16

                         UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549
                         AMENDMENT NO. 1
                               to
                           FORM 10-K/A

(Mark One)

/X/       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

          For the fiscal year ended December 31, 1999

                               or

/ /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
          SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

          For the transition period _________to__________

                    Commission file number ___________

                        CLIMACHEM, INC.
     (Exact name of Registrant as specified in its Charter)

                 Oklahoma                              73-1528549
          (State of Incorporation)                  (I.R.S. Employer
                                                   identification No.)
          16 South Pennsylvania Avenue
            Oklahoma City, Oklahoma                        73107
      (Address of principal executive offices)           (Zip Code)

       Registrant's telephone number, including area code

                         (405) 235-4546

Securities Registered Pursuant to Section 12(b) of the Act:  None

Securities Registered Pursuant to Section 12(g) of the Act:  None

     Indicate by check mark whether the Registrant (1) has  filed
all  reports  required by Section 13 or 15(d) of  the  Securities
Exchange Act of 1934 during the preceding 12 months (or  for  the
shorter  period that the Registrant has had to file the reports),
and  (2) has been subject to the filing requirements for the past
90 days.  YES   X    NO _____.

     Indicate  by  check mark if disclosure of delinquent  filers
pursuant  to Item 405 of Regulation S-K is not contained  herein,
and will not be contained, to the best of Registrant's knowledge,
in  definitive  proxy or information statements  incorporated  by
reference in Part III of this Form 10-K or any amendment to  this
Form 10-K. __________.

     All outstanding shares of Common Stock of the registrant are
held  directly or indirectly by the registrant=s parent  company,
LSB Industries, Inc.



                           SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d)  of  the
Securities  Exchange  Act of 1934, as amended,  the  Company  has
caused  the undersigned, duly-authorized, to sign this  Amendment
No.  1  to  the report on its behalf of this 28th day  of  April,
2000.

                              CLIMACHEM, INC.


                              By:
                                  /s/ Jack E. Golsen
                                 Jack E. Golsen
                                 Chairman of the Board and
                                 President
                                 (Principal Executive Officer)

                              By:
                                  /s/ Tony M. Shelby
                                 Tony M. Shelby
                                  Vice  President-Chief Financial Officer
                                 (Principal Financial Officer)

                              By:
                                  /s/ Jim D. Jones
                                 Jim D. Jones
                                 Vice President-Treasurer
                                 (Principal Accounting Officer)

     Pursuant to the requirements of the Securities Exchange  Act
of  1934, as amended, the undersigned have signed this report  on
behalf  of  the  Company,  in the capacities  and  on  the  dates
indicated.

Dated:  April 28, 2000          By:
                                  /s/ Jack E. Golsen
                                 Jack E. Golsen, Director

Dated:  April 28, 2000          By:
                                  /s/ Tony M. Shelby
                                 Tony M. Shelby, Director

Dated:  April 28, 2000          By:
                                  /s/ David R. Goss
                                 David R. Goss, Director

Dated:  April 28, 2000          By:
                                  /s/ Barry H. Golsen
                                 Barry H. Golsen, Director

Dated:  April 28, 2000          By:
                                  /s/ Robert C. Brown
                                 Robert C. Brown, Director

Dated:  April 28, 2000          By:
                                  /s/ Bernard G. Ille
                                 Bernard G. Ille, Director

Dated:  April 28, 2000          By:
                                  /s/ Jerome D. Shaffer
                                 Jerome D. Shaffer, Director

Dated:  April 28, 2000          By:
                                  /s/ Raymond B. Ackerman
                                 Raymond B. Ackerman, Director

Dated:  April 28, 2000          By:
                                  /s/ Horace Rhodes
                                 Horace Rhodes, Director.


                            PART III


Item 10.  Directors and Executive Officers of the Company.

     The following table sets forth certain information regarding
the  directors and executive officers of the Company.  Except for
Mr.  Wewers, the directors and officers of the Company also serve
as  directors and officers of the Company=s parent, LSB.  Each of
the  directors  and officers listed below have  served  in  their
respective positions since the Company=s formation in 1997.   The
executive  officers are elected by the Board of  Directors.   The
term of each director of the Company is one year.

Name                       Age    Office

Jack E. Golsen             71     Chairman of the Board, Chief Executive
                                  Officer and President
Barry H. Golsen            49     President
                                  of LSB's Climate Control
                                  Business and Vice Chairman of
                                  the Board
David R. Goss              59     Vice President and Director
Tony M. Shelby             58     Vice President/Chief Financial
                                  Officer and Director
Jim D. Jones               58     Vice President-Treasurer
David M. Shear             40     Secretary
James L. Wewers            54     Vice President
Raymond B. Ackerman        77     Director
Robert C. Brown, M.D.      69     Director
Bernard G. Ille            73     Director
Horace G. Rhodes           72     Director
Jerome D. Shaffer, M.D.    83     Director

     Jack  E.  Golsen, the founder of LSB, has served as Chairman
of  the Board, Chief Executive Officer and President of LSB since
its inception in 1969.  During 1996, Mr. Golsen was inducted into
the  Oklahoma  Commerce and Industry Hall  of  Honor  as  one  of
Oklahoma=s leading industrialists.  Mr. Golsen has a degree  from
the University of New Mexico in biochemistry.

     Barry H. Golsen has served as the Vice Chairman of the Board
of  LSB  since  August, 1994, and has served for more  than  five
years  as  the President of LSB=s Climate Control Business.   Mr.
Golsen  has  both  his  undergraduate and law  degrees  from  the
University of Oklahoma.

     Tony M. Shelby, a certified public accountant, has served as
a  director  of LSB since 1971 and has served as the Senior  Vice
President  and Chief Financial Officer of LSB for more than  five
years.   Prior  to  becoming  Senior  Vice  President  and  Chief
Financial  Officer of LSB, Mr. Shelby served as  Chief  Financial
Officer  of  a  subsidiary  of the  Company,  and  was  with  the
accounting firm of Arthur Young & Co., a predecessor to  Ernst  &
Young LLP.  Mr. Shelby is a graduate of Oklahoma City University.

     David R. Goss, a certified public accountant, has served  as
a  director  of LSB since 1971 and has served as the Senior  Vice
President  -  Operations of LSB or in a comparable  capacity  for
more  than  five  years.   Mr. Goss  is  a  graduate  of  Rutgers
University.

     Jim  D. Jones, a certified public accountant, has served  in
his present capacity with LSB since 1976.  Prior to that time, he
was an accountant with Arthur Young & Co., a predecessor to Ernst
&  Young  LLP.   Mr.  Jones is a graduate of  the  University  of
Central Oklahoma.

     David  M.  Shear  has  served as the Vice  President-General
Counsel of LSB since 1990.  Prior to that time, Mr. Shear was  in
private  practice  with a law firm in Boston, Massachusetts,  and
served  as  an  attorney with the Federal Trade Commission.   Mr.
Shear  is a graduate of Brandeis University and has a law  degree
from Boston University.

     James  L. Wewers has served for more than five years as  the
President  of the Chemical Business.  Prior to becoming President
of  the  Chemical Business, Mr. Wewers was an executive with  the
Chemicals  Group  of  Gulf  Oil.  Mr. Wewers  is  a  graduate  of
Rockhurst College.

     Raymond  B. Ackerman has served as a director of  LSB  since
1993.   Mr.  Ackerman has served as Chairman  of  the  Board  and
President   of  Ackerman,  McQueen,  Inc.,  the  largest   public
relations  firm  in Oklahoma, from 1972 until his  retirement  in
1992.   Mr.  Ackerman  currently serves as Chairman  Emeritus  of
Ackerman,  McQueen, Inc.  Mr. Ackerman retired as a Rear  Admiral
from  the  United  States  Naval Reserves.   Mr.  Ackerman  is  a
graduate of Oklahoma City University, and in 1996, he was awarded
an honorary doctorate from Oklahoma City University.

     Robert C. Brown, M.D., has served as a director of LSB since
1969.   Dr.  Brown has practiced medicine for many years  and  is
Vice  President and Treasurer of Plaza Medical Group,  P.C.   Dr.
Brown  is a graduate of Tufts University and received his medical
degree from Tufts University.

     Bernard G. Ille has served as a director of LSB since  1971.
Mr. Ille served as President and Chief Executive Officer of First
Life  Assurance Company from May, 1988, until it was acquired  in
March,  1994.   For more than five years prior to  joining  First
Life,  Mr.  Ille  served  as President of  United  Founders  Life
Insurance  Company.   Mr.  Ille is a director  of  Landmark  Land
Company,  Inc., which was the parent company of First Life.   Mr.
Ille  is  also a director for Quail Creek Bank, N.A. Mr. Ille  is
currently a private investor.  He is a graduate of the University
of Oklahoma.

     Horace G. Rhodes has served as a director of LSB since 1996.
Mr.  Rhodes  is  the managing partner of the law  firm  of  Kerr,
Irvine,  Rhodes & Ables and has served in such capacity  and  has
practiced law for a period in excess of five years.  Since  1972,
Mr.  Rhodes  has served as Executive Vice President  and  General
Counsel for the Association of Oklahoma Life Insurance Companies,
and since 1982 has served as Executive Vice President and General
Counsel  for  the  Oklahoma  Life and Health  Insurance  Guaranty
Association.   Mr.  Rhodes  received his  undergraduate  and  law
degrees from the University of Oklahoma.

     Jerome  D.  Shaffer, M.D., has served as a director  of  LSB
since  its inception in 1969.  He is currently and has  been  for
the  last  five  years  a private investor.   Dr.  Shaffer  is  a
graduate of Penn State University and received his medical degree
from Jefferson Medical College.

     Jack E. Golsen is the father of Barry H. Golsen.  Dr. Robert
C.  Brown  is the brother-in-law and uncle of Jack E. Golsen  and
Barry H. Golsen, respectively.

Item 11.  Executive Compensation.

     The  following  table shows the aggregate cash  compensation
which  the  Company and its subsidiaries paid or accrued  to  the
Chief  Executive  Officer and each of the other most  highly-paid
executive  officers  of  the Company  (which  includes  the  Vice
Chairman  of  the  Board  who also serves  as  President  of  the
Company's  Climate Control Business), other than the  CEO,  whose
total  annual  salary  and  bonus exceeds  $100,000.   The  table
includes cash distributed for services rendered during 1999, plus
any cash distributed during 1999 for services rendered in a prior
year,  less  any  amount  relating to those  services  previously
included  in the cash compensation table for a prior  year.   The
compensation  set forth below is for 1997, 1998  and  1999  only,
since  the  Company was formed in 1997 (See Note 1  on  following
table).

                    Summary Compensation Table(1)

                        Annual Compensation     Long-term
                                                 Compen-
                                                  sation
                                                  Awards

   Name and     Year  Salary   Bonus    Other   Securities    All
   Postion             ($)     ($)(3)   Annual  Underlying   Other
                                        Compen-   Stock     Compen-
                                        sation   Options    sation
                                        ($)(4)                ($)

Jack E. Golsen  1999    -(2)     -        -      132,500      -
Chairman of     1998    -(2)     -        -         -         -
the             1997     -       -        -         -         -
Board,
President
and Chief
Executive
Officer

Barry H.        1999  226,60     -        -       93,000      -
Golsen          1998  226,600    -        -         -         -
Vice Chairman   1997  223,300    -        -         -         -
of
the Board and
President of the Climate Control Business

James L.        1999  200,850    -        -       30,000      -
Wewers,         1998  200,850    -        -         -         -
Vice President  1997  197,925    -        -         -         -



     (1)  As discussed at Item 13 "Services Agreement", executive
officers, (excluding  Jack E. Golsen and Tony Shelby) which  have
been paid by LSB in prior years, will be compensated directly  by
the  Company  for periods subsequent to December 31,  1999.   The
Company  has  previously  reimbursed LSB for  such  compensations
under the terms of the "Services Agreement".

     (2)  For 1999, 1998 and 1999,  LSB paid to Jack E. Golsen  a
salary  of  $477,400, $477,400 and $470,450.   Although  Jack  E.
Golsen  performed  substantial services for  the  Company  during
1999,  the Company did not reimburse LSB for any of Mr.  Golsen's
compensation due to provisions of the Services Agreement  between
LSB  and  the  Company (AServices Agreement@) which  specifically
prohibit  the Company from reimbursing LSB for costs and expenses
associated  with Mr. Golsen.  See AItem 13, Certain Relationships
and  Related  Transactions@  for a  discussion  of  the  Services
Agreement and payments to LSB under such agreement.  The  Company
and  LSB  are  also parties to a Management Agreement  under  the
terms  of  which  the  Company  may,  under  certain  conditions,
reimburse  LSB for the services of Mr. Golsen.  The  Company  did
not meet the earnings criteria under the Management Agreement  in
1998 or 1999 to require the Company to make payments to LSB under
this  agreement. See AItem 13, Certain Relationships and  Related
Transactions@  for  a  discussion of  the  Management  Agreement.
Barry  H.  Golsen and James L. Wewers are paid by LSB, and  under
the  Services  Agreement  the Company  reimburses  LSB  for  that
portion of the compensation paid to Barry H. Golsen and James  L.
Wewers  relating to the Company and its subsidiaries.  Since  all
or substantially all of the services performed by Barry H. Golsen
and  James  L.  Wewers  were related to the  Company  and/or  its
subsidiaries,  the  Company reimbursed LSB for  all  compensation
paid to Barry H. Golsen and James L. Wewers during 1997, 1998 and
1999. For periods subsequent to December 31, 1999, Barry H. Golsen
and James L. Wewers will be compensated directly by the Company
in lieu of the Company reimbursing LSB, see Note (1) above for
their compensations.

     (3)   Bonuses are for services rendered for the prior fiscal
year.  No bonuses were paid to the above-named executive officers
for  1996, 1997 or 1998, and no bonuses for 1999 performance  are
to be paid to the above-named executive officers.

     (4)    Does  not  include  perquisites  and  other  personal
benefits, securities or property for the named executive  officer
in any year if the aggregate amount of such compensation for such
year  does not exceed the lesser of either $50,000 or 10% of  the
total of annual salary and bonus reported for the named executive
officer for such year.

      Directors' Compensation. Due to LSB and the Company holding
joint Board of Director meetings and also due to the revised
allocations of costs discussed further at Item 13 "Services
Agreement", effective January 1, 2000, allocation of 75% of the
directors' fees paid to the members of the Board of Directors that
are not employees of LSB or the Company and that are directors of
both the Company and LSB compensation will be paid by the Company.
The Company believes that this allocation is fair and reasonable as
substantial portion of the businesses of LSB are owned by the Company.

      Option  Grants  in  1999. The following  table  sets  forth
information  relating to individual grants of LSB  stock  options
made to each of the named executive officers in the above Summary
Compensation Table during the last fiscal year:


                       Individual Grants

Name              Number     % of    Exercise  Expiration     Potential
                    of       Total     Price      Date      Realizable
                  Shares    Options   ($/sh)                  Value at
                    of      Granted                        Assumed Annual
                  Common   Employees                       Rates of Stock
                  Stock     in 1999                            Price
                 underlying                                 Appreciation
                  Options                                 for Option Term
                  Granted                                       (2)
                  (#) (1)                                  5% ($)     10%

Jack E. Golsen    132,500     14.0     1.375    7-8-04     29,197    84,553
Barry H. Golsen   93,000       9.8     1.375    7-8-04     20,493    59,347
James L. Wewers   30,000       3.2     1.25     7-8-09     23,584    59,765



(1)  The  Company has adopted a 1981 Incentive Stock Option  Plan
     (the  1981  plan), a 1986 Incentive Stock Option  Plan  (the
     1986  plan),  a 1993 Incentive Stock Option Plan  (the  1993
     plan),  and  a  1998 Incentive Stock Option Plan  (the  1998
     plan).  The 1981 plan, the 1986 plan, the 1993 plan, and the
     1998  plan  are  collectively designated as the  Plans.  The
     Plans  provide that the Company may grant options under  the
     Plans  to key salaried employees of the Company.  The option
     price  for all options granted under the Plans cannot  equal
     less than 100% (or 110% for persons possessing more than 10%
     of  the voting stock of the Company) of the market value  of
     the  Company's Common Stock on the date of the  grant.   The
     Company  could  grant  options under  the  1981  Plan  until
     November 30, 1991, until April 10, 1996 under the 1986 Plan,
     and  can  grant options until August 5, 2003 under the  1993
     Plan,  and  until August 13, 2008 under the 1998 Plan.   The
     holder of an option granted under the Plans may not exercise
     the  option after ten (10) years from the date of  grant  of
     the  option  (or five (5) years for persons possessing  more
     than  10% of the voting stock of the Company).  The  options
     become exercisable approximately 20% after one year from the
     date  of  the grant, an additional 20% after two  years,  an
     additional  30%  after three years, and  the  remaining  30%
     after four years.

(2)  The  potential  realizable value of each  grant  of  options
     assumes that the market price of the Company's Common  Stock
     appreciates in value from the date of grant to  the  end  of
     the  option  term at the annualized rates shown  above  each
     column.  The actual value that an executive may realize,  if
     any, will depend on the amount by which the market price  of
     the  Company's Common Stock at the time of exercise  exceeds
     the  exercise price of the option.  As of April 7, 2000, the
     closing  price of a share of the Company's Common  Stock  as
     quoted  on  the Over-the-Counter Bulletin Board  was  $.718.
     There  is  no assurance that any executive will receive  the
     amounts estimated in this table.

     Employment  Contracts  and  Termination  of  Employment  and
Change in Control Arrangements.

(a)  Termination of Employment and Change in Control Agreements.
     The  Company does not have any severance agreements with its
     officers.    However,   LSB  has  entered   into   severance
     agreements  with  Jack E. Golsen, Barry H. Golsen,  Tony  M.
     Shelby,  David R. Goss, David M. Shear, James L. Wewers  and
     certain other officers of LSB and subsidiaries of LSB.

     Each  severance agreement provides (among other things) that
     if, within twenty-four (24) months after the occurrence of a
     change  in  control (as defined) of LSB, LSB terminates  the
     officer's  employment other than for cause (as defined),  or
     the  officer terminates his employment for good  reason  (as
     defined),  LSB must pay the officer an amount equal  to  2.9
     times  the  officer's base amount (as defined).  The  phrase
     "base  amount"  means the average annual gross  compensation
     paid  by  LSB to the officer and includable in the officer's
     gross income during the period consisting of the most recent
     five  (5)  year period immediately preceding the  change  in
     control.   If the officer has been employed by LSB for  less
     than 5 years, the base amount is calculated with respect  to
     the  most  recent number of taxable years ending before  the
     change in control that the officer worked for LSB.

     The  severance agreements provide that a "change in control"
     means  a  change  in control of LSB of a nature  that  would
     require  the  filing of a Form 8-K with the  Securities  and
     Exchange Commission and, in any event, would mean when:  (1)
     any  individual,  firm, corporation, entity,  or  group  (as
     defined  in Section 13(d)(3) of the Securities Exchange  Act
     of  1934, as amended) becomes the beneficial owner, directly
     or  indirectly,  of  thirty percent (30%)  or  more  of  the
     combined voting power of LSB's outstanding voting securities
     having  the  right  to vote for the election  of  directors,
     except  acquisitions by:  (a) any person, firm, corporation,
     entity,  or  group  which, as of the date of  the  severance
     agreement,  has that ownership, or (b) Jack E.  Golsen,  his
     wife;  his  children and the spouses of  his  children;  his
     estate; executor or administrator of any estate, guardian or
     custodian for Jack E. Golsen, his wife, his children, or the
     spouses   of   his   children,   any   corporation,   trust,
     partnership,  or other entity of which Jack E.  Golsen,  his
     wife,  children, or the spouses of his children own at least
     eighty percent (80%) of the outstanding beneficial voting or
     equity interests, directly or indirectly, either by any  one
     or   more  of  the  above-described  persons,  entities,  or
     estates; and certain affiliates and associates of any of the
     above-described   persons,   entities,   or   estates;   (2)
     individuals who, as of the date of the severance  agreement,
     constitute  the  Board of Directors of LSB  (the  "Incumbent
     Board")  and  who  cease  for any  reason  to  constitute  a
     majority  of the Board of Directors except that  any  person
     becoming  a director subsequent to the date of the severance
     agreement,  whose  election or nomination  for  election  is
     approved by a majority of the Incumbent Board (with  certain
     limited  exceptions),  will  constitute  a  member  of   the
     Incumbent  Board; or (3) the sale by the Company of  all  or
     substantially all of its assets.

     Except for the severance agreement with Jack E. Golsen,  the
     termination of an officer's employment with LSB "for  cause"
     means  termination  because of: (a) the mental  or  physical
     disability from performing the officer's duties for a period
     of  one hundred twenty (120) consecutive days or one hundred
     eighty  days  (even though not consecutive) within  a  three
     hundred  sixty  (360) day period; (b) the  conviction  of  a
     felony;  (c) the embezzlement by the officer of  LSB  assets
     resulting in substantial personal enrichment of the  officer
     at  the expense of LSB; or (d) the willful failure (when not
     mentally or physically disabled) to follow a direct  written
     order  from  LSB=s Board of Directors within the  reasonable
     scope  of  the officer's duties performed during  the  sixty
     (60)  day  period  prior  to the  change  in  control.   The
     definition  of "Cause" contained in the severance  agreement
     with  Jack E. Golsen means termination because of:  (a)  the
     conviction  of  Mr.  Golsen  of  a  felony  involving  moral
     turpitude after all appeals have been completed; or  (b)  if
     due  to  Mr. Golsen's serious, willful, gross misconduct  or
     willful,  gross  neglect  of  his  duties  has  resulted  in
     material  damages to LSB and its subsidiaries,  taken  as  a
     whole, provided that (i) no action or failure to act by  Mr.
     Golsen  will  constitute  a reason  for  termination  if  he
     believed, in good faith, that such action or failure to  act
     was  in  LSB=s or its subsidiaries' best interest, and  (ii)
     failure of Mr. Golsen to perform his duties hereunder due to
     disability shall not be considered willful, gross misconduct
     or willful, gross negligence of his duties for any purpose.

     The  termination  of an officer's employment  with  LSB  for
     "good   reason"  means  termination  because  of   (a)   the
     assignment  to the officer of duties inconsistent  with  the
     officer's  position, authority, duties, or  responsibilities
     during  the sixty (60) day period immediately preceding  the
     change  in control of LSB or any other action which  results
     in the diminishment of those duties, position, authority, or
     responsibilities; (b) the relocation of the officer; (c) any
     purported  termination  by LSB of the  officer's  employment
     with  LSB  otherwise  than  as permitted  by  the  severance
     agreement;  or  (d) in the event of a change in  control  of
     LSB,  the  failure  of the successor or  parent  company  to
     agree, in form and substance satisfactory to the officer, to
     assume (as to a successor) or guarantee (as to a parent) the
     severance agreement as if no change in control had occurred.

     Except for the severance agreement with Jack E. Golsen, each
     severance  agreement runs until the earlier of:   (a)  three
     years after the date of the severance agreement, or (b)  the
     officer's   normal  retirement  date  from   LSB;   however,
     beginning   on  the  first  anniversary  of  the   severance
     agreement  and  on each annual anniversary  thereafter,  the
     term of the severance agreement automatically extends for an
     additional   one-year  period,  unless  LSB   gives   notice
     otherwise  at least sixty (60) days prior to the anniversary
     date.   The  severance  agreement with  Jack  E.  Golsen  is
     effective for a period of three (3) years from the  date  of
     the severance agreement; except that, commencing on the date
     one  (1) year after the date of such severance agreement and
     on  each  annual anniversary thereafter, the  term  of  such
     severance agreement shall be automatically extended so as to
     terminate three (3) years from such renewal date, unless LSB
     gives  notices otherwise at least one (1) year prior to  the
     renewal date.

(b)  Employment  Agreement.  The Company does not have employment
     agreements  with  any of its officers.  However,  in  March,
     1996, LSB entered into an employment agreement with Jack  E.
     Golsen.   The  employment agreement requires LSB  to  employ
     Jack E. Golsen as an executive officer of LSB for an initial
     term  of  three (3) years and provides for two (2) automatic
     renewals of three (3) years each unless terminated by either
     party by the giving of written notice at least one (1)  year
     prior  to  the  end of the initial or first renewal  period,
     whichever  is applicable. Under the terms of such employment
     agreement,  Mr.  Golsen shall be paid  (i)  an  annual  base
     salary at his 1995 base rate, as adjusted from time to  time
     by  the  Compensation  Committee, but such  shall  never  be
     adjusted  to  an  amount less than Mr.  Golsen's  1995  base
     salary,  (ii) an annual bonus in an amount as determined  by
     the  Compensation  Committee, and  (iii)  receive  from  LSB
     certain  other  fringe  benefits.  The employment  agreement
     provides that Mr. Golsen's employment may not be terminated,
     except  (i)  upon  conviction of a  felony  involving  moral
     turpitude  after all appeals have been exhausted,  (ii)  Mr.
     Golsen's  serious,  willful, gross  misconduct  or  willful,
     gross  negligence of duties resulting in material damage  to
     LSB  and  its  subsidiaries, taken as a  whole,  unless  Mr.
     Golsen  believed, in good faith, that such action or failure
     to  act  was  in  the  Company's or its  subsidiaries'  best
     interest,  and (iii) Mr. Golsen's death; provided,  however,
     no such termination under (i) or (ii) above may occur unless
     and  until LSB has delivered to Mr. Golsen a resolution duly
     adopted  by  an  affirmative vote of  three-fourths  of  the
     entire  membership of the Board of Directors  at  a  meeting
     called for such purpose after reasonable notice given to Mr.
     Golsen finding, in good faith, that Mr. Golsen violated  (i)
     or  (ii) above.  If Mr. Golsen's employment is terminated in
     breach of this Agreement, then he shall, in addition to  his
     other  rights  and remedies, receive and LSB  shall  pay  to
     Mr.  Golsen (i) in a lump sum cash payment, on the  date  of
     termination,  a  sum  equal to the amount  of  Mr.  Golsen's
     annual  base salary at the time of such termination and  the
     amount  of the last bonus paid to Mr. Golsen prior  to  such
     termination  times (a) the number of years  remaining  under
     the employment agreement or (b) four (4) if such termination
     occurs  during  the last twelve (12) months of  the  initial
     period  or  the  first renewal period, and (ii)  provide  to
     Mr. Golsen all of the fringe benefits that LSB was obligated
     to  provide  during  his  employment  under  the  employment
     agreement  for  the remainder of the term of the  employment
     agreement,  or,  if terminated at any time during  the  last
     twelve  (12)  months of the initial period or first  renewal
     period,  then during the remainder of the term and the  next
     renewal period.

     If there is a change in control (as defined in the severance
agreement between Mr. Golsen and LSB) and within twenty-four (24)
months  after  such change in control Mr. Golsen  is  terminated,
other  than  for  Cause (as defined in the severance  agreement),
then  in  such event, the severance agreement between Mr.  Golsen
and LSB shall be controlling.

     In  the event Mr. Golsen becomes disabled and is not able to
perform  his  duties under the employment agreement as  a  result
thereof for a period of twelve (12) consecutive months within any
two (2) year period, LSB shall pay Mr. Golsen his full salary for
the  remainder  of  the  term  of the  employment  agreement  and
thereafter sixty percent (60%) of such salary until Mr.  Golsen's
death.

     Compensation Committee Interlocks and Insider Participation.
     LSB=s Executive Salary Review Committee has the authority to
set  the  compensation  of all officers  of  the  Company.   This
Committee generally considers and approves the recommendations of
the President of LSB.  The members of the Executive Salary Review
Committee  of  LSB  are  the following non-management  directors:
Robert  C.  Brown, M.D., Jerome D. Shaffer, M.D., and Bernard  G.
Ille. During 1999, the Executive Salary Review Committee had  one
meeting.

Item 12.  Security Ownership of Certain Benficial Owners and Management.
    (a) and (b) All of the outstanding shares of the Company's voting
securities are owned by LSB.  (c) If change in control occurs at LSB,
such would result in a change in control of the Company.

Item 13.  Certain Relationships and Related Transactions.

Formation and Capitalization of Company

     The  Company  was  formed as an Oklahoma corporation  and  a
wholly  owned subsidiary of LSB on October 17, 1997.  The Company
acquired its subsidiaries through capital contributions  of  each
subsidiary=s  outstanding stock from LSB to the  Company,  except
Northwest   Financial   Corporation  (ANorthwest@),   which   was
contributed to the Company by Prime, a wholly owned subsidiary of
LSB.   LSB owns 95% and Prime owns the remaining 5% of the issued
and outstanding capital stock of the Company.

Leases

     The Company's Climate Control manufacturing subsidiaries are
leasing  facilities from Prime, a subsidiary of  LSB  but  not  a
subsidiary of the Company, under various operating leases  and  a
capital  lease.  Approximately 270,000 square feet are being leased
by the Company or its subsidiaries from Prime.  Rental expense
associated  with  the  operating leases and the capital lease
aggregated  $1,806,000 for the year  ended  December  31,
1999.   In   addition to the leases described above, in  December
1999, a subsidiary of the Climate Control Business entered into a
capital  lease  with  Prime ("December 1999 Lease")  to  lease  a
manufacturing  facility.  The lease agreement is for  a  term  of
sixteen  (16) years and required an initial payment of $2 million
to  reimburse  Prime  for capital improvements  required  at  the
facility  previously  made  by Prime  for  the  Climate  Control
Business,  which  was  paid in January  2000,  and  requires  112
monthly payments of $20,291 commencing on September 1, 2006.

EDC Purchase

     In  1983, LSB Chemical Corp. (ALSBC@), a subsidiary  of  the
Company,  acquired all of the outstanding stock of EDC  from  its
then   four   stockholders  (AEx-Stockholders@).   A  substantial
portion  of  the  purchase price consisted of  an  earnout  based
primarily  on the annual after-tax earnings of EDC for a  10-year
period.   During 1989, two of the Ex-Stockholders  received  LSBC
promissory notes for a portion of their earnout, in lieu of cash,
totaling  approximately $896,000, payable  $496,000  in  January,
1990, and $400,000 in May, 1994.  LSBC agreed to a buyout of  the
balance  of  the  earnout  from the four Ex-Stockholders  for  an
aggregate purchase amount of $1,231,000.  LSBC purchased for cash
the earnout from two of the Ex-Stockholders and issued multi-year
promissory  notes  totaling  $676,000  to  the  other   two   Ex-
Stockholders.    Jack   E.  Golsen  guaranteed   LSBC=s   payment
obligation  under  the promissory notes.  These promissory  notes
have  been  assigned in their entirety from LSBC to the  Company,
and the guarantee by Jack E. Golsen remains in place.  The unpaid
balance of these notes at March 31, 2000, was $400,000.

Purchase of Certain Real Estate and Option

      In  1995,  a subsidiary of LSB invested approximately  $2.8
million  to  purchase  a  fifty  percent  (50%)  limited  partner
interest in an energy conservation joint venture (the "Project").
The  Project was to retrofit residential housing units at a  U.S.
Army  base,  which  it  completed  during  1996.   The  completed
contract  was  for  installation  of  energy-efficient  equipment
(including  air conditioning and heating equipment), which  would
reduce utility consumption.  For the installation and management,
the   project  will  receive  a  percentage  of  all  energy  and
maintenance  savings during the twenty (20) year  contract  term.
In   January  1999,  the  Company  acquired  this  investment  by
purchasing  from LSB the stock of the LSB subsidiary  that  owned
the  Project.  The Company paid $3.1 million to LSB in connection
with  this purchase.  This amount equaled the book value  of  the
investment on the books of LSB's subsidiary, which management  of
the Company believes approximated the investment's fair value, at
the date of purchase.

     In April 1999, the Company's Board of Directors approved the
acquisition  of  certain  assets  from  LSB,  which  assets   are
materially related to the lines of the Climate Control  Business.
As  a  result,  in  April  1999  the  Company  purchased  from  a
subsidiary  of  LSB  (not  the Company or  a  subsidiary  of  the
Company),  an  option  to  acquire a  French  HVAC  manufacturing
company  and  all  amounts  due  and  payable  from  such  French
manufacturer  or its parent to LSB.  The Company  paid  LSB  $2.6
million  for  the  option and receivables  due  from  the  French
manufacturer  and its parent.  This amount equaled the  net  book
value  of the investment on the books of LSB's subsidiary,  which
management  of the Company believes approximated the investment's
fair value, at the date of purchase.

Contractual Arrangements

     Services Agreement

     On  November  21, 1997, the company and LSB entered  into  a
services  agreement (the "Services Agreement") pursuant to  which
LSB  will  continue  to provide to the Company various  services,
including financial and accounting, order entry, billing, credit,
payable,  insurance,  legal,  human  resources,  advertising  and
marketing,  and  related administrative and management  services,
that  LSB  has  historically  provided  to  the  operations   and
businesses  of  the  Company.  The  Company  will  pay  to  ,  or
reimburse, LSB for the costs and expenses incurred by LSB in  the
performance of the Services Agreement.

      Under the terms of the Services Agreement, the Company will
pay  to, or reimburse, LSB for the value of the office facilities
of   LSB,   including  LSB's  principal  offices  and   financial
accounting  offices utilized in the performance of  the  Services
Agreement.   LSB will determine the proportionate usage  of  such
facilities by LSB and the Company, and the Company will  pay  to,
or reimburse, LSB for its proportionate share of such usage.

      Charges  for such services aggregate $4,780,000, $2,265,000
and  $1,950,000 for the years ended December 31, 1999,  1998  and
1997,  respectively.   Management of the Company  believes  these
charges  from LSB reasonably approximate additional  general  and
administrative  costs,  which would have  been  incurred  if  the
Company  had  been  an  independent entity during  such  periods.
These  amounts do not include reimbursements for costs  described
in  the next paragraph or amounts paid by LSB relating to certain
of the Company's payroll that are directly charged to the Company
by LSB.

      The  Services Agreement also provides that LSB will  permit
employees  of  the Company and its subsidiaries  to  continue  to
participate in the benefit plans and programs sponsored  by  LSB.
The  Company  will  pay  to,  or reimburse,  LSB  for  the  costs
associated with participation by the employees of the Company  in
LSB's benefit plans and programs.

      In addition, the Services Agreement allows for purchases of
other  goods  and  services to the extent that  the  amount  paid
approximate fair value that would be paid to a third  party.   In
1999, subsidiaries of the Company purchased certain raw materials
with LSB's assistance and paid $461,000 to LSB in commissions  on
such  purchases.   The  Company  also  purchased  $1,076,000   in
industrial supplies, in 1999, from subsidiaries of LSB which  are
not subsidiaries of the Company.

      LSB  is  focusing  its efforts and resources  on  its  core
businesses,  which represents that of the Company.  LSB  is  also
realigning its overhead to better match its focus on the Chemical
and Climate Control Businesses of the Company. In connection with
such  restructuring, effective January 1, 2000, the Company began
paying certain executive officers of both LSB and the Company
and  certain  other  employees of both LSB and the Company formerly
paid by LSB, and reimbursed by the Company, as well as operating
costs previously  paid by  LSB  and reimbursed by the Company
pursuant to the  "Services Agreement".

     Management Agreement

     On  November  21, 1997, LSB and the Company entered  into  a
management agreement (the "Management Agreement"), which provides
that  LSB  will provide to the Company, managerial oversight  and
guidance  concerning the broad policies, strategic decisions  and
operations of the Company and the subsidiaries and the  rendering
of  such  further  managerial  assistance  as  deemed  reasonably
necessary by LSB.  Under the Management Agreement, the Company is
to  pay  LSB a fee for such services, which will not exceed  $1.8
million annually.  The fee will be paid quarterly based upon  the
excess   of  actual  earnings  before  interest,  income   taxes,
depreciation  and amortization ("EBITDA") for the  quarter  minus
$6,500,000,  not  to  exceed $450,000.  If  at  the  end  of  the
calendar  year, EBITDA is less than $26 million, management  fees
paid to LSB during the year shall be refunded to the Company  for
the  first  three quarters of the year, not to exceed $1,350,000.
The  maximum  management fee amount to be  paid  to  LSB  by  the
Company  is  adjusted annually commensurate with  the  percentage
change,  if any, in the Consumer Price Index during the preceding
calendar year.  No payments were made to LSB under the Management
Agreement in 1999, 1998, or 1997.

     Tax Sharing Agreement

     On November 21, 1997, the Company and LSB entered into a tax
sharing  agreement (the "Tax Sharing Agreement")  which  provides
for  (i)  the allocation of payments of taxes for periods  during
which  the  Company and its subsidiaries and LSB are included  in
the  same  consolidated group for federal income tax purposes  or
the  same  consolidated, combined or unitary returns  for  state,
local   or   foreign  tax  purposes,  (ii)  the   allocation   of
responsibility for the filing of tax returns, (iii)  the  conduct
of  tax  audits and the handling of tax controversies,  and  (iv)
various  related  matters.   For  tax  periods  beginning   after
December  1996 and ending ten years thereafter, so  long  as  the
Company  is  included in LSB's consolidated  federal  income  tax
returns  or  state consolidated combined or unitary tax  returns,
the Company will be required to pay to LSB an amount equal to the
Company's  consolidated federal and state  income  tax  liability
calculated as if the Company and its subsidiaries were a separate
consolidated  tax  group and not part of LSB's  consolidated  tax
group.    Such   amount   is  payable  in   estimated   quarterly
installments.  If the sum of the estimated quarterly installments
is  (a) determined by LSB, under the Tax Sharing Agreement,  then
LSB  will refund the amount of the excess to the Company, or  (b)
less  than the Company's tax Sharing Agreement, then the  Company
will  pay to LSB the amount of the deficiency.  The Company  paid
approximately $1.0 million to LSB in 1997 (none in 1999 and 1998)
under the tax sharing agreement.

Directors' Compensation

Due to LSB and the Company holding joint Board of Director meetings
and also due to the revised allocations of costs discussed further
at Item 13 "Servcies Agreement", effective January 1, 2000, allocation
of 75% of the director's fees paid to the members of the Board of
Directors that are not employees of LSB or the Company and that are
directors of both the Company and LSB compensation will be paid by
the Company.  The Company believes that this allocation is fair and
reasonable as a substantial portion of the businesses of LSB are owned
by the Company.
Industrial Supplies, Machines and Climate Control Equipment

     During   the   year   ended  December  31,   1999,   certain
subsidiaries of LSB that are not subsidiaries of the Company sold
to  subsidiaries  of the Company approximately  $1.5  million  in
industrial  supplies, machine tools and certain thermostats,  and
it  is  anticipated that such transactions will continue  in  the
future.

Affiliated Loans

     The  Company  has,  at  various  times,  maintained  certain
unsecured borrowings from LSB and its subsidiaries and made loans
and  advances to LSB which generally bear interest.  At  December
31,  1999  the  Company had loans and advances due  from  LSB  of
approximately $13.4 million, $10.0 million and bears interest  at
10 3/4%, maturing November 2007 and $3.4 million due from LSB and
affiliates related to cash advances from the Company to  LSB  and
affiliates  prior  tot  he sale of the Notes,  as  defined,  from
borrowings on the Company's credit facilities.  This loan is  due
by its terms in November 2007 and bears interest at 7% per annum.
At  December 31, 1999 the Company had $2.4 million due  from  LSB
and affiliates included in current assets related to advances  as
discussed  previously, interest and refunds due  associated  with
operations  under  the  Service Agreement or  refunds  under  the
management agreement.  At December 31, 1999, LSB had not made the
December  1  interest  payment  to  the  Company  for  the  loans
described  above.   LSB made the December 1 interest  payment  in
March   2000.   The  Company  earned  interest  income   on   net
$1,474,000, $1,316,000 and $357,000 for the years ended  December
31, 1999, 1998 and 1997, respectively.

Revolving Credit Facility

     LSB,  certain  subsidiaries of LSB that are not subsidiaries
of  the  Company,  and certain subsidiaries of  the  Company  are
parties  to a revolving credit facility.  LSB guarantees  all  of
the   obligations  of  the  Company=s  subsidiaries  under   such
revolving credit facility.

Guaranty of Loans

     As  of  December  31,  1999, LSB has  guaranteed  the  lease
payments  due  by the Company=s fan coil business under  a  lease
purchase   agreement   of  $279,000.   In   addition,   LSB   has
unconditionally  guaranteed  repayment  by  the  Climate  Control
Business  of certain term debt, the principal amount of which  is
currently $1.0 million.

Employee Benefit Plans

     Prior to the formation of the Company, the employees of  the
Chemical  Business and the Climate Control Business were eligible
to  participate in LSB=s Employee Savings Plan, health  insurance
plan,  and  various  stock  option plans.  LSB  has  allowed  the
employees  of the Company to continue to be eligible for  all  of
such plans on the same terms and conditions as LSB=s employees.