<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
PRE-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
KFX INC.
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1079971
- ---------------------------------- ----------
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
1999 Broadway, Suite 3200, Denver, Colorado 80202, (303) 293-2992
-----------------------------------------------------------------
(Address, including ZIP code, and telephone number,
including area code, of registrant's principal executive offices)
-----------------------
Theodore Venners
President and Chief Executive Officer
1999 Broadway, Suite 3200, Denver, Colorado 80202, (303) 293-2992
-----------------------------------------------------------------
(Name, address, including ZIP code, and telephone number,
including area code, of agent for service)
____________________
COPIES TO:
Warren L. Troupe, Esq.
Deborah A. Hogan, Esq.
Kutak Rock
717 Seventeenth Street, Suite 2900
Denver, Colorado 80202
(303) 297-2400
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, 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 this prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===================================================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF PROPOSED MAXIMUM OFFERING AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED PRICE PER SHARE/(1)/ PRICE/(1)/ REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par 2,323,000 $7.34 $17,050,820 $5,879.59/(2)/
value per share
===================================================================================================================================
</TABLE>
/(1)/ Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
/(2)/ $5,552.65 was paid with previous filings.
-------------------------------
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 AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
IN ACCORDANCE WITH RULE 429 UNDER THE SECURITIES ACT OF 1933, THE
PROSPECTUS CONTAINED HEREIN ALSO RELATES TO (1) 237,747 SHARES OF THE
REGISTRANT'S COMMON STOCK COVERED BY REGISTRATION STATEMENT NO. 33-90128, AND
(2) 431,630 SHARES OF THE REGISTRANT'S COMMON STOCK COVERED BY REGISTRATION
STATEMENT NO. 33-97148.
<PAGE>
PROSPECTUS
2,992,377 SHARES
KFX INC.
COMMON STOCK
This Prospectus relates to 2,992,377 shares of Common Stock, par value
$.001 per share (the "Common Stock") of KFx Inc., a Delaware corporation (the
"Company"), which may be offered from time to time by the selling stockholders
named herein (the "Selling Stockholders"), including shares to be received upon
the exercise of stock options and warrants. The Company will not receive any
proceeds from the sale of the Common Stock offered by the Selling Stockholders
hereby but will receive certain proceeds upon the exercise of the stock options
and warrants, which proceeds will be used for working capital. The Company will
pay all expenses incident to the registration of the Common Stock under the
Securities Act of 1933, as amended (the "Securities Act").
Sales by the Selling Stockholders hereby may be effected from time to time
in one or more transactions for their own account (which may include block
transactions) on the American Stock Exchange or in negotiated transactions.
Sales will be at prices and on terms then prevailing or at prices related to the
current market price or at negotiated prices and terms. In connection with any
sales of the Common Stock offered hereby, the Selling Stockholders and
participating agents, brokers or dealers may be deemed to be underwriters as
that term is defined under the Securities Act, and commissions or discounts or
any profit realized on the resale of such securities may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution."
The Common Stock is listed for trading on the American Stock Exchange
("AMEX") under the symbol "KFX." On July 16, 1996, the last reported sale price
of the Common Stock on the AMEX was $6.75 per share.
THESE SECURITIES ARE SUBJECT TO A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN PURCHASING THE SHARES OF COMMON
STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES 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 July __, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at Room 1024, 450 Fifth Street, N.W, Washington, D.C.
20549. The Common Stock of the Company is quoted on the American Stock Exchange.
Reports and other information concerning the Company may also be inspected at
the offices of The American Stock Exchange, Inc. at 86 Trinity Place, New York,
New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus: (1) the Company's Annual Report on
Form 10-KSB for the fiscal year ended December 31, 1995, (2) Amendment No. 1 to
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995,
(3) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1996, (4) the Company's Current Report on Form 8-K dated April 19, 1996, and (5)
the description of the Company's Common Stock contained in its Registration
Statement on Form 10-SB filed with the Commission on July 11, 1994. All
documents filed by the Company with the Commission pursuant to Section 13(a), 13
(c), 14 or 15 (d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering covered by this Prospectus will be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained herein
or in any document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide, without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the information that has been or may be incorporated by reference
in this Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference into such documents). Such requests
should be directed to KFx Inc. Attention: Corporate Secretary, 1999 Broadway,
Suite 3200, Denver, Colorado 80202, telephone (303) 293-2992.
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RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in the Prospectus. In addition to the other information contained in this
Prospectus, prospective investors should carefully consider the following risk
factors before purchasing the Common Stock offered hereby.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY. The
Company has had no material licensing, royalty or product sales revenues or
income from operations since its inception in February 1988 (or prior to
inception when the operations of the Company were conducted by various
predecessor entities). Net losses before extraordinary items were approximately
$8.8 million and $6.1 million in 1995 and 1994, respectively. The Company
expects to incur additional losses in the foreseeable future and there can be no
assurance that the Company will ever achieve substantial revenues or
profitability, or that profitability will be sustained for any period of time.
UNCERTAINTY OF ADDITIONAL FUNDING. The current near-term funding sources
available to the Company are (i) cash on hand, which as of July 16, 1996 was
approximately $3.4 million; (ii) an option granted to Thermo Ecotek Corporation
("TEC") for the sale of up to 1.25 million shares of Common Stock during a two-
month period beginning in December 1996, for proceeds to the Company of up to
$2.5 million; (iii) the expected start-up of the KFx Fuel Partners, L.P.
production facility near Gillette, Wyoming in the fourth quarter of 1996 (the
"Project"), which is expected to result in royalty payments, net profits
interest, and possible management fees to the Company; (iv) the exercise of
certain outstanding common stock purchase warrants, which could result in
proceeds to the Company in late 1996 of up to approximately $0.5 million; and
(v) certain cost reimbursements from K-Fuel L.L.C., a Delaware limited liability
company ("K-Fuel LLC") formed to facilitate a collective research and
development program between the Company and Kennecott Alternative Fuels, Inc.
("KECC"). See "THE COMPANY-Recent Developments." The Company believes that based
solely on the current cash on hand and the expected cost reimbursement payments
from K-Fuel LLC, the Company will be able to fund its current operating
requirements until the second or third quarter of 1997. If TEC does not exercise
its option in December 1996 or January 1997, the Company will be required to
seek additional financing sources in late 1997 or early 1998. Additionally, the
Company may be required to obtain additional financing for an equity
participation, if any, in any future K-Fuel production facilities. The Company
does not currently have any commitments with respect to additional financing,
and there can be no assurance that such financing would be available on terms
acceptable to the Company or at all. In addition, the ability of the Company to
secure additional financing is limited by the terms of a Stock Purchase
Agreement between the Company and TEC pursuant to which, without the prior
written consent of TEC, the Company may not, among other things, issue or sell
any class or series of stock other than Common Stock; use more than 10% of the
proceeds from the sale of
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<PAGE>
any stock for activities other than the construction, ownership and/or operation
of K-Fuel plants, or incur any indebtedness other than purchase money
indebtedness that is secured only by the assets of a particular project and is
nonrecourse to the Company and its subsidiaries.
UNCERTAINTY OF PROJECT PROFITABILITY. The Company currently anticipates
that one of its significant future revenue sources will be the commencement of
licensing and royalty payments and operating revenues from the Project and
future expected production facilities to be developed under the agreements with
K-Fuel LLC. See "THE COMPANY-Recent Developments." However, there can be no
assurance that the Project will be profitable or that it will be able to begin
operations as scheduled or that any additional facilities will be developed. The
failure of the Company to receive payments from the Project as anticipated may
require the Company to seek additional financing in late 1997.
NO ESTABLISHED MARKET FOR BENEFICIATED FUEL PRODUCTS. Although the Company
believes that a substantial market will develop both domestically and
internationally for clean coal fuel products, an established market does not
currently exist. As no established market exists, the availability of accurate
and reliable pricing information and transportation alternatives are not fully
known. The future success of the Company will be determined by its ability to
establish such a market among potential customers such as electrical utility
companies and industrial coal users. Many of such potential users of the
Company's fuel products will be able to choose among alternative fuel supplies.
Although the Company has successfully operated a K-Fuel Technology (as defined
herein) demonstration plant, the market viability of the K-Fuel Technology will
not be known until the Company constructs one or more commercial-scale
production facilities, either in the United States or internationally. Pursuant
to a Partnership Agreement by and among Eco Fuels, Inc., KFx Wyoming, Inc., a
wholly owned subsidiary of the Company, and TCK Fuels, Inc., the Company has a
5% interest in a limited partnership formed to construct, develop and operate
the Project. Until the Project is completed or another commercial-scale facility
is constructed, the Company faces the risk that it will be unable to generate
sufficient market interest to continue in business. Further, there can be no
assurance that the Project or any other commercial-scale facility will be
successful.
FEDERAL REGULATION OF AIR EMISSIONS. A significant factor driving the
creation of the United States market is the Clean Air Act, as amended by the
Clean Air Act Amendments of 1990 (the "Clean Air Act"). The Clean Air Act
specifies certain air emission requirements for electrical utility companies and
industrial coal users. The Company believes that compliance with such
regulations by these coal users can be fully or partially met through the use of
clean-burning fuel technologies such as that developed by the Company. A full or
partial repeal of the Clean Air Act would have a material adverse effect on the
Company. The Company is unable to predict future regulatory changes and their
impact on the demand for the Company's products.
OIL BARREL EQUIVALENT TAX CREDIT. The Federal Oil Barrel Equivalent Tax
Credit ("OBETC") is a significant incentive for potential joint venture partners
to invest in United States commercial-scale production facilities using the K-
Fuel Technology. A repeal or revision
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of the amount of federal tax credits provided by the OBETC could negatively
impact the ability of the Company to attract additional joint venture partners
for United States commercial-scale production facilities.
COMPETITION. The Company will face competition from other companies in the
clean coal and alternative fuel technology industries. Some of these companies
have financial and managerial resources greater than those of the Company, and
therefore may be able to offer products more competitively priced and more
widely available than those of the Company. Also, such competitors' products may
make the Company's technology and products obsolete or non-competitive.
CLAIMS AGAINST FUTURE LICENSING AND ROYALTY STREAMS. The Company
anticipates that a significant portion of its future revenue stream will be in
the form of licensing and royalty payments from third party licensees operating
commercial-scale production facilities. As part of a debt restructuring
agreement reached with the State of Wyoming in 1994, the Company granted a 12%
interest in future licensing and royalty payments from its K-Fuel Technology to
the State of Wyoming, until the State's interest has reached $5 million.
Thereafter, the State's interest decreases to 6% of licensing and royalty
streams. The Company also has a royalty agreement with Mr. Edward Koppelman, the
inventor of the K-Fuel Technology, whereby Mr. Koppelman is entitled to 25% of
future license fees and royalty payments received by the Company up to a maximum
of approximately $75.7 million. Additionally, the Company has entered into
royalty agreements with two other entities in connection with the Project
whereby the Company is obligated to pay (i) an overriding royalty of 0.5% on the
gross revenues generated by the sale of fuel produced at any plant (other than
the Project) located in the United States in which the feedstock is coal and
which uses the proprietary Series "C" technology to produce fuel, and (ii) 20%
of the royalty income received by the Company until the earlier of such time as
(a) the other party has received royalty payments of $1,500,000 or (b) September
15, 2015, respectively. Amounts due under these agreements may restrict or limit
the Company's ability to pursue other commercialization opportunities as such
payments will decrease cash flow from operations.
RELIANCE ON EXISTING MANAGEMENT. The Company's progress to date has been
largely the result of the efforts of its executive management team and Board of
Directors. The loss to the Company of any of these individuals could have a
material adverse effect on the Company. The Company has a limited amount of "key
man" life insurance for Theodore Venners, the Chairman of the Board of
Directors, President and Chief Executive Officer.
COMMON STOCK ELIGIBLE FOR FUTURE SALE AND PRICE OF COMMON STOCK. Sales of
substantial numbers of shares of Common Stock in the public market following the
offering hereby could adversely affect the market price of the Common Stock.
Upon completion of this offering, there will continue to be 22,531,040 shares of
Common Stock outstanding. The 2,992,377 shares of Common Stock sold pursuant to
this offering will be freely tradeable without restriction (except as to those
shares sold to affiliates of the Company). Of the remaining shares of Common
Stock outstanding, 15,672,070 are "restricted securities" within
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<PAGE>
the meaning of Rule 144 under the Securities Act ("Rule 144"). In the near
future the Company may also consider filing a registration statement with
respect to shares of Common Stock to be offered and sold by the Company in order
to raise capital for a commercial plant project, although at this time the
Company cannot estimate the amount or time of such an offering. The Company is
unable to predict the effect that sales of Common Stock under Rule 144 or
pursuant to such registration or otherwise may have on the then prevailing
market price of the Common Stock.
DILUTION; CHANGE IN CONTROL. There are currently outstanding options and
warrants to purchase 10,900,000 shares of Common Stock, which includes TEC's
option to acquire up to 1,250,000 shares and a warrant issued to TEC to purchase
7,750,000 shares of Common Stock ("Warrant A"). In addition, TEC has a warrant
(the "Control Warrant"), which may only be exercised if TEC exercises the stock
option and Warrant A. The Control Warrant gives TEC the right to purchase the
number of shares of Common Stock that, when added to all shares owned by TEC on
the exercise date or which TEC has the right to acquire within sixty days of the
exercise date, would be sufficient to give TEC ownership of 51 percent of the
Common Stock outstanding, on a fully diluted basis, on the exercise date. To the
extent such options or warrants are exercised, it will result in dilution to
existing stockholders. In addition, as long as such options or warrants are
outstanding, the terms upon which the Company will be able to obtain additional
equity capital may be adversely affected since the holders of the outstanding
options and warrants can be expected to exercise them, to the extent that they
are able to, thereby adversely affecting the Company's ability to raise
additional equity capital.
GOVERNMENTAL REGULATION. The Company's business is subject to numerous
federal and state regulations. Any United States production plants which may be
constructed will require numerous permits, approvals and certificates from
appropriate federal, state and local governmental agencies before construction
of any such facility may begin, and will be subject to periodic maintenance or
review requirements once any such facilities begin production. Such permits and
regulations relate to (i) air quality; (ii) wastewater discharge; (iii) land
quality; and (iv) hazardous waste treatment storage and disposal. There can be
no assurance that such approval will be granted to the Company. In addition,
there can be no assurance that future domestic or international governmental
regulations will not change such that the necessary permits and approvals for
any future commercial-scale production facilities will be prohibitively
expensive or difficult to obtain. Any failure to obtain required regulatory
approvals, or any substantial delay in obtaining such approval, could have a
material adverse effect on the Company.
OPERATIONS IN FOREIGN COUNTRIES. The Company believes that opportunities
for exploiting its technologies may exist in foreign countries that are
experiencing severe environmental problems or in countries that can develop an
export market for beneficiated coal fuel products. Many of these countries are
located in Asia and Eastern Europe, and have histories of volatile government
control and poor economic conditions. Although the Company currently has no
production facilities in any of these countries, future production facilities in
such countries could be subject to high levels of regulation and/or taxation,
poor local economic
6
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conditions, and in extreme circumstances, expropriation of assets. Additionally,
repatriated net revenues from such production facilities could be subject to
unfavorable foreign exchange conditions. The Company has identified the
countries of the Czech Republic, Indonesia and Turkey as current specific
targets for the K-Fuel Technology. The specific risks associated with
investments in these countries can generally be categorized as those risks
identified above.
ABSENCE OF DIVIDENDS. The Company has never paid any cash dividends and
does not anticipate paying cash dividends in the foreseeable future. In
addition, pursuant to a stock purchase agreement between the Company and TEC, so
long as TEC, together with its affiliates, own at least 1,000,000 shares of
Common Stock and either of the warrants issued to TEC remain in effect, the
Company may not declare or pay any dividends on its Common Stock other than
dividends payable solely in Common Stock.
THE COMPANY
The Company, formerly Beaumont Financial Ltd., was incorporated in Delaware
in February 1988 and is engaged in the business of licensing and commercializing
a technology that enhances the combustion characteristics of coal and other
carbonaceous fuels ( the "K-Fuel Technology"). The K-Fuel Technology uses heat
and pressure to physically and chemically transform high-moisture, low energy
per pound coal and other organic feedstocks into a lower moisture, high energy
solid fuel ("K-Fuel"). The Company believes that the principal benefit of the K-
Fuel Technology in the United States is that the fuel produced from the process
can allow electrical power producers, manufacturers and other large scale users
of coal to meet the clean air standards imposed by the Clean Air Act. In the
absence of a clean-burning fuel such as that produced by the K-Fuel Technology,
many existing users of coal face costly capital expenditure requirements to
modify their coal-powered facilities to comply with the Clean Air Act. The
Company believes that the principal benefit of the K-Fuel Technology in markets
outside of the United States is that low-rank indigenous coal supplies can be
upgraded to provide a more cost effective and less environmentally damaging fuel
source for power producers, manufacturers and households. This is of particular
importance for many developing nations that are rapidly industrializing and that
face pressure (both internally and externally) to increase their environmental
standards and make the most cost effective use of indigenous energy sources.
Also, the ability to upgrade low-rank indigenous coal resources to a more clean
burning, energy efficient fuel could create the opportunity for nations with
abundant coal resources to generate hard currency export earnings from the sale
of upgraded fuel product. See "Risk Factors."
RECENT DEVELOPMENTS
In April 1996 the Company and KECC, a wholly owned subsidiary of Kennecott
Energy and Coal Company, formed K-Fuel LLC. Pursuant to the Limited Liability
Company Agreement of K-Fuel LLC (the "Agreement"), K-Fuel LLC will provide
support for further technical advancement and the commercialization of business
opportunities arising out of the K-Fuel Technology, including research and
development, sublicensing, marketing and consulting, but not including any
actual construction of plants or facilities to produce K-Fuel products on
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a commercial basis ("Commercial Projects"). Commercial Projects will be
constructed by separate entities in which KECC, the Company or both will have an
equity interest and which will receive a sublicense from K-Fuel LLC for the K-
Fuel Technology.
Initially, the Company will have a 51% interest in K-Fuel LLC and KECC will
have a 49% interest. At such time as entities in which KECC has an equity
interest have placed into service Commercial Projects with a collective design
capacity equal to or in excess of 3 million tons of K-Fuel product per annum,
KECC will have a 51% interest in K-Fuel LLC and the Company will have a 49%
interest. The initial capital contributions to K-Fuel LLC by KECC and the
Company were $1,001,000 and $1,000, respectively. Subsequently, K-Fuel LLC made
a payment of $1,000,000 of such capital contribution to the Company in
consideration for the Company entering into the Agreement. KECC has also agreed
to pay to K-Fuel LLC such amounts as may be necessary for all research and
development costs incurred by K-Fuel LLC up to $4,000,000. KECC has the right to
terminate its obligation to fund research and development costs at any time upon
written notice to the Company. Upon such termination, the Company would have the
right and option to acquire all of KECC's interest in K-Fuel LLC for $1,000 and
KECC would no longer have an interest in K-Fuel LLC or the K-Fuel Technology.
In connection with the Agreement, the Company granted K-Fuel LLC an
exclusive, worldwide, fully-paid, royalty-free right and license (including the
right to grant sublicenses) to and under the K-fuel Technology, except to the
extent that it pertains to the beneficiation or restructuring of coal or coal
related feedstocks under the Series A and Series B K-Fuel Technology (the "KFX
License"). In addition, Heartland Fuels Corporation, an 85% owned subsidiary of
the Company, granted K-Fuel LLC an exclusive, worldwide, fully-paid, royalty-
free right and license (including the right to grant sublicenses) to and under
the Series A and Series B K-Fuel Technology, as it pertains to the beneficiation
or restructuring of coal or coal related feedstocks (the "HFC License"). Both
the KFX License and the HFC License specify minimum terms and provisions for any
sublicenses granted by K-Fuel LLC to third parties.
The Company's principal executive offices are located at 1999 Broadway,
Suite 3200, Denver, Colorado 80202, and its telephone number is (303) 293-2992.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of the Common Stock by
the Selling Stockholders. However, the Company may receive a maximum of
[$7,853,150] upon the exercise of the warrants and the stock options, which
proceeds will be used for working capital requirements and general corporate
purposes.
SELLING STOCKHOLDERS
The Common Stock is to be offered and sold from time to time by and on
behalf of the Selling Stockholders named in the following table, in the manner
and under the circumstances described on the cover page of this Prospectus and
under "Plan of Distribution." The following
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table sets forth for each Selling Stockholder the number of shares of Common
Stock beneficially owned prior to the offering, the number of shares to be
offered and, assuming that each Selling Stockholder sells all of his/her
shares, the number and percentage of shares of Common Stock to be owned by each
after completion of the offering.
<TABLE>
<CAPTION>
Percentage
of
Common Common Outstanding
Stock Stock Common
Owned Common Owned Stock Owned
Stockholder Before Stock After After
Offering Offered Offering Offering
========================================================================================================
<S> <C> <C> <C> <C>
Eugene M. and Ann G. Anderson 27,500 27,500 -- --
Bergen Fondsmegler Forretning A/S 100,000 100,000 -- --
ENSERV Inc./(1)/ 375,000 375,000 -- --
Donald L. Ewart 15,000 15,000 -- --
Robert J. Frulla 31,000 31,000 -- --
William A. Gooch 13,000 13,000 -- --
C. Boyden Gray 12,500 12,500 -- --
Jack M. Grinwis 15,000 15,000 -- --
John C. Grisham 15,000 15,000 -- --
Donald K. Harness 15,385 15,385 -- --
Chantal A. Hickman 16,500 16,500 -- --
RHC Investments Client Account #7 5,000 5,000 -- --
Emily S. and Edward L. Larner 9,333 9,333 -- --
Alan L. Levick 6,667 6,667 -- --
Herbert Lichtenstein 3,125 3,125 -- --
M&H Investments Client Account #6 10,000 10,000 -- --
Al Nuzum Supply Co., Inc. 22,223 22,223 -- --
Olympic Consulting, Inc. 10,000 10,000 -- --
Henry D. Owen 15,000 15,000 -- --
Pequot Scout Fund, L.P. 35,000 35,000 -- --
Pequot Partners Fund, L.P. 85,000 85,000 -- --
Sally T. Pierce 26,667 26,667 -- --
Robert E. Pumphrey 11,900 11,900 -- --
Robert E. Pumphrey and Lisa 28,582 10,400 18,182 *
Pumphrey
Colin Rampton 906 906 -- --
RHC Investments 83-X1 4,630 4,630 -- --
RHC Investments 82-X1 500 500 -- --
Philip E. Ruppe 24,391 24,391 -- --
Scott A. Shuda 500 500 -- --
Smart & Therenet, P.C. 22,000 22,000 -- --
</TABLE>
9
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<TABLE>
<CAPTION>
Percentage
of
Common Common Outstanding
Stock Stock Common
Owned Common Owned Stock Owned
Stockholder Before Stock After After
Offering Offered Offering Offering
===============================================================================================================
<S> <C> <C> <C> <C>
William H. Timbers 10,000 10,000 -- --
Pedro H. Valdes 17,000 17,000 -- --
Theodore Venners/(3)(7)/ 4,953,467/(10)(11)/ 185,000/(12)/ 4,768,467 22%
Venners & Company, Ltd./(2)/ 40,000 40,000 -- --
J. Richard Welton 31,250 31,250 -- --
Olen Wilson, Jr. 10,000 10,000 -- --
SHARES UNDERLYING WARRANTS
Pequot Scout Fund, L.P. 37,500 37,500 -- --
Pequot International Fund, L.P. 87,500 87,500 -- --
Innovative Research Associates, Inc. 75,000 75,000 -- --
Peter G. Martin/(3)/ 75,000 75,000 -- --
Richard C. Whitner 100,000 100,000 -- --
John P. Demoleas 5,000 5,000 -- --
SHARES UNDERLYING
STOCK OPTIONS
Starkey A. Wilson/(3)/ 1,269,100/(4)/ 150,000 1,119,100 5%
James A. Bitonti/(3)/ 490,050/(5)/ 50,000 440,050 2%
Jack C. Pester/(3)/ 67,126/(6)/ 50,000 17,126 *
Robert H. Gentile 80,000 80,000 -- --
Joyce M. Goldman/(7)/ 225,000/(8)/ 75,000 150,000 --
Jeffrey A. Hansen/(7)/ 30,000 30,000 -- --
Brenda S. Keiser/(7)/ 26,000 26,000 -- --
Jonathan W. Kohn/(7)/ 18,000 18,000 -- --
Michael L. Schlegal/(7)/ 26,000 26,000 -- --
Rudolph G. Swenson/(7)/ 245,100/(9)/ 95,000 150,100 *
Kurt Eckrich/(3)(7)/ 601,000/(13)/ 600,000 1,000 *
Richard L. Eckrich 50,000/(15)/ 50,000 -- --
William L. Keepers/(17)/ 133,586/(16)/ 130,000 3,586 *
- ---------------------
</TABLE>
10
<PAGE>
* Less than 1%
/(1)/ On August 18, 1995, the Company entered into an agreement with
ENSERV, Inc., whereby the Company agreed to purchase 800 shares of
common stock of Heartland Fuels Corporation for a purchase price of
$250,000 in cash and 375,000 shares of Common Stock.
/(2)/ On January 1, 1994, the Company entered into a consulting agreement
with Venners & Company, Ltd. pursuant to which the Company agreed
to pay Venners & Company, Ltd. a fixed monthly amount of $10,000
for consulting services.
/(3)/ Director of the Company.
/(4)/ Includes 150,000 shares to be acquired pursuant to the stock
options, some of which are not exercisable within 60 days of the
date of this Prospectus.
/(5)/ Includes 50,000 shares to be acquired pursuant to the stock
options, some of which are not exercisable within 60 days of the
date of this Prospectus.
/(6)/ Includes 50,000 shares to be acquired pursuant to the stock
options, some of which are not exercisable within 60 days of the
date of this Prospectus.
/(7)/ Employee of the Company.
/(8)/ Includes 75,000 Shares to be acquired pursuant to the stock
options, some of which are not exercisable within 60 days of the
date of this Prospectus.
/(9)/ Includes 95,000 Shares to be acquired pursuant to the stock
options, some of which are not exercisable within 60 days of the
date of this Prospectus.
/(10)/ Includes 50,000 shares to be acquired pursuant to the stock
options, some of which are not exercisable within 60 days of the
date of this Prospectus.
/(11)/ Includes 755,100 shares owned by a corporation of which Mr.
Venners owns 75% of the outstanding common stock.
/(12)/ Includes 135,000 shares of Common Stock being registered hereby for
transfer in settlement of certain indebtedness of Mr. Venners and
50,000 shares of Common Stock underlying stock options.
/(13)/ Includes 600,000 shares to be acquired pursuant to stock options,
all of which are currently exercisable.
/(14)/ Former officer and director.
/(15)/ Includes 50,000 shares to be acquired pursuant to stock options,
all of which are exercisable within 60 days of the date of this
Prospectus.
/(16)/ Includes 130,000 shares to be acquired pursuant to stock options,
all of which are currently exercisable.
11
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock may be offered by the Selling Stockholders from
time to time in one or more transactions for their own account on the
American Stock Exchange or in negotiated transactions. Sales will be at
prices and on terms then prevailing or at prices related to the current
market price or at negotiated prices and terms. The Common Stock may be
sold by one or more of the following methods: (a) a block trade in which
the broker or dealer so engaged will attempt to sell the Common Stock as
agent, but may position and resell a portion of the block as principal in
order to consummate the transaction; (b) purchase by a broker or dealer
as principal, and the resale by such broker or dealer for its account
pursuant to this Prospectus, including resale to another broker or
dealer; or (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. Any such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from
the Selling Stockholders or the purchasers of Common Stock 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). The Selling Stockholders and any
broker-dealers that act in connection with the sale of the Common Stock
may be deemed to be "underwriters" within the meaning of Section 2(11) of
the Securities Act and any commissions received by them and any profit on
the resale of the Common Stock as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.
The Common Stock covered by this Prospectus may be sold under
Rule 144 rather than this Prospectus if they qualify for sale under Rule
144. As of the date of this Prospectus, 55,800 shares of such Common
Stock may qualify for resale under Rule 144.
12
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement
on Form S-3 (herein, together with all amendments and exhibits, referred
to as the "Registration Statement") under the Securities Act with respect
to the Common Stock offered hereby. This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts
of which have been omitted in accordance with the rules and regulations
of the Commission. Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not
necessarily complete, and in each instance, reference is made to the copy
of such contract or other document filed as an exhibit or incorporated by
reference to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified in all respects by such
reference. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration
Statement. Copies of the Registration Statement may be inspected, without
charge, at the offices of the Commission, or obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.
LEGAL MATTERS
Certain legal matters relating to the Common Stock to be offered
hereby will be passed upon for the Company by Kutak Rock, Suite 2900, 717
Seventeenth Street, Denver, Colorado 80202.
EXPERTS
The consolidated financial statements incorporated in this
Prospectus by reference to the Annual Report on Form 10-KSB for the year
ended December 31, 1995, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
13
<PAGE>
===========================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING, OTHER
THAN THOSE MADE IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANYONE WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION.
-------------------
TABLE OF CONTENTS
-------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION........... 2
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE....... 2
RISK FACTORS.................... 3
THE COMPANY..................... 7
USE OF PROCEEDS................. 8
SELLING STOCKHOLDERS............ 8
PLAN OF DISTRIBUTION............ 12
LEGAL MATTERS................... 13
EXPERTS......................... 13
</TABLE>
=======================================
=======================================
2,992,377 SHARES
KFX INC.
COMMON STOCK
- ----------------------------------------
PROSPECTUS
- ----------------------------------------
_________, 1996
========================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be borne by the
registrant, other than underwriting discounts and commissions, in
connection with the issuance and distribution of the Common Stock
hereunder.
<TABLE>
<CAPTION>
Payable by
the
Registrant
-----------
<S> <C>
SEC registration fee........... $ 5,879.59
Accounting fees and expenses... 5,000.00
Legal fees and expenses........ 10,000.00
Printing costs................. 2,000.00
Blue Sky fees and expenses..... 1,000.00
Miscellaneous..................
----------
Total..................... $23,879.59
==========
</TABLE>
The foregoing items, except for the SEC registration fee, are
estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)7 of the Delaware General Corporation Law (the "DGCL")
enables a corporation in its original certificate of incorporation or an
amendment thereto to eliminate or limit the personal liability of a
director for violations of the director's fiduciary duty, except (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the DGCL (providing for liability of directors
for unlawful payment of dividends or unlawful stock purchases or
redemptions), or (iv) for any transaction from which a director derived
an improper personal benefit.
Section 145 of the DGCL provides that directors and officers of
Delaware corporations may, under certain circumstances, be indemnified
against expenses (including attorneys' fees) and other liabilities
actually and reasonably incurred by them as a result of any suit brought
against them in their capacity as a director or officer, if they acted in
good faith and in a manner
II-1
<PAGE>
they reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
if they had no reasonable cause to believe their conduct was unlawful.
Section 145 also provides that directors and officers may also be
indemnified against expenses (including attorneys' fees) incurred by them
in connection with a derivative suit if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification may be made
without court approval if such person was adjudged liable to the
corporation.
The Company has implemented such indemnification provisions in its
Certificate of Incorporation which provides that officers and directors
shall be entitled to be indemnified by the Company to the fullest extent
permitted by law against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with any
action, suit or proceeding by reason of the fact that he or she is or was
an officer or director of the Company.
The above discussion of the Company's Certificate of Incorporation
and Sections 102(b)(7) and 145 of the DGCL is not intended to be
exhaustive and is qualified in its entirety by such Certificate of
Incorporation and statutes.
ITEM 16. EXHIBITS.
The following is a complete list of exhibits filed as part of the
Registration Statement. Exhibit numbers correspond to the numbers in the
Exhibit Table of Item 601 of Regulation S-K.
5.1 Opinion of Kutak Rock as to the legality of the Common Stock
being registered.
23.1 Consent of Kutak Rock (see Exhibit 5.1).
23.2 Consent of Price Waterhouse LLP.
24.1 Powers of Attorney.
ITEM 17. UNDERTAKINGS.
The 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:
(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(b) 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
II-2
<PAGE>
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not
exceed what was registered) and any deviation from the low
or high end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(c) 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;
Provided, however, that paragraphs (1)(a) and (1)(b) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the undersigned pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) 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.
(3) 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 such 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
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Pre-Effective Amendment No. 2 to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Denver, State of Colorado, on the 17th day of July, 1996.
KFX INC.
(Registrant)
By: /s/ Theodore Venners
----------------------------------
Theodore Venners, Chairman, President and
Chief Executive Officer
<TABLE>
<CAPTION>
Name Title Date
- --------------------- -------------------------------------- -------------
<S> <C> <C>
* Director July 17, 1996
- ---------------------
James A. Bitonti
/s/ Kurt B. Eckrich
- --------------------- Executive Vice President, Chief July 17, 1996
Kurt B. Eckrich Financial Officer and Director
* Director July 17, 1996
- ---------------------
Brian D. Holt
* Director July 17, 1996
- ---------------------
Peter G. Martin
* Director July 17, 1996
- ---------------------
Jack C. Pester
/s/ Rudolph G. Swenson
- --------------------- Vice President, Secretary and July 17, 1996
Rudolph G. Swenson Treasurer
/s/ Theodore Venners
- -------------------- Chairman of the Board of Directors, July 17, 1996
Theodore Venners President and Chief Executive Officer
* Director July 17, 1996
- ---------------------
Starkey A. Wilson
</TABLE>
/s/ Theodore Venners
*By ----------------------
Theodore Venners,
as Attorney-in-Fact
II-4
<PAGE>
EXHIBIT INDEX
5.1 Opinion of Kutak Rock as to the legality of the Common Stock
being registered./**/
23.1 Consent of Kutak Rock (see Exhibit 5.1)./**/
23.2 Consent of Price Waterhouse LLP./*/
24.1 Powers of Attorney./**/
________________
/*/ Filed herewith.
/**/ Previously filed.
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 2 to the Registration Statement
on Form S-3 of our report dated March 28, 1996, which appears on page F-2
of KFx Inc.'s Annual Report on Form 10-KSB for the year ended December
31, 1995. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
July 16, 1996
