<PAGE>
Filed with the Securities and Exchange Commission
on May 30, 1997 Registration No. 333-____.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
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
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. and Deborah A. Schultz, Esq.
Morrison & Foerster LLP
370 17th Street, Suite 5200, Denver, Colorado 80202
(303) 592-1500
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, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please 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 Proposed
maximum maximum
Title of each class of Amount to offering aggregate
securities to be be price per offering Amount of
registered registered share/(1)/ price/(1)/ registration fee
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value per share 527,885 $3.82 $2,016,520.70 $611.07
======================================================================================
</TABLE>
/(1)/ Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
-------------------------------
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.
<PAGE>
PROSPECTUS
527,885 Shares
KFX INC.
Common Stock, $.001 par value
This Prospectus relates to an aggregate of 527,885 shares of common
stock, $.001 par value 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"), of which 340,000
shares represent shares underlying outstanding warrants (the "Warrants") and
stock options (the "Options") and are being offered for sale by the Selling
Stockholders upon the exercise thereof. The Company will not receive any
proceeds from the sale of the shares of Common Stock offered by the Selling
Stockholders hereby. However, the Company will receive proceeds from the
applicable Selling Stockholders in the event the Warrants and/or Options are
exercised. 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 the Selling Stockholder's 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
under the symbol "KFX." On May 28, 1997, the last reported sale price of the
Common Stock was $3.82 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 June __, 1997.
<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 Commission also maintains a website that contains reports, proxy and
information statements and other information regarding the Company. The address
of the site is http://www.sec.gov. The Common Stock 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-K for the year ended
December 31, 1996;
(2) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997; and
(3) The description of the 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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<PAGE>
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. Further, any forward looking statement
or statements speak only as of the date on which such statement was made, and
the Company undertakes no obligation to update any forward looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events.
Therefore forward looking statements should not be relied upon as a prediction
of actual future results. 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
$5.6 million and $8.8 million in 1996 and 1995, 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. Until the Company successfully
negotiates additional third-party licensing and royalty agreements and/or
independently constructs and operates additional commercial-scale production
facilities, the Company anticipates that it will continue to incur negative cash
flow from operations and operating losses. The royalties and profit interests
to be derived from the Company's 5 percent ownership interest in the KFX Fuel
Partners, L.P. ("KFP") production facility near Gillette, Wyoming (the "KFP
Project") will not be sufficient to meet all of the operating and debt service
needs of the Company based on current and future anticipated operating plans and
budgets. Until such time as the Company has in place sufficient additional
commercial-scale production facilities (either owned independently or through
joint venture entities similar to the KFP Project) to generate positive cash
flow from operations, the Company will be dependent on additional debt and/or
equity financing. The Company expects that most or all of its financing needs
in 1997 with respect to day-to-day operations and debt service requirements will
be met from the $2,500,000 in proceeds from the sale of common stock in January
1997 to Thermo Ecotek Corporation ("TCK"), certain revenues from research and
development subcontract agreements with K-Fuel LLC, and the Company's interest
in profits and production royalties from the KFP Project.
The Company's current cash balances, the expected revenues to be
derived from the Company's research and development subcontract agreements with
K-Fuel LLC, and the royalty income to be derived from the commencement of
operations of the KFP Project in 1997 are expected to fund the Company's
operations and debt service requirements until the first quarter of 1998 based
on current operating plans and budgets. The Company does not expect to realize
any significant net revenues from its 5 percent ownership interest in KFP during
1997. The Company will need to realize
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additional operating funding sources and reduce certain operating expenses to
sustain operations into 1998 and beyond. Such potential sources of funding may
include, but are not limited to (1) the possible sale of all or a portion of the
Company's 5 percent interest in KFP; (2) certain development and license fees
that may be derived from a potential 125,000 tons per year ("TPY") expansion of
the KFP Project; and (3) license fees to be derived from the proposed
construction of an Indonesia K-Fuel production facility in late 1997 or early
1998. There are no assurances that any of these potential funding sources will
materialize, and the Company does not currently have any commitments with
respect to any such funding sources. If such events do not materialize, the
Company may be forced to seek debt and/or equity financing which may not be
available on terms favorable to the Company, if at all. The Company does not
currently have any commitments with respect to any debt or equity financing.
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
TCK pursuant to which, without the prior written consent of TCK, 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 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. For further information regarding the terms of
the Stock Purchase Agreement, please refer to the copy of the Stock Purchase
Agreement filed with the Commission as an exhibit to the Company's Current
Report on Form 8-K dated August 18, 1995.
Uncertainty of General Project Development. The process of
developing, permitting, financing and constructing K-Fuel production facilities
is complex, lengthy and costly. Only a small percentage of the projects that
the Company evaluates and pursues may ultimately result in operating projects.
As a result, the Company may not recover any expenses that it incurs in the
evaluation and development of certain projects.
Uncertainty Regarding KFP Project. A fire at the KFP facility in
December 1996 destroyed one of two oil heating systems for the KFP facility.
Until the fire damage is fully repaired and the KFP facility is operating at
full capacity, the Company may experience difficulty in attracting other
investors to an expansion of the KFP Project, or negotiating suitable terms with
investors with respect to the sale of all or a portion of the Company's
ownership interest in KFP. In addition, KFP is currently experiencing certain
start-up problems including issues relating to the flow of materials within the
facility. The Company expects that the fire damage will be fully repaired, the
start-up problems will be resolved and the KFP facility will be fully
operational in the second or third quarter of 1997.
The Company also anticipates that it will be required to fund a
capital call in the second quarter of 1997 relating to certain cost overruns on
the construction of the KFP Project. The amount of the capital call is expected
to be approximately $600,000, reduced by a receivable in the amount of
approximately $470,000 KFP owes to the Company. The net amount of the capital
call, or approximately $130,000, will be paid from available cash or through the
issuance of a short-term promissory note to KFP. There are no assurances that
additional capital calls will not be required to be funded by the Company in
1997.
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There are no assurances that the KFP Project will not experience other
technical or operational problems during its start-up phase or beyond. To the
extent that such technical or operational problems materialize, it may adversely
impact the Company's ability to develop other K-Fuel projects or sell its
interest in the KFP Project as is currently planned. Additionally, the KFP
Project must produce a fuel product of certain minimum performance
specifications to qualify for the OBETC (defined below) and also to attract
market interest in the K-Fuel product from electric utilities and other
potential buyers. To the extent that such minimum performance specifications
are not achieved, it may adversely impact the KFP Project's qualification for
the OBETC and its marketing efforts. Any such events would have a material
adverse impact on the Company.
Federal Regulation of Air Emissions. A significant factor driving the
creation of the United States market for K-Fuel and other beneficiated coal
products 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") promulgated under Section 29 of the Internal Revenue Code
of 1986, as amended, 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 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.
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 license fees and royalty payments from its K-Fuel Technology
(as defined herein) to the State of Wyoming, until the State has been paid $5
million. Thereafter, the State's interest decreases to 6% of license fees and
royalty payments. The Company also has an 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 $75.2 million. Additionally, the Company has entered
into separate royalty agreements with two other entities in connection with the
KFP 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 KFP 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
based on the Company's production of K-Fuel in North America or (b) September
15, 2015, respectively. Amounts due under these agreements may restrict or
limit the Company's ability to
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pursue other commercialization opportunities as such payments will decrease cash
flow from operations.
Risks Associated with International Development. The Company believes
that the most significant near-term (i.e., three to five years) growth
opportunities for the K-Fuel Technology are in markets outside of the United
States. In that regard, the Company is actively pursuing projects in Indonesia
and Turkey, and also has identified the Czech Republic as a potentially
attractive market. Additionally, other countries may be identified as
attractive development prospects in the future. Doing business in many foreign
countries exposes the Company to many risks that are not present in the United
States, including political, military, privatization, currency exchange and
repatriation risks, and higher credit risks associated with fuel purchasers. In
addition, it is possible that legal obligations may be more difficult for the
Company to enforce in foreign countries and that the Company may be at a
disadvantage in any legal proceeding within the local jurisdiction. Local laws
may also limit the ability of the Company to hold a majority interest in some of
the projects that it develops.
Uncertainty of Community Support. Development, construction and
operation of K-Fuel production facilities requires numerous environmental and
other permits. The process of obtaining these permits can be lengthy and
expensive. In addition, local opposition to a particular project can
substantially increase the cost and time associated with developing a project,
and can potentially render a project unfeasible or uneconomic. The Company may
incur substantial costs or delays or may be unsuccessful in developing K-Fuel
production facilities as a result of such opposition.
Electrical Utility Regulatory Changes. The domestic electric utility
market is currently in the early stages of what is expected to be a significant
move to deregulate the industry over the next three to five years. The National
Energy Policy Act of 1992 exempts a new class of facilities from certain federal
utility regulation and liberalizes access for non-utility generators to the
utility power transmission grid. In addition, many states are considering the
elimination of many of the regulations that currently limit the ability of power
generators to negotiate power-sales agreements directly with industrial and
commercial customers. The Company believes that these regulatory changes will
result in utilities and other power generators placing a high emphasis on
reducing costs in their operations. This may result in increased competition
from other producers of beneficiated coal products or other fuel sources to the
extent that such competing fuels result in costs savings for utilities and other
power producers.
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 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, that produces fuel that meets certain
minimum performance specifications. Until the KFP Project is completed or
another commercial-scale
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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 KFP Project or any other commercial-scale facility will
be successful.
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.
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 $5,000,000 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
23,926,040 shares of Common Stock outstanding. The 527,885 shares of Common
Stock sold pursuant to this offering will be freely tradable without restriction
(except as to those shares sold to affiliates of the Company). Of the remaining
shares of Common Stock outstanding, 15,373,082 are "restricted securities"
within 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 10,582,500 shares of Common Stock, which includes a
warrant issued to TCK to purchase 7,750,000 shares of Common Stock ("Warrant
A"). In addition, TCK has a warrant ("Warrant B"), which may only be exercised
if TCK exercises Warrant A. Warrant B gives TCK the right to purchase the
number of shares of Common Stock that, when added to all shares owned by TCK on
the exercise date or which TCK has the right to acquire within sixty days of the
exercise date, would be sufficient to give TCK 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
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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.
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 TCK, so
long as TCK, together with its affiliates, own at least 1,000,000 shares of
Common Stock and either Warrant A or Warrant B remains 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
General. 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 May 1997, KFP notified Yanke Energy, Inc. of
its desire to proceed with pre-engineering and certain other activities related
to the construction of a fifth processing vessel at the KFP Project, which would
increase the annual capacity of the KFP Project from 500,000 TPY to 625,000 TPY
(the "Expansion Unit"). The cost of the Expansion Unit is currently estimated
to be $12 million, and is expected to be funded by the Company and other
investors. However, there can be no assurance that such financing will be
available on terms acceptable to the Company, if at all. The
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Company has retained an investment banking firm to assist with raising financing
for the construction of the Expansion Unit. The Company and KFP are currently
negotiating the terms pursuant to which the Company will fund the construction
of the Expansion Unit, and terms of an increased interest in KFP in return for
the Company providing such funding.
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. The Company will use the proceeds from exercise of
the Warrants and/or the Options for working capital 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 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
Stockholders sells all of his shares, the number and percentage of shares of
Common Stock to be owned by each after completion of the offering.
<TABLE>
<CAPTION>
Percentage
Common Common of
Stock Stock Outstanding
Owned Common Owned Common Stock
Before Stock After Owned After
Stockholders Offering Offered Offering Offering
==================================================================================
<S> <C> <C> <C> <C>
David M. Bretzlauf 37,500 7,500 30,000 *
Joyce M. Goldman/(1)/ 225,000/(4)/ 150,000 75,000 *
Hillari Koppelman 15,385 15,385 -- --
Thomas D. Smart & Susan
M. Thevenet 26,300 15,000 11,300 *
Shares Underlying Warrants
Dawson Mathis 33,333 33,333 -- --
John P. Venners/(2)/ 482,176/(5)/ 33,334 448,842 1.88%
Richard C. Wither 170,833 33,333 137,500 *
Shares Underlying Options
Kurt B. Eckrich/(3)/ 752,000/(6)/ 150,000 602,000 2.43%
</TABLE>
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<TABLE>
<CAPTION>
Percentage
Common Common of
Stock Stock Outstanding
Owned Common Owned Common Stock
Stockholders Before Stock After Owned After
Offering Offered Offering Offering
======================================================================
<S> <C> <C> <C> <C>
Donald J. Ewart 36,500 30,000 6,500 *
Jack Grinwis 36,500 30,000 6,500 *
John Grisham 40,000 30,000 10,000 *
</TABLE>
_________________________
* Less than 1%.
(1) Officer of the Company.
(2) John Venners is President of Venners & Company Ltd. The Company has a
consulting agreement with Venners & Company Ltd. under which it pays
Venners & Company Ltd. $12,000 per month.
(3) Director and Officer of the Company.
(4) Includes 75,000 shares to be acquired upon the exercise of stock options,
all of which are currently exercisable.
(5) Includes 40,000 shares owned by a corporation owned 100% by John Venners.
(6) Includes 750,000 shares to be acquired pursuant to options, some of which
are not exercisable within 60 days of the date of this Prospectus.
PLAN OF DISTRIBUTION
The Common Stock may be offered by the Selling Stockholders from time
to time in one or more transactions for his 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.
10
<PAGE>
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, 15,373,082 shares of such Common Stock may qualify for
resale under Rule 144.
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 Morrison & Foerster, LLP, 370 17th
Street, Suite 5200, Denver, Colorado 80202.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference to the Annual Report on Form 10-K of KFX Inc. for the year ended
December 31, 1996, 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 auditing and accounting.
11
<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. 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................ 8
USE OF PROCEEDS............ 9
SELLING STOCKHOLDERS....... 9
PLAN OF DISTRIBUTION....... 9
ADDITIONAL INFORMATION..... 10
LEGAL MATTERS.............. 10
EXPERTS.................... 11
</TABLE>
===============================================================================
527,885 Shares
KFX INC.
COMMON STOCK
_____________________
PROSPECTUS
_____________________
June __, 1997
==============================================================================
<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.
Payable by the
Registrant
--------------
SEC registration fee.................... $ 611.07
Accounting fees and expenses............ 2,500.00
Legal fees and expenses................. 5,000.00
Printing costs.......................... 500.00
Blue Sky fees and expenses.............. 250.00
Miscellaneous........................... 250.00
Total.................................. $9,111.07
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 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
<PAGE>
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 Morrison & Foerster, LLP as to the legality of the
Common Stock being registered.
23.1 Consent of Morrison & Foerster, LLP (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 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
<PAGE>
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.
<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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, State of Colorado, on the 19th day of May,
1997.
KFX INC.
(Registrant)
By: /s/ Kurt B. Eckrich
______________________________________
Kurt B. Eckrich, Executive Vice
President and Chief Financial Officer
<PAGE>
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Kurt B. Eckrich, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments to this Registration Statement on Form S-3 and file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, to all intents and
purposes and as full as they might or could do in person, hereby ratifying and
confirming all that such attorney-in-fact and agent, or his substitute may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Vincent N. Cook Director May 21, 1997
- ---------------------------
Vincent N. Cook
/s/ Kurt B. Eckrich Director, Executive Vice President May 19, 1997
- --------------------------- and Chief Financial Officer
Kurt B. Eckrich
/s/ Brian D. Holt Director May 20, 1997
- ---------------------------
Brian D. Holt
/s/ Peter G. Martin Director May 20, 1997
- ---------------------------
Peter G. Martin
/s/ Jack C. Pester Director May 19, 1997
- ---------------------------
Jack C. Pester
/s/ Theodore Venners Chairman of the Board of Directors, May 20, 1997
- --------------------------- President and Chief Executive
Theodore Venners Officer
/s/ Starkey A. Wilson Director May 21, 1997
- ---------------------------
Starkey A. Wilson
</TABLE>
<PAGE>
EXHIBIT INDEX
5.1 Opinion of Morrison & Foerster, LLP as to the legality of the
Common Stock being registered./*/
23.1 Consent of Morrison & Foerster, LLP (see Exhibit 5.1)./*/
23.2 Consent of Price Waterhouse LLP./*/
24.1 Powers of Attorney./*/
________________
/*/ Filed herewith.
<PAGE>
EXHIBIT 5.1
OPINION OF MORRISON & FOERSTER, LLP
May 30, 1997
KFX Inc.
1999 Broadway
Suite 3200
Denver, Colorado 80202
Ladies and Gentlemen:
We have acted as your counsel in connection with the filing of the
Registration Statement on Form S-3 (the "Registration Statement") and related
prospectus (the "Prospectus") under the Securities Act of 1933, as amended (the
"Act"), relating to 527,885 shares of your common stock, $.001 par value per
share (the "Shares"). In connection therewith, we have reviewed such
Registration Statement, certain of your corporate records and proceedings taken
in connection with the authorization and issuance of the Shares, and such other
factual and legal matters as we have considered necessary for purposes of this
opinion.
Based on and subject to the foregoing, we are of the opinion that the
Shares will, when sold, be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in such Registration Statement. This consent does not
constitute a consent under Section 7 of the Act, and in consenting to the
reference to our firm under such heading we have not certified and part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under Section 7 or the rules and regulations
of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ MORRISON & FOERSTER, LLP
MORRISON & FOERSTER, LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT ACCOUNTANTS' CONSENT
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 19, 1997, appearing on page F-2 of KFX Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1996. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
May 29, 1997
