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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] 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.
(Name of small business issuer in its charter)
Colorado 84-0957421
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1331 17th Street, Suite 720
Denver, Colorado 80202
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(Address of principal executive offices)
Issuer's telephone number, including area code:
(303) 298-8008
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 _____.
The number of shares outstanding of each of the issuer's classes of
common equity, as of March 31, 1999: common stock 43,982,283.
<PAGE>
RENTECH, INC.
FORM 10-QSB QUARTERLY REPORT
Table of Contents
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 1999
and September 30, 1998 . . . . . . . . . . . . . . . . . . .3
Consolidated Statements of Operations for the three
and six months ended March 31, 1999 and March 31, 1998 . . .5
Consolidated Statement of Stockholders' Equity for
the six months ended March 31, 1999. . . . . . . . . . . . .6
Consolidated Statements of Cash Flows for the six
months ended March 31, 1999 and March 31, 1998 . . . . . . .7
Notes to the Consolidated Financial Statements . . . . . . .8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . 11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None.. . . . . . . . . . . . . . . . . 15
Item 2. Change in Securities and Use of proceeds - None. . . . . . 15
Item 3. Defaults Upon Senior Securities - None.. . . . . . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders - None.15
Item 5. Other Information - None.. . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 15
(a) Exhibits - None
</TABLE>
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RENTECH, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
(Unaudited)
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,768,885 $ 3,056,379
Accounts receivable, net 159,632 224,933
Inventories 103,659 99,574
Prepaid expenses and other current assets 151,271 209,179
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Total Current Assets 2,183,447 3,590,065
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PROPERTY AND EQUIPMENT
Property and equipment, net of accumulated
depreciation of $232,778 and $180,258 as
of March 31, 1999 and September 30, 1998
respectively 2,077,885 320,057
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OTHER ASSETS
Licensed technology, net of accumulated
amortization of $1,287,323 and $1,172,951
as of March 31, 1999 and September 30,
1998 respectively 2,143,825 2,258,197
Goodwill, net of accumulated amortization
of $163,726 and $124,333 as of March 31,
1999 and September 30,1998 respectively 1,045,989 1,085,382
Investment in ITN/ES 3,080,427 3,079,107
Technology rights, net of accumulated
amortization of $42,341 and $28,776 as of
March 31, 1999 and September 30, 1998
respectively 245,405 258,970
Deposits and other assets 331,137 123,472
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Total Other Assets 6,846,783 6,805,128
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Total Assets $ 11,108,115 $ 10,715,250
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</TABLE>
See notes to the consolidated financial statements
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RENTECH, INC. AND SUBSIDIARY
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
(Unaudited)
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 250,699 $ 315,116
Accrued liabilities 54,810 79,568
Lessee deposits 11,954 -0-
Current portion of long-term debt 78,972 -0-
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Total Current Liabilities 396,435 394,684
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LONG-TERM DEBT
Mortgage payable, net of current portion (Note 3) 909,638 -0-
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Total Liabilities 1,306,073 394,684
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STOCKHOLDERS' EQUITY
Series A convertible preferred stock -
$10 par value; 200,000 shares authorized; 0
and 50,000 shares issued and outstanding;
$10.00 per share liquidation value (in the
aggregate $0 and $528,347 including accrued
dividends of $28,347 as of September 30, 1998) -0- 500,000
Series B convertible preferred stock - $10 par
value; 800,000 shares authorized; 47,500
and 107,500 shares issued and outstanding;
$10.00 per share liquidation value (in the
aggregate $487,304 and $1,081,000 including
accrued dividends of $12,304 and $6,000) 475,000 1,075,000
Common stock - $.01 par value; 100,000,000
shares authorized; 43,982,283 and 40,075,292
shares issued and outstanding 439,829 400,750
Additional paid-in capital 23,625,451 21,426,487
Accumulated deficit (14,738,238) (13,081,671)
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Total Stockholders' Equity 9,802,042 10,320,566
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Total Liabilities and Stockholders' Equity $ 11,108,115 $ 10,715,250
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</TABLE>
See notes to the consolidated financial statements.
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RENTECH, INC. AND SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES:
Product sales $ 409,563 $ 393,182 $ 810,849 $ 795,349
Rental income 14,112 -0- 14,112 -0-
Royalty income 60,023 -0- 220,024 -0-
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Total Revenues 483,698 393,182 1,044,985 795,349
COSTS OF SALES:
Cost of sales 184,459 196,534 358,596 368,834
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GROSS PROFIT 299,239 196,648 686,389 426,515
EXPENSES:
General and administrative 970,799 603,295 1,833,487 1,172,479
Research and development 88,426 9,063 126,820 9,701
Depreciation and
amortization 117,105 89,979 219,850 180,183
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Total Expenses 1,176,330 702,337 2,180,157 1,362,363
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LOSS FROM OPERATIONS (877,091) (505,689) (1,493,768) (935,848)
OTHER INCOME (EXPENSE):
Interest income 25,792 4,469 58,225 6,939
Interest expense (11,985) (35,827) (12,215) (111,158)
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Total Other Income (Expense) 13,807 (31,358) 46,010 (104,219)
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NET LOSS (863,284) (537,047) (1,447,758) (1,040,067)
Dividend requirement on
Preferred Stock 176,617 228,110 208,809 28,110
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LOSS APPLICABLE TO COMMON
STOCK $ (1,039,901) $ (765,157) $(1,656,567) $(1,068,177)
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Basic and diluted weighted
average number of shares
outstanding 43,362,908 31,008,405 42,649,442 30,496,444
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NET LOSS PER SHARE:
Basic and diluted $(0.02) $(0.02) $(0.04) $(0.04)
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</TABLE>
See notes to the consolidated financial statements.
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RENTECH, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
For the Six Months ended March 31, 1999(Unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Additional
Series A Series B Par Paid-in Accumulated
Shares Amount Shares Amount Shares Value Capital Deficit
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, October 1, 1998 50,000 $ 500,000 107,500 $ 1,075,000 40,075,292 $ 400,750 $ 21,426,487 $(13,081,671)
Preferred stock issued
for cash, net of offering
costs of $75,000 75,000 750,000 (79,000)
Common stock issued,
for cash 835,610 8,366 227,828
Common stock issued
for dividends on Series A
Preferred stock 52,068 521 55,761
Common stock issued
for dividends on Series B
Preferred stock 23,937 239 28,303
Common stock issued
for conversion of Series A
Preferred stock (50,000) (500,000) 730,549 7,305 492,695
Common stock issued
for conversion of Series B
Preferred stock (135,000) (1,350,000) 2,264,827 22,648 1,327,352
Dividends on preferred stock 146,025 (208,809)
Net loss for the six
months ended
March 31, 1999 (1,447,758)
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Balances, March 31, 1999
(unaudited) -0- $ -0- 47,500 $ 475,000 43,982,283 $ 439,829 $23,625,451 $(14,738,238)
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</TABLE>
See notes to the consolidated financial statements.
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RENTECH, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
For the Six Months Ended March 31, (Unaudited) 1999 1998
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<S> <C> <C>
OPERATING ACTIVITIES
Net Loss $(1,447,758) $ (1,040,067)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 219,850 180,183
Interest paid with Common Stock -0- 45,621
Changes in operating assets and liabilities:
(Increase) Decrease in accounts receivables 65,301 (106,028)
(Increase) Decrease in inventories (4,085) (2,566)
(Increase) Decrease in prepaids and other
current assets 57,908 (50,009)
Increase (Decrease) in accounts payable
and other accrued liabilities (67,135) 107,534
Increase in lessee deposits 11,954 -0-
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Net Cash Used in Operating Activities: (1,163,965) (865,332)
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INVESTING ACTIVITIES
Purchase of land and buildings (444,561) -0-
Purchase of equipment (376,687) (17,561)
(Increase) Decrease in deposits and other
assets (207,665) (2,511)
Investment in ITN/ES (1,320) -0-
ITN deposit -0- (200,000)
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Net Cash Used in Investing Activities: (1,030,233) (220,072)
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FINANCING ACTIVITIES
Proceeds from convertible notes payable -0- 60,000
Repayment of notes payable -0- (690,000)
Proceeds from issuance of preferred stock 750,000 2,000,000
Proceeds from issuance of common stock 236,194 490,960
Payment for offering costs (79,000) (253,559)
Payment of mortgage principal (490) -0-
Increase (Decrease) in dividends payable -0- 28,110
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Net Cash Provided by Financing Activities 906,704 1,579,291
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INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,287,494) 493,887
Cash and Cash Equivalents,
Beginning of Period 3,056,379 391,487
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Cash and Cash Equivalents,
End of Period $ 1,768,885 $ 885,374
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</TABLE>
See notes to consolidated financial statements.
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<PAGE>
RENTECH, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
March 31, 1999 (Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying statements should be read in
conjunction with the audited financial statements included in the Company's
September 30, 1998 annual report on Form 10-KSB. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the six months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the full fiscal year
ending September 30, 1999.
2. SIGNIFICANT ACCOUNTING POLICIES
Consolidation - The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiary, Okon, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Inventories -Inventories which consist of water protection sealants,
chemicals and packaging supplies, are recorded at the lower of cost
(first-in, first-out)or market.
Licensed Technology - Capitalized investment in licensed technology
represents costs incurred by the Company primarily for the purpose of
demonstrating the Company's proprietary technology to prospective licensees,
which it licenses to third parties under various fee arrangements. These
capitalized costs are being amortized using the straight line method over 15
years.
Investment in ITN/ES represents a 10% interest in ITN Energy Systems,
Inc. The investment is stated at cost. The investment is evaluated
periodically and is carried at the lower of cost or net realizable value.
Technology Rights - Technology rights are recorded at cost and are
being amortized on a straight-line method over a 10 year estimated life.
Property and Equipment - Property and equipment is stated at cost and
depreciated and amortized using the straight-line method over the estimated
useful lives of the assets, which range from five to thirty years except for
leasehold improvements which are amortized over the shorter of the useful
life or the remaining lease term. Maintenance and repairs are expensed as
incurred. Major renewals and improvements are capitalized and assets replaced
are retired. When property and equipment are retired or otherwise disposed
of, the asset and accumulated depreciation or amortization are removed from
the accounts and the resulting profit or loss is reflected in income.
Excess of Cost Over Net Assets Acquired - The excess of cost over net
assets acquired, which relate to the acquisition of Okon, is being amortized
over a 15 year period using the straight-line method.
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Long-Lived Assets - Long-lived assets, identifiable intangibles, and
excess of costs over net assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be
recoverable. If the expected future cash flow from the use of the asset and
its eventual disposition is less than the carrying amount of the asset, an
impairment loss is recognized and measured using the asset's fair value.
Revenue Recognition - The Company reports its royalty income when the
revenue earning activities that are to be provided by the Company have been
performed and no future obligations to perform services exist. Sales of
water-based stains sealers and coatings are recognized when the goods are
shipped to the customers.
Research and Development Costs - Research and development costs are
charged to expense as incurred.
Net Income (Loss) Per Share - Statement of Financial Accounting
Standards No. 128 provides for the calculation of "Basic" and "Diluted"
earnings per share. Basic earnings per share includes no dilution and is
computed by dividing income available to common stockholders by the
weighted-average number of shares outstanding during the period. Diluted
earning per share reflect the potential dilution of securities that could
share in the earnings of the Company, similar to fully diluted earnings per
share. Options and warrants are not considered in the computation of diluted
earnings per share as their inclusion would be antidilutive. For the periods
ended March 31, 1999 and 1998 , total stock options and stock warrants of
5,365,626 and 4,631,626 respectively were not included in the computation of
diluted loss per share because their effect was anti-dilutive.
The Company has adopted Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"). Comprehensive income
is comprised of net income and all changes to the consolidated statements of
stockholders' equity, except those due to investments by stockholders,
changes in paid in capital and distributions to stockholders. The adoption of
SFAS No. 130 does not impact the Company's consolidated financial statements
for 1999 and 1998.
3. MORTGAGE PAYABLE
The mortgage which was taken February 8, 1998 in the amount of $989,100
matures on March 1, 2029, bears interest at 8.25% and is repayable in monthly
installments of $7,516.80. The mortgage is fully secured by land and building.
4. PREFERRED STOCK
In January 1999, the Company issued 75,000 shares of its Series B
Preferred Stock for net proceeds of $675,000 after offering costs of $79,000.
During the period ended March 31, 1999, the Company converted 50,000 shares
of Series A Preferred Stock at $10.00 per share and 1,350,000 shares of
Series B Preferred Stock together with dividends earned on these shares for
782,617 and 2,288,764 common shares respectively.
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<PAGE>
<TABLE>
<CAPTION>
5. SUPPLEMENTAL DATA TO STATEMENTS OF CASH FLOWS
for the Six Months Ended March 31, 1999 1998
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<S> <C> <C>
Cash payments for interest $58,225 $65,537
Excluded from the statements of cash flows were the effects of
certain noncash investing and financing activities as follows:
Issuance of common stock from conversion of
Preferred stock and dividends $1,934,824 $-0-
Purchase of land and buildings financed with mortgage payable $ 989,100 $-0-
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998
RESULTS OF OPERATIONS.
For the three and six months ended March 31, 1999, the Company recorded
losses of $863,284 and $1,447,758 compared to net losses of $537,047 and
$1,040,067 for the comparable period in 1998 fiscal year. The increase for
1999 is primarily due to increases in general and administrative expenses and
research and development expenses. These increases are partially offset by
royalty revenue and interest income.
Net sales of water-based paints, sealers and coatings by the Company's
Okon subsidiary for the three and six months ended March 31, 1999 were
$409,563 and $810,849 as compared to $393,182 and $795,349 during the three
and six months ended March 31, 1998. On October 8, 1998, the Company entered
into a licensing agreement with Texaco Natural Gas, Inc. for the Rentech GTL
Technology. Under the license, Texaco has the right to use Rentech's GTL
Technology alone and in combination with Texaco's proprietary gasification
technology to produce liquid hydrocarbon products such as naphtha, fuel and
specialty products. Under this agreement, the Company earned $60,000 and
$220,000 in royalty income during the three and six months ended March 31,
1999 compared to no royalty income for the prior comparable period. In
February 1999, the Company acquired the land and building occupied by its
research department and three other tenants. Rental income from this facility
contributed $14,112 to the six month period ended March 31, 1999.
Gross profit increased to $299,239 and $686,389 for the three and six
month periods ended March 31, 1999 compared to a gross profit of $196,648 and
$426,515 for the three and six month periods ended March 31, 1999 because of
royalty income and rental income which was earned during the three and six
month periods ended March 31, 1999.
General and administrative expenses increased to $970,799 and
$1,833,487 for the three and six month periods ended March 31, 1999, compared
to $612,358 and $1,182,180 for the same periods in 1998. This increase is
caused by approximately $375,000 in expense from the hiring of additional
office, sales and laboratory staff and salary increases during fiscal 1999.
Research and development costs increased to $88,426 and $126,820 for
the three and six month periods ended March 31, 1999, compared to $9,063 and
$9,701 for the same periods in 1998. This increase is primarily attributable
to accelerated research in Fischer-Tropsch technology.
Depreciation and amortization increased by $27,126 and $39,667 for the
three and six month periods ended March 31, 1999 compared to the three months
and six months ended March 31,1998 primarily due to depreciation of equipment
and amortization of leasehold improvements associated with setting up the new
laboratory and research facility.
Loss from operations increased to $877,091 and $1,493,768 for the three
and six month periods ended March 31, 1999 compared to $$505,689 and $935,848
for the comparable period in 1998 fiscal year. The increased loss is
primarily due to increases in office staff , laboratory personnel and other
costs associated with increased research. Cost increases are partially
offset by royalty income which commenced in October 1998.
Interest income was $21,323 and $51,286 higher during the three and
six month periods ended March 31, 1999 as compared to the same period of 1998
because of the Company's increase in cash on hand.
Interest expense during the three and six month periods ended March
31, 1999 was $11,985 and $12,215 compared to $35,827 and $111,158 during
comparable 1998 periods due to interest charges relating to $1,310,500 in
debt which was eliminated in 1998 offset by interest on Mortgage taken in
February 1999 when the laboratory facility was purchased.
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LIQUIDITY AND CAPITAL RESOURCES.
At March 31, 1999, the Company had working capital of $1,787,012 as
compared to working capital of $3,195,381 at September 30, 1998. The
decrease in working capital is primarily due to the use of cash in operations
and purchase of capital assets partially offset by the proceeds from
preferred stock and common stock issued for cash and the proceeds from a
long-term mortgage.
The cash received by the Company during the fiscal year ended September
30, 1998 and the cash generated from Okon's operations are expected to be
adequate to fund the Company's operations at the current level through the
2000 fiscal year.
The Company is discussing other proposals made by several energy
companies for exploitation of the Company's GTL Technology through licenses
or other business ventures. No assurances can be made that these
discussions or arrangements will result in revenues to the Company. In
October 1998, Rentech entered into a license agreement with Texaco Natural
Gas, Inc. for commercialization of Rentech's GTL Technology.
The Company has made significant commitments for capital expenditures.
Management has purchased for $1,433,661 the building housing its new
laboratory and invested approximately $350,000 in building renovations and
new testing equipment during the period ended March 31, 1999. The Company is
in the process of closing its Pueblo testing facility.
The Company has deferred tax assets with a 100 percent valuation
allowance at March 31, 1999 and September 30, 1998. Management is not able to
determine if it is more likely than not that the deferred tax assets will be
realized.
Rentech's common stock presently is traded on the Nasdaq SmallCap
Market. One of the requirements for continued trading of securities on that
market is a minimum bid price of $1.00 or more per share. If a deficiency
exists for a period of 30 consecutive business days, Nasdaq is required to
notify the issuer, which then has a period of 90 calendar days from such
notification to achieve compliance. Compliance can be achieved by meeting the
applicable standard for a minimum of ten consecutive business days during the
90-day compliance period. From November 18, 1998, to the date of this 10Q,
the bid price of Rentech's common stock has been less than $1.00 per share.
By letter dated January 5, 1999, Nasdaq advised Rentech that it was not
in compliance with the minimum bid price requirement and that Rentech had
until April 5, 1999 to achieve compliance. Since Rentech did not meet those
requirements, and to stay delisting of its stock from the Nasdaq SmallCap
Market, Rentech requested a hearing with Nasdaq. The request had the effect
of staying the delisting. By letter dated April 7, 1999, the Nasdaq Listing
Qualifications Panel scheduled a hearing on Rentech's request for continued
listing. The hearing is scheduled for May 20, 1999. Rentech does not know at
this time whether its request will be granted. If it is not, Rentech intends
to file an additional appeal.
YEAR 2000
The Company, like most other companies, is faced with the Year 2000
Issue, which is the result of computer programs that are written using two
digits rather than four to define the applicable year. Any computer programs
that affect the Company's activities and that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing disruptions
of operations that depend upon such date-sensitive software or computer
hardware. The potential problems include, among other things, a temporary
inability to process transactions, send invoices, transfer funds, or engage
in similar normal business activities. The problems caused by the Year 2000
Issue may be exacerbated and cause widespread business disruption because of
the interdependence of computer and telecommunications systems in the United
States and throughout the world.
The Company has completed an initial assessment of Year 2000 compliance
for its own information technology and business infrastructure. Based upon
this assessment, the Company believes its computer software, hardware and
embedded technology would present limited Year 2000 Issues. The Company
believes that its activities do not rely upon date-sensitive
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computer software, hardware or embedded technology for its own activities.
The Company has been unable to evaluate whether the software, hardware and
embedded technology used by third parties with whom it conducts business,
including licensees, joint venture parties, and potential licensees, are
Year 2000 compliant. If third parties who do business with the Company or
governmental regulatory agencies fail to timely remediate their Year 2000
Issues, then the Company may experience business interruptions, and in the
worst case, the inability to engage in normal business operations for an
unknown length of time. The effect of these and related difficulties on the
Company's operations, income and financial condition could be materially
adverse. To date, the Company's assessment of the Year 2000 Issue has not
resulted in material costs. The Company does not believe that any material
expenditures will be required to complete its assessment.
The Company recognizes the need for Year 2000 contingency plans because
of the uncertainty associated with the Year 2000 Issue. The Company does
plan to replace its word processing and financial spread sheet software and
its computer hardware if they are impacted by Year 2000 Issues. The cost of
any such replacements is not expected to be material. The Company believes
that it will not be able to require third parties with whom it conducts
business or government agencies to resolve their Year 2000 Issues. The
Company has not developed contingency plans that would assure it will not be
adversely impacted by the effect of the Year 2000 Issue, and it does not
intend to prepare such plans.
ANALYSIS OF CASH FLOW
As discussed under "Results of Operations," the Company had net losses
of $1,444,758 and $1,040,067 respectively for the six months ended March 31,
1999 and 1998. The 1998 non-cash expenses include a $45,621 charge for
interest on convertible notes payable satisfied with the issuance of common
stock.
There was a $65,301 decrease in accounts receivable during the six
months ended March 31,1999 compared to a $106,028 increase during the
comparable fiscal year 1998 period.
Accounts payable decreased by $67,135 during the six months ended March
31, 1999 compared to a $107,534 increase for the prior year comparable period.
Lessee deposits increased by $11,954 during the six month period ended
March 31,1999 when the Company purchased the lab facility which was occupied
by tenants.
During the six months ended March 31, 1999, $1,163,965 in cash was used
by operating activities compared to a net cash usage of $865,332 for the
comparable period last year.
The Company purchased $376,687 in equipment and leasehold improvements
and $444,561 in real estate during the first half of fiscal 1999 compared to
purchases of $17,561 during the comparable 1998 period.
Deposits and other assets increased by $207,665 during the six months
ended March 31, 1999 compared to a $2,511 increase for the comparable 1998
period. An additional $26,320 was paid on a future joint venture project and
$177,615 was paid on a deposit against a planned future acquisition. A
$200,000 deposit paid in the six month period ended March 31, 1998 was
applied against the purchase price of a 10% interest in ITN/ES in fiscal 1998.
The Company financed a portion of its activities by net proceeds of
$675,000 from the issuance of preferred stock and $236,194 from the issuance
of its common stock during the 1999 period compared to proceeds of $60,000
from convertible notes payable and $490,960 from common stock during the
comparable period in 1998.
The Company financed the purchase of real estate by taking a mortgage
in the amount of $989,100 in February 1999. As of March 31, 1999 $490 was
paid on the principal.
-13-
<PAGE>
Cash decreased during the six months ended March 31, 1999 by $1,287,494
compared to an increase of $493,887 for the comparable period in 1998. These
changes decreased the ending cash balance to $1,768,885 at March 31, 1999
from $3,056,379 at September 30, 1998. The 1998 changes increased the
$391,487 September 30, 1997 cash balance to $885,374 at March 31, 1998.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Change in Securities and Use of Proceeds.
There were no sales of the Company's equity securities sold by the
Company during the period covered by this report that were not registered
under the Securities Act of 1933, as amended.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. None
(b) Reports. None
-15-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RENTECH, INC.
Dated: May 14, 1999
----------------------------------------------
Dennis L. Yakobson, President
Dated: May 14, 1999
----------------------------------------------
James P. Samuels, Vice President-Finance
and Chief Financial Officer
-16-
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<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
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