0001004878-13-000144.txt : 20130506
0001004878-13-000144.hdr.sgml : 20130506
20130503195012
ACCESSION NUMBER: 0001004878-13-000144
CONFORMED SUBMISSION TYPE: S-3
PUBLIC DOCUMENT COUNT: 8
FILED AS OF DATE: 20130506
DATE AS OF CHANGE: 20130503
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: SYNERGY RESOURCES CORP
CENTRAL INDEX KEY: 0001413507
STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311]
IRS NUMBER: 202835920
STATE OF INCORPORATION: CO
FISCAL YEAR END: 0831
FILING VALUES:
FORM TYPE: S-3
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-188364
FILM NUMBER: 13814218
BUSINESS ADDRESS:
STREET 1: 20203 HIGHWAY 60
CITY: PLATTEVILLE
STATE: CO
ZIP: 80651
BUSINESS PHONE: 303-591-7413
MAIL ADDRESS:
STREET 1: 20203 HIGHWAY 60
CITY: PLATTEVILLE
STATE: CO
ZIP: 80651
FORMER COMPANY:
FORMER CONFORMED NAME: Brishlin Resources, Inc.
DATE OF NAME CHANGE: 20071217
FORMER COMPANY:
FORMER CONFORMED NAME: Blue Star Energy Inc
DATE OF NAME CHANGE: 20070926
S-3
1
forms3may-13.txt
FORM S-3 MAY 2013
As filed with the Securities and Exchange Commission on May __, 2013.
Registration No. 333-_________
UNITED STATES
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 its charter)
Colorado
--------------------
(State or other jurisdiction of incorporation or organization)
20203 Highway 60
Platteville, CO 80651
20-2835920 (970) 737-1073
------------------------ -----------------------------
IRS Employer I.D. telephone (Address, including zip code, and
number) including area code 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 & Hart, LLC
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 the selling shareholders
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," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
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 (2) 11,446,860 $6.65 $76,121,619 $10,383
Total
------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) under the Securities Act, the registration fee is
calculated on the basis of the average of the high and low sale prices for
the common stock on the NYSE MKT on April 30, 2013.
(2) Shares of common stock offered by selling shareholders.
---------------
The registrant 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 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS
SYNERGY RESOURCES CORPORATION
Common Stock
By means of this prospectus a number of persons are offering to sell up to
11,345,998 shares of our common stock which may be issued upon the exercise of
our Series C and D warrants, the exercise of options held by two of our officers
and directors, and the exercise of warrants issued to an investor relations
consultant. In addition, by means of this prospectus, a number of persons are
offering to sell up to 100,862 shares of our common stock which they received
upon the exercise of our Series C and D warrants. The shares owned by selling
shareholders may be sold through the NYSE MKT, any other trading facility on
which the shares are traded, or otherwise, at prices related to the then current
market price, or in negotiated transactions.
We will not receive any proceeds from the sale of the common stock by the
selling shareholders. We will, however, receive proceeds from the exercise of
the warrants or options. Each warrant, when exercised, will entitle the holder
to receive a certain number of shares at an initial exercise price ranging from
$1.00 to $6.00 per share. Therefore, if all of the warrants and options
described in the "Selling Shareholders" section of this prospectus are
exercised, we will issue 11,345,998 shares of our common stock and we will
receive proceeds of approximately $56,476,000. We will pay for the expenses of
the registration of the resale of shares, which are estimated to be $55,000.
Our common stock is traded on the NSYE MKT under the symbol "SYRG". On
April 30, 2013 the closing price for our common stock was $6.79.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
THESE SECURITIES ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. FOR A
DESCRIPTION OF CERTAIN IMPORTANT FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS
PROSPECTUS.
The date of this prospectus is May ___, 2013.
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED BY THE OTHER INFORMATION APPEARING ELSEWHERE IN THIS
PROSPECTUS.
Overview
Synergy Resources Corporation ("we," "our," "us" or "the Company") is a
growth-oriented independent oil and gas company engaged in the acquisition,
development, and production of crude oil and natural gas in and around the
Denver-Julesburg Basin ("D-J Basin") of Colorado. All of our producing wells are
in the Wattenberg Field, which has a history as one of the most prolific
production areas in the country. We hold developed and undeveloped acreage in
the Wattenberg Field, and hold significant undeveloped acreage positions east of
the Wattenberg Field. Our holdings extend into eastern Colorado and western
Nebraska. Although we have not yet commenced exploration and development
activities in the eastern areas, we may do so in the future.
Since commencing active operations in September 2008, we have undergone
significant growth. As disclosed in the following table, as of February 28,
2013, we have drilled, acquired, or participated in 284 gross oil and gas wells
and have successfully completed 278 wells that went into production. There were
six wells at various stages of the drilling and completion process. We have not
drilled any non-productive wells.
As of February 28, 2013 our estimated proved reserves exceeded 7 million
Bbls of oil and 44 Bcf of gas. We currently hold approximately 259,000 gross
acres and 218,000 net acres under lease.
Strategy
Our strategy for continued growth includes additional drilling activities,
acquisition of existing wells, and recompletion of wells to more rapidly access
and/or extend reserves through improved hydraulic stimulation techniques. We
attempt to maximize our return on assets by drilling and operating wells in
which we have a majority net revenue interest. We attempt to limit our risk by
drilling in proven areas.
2
All wells drilled prior to 2012 were relatively low-risk vertical wells
(including wells that are considered directional wells). Over the last twelve
months we participated with other operators in six horizontal wells that reached
productive status. We have agreed to participate in seven horizontal wells that
have either commenced drilling operations or expect drilling activity during
2013, and are evaluating prospects for 27 wells that have been proposed. Initial
results from the wells have been encouraging.
Historically, we were a company that drilled vertical wells. Newer
technology allows exploitation of hydrocarbon deposits using horizontal wells.
The new technology is evolving rapidly and shows great promise. We plan to
transition our primary emphasis from vertical drilling to horizontal drilling
during the remainder of the fiscal year. Our capital expenditure budget for 2013
anticipated participation in ten horizontal wells operated by others. That
budget may be increased. Furthermore, we plan to drill and operate four
horizontal wells for our own account during the current fiscal year. We expect
to spud the first horizontal well for our own account during the spring.
During our start-up years, our cash flow from operations was not sufficient
to fund our growth plans and we relied on proceeds from the sale of debt and
equity securities. Our cash flow from operations is increasing, and we plan to
finance an increasing percentage of our growth with internally generated funds.
Ultimately, implementation of our growth plans will be dependent upon the
success of our operations and the amount of financing we are able to obtain.
Significant Developments
As an operator, we continued our active vertical well drilling program from
September 1, 2012 through February 28, 2013. During that time, we drilled 27 new
wells and brought all of them into productive status. In addition, the ten wells
that were in progress at August 31, 2012 reached productive status. We have
substantially completed our plans for drilling vertical wells during the 2013
fiscal year, and plan to focus our efforts on horizontal wells during the
remaining six months of the fiscal year. With regard to activity on wells in
which we participate as a non-operating interest owner, nine wells were drilled
(including two horizontal wells) and fourteen wells reached productive status
(including three horizontal wells). Six non-operated wells were in various
stages of drilling or completion at February 28, 2013, and two additional
horizontal wells were spud in March.
On December 5, 2012, we completed an acquisition of assets from Orr Energy
LLC. The assets included 36 producing oil and gas wells along with a number of
undeveloped leases. We assumed operational responsibility on 35 of the producing
wells. Purchase consideration included cash of $30 million and 3,128,422 shares
of our restricted common stock. Our preliminary evaluation of the assets
indicates that the fair value of the acquisition will approximate $42 million.
Revenues and expenses from the Orr properties were consolidated with our
operations commencing on December 5, 2012, and contributed approximately
$745,000 to operating income during the quarter.
In November 2012, we modified our borrowing arrangement with Community
Banks of Colorado, successor in interest to Bank of Choice, to increase the
maximum allowable borrowings. The new revolving line of credit increases the
maximum lending commitment to $150 million, subject to a borrowing base
calculation.
3
The arrangement contains covenants that, among other things, restrict the
payment of dividends and require compliance with certain financial ratios. The
borrowing arrangement is collateralized by certain of our assets, including
producing properties. Maximum borrowings are subject to reduction based upon a
borrowing base calculation, which will be re-determined semi-annually using
updated reserve reports. As of February 28, 2013, the borrowing base calculation
limited maximum borrowings to $47 million. In December, we utilized a portion of
the financing available through this arrangement to fund the acquisition of Orr
assets. We expect to use the remaining proceeds to fund our drilling and
development expenditures and to provide working capital.
Interest accrues at a variable rate, which will equal or exceed the minimum
rate of 2.5%. The interest rate pricing grid contains a graduated escalation in
applicable margin for increased utilization. At our option, interest rates will
be referenced to the Prime Rate plus a margin of 0% to 1%, or the London
InterBank Offered Rate plus a margin of 2.5% to 3.25%. The maturity date for the
arrangement is November 28, 2016.
We commenced our commodity hedging program beginning January 1, 2013. As of
February 28, 2013, we had hedged approximately 118,000 barrels of oil over the
remainder of calendar 2013 and all of calendar 2014. We used both commodity
swaps and collars. Our hedge positions generated a loss of $154,000 during the
quarter, consisting of realized losses of $20,000 and net unrealized losses of
$134,000. Our commodity hedge positions are revalued at fair value for each
reporting period, and can have a significant impact on reported results of
operations.
On March 1, 2013, we entered into an Agreement with Vecta Oil and Gas,
Ltd., relating to oil and gas properties located in the Denver-Julesberg Basin,
Colorado. The Agreement closed on March 13, 2013. At the closing, we paid Vecta
a leasehold reimbursement fee consisting of a cash payment of $2,928,502 and the
issuance to Vecta of 100,000 shares of our restricted common stock having a
value, for purposes of the Agreement, of approximately $660,000. Pursuant to the
terms of the Agreement:
o Greenhorn Project Area Leasehold (91,837 gross and 43,757 net acres) -
we and Vecta exchanged 6,977 net acres in oil and gas leases located
in Morgan and Weld Counties, Colorado, and we acquired an additional
4,580 net acres from Vecta in oil and gas leases located in Morgan and
Weld Counties, Colorado. Following this exchange and acquisition, we
owned an undivided 35% working interest and Vecta owned an undivided
65% working interest in 43,757 net acres.
o Wattenberg Extension Area Leasehold (2,758 gross and 2,023 net acres)
- Vecta conveyed to us 65% of its working interest in oil and gas
leases covering 2,023 net acres in Weld County, Colorado.
o State of Colorado Leasehold (960 gross and 960 net acres) - Vecta
conveyed to us 30% of its working interest in oil and gas leases from
the Colorado Board of Land Commissioners covering 960 net acres in
Weld County, Colorado. Following this exchange and acquisition, we
owned an undivided 65% working interest and Vecta owned an undivided
35% working interest in the leasehold acreage.
4
o Supplemental Greenhorn Project Area Leasehold (9,838 gross and 1,904
net acres) - Vecta conveyed to us 35% of its working interest in oil
and gas leases covering 1,904 net acres in Morgan and Weld Counties,
Colorado.
In total, the Agreement covers 101,675 gross (45,661 net) acres in which we
hold a 35% working interest and approximately 3,718 gross (2,983 net) acres in
which we hold a 65% working interest. Subject to certain exceptions, the oil and
gas leases subject to the Agreement were delivered with an 80% net revenue
interest, and we reserved an overriding royalty interest, subject to
proportionate reductions, equal to 20%, less existing landowners' and overriding
royalties. However, no overriding royalty interest was reserved with respect to
any state or federal oil and leases or any of the oil and gas leases comprising
the Supplemental Greenhorn Project Area.
The Agreement also establishes an area of mutual interest covering
designated areas in Morgan and Weld Counties, Colorado.
We will work with Vecta to:
o acquire new proprietary seismic data across a portion of the oil and
gas leases that are the subject of the Agreement;
o drill a horizontal well on one of the leases to evaluate either the
Greenhorn Shale or Niobrara Shale; and
o conduct other exploration projects in the area covered by the leases
as may be mutually agreed upon. The Agreement contemplates the
drilling of an initial well to test the Greenhorn formation on or
before October 31, 2013.
We will be the operator for all wells to be drilled on the leases.
Our website is: www.syrginfo.com. Information on our website is not a part
of this prospectus.
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.
The Offering
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, for a total of 9,000,000 shares of common stock
issuable upon exercise of the Series C warrants. The notes were convertible into
shares of our common stock at a conversion price of $1.60 per share. 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. All notes have
been converted into 11,250,000 shares of our common stock. Following the sale of
the units, a number of warrant holders exercised their warrants. As of May 1,
2013, 8,970,000 shares were issuable upon the exercise of the remaining Series C
warrants.
5
We paid the placement agent for the Unit offering a commission of 8% of the
amount raised in the offering. We also sold to the placement agent, for a
nominal price, 1,125,000 Series D warrants. Each Series D warrant allows the
holder to purchase one share of our common stock at a price of $1.60 per share.
The Series D warrants expire on December 31, 2014. Following the sale of the
Units, a number of warrant holders exercised their warrants. As of May 1, 2013,
325,998 shares were issuable upon the exercise of the remaining Series D
warrants.
In June 2008 we issued options to purchase 2,000,000 shares of our common
stock at an exercise price of $1.00 per share. The options expire on June 11,
2016 and are held by entities controlled by Ed Holloway and William E. Scaff,
Jr., two of our officers and directors.
<
In July 2012 we issued a warrant to the Liolios Group, an investor
relations consultant. The warrant entitles the holder to purchase 25,000 shares
of our common stock at any time prior to September 30, 2015 and 25,000 shares of
our common stock at any time prior to December 31, 2015. The warrant may be
exercised at a price of $2.69 per share.
By means of this prospectus a number of persons are offering to sell up to
11,345,998 shares of our common stock which may be issued upon the exercise of
our Series C and D warrants, the exercise of options held by two of our officers
and directors, and the exercise of the warrant issued to the Liolios Group. In
addition, by means of this prospectus a number of persons are offering to sell
up to 100,862 shares of our common stock which they received upon the exercise
of our Series C and D warrants. The shares owned by selling shareholders may be
sold through the NYSE MKT, any other trading facility on which the shares are
traded, or otherwise, at prices related to the then current market price, or in
negotiated transactions.
As of April 30, 2013, we had 55,226,616 outstanding shares of common stock.
The number of our outstanding shares does not include shares issuable upon the
exercise of outstanding warrants or the exercise of options granted to our
officers, directors and employees.
Risk Factors
The purchase of the securities offered by this prospectus 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 "Risk Factors" section of this prospectus below for
additional Risk Factors.
Use of Proceeds
We will not receive any proceeds from the sale of the common stock by the
selling shareholders. We will, however, receive proceeds from the exercise of
the warrants or options. Each warrant or option, when exercised, will entitle
the holder to receive a certain number of shares at an initial exercise price
ranging from $1.00 to $6.00 per share. Therefore, if all of the warrants and
options described in the "Selling Shareholders" section of this prospectus are
exercised, we will issue 11,345,998 shares of our common stock and we will
receive proceeds of approximately $56,476,000. However, none of the warrants or
options may be exercised and there is no guarantee that we will receive any or
all of these proceeds. If any of the warrants or options are exercised, we will
use the proceeds for capital expenditures, working capital, repayment of
indebtedness, or general corporate purposes.
6
We will pay for the expenses of the registration of the resale of shares,
which are estimated to be $55,000.
Forward-Looking Statements
This prospectus contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties and are based on the beliefs and assumptions
of management and information currently available to management. The use of
words such as "believes", "expects", "anticipates", "intends", plans",
"estimates", "should", "likely" or similar expressions, indicates a
forward-looking statement.
The identification in this prospectus of factors that may affect our future
performance and the accuracy of forward-looking statements is meant to be
illustrative and by no means exhaustive. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty.
Factors that could cause our actual results to differ materially from those
expressed or implied by forward-looking statements include, but are not limited
to:
o The success of our exploration and development efforts;
o The price of oil and gas;
o The worldwide economic situation;
o Any change in interest rates or inflation;
o The willingness and ability of third parties to honor their
contractual commitments;
o Our ability to raise additional capital, as it may be affected by
current conditions in the stock market and competition in the oil and
gas industry for risk capital;
o Our capital expenditures, as they may be affected by delays or cost
overruns;
o Our costs of production;
o Environmental and other regulations, as the same presently exist or
may later be amended;
o Our ability to identify, finance and integrate any future
acquisitions; and
o The volatility of our stock price.
RISK FACTORS
Investors should be aware that this offering 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.
7
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 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 are 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.
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
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
8
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 oil or gas in quantities sufficient 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 not under 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 various governmental authorities.
Buyers of our gas, if any, may refuse to purchase gas from us in the event of
oversupply.
If we drill wells that 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.
Lack of take-away capacity in the Wattenberg Field could restrict our ability to
sell crude oil and natural gas.
During 2012, crude oil and natural gas production increased significantly
in and around the Wattenberg Field and has strained the capacity of the
midstream operators to collect and process the hydrocarbons. While midstream
operators are increasing their capacity to gather and process natural gas and
crude oil, it is unknown whether the increased capacity will be sufficient. A
lack of capacity on the part of midstream operators could constrain our ability
to sell crude oil and natural gas and have a negative effect on our results of
operation.
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.
9
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 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.
Opposition to Hydraulic Fracturing may increase the cost and time to complete
our wells
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. While
companies have been using the technique for decades, as drilling expands to more
populated areas, environmentalists raise concern about the effects on the
population's health and drinking water.
In April of 2012, the Obama administration proposed the first national
standards to control air pollution from gas wells stimulated by hydraulic
fracturing. The EPA published claims that the new regulations would ensure
pollution is controlled without slowing natural gas production, actually
resulting in more product for fuel suppliers to bring to market. The proposal
would restrict the venting of gases during the well completion phase, and
require the implementation of a new technology to reduce emissions of pollutants
during completion of wells. Implementation of the pollution-reducing equipment
for so-called "green completions" is required by January 2015.
Locally, some counties and municipalities are attempting to impose more
stringent regulations than those required by the Colorado Oil and Gas
Conservation Commission. Litigation has been initiated to determine the legality
of these attempts. Depending on the legislation that may ultimately be enacted
or the regulations that may be adopted at the federal, state and/or local
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 transactions with related parties may cause conflicts of interests that may
adversely affect us.
Ed Holloway and William E. Scaff, Jr., both of whom are officers, directors
and principal shareholders, control two entities, Petroleum Exploration &
Management, LLC ("PEM") and HS Land & Cattle, LLC ("HSLC"), with whom we do
business. We presently lease the Platteville office space and equipment storage
yard from HSLC at a rate of $10,000 per month. During 2011, we purchased all of
the operating oil and gas assets owned by PEM.
10
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
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.
Our failure to obtain capital may significantly restrict our proposed
operations.
We need additional capital 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 shareholders and
could be at prices substantially below the price investors paid for their shares
of our common stock. Our failure to obtain the capital required will result in
the slower implementation of our business plan. There can be no assurance that
we will be able to obtain the necessary capital.
We will need to consistently generate positive cash flow or obtain
additional financing until we are able to consistently yield sufficient cash
essential for the growth of our operations in executing our strategic business
plan.
As a result of our short operating history, it is difficult for potential
investors to evaluate our business.
Although our common stock has been listed on the NYSE MKT since July 27, 2011,
the trading in our stock has, at times, been limited and sporadic.
Additionally, the trading price of our common stock may fluctuate widely in
response to various factors, some of which are beyond our control. Factors that
could negatively affect our share price include, but are not limited to:
o actual or anticipated fluctuations in our quarterly results of
operations;
o liquidity;
o sales of common stock by our shareholders;
o changes in oil and natural gas prices;
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;
11
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 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 our outstanding shares by adding a
substantial number of additional shares of common stock.
The credit risk of financial institutions could adversely affect us.
We have entered into transactions with counterparties in the financial
services industry, including commercial banks, insurance companies, and their
affiliates. These transactions expose us to credit risk in the event of default
of our counterparty, principally with respect to hedging agreements but also
insurance contracts and bank lending commitments. Deterioration in the credit
markets may impact the credit ratings of our current and potential
counterparties and affect their ability to fulfill their existing obligations to
us and their willingness to enter into future transactions with us.
Our use of hedging transactions could reduce our cash flow and/or result in
reported losses.
We periodically enter into hedging agreements for a portion of our
anticipated oil production. Our commodity hedging agreements are limited in
duration, usually for periods of two years or less. Should commodity prices
increase after we have entered into a hedging transaction, our cash flows will
be lower than they would have been had the hedge not been in place.
For financial reporting purposes, we do not use hedge accounting, thus we
are required to record changes in the fair value of our hedging instruments
through our earnings rather than through other comprehensive income had we
elected to use hedge accounting. As a consequence, we may report material
unrealized losses or gains on our hedging agreements prior to their expiry. The
12
amount of the actual realized losses or gains will differ and will be based on
the actual prices of the commodities on the settlement dates as compared to the
hedged prices contained in the hedging agreements. As a result, our periodic
financial results will be subject to fluctuations related to our derivative
instruments.
We are dependent upon the contributions of our senior management team and other
key employees for our success.
If one or more of these executives, or other key employees, were to cease
to be employed by us, our progress could be adversely affected. In particular,
we may have to incur costs to replace senior executive officers or other key
employees who leave, and our ability to execute our business strategy could be
impaired if we are unable to replace such persons in a timely manner.
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of the shares of
common stock pursuant to this prospectus. We will, however, receive proceeds
from the exercise of the warrants. Each warrant, when exercised, will entitle
the holder to receive a certain number of shares at an initial exercise price
ranging from $1.00 per share to $6.00 per share. Therefore, if all of the
outstanding warrants offered hereby are exercised, we will issue 11,345,998
shares of our common stock and we will receive proceeds of approximately
$56,476,000. However, none of the warrants or options may be exercised and there
is no guarantee that we will receive any or all of these proceeds. If any of the
warrants or options are exercised, we will use the proceeds for capital
expenditures, working capital, repayment of indebtedness, or general corporate
purposes.
SELLING SHAREHOLDERS
The persons listed in the following tables plan to offer the shares shown
opposite their respective names by means of this prospectus. The owners of the
shares to be sold by means of this prospectus are referred to as the "selling
shareholders". The selling shareholders acquired their shares in the
transactions described below. We will not receive any proceeds from the sale of
the securities by the selling shareholders. We will pay all costs of registering
the securities offered by the selling shareholders. The selling shareholders
will pay all sales commissions and other costs of the sale of the securities
offered by them.
Securities Issuable Upon Exercise of Options.
In 2008 we issued options to purchase 2,000,000 shares of our common stock
at an exercise price of $1.00. The options expire on June 11, 2016. The persons
listed in the following table are offering the shares issuable upon the exercise
of the options, shown opposite their respective names, by means of this
prospectus.
13
Shares
Issuable
Upon Shares to Share Percentage
Selling Shares Exercise be sold in Ownership After
Shareholder Owned of Options this Offering After Offering Offering
------------ -------- ---------- ----------- -------------- ---------
Each of Nine, LLC 1,470,000 1,000,000 1,000,000 1,470,000 2.7%
My Way LLC 1,520,000 1,000,000 1,000,000 1,520,000 2.7%
The controlling persons of these selling shareholders are:
Name of Shareholder Controlling Person
Each of Nine, LLC Ed Holloway
My Way LLC William E. Scaff, Jr.
Series C and Series D warrants
Between December 2009 and March 2010, we sold 180 Units to a group of
private investors. The Units were sold at a price of $100,000 per Unit. Each
Unit consisted of one Promissory Note in the principal amount of $100,000 and
50,000 Series C warrants. At any time after May 31, 2010, the Notes could be
converted into shares of our common stock, initially at a conversion price of
$1.60 per share. 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 on or before
December 31, 2014, for a total of 9,000,000 shares of common stock issuable upon
exercise of the Series C warrants. All Notes were subsequently converted into
shares of our common stock. Following the sale of the Units, a number of warrant
holders exercised their warrants. As of May 1, 2013, 8,970,000 shares were
issuable upon the exercise of the remaining Series C warrants.
In connection with this private offering we paid Bathgate Capital Partners
(now named GVC Capital), the placement agent for the offering, a commission of
$977,100 plus a non-accountable expense allowance of $360,000. We also issued to
the placement agent 1,125,000 Series D warrants. Each Series D warrant entitles
the holder to purchase one share of our common stock at a price of $1.60 per
share at any time on or before December 31, 2014. Following the sale of the
Units, a number of warrant holders exercised their warrants. As of May 1, 2013,
a total of 325,998 shares were issuable upon the exercise of the remaining
Series D warrants.
The persons listed in the following table plan to offer the shares issuable
upon the exercise of the Series C warrants, shown opposite their respective
names, by means of this prospectus.
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned C Warrants this Offering Offering (2) Offering
---------------- ----- -------------- ------------- ------------ ---------
Accredited Members, Inc. -- 12,500 12,500 -- --
Stephen F. Albert 15,960 12,500 12,500 15,960 *
James D. Allard -- 50,000 50,000 -- --
Anchor Ventures, LLC -- 75,000 75,000 -- --
14
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned C Warrants this Offering Offering (2) Offering
---------------- ----- ------------- ------------- ------------ ---------
Jason Anderson -- 25,000 25,000 -- --
John David Anderson -- 25,000 25,000 -- --
Robert Anderson -- 25,000 25,000 -- --
Les D. Armstrong 31,825 25,000 25,000 31,825 *
Ronald Armstrong 118,750 55,000 55,000 118,750 *
Ronald L. Blach 62,692 50,000 50,000 62,692 *
Michael S. Barish -- 100,000 100,000 -- --
Margaret Bathgate -- 25,000 25,000 -- --
Steven M. Bathgate IRA,
Delaware Charter Guarantee
& Trust Co. as custodian -- 55,000 55,000 -- --
Larry Baucke & Laurie Baucke -- 200,000 200,000 -- --
William C. Bensler -- 50,000 50,000 -- --
Larry E. & Terryl A. Benson -- 16,000 16,000 -- --
Ruth Bluhm and Gary Bluhm -- 12,500 12,500 -- --
Gary and Theresa Boening -- 50,000 50,000 -- --
Alvin R. Bonnette, Trustee -- 100,000 100,000 -- --
Gary A. and Linda J. Brauns -- 37,500 37,500 -- --
Joseph P. Brophy -- 100,000 100,000 -- --
Brothers LLC -- 50,000 50,000 -- --
William J. Brucham, IRA 5,000 20,000 20,000 5,000 --
The Burns Partnership, LLC -- 200,000 200,000 -- --
Busha Investments LLC -- 100,000 100,000 -- --
Butera Family Trust -- 75,000 75,000 -- --
C & R Industries Inc. -- 25,000 25,000 -- --
Rodney D. Cerny IRA,
Delaware Charter Guarantee
& Trust Co. as custodian -- 25,000 25,000 -- --
Lawrence Chimerine IRA,
CGMI as custodian 15,889 12,500 12,500 15,889 *
Michael and Teri Cox-Baldwin
2003 Family Trust -- 50,000 50,000 -- --
John E. & Patricia E. Crowley -- 25,000 25,000 -- --
Charles Curtis -- 50,000 50,000 -- --
D&P Kelsall Family LLLP -- 25,000 25,000 -- --
Leslie W. David Trust -- 50,000 50,000 -- --
Glen S. Davis -- 12,500 12,500 -- --
Diamond S DGT Trust -- 100,000 100,000 -- --
Michael E. Donnelly -- 5,087 5,087 -- --
Duncan Family Trust 1997 -- 100,000 100,000 -- --
15
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned C Warrants this Offering Offering (2) Offering
---------------- ----- ------------- ------------- ------------ ---------
William Max Duncan &
Kathleen Ann Duncan -- 200,000 200,000 -- --
James B. Edson -- 50,000 50,000 -- --
Betty B. Fisher and
William R. Fisher -- 50,000 50,000 -- --
Robert B. Fisher
Revocable Trust -- 250,000 250,000 -- --
Elaine Foe -- 50,000 50,000 -- --
Eric Gagne -- 50,000 50,000 -- --
Johnny Galbraith -- 50,000 50,000 -- --
Roland & Cynthia Gentner -- 50,000 50,000 -- --
John D. Gibbs -- 125,000 125,000 -- --
Kim J. Gloystein IRA, Delaware
Charter Guarantee & Trust
Co. as custodian -- 10,000 10,000 -- --
GrassRoutes -- 50,000 50,000 -- --
Cynthia & Rose Greenfield 5,000 10,000 10,000 5,000 *
Zenas N. Gurley 75,452 25,000 25,000 75,452 *
Michele Hannan -- 50,000 50,000 -- --
Dennie C. Harms 9,375 25,000 25,000 9,375 *
Geraldine Haukos -- 75,000 75,000 -- --
Jan Haukos -- 50,000 50,000 -- --
Kim Haukos -- 50,000 50,000 -- --
Jack P. Herick -- 10,000 10,000 -- --
Debra Herman -- 100,000 100,000 -- --
Herman Enterprises, LLC -- 150,000 150,000 -- --
Robyne L. Huebner &
James W. Huebner -- 5,000 5,000 -- --
Wayne Huepenbecker -- 50,000 50,000 -- --
William & Cheryl Hughes
Family Trust -- 100,000 100,000 -- --
Iiams Family Trust -- 13,750 13,750 -- --
Judith C. Jacobsen Trust -- 50,000 50,000 -- --
John P. Jenkins IRA, Delaware
Charter Guarantee & Trust Co. -- 12,500 12,500 --
Greg A. Jones -- 50,000 50,000 -- --
Jung Capital Partners LLLP -- 50,000 50,000 -- --
Grace Kenkel Revocable Trust -- 25,000 25,000 -- --
Stephanie L. Kenkel &
David A. Kenkel -- 25,000 25,000 -- --
The Kleemann Family 2004
Revocable Trust -- 50,000 50,000 -- --
Bruce Kramer 134,928 25,000 25,000 134,928 *
16
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned C Warrants this Offering Offering (2) Offering
---------------- ----- ------------- ------------- ------------ ---------
Kimberly Krause IRA, Sterling
Trust as custodian -- 24,913 24,913 -- --
Jon B. Kruljac &
Teri E. Kruljac -- 25,000 25,000 -- --
Alan Kurus, IRA, Delaware
Charter Guarantee & Trust
as custodian -- 50,000 50,000 -- --
Gayle M. Laufer
Revocable Trust -- 25,000 25,000 -- --
Wayne L. Laufer
Revocable Trust -- 250,000 250,000 -- --
Lazarus Investment
Partners LLLP -- 500,000 500,000 -- --
Brian Lewand -- 50,000 50,000 -- --
Christopher R. Lewand -- 50,000 50,000 -- --
Paul W. Lewis -- 50,000 50,000 -- --
Robert M. Liess -- 25,000 25,000 -- --
Lighthouse Capital LTD -- 51,750 51,750 -- --
Lucas Family Trust -- 35,000 35,000 -- --
Kent J. Lund IRA, Delaware
Charter Guarantee & Trust
Co.as custodian -- 10,000 10,000 -- --
M&L Cattle Co. -- 100,000 100,000 -- --
M & T Farms LLC -- 50,000 50,000 -- --
Ronald & Patricia Mack -- 12,000 12,000 -- --
James A. Maisano -- 25,000 25,000 -- --
Mario Mapelli -- 50,000 50,000 -- --
Richard Martin -- 25,000 25,000 -- --
John Marx -- 12,500 12,500 -- --
Eugene C. McColley IRA,
Delaware Charter Guarantee
& Trust Co. as custodian -- 16,000 16,000 -- --
Robert F. McCullough Jr. -- 75,000 75,000 -- --
Jerry McPherson 25,000 50,000 50,000 25,000 *
Lelya J. Menscher -- 25,000 25,000 -- --
Wilbert L. Miles 15,926 12,500 12,500 15,926 *
Robert N. Miller 20,000 15,000 15,000 20,000 *
Peter J. Mindock -- 100,000 100,000 -- --
H. Steven Mishket -- 10,000 10,000 -- --
MJ Energy, LLC -- 50,000 50,000 -- --
Paul Montanarella -- 22,000 22,000 -- --
Paul Montanarella IRA,
Sterling Trust as custodian -- 11,000 11,000 -- --
William D. Moreland 43,466 320,000 320,000 43,466 *
17
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned C Warrants this Offering Offering (2) Offering
---------------- ----- -------------- ------------- ------------ ---------
David R. Morgan -- 25,000 25,000 -- --
Mundon Anticline
Investment, LLC -- 50,000 50,000 -- --
Joseph W. Newton 25,000 100,000 100,000 25,000 *
Bernard Orsi and Sandra Orsi -- 50,000 50,000 -- --
Mary Jane Peck IRA, Delaware
Charter Guarantee & Trust
as custodian -- 50,000 50,000 -- --
Jerry W. Peterson IRA, Delaware
Charter Guarantee & Trust Co.
as custodian -- 7,500 7,500 -- --
Shane T. Petersen &
Kathrine M. Petersen -- 5,000 5,000 -- --
Sharon L. Pitkin Trust, Southwest
Securities, Inc. as custodian -- 50,000 50,000 -- --
Steven D. Plissey IRA,
Delaware Charter Guarantee &
Trust Co. as custodian 7,500 10,000 10,000 7,500 *
Pooling Effect LLC -- 100,000 100,000 -- --
Roger Prenzlow and
Vicki Prenzlow -- 12,500 12,500 -- --
Professional Project Mgmt, Inc.,
DBP Sandra S. Burcham &
William J. Burcham 5,000 25,000 25,000 5,000 *
Proteus Cap 401 (K) Plan,
Colorado State Bank &
Trust as custodian -- 25,000 25,000 -- --
Joe Raith -- 100,000 100,000 -- --
Beth A. Reid -- 50,000 50,000 -- --
Jason David Reid -- 50,000 50,000 -- --
Ruben Roy Richardson 379,795 250,000 250,000 379,795 *
J.W. Roth -- 12,500 12,500 -- --
Earl W. Sauder Irrevocable
Trust -- 50,000 50,000 -- --
The Earl W. Sauder, LLC -- 100,000 100,000 -- --
Stephen L. Sauder -- 50,000 50,000 -- --
Sauder Family LLC -- 25,000 25,000 -- --
George F. or Mary Clare Schmitt -- 100,000 100,000 -- --
Jon F. Schutz -- 37,500 37,500 -- --
Daniel V. Seedorf 15,625 12,500 12,500 15,625 *
Roger Seedorf -- 12,500 12,500 -- --
H.L. Severance, Inc. Pension
Plan and Trust -- 75,000 75,000 -- *
18
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned C Warrants this Offering Offering (2) Offering
---------------- ----- ------------- ------------- ------------ ---------
H. L. Severance Inc.
Profit Sharing Plan
& Trust -- 12,500 12,500 -- --
H. Leigh Severance -- 80,000 80,000 -- --
George L. Seward Alternative
Energy LLC -- 87,500 87,500 -- --
George L. Seward 1,248,161 350,000 350,000 1,248,161 2.3%
Karen Seward 40,411 25,000 25,000 40,411 *
David C. Shatzer -- 70,000 70,000 -- --
Michael V. and Lori D. Shoop -- 100,000 100,000 -- --
Roy G. Shuman -- 18,000 18,000 -- --
Roy G. Shuman, Equity Trust
Co. dba Sterling Trust as
custodian -- 32,000 32,000 -- --
Jolie Slaton -- 25,000 25,000 -- --
John H. Staiano IRA, Delaware
Charter Guarantee & Trust Co.
as custodian 70,000 50,000 50,000 70,000 *
Alva Terry Staples -- 15,000 15,000 -- --
Stucky Red Bluff, Inc. -- 25,000 25,000 -- --
Jo Svihorec IRA, Southwest
Securities Inc. as custodian -- 25,000 25,000 -- --
Steven A Thorn &
Letha M. Thorn 15,930 12,500 12,500 15,930 *
William S. Vann -- 25,000 25,000 -- --
Lazaros and Patricia C. Voreadis -- 25,000 25,000 -- --
W&O Enterprises LLC -- 5,000 5,000 -- --
Stephanie Kulbacki-Welton 12,725 10,000 10,000 12,725 *
Michael Williams -- 10,000 10,000 -- --
James H.B. Wilson Testamentary
Trust -- 12,500 12,500 -- --
Jeffrey S. and Rhonda S. Wolff -- 50,000 50,000 -- --
Wooden Spoon Limited
Partnership -- 25,000 25,000 -- --
YuCo Energy LLC -- 275,000 275,000 -- --
Alan Budd Zuckerman -- 5,000 5,000 -- --
John W. Zurbrigen -- 25,000 25,000 -- --
4X4 LLC -- 50,000 50,000 -- --
----- --------- ---------
8,970,000 8,970,000
========= =========
* Less than 1%
(1) See the information following this table for details on the controlling
persons for the non-individual selling shareholders.
(2) Assumes the sale of all shares that may be sold under this prospectus.
19
Securities Issuable Upon Exercise of Series D Warrants
Shares Issuable Share Percentage
Upon Exercise Shares to Ownership Ownership
Name of Selling Shares of Series be sold in After After
Shareholder (1) Owned D Warrants this Offering Offering (3) Offering
---------------- ----- ------------- ------------- ------------ ---------
CapWest Securities, Inc. -- 1,058 1,058 -- --
David Drennen -- 18,080 18,080 -- --
John Jung -- 1,875 1,875 -- --
Jon B. Kruljac -- 300,000 300,000 -- --
Gene McColley -- 1,116 1,116 -- --
Morris McDonald -- 938 938 -- --
WMS Enterprises, LLC -- 2,931 2,931 -- --
------- -------
325,998 325,998
======= =======
Investor Relations Consultant
In July 2012 we issued a warrant to the Liolios Group, an investor
relations consultant. The warrant entitles the holder to purchase 25,000 shares
of our common stock at any time prior to September 30, 2015 and 25,000 shares of
our common stock at any time prior to December 31, 2015. The warrant may be
exercised at a price of $2.69 per share.
Other Selling Shareholders
Following their issuance, the following persons exercised Series C or D
warrants and are offering for the sale, by means of this prospectus, the shares
of common stock they received upon the exercise of the warrants.
Shares Shares Percentage
Owned Shares to Owned Ownership
Name of Prior to be sold in After After
Selling Shareholder Offering this Offering Offering Offering
------------------- ---------- -------------- --------- ----------
William J. Burchman, Jr. 5,000 5,000 -- --
Zenas N. Gurley 75,452 75,452 -- --
Michael J. Morgan 3,771 3,771 -- --
Anthony B. Petrelli 16,639 16,639 -- --
------- -------
100,862 100,862
======= =======
(1) See the information following this table for details on the controlling
persons for the non-individual selling shareholders.
(2) The placement agent subsequently assigned the Series D warrants to a number
of its registered representatives and employees, as well as selected
dealers participating in the private offering. The selected dealers, in
turn,
20
assigned most of the Series D warrants to a number of their registered
representatives and employees.
(3) Assumes the sale of all shares that may be sold under this prospectus.
The controlling persons of the non-individual selling shareholders are:
Name of Shareholder Controlling Person
------------------- ------------------
Accredited Members, Inc. Kent Kiefer
Anchor Ventures, LLC Anne Wenaas
Brothers LLC William T Ahlborg
The Burns Partnership, LLC David A Burns
Busha Investments LLC Donald C. Busha
C & R Industries Inc. Richard Cruickshank
D&P Kelsall Family LLLP Pamela Kelsall
Diamond S DGT Trust Scott W. Sparkman
Grass Routes Scott Lee
Herman Enterprises, LLC Benjamin Herman
Jung Capital Partners LLLP Jon Jung
Lazarus Investment Partners LLLP Justin Borus
Lighthouse Capital LTD Carl Caserta
M&L Cattle Co. Steve Winger
M & T Farms LLC Thomas L. Goding
MJ Energy, LLC Michael P. McNamara
Mundon Anticline Investment, LLC Kent E. Mundon-
Pooling Effect LLC Constance M. Sacco
Professional Project Mgmt, Inc. William J. & Sandra S. Burcham
The Earl W. Sauder, LLC Bobbie L. Agler
Sauder Family LLC Steven L. Sauder
George L. Seward Alternative
Energy LLC George L Seward
Stucky Red Bluff, Inc. Judith Jacobsen
W&O Enterprises LLC Christopher S. Wrolstad
Wooden Spoon Limited Partnership Robert A. Ingalls
YuCo Energy LLC Mark Roth
4X4 LLC Tim Warde
CapWest Securities, Inc. Chris Wrolstad
WMS Enterprises, LLC Dale Hall
Relationships
With the exception of Ed Holloway, William E. Scaff, Jr., George Seward,
and Jon Kruljac, each of whom is currently an officer or director, no selling
shareholder has, or had, any material relationship with us, or our officers or
directors.
CapWest Securities, Inc. is a securities broker.
21
To our knowledge, the following persons are affiliated with a securities
broker:
Morris McDonald
Zenas N. Gurley
Anthony B. Petrelli
PLAN OF DISTRIBUTION
The shares of common stock owned by the selling shareholders may be offered
and sold by means of this prospectus from time to time as market conditions
permit.
The shares of common stock may be sold by one or more of the following
methods, without limitation:
o a block trade in which a broker or dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o direct transactions between sellers and purchasers without a
broker/dealer.
In competing sales, brokers or dealers engaged by the selling shareholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from selling shareholders in amounts to be
negotiated. As to any particular broker-dealer, this compensation might be in
excess of customary commissions. Neither we nor the selling shareholders can
presently estimate the amount of such compensation. Notwithstanding the above,
we do not believe that any FINRA member will charge commissions that exceed 8%
of the total proceeds from the sale.
The securities may be sold in one or more transactions at:
o fixed prices;
o prevailing market prices at the time of sale;
o prices related to such prevailing market prices;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on which the
securities may be listed or quoted at the time of the sale;
o in the over-the-counter market;
22
o otherwise than on such exchanges or services or in the
over-the-counter market;
o through the writing and exercise of options, whether such options are
listed on an options exchange or otherwise; or
o through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with the sales of the securities or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions. These broker-dealers or other financial institutions may
in turn engage in short sales of the securities in the course of hedging their
positions. The selling shareholders may also sell the securities short and
deliver securities to close out short positions, or loan or pledge the
securities to broker-dealers that in turn may sell securities.
At the time a particular offering is made, if required, a prospectus
supplement will be distributed, which will set forth the names of the selling
shareholders, the aggregate amount and type of securities being offered, the
price at which the securities are being sold and other material terms of the
offering, including the name or names of any underwriters, broker-dealers or
agents, any discounts, commissions and other terms constituting compensation
from the selling shareholders and any discounts, commissions or concessions
allowed or reallowed to paid broker-dealers. In addition, if we are notified by
a selling shareholder that a donee or pledgee intends to sell more than 500
shares we will file a supplement to this prospectus.
We cannot be certain that any selling shareholder will sell any or all of
the securities pursuant to this prospectus. Further, we cannot assure you that
any such selling shareholder will not transfer, devise or gift the securities by
other means not described in this prospectus. In addition, any security covered
by this prospectus that qualifies for sale pursuant to Rule 144 of the
Securities Act may be sold under Rule 144 rather than under this prospectus. The
securities may be sold in some states only through registered or licensed
brokers or dealers. In addition, in some states the securities may not be sold
unless they have been registered or qualified for sale or an exemption from
registration or qualification is available and complied with.
The selling shareholders and any other person participating in the sale of
the securities will be subject to the Exchange Act. The Exchange Act rules
include, without limitations Regulation M, which may limit the timing of
purchases and sales of any of the securities by the selling shareholders and any
other such person. In addition, Regulation M may restrict the ability of any
person engaged in the distribution of the securities and the ability of any
person or entity to engage in market-making activities with respect to the
securities.
We have agreed to indemnify the selling shareholders against certain
liabilities, including liabilities under the Securities Act, arising out of or
based upon any untrue statement or alleged untrue statement of any material fact
contained in the registration statement of which this prospectus is a part, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
23
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading.
The selling shareholders have agreed to indemnify us against certain
liabilities, including liabilities under the Securities Act, arising out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement of which this prospectus is a part,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to us
through an instrument duly executed by such selling shareholder specifically
stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the common stock to the public, other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 100,000,000 shares of common stock, par value
$0.001 per share. 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.
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. Our borrowing arrangement contains terms that require the lenders to
approve cash dividend payments. 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, par value
$0.01 per share. 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
24
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 "Selling Shareholders" 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
indemnification for liabilities arising under the Securities Act 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 Securities Act and is therefore unenforceable.
AVAILABLE 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.
25
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 for the fiscal year ended August 31, 2012
filed on November 14, 2012;
o 8-K Reports filed on:
September 24, 2012
October 24, 2012
October 25, 2012
November 9, 2012
November 14, 2012
December 3, 2012
December 3, 2012
December 7, 2012
January 10, 2013
January 28, 2013
February 14, 2013
March 7, 2013
March 12, 2013
March 19, 2013
April 5, 2013
April 9, 2013
o Report on Form 10-Q for the three months ended November 30, 2012.
o Report on Form 10-Q for the six months ended February 28, 2013.
o Description of our common stock contained in our registration
Statement on Form 8-A filed on July 19, 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
26
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.
LEGAL MATTERS
Certain legal matters with respect to the securities offered hereby will be
passed upon for us by Hart & Hart LLC, Denver, Colorado.
EXPERTS
The financial statements of Synergy Resources Corporation as of and for the
years ended August 31, 2012 and 2011 incorporated by reference in this
prospectus, have been so incorporated in reliance on the reports of EKS&H, LLLP,
an independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting.
The information relating to our oil and natural gas reserves, as of August
31, 2012 and August 31, 2011, incorporated into this prospectus supplement by
reference, including all statistics and data, was derived from letters dated
November 2, 2012 and October 13, 2011, respectively, evaluating our oil and
natural gas properties, prepared by Ryder Scott Company, L.P., our independent
petroleum engineer, in reliance on the authority of such firm as experts in the
oil and natural gas industry.
27
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY ...................................................
RISK FACTORS ........................................................
SELLING SHAREHOLDERS..................................................
DESCRIPTION OF SECURITIES.............................................
INDEMNIFICATION.......................................................
AVAILABLE INFORMATION.................................................
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this prospectus, and
if given or made, such information or representations must not be relied upon as
having been authorized by Synergy Resources Corporation. This prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, any of
the securities offered in any jurisdiction to any person to whom it is unlawful
to make an offer by means of this prospectus.
28
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table shows the costs and expenses payable by the Company in
connection with this registration statement.
SEC Filing Fee $10,383
Legal Fees and Expenses 30,000
Accounting Fees and Expenses 10,000
Miscellaneous Expenses 4,617
-------
TOTAL $55,000
=======
All expenses other than the SEC filing fee are estimated.
Item 15. Indemnification of Officers and Directors
The Colorado Business Corporation Act provides 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 Company's
best interest.
Item 16. Exhibits
The following exhibits are filed with this Registration Statement:
Exhibits
1.1 Purchase Agreement, dated as of December 16, 2011, by and between
Synergy Resources Corporation and Northland Securities, Inc., acting
severally on behalf of itself and the underwriters named in Schedule I
thereto (1)
3.1.1 Articles of Incorporation (2)
3.1.2 Amendment to Articles of Incorporation (1)
3.1.3 Bylaws
4.1 Form of Common Stock Certificate (1)
5.1 Opinion of Hart & Hart, LLC
10.1 Employment Agreement with Ed Holloway (3)
10.2 Employment Agreement with William E. Scaff, Jr. (3)
29
10.3 Administrative Services Agreement (4)
10.4 Agreement regarding Conflicting Interest Transactions (4)
10.5 Consulting Services Agreement with Raymond McElhaney and Bill Conrad (5)
10.6.1 Form of Convertible Note (5)
10.6.2 Form of Subscription Agreement (5)
10.6.3 Form of Series C Warrant (5)
10.6.4 Form of Series D Warrant
10.6.5 Liolios Group Warrant
10.7 Purchase and Sale Agreement with Petroleum Exploration and Management,
LLC (wells, equipment and well bore leasehold assignments) (5)
10.8 Purchase and Sale Agreement with Petroleum Management, LLC (operations and
leasehold) (5)
10.9 Purchase and Sale Agreement with Chesapeake Energy (5)
10.10 Lease with HS Land & Cattle, LLC (5)
10.11 Employment Agreement with Frank L. Jennings (6)
10.12 Purchase and Sale Agreement with Petroleum Exploration and Management,
LLC (7)
10.13 Loan Agreement with Bank of Choice (presently known as Community Banks
of Colorado) (8)
10.14 Purchase and Sale Agreement with DeClar Oil & Gas, Inc. and Wolf Point
Exploration, LLC (9)
10.15 Amendment to Line of Credit Agreement (10)
10.16 Amendment #2 to Loan Agreement (12)
10.17 Purchase and Sale Agreement with ORR Energy LLC (Weld County, Colorado
oil and gas property) (12)
23.1 Consent of Hart & Hart LLC
23.2 Consent of EKS&H LLLP
23.3 Consent of Ryder Scott Company, L.P.
30
99 Report of Ryder Scott Company, L.P. (13)
-----------
1 Incorporated by reference to the same exhibit filed with the Company's
report on Form 8-K filed on December 16, 2011.
2 Incorporated by reference to the same exhibit filed with the Company's
registration statement on Form SB-2, File #333-146561. - NTD: Intend to
file current bylaws?
3 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.
4 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.
5 Incorporated by reference to the same exhibit filed with the Company's
report on Form 10-K/A filed on June 3, 2011. - NTD: Need to file forms of
Series D warrants? Investor Relations warrants?
6 Incorporated by reference to the same exhibit filed with the Company's
report on Form 8-K filed on June 24, 2011.
7 Incorporated by reference to Exhibit 10.12 filed with the Company's report
on Form 8-K filed on August 5, 2011.
8 Incorporated by reference to Exhibit 10.13 filed with the Company's report
on Form 8-K filed on December 2, 2011.
9 Incorporated by reference to Exhibit 10.14 filed with the Company's report
on Form 8-K filed on February 23, 2012.
10 Incorporated by reference to Exhibit 10.15 filed with the Company's report
on Form 8-K filed on April 25, 2012.
11 Incorporated by reference to Exhibit 14 filed with the Company's report on
Form 8-K filed on July 22, 2011.
12 Incorporated by reference to the same exhibit filed with the Company's
report on Form 8-K filed on October 25, 2012.
13 Incorporated by reference to the same exhibit filed with the Company's
report on Form 10-K filed on November 14, 2012.
31
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:
(ii) To reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 that remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement 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.
Insofar as indemnification for liabilities arising under the Securities Act
of l933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions or otherwise, 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
32
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.
(4) That, for the purpose of determining liability under the Securities
Act of 1933 to any purchaser:
(i) If the registrant is relying on Rule 430B:
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) shall be deemed to be part of the registration statement as of the
date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430B, for liability purposes of the issuer and any person that is at that date
an underwriter, such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such effective date; or
(ii) If the registrant is subject to Rule 430C, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
33
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or
on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Platteville, state of Colorado, on May 3, 2013.
SYNERGY RESOURCES CORPORATION
By: /s/ Ed Holloway
-------------------------------
Ed Holloway, Principal Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, 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 May 3, 2013
---------------------- Officer and a Director
Ed Holloway
/s/ William E. Scaff, Jr Executive Vice President, May 3, 2013
---------------------- Secretary, Treasurer, and a Director
William E. Scaff, Jr.
/s/ Frank L. Jennings Principal Financial May 3, 2013
---------------------- and Accounting Officer
Frank L. Jennings
/s/ Rick Wilber Director May 3, 2013
----------------------
Rick Wilber
Director
----------------------
Raymond E. McElhaney
Director
----------------------
Bill M. Conrad
Director
----------------------
R.W. Noffsinger, III
/s/ George Seward Director May 3, 2013
----------------------
George Seward
35
EXHIBITS
SYNERGY RESOURCES CORPORATION
REGISTRATION STATEMENT ON FORM S-3
EX-3
2
forms3ex313may-13.txt
EXH. 3.1.3 - BYLAWS
EXHIBIT 3.1.3
BYLAWS
OF
SYNERGY RESOURCES CORPORATION
ARTICLE I
OFFICES
Section l. Offices:
The principal office of the Corporation shall be determined by the Board
of Directors, and the Corporation shall have other offices at such places as the
Board of Directors may from time to time determine.
ARTICLE II
STOCKHOLDER'S MEETINGS
Section l. Place:
The place of stockholders' meetings shall be the principal office of the
Corporation unless another location shall be determined and designated from time
to time by the Board of Directors.
Section 2. Annual Meeting:
The annual meeting of the stockholders of the Corporation for the election
of directors to succeed those whose terms expire, and for the transaction of
such other business as may properly come before the meeting, shall be held no
later than one year after the end of the Corporation's fiscal year on a date to
be determined by the Board of Directors.
Section 3. Special Meetings:
Special meetings of the stockholders for any purpose or purposes may be
called by the President, the Board of Directors, or the holders of ten percent
(l0%) or more of all the shares entitled to vote at such meeting, by the giving
of notice in writing as hereinafter described.
Section 4. Voting:
At all meetings of stockholders, voting may be viva voce; but any
qualified voter may demand a stock vote, whereupon such vote shall be taken by
ballot and the Secretary shall record the name of the stockholder voting, the
number of shares voted, and, if such vote shall be by proxy, the name of the
proxy holder. Voting may be in person or by proxy appointed in writing, manually
signed by the stockholder or his duly authorized attorney-in-fact. No proxy
shall be valid after eleven months from the date of its execution, unless
otherwise provided therein.
Each stockholder shall have such rights to vote as the Articles of
Incorporation provide for each share of stock registered in his name on the
books of the Corporation. The Corporation may establish a record date, not to
exceed, in any case, fifty (50) days preceding the meeting, for the
determination of stockholders entitled to vote. The Secretary of the Corporation
shall make, at least ten (l0) days before each meeting of stockholders, a
1
complete list of the stockholders entitled to vote at such meeting or any
adjournment thereof, arranged in alphabetical order, with the address of and the
number of shares held by each, which list, for a period of ten (l0) days prior
to such meeting, shall be kept on file at the principal office of the
Corporation and shall be subject to inspection by any stockholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
stockholder during the whole time of the meeting.
Section 5. Order of Business:
The order of business at any meeting of stockholders shall be as follows:
l. Calling the meeting to order.
2. Calling of roll.
3. Proof of notice of meeting.
4. Report of the Secretary of the stock represented at the meeting and the
existence or lack of a quorum.
5. Reading of minutes of last previous meeting and disposal of any
unapproved minutes.
6. Reports of officers.
7. Reports of committees.
8. Election of directors, if appropriate.
9. Unfinished business.
10 New business.
11. Adjournment.
12. To the extent that these Bylaws do not apply, Roberts' Rules of Order
shall prevail.
Section 6. Notices:
Written or printed notice stating the place, day, and hour of the meeting
and, in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (l0) nor more than fifty (50)
days before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or persons calling the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the Corporation, with postage thereon prepaid.
2
Section 7. Quorum:
A quorum at any annual or special meeting shall consist of the
representation in person or by proxy of 33 1/3% of the issued and outstanding
capital stock of the Corporation entitled to vote at such meeting. In the event
a quorum be not present, the meeting may be adjourned by those present for a
period not to exceed sixty (60) days at any one adjournment; and no further
notice of the meeting or its adjournment shall be required.
ARTICLE III
BOARD OF DIRECTORS
Section l. Organization and Powers:
The Board of Directors shall constitute the policy-making or legislative
authority of the Corporation. Management of the affairs, property, and business
of the Corporation shall be vested in the Board of Directors, which shall
consist of not less than one nor more than ten members, who shall be elected at
the annual meeting of stockholders by a plurality vote for a term of one (l)
year, and shall hold office until their successors are elected and qualify. The
number of directors shall be established from time-to-time by a resolution of
the directors. Directors need not be stockholders. Directors shall have all
powers with respect to the management, control, and determination of policies of
the Corporation that are not limited by these Bylaws, the Articles of
Incorporation, or by statute, and the enumeration of any power shall not be
considered a limitation thereof.
Section 2. Vacancies:
Any vacancy in the Board of Directors, however caused or created, shall be
filled by the affirmative vote of a majority of the remaining directors, though
less than a quorum of the Board, or at a special meeting of the stockholders
called for that purpose. The directors elected to fill vacancies shall hold
office for the unexpired term and until their successors are elected and
qualify.
Section 3. Regular Meetings:
A regular meeting of the Board of Directors shall be held, without other
notice than this Bylaw, immediately after and at the same place as the annual
meeting of stockholders or any special meeting of stockholders at which a
director or directors shall have been elected. The Board of Directors will meet
quarterly.
Section 4. Special Meetings:
Special meetings of the Board of Directors may be held at the principal
office of the Corporation, or such other place as may be fixed by resolution of
the Board of Directors for such purpose, at any time on call of the President or
of any member of the Board, or may be held at any time and place without notice,
by unanimous written consent of all the members, or with the presence and
participation of all members at such meeting. A resolution in writing signed by
all the directors shall be as valid and effectual as if it had been passed at a
meeting of the directors duly called, constituted, and held.
3
Section 5. Notices:
Notices of both regular and special meetings, save when held by unanimous
consent or participation, shall be mailed by the Secretary to each member of the
Board not less than three days before any such meeting and notices of special
meetings may state the purposes thereof. No failure or irregularity of notice of
any regular meeting shall invalidate such meeting or any proceeding thereat.
Section 6. Quorum and Manner of Acting:
A quorum for any meeting of the Board of Directors shall be a majority of
the Board of Directors as then constituted. Any act of the majority of the
directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors. Any action of such majority, although not at a regularly
called meeting, and the record thereof, if assented to in writing by all of the
other members of the Board, shall always be as valid and effective in all
respects as if otherwise duly taken by the Board of Directors.
Section 7. Executive Committee:
The Board of Directors may by resolution of a majority of the Board
designate two (2) or more directors to constitute an executive committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors in the management of the
Corporation; but the designation of such committee and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
member thereof, of any responsibility imposed on it or him by law.
Section 8. Order of Business:
The order of business at any regular or special meeting of the Board of
Directors, unless otherwise prescribed for any meeting by the Board, shall be as
follows:
l. Reading and disposal of any unapproved minutes.
2. Reports of officers and committees.
3. Unfinished business.
4. New business.
5. Adjournment.
6. To the extent that these Bylaws do not apply, Roberts' Rules of Order
shall prevail.
4
ARTICLE IV
OFFICERS
Section l. Titles:
The officers of the Corporation shall consist of a President, one or more
Vice Presidents, a Secretary, and a Treasurer, who shall be elected by the
directors at their first meeting following the annual meeting of stockholders.
Such officers shall hold office until removed by the Board of Directors or until
their successors are elected and qualify. The Board of Directors may appoint
from time to time such other officers as it deems desirable who shall serve
during such terms as may be fixed by the Board at a duly held meeting. The
Board, by resolution, shall specify the titles, duties and responsibilities of
such officers.
Section 2. President:
The President shall preside at all meetings of stockholders and, in the
absence of a, or the, Chairman of the Board of Directors, at all meetings of the
directors. He shall be generally vested with the power of the chief executive
officer of the Corporation and shall countersign all certificates, contracts,
and other instruments of the Corporation as authorized by the Board of Directors
or required by law. He shall make reports to the Board of Directors and
stockholders and shall perform such other duties and services as may be required
of him from time to time by the Board of Directors.
Section 3. Vice President:
The Vice President shall perform all the duties of the President if the
President is absent or for any other reason is unable to perform his duties and
shall have such other duties as the Board of Directors shall authorize or
direct.
Section 4. Secretary:
The Secretary shall issue notices of all meetings of stockholders and
directors, shall keep minutes of all such meetings, and shall record all
proceedings. He shall have custody and control of the corporate records and
books, excluding the books of account, together with the corporate seal. He
shall make such reports and perform such other duties as may be consistent with
his office or as may be required of him from time to time by the Board of
Directors.
Section 5. Treasurer:
The Treasurer shall have custody of all moneys and securities of the
Corporation and shall have supervision over the regular books of account. He
shall deposit all moneys, securities, and other valuable effects of the
Corporation in such banks and depositories as the Board of Directors may
designate and shall disburse the funds of the Corporation in payment of just
debts and demands against the Corporation, or as they may be ordered by the
Board of Directors, shall render such account of his transactions as may be
required of him by the President or the Board of Directors from time to time and
shall otherwise perform such duties as may be required of him by the Board of
Directors.
5
The Board of Directors may require the Treasurer to give a bond
indemnifying the Corporation against larceny, theft, embezzlement, forgery,
misappropriation, or any other act of fraud or dishonesty resulting from his
duties as Treasurer of the Corporation, which bond shall be in such amount as
appropriate resolution or resolutions of the Board of Directors may require.
Section 6. Vacancies or Absences:
If a vacancy in any office arises in any manner, the directors then in
office may choose, by a majority vote, a successor to hold office for the
unexpired term of the officer. If any officer shall be absent or unable for any
reason to perform his duties, the Board of Directors, to the extent not
otherwise inconsistent with these Bylaws, may direct that the duties of such
officer during such absence or inability shall be performed by such other
officer or subordinate officer as seems advisable to the Board.
ARTICLE V
STOCK
Section 1. Regulations:
The Board of Directors shall have power and authority to take all such
rules and regulations as they deem expedient concerning the issue, transfer, and
registration of certificates for shares of the capital stock of the Corporation.
The Board of Directors may appoint a Transfer Agent and/or a Registrar and may
require all stock certificates to bear the signature of such Transfer Agent
and/or Registrar.
Section 2. Restrictions on Stock:
The Board of Directors may restrict any stock issued by giving the
Corporation or any stockholder "first right of refusal to purchase" the stock,
by making the stock redeemable or by restricting the transfer of the stock,
under such terms and in such manner as the directors may deem necessary and as
are not inconsistent with the Articles of Incorporation or by statute. Any stock
so restricted must carry a stamped legend setting out the restriction or
conspicuously noting the restriction and stating where it may be found in the
records of the Corporation.
ARTICLE VI
DIVIDENDS AND FINANCES
Section l. Dividends:
Dividends may be declared by the directors and paid out of any funds
legally available therefor, as may be deemed advisable from time to time by the
Board of Directors of the Corporation. Before declaring any dividends, the Board
of Directors may set aside out of net profits or earned or other surplus such
sums as the Board may think proper as a reserve fund to meet contingencies or
for other purposes deemed proper and to the best interests of the Corporation.
6
Section 2. Monies:
The monies, securities, and other valuable effects of the Corporation
shall be deposited in the name of the Corporation in such banks or trust
companies as the Board of Directors shall designate and shall be drawn out or
removed only as may be authorized by the Board of Directors from time to time.
Section 3. Fiscal Year:
The Board of Directors by resolution shall determine the fiscal year of
the Corporation.
ARTICLE VII
AMENDMENTS
These Bylaws may be altered, amended, or repealed by the Board of
Directors by resolution of a majority of the Board.
ARTICLE VIII
INDEMNIFICATION
The Corporation shall indemnify any and all of its directors or officers,
or former directors or officers, or any person who may have served at its
request as a director or officer of another corporation in which this
Corporation owns shares of capital stock or of which it is a creditor and the
personal representatives of all such persons, against expenses actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding in which they, or any of them, were made parties, or a party, by
reason of being or having been directors or officers or a director or officer of
the Corporation, or of such other corporation, except in relation to matters as
to which any such director or officer or person shall have been adjudged in such
action, suit, or proceeding to be liable for negligence or misconduct in the
performance of any duty owed to the Corporation. Such indemnification shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled, independently of this Article, by law, under any Bylaw agreement, vote
of stockholders, or otherwise.
ARTICLE IX
CONFLICTS OF INTEREST
No contract or other transaction of the Corporation with any other
persons, firms or corporations, or in which the Corporation is interested, shall
be affected or invalidated by the fact that any one or more of the directors or
officers of the Corporation is interested in or is a director or officer of such
other firm or corporation; or by the fact that any director or officer of the
Corporation, individually or jointly with others, may be a party to or may be
interested in any such contract or transaction.
7
EX-5
3
forms3ex5may-13.txt
EXH. 5 - H&H OPINION LETTER
EXHIBIT 5
HART & HART, LLC
ATTORNEYS AT LAW
1624 Washington Street
Denver, CO 80203
William T. Hart, P.C. ________ harttrinen@aol.com
Will Hart (303) 839-0061
Fax: (303) 839-5414
May 3, 2013
Synergy Resources Corporation
20203 Highway 60
Platteville, CO 80651
This letter will constitute an opinion upon the legality of the sale by
certain shareholders of Synergy Resources Corporation, a Colorado corporation
(the "Company"), of up to 11,446,860 shares of common stock as referred to in
the Registration Statement on Form S-3 filed by the Company with the Securities
and Exchange Commission.
We have examined the Articles of Incorporation, the Bylaws, and the minutes
of the Board of Directors of the Company, and the applicable laws of the State
of Colorado, and a copy of the Registration Statement. We have also examined
such other documents as we considered necessary for rendering this opinion. In
our opinion, the shares of the Company's common stock offered by the selling
shareholders were legally issued and represent fully paid and non-assessable
shares of the Company's common stock.
Very truly yours,
HART & HART, LLC
/s/ William T. Hart
William T. Hart
EX-10
4
forms3ex1064may-13.txt
EXH. 10-6-4 - WARRANT CERT.
EXHIBIT 10.6.4
The Warrant and the underlying Shares represented by this Certificate have not
been registered under the Securities Act of 1933 (the "Act"), and are
"restricted securities" as that term is defined in Rule144 under the Act. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of which is to be
established to the satisfaction of the Company. Additionally, Warrants are only
exercisable or convertible when such exercise, and the issuance of the
underlying Shares, can be affected in compliance with applicable state
securities laws.
WARRANT CERTIFICATE
Synergy Resources Corporation
____________Warrants
This Warrant Certificate certifies that or registered assigns (the "Warrant
Holder"), is the registered owner of the above-indicated number of Warrants
("Warrants") expiring at 5:00 p.m., Mountain time, on December 31, 2014 (the
"Expiration Date"). Each Warrant entitles the Warrant Holder to purchase from
Synergy Resources Corporation (the "Company"), a Colorado corporation, at any
time commencing on the date it is issued but before the Expiration Date, one
fully paid and non-assessable share ("Share") of the Company's common stock at a
purchase price of $1.60 per Share (the "Exercise Price") upon surrender of this
Warrant Certificate, with the exercise form or warrant conversion exercise form
hereon duly completed and executed, with payment of the Exercise Price or
cashless exercise, at the principal office of the Company, but only subject to
the conditions set forth herein and in the Terms of Warrants ("Warrant Terms").
The Exercise Price, the number of Shares purchasable upon exercise of each
Warrant, and the number of Warrants outstanding are subject to adjustments upon
the occurrence of certain events set forth in the Warrant Terms. Reference is
hereby made to the other provisions of this Warrant Certificate and the
provisions of the Warrant Terms, all of which are hereby incorporated by
reference herein and made a part of this Warrant Certificate and which shall for
all purposes have the same effect as though fully set forth at this place.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Company, a new Warrant Certificate, or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants, subject to any adjustments made in accordance with the Warrant Terms,
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Terms.
The Warrant Holder evidenced by this Warrant Certificate may exercise all
or any whole number of such Warrants in the manner stated hereon and in the
Warrant Terms. The Exercise Price shall be payable in lawful money of the United
States of America in cash or by certified or cashier's check or bank draft
payable to the order of the Company. Upon any exercise of any Warrants evidenced
by this Warrant Certificate in an amount less than the number of Warrants so
evidenced, there shall be issued to the Warrant Holder a new Warrant Certificate
1
evidencing the number of Warrants not so exercised or converted. No adjustment
shall be made for any dividends on any shares issued upon exercise of this
Warrant.
No Warrant may be exercised after 5:00 p.m., Mountain time, on the
Expiration Date, and any Warrant not exercised by such time shall become void.
COPIES OF THE WARRANT TERMS, WHICH DEFINES THE RIGHTS, RESPONSIBILITIES
AND OBLIGATIONS OF THE COMPANY AND THE WARRANT HOLDERS, ARE ON FILE WITH THE
COMPANY. ANY WARRANT HOLDER MAY OBTAIN A COPY OF THE WARRANT TERMS, FREE OF
CHARGE, BY A WRITTEN REQUEST TO THE PRINCIPAL OFFICE OF THE COMPANY.
This Warrant Certificate, when surrendered to the Company, in person or by
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Terms, without payment of a charge,
except for any tax or other governmental charge imposed in connection with such
exchange, for another Warrant Certificate or Warrant Certificates of like tenor
and evidencing a like number of Warrants, subject to any adjustment made in
accordance with the Warrant Terms.
The Company may deem and treat the registered holder hereof as the
absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone) for all purposes and the
Company shall not be affected by any notice to the contrary. No Warrant Holder,
as such, shall have the rights of a stockholder of the Company, either at law or
in equity, and the rights of the Warrant Holder, as such, are limited to those
rights expressly provided in the Warrant Terms and in the Warrant Certificates.
The Company shall not be required to issue fractions of Warrants upon any
such adjustment or to issue fractions of shares upon the exercise of any
Warrants after any such adjustment, but the Company, in lieu of issuing any such
fractional interest, shall pay an amount in cash equal to such fraction times
the current market value of one Warrant or one share, as the case may be,
determined in accordance with the Warrant Terms.
Unless the amendment is able to be effected by the Company in accordance
with the Warrant Terms, the Warrant Terms are subject to amendment only upon the
approval of holders of not less than a majority of the outstanding Warrants,
except that no such amendment shall accelerate the Expiration Date or increase
the Exercise Price without the approval of all the holders of all outstanding
Warrants.
IMPORTANT: The Warrants represented by this Certificate may not be
exercised or converted by a Warrant Holder unless at the time of exercise the
underlying Shares are qualified for sale, by registration or otherwise, in the
state where the Warrant Holder resides or unless the issuance of the Shares
would be exempt under the applicable state securities laws. Further, a
registration statement under the Securities Act of 1933, as amended, covering
the exercise of the Warrants must be in effect and current at the time of
2
exercise unless the issuance of Shares upon any exercise is exempt from the
registration requirements of the Securities Act of 1933, as amended.
Notwithstanding the provisions hereof, unless such registration statement and
qualification are in effect and current at the time of exercise, or unless
exemptions are available, the Company may decline to permit the exercise of the
Warrants and the holder hereof would then only have the choice of either
attempting to sell the Warrants, if a market existed therefor, or letting the
Warrants expire.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and by its Secretary, each by a facsimile of said
officers' signatures, and has caused a facsimile of its corporate seal to be
imprinted hereon.
Dated: _____________ SYNERGY RESOURCES CORPORATION
By: By:
--------------------------- ------------------------------------
Secretary Chief Executive Officer
3
EX-10
5
forms3ex1065may-13.txt
EXH. 10-6-5 - WARRANT
EXHIBIT 10.6.5
SYNERGY RESOURCES CORPORATION
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD,
PLEDGED, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION
WHICH IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT AND
ANY APPLICABLE STATE LAWS.
WARRANT
-----------------
THIS CERTIFIES that, for value received, Liolios Group, Inc. (the
"Holder"), is entitled, upon the terms and subject to the limitations
on exercise and the conditions hereinafter set forth, to subscribe for
and purchase from Synergy Resources Corporation, (the "Company"), up to
50,000 shares (the "Warrant Shares") of Common Stock of the Company
(the "Common Stock"). The purchase price of one share of Common Stock
(the "Exercise Price") under this Warrant is $2.69.
Warrants to purchase 25,000 Warrant Shares must be exercised prior to
September 30, 2015 and Warrants to purchase 25,000 Warrant Shares must
be exercised prior to December 31, 2015. September 30, 2015 and
December 31, 2015 are each a "Termination Date".
1. Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in part, at the office or agency of the Company by the
Holder in person or by duly authorized attorney, upon surrender of this Warrant
to the Company.
2. Authorization of Shares. The Company covenants that all Warrant Shares
which may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant. Exercise of this Warrant may be made on or before
the Termination Date by the surrender of this Warrant and the Notice of Exercise
Form annexed hereto duly executed, at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing to the
1
registered Holder at the address of such Holder appearing on the books of the
Company) and upon payment of the Exercise Price of the shares thereby purchased
by wire transfer or cashier's check drawn on a United States bank or by means of
a cashless exercise, the Holder shall be entitled to receive a certificate for
the number of Warrant Shares so purchased.
Exercise of this Warrant may also by made by means of a "Cashless
Exercise" as provided in Section 4 of the Financial Public Relations Agreement
between the Company and the Holder dated July 1, 2012.
4. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which Holder would otherwise be entitled
to purchase upon such exercise, the Company shall pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Exercise Price.
5. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
Transfer, Division and Combination. Subject to compliance with any
applicable securities laws, transfer of this Warrant and all rights hereunder,
in whole or in part, shall be registered on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant at the principal
office of the Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. In the event that the Holder wishes to transfer a
portion of this Warrant, the Holder shall transfer at least 1,000 shares
underlying this Warrant to any such transferee. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denomination or
denominations specified in such instrument of assignment, and shall issue to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
7. No Rights as Shareholder until Exercise. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof.
8. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
2
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.
9. Adjustments of Exercise Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
happening of any of the following. In case the Company shall (i) subdivide its
outstanding shares of Common Stock into a greater number of shares, (ii) combine
its outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iii) issue any shares of its capital stock in a reclassification of
the Common Stock, then the number of Warrant Shares purchasable upon exercise of
this Warrant immediately prior thereto shall be adjusted so that the Holder
shall be entitled to receive the kind and number of Warrant Shares or other
securities of the Company which it would have owned or have been entitled to
receive had such Warrant been exercised in advance thereof. Upon each such
adjustment of the kind and number of Warrant Shares or other securities of the
Company which are purchasable hereunder, the Holder shall thereafter be entitled
to purchase the number of Warrant Shares or other securities resulting from such
adjustment at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares purchasable pursuant hereto immediately prior to
such adjustment and dividing by the number of Warrant Shares or other securities
of the Company resulting from such adjustment. An adjustment made pursuant to
this paragraph shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
10. Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In case the Company shall reorganize its capital, reclassify its
capital stock, consolidate or merge with or into another corporation (where the
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of the Company), or sell, transfer
or otherwise dispose of all or substantially all its property, assets or
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then the Holder shall have the right thereafter to receive, upon
exercise of this Warrant, the number of shares of Common Stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
3
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board of
Directors of the Company) in order to provide for adjustments of Warrant Shares
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 10.
11. Arbitration. Any dispute in any way involving this Warrant will be
settled by binding arbitration in Denver, Colorado in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.
This Warrant is effective: July 1, 2012
SYNERGY RESOURCES CORPORATION
By: /s/ Ed Holloway
--------------------------------------
Ed Holloway, Chief Executive Officer
4
NOTICE OF EXERCISE
To: Synergy Resources Corporation
20203 Highway 60
Platteville, CO 80651
The undersigned hereby elects to purchase ________ Warrant Shares (the
"Common Stock"), of Synergy Resource Corporation pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.
Please issue a certificate or certificates representing said Warrant
Shares in the name of the undersigned or in such other name as is specified
below:
-------------------------------
The Warrant Shares shall be delivered to the following:
-------------------------------
-------------------------------
-------------------------------
[PURCHASER]
By: ______________________________
Name:_________________________
Title:________________________
Dated: ________________________
5
EX-23
6
forms3ex231may-13.txt
EXH. 23.1 - CONSENT OF H&H
EXHIBIT 23.1
CONSENT OF ATTORNEYS
Reference is made to the Registration Statement of Synergy Resources
Corporation on Form S-3 whereby selling shareholders propose to sell up to
11,446,860 shares of the Company's common stock. Reference is also made to
Exhibit 5 included in the Registration Statement relating to the validity of the
securities proposed to be issued and sold.
We hereby consent to the use of our opinion concerning the validity of the
securities proposed to be issued and sold.
Very truly yours,
HART & HART, LLC
/s/ William T. Hart
William T. Hart
Denver, Colorado
May 3, 2013
EX-23
7
forms3ex232may-13.txt
EXH. 23.2 - CONSENT OF ACCOUNTANT EKSH
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Synergy Resources Corporation
Platteville, Colorado
We consent to the use in this Registration Statement on Form S-3 of Synergy
Resources Corporation (the "Company") of our report of independent registered
public accounting firm dated November 13, 2012 with respect to the balance
sheets of the Company as of August 31, 2012 and 2011, and the related statements
of operations, shareholders' equity and cash flows for years then ended, which
report appears in the August 31, 2012 annual report on Form 10-K of Synergy
Resources Corporation. We also consent to the reference to our firm under the
heading "Experts" in such Registration Statement
/s/ EKS&H LLLP
EKS&H LLLP
May 2, 2013
Denver, Colorado
EX-23
8
forms3ex233may-13.txt
EXH. 23.3 - CONSENT OF ENGINEER RYDER SCOTT
EXHIBIT 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS
We hereby consent in this Registration Statement of Synergy Resources
Corporation on Form S-3 of references to our firm, in the context in which they
appear, to our reserve estimates as of August 31, 2012. Reference is also made
to Exhibit 99 included in the Registration Statement relating to the Company's
proven oil and gas reserves.
/s/ RYDER SCOTT COMPANY, L.P.
RYDER SCOTT COMPANY, L.P.
Denver, Colorado
May 3, 2013