Synthesis Energy Systems, Inc. Announces Financial Results for the Second Quarter of Fiscal 2013

  Synthesis Energy Systems, Inc. Announces Financial Results for the Second
                            Quarter of Fiscal 2013

PR Newswire

HOUSTON, Feb. 6, 2013

HOUSTON, Feb. 6, 2013 /PRNewswire/ -- Synthesis Energy Systems, Inc. (Nasdaq:
SYMX), a global energy and gasification technology company that provides
products and solutions to the energy and chemicals industries, today announced
financial and operating results for the second quarter of fiscal 2013, ended
December 31, 2012.

"We are keenly focused on delivering key objectives for the Company intended
to provide revenue, earnings and operating cash flows in 2013," stated Robert
Rigdon, President and CEO. "Our Yima JV plant is now in the very early stages
of producing methanol, which is a much anticipated milestone for SES. Through
our cooperation with Crystal Vision Energy, we are actively engaged in
financing and M&A activities in China designed to deliver near term financial
results. We have also completed two important technology engineering
agreements with potential partners related to applying our technology into
business vertical segments of steel and waste feedstocks to chemicals, and we
believe we are successfully positioning ourselves to turn the corner toward
profitability during calendar 2013."

Second Quarter 2013 Financial Results (Unaudited)

Total revenue for the three months ended December 31, 2012, was $13,000 versus
$183,000 for the three months ended December 31, 2011.

Technology licensing and related services revenues for the three months ended
December 31, 2012 were $13,000 versus $164,000 for the three months ended
December 31, 2011 due to less technology related services performed during the
period. The Company has recently received orders from customers totaling
$850,000 for technology services that are expected to be recognized as revenue
for the quarters ending March and June of 2013.

There were no product sales for the three months ended December 31, 2012 as
the Company has continued to keep the ZZ joint venture plant idle since
September 2011 to resolve nonpayment of contractual capacity fees of
approximately $6.8 million owed by Xuecheng Energy (previously Hai Hua) and to
restructure the commercial arrangements for the joint venture. Discussions
regarding the nonpayment and restructuring are ongoing. In the event that the
Company is not successful reaching agreement with Xuecheng Energy, the Company
will seek to recover the outstanding capacity fees through binding
arbitration.

The operating loss for the second quarter of fiscal 2013 was $3.9 million
versus an operating loss of $4.8 million for the second quarter of 2012. The
improvement in operating loss was primarily due to holding the ZZ Joint
Venture plant idle.

The net loss attributable to stockholders for the second quarter of fiscal
2013 was $4.4 million, or $0.07 per share, versus a loss of $5.0 million, or
$0.10 per share, for the prior year's second quarter.

At December 31, 2012, the Company had cash and cash equivalents of $23.3
million and working capital of $15.6 million.

Corporate Highlights

  oAfter over three years of development and construction, the Yima Joint
    Venture plant achieved a very significant milestone by producing its first
    methanol in late December 2012 and also its first simultaneous operation
    of two of the three gasification systems. The plant is designed to
    produce 300,000 tonnes per year of methanol from two operating gasifiers.
    Successful operating achievements such as these are moving the plant much
    closer to full scale, steady-state operation and methanol production,
    which is expected to occur by early summer.

  oOn December 21, 2012, the Company entered into an agreement with a global
    leader in iron ore processing and steel production to define a product
    that integrates the SES gasification technology into production of steel.
    The integration of SES technology with this process would allow use of low
    cost, low quality coal as the energy feedstock for steel production in an
    environmentally favorable way. The Company will be assisted in this effort
    by Fluor Enterprises.

  oEffective January 1, 2013, the Company entered into a new agreement to
    continue and expand our relationship with Crystal Vision Energy Limited
    ("CVE"), which provides leadership and management services for our China
    operations. The Company and CVE will focus on growth of SES China, the
    Company's China business platform including the operations of the Yima
    Joint Venture plant and the ZZ Joint Venture plant, capital raising, M&A,
    and management services.

  oOn January 15, 2013, the Company announced an agreement with a U.S.-based
    customer to assess the feasibility and optimal uses of SES' gasification
    technology for the production of valuable 'green' chemicals. The Company
    will lead an engineering study, commissioned and funded by the customer,
    which will define an optimal use of potential feedstock combinations that
    may include used tires, auto shredder residue and refuse-derived fuel to
    efficiently and cost-effectively produce commercially viable chemicals
    such as methanol and methanol derivatives. Fluor Enterprises will also be
    assisting the Company in this effort.

Conference Call Information

Senior management will hold a conference call to review the Company's
financial results for the second quarter of fiscal 2013 and provide a
corporate update this morning at 8:30 a.m. Eastern Time.

To access the live webcast, please log on to the Company's website at
www.synthesisenergy.com. Alternatively, domestic callers may participate in
the live telephone conference call by dialing (800) 860-2442 and international
callers should dial (412) 858-4600.

An archived version of the webcast will be available on the Company's website
through March 6, 2013. A telephone replay of the conference call will be
available beginning approximately one hour after the completion of the call
and will be available through March 6, 2013. Domestic callers can access the
telephonic replay by dialling (877) 344-7529. International callers should
dial (412) 317-0088. The PIN access code for the live call and the replay is
10024318#.

About Synthesis Energy Systems, Inc.

SES provides technology, equipment and engineering services for the conversion
of low rank, low cost coal and biomass feedstocks into energy and chemical
products. Its strategy is to create value through providing technology and
equipment in regions where low rank coals and biomass feedstocks can be
profitably converted into high value products through its proprietary U-GAS^®
fluidized bed gasification technology, which SES licenses from the Gas
Technology Institute. U-GAS^® gasifies coal cost effectively, without many of
the harmful emissions normally associated with coal combustion plants. The
primary advantages of U-GAS^® relative to other gasification technologies are
(a) greater fuel flexibility provided by the ability of SES to use all ranks
of coal (including low rank, high ash and high moisture coals, which are
significantly cheaper than higher grade coals), many coal waste products and
biomass feed stocks; and (b) the ability of SES to operate efficiently on a
smaller scale, which enables the construction of plants more quickly, at a
lower capital cost, and, in many cases, in closer proximity to coal sources.
SES currently has offices in Houston, Texas, and Shanghai, China. For more
information on SES, please visit www.synthesisenergy.comor call (713)
579-0600.

SES Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact are forward-looking statements. Forward-looking
statements are subject to certain risks, trends and uncertainties that could
cause actual results to differ materially from those projected. Among those
risks, trends and uncertainties are the development stage of the SES
operations, its estimate of the sufficiency of existing capital sources, its
ability to successfully develop its licensing business, its ability to raise
additional capital to fund cash requirements for future investments and
operations including its China platform initiative, its ability to reduce
operating costs, the limited history and viability of its technology,
commodity prices and the availability and terms of financing opportunities,
its results of operations in foreign countries, its ability to diversify, its
ability to complete the restructuring of the ZZ Joint Venture, its ability to
obtain the necessary approvals and permits for its future projects, the
estimated timetables for achieving mechanical completion and commencing
commercial operations for the Yima project as well as the ability of the Yima
project to produce revenues and earnings, the sufficiency of internal controls
and procedures and the ability of SES to grow its business and generate
revenues and earnings as a result of its proposed China and India platform
initiatives and its relationship with Crystal Vision Energy, as well as its
joint venture with Midas Resource Partners. Although SES believes that in
making such forward-looking statements its expectations are based upon
reasonable assumptions, such statements may be influenced by factors that
could cause actual outcomes and results to be materially different from those
projected. SES cannot assure you that the assumptions upon which these
statements are based will prove to have been correct.

Important Notice from SES

In connection with the proposed ZJX/China Energy transaction, SES has filed a
preliminary proxy statement, and intends to file a definitive proxy statement,
with the SEC and intends to mail the definitive proxy statement to the
stockholders of SES. SES and its directors and officers may be deemed to be
participants in the solicitation of proxies from the stockholders of SES in
connection with the transaction. Information about the transaction is set
forth in the preliminary proxy statement filed, and will be set forth in the
definitive proxy statement to be filed by SES with the SEC.

You may obtain the preliminary statement and, when available, the definitive
proxy statement, for free by visiting EDGAR on the SEC website at www.sec.gov.
Investors should read the definitive proxy statement carefully before making
any voting or investment decision because that document will contain important
information.

SYNTHESIS ENERGY SYSTEMS, INC.

(A Development Stage Enterprise)



Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)
                            Three Months Ended          Six Months Ended
                            December 31,                December 31,
                            2012          2011          2012          2011
Revenue:
Product sales and other —   $        $        $     —  $  
related parties             —             19                          2,121
Technology licensing and    13            164           84            471
related services
Other                       —             —             —             86
Total revenue               13            183           84            2,678
Costs and Expenses:
Costs of sales and plant    133           881           264           4,085
operating expenses
General and administrative  3,141         3,174         6,223         6,199
expenses
Stock-based compensation    109           292           272           359
expense
Depreciation and            570           641           1,146         1,281
amortization
Total costs and expenses    3,953         4,988         7,905         11,924
Operating loss              (3,940)       (4,805)       (7,821)       (9,246)
Non-operating (income)
expense:
Equity in losses of joint   400           402           917           834
ventures
Foreign currency gains      (85)          (202)         (48)          (615)
Interest income             (15)          (26)          (28)          (63)
Interest expense            78            142           174           326
Net loss                    (4,318)       (5,121)       (8,836)       (9,728)
Less: net (income) loss
attributable to             (85)          74            (52)          141
noncontrolling interests
Net loss attributable to    $  (4,403)  $  (5,047)  $  (8,888)  $ 
stockholders                                                          (9,587)
Net loss per share:
Basic and diluted           $           $           $           $  
                            (0.07)       (0.10)       (0.16)       (0.19)
Weighted average common
shares outstanding:
Basic and diluted           61,899        50,862        57,116        50,860

SYNTHESIS ENERGY SYSTEMS, INC.

(A Development Stage Enterprise)



Consolidated Balance Sheets

(In thousands)

(Unaudited)
                                                    December 31,  June 30,

                                                    2012          2012
ASSETS
Current assets:
Cash and cash equivalents                           $   23,303  $   18,035
Accounts receivable                                 102           316
Prepaid expenses and other currents assets          2,449         2,015
Inventory                                           23            23
Total current assets                                25,877        20,389
Property, plant and equipment, net                  33,115        33,942
Intangible assets, net                              1,060         1,126
Investment in Yima joint ventures                   33,164        33,340
Other long-term assets                              3,830         4,050
Total assets                                        $   97,046  $   92,847
LIABILITIES AND EQUITY
Current liabilities:
Accrued expenses and accounts payable               $ 7,780       $ 8,080
Current portion of long-term bank loan              2,450         2,435
Total current liabilities                           10,230        10,515
Long-term bank loan                                 1,161         2,372
Total liabilities                                   11,391        12,887
Equity:
Common stock, $0.01 par value: 200,000 shares
authorized: 62,577 and 52,022 shares issued and     626           520
outstanding, respectively
Additional paid-in capital                          221,590       207,345
Deficit accumulated during development stage        (140,696)     (131,808)
Accumulated other comprehensive income              4,976         4,802
Total stockholders' equity                          86,496        80,859
Noncontrolling interests in subsidiaries            (841)         (899)
Total equity                                        85,655        79,960
Total liabilities and equity                        $   97,046  $   92,847

SOURCE Synthesis Energy Systems, Inc.

Website: http://www.synthesisenergy.com
Contact: Kevin Kelly, Synthesis Energy Systems, Inc., Chief Accounting
Officer, +1-713-579-0600, Kevin.Kelly@synthesisenergy.com, or Matthew D.
Haines, MBS Value Partners, LLC, Managing Director, +1-212-710-9686,
Matt.Haines@mbsvalue.com
 
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