##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 01-33522
 SYNTHESIS ENERGY SYSTEMS, INC.
  Delaware
(State or Other Jurisdiction of Incorporation or Organization)
    
    20-2110031
(I.R.S. Employer Identification No.)Three Riverway, Suite 300, Houston, Texas
(Address of Principal Executive Offices)
    
    77056
(Zip Code)
 (713) 579-0600
  Common Stock, $.01 par value
(Title of Class)
    
    NASDAQ Stock Market
(Name of Exchange on Which Registered)
 None
 Yes o No þ
 Yes o No þ
 þ No o
 Yes o No o
 Form 10-K. o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Description of Business
    
    
    1Item 1A. Risk Factors
    
    
    12Item 1B. Unresolved Staff Comments
    
    
    22Item 2. Description of Property
    
    
    22Item 3. Legal Proceedings
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23PART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    24Item 6. Selected Financial Data
    
    
    25Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    36Item 8. Financial Statements and Supplementary Data
    
    
    37Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    61Item 9A. Controls and Procedures
    
    
    61Item 9B. Other Information
    
    
    62PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    62Item 11. Executive Compensation
    
    
    62Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    62Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    62Item 14. Principal Accountant Fees and Services
    
    
    62Item 15. Exhibits and Financial Statement Schedules
    
    
    63Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   i




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##### Table of Contents



Forward-Looking Statements
     
 PART I
 
 Item 1. Description of Business
 ® ® ® ® ® ®
 ®
  1




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##### Table of Contents



®
 Overview of U-GAS ®
 ® ® ® ® ®
 ®
 ® ®
 
 ® ®
  2




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##### Table of Contents



GTI Agreements
 License Agreement
 ® ® ® ®
 ®
 ®
 ®
  3




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##### Table of Contents



Other Services
 ® ®
 Business Strategy
  
    
    Executing on existing projects in China.We are continuing to implement operational
measures to improve the financial performance of our Zao Zhuang project in the near term, while also continuing to evaluate alternatives to better position the project to be commercially and financially successful in the future.
These alternatives include the possible expansion of the plant to produce other
products for other customers. We also intend to continue to leverage our success to date at the ZZ Joint
Venture in our ongoing business development efforts, including through further visits from senior executives of possible customers and partners, as well as government officials, from China, India, Australia, Vietnam and the United States.
 We are also continuing the ongoing
construction of our Yima project, and are working to restructure our joint venture
agreements to change the scope of the project from methanol to glycol production.
 
    
    Leveraging our proprietary technology through licensing, equipment sales and related
services to increase revenues and position us for future growth.  We provide a proprietary technology package whereby we license U-GAS® technology rights to third
parties, deliver an engineered technology transfer package and provide proprietary equipment
components to customers who plan to own and operate projects. We
intend to focus on developing opportunities for our proprietary
technology package whereby we
 may (i) integrate our U-GAS® technology package with downstream technologies to provide a fully
integrated offering where we may invest in projects either directly or through an investment
partner or (ii) may partner with engineering, equipment and technology companies to provide our
U-GAS® technology package into an integrated modular product offering, which may include coal or
biomass feedstocks for units producing power and fuels such as SNG, MTG, diesel and ethanol as well
as methanol for gasoline blending. We anticipate that we can increase revenues through collecting technology licensing fees and
royalties, engineering and technical service fees, as well as equipment product sales sold
to customers who plan to own and operate projects and desire to incorporate our proprietary
technology. We also believe that our licensing activities will provide additional insight
into project development activities, which may allow us to make selective equity investments
in such projects in the future, develop integrated, modular product offerings, or take
options in projects for which we provide a license.
 
    
    Expanding our relationships with strong strategic partners.Our efforts have been
initially focused on facilities producing syngas, methanol and DME in China. We are
expanding our relationships with our current partners, developing new relationships with
strategic partners and developing new downstream coal-to-chemicals and coal-to-energy
products which may expand our initial focus to include facilities producing SNG, methanol to
gasoline, or MTG, glycol, power and reducing gas for the steel
industry. We are exploring new markets for entry such as the U.S., India, Australia, Vietnam, and other parts of Europe
and Asia. Such strategic relationships may include an investment in projects either
directly by us or through an investment partner where U-GAS® plants may supply
syngas to strategic customers via long-term offtake agreements.
 
    
    Developing value where we have a competitive advantage and have access or rights to feedstock resources. We believe that we have the
greatest competitive advantage using our U-GAS® technology in situations where
there is a ready source of low rank, low cost coal, coal waste or biomass to utilize as
a feedstock. We are focusing our efforts in countries with large low rank coal resources such as India, the
U.S., China, Turkey and Australia. We are working to develop structured transactions that include
securing options to these feedstock resources. For example, we are currently in discussions
regarding several projects in Inner Mongolia, China where the provincial government is making coal
resources available to the project owners which adds protection for the project from future coal
cost increases, as well as potentially increasing project revenues. In these cases, we may provide
technology to add value to coal resources which may be of little value without our U-GAS®
conversion technology or may acquire or partner with owners of these resources to create more value
and opportunity for us through the integration of our technology with the resources. Additionally,
where capital and/or financing is available, we may acquire an interest in such resources,
including existing facilities or coal mines, where we could create value with our U-GAS® technology
through securing greater access to feedstock.
  4




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##### Table of Contents




    
    Continue to develop and improveU-GAS®technology.We are continually seeking
to improve the overall plant availability, plant efficiency rates and fuel handling
capabilities of the existing
U-GAS®
gasification technology. We are continuing
to work with our prospective customers to determine the suitability of their low rank coals
for our U-GAS® technology through our proprietary coal characterization testing
as well as selective commercial scale testing in our Zao Zhuang
facility. In addition, we
are growing our technology base through continued development of know-how with our
engineering and technical staff, growing and protecting our trade secrets as well as through
patenting improvements tested at our Zao Zhuang facility, and improvements resulting from
integration of our technology with downstream processes. To date, we have filed 13 patent
applications relating to our improvements to the U-GAS® technology.
 
    
    Grow earnings through increased revenues and control of expenses.We remain intently
focused on control of our expenses while we grow revenues from our technology business. We
believe our strategy will allow us to grow near term revenues to position us for sustainable
long term growth. We intend to minimize project development expense on projects until we
have assurances that acceptable financing is available to complete the project. Until the
capital markets improve, our strategy will be to operate using our current capital resources
and to leverage the resources of financing partners.
 Target Markets
 China
 ®
    5




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##### Table of Contents



®
 United States
 ®
 India
 ®
 Business Development, Engineering and Project Management
 Business Development Staff
 ®
 Technology Engineering and Project Management Staff
 ®
  6




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##### Table of Contents



Technology Licensing and Related Services
 ® ® ®
 ®
 Current Operations and Projects
 Zao Zhuang Joint Venture
 Joint Venture Agreement
 ®
  7




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##### Table of Contents



Syngas Purchase and Sale Agreement
    
  8




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##### Table of Contents



Yima Joint Ventures
      Golden Concord Joint Venture
 ®
 ®
  9




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##### Table of Contents



Business Concentration
  Competition
 ® ® ® ®
  Suppliers
  Research and Development
 ®
 Governmental and Environmental Regulation
   10




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China
   United States
    11




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Employees
  
 Item 1A. Risk Factors
 Risks Related to Our Business
 We will require substantial additional funding, and our failure to raise additional capital
necessary to support and expand our operations could reduce our ability to compete and could harm
our business.
  
    
    general and administrative expenses;
 
    
    debt service related to the ZZ Joint Venture;
 
    
    working capital;
 
    
    project, third party
licensing and technical development expenses; and
 
    
    general corporate purposes.
     12




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We are in an early stage of our development and our business strategies may not be accepted in
the marketplace and may not help us to achieve profitability.
 ®
 Our results of operations may fluctuate.
 ®
 We may not be successful developing opportunities to license the U-GAS ® technology.
 ® ®
 We have performance guarantees under our third party licensing agreements.
 ®
  13




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##### Table of Contents



Limited continuing rights of prior licensees of U-GAS ® technology could limit the
exclusivity of our license and materially adversely affect our business and results of operations.
 ® ® ® ®
 We face the potential inability to protect our intellectual property rights which could have a
material adverse effect on our business.
 ® ® ® ®
  Continued disruption in U.S. and international economic conditions and in the commodity and
credit markets may adversely affect our business, financial condition and results of operation .
   14




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##### Table of Contents



The U.S. governments current plans to address the financial crises may not be effective to
stabilize the financial markets or to increase the availability of credit.
  The termination of our license agreement with GTI or any of our joint venture agreements or
licensing agreements would materially adversely affect our business and results of operations.
  Our projects and projects of our customers are subject to an extensive governmental approval
process which could delay the implementation of our business strategy .
   We utilize a technology with a limited commercial history. If the U-GAS ® technology
fails to gain or loses market acceptance, our business will suffer.
 ® ® ® ® ®
  15




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##### Table of Contents



We are dependent on our relationships with our strategic partners for project development.
 ®
 We may never be able to reach agreements regarding the completion of future projects.
  Joint ventures that we enter into present a number of challenges that could have a material
adverse effect on our business and results of operations.
    We or our joint venture partners will manage the design, procurement and construction of our
plants. If our or their management of these issues fails, our business and operating results could
suffer.
 ®
  16




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##### Table of Contents



A portion of our revenues will be derived from the merchant sales of commodities and our
inability to obtain satisfactory prices could have a material adverse effect on our business.
  We are dependent on the availability and cost of low rank coal and coal waste and our
inability to obtain a low cost source could have an impact on our business.
 ®
 We are dependent on key personnel who would be difficult to replace.
  Payment of severance benefits could strain our cash flow.
   17




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##### Table of Contents



Our success will depend in part on our ability to grow and diversify, which in turn will
require that we manage and control our growth effectively.
  We face intense competition. If we cannot gain market share among our competition, we may not
earn revenues and our business may be harmed.
  In our areas of operation, the projects we and our customers intend to build are subject to
rigorous environmental regulations, review and approval. We cannot assure you that such approvals
will be obtained, applicable requirements will be satisfied or approvals, once granted, will be
maintained.
     18




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##### Table of Contents



We may incur substantial liabilities to comply with climate control legislation and regulatory
initiatives.
 ®
  Our controls and procedures may fail or be circumvented.
  We are subject to the requirements of Section 404 of the Sarbanes-Oxley Act. If we are unable
to maintain compliance with Section 404 or if the costs related to compliance are significant, our
profitability, stock price and results of operations and financial condition could be materially
adversely affected.
     19




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##### Table of Contents



Risks Related to Our Chinese Operations
 Foreign laws may not afford us sufficient protections for our intellectual property, and we
may not be able to obtain patent protection outside of the United States.
  Our operations in China may be adversely affected by evolving economic, political and social
conditions.
  Long term offtake agreements could be difficult to obtain and, if obtained, enforce because of
Chinas underdeveloped legal system.
  Our results of operations would be negatively affected by potential currency fluctuations in
exchange rates with foreign countries.
    20




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##### Table of Contents



Chinese regulations of loans and direct investment by offshore entities to Chinese entities
may delay or prevent us from utilizing proceeds of funds to make loans or additional capital
contributions to our operations in China, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.
  We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and
similar worldwide anti-bribery laws.
   Risks Related to our Common Stock
 Our historic stock price has been volatile and the future market price for our common stock is
likely to continue to be volatile.
  If we do not meet the NASDAQ continued listing requirements, our common stock may be delisted .
   21




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##### Table of Contents



Our common stock is thinly traded on The NASDAQ Stock Market.
  The market valuation of our business may fluctuate due to factors beyond our control and the
value of the investment of our stockholders may fluctuate correspondingly.
  
    
    Changes in securities analysts estimates of our financial performance;
 
    
    Fluctuations in stock market prices and volumes, particularly among securities of energy
companies;
 
    
    Changes in market valuations of similar companies;
 
    
    Announcements by us or our competitors of significant contracts, new technologies,
acquisitions, commercial relationships, joint ventures or capital commitments;
 
    
    Variations in our quarterly operating results;
 
    
    Fluctuations in coal, oil, natural gas, methanol and ammonia prices;
 
    
    Loss of a major customer of failure to complete significant commercial contracts;
 
    
    Loss of a relationship with a partner; and
 
    
    Additions or departures of key personnel.
  Investors should not look to dividends as a source of income .
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   22




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Item 3. Legal Proceedings
  
 Item 4. [Removed and Reserved.]
  23




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##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
 Market Price for Common Stock and Stockholders
  Sales PriceHigh
    
    
    LowYear Ending June 30, 2010:First Quarter
    
    $
    1.45
    
    
    $
    0.76Second Quarter
    
    $
    1.36
    
    
    $
    0.84Third Quarter
    
    $
    1.21
    
    
    $
    0.91Fourth Quarter
    
    $
    1.33
    
    
    $
    0.95Year Ending June 30, 2009:First Quarter
    
    $
    11.05
    
    
    $
    2.16Second Quarter
    
    $
    4.92
    
    
    $
    0.52Third Quarter
    
    $
    0.80
    
    
    $
    0.41Fourth Quarter
    
    $
    1.69
    
    
    $
    0.54
  Dividend Policy
  Securities Authorized For Issuance Under Equity Compensation Plans
  Equity Compensation Plan InformationNumber of securitiesWeighted average
    
    
    remaining available forNumber of securities to
    
    
    exercise price of
    
    
    future issuance underbe issued upon exercise
    
    
    outstanding
    
    
    equity compensation plansof outstanding options,
    
    
    options, warrants
    
    
    (excluding securitieswarrants and rights
    
    
    and rights
    
    
    reflected in column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders (1)
    
    
    6,037,573
    (2)
    
    $
    0.74
    
    
    
    1,507,627
    (2)Equity compensation
plans not approved by
security holders
    
    
    
    
    
    
    
    
    
    
    Total as of June 30, 2010
    
    
    6,037,573
    
    
    $
    0.74
    
    
    
    1,507,627
 (1)
    
    Consists of the Amended and Restated 2005 Incentive Plan, as amended, or the Plan.(2)
    
    Of the total 8,000,000 shares under the Plan, options to acquire 6,037,573 shares of commons
stock were outstanding at June 30, 2010 and 5,800 shares of restricted stock had been granted
under the Plan. The shares issued for the restricted stock grants were vested immediately upon
grant.  24




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##### Table of Contents



Item 6. Selected Financial Data
  Statements of Operations Data
  Years Ended June 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Revenue:Product sales and other related parties
    
    $
    8,423
    
    
    $
    1,852
    
    
    $
    203
    
    
    $
    
    
    
    $
    Technology licensing and related services
    
    
    732
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    146
    
    
    
    250
    
    
    
    125
    
    
    
    
    
    
    
    Total revenue
    
    
    9,301
    
    
    
    2,102
    
    
    
    328
    
    
    
    
    
    
    
    Costs and Expenses:Costs of sales and plant operating expenses
    
    
    8,621
    
    
    
    7,449
    
    
    
    2,396
    
    
    
    
    
    
    
    General and administrative expenses
    
    
    12,220
    
    
    
    16,395
    
    
    
    13,147
    
    
    
    5,644
    
    
    
    1,018Project and technical development expenses
    
    
    1,873
    
    
    
    1,046
    
    
    
    5,615
    
    
    
    1,136
    
    
    
    1,245Asset impairment losses
    
    
    6,575
    
    
    
    2,500
    
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation expense
    
    
    2,179
    
    
    
    1,869
    
    
    
    6,029
    
    
    
    6,640
    
    
    
    3,043Depreciation and amortization
    
    
    2,674
    
    
    
    2,905
    
    
    
    1,202
    
    
    
    222
    
    
    
    5Total costs and expenses
    
    
    34,142
    
    
    
    32,164
    
    
    
    28,389
    
    
    
    13,642
    
    
    
    5,311Operating loss
    
    
    (24,841
    )
    
    
    (30,062
    )
    
    
    (28,061
    )
    
    
    (13,642
    )
    
    
    (5,311
    )Non-operating (income) expense:Equity in losses  Yima joint ventures
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    (133
    )
    
    
    (1,742
    )
    
    
    (397
    )
    
    
    (463
    )
    
    
    (129
    )Interest expense
    
    
    668
    
    
    
    959
    
    
    
    388
    
    
    
    
    
    
    
    Net loss
    
    
    (25,415
    )
    
    
    (29,279
    )
    
    
    (28,052
    )
    
    
    (13,179
    )
    
    
    (5,182
    )Less: net loss attributable to noncontrolling interests
    
    
    3,667
    
    
    
    703
    
    
    
    610
    
    
    
    37
    
    
    
    Net loss attributable to stockholders
    
    $
    (21,748
    )
    
    $
    (28,576
    )
    
    $
    (27,442
    )
    
    $
    (13,142
    )
    
    $
    (5,182
    )Net loss per share:Basic and diluted
    
    $
    (0.45
    )
    
    $
    (0.60
    )
    
    $
    (0.80
    )
    
    $
    (0.47
    )
    
    $
    (0.19
    )Weighted average common shares outstanding
Basic and diluted
    
    
    48,230
    
    
    
    48,017
    
    
    
    34,385
    
    
    
    27,852
    
    
    
    27,754
 Balance Sheet Data
  June 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Total working capital
    
    $
    38,305
    
    
    $
    82,140
    
    
    $
    117,646
    
    
    $
    (54
    )
    
    $
    2,868Total assets
    
    
    120,581
    
    
    
    146,136
    
    
    
    177,747
    
    
    
    38,472
    
    
    
    3,213Total liabilities
    
    
    16,542
    
    
    
    20,040
    
    
    
    24,241
    
    
    
    18,922
    
    
    
    328Total equity
    
    
    104,039
    
    
    
    126,096
    
    
    
    153,506
    
    
    
    19,550
    
    
    
    2,885
  25




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Business Overview
 ® ® ® ® ® ®
 ®
 ®
  
    
    Executing on existing projects in China.We are continuing to implement operational
measures
to improve the financial performance of our Zao Zhuang project in the
near term, while also continuing to evaluate alternatives to better position
the project to be commercially and financially successful in the future.
These alternatives include
the possible expansion of the plant to produce other
products for other customers. We also intend to continue to  leverage our success to date at the ZZ Joint
Venture in our ongoing business development efforts,
including through further visits from senior executives of possible
customers and partners, as well
as government officials, from China, India, Australia, Vietnam and the United States.
 We are also continuing the ongoing
construction of our Yima project, and are working to restructure our joint venture
agreements to change the scope of the project from methanol to glycol production.
 
    
    Leveraging our proprietary technology through licensing, equipment sales and related
services
to increase revenues and position us for future growth. We provide a proprietary technology package whereby we license U-GAS® technology rights to third
parties, deliver an engineered technology transfer package and provide proprietary equipment
components to customers who plan to own and operate projects.
  We intend to focus on developing opportunities for our proprietary
technology package whereby we may (i) integrate our U-GAS® technology package with downstream technologies to provide a fully
integrated offering where we may invest in projects either directly or through an investment
partner or (ii) may partner with engineering, equipment and technology companies to provide our
U-GAS® technology package into an integrated modular product offering, which may include coal or
biomass feedstocks for units producing power and fuels such as SNG, MTG, diesel and ethanol as well
as methanol for gasoline blending.

 We
anticipate that we can increase revenues through collecting technology licensing fees and
royalties, engineering and technical service fees, as well as equipment product sales sold
to customers who plan to own and operate projects and desire to incorporate our proprietary
technology. We also believe that our licensing activities will provide additional insight
into project development activities, which may allow us to make selective equity investments
in such projects in the future, develop integrated, modular product offerings, or take
options in projects for which we provide a license.
  26




---



##### Table of Contents




    
    Expanding our relationships with strong strategic partners.Our efforts have been
initially focused on facilities producing syngas, methanol and DME in China. We are
expanding our relationships with our current partners, developing new relationships with
strategic partners and developing new downstream coal-to-chemicals and coal-to-energy
products which may expand our initial focus to include facilities producing SNG, methanol to
gasoline, or MTG, glycol, power and reducing gas for the steel industry. We are exploring new markets for entry such as the U.S., India, Australia, Vietnam, and other parts of Europe
and Asia. Such strategic relationships may include an investment in projects either
directly by us or through an investment partner where U-GAS® plants may supply
syngas to strategic customers via long-term offtake agreements.
 
    
    Developing value where we have a competitive advantage and have access of rights to feedstock resources.We believe that we have the
greatest competitive advantage using our U-GAS® technology in situations where
there is a ready source of low rank, low cost coal, coal waste or biomass to utilize as
a feedstock. We are focusing our efforts in countries with large low rank coal resources such as India, the
U.S., China, Turkey and Australia. We are working to develop structured transactions that include
securing options to these feedstock resources. For example, we are currently in discussions
regarding several projects in Inner Mongolia, China where the provincial government is making coal
resources available to the project owners which adds protection for the project from future coal
cost increases, as well as potentially increasing project revenues. In these cases, we may provide
technology to add value to coal resources which may be of little value without our U-GAS®
conversion technology or may acquire or partner with owners of these resources to create more value
and opportunity for us through the integration of our technology with the resources. Additionally,
where capital and/or financing is available, we may acquire an interest in such resources,
including existing facilities or coal mines, where we could create value with our U-GAS® technology
through securing greater access to feedstock.
 
    
    Continue to develop and improveU-GAS®technology.We are continually seeking
to improve the overall plant availability, plant efficiency rates and fuel handling
capabilities of the existing U-GAS® gasification technology. We are continuing
to work with our prospective customers to determine the suitability of their low rank coals
for our U-GAS® technology through our proprietary coal characterization testing
as well as selective commercial scale testing in our Zao Zhuang facility. In addition, we
are growing our technology base through continued development of know-how with our
engineering and technical staff, growing and protecting our trade secrets as well as through
patenting improvements tested at our Zao Zhuang facility, and improvements resulting from
integration of our technology with downstream processes. To date, we have filed 13 patent
applications relating to our improvements to the U-GAS® technology.
 
    
    Grow earnings through increased revenues and control of expenses.We remain intently
focused on control of our expenses while we grow revenues from our technology business. We
believe our strategy will allow us to grow near term revenues to position us for sustainable
long term growth. We intend to minimize project development expense on projects until we
have assurances that acceptable financing is available to complete the project. Until the
capital markets improve, our strategy will be to operate using our current capital resources
and to leverage the resources of financing partners.
 Results of Operations
  Year Ended June 30, 2010 Compared to Year Ended June 30, 2009
 Revenue.
   27




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##### Table of Contents



Costs of sales and plant operating expenses.
 General and administrative expenses.
 Project and technical development expenses. ®
 Asset impairment losses.
 Stock-based compensation expense.
 Depreciation and amortization.
 Equity in losses of Yima Joint Ventures.
 Interest income.
  28




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##### Table of Contents



Interest expense.
 Net loss attributable to noncontrolling interests.
 Year Ended June 30, 2009 Compared to Year Ended June 30, 2008
 Revenue.
  Cost of sales and plant operating expenses.
 General and administrative expenses.
 Project and technical development expenses.
 Asset impairment losses.
 Stock-based compensation expense.
  29




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##### Table of Contents



Depreciation and amortization.
 Interest income.
 Interest expense.
 Net loss attributable to noncontrolling interests.
 Liquidity and Capital Resources
   Loan Agreement
  
    
    Term of the loan is seven years from the commencement date (March 22, 2007) of the loan;
 
    
    Interest is adjusted annually based upon the standard rate announced each year by the
Peoples Bank of China, and as of June 30, 2010, the applicable interest rate was 5.94% and
is payable monthly;
 
    
    Principal payments of $1.1 million are due in March and September of each year beginning
on September 22, 2008 and ending on March 31, 2014;
 
    
    Hai Hua is the guarantor of the entire loan;
 
    
    Assets of the ZZ Joint Venture are pledged as collateral for the loan;
 
    
    Covenants include, among other things, prohibiting pre-payment without the consent of
ICBC and permitting ICBC to be involved in the review and inspection of the Zao Zhuang
plant; and
 
    
    Subject to customary events of default which, should one or more of them occur and be
continuing, would permit ICBC to declare all amounts owing under the contract to be due and
payable immediately.
  30




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##### Table of Contents



Other
    Outlook
  .
 ® ® ® ®
  31




---



##### Table of Contents



® ® ®
 ® ® ® ® ®
  ®
   32




---



##### Table of Contents



Critical Accounting Policies
   Revenue Recognition
   Impairment Evaluation of Long-Lived Assets
   33




---



##### Table of Contents



Undiscounted Expected Future Cash Flows .
 Fair Value .
  ZZ Joint Venture Plant Impairment Analysis
   Accounting for Variable Interest Entities (VIEs) and Financial Statement Consolidation Criteria
   34




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##### Table of Contents



Off Balance Sheet Arrangements
  Contractual
Obligations
  Less than 1
    
    
    1-3
    
    
    4-5
    
    
    After 5Contractual Obligations
    
    Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsZZ Joint Venture long-term bank loan, including interest
    
    $
    10,079
    
    
    $
    2,739
    
    
    $
    5,131
    
    
    $
    2,209
    
    
    $
    Operating leases
    
    
    919
    
    
    
    390
    
    
    
    529
    
    
    
    
    
    
    
    Total
    
    $
    10,998
    
    
    $
    3,129
    
    
    $
    5,660
    
    
    $
    2,209
    
    
    $
    
 Recently Issued Accounting Standards
      35




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##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosure About Market Risk
 Qualitative disclosure about market risk
  Foreign currency risk
  Commodity price risk
  Interest rate risk
  Customer credit risk
   36




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 INDEX TO FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms
    
    
    38Consolidated Balance Sheets as of June 30, 2010 and 2009
    
    
    40Consolidated Statements of Operations for the years ended June 30, 2010, 2009 and 2008 and the period from
November 4, 2003 (inception) to June 30, 2010
    
    
    41Consolidated Statement of Equity for the years ended June 30, 2010, 2009 and 2008 and the period
from November 4, 2003 (inception) to June 30, 2010
    
    
    42Consolidated Statements of Cash Flows for the years ended June 30, 2010, 2009 and 2008 and the period from
November 4, 2003 (inception) to June 30, 2010
    
    
    43Notes to the Consolidated Financial Statements
    
    
    44
  37




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Report of Independent Registered Accounting Firm
 
   
  38




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  39




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##### Table of Contents



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
 
 Consolidated Balance Sheets
(In thousands)
 June 30,
    
    
    June 30,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    42,573
    
    
    $
    90,420Accounts receivable
    
    
    2,672
    
    
    
    1,333Prepaid expenses and other currents assets
    
    
    1,875
    
    
    
    689Inventory
    
    
    983
    
    
    
    780Total current assets
    
    
    48,103
    
    
    
    93,222Construction-in-progress
    
    
    565
    
    
    
    6,078Property, plant and equipment, net
    
    
    35,316
    
    
    
    37,713Intangible asset, net
    
    
    1,272
    
    
    
    1,386Investment in Yima joint ventures
    
    
    32,430
    
    
    
    1,500Other long-term assets
    
    
    2,895
    
    
    
    6,237Total assets
    
    $
    120,581
    
    
    $
    146,136LIABILITIES AND EQUITYCurrent liabilities:Accrued expenses and accounts payable
    
    $
    7,008
    
    
    $
    8,828Deferred revenue
    
    
    522
    
    
    
    Current portion of long-term bank loan
    
    
    2,268
    
    
    
    2,254Total current liabilities
    
    
    9,798
    
    
    
    11,082Long-term bank loan
    
    
    6,744
    
    
    
    8,958Total liabilities
    
    
    16,542
    
    
    
    20,040Equity:Common stock, $0.01 par value: 200,000 and
100,000 shares authorized: 48,337 and
48,118 shares issued and outstanding,
respectively
    
    
    483
    
    
    
    481Additional paid-in capital
    
    
    198,720
    
    
    
    196,441Deficit accumulated during development stage
    
    
    (96,449
    )
    
    
    (74,701
    )Accumulated other comprehensive income
    
    
    1,836
    
    
    
    1,598Total stockholders equity
    
    
    104,590
    
    
    
    123,819Noncontrolling interests in subsidiaries
    
    
    (551
    )
    
    
    2,277Total equity
    
    
    104,039
    
    
    
    126,096Total liabilities and equity
    
    $
    120,581
    
    
    $
    146,136
   40




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##### Table of Contents



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
 
 Consolidated Statements of Operations
(In thousands, except per share amounts)
 November 4, 2003Year Ended June 30,
    
    
    (inception)2010
    
    
    2009
    
    
    2008
    
    
    to June 30, 2010Revenue:Product sales and other  related parties
    
    $
    8,423
    
    
    $
    1,852
    
    
    $
    203
    
    
    $
    10,477Technology licensing and related services
    
    
    732
    
    
    
    
    
    
    
    
    
    
    
    732Other
    
    
    146
    
    
    
    250
    
    
    
    125
    
    
    
    521Total revenue
    
    
    9,301
    
    
    
    2,102
    
    
    
    328
    
    
    
    11,730Costs and Expenses:Costs of sales and plant operating expenses
    
    
    8,621
    
    
    
    7,449
    
    
    
    2,396
    
    
    
    18,464General and administrative expenses
    
    
    12,220
    
    
    
    16,395
    
    
    
    13,147
    
    
    
    48,654Project and technical development expenses
    
    
    1,873
    
    
    
    1,046
    
    
    
    5,615
    
    
    
    11,055Asset impairment losses
    
    
    6,575
    
    
    
    2,500
    
    
    
    
    
    
    
    9,075Stock-based compensation expense
    
    
    2,179
    
    
    
    1,869
    
    
    
    6,029
    
    
    
    19,760Depreciation and amortization
    
    
    2,674
    
    
    
    2,905
    
    
    
    1,202
    
    
    
    7,010Total costs and expenses
    
    
    34,142
    
    
    
    32,164
    
    
    
    28,389
    
    
    
    114,018Operating loss
    
    
    (24,841
    )
    
    
    (30,062
    )
    
    
    (28,061
    )
    
    
    (102,288
    )Non-operating (income) expense:Equity in losses of Yima joint ventures
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    39Interest income
    
    
    (133
    )
    
    
    (1,742
    )
    
    
    (397
    )
    
    
    (2,878
    )Interest expense
    
    
    668
    
    
    
    959
    
    
    
    388
    
    
    
    2,017Net loss
    
    
    (25,415
    )
    
    
    (29,279
    )
    
    
    (28,052
    )
    
    
    (101,466
    )Less: net loss attributable to noncontrolling interests
    
    
    3,667
    
    
    
    703
    
    
    
    610
    
    
    
    5,017Net loss attributable to stockholders
    
    $
    (21,748
    )
    
    $
    (28,576
    )
    
    $
    (27,442
    )
    
    $
    (96,449
    )Net loss per share:Basic and diluted
    
    $
    (0.45
    )
    
    $
    (0.60
    )
    
    $
    (0.80
    )
    
    $
    (2.78
    )Weighted average common shares outstanding:Basic and diluted
    
    
    48,230
    
    
    
    48,017
    
    
    
    34,385
    
    
    
    34,724
   41




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##### Table of Contents



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
 
 Consolidated Statement of Equity
(In thousands)
 DeficitAccumulated
    
    
    AccumulatedCommon Stock
    
    
    
    
    
    
    During the
    
    
    Other
    
    
    Non-Common
    
    
    Additional
    
    
    Development
    
    
    Comprehensive
    
    
    controllingShares
    
    
    Stock
    
    
    Paid-in Capital
    
    
    Stage
    
    
    Income
    
    
    Interest
    
    
    TotalBalance at November 4, 2003
(inception)
    
    
    100,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Net loss for the period November 4,
2003 to June 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2004
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares Forfeited in Merger
    
    
    (94,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares Issued in Merger
    
    
    21,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (358
    )
    
    
    
    
    
    
    
    
    
    
    (358
    )Investor contributions
    
    
    
    
    
    
    264
    
    
    
    236
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500Conversion of debt to equity
    
    
    
    
    
    
    6
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Net proceeds from private placement
offering
    
    
    1,030
    
    
    
    10
    
    
    
    2,474
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,484Balance at June 30, 2005
    
    
    28,030
    
    
    
    280
    
    
    
    2,715
    
    
    
    (358
    )
    
    
    
    
    
    
    
    
    
    
    2,637Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,183
    )
    
    
    
    
    
    
    
    
    
    
    (5,183
    )Net proceeds from private placement
offering
    
    
    970
    
    
    
    10
    
    
    
    2,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,388Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    3,043
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,043Adjustment related to return of shares
    
    
    (4,353
    )
    
    
    (44
    )
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at June 30, 2006
    
    
    24,647
    
    
    
    246
    
    
    
    8,180
    
    
    
    (5,541
    )
    
    
    
    
    
    
    
    
    
    
    2,885Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,142
    )
    
    
    
    
    
    
    (37
    )
    
    
    (13,179
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    175Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,004
    )Contributions from noncontrolling
interest partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    492
    
    
    
    492Net proceeds from private placement
offering
    
    
    3,346
    
    
    
    34
    
    
    
    16,126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,160Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    6,608
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,608Shares issued for amended GTI license
    
    
    191
    
    
    
    2
    
    
    
    1,374
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,376Shares issued upon UCF option exercise
    
    
    2,000
    
    
    
    20
    
    
    
    4,980
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,000Stock grants to employees
    
    
    4
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33Balance at June 30, 2007
    
    
    30,188
    
    
    
    302
    
    
    
    37,301
    
    
    
    (18,683
    )
    
    
    175
    
    
    
    455
    
    
    
    19,550Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,442
    )
    
    
    
    
    
    
    (610
    )
    
    
    (28,052
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,390
    
    
    
    
    
    
    
    1,390Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,662
    )Contributions from noncontrolling
interest partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,124
    
    
    
    3,124Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    6,010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,010Exercise of stock options
    
    
    92
    
    
    
    1
    
    
    
    564
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    565Shares issued for GTI reservation use
fee
    
    
    278
    
    
    
    3
    
    
    
    2,497
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,500Shares issued in public offerings
    
    
    17,451
    
    
    
    174
    
    
    
    148,226
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    148,400Stock grants to employees
    
    
    2
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19Balance at June 30, 2008
    
    
    48,011
    
    
    
    480
    
    
    
    194,617
    
    
    
    (46,125
    )
    
    
    1,565
    
    
    
    2,969
    
    
    
    153,506Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (28,576
    )
    
    
    
    
    
    
    (703
    )
    
    
    (29,279
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    11
    
    
    
    44Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,235
    )Public offering costs
    
    
    
    
    
    
    
    
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,869
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,869Exercise of stock options
    
    
    107
    
    
    
    1
    
    
    
    62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63Balance at June 30, 2009
    
    
    48,118
    
    
    
    481
    
    
    
    196,441
    
    
    
    (74,701
    )
    
    
    1,598
    
    
    
    2,277
    
    
    
    126,096Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,748
    )
    
    
    
    
    
    
    (3,667
    )
    
    
    (25,415
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    238
    
    
    
    
    
    
    
    238Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,177
    )Contributions from noncontrolling
interest partners
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    839
    
    
    
    839Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    2,179
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,179Exercise of stock options
    
    
    219
    
    
    
    2
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Balance at June 30, 2010
    
    
    48,337
    
    
    $
    483
    
    
    $
    198,720
    
    
    $
    (96,449
    )
    
    $
    1,836
    
    
    $
    (551
    )
    
    $
    104,039
   42




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##### Table of Contents



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
 
 Consolidated Statements of Cash Flows
(In thousands)
 November 4, 2003Year Ended June 30,
    
    
    (inception)2010
    
    
    2009
    
    
    2008
    
    
    to June 30, 2010Cash flows from operating activities:Net loss
    
    $
    (25,415
    )
    
    $
    (29,279
    )
    
    $
    (28,052
    )
    
    $
    (101,466
    )Adjustments to reconcile net loss to net cash used in
operating activities:Stock-based compensation expense
    
    
    2,179
    
    
    
    1,869
    
    
    
    6,029
    
    
    
    19,760Depreciation of property, plant and equipment
    
    
    2,445
    
    
    
    2,671
    
    
    
    986
    
    
    
    6,165Equity in losses of Yima joint ventures
    
    
    (39
    )
    
    
    
    
    
    
    
    
    
    
    (39
    )Amortization of intangible and other assets
    
    
    229
    
    
    
    234
    
    
    
    215
    
    
    
    845Loss on disposal of property, plant and equipment
    
    
    3
    
    
    
    37
    
    
    
    93
    
    
    
    136Asset impairment losses
    
    
    6,575
    
    
    
    2,500
    
    
    
    
    
    
    
    9,075Changes in operating assets and liabilities:Accounts receivable
    
    
    (1,331
    )
    
    
    (1,164
    )
    
    
    (168
    )
    
    
    (2,663
    )Prepaid expenses and other current assets
    
    
    (906
    )
    
    
    1,578
    
    
    
    (462
    )
    
    
    (230
    )Inventory
    
    
    (199
    )
    
    
    (261
    )
    
    
    (516
    )
    
    
    (977
    )Other long-term assets
    
    
    154
    
    
    
    (1,353
    )
    
    
    (31
    )
    
    
    (1,230
    )Deferred revenue
    
    
    522
    
    
    
    
    
    
    
    
    
    
    
    522Accrued expenses and payables
    
    
    (511
    )
    
    
    (3,581
    )
    
    
    3,065
    
    
    
    980Net cash used in operating activities
    
    
    (16,294
    )
    
    
    (26,749
    )
    
    
    (18,841
    )
    
    
    (69,122
    )Cash flows from investing activities:Capital expenditures
    
    
    (801
    )
    
    
    (4,155
    )
    
    
    (22,268
    )
    
    
    (37,957
    )Equity investment in Yima Joint Ventures
    
    
    (29,391
    )
    
    
    (1,500
    )
    
    
    
    
    
    
    (30,891
    )Purchase of marketable securities
    
    
    
    
    
    
    (45,000
    )
    
    
    
    
    
    
    (45,000
    )Redemption of marketable securities
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    45,000GTI license royalty  Yima Joint Ventures
    
    
    
    
    
    
    (1,500
    )
    
    
    
    
    
    
    (1,500
    )ExxonMobil license royalty
    
    
    
    
    
    
    (1,250
    )
    
    
    
    
    
    
    (1,250
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Restricted cash  investments in (redemptions of)
certificates of deposit
    
    
    50
    
    
    
    150
    
    
    
    (579
    )
    
    
    (379
    )Loan proceeds transferred from (to) restricted cash
    
    
    
    
    
    
    
    
    
    
    11,101
    
    
    
    Amendment to GTI license rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500
    )Purchase of land use rights
    
    
    (177
    )
    
    
    
    
    
    
    (833
    )
    
    
    (1,896
    )Receipt of Chinese governmental grant
    
    
    
    
    
    
    
    
    
    
    556
    
    
    
    556Project prepayments
    
    
    
    
    
    
    (102
    )
    
    
    (895
    )
    
    
    (3,210
    )Net cash used in investing activities
    
    
    (30,319
    )
    
    
    (8,350
    )
    
    
    (12,918
    )
    
    
    (77,020
    )Cash flows from financing activities:Payments on long-term bank loan
    
    
    (2,268
    )
    
    
    (2,253
    )
    
    
    
    
    
    
    (4,521
    )Proceeds from long-term bank loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,081Proceeds (costs) from issuance of common stock, net
    
    
    
    
    
    
    (107
    )
    
    
    148,556
    
    
    
    174,981Prepaid interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (276
    )Deferred financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (143
    )Contributions from noncontrolling interest partners
    
    
    839
    
    
    
    
    
    
    
    3,124
    
    
    
    4,456Proceeds from exercise of stock options, net
    
    
    138
    
    
    
    63
    
    
    
    565
    
    
    
    765Loans from shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Net cash provided by (used in) financing activities
    
    
    (1,291
    )
    
    
    (2,297
    )
    
    
    152,245
    
    
    
    187,354Net increase (decrease) in cash
    
    
    (47,904
    )
    
    
    (37,396
    )
    
    
    120,486
    
    
    
    41,212Cash and cash equivalents, beginning of period
    
    
    90,420
    
    
    
    127,872
    
    
    
    6,202
    
    
    
    Effect of exchange rates on cash
    
    
    57
    
    
    
    (56
    )
    
    
    1,184
    
    
    
    1,361Cash and cash equivalents, end of period
    
    $
    42,573
    
    
    $
    90,420
    
    
    $
    127,872
    
    
    $
    42,573
   43




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##### Table of Contents



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
 
 Notes to the Consolidated Financial Statements
 Note 1  Summary of Significant Accounting Policies
 (a) Organization and description of business
 ® ®
 (b) Basis of presentation and principles of consolidation
  (c) Use of estimates
  (d) Cash and cash equivalents
   44




---



##### Table of Contents



(e) Supplemental disclosures of cash flow information (in thousands):
 November 4, 2003Years Ended June 30,
    
    
    (inception)2010
    
    
    2009
    
    
    2008
    
    
    to June 30, 2010Interest paid
    
    $
    608
    
    
    $
    950
    
    
    $
    918
    
    
    $
    2,919Interest received
    
    
    133
    
    
    
    1,746
    
    
    
    416
    
    
    
    2,850Non-cash transactions:Accrued construction-in- progress
    
    
    101
    
    
    
    1,556
    
    
    
    367
    
    
    
    101Stock issued to employees
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    52Fair value of stock issued to GTI
    
    
    
    
    
    
    
    
    
    
    2,500
    
    
    
    3,876Conversion of debt to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
 (f) Restricted assets
  (g) Inventories
  (h) Construction-in-progress
  (i) Property, plant, and equipment
  (j) Intangible assets
 Intangibles- Goodwill
and Other. Accounting for Impairment or Disposal of Long-Lived Assets.
  45




---



##### Table of Contents



(k) Impairment of long-lived assets
    (l) Income taxes
  (m) Debt issuance costs
  (n) Land use rights
  (o) Foreign currency translation
   46




---



##### Table of Contents



(p) Revenue recognition
   (q) Stock-based compensation
 Compensation  Stock Compensation.
 (r) Accounting for variable interest entities (VIEs) and financial statement consolidation criteria
   (s) Fair value measurements
  Level 1
    
    Unadjusted quoted prices in active markets that are accessible at
the measurement date for identical, unrestricted assets or
liabilities;Level 2
    
    Quoted prices in markets that are not active, or inputs that are
observable, either directly or indirectly, for substantially the
full term of the asset or liability; andLevel 3
    
    Prices or valuation techniques that require inputs that are both
significant to the fair value measurement and unobservable (i.e.,
supported by little or no market activity).
   47




---



##### Table of Contents



June 30,
2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Certificates of Deposit
    
    $
    
    
    
    $
    379
    (1)
    
    $
    
    
    
    $
    379Money Market Funds
    
    
    
    
    
    
    38,624
    (2)
    
    
    
    
    
    
    38,624
 June 30,
2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Certificates of Deposit
    
    $
    
    
    
    $
    679
    
    
    $
    
    
    
    $
    679Money Market Funds
    
    
    
    
    
    
    89,035
    (2)
    
    
    
    
    
    
    89,035
 (1)
    
    Amount included in other current assets on the Companys consolidated balance sheet.(2)
    
    Amount included in cash and cash equivalents on the Companys consolidated balance sheet.   (t) Comprehensive income (loss)
  Three Months Ended June 30,
    
    
    Twelve Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss, as reported
    
    $
    (3,742
    )
    
    $
    (6,742
    )
    
    $
    (25,415
    )
    
    $
    (29,279
    )Unrealized foreign currency translation adjustment
    
    
    223
    
    
    
    9
    
    
    
    238
    
    
    
    44Comprehensive loss
    
    
    (3,519
    )
    
    
    (6,733
    )
    
    
    (25,177
    )
    
    
    (29,235
    )Less comprehensive loss attributable to
noncontrolling interests
    
    
    51
    
    
    
    48
    
    
    
    3,667
    
    
    
    692Comprehensive loss attributable to SES
    
    $
    (3,468
    )
    
    $
    (6,685
    )
    
    $
    (21,510
    )
    
    $
    (28,543
    )
 Note 2  Recently Issued Accounting Standards
    48




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##### Table of Contents



49




---



##### Table of Contents



Note 3  Current Projects
 Zao Zhuang Joint Venture
 Joint Venture Agreement
 ®
 Syngas Purchase and Sale Agreement
     50




---



##### Table of Contents



Loan Agreement
  
    
    Term of the loan is seven years from the commencement date (March 22, 2007) of the loan;
 
    
    Interest is adjusted annually based upon the standard rate announced each year by the
Peoples Bank of China, and as of June 30, 2010, the applicable interest rate was 5.94% and
is payable monthly;
 
    
    Principal payments of $1.1 million are due in March and September of each year beginning
on September 22, 2008 and ending on March 31, 2014;
 
    
    Hai Hua is the guarantor of the entire loan;
 
    
    Assets of the ZZ Joint Venture are pledged as collateral for the loan;
 
    
    Covenants include, among other things, prohibiting pre-payment without the consent of
ICBC and permitting ICBC to be involved in the review and inspection of the Zao Zhuang
plant; and
 
    
    Subject to customary events of default which, should one or more of them occur and be
continuing, would permit ICBC to declare all amounts owing under the contract to be due and
payable immediately.
   51




---



##### Table of Contents



Yima Joint Ventures
         52




---



##### Table of Contents



Year ended(In thousands)
    
    June 30, 2010Revenue
    
    $
    Operating loss
    
    
    (1,189
    )Net loss
    
    
    (157
    )
 As of(In thousands)
    
    June 30, 2010Current assets
    
    $
    118,073Noncurrent assets
    
    
    11,694Current liabilities
    
    
    6,046Noncurrent liabilities
    
    
    
 Golden Concord Joint Venture
 ®
 ®
 ®
 Note 4  Risks and Uncertainties
 .
  53




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##### Table of Contents



Note 5  Property, Plant and Equipment
  Estimated
    
    
    June 30,useful lives
    
    
    2010
    
    
    2009Furniture and fixtures
    
    
    2 to 3 years
    
    
    $
    312
    
    
    $
    384Production equipment
    
    20 years
    
    
    31,599
    
    
    
    31,295Building  plant and office
    
    30 years
    
    
    7,344
    
    
    
    7,736Leasehold improvements
    
    Lease term
    
    
    115
    
    
    
    131Computer hardware
    
    3 years
    
    
    376
    
    
    
    397Computer software
    
    3 years
    
    
    901
    
    
    
    897Office equipment
    
    3 years
    
    
    233
    
    
    
    240Motor vehicles
    
    5 years
    
    
    197
    
    
    
    211$
    41,077
    
    
    $
    41,291Less: Accumulated depreciation
    
    
    
    
    
    
    (5,761
    )
    
    
    (3,578
    )Net carrying value
    
    
    
    
    
    $
    35,316
    
    
    $
    37,713
  Note 6  Detail of Selected Balance Sheet Accounts
  June 30,2010
    
    
    2009Raw Materials
    
    $
    983
    
    
    $
    192Parts and assemblies
    
    
    
    
    
    
    588$
    983
    
    
    $
    780
  June 30,2010
    
    
    2009Golden Concord JV
    
    $
    
    
    
    $
    4,821ZZ Joint Venture
    
    
    565
    
    
    
    1,257$
    565
    
    
    $
    6,078
  54




---



##### Table of Contents



June 30,2010
    
    
    2009GTI license royalty  Yima Joint Ventures (a)
    
    $
    
    
    
    $
    1,500Land use rights
    
    
    739
    
    
    
    1,448Project prepayments
    
    
    
    
    
    
    666GTI license royalty, net  ZZ Joint Venture
    
    
    733
    
    
    
    744Restricted cash
    
    
    
    
    
    
    329Value added tax receivable  ZZ Joint Venture
    
    
    1,284
    
    
    
    1,368Other
    
    
    139
    
    
    
    182$
    2,895
    
    
    $
    6,237
 (a)
    
    In June 2009, the Company agreed to pay GTI a non-refundable payment of $1.5 million
toward future royalties due to GTI for the Yima Joint Ventures project. Upon formation of
the Yima Joint Ventures, the Company reclassified this cost as part of its investment in
the Yima Joint Ventures.  As of June 30,2010
    
    
    2009Construction and equipment costs
    
    $
    3,308
    
    
    $
    4,880Accounts payable  trade
    
    
    293
    
    
    
    562Accrued payroll, vacation and bonuses
    
    
    907
    
    
    
    1,025Technical consulting, engineering and design services
    
    
    459
    
    
    
    423Yima Joint Ventures consulting fee
    
    
    924
    
    
    
    Book overdrafts
    
    
    
    
    
    
    1,003Other
    
    
    1,117
    
    
    
    935$
    7,008
    
    
    $
    8,828
 Note 7  Intangible assets
 GTI License Agreement
 ® ® ® ®
 ®
  55




---



##### Table of Contents



®
 ®
   Other Services
 ® ®
 ®
  As of June 30, 2010
    
    
    As of June 30, 2009Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetUse rights of U-GAS®
    
    $
    1,886
    
    
    $
    725
    
    
    $
    1,161
    
    
    $
    1,886
    
    
    $
    537
    
    
    $
    1,349Other intangible assets
    
    
    111
    
    
    
    
    
    
    
    111
    
    
    
    37
    
    
    
    
    
    
    
    37Total
    
    $
    1,997
    
    
    $
    725
    
    
    $
    1,272
    
    
    $
    1,923
    
    
    $
    537
    
    
    $
    1,386
 ®
  56




---



##### Table of Contents



Note 8  Income taxes
  Year Ended June 30,2010
    
    
    2009
    
    
    2008Domestic
    
    $
    (8,289
    )
    
    $
    (9,992
    )
    
    $
    (18,969
    )Foreign
    
    
    (17,126
    )
    
    
    (19,287
    )
    
    
    (9,083
    )Net loss before noncontrolling interest
    
    $
    (25,415
    )
    
    $
    (29,279
    )
    
    $
    (28,052
    )
 Provision for income taxes
  Year Ended June 30,2010
    
    
    2009
    
    
    2008Net loss before noncontrolling interest
    
    $
    (25,415
    )
    
    $
    (29,279
    )
    
    $
    (28,052
    )Computed tax benefit at statutory rate
    
    
    (8,896
    )
    
    
    (10,247
    )
    
    
    (9,818
    )Other
    
    
    105
    
    
    
    463
    
    
    
    88Tax on income (losses) from foreign operations
    
    
    2,318
    
    
    
    4,400
    
    
    
    1,822Valuation allowance
    
    
    6,473
    
    
    
    5,384
    
    
    
    7,908$
    
    
    
    $
    
    
    
    $
    
 Deferred tax assets (liabilities)
  Year Ended June 30,2010
    
    
    2009Deferred tax assets (liabilities):Net operating loss carry forward
    
    $
    18,374
    
    
    $
    12,833Depreciation and amortization
    
    
    6
    
    
    
    (32
    )Stock-based compensation
    
    
    5,183
    
    
    
    4,613Accrued vacation
    
    
    9
    
    
    
    23Accrued bonus
    
    
    
    
    
    
    97Other accruals
    
    
    963
    
    
    
    529Subtotal
    
    
    24,535
    
    
    
    18,063Valuation allowance
    
    
    (24,535
    )
    
    
    (18,063
    )Net deferred assets (liabilities)
    
    $
    
    
    
    $
    
      57




---



##### Table of Contents



Note 9  Net Loss Per Share Data
  Note 10  Commitments and Contingencies
 Letters of credit
  Operating leases
  Years Ending June 30,
    
    Total2011
    
    $
    3902012
    
    
    2652013
    
    
    264Thereafter
    
    
    Total operating lease commitments
    
    $
    919
 Litigation
   58




---



##### Table of Contents



Governmental and Environmental Regulation
  Note 11  Stock-Based Compensation
   Assumptions
  Year Ended June 30,2010
    
    
    2009
    
    
    2008Risk-free rate of return
    
    
    2.53
    %
    
    
    1.80
    %
    
    
    3.47
    %Expected life of award
    
    5.6 years
    
    
    5.6 years
    
    
    6.1 yearsExpected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility of stock
    
    
    94
    %
    
    
    87
    %
    
    
    73
    %Weighted-average grant date fair value
    
    $
    0.73
    
    
    $
    0.46
    
    
    $
    6.72
   59




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##### Table of Contents



WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    ValueStock Options
    
    
    Price
    
    
    Term (years)
    
    
    (in millions)Outstanding at June 30, 2007
    
    
    5,662,500
    
    
    $
    3.50Granted
    
    
    1,852,500
    
    
    
    9.65Exercised
    
    
    (92,000
    )
    
    
    6.20Cancelled/forfeited
    
    
    (287,000
    )
    
    
    7.89Outstanding at June 30, 2008
    
    
    7,136,000
    
    
    
    4.90Granted
    
    
    6,082,538
    
    
    
    1.08Exercised
    
    
    (106,750
    )
    
    
    0.59Cancelled/forfeited
    
    
    (8,012,250
    )
    
    
    4.83Outstanding at June 30, 2009
    
    
    5,099,538
    
    
    
    0.67Granted
    
    
    1,230,535
    
    
    
    0.99Exercised
    
    
    (250,250
    )
    
    
    0.55
    
    
    
    
    
    
    $
    0.15Cancelled/forfeited
    
    
    (42,250
    )
    
    
    0.49Outstanding at June 30, 2010
    
    
    6,037,573
    
    
    
    0.74
    
    
    
    8.79
    
    
    $
    2.36Exercisable at June 30, 2010
    
    
    4,184,831
    
    
    
    0.67
    
    
    
    8.70
    
    
    $
    1.84
   WeightedAverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Term
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$0.43 to $0.66
    
    
    4,404,538
    
    
    
    8.63
    
    
    $
    0.62
    
    
    
    3,728,412
    
    
    $
    0.63$0.67 to $1.00
    
    
    1,044,088
    
    
    
    9.35
    
    
    
    0.88
    
    
    
    416,419
    
    
    
    0.89$1.01 to $2.00
    
    
    538,947
    
    
    
    9.10
    
    
    
    1.28
    
    
    
    27,500
    
    
    
    1.92$2.01 to $3.00
    
    
    50,000
    
    
    
    8.29
    
    
    
    2.59
    
    
    
    12,500
    
    
    
    2.59Total
    
    
    6,037,573
    
    
    
    
    
    
    
    
    
    
    
    4,184,831
 Note 12  Quarterly Results of Operations (Unaudited) (in thousands, except per share amounts)
 1st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    Year2010:Revenues
    
    $
    2,301
    
    
    $
    2,607
    
    
    $
    2,621
    
    
    $
    1,772
    
    
    $
    9,301Operating loss (a)
    
    
    (4,858
    )
    
    
    (11,119
    )
    
    
    (5,209
    )
    
    
    (3,655
    )
    
    
    (24,841
    )Net loss (a)
    
    
    (4,999
    )
    
    
    (11,320
    )
    
    
    (5,353
    )
    
    
    (3,743
    )
    
    
    (25,415
    )Net loss attributable to stockholders (a)
    
    
    (4,579
    )
    
    
    (8,199
    )
    
    
    (5,281
    )
    
    
    (3,689
    )
    
    
    (21,748
    )Net loss per share  basic and diluted (a)
    
    
    (0.10
    )
    
    
    (0.17
    )
    
    
    (0.11
    )
    
    
    (0.08
    )
    
    
    (0.45
    )2009:Revenues
    
    
    125
    
    
    
    483
    
    
    
    326
    
    
    
    1,168
    
    
    
    2,102Operating loss (b)
    
    
    (9,337
    )
    
    
    (10,519
    )
    
    
    (3,559
    )
    
    
    (6,647
    )
    
    
    (30,062
    )Net loss (b)
    
    
    (8,839
    )
    
    
    (10,090
    )
    
    
    (3,607
    )
    
    
    (6,743
    )
    
    
    (29,279
    )Net loss attributable to stockholders (b)
    
    
    (8,516
    )
    
    
    (9,752
    )
    
    
    (3,615
    )
    
    
    (6,693
    )
    
    
    (28,576
    )Net loss per share  basic and diluted (b)
    
    
    (0.18
    )
    
    
    (0.20
    )
    
    
    (0.08
    )
    
    
    (0.14
    )
    
    
    (0.60
    )
 (a)
    
    The operating results for the second quarter of 2010 included a $6.6 million impairment
loss related to the GC Joint Venture.(b)
    
    The operating results for the third quarter of 2009 included credits of approximately
$3.4 million that were recognized to stock-based compensation expense due to the reversal
of previously recognized expense due to forfeitures related to cancellations of terminated
employees stock option awards.  60




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  
 Item 9A. Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures
   (b)
    
    Managements Report on Internal Control over Financial Reporting
   Internal Control  Integrated Framework
   61




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(c)
    
    Remediation Plans for Material Weakness in Internal Control over Financial Reporting
Related to Complex and Non-Routine Transactions
  (d)
    
    Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accounting Fees and Services
   62




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##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules
 1.
    
    Financial Statements.Reference is made to the Index to Consolidated Financial
Statements at Item 8 of this Annual Report.
 2.
    
    Financial Statement Schedules.All schedules are omitted because they are not
applicable or the required information is shown in the financial statements or the notes
to the financial statements.
 3.
    
    Exhibits.
 Number
    
    Description of Exhibits3.1
    
    
    Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Companys Registration
Statement (Registration No. 333-140367) on Form SB-2 filed on
January 31, 2007).3.2
    
    
    Certificate of Amendment to the Certificate of Incorporation
of the Company dated effective December 16, 2009 (incorporated
by reference to Exhibit 3.1 to the Companys Current Report on
Form 8-K filed on December 17, 2009).3.3
    
    
    Amended and Restated Bylaws of the Company (incorporated by
reference to Exhibit 3.2 to Amendment No. 2 to the Companys
Registration Statement (Registration No. 333-140367) on Form
SB-2 filed on March 30, 2007).4.1
    
    
    Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Companys Registration Statement
(Registration No. 333-140367) on Form SB-2 filed on January
31, 2007).10.1
    
    
    Cooperative Joint Venture Contract of SES (Zao Zhuang) New Gas
Company Ltd. between Shandong Hai Hua Coal & Chemical Company
Ltd. and Synthesis Energy Systems Investments, Inc. dated July
6, 2006  English translation from original Chinese document
(incorporated by reference to Exhibit 10.4 to the Companys
Registration Statement (Registration No. 333-140367) on Form
SB-2 filed on January 31, 2007).10.2
    
    
    Amendment to Cooperative Joint Venture Contract of SES
(Zao Zhuang) New Gas Company Ltd. between Shandong Hai Hua Coal
& Chemical Company Ltd. and Synthesis Energy Systems
Investments, Inc. dated November 8, 2006  English translation
from original Chinese document (incorporated by reference to
Exhibit 10.5 to the Companys Registration Statement
(Registration No. 333-140367) on Form SB-2 filed on January
31, 2007).
  63




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##### Table of Contents



Number
    
    Description of Exhibits10.3
    **
    
    Contract for Synthesis Gas Purchase and Sales by and between
Shandong Hai Hua Coal & Chemical Company Ltd. and Synthesis
Energy Systems (Zao Zhuang) New Gas Company Ltd. dated October
22, 2006  English translation from original Chinese document
(incorporated by reference to Exhibit 10.6 to Amendment No. 4
to the Companys Registration Statement (Registration No.
333-140367) on Form SB-2 filed on May 23, 2007).10.4
    +
    
    Amended and Restated Employment Agreement between the Company
and Donald P. Bunnell dated July 14, 2006 (incorporated by
reference to Exhibit 10.10 to the Companys Registration
Statement (Registration No. 333-140367) on Form SB-2 filed on
January 31, 2007).10.5
    +
    
    Consulting Agreement between the Company and Lorenzo Lamadrid
dated May 30, 2006 (incorporated by reference to Exhibit 10.11
to the Companys Registration Statement (Registration No.
333-140367) on Form SB-2 filed on January 31, 2007).10.6
    +
    
    Amended and Restated 2005 Incentive Plan (incorporated by
reference to Exhibit 10.13 to Amendment No. 3 to the Companys
Registration Statement (Registration No. 333-140367) on Form
SB-2 filed on May 1, 2007).10.7
    
    
    Shareholders Loan Agreement by and between Synthesis Energy
Systems Investments, Inc. and Synthesis Energy Systems
(Zao Zhuang) dated March 20, 2007 (incorporated by reference to
Exhibit 10.15 to Amendment No. 2 to the Companys Registration
Statement (Registration No. 333-140367) on Form SB-2 filed on
March 30, 2007).10.8
    
    
    Fixed Assets Loan Contract between Synthesis Energy Systems
(Zao Zhuang) New Gas Company Ltd. and Industrial and Commercial
Bank of China dated March 27, 2007  English translation from
original Chinese document (incorporated by reference to
Exhibit 10.16 to Amendment No. 2 to the Companys Registration
Statement (Registration No. 333-140367) on Form SB-2 filed on
March 30, 2007).10.9
    
    
    Second Amendment to Cooperative Joint Venture Contract of SES
(Zao Zhuang) New Gas Company Ltd., between Shandong Hai Hua
Coal & Chemical Company Ltd. and Synthesis Energy Systems
Investments, Inc., dated February 12, 2007  English
translation from original Chinese document (incorporated by
reference to Exhibit 10.6 to Amendment No. 3 to the Companys
Registration Statement (Registration No. 333-140367) on Form
SB-2 filed on May 1, 2007).10.10
    
    
    Co-Operative Joint Venture Contract of SES  GCL (Inner
Mongolia) Coal Chemical Co., Ltd. between Inner Mongolia
Golden Concord (Xilinhot) Energy Investment Co., Ltd. and
Synthesis Energy Systems Investments, Inc. dated May 25, 2007
 English translation from original Chinese document
(incorporated by reference to Exhibit 10.21 to Amendment No. 5
to the Companys Registration Statement (Registration No.
333-140367) on Form SB-2 filed on June 6, 2007).10.11
    
    
    Joint Development Agreement by and between Synthesis Energy
Systems, Inc. and AEI dated July 11, 2007 (incorporated by
reference to Exhibit 10.24 to Amendment No. 1 to the Companys
Registration Statement (Registration No. 333-143817) on Form
SB-2 filed on July 16, 2007).10.12
    
    
    Form of Indemnification Agreement between the Company and its
officers and directors (incorporated by reference to Exhibit
10.25 to the Companys Annual Report on Form 10-KSB for the
year ended June 30, 2007).10.13
    
    
    Reservation and Use Agreement dated September 25, 2007 between
the Company and the Gas Technology Institute (incorporated by
reference to Exhibit 10.26 to Amendment No. 4 to the Companys
Registration Statement (Registration No. 333-143817) on Form
SB-2 filed on September 26, 2007).10.14
    
    
    First Amendment to Joint Development Agreement by and between
the Company and AEI dated September 26, 2007 (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on
Form 8-Kfiled on October 2, 2007).10.15
    
    
    Lease Agreement between Synthesis Energy Systems, Inc. and
AVPF Riverway Ltd. dated January 14, 2008 (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on
Form 8-K filed on January 31, 2008).
  64




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##### Table of Contents



Number
    
    Description of Exhibits10.16
    +
    
    First Amendment to the Amended and Restated 2005 Incentive
Plan (incorporated by reference to Annex B to the Companys
Proxy Statement on Schedule 14A filed on November 15, 2007).10.17
    
    
    Employment Agreement between the Company and Robert Rigdon
dated March 14, 2008 (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form 8-K filed on
November 12, 2008).10.18
    
    
    Employment Agreement between the Company and Kevin Kelly dated
October 16, 2008 (incorporated by reference to Exhibit 10.2 to
the Companys Current Report on Form 8-K filed on November 12,
2008).10.19
    
    
    Letter Agreement between the Company and Kevin Kelly dated
January 9, 2009 (incorporated by reference to Exhibit 10.2 to
the Companys Current Report on Form 8-K filed on January 14,
2009).10.20
    
    
    Separation Agreement and Release between the Company and
Timothy E. Vail dated effective March 31, 2009 (incorporated
by reference herein to Exhibit 10.6 to the Companys Current
Report on Form 8-K dated April 2, 2009).10.21
    
    
    Separation Agreement and Release between the Company and David
Eichinger dated effective March 31, 2009 (incorporated by
reference herein to Exhibit 10.7 to the Companys Current
Report on Form 8-K dated April 2, 2009).10.22
    
    
    Form of Nonstatutory Stock Option Agreement (incorporated by
reference herein to Exhibit 10.8 to the Companys Current
Report on Form 8-K dated April 2, 2009).10.23
    +
    
    Letter Agreement between the Company and Don Bunnell dated
August 13, 2009 (incorporated by reference to Exhibit 10.2 to
the Companys Current Report on Form 8-K filed on August 13,
2009).10.24
    
    
    Form of Equity Joint Venture Contract between Yima Coal
Industry (Group) Co., Ltd. and Synthesis Energy Investment
Holdings, Inc. dated August 27, 2009  English translation
from original Chinese document. (incorporated by reference to
Exhibit 10.1 to the Companys Current Report on Form 8-K filed
on September 2, 2009).10.25
    **
    
    Amended and Restated License Agreement by and between the
Company and the Gas Technology Institute dated November 5,
2009 (incorporated by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on November 12,
2009).10.26
    +
    
    Letter Agreement between the Company and Lorenzo Lamadrid
dated August 15, 2010 (incorporated by reference to Exhibit
10.2 to the Companys Current Report on Form 8-K filed on
August 17, 2010).21.1
    *
    
    Subsidiaries of the Company.23.1
    *
    
    Consent of PricewaterhouseCoopers LLP.23.2
    *
    
    Consent of KPMG LLP.31.1
    *
    
    Certification of Chief Executive Officer of Synthesis Energy
Systems, Inc. pursuant to Rule 13a-14(a) promulgated under the
Securities Exchange Act of 1934, as amended.31.2
    *
    
    Certification of Chief Accounting Officer of Synthesis Energy
Systems, Inc. pursuant to Rule 13a-14(a) promulgated under the
Securities Exchange Act of 1934, as amended.32.1
    *
    
    Certification of Chief Executive Officer of Synthesis Energy
Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the
Securities Exchange Act of 1934, as amended, and Section 1350
of Chapter 63 of Title 18 of the United States Code.32.2
    *
    
    Certification of Chief Accounting Officer of Synthesis Energy
Systems, Inc. pursuant to Rule 13a-14(b) promulgated under the
Securities Exchange Act of 1934, as amended, and Section 1350
of Chapter 63 of Title 18 of the United States Code.
 
 *
    
    Filed herewith.**
    
    Portions of this exhibit have been omitted pursuant to a request for confidential treatment
accepted by the Securities and Exchange Commission and this exhibit has been filed separately
with the Securities and Exchange Commission in connection with such request.+
    
    Management contract or compensatory plan or arrangement. 
  65




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##### Table of Contents



SIGNATURES
  SYNTHESIS ENERGY SYSTEMS, INC.Date: September 23, 2010
    By:
    /s/ Robert RigdonRobert Rigdon, Presidentand Chief Executive Officer  Signature
    
    Capacity In Which Signed
    
    Date/s/ Robert Rigdon

Robert Rigdon
    
    President and Chief Executive Officer and Director
(Principal Executive Officer)
    
    September 23, 2010/s/ Kevin Kelly

Kevin Kelly
    
    Chief Accounting Officer, Controller and Secretary
(Principal Financial and Accounting Officer)
    
    September 23, 2010/s/ Donald Bunnell

Donald Bunnell
    
    President, Chief Executive Officer  Asia
Pacific and Director
    
    September 23, 2010/s/ Lorenzo Lamadrid

Lorenzo Lamadrid
    
    Director
    
    September 23, 2010/s/ Michael Storey

Michael Storey
    
    Director
    
    September 23, 2010/s/ Denis Slavich

Denis Slavich
    
    Director
    
    September 23, 2010/s/ Harry Rubin

Harry Rubin
    
    Director
    
    September 23, 2010/s/ Ziwang Xu

Ziwang Xu
    
    Director
    
    September 23, 2010
  66