As filed with the Securities and Exchange Commission on September 29,
2011.
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
Registration Statement Under
THE SECURITIES ACT OF 1933
SYNERGY RESOURCES CORPORATION
(Exact name of registrant as specified in charter)
Colorado
--------------
(State or other jurisdiction of incorporation)
20203 Highway 60
Platteville, CO 80651
20-2835920 (970) 737-1073
---------------------------- ------------------------------------------------
IRS Employer I.D.Number) (Address, including zip code, and telephone number
including area of principal executive offices)
William E. Scaff, Jr.
20203 Highway 60
Platteville, CO 80651
(970) 737-1073
---------------------------------------
(Name and address, including zip code, and telephone
number, including area code, of agent for service)
Copies of all communications, including all communications sent
to the agent for service, should be sent to:
William T. Hart, Esq.
Hart & Trinen
1624 Washington Street
Denver, Colorado 80203
(303) 839-0061
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement
becomes effective as determined by market conditions
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a registration statement pursuant to General Instruction I.D. or
a post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. [ ]
If this Form is a post-effective amendment to a registration statement filed
pursuant to General Instruction I.D. filed to register additional securities or
additional classes of securities pursuant to Rule 413(b) under the Securities
Act, check the following box. [ ]
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", and "smaller reporting company" in
Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [X]
Non-accelerated filer [ ] Smaller reporting company [ ]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
-------------------------------------------------------------------------------
Title of each Proposed Proposed
Class of Maximum Maximum
Securities Securities Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price Fee
---------- ---------- ----------- ---------- -----------
Common stock,
preferred stock,
convertible preferred
stock, promissory
notes, convertible notes,
and warrants, or any
combination of
the foregoing (2) (2) (2) (2)
Total $75,000,000 $75,000,000 $8,708
-------------------------------------------------------------------------------
(1) The amount of registration fee, calculated in accordance with Rule 457(o),
is the maximum aggregate offering price at which the securities subject to
this registration statement are proposed to be offered.
(2) There are being registered hereunder an indeterminate amount and number of
securities as may be sold, from time to time, by the Company.
The Company hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of l933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
SYNERGY RESOURCES CORPORATION
Common Stock
We may offer from time to time shares of our common stock, preferred stock,
convertible preferred stock, promissory notes, convertible notes, rights,
warrants, or any combination of the foregoing, as well as securities issuable
upon the conversion of notes or the exercise of warrants, at an initial offering
price not to exceed $75,000,000, at prices and on terms to be determined at or
prior to the time of sale in light of market conditions at the time of sale.
Specific terms pertaining to the securities offered by this prospectus will
be set forth in one or more accompanying prospectus supplements, together with
the terms of the offering and the initial price and the net proceeds to us from
the sale. The prospectus supplement will set forth, without limitation, the
number of securities offered and the terms of the offering.
We may sell the securities offered by this prospectus directly, through
agents designated from time to time, or through underwriters or dealers. If any
agents or any underwriters or dealers are involved in the sale of the
securities, the names of the agents, underwriters or dealers, any applicable
commissions and discounts, and the net proceeds to us will be set forth in the
applicable prospectus supplement.
We may not use this prospectus to complete sales of our securities unless
this prospectus is accompanied by a prospectus supplement.
The securities offered by this prospectus are speculative and involve a
high degree of risk and should be purchased only by persons who can afford to
lose their entire investment. For a description of certain important factors
that should be considered by prospective investors, see "Risk Factors" beginning
on page 5 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or has passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
Our common stock is traded on the NYSE Amex under the symbol "SYRG". On
September 27, 2011, the closing price of our common stock on the NYSE Amex was
$2.89.
Date of this Prospectus is _______________
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED BY THE OTHER INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.
GENERAL
We are an oil and gas operator in Colorado and are focused on the
acquisition, development, exploitation, exploration and production of oil and
natural gas properties primarily located in the Wattenberg field in the D-J
Basin in northeast Colorado. As of September 20, 2011, we had 181,500 gross and
160,800 net acres under lease, most of which are located in the D-J Basin. Of
this acreage, 6,185 gross acres are held by production. Between September 1,
2008 and September 20, 2011, we drilled and completed 52 development wells on
our leases. In the most recent complete reserve report available, effective for
the period ended August 31, 2010, our estimated net proved oil and gas reserves,
were 4.5 Bcf of natural gas and 676.7 MBbls of oil and condensate.
Business Strategy
Our primary objective is to enhance shareholder value by increasing our net
asset value, net reserves and cash flow through acquisitions, development,
exploitation, exploration and divestiture of oil and gas properties. We intend
to follow a balanced risk strategy by allocating capital expenditures in a
combination of lower risk development and exploitation activities and higher
potential exploration prospects. Key elements of our business strategy include
the following:
o Concentrate on our existing core area in the D-J Basin, where we have
significant operating experience. Most of our current wells and
undeveloped acreage are located within the D-J Basin. Focusing our
operations in this area leverages our management, technical and
operational experience in the basin.
o Develop and exploit existing oil and natural gas properties. Since our
inception our principal growth strategy has been to develop and
exploit our acquired and discovered properties to add proved reserves.
As of September 20, 2011, we have identified over four hundred
development and extension drilling locations and over forty
recompletion/workover projects on our existing properties and wells.
o Complete selective acquisitions. We seek to acquire undeveloped and
producing oil and gas properties, primarily in the D-J Basin. We will
seek acquisitions of undeveloped and producing properties that will
provide us with opportunities for reserve additions and increased cash
flow through production enhancement and additional development and
exploratory prospect generation opportunities.
o Retain control over the operation of a substantial portion of our
production. As operator on a majority of our wells and undeveloped
acreage, we control the timing and selection of new wells to be
drilled or existing wells to be recompleted. This allows us to modify
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our capital spending as our financial resources allow and market
conditions support.
o Maintain financial flexibility while focusing on controlling the costs
of our operations. We intend to finance our operations through a
mixture of debt and equity capital as market conditions allow. Our
management has historically been a low cost operator in the D-J Basin
and we continue to focus on operating efficiencies and cost
reductions.
Our growth plans for the fiscal year ending August 31, 2012 include
additional drilling activities, acquisition of existing wells, and recompletion
of wells that provide good prospects for improved stimulation techniques.
Implementation of our growth plans will be dependent upon the amount of
financing we are able to obtain.
Competitive Strengths
We believe that we are positioned to successfully execute our business
strategy because of the following competitive strengths:
o Management experience. Our key management team possesses an average of
thirty years of experience in the oil and gas industry, primarily
within the D-J Basin. Members of our management team have drilled,
participated in drilling, and/or operated over 350 wells in the D-J
Basin.
o Balanced oil and natural gas reserves and production. Approximately
48% of our estimated proved reserves were oil and condensate and 52%
were natural gas. We believe this balanced commodity mix will provide
diversification of sources of cash flow and will lessen the risk of
significant and sudden decreases in revenue from short-term commodity
price movements.
o Ability to recomplete D-J Basin wells numerous times throughout the
life of a well. We have experience with and knowledge of D-J Basin
wells that have been recompleted up to four times since initial
drilling. This provides us with numerous high return recompletion
investment opportunities on our current and future wells and the
ability to manage the production through the life of a well.
o Insider ownership. At September 20, 2011 our directors and executive
officers beneficially owned approximately 33% of our outstanding
shares of common stock, providing a strong alignment of interest
between management, the board of directors and our outside
shareholders.
Our website is: www.synergyresourcescorporation.com.
Our offices are located at 20203 Highway 60, Platteville, CO 80651. Our
office telephone number is (970) 737-1073 and our fax number is (970) 737-1045.
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THE OFFERING
Securities Offered:
We may offer from time to time shares of common stock, preferred stock,
promissory notes, convertible notes, rights and warrants, or any combination of
the foregoing, as well as securities issuable upon the conversion of notes or
the exercise of warrants, at an initial offering price not to exceed
$75,000,000, at prices and on terms to be determined at or prior to the time of
sale in light of market conditions at the time of sale. We may not use this
prospectus to complete sales of our securities unless this prospectus is
accompanied by a prospectus supplement. See the "Plan of Distribution" section
of this prospectus for additional information concerning the manner in which our
securities may be offered.
Common Stock Outstanding: As of September 20, 2011, we had
36,098,212 outstanding shares of common stock. The
number of outstanding shares does not give effect to
shares which may be issued upon the exercise and/or
conversion of options, warrants or other convertible
securities. See "Comparative Share Data" for more
information.
Risk Factors: Any purchase of our securities involves a high
degree of risk. Risk factors include our short
operating history, losses since we were
incorporated, and the possible need for us to
sell shares of our common stock to raise
capital. See the "Risk Factors" section of this
prospectus below for additional Risk Factors.
NYSE Amex Symbol: SYRG
Forward-Looking Statements
This prospectus contains or incorporates by reference "forward-looking
statements," as that term is used in federal securities laws, concerning our
financial condition, results of operations and business. These statements
include, among others:
o statements concerning the benefits that we expect will result from our
business activities and results of exploration that we contemplate or
have completed, such as increased revenues; and
o statements of our expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical
facts.
You can find many of these statements by looking for words such as
"believes," "expects," "anticipates," "estimates" or similar expressions used in
this prospectus.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties that may cause our actual results to be materially different
4
from any future results expressed or implied in those statements. Because the
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied. We caution you not to put undue
reliance on these statements, which speak only as of the date of this
prospectus. Further, the information contained in this prospectus, or
incorporated herein by reference, is a statement of our present intention and is
based on present facts and assumptions, and may change at any time.
RISK FACTORS
Investors should be aware that any purchase of our securities involves
certain risks, including those described below, which could adversely affect the
value of our common stock. We do not make, nor have we authorized any other
person to make, any representation about the future market value of our common
stock. In addition to the other information contained in this prospectus, the
following factors should be considered carefully in evaluating an investment in
our securities.
We may never be profitable. As of the date of this prospectus we had reported
significant net losses for each year since inception. Although we recently
reported an operating profit for the quarter ended May 31, 2011, we reported a
net loss of $(13,189,974) for the nine months ended May 31, 2011, and we expect
to report a net loss for the year ended August 31, 2011. Unless and until we are
profitable for an entire year, we will need to raise enough capital to be able
to fund the costs of our operations and our planned oil and gas exploration and
development activities.
Our transactions with related parties may cause conflicts of interests that may
adversely affect us. Between June 11, 2008 and June 30, 2010, and pursuant to
the terms of an Administrative Services Agreement with Petroleum Management,
LLC, we were provided with office space and equipment storage in Platteville,
Colorado, as well as secretarial, word processing, telephone, fax, email and
related services for a fee of $20,000 per month. Following the termination of
the Administrative Services Agreement, and since July 1, 2010, we have leased
the office space and equipment storage yard in Platteville from HS Land &
Cattle, LLC at a rate of $10,000 per month.
In addition to the above, we acquired oil and gas properties from Petroleum
Exploration & Management, LLC ("PEM").
Petroleum Management, LLC, PEM and HS Land & Cattle, LLC are controlled by
Ed Holloway and William E. Scaff, Jr., both of whom are our officers, directors
and principal shareholders. In addition, in the past we have purchased oil and
gas assets from PEM.
We believe that the transactions and agreements that we have entered into
with these affiliates are on terms that are at least as favorable as could
reasonably have been obtained at such time from third parties. However, these
relationships could create, or appear to create, potential conflicts of interest
when our board of directors is faced with decisions that could have different
implications for us and these affiliates. The appearance of conflicts, even if
such conflicts do not materialize, might adversely affect the public's
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perception of us, as well as our relationship with other companies and our
ability to enter into new relationships in the future, which could have a
material adverse effect on our ability to do business.
Hydraulic fracturing, the process used for releasing oil and gas from shale
rock, has recently come under increased scrutiny and could be the subject of
further regulation that could impact the timing and cost of development. The
Environmental Protection Agency (the "EPA") recently amended the Underground
Injection Control, or UIC, provisions of the federal Safe Drinking Water Act
(the "SDWA") to exclude hydraulic fracturing from the definition of "underground
injection." However, the U.S. Senate and House of Representatives are currently
considering bills entitled the Fracturing Responsibility and Awareness of
Chemicals Act (the "FRAC Act"), to amend the SDWA to repeal this exemption. If
enacted, the FRAC Act would amend the definition of "underground injection" in
the SDWA to encompass hydraulic fracturing activities, which could require
hydraulic fracturing operations to meet additional permitting and financial
assurance requirements, adhere to certain construction specifications, fulfill
monitoring, reporting, and recordkeeping obligations, and meet plugging and
abandonment requirements. The FRAC Act also proposes to require the reporting
and public disclosure of chemicals used in the fracturing process, which could
make it easier for third parties opposing the hydraulic fracturing process to
initiate legal proceedings based on allegations that specific chemicals used in
the fracturing process could adversely affect groundwater.
Depending on the legislation that may ultimately be enacted or the
regulations that may be adopted at the federal, state and/or provincial levels,
exploration and production activities that entail hydraulic fracturing could be
subject to additional regulation and permitting requirements. Individually or
collectively, such new legislation or regulation could lead to operational
delays or increased operating costs and could result in additional burdens that
could increase the costs and delay the development of unconventional oil and gas
resources from shale formations which are not commercial without the use of
hydraulic fracturing. This could have an adverse effect on our business.
Our failure to obtain capital may significantly restrict our proposed
operations. We need additional capital to provide working capital and to fund
our capital expenditure plans. We do not know what the terms of any future
capital raising may be but any future sale of our equity securities would dilute
the ownership of existing stockholders and could be at prices substantially
below the price investors paid for the shares of common stock sold in this
offering. Our failure to obtain the capital which we require will result in the
slower implementation of our business plan or our inability to implement our
business plan. There can be no assurance that we will be able to obtain the
capital which we will need.
We will need to generate positive cash flow or obtain additional financing
until we are able to consistently earn a profit. As a result of our short
operating history it is difficult for potential investors to evaluate our
business. There can be no assurance that we can implement our business plan,
that we will be profitable, or that our securities will have any value.
Oil and gas exploration is not an exact science, and involves a high degree of
risk. The primary risk lies in the drilling of dry holes or drilling and
completing wells which, though productive, do not produce gas and/or oil in
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sufficient amounts to return the amounts expended and produce a profit. Hazards,
such as unusual or unexpected formation pressures, downhole fires, blowouts,
loss of circulation of drilling fluids and other conditions are involved in
drilling and completing oil and gas wells and, if such hazards are encountered,
completion of any well may be substantially delayed or prevented. In addition,
adverse weather conditions can hinder or delay operations, as can shortages of
equipment and materials or unavailability of drilling, completion, and/or
work-over rigs. Even though a well is completed and is found to be productive,
water and/or other substances may be encountered in the well, which may impair
or prevent production or marketing of oil or gas from the well.
Exploratory drilling involves substantially greater economic risks than
development drilling because the percentage of wells completed as producing
wells is usually less than in development drilling. Exploratory drilling itself
can be of varying degrees of risk and can generally be divided into higher risk
attempts to discover a reservoir in a completely unproven area or relatively
lower risk efforts in areas not too distant from existing reservoirs. While
exploration adjacent to or near existing reservoirs may be more likely to result
in the discovery of oil and gas than in completely unproven areas, exploratory
efforts are nevertheless high risk activities.
Although the completion of oil and gas wells is, to a certain extent, less
risky than drilling for oil and gas, the process of completing an oil or gas
well is nevertheless associated with considerable risk. In addition, even if a
well is completed as a producer, the well for a variety of reasons may not
produce sufficient oil or gas in order to repay our investment in the well.
The acquisition, exploration and development of oil and gas properties, and the
production and sale of oil and gas are subject to many factors which are outside
our control. These factors include, among others, general economic conditions,
proximity to pipelines, oil import quotas, supply, demand, and price of other
fuels and the regulation of production, refining, transportation, pricing,
marketing and taxation by Federal, state, and local governmental authorities.
Buyers of our gas, if any, may refuse to purchase gas from us in the event of
oversupply. If wells which we drill are productive of natural gas, the
quantities of gas that we may be able to sell may be too small to pay for the
expenses of operating the wells. In such a case, the wells would be "shut-in"
until such time, if ever, that economic conditions permit the sale of gas in
quantities which would be profitable.
Interests that we may acquire in oil and gas properties may be subject to
royalty and overriding royalty interests, liens incident to operating
agreements, liens for current taxes and other burdens and encumbrances,
easements and other restrictions, any of which may subject us to future
undetermined expenses. We do not intend to purchase title insurance, title
memos, or title certificates for any leasehold interests we will acquire. It is
possible that at some point we will have to undertake title work involving
substantial costs. In addition, it is possible that we may suffer title failures
resulting in significant losses.
The drilling of oil and gas wells involves hazards such as blowouts, unusual or
unexpected formations, pressures or other conditions which could result in
substantial losses or liabilities to third parties. Although we intend to
7
acquire adequate insurance, or to be named as an insured under coverage acquired
by others (e.g., the driller or operator), we may not be insured against all
such losses because insurance may not be available, premium costs may be deemed
unduly high, or for other reasons. Accordingly, uninsured liabilities to third
parties could result in the loss of our funds or property.
Our operations are dependent upon the continued services of our officers. The
loss of any of these officers, whether as a result of death, disability or
otherwise, may have a material adverse effect upon our business.
Our operations will be affected from time to time and in varying degrees by
political developments and Federal and state laws and regulations regarding the
development, production and sale of crude oil and natural gas. These regulations
require permits for drilling of wells and also cover the spacing of wells, the
prevention of waste, and other matters. Rates of production of oil and gas have
for many years been subject to Federal and state conservation laws and
regulations and the petroleum industry is subject to Federal tax laws. In
addition, the production of oil or gas may be interrupted or terminated by
governmental authorities due to ecological and other considerations. Compliance
with these regulations may require a significant capital commitment by and
expense to us and may delay or otherwise adversely affect our proposed
operations.
From time to time legislation has been proposed relating to various
conservation and other measures designed to decrease dependence on foreign oil.
No prediction can be made as to what additional legislation may be proposed or
enacted. Oil and gas producers may face increasingly stringent regulation in the
years ahead and a general hostility towards the oil and gas industry on the part
of a portion of the public and of some public officials. Future regulation will
probably be determined by a number of economic and political factors beyond our
control or the oil and gas industry.
Our activities will be subject to existing federal and state laws and
regulations governing environmental quality and pollution control. Compliance
with environmental requirements and reclamation laws imposed by Federal, state,
and local governmental authorities may necessitate significant capital outlays
and may materially affect our earnings. It is impossible to predict the impact
of environmental legislation and regulations (including regulations restricting
access and surface use) on our operations in the future although compliance may
necessitate significant capital outlays, materially affect our earning power or
cause material changes in our intended business. In addition, we may be exposed
to potential liability for pollution and other damages.
There is only a limited public market for our common stock. Although our common
stock has recently been listed on the NYSE Amex, the trading in our stock has
been limited and sporadic. A consistently active trading market for our common
stock may never develop, or continue if one emerges. In addition, the price of
our common stock has been volatile. Some of the factors that could negatively
affect our share price include:
o actual or anticipated fluctuations in our quarterly results of
operations;
o liquidity;
8
o sales of common stock by our shareholders;
o changes in oil and natural gas prices;
o changes in our cash flow from operations or earnings estimates;
o publication of research reports about us or the oil and natural gas
exploration and production industry generally;
o increases in market interest rates which may increase our cost of
capital;
o changes in applicable laws or regulations, court rulings and
enforcement and legal actions;
o changes in market valuations of similar companies;
o adverse market reaction to any indebtedness we incur in the future;
o additions or departures of key management personnel;
o actions by our shareholders;
o commencement of or involvement in litigation;
o news reports relating to trends, concerns, technological or
competitive developments, regulatory changes and other related issues
in our industry;
o speculation in the press or investment community regarding our
business;
o general market and economic conditions; and
o domestic and international economic, legal and regulatory factors
unrelated to our performance.
Shares issuable upon the exercise of outstanding warrants and options may
substantially increase the number of shares available for sale in the public
market and may depress the price of our common stock. We have outstanding
options and warrants which, as of the date of this prospectus, could potentially
allow the holders to acquire a substantial number of shares of our common stock.
Until the options and warrants expire, the holders will have an opportunity to
profit from any increase in the market price of our common stock without
assuming the risks of ownership. Holders of options and warrants may exercise
these securities at a time when we could obtain additional capital on terms more
favorable than those provided by the options or warrants. The exercise of the
options and warrants will dilute the voting interest of the current owners of,
outstanding shares by adding a substantial number of additional shares of common
stock.
MARKET FOR OUR COMMON STOCK
On February 27, 2008, our common stock began trading on the OTC Bulletin
Board under the symbol "BRSH." There was no established trading market for our
common stock prior to that date.
9
On September 22, 2008, a 10-for-1 reverse stock split, approved by our
shareholders on September 8, 2008, became effective on the OTC Bulletin Board
and our trading symbol was changed to "SYRG.OB." On July 27, 2011 our common
stock began trading on the NYSE Amex under the symbol "SYRG".
Shown below is the range of high and low closing prices for our common
stock for the periods indicated as reported by the OTC Bulletin Board prior to
July 27, 2011 and by the NYSE Amex on and after July 27, 2011. The market
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions.
Quarter Ended High Low
------------- ---- ---
November 30, 2008 $4.75 $3.10
February 28, 2009 $3.45 $1.25
May 31, 2009 $1.80 $1.45
August 31, 2009 $1.80 $1.10
November 30, 2009 $1.47 $1.00
February 28, 2010 $3.86 $1.35
May 31, 2010 $3.85 $2.40
August 31, 2010 $3.00 $2.25
November 30, 2010 $2.40 $1.95
February 28, 2011 $4.74 $2.25
May 31, 2011 $4.90 $3.20
August 31, 2011 $3.69 $2.55
On September 27, 2011, the closing price of our common stock on the NYSE
Amex was $2.89.
As of September 20, 2011, we had 36,098,212 outstanding shares of common
stock and approximately 300 shareholders of record. The number of beneficial
owners of our common stock is approximately 925.
Holders of our common stock are entitled to receive dividends as may be
declared by our board of directors. Our board of directors is not restricted
from paying any dividends but is not obligated to declare a dividend. No cash
dividends have ever been declared and it is not anticipated that cash dividends
will ever be paid.
Our articles of incorporation authorize our board of directors to issue up
to 10,000,000 shares of preferred stock. The provisions in the articles of
incorporation relating to the preferred stock allow our directors to issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to the holders of our common
stock. The issuance of preferred stock with these rights may make the removal of
management difficult even if the removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if these
transactions are not favored by our management.
10
On December 1, 2008, we purchased 1,000,000 shares of our common stock from
the Synergy Energy Trust, one of our initial shareholders, for $1,000, which was
the same amount which we received when the shares were sold to the Trust. With
the exception of that transaction, we have not purchased any of our securities
and no person affiliated with us has purchased any of our securities for our
benefit.
COMPARATIVE SHARE DATA
The following table lists additional shares of our common stock, which may
be issued as of September 20, 2011 upon the exercise of outstanding options or
warrants.
Number of Note
Shares Reference
------ ---------
Shares issuable upon the exercise of Series C warrants 9,000,000 A
Shares issuable upon the exercise of placement agents'
warrants 779,906 A
Shares issuable upon exercise of Series A warrants that
were granted to those persons owning shares of our
common stock prior to the acquisition of Predecessor
Synergy 1,038,000 B
Shares issuable upon exercise of Series A warrants
sold in prior private offering. 2,060,000 C
Shares issuable upon exercise of Series A and Series B
warrants 2,000,000 D
Shares issuable upon exercise of sales agent warrants 126,932 D
Shares issuable upon exercise of options held by our
officers and employees 4,470,000 E
A. Between December 2009 and March 2010, we sold 180 Units at a price of
$100,000 per Unit to private investors. Each Unit consisted of one $100,000 note
and 50,000 Series C warrants. The notes were converted into shares of our common
stock at a conversion price of $1.60 per share, at the option of the holder.
Each Series C warrant entitles the holder to purchase one share of our common
stock at a price of $6.00 per share at any time prior to December 31, 2014. As
of the interim reporting period ended May 31, 2011, all notes had been converted
into 11,250,000 shares of our common stock.
We paid Bathgate Capital Partners (now named GVC Capital), the placement
agent for the Unit offering, a commission of 8% of the amount Bathgate Capital
raised in the Unit offering. We also sold to the placement agent, for a nominal
price, warrants to purchase 1,125,000 shares of our common stock at a price of
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$1.60 per share. The placement agent's warrants expire on December 31, 2014. As
of the interim reporting period ended May 31, 2011, warrants to purchase 345,094
shares had been exercised by their holders.
B. Each shareholder of record on the close of business on September 9, 2008
received one Series A warrant for each share which they owned on that date (as
adjusted for a reverse split of our common stock which was effective on
September 22, 2008). Each Series A warrant entitles the holder to purchase one
share of our common stock at a price of $6.00 per share at any time prior to
December 31, 2012.
C. Prior to our acquisition of Predecessor Synergy, Predecessor Synergy sold
2,060,000 Units to a group of private investors at a price of $1.00 per Unit.
Each Unit consisted of one share of Predecessor Synergy's common stock and one
Series A warrant. In connection with the acquisition of Predecessor Synergy,
these Series A warrants were exchanged for 2,060,000 of our Series A warrants.
The Series A warrants are identical to the Series A warrants described in Note B
above.
D. Between December 1, 2008 and June 30, 2009, we sold 1,000,000 units at a
price of $3.00 per unit. Each unit consisted of two shares of our common stock,
one Series A warrant and one Series B warrant. The Series A warrants are
identical to the Series A warrants described in Note B above. Each Series B
warrant entitles the holder to purchase one share of our common stock at a price
of $10.00 per share at any time prior to December 31, 2012.
In connection with this unit offering, we paid the sales agent for the
offering a commission of 10% of the amount the sales agent sold in the offering.
We also issued warrants to the sales agent. The warrants allow the sales agent
to purchase 31,733 units (which units were identical to the units sold in the
offering) at a price of $3.60 per unit. The sales agent warrants will expire on
the earlier of December 31, 2012 or twenty days following written notification
from us that our common stock had a closing bid price at or above $7.00 per
share for any ten of twenty consecutive trading days.
E. Options are exercisable at prices between $1.00 and $10.00 per share and
expire at various dates between June 2013 and August 2021.
We may sell additional shares of our common stock, preferred stock,
warrants, convertible notes or other securities to raise additional capital. We
do not have any commitments or arrangements from any person to purchase any of
our securities and there can be no assurance that we will be successful in
selling any additional securities.
PLAN OF DISTRIBUTION
We may sell shares of its common stock, preferred stock, convertible
preferred stock, promissory notes, convertible notes, rights, or warrants in
and/or outside the United States: (i) through underwriters or dealers; (ii)
12
directly to a limited number of purchasers or to a single purchaser; or (iii)
through agents. The applicable prospectus supplement with respect to the offered
securities will set forth the name or names of any underwriters or agents, if
any, the purchase price of the offered securities and the proceeds to us from
such sale, any delayed delivery arrangements, any underwriting discounts and
other items constituting underwriters' compensation, any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
and any compensation paid to a placement agent. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
Notwithstanding the above, the maximum commission or discount to be
received by any NASD member or independent broker-dealer will not be greater
than 10% in connection with the sale of any securities offered by means of this
prospectus or any related prospectus supplement, exclusive of any
non-accountable expense allowance. Any securities issued by us to any FINRA
member or independent broker-dealer in connection with an offering of our
securities will be considered underwriting compensation and may be restricted
from sale, transfer, assignment, or hypothecation for a number of months
following the effective date of the offering, except to officers or partners
(not directors) of any underwriter or member of a selling group and/or their
officers or partners.
Our securities may be sold:
o At a fixed price.
o As the result of the exercise of warrants or the conversion of
preferred shares or notes and at fixed or varying prices, as
determined by the terms of the warrants or convertible securities.
o At varying prices in at the market offerings.
o In privately negotiated transactions, at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices.
If underwriters are used in the sale, the offered securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of securities to be named in the
prospectus supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such prospectus supplement. Unless otherwise set forth in the
prospectus supplement, the obligations of the underwriters to purchase the
offered securities will be subject to conditions precedent and the underwriters
will be obligated to purchase all the offered securities if any are purchased.
If dealers are utilized in the sale of offered securities in respect of
which this prospectus is delivered, we will sell the offered securities to the
13
dealers as principals. The dealers may then resell the offered securities to the
public at varying prices to be determined by the dealers at the time of resale.
The names of the dealers and the terms of the transaction will be set forth in
the prospectus supplement relating to the securities sold to the dealers.
If an agent is used in an offering of offered securities, the agent will be
named, and the terms of the agency will be set forth, in the prospectus
supplement. Unless otherwise indicated in the prospectus supplement, an agent
will act on a best efforts basis for the period of its appointment.
The securities may be sold directly by us to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale of the securities purchased by the
institutional investors. The terms of any of the sales, including the terms of
any bidding or auction process, will be described in the applicable prospectus
supplement.
We may permit agents or underwriters to solicit offers to purchase its
securities at the public offering price set forth in a prospectus supplement
pursuant to a delayed delivery arrangement providing for payment and delivery on
the date stated in the prospectus supplement. Any delayed delivery contract,
when issued, will contain definite fixed price and quantity terms. The
obligations of any purchaser pursuant to a delayed delivery contract will not be
subject to any market outs or other conditions other than the condition that the
delayed delivery contract will not violate applicable law. In the event the
securities underlying the delayed delivery contract are sold to underwriters at
the time of performance of the delayed delivery contract, those securities will
be sold to those underwriters. Each delayed delivery contract shall be subject
to our approval. We will pay the commission indicated in the prospectus
supplement to underwriters or agents soliciting purchases of securities pursuant
to delayed delivery arrangements accepted by us.
Notwithstanding the above, while prospectus supplements may provide
specific offering terms, or add to or update information contained in this
prospectus, any fundamental changes to the offering terms will be made by means
of a post-effective amendment.
Agents, dealers and underwriters may be entitled under agreements with us
to indemnification from us against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments made by such agents, dealers or underwriters.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 100,000,000 shares of common stock. Holders of
our common stock are each entitled to cast one vote for each share held of
record on all matters presented to the shareholders. Cumulative voting is not
allowed; hence, the holders of a majority of our outstanding common shares can
elect all directors.
14
Holders of our common stock are entitled to receive such dividends as may
be declared by our Board of Directors out of funds legally available and, in the
event of liquidation, to share pro rata in any distribution of our assets after
payment of liabilities. Our Board of Directors is not obligated to declare a
dividend. It is not anticipated that dividends will be paid in the foreseeable
future.
Holders of our common stock do not have preemptive rights to subscribe to
additional shares if issued. There are no conversion, redemption, sinking fund
or similar provisions regarding the common stock. All outstanding shares of
common stock are fully paid and nonassessable.
Preferred Stock
We are authorized to issue 10,000,000 shares of preferred stock. Shares of
preferred stock may be issued from time to time in one or more series as may be
determined by our Board of Directors. The voting powers and preferences, the
relative rights of each such series and the qualifications, limitations and
restrictions of each series will be established by the Board of Directors. Our
directors may issue preferred stock with multiple votes per share and dividend
rights which would have priority over any dividends paid with respect to the
holders of our common stock. The issuance of preferred stock with these rights
may make the removal of management difficult even if the removal would be
considered beneficial to shareholders generally, and will have the effect of
limiting shareholder participation in transactions such as mergers or tender
offers if these transactions are not favored by our management. As of the date
of this prospectus, we had not issued any shares of preferred stock.
Warrants
See the "Comparative Share Data" section of this prospectus for information
concerning our outstanding warrants.
Transfer Agent
Corporate Stock Transfer
3200 Cherry Creek Drive South, Suite 430
Denver, Colorado 80209
Phone: 303-282-4800
Fax: 303-282-5800
INDEMNIFICATION
Our bylaws authorize indemnification of directors, officers, employees or
agents against expenses incurred by him in connection with any action, suit, or
proceeding to which he is named a party by reason of his having acted or served
in such capacity, except for liabilities arising from his own misconduct or
negligence in performance of his duty. In addition, even a director, officer,
employee, or agent who was found liable for misconduct or negligence in the
performance of his duty may obtain such indemnification if, in view of all the
circumstances in the case, a court of competent jurisdiction determines such
person is fairly and reasonably entitled to indemnification. Insofar as
15
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers, or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
ADDITIONAL INFORMATION
We are subject to the requirements of the Securities Exchange Act of l934
and are required to file reports, proxy statements and other information with
the Securities and Exchange Commission. Copies of any such reports, proxy
statements and other information filed by us can be read and copied at the
Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C.,
20549. The public may obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. The Commission
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding public companies. The address of
that site is http://www.sec.gov.
We will provide, without charge, to each person to whom a copy of this
prospectus is delivered, including any beneficial owner, upon the written or
oral request of such person, a copy of any or all of the documents incorporated
by reference below (other than exhibits to these documents, unless the exhibits
are specifically incorporated by reference into this prospectus). Requests
should be directed to:
Synergy Resources Corporation
20203 Highway 60
Platteville, CO 80651
(970) 737-1073
The following documents have been filed with the Commission and are
incorporated by reference into this prospectus:
o Annual Report on Form 10-K/A for the fiscal year ended August 31, 2010
filed on June 3, 2011;
o 8-K Reports filed on:
December 29, 2010;
January 14, 2011;
January 20, 2011;
March 23, 2011;
March 25, 2011;
April 1, 2011;
April 14, 2011;
May 25, 2011;
June 13, 2011;
June 24, 2011;
June 29, 2011;
16
July 22, 2011;
August 5, 2011; and
August 15, 2011;
o Report on Form 10-Q for the three and nine months ended May 31, 2011;
and
o Amendment No. 2 to the Registration Statement on Form S-1 filed on
September 26, 2011.
All documents we file with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference into this prospectus and to be a part of this prospectus from the
date of the filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference shall be deemed to be
modified or superseded for the purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
which also is or is deemed to be incorporated by reference in this prospectus
modifies or supersedes such statement. Such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this prospectus.
Investors are entitled to rely upon information in this prospectus or
incorporated by reference at the time it is used, even though that information
may be superseded or modified by information subsequently incorporated by
reference into this prospectus.
We have filed with the Securities and Exchange Commission a Registration
Statement under the Securities Act of l933, as amended, with respect to the
securities offered by this prospectus. This prospectus does not contain all of
the information set forth in the Registration Statement. For further
information, reference is made to the Registration Statement and to the exhibits
filed with the Registration Statement. Statements contained in this prospectus
as to the contents of any contract or other documents are summaries which are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. The Registration Statement and related exhibits may also be examined
at the Commission's internet site.
17
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
-------------------------------------------
SEC Filing Fee $8,708
Blue Sky Fees and Expenses 500
Printing and Engraving Expenses 500
Legal Fees and Expenses 20,000
Accounting Fees and Expenses 5,000
Miscellaneous Expenses 5,292
--------
TOTAL $40,000
=======
All expenses other than the S.E.C. filing fees are estimated.
Item 15. Indemnification of Officers and Directors.
-----------------------------------------
It is provided by Section 7-109-102 of the Colorado Revised Statutes and
the Company's Bylaws that the Company may indemnify any and all of its officers,
directors, employees or agents or former officers, directors, employees or
agents, against expenses actually and necessarily incurred by them, in
connection with the defense of any legal proceeding or threatened legal
proceeding, except as to matters in which such persons shall be determined to
not have acted in good faith and in the best interest of the Company.
Item 16. Exhibits
--------
The following exhibits are filed with this Registration Statement:
Exhibits Page Number
-------- -----------
3.1.1 Articles of Incorporation (1)
3.1.2 Amendment to Articles of Incorporation (2)
3.1.2 Bylaws (1)
5. Opinion of Counsel ___
10.1 Employment Agreement with Ed Holloway (2)
10.2 Employment Agreement with William E. Scaff, Jr. (2)
10.3 Administrative Services Agreement (3)
10.4 Agreement regarding Conflicting Interest Transactions (3)
10.5 Consulting Services Agreement with Raymond McElhaney and
Bill Conrad (4)
18
Exhibits Page Number
-------- -----------
10.6.1 Form of Convertible Note (4)
10.6.2 Form of Subscription Agreement
(4)
10.6.3 Form of Series C Warrant (4)
10.7 Purchase and Sale Agreement with Petroleum Exploration and
Management, LLC (wells, equipment and well bore leasehold
assignments) (4)
10.8 Purchase and Sale Agreement with Petroleum Management, LLC
(operations and leasehold) (4)
10.9 Purchase and Sale Agreement with Chesapeake Energy (4)
10.10 Lease with HS Land & Cattle, LLC (4)
10.11 Employment Agreement with Frank L. Jennings (5)
10.12 Purchase and Sale Agreement with Petroleum Exploration and
Management, LLC (6)
14. Code of Ethics (as amended) (7)
23.1 Consent of Hart & Trinen ___
23.2 Consents of Ehrhardt Keefe Steiner & Hottman PC and
Stark Schenkein, LLP ___
23.3 Consent of Ryder Scott Company, L.P. ___
99 Report of Ryder Scott Company, L.P. (4)
(1) Incorporated by reference to the same exhibit filed with the Company's
registration statement on Form SB-2, File #333-146561.
(2) Incorporated by reference to the same exhibit filed with the Company's
transition report on Form 8-K for the period ended August 31, 2008.
(3) Incorporated by reference to the same exhibit filed with the Company's
transition report on Form 10-K for the year ended August 31, 2008.
(4) Incorporated by reference to the same exhibit filed with the Company's
report on Form 10-K/A filed on June 3, 2011.
(5) Incorporated by reference to the same exhibit filed with the Company's
report on Form 8-K filed on June 24, 2011.
(6) Incorporated by reference to Exhibit 10.12 filed with the Company's report
on Form 8-K filed on August 5, 2011.
19
(7) Incorporated by reference to Exhibit 14 filed with the Company's report on
Form 8-K filed on July 22, 2011.
Item 17. Undertakings.
------------
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement.
(i) To include any prospectus required by Section l0(a)(3) of the
Securities Act of l933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii)To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement, including
(but not limited to) any addition or deletion of a managing underwriter.
(2) That, for the purpose of determining any liability under the Securities
Act of l933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities arising under the Securities Act
of l933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
20
POWER OF ATTORNEY
The registrant and each person whose signature appears below hereby
authorizes the agent for service named in this Registration Statement, with full
power to act alone, to file one or more amendments (including post-effective
amendments) to this Registration Statement, which amendments may make such
changes in this Registration Statement as such agent for service deems
appropriate, and the Registrant and each such person hereby appoints such agent
for service as attorney-in-fact, with full power to act alone, to exe- cute in
the name and in behalf of the Registrant and any such person, individually and
in each capacity stated below, any such amendments to this Registration
Statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of l933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Denver, Colorado on the 29th day
of September, 2011.
SYNERGY RESOURCES CORPORATION
By: /s/ Ed Holloway
-------------------------------------
Ed Holloway, Principal Executive Officer
In accordance with the requirements of the Securities Act of l933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/ Ed Holloway Principal Executive September 29, 2011
------------------------ Officer and a Director
Ed Holloway
/s/ William E. Scaff, Jr. Director September 29, 2011
------------------------
William E. Scaff, Jr.
/s/ Frank L. Jennings Principal Financial September 29, 2011
------------------------ and Accounting Officer
Frank L. Jennings
/s/ Rick Wilber Director September 29, 2011
------------------------
Rick Wilber
/s/ Raymond E. McElhaney Director September 29, 2011
------------------------
Raymond E. McElhaney
/s/ Bill M. Conrad Director September 29, 2011
------------------------
Bill M. Conrad
/s/ R.W. Noffsinger, III Director September 29, 2011
------------------------
R.W. Noffsinger, III
/s/ George Seward Director September 29, 2011
------------------------
George Seward
21
SYNERGY RESOURCES CORPORATION
FORM S-3
EXHIBITS