UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2002.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______.
COMMISSION FILE NO. 0-21911
SYNTROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-1565725
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1350 South Boulder, Suite 1100
Tulsa, Oklahoma 74119-3295
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 592-7900
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO .
--- ---
At May 1, 2002, the number of outstanding shares of the issuer's common
stock was 33,282,707.
SYNTROLEUM CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements.
Unaudited Consolidated Balance Sheets as of March 31, 2002 and
December 31, 2001 ............................................. 1
Unaudited Consolidated Statements of Operations for the three
month periods ended March 31, 2002 and 2001 ................... 2
Unaudited Consolidated Statements of Stockholders' Equity for
the three month period ended March 31, 2002 ................... 3
Unaudited Consolidated Statements of Cash Flows for the
three month periods ended March 31, 2002 and 2001 ............. 4
Notes to Unaudited Consolidated Financial Statements ............ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ..................................... 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk ...... 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ............................................... 16
Item 2. Changes in Securities and Use of Proceeds ....................... 16
Item 3. Defaults Upon Senior Securities ................................. 16
Item 4. Submission of Matters to a Vote of Security Holders ............. 17
Item 5. Other Information ............................................... 17
Item 6. Exhibits and Reports on Form 8-K ................................ 17
SIGNATURES ............................................................... 18
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements as
well as historical facts. These forward-looking statements include statements
relating to our gas-to-liquids technology known as the Syntroleum Process and
related technologies, gas-to-liquids plants based on the Syntroleum Process
including the proposed Sweetwater plant, anticipated costs to design, construct
and operate these plants, anticipated costs to make products from these plants,
the timing of commencement and completion of the design and construction of
these plants, obtaining required financing for these plants, the economic
construction and operation of gas-to-liquids plants, plans and expectations
relating to our Talara Project, the value and markets for plant products,
testing, certification, characteristics and use of plant products, the continued
development of the Syntroleum Process (alone or with partners), anticipated
capital expenditures, use of proceeds from our 2000 public offering, anticipated
revenues, the sale of and costs associated with our real estate inventory and
any other statements regarding future growth, cash needs, operations, business
plans and financial results. When used in this document, the words "anticipate,"
"believe," "estimate," "expect," "intend," "may," "plan," "project," "should",
and similar expressions are intended to be among the statements that identify
forward-looking statements. Although we believe that the expectations reflected
in these forward-looking statements are reasonable, these kinds of statements
involve risks and uncertainties. Actual results may not be consistent with these
forward-looking statements. Important factors that could cause actual results to
differ from these forward-looking statements include the risks that the cost of
designing, constructing and operating commercial-scale gas-to-liquids plants
will exceed current estimates, the schedule for construction of commercial-scale
GTL plants will extend beyond current estimated schedules, financing for design
and construction of commercial-scale GTL plants and our other activities may not
be available, commercial-scale gas-to-liquids plants will not achieve the same
results as those demonstrated on a laboratory or pilot basis, gas-to-liquids
plants may experience technological and mechanical problems, improvements to the
Syntroleum Process currently under development may not be successful, markets
for gas-to-liquids plant products may not develop, plant economics may be
adversely impacted by operating conditions, including energy prices,
construction risks and risks associated with investments and operations in
foreign countries, our ability to implement corporate strategies, competition,
intellectual property risks, our ability to obtain financing and other risks
described in this Quarterly Report on Form 10-Q and Syntroleum's Annual Report
on Form 10-K for the year ended December 31, 2001.
As used in this Quarterly Report on Form 10-Q, the terms "we," "our" or
"us" mean Syntroleum Corporation, a Delaware corporation, and its predecessors
and subsidiaries, unless the context indicates otherwise.
i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
SYNTROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
March 31, December 31,
2002 2001
--------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 39,590 $ 44,737
Accounts and notes receivable ............................... 1,885 1,795
Other current assets ........................................ 559 661
--------- ---------
Total current assets ................................... 42,034 47,193
REAL ESTATE UNDER DEVELOPMENT .................................... 1,756 3,028
INVESTMENTS ...................................................... 786 1,072
RESTRICTED CASH .................................................. 17,147 16,506
PROPERTY AND EQUIPMENT, net ...................................... 33,957 34,049
NOTES RECEIVABLE ................................................. 2,311 2,322
OTHER ASSETS, net ................................................ 1,422 1,342
--------- ---------
$ 99,413 $ 105,512
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................ $ 4,045 $ 3,993
Accrued liabilities ......................................... 400 435
--------- ---------
Total current liabilities .............................. 4,445 4,428
LONG-TERM DEBT ................................................... 1,269 1,190
OTHER NONCURRENT LIABILITIES ..................................... 25 26
DEFERRED REVENUE ................................................. 35,008 34,351
MINORITY INTERESTS ............................................... 2,773 2,786
--------- ---------
Total liabilities ...................................... 43,520 42,781
--------- ---------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 5,000 shares authorized,
no shares issued .......................................... - -
Common stock, $0.01 par value, 150,000 shares authorized,
40,958 shares issued, including shares in treasury ......... 410 410
Additional paid-in capital .................................. 163,681 163,734
Notes receivable from sale of common stock .................. (599) (599)
Notes receivable from officers secured by common stock ...... (1,595) (1,595)
Accumulated deficit (105,927) (99,142)
--------- ---------
55,970 62,808
Less-treasury stock, 7,675 shares ........................ (77) (77)
--------- ---------
Total stockholders' equity ............................. 55,893 62,731
--------- ---------
$ 99,413 $ 105,512
========= =========
The accompanying notes are an integral part of these unaudited consolidated
balance sheets.
1
SYNTROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the Three Months Ended
March 31,
--------------------------
2002 2001
-------- --------
REVENUES:
Joint development revenue ....................... $ 639 $ 256
Real estate sales ............................... 444 1,137
Other ........................................... - 1
-------- --------
Total revenues ................................ 1,083 1,394
-------- --------
COST AND EXPENSES:
Cost of real estate sales ....................... 332 648
Pilot plant, engineering and research and
development ................................... 4,173 4,549
General and administrative ...................... 3,725 4,048
-------- --------
INCOME (LOSS) FROM OPERATIONS ..................... (7,147) (7,851)
INVESTMENT AND INTEREST INCOME .................... 435 1,473
FOREIGN EXCHANGE GAIN (LOSS) ...................... (26) 442
-------- --------
INCOME (LOSS) BEFORE MINORITY
INTERESTS AND INCOME TAXES ...................... (6,738) (5,936)
MINORITY INTERESTS ................................ (33) (120)
INCOME TAXES ...................................... (14) (17)
-------- --------
NET INCOME (LOSS) ................................. $ (6,785) $ (6,073)
======== ========
NET INCOME (LOSS) PER SHARE -
Basic and diluted ............................... $ (.20) $ (.18)
======== ========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ........ 33,282 33,148
======== ========
The accompanying notes are an integral part of these unaudited consolidated
statements.
2
SYNTROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands)
Common Stock
------------------- Additional Total
Number Paid-in Notes Accumulated Treasury Stockholders'
of Shares Amount Capital Receivable Deficit Stock Equity
--------- ------ ---------- ---------- ----------- -------- -------------
BALANCE, December 31, 2001 ........... 40,958 $ 410 $ 163,734 $ (2,194) $ (99,142) $ (77) $ 62,731
CONSULTANT OPTIONS GRANTED ...... - - (53) - - - (53)
NET INCOME (LOSS) ............... - - - - (6,785) - (6,785)
--------- ------ ---------- ---------- ----------- -------- -------------
BALANCE, March 31, 2002 .............. 40,958 $ 410 $ 163,681 $ (2,194) $ (105,927) $ (77) $ 55,893
========= ====== ========== ========== =========== ======== =============
The accompanying notes are an integral part of these unaudited consolidated
statements.
3
SYNTROLEUM CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Three Months
Ended March 31,
--------------------
2002 2001
-------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................... $ (6,785) $ (6,073)
Adjustments to reconcile net income (loss)
to net cash used in operations:
Minority interest in subsidiaries ................................... (13) 50
Depreciation and amortization ....................................... 211 247
Foreign currency exchange ........................................... 708 (2,129)
Non-cash compensation expense ....................................... (54) 47
Equity in affiliates ................................................ - (12)
Changes in real estate held for sale and under development .......... 1,272 334
Changes in assets and liabilities--
Accounts and notes receivable ............................... (79) (101)
Changes in trading securities ............................... - (97)
Other assets ................................................ 10 -
Accounts payable ............................................ 52 (2,597)
Accrued liabilities and other ............................... (36) (84)
-------- ---------
Net cash used in operating activities ..................... (4,714) (10,415)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .................................. (107) (3,345)
Increase in restricted cash ......................................... 43 (150)
Changes in investments and distributions from investment funds ...... 286 (98)
-------- ---------
Net cash (used in) provided by investing activities ....... 222 (3,593)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and option exercises ............. - 86
Proceeds from issuance of long-term debt ............................ 27 -
-------- ---------
Net cash provided by financing activities ................. 27 86
-------- ---------
FOREIGN EXCHANGE EFFECT ON CASH ........................................ (682) 1,687
-------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS .............................. (5,147) (12,235)
CASH AND CASH EQUIVALENTS, beginning of period ......................... 44,737 83,150
-------- ---------
CASH AND CASH EQUIVALENTS, end of period ............................... $ 39,590 $ 70,915
======== =========
The accompanying notes are an integral part of these unaudited consolidated
statements.
4
SYNTROLEUM CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
1. Basis of Reporting
The primary operations of Syntroleum Corporation (together with its
predecessors and subsidiaries, the "Company" or "Syntroleum") to date have
consisted of the research and development of a proprietary process (the
"Syntroleum Process") designed to convert natural gas into synthetic liquid
hydrocarbons (gas-to-liquids or "GTL") and activities related to
commercialization of the Syntroleum process. Synthetic liquid hydrocarbons
produced by the Syntroleum Process can be further processed into high quality
liquid fuels such as diesel, kerosene and naphtha, high quality specialty
products such as synthetic lubricants, synthetic drilling fluid, waxes, liquid
normal paraffins and certain chemical feedstocks.
The Company's current focus is to commercialize the Syntroleum Process
through licensing and constructing commercial plants. The Company has sold
license agreements to seven oil companies and the Commonwealth of Australia. In
addition to operating its own pilot plant in Tulsa, Oklahoma, the Company
participated in the operation of a demonstration plant located at ARCO's
refinery in Cherry Point, Washington.
The construction of Company owned GTL plants will require significant
capital expenditures. The Company has an effective registration statement for
the proposed offering from time to time of shares of our common stock, preferred
stock, debt securities, depositary shares or warrants for an aggregate initial
offering price of $250,000,000. The Company intends to obtain additional funding
through joint ventures, partnerships, license agreements and other strategic
alliances, as well as various other financing arrangements. The Company may also
seek debt or additional equity financing in the capital markets. In the event
such capital resources are not available to the Company, its GTL plant
development and other activities may be curtailed.
The Company is also developing a commercial-scale specialty products plant
to be located in Western Australia known as the Sweetwater plant and is
currently seeking financing for the project. Definitive agreements with equity
and debt participants in the Sweetwater project and the Company's other capital
projects are expected to include conditions to funding, many of which could be
outside of its control. If adequate funds are not available, the Company may be
required to delay or to eliminate expenditures for the Sweetwater project and
its other capital projects, as well as its research and development and other
activities or seek to enter into a business combination transaction with another
company. The Company could also be forced to license to third parties the rights
to commercialize additional products or technologies that it would otherwise
seek to develop itself. If the Company obtains additional funds by issuing
equity securities, dilution to stockholders may occur. In addition, preferred
stock could be issued in the future without stockholder approval and the terms
of the preferred stock could include dividend, liquidation, conversion, voting
and other rights that are more favorable than the rights of the holders of the
Company's common stock. The Company can give no assurance that any of the
transactions outlined above will be available to it when needed or on terms
acceptable or favorable to the Company.
The consolidated financial statements included in this report have been
prepared by Syntroleum without audit pursuant to the rules and regulation of the
Securities and Exchange Commission ("SEC"). Accordingly, these statements
reflect all adjustments (consisting of normal recurring entries), which are, in
the opinion of management, necessary for a fair statement of the financial
results for the interim periods presented. These financial statements should be
read together with the financial statements and the notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 2001
filed with the SEC under the Securities Exchange Act of 1934.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. Earnings Per Share
The Company applies the provisions of SFAS No. 128, "Earnings Per Share."
Basic and diluted earnings (losses) per common share were computed by dividing
net income (loss) by the weighted average number of shares of common stock
outstanding during the reporting periods. Options to purchase 3,898,533 shares
of common stock at an average exercise price of $10.30 were not included in the
computation of diluted earnings per share for the
5
three months ended March 31, 2002 because inclusion of these options would be
anti-dilutive. Options to purchase 3,318,644 shares of common stock at an
average exercise price of $10.75 were not included in the computation of diluted
earnings per share for the three months ended March 31, 2001 because inclusion
of these options would be anti-dilutive.
3. New Accounting Pronouncements
In July 2001, the FASB issued Statement No. 142, "Goodwill and Other
Intangible Assets," and Statement No. 143, "Accounting for Asset Retirement
Obligations." Under Statement No. 142, goodwill is no longer subject to
amortization over its estimated useful life. Rather, goodwill will be subject to
at least an annual assessment for impairment by applying a fair-value-based
test. Additionally, an acquired intangible asset should be separately recognized
if the benefit of the intangible asset is obtained through contractual or other
legal rights, or if the intangible asset can be sold, transferred, licensed,
rented, or exchanged, regardless of the acquirer's intent to do so. Under
Statement No. 142 there will be more recognized intangible assets, such as
unpatented technology and database content, being separated from goodwill. Those
assets will be amortized over their useful lives, other than assets that have an
indefinite life. Statement No. 142 is required to be applied starting with
fiscal years beginning after December 15, 2001. The Company's adoption of
Statement No. 142 on January 1, 2002 did not have a material impact on the
Company's financial condition and results of operations as it does not have any
goodwill.
Statement No. 143 requires entities to record the fair value of a liability
for an asset retirement obligation in the period in which it is incurred and a
corresponding increase in the carrying amount of the related long-lived asset.
Statement No. 143 is effective for fiscal years beginning after June 15, 2002.
The Company is currently assessing the impact of Statement No. 143 on its
financial condition and results of operations.
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." Statement No. 144 supercedes the
previously issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of" and addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. Statement No. 144 is effective for fiscal years beginning after December
15, 2001. The Company's adoption of Statement No. 144 on January 1, 2002 did not
have any impact on its financial condition and results of operations.
4. Footnotes Incorporated by Reference
Certain footnotes are applicable to the financial statements, but would be
substantially unchanged from the footnotes presented in the audited financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 as filed with the SEC, and are incorporated herein by
reference as follows:
Note Description
------ ---------------------------------------------
1. Summary of Significant Accounting Policies
2. Investments
3. Restricted Cash
4. Property and Equipment
5. Notes Receivable Related to Common Stock
6. Notes Receivable
7. Long-Term Debt
8. Minority Interests
9. Licensing Activity
10. Public Offering
11. Income Taxes
12. Commitments
13. Fair Value of Financial Instruments
14. Cash Equivalents and Short-Term Investments
6
Note Description
------ -------------------------------------------
15. Stock Options
16. Significant Customers
17. Stockholder Rights Plan
7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
You should read the following information together with the information
presented elsewhere in this Quarterly Report on Form 10-Q and with the
information presented in our Annual Report on Form 10-K for the year ended
December 31, 2001 (including our audited financial statements and the
accompanying notes).
Overview
We are incurring costs with respect to developing and commercializing the
Syntroleum Process and do not anticipate recognizing any significant revenues
from licensing our technology or from production from either a fuel or specialty
plant in the near future. As a result, we expect to continue to operate at a
loss unless and until sufficient revenues are recognized from licensing
activities or gas-to-liquids plants.
Our Business
We are a leading developer and licensor of a proprietary process for
converting natural gas to synthetic liquid hydrocarbons, a process generally
known as gas-to-liquids, or GTL, technology. We sell licenses to use our GTL
technology, known as the Syntroleum Process, for the production of fuels, and we
plan to develop and own GTL plants based on the Syntroleum Process that produce
refined fuels and specialty products. We anticipate that the Syntroleum Process
will be an attractive solution in many cases for companies with natural gas
reserves that are not economic to produce using traditional technology.
The Syntroleum Process produces synthetic liquid hydrocarbons, also known
as synthetic crude oil, that are substantially free of contaminants normally
found in conventional products made from crude oil. These synthetic liquid
hydrocarbons can be further processed into higher margin products through
conventional refining processes. These products include:
o premium, ultra-clean liquid fuels, such as synthetic diesel, kerosene,
gasoline, naphtha, and fuel for fuel cells; and
o specialty products, such as synthetic lubricants, process oils, high
melting point waxes, liquid normal paraffins, drilling fluids, and
chemical feedstocks.
We believe that the costs to produce ultra-clean fuels and specialty
products from natural gas using the Syntroleum Process can be competitive with
the costs to produce comparable quality products from conventional processes. We
also believe that these ultra-clean fuels meet or exceed new and proposed
environmental requirements.
The key advantages of our technology over traditional GTL technologies are
the use of air in the conversion process (in contrast to the requirement for
pure oxygen in other technologies) and the use of our proprietary catalysts,
which enhance the conversion efficiency of the catalytic reaction. We believe
these advantages will reduce capital and operating costs of GTL plants based on
the Syntroleum Process, while also permitting smaller unit sizes, including
mobile plants that could be placed on skids, barges and ocean-going vessels.
Based on our demonstrated research, we believe that the Syntroleum Process can
be economically applied in GTL plants with throughput levels from less than
10,000 to over 100,000 barrels per day. The advantages of our technology
combined with the large worldwide resource base of stranded natural gas provide
what we believe is a significant market opportunity for the use of the
Syntroleum Process by our company and our licensees to develop cost-effective
GTL plants.
We have successfully demonstrated many elements and variations of the
Syntroleum Process in pilot plant operations and laboratory tests, including our
joint participation in a 70 barrel per day GTL demonstration plant with one of
our licensees, ARCO (a subsidiary of BP), at ARCO's Cherry Point refinery in
Washington. We are currently developing a project with the United States
Department of Energy and Marathon Oil Company to move the Cherry Point
demonstration plant to Tulsa, Oklahoma where it will be the basis of a new 70
barrel per day stand alone synthetic fuels production demonstration facility.
8
While we have not yet built a commercial-scale GTL plant based on the
Syntroleum Process, we are currently developing a nominal 11,500 barrel per day
specialty product GTL plant based on the Syntroleum Process known as the
Sweetwater plant to be constructed in Western Australia. Additionally, we have
been approached regarding the possibility of moving the plant to other sites
where stranded gas is located. In connection with these proposals, we have
discussed the availability of financial sponsorship for the project. We are
currently evaluating these alternatives.
Operating Revenues
During the periods discussed below, our revenues were primarily generated
from the following:
o sales of real estate holdings owned by SLH Corporation prior to the
merger of Syntroleum Corporation and SLH Corporation,
o reimbursement for research and development activities associated with
the Syntroleum Process, and
o other sources, including rent generated by real estate holdings owned
by SLH prior to the merger.
o Because substantially all of our real estate portfolio has been sold,
we expect to receive lower levels of revenues from these sources in
future periods.
In the future, we expect to receive revenue relating to the Syntroleum
Process from four principal sources:
o licensing,
o catalyst sales,
o sales of products from or fees for the use of GTL plants in which we
own an equity interest, and
o revenues from research and development activities carried out with
industry partners.
Until the commencement of commercial operation of GTL plants in which we own an
interest, we expect that cash flow relating to the Syntroleum Process will
consist primarily of license fee deposits, site license fees and revenues
associated with joint development activities. We will not receive any cash flow
from GTL plants in which we own an equity interest until the first of these
plants is constructed. Our future operating revenues will depend on the
successful commercial construction and operation of GTL plants based on the
Syntroleum Process, the success of competing GTL technologies and other
competing uses for natural gas. We expect our results of operations and cash
flows to be affected by changing crude oil, fuel and specialty product prices.
If the price of these products increases (decreases), there could be a
corresponding increase (decrease) in operating revenues.
Operating Expenses
Our operating expenses historically have consisted primarily of pilot
plant, engineering, including third party engineering, and research and
development expenses and general and administrative expenses, which include
costs associated with general corporate overhead, compensation expense, legal
and accounting expense and expenses associated with other related administrative
functions.
Our policy is to expense pilot plant, engineering and research and
development costs as incurred. All of these research and development expenses
are associated with our development of the Syntroleum Process. Research and
development expenses include costs to operate both our laboratory and technology
center, salaries and wages associated with these operations, research and
development services performed by universities, consultants and third parties
and additional supplies and equipment needs for these facilities. We have also
recognized depreciation and amortization expense primarily related to office and
computer equipment and patents. Our operating expenses have also included
9
costs of real estate sold and real estate operating expense. Our general and
administrative expenses have increased substantially as we have expanded our
research and development, engineering and commercial activities, including
staffing levels. We also expect to continue to incur pilot plant, engineering
and research and development expenses as we continue to develop, improve, and
commercialize our GTL technology.
As a result of the completion of a substantial portion of the engineering
and process/product testing associated with our Sweetwater project and in an
effort to conserve working capital, we plan to decrease our operating expenses
compared to prior years while continuing to fund our most critical research and
development and project development activities.
If we are successful in developing a GTL plant in which we own an interest,
we expect to incur significant expenses in connection with the start-up of the
plant. For example, we expect that our expenses will increase at the time of
commencement of construction of the Sweetwater plant. Upon the commencement of
commercial operation of the Sweetwater plant, we will incur cost of sales
expenses relating primarily to the cost of natural gas feedstock for this plant
and operating expenses relating to this plant, including labor, supplies and
maintenance. Due to the substantial capital expenditures associated with the
construction of GTL plants, we expect to incur significant depreciation and
amortization expense in the future. Our policy is to expense costs associated
with the development of GTL plants until financial close unless they have future
economic value for future projects. Engineering costs are capitalized once an
engineering contract leading to a firm lump sum price has been signed.
Results Of Operations
Overview
Our primary research and development projects during the first three months
of 2002 related to the GTL technology for use in licensee GTL plants, including
confirmation of catalyst performance and reactor designs. Of the $4.2 million
expenses for pilot plant, engineering and research and development during the
first three months of 2002, approximately $1.2 million directly related to the
expansion of our existing pilot plant facilities in Tulsa, Oklahoma. We also
spent $1 million related to the DOE project and engineering related to licensee
support. In addition, an aggregate of $2 million of expenses incurred during the
first three months of 2002 related to salaries and wages, outside contract
services, lab equipment and improvements and pilot plant and laboratory
operating expenses, which primarily supported work on technology we plan to use
in the Sweetwater plant and other licensee sites.
During January of 2002, we announced that Congress had appropriated $3.5
million for a proposed Flexible JP-8 (single battlefield fuel) Pilot Plant
program under the Department of Defense Appropriation Bill, 2002. We expect to
negotiate a contract with the DOD to participate in the program, which will
provide for the design of a marine-based fuel-production plant, as well as
testing of synthetically-made (gas-to-liquids) JP-8 fuel in military diesel and
turbine engine applications. We cannot assure you that we will be successful in
concluding a contract with DOD to participate in this program.
We continued to work on our DOE project during the first three months of
2002. This project was announced during 2001 and during the third quarter of
2001 the U.S. Department of Energy (DOE) concluded an agreement with Integrated
Concepts & Research Corporation (ICRC) to provide funding to a team of companies
for the GTL Ultra-Clean Fuels Production and Demonstration Project for which
preliminary approval was announced by us in October 2000. We are the prime
subcontractor for this project. Under the terms of the agreement, the DOE will
fund $16 million of the $36 million project, and the other project participants
will provide the remaining $20 million. We are currently in discussions with
Marathon Oil Company regarding its participation in this project. Under the
program, Syntroleum's Cherry Point GTL facility, which has been disassembled and
relocated from ARCO's Cherry Point Refinery in Washington State to a site near
Tulsa, Oklahoma, where it is expected to become the basis for construction of a
new GTL facility expected to produce up to approximately 70 barrels per day of
Syntroleum ultra-clean diesel fuel and synthetic naphtha. Construction for the
project is currently underway, with fuel deliveries expected to commence in
early third quarter 2003. The fuels from this facility are expected to be tested
by other project participants in advanced power train and emission control
technologies and are also expected to be tested in bus fleets by the Washington
Metropolitan Area Transit Authority and the U.S. National Park Service
10
at Denali National Park in Alaska. Completion of the project is subject to
continued congressional appropriation of project funds as well as our ability to
attract the remaining necessary funds not provided by the DOE. In addition,
construction of this project will be subject to the risks of delay inherent in
any large construction project.
During the first quarter of 2002 we continued our work on our Talara
Project. This project was announced during the fourth quarter of 2001 with plans
to develop an integrated NGL/GTL (natural gas liquids/gas-to-liquids) project in
the Talara Basin of Northwest Peru. We expect to develop this project in three
phases. Phase I is expected to consist of construction of a nominal 2,000 barrel
per day NGL plant to upgrade and replace an existing plant. Phase II is expected
to involve the expansion of the NGL plant and the construction of a 5,000 barrel
per day GTL plant. Phase III is expected to involve expansion of the GTL
facility if additional natural gas reserves and production in the area are
developed. Completion of this project is subject to satisfaction of several
conditions including negotiation and execution of definitive gas purchase
agreements, engineering, procurement and construction agreements and other
agreements, site acquisition and financing. We cannot assure you that this
project will commence actual operations. We located an existing NGL plant, which
we plant to recondition and move to Talara once all of the contracts are in
place. We currently estimate that the plant should be ready to ship by the end
of September and could come on stream early next year. In connection with this
proposed project, we signed a license contract with the government of Peru under
which we have acquired exploration and production rights to the offshore
Peruvian oil and gas block designated as Z-1. Previous exploration activity in
the area has identified possible gas and condensate prospects, which we believe
have remained undeveloped up to now due to lack of an adequate market for the
gas. We anticipate that development of these prospects would facilitate the
third phase of the Talara project. We are also in discussions with several oil
and gas companies who have expressed interest in partnering with us in the
development of the Z-1 block. In addition, this project will be subject to the
risks of delay inherent in any large construction project.
Three Months Ended March 31, 2002 Compared to Three Months Ended March 31, 2001
Joint Development Revenue. Revenues from our joint research and development
and pilot plant operations were $639,000 in the first quarter of 2002, up
$383,000 from the first quarter of 2001 when they were $256,000. The increase
was primarily due to increased reimbursement for engineering relating to our
proposed project with the DOE.
Real Estate Sales Revenue. Revenues from the sale of real estate were
$444,000 in the first quarter of 2002, down $693,000 from the first quarter of
2001 when they were $1,137,000. The decrease resulted from fewer lot sales from
our Houston real estate partnership during 2002 as compared to 2001. Real estate
sales revenues should continue to decrease in the future as our remaining real
estate inventory is sold.
Cost of Real Estate. The cost of real estate sold was $332,000 in the first
quarter of 2002, down $316,000 from $648,000 in the first quarter of 2001. This
decrease resulted from the fewer lot sales from our Houston real estate
partnership during 2002 as compared to 2001.
Pilot Plant, Engineering and R&D Expense. Expenses from pilot plant,
engineering and research and development activities were $4,173,000 in the first
quarter of 2002, down $376,000 from the first quarter of 2001 when these
expenses were $4,549,000. The decrease was primarily the result of the continued
cost cutting efforts and streamlining of our R&D project objectives and lower
expenses associated with the design and engineering of the Sweetwater plant.
General and Administrative Expense. General and administrative expenses
were $3,725,000 in the first quarter of 2002, down $323,000 from the first
quarter of 2001 when these expenses were $4,048,000. The decrease is
attributable primarily to decreased spending on outside consultants and
decreased legal fees related to the Sweetwater Project.
Investment, Interest and Other Income. Investment, interest and other
income was $376,000 in the first quarter of 2002, down $1,419,000 from the first
quarter of 2001 when this income was $1,795,000. The decrease was primarily
attributable to decreased interest income from lower cash balances, lower
interest rates and a foreign
11
currency loss of $26,000 compared to a foreign currency gain of $442,000 in the
first quarter of 2001.
Provision for Income Taxes. Income tax expense was $14,000 in the first
quarter of 2002, down from $17,000 in the first quarter of 2001. Tax expense
during both periods represents the Australian withholding tax imposed on
interest we earned on funds held in Australian bank accounts and on the third
advance of loan proceeds under our loan agreement with the Commonwealth of
Australia. We expect to incur similar withholding tax expense with respect to
any future interest payments to us from these Australian bank accounts and any
future advances of loan proceeds. We incurred a loss in both the first quarter
of 2002 and the first quarter of 2001 and did not recognize an income tax
benefit for these losses.
Net Income (Loss). In the first quarter of 2002, we experienced a loss of
$6,785,000. The loss was $712,000 higher than in the first quarter of 2001 when
we experienced a loss of $6,073,000. The increase in the loss is a result of the
factors described above.
Liquidity and Capital Resources
General
As of March 31, 2002, we had $39,590,000 in cash and short-term investments
and $4,445,000 in current liabilities. Our long-term debt as of March 31, 2002
was $1,269,000. This debt matures in 2025 and reflects cash loan proceeds
received under our loan agreement with the Commonwealth of Australia. These
funds are held in escrow (AUD$20 million, which is approximately U.S.$10
million) and are discounted over the remaining term of the loan using an imputed
interest rate of nine percent. The difference between the cash received and the
discounted long-term debt amount of $1,125,000 has been recorded as a reduction
in the costs of the related Sweetwater project. The long-term debt amount
reflected for these proceeds will, excluding the effect of currency exchange
rate fluctuations, increase over time as the remaining term of the loan
declines. Pending satisfaction of conditions relating to the financing,
construction and completion of the Sweetwater plant, loan proceeds will be held
in escrow. Should the conditions not be fully satisfied by August 2004, any loan
proceeds remaining in escrow may be returned to the Commonwealth. As of March
31, 2002, we had $1,885,000 in accounts and notes receivable outstanding. We
also had $17,147,000 in restricted investments as of March 31, 2002 that were
held in escrow representing proceeds received from the Commonwealth of Australia
under our loan and license agreements with the Commonwealth and a $300,000
letter of credit guarantee for our Talara project.
Cash flows used in operations were $4,714,000 in the first three months of
2002 compared to cash outflows of $10,415,000 during the first three months of
2001. This decrease in cash flows used in operations was primarily the result of
decreased disbursements relating to outside consultants associated with the
development of our Sweetwater plant in Western Australia and the streamlining of
our research and development activities during 2002, and decreased foreign
currency exchange rate adjustments.
Cash flows provided by investment activities were $222,000 in the first
three months of 2002 compared to cash outflows of $3,593,000 in the first three
months of 2001. The decrease resulted primarily from decreased capitalized costs
for our Sweetwater plant during 2002.
Cash flows provided by financing activities were $27,000 in the first three
months of 2002 compared to $86,000 in the first three months of 2001. The
difference is primarily due to the exercise of stock options during the first
quarter of 2001.
We have expended and will continue to expend a substantial amount of funds
to continue the research and development of our GTL technologies, to market the
Syntroleum Process and to design and construct GTL plants. We intend to finance
the Sweetwater plant primarily through non-recourse debt financing at the
project level, as well as equity financing, and plan to obtain additional funds
for our other GTL plant projects primarily through a combination of equity and
debt project financing. We also intend to obtain additional funds through
collaborative or other arrangements with strategic partners and others and debt
(including debt which is convertible into our common or preferred stock) and
equity financing. We have an effective registration statement for the proposed
offering from time to time of shares of our common stock, preferred stock, debt
securities, depositary shares or warrants for an
12
aggregate initial offering price of $250,000,000. We also intend to obtain
additional funding through joint ventures, partnerships, license agreements and
other strategic alliances, as well as various other financing arrangements.
Definitive agreements with equity and debt participants in the Sweetwater
project and our other capital projects are expected to include conditions to
funding, many of which could be outside of our control. If adequate funds are
not available, we may be required to delay or to eliminate expenditures for the
Sweetwater project and our other capital projects, as well as our research and
development and other activities or seek to enter into a business combination
transaction with another company. We could also be forced to license to third
parties the rights to commercialize additional products or technologies that we
would otherwise seek to develop ourselves. If we obtain additional funds by
issuing equity securities, dilution to stockholders may occur. In addition,
preferred stock could be issued in the future without stockholder approval and
the terms of our preferred stock could include dividend, liquidation,
conversion, voting and other rights that are more favorable than the rights of
the holders of our common stock. We can give no assurance that any of the
transactions outlined above will be available to us when needed or on terms
acceptable or favorable to us.
Assuming the commercial success of the plants based on the Syntroleum
Process, we expect that license fees, catalyst sales and sales of specialty
products from GTL plants in which we own an interest will be a source of funds
for operations. However, we may not receive any of these revenues, and these
revenues may not be sufficient for capital expenditures or operations and may
not be received within the expected time frame. If we are unable to generate
funds from operations, our need to obtain funds through financing activities
will be increased.
We have sought and intend to continue to temporarily invest our assets,
pending their use, so as to avoid becoming subject to the registration
requirements of the Investment Company Act of 1940. These investments are likely
to result in lower yields on the funds invested than might be available in the
securities market generally. If we were required to register as an investment
company under the Investment Company Act, we would become subject to substantial
and costly regulation that would have a material adversely affect on us.
Sweetwater Plant
We are developing a nominal 11,500 barrel per day specialty product GTL
plant in Australia that we call the Sweetwater plant. We currently anticipate
that this plant will produce synthetic lube oil, normal paraffins, process oils
and light paraffins. The plant will use a fixed tube reactor design which
produces a high yield of the desired products with high wax content. The plant
design has lower scale-up risks than other reactor designs and will include
additional refining equipment necessary to produce the targeted specialty
products. We plan to construct this plant through a joint venture with other
parties who we expect will furnish a portion of the needed equity financing.
After receiving a financial commitment from the Commonwealth of Australia, we
selected a site for the plant about four kilometers from the North West Shelf
liquid natural gas facility on the Burrup Peninsula of Western Australia. We
have applied for and received most of the necessary permits for the plant.
We currently expect the capital costs of the Sweetwater plant to be funded
primarily by non-recourse senior and subordinated debt at the project level, as
well as equity financing from third parties, together with our own equity
contribution. We are seeking third party equity participation in the project and
we are attempting to obtain both debt and equity financing to fund final design,
construction, and start-up of the plant. We are currently in discussions with
several potential equity participants in the project. However, we cannot assure
you that we will obtain the necessary financing for this project. Additionally,
we have been approached regarding the possibility of moving the plant to other
sites where stranded gas is located. In connection with these proposals, we have
discussed the availability of financial sponsorship. We are currently evaluating
these alternatives.
The State of Western Australia has announced its intention to assist the
Sweetwater project with an AUD $30 million (approximately U.S. $15 million)
common use infrastructure package, including construction of a desalination
plant to which the Sweetwater plant will supply steam and from which the plant
will receive cooling water. In addition, we have entered into a gas purchase
agreement with the North West Shelf Gas Partners, whose members include
affiliates of BHP Petroleum, BP, Chevron, Mitsui, Mitsubishi, Royal Dutch Shell
and Woodside Energy Ltd. Subject to certain conditions, North West Shelf Gas
Partners have agreed to supply the Sweetwater plant with the natural gas
required to operate the plant at full capacity for 20 years. The agreement
provides fixed purchase prices for the gas, subject to fixed periodic escalation
provisions.
13
In August 2000, we entered into a license agreement with the Commonwealth
of Australia to license the Syntroleum Process as part of a program designed to
unlock the value of Australia's energy reserves and improve the quality of the
environment. Under the license agreement, the Commonwealth made an AUD $30
million (approximately U.S. $15 million) deposit, of which AUD $15 million
(approximately U.S. $7 million) is currently held in escrow pending satisfaction
of conditions relating to the construction of the Sweetwater plant. AUD $20
million (approximately U.S. $10 million) of the license fee may be credited
against future site license fees otherwise payable under the Commonwealth
license. At the same time, we entered into a loan agreement with the
Commonwealth under which the Commonwealth will make a non-amortizing,
interest-free loan to us in the amount of AUD $40 million (approximately U.S.
$22 million) with a 25-year maturity to support the further development and
commercialization of GTL technologies in Australia and under which we have
agreed to conduct a feasibility study on constructing a large-scale GTL fuels
plant in Australia. Loan proceeds are to be made available to us in three
successive advances. Pending satisfaction of conditions relating to the
financing, construction and completion of the Sweetwater plant, loan proceeds
will be held in escrow. Should the conditions not be fully satisfied by August
2004, any license and loan proceeds remaining in escrow will be returned to the
Commonwealth. To date, we have received two advances of loan proceeds under our
loan with the Commonwealth, which are currently being held in escrow.
In April 2001, we entered into an agreement with Clough-PGS Joint Venture
to provide operating and maintenance services for the Sweetwater plant during
the construction and provisional acceptance phases and for the following 10
operating years. Clough-PGS is a joint venture between Clough Engineering Ltd.,
an Australian company that is part of Clough Ltd., and PGS Production Pty. Ltd.,
an Australian subsidiary of Petroleum Geo-Services ASA. The agreement provides
for total payments to Clough-PGS of approximately AUD$350 million (approximately
U.S. $173 million) over the ten year operations phase of the agreement.
In August of 2001, we entered into an engineering, procurement and
construction (EPC) contract with Tessag Industrie Anlagen GmbH (as a result of a
recent name change, now known as RWE Industrie-Losugen GmbH), a subsidiary of
RWE AG. The EPC contract covers engineering, procurement, construction,
pre-commissioning, commissioning and testing of the Sweetwater plant, plus
personnel training for a lump sum price of $599.5 million. The plant's operating
capacity has increased from the original 10,000 to 11,500 nominal
barrels-per-day as a result of pilot plant tests demonstrating higher conversion
rates than those included in the original design as well as standard engineering
design margins which had not been considered previously. The final price may
vary up or down with exchange rates until financial close on the project, when
the price will be fixed in U.S. dollars. Tessag's final price does not include
interest during construction and other owner's costs, which include proprietary
catalysts to be supplied by Syntroleum. Our current estimate of these costs,
excluding interest during construction, is approximately $90 million. Financing
for and construction of the plant will be subject to the risks inherent in any
large construction project.
We have also entered into contracts for long-term wharf and gas
transportation services, a lease for the plant site and water supply.
Real Estate and Other Asset Sales
As of March 31, 2002, our real estate inventory consisted of land in
Houston, Texas comprised of 255 acres of undeveloped land and 53 lots known as
the "Houston real estate partnership." This real estate inventory was owned by
SLH Corporation prior to the merger of Syntroleum Corporation and SLH
Corporation and reflects the remaining assets of a real estate development
business that was conducted by SLH's former parent corporation. Our total real
estate inventory had an aggregate carrying value at March 31, 2002 of
approximately $2 million. The Houston real estate partnership is being developed
for commercial and residential use and ultimate sale. During the first three
months of 2002 we received $1.4 million from municipal utility district bond
payments associated with cost recovery of site utilities associated with our
Houston real estate partnership.
Our other assets at March 31, 2002 included an investment in a privately
owned developer of proprietary bone substitute technology, which had a carrying
value of approximately $506,000; an investment in a privately held venture
capital limited partnership, which had a carrying value of $190,000; and an
equity investment in a recently
14
renovated hotel in Tulsa, Oklahoma.
We plan to liquidate our real estate assets and other investments in an
orderly manner to maximize their value. The timing of these sales will create
variances in period-to-period earnings recognition. We do not intend to acquire
additional real estate holdings for development or sale outside our core
business interests, and revenue from real estate sales should decrease as the
current real estate inventory is liquidated.
Currency Risk
We expect to conduct a portion of our business in currencies other than the
United States dollar. We may attempt to minimize our currency exchange risk by
seeking international contracts payable in local currency or we may choose to
convert our currency position into United States dollars. Our engineering,
procurement and construction contract for the Sweetwater plant is denominated
primarily in Australian dollars and Euros but, upon the closing of the debt and
equity financing for the plant, the contract will be converted to and
denominated in United States dollars at then prevailing exchange rates. Until
then, we expect the contract to subject us to risks associated with exchange
rate fluctuations. In addition, we expect to seek contractual purchase price
adjustments based on an exchange rate formula related to United States dollars.
In the future, we may also have significant investments in countries other than
the United States. The functional currency of these foreign operations may be
the local currency and, accordingly, financial statement assets and liabilities
may be translated at prevailing exchange rates and may result in gains or losses
in current income. Currently, all of our subsidiaries use the United States
dollar for their functional currency. Monetary assets and liabilities are
translated into United States dollars at the rate of exchange in effect at the
balance sheet date. Transaction gains and losses that arise from exchange rate
fluctuations applicable to transactions denominated in a currency other than the
United States dollar are included in the results of operations as incurred.
New Accounting Pronouncements
In July 2001, the FASB Statement No. 142, "Goodwill and Other Intangible
Assets," and Statement No. 143, "Accounting for Asset Retirement Obligations."
Under Statement No. 142, goodwill is no longer subject to amortization over its
estimated useful life. Rather, goodwill will be subject to at least an annual
assessment for impairment by applying a fair-value-based test. Additionally, an
acquired intangible asset should be separately recognized if the benefit of the
intangible asset is obtained through contractual or other legal rights, or if
the intangible asset can be sold, transferred, licensed, rented, or exchanged,
regardless of the acquirer's intent to do so. Under Statement No. 142 there will
be more recognized intangible assets, such as unpatented technology and database
content, being separated from goodwill. Those assets will be amortized over
their useful lives, other than assets that have an indefinite life. Statement
No. 142 is required to be applied starting with fiscal years beginning after
December 15, 2001. The Company's adoption of Statement No. 142 on January 1,
2002 did not have a material impact on the Company's financial condition and
results of operations as it does not have any goodwill.
Statement No. 143 requires entities to record the fair value of a liability
for an asset retirement obligation in the period in which it is incurred and a
corresponding increase in the carrying amount of the related long-lived asset.
Statement No. 143 is effective for fiscal years beginning after June 15, 2002.
The Company is currently assessing the impact of Statement No. 143 on its
financial condition and results of operations.
In August 2001, the FASB issued Statement No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." Statement No. 144 supercedes the
previously issued Statement No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed Of" and addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. Statement No. 144 is effective for fiscal years beginning after December
15, 2001. The Company's adoption of Statement No. 144 on January 1, 2002 did not
have a material impact on its financial condition and results of operations.
15
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We had $39,590,000 in cash equivalents and short-term investments in the
form of money market instruments as of March 31, 2002. We also hold restricted
funds in the form of the funds currently held in our Australian escrow accounts.
These funds earn interest at an annual rate of approximately 3.5% percent and
are marked to market at the end of each reporting period. These accounts can
have fluctuating balances relating to the foreign currency exchange rate between
the United States and Australian Dollar.
Foreign exchange risk currently relates to our two escrow accounts held in
Australian dollars in the total amount of U.S. $16,847,000 at March 31, 2002,
and to long-term debt held in Australian dollars in the amount of U.S.$1,269,000
at March 31, 2002. This long-term debt matures in 2025 and has been discounted
using an imputed interest rate of nine percent. We also have deferred revenue
that is denominated in Australian dollars. This deferred revenue was
U.S.$16,008,000 at March 31, 2002. These restricted funds, long-term debt and
associated discount and deferred revenue are converted to United States dollars
for financial reporting purposes at the end of every reporting period. To the
extent that conversion results in gains or losses, such gains or losses will be
reflected in our statements of operations.
We have not purchased futures contracts nor have we purchased any
derivative financial instruments.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
Our Registration Statement on Form S-3 (Registration No. 333-32968), as
amended (the "Registration Statement"), in connection with the registration of
shares of our common stock with an aggregate offering price of up to
$120,000,000 was declared effective by the Securities and Exchange Commission on
April 25, 2000. As described in a prospectus supplement dated June 29, 2000, an
offering commenced on June 29, 2000 pursuant to the Registration Statement, and
resulted in (i) the sale by us of 5,250,000 shares of common stock on July 6,
2000 and (ii) the sale by us of 400,000 shares of common stock on July 19, 2000
pursuant to the exercise of the underwriters' over-allotment option.
The net proceeds to use from the offering were approximately $92 million.
To date, we have used approximately 52 million in such net proceeds for the
development of our Sweetwater project, purchase of catalyst material and
operating expenses. The remaining net proceeds from the offering are currently
invested in short-term cash and cash equivalents. None of such payments were
direct or indirect payments to our directors or officers or their associates, to
persons owning ten percent or more of any class of our equity securities or to
our affiliates.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
16
Item 6. Exhibits and Reports on Form 8-K.
Reports on Form 8-K. The Company did not file any reports on Form 8-K
during the quarter ending March 31, 2002.
Exhibits. Not applicable
17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNTROLEUM CORPORATION, a Delaware
corporation (Registrant)
Date: May 13, 2002 By: /s/ Mark A. Agee
-------------------------------------------------
Mark A. Agee
President and Chief Operating Officer
Date: May 13, 2002 By: /s/ Randall M. Thompson
-------------------------------------------------
Randall M. Thompson
Chief Financial Officer (Principal
Financial Officer)
18