<PAGE>
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 June 30, 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
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1331 17TH STREET, SUITE 720
DENVER, COLORADO 80202
----------------------------------------
(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 June 30, 1999: common stock 45,388,742.
<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 June 30, 1999
and September 30, 1998...................................................3
Consolidated Statements of Operations for the three
and nine months ended June 30, 1999 and June 30, 1998....................5
Consolidated Statement of Stockholders' Equity for
the nine months ended June 30, 1999......................................6
Consolidated Statements of Cash Flows for the nine
months ended June 30, 1999 and June 30, 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................................................19
Item 2. Change in Securities and Use of proceeds - None.........................19
Item 3. Defaults Upon Senior Securities - None..................................19
Item 4. Submission of Matters to a Vote of Security Holders - None..............19
Item 5. Other Information - None................................................19
Item 6. Exhibits and Reports on Form 8-K........................................19
(a) Exhibits - None
Signatures.......................................................................20
</TABLE>
2
<PAGE>
RENTECH, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
(Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 844,532 $ 3,056,379
Accounts receivable, net 371,816 224,933
Inventories 110,266 99,574
Prepaid expenses and other current assets 209,269 209,179
- -------------------------------------------------------------------------------------------------
Total Current Assets 1,535,883 3,590,065
- -------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Property and equipment, net of accumulated
depreciation of $268,383 and $180,258 as of
June 30, 1999 and September 30, 1998 respectively 3,359,943 320,057
- -------------------------------------------------------------------------------------------------
OTHER ASSETS
Licensed technology, net of accumulated
amortization of $1,344,510 and $1,172,951 as of
June 30, 1999 and September 30, 1998 respectively 2,086,639 2,258,197
Goodwill, net of accumulated amortization
of $184,771 and $124,333 as of June 30,
1999 and September 30,1998 respectively 1,183,839 1,085,382
Investment in ITN/ES 3,080,427 3,079,107
Technology rights, net of accumulated
amortization of $49,124 and $28,776 as of
June 30, 1999 and September 30, 1998 respectively 238,622 258,970
Deposits and other assets 528,431 123,472
- -------------------------------------------------------------------------------------------------
Total Other Assets 7,117,958 6,805,128
- -------------------------------------------------------------------------------------------------
Total Assets $ 12,013,784 $ 10,715,250
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
See notes to the consolidated financial statements
3
<PAGE>
RENTECH, INC. AND SUBSIDIARY
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
(Unaudited)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 236,675 $ 315,116
Accrued liabilities 63,241 79,568
Lessee deposits 9,248 -0-
Current portion of long-term debt 560,873 -0-
- -------------------------------------------------------------------------------------------------
Total Current Liabilities 870,037 394,684
- -------------------------------------------------------------------------------------------------
LONG-TERM DEBT
Loans payable, net of current portion (Note 3) 196,869 -0-
Mortgage payable, net of current portion (Note 3) 954,892 -0-
- -------------------------------------------------------------------------------------------------
Total Long-Term debt 1,151,761 -0-
- -------------------------------------------------------------------------------------------------
Total Liabilities 2,021,798 394,684
- -------------------------------------------------------------------------------------------------
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; 88,000 and 107,500 shares
issued and outstanding; $10.00 per share liquidation
value (in the aggregate $887,168 and $1,081,000
including accrued dividends of $7,168 and $6,000 as
of June 30, 1999 and September 30, 1998) 880,000 1,075,000
Common stock - $.01 par value; 100,000,000 shares
authorized; 45,388,742 and 40,075,292 shares
issued and outstanding 453,885 400,750
Additional paid-in capital 24,390,972 21,426,487
Accumulated deficit (15,732,871) (13,081,671)
- -------------------------------------------------------------------------------------------------
Total Stockholders' Equity 9,991,986 10,320,566
- -------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 12,013,784 $ 10,715,250
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
See notes to the consolidated financial statements.
4
<PAGE>
RENTECH, INC. AND SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Product sales $ 576,103 $ 586,451 $ 1,386,953 $ 1,381,800
Service revenues 145,951 -0- 145,951 -0-
Rental income 27,767 -0- 38,975 -0-
Royalty income 60,455 -0- 280,479 -0-
- -----------------------------------------------------------------------------------------------------------------------------
Total Revenues 810,276 586,451 1,852,358 1,381,800
COSTS OF SALES:
Cost of sales 301,562 258,456 650,069 627,290
- -----------------------------------------------------------------------------------------------------------------------------
GROSS PROFIT 508,714 327,995 1,202,289 754,510
EXPENSES:
General and administrative 1,111,560 619,942 2,941,559 1,811,823
Research and development 76,046 26,005 219,589 16,304
Depreciation and amortization 101,912 87,146 315,769 267,329
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,289,518 733,093 3,476,917 2,095,456
- -----------------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (780,804) (405,098) (2,274,728) (1,340,946)
OTHER INCOME (EXPENSE):
Interest income 11,207 14,740 69,431 21,678
Interest expense (26,681) (2,635) (38,896) (113,793)
- -----------------------------------------------------------------------------------------------------------------------------
Total Other Income (Expense) (15,474) 12,105 30,535 (92,115)
- -----------------------------------------------------------------------------------------------------------------------------
NET LOSS (796,278) (392,993) (2,244,093) (1,433,061)
Dividend requirement on Preferred Stock 208,809 425,062 407,107 653,172
- -----------------------------------------------------------------------------------------------------------------------------
LOSS APPLICABLE TO COMMON STOCK $ (1,005,087) $ (818,055) $(2,651,200) $(2,086,233)
- -----------------------------------------------------------------------------------------------------------------------------
Basic and diluted weighted average
number of shares outstanding 44,432,781 34,294,355 43,243,888 31,795,381
- -----------------------------------------------------------------------------------------------------------------------------
NET LOSS PER SHARE:
Basic and diluted $(0.02) $(0.02) $(0.06) $(0.07)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to the consolidated financial statements.
5
<PAGE>
RENTECH, INC. AND SUBSIDIARY
Condensed Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
For the Nine Months ended June 30, 1999 (Unaudited)
Preferred Stock Common Stock Additional
Series A Series B Par Paid-in Accumulated
Shares Amount Shares Amount Shares Value Capital Deficit
- -----------------------------------------------------------------------------------------------------------------------------------
<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 $75,000 163,000 1,630,000 (159,000)
Common stock issued,
for cash 985,610 9,866 276,328
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 50,571 505 39,152
Common stock issued
for conversion of Series A
Preferred stock (50,000) (500,000) 730,549 7,305 492,174
Common stock issued
for investment in subsidiary 100,000 1,000 49,000
Common stock issued
for conversion of Series B
Preferred stock (182,500) (1,825,000) 3,394,652 33,938 1,784,170
Dividends on preferred stock 345,758 (407,107)
Stock options issued for services 81,142
Net loss for the six
months ended June 30, 1999 (2,244,093)
- -----------------------------------------------------------------------------------------------------------------------------------
Balances, June 30, 1999
(unaudited) -0- $ -0- 88,000 $ 880,000 45,388,742 $ 453,885 $ 24,390,972 $(15,732,871)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to the consolidated financial statements.
6
<PAGE>
RENTECH, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
For the Nine Months Ended June 30, (Unaudited) 1999 1998
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss $(2,244,093) $ (1,433,061)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 340,465 270,887
Interest paid with Common Stock -0- 45,621
Changes in operating assets and liabilities,
net of business acquisition:
(Increase) in accounts receivables (146,883) (145,345)
(Increase) Decrease in inventories (10,692) 6,435
(Increase) Decrease in prepaids and other current assets 105,367 (21,640)
Increase (Decrease) in accounts payable
and other accrued liabilities (67,591) 50,049
Increase in lessee deposits 9,248 -0-
- --------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities: (2,014,179) (1,227,054)
- --------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of land and buildings (448,224) -0-
Purchase of equipment (505,335) (60,721)
Purchase of business (590,109) -0-
Deposit on planned acquisition -0- (50,000)
(Increase) Decrease in deposits and other assets (404,959) (2.511)
Investment in ITN/ES (1,320) -0-
ITN deposit -0- (230,000)
- --------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities: (1,949,947) (343,232)
- --------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from convertible notes payable -0- 60,000
Repayment of notes payable -0- (690,000)
Proceeds from issuance of preferred stock 1,630,000 2,000,000
Proceeds from issuance of common stock 286,194 708,345
Payment for offering costs (159,000) (253,559)
Payment of mortgage principal (2,895) -0-
Payment of loan principal (6,420) -0-
Sale of fixed assets 4,400 -0-
- --------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 1,752,279 1,824,786
- --------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,211,847) 254,500
Cash and Cash Equivalents,
Beginning of Period 3,056,379 391,487
- --------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents,
End of Period $ 844,532 $ 645,987
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
RENTECH, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
June 30, 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 nine months ended June 30, 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 subsidiaries. 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 and Petroleum
Mud Logging, is being amortized over a 15 year period using the straight-line
method.
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. Sales and revenues from mud logging services are
billed at the completion of the service. Laboratory research service revenues
are recognized upon completion of a project.
8
<PAGE>
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 June 30, 1999 and 1998 , total stock options and stock warrants of
5,365,626 and 5,519,707 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. BUSINESS ACQUISITION
On June 1, 1999, the Company acquired the assets of Petroleum Mud
Logging, Inc. and Petroleum Well Logging, Inc. for $590,109 in cash, $50,000
in the Company's common stock, assumption of debt in the amount of $127,849,
a one year note in the amount of $205,000 bearing interest at 9.75% per annum
payable June 1, 2000 and a two year note in the amount of $400,000 bearing
interest at 9.75% payable in monthly installments of $18,590.64, commencing
July 1, 1999. The acquisition was recorded using the purchase method of
accounting by which the assets are valued at fair market value at the date of
acquisition. The operating results of this acquisition have been included in
the accompanying consolidated financial statements from the date of
acquisition. The allocation of the purchase price was as follows:
<TABLE>
<S> <C>
Prepaid shop supplies $ 24,314
Property and equipment 1,189,752
Goodwill 158,892
------------
Total purchase price $ 1,372,958
------------
------------
</TABLE>
The following unaudited pro forma consolidated results of
operations are presented as if the acquisition had been made at the beginning
of the periods presented.
<TABLE>
<CAPTION>
Pro Forma Results for the
Nine Months Ended June 30,
1999 1998
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Revenue $ 2,442,758 $ 2,264,181
Net Loss $(2,288,041) $(1,424,335)
Net loss attributable to common stock $(2,695,148) $(2,077,507)
Net loss per share $ (.06) $ (.07)
</TABLE>
4. LONG-TERM DEBT
On June 1, 1999 the Company entered into two notes payable with
the sellers of Petroleum Mud Logging, Inc. (See Note 3). Note I in the amount
of $205,000 bears interest at 9.75% and is payable in full plus accrued
interest one year from the date of this note. Note II in the amount of
$400,000 bears interest at 9.75% and is payable in monthly installments of
$18,590.64 beginning July 1, 1999. Any balance remaining two years from the
date of this note is due and payable. Notes payable by Petroleum Mud Logging,
Inc were assumed as part of the purchase price. These notes totaling $57,100
bear interest at rates between 9.25% and 11% and have an aggregate monthly
payment of $3,813. All indebtedness associated with the purchase is secured
by Rentech, Inc. and property owned by Petroleum Mud Logging subject to the
first claim of the mortgage.
The mortgage assumed on property acquired with the purchase of
Petroleum Mud Logging assets, in the amount of
9
<PAGE>
$70,749 bears interest at the rate of 9% and is repayable in monthly
installments of $988.34. The mortgage is secured by land and building.
The mortgage which was taken February 8, 1998, for the purpose of
acquiring the property occupied by the Company's laboratory, 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.
5. 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.
In May 1999, the Company issued 88,000 shares of its Series B Preferred Stock
for net proceeds of $796,000 after offering costs of $80,000. During the
period ended June 30, 1999, the Company converted 50,000 shares of Series A
Preferred Stock at $10.00 per share and 182,500 shares of Series B Preferred
Stock together with dividends earned on these shares for 782,617 and
3,445,223 common shares respectively.
6. SUPPLEMENTAL DATA TO STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
for the Nine Months Ended June 30, 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash payments for interest $ 69,432 $ -0-
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 $2,413,526 $ 890,877
Issuance of common stock for future services $ 188,185
Issuance of common stock from conversion of
Convertible notes payable $ 620,500
Issuance of common stock for deposit on investment $ 337,500
Issuance of stock options for services $ 81,142
Increase in accrued liabilities for accrued dividends $ 21,261 $ 62,285
Purchase of land and buildings financed with mortgage payable $ 989,100
Purchase of business financed with notes payable, common stock
and assumption of existing debt $ 782,849
</TABLE>
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998
RESULTS OF OPERATIONS.
For the three and nine months ended June 30, 1999, the Company
recorded losses of $796,278 and $2,244,093 compared to net losses of $392,993
and $1,433,061 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, service revenue which began in the current fiscal period
and an increase in interest income.
Net sales of water-based paints, sealers and coatings by the
Company's Okon subsidiary for the three and nine months ended June 30, 1999
were $576,103 and $1,386,953 as compared to $586,451 and $1,381,800 during
the three and nine months ended June 30, 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 $280,000 in royalty income during the three and nine
months ended June 30, 1999 compared to no royalty income for the prior
comparable periods. Under a contract with Texaco Natural Gas Inc, the Company
began billing for the technical services in April 1999. Revenues for
technical services for the three month and nine month periods were $45,000
and $60,000 respectively. 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 $27,767 and $38,975 to the three and
nine month periods ended June 30, 1999. On June 1, 1999, the Company acquired
the assets of Petroleum Mud Logging, Inc in Oklahoma City Oklahoma. The
revenue contributed from this subsidiary was $81,951 for the nine month
period ended June 30, 1999.
Gross profit increased to $508,714 and $1,202,289 for the three
and nine month periods ended June 30, 1999 compared to a gross profit of
$327,995 and $754,510 for the three and nine month periods ended June 30,
1998 primarily because of royalty income, service income from the laboratory
and mud logging, and rental income which was earned during the three and nine
month periods ended March 31, 1999.
General and administrative expenses increased to $1,111,560 and
$2,941,559 for the three and nine month periods ended June 30, 1999, compared
to $619,942 and $1,811,823 for the same periods in 1998. This increase is
caused by approximately $500,000 in expense from the hiring of additional
office, sales and laboratory staff and salary increases during fiscal 1999.
Research and development costs increased to $76,046 and $219,586
for the three and nine month periods ended June 30, 1999, compared to $26,005
and $16,304 for the same periods in 1998. This increase is primarily
attributable to increased research in Fischer-Tropsch technology.
Depreciation and amortization increased by $14,766 and $48,440 for
the three and nine month periods ended June 30, 1999 compared to the three
months and nine months ended June 30,1998 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 $780,804 and $2,274,620 for the
three and nine month periods ended June 30, 1999 compared to $405,098 and
$1,340,946 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
11
<PAGE>
by royalty income which commenced in October 1998, revenue from laboratory
technical services billed and revenue from mud logging services.
Interest income was $47,753 higher during the nine month period
ended June 30, 1999 as compared to the same period of 1998 because the
Company's in cash on hand was greater than for the comparable period in 1998.
Interest income was $3,533 less for the three month period as cash on hand
was lower than the comparable period in 1998.
Interest expense during the three and nine month periods ended
June 30, 1999 was $26,681 and $38,896 compared to $2,635 and $113,793 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 and interest on
notes taken in June 1999 when the net assets of Petroleum Mud Logging , Inc.
were acquired.
LIQUIDITY AND CAPITAL RESOURCES.
At June 30, 1999, the Company had working capital of $665,846 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,
purchase of a business, deposits on planned future acquisitions and purchase
of capital assets partially offset by the proceeds from preferred stock and
common stock issued for cash.
The cash received by the Company during the nine month period
ended June 30, 1999 and the cash generated from 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.
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 June 30, 1999.
The Company is in the process of closing its Pueblo testing facility. An
operating business was acquired June 1, 1999 for $1,372,958.
The Company has deferred tax assets with a 100 percent valuation
allowance at June 30, 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.
2ND QUARTER ACTIVITIES
ACQUISITION OF MUD LOGGING, INC. AND PETROLEUM WELL LOGGING, INC.
Rentech announced that it has completed the acquisition of the
assets of Petroleum Mud Logging, Inc. ("PML") and Petroleum Well Logging,
Inc. ("PWL"), two related firms located in Oklahoma City, Oklahoma. PML and
PWL have provided petroleum and natural gas well mudlogging services to the
oil and gas industry for the past thirty-six years.
Mudlogging is an essential and invaluable part of drilling an oil
and gas well. Mudlogging companies (the name is derived from the drilling mud
that is used to lubricate the drill bit when drilling for oil or gas) analyze
the mineralization and gasses in the drilling mud in order to better
determine the presence of hydrocarbons in a well.
Specializing in natural gas, PML, PWL and their twenty-four
employees, have achieved a strong technical presence in their field. PML and
PWL maintain a fleet of eighteen mudlogging units. Each is equipped with
state of the art instrumentation and satellite uplink capabilities for
immediate worldwide transmission of results to their customers. They provide
mudlogging services in a five state area (Texas, Oklahoma, Kansas, Louisiana
and Arkansas), to numerous companies including current customers such as
Anadarko, Shell and Texaco. Their database of comprehensive mudlogs is
considered to be one of the most extensive libraries of information of its
kind.
12
<PAGE>
Rentech estimates that the acquisition will generated between $1.2
million and $1.5 million in gross revenue for the Company in its first full
year of ownership and will contribute to the Company's goal of becoming cash
flow positive.
AGREEMENT WITH REPUBLIC FINANCIAL CORPORATION
The Company completed an agreement with Republic Financial
Corporation ("Republic") pursuant to which Rentech and Republic will jointly
develop projects utilizing Rentech's proprietary Fischer-Tropsch technology.
Republic is a 28 year old privately held asset acquisition and
financial services firm, headquartered in Denver, Colorado. Republic has
strategic relationships with selected Fortune 500 companies and has ownership
interests in approximately $700 million of assets in the following
industries: energy, chemicals, natural resources, commercial aircraft and
commercial real estate. Republic recently agreed to acquire 119 Boeing 727
200-passenger aircraft airframes from a major US air carrier to supply its
727 200-passenger-to-freighter conversion program.
The Republic/Rentech agreement represents a milestone for Rentech
in its efforts to commercialize the Company's Fisher-Tropsch technology.
Rentech's access to capital to finance either new plants or to purchase
exiting industry facilities, which can be modified to Fisher-Tropsch plants,
is materially enhanced by having a strategic alliance with Republic. Rentech
and Republic will immediately begin to pursue projects under this agreement.
LETTER OF INTENT TO ACQUIRE MAJORITY INTEREST IN REN CORPORATION
In the second quarter, Rentech announced the signing of a Letter
of Intent to acquire fifty-one percent of the stock of REN Corporation
("REN"), located in Stillwater, Oklahoma.
Established in 1980, REN is a world leader in the manufacture of
complex microprocessor controlled industrial systems. REN's primary market
has been automated test equipment for the fluid power industry. REN
manufactures test instruments for various types of equipment such as
automatic hydraulic presses, transmissions, diesel fuel injection pumps and
gearbox and power supply systems. REN's customer base currently consists of
some of the world's largest heavy equipment manufacturers, including Boeing,
Case Corporation, Caterpillar, Inc., John Deere, Sauer-Sundstrand, Eaton and
Mannesmann-Rexroth.
Rentech views the potential acquisition as an excellent complement
to the organization as it fits well within the parameters Rentech has set
forth in its acquisition strategy of building a solid business foundation for
the Company. The acquisition criteria are: (a) the company must be situated
geographically within the central United States; (b) the company must be cash
flow positive; (c) the current active management must stay with the company
for a minimum of two to five years; and, (d) the company must be able to grow
with minimal capital outlays.
The final agreement is subject to the completion of Rentech's due
diligence and the funding of the purchase and approval by each company's
managements.
13
<PAGE>
TECHNICAL SERVICES AGREEMENT REACHED BETWEEN RENTECH AND TEXACO
ENERGY SYSTEMS
On June 16, 1999, Texaco Energy Systems, a subsidiary of Texaco
Inc. (Texaco), and Rentech announced the signing of a Technical Services
Agreement to research the integration of Rentech's "Fisher-Tropsch"
technology with Texaco's gasification process. The goal of the Agreement is
to produce a clean burning sulfur and aromatic free diesel fuel.
The Technical Services Agreement is a follow-up to a Licensing
Agreement between the two companies signed on October 8, 1998. The Technical
Services Agreement calls for technical and developmental work to be carried
out at the Rentech research and development facilities in Denver. The
companies will work to maximize the hydrocarbon yield from synthesis gas
produced by the Texaco gasification process. Work has already begun and will
be carried out over the next 18 months.
The Texaco gasification process is a proprietary technology for
producing synthesis gas from a broad range of feedstocks such as coal,
petroleum coke, residual oils and byproducts generated in refineries and
chemical plants. Worldwide, there are 68 Texaco-owned or licensed
gasification plants operating or under construction.
Texaco Energy Systems Inc. is working to develop commercially
viable, environmentally beneficial fuel conversion systems which use
hydrocarbon feedstocks. In addition, Texaco Energy Systems is pursuing the
application of its gasification process to fuel cell technologies for
transportation and distributed power systems. The value of the Agreement may
approximate $2 million in engineering fees over the next 10 months.
GOVERNMENT CONTRACTS FOR ITN ENERGY SYSTEMS AND GLOBAL SOLAR
ENERGY, LLC
In the second quarter Rentech announced that ITN Energy Systems
("ITN") and Global Solar Energy LLC ("GSE") have been the recipients of nine
research and development contracts from various federal government entities
totaling $3.7 million. Rentech owns a ten percent interest in ITN.
The size of the contracts vary from $69,871 for a six-month study,
to $747,832 for a two-year project. The awards were granted by the National
Aeronautical Space Administration, (NASA), NASA Jet Propulsion Laboratory,
NASA Johnson Space Center, the Air Force Research Laboratory and the United
States Department of Naval Defense.
The contracts range from study phase work to programs that will
develop and demonstrate actual prototype systems. The contracts will
incorporate ITN's expertise in light-weight thin film technologies,
including: thin film batteries; flexible photovoltaic panels; flex circuitry;
radio frequency circuitry (RF); shape memory alloys; lightweight high energy
power storage; and, lightweight development systems for space.
One of the contracts awarded by NASA was received by GSE. The
$599,857 two-year project is for a high voltage module and provide a 300-volt
test unit for a possible space flight experiment. ITN specializes in the
manufacture of lightweight thin film substrates using proprietary vapor
deposition technology developed by its founder, Dr. Mohan Misra. ITN holds a
50% interest in GSE, a venture with UniSource Energy Corporation.
SUBSEQUENT EVENTS
RENTECH AND THERMAL CONVERSION CORP. RECEIVE $175,00 FROM DOE
Rentech, Inc. received a $175,000 grant from the Department of
Energy ("DOE") as part of a cost-sharing contract to demonstrate Therman
Conversion Corp.'s ("TCC") plasma reforming process.
The $175,00 DOE contribution provided for the testing of TCC's
plasma technology. Testing will include the introduction of steam to the
feedstock base as well as various natural gas compositions.
The original two-phase, Joint Demonstration Project ("JDP") was
established in September of 1998 to evaluate the use of the TCC plasma
technology which uses a proprietary high-power, induction-coupled plasma
torch and high-temperature reactors
14
<PAGE>
to convert natural gas into a tailored synthesis gas, suitable for use by
Rentech's Gas-To-Liquids ("GTL") process. Synthesis gas, a mixture of carbon
monoxide (CO) and hydrogen (H2) is the intermediate step for the conversion
of carbon bearing materials to liquid hydrocarbon for all GTL processes.
This successful demonstration of the TCC system can now provide
for the reduction in the cost of GTL development, making Rentech's GTL
process even more competitive as an alternative oil and gas technology in the
future. TCC's plasma technology may also provide a cost-effective solution
for barge mounted GTL processes. Use of the TCC system, as the first step in
the Rentech process, could be implemented as part of the overall GTL process,
to convert natural gas produced on remote off-shore platforms into clean
liquid hydrocarbons that previously might not have been possible.
RENTECH INITIATES METHANOL PLANT CONVERSION EVALUATION
Rentech, Inc. and the owners of a domestic methanol production
facility have initiated an evaluation of the economic feasibility of
converting an existing methanol facility to produce Fisher-Tropsch ("FT")
liquid hydrocarbon products.
The companies will proceed immediately with the evaluation. After
conversion, the plant will use Rentech's patented and proprietary
Gas-To-Liquids ("GTL"), or FT technology. Successful retrofitting of the
facility could provide in excess of 2000 bbl./d of high quality GTL products.
The mix would include clean burning, sulfur and aromatic free diesel fuel,
naphtha and other high value premium products. The identity of the methanol
plant owner will only be disclosed after a decision to proceed has been
reached.
The first step in making methanol or Fisher-Tropsch products
requires the production of synthesis gas. The front-end synthesis gas process
represents 60% of the cost of building a GTL facility. Already having the
syngas plant in place may allow for the implementation of a GTL system at a
substantial savings of cost and time. The costs savings of retrofitting a
methanol plant with GTL technology could be 30% to 70% less than the expense
of developing and building a full scale GTL facility, depending on the
products produced.
RENTECH ENTERS FORMAL PETITION TO THE DOE FOR ALTERNATIVE FUEL
DESIGNATION
Rentech has filed a formal petition with the Department of Energy
("DOE") to designate Rentech Inc.'s clean-burning diesel fuel produced by its
Fisher-Tropsch ("FT") process from natural gas or coal as an "Alternative
Fuel" under Section 301(2) of the ENERGY POLICY ACT OF 1992.
The purpose of this petition is to request the Secretary of Energy
to initiate a rulemaking determining that the Fisher-Tropsch clean diesel
fuel produced by Rentech, Inc.'s proprietary and patented Fisher-Tropsch
process meets the criteria set forth in Section 301(2) of the ENERGY POLICY
ACT OF 1992 ("EPACT"), and is therefore found to be an "alternative fuel"
under the law and implementing regulations. The petition contains, in part,
the following:
"... EPACT was legislated for the purpose of reducing our
country's dependence on foreign oil. Its passage affected
virtually every sector of the energy industry. Among its
many provisions are mechanisms to promote vehicles that run
on non-petroleum-based fuels. EPACT listed several fuels
that qualify as an alternative fuel and made provision for
the Secretary to determine, by rule, other fuels that meet
certain criteria to also be classified as an "...
alternative fuel." Specifically, the criteria are that the
fuel is "... substantially not petroleum and would yield
substantial energy security benefits and substantial
environmental benefits ...".
Rentech has developed a proprietary iron-based catalyst
which it utilized in the Rentech Fisher-Tropsch process that
takes natural gas, coal or refinery waste bottoms and
converts them into a sulfur and aromatic free (no cancer
causing agents) diesel fuel and other high quality
by-products. Rentech's Diesel Fuel is clean burning (low
smoke), sulfur free (reduced engine wear), has high cetane
index (fast starting), and contains no aromatics
15
<PAGE>
(low pollution). Additionally, its use does not require any
existing diesel engine modifications. The Rentech iron-based
catalyst is a non-hazardous material easily disposed of when
it is spent.
Because the Rentech process uses natural gas or coal as its
primary feedstocks to produce its clean diesel fuel, it is,
by definition, not petroleum based. The feedstocks can be
obtained from many under-utilized sources and will add to
domestic production capacities and reduce our country's need
for imported oil. Use of the fuel offers significant
environmental benefits because the fuel can utilize waste
materials as feedstock; is environmentally benign in its
manufacture; and, is clean burning in existing diesel
engines. The sulfur-free fuel will also be useful in the new
generation of fuel cell technologies.
With the existing testing of F-T diesel and the support of
the DOE, National Renewable Energy Laboratory, Environmental
Protection Agency and industry for the implementation of F-T
diesel in the mix of transportation fuels in the United
States, we assert that it is in the national interest to
have Rentech's clean Fisher-Tropsch Diesel Fuel approved as
an alternative fuel under EPACT. Such approval will speed
the maker's acceptance of this and similar fuels and will
lead to the construction and long-term operation of many
production facilities, adding jobs to the economy and a
clean fuel to the marketplace ..."
With this action, Rentech becomes the first F-T technology
provider to petition the DOE for alternative fuels designation. Under EPACT
mandates, seventy-five percent of all federal and state government purchased
vehicles and ninety percent of all affected vehicle purchases by private
alternative fuels supplies must be alternative fuel vehicles (AFVs.) These
requirements began in 1997 and affect centrally fueled fleets with twenty or
more light duty vehicles (less than 8,500 lbs.) that operate in major urban
areas. Current DOE documentation states that these goals are not being
reached and that a minimum of $13 billion in tax credits and subsidies must
be spent just on an alternative fuels ("AF") infrastructure to reach a five
percent AF market penetration by the year 2010.
The clean burning properties of F-T have been known for years and
have shown under extensive test conditions and everyday use as a
transportation fuel, to be one of the cleanest alternative fuels made from
coal or natural gas available. The finest research institutes in the world as
well as the DOE have publicly stated that F-T fuels are part of the solution
to reducing emissions. Given all the factors including, fuel quality and
performance, delivery infrastructure and vehicle cost savings, a designation
of F-T fuels as an alternative fuel by the DOE could provide the United
States with the most immediate and coast effective solution to our clean air
dilemma."
RENTECH SIGNS PRIVATE FINANCING ENGAGEMENT LETTER WITH EVEREN;
WILL SEEK TO RAISE UP TO $20,000,000
Rentech, Inc. and EVEREN Securities, Inc., the primary subsidiary
of EVEREN Capital Corporation (NYSE: EVR), announced today that Rentech has
signed a Private Financing Engagement Letter with EVEREN whereby EVEREN will
assist Rentech as its exclusive financial advisor.
Under the terms of the Engagement Letter EVEREN will support
Rentech in its efforts to obtain an aggregate of $15,000,000 to $20,000,000
through privately placed equity with institutional and industry investors.
Rentech will use the proceeds to: advance its business plan; continue to
strengthen the financial position of the Company; fund its previously defined
acquisitions; promote, market and enhance its position in Gas-To-Liquids and
related activities; and position the Company to take full advantage of the
commercialization of its Gas-To-Liquids technology. While the proposed
offering will result in the issuance of additional Rentech shares, it is
expected to be anti-dilutive on an earnings and cash flow basis based upon
acquisitions and GTL projects currently contemplated.
EVEREN Capital Corporation is a financial services holding company
whose primary subsidiary, EVEREN Securities, Inc. ranks among the 10 largest
national full-service securities brokerage firms in the U.S. EVEREN provides
comprehensive
16
<PAGE>
investment, financial advisory and capital markets services to individuals,
governments, corporations and institutions. The firm's 1,872 investment
consultants are located in 169 branches, serving 633,000 clients representing
$67.2 billion in assets.
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 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 $2,245,027 and $1,433,061 respectively for the nine months ended
June 30, 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 $146,883 increase in accounts receivable during the
nine months ended June 30,1999 compared to a $145,345 increase during the
comparable fiscal year 1998 period. Increases in accounts receivable during
the current fiscal year resulting from new revenues generated by billing of
services were offset by decreases in Okon's accounts receivable.
Accounts payable decreased by $67,591 during the nine months ended
June 30, 1999 compared to a $50,049 increase for the prior year comparable
period.
Lessee deposits increased by $9,248 during the nine month period
ended June 30,1999 when the Company purchased the lab facility which was
occupied by tenants.
17
<PAGE>
The Company purchased $505,335 in equipment and leasehold
improvements, $448,224 in real estate and used $590,009 in cash to acquire
the net assets of Petroleum Mud Logging, Inc. and Petroleum Well Logging Inc.
during the nine month period ended June 30, 1999 compared to equipment
purchases of $60,721 during the comparable 1998 period.
Deposits and other assets increased by $404,959 during the nine
months ended June 30,1999 compared to a $2,511 increase for the comparable
1998 period. An additional $26,320 was paid on a future joint venture project
and $377,615 was paid on deposits against planned future acquisitions
A $230,000 deposit paid in the nine month period ended June 30,
1998 was applied against the purchase price of a ten percent interest in
ITN/ES in fiscal 1998.
The Company financed a portion of its activities by net proceeds
of $1,471,000 from the issuance of preferred stock and $286,194 from the
issuance of its common stock during the 1999 period compared to proceeds of
$60,000 from convertible notes payable and $2,454,786 in net proceeds from
the issuance of preferred stock and 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 June 30, 1999
$2,437 was paid on the principal. An additional mortgage in the amount of
$70,749 and notes payable totaling $57,100 were assumed when the net assets
of Petroleum Mud Logging, Inc were purchased June 1, 1999. As of June 30,
1999, the Company made principal payments of $6,878 on these notes payable.
Cash decreased during the nine months ended June 30, 1999 by
$2,211,847 compared to an increase of $254,500 for the comparable period in
1998. These changes decreased the ending cash balance to $844,532 at June 30,
1999 from $3,056,379 at September 30, 1998. The 1998 changes increased the
$391,487 September 30, 1997 cash balance to $645,987 at June 30, 1998.
18
<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
19
<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: August 14, 1999 /s/ Dennis L. Yakabson
------------------------------
Dennis L. Yakobson, President
Dated: August 14, 1999 /s/ James P. Samuels
------------------------------
James P. Samuels, Vice President-Finance
and Chief Financial Officer
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 844,532
<SECURITIES> 0
<RECEIVABLES> 373,320
<ALLOWANCES> 1,504
<INVENTORY> 110,266
<CURRENT-ASSETS> 1,535,883
<PP&E> 3,359,943
<DEPRECIATION> 268,383
<TOTAL-ASSETS> 12,013,784
<CURRENT-LIABILITIES> 870,037
<BONDS> 954,892
0
880,000
<COMMON> 453,885
<OTHER-SE> 8,658,101
<TOTAL-LIABILITY-AND-EQUITY> 12,013,784
<SALES> 1,386,953
<TOTAL-REVENUES> 1,852,358
<CGS> 650,069
<TOTAL-COSTS> 4,126,986
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,800
<INTEREST-EXPENSE> 38,896
<INCOME-PRETAX> (2,244,093)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,244,093)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,244,093)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
