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



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

PR Newswire

HOUSTON, Sept. 19, 2013

HOUSTON, Sept. 19, 2013 /PRNewswire/ -- Synthesis Energy Systems, Inc.
(Nasdaq: SYMX) today announced financial and operating results for the fourth
quarter of fiscal 2013, ended June 30, 2013.

(Logo: http://photos.prnewswire.com/prnh/20130710/NY45085LOGO)

"During our 2013 fiscal year, we made important progress toward creating
significant value for our shareholders by negotiating and executing a new
agreement that will allow our ZZ Joint Venture plant to restart and produce
revenues later this year; the Yima JV started up the project and achieved
initial methanol production and sales from the plant; we signed a joint
marketing agreement with GE; advancing our 'capital-lite' strategy to
accelerate the commercialization of our patented technology through industry
partnerships and collaborations; and other key initiatives," stated Robert
Rigdon, President and CEO. "During fiscal 2014, we anticipate further progress
in executing our business plan including generating revenues from our ZZ and
Yima joint venture plants in China." 

Fourth Quarter 2013 Financial Results (Unaudited)

Total revenue for the three months ended June 30, 2013, was $192,000 versus
$284,000 for the three months ended June 30, 2012. These revenues were
comprised of engineering services and feedstock studies.

The operating loss for the fourth quarter of fiscal 2013 was $5.5 million
versus an operating loss of $4.2 million for the fourth quarter of fiscal
2012. The increase in operating loss was primarily due to non-cash charges
including a $1.0 million write-off to general and administrative expenses of
previously deferred financing costs related to the ZJX stock purchase
agreement that was terminated in June 2013, and an increase in stock-based
compensation expenses.

The net loss attributable to stockholders for the fourth quarter of fiscal
2013 was $5.7 million, or $(0.09) per share, versus a loss of $5.0 million, or
$(0.10) per share, for the prior year's fourth fiscal quarter.

In June 2013, the Company changed its method of accounting for its investment
in the Yima Joint Ventures from the equity method to the cost method.  Through
its interactions with the Yima Joint Ventures related to the startup and
operations, the Company has concluded that at this time it does not have
sufficient influence on the Yima Joint Ventures' operations to support the
equity method of accounting for its investment. As a result, the Company's
share of the Yima Joint Venture's net earnings or losses will not be included
in the Company's consolidated financial statements after May 31, 2013.

At June 30, 2013, the Company had cash and cash equivalents of $15.9 million
and working capital of $8.4 million.

Fiscal 2013 Financial Results (Unaudited)

For the fiscal year ended June 30, 2013, total revenues were $579,000 versus
$3.1 million for fiscal 2012. These results included a $2.1 million decrease
in product sales from the ZZ Joint Venture plant due to idling syngas
production in September 2011.

Technology licensing and related services revenues were $534,000 for the year
ended June 30, 2013, versus $855,000 for the prior fiscal year, and included
revenues from engineering services and feedstock studies for potential
customer projects.

The operating loss for fiscal 2013 was $18.4 million compared to an operating
loss of $18.3 million for fiscal 2012. 

The net loss attributable to stockholders for fiscal 2013 was $19.9 million or
$(0.33) per share versus $19.9 million or $(0.39) per share for fiscal 2012.  

Recent Corporate Highlights

  o SES entered into a definitive agreement with Xuecheng Energy, formerly
    Shandong Hai Hua Coal & Chemical Company Ltd. (Hai Hua), that it expects
    will enable SES' Zao Zhuang Joint Venture (ZZ JV) to restart the plant and
    expand into producing and selling methanol. The annual methanol production
    capacity of the expanded ZZ JV is expected to be approximately 90,000
    metric tons per year, which SES believes can generate approximately $30
    million in annual revenues from the ZZ JV starting in late 2013, assuming
    recent average methanol prices in China. SES expects to resume operation
    of the ZZ JV after completion of retrofit and upgrades to both the
    methanol unit and the syngas plant. Subject to acceptable completion of
    the retrofit and other preconditions as defined in the contract, this new
    agreement will supersede the previous syngas sales agreement between the
    ZZ JV and Hai Hua. Bank financing of $3.2 million has been recently
    obtained to begin the work to retrofit and upgrade the plants. SES owns
    97.5% of the ZZ JV.
  o SES announced a 'capital-lite' strategy for accelerating the
    commercialization of its patented technology through industry partnerships
    and collaborations instead of direct SES investment into large scale
    gasification plants. This 'capital-lite' approach is designed to take full
    advantage of the capabilities of SES' gasification technology and build
    shareholder value through partnering with established and well-capitalized
    companies that have existing businesses in key market verticals and with
    the financial and personnel resources to deliver technology and equipment
    solutions into multiple projects on a global scale.
  o SES formed a new business unit to help deploy the Company's technology,
    equipment and services for the distributed power generation market — a
    business unit that SES believes has potential to grow significantly once
    fully developed over the next several years. The new SES business unit
    will focus on deploying the Company's technology to produce clean syngas
    fuel which can be used in General Electric's aero-derivative gas turbine
    engines used for power production as well as developing new partnerships
    with other established companies currently serving global power markets
    with power generation technology, engineering, equipment and construction
    services.
  o The Yima Joint Ventures project in Henan Province, China, which SES has a
    25% ownership interest in, has recently ramped up methanol production to
    approximately 80 percent of total design capacity of 300,000 tonnes per
    year and is now selling its methanol product to a local industrial
    company. SES expects the Yima Joint Venture to complete its commissioning
    and transition into full commercial operations by the end of calendar
    2013.
  o SES has developed a novel technology approach for integrating its
    gasification technology with renewable waste resources and conventional
    natural gas technology to cleanly and cost effectively produce high-value
    "green chemicals" on a large scale. SES believes this new, innovative
    approach has primary applicability near large metropolitan areas where it
    can enable economical production of chemicals such as methanol. It
    potentially offers an attractive economical solution for the smart
    utilization of ever-increasing amounts of municipal waste generated
    worldwide. SES is working with a Houston-based company who is developing
    the first project using this approach to produce approximately 500,000
    tons per year of methanol.
  o Donald Bunnell, a director and a co-founder of SES, has assumed the role
    of Chief Commercial Officer. In his new role, Mr. Bunnell will focus on
    developing and closing new and existing commercialization partnership
    opportunities to address key business verticals through technology
    licensing, equipment sales and engineering services. In addition, Mr.
    Bunnell is leading our SES China management team.
  o SES appointed Charles Costenbader as Chief Financial Officer. Mr.
    Costenbader brings 25 years of experience in energy-related finance,
    including senior positions at Tangent Energy Solutions, Inc., Macquarie
    Bank, Galveston Bay Biodiesel, L.P. and GE Capital.

Conference Call Information

Senior management will hold a conference call to review the Company's
financial results for the fourth 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 1-866-652-5200 and international
callers should dial 1-412-317-6060. Callers should ask for the Synthesis
Energy Systems call.

An archived version of the webcast will be available on the Company's website
through October 21, 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 October 21, 2013. Domestic callers can access
the telephonic replay by dialling 1-877- 344-7529. International callers
should dial 1-412-317-0088. The PIN access code for the live call and the
replay is 10032736#.

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 SES' proprietary
fluidized bed gasification technology. SES' technology gasifies coal cost
effectively, without many of the harmful emissions normally associated with
coal combustion plants. The primary advantages of the SES technology relative
to other gasification technologies are (a) greater fuel flexibility provided
by the ability 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 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.com or
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 operations of
SES, 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 and production
of methanol, its ability to obtain the necessary approvals and permits for
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, its ability to grow its business and
generate revenues and earnings as a result of its proposed China and India
platform initiatives, and its ability to develop its power business unit and
marketing arrangement with GE and its other business verticals, steel and
renewables. 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.

TABLES FOLLOW

 

SYNTHESIS ENERGY SYSTEMS, INC.

(A Development Stage Enterprise)

 

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)
                         Three Months Ended          Twelve Months Ended
                         June 30,                    June 30,
                         2013          2012          2013         2012
Revenue:
Product sales and other  $             $             $            $      2,121
— related parties        45             —             45
Technology licensing     147           284           534          855
and related services
Other                    —             —             —            86
Total revenue            192           284           579          3,062
Costs and Expenses:
Costs of sales and
plant operating          211           437           750          4,767
expenses
General and              4,047         3,295         13,599       13,197
administrative expenses
Stock-based              849           172           2,317        879
compensation expense
Depreciation and         569           583           2,292        2,486
amortization
Total costs and          5,676         4,487         18,958       21,329
expenses
Operating loss           (5,484)       (4,203)       (18,379)     (18,267)
Non-operating (income)
expense:
Equity in losses of      213           637           1,372        1,881
joint ventures
Foreign currency         (55)          69            (80)         (548)
(gains) losses
Interest income          (9)           (11)          (50)         (90)
Interest expense         54            96            302          562
Net loss                 (5,687)       (4,994)       (19,923)     (20,072)
Less: net  income
(loss) attributable to   22            44            (10)         176
noncontrolling
interests
Net loss attributable    $    (5,665)  $    (4,950)  $  (19,933)  $  (19,896)
to stockholders
Net loss per share:
Basic and diluted        $             $             $            $    
                          (0.09)        (0.10)        (0.33)       (0.39)
Weighted average common
shares outstanding:
Basic and diluted        63,442        51,511        60,171       51,024

 

 

SYNTHESIS ENERGY SYSTEMS, INC.

(A Development Stage Enterprise)

 

Consolidated Balance Sheets

(In thousands)

(Unaudited)
                                                    June 30,      June 30,

                                                    2013          2012
ASSETS
Current assets:
Cash and cash equivalents                           $     15,870  $     18,035
Accounts receivable                                 2             316
Prepaid expenses and other currents assets          2,636         2,015
Inventory                                           —             23
      Total current assets                          18,508        20,389
Property, plant and equipment, net                  32,641        33,942
Intangible assets, net                              1,060         1,126
Investment in joint ventures                        33,311        33,340
Other long-term assets                              2,844         4,050
      Total assets                                  $     88,364  $     92,847
LIABILITIES AND EQUITY
Current liabilities:
Accrued expenses and accounts payable               $ 7,632       $ 8,080
Current portion of long-term bank loan              2,428         2,435
      Total current liabilities                     10,060        10,515
Long-term bank loan                                 —             2,372
      Total liabilities                             10,060        12,887
Equity:
Stockholders' Common stock, $0.01 par value:
200,000 shares authorized: 63,583 and 52,022 shares 636           520
issued and outstanding, respectively
Additional paid-in capital                          224,337       207,345
Deficit accumulated during development stage        (151,741)     (131,808)
Accumulated other comprehensive income              5,958         4,802
      Total stockholders' equity                    79,190        80,859
Noncontrolling interests in subsidiaries            (886)         (899)
      Total equity                                  78,304        79,960
         Total liabilities and equity               $     88,364  $     92,847

 

SOURCE Synthesis Energy Systems, Inc.

Website: http://www.synthesisenergy.com
Contact: Kevin Kelly, Chief Accounting Officer, Synthesis Energy Systems,
Inc., (713) 579-0600, Kevin.Kelly@synthesisenergy.com; Investors: Matthew D.
Haines, Managing Director, MBS Value Partners, LLC, (212) 710-9686,
Matt.Haines@mbsvalue.com; or Media: Richard Anderson, Senior Managing
Director, Feintuch Communications, (718) 986-1596, SES@feintuchpr.com
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