10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011.

OR

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 NO. 001-34490

SYNTROLEUM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 73-1565725
(I.R.S. Employer
Identification No.)

5416 S. Yale Suite 400
Tulsa, Oklahoma 74135
(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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Smaller reporting company o Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

At August 1, 2011, the number of outstanding shares of the issuer’s common stock was 97,903,160.

SYNTROLEUM CORPORATION
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010		1
Unaudited Consolidated Statements of Operations for the three-months and six-months ended June 30, 2011 and 2010		2
Unaudited Consolidated Statement of Stockholders’ Equity for the six-months ended June 30, 2011		3
Unaudited Consolidated Statements of Cash Flows for the six-months ended June 30, 2011 and 2010		4
Notes to Unaudited Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3. Quantitative and Qualitative Disclosures About Market Risk		13
Item 4. Controls and Procedures		13
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		13
Item 1A. Risk Factors		13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		13
Item 3. Defaults Upon Senior Securities		13
Item 4. Reserved		13
Item 5. Other Information		13
Item 6. Exhibits		13
SIGNATURES		14
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as well as historical facts. These forward-looking statements include statements relating to the Fischer-Tropsch (“FT”) process, Syntroleum^® Process, Synfining^® Process, and related technologies including, gas-to-liquids (“GTL”), coal-to-liquids (“CTL”) and biomass-to-liquids (“BTL”), our renewable fuels Bio-Synfining™ Technology, plants based on the Syntroleum^® Process and/or Bio-Synfining™, anticipated costs to design, construct and operate these plants, the timing of commencement and completion of the design and construction of these plants, expected production of fuel, obtaining required financing for these plants and our other activities, the economic construction and operation of Fischer-Tropsch (“FT”) and/or Bio-Synfining™ plants, the value and markets for products, testing, certification, characteristics and use of plant products, the continued development of the Syntroleum^® Process and Bio-Synfining™ Technology and the anticipated capital expenditures, expense reductions, cash outflows, expenses, use of proceeds from our equity offerings, anticipated revenues, availability of catalyst, our support of and relationship with our licensees, and any other forward-looking statements including future growth, cash needs, capital availability, 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. Syntroleum undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. Important factors that could cause actual results to differ from these forward-looking statements are described under “Item 1A. Risk Factors” and elsewhere in our 2010 Annual Report on Form 10-K.

As used in this Quarterly Report on Form 10-Q, the terms “Syntroleum,” “we,” “our” or “us” mean Syntroleum Corporation, a Delaware corporation, and its predecessors and subsidiaries, unless the context indicates otherwise.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

SYNTROLEUM CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

	June 30,			December 31,
	2011			2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,253		$	12,513
Restricted cash		1,233			484
Accounts receivable		59			556
Accounts receivable from Dynamic Fuels, LLC		1,842			729
Other current assets		112			361
Total current assets		9,499			14,643
PROPERTY AND EQUIPMENT — at cost, net		89			97
INVESTMENT IN AND LOANS TO DYNAMIC FUELS, LLC		40,435			43,523
OTHER ASSETS, net		1,132			1,133
	$	51,155		$	59,396
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	26		$	1,090
Accrued employee costs		436			119
Deposits		1,233			484
Total current liabilities		1,695			1,693
NONCURRENT LIABILITIES OF DISCONTINUED OPERATIONS		603			603
DEFERRED REVENUE		24,948			24,300
COMMITMENTS AND CONTINGENCIES
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, 81,978 and 81,683 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		820			817
Additional paid-in capital		374,888			374,397
Accumulated deficit		(351,799	)		(342,414	)
Total stockholders’ equity		23,909			32,800
	$	51,155		$	59,396

The accompanying notes are an integral part of these unaudited consolidated statements.

1

SYNTROLEUM CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	For the Three months						For the Six Months
	Ended June 30,						Ended June 30,
	2011			2010			2011			2010
REVENUES:
Technology	$	150		$	400		$	300		$	3,300
Technical services		383			512			884			1,413
Technical services from Dynamic Fuels, LLC		316			378			514			815
Royalties from Dynamic Fuels, LLC plant production		339			—			339			—
Total revenues		1,188			1,290			2,037			5,528
COSTS AND EXPENSES:
Engineering		588			528			1,144			1,124
Depreciation and amortization		50			54			99			116
General, administrative and other (including non-cash equity compensation of ($8) and $205 for the three months ended June 30, 2011 and 2010, respectively, and $459 and $1,026 for the six months ended June 30, 2011 and 2010, respectively.)		764			1,774			2,595			3,827
OPERATING INCOME (LOSS)		(214	)		(1,066	)		(1,801	)		461
INVESTMENT AND INTEREST INCOME		2			8			6			14
LOSS IN EQUITY OF DYNAMIC FUELS, LLC		(4,829	)		(1,119	)		(6,938	)		(1,865	)
OTHER EXPENSE, net		2			28			4			62
FOREIGN CURRENCY EXCHANGE		(430	)		942			(648	)		546
LOSS FROM CONTINUING OPERATIONS		(5,469	)		(1,207	)		(9,377	)		(782	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		(9	)		182			(8	)		160
NET LOSS	$	(5,478	)	$	(1,025	)	$	(9,385	)	$	(622	)
BASIC NET INCOME (LOSS) PER SHARE:
Loss from continuing operations	$	(0.07	)	$	(0.01	)	$	(0.11	)	$	(0.01	)
Income (loss) from discontinued operations		0.00			0.00		$	0.00		$	0.00
Net loss	$	(0.07	)	$	(0.01	)	$	(0.11	)	$	(0.01	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		81,965			76,336			81,954			76,687
Diluted		81,965			76,336			81,954			76,687

The accompanying notes are an integral part of these unaudited consolidated statements.

2

SYNTROLEUM CORPORATION AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands)

	Common Stock									Total
	Number				Additional		Accumulated			Stockholders’
	of Shares		Amount		Paid-In Capital		Deficit			Equity
Balance, December 31, 2010		81,683	$	817	$	374,397	$	(342,414	)	$	32,800
Stock options exercised		53		1		34		—			35
Vesting of awards granted		15		—		42		—			42
Stock-based bonuses and match to 401(k) Plan		227		2		415		—			417
Net loss		—		—		—		(9,385	)		(9,385	)
Balance, June 30, 2011		81,978	$	820	$	374,888	$	(351,799	)	$	23,909

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 Six Months Ended June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(9,385	)	$	(622	)
Income (loss) from discontinued operations		(8	)		160
Net loss from continuing operations		(9,377	)		(782	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		99			116
Abandoned patent write-off		—			466
Foreign currency exchange		648			(546	)
Non-cash compensation expense		459			1,026
Non-cash loss in equity method investee		6,938			1,865
Changes in assets and liabilities:
Accounts receivable		497			46
Accounts receivable from Dynamic Fuels, LLC		(1,113	)		2,793
Other assets		182			196
Accounts payable		(1,064	)		73
Accrued liabilities and other		317			58
Deferred revenue		—			(3,217	)
Net cash provided by (used in) continuing operations		(2,414	)		2,094
Net cash used in discontinued operations		(8	)		(257	)
Net cash provided by (used in) operating activities		(2,422	)		1,837
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(23	)		(3	)
Investment in and loans to Dynamic Fuels, LLC		(3,850	)		(5,000	)
Net cash used in investing activities		(3,873	)		(5,003	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, warrants and option exercises		35			83
Proceeds from common stock purchase agreement		—			2,749
Net cash provided by financing activities		35			2,832
NET CHANGE IN CASH AND CASH EQUIVALENTS		(6,260	)		(334	)
CASH AND CASH EQUIVALENTS, beginning of period		12,513			25,012
CASH AND CASH EQUIVALENTS, end of period	$	6,253		$	24,678

The accompanying notes are an integral part of these unaudited consolidated statements.

4

SYNTROLEUM CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

1. Basis of Reporting

The focus of Syntroleum Corporation and subsidiaries is the commercialization of our technologies to produce synthetic liquid hydrocarbons. Operations to date have consisted of activities related to the commercialization of a proprietary process (the “Syntroleum^® Process”) and previously consisted of research and development of the Syntroleum^® Process designed to convert carbonaceous material (biomass, coal, natural gas and petroleum coke) into synthetic liquid hydrocarbons. Synthetic hydrocarbons produced by the Syntroleum^® Process can be further processed using the Syntroleum Synfining^® Process into high quality liquid fuels, such as diesel, jet fuel, kerosene, naphtha, propane and other renewable chemical products.

Our Bio-Synfining™ Technology is a renewable fuels application of our Synfining^® Technology. This technology is applied commercially via our Dynamic Fuels, LLC joint venture with Tyson Foods, Inc. The technology processes renewable triglycerides and/or fatty acids to make renewable synthetic products.

The consolidated financial statements include the accounts of Syntroleum Corporation and our majority-owned subsidiaries. All significant inter-company accounts and transactions have been eliminated. Companies in which we own a 20 percent to 50 percent interest, but in which we do not have a controlling interest are accounted for by the equity method. We own 50 percent and have a non-controlling interest in Dynamic Fuels, LLC (“Dynamic Fuels”). The entity is accounted for under the equity method and is not required to be consolidated in our financial statements; however, our share of the Dynamic Fuels results of operations is reflected in the Consolidated Statements of Operations and the subsidiary’s summarized financial information is reported in Note 5, “Investment in and Loans to Dynamic Fuels, LLC”. The carrying value of our investment in Dynamic Fuels is reflected in “Investment in and Loans to Dynamic Fuels, LLC” in our Consolidated Balance Sheets.

The consolidated financial statements included in this report have been prepared by the Company without audit, pursuant to the rules and regulations 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, 2010 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 of America 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. Our financial position and results of operations are materially affected by Dynamic Fuels’ financial position and results of operations as of and for the six months ended March 31, 2011. During this period, the plant was commencing initial operations while its operating and financial controls were undergoing late-stage development. As a result the financial statements may be more significantly impacted by management’s estimates and assumptions than they will be when operations stabilize and the accounting processes mature. Actual results could differ from those estimates.

2. Operations and Liquidity

In the past we have sustained recurring losses and negative cash flows from operations. As of June 30, 2011, we had approximately $6.3 million of cash and cash equivalents and $1.9 million of accounts receivable available to fund operations and investing activities. We review cash flow forecasts and budgets periodically. Based on production levels and gross margins from the sale of finished goods and upon working capital and capital expenditures requirements for the Dynamic Fuels plant, we expect to receive partner distributions from Dynamic Fuels in the future.

3. Restricted Cash

Restricted cash consists of cash held in an escrow account for the prepayment of operations and invoices for an ongoing contractual project. The account has also been recorded as a liability in current deposits on the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010.

4. Reclassifications

Certain reclassifications have been made to the June 30, 2010 statements of cash flows to conform to the June 30, 2011 presentation. These reclassifications had no impact on net income.

5. Investment in and Loans to Dynamic Fuels, LLC

On June 22, 2007, we entered into definitive agreements with Tyson to form Dynamic Fuels, to construct and operate facilities in the United States using our Bio-Synfining™ Technology. Dynamic Fuels is organized and operated pursuant to the provisions of its Limited Liability Company Agreement between the Company and Tyson (the “LLC Agreement”).

5

The LLC Agreement provides for management and control of Dynamic Fuels to be exercised jointly by representatives of the Company and Tyson equally with no LLC member exercising control. This entity is accounted for under the equity method and is not required to be consolidated in our financial statements; however, our share of the Dynamic Fuels net income or loss is reflected in the Consolidated Statements of Operations. Dynamic Fuels has a different fiscal year than us. The Dynamic Fuels fiscal year ends on September 30 and we report our share of Dynamic Fuels results of operations on a three month lag. Our carrying value in Dynamic Fuels is reflected in “Investment in and Loans to Dynamic Fuels, LLC” in our Consolidated Balance Sheets. As of June 30, 2011, Syntroleum’s total estimate of maximum exposure to loss as a result of its relationships with this entity was approximately $42,277,000, which represents our equity investment in and loans to this entity in the amount of $40,435,000 and accounts receivable from this entity in the amount of $1,842,000, which fluctuates from time to time with certain operating activities.

Dynamic Fuels, LLC Quarter Ended March 31, 2011 Unaudited Financials (in thousands):

	March 31,
Balance Sheet	2011
Cash and Receivables	$	10,892
Inventory		10,506
Property, Plant and Equipment and Other Assets		150,682
Total Assets	$	172,080
Current Liabilities	$	8,079
Notes and Accounts Payable to Related Parties		17,620
Long-Term Liabilities		100,037
Total Liabilities		125,736
Total Members’ Equity		46,344
Total Liabilities and Members’ Equity	$	172,080

	For the Quarter			For the Six
	Ended March 31,			Months Ended
Statement of Operations	2011			March 31, 2011
Revenue	$	20,375		$	28,098
Operating Expenses		28,455			40,464
Loss from Operations		(8,080	)		(12,366	)
Other Income (Expense)		(1,025	)		(1,305	)
Net Loss	$	(9,105	)	$	(13,671	)

The losses generated by Dynamic Fuels during their six months ended March 31, 2011, relate to plant commissioning with limited production, 6.5 million gallons or approximately 20% of plant design, and additional expenses for materials and labor to address mechanical reliability issues with key pieces of equipment. 5.7 million gallons of renewable products were sold during their six months ended March 31, 2011.

Dynamic Fuels began commercial operations in November of 2010 and produced over 19.3 million gallons of products by the end of July, 2011. Specifically, plant production was 7.2 million gallons from the start of plant operations in October 2010 through April, 2011 and 3.1, 3.6 and 5.4 million gallons in May, June and July, respectively. The plant has run the hydro-processing reactors up to 120% of design feed rates, but stable production has been interrupted by mechanical reliability issues with certain key pieces of rotating equipment and third party supply of hydrogen, electricity and feedstock. The plant continues to demonstrate improved reliability with compressor run time in excess of 1600 hours which is a 217% improvement over its previous best run time and we have encountered no issues with the solvent recycle pump since we last replaced the seals in March, 2011. The plant’s design rates are 75 million gallons per year.

During the six months ended June 30, 2011 and June 30, 2010, we recognized revenue associated with our technical services agreement between us and Dynamic Fuels in the amount of $514,000 and $815,000 respectively. This revenue is reported in “Technical services from Dynamic Fuels, LLC” in the Consolidated Statement of Operations. We had a receivable from Dynamic Fuels of $1,842,000 and $729,000 as of June 30, 2011 and December 31, 2010, respectively. In April, we made additional payments of $260,000 for purchases made on behalf of Dynamic Fuels for prepayments to raw material suppliers. Dynamic Fuels paid Syntroleum once raw materials were received on site in July 2011. For the three months ended June 30, 2011, Syntroleum and Tyson each contributed an additional $3,850,000 in the form of working capital loans to the entity. We provided $650,000 in the form of a working capital loan in July 2011 and expect to provide additional working capital loans for the prepayment to raw material suppliers of fats, oils and greases in the third quarter. The total amount of working capital loans of $9,500,000 will be repaid to each member upon Dynamic Fuels generating sufficient working capital from fuel sales.

6

6. Earnings Per Share

	Three months ended				Six months ended
	June 30,				June 30,
	2011		2010		2011		2010
	(in thousands, except per share				(in thousands, except per share
	amounts)				amounts)
Basic weighted-average shares		81,965		76,336		81,954		76,687
Effect of dilutive securities:
Unvested restricted stock units		—		—		—		—
Stock options		—		—		—		—
Diluted weighted-average shares		81,965		76,336		81,954		76,687

The table below includes information related to stock options, warrants and restricted stock that were outstanding at June 30 of each respective year but have been excluded from the computation of weighted-average stock options due to the option exercise price exceeding the first quarter weighted-average market price of our common shares or their inclusion would have been anti-dilutive to our income (loss) per share.

	June 30,		June 30,
	2011		2010
Options, warrants and restricted stock excluded (in thousands)		18,062		19,283
Weighted-average exercise prices of options, warrants and restricted stock excluded	$	2.56	$	1.63
Six month weighted average market price	$	1.85	$	2.23

7. Stock-Based Compensation

Our share-based incentive plans permit us to grant restricted stock units, restricted stock, incentive or non-qualified stock options, and certain other instruments to employees, directors, consultants and advisors of the Company. Certain stock options and restricted stock units vest in accordance with the achievement of specific Company objectives. The exercise price of options granted under the plan must be at least equal to the fair market value of our common stock on the date of grant. All options granted vest at a rate determined by the Nominating and Compensation Committee of our Board of Directors and are exercisable for varying periods, not to exceed ten years. Shares issued under the plans upon option exercise or stock unit conversion are generally issued from authorized, but previously unissued shares.

As of June 30, 2011, approximately 4,625,032 shares of common stock were available for grant under our current plan. We are authorized to issue up to approximately 12,684,667 plan equivalent shares of common stock in relation to stock options or restricted shares outstanding or available for grant under the plans.

Stock Options

The number and weighted average exercise price of stock options outstanding are as follows:

	Shares			Weighted
	Under			Average Price
	Stock Options			Per Share
OUTSTANDING AT DECEMBER 31, 2010		8,283,586		$	2.94
Granted at market price		—		$	—
Exercised		(52,500	)	$	0.66
Expired or forfeited		(184,163	)	$	7.41
OUTSTANDING AT JUNE 30, 2011		8,046,923		$	1.84

7

The following table summarizes information about stock options outstanding at June 30, 2011:

Options Outstanding							Options Exercisable
									Weighted
			Weighted		Weighted Average				Average Exercise
Range of	Options		Average Exercise		Remaining		Options		Price
Exercise Price	Outstanding		Price		Contractual Life		Exercisable		Per Share
$0.66 – $0.66		4,865,881	$	0.66		7.05		1,300,181	$	0.66
$1.49 – $1.55		1,010,666		1.55		1.25		1,010,666		1.55
$1.62 – $2.89		1,140,195		2.33		3.21		1,140,195		2.33
$3.19 – $6.88		764,277		6.33		2.99		764,277		6.33
$7.10 – $9.67		240,904		9.28		4.13		240,904		9.28
$10.51 – $10.51		25,000		10.51		4.09		25,000		10.51
		8,046,923	$	1.84				4,481,223	$	2.77

A total of 3,565,700 stock options with a weighted average exercise price of $0.66 were outstanding at June 30, 2011 and had not vested. There were no stock options granted during the six months ended June 30, 2011 or 2010.

The total intrinsic value of options exercised (i.e., the difference between the market price on the exercise date and the price paid by the employee to exercise the options) during the six months ended June 30, 2011 and 2010 was $76,000 and $197,000, respectively. The total amount of cash received in 2011 and 2010 by the Company from the exercise of these options was $35,000 and $82,000, respectively. As of June 30, 2011, there was $3,941,000 intrinisic value of stock options that were fully vested or were expected to vest. The remaining weighted average contractual term for options exercisable is approximately 4.02 years. In addition, as of June 30, 2011 unrecognized compensation cost related to non-vested stock options was $75,000, which will be fully amortized using the straight-line basis over the remaining vesting period of the options, which will be fully amortized upon vesting of the options, which is expected to occur in 2011.

Non-cash compensation cost related to stock and stock options and restricted stock recognized during the six months ended June 30, 2011 and 2010 was $459,000 and $1,026,000, respectively.

Restricted Stock

We also grant common stock and restricted common stock units to employees. These awards are recorded at their fair values on the date of grant and compensation cost is recorded using graded vesting over the expected term. The weighted average grant date fair value of common stock and restricted stock units granted during the six months ended June 30, 2011 and 2010 was $2.21 and $2.59 per share (total grant date fair value of $436,000 and $379,000), respectively. As of June 30, 2011, the aggregrate intrinsic value of restricted stock units that are expected to vest was approximately $1,463,000. In addition, as of June 30, 2011, unrecognized compensation cost related to non-vested restricted stock units was $22,000, which is expected to be recognized in 2011. The total fair value of restricted stock units vested during the six months ended June 30, 2011 and 2010 was $499,000 and $420,000, respectively.

The following table reflects restricted stock unit activity for the six months ended June 30, 2011.

				Weighted-Average
				Grant Date Fair
	Shares / Units			Value
NONVESTED AT DECEMBER 31, 2010		1,055,212		$	0.41
Granted		196,977		$	2.21
Vested		(204,477	)	$	2.44
Forfeited		—		$	—
NONVESTED AT JUNE 30, 2011		1,047,712		$	0.35

8. Common Stock Purchase Agreement

On July 6, 2011 the Company closed the issuance and sale of 15,900,000 shares of its common stock and accompanying warrants to purchase a total of 7,950,000 shares of common stock. A combination of one share of common stock and a five year warrant to purchase 0.5 shares of common stock was sold in the offering for a combined public offering price of $1.58 per share, less underwriting discounts and commissions payable by the Company. The underwriter, JMP Securities LLC, purchased the common stock and warrants at a discounted price of $1.49 per combination, representing a 5.7% discount to the public offering price. Cash proceeds received by the Company, after the payment of underwriter commission and expenses and offering expenses, were approximately $23,575,000.

8

9. Commitments and Contingencies

We have entered into employment agreements, which provide severance benefits to several key employees. Commitments under these agreements totaled approximately $2,139,000 at June 30, 2011. Expense is not recognized until an employee is severed.

We entered into a Bio-Synfining Master License Agreement on June 22, 2007 with Dynamic Fuels, LLC. Under this license agreement, we at the request of the licensee must execute a Site License Agreement in favor of licensee for licensee’s use of our Bio-Synfining™ Technology. The form of the Site License Agreement is included in the agreement as Exhibit B. The form of the Site License Agreement includes process guarantees if the plant fails to pass a performance test as defined in the Site License Agreement. If the plant fails to meet the Process Guarantee during the Performance Test and such failure is due in whole or in part to the Process Design Package, then we and Dynamic Fuels shall mutually agree whether or not remedial measures are reasonably likely to cause the plant to satisfy the Process Guarantee. The actual cost of the remedial measures will be reimbursed to licensee through application of any future royalties owed to us, not to exceed $9,800,000. If the remedial measures are not effective, we shall pay to Dynamic Fuels an additional amount for liquidated damages in an amount not to exceed $9,800,000. As of the date of this filing the Site License Agreement has not been executed by Dynamic Fuels and we cannot be certain the document that will be executed will have this same language and amounts.

9

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, 2010 (including our audited financial statements and the accompanying notes).

Overview

Our focus is the commercialization of our technologies to produce synthetic liquid hydrocarbons. Operations to date have consisted of activities related to the commercialization of a proprietary process (the “Syntroleum^® Process”) and previously consisted of research and development of the Syntroleum^® Process designed to convert carbonaceous material (biomass, coal, natural gas and petroleum coke) into synthetic liquid hydrocarbons. Synthetic hydrocarbons produced by the Syntroleum^® Process can be further processed using the Syntroleum Synfining^® Process into high quality liquid fuels, such as diesel, jet fuel, kerosene, naphtha, propane and other renewable chemical products.

Our Bio-Synfining™ Technology is a renewable fuels application of our Synfining^® Technology. This technology is applied commercially via our Dynamic Fuels, LLC joint venture with Tyson Foods, Inc. The technology processes renewable feedstocks such as triglycerides and/or fatty acids to make renewable synthetic products.

Commercial and Licensee Projects

On June 22, 2007, we entered into definitive agreements with Tyson to form Dynamic Fuels, to construct and operate facilities in the United States using our Bio-Synfining™ Technology. Dynamic Fuels is organized and operated pursuant to the provisions of its Limited Liability Company Agreement between the Company and Tyson (the “LLC Agreement”).

The LLC Agreement provides for management and control of Dynamic Fuels to be exercised equally by representatives of the Company and Tyson equally. This entity is accounted for under the equity method and is not required to be consolidated in our financial statements; however, our share of the Dynamic Fuels net income or loss is reflected in the Consolidated Statements of Operations. Dynamic Fuels has a different fiscal year than us. The Dynamic Fuels fiscal year ends on September 30 and we report our share of Dynamic Fuels results of operations on a three month lag. Our carrying value in Dynamic Fuels is reflected in “Investment in and loans to Dynamic Fuels, LLC” in our Consolidated Balance Sheets. As of June 30, 2011, Syntroleum’s total estimate of maximum exposure to loss as a result of its relationships with this entity was approximately $42,277,000, which represents our equity investment in and loans to this entity in the amount of $40,435,000 and accounts receivable from this entity in the amount of $1,842,000, which fluctuates from time to time with certain operating activities. Each member has contributed $40.5 million in capital contributions and an additional $8.9 million in the form of a working capital loans to the entity. An additional $0.7 million working capital loan was made to the entity in July, 2011. The $9.5 million loans will be repaid to each member upon Dynamic Fuels generating sufficient working capital from fuel sales.

Dynamic Fuels began commercial operations in November of 2010 and produced over 19.3 million gallons of products by the end of July, 2011. Specifically, plant production was 7.2 million gallons from the start of plant operations in October 2010 through April, 2011 and 3.1, 3.6 and 5.4 million gallons in May, June and July, respectively. The plant has run the hydro-processing reactors up to 120% of design feed rates, but stable production has been interrupted by mechanical reliability issues with certain key pieces of rotating equipment and third party supply of hydrogen, electricity and feedstock. The plant continues to demonstrate improved reliability with compressor run time in excess of 1600 hours which is a 217% improvement over its previous best run time and we have encountered no issues with the solvent recycle pump since we last replaced the seals in March, 2011. The plant’s design rates are 75 million gallons per year.

The losses generated by Dynamic Fuels during their six months ended March 31, 2011, relate to plant commissioning with limited production, 6.5 million gallons or approximately 20% of plant design, and additional expenses for materials and labor to address mechanical reliability issues with key pieces of equipment. 5.7 million gallons of renewable products were sold during their six months ended March 31, 2011. Dynamic Fuels summarized financial information is reported in Note 5, “Investment in and Loans to Dynamic Fuels, LLC”.

Diesel is quality tested and meets ASTM D975 standards for diesel. The renewable products have low emissions and nearly no aromatics. Our jet fuel meets all petroleum based jet fuel specifications of ASTM D7566. The production of our fuel is eligible for the $1.00 tax credit per gallon of renewable diesel and $0.50 per gallon of renewable naphtha under the Energy Independence Act and Energy Policy Act of 2005. Our fuel also generates 1.7 Renewable Identification Number’s, (“RIN”) per gallon. As of June 30, 2011, RIN prices were $1.34 per gallon and therefore worth $2.28 per gallon with the 1.7 multiplier. Our fuel can be sold with the RIN premium included in our price of fuel.

On October 21, 2008, Dynamic Fuels issued tax exempt bonds through the Louisiana Public Facilities Authority in the amount of $100 million at an initial interest rate of 1.3% to fund construction of the plant. The Bonds required a letter of credit in the amount of $100 million as collateral for Dynamic Fuels’ obligations under the Bonds. Tyson agreed under the terms of the Warrant Agreement to provide credit support for the entire $100 million Bond issue. The interest rate for the Bonds is a daily floating interest rate and may change significantly from this amount. In the fourth quarter of 2008, Dynamic Fuels entered into an interest rate swap, which had the effect of locking in the interest rate at 2.19% for a period of 5 years with declining swap coverage. This debt funding is in addition to the equity contributions and loans provided by each member.

10

Results of Operations

Consolidated Unaudited Results for the Three Months and Six Months Ended,

	Three Months Ended				Six Months Ended
Revenues	June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
	(In Thousands)
Technology	$	150	$	400	$	300	$	3,300
Technical Services		383		512		884		1,413
Technical Services from Dynamic Fuels, LLC		316		378		514		815
Royalties from Dynamic Fuels, LLC Plant Production		339		—		339		—
	$	1,188	$	1,290	$	2,037	$	5,528

Technology Revenue. Technology Revenue was $300,000 and $3,300,000 for the six months ended June 30, 2011 and 2010, respectively and relates to the delivery of technology equipment related to our transfer of technology sale that occurred in 2010. Technology Agreements will be unique to individual customers. Revenue recognition will be determined on an individual contract basis. We are actively pursuing other agreements. Due to the complexity and due diligence requirements of these agreements, the business development requirements typically span current year timing.

Technical Services Revenue. Revenues from engineering services for technical services contracts related to certain Technology Revenue Agreements and continued work on the engineering design and project management of Dynamic Fuels were $1,398,000 and $2,228,000 for the six months ended June 30, 2011 and 2010, respectively. We expect to continue to earn revenues for engineering services to other customers on an individual contract basis in 2011. Revenue from Dynamic Fuels decreased in 2011 as the initial engineering design work is completed.

Royalty Revenue. Revenues from royalties of renewable fuel production at the Dynamic Fuels plant is recognized from production of renewable products from the date of commercial operations to June 30, 2011. We will continue to recognize royalties from actual plant production of renewable products quarterly.

	Three Months Ended					Six Months Ended
Operating Costs and Expenses	June 30, 2011			June 30, 2010		June 30, 2011		June 30, 2010
	(In Thousands)
Engineering	$	588		$	528	$	1,144	$	1,124
Depreciation and amortization		50			54		99		116
Non-cash equity compensation		(8	)		205		459		1,026
General, administrative and other		772			1,569		2,136		2,801
	$	1,402		$	2,356	$	3,838	$	5,067

Engineering. Expenses from engineering activities were $1,144,000 for the six months ended June 30, 2011 compared to $1,124,000 during the same period in 2010. There was no change to engineering personnel or engineering activities for 2011 compared to 2010.

Non-cash Equity Compensation. Non-cash equity compensation for the six months ended June 30, 2011 was $459,000 compared to $1,026,000 for the same period in 2010. The decreased expense primarily relates to the vesting schedule of performance based awards granted to all employees in 2008. The vesting of these awards is based on achieving certain milestones associated with the Bio-Synfining™ Technology project. A majority of the expense associated with these awards was recognized in 2009 and 2010. We expect to recognize the remaining amount of equity compensation for the milestone based awards in 2011.

General, Administrative and Other. General and administrative expenses for the six months ended June 30, 2011 were $2,136,000 compared to $2,801,000 during the same period in 2010. The decrease in general and administrative expenses primarily relates to decreased legal fees due to settlement of litigation.

Loss from Dynamic Investment. The losses generated by Dynamic Fuels during the six months ended March 31, 2011, relate to plant commissioning with limited production, 6.5 million gallons or approximately 20% of plant design, and additional expenses for materials and labor to address mechanical reliability issues with key pieces of equipment. Loss from our investment in Dynamic was $4,829,000 and $6,938,000 for the quarter and six months ended March 31, 2011, respectively. This compares to a loss of $1,119,000 and $1,865,000 for the same periods in 2010. Dynamic Fuels’ revenues were $28,098,000 with operating expenditures of $40,464,000 and other expense of $1,305,000 for the six months ended March 31, 2011. We expect to report income from this investment in 2012 upon continuous full rate commercial operations. We report our 50 percent share of Dynamic Fuels results of operations on a three month lag basis.

11

Liquidity and Capital Resources

General

As of June 30, 2011, we had approximately $6,253,000 in cash and cash equivalents. At June 30, 2011, we had $1,901,000 in accounts receivable outstanding relating to our Technical Services Revenue provided to Dynamic Fuels and other clients and other payments provided to Dynamic Fuels. We believe that all of the receivables currently outstanding will be collected and have not established a reserve for bad debts.

Our current liabilities totaled $1,695,000 as of June 30, 2011.

On July 6, 2011 the Company closed the issuance and sale of 15,900,000 shares of its common stock and accompanying warrants to purchase a total of 7,950,000 shares of common stock. A combination of one share of common stock and a five year warrant to purchase 0.5 shares of common stock was sold in the offering for a combined public offering price of $1.58 per share, less underwriting discounts and commissions payable by the Company. The underwriter, JMP Securities LLC, purchased the common stock and warrants at a discounted price of $1.49 per combination, representing a 5.7% discount to the public offering price. Cash proceeds received by the Company, after the payment of underwriter commission and expenses and offering expenses, were approximately $23,575,000.

Our business plan over the next several years includes potential investments in additional plants and we will need to raise capital to accomplish this plan. If we obtain additional funds by issuing equity, dilution to stockholders may occur. In addition, preferred stock could be issued 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. There can be no assurance as to the availability or terms upon which such financing might be available. If we are unable to generate funds from operations, our need to obtain funds through financing activities will be increased.

Cash Flows

Cash flows used in operations was $2,422,000 during the six months ended June 30, 2011, compared to cash flows provided by operations of $1,837,000 during the six months ended June 30, 2010. 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 $0 in 2011 and additional payments of $260,000 for purchases made on behalf of Dynamic Fuels for prepayments to raw material suppliers. Dynamic Fuels paid Syntroleum once raw materials were received on site in July 2011.

Cash flows used in investing activities were $3,873,000 during the six months ended June 30, 2011 compared to $5,003,000 during the six months ended June 30, 2010. We funded $3,850,000 into Dynamic Fuels as a working capital loan during the three months ended June, 2010. We provided $650,000 in working capital loans in July 2011 and expect to provide additional working capital loans for the prepayment to raw material suppliers of fats, oils and greases in the third quarter.

Cash flows provided by financing activities during the six months ended June 30, 2011 was $35,000 compared to $2,832,000 used during the six months ended June 30, 2010. The cash provided by financing activities during 2010 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. As reported above, we closed a substantial financing on July 6, 2011, generating net proceeds to the Company of approximately $23,575,000.

Contractual Obligations

Our operating leases include leases for corporate headquarters, copiers and software.

We have entered into employment agreements, which provide severance cash benefits to several key employees. Commitments under these agreements totaled approximately $2,139,000 at June 30, 2011. Expense is not recognized until an employee is severed.

We entered into a Bio-Synfining Master License Agreement on June 22, 2007 with Dynamic Fuels, LLC. Under this license agreement, we at the request of the licensee must execute a Site License Agreement in favor of licensee for licensee’s use of our Bio-Synfining™ Technology. The form of the Site License Agreement is included in the agreement as Exhibit B. The form of the Site License Agreement includes process guarantees if the plant fails to pass a performance test as defined in the Site License Agreement. If the plant fails to meet the Process Guarantee during the Performance Test and such failure is due in whole or in part to the Process Design Package, then we and Dynamic Fuels shall mutually agree whether or not remedial measures are reasonably likely to cause the plant to satisfy the Process Guarantee. The actual cost of the remedial measures will be reimbursed to licensee through application of any future royalties owed to us, not to exceed $9,800,000. If the remedial measures are not effective, we shall pay to Dynamic Fuels an additional amount for liquidated damages in an amount not to exceed $9,800,000. As of the date of this filing the Site License Agreement has not been executed by Dynamic Fuels and we cannot be certain the document that will be executed will have this same language and amounts.

We may need to fund future short-term working capital needs of Dynamic Fuels on an as needed basis.

New Accounting Pronouncements

No new accounting standards have been adopted since the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 was filed.

12

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes to the Quantitative and Qualitative Disclosures about Market Risk described in our annual report on Form 10-K for the year ended December 31, 2010.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2011 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control over Financial Reporting. There has been no change in our internal controls over financial reporting that occurred during the three months ended June 30, 2011 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors

There have been no material changes to the risk factors described in our annual report on Form 10-K for the year ended December 31, 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Securities.

None.

Use of Proceeds.

Not applicable.

Purchases of Equity Securities by the Issuer and Affiliated Purchases.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Reserved

Item 5. Other Information.

None.

Item 6. Exhibits.

31.1	Section 302 Certification of Edward G. Roth
31.2	Section 302 Certification of Karen L. Gallagher
32.1	Section 906 Certification of Edward G. Roth
32.2	Section 906 Certification of Karen L. Gallagher

13

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: August 8, 2011	By:	/s/ Edward G. Roth Edward G. Roth
		President and Chief Executive Officer (Principal Executive Officer)
Date: August 8, 2011	By:	/s/ Karen L. Gallagher Karen L. Gallagher
		Senior Vice President and Principal Financial Officer (Principal Financial Officer)

14

INDEX TO EXHIBITS

No.		Description of Exhibit
	31.1	Section 302 Certification of Edward G. Roth
	31.2	Section 302 Certification of Karen L. Gallagher
	32.1	Section 906 Certification of Edward G. Roth
	32.2	Section 906 Certification of Karen L. Gallagher

15

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Edward G. Roth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Syntroleum Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date August 8, 2011

/s/ Edward G. Roth Edward G. Roth

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Karen L. Gallagher, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Syntroleum Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2011

/s/ Karen L. Gallagher Karen L. Gallagher

Senior Vice President and

Principal Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) (the “Act”), I, Edward G. Roth, Chief Executive Officer of Syntroleum Corporation (the “Company”), hereby certify, to the best of my knowledge:

(1) The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 8, 2011

/s/ Edward G. Roth Edward G. Roth

President and Chief Executive Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Act and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

Exhibit 32.2

Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) (the “Act”), I, Karen L. Gallagher, Senior Vice President and Principal Financial Officer of Syntroleum Corporation (the “Company”), hereby certify, to the best of my knowledge:

(1) The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2011 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 8, 2011

/s/ Karen L. Gallagher Karen L. Gallagher

Senior Vice President and

Principal Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Act and is not being filed as part of the Report or as a separate disclosure document.

XML



Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data	Jun. 30, 2011	Dec. 31, 2010
Consolidated Balance Sheets
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000	5,000
Preferred stock, shares issued
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	150,000	150,000
Common stock, shares issued	81,978	81,683
Common stock, shares outstanding	81,978	81,683

XML



Consolidated Statements Of Operations (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
REVENUES:
Technology	$ 150	$ 400	$ 300	$ 3,300
Technical services	383	512	884	1,413
Technical services from Dynamic Fuels, LLC	316	378	514	815
Royalties from Dynamic Fuels, LLC plant production	339		339
Total revenues	1,188	1,290	2,037	5,528
COSTS AND EXPENSES:
Engineering	588	528	1,144	1,124
Depreciation and amortization	50	54	99	116
General, administrative and other (including non-cash equity compensation of ($8) and $205 for the three months ended June 30, 2011 and 2010, respectively, and $459 and $1,026 for the six months ended June 30, 2011 and 2010, respectively.)	764	1,774	2,595	3,827
OPERATING INCOME (LOSS)	(214)	(1,066)	(1,801)	461
INVESTMENT AND INTEREST INCOME	2	8	6	14
LOSS IN EQUITY OF DYNAMIC FUELS, LLC	(4,829)	(1,119)	(6,938)	(1,865)
OTHER EXPENSE, net	2	28	4	62
FOREIGN CURRENCY EXCHANGE	(430)	942	(648)	546
LOSS FROM CONTINUING OPERATIONS	(5,469)	(1,207)	(9,377)	(782)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS	(9)	182	(8)	160
NET LOSS	$ (5,478)	$ (1,025)	$ (9,385)	$ (622)
BASIC NET INCOME (LOSS) PER SHARE:
Loss from continuing operations	$ (0.07)	$ (0.01)	$ (0.11)	$ (0.01)
Income (loss) from discontinued operations	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Net loss	$ (0.07)	$ (0.01)	$ (0.11)	$ (0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic	81,965	76,336	81,954	76,687
Diluted	81,965	76,336	81,954	76,687

XML



Document And Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 01, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Entity Registrant Name	SYNTROLEUM CORP
Entity Central Index Key	0001029023
Entity Filer Category	Accelerated Filer
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		97,903,160

XML



Investment In And Loans To Dynamic Fuels, LLC

6 Months Ended

Jun. 30, 2011

Investment In And Loans To Dynamic Fuels, LLC

Investment In And Loans To Dynamic Fuels, LLC

5.     Investment in and Loans to Dynamic Fuels, LLC

On June 22, 2007, we entered into definitive agreements with Tyson to form Dynamic Fuels, to construct and operate facilities in the United States using our Bio-Synfining™ Technology. Dynamic Fuels is organized and operated pursuant to the provisions of its Limited Liability Company Agreement between the Company and Tyson (the "LLC Agreement"). 

The LLC Agreement provides for management and control of Dynamic Fuels to be exercised jointly by representatives of the Company and Tyson equally with no LLC member exercising control.  This entity is accounted for under the equity method and is not required to be consolidated in our financial statements; however, our share of the Dynamic Fuels net income or loss is reflected in the Consolidated Statements of Operations.  Dynamic Fuels has a different fiscal year than us. The Dynamic Fuels fiscal year ends on September 30 and we report our share of Dynamic Fuels results of operations on a three month lag.  Our carrying value in Dynamic Fuels is reflected in "Investment in and Loans to Dynamic Fuels, LLC" in our Consolidated Balance Sheets.  As of June 30, 2011, Syntroleum's total estimate of maximum exposure to loss as a result of its relationships with this entity was approximately $42,277,000, which represents our equity investment in and loans to this entity in the amount of $40,435,000 and accounts receivable from this entity in the amount of $1,842,000, which fluctuates from time to time with certain operating activities. 

Dynamic Fuels, LLC Quarter Ended March 31, 2011 Unaudited Financials (in thousands):

	March 31,
Balance Sheet	2011
Cash and Receivables	$      10,892
Inventory	10,506
Property, Plant and Equipment and Other Assets	150,682
Total Assets	$   172,080
Current Liabilities	$      8,079
Notes and Accounts Payable to Related Parties	17,620
Long-Term Liabilities	100,037
Total Liabilities	125,736
Total Members' Equity	46,344
Total Liabilities and Members' Equity	$  172,080

Statement of Operations	For the Quarter Ended March 31, 2011	For the Six Months Ended March 31, 2011
Revenue	$                 20,375	$          28,098
Operating Expenses	28,455	40,464
Loss from Operations	(8,080)	(12,366)
Other Income (Expense)	(1,025)	(1,305)
Net Loss	$              (9,105)	$       (13,671)

The losses generated by Dynamic Fuels during their six months ended March 31, 2011, relate to plant commissioning with limited production, 6.5 million gallons or approximately 20% of plant design, and additional expenses for materials and labor to address mechanical reliability issues with key pieces of equipment.  5.7 million gallons of renewable products were sold during their six months ended March 31, 2011. 

Dynamic Fuels began commercial operations in November of 2010 and produced over 19.3 million gallons of products by the end of July, 2011.  Specifically, plant production was 7.2 million gallons from the start of plant operations in October 2010 through April, 2011 and 3.1, 3.6 and 5.4 million gallons in May, June and July, respectively.  The plant has run the hydro-processing reactors up to 120% of design feed rates, but stable production has been interrupted by mechanical reliability issues with certain key pieces of rotating equipment and third party supply of  hydrogen, electricity and feedstock.  The plant continues to demonstrate improved reliability with compressor run time in excess of 1600 hours which is a 217% improvement over its previous best run time and we have encountered no issues with the solvent recycle pump since we last replaced the seals in March, 2011.   The plant's design rates are 75 million gallons per year.

During the six months ended June 30, 2011 and June 30, 2010, we recognized revenue associated with our technical services agreement between us and Dynamic Fuels in the amount of $514,000 and $815,000 respectively.  This revenue is reported in "Technical services from Dynamic Fuels, LLC" in the Consolidated Statement of Operations.  We had a receivable from Dynamic Fuels of $1,842,000 and $729,000 as of June 30, 2011 and December 31, 2010, respectively.  In April, we made additional payments of $260,000 for purchases made on behalf of Dynamic Fuels for prepayments to raw material suppliers.  Dynamic Fuels paid Syntroleum once raw materials were received on site in July 2011.  For the three months ended June 30, 2011, Syntroleum and Tyson each contributed an additional $3,850,000 in the form of working capital loans to the entity.  We provided $650,000 in the form of a working capital loan in July 2011 and expect to provide additional working capital loans for the prepayment to raw material suppliers of fats, oils and greases in the third quarter.   The total amount of working capital loans of $9,500,000 will be repaid to each member upon Dynamic Fuels generating sufficient working capital from fuel sales.

XML



Basis Of Reporting

6 Months Ended

Jun. 30, 2011

Basis Of Reporting

Basis Of Reporting

1.     Basis of Reporting

                The focus of Syntroleum Corporation and subsidiaries is the commercialization of our technologies to produce synthetic liquid hydrocarbons.  Operations to date have consisted of activities related to the commercialization of a proprietary process (the "Syntroleum® Process") and previously consisted of research and development of the Syntroleum® Process designed to convert carbonaceous material (biomass, coal, natural gas and petroleum coke) into synthetic liquid hydrocarbons.  Synthetic hydrocarbons produced by the Syntroleum® Process can be further processed using the Syntroleum Synfining® Process into high quality liquid fuels, such as diesel, jet fuel, kerosene, naphtha, propane and other renewable chemical products. 

                Our Bio-Synfining™ Technology is a renewable fuels application of our Synfining® Technology.  This technology is applied commercially via our Dynamic Fuels, LLC joint venture with Tyson Foods, Inc.  The technology processes renewable triglycerides and/or fatty acids to make renewable synthetic products. 

                The consolidated financial statements include the accounts of Syntroleum Corporation and our majority-owned subsidiaries.  All significant inter-company accounts and transactions have been eliminated.  Companies in which we own a 20 percent to 50 percent interest, but in which we do not have a controlling interest are accounted for by the equity method.  We own 50 percent and have a non-controlling interest in Dynamic Fuels, LLC ("Dynamic Fuels"). The entity is accounted for under the equity method and is not required to be consolidated in our financial statements; however, our share of the Dynamic Fuels results of operations is reflected in the Consolidated Statements of Operations and the subsidiary's summarized financial information is reported in Note 5, "Investment in and Loans to Dynamic Fuels, LLC".  The carrying value of our investment in Dynamic Fuels is reflected in "Investment in and Loans to Dynamic Fuels, LLC" in our Consolidated Balance Sheets.  

The consolidated financial statements included in this report have been prepared by the Company without audit, pursuant to the rules and regulations 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, 2010 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 of America 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.  Our financial position and results of operations are materially affected by Dynamic Fuels' financial position and results of operations as of and for the six months ended March 31, 2011.  During this period, the plant was commencing initial operations while its operating and financial controls were undergoing late-stage development.  As a result the financial statements may be more significantly impacted by management's estimates and assumptions than they will be when operations stabilize and the accounting processes mature.  Actual results could differ from those estimates.

XML



Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

7.     Stock-Based Compensation

Our share-based incentive plans permit us to grant restricted stock units, restricted stock, incentive or non-qualified stock options, and certain other instruments to employees, directors, consultants and advisors of the Company.   Certain stock options and restricted stock units vest in accordance with the achievement of specific Company objectives. The exercise price of options granted under the plan must be at least equal to the fair market value of our common stock on the date of grant. All options granted vest at a rate determined by the Nominating and Compensation Committee of our Board of Directors and are exercisable for varying periods, not to exceed ten years.  Shares issued under the plans upon option exercise or stock unit conversion are generally issued from authorized, but previously unissued shares. 

As of June 30, 2011, approximately 4,625,032 shares of common stock were available for grant under our current plan.  We are authorized to issue up to approximately 12,684,667 plan equivalent shares of common stock in relation to stock options or restricted shares outstanding or available for grant under the plans. 

Stock Options

The number and weighted average exercise price of stock options outstanding are as follows:

	Shares Under	Weighted Average Price
	Stock Options	Per Share
OUTSTANDING AT DECEMBER 31, 2010	8,283,586	$     2.94
Granted at market price	-	$           -
Exercised	(52,500)	$     0.66
Expired or forfeited	(184,163)	$   7.41
OUTSTANDING AT JUNE 30, 2011	8,046,923	$     1.84

The following table summarizes information about stock options outstanding at June 30, 2011:

Options Outstanding						Options Exercisable
Range of Exercise Price			Options Outstanding	Weighted Average Exercise Price	Weighted Average Remaining Contractual Life		Options Exercisable	Weighted Average Exercise Price Per Share
$0.66	-	$0.66	4,865,881	$0.66	7.05		1,300,181	$0.66
$1.49	-	$1.55	1,010,666	1.55	1.25		1,010,666	1.55
$1.62	-	$2.89	1,140,195	2.33	3.21		1,140,195	2.33
$3.19	-	$6.88	764,277	6.33	2.99		764,277	6.33
$7.10	-	$9.67	240,904	9.28	4.13		240,904	9.28
$10.51	-	$10.51	25,000	10.51	4.09		25,000	10.51
			8,046,923	$1.84			4,481,223	$2.77

A total of 3,565,700 stock options with a weighted average exercise price of $0.66 were outstanding at June 30, 2011 and had not vested.  There were no stock options granted during the six months ended June 30, 2011 or 2010.  

The total intrinsic value of options exercised (i.e., the difference between the market price on the exercise date and the price paid by the employee to exercise the options) during the six months ended June 30, 2011 and 2010 was $76,000 and $197,000, respectively.   The total amount of cash received in 2011 and 2010 by the Company from the exercise of these options was $35,000 and $82,000, respectively.   As of June 30, 2011, there was $3,941,000 intrinisic value of stock options that were fully vested or were expected to vest.  The remaining weighted average contractual term for options exercisable is approximately 4.02 years.  In addition, as of June 30, 2011 unrecognized compensation cost related to non-vested stock options was $75,000, which will be fully amortized using the straight-line basis over the remaining vesting period of the options, which will be fully amortized upon vesting  of the options, which is expected to occur in 2011.    

Non-cash compensation cost related to stock and stock options and restricted stock recognized during the six months ended June 30, 2011 and 2010 was $459,000 and $1,026,000, respectively. 

Restricted Stock

We also grant common stock and restricted common stock units to employees.  These awards are recorded at their fair values on the date of grant and compensation cost is recorded using graded vesting over the expected term.  The weighted average grant date fair value of common stock and restricted stock units granted during the six months ended June 30, 2011 and 2010 was $2.21 and $2.59 per share (total grant date fair value of $436,000 and $379,000), respectively.  As of June 30, 2011, the aggregrate intrinsic value of restricted stock units that are expected to vest was approximately $1,463,000.  In addition, as of June 30, 2011, unrecognized compensation cost related to non-vested restricted stock units was $22,000,  which is expected to be recognized in 2011.  The total fair value of restricted stock units vested during the six months ended June 30, 2011 and 2010 was $499,000 and $420,000, respectively. 

The following table reflects restricted stock unit activity for the six months ended June 30, 2011. 

	Shares / Units	Weighted-Average Grant Date Fair Value
NONVESTED AT DECEMBER 31, 2010	1,055,212	$  0.41
Granted	196,977	$  2.21
Vested	(204,477)	$  2.44
Forfeited	-	$        -
NONVESTED AT JUNE 30, 2011	1,047,712	$  0.35

XML



Common Stock Purchase Agreement

6 Months Ended

Jun. 30, 2011

Common Stock Purchase Agreement

Common Stock Purchase Agreement

8.     Common Stock Purchase Agreement

                On July 6, 2011 the Company closed the issuance and sale of 15,900,000 shares of its common stock and accompanying warrants to purchase a total of 7,950,000 shares of common stock. A combination of one share of common stock and a five year warrant to purchase 0.5 shares of common stock was sold in the offering for a combined public offering price of $1.58 per share, less underwriting discounts and commissions payable by the Company.  The underwriter, JMP Securities LLC, purchased the common stock and warrants at a discounted price of $1.49 per combination, representing a 5.7% discount to the public offering price.  Cash proceeds received by the Company, after the payment of underwriter commission and expenses and offering expenses, were approximately $23,575,000.

XML



Earnings Per Share

6 Months Ended

Jun. 30, 2011

Earnings Per Share

Earnings Per Share

6.     Earnings Per Share

	Three months ended June 30,		Six months ended  June 30,
	2011	2010	2011	2010
	(in thousands, except per share amounts)		(in thousands, except per share amounts)
Basic weighted-average shares	81,965	76,336	81,954		76,687
Effect of dilutive securities:
Unvested restricted stock units	-	-	-		-
Stock options	-	-	-		-
Diluted weighted-average shares	81,965	76,336	81,954		76,687

The table below includes information related to stock options, warrants and restricted stock that were outstanding at June 30 of each respective year but have been excluded from the computation of weighted-average stock options due to the option exercise price exceeding the first quarter weighted-average market price of our common shares or their inclusion would have been anti-dilutive to our income (loss) per share.

	June 30, 2011	June 30, 2010
Options, warrants and restricted stock excluded (in thousands)	18,062	19,283
Weighted-average exercise prices of options, warrants and restricted stock excluded	$   2.56	$ 1.63
Six month weighted average market price	$  1.85	$ 2.23

XML



Consolidated Statement Of Stockholders' Equity (USD $) In Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance, in value at Dec. 31, 2010	$ 817	$ 374,397	$ (342,414)	$ 32,800
Balance, in shares at Dec. 31, 2010	81,683
Stock options exercised, in shares	53
Stock options exercised, in value	1	34		35
Vesting of awards granted, in shares	15
Vesting of awards granted, in value		42		42
Stock-based bonuses and match to 401(k) Plan, in shares	227
Stock-based bonuses and match to 401(k) Plan, in value	2	415		417
Net loss			(9,385)	(9,385)
Balance, in value at Jun. 30, 2011	$ 820	$ 374,888	$ (351,799)	$ 23,909
Balance, in shares at Jun. 30, 2011	81,978

XML



Operations And Liquidity

6 Months Ended

Jun. 30, 2011

Operations And Liquidity

Operations And Liquidity

2.Operations and Liquidity

In the past we have sustained recurring losses and negative cash flows from operations. As of June 30, 2011, we had approximately $6.3 million of cash and cash equivalents and $1.9 million of accounts receivable available to fund operations and investing activities.  We review cash flow forecasts and budgets periodically.  Based on production levels and gross margins from the sale of finished goods and upon working capital and capital expenditures requirements for the Dynamic Fuels plant, we expect to receive partner distributions from Dynamic Fuels in the future.

XML



Restricted Cash

6 Months Ended

Jun. 30, 2011

Restricted Cash

Restricted Cash

3.      Restricted Cash

                Restricted cash consists of cash held in an escrow account for the prepayment of operations and invoices for an ongoing contractual project.  The account has also been recorded as a liability in current deposits on the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010.

XML



Reclassifications

6 Months Ended

Jun. 30, 2011

Reclassifications

Reclassifications

4.     Reclassifications

Certain reclassifications have been made to the June 30, 2010 statements of cash flows to conform to the June 30, 2011 presentation.  These reclassifications had no impact on net income.

XML



Consolidated Statements Of Operations (Parenthetical) (USD $) In Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements Of Operations
General, administrative and other, non-cash equity compensation	$ (8)	$ 205	$ 459	$ 1,026

XML



Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (9,385)	$ (622)
Income (loss) from discontinued operations	(8)	160
Net loss from continuing operations	(9,377)	(782)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	99	116
Abandoned patent write-off		466
Foreign currency exchange	648	(546)
Non-cash compensation expense	459	1,026
Non-cash loss in equity method investee	6,938	1,865
Changes in assets and liabilities:
Accounts receivable	497	46
Accounts receivable from Dynamic Fuels, LLC	(1,113)	2,793
Other assets	182	196
Accounts payable	(1,064)	73
Accrued liabilities and other	317	58
Deferred revenue		(3,217)
Net cash provided by (used in) continuing operations	(2,414)	2,094
Net cash used in discontinued operations	(8)	(257)
Net cash provided by (used in) operating activities	(2,422)	1,837
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(23)	(3)
Investment in and loans to Dynamic Fuels, LLC	(3,850)	(5,000)
Net cash used in investing activities	(3,873)	(5,003)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, warrants and option exercises	35	83
Proceeds from common stock purchase agreement		2,749
Net cash provided by financing activities	35	2,832
NET CHANGE IN CASH AND CASH EQUIVALENTS	(6,260)	(334)
CASH AND CASH EQUIVALENTS, beginning of period	12,513	25,012
CASH AND CASH EQUIVALENTS, end of period	$ 6,253	$ 24,678

XML



Commitments And Contingencies

6 Months Ended

Jun. 30, 2011

Commitments And Contingencies

Commitments And Contingencies

9.       Commitments and Contingencies

We have entered into employment agreements, which provide severance benefits to several key employees.  Commitments under these agreements totaled approximately $2,139,000 at June 30, 2011.  Expense is not recognized until an employee is severed. 

We entered into a Bio-Synfining Master License Agreement on June 22, 2007 with Dynamic Fuels, LLC.  Under this license agreement, we at the request of the licensee must execute a Site License Agreement in favor of licensee for licensee's use of our Bio-Synfining™ Technology.  The form of the Site License Agreement is included in the agreement as Exhibit B.  The form of the Site License Agreement includes process guarantees if the plant fails to pass a performance test as defined in the Site License Agreement.  If the plant fails to meet the Process Guarantee during the Performance Test and such failure is due in whole or in part to the Process Design Package, then we and Dynamic Fuels shall mutually agree whether or not remedial measures are reasonably likely to cause the plant to satisfy the Process Guarantee.  The actual cost of the remedial measures will be reimbursed to licensee through application of any future royalties owed to us, not to exceed $9,800,000.  If the remedial measures are not effective, we shall pay to Dynamic Fuels an additional amount for liquidated damages in an amount not to exceed $9,800,000.   As of the date of this filing the Site License Agreement has not been executed by Dynamic Fuels and we cannot be certain the document that will be executed will have this same language and amounts. 

XML



Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
ASSETS
Cash and cash equivalents	$ 6,253	$ 12,513
Restricted cash	1,233	484
Accounts receivable	59	556
Accounts receivable from Dynamic Fuels, LLC	1,842	729
Other current assets	112	361
Total current assets	9,499	14,643
PROPERTY AND EQUIPMENT - at cost, net	89	97
INVESTMENT IN AND LOANS TO DYNAMIC FUELS, LLC	40,435	43,523
OTHER ASSETS, net	1,132	1,133
Assets	51,155	59,396
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	26	1,090
Accrued employee costs	436	119
Deposits	1,233	484
Total current liabilities	1,695	1,693
NONCURRENT LIABILITIES OF DISCONTINUED OPERATIONS	603	603
DEFERRED REVENUE	24,948	24,300
COMMITMENTS AND CONTINGENCIES
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, 81,978 and 81,683 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	820	817
Additional paid-in capital	374,888	374,397
Accumulated deficit	(351,799)	(342,414)
Total stockholders' equity	23,909	32,800
Liabilities and Equity, Total	$ 51,155	$ 59,396