Equity Method Investments and Joint Ventures Disclosure [Text Block] | Note 2 Synthesis Energy Systems (Zao Zhuang) New Gas Company Ltd. (“ZZ Joint Venture”) In July 2006, · developing, constructing and operating a syngas production plant utilizing SGT in Zao Zhuang City, Shandong Province, China and · producing and selling syngas and the various byproducts of the plant. We initially owned 97.6% 2.4%. June 2015, 61% $10 four December 2016, first $1.6 June 26, 2015. Rui Feng’s second December 2015, third May 2016 December 2016. 10% Because Rui Feng has not made additional installment payments, we owned approximately 88.1% Agreement with Xuecheng Energy In August 2016, nine 2013. October 31, 2016. second 2017, In October 2016, 283 three Yima Joint Ventures In August 2009, October 2008 April 2009. · we and Yima contribute equity of 25% 75%, · Yima is obligated to provide debt financing via shareholder loans to the project until the project is able to secure third · Yima will supply coal to the project at a preferential price. As discussed below in November 2016, We own a 25% 75% 49% The remaining capital for the project construction has been funded with project debt obtained by the Yima Joint Venture. Yima agreed to guarantee the project debt in order to secure debt financing from domestic Chinese banking sources. We have agreed to pledge to Yima our ownership interests in the joint ventures as security for our obligations under any project guarantee. In the event that the necessary additional debt financing is not obtained, Yima has agreed to provide a loan to the joint ventures to satisfy the remaining capital needs of the project with terms comparable to current market rates at the time of the loan. Under the terms of the joint venture agreement, the Yima Joint Venture is governed by a board of directors consisting of eight two six 30 July 2016. We believe there is a consistent pattern of the Yima Joint Venture management not demonstrating an understanding of the methanol facility operations and not sourcing available expertise in China to improve the overall operations. We have witnessed operation of the gasifier systems at Yima with design and operating parameter deviations from our existing technology recommendations. We continue to experience a limited ability to influence the Yima Joint Venture’s operating performance. As a result of the issues noted above, Yima’s parent company, Henan Energy Chemistry Group Company (“Henan Energy”) restructured the management of the Yima Joint Venture under the direction of the Henan Coal Gasification Company (“Henan Gasification”), which is an affiliated company reporting directly to Henan Energy. Henan Gasification currently has full authority of day to day operational and personnel decisions at the Yima Joint Venture. The ownership of the Yima Joint Venture is unchanged. Since 2014, Current Yima Plant Operating Description Despite initiating methanol production in December 2012, 2016. March 2016, In June 2016, November 2016. In 2009, three To resolve these issues, during the quarter ended June 30, 2016, three July 2016, one November 2016 The Yima Joint Venture experienced certain liquidity concerns with a series of third 2016. 75% October 2016 one October 2017, October 2016. third March 31, 2017, $68.7 third September 2017. Because of the situations detailed above, our management evaluated the conditions of the Yima Joint Venture to determine whether an other than temporary decrease in value had occurred for the year ended June 30, 2016. third June 30, 2016, $8.6 June 30, 2016. In November 2016, two third nine March 31, 2017. $26.2 March 31, 2017 June 30, 2016. Tianwo-SES Clean Energy Technologies Limited (the “Tianwo-SES Joint Venture”) Joint Venture Contract In February 2014, one 53.8 April 2014 46.2 two 100 $14.5 65% We have contributed certain exclusive technology sub-licensing rights into the Tianwo-SES Joint Venture for the territory pursuant to the terms of a Technology Usage and Contribution Agreement (the “TUCA”) entered into among the Tianwo-SES Joint Venture, STT and us on the same date and further described in more detail below. We own 35% may first The JV Contract also includes a non-competition provision which requires that the Tianwo-SES Joint Venture be the exclusive legal entity within the Tianwo-SES Joint Venture territory for the marketing and sale of any gasification technology or related equipment that utilizes low quality coal feedstock. Notwithstanding this, STT has the right to manufacture and sell gasification equipment outside the scope of the Tianwo-SES Joint Venture within the Tianwo-SES Joint Venture territory. In addition, we have the right to develop and invest equity in projects outside of the Tianwo-SES Joint Venture within the Tianwo-SES Joint Venture territory. After the termination of the Tianwo-SES Joint Venture, STT must obtain written consent from us to market development of any gasification technology that utilizes low quality coal feedstock in the Tianwo-SES Joint Venture territory. The JV Contract may 24 TUCA Pursuant to the TUCA, we have contributed to the Tianwo-SES Joint Venture certain exclusive rights to our gasification technology in the Tianwo-SES Joint Venture territory, including the right to: (i) grant site specific project sub-licenses to third The Tianwo-SES Joint Venture will be the exclusive operational entity for business relating to our technology in the Tianwo-SES Joint Venture territory. If the Tianwo-SES Joint Venture loses exclusivity due to a breach by us, STT is to be compensated for direct losses and all lost project profits. We will also provide training for technical personnel of the Tianwo-SES Joint Venture through the second Any party making, whether patentable or not, improvements relating to our technology after the establishment of the Tianwo-SES Joint Venture, grants to the other party an irrevocable, non-exclusive, royalty free right to use or license such improvements and agrees to make such improvements available to us free of charge. All such improvements shall become part of our technology and both parties shall have the same rights, licenses and obligations with respect to the improvement as contemplated by the TUCA. The Tianwo-SES Joint Venture is required to establish an Intellectual Property Committee, with two two March 31, 2017 Any breach of or default under the TUCA which is not cured on notice entitles the non-breaching party to terminate. The Tianwo-SES Joint Venture indemnifies us for misuse of our technology or infringement of our technology upon rights of any third Current relationship with STT The second 46.2 $6.7 April 2016 Tianwo-SES Joint Venture unaudited financial data The following table presents summarized financial information for the Tianwo-SES Joint Venture (in thousands): Three Months Ended Nine Months Ended Income Statement data: 2017 2016 2017 2016 Revenue $ 1,317 $ — $ 3,709 $ 10,114 Operating loss (343 ) (352 ) (3,477 ) (1,720 ) Net loss (1,176 ) (292 ) (4,310 ) (1,075 ) Balance sheet data: As of As of Current assets $ 8,065 $ 9,856 Noncurrent assets 5,658 7,366 Current liabilities 5,992 4,719 Noncurrent liabilities — — Equity 7,731 12,503 The Tianwo-SES Joint Venture is accounted for under the equity method. The Company’s capital contribution in the formation of the venture was the TUCA, which is an intangible asset. As such, the Company did not record a carrying value at the inception of the venture. Under the equity method of accounting, losses in the venture are not recorded if the losses cause the carrying value to be negative and there is no requirement of the Company to contribute additional capital. As the Company is not required to contribute additional capital, the Company is not recognizing losses in the venture, as this would cause the carrying value to be negative. Had the Company recognized its share of the losses related to the venture, the Company would have recognized losses of approximately $0.4 $0.1 March 31, 2017 2016, $1.5 $0.4 nine March 31, 2017 2016, $2.9 CESI-SES Investment Platforms In March 2016, 20 five two 12 51% 49% In July 2016, two March 23, 2017. may If CESI were to not continue to participate in these projects, it could cause delays as we seek replacement partners and alternative funding sources. Alternatively, given our shift away from the China market, we may Dongying Projects In May 2016, first three 2 ($290 June 2016, 550 ($79.7 We have not completed the work necessary to commence these projects and may may Australian Future Energy Pty Ltd ("AFE”) In May 2015, April 2017, 270 In forming AFE, we contributed conditional exclusive access to SGT in Australia via a Master Technology Agreement and we received our ownership interest in AFE. The Master Technology Agreement also states SES will share a portion of its earned license fee with AFE, and AFE will exclusively use SES technology while SES will exclusively use AFE as its channel to the Australian market. In addition to the initial technology transfer, we have been contributing engineering support for AFE’s business development while Ambre has contributed cash. In fiscal year 2016, $0.2 January 2017, $0.4 March 31, 2017, 39% $0.3 March 31, 2017. Because of the early stage business development expenses incurred by AFE, the carrying value of AFE was zero June 30, 2016. $0.4 AFE is currently evaluating project opportunities that would use SGT and recently signed agreements with SES to provide certain license and engineering services, as they begin the initial scoping of potential projects. AFE plans to utilize the unmarketable coal from the Callide mine discussed below to responsibly manufacture energy or chemical products. Batchfire Because of AFE’s early stage business development efforts associated with the Callide coal mine in Central Queensland, Australia, and AFE created Batchfire. Batchfire was a spin-off company for which ownership interest was distributed to the existing shareholders of AFE and to the new Batchfire management team in December 2015. October 2016. October 31, 2016, 11% zero March 31, 2017 June 30, 2016. |