Synthesis Energy Systems Announces Fourth Quarter 2009 Financial Results

Conference call scheduled for 8:00 a.m. Eastern Today

• Press Release
• Source: Synthesis Energy Systems, Inc.
• On 7:00 am EDT, Tuesday September 15, 2009

HOUSTON, Sept. 15 /PRNewswire-FirstCall/ -- Synthesis Energy Systems, Inc. (the "Company") (Nasdaq: SYMX - News), a global industrial gasification company, today announced results for the fourth quarter and fiscal year ended June 30, 2009.

"During the quarter our Hai Hua plant was available for production for approximately 95% of the period, was operated 60% of the period and produced compliant syngas 98% of the time during operation. This resulted in a significant improvement in sales for the fourth quarter over previous periods," said Robert Rigdon, President and CEO of the Company. "We expect this improved operating performance to continue and we are encouraged by our operating results which we believe demonstrate the reliability of our U-GAS® technology," Rigdon added.

Fourth Quarter Financial Results (Unaudited)

For the quarter ended June 30, 2009, the Company reported revenue for product sales at the Hai Hua plant of $1.2 million, which is an increase of $1.1 million from the prior quarter, due to the plant's increased production and availability for production.

Cost of sales and plant operating expenses were $2.2 million, an increase of $1.3 million from the prior quarter, and reflect the ramp-up of the plant during May.

General and administrative expenses were $3.2 million for the quarter, reflecting a reduction of approximately 30% compared to G&A levels during the first half of fiscal 2009, and a reduction of 16% compared to the prior quarter.

Project and technical development expenses were $1.4 million for the quarter and included an impairment loss on a $1.25 million royalty to ExxonMobil under the Company's license rights agreement that was paid during the quarter ended December 31, 2008.

Our operating loss for the quarter, excluding the $1.25 million impairment loss and non-cash expenses which are comprised of stock-based compensation and depreciation and amortization, was $(4.4) million compared to an operating loss of $(4.7) million for the prior quarter.

At June 30, 2009, the Company had cash and cash equivalents of $90.4 million and working capital of $82.1 million. As previously disclosed, the Company invested $29.3 million of cash into the Yima project in August 2009.

Conference Call Information

Senior management will hold a conference call today at 8:00 a.m. Eastern Time to review the Company's financial results for the quarter and year ended June 30, 2009 and provide an update on corporate developments.

To access the live webcast, please log on to the Company's website at www.synthesisenergy.com. Alternatively, callers may participate in the conference call by dialing (612) 332-0107. An archived version of the webcast will be available on the website through October 15, 2009. A telephone replay of the conference call will be available approximately two hours after the completion of the call through Monday, September 21, 2009. Callers can access the replay by dialing (320) 365-3844; the PIN access number is 114485.

About Synthesis Energy Systems, Inc.

SES is an energy and technology company that builds, owns and operates coal gasification plants that utilize its proprietary U-GAS® fluidized bed gasification technology to convert low rank coal and coal wastes into higher value energy and chemical products, such as transportation fuel, substitute natural gas, fuel gas, methanol and ammonia. The U-GAS® technology, which SES licenses from the Gas Technology Institute, gasifies coal 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 our 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) our ability to operate efficiently on a smaller scale, which enables us to construct 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, visit or call (713) 579-0600.

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 our early stage of development, our estimate of the sufficiency of existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, our ability to reduce operating costs, the limited history and viability of our technology, the effect of the current international financial crisis on our business, commodity prices and the availability and terms of financing opportunities, our results of operations in foreign countries and our ability to diversify, our ability to maintain production from our first plant in the Hai Hua joint venture project, approvals and permits for our Yima project and other future projects, the estimated timetables for achieving mechanical completion and commencing commercial operations for the Yima project, and the sufficiency of internal controls and procedures. Although we believe that in making such forward-looking statements our 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. We cannot assure you that the assumptions upon which these statements are based will prove to have been correct.

                          SYNTHESIS ENERGY SYSTEMS, INC.
                         (A Development Stage Enterprise)

                           Consolidated Balance Sheets
                                 (In thousands)
                                   (Unaudited)

                                          June 30,     June 30,
                                            2009         2008
                                            ----         ----
     ASSETS

     Current assets:
       Cash and cash equivalents           $90,420     $127,872
       Accounts receivable                   1,333          169
       Prepaid expenses and other
        currents assets                        689        2,162
       Inventory                               780          516
                                               ---          ---
         Total current assets               93,222      130,719
       Construction-in-progress              6,078        2,408
       Property, plant and equipment, net   37,713       37,570
       Intangible asset, net                 1,386        1,546
       Other long-term assets                7,737        5,504
                                             -----        -----
         Total assets                     $146,136     $177,747
                                          ========     ========

     LIABILITIES AND STOCKHOLDERS' EQUITY

     Current liabilities:
       Accrued expenses and accounts
        payable                             $8,828      $10,828
       Current portion of long-term
        bank loan                            2,254        2,245
                                             -----        -----
         Total current liabilities          11,082       13,073
     Long-term bank loan                     8,958       11,168
                                             -----       ------
         Total liabilities                  20,040       24,241

     Commitments and contingencies

     Minority interest                       2,277        2,969

     Stockholders' Equity:
       Common stock, $0.01 par value:
        100,000 shares authorized:
        48,118 and 48,011 shares issued
        and outstanding, respectively          481          480

       Additional paid-in capital          196,441      194,617
       Deficit accumulated during
        development stage                  (74,701)     (46,125)
       Accumulated other comprehensive
        income                               1,598        1,565
                                             -----        -----
         Total stockholders' equity        123,819      150,537
                                           -------      -------
         Total liabilities and
          stockholders' equity            $146,136     $177,747
                                          ========     ========

                          SYNTHESIS ENERGY SYSTEMS, INC.
                        (A Development Stage Enterprise)

                     Consolidated Statements of Operations
                    (In thousands, except per share amounts)
                                   (Unaudited)

                                                   Three Months Ended
                                                   ------------------
                                             June 30,   March 31,   June 30,
                                              2009        2009       2008
                                             --------   ---------   --------
    Revenue:
       Product sales                          $1,168      $76         $288
       Project development fees                    -      250            -
                                                 ---      ---          ---
    Total revenue                              1,168      326          288

    Costs and Expenses:
       Costs of sales and plant operating
        expenses                               2,207      906        2,197
       General and administrative expenses     3,245    3,841        4,647
       Project and technical development
        expenses                               1,362      251        2,736
       Stock-based compensation expense          283   (1,798)       2,169
       Depreciation and amortization             718      685          717
                                                 ---      ---          ---

    Total costs and expenses                   7,815    3,885       12,466
                                               -----    -----       ------

    Operating loss                            (6,647)  (3,559)     (12,178)

    Non-operating (income) expense:
       Interest income                           (84)    (195)        (205)
       Interest expense                          179      243          275
                                                 ---      ---          ---

    Net loss before minority interest         (6,742)  (3,607)     (12,248)

    Minority interest                             49       (8)         338
                                                 ---      ---          ---
       Net loss                              $(6,693) $(3,615)    $(11,910)
                                             =======  =======    =========

    Net loss per share:
       Basic and diluted                      $(0.14)  $(0.08)      $(0.32)
                                              ======   ======       ======

    Weighted average common shares outstanding
       Basic and diluted                      48,037   48,011       37,011
                                              ======   ======       ======

                           SYNTHESIS ENERGY SYSTEMS, INC.
                          (A Development Stage Enterprise)

                        Consolidated Statements of Operations
                      (In thousands, except per share amounts)
                                    (Unaudited)

                                              Year Ended June 30,
                                              -------------------
                                                2009       2008
                                                ----       ----
    Revenue:
      Product sales                           $1,852       $203
      Product development fees                   250        125
                                                 ---        ---
    Total revenue                              2,102        328

    Costs and Expenses:
      Costs of sales and plant operating
       expenses                                7,449      2,396
      General and administrative expenses     16,395     13,147
      Project and technical development
       expenses                                3,546      5,615
      Stock-based compensation expense         1,869      6,029
      Depreciation and amortization            2,905      1,202
                                               -----      -----

    Total costs and expenses                  32,164     28,389
                                              ------     ------

    Operating loss                           (30,062)   (28,061)

    Non-operating (income) expense:
      Interest income                         (1,742)      (397)
      Interest expense                           959        388
                                                 ---        ---

    Net loss before minority interest        (29,279)   (28,052)

    Minority interest                            703        610
                                                 ---        ---
      Net loss                              $(28,576)  $(27,442)
                                           =========  =========

    Net loss per share:
      Basic and diluted                       $(0.60)    $(0.80)
                                              ======     ======

    Weighted average common shares
     outstanding
      Basic and diluted                       48,017     34,385
                                              ======     ======

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