particularly in view of the requirements of the
federal Clean Air Act, may be saleable at premium prices. The
Technology has the potential of reducing, in this and other countries,
dependency upon imports of crude oil and petroleum products by
converting the large fields of shut-in natural gas reserves in this
country into liquids that can be inexpensively trucked to users.
The executive offices of the Company are located at 1331 17th
Street, Suite 720, Denver, Colorado 80202, telephone (303) 298-8008,
fax (303) 298-8010.
<PAGE>
PAGE 8
Recent Developments
On January 26, and on February 9, 1998, the Company sold a total
of 200,000 shares of its Series 1998-A Preferred Stock at $10 per share
in a private placement to certain persons included among the Selling
Shareholders. The Series 1998-A Preferred Stock may be converted by
the holders into Common Stock at $1.00 per share of Common Stock as to
120,000 shares of the preferred stock and at $1.03125 per share of
Common Stock as to 80,000 shares of the preferred stock, or, if lower,
82.5% of the average closing bid of the Common Stock over the five
consecutive trading days following the date of conversion. 120,000
shares of the Series 1998-A Preferred Stock is convertible starting May
26, and the remaining 80,000 shares are convertible starting June 9,
1998.
The holders of the Series 1998-A Preferred Stock acquired, without
additional cost, warrants for the purchase of the Company's Series
1998-B Preferred Stock at $10 per share. The warrants provide for the
warrant holders, during the 18 months after the purchase of the Series
1998-A Preferred Stock, to purchase and the Company to sell 200,000
shares of the Series 1998-B Preferred Stock, and at the Company's
option, up to a maximum of 800,000 shares of the Series
1998-B Preferred Stock at $10 per share. The obligations of the
Company to sell and the warrant holders to purchase are subject to
certain objective criteria, primarily the trading volume and market
price of the Common Stock. Shares of the Series 1998-B Preferred Stock
are convertible into shares of Common Stock at 82.5% of the average
closing bid of the Common Stock for the five trading days preceding
conversion of the preferred stock into Common Stock.
Both the Series 1998-A Preferred Shares and the 1998-B Preferred
Shares accrue dividends at 9% per annum. The dividends may, at the
election of the Company, be paid in cash or shares of Common Stock at
its market price at the time of payment. The holders of the preferred
shares are entitled, in the event of liquidation, dissolution or
winding up of the Company, to receive the $10 par value plus
accumulated but unpaid dividends on the preferred shares before
distributions are made to holders of Common Stock.
The Shares offered hereby by the Selling Shareholders include a
maximum of 13,333,334 Shares of Common Stock issuable upon conversion
of the Series 1998-A Preferred Stock and the Series 1998-B Preferred
Stock. For purposes of determining the number of Shares to be offered
by the Selling Shareholders who hold the preferred shares, the number
of Shares calculated to be issuable upon conversion of the preferred
stock is based on a low conversion price. That conversion price, which
is used merely for the purposes of setting forth a number for this
Prospectus, is 75% of the average closing bid price of the Common Stock
over the five consecutive trading days preceding the first sale of
preferred stock on January 26, 1998. That average price was $1.00.
The conversion price used for this Prospectus is therefore $.75. The
number of Shares of Common Stock issuable upon conversion of the
preferred stock is subject to adjustment depending on the market price
on the date of conversion and could be materially less or more than the
number estimated in this Prospectus. The exact number depends on
future events that cannot be predicted by the Company. The unknown
factors include the amount of the preferred stock that is converted and
the future market price of the Common Stock, and whether dividends on
the preferred stock are paid in Shares of Common Stock or cash.
<PAGE>
PAGE 9
RISK FACTORS
This Prospectus contains statements that constitute
"forward-looking statements" within the meaning of Section 21E of the
Exchange Act and Section 27A of the Securities Act. The words
"expect," estimate," "anticipate," "predict," "believe," and similar
expressions and variations thereof are intended to identify
forward-looking statements. Such statements appear in a number of
places in this filing and include statements regarding the intent,
belief or current expectations of the Company, its directors or
officers with respect to, among other things (a) trends affecting the
financial condition or results of operations of the Company, and (b)
the business and growth strategies of the Company. Readers are
cautioned that any such forward-looking statements are not guarantees
of future performance and involve risks and uncertainties, and that
actual results may differ materially from those projected in this
Prospectus, for the reasons, among others, set forth in the following:
1. Lack of Profitable Operations. From inception on December 18,
1981, through September 30, 1997, the Company has sustained losses
aggregating $9,735,824. For the year ended September 30, 1997 and the
nine month period ended September 30, 1996, the Company had net losses
of $1,375,686 and $392,478, respectively. For the three months ended
December 31, 1997 and 1996, the Company recorded losses of $503,020 and
$257,540, respectively. The increase of approximately 350% in loss for
the twelve month period in 1997 compared to the nine month period in
1996 is due to a decrease in contract revenues and license fees of
$295,176, increase in interest expense of approximately $289,000 from
the addition of $1,250,500 in debt and extraordinary gain in 1996 of
$200,434. Increases in 1997 costs over 1996 are attributable in
general to the longer fiscal period in 1997 and in particular to public
relations costs and approximately $100,000 in hiring costs of a chief
financial officer. Profit contributed by Okon from its acquisition in
March 1997 partially offset the increases in costs due to the longer
fiscal period. The losses since inception raise substantial doubt
about the ability of the Company to continue as a going concern, as
stated in the report of independent certified public accountants
contained in the September 30, 1997 audited financial statements.
There are no assurances that the Company will complete acquisitions of
revenue producing businesses or that the Company's licensees will
complete construction of plants using the Technology, or that any
gas-to-liquids conversion plants that are completed will be operated
profitably or provide engineering design fees, license fees or
royalties for the Company.
2. Economic Feasibility of Gas-to-Liquids Technology Not Assured.
Whether any full-scale conversion plant using the Technology can be
profitably operated depends upon the availability of low-cost feedstock
and the economic feasibility or efficiency of the Technology, as well
as a ready market for the end products (primarily premium diesel fuel,
naphthas and waxes) at reasonable prices. The diesel fuel produced by
the Technology has not been subjected to long-term engine tests to
determine if there are any adverse effects. No in-depth cost or price
studies have been prepared by independent third parties for the
Company. Any significant decrease in prices of crude oil below
approximately $16 or of commercial No. 2 diesel fuel below
approximately $.50 per gallon could have a material adverse effect upon
the economic potential of the Technology.
<PAGE>
PAGE 10
3. Dependence upon Management. At this stage of the Company's
development, economic success of the gas-to-liquids Technology depends
upon design of gas conversion plants and their startup to achieve
optimal process plant operations, and establishment of the Company's
advanced technology business. Both require knowledge, skills, and
relationships unique to the Company's technical personnel. Moreover,
to successfully compete with its gas conversion Technology and advanced
technology, the Company will be required to engage in continuous
research and development regarding processes, products, markets and
costs. Loss of the services of the executive officers of the Company,
particularly Drs. Charles B. Benham or Mark S. Bohn due to their
technical expertise and knowledge related to the gas conversion
Technology, could be expected to have a material adverse effect upon
the Company. The Company's employment contract with Dr. Benham,
expires on March 31, 1999. It has no employment contract with Dr. Bohn
who works for the Company on a part-time basis as needed.
4. New Business Risks Associated With Entry into Advanced
Technology Business. The likelihood of success of the Company's entry
into the advanced technology business of producing and selling flexible
thin-film substrates by electronic deposition through ITN Electronic
Substrates LLC, and the Company's proposed entry, through ITN/ES LLC
and other entities, into other new businesses involving advanced
technology, must be considered in view of the problems, expenses,
difficulties, complications and delays frequently encountered with
starting up a new business, including the development of new technology
and the marketing of new products. The Company has no history of
operations in these lines of business upon which to evaluate its
prospects for future operating or financial success.
5. Risk of Technological and Regulatory Change and Requirement
for New Products. The market for advanced technology products is
characterized by rapidly changing technology, new legislation and
regulations, and evolving industry standards. The introduction of
products embodying new technology, the adoption of new legislation or
regulations, or the emergence of new industry standards could render
the Company's products and future products, if any, obsolete and
unmarketable. The success and growth of the Company will depend, in
part, upon its ability to anticipate changes in technology, market
needs, law, regulations, and industry standards, and to successfully
develop and introduce new and enhanced products on a timely basis. The
Company will need to devote a substantial amount of its efforts to
research and development as well as to sales and marketing.
6. Effect of Competition. The products of the gas-to-liquids
Technology will compete with other petroleum products, including
products produced by similar methods. To a great extent, competition
in this business will be based upon price, although compliance with
environmental laws may create demand for the Company's low aromatic,
sulphur-free diesel fuel even at premium prices. Others have and are
actively seeking to develop technology that will enable results similar
to the Company's processes for conversion of gas-to-liquid
hydrocarbons. The most likely competition will come from major
corporations in the oil and gas and synthetic fuel industries that have
vastly greater technical and financial resources than the Company. The
stains, sealers and coatings industry is highly competitive and has
historically been subject to intense price competition. It is
estimated that there are approximately 800 coatings manufacturers in
the United States, many of which are small companies that provide
intense competition within regional and local markets, especially with
<PAGE>
PAGE 11
respect to lower price coatings and custom made specialty items
required on a short-term delivery basis. The Company's primary
competition is approximately one dozen other manufacturers, of
which at least five are large, better capitalized, and have more
extensive distribution networks. Other manufacturers are large
diversified corporations, the assets of which are vastly greater than
those of the Company, which compete on a nationwide basis. The
Company's overall position in the coatings industry, as one of the
smallest manufacturers, is minor. The advanced technology industry
producing thin-film substrates by electronic deposition is highly
competitive. Competitors include at least a dozen United States and
international competitors, many of which are large diversified
businesses, and the assets of which are greatly superior to those of
the Company. Competition for the advanced technology products is based
upon price, quality, and quantity of the products, as well as
reputation, none of which have been established by the Company because
it is only now entering into this business.
7. Need for Inexpensive Feedstock to Produce Gas-to-Liquids
Products that Are Competitively Priced. Successful exploitation of the
Company's gas-to-liquids Technology depends upon the availability of
substantial quantities of carbon-bearing, low-cost feedstock for plants
that use the Technology. Management believes such feedstock gas will
be readily available from sources such as natural gas wells that are
not producing gas because of remote locations, and from other sources
such as synthesis gas produced by gasification of coal and refinery
bottoms, as well as industrial off gases. However, in the event
low-cost gas cannot be obtained, then plants using the Technology may
not be able to produce products for sale at competitive prices.
Although the cost of diesel fuel produced at the plants may require
that it be sold at prices somewhat higher than competing diesel fuels,
management expects that many users, particularly those subject to the
increasingly strict mandates of the Clean Air Act, will pay a premium.
If prices for crude oil are in the range of $16 per barrel and diesel
fuel at approximately $.50 per gallon or higher, management believes
that the diesel fuel produced using the Technology can be priced
competitively, but no such assurance can be given. Also, should oil or
commercial No. 2 diesel fuel prices both decrease significantly, any
market for the Company's diesel fuel that may hereafter exist could be
adversely affected.
8. Lack of Adequate Capital to Exploit the Gas-to-Liquids
Technology. The capital cost of gas conversion plants and natural gas
fields or other sources of feedstock that use the Company's Technology
requires more capital than is available to the Company or to many of
its potential licensees. While the Company does not presently plan to
build its own plants for use of the Technology, and expects its
licensees to acquire feedstock and build and own plants for which they
are licensed by the Company, many potential licensees are unable to
finance the construction costs and acquire feedstock, or to do so
readily. These limitations have slowed and will continue to delay use
of the Technology and resulting revenues to the Company from use of
the Technology unless the Company is able to join with other better
capitalized companies to commercially exploit the Technology. There
are no assurances that such joint arrangements will be available or
acceptable to the Company.
9. Lack of End Product Purchase Contracts. The Company has
previously contacted various potential purchasers of the products of
the gas-to-liquids Technology, primarily users of diesel fuel, and
<PAGE>
PAGE 12
potential purchasers of the thin-film substrates, but has no contracts
for purchase of such end products. The Company's gas-to-liquids
licensees are responsible for marketing products from gas conversion
plants constructed by them. Because the diesel fuel produced is
relatively non-polluting, it is believed that metropolitan
transportation districts and other users of fuel in urban areas having
air pollution problems may be interested in purchasing such fuel,
possibly at a premium over the price of commercial diesel fuel.
However, no such assurance can be given.
10. Risk of Expatriation Laws. In its offshore operations
involving the gas-to-liquids Technology, the Company expects it will
usually be paid design contract fees, license fees, royalties and other
compensation denominated in the currency of the subject country. The
Company will thus be subject to the risk of fluctuation of currency
exchange rates. Whenever possible, however, management intends to
negotiate payment in U.S. dollars. In addition, some countries have
laws that may adversely affect the ability of the Company to remove
funds from that country, may impose taxes upon such removal, or limit
the amount of the payments that a licensee can make to the Company.
11. Uninsured Losses Related to the Gas-to-Liquids Technology.
Certain types of losses (generally losses of a catastrophic nature such
as damage to a gas conversion plant in which the Company may hold an
interest caused by fire, explosion, war, earthquakes and floods) are
either uninsurable or not economically insurable. Should an uninsured
or partially insured loss occur, the Company could suffer a loss of
invested capital and any profits that might otherwise have been
anticipated.
12. Limitation on Protection of Intellectual Property. The
Company relies on a combination of patent, trade secret, copyright and
trademark law, nondisclosure agreements and technical security measures
to protect its intellectual property rights in its lines of business.
There are no assurances that these rights or any additional patents
will be adequate to protect the Company's interest in present and any
future intellectual property. Patents and copyrights may be contested
by competitors and held invalid or not effective to preclude others
from using similar concepts and functionally similar processes. The
protection afforded to intellectual property by other nations is
generally not as effective as that provided within the United States.
13. No Expectation of Dividends. No dividends have been paid on
the Company's Common Stock since inception, and it is highly unlikely
that any dividends will be paid in the near term due to existing
capital needs. However, if the business plan is successful, the
Company may generate substantial revenue from its lines of business,
which, barring unanticipated capital commitments, is expected to allow
payment of dividends. No assurance can be given, however, that the
Company will ever pay, or be in a position to pay dividends.
14. Potential Dilution Due to Exercise of Stock Options and
Warrants and Additional Private Offerings. The Company has committed
to issue a substantial number of shares of Common Stock upon exercise
of presently outstanding stock options, warrants and preferred stock.
The Company may issue additional shares of its Common Stock or
warrants for the purchase of Common Stock to raise operating capital or
acquire other businesses or assets. Issuance of additional shares of
Common Stock will reduce the percentage ownership interest in the
Company represented by shares of Common Stock acquired by purchasers
and may dilute the value of their interest in the Company.
<PAGE>
PAGE 13
15. Potential Dilution of Shareholder Rights by Issuance of
Preferred Stock. The Company is authorized to issue up to 1,000,000
shares of preferred stock, par value $10 per share and has entered into
arrangements for issuing up to all of the preferred stock. See "RECENT
DEVELOPMENTS." Preferred stock can be issued in one or more series,
the terms of which are determined at the time of issuance by the
board of directors without any requirement for shareholder approval.
Such rights may include voting rights, preferences as to dividends and,
upon liquidation, conversion and redemption rights, and mandatory
redemption provisions pursuant to sinking funds or otherwise.
Conversion of the preferred stock or issuance of preferred stock in the
future could affect the rights of the holders of Common Stock and
therefore reduce the value of the Common Stock. Rights could also be
granted to holders of preferred stock issued after this date that could
reduce the attractiveness of the Company as a potential takeover
target. See "DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK."
16. Deterrence of Tender Offers by Fair Price Provisions. The
Company's Articles of Incorporation include provisions designed to
assure shareholders, to the extent possible, that any hostile takeover
attempt or merger of the Company with a significant shareholder or its
affiliate will result in shareholders receiving a fair value for their
securities. These provisions include grouping of the board of
directors into three classes with staggered terms; a requirement that
directors may be removed without cause only with the approval of the
holders of 66-2/3% of the outstanding voting power of the capital stock
of the Company; and a requirement that the holders of not less than
66-2/3% of the voting power of the outstanding capital stock of the
Company approve certain business combinations of the Company with any
holder of more than 10% of such voting power or an affiliate of any
such holder unless the transaction is either approved by at least a
majority of the uninterested and unaffiliated members of the board of
directors or unless certain minimum price and procedural requirements
are met. These provisions could deter a hostile tender offer by a
third party for the purchase of some or all of the Company's
outstanding securities and could have the effect of entrenching
management. See "DESCRIPTION OF COMMON STOCK AND PREFERRED
STOCK."
17. Volatility of Stock Prices; Penny Stock Rules. The
over-the-counter markets for securities such as the Company's Common
Stock historically have experienced extreme price and volume
fluctuations. These broad market fluctuations, variations in the
Company's results of operations, and other economic and industry trends
may adversely affect the market price of the Company's Common Stock.
Although the Common Stock is listed for quotation on the NASDAQ
SmallCap Market, there are no assurances that the Common Stock will
meet the minimum bid price of $1 or other listing requirements.
Accordingly, there can be no assurance that the Common Stock will
remain eligible for quotation on NASDAQ. In the event of ineligibility
and delisting, the Common Stock would become subject to rules of the
Securities and Exchange Commission regulating broker-dealer practices
in connection with transactions in "penny stocks." The penny stock
rules may make many brokers unwilling to engage in transactions in the
Company's Common Stock because of the added burdens imposed on the
broker by those rules to make disclosures and to determine and
establish the suitability of each prospective purchaser of the Common
Stock. The penny stock rules may make it more difficult for purchasers
of Common Stock in this offering to dispose of their securities and
could adversely affect the market price of the Common Stock.
<PAGE>
PAGE 14
USE OF PROCEEDS
The Shares are being offered for the account of Selling
Shareholders, and the Company will not receive any proceeds from the
sale of Shares by them.
The Company has applied the net proceeds of approximately $481,554
that it received from the sale of the Common Stock associated
with the Convertible Notes to redemption of its preferred shares issued
in 1997. The Company anticipates applying the net proceeds of
approximately $1,765,000 that it received from the sale of the Series
1998-A Preferred Shares as follows:
<TABLE>
<CAPTION>
Purpose Proceeds
------- --------
<S> <C>
Expansion of gas-to-liquids business $ 465,000
Consulting fees and expenses 400,000
Contribution for 10% of ITN/ES LLC 200,000
Working capital of ITN/ES LLC 100,000
Working capital of ITN Electronic Substrates LLC 300,000
Payment of long-term promissory notes of Okon 300,000
----------
Total $1,765,000
</TABLE>
If all of the Warrants are exercised and all the warrants to
purchase Series 1998-B Preferred Shares are exercised, of which there
is no assurance, the Company would receive approximately $7,400,000
as the net proceeds. The Company anticipates that such net proceeds
would be applied for the following purposes and in the following
amounts:
<TABLE>
<CAPTION>
Purpose Proceeds
------- --------
<S> <C>
Expansion of gas-to-liquids business $1,400,000
Acquisition of additional interests
in ITN/ES LLC 3,000,000
Additional working capital for ITN
Electronic Substrates LLC 3,000,000
----------
Total $7,400,000
</TABLE>
The foregoing information as to the use of the net offering
proceeds represents management's best estimate based upon current
conditions as to how the net proceeds would be used. The Company
reserves the right to revise the application of the net proceeds. Any
amounts not used for these purposes will be used for working capital
and general corporate purposes.
<PAGE>
PAGE 15
SELLING SHAREHOLDERS
A total of 15,789,544 of the Shares registered pursuant to this
Registration Statement underlie the Convertible Notes, Warrants, Series
1998-A Preferred Stock and warrants to purchase the Series
1998-B Preferred Stock, all of which are issued and outstanding. The
remaining 2,044,550 Shares are issued and outstanding. The Convertible
Notes, Warrants, Series 1998-A Preferred Stock, Warrants to purchase
Series 1998-B Preferred Stock, and 2,044,550 Shares were issued by the
Company in transactions that the Company reasonably believes to be exempt
from the registration requirements of the Securities Act of 1933, as
amended, to persons reasonably believed by the Company to be "accredited
investors" (as defined in Rule 501(a) of the Securities Act of 1933, as
amended).
The Convertible Notes and the Warrants for the purchase of 175,909
Shares are presently subject to conversion and if not converted by April
20, 1998, and if the average closing bid price for the 5 trading days
preceding that date is $.50 or more, will be converted then at $.33 per
share. If these conditions do not occur, the Convertible Notes will be
converted, no later than October 9, 1998, into Shares of Common Stock at
the lower of 70% of the average closing bid price of the Common Stock for
the 5 trading days immediately preceding the conversion date or $.33 per
share.
Of the Warrants, those for the purchase of up to 200,000 shares of
Common Stock may be exercised until March 7, 1999 at $.25 per share. The
remaining Warrants for the purchase of up to 200,000 shares of Common
Stock may be exercised starting 120 days after issuance, or May 26 and
June 9, 1998, and ending February 9, 2003. The exercise price of the
latter Warrants is $1.00.
The Series 1998-A Preferred Stock may be converted into Common
Stock starting May 26 and June 9, 1998 as to 120,000 and 80,000 Shares,
respectively. The conversion price is $1.00 and $1.03125 for 120,000 and
80,000 shares, respectively, of the preferred stock, or 82.5% of the
average closing bid price of the Common Stock over the five consecutive
trading days preceding the date of conversion, whichever is lower.
The warrants for purchase of the Series 1998-B Preferred Stock may
be exercised until July 26 and August 9, 1999. The conversion price is
82.5% of the average closing bid price of the Common Stock over the five
consecutive trading days preceding the date of conversion.
The shares of Common Stock owned by the Selling Shareholders and the
shares of Common Stock (the "Shares") underlying the Convertible Notes,
stock purchase warrants and preferred shares held by them are being
offered by the Selling Shareholders identified in the following table.
<PAGE>
PAGE 16
<TABLE>
<CAPTION>
Number of Shares
Number of to be Beneficially Owned
Name of Number of Shares Shares That On Completion of the Offering
Selling Beneficially Owned May Be % of
Shareholder Record Indirect Offered(1) Record Indirect Class
- ----------------- ------ -------- ---------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
Marte W. Anderson & Shireen --- 5,333,334 666,667 --- --- 0
Anderson
The Augustine Fund, L.P. --- 6,666,667 6,666,667 --- --- 0
William K. Beaucamp and
Timothy A. Beaucamp --- 40,303 40,303 --- --- 0
Charles C. Bruner --- 41,000 41,000 --- --- 0
Steven F Burns and
Maureen E. Burns --- 120,909 120,909 --- --- 0
Andrew Cambron --- 40,303 40,303 --- --- 0
J.C. Carpenter --- 80,606 80,606 --- --- 0
William J. Cleary --- 40,303 40,303 --- --- 0
Denora Corp. A.E.C. --- 104,788 104,788 --- --- 0
Ellen W. Epstein --- 40,303 40,303 --- --- 0
Alma L. Fleutsch --- 3,259 3,259 --- --- 0
The Global Funding Group, L.L.C. --- 266,000 200,000 --- --- 0
Global Funding Public
Relations Services, Ltd. 66,000 200,000 66,000 --- --- 0
Joanne R. Gregory --- 80,606 80,606 --- --- 0
The Hamilton Fund, L.L.C. --- 1,333,333 1,333,333 --- --- 0
Hyett Capital Ltd. --- 25,000 25,000 --- --- 0
G. Scott Howard --- 201,515 201,515 --- --- 0
Kent T. Hultquist 63,375 120,909 120,909 63,375 --- *
Donald G. Hunter 307,600 161,212 161,212 307,600 --- 1.0
ITN/ES LLC 1,200,000 --- 1,200,000 --- --- 0
Richard E. Jung --- 40,303 40,303 --- --- 0
Lucas Liakos --- 80,606 80,606 --- --- 0
B. Lombardi --- 40,303 40,303 --- --- 0
Tara Grau Martin --- 80,606 80,606 --- --- 0
Sharon Mencin and Douglas
Tripple --- 80,606 80,606 --- --- 0
George E. Miller and
Karen E. Miller --- 60,454 60,454 --- --- 0
J. Henry Morgan --- 20,000 20,000 --- --- 0
Phillip S Mushlin 366,950 120,909 120,909 366,950 --- 1.2
Eugene L. Neidiger --- 42,000 42,000 --- --- 0
Regina L. Neidiger --- 6,400 6,400 --- --- 0
William Oyen and
Carolyn S. Oyen,
TTEE FBO Oyen Family
Joint Trust --- 211,591 211,591 --- --- 0
Robert L. Parrish --- 19,000 19,000 --- --- 0
Anthony B. Petrelli --- 41,000 41,000 --- --- 0
Thomas F. Pierson, P.C. --- 40,303 40,303 --- --- 0
Pro Future Special Equities
Fund, L.P. --- 5,333,334 4,666,667 --- --- 0
Stanley B. Ranch --- 120,909 120,909 --- --- 0
Carolyn Mia Reed --- 175,000 175,000 --- --- 0
Dr. Stuart Sklarek --- 161,212 161,212 --- --- 0
Robert L. Surdam 61,000 80,606 80,606 61,000 --- 0
Douglas W. Tripple --- 57,000 57,000 --- --- 0
Gregory D. Tripple and
Maria-Elena Sandoval-Duque --- 68,515 68,515 --- --- 0
Harvey D. Tripple and
Beverly A. Tripple --- 201,515 201,515 --- --- 0
John J. Turk, Jr. --- 44,603 44,603 --- --- 0
Robert E. Warner and
Patricia J. Warner --- 40,303 40,303 --- --- 0
Howard, Weil, Labouisse,
Friedrichs, Inc. 100,000 --- 100,000 --- --- 0
---------
Total 17,834,094(1)
</TABLE>
---------------
[FN]
*Less than 1%
<F1> Represents up to a maximum of 15,789,554 shares of Common Stock
issuable upon conversion of the Convertible Notes, exercise of the
Warrants, conversion of Series 1998-A Preferred Stock, exercise of
of warrants to purchase Series 1998-B Preferred Stock, plus
2,044,550 Shares issued and outstanding. For purposes of
determining the number of Shares to be offered by such Selling
Shareholders, the number of Shares calculated to be issuable upon
conversion of the preferred stock is based on a low conversion
price. That conversion price, which is used merely for the
purposes of setting forth a number for this Prospectus, is 75% of
the average closing bid price for the Common Stock over the five
consecutive trading days preceding the first sale of preferred
stock on January 26, 1998. That average price was $1.00. The
conversion price used for this Prospectus is therefore $.75. The
number of Shares of Common Stock issuable upon conversion of the
preferred stock is subject to adjustment depending on the market
price on the date of conversion and could be materially less or
more than the number estimated in this Prospectus. The exact
number depends on future events that cannot be predicted by the
Company. The unknown factors include the amount of the preferred
stock that is converted, the future market price of the Common
Stock, and whether dividends on the preferred stock are paid in
Shares of Common Stock or cash.
</FN>
<PAGE>
PAGE 17
To the knowledge of the Company, none of the other Selling
Shareholders nor any officers, directors or employees of a Selling
Shareholder have held any office, position or other material
relationship with the Company, its predecessors or affiliates during
the past three years.
Each Selling Shareholder has represented that he purchased the
Common Stock for investment and with no present intention of
distributing or reselling such Shares unless registered for resale.
However, in recognition of the fact that holders of restricted
securities may wish to be legally permitted to sell their Shares when
they deem appropriate, the Company has filed with the Commission under
the Securities Act a Form S-3 registration statement of which this
Prospectus forms a part with respect to the resale of the Shares from
time to time in the over-the-counter market or in privately negotiated
transactions. The Company has agreed to prepare and file such
amendments and supplements to the Registration Statement and to use its
best efforts to obtain effectiveness of the Registration Statement and
to keep the Registration Statement effective until all the Shares
offered hereby have been sold pursuant thereto, until such Shares are
no longer, by reason of Rule 144 under the Securities Act or any other
rule of similar effect, required to be registered for the sale thereof
by the Selling Shareholders, or for a period of 24 months, whichever
occurs first.
Certain of the Selling Shareholders, their associates and
affiliates may from time to time be customers of, engage in
transactions with, and/or perform services for the Company or its
subsidiaries in the ordinary course of business.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time to
purchasers directly by the Selling Shareholders. Alternatively, the
Selling Shareholders may from time to time offer the Shares to or
through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders or the purchasers of Shares
for whom they may act as agents. The Selling Shareholders and any
underwriters, broker/dealers or agents that participate in the
distribution of Shares may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of the Shares
by them deemed to be "underwriters" within the meaning of the
Securities Act and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agents
may be deemed to be underwriting discounts and commissions under the
Securities Act.
The Shares offered hereby may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the
time of sale, any varying prices determined at the time of sale, or at
negotiated prices. The sale of the Shares may be effected in
transactions (which may involve crosses or block transactions) (i) on
any national or international securities exchange or quotation services
on which the Shares may be listed or quoted at the time of sale, (ii)
in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or in the over-the-counter market or (iv) through the
writing of options. At the time a particular offering of the Shares is
<PAGE>
PAGE 18
made, a prospectus supplement, if required, will be distributed which
will set forth the aggregate amount and type of Shares being offered
and the terms of the offering, including the name or names of any
underwriters, broker/dealers of agents, any discounts, commissions and
other terms constituting compensation from the Selling Shareholders and
any discounts, commissions or concessions allowed or reallowed or paid
to broker/dealers. Selling Shareholders may also sell such shares
pursuant to Rule 144 or Rule 144A under the Securities Act of 1933 if
the requirements for the availability of such rules have been
satisfied.
To comply with the securities laws of certain jurisdictions, if
applicable, the Shares will be offered or sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition,
in certain jurisdictions the Shares may not be offered or sold unless
they have been registered or qualified for sale in such jurisdictions
or any exemption from registration or qualification is available and
is complied with.
The Selling Shareholders will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the
Shares by the Selling Shareholders. The foregoing may affect the
marketability of the Shares.
Pursuant to the Registration Rights Agreement, all expenses of the
registration of the Shares will be paid by the Company, including,
without limitation, Commission filing fees and expenses in compliance
with state securities or "blue sky" laws; provided, however, that the
Selling Shareholders will pay all underwriting discounts and selling
commissions, if any. The Selling Shareholders will be indemnified by
the Company against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK
The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock, $.01 par value per share, and
1,000,000 shares of preferred stock, $10 par value per share. A quorum
for purposes of meetings of common shareholders consists of a majority
of the issued and outstanding shares of Common Stock, and once a quorum
is established, action of a routine nature may properly be taken by a
majority of the shares represented in person or by proxy at the
meeting. Most major corporate transactions such as mergers,
consolidations, sales of all or substantially all assets, and certain
amendments to the articles of incorporation require approval by the
holders of two-thirds of the issued and outstanding shares of Common
Stock entitled to vote. The Company's board of directors is
authorized to issue shares of Common Stock and preferred stock without
approval of shareholders. Shares of preferred stock may be issued in
one or more series, the terms of which will be determined at the time
of issuance by the board of directors without any requirement for
shareholder approval. Such rights may include voting rights,
preferences as to dividends, and upon liquidation, conversion and
redemption rights, and mandatory redemption provisions pursuant to
sinking funds or otherwise. The Company has issued 200,000 shares
of Series 1998-A Preferred Stock, and may issue 800,000 shares of
Series 1998-B Preferred Stock. See "SUMMARY-Recent Developments."
<PAGE>
PAGE 19
The Shares of Common Stock covered by this Prospectus are fully
paid and nonassessable. Holders of the Common Stock have no preemptive
rights. Each stockholder is entitled to one vote for each share of
Common Stock held of record by such stockholder. There is no right to
cumulate votes for election of directors. Upon liquidation of the
Company, the assets then legally available for distribution to holders
of the Common Stock will be distributed ratably among such shareholders
in proportion to their stock holdings. Holders of Common Stock are
entitled to dividends when, as and if declared by the Board of
Directors out of funds legally available therefor. While shares of
the Series 1998-A and Series 1998-B Preferred Stock are outstanding, no
dividends may be paid on the Common Stock unless dividends on the
Preferred Stock have been paid, and no shares of Common Stock may be
purchased or funds set aside for that purpose by the Company except in
amounts of less than $100,000 per year.
LEGAL OPINIONS
Brega & Winters P.C., 1700 Lincoln Street, Suite 2222, Denver,
Colorado 80203 has rendered an opinion as to the legality of the Shares
issued to the Selling Shareholders.
EXPERTS
The financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-KSB for the
twelve months ended September 30, 1997 and the nine-month period ended
September 30, 1996 have been audited by BDO Seidman, LLP, independent
certified public accountants, as stated in their report (which
contained an explanatory paragraph relative to the going concern
uncertainty), which is incorporated herein, and has been so
incorporated in reliance upon such report given upon the authority of
the said firm as experts in accounting and auditing.
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING HEREIN
CONTAINED AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT ANY INFORMATION CONTAINED HEREIN IS
CORRECT AS TO ANY OF THE TIME SUBSEQUENT TO ITS DATE. HOWEVER, THE
COMPANY HAS UNDERTAKEN TO AMEND THE REGISTRATION STATEMENT OF WHICH
THIS PROSPECTUS IS A PART TO REFLECT ANY FACTS OR EVENTS ARISING AFTER
THE EFFECTIVE DATE THEREOF WHICH INDIVIDUALLY OR IN THE AGGREGATE
REPRESENT A FUNDAMENTAL CHANGE IN THE INFORMATION SET FORTH IN THE
REGISTRATION STATEMENT. IT IS ANTICIPATED, HOWEVER, THAT MOST UPDATED
INFORMATION WILL BE INCORPORATED HEREIN BY REFERENCE TO THE COMPANY'S
REPORTS FILED UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"DOCUMENTS INCORPORATED BY REFERENCE."
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS
TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
PAGE 20
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Available Information 5
Documents Incorporated by Reference 5
Summary 6
Risk Factors 8
Use of Proceeds 14
Selling Shareholders 15
Plan of Distribution 17
Description of Common Stock and Preferred Stock 18
Legal Opinions 19
Experts 19
</TABLE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
Item 14. Other Expenses of Issuance and Distribution.
<S> <C>
Registration Fee - Securities and Exchange Commission $ 6,247.51
Legal Fees and Disbursements* 25,000.00
Accounting Fees and Disbursements* 5,000.00
Legal Fees and Expenses in Connection with Blue Sky Filings* 1,750.00
Miscellaneous* 375.00
-----------
Total $ 38,372.51
===========
- --------------------
<FN>
* Estimated.
</FN>
</TABLE>
Item 15. Indemnification of Directors and Officers.
The only charter provision, bylaw, contract, arrangement or
statute under which any director, officer or controlling person of
Registrant is insured and indemnified in any manner as such is as
follows:
<PAGE>
PAGE 21
(a) Registrant has the power under the Colorado Corporation Code
to indemnify any person who was or is a party or is threatened to be
made a party to any action, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was a
director, officer, employee, fiduciary, or agent of Registrant or was
serving at its request in a similar capacity for another entity,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection therewith if he acted in good faith and in a manner he
reasonably believed to be in the best interest of the corporation and,
with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. In case of an action
brought by or in the right of Registrant such persons are similarly
entitled to indemnification if they acted in good faith and in a manner
reasonably believed to be in the best interests of Registrant but no
indemnification shall be made if such person was adjudged to be liable
for negligence or misconduct in the performance of his duty to
Registrant unless and to the extent the court in which such action or
suits was brought determines upon application that despite the
adjudication of liability, in view of all circumstances of the case,
such person is fairly and reasonably entitled to indemnification. Such
indemnification is not deemed exclusive of any other rights to which
those indemnified may be entitled under the Articles of Incorporation,
Bylaws, agreement, vote of shareholders or disinterested directors, or
otherwise.
(b) The Articles of Incorporation and Bylaws of Registrant
generally require indemnification of officers and directors to the
fullest extent allowed by law.
(c) Paragraph 3 of the Certificate of the Selling Shareholders,
filed as Exhibit 1 to this Registration Statement, contains provisions
by which Registrant and its controlling persons are indemnified
against certain losses, claims, expenses and liabilities under the
Securities Act of 1933, as amended.
Item 16. Exhibits.
The following exhibits are filed as part of this Registration
Statement:
<TABLE>
<CAPTION>
Exhibit Sequential
Number Document Page Number
<S> <C> <C>
- ------- -------- -----------
EX-1 Form of Certificate of Selling Shareholders (incorporated by reference
from Registrant's Form S-3 Registration Statement No. 333-35571,
Exhibit 1, filed with the Securities and Exchange Commission on
September 12, 1997).
EX-3.(i).1 Restated and Amended Articles of Incorporation, dated January 4, 1991
(incorporated herein by reference from the exhibits to Amendment
No. 2 to Registrant's Form S-18 Registration Statement No. 33-37150-D
filed with the Securities and Exchange Commission on January 18, 1991).
<PAGE>
PAGE 22
EX-3.(i).2 Articles of Amendment dated April 5, 1991 to the Restated and Amended
Articles of Incorporation (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K dated August 10,
1993 filed with the Securities and Exchange Commission).
EX-3.(i).3 Articles of Amendment to Articles of Incorporation - Preferences,
Limitations and Relative Rights of Convertible Preferred Stock,
Series 1998-A (incorporated herein from Registrant's Form 8-K
dated March 2, 1998 filed with the Securities and Exchange
Commission on March 2, 1998).
EX-3.(i).4 Articles of Amendment to Articles of Incorporation - Preferences, Limitations
and Relative Rights of Convertible Preferred Stock, Series 1998-B
(incorporated herein from Registrant's Form 8-K dated March 2, 1998
filed with the Securities and Exchange Commission on March 2, 1998).
EX-3.3 Bylaws as amended, (incorporated herein by reference from the exhibits
to Registrant's Form S-18 Registration Statement No. 33-37150-D filed
with the Securities and Exchange Commission on January 18, 1991).
EX-4 Form of Placement Agent Warrant for the purchase of 58,300 shares of Common
Stock (incorporated herein from Registrant's Form 10-KSB dated December 29,
1997, as Exhibit 4.1, filed with the Securities and Exchange Commission on
December 29, 1997).
EX-4.1 Form of Convertible Promissory Notes (incorporated herein from Registrant's
Form 10-KSB dated December 29, 1997, as Exhibit 4.2, filed with the
Securities and Exchange Commission on December 29, 1997).
EX-4.2 Form of Warrant to Purchase 200,000 Shares of Common Stock (incorporated
herein from Registrant's Form 8-K dated March 2, 1998 filed with the
Securities and Exchange Commission on March 2, 1998).
EX-4.3 Form of Registration Rights Agreement dated October 1997 (incorporated herein
from Registrant's Form 8-K dated March 2, 1998 filed with the Securities
and Exchange Commission on March 2, 1998).
EX-4.4 Form of Registration Rights Agreement dated February 1998 (incorporated herein
from Registrant's Form 8-K dated March 2, 1998 filed with the Securities
and Exchange Commission on March 2, 1998).
EX-4.5 Form of Warrant to Purchase Series 1998-B Preferred Shares dated February 9,
1998 for purchase of 800,000 Shares of Series 1998-B Preferred Stock
(incorporated herein from Registrant's Form 8-K dated March 2, 1998,
filed with the Securities and Exchange Commission on March 2, 1998).
EX-5 Opinion of Brega & Winters, P.C.
EX-10.1 Profit Sharing Plan (incorporated herein by reference from the exhibits
to Registrant's Form S-18 Registration Statement No. 33-37150-D filed
with the Securities and Exchange Commission on or about October 30, 1990).
EX-10.2 1990 Stock Option Plan (incorporated herein by reference from the
exhibits to the Company's Registration Statement No. 33-37150-D filed
with the Securities and Exchange Commission on Form S-18 dated
April 12, 1992).
EX-10.3 1994 Stock Option Plan (incorporated herein by reference from the
exhibits to Post-Effective Amendment No. 5 to Registrant's Form S-18
on Form SB-2 Registration Statement No. 33-37150-D filed with the
Securities and Exchange Commission on or about September 19, 1994).
EX-10.4 1996 Stock Option Plan (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K dated December 18,
1996 filed with the Securities and Exchange Commission).
<PAGE>
PAGE 23
EX-10.5 Employment Contracts with Charles B. Benham, Dennis L. Yakobson and
Ronald C. Butz dated November 14, 1994 (incorporated herein by refer-
ence from the exhibits to Registrant's Current Report on Form 8-K dated
November 14, 1994 filed with the Securities and Exchange Commission).
EX-10.6 Articles of Organization of ITN Electronic Substrates LLC dated August 4,
1997 (incorporated herein by reference from the exhibits to Registrant's
Amendment No. One on Form 10-KSB/A dated October 31, 1997 to Form 10-KSB
for the Transition Period ended September 30, 1996).
EX-10.7 License to Donyi Polo Petrochemicals Pty dated June 25, 1994
(incorporated herein by reference from the exhibits to Registrant's
Amendment No. One on Form 10-KSB/A dated October 31, 1997 to Form 10-KSB
for the Transition Period ended September 30, 1996).
EX-23.1 Consent of Independent Certified Public Accountants.
EX-23.2 Consent of Brega & Winters P.C. (included in Exhibit 5).
EX-99.1 Letter of Intent between Rentech, Inc. and ITN Energy Systems, Inc. dated
October 17, 1996 (incorporated herein by reference from the exhibits to
Registrant's Current Report on Form 8-K/A dated November 7, 1996 filed
with the Securities and Exchange Commission).
EX-99.2 Report of Independent Certified Public Accountants (incorporated herein by
reference from the exhibits to Registrant's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1997 and for the nine
months ended September 30, 1996, filed with the Securities and Exchange
Commission on December 29, 1997).
</TABLE>
Item 17. Undertakings.
I. (a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
<PAGE>
PAGE 24
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by a director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
of whether such indemnification by it is against public policy as
expressed in the Act and shall be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado, on
the 24th day of February, 1998.
RENTECH, INC.
(signature)
By: ---------------------------------
Dennis L. Yakobson, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
GENERAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, each person whose signature
appears below, hereby authorizes, constitutes and appoints Dennis L.
Yakobson and Ronald C. Butz and each of them, his true and lawful
attorney-in-fact and agents with full power of substitution and
<PAGE>
PAGE 25
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement for the registration
under the Securities Act of 1933, as amended, of securities of Rentech,
Inc. and any and all pre-effective and post-effective amendments to this
Registration Statement, together with any and all exhibits thereto and
other documents required to be filed with respect hereto and thereto and
to file the same with the Securities and Exchange Commission and any
other regulatory authority, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about
the premises, as fully to all intends and purposes as he might or could
do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and each of them, or their or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof and
incorporate such changes as any of the said attorneys-in-fact deems
appropriate.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
(signature)
- ------------------------- President, Chief Executive February 24, 1998
Dennis L. Yakobson Officer and Director
(signature)
- ------------------------- Director February 24, 1998
Mark S. Bohn
by Dennis L. Yakobson,
attorney in fact
(signature)
- ------------------------- Vice President, Chief February 24, 1998
Ronald C. Butz Operating Officer,
By Dennis L. Yakobson, Secretary and Director
attorney in fact
(signature)
- ------------------------- Director February 24, 1998
Erich W. Tiepel
by Dennis L. Yakobson
attorney in fact
(signature)
- ------------------------- Vice President-Finance, and February 24, 1998
James P. Samuels Chief Financial Officer
</TABLE>
<PAGE>
PAGE 26
<TABLE> EXHIBIT INDEX
<CAPTION>
Exhibit Sequential
Number Document Page Number
<S> <C> <C>
EX-1 Form of Certificate of Selling Shareholders (incorporated by reference
from Registrant's Form S-3 Registration Statement No. 333-35571,
Exhibit 1, filed with the Securities and Exchange Commission on
September 12, 1997).
EX-3.(i).1 Restated and Amended Articles of Incorporation, dated January 4, 1991
(incorporated herein by reference from the exhibits to Amendment
No. 2 to Registrant's Form S-18 Registration Statement No. 33-37150-D
filed with the Securities and Exchange Commission on January 18, 1991).
EX-3.(i).2 Articles of Amendment dated April 5, 1991 to the Restated and Amended
Articles of Incorporation (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K dated August 10,
1993 filed with the Securities and Exchange Commission).
EX-3.(i).3 Articles of Amendment to Articles of Incorporation - Preferences,
Limitations and Relative Rights of Convertible Preferred Stock,
Series 1998-A (incorporated herein from Registrant's Form 8-K
dated March 2, 1998 filed with the Securities and Exchange
Commission on March 2, 1998).
EX-3.(i).4 Articles of Amendment to Articles of Incorporation - Preferences,
Limitations and Relative Rights of Convertible Preferred Stock, Series
1998-B (incorporated herein from Registrant's Form 8-K dated March 2,
1998 filed with the Securities and Exchange Commission on March 2, 1998).
EX-3.3 Bylaws as amended, (incorporated herein by reference from the exhibits
to Registrant's Form S-18 Registration Statement No. 33-37150-D filed
with the Securities and Exchange Commission on January 18, 1991).
EX-4 Form of Placement Agent Warrant for the purchase of 58,300 shares of
Common Stock (incorporated herein from Registrant's Form 10-KSB dated
December 29, 1997, as Exhibit 4.1, filed with the Securities and Exchange
Commission on December 29, 1997).
EX-4.1 Form of Convertible Promissory Notes (incorporated herein from
Registrant's Form 10-KSB dated December 29, 1997, as Exhibit 4.2, filed
with the Securities and Exchange Commission on December 29, 1997).
EX-4.2 Form of Warrant to Purchase 200,000 Shares of Common Stock (incorporated
herein from Registrant's Form 8-K dated March 2, 1998 filed with the
Securities and Exchange Commission on March 2, 1998).
EX-4.3 Form of Registration Rights Agreement dated October 1997 (incorporated
herein from Registrant's Form 8-K dated March 2, 1998 filed with the
Securities and Exchange Commission on March 2, 1998).
EX-4.4 Form of Registration Rights Agreement dated February 1998 (incorporated
herein from Registrant's Form 8-K dated March 2, 1998 filed with the
Securities and Exchange Commission on March 2, 1998).
EX-4.5 Form of Warrant to Purchase Series 1998-B Preferred Shares dated February
9, 1998 for purchase of 800,000 Shares of Series 1998-B Preferred Stock
(incorporated herein from Registrant's Form 8-K dated March 2, 1998,
filed with the Securities and Exchange Commission on March 2, 1998).
EX-5 Opinion of Brega & Winters, P.C.
EX-10.1 Profit Sharing Plan (incorporated herein by reference from the exhibits
to Registrant's Form S-18 Registration Statement No. 33-37150-D filed
with the Securities and Exchange Commission on or about October 30,
1990).
<PAGE>
PAGE 27
EX-10.2 1990 Stock Option Plan (incorporated herein by reference from the
exhibits to the Company's Registration Statement No. 33-37150-D filed
with the Securities and Exchange Commission on Form S-18 dated
April 12, 1992).
EX-10.3 1994 Stock Option Plan (incorporated herein by reference from the
exhibits to Post-Effective Amendment No. 5 to Registrant's Form S-18
on Form SB-2 Registration Statement No. 33-37150-D filed with the
Securities and Exchange Commission on or about September 19, 1994).
EX-10.4 1996 Stock Option Plan (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K dated December
18, 1996 filed with the Securities and Exchange Commission).
EX-10.5 Employment Contracts with Charles B. Benham, Dennis L. Yakobson and
Ronald C. Butz dated November 14, 1994 (incorporated herein by
reference from the exhibits to Registrant's Current Report on Form 8-K
dated November 14, 1994 filed with the Securities and Exchange
Commission).
EX-10.6 Articles of Organization of ITN Electronic Substrates LLC dated August
4, 1997 (incorporated herein by reference from the exhibits to
Registrant's Amendment No. One on Form 10-KSB/A dated October 31, 1997
to Form 10-KSB for the Transition Period ended September 30, 1996).
EX-10.7 License to Donyi Polo Petrochemicals Pty dated June 25, 1994
(incorporated herein by reference from the exhibits to Registrant's
Amendment No. One on Form 10-KSB/A dated October 31, 1997 to Form
10-KSB for the Transition Period ended September 30, 1996).
EX-23.1 Consent of Independent Certified Public Accountants.
EX-23.2 Consent of Brega & Winters P.C. (included in Exhibit 5).
EX-99.1 Letter of Intent between Rentech, Inc. and ITN Energy Systems, Inc.
dated October 17, 1996 (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K/A dated
November 7, 1996 filed with the Securities and Exchange Commission).
EX-99.2 Report of Independent Certified Public Accountants (incorporated
herein by reference from the exhibits to Registrant's Annual Report
on Form 10-KSB for the fiscal year ended September 30, 1997, and for
the nine months ended September 30, 1996, filed with the Securities
and Exchange Commission on December 29, 1997).
</TABLE>
APPENDIX
On the Prospectus cover there is a red herring running vertically on
the left-hand side of the page. It reads as follows:
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be
sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.
EXHIBIT 5
Brega & Winters P.C. Attorneys at Law
One Norwest Center, 1700 Lincoln Street, Suite 2222
Denver, Colorado 80202
(303) 866-9400
FAX: (303) 861-9109
March 3, 1998
Rentech, Inc.
1331 17th Street, Suite 720
Denver, Colorado 80202
Re: Registration Statement on Form S-3
Gentlemen:
This firm has represented Rentech, Inc., a Colorado corporation (the
"Company") in connection with the proposed offering by selling
shareholders of up to 17,834,094 Shares of Common Stock, $.01 par value
(the "Shares"), pursuant to a Registration Statement on Form S-3. In
connection with such representation, we have reviewed the Company's
articles of incorporation, bylaws, minute books and the applicable laws
of the state of Colorado.
Based on such review, we are of the opinion that the Shares issued
to the selling shareholders identified in the registration statement are
fully paid and non-assessable.
We hereby consent to the reference to our firm under the heading
"LEGAL OPINIONS" in the Registration Statement on Form S-3 and the
related Prospectus and to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
(Signature)
BREGA & WINTERS P.C.
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Rentech, Inc.
1331 17th Street, Suite 720
Denver, CO 80202
We consent to the incorporation by reference in the Registration
Statement of Rentech, Inc. on Form S-3 of our report dated November 26,
1997 relating to the consolidated financial statements (which contained
an explanatory paragraph relative to the going concern uncertainty)
appearing in the Annual Report on Form 10-KSB of Rentech, Inc. for
the year ended September 30, 1997 and for the nine months ended
September 30, 1996, and to the reference to us under the heading
"Experts" in the Prospectus, which is part of such Registration
Statement.
BDO Seidman, LLP
February 24, 1998
Denver, Colorado
