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Syntroleum Corp. Reports Operating Results (10-Q)

July 28, 2010 | About:
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10qk

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Syntroleum Corp. (SYNM) filed Quarterly Report for the period ended 2010-06-30.

Syntroleum Corp. has a market cap of $153.4 million; its shares were traded at around $1.98 with and P/S ratio of 5.6. SYNM is in the portfolios of Steven Cohen of SAC Capital Advisors, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

The capital and working capital budget for Dynamic Fuels financing, construction and initial operations of the first plant to use our Bio-Synfining Technology is estimated to equal $170.0 million in total. Dynamic Fuels received approval from the Louisiana State Bond Commission to sell $100 million in Gulf Opportunity Tax Exempt Bonds to partially finance the plant. These bonds were sold on October 21, 2008, in the amount of $100 million and are due October 1, 2033. Syntroleum and Tyson have made capital contributions in the amount of $25.0 million each. The remaining estimated $20.0 million in total ($10.0 million each) will be funded as needed in the remainder of 2010.

Cash flows provided by operations was $1,837,000 during the six months ended June 30, 2010, compared to cash flows provided by operations of $12,602,000 during the six months ended June 30, 2009. The decrease in cash flows provided by operations primarily results from the collection of revenues from technology deployment agreements of $2,750,000 in 2010 compared to $16,000,000 in 2009. Significant cash flows from technology transfer agreements are not expected to occur for the remainder of 2010.

Cash flows used in investing activities were $5,003,000 during the six months ended June 30, 2010, compared to $6,104 cash flows used in investing activities during the six months ended June 30, 2009. We funded $5,000,000 into Dynamic Fuels in June of 2010 and have committed to an additional $10,000,000 investment by the end of 2010, if needed. We expect to utilize available cash for this investment.

Cash flows provided by financing activities during the six months ended June 30, 2010 was $2,832,000 compared to $364,000 used in financing activities during the six months ended June 30, 2009. The cash provided by financing activities is primarily due to net proceeds received from our Stock Purchase Agreement with Fletcher. Fletcher purchased 1,135,374 shares of our common stock at a stock price of approximately $2.64 in April of 2010.

The capital and working capital budget for Dynamic Fuels financing, construction and initial operations of the first plant to use the Companys Bio-Synfining Technology is estimated to equal $170.0 million. Dynamic Fuels received approval from the Louisiana State Bond Commission to sell $100 million in Gulf Opportunity Zone Tax Exempt Bonds to partially finance the plant. These bonds were sold on October 21, 2008, in the amount of $100 million. Syntroleum and Tyson have made capital contributions in the amount of $25.0 million each. The remaining estimated $10.0 million each is anticipated to be funded in the remainder of 2010. We expect to fund the remaining 2010 commitment from available cash. The plant is expected to begin commercial operations by the third quarter of 2010.

Pursuant to our Registration Statement on Form S-3 (No. 333-157879) we have issued and sold 4,541,497 shares of our common stock to Fletcher International, Ltd. for an aggregate purchase price of $12 million or approximately $2.64 per share. In connection with these transactions and pursuant to such Registration Statement, Fletcher was also issued warrants to purchase an additional 5,676,871 shares of our common stock at an exercise price of approximately $3.30 per share. These shares and warrants were sold and issued in three separate closings occurring on October 14, 2009, December 30, 2009 and April 20, 2010. The terms of the offering to Fletcher were described in our Prospectus Supplement on Form 424B2 filed with the Commission on October 14, 2009, and in Current Reports on Form 8-K filed with the Commission on October 14, 2009, December 30, 2009 and April 20, 2010, the terms of which are incorporated herein by reference.

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