##### 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, 2011
 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
    
    20-2110031(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)Three Riverway, Suite 300, Houston, Texas
    
    77056(Address of Principal Executive Offices)
    
    (Zip Code)
 (713) 579-0600
  Common Stock, $.01 par value
    
    NASDAQ Stock Market(Title of Class)
    
    (Name of Exchange on Which Registered)
 None
 Yes o No þ
 Yes o No þ
 Yes þ No o
 Yes o No o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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##### 



TABLE OF CONTENTS
 PagePART IItem 1. Description of Business
    
    
    3Item 1A. Risk Factors
    
    
    15Item 1B. Unresolved Staff Comments
    
    
    26Item 2. Description of Property
    
    
    26Item 3. Legal Proceedings
    
    
    26Item 4.
[Removed and Reserved]
    
    
    27PART IIItem 5. Market for Registrants Common Equity and Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    27Item 6. Selected Financial Data
    
    
    28Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 7A. Quantitative and Qualitative Disclosure About Market Risk
    
    
    40Item 8. Financial Statements and Supplementary Data
    
    
    42Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    69Item 9A. Controls and Procedures
    
    
    69Item 9B. Other Information
    
    
    69PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    70Item 11. Executive Compensation
    
    
    74Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    78Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    79Item 14. Principal Accountant Fees and Services
    
    
    80Item 15. Exhibits and Financial Statement Schedules
    
    
    81Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



Forward-Looking Statements
  Form 10-K.
   
 PART I
 
 Item 1.
    
    Description of Business
 ® ® ® ® ® ®
 ®
  3




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Overview of U-GAS ®
 ® ® ® ® ®
 ®
 ® ®
 
 ® ®
  4




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®
 GTI Agreements
 License Agreement
 ® ® ® ®
 ®
 ®
  5




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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 ZZ Joint Venture plant in the near
term, while also continuing to evaluate alternatives to better position the project to be
commercially and financially successful in the future including 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
southern Africa. 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 package and provide proprietary equipment components to
customers who have contracted 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,
methanol to gasoline, or 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 have contracted 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 and developing new relationships,
including through our transaction with ZJX and China Energy and through strategic joint
venture initiatives in specific markets that will enable us to expand our business. 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. For example, through our joint venture SES
Resource Solutions, we are working with Midas
Resource Partners AG, a coal resource consulting and project development firm, to collaborate
on project origination and project development activities for integrated coal
resource-gasification projects to incentivize third party investors to commit to providing
financing for such projects. We are also developing new downstream coal-to-chemicals and
coal-to-energy projects which may expand our initial focus to include facilities producing
SNG, MTG, glycol, and power and reducing gas for the steel industry. We are exploring new
markets for entry such as India, Australia, and other parts of Asia and Europe.
  6




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
    
    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, China, Australia and South
Africa. We are working to develop transactions that include securing options to these
feedstock resources. For example, we are currently in discussions regarding development
opportunities in Inner Mongolia, China where provincial authorities are willing to make
available coal resources to the project owners, which adds protection from future coal cost
increases, and can potentially lead to increased project revenue. 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 strategic relationships and 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 by securing direct access to feedstock.
 
    
    Continue to develop and improveU-GAS®technology.We are continually seeking
to improve overall plant availability, plant efficiency rates and fuel handling capabilities
our 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 proprietary coal characterization testing as well as
selective commercial scale testing in our ZZ Joint Venture plant. Additionally, 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 a result of patenting
improvements tested at our ZZ Joint Venture plant, and improvements resulting from
integration of our technology with downstream processes. One example includes the
development of our FMS which we believe can maximize the utilization of low rank coal in our
U-GAS®-based gasifiers, resulting in improved cost advantages. We have filed
several 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 expenses until we have
assurances that acceptable financing is available to complete our projects. Until we have
such assurances, our strategy will be to operate using current capital resources and
leveraging the resources of our strategic relationship and/or financing partners.
 Target Markets
 China
 ®
  7




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®
 India
 ®
 Australia
  Other Countries
  Business Development, Engineering and Project Management
 Business Development Staff
 ®
  8




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Technology, Engineering and Project Management Staff
 ®
  Technology Licensing and Related Services
 ®
 ®
  ®
 ®
   9




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##### Table of Contents



Current Operations and Projects
 Zao Zhuang Joint Venture
 Joint Venture Agreement
 ®
 Syngas Purchase and Sale Agreement
     10




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##### Table of Contents



Yima Joint Ventures
      11




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Golden Concord Joint Venture
 ®
 ®
 SES Resource Solutions
 ®
  
    
    SRS having the exclusive right to promote our gasification technology for the
purpose of securing low-cost coal resources in projects worldwide that have been
approved by us;
 
    
    Midas providing expertise to originate and execute the above projects;
 
    
    Us providing SRS with technology licenses and engineering development support
for use in developing the joint integrated coal resource projects; and
  12




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
    
    SRS being managed by a four person board of directors, two of which were
appointed by us and two of which were appointed by Midas.
 
    
    Us agreeing to provide up to $2.0 million in funding to the joint
venture, although it has the ability to discontinue funding at any point in time.
 
    
    Revenue and profits being equally divided between the joint venture partners.
  Share Purchase Agreement with ZJX
  Use of Proceeds
   Project Development
   Business Concentration
  Competition
 ® ® ® ®
  Suppliers
  Research and Development
 ®
  13




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Governmental and Environmental Regulation
  China
   th
 United States
   14




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##### Table of Contents



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;
 
    
    operating expenses of SRS; and
 
    
    general corporate purposes.
  15




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Our lack of operating history precludes us from forecasting operating results 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.
 ®
  16




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We may not be successful developing opportunities to license the
U-GAS ® technology.
 ® ®
 We have performance guarantees under our third party licensing agreements.
 ®
 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.
 ® ® ® ®
   17




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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.
 ®
 Economic uncertainty could negatively impact our business, limit our access to the credit and
equity markets, increase the cost of capital, and may have other negative consequences that we
cannot predict.
  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 .
   18




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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.
    19




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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.
 ®
 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 key personnel who would be difficult to replace.
  Payment of severance benefits could strain our cash flow.
   20




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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.
     21




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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.
    22




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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.
    23




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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.
   The Chinese government exerts substantial influence over the manner in which we must conduct
our business activities.
  We may have difficulty establishing adequate management, legal and financial controls in
China.
   24




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Any recurrence of Severe Acute Respiratory Syndrome, Avian Flu, or another widespread public
health problem, in China could adversely affect our operations.
  
    
    quarantines or closures of some of our operating plants, which would severely disrupt
our operations,
    
    the sickness or death of our key officers and employees, and
    
    a general slowdown in the Chinese economy.
  Uncertainties with respect to the Chinese legal system could limit the legal protections
available to you and us.
  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.
  Our common stock is thinly traded on The NASDAQ Stock Market.
   25




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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
  
 Item 3.
    
    Legal Proceedings
    26




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##### Table of Contents



Item 4.
    
    [Removed and Reserved.]
 
 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, 2011:First Quarter
    
    $
    1.21
    
    
    $
    0.81Second Quarter
    
    $
    1.20
    
    
    $
    0.80Third Quarter
    
    $
    3.12
    
    
    $
    1.03Fourth Quarter
    
    $
    4.50
    
    
    $
    1.55Year Ending June 30, 2010:First Quarter
    
    $
    1.45
    
    
    $
    0.76Second Quarter
    
    $
    1.36
    
    
    $
    0.84Third Quarter
    
    $
    1.21
    
    
    $
    0.91Fourth Quarter
    
    $
    1.33
    
    
    $
    0.95
  Dividend Policy
   27




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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)
    
    
    6,563,344
    (2)
    
    $
    0.91
    
    
    
    690,370
    (2)Equity compensation plans not approved by security
holders
    
    
    
    
    
    
    
    
    
    
    Total as of June 30, 2011
    
    
    6,563,344
    
    
    $
    0.91
    
    
    
    690,370
 (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 6,563,344 shares of commons
stock were outstanding at June 30, 2011 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.
 
 Item 6.
    
    Selected Financial Data
  Statements of Operations Data
 Years Ended June 30,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007Total revenue
    
    $
    10,158
    
    
    $
    9,301
    
    
    $
    2,102
    
    
    $
    328
    
    
    
    Operating loss
    
    
    (15,730
    )
    
    
    (24,964
    )
    
    
    (30,062
    )
    
    
    (28,061
    )
    
    
    (13,642
    )Net loss
    
    
    (15,620
    )
    
    
    (25,415
    )
    
    
    (29,279
    )
    
    
    (28,052
    )
    
    
    (13,179
    )Less: net loss attributable to noncontrolling interests
    
    
    157
    
    
    
    3,667
    
    
    
    703
    
    
    
    610
    
    
    
    37Net loss attributable to stockholders
    
    
    (15,463
    )
    
    
    (21,748
    )
    
    
    (28,576
    )
    
    
    (27,442
    )
    
    
    (13,142
    )Net loss per share:Basic and diluted
    
    $
    (0.32
    )
    
    $
    (0.45
    )
    
    $
    (0.60
    )
    
    $
    (0.80
    )
    
    $
    (0.47
    )Weighted average common shares outstanding:Basic and diluted
    
    
    48,584
    
    
    
    48,230
    
    
    
    48,017
    
    
    
    34,385
    
    
    
    27,852
 Balance Sheet Data
 June 30,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007Total working capital
    
    $
    28,552
    
    
    $
    38,305
    
    
    $
    82,140
    
    
    $
    117,646
    
    
    $
    (54
    )Total assets
    
    
    109,974
    
    
    
    120,581
    
    
    
    146,136
    
    
    
    177,747
    
    
    
    38,472Total liabilities
    
    
    13,190
    
    
    
    16,542
    
    
    
    20,040
    
    
    
    24,241
    
    
    
    18,922Total equity
    
    
    96,784
    
    
    
    104,039
    
    
    
    126,096
    
    
    
    153,506
    
    
    
    19,550
  28




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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 ZZ Joint Venture plant in the near
term, while also continuing to evaluate alternatives to better position the project to be
commercially and financially successful in the future, including 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
southern Africa. 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 package and provide proprietary equipment components to
customers who have contracted 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,
methanol to gasoline, or 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 have contracted 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.
  29




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##### 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 and developing new relationships,
including through our transaction with ZJX and China Energy and through strategic joint
venture initiatives in specific markets that will enable us to expand our business. 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. For example, through our joint venture SES
Resource Solutions, we are working with Midas Resource Partners AG, a coal resource
consulting and project development firm, to collaborate on project origination and project
development activities for integrated coal resource-gasification projects to incentivize
third party investors to commit to providing financing for such projects. We are also
developing new downstream coal-to-chemicals and coal-to-energy projects which may expand our
initial focus to include facilities producing SNG, MTG, glycol, and power and reducing gas
for the steel industry. We are exploring new markets for entry such as India, Australia, and
other parts of Asia and Europe.
 
    
    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, China, Australia and South
Africa. We are working to develop transactions that include securing options to these
feedstock resources. For example, we are currently in discussions regarding development
opportunities in Inner Mongolia, China where provincial authorities are willing to make
available coal resources to the project owners, which adds protection from future coal cost
increases, and can potentially lead to increased project revenue. 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 strategic relationships and 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 by securing direct access to feedstock.
 
    
    Continue to develop and improveU-GAS®technology.We are continually seeking
to improve overall plant availability, plant efficiency rates and fuel handling capabilities
our 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 proprietary coal characterization testing as well as
selective commercial scale testing in our ZZ Joint Venture plant. Additionally, 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 a result of patenting
improvements tested at our ZZ Joint Venture plant, and improvements resulting from
integration of our technology with downstream processes. One example includes the
development of our FMS which we believe can maximize the utilization of low rank coal in our
U-GAS®-based gasifiers, resulting in improved cost advantages. We have filed
several 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 expenses until we have
assurances that acceptable financing is available to complete our projects. Until we have
such assurances, our strategy will be to operate using current capital resources and
leveraging the resources of our strategic relationship and/or financing partners.
 Results of Operations
   30




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Year Ended June 30, 2011 Compared to the Year Ended June 30, 2010
 Revenue
    Costs of sales and plant operating expenses
 General and administrative expenses.
 Project and technical development expenses.
 Stock-based compensation expense.
 Depreciation and amortization expense.
 Asset impairment loss.
  31




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Equity in losses of Yima Joint Ventures.
 Foreign currency gain
 Interest income.
 Interest expense.
 Net loss attributable to noncontrolling interests.
 Year Ended June 30, 2010 Compares to the Year Ended June 30, 2009
 Revenue.
     Costs of sales and plant operating expenses.
  32




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##### Table of Contents



General and administrative expenses.
 Project and technical development expenses. ®
 Asset impairment losses.
 Stock-based compensation expense.
 Depreciation and amortization expense.
 Equity in losses of the Yima Joint Ventures.
 Interest income.
 Interest expense.
 Net loss attributable to noncontrolling interests.
 Liquidity and Capital Resources
    33




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##### 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, 2011, the applicable interest rate was 6.6% and
is payable monthly;
 
    
    Principal payments of RMB 7.7 million (approximately $1.2 million based on current
currency exchange rates) 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 ZZ Joint Venture
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.
  Share Purchase Agreement with ZJX
  Use of Proceeds
    34




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##### Table of Contents



Project Development
   Other
  Outlook
 ® ® ®
  ® ®
  35




---



##### Table of Contents



® ® ® ® ®
   ®
  36




---



##### Table of Contents



Critical Accounting Policies
   Revenue Recognition
   37




---



##### Table of Contents



Impairment Evaluation of Long-Lived Assets
   Undiscounted Expected Future Cash Flows .
 Fair Value .
  ZZ Joint Venture Plant Impairment Analysis
   38




---



##### Table of Contents



Accounting for Variable Interest Entities and Financial Statement Consolidation Criteria
      Off Balance Sheet Arrangements
  Contractual Obligations
 Our material contractual obligations at June 30, 2011 were as follows (in thousands):
 Less than 1
    
    
    1-3
    
    
    4-5
    
    
    After 5Contractual Obligations
    
    Total
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsZZ Joint Venture long-term bank loan, including interest
    
    $
    7,798
    
    
    $
    2,777
    
    
    $
    5,021
    
    
    $
    
    
    
    $
    Operating leases
    
    
    629
    
    
    
    365
    
    
    
    264
    
    
    
    
    
    
    
    Total
    
    $
    8,427
    
    
    $
    3,142
    
    
    $
    5,285
    
    
    $
    
    
    
    $
    
 Recently Issued Accounting Standards
   39




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##### Table of Contents



Item 7A.
    
    Quantitative and Qualitative Disclosure About Market Risk
 Qualitative disclosure about market risk.
  Foreign currency risk
   40




---



##### Table of Contents



Commodity price risk
  Interest rate risk
  Customer credit risk
   41




---



##### Table of Contents



Item 8.
    
    Financial Statements and Supplementary Data
 INDEX TO FINANCIAL STATEMENTS
 PageReports of Independent Registered Public Accounting Firms
    
    
    43Consolidated Balance Sheets as of June 30, 2011 and 2010
    
    
    45Consolidated Statements of Operations for the years ended
June 30, 2011, 2010 and 2009 and the period from November 4, 2003
(inception) to June 30, 2011
    
    
    46Consolidated Statement of Equity for the years ended June 30,
2011, 2010 and 2009 and the period from November 4, 2003 (inception) to
June 30, 2011
    
    
    47Consolidated Statements of Cash Flows for the years ended
June 30, 2011, 2010 and 2009 and the period from November 4, 2003
(inception) to June 30, 2011
    
    
    48Notes to the Consolidated Financial Statements
    
    
    49
  42




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Report of Independent Registered Accounting Firm
 
  
  43




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
  44




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##### Table of Contents



SYNTHESIS ENERGY SYSTEMS, INC.
(A Development Stage Enterprise)
 
 Consolidated Balance Sheets
 (In thousands)
 June 30,
    
    
    June 30,2011
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    32,176
    
    
    $
    42,573Accounts receivable
    
    
    2,574
    
    
    
    2,672Prepaid expenses and other currents assets
    
    
    1,382
    
    
    
    1,875Inventory
    
    
    913
    
    
    
    983Total current assets
    
    
    37,045
    
    
    
    48,103Property, plant and equipment, net
    
    
    35,183
    
    
    
    35,881Intangible asset, net
    
    
    1,226
    
    
    
    1,272Investment in Yima joint ventures
    
    
    33,520
    
    
    
    32,430Other long-term assets
    
    
    3,000
    
    
    
    2,895Total assets
    
    $
    109,974
    
    
    $
    120,581LIABILITIES AND EQUITYCurrent liabilities:Accrued expenses and accounts payable
    
    $
    6,113
    
    
    $
    7,008Deferred revenue
    
    
    
    
    
    
    522Current portion of long-term bank loan
    
    
    2,380
    
    
    
    2,268Total current liabilities
    
    
    8,493
    
    
    
    9,798Long-term bank loan
    
    
    4,697
    
    
    
    6,744Total liabilities
    
    
    13,190
    
    
    
    16,542Equity:Common stock, $0.01 par value - 200,000
shares authorized - 50,850 and 48,337
shares issued and outstanding, respectively
    
    
    509
    
    
    
    483Additional paid-in capital
    
    
    205,055
    
    
    
    198,720Deficit accumulated during development stage
    
    
    (111,912
    )
    
    
    (96,449
    )Accumulated other comprehensive income
    
    
    3,848
    
    
    
    1,835Total stockholders equity
    
    
    97,500
    
    
    
    104,589Noncontrolling interests in subsidiaries
    
    
    (716
    )
    
    
    (550
    )Total equity
    
    
    96,784
    
    
    
    104,039Total liabilities and equity
    
    $
    109,974
    
    
    $
    120,581
   45




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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)2011
    
    
    2010
    
    
    2009
    
    
    to June 30, 2011Revenue:Product sales and other  related parties
    
    $
    8,913
    
    
    $
    8,423
    
    
    $
    1,852
    
    
    $
    19,390Technology licensing and related services
    
    
    1,245
    
    
    
    732
    
    
    
    
    
    
    
    1,977Other
    
    
    
    
    
    
    146
    
    
    
    250
    
    
    
    521Total revenue
    
    
    10,158
    
    
    
    9,301
    
    
    
    2,102
    
    
    
    21,888Costs and Expenses:Costs of sales and plant operating expenses
    
    
    9,120
    
    
    
    8,621
    
    
    
    7,449
    
    
    
    27,584General and administrative expenses
    
    
    12,686
    
    
    
    12,343
    
    
    
    16,395
    
    
    
    62,141Project and technical development expenses
    
    
    227
    
    
    
    1,873
    
    
    
    1,046
    
    
    
    11,283Asset impairment losses
    
    
    
    
    
    
    6,575
    
    
    
    2,500
    
    
    
    9,075Stock-based compensation expense
    
    
    1,234
    
    
    
    2,179
    
    
    
    1,869
    
    
    
    20,994Depreciation and amortization
    
    
    2,621
    
    
    
    2,674
    
    
    
    2,905
    
    
    
    9,631Total costs and expenses
    
    
    25,888
    
    
    
    34,265
    
    
    
    32,164
    
    
    
    140,708Operating loss
    
    
    (15,730
    )
    
    
    (24,964
    )
    
    
    (30,062
    )
    
    
    (118,820
    )Non-operating (income) expense:Equity in losses of Yima joint ventures
    
    
    363
    
    
    
    39
    
    
    
    
    
    
    
    402Foreign currency gains, net
    
    
    (1,004
    )
    
    
    (123
    )
    
    
    
    
    
    
    (1,805
    )Interest income
    
    
    (169
    )
    
    
    (133
    )
    
    
    (1,742
    )
    
    
    (3,047
    )Interest expense
    
    
    700
    
    
    
    668
    
    
    
    959
    
    
    
    2,717Net loss
    
    
    (15,620
    )
    
    
    (25,415
    )
    
    
    (29,279
    )
    
    
    (117,087
    )Less: net loss attributable to noncontrolling interests
    
    
    157
    
    
    
    3,667
    
    
    
    703
    
    
    
    5,175Net loss attributable to stockholders
    
    $
    (15,463
    )
    
    $
    (21,748
    )
    
    $
    (28,576
    )
    
    $
    (111,912
    )Net loss per share:Basic and diluted
    
    $
    (0.32
    )
    
    $
    (0.45
    )
    
    $
    (0.60
    )
    
    $
    (3.06
    )Weighted average common shares outstanding:Basic and diluted
    
    
    48,584
    
    
    
    48,230
    
    
    
    48,017
    
    
    
    36,535
   46




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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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    237
    
    
    
    1
    
    
    
    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
    )
    
    
    1,835
    
    
    
    (550
    )
    
    
    104,039Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,463
    )
    
    
    
    
    
    
    (157
    )
    
    
    (15,620
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,013
    
    
    
    (9
    )
    
    
    2,004Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,616
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    1,203
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,203Exercise of stock options
    
    
    291
    
    
    
    4
    
    
    
    166
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170Net proceeds from issuance of common stock
    
    
    2,222
    
    
    
    22
    
    
    
    4,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,988Balance at June 30, 2011
    
    
    50,850
    
    
    $
    509
    
    
    $
    205,055
    
    
    $
    (111,912
    )
    
    $
    3,848
    
    
    $
    (716
    )
    
    $
    96,784
   47




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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)2011
    
    
    2010
    
    
    2009
    
    
    to June 30, 2011Cash flows from operating activities:Net loss
    
    $
    (15,620
    )
    
    $
    (25,415
    )
    
    $
    (29,279
    )
    
    $
    (117,087
    )Adjustments to reconcile net loss to net cash used in
operating activities:Stock-based compensation expense
    
    
    1,234
    
    
    
    2,179
    
    
    
    1,869
    
    
    
    20,994Depreciation of property, plant and equipment
    
    
    2,400
    
    
    
    2,445
    
    
    
    2,671
    
    
    
    8,565Amortization of intangible and other assets
    
    
    221
    
    
    
    229
    
    
    
    234
    
    
    
    1,066Equity in losses of Yima joint ventures
    
    
    363
    
    
    
    39
    
    
    
    
    
    
    
    402Foreign currency gains
    
    
    (1,004
    )
    
    
    (123
    )
    
    
    
    
    
    
    (1,805
    )Loss on disposal of property, plant and equipment
    
    
    17
    
    
    
    3
    
    
    
    37
    
    
    
    153Asset impairment losses
    
    
    
    
    
    
    6,575
    
    
    
    2,500
    
    
    
    9,075Changes in operating assets and liabilities:Accounts receivable
    
    
    218
    
    
    
    (1,331
    )
    
    
    (1,164
    )
    
    
    (2,445
    )Prepaid expenses and other current assets
    
    
    (456
    )
    
    
    (906
    )
    
    
    1,578
    
    
    
    (687
    )Inventory
    
    
    119
    
    
    
    (199
    )
    
    
    (261
    )
    
    
    (858
    )Other long-term assets
    
    
    590
    
    
    
    154
    
    
    
    (1,353
    )
    
    
    (639
    )Deferred revenue
    
    
    (522
    )
    
    
    522
    
    
    
    
    
    
    
    Accrued expenses and payables
    
    
    (1,093
    )
    
    
    (511
    )
    
    
    (3,581
    )
    
    
    566Net cash used in operating activities
    
    
    (13,533
    )
    
    
    (16,339
    )
    
    
    (26,749
    )
    
    
    (82,700
    )Cash flows from investing activities:Capital expenditures
    
    
    (74
    )
    
    
    (801
    )
    
    
    (4,155
    )
    
    
    (38,030
    )Equity investment in Yima joint ventures
    
    
    
    
    
    
    (29,288
    )
    
    
    (1,500
    )
    
    
    (30,788
    )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  redemptions of certificates of deposit
    
    
    329
    
    
    
    50
    
    
    
    150
    
    
    
    (50
    )Amendment to GTI license rights
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (500
    )Purchase of land use rights
    
    
    
    
    
    
    (177
    )
    
    
    
    
    
    
    (1,896
    )Receipt of Chinese governmental grant
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    556Project prepayments
    
    
    
    
    
    
    
    
    
    
    (102
    )
    
    
    (3,210
    )Net cash provided by (used in) investing activities
    
    
    255
    
    
    
    (30,216
    )
    
    
    (8,350
    )
    
    
    (76,661
    )Cash flows from financing activities:Payments on long-term bank loan
    
    
    (2,351
    )
    
    
    (2,268
    )
    
    
    (2,253
    )
    
    
    (6,872
    )Proceeds from long-term bank loan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,081Proceeds from exercise of stock options, net
    
    
    186
    
    
    
    138
    
    
    
    63
    
    
    
    951Proceeds (costs) from issuance of common stock, net
    
    
    4,988
    
    
    
    
    
    
    
    (107
    )
    
    
    179,969Prepaid interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (276
    )Financing costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (143
    )Contributions from noncontrolling interest partners
    
    
    
    
    
    
    839
    
    
    
    
    
    
    
    4,456Loans from shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11Net cash provided by (used in) financing activities
    
    
    2,823
    
    
    
    (1,291
    )
    
    
    (2,297
    )
    
    
    190,177Net increase (decrease) in cash
    
    
    (10,455
    )
    
    
    (44,846
    )
    
    
    (37,396
    )
    
    
    30,816Cash and cash equivalents, beginning of period
    
    
    42,573
    
    
    
    90,420
    
    
    
    127,872
    
    
    
    Effect of exchange rates on cash
    
    
    58
    
    
    
    (1
    )
    
    
    (56
    )
    
    
    1,360Cash and cash equivalents, end of period
    
    $
    32,176
    
    
    $
    42,573
    
    
    $
    90,420
    
    
    $
    32,176
   48




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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
   49




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##### Table of Contents



(e) Supplemental disclosures of cash flow information (in thousands):
 November 4, 2003Years Ended June 30,
    
    
    (inception)2011
    
    
    2010
    
    
    2009
    
    
    to June 30, 2011Interest paid
    
    $
    498
    
    
    $
    608
    
    
    $
    950
    
    
    $
    3,417Interest received
    
    
    169
    
    
    
    133
    
    
    
    1,746
    
    
    
    3,019Non-cash transactions:Accrued construction-in- progress
    
    
    
    
    
    
    101
    
    
    
    1,556
    
    
    
    Stock issued to employees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52Fair value of stock issued to GTI
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,876Conversion of debt to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
 (f) Restricted assets
  (g) Inventories
  (h) Property, plant, and equipment
  (i) Intangible assets
 Intangibles- Goodwill
and Other. Accounting for Impairment or Disposal of Long-Lived Assets.
  50




---



##### Table of Contents



(j) Impairment of long-lived assets
    (k) Income taxes
  (l) Debt issuance costs
  (m) Land use rights
  (n) Foreign currency translation
  (o) Revenue recognition
   51




---



##### Table of Contents



(p) Stock-based compensation
 Compensation  Stock Compensation.
 (q) Accounting for variable interest entities (VIEs) and financial statement consolidation criteria
    52




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##### Table of Contents



June 30, 2011Consolidated
    
    
    ZZ Joint Venture (1)
    
    
    % (2)Current assets
    
    $
    37,045
    
    
    $
    3,767
    
    
    
    10
    %Long-term assets
    
    
    72,929
    
    
    
    36,936
    
    
    
    51
    %Total assets
    
    $
    109,974
    
    
    $
    40,703
    
    
    
    37
    %Current liabilities
    
    $
    8,493
    
    
    $
    3,486
    
    
    
    41
    %Long-term liabilities
    
    
    4,697
    
    
    
    4,697
    
    
    
    100
    %Equity
    
    
    96,784
    
    
    
    32,520
    
    
    
    34
    %Total liabilities and equity
    
    $
    109,974
    
    
    $
    40,703
    
    
    
    37
    %
 June 30, 2010Consolidated
    
    
    ZZ Joint Venture (1)
    
    
    % (2)Current assets
    
    $
    48,103
    
    
    $
    5,198
    
    
    
    11
    %Long-term assets
    
    
    72,478
    
    
    
    38,811
    
    
    
    54
    %Total assets
    
    $
    120,581
    
    
    $
    44,009
    
    
    
    36
    %Current liabilities
    
    $
    9,798
    
    
    $
    5,852
    
    
    
    60
    %Long-term liabilities
    
    
    6,744
    
    
    
    6,744
    
    
    
    100
    %Equity
    
    
    104,039
    
    
    
    31,413
    
    
    
    30
    %Total liabilities and equity
    
    $
    120,581
    
    
    $
    44,009
    
    
    
    36
    %
 (1)
    
    Amounts reflect information for ZZ Joint Venture and exclude intercompany items.(2)
    
    ZZ Joint Ventures percentage of the amount on the Companys consolidated balance
sheets.
    (r) 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; and
 Level 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).
  53




---



##### Table of Contents



June 30, 2011Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Certificates of Deposit
    
    $
    
    
    
    $
    50
    (1)
    
    $
    
    
    
    $
    50Money Market Funds
    
    
    
    
    
    
    29,372
    (2)
    
    
    
    
    
    
    29,372
 June 30, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssets:Certificates of Deposit
    
    $
    
    
    
    $
    379
    (1)
    
    $
    
    
    
    $
    379Money Market Funds
    
    
    
    
    
    
    38,624
    (2)
    
    
    
    
    
    
    38,624
 (1)
    
    Amount included in other current assets on the Companys consolidated balance sheets.(2)
    
    Amount included in cash and cash equivalents on the Companys consolidated balance sheets.
 (s) Comprehensive income (loss)
  Year EndedJune 30,2011
    
    
    2010Net loss, as reported
    
    $
    (15,620
    )
    
    $
    (25,415
    )Unrealized foreign currency translation
adjustment
    
    
    2,004
    
    
    
    238Comprehensive loss
    
    
    (13,616
    )
    
    
    (25,177
    )Less comprehensive loss attributable to
noncontrolling interests
    
    
    166
    
    
    
    3,666Comprehensive loss attributable to the Company
    
    $
    (13,450
    )
    
    $
    (21,511
    )
 (t) Developmen Stage Status
   54




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##### Table of Contents



Note 2  Recently Issued Accounting Standards
       Note 3  Current Projects
 Zao Zhuang Joint Venture
 Joint Venture Agreement
 ®
  55




---



##### Table of Contents



Syngas Purchase and Sale Agreement
        56




---



##### 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, 2011, the applicable interest rate was 6.6% and
is payable monthly;
 
    
    Principal payments of RMB 7.7 million (approximately $1.2 million based on current
currency exchange rates) 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.
  Yima Joint Ventures
    57




---



##### Table of Contents



Three Months Ended
    
    
    Year EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Income statement data:Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Operating loss
    
    
    (577
    )
    
    
    (451
    )
    
    
    (2,110
    )
    
    
    (1,189
    )Net loss
    
    
    (340
    )
    
    
    (130
    )
    
    
    (1,484
    )
    
    
    (157
    )
 June 30,
    
    
    June 30,2011
    
    
    2010Balance sheet data:Current assets
    
    $
    64,120
    
    
    $
    118,073Noncurrent assets
    
    
    75,096
    
    
    
    11,694Current liabilities
    
    
    10,916
    
    
    
    6,046Noncurrent liabilities
    
    
    
    
    
    
    
  58




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##### Table of Contents



Golden Concord Joint Venture
 ®
 ®
 SES Resource Solutions
 ®
 
    
    SRS has the exclusive right to promote our gasification technology for the
purpose of securing low-cost coal resources in projects worldwide that have been
approved by the Company;
 
    
    Midas provides expertise to originate and execute the above projects;
 
    
    the Company providing SRS with technology licenses and engineering development
support for use in developing the joint integrated coal resource projects; and
 
    
    SRS being managed by a four person board of directors, two of which are
appointed by the Company and two of which are appointed by Midas.
 
    
    the Company agreeing to provide up to $2.0 million in funding to the joint
venture, although it has the ability to discontinue funding at any point in time.
 
    
    revenue and profits being equally divided between the joint venture partners.
  Note 4  Risks and Uncertainties
   59




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##### Table of Contents



Note 5  Property, Plant and Equipment
  Estimated
    
    
    June 30,useful lives
    
    
    2011
    
    
    2010Furniture and fixtures
    
    
    2 to 3 years
    
    
    $
    317
    
    
    $
    312Production equipment
    
    20 years
    
    
    33,276
    
    
    
    31,599Building  plant and office
    
    30 years
    
    
    7,715
    
    
    
    7,344Leasehold improvements
    
    Lease term
    
    
    119
    
    
    
    115Computer hardware
    
    3 years
    
    
    377
    
    
    
    376Computer software
    
    3 years
    
    
    954
    
    
    
    901Office equipment
    
    3 years
    
    
    249
    
    
    
    233Motor vehicles
    
    5 years
    
    
    207
    
    
    
    197Construction-in-progress
    
    
    
    
    
    
    414
    
    
    
    56543,628
    
    
    
    41,642Less: Accumulated depreciation
    
    
    
    
    
    
    (8,445
    )
    
    
    (5,761
    )Net carrying value
    
    
    
    
    
    $
    35,183
    
    
    $
    35,881
  Note 6  Detail of Selected Balance Sheet Accounts
  June 30,2011
    
    
    2010Raw materials
    
    $
    212
    
    
    $
    365Parts and assemblies
    
    
    701
    
    
    
    618$
    913
    
    
    $
    983
  60




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##### Table of Contents



June 30,2011
    
    
    2010Land use rights
    
    $
    759
    
    
    $
    739GTI license royalty, net  ZZ Joint Venture
    
    
    753
    
    
    
    733Value added tax receivable  ZZ Joint Venture
    
    
    705
    
    
    
    1,284Deferred stock offering costs (a)
    
    
    685
    
    
    
    Other
    
    
    98
    
    
    
    139$
    3,000
    
    
    $
    2,895
 (a)
    
    Deferred stock offering costs are costs incurred related to the share purchase agreement with
ZJX and China Energy as described in Note 12.
  As of June 30,2011
    
    
    2010Construction and equipment costs
    
    $
    668
    
    
    $
    3,308Accounts payable  trade
    
    
    866
    
    
    
    293Accrued payroll, vacation and bonuses
    
    
    910
    
    
    
    907Technical consulting, engineering and design services
    
    
    662
    
    
    
    459Yima Joint Ventures consulting fee
    
    
    924
    
    
    
    924Advance from Yima Joint Ventures for equipment construction
    
    
    877
    
    
    
    Other
    
    
    1,206
    
    
    
    1,117$
    6,113
    
    
    $
    7,008
 Note 7  Intangible assets
 GTI License Agreement
 ® ® ® ®
 ®
 ®
  61




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®
   Other Services
 ® ®
 ®
 The cost and accumulated amortization of intangible assets were as follows (in thousands):
 As of June 30, 2011
    
    
    As of June 30, 2010Gross
    
    
    
    
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    
    Amortization
    
    
    NetUse rights of U-GAS®
    
    $
    1,886
    
    
    $
    914
    
    
    $
    972
    
    
    $
    1,886
    
    
    $
    725
    
    
    $
    1,161Other intangible assets
    
    
    254
    
    
    
    
    
    
    
    254
    
    
    
    111
    
    
    
    
    
    
    
    111Total
    
    $
    2,140
    
    
    $
    914
    
    
    $
    1,226
    
    
    $
    1,997
    
    
    $
    725
    
    
    $
    1,272
 ®
  62




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##### Table of Contents



Note 8  Income taxes
  Year Ended June 30,2011
    
    
    2010
    
    
    2009Domestic
    
    $
    (6,835
    )
    
    $
    (8,289
    )
    
    $
    (9,992
    )Foreign
    
    
    (8,785
    )
    
    
    (17,126
    )
    
    
    (19,287
    )Net loss before noncontrolling interest
    
    $
    (15,620
    )
    
    $
    (25,415
    )
    
    $
    (29,279
    )
 Provision for income taxes
  Year Ended June 30,2011
    
    
    2010
    
    
    2009Net loss before noncontrolling interest
    
    $
    (15,620
    )
    
    $
    (25,415
    )
    
    $
    (29,279
    )Computed tax benefit at statutory rate
    
    
    (5,467
    )
    
    
    (8,896
    )
    
    
    (10,247
    )Other
    
    
    178
    
    
    
    105
    
    
    
    463Tax on income (losses) from foreign operations
    
    
    2,910
    
    
    
    2,318
    
    
    
    4,400Valuation allowance
    
    
    2,379
    
    
    
    6,473
    
    
    
    5,384$
    
    
    
    $
    
    
    
    $
    
 Deferred tax assets
  As of June 30,2011
    
    
    2010Deferred tax assets (liabilities):Net operating loss carry forward
    
    $
    20,351
    
    
    $
    18,374Depreciation and amortization
    
    
    (14
    )
    
    
    6Stock-based compensation
    
    
    5,400
    
    
    
    5,183Investment in joint venture
    
    
    186
    
    
    
    Accruals
    
    
    992
    
    
    
    972Subtotal
    
    
    26,915
    
    
    
    24,535Valuation allowance
    
    
    (26,915
    )
    
    
    (24,535
    )Net deferred assets
    
    $
    
    
    
    $
    
      63




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##### Table of Contents



Note 9  Net Loss Per Share Data
  Note 10  Commitments and Contingencies
 Operating leases
  Years Ending June 30,
    
    Total2012
    
    $
    3652013
    
    
    2642014
    
    
    Thereafter
    
    
    Total operating lease commitments
    
    $
    629
 Litigation
    64




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##### Table of Contents



Governmental and Environmental Regulation
  Note 11  Stock-Based Compensation
   Assumptions
  Year Ended June 30,2011
    
    
    2010
    
    
    2009Risk-free rate of return
    
    
    2.31
    %
    
    
    2.53
    %
    
    
    1.80
    %Expected life of award
    
    5.6 years
        
    5.6 years
        
    5.6 yearsExpected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility of stock
    
    
    109
    %
    
    
    94
    %
    
    
    87
    %Weighted-average grant date fair value
    
    $
    1.35
    
    
    $
    0.73
    
    
    $
    0.46
   65




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##### Table of Contents



Stock option activity during the three years ended June 30, 2011 was as follows:
 WeightedWeighted
    
    
    Average
    
    
    AggregateAverage
    
    
    Remaining
    
    
    IntrinsicNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    ValueStock Options
    
    
    Price
    
    
    Term (years)
    
    
    (in millions)Outstanding 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
    )
    
    
    0.55Cancelled/forfeited
    
    
    (42,250
    )
    
    
    0.49Outstanding at June 30, 2010
    
    
    6,037,573
    
    
    
    0.74Granted
    
    
    1,490,496
    
    
    
    1.66Exercised
    
    
    (291,486
    )
    
    
    0.71
    
    
    
    
    
    
    $
    0.49Cancelled/forfeited
    
    
    (673,239
    )
    
    
    1.13Outstanding at June 30, 2011
    
    
    6,563,344
    
    
    
    0.91
    
    
    
    8.26
    
    
    
    6.89Exercisable at June 30, 2011
    
    
    4,860,508
    
    
    
    0.76
    
    
    
    8.00
    
    
    
    5.55
   WeightedAverageRemaining
    
    
    Weighted
    
    
    
    
    
    
    WeightedContractual
    
    
    Average
    
    
    
    
    
    
    AverageNumber
    
    
    Term
    
    
    Exercise
    
    
    Number
    
    
    ExerciseRange of Exercise Prices
    
    Outstanding
    
    
    (Years)
    
    
    Price
    
    
    Exercisable
    
    
    Price$0.43 to $0.66
    
    
    3,991,424
    
    
    
    7.73
    
    
    $
    0.62
    
    
    
    3,623,049
    
    
    $
    0.63$0.67 to $1.00
    
    
    1,157,213
    
    
    
    8.52
    
    
    
    0.91
    
    
    
    818,463
    
    
    
    0.90$1.01 to $2.00
    
    
    969,707
    
    
    
    9.45
    
    
    
    1.05
    
    
    
    311,496
    
    
    
    1.04$2.01 to $3.00
    
    
    45,000
    
    
    
    9.02
    
    
    
    2.35
    
    
    
    7,500
    
    
    
    2.32$3.01 to $4.00
    
    
    400,000
    
    
    
    9.77
    
    
    
    3.25
    
    
    
    100,000
    
    
    
    3.25Total
    
    
    6,563,344
    
    
    
    
    
    
    
    
    
    
    
    4,860,508
 Note 12  Share Purchase Agreement with ZJX
  Issuance of Shares
    66




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##### Table of Contents



Use of Proceeds
   Other
     67




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##### Table of Contents



Note 13  Quarterly Results of Operations

 (Unaudited) (in thousands, except per share amounts)
 1st Quarter
    
    
    2nd Quarter
    
    
    3rd Quarter
    
    
    4th Quarter
    
    
    Year2011:Revenues
    
    $
    1,622
    
    
    $
    2,882
    
    
    $
    3,133
    
    
    $
    2,521
    
    
    $
    10,158Operating loss
    
    
    (3,862
    )
    
    
    (3,544
    )
    
    
    (3,603
    )
    
    
    (4,721
    )
    
    
    (15,730
    )Net loss
    
    
    (3,768
    )
    
    
    (3,593
    )
    
    
    (3,596
    )
    
    
    (4,663
    )
    
    
    (15,620
    )Net loss attributable to stockholders
    
    
    (3,742
    )
    
    
    (3,561
    )
    
    
    (3,559
    )
    
    
    (4,601
    )
    
    
    (15,463
    )Net loss per share  basic and diluted
    
    
    (0.08
    )
    
    
    (0.07
    )
    
    
    (0.07
    )
    
    
    (0.09
    )
    
    
    (0.32
    )2010:Revenues
    
    
    2,301
    
    
    
    2,607
    
    
    
    2,621
    
    
    
    1,772
    
    
    
    9,301Operating loss (a)
    
    
    (4,858
    )
    
    
    (11,119
    )
    
    
    (5,209
    )
    
    
    (3,778
    )
    
    
    (24,964
    )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
    )
 (a)
    
    The operating results for the second quarter of 2010 included a $6.6 million impairment
loss related to the GC Joint Venture.
 Note 14  Segment Information
   Three Months Ended
    
    
    Year EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Revenue:ZZ Joint Venture plant
    
    $
    2,290
    
    
    $
    1,429
    
    
    $
    8,913
    
    
    $
    7,939Technology licensing and related services
    
    
    231
    
    
    
    343
    
    
    
    1,245
    
    
    
    1,362Corporate & other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total revenue
    
    $
    2,521
    
    
    $
    1,772
    
    
    $
    10,158
    
    
    $
    9,301Operating loss:ZZ Joint Venture plant
    
    
    (1,299
    )
    
    
    (590
    )
    
    
    (2,848
    )
    
    
    (3,332
    )Technology licensing and related services
    
    
    (244
    )
    
    
    (537
    )
    
    
    (1,149
    )
    
    
    (1,598
    )Corporate & other
    
    
    (3,178
    )
    
    
    (2,652
    )
    
    
    (11,733
    )
    
    
    (20,034
    )Total operating loss
    
    $
    (4,721
    )
    
    $
    (3,779
    )
    
    $
    (15,730
    )
    
    $
    (24,964
    )
 June 30,
    
    
    June 30,2011
    
    
    2010Assets:ZZ Joint Venture plant
    
    $
    40,703
    
    
    $
    44,009Technology licensing and related services
    
    
    1,196
    
    
    
    1,255Corporate & other
    
    
    68,075
    
    
    
    75,317Total assets
    
    $
    109,974
    
    
    $
    120,581
  68




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##### Table of Contents



Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  
 Item 9A.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
  Internal Control  Integrated Framework
  Changes in Internal Control Over Financial Reporting
  
 Item 9B.
    
    Other Information
   69




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##### Table of Contents



PART III
 
 Item 10.
    
    Directors, Executive Officers and Corporate Governance
 Directors and Executive Officers
  Name
    
    Age

    
    PositionRobert Rigdon
    
    
    53
    
    
    President, Chief Executive Officer and DirectorKevin Kelly
    
    
    48
    
    
    Chief Accounting Officer, Controller and SecretaryLorenzo Lamadrid
    
    
    60
    
    
    Chairman of the BoardDonald Bunnell
    
    
    46
    
    
    DirectorMichael Storey
    
    
    69
    
    
    DirectorDenis Slavich
    
    
    71
    
    
    DirectorHarry Rubin
    
    
    58
    
    
    DirectorZiwang Xu
    
    
    54
    
    
    Director
 Robert Rigdon
 Education
 Directorships in the past five years
 Kevin Kelly
 Education
 Lorenzo Lamadrid.
  70




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##### Table of Contents



Education
 Directorships in the past five years (other than our Board)
 Donald Bunnell
 Education
 Directorships in the past five years (other than our Board)
 Michael Storey
 Education
 Directorships in the past five years (other than our Board)
 Denis Slavich
  71




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##### Table of Contents



Education
 Directorships in the past five years(other than our Board)
 Harry Rubin
 Education
 Directorships in the past five years (other than our Board)
 Ziwang Xu
 Education
 Directorships in the past five years (other than our Board)
 Section 16(a) Beneficial Ownership Reporting Compliance
    72




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##### Table of Contents



Director Independence
  Material Changes in Director Nominations Process
  Audit Committee
  Code of Ethics
 www.synthesisenergy.com
 Corporate Governance
 www.synthesisenergy.com
  73




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##### Table of Contents



Item 11.
    
    Executive Compensation
 Summary Compensation Table
  Non-EquityName and Principal
    
    Fiscal
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Incentive Plan
    
    
    All OtherPosition
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    Awards (1)
    
    
    Compensation
    
    
    Compensation
    
    
    TotalRobert Rigdon
    
    
    2011
    
    
    $
    300,000
    
    
    $
    120,000
    
    
    $
    
    
    
    $
    1,066,394
    
    
    $
    
    
    
    $
    
    
    
    $
    1,486,394President and CEO
    
    
    2010
    
    
    $
    300,000
    
    
    $
    120,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    420,0002009
    
    
    $
    270,000
    
    
    $
    146,000
    
    
    $
    
    
    
    $
    185,789
    
    
    $
    
    
    
    $
    
    
    
    $
    601,789Kevin Kelly
    
    
    2011
    
    
    $
    230,000
    
    
    $
    34,500
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    264,500Chief Accounting
    
    
    2010
    
    
    $
    230,000
    
    
    $
    69,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    299,000Officer, Controller
    
    
    2009
    
    
    $
    155,000
    
    
    $
    62,000
    
    
    $
    
    
    
    $
    207,773
    
    
    $
    
    
    
    $
    
    
    
    $
    424,773and SecretaryDonald Bunnell (2)
    
    
    2011
    
    
    $
    120,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20,000
    
    
    $
    140,000President and CEO
    
    
    2010
    
    
    $
    180,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    5,000
    
    
    $
    185,000- Asia Pacific
    
    
    2009
    
    
    $
    180,000
    
    
    $
    72,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    252,000Timothy Vail (3)
    
    
    2011
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Former President
    
    
    2010
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    and CEO
    
    
    2009
    
    
    $
    135,000
    
    
    $
    
    
    
    $
    
    
    
    $
    469,723
    
    
    $
    
    
    
    $
    
    
    
    $
    604,723
 
 (1)
    
    The amounts in the Option awards column reflect the aggregate grant date fair value
of awards pursuant to the Plan, as amended (the 2005 Plan) for the fiscal years ended
June 30, 2009, 2010 and 2011, in accordance with ASC 718. Assumptions used in the
calculation of these amounts are included in Note 11Stock-Based Compensation to our
audited financial statements for the fiscal year ended June 30, 2011 included herein our
annual report on Form 10-K for the year ended June 30, 2011. However, as required, the
amounts shown exclude the impact of estimated forfeitures related to service-based vesting
conditions.(2)
    
    Effective March 1, 2011, Mr. Bunnell ceased employment with us to pursue other
long-standing interests. In addition to the compensation that he received as an employee,
Mr. Bunnell has earned, but not yet received, $18,000 during the year ended June 30, 2011
for consulting services provided to us as described below under  Director Compensation.(3)
    
    Effective March 31, 2009, Mr. Vail ceased employment with us based on a mutual decision
with the Board. In connection with the departure, he entered into a Separation Agreement
and Release with us, or the Release, whereby (i) his employment agreement with us was
terminated, subject to the continued enforcement of the provisions relating to
non-competition and confidentiality; (ii) he entered into a mutual release; (iii) his
Indemnification Agreement with us, dated August 13, 2008, survived the termination of his
employment agreements; (iv) he was granted reimbursement of his payment of his COBRA
premiums through (a) the one year anniversary of the termination or (b) until he is
eligible to participate in the health insurance plan of another employer, whichever is
sooner; and (v) he was granted a new option grant in satisfaction of his 2008 bonus and a
right to participate in our option exchange program. The grant was a fully vested option
to acquire 68,182 shares of common stock at an exercise price of $0.66 per share, in
satisfaction of his bonus earned during the year ended December 31, 2008. In addition, as
part of the option exchange program, Mr. Vail exchanged all of his option grants
outstanding on March 31, 2009 for a new fully vested option grant to acquire 960,000 shares
of common stock at an exercise price of $0.66 per share.
  74




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##### Table of Contents



Employment Agreements
   Potential Payments upon Termination or Change of Control
     75




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##### Table of Contents



Robert Rigdon  Chief Executive Officer and President
 VoluntaryTermination
    
    
    
    
    
    
    Involuntary
    
    
    
    
    
    
    After aVoluntary
    
    
    for Good
    
    
    For Cause
    
    
    Not for Cause
    
    
    Death or
    
    
    Change inExecutive Benefits and Payments
    
    Termination
    
    
    Reason
    
    
    Termination
    
    
    Termination(2)
    
    
    Disability
    
    
    Control(3)Upon Termination(1)
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)CompensationSeverance (4)
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    300,000
    
    
    
    
    
    
    
    300,000Performance bonus (5)
    
    
    
    
    
    
    120,000
    
    
    
    
    
    
    
    120,000
    
    
    
    
    
    
    
    Stock Options (Unvested and
Accelerated)(6)
    
    
    
    
    
    
    232,969
    
    
    
    
    
    
    
    232,969
    
    
    
    232,969
    
    
    
    232,969Benefits and PerquisitesHealth and Welfare Benefits
Continuation (7)
    
    
    
    
    
    
    18,541
    
    
    
    
    
    
    
    18,541
    
    
    
    
    
    
    
    18,541Tax Gross-up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    671,510
    
    
    
    
    
    
    
    671,510
    
    
    
    232,969
    
    
    
    551,510
 Kevin Kelly
Chief Accounting Officer, Controller and Secretary
 VoluntaryTermination
    
    
    
    
    
    
    Involuntary
    
    
    
    
    
    
    After aVoluntary
    
    
    for Good
    
    
    For Cause
    
    
    Not for Cause
    
    
    Death or
    
    
    Change inExecutive Benefits and Payments
    
    Termination
    
    
    Reason
    
    
    Termination
    
    
    Termination(2)
    
    
    Disability
    
    
    Control(3)Upon Termination(1)
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)CompensationSeverance (4)
    
    
    
    
    
    
    230,000
    
    
    
    
    
    
    
    230,000
    
    
    
    
    
    
    
    Annual Cash Incentive (5)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock Options (Unvested and
Accelerated)(6)
    
    
    
    
    
    
    101,750
    
    
    
    
    
    
    
    101,750
    
    
    
    
    
    
    
    101,750Benefits and PerquisitesHealth and Welfare Benefits
Continuation (7)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,541
    
    
    
    
    
    
    
    18,541Tax Gross-up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    331,750
    
    
    
    
    
    
    
    350,291
    
    
    
    
    
    
    
    120,291
 (1)
    
    For purposes of this analysis, we assumed that the effective date of termination is June 30,
2011 and that the executives compensation is as follows: Mr. Rigdons base salary is equal to
$300,000 and his performance bonus is equal to 40% of base salary; and Mr. Kellys base salary
is equal to $230,000 and incentive target opportunity is equal to 50% of base salary.(2)
    
    Non-renewal of Mr. Rigdons agreement by us is considered an involuntary not for cause
termination for purposes of his employment agreement.(3)
    
    In the case of Mr. Rigdon, After a Change in Control means a termination for any reason
(other than by us for cause) within 60 days of a change in control. In the case of Mr. Kelly,
After a Change in Control means automatically upon the occurrence of a change in control.(4)
    
    Under Voluntary Termination for Good Reason and Involuntary Not for Cause Termination
(and in the case of Mr. Rigdon, under After a Change in Control) severance under Mr. Kellys
agreements is all base salary for the remainder of the employment period for not less than
twelve months and severance under Mr Rigdons agreement is one year of base salary as in
effect at the time of termination.(5)
    
    The bonus amounts included under Voluntary Termination for Good Reason and Involuntary Not
for Cause Termination (and in the case of Mr. Rigdon, under After a Change in Control), are
based on the maximum bonus that each executive could receive upon termination under their
employment agreement for such reasons. The amounts of performance bonuses payable under the
employment agreements of each of Messrs. Rigdon and Kelly are in the discretion of the Board
and/or the Compensation Committee.(6)
    
    Pursuant to the terms of their employment agreements, under Voluntary Termination for Good
Reason, Involuntary Not for Cause Termination or After a Change in Control for Messrs.
Rigdon and Kelly, the vesting of all outstanding stock options will be accelerated and all
stock options shall be 100% vested on the date of termination of employment or on the
effective date of the change in control, as applicable.(7)
    
    Health and Welfare Benefits Continuation is calculated as 12 months of reimbursement of COBRA
premiums under Involuntary Not for Cause Termination (and in the case of Mr. Rigdon under
Voluntary Termination for Good Reason and After a Change in Control). Such benefits
payable will cease prior to the end of 12 months if the executive is eligible to participate
in the health insurance plan of another employer.
  76




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##### Table of Contents



Outstanding Equity Awards for Year Ended June 30, 2011
  Option Awards
    
    
    Stock AwardsEquityIncentivePlan Awards:Market orEquity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity
    
    
    PayoutIncentive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Incentive
    
    
    ValuePlan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plan Awards:
    
    
    ofAwards:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Market
    
    
    Number
    
    
    UnearnedNumber
    
    
    Number
    
    
    Number
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Value of
    
    
    of
    
    
    Shares,of
    
    
    of
    
    
    of
    
    
    
    
    
    
    
    
    
    
    of Shares
    
    
    Shares or
    
    
    Unearned
    
    
    Units orSecurities
    
    
    Securities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    or Units
    
    
    Units of
    
    
    Shares,
    
    
    OtherUnderlying
    
    
    Underlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    of Stock
    
    
    Stock
    
    
    Units or
    
    
    RightsUnexercised
    
    
    Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    
    
    
    
    That Have
    
    
    That Have
    
    
    Other Rights
    
    
    That HaveOptions
    
    
    Options
    
    
    Unearned
    
    
    Exercise
    
    
    Option
    
    
    Not
    
    
    Not
    
    
    That Have
    
    
    Not(#)
    
    
    (#)
    
    
    Options
    
    
    Price
    
    
    Expiration
    
    
    Vested
    
    
    Vested
    
    
    Not Vested
    
    
    VestedName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    ($)
    
    
    Date
    
    
    (#)
    
    
    ($)
    
    
    (#)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)Robert Rigdon
    
    
    65,625
    
    
    
    21,875
    
    
    
    
    
    
    
    0.43
    
    
    
    02/10/19
    (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65,625
    
    
    
    21,875
    
    
    
    
    
    
    
    0.66
    
    
    
    03/31/19
    (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,500
    
    
    
    37,500
    
    
    
    
    
    
    
    0.43
    
    
    
    02/10/19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    
    
    
    
    0.66
    
    
    
    03/31/19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    300,000
    
    
    
    
    
    
    
    3.25
    
    
    
    04/08/21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kevin Kelly
    
    
    18,750
    
    
    
    18,750
    
    
    
    
    
    
    
    0.43
    
    
    
    02/10/19
    (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,500
    
    
    
    12,500
    
    
    
    
    
    
    
    0.73
    
    
    
    01/09/19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    0.66
    
    
    
    03/31/19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    50,000
    
    
    
    
    
    
    
    0.66
    
    
    
    03/31/19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Donald Bunnell
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Timothy Vail
    
    
    960,000
    
    
    
    
    
    
    
    
    
    
    
    0.66
    
    
    
    03/31/19
    (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,182
    
    
    
    
    
    
    
    
    
    
    
    0.66
    
    
    
    03/31/19
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Represents stock option awards made in connection with our stock option exchange program
during fiscal 2009.
 Director Compensation
   77




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##### Table of Contents



NonqualifiedFees Earned
    
    
    
    
    
    
    
    
    
    
    Non-Equity
    
    
    Deferredor Paid in
    
    
    Stock
    
    
    Option
    
    
    Incentive
    
    
    Compensation
    
    
    All OtherName
    
    Cash
    
    
    Awards
    
    
    Awards (1) (2)
    
    
    Compensation
    
    
    Earnings
    
    
    Compensation
    
    
    Total(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)Lorenzo Lamadrid
    
    $
    60,000
    
    
    
    
    
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    160,000Donald Bunnell
    
    $
    18,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    18,000Michael Storey
    
    $
    6,000
    
    
    
    
    
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    106,000Denis Slavich
    
    $
    6,000
    
    
    
    
    
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    106,000Harry Rubin
    
    $
    6,000
    
    
    
    
    
    
    $
    100,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    106,000Ziwang Xu
    
    $
    6,000
    
    
    
    
    
    
    $
    90,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    96,000
 
 (1)
    
    The amounts in the Option Awards column reflect the aggregate grant date fair
value for the fiscal year ended June 30, 2011, in accordance with ASC 718. Assumptions
used in the calculation of these amounts are included in Note 11Stock-Based
Compensation to our audited financial statements for the fiscal year ended June 30,
2011 included herein. However, as required, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions.(2)
    
    As of June 30, 2011, Messrs. Lamadrid, Storey, Slavich, Rubin and Xu had
outstanding options exercisable for a total of 381,481; 481,481; 481,481; 456,481and
184,470 shares of common stock, respectively.
   
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  
    
    each person who is known by us to beneficially own 5% or more of the outstanding
class of our capital stock;
 
    
    each member of the Board;
 
    
    each of our executive officers; and
 
    
    all of our directors and executive officers as a group.
  78




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##### Table of Contents



Numbers of Shares ofCommon Stock
    
    
    % of Common StockName and Address of Beneficial Owner
    
    Beneficially Owned
    
    
    Outstanding (1)Columbia Wanger Asset Management, L.P. (2) 
227 West Monroe Street, Suite 3000
Chicago, IL 60606
    
    
    6,981,000
    
    
    
    13.7
    %Donald Bunnell
    
    
    3,804,318
    
    
    
    7.5
    %Lorenzo Lamadrid (3)
    
    
    3,556,481
    
    
    
    6.9
    %David A. Schwedel (4) 
4000 Ponce de Leon Boulevard, Suite 470
Coral Gables, Florida 33134
    
    
    3,020,738
    
    
    
    5.9
    %Michael Storey (5)
    
    
    1,881,481
    
    
    
    3.7
    %Harry Rubin (6)
    
    
    526,481
    
    
    
    1
    %Denis Slavich (7)
    
    
    501,481
    
    
    
    1
    %Ziwang Xu (8)
    
    
    184,470
    
    
    
    *Robert Rigdon (9)
    
    
    388,750
    
    
    
    *Kevin Kelly (10)
    
    
    103,750
    
    
    
    *Executive Officers and Directors as a
group (8 persons)
    
    
    10,947,212
    
    
    
    20.5
    %
 
 *
    
    Less than 1%(1)
    
    Based on 50,850,220 shares outstanding as of June 30, 2011.(2)
    
    Based on information included in a Schedule 13G/A filed on February 11, 2011. Also includes
shares held by Columbia Acorn Trust, which has agreed to file as a group with Columbia Wanger
Asset Management, L.P.(3)
    
    Includes 381,481 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.(4)
    
    Based on information included in a Form 4 filed on January 9, 2008. Includes 205,200 shares
held by the David A. Schwedel Living Trust of which Mr. Schwedel is the beneficial owner.(5)
    
    Includes 481,481 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.(6)
    
    Includes 456,481 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.(7)
    
    Includes 481,481 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.(8)
    
    Includes 184,470 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.(9)
    
    Includes 368,750 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.(10)
    
    Includes 101,250 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days.
 
 Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    79




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##### Table of Contents



Item 14.
    
    Principal Accounting Fees and Services
  June 30, 2011
    
    
    June 30, 2010Audit Fees
    
    $
    455,000
    
    
    $
    440,000Other
    
    
    
    
    
    
    28,842Total
    
    $
    455,000
    (1)
    
    $
    468,842
    (1)
 (1)
    
    Includes $10,000 of audit fees for services rendered by KPMG for each of the
years ended June 30, 2011 and 2010.
   80




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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 on Form 10-K.
 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).10.3
    **
    
    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).
  81




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##### Table of Contents



Number
    
    Description of Exhibits10.10
    
    
    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-K filed 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).10.16
    +
    
    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
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).10.18
    
    
    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).10.19
    
    
    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).10.20
    
    
    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).10.21
    
    
    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).10.22
    
    
    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).10.23
    **
    
    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).10.24
    +
    
    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).10.25
    
    
    Share Purchase Agreement dated March 31, 2011
between Synthesis Energy Systems, Inc., China
Energy Industry Holdings Group Co. Ltd. and
Zhongjixuan Investment Management Company Ltd
(incorporated by reference to Exhibit 10.1 to
the Companys Current Report on Form 8-K
filed on March 31, 2011).10.26
    
    
    Consulting Agreement between the Company and
Don Bunnell dated April 1, 2011 (incorporated
by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on April 6,
2011).10.27
    
    
    Amended and Restated Employment Agreement
between the Company and Robert W. Rigdon
dated April 8, 2011 (incorporated by
reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K filed on April 12,
2011).
  82




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##### Table of Contents



Number
    
    Description of Exhibits10.28
    
    
    Share Purchase Agreement dated June 9, 2011
between the Company and Zuari Industries
Limited (incorporated by reference to Exhibit
10.1 to the Companys Current Report on Form
8-K filed on June 10, 2011).10.29
    
    
    Letter Agreement date August 16, 2011 between
the Company, China Energy Industry Holding
Group Co. Ltd and Zhongjixuan Investment
Management Company Ltd. (incorporated by
reference to Exhibit 10.2 to the Companys
Current Report on Form 8-K filed on August
16, 2011).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.
  83




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##### Table of Contents



SIGNATURES
  SYNTHESIS ENERGY SYSTEMS, INC.Date: September 27, 2011
    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 27, 2011/s/ Kevin Kelly

Kevin Kelly
    
    Chief Accounting Officer, Controller and Secretary
(Principal Financial and Accounting Officer)
    
    September 27, 2011/s/ Donald Bunnell

Donald Bunnell
    
    Director
    
    September 27, 2011/s/ Lorenzo Lamadrid

Lorenzo Lamadrid
    
    Director
    
    September 27, 2011/s/ Michael Storey

Michael Storey
    
    Director
    
    September 27, 2011/s/ Denis Slavich

Denis Slavich
    
    Director
    
    September 27, 2011/s/ Harry Rubin

Harry Rubin
    
    Director
    
    September 27, 2011/s/ Ziwang Xu

Ziwang Xu
    
    Director
    
    September 27, 2011
  84