The following summary contains basic information about this offering. It likely does not contain all the information that is important to you. For a more complete understanding of this offering, we encourage you to read this entire document and the documents we have referred you to. All references to dollar amounts are in U.S. dollars unless otherwise indicated.

Synergy Technologies Corporation is developing and commercializing two proprietary and patented processes that it hopes will change the way the world develops oil and gas. Synergy is presently a development stage company with no revenues and substantial debt. Our technologies have not yet been proven to be commercially viable. However, Synergy intends for petrochemical applications of its "Syngen" process to be commercially available in less than one year. There are no guarantees that Synergy will be able to achieve commercial viability of either technology in this time frame or that commercial viability will ever be achieved. (see "DESCRIPTION OF BUSINESS").

Synergy's first technology, referred to as the Syngen process, uses an electrical discharge to convert natural gas into other gases, referred to as synthetic gas, which is a mixture of carbon monoxide and hydrogen, at a capital cost and operating cost which we believe will be lower than conventional or known competing technologies. Production of synthesis gas by the Syngen process then leads to the production of synthetic fuels when coupled with Synergy's Fischer-Tropsch system. The types of synthetic fuels that are produced are diesel, jet fuel and naptha. Fischer-Tropsch processes have been used for over fifty years in Russia and South Africa. Considerable research and development efforts have been expended to improve the catalysts Fisher-Tropsch processes. Typical processes primarily produce wax from the conversion of synthetic gas. A catalyst to limit wax formation could result in improved yield and reduced Fischer-Tropsch capital and operating expenditures, resulting in a more economically attractive process. The catalyst technology which Syngen Technologies Limited uses prevents wax formation and produces fuels. When the Syngen process and the proprietary Fischer-Tropsch system are coupled, a gas-to-liquids system is created. Synergy believes the cost savings of its gas-to-liquids system creates an attractive option to other commercial applications. The market for gas-to-liquids products is expected to significantly increase during the next 2-3 years due to legislation limiting emissions. Synergy's gas-to-liquids process is believed to create super clean, low-emission transportation fuels.

The Syngen process can also be used to produce hydrogen and other gases for use in the petrochemical industry. Moreover, the Syngen process is expected to have applications in the fuel cell industry by producing hydrogen as fuel for fuel cells.

Synergy's other technology, referred to as the heavy oil upgrading technology, is expected to significantly reduce the costs of upgrading heavy oil. The cost savings will be derived from reduced capital cost for building an upgrading facility using a process that is far less complex than current competing technologies. It is also based on the fact that upgraded oil is light enough to be transported in conventional pipelines. This avoids the costs of dilution product or thermal viscosity reduction. Also, the heavy oil upgrading technology creates more valuable liquids containing large amounts of gasoline, jet fuel and diesel, which are more profitable and easier to refine.

Synergy is working toward the commercialization of both of these technologies and presently has two operating pilot plants, a one-half barrel per day heavy oil upgrader and a Syngen reactor for the conversion of natural gas to other gases. Results from testing of these technologies indicate that the next stage of development will be the construction of commercial units. We will be required to raise substantial capital for the next stage of development of these two proprietary technologies but there can be no assurance that we will be able to raise the required funds.

Synergy's principal executive offices are located at 335-25th Street S.E., Calgary, Alberta T2A 7H8 and the telephone number at that location is (403) 269-2274. As used in this prospectus, the terms "we", "us" and "our", mean Synergy Technologies Corporation, a Colorado corporation, and its subsidiaries and predecessors, unless the context indicates otherwise.

This registration statement includes or incorporates by reference forward-looking statements that reflect our current view of future events and financial performance. These forward-looking statements are subject to numerous risks and uncertainties, including those factors discussed elsewhere in or incorporated by reference into this prospectus, the prospectus supplement, any pricing supplement and our other filings with the Securities and Exchange Commission (the "SEC").

These risks and uncertainties could cause actual results or events to differ materially from anticipated or historical results. You can identify forward-looking statements by our use of words like "anticipate," "believe," "budget," "estimate," "expect," "forecast," "intend," "may," "plan," "predict," "project," "should" and similar expressions. Any statement that is not a historical fact is a forward-looking statement. We caution you not to place undue reliance on these forward-looking statements, whether as a result of new information, future events or otherwise.

The following is a summary of the material risks relating to our projects. If any of the following risks actually occur, our business, financial condition or results of operations could be materially adversely affected.

Synergy intends to develop and commercialize two patented technologies that it hopes will change the way the world develops oil and gas. Synergy's operations are limited to such development work. Synergy is relying on the potential success of either of its technologies to be able to earn revenues and net profits. There can be no assurance that management will be able to achieve these goals. At the present time, neither of the technology's commercial applications have been proven. Moreover, the construction of commercial units is a significant capital expenditure. If either of the technologies do become commercially viable, our financial well-being may still be in question. This is because we cannot at this time be assured of the amount or quantity of licences, royalties or other revenues that may be earned from either of our technologies. We have no revenues to date and substantive debt. There can be no assurance that without further funds being raised Synergy will be able to continue as an operating company or that it will ever achieve commercial applications for its technologies. If neither of its technologies prove to be commercially viable, Synergy will likely cease to be a going concern.

While we have employees and advisors who have experience in the industries which we expect to target, we may not have sufficient qualified employees to achieve our goals at this time. This could delay our market penetration and profitability. To address these risks, we must, among other things, attract, retain and motivate the personnel we presently have and seek to add additional qualified personnel. We have no assurance that we will be able to meet the challenge of attracting the required experienced personnel to operate our businesses.

We have incurred losses and anticipate continued losses in the future. As of September 30, 2000, we had an accumulated deficit of $7,579,318USD. We have not yet achieved profitability and expect to continue to incur net losses until we recognize sufficient revenues from our technologies whether by licensing, royalties, plant operations or direct sales. See, "Management's Discussion and Analysis or Plan of Operation - General". We can give no assurance that we will achieve or sustain profitability.

We will require additional capital and there is no assurance that additional capital will be available on terms acceptable to us. We intend to draw upon the resources of potential joint venture partners, government funding, project financings, and equity offerings to meet the costs of building and operating during fiscal year 2000 a commercial facility utilizing the heavy oil upgrading technology which we call "CPJ" (see "DESCRIPTION OF PROPERTY"). We will continue to develop commercial applications of our Syngen technology, which will also require additional capital. There is no assurance that we will be able to get the required capital from these potential joint venture partners and the inability to raise the required capital would mean that we would not be able to continue as a going concern.

Our common stock is quoted on the NASD's OTC/Bulletin Board. Quotations on the OTC/Bulletin Board reflect inter-dealer prices, without retail mark-up, markdown or commission and may not reflect actual transactions. Although our common stock is quoted on the OTC/Bulletin Board, it may be subject to certain rules adopted by the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in "penny stocks". Penny stocks generally are securities with a price of less than $5.00USD (other than securities registered on certain national exchanges or quoted on the Nasdaq system, provided that the exchange or system provides current price and volume information with respect to transactions in these securities). The penny stock rules require broker-dealers, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level or risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's account for transactions in penny stocks except for established customers and accredited investors (generally institutions with assets in excess of $5,000,000USD or individuals with a net worth in excess of $1,000,000USD or annual income of $200,000USD or $300,000USD jointly with their spouse). Consequently, the shares are subject to the penny stock rules, and these disclosure requirements may have an adverse effect on the ability of broker-dealers to sell the shares and may affect the ability of investors in this offering to sell the shares and otherwise affect the trading market of the shares. Accordingly, prospective investors may be unable to liquidate an investment in shares and should be prepared to bear the economic risk of their investment for an indefinite period and be able to withstand a total loss of their investment.

The principal shareholder of our common stock, Laxarco Holding Limited, owns an aggregate of 13,000,000 shares of common stock of Synergy. These shares are currently held in escrow and will not be released to Laxarco Holding until certain conditions are met. Since most of these conditions have already been met by Laxarco Holding, it is very likely that these shares will be released prior to effectiveness of this prospectus. (See "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - CHANGE OF CONTROL".) Until then, these shares are subject to a voting proxy from Laxarco Holding to Synergy's Board of Directors. However, upon release of the shares, the voting proxy will expire and Laxarco Holding may be able to elect all members of the Board of Directors of Synergy and thereby control the affairs and management of Synergy. Laxarco Holding will, therefore, be able to effectively control all matters requiring shareholder approval, including amendments to Synergy's Articles of Incorporation, mergers, share exchanges, the sale of all or substantially all of Synergy's assets, and other fundamental transactions.

The officers and directors of Synergy are or may be officers and directors of our affiliates and/or officers and directors of other corporate entities, which are not affiliates of Synergy. These affiliates or non-affiliates may be involved in business enterprises similar to those conducted by Synergy. See "MANAGEMENT".

It has not been commercially proven that either Synergy's gas-to-liquids technology nor its heavy oil upgrading technology will be commercially exploitable. We might not successfully commercialize our technologies, and commercial scale gas-to-liquids plants and heavy oil upgrading plants based on the Synergy technologies may never be successfully constructed or operated. There is no certainty that the technologies will be commercially proven or that, if so proven, they will be successfully marketed. Even if either of our technologies are proven commercially exploitable and marketable, there can be no guarantee that either will be marketed successfully prior to the introduction of similar technologies by competing companies nor is there any guarantee we will obtain sufficient market share to ensure profitable exploitation of the technologies.

The gas-to-liquids industry in which Synergy operates is still evolving but will become highly competitive. Some of the largest competitors are major oil and gas companies and thus are substantially larger and better capitalized than Synergy. Because of these resources, these companies may be better able than Synergy to obtain customers and pursue new business opportunities.

The heavy oil upgrading industry in which Synergy also operates is similarly competitive and the same challenges of larger and better capitalized companies with better ability to obtain customers and pursue new business opportunities.

Our ability to protect our intellectual property rights involves many complexities and uncertainties, and commercialization of our technologies could give rise to claims that our technologies infringe upon the rights of others. Our success depends on our ability to protect our intellectual property rights, which involves complex legal, scientific and factual questions and uncertainties. We rely on a combination of patents, trade secret laws and contractual restrictions to protect our proprietary rights. We cannot assure you that additional patents will be granted, or that our existing patents might not provide us with commercial benefit or might not be infringed upon, invalidated or circumvented by others. In addition, the availability of patents in foreign markets, and the nature of any protection against competition that may be afforded by those patents, are often difficult to predict and vary significantly from country to country. Our licensors or we may choose not to seek, or may be unable to obtain, patent protection in a country that could potentially be an important market for our technologies. Our confidentiality agreements are designed to protect our trade secrets, but could be breached and we might not have adequate remedies for the breach. In addition, our trade secrets and proprietary know-how might otherwise become known or be independently discovered by others.

Commercialization of our technologies may give rise to claims that our technologies infringe upon the patents or other proprietary rights of others. Although it is our policy to regularly review patents that may have applicability in the industries in which our technologies are applicable to, we may not become aware of these patents or rights until after we have made a substantial investment in the development and commercialization of those technologies. Legal actions could be brought against us, our partners or licensees, claiming damages and seeking an injunction that would prevent us, our partners or licensees, from testing, marketing or commercializing the affected technologies. Major energy companies seeking to gain a competitive advantage may have an interest in bringing one of these actions. If an infringement action was successful, in addition to potential liability for damages, our partners, our licensees or we could be required to obtain a license in order to continue to test, market or commercialize the affected technologies. Any required license might not be made available or, if available, might not be available on acceptable terms, and we could be prevented entirely from testing, marketing or commercializing the affected technology. We may have to expend substantial resources in litigation, either in enforcing our patents, defending against the infringement claims of others, or both. Many possible claimants, like the energy companies that have or may be developing proprietary gas-to-liquids or heavy oil upgrading technologies competitive with the Synergy technologies, have significantly more resources to spend on litigation. We can give no assurance that third parties will not claim infringement by us with respect to past, present or future gas-to-liquids or heavy oil upgrading technologies. In any potential intellectual property dispute involving us, our licensees or partners could also become the target of litigation.

We could have potential indemnification liabilities to licensees or partners relating to the operation of gas-to-liquids plants or heavy oil upgrading plants based on the Synergy technologies or intellectual property disputes.

Both of our technologies and a number of improvements to the gas-to-liquids and heavy oil upgrading technologies are in various early stages of development. These improvements will require substantial additional investment, development and testing prior to their commercialization. We might not be successful in developing these improvements and, if developed, they may not be capable of being utilized on a commercial basis. If improvements to the Synergy technologies currently under development do not become commercially viable on a timely basis, the total potential market for gas-to-liquids and heavy oil upgrading plants that could be built by us and our partners could be significantly limited.

The economic application of the Synergy technologies depends on favorable plant operating conditions. Among the operating conditions that impact gas-to-liquids and heavy oil upgrading plant economics are the site location, infrastructure, weather conditions, the size of the equipment, the quality of the feedstock, the type of plant products and the market for products. If a gas-to-liquids plant or a heavy oil upgrading plant is located in an area that requires the construction of substantial infrastructure, plant economics could be adversely affected.

Industry rejection of our technologies would make the construction of gas-to-liquids and heavy oil upgrading plants based on the Synergy technologies more difficult or impossible and adversely affect our ability to receive future license fees. Demand and industry acceptance of our gas-to-liquids and heavy oil upgrading technologies is subject to a high level of uncertainty. Any partnership with a high profile industry partner that did not achieve success or any commercial plant based on the gas-to-liquids or heavy oil upgrading technologies which did not achieve success could adversely affect other industry partners perception of the Synergy technologies. In addition, some oil companies may be motivated to seek to prevent industry acceptance of gas-to-liquids technology based on their belief that widespread adoption of gas-to-liquids technology might negatively impact their competitive position.

Any time a new product is introduced into a market, such as the patented or patent pending technologies discussed herein, there is a substantial risk that sales will not meet expectations or even cover the cost of operations. General market conditions might dictate that sales will be slow or even non-existent, and/or the product itself might not fit the needs of buyers enough to induce sales. There is no way to predict the volume of sales that will occur or even if sales will be sufficient to support our future operations. Numerous external factors that are beyond our control may affect the appeal of the products offered and developed. These factors include consumer demand, market fluctuations, the proximity and capacity of suppliers and government regulations, including regulations relating to prices, taxes, and royalties, importing and exporting of products and environmental controls. The exact effect of these factors cannot be accurately predicted, but it is possible they will result in us not receiving an adequate return on our invested capital.

Our operations may be subject to environmental regulations promulgated by government agencies from time to time. In order to proceed with the development of one or both of our technologies it may be necessary to obtain permits or to post bonds with notices to several governmental agencies including the applicable environmental agency. In certain areas defined as sensitive areas, the environmental agency requires special work permits. These licenses, bonds and special work permits may require additional capital from Synergy. The amounts required will vary and cannot be determined at this time. We do not foresee the potential requirement of any licenses, permits or bonds as a hindrance to our general operations or the development of the two technologies.

As the greater portion of our projected revenue stream will depend on royalty revenues obtained from the processing of oil and gas, it is necessary to note that in general the marketability of oil and gas can be affected by numerous external factors beyond the our control and/or the control of our customers. These factors include market fluctuations, the world price of oil, the supply and demand for gas, the deregulation of gas prices, the proximity to and capacity of oil and gas pipelines and processing equipment, and government regulations, including regulations relating to prices, taxes, royalties, land tenure, allowable production, the import and export of oil and gas and environmental protection. The effect of these factors on our projected cash flows cannot be accurately predicted.

We file annual, quarterly and current reports and other information with the SEC. You can read and copy these materials at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's regional offices located at Seven World Trade Center, New York, New York 10048 and at 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. You can obtain information about the operation of the SEC's public reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a Web site that contains information we file electronically with the SEC, which you access over the Internet at http://www.sec.gov.; most of this information can also be accessed from our web page at http://www.synergytechnologies.com.

The securities of the selling security holders offered pursuant to this registration statement and prospectus are for the benefit of the Selling Security Holders. We are not selling common stock on behalf of the selling security holders and have no control or effect on the 963,000 common shares, the 750,000 shares issuable upon conversion of the convertible promissory notes, 847,666 shares issuable upon exercise of the existing warrants or 1,669,332 warrants issuable upon conversion of the convertible promissory notes and the exercise of other existing warrants. Therefore, we will not share in or receive any part of the proceeds realized on the sale of any of the selling security holders' shares offered. Any proceeds received by us for the exercise of the warrants shall be utilized for general working capital requirements.

The Offering Price will be determined by the prevailing market price at the time of the sales by the selling security holders.

The selling security holders may sell their common stock in one or more transactions (which may include "block" transactions in the Over-the-Counter market), in negotiated transactions in a combination of methods of sales, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to these prevailing market prices or at negotiated prices. The Selling Security Holders may effect these transactions by selling the common shares and the underlying warrants directly to purchasers, or may to or through agents, dealers or underwriters designated from time to time, and those agents, dealers or underwriters may receive compensation in the form of discounts, concessions or commissions from the selling security holders and/or the purchaser(s) of the common shares for whom they may act as agent or to whom they may sell as principals, or both. The selling security holders and any agents, dealers or underwriters that act in connection with the sale of the common shares might be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act of 1933, and any discount or commission received by them and any profit on the resale of the common shares as principal might be deemed to be underwriting discounts or commissions under the Securities Act of 1933.

We are not aware of any current or future plans, proposals, arrangements or understandings by any selling security holders to distribute their shares to their respective outstanding shareholders or partners.

We are not aware of any plans, arrangements or understanding by any Selling Security Holders to sell their shares to any particular individual(s) or to use their shares to satisfy contractual obligations.

We will receive no portion of the proceeds from the sale of the shares by the selling security holders and will pay some of the costs relating to the registration of this offering (other than any fees and expenses of counsel for the selling security holders). Any commissions, discounts or other fees payable to a broker, dealer, underwriter, agent or market maker in connection with the sale of any of the holders' shares will be paid by the selling security holders.

This offering by selling security holders will remain outstanding until all the holders' shares are sold or until terminated by the selling security holders. On behalf of the selling security holders, we are registering 963,000 common shares currently outstanding and 847,666 shares underlying existing warrants. We are also registering the common shares underlying units to be issued upon conversion of convertible promissory notes held by some Selling Security Holders. Commencing in May 2000, Synergy issued and sold $2,250,000USD of convertible promissory notes (the "notes"). The notes are convertible into units at the rate of $3.00USD per unit. Each unit is comprised of :(a) one (1) share of common stock; (b) a warrant to purchase one (1) share for $4.00USD; and (c) a warrant to purchase one (1) share for $8.00USD. We are registering all 750,000 of the shares issuable upon conversion of the notes and all 1,500,000 shares issuable upon exercise of the warrants that would be issued on conversion of the notes. In connection with the offering of the notes, we issued warrants to purchase a total of 84,666 units, which are duplicates of the units into which the notes are convertible at an exercise price of $3.00USD per share. These warrants were issued as a commission to those companies and individuals that assisted in the placement of the notes. The amount of shares owned prior to the offering and offered by the Selling Security Holders under this prospectus is based on the conversion of all the notes held by each applicable Selling Security Holders, the exercise of each of the selling security holder's warrants issuable upon conversion of all the notes and the exercise of any other warrants or options held by each of the selling security holders that may be exercised in the next sixty (60) days. The amount and percentage owned after the offering assumes the issuance of all shares issuable as a result of the exercise of each of the above-described options and warrants and sale of all of the common shares being registered on behalf of the selling security holders.

Following is a list of selling security holders whose shares are being registered and offered by this registration statement, which list includes each selling security holders name, any position or natural relationship with Synergy or any of its predecessors or affiliates during the past three (3) years, the amount of securities owned by each selling security holder prior to the offering, the amount to be offered for the selling security holders account and the amount and percentage (if more than one percent) of the class to be owned after the offering is complete.

The selling security holders may sell the holders' shares offered in one or more transactions (which may include "block" transactions), in combination of these methods of sales, at fixed prices which may be changed, at market prices prevailing at the time of sale, at prices related to these prevailing market prices or at negotiated prices. The selling security holders may effect these transactions by selling the holders' shares directly to purchasers, or may sell to or through agents, dealers or underwriters designated from time to time, and these agents, dealers or underwriters may receive compensation in the form of discounts, concessions or commissions from the selling security holders and/or the purchaser(s) of the holders' shares for whom they my act as agent or to whom they may sell as principals, or both. The selling security holders and any agents, dealers or underwriters that act in connection with the sale of the shares might be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, and any discount or commission received by them and any profit on the resale of the common shares as principal might be deemed to be underwriting discounts or commissions under the Securities Act.

During 1996, Stone Canyon Resources Inc., the Colorado corporation, purchased interests in leasehold properties. Through December 31, 1997, Stone Canyon Resources Inc., the Colorado corporation, repaid $458,080USD for acquisition costs and development costs associated with the leasehold properties. This amount was paid to Bataa Oil, Inc., by the founding shareholders of Stone Canyon Resources Inc., the Colorado corporation, which then repaid this amount to the founding shareholders. Bataa Oil, Inc. served as operator of each lease. Stone Canyon Resources Inc., the Colorado corporation, also issued a total of 1,700,000 shares of its common stock to the founders of Stone Canyon Resources Inc., the Colorado corporation, including 411,842 shares of its common stock to Bataa Oil and Bataa Oil's designees and 63,910 shares to Richard and Anita Knight as part of the consideration for those properties, which shares were issued for shares of Synergy as part of the share exchange agreement in 1997 with Synergy and Stone Canyon Resources Inc., the Colorado corporation.

Stone Canyon Resources Inc., the Colorado corporation and Synergy contended that Bataa represented to Stone Canyon Resources Inc., the Colorado Corporation and/or its affiliates that the price for these properties was set as the price paid by Bataa for these properties. Stone Canyon Resources Inc., the Colorado Corporation and Synergy learned that Bataa's cost for these properties were far less than the amount charged by Bataa. Synergy questioned the form of legal title taken for the properties as well as adequate documentation and disclosure of all underlying obligations, liabilities and arrangements relating to the properties, between Bataa Oil, Inc. and the vendors. Synergy also learned that some of these leases were forfeited due to a failure to meet a drilling obligation imposed by G & H Production. Synergy was not apprised of these obligations prior to acquisition of its interest in the leases. Synergy was advised by legal counsel that the issuance of the shares to Bataa Oil and its designees was without the kind, amount or form of consideration as authorized by the Board of Directors and could therefore be deemed to be an invalid issuance. In order to protect the interests of all shareholders, Synergy placed a "stop transfer" with the transfer company against all of the founders shares, including the shares issued to Bataa and Bataa's designees and Richard and Anita Knight.

As a result of this dispute, in May 1999, Bataa Oil, Richard and Anita Knight and other affiliated individuals and entities filed a complaint in the District Court, County of Denver, in the State of Colorado (Case No. 99CV3482) against Synergy, its wholly-owned subsidiary, Stone Canyon Resources Inc., the Colorado Corporation and Stone Canyon Resources Ltd., the Canadian corporation, which was previously Synergy's sole controlling shareholder. The original complaint asserted only one claim (breach of fiduciary duty and mandatory injunction) against Synergy to compel it to remove restrictive legends from the plaintiffs' shares of Synergy's common stock. The plaintiffs amended their complaint twice, and as a result, have named additional defendants to this lawsuit, including members of Synergy's Board of Directors, Synergy's transfer agent (Holladay Stock Transfer Inc.) and other individuals. The plaintiffs' second complaint also included causes of action for conversion, civil conspiracy and unjust enrichment. Synergy's answer and counterclaims denied all material allegations, asserted numerous affirmative defenses and asserted counterclaims against Plaintiffs Bataa Oil, David Calvin and/or Richard and Anita Knight for an accounting, fraud, intentional misrepresentation, breach of fiduciary duty, damages and punitive damages. Synergy disputed the allegations made by the plaintiffs and claims they are untrue.

On September 13, 2000, Synergy, Stone Canyon Resources Inc., the Colorado Corporation, Stone Canyon Resources Ltd., the Canadian corporation, and others entered into a settlement agreement with Bataa Oil, its affiliates and applicable employees whereby Bataa and Bataa's designees that received any of the 411, 842 shares of common stock disclaimed any and all interests therein. Each of the parties to the settlement agreement agreed to dismiss all pending litigation against each other and release each other from all claims that they may have respectively as of that date, whether known or unknown. This settlement agreement did not include Tedd and Mary Duncan or Richard and Anita Knight nor a disclaimer to the 63,910 shares previously issued to the Knights. Synergy will continue to vigorously defend this action and will seek damages from the Duncans and the Knights if Synergy is successful in its counterclaims.

The following table sets forth the names and ages of all directors and executive officers of Synergy as of the date of this report, indicating all positions and offices with Synergy held by each person:

The members of the Synergy's Board of Directors are elected by the holders of Synergy's common stock. Cumulative voting for directors is not permitted. The term of office of directors of Synergy ends at the next annual meeting of Synergy's shareholders or when the successors are elected and qualified. The annual meeting of shareholders is specified in Synergy's bylaws to be held within six (6) months of the end of each fiscal year and the last annual meeting was held on June 28, 2000. The term of office of each officer of Synergy ends at the next annual meeting of the Synergy's Board of Directors, expected to take place immediately after the next annual meeting of shareholders, or when his successor is elected and qualifies. Except as otherwise indicated below, no organization by which any officer or director previously has been employed is an affiliate, parent, or subsidiary of Synergy.

The following table furnishes the information concerning the officers and directors of Synergy as of September 19, 2000. The directors of Synergy are elected every year and serve until their successors are elected and qualify.

Mr. Gradek has been a director of Synergy since September 14, 1999 and became Synergy's Chief Executive Officer on August 15, 2000. Mr. Gradek worked for Canadian Pacific Railway during the last six years as Director Capacity Planning and previously as Director of Locomotive Fleet Management and a participant in the corporation's total business redesign. Mr. Gradek previously served Air Canada for fifteen years as Director of Yield Management, Manager of Schedule Design, Aircraft Customer Service Manager, Operation Auditor and Manager of Passenger Pricing, respectively. Mr. Gradek received a Bachelor's Degree in Applied Science from Loyola College (Montreal), Bachelor of Engineering (Electronics) from Carleton University (Ottawa) and his MBA degree from U. Western Ontario (London). Mr. Gradek is fluent in English and French.

Mr. Haworth who has been with Synergy since December 1997, obtained his B.Sc. in December 1987 from the University of Wyoming and a Degree in Petroleum Technology from SAIT in 1984. Mr. Haworth was previously employed by Schlumberger (formerly REDA Services) as the sales manager. Mr. Haworth has several years of experience in the oil and gas industry supervising and coordinating the marketing, sales and field services and order initiation for the Canadian market. Mr. Haworth has extensive experience in preparing business plans and presentation material. Mr. Haworth has been an officer and director of Stone Canyon Canada from July 1997 to present and an officer and director of Stone Canyon Resources Inc., the Colorado Corporation from January 1998 to present.

Ms. Danforth, has been an officer of Synergy since December 1, 1997, has been a director of Carbon Resources since May 22, 1998 and a director of Syngen Technologies Limited since June 25, 1999 and a director of Lanisco Holdings Limited, since August 1999. Ms. Danforth has spent the past several years in the employ of publicly traded companies. Ms. Danforth provides contract administrative and accounting services to these companies. Ms. Danforth has recently expanded her duties to include a stronger focus on the oil and gas sector and has attended numerous courses and seminars offered by CAPL and the University of Calgary to familiarize herself with the industry. Ms. Danforth has been an officer of Stone Canyon Canada from November 14, 1996 to date. Ms. Danforth is currently completing her studies to become a certified general accountant.

Mr. Cernovitch has been with Synergy since December 1997 and is currently employed as Vice-President. Mr. Cernovitch was previously employed with Georgia Pacific Securities as an investment advisor, Mr. Cernovitch studied the review and assessment of the financial operations of corporate operations. Mr. Cernovitch takes an active role in the management of Synergy's financial operations and investor relations. Mr. Cernovitch is an economics graduate of McGill University.

Mr. Cooley has been Synergy's technology director since October 1997 and became a member of the Board of Directors on August 2, 2000. Mr. Cooley previously served as President of Kvaerner Membrane Systems, Inc. from August 1994 through October 1997. Prior to that, from 1984 through August 1994, Mr. Cooley was the General Manager - Marketing and Engineering for Grace Membrane Systems, which was acquired by Kvaerner in August 1994. Mr. Cooley is a registered professional engineer in the State of Texas and the Province of Alberta, Canada. Mr. Cooley holds three (3) U.S. patents and two (2) Canadian patents and he has had eight (8) papers published. Mr. Cooley is one of the pioneers of the development application of gas permeation membranes for natural gas processing. Mr. Cooley earned a B.A. degree in Chemical Engineering from Rice University in 1963 and a B.S. degree in Chemical Engineering from Rice University in 1964.

Mr. Shone has been with Synergy since December 1997, is currently employed by the Business Development Bank of Canada (BDC) in the finance department and is serving his first term on the Board of a publicly trading Company. Previously employed with the Trust Company of the Bank of Montreal as a client service officer, Mr. Shone understands the review and assessment of the financial operations of corporate operations. Mr. Shone takes an active role in the management of Synergy's financial operations and annual corporate expenditures. Mr. Shone has knowledge of financial statement review and preparation, budgeting and financial forecasting. Mr. Shone is a graduate of McGill University. Mr. Shone has been a director of Stone Canyon Resources Inc., the Colorado Corporation since January 1998.

With an extensive career as an oil and gas executive, Mr. Nielson brings an understanding of the industry to Synergy. Mr. Nielson was President and Chief Executive Officer of Husky Oil of Calgary, Alberta, Canada, from 1973 to 1979, during which time Husky Oil experienced tremendous growth, a four-fold increase in operating revenues and a six-fold increase in profits. He also began the planning that led to the development of Husky's heavy oil upgrader at Lloydminster, Alberta. Upon his return to Wyoming in 1979, Mr. Nielson formed JN Oil and Gas, a privately owned exploration and production Company. After 12 years at the helm of JN Oil and Gas, he formed Nielson and Associates. Mr. Nielson, currently serves as a director at the American Petroleum Institute, the Shoshone First Bank of Cody, Wyoming, and the Y-Tex Corporation of Cody, Wyoming.

Mr. Baumert was elected to the Board of Directors in September 2000. Mr. Baumert has experience in the area of worldwide licensing of technology and intellectual property rights. Mr. Baumert has been the Business Director of UNICARB7 Systems Business of the Union Carbide Corporation since 1990. Mr. Baumert has been with Union Carbide since 1966 and during that time has held the positions of Director of Marketing, National Sales Management and International Business Director. Mr. Baumert received a B.S. in Business Administration and Management from the University of Nebraska in 1963.

The following table sets forth information, as of November 30, 2000 with respect to the beneficial ownership of Synergy's common stock by each person known by us to be the beneficial owner of more than five percent of the outstanding Common Stock, by each of Synergy's officers and directors, and by the officers and directors of Synergy as a group. Information is also provided regarding beneficial ownership of common stock if all outstanding options, warrants, rights and conversion privileges (to which the applicable officers and directors have the right to exercise in the next sixty (60) days) are exercised and additional shares of common stock are issued:

On August 21, 2000, Synergy's Board of Directors resolved to release from escrow 13,000,000 shares of common stock being held against the shares of Syngen Technologies Limited and the title to the heavy oil upgrading technology, known as CPJ. The 13,000,000 shares were issued in the name of Laxarco Holding and are to be released upon an undertaking by Laxarco Holding to supply technical personnel in accordance with terms and conditions set forth in its previous agreement with Carbon Resources (see "DESCRIPTION OF BUSINESS") and the delivery of the shares of Syngen Technologies from escrow to Synergy. As of the date of this filing, the above-reference undertaking has been delivered to Synergy. Upon delivery of the Syngen Technologies shares, the 13,000,000 shares will be released to Laxarco Holding. Synergy expects that this will take place prior to the effective date of this prospectus.

The total number of shares of all classes of stock that Synergy is authorized to issue is 50,000,000 shares of common stock, $0.002USD par value. We had 12,714,632 shares of common stock outstanding as of December 7, 2000.

The holders of common stock are entitled to one vote per share on all matters voted on by our stockholders, including the election of directors. Except as otherwise required by law, the holders of shares of common stock exclusively possess all voting power of our stockholders. The holders of common stock are entitled to those dividends as may be declared form time to time by the board of directors from funds available for dividends.

None of the experts or legal counsel named in the prospectus are affiliated with Synergy, except Mr. W. Scott Lawler, who is in-house legal counsel for Synergy. Mr. Lawler will receive no direct or indirect interest in Synergy as a result of this registration statement, nor will he receive any continued income as a result of this registration statement.

On February 10, 1997, Synergy Technologies Corporation, a Colorado corporation, was incorporated under the laws of the State of Colorado, under the name of Automated Transfer Systems Corporation.

Synergy was incorporated for the business of providing ATM customers with a solution for automated teller machine and electronic transfer processing but was unsuccessful in its research and development. As of October, 1997, Synergy had no operations.

On November 24, 1997, Synergy filed with the State of Colorado Secretary of State, Articles of Exchange entered into by and between itself and Stone Canyon Resources, Inc., a Colorado corporation, whereby Synergy acquired 100% of the outstanding shares of common stock of Stone Canyon Colorado, in exchange for 2,901,007 shares of common stock of Synergy, exchanged on a one share for one share basis. Synergy, at that time, also issued an additional 4,539,162 shares of its common stock to convert $453,916 of Stone Canyon Colorado's debt into equity.

On February 12, 1999, Synergy filed a Certificate of Amendment with the Department of State of the State of Colorado changing its name from Automated Transfer Systems Corporation to Synergy Technologies Corporation. The name change was accepted by the State of Colorado on March 2, 1999.

Through a series of transactions, acquisitions and contracts, commending in May 1998, we were able to acquire the rights to two unrelated patented technologies that each have applications in the oil and gas industry. The characteristics, attributes and potential of these two technologies are discussed below under the heading "Technologies".

We currently have two wholly-owned subsidiaries, and own fifty percent of a third corporation with a partner in one of the technologies. Details of these corporations are discussed below due to the fact that most of our operations and value are in these subsidiaries and affiliated corporation.

As described above, Stone Canyon Colorado is a wholly-owned subsidiary of Synergy and has focused its business operations on oil and gas projects. Stone Canyon Colorado has no operations at this time due to the fact that its participation in most of the project in which it has been involved have been terminated through expiration of leases. It still holds a small interest in oil and gas leases in Alberta, Canada but has no present plans to commence any operations on these leases.

Syngen Technologies Limited is a Cyprus corporation and a wholly-owned subsidiary of Synergy. Syngen Technologies directly owns the rights to our gas-to-liquids technologies, which are comprised of our patented reactor that converts natural gas into synthetic gas and a licensed catalyst that converts synthetic gas into liquid fuels, such as diesel, jet fuel and naptha, from which gasoline is produced. Syngen Technologies was formed for the purpose of developing and commercializing these technologies.

Carbon Resources Limited is a Cyprus corporation and currently is owned equally by Synergy and its heavy oil upgrading technology partner, Texas T Petroleum Ltd. Carbon Resources was formed to acquire, own, develop and commercialize a heavy oil upgrading system called "CPJ". In order to develop the CPJ technology, Synergy needed to raise funds to pay for construction of a pilot plant, commission an independent expert study of the CPJ system and numerous other costs associated with the development of a new technology. In 1999, Texas T Petroleum commenced providing these funds and ultimately contributed the aggregate amount of $1,100,000USD towards all of the development costs of the technology, plus 2,000,000 shares of its common stock and warrants to purchase an additional 2,000,000 shares at $1.00USD per share. In exchange for this funding, Synergy transferred to Texas T Petroleum fifty percent of the outstanding shares of Carbon Resources. Texas T Petroleum became an equal partner with Synergy in Carbon Resources and in the CPJ technology.

As discussed above, Texas T Petroleum is an equal partner with Synergy in the CPJ Technology. Texas T Petroleum is a private, Colorado corporation. Synergy's stockholding of 2,000,000 shares of Texas T Petroleum is equal to approximately 9.1% of its issued and outstanding shares. As discussed below under the heading "Technologies", Texas T Petroleum and Synergy have agreed to manage the CPJ technology through a seven-person management committee consisting of two representatives from Synergy, two representatives from Texas T Petroleum, two representatives from Synergy's largest shareholder, Laxarco Holding Limited and the inventor of the CPJ technology, Dr. Pierre Jorgensen.

(1)-(3) Principal Services and their Markets; Distribution Methods; Statutes of Publicly Announced Products.

We are at the commercialization stage in our CPJ technology and are looking to establish our first project for a commercial CPJ plant. We expect that the first project will take place in North America. Although we have received interest from a number of companies regarding this technology, we have yet to enter into an agreement for a project.

We are in the commissioning stage of our pilot plant that utilized our Syngen technology, which means we are verifying that the plant meets its design expectations. Upon completion of commissioning we shall have our first commercial application of this technology, which will be the generation of hydrogen as fuel for fuel cell power generators.

We are also currently working on the development of further applications based on this technology. One of such applications is a gas-to-liquids system, which incorporates the Syngen process and a proven catalyst that converts the synthetic gas produced by the Syngen process into synthetic fuels, such as diesel, jet fuel and naptha.

Other applications of this technology are expected to be developed following installation of our first commercial Syngen units for fuel cells and for a gas-to-liquids system.

(4) Competitive Conditions. The oil and gas industry is highly competitive. Synergy faces competition from large numbers of oil and gas companies, public and private drilling programs and major oil companies engaged in the acquisition, exploration, development and production of hydrocarbons in all areas in which it may attempt to operate in the future. Many of the programs and companies so engaged possess greater financial and personnel resources than Synergy and therefore have greater leverage to use in developing technologies, establishing plants and markets, acquiring prospects, hiring personnel and marketing. Accordingly, a high degree of competition in these areas is expected to continue. The markets for crude oil and natural gas production have increased substantially in recent years. Oil prices have stabilized generally, but the world market for crude oil should be considered unstable due to uncertainty in the Middle East. There is considerable uncertainty as to future production levels of major oil producing countries.

(5) Sources of Raw Materials and Names of Principal Suppliers. Not applicable.

(6) Dependence on a Single Customer or a Few Customers. None. We have no customers at this time.

(7) Patents and Royalty Agreements. Synergy, through its subsidiaries, has the following patents and patent applications on file in regards to its Technologies (all of which have been assigned to one of its subsidiaries):

1. French Patent Application No. 97-10989: A CZERNICHOWSKI, P. CZERNICHOWSKI "Assistance Electrique D'Oxydation Partelle d'Hydrocarbures Legers Par L'Oxygene". Filing Date 01.09.97 This application was accepted on October 20, 1997.

2. French Patent Application No. 97-00364: A CZERNICHOWSKI, P. CZERNICHOWSKI, "Conversion D'Hydrocarbures Assistee par Les Arcs Electrirques Gissants En Presence De La Vapeur D'Eau Et/ou De Gaz Carbonique". Filing Date: 13.01.97

3. USA and PCT Patent Applications Nos. US5371-00100 and PCT/US98/00393: A CZERNICHOWSKI, P. CZERNICHOWSKI, "Conversion of hydrocarbons assisted by gliding electric arcs in the presence of water vapor and/or carbon dioxide". Filing date: 12.01.98

4. USA and PCT Patent Applications Nos US5407-00500 and PCT/US98M8027: A CZERNICHOWSKI, P. CZERNICHOWSKI, "Electrically assisted partial oxidation of light hydrocarbons by oxygen". Filing Date: 23.08.98

5. French Patent No. 981283: P JORGENSEN, "Conversion profonde jumelant la demetallisation et la conversion de bruts, residus ou huiles lourdes en liquides legers, a l'aide de composes oxygens purs ou impurs (H₂0, CO₂ , CO accompangnes de H₂, N₂ SH₂ etc)". Filing date 16.10.98

Synergy and Carbon Resources are parties to an agreement with the inventor of the CPJ technology whereby five percent of the net revenues earned from the CPJ technology will be paid to Dr. Jorgensen as a royalty fee in consideration of acquiring the technology from Dr. Jorgensen.

(8) - (9) Need for Governmental Approval; Government Regulations. At this time we are unaware of any governmental laws, rules or regulations that are applicable to our operations or those of our subsidiaries. We are aware that in order to commence construction and operation of demonstration plants for the technologies in the Province of Alberta, Canada, certain approvals from the Alberta Energy Utility Board and other Alberta regulatory bodies will be necessary. Synergy expects that should it determine to construct the plants in any jurisdiction that there will be governmental laws, rules or regulations with which Synergy must comply.

(10) Synergy Sponsored Research and Development.

(a) During the fiscal year ended December 31, 1999, we spent $310,019USD in the development of our gas-to-liquids technology. During fiscal year 2000 through November 30, 2000, we spent $108,146USD on the development of this technology .

(b) During the fiscal year ended December 31, 1999, Synergy spent $454,838USD in the further research and development of the CPJ technology. During the fiscal year 2000, through November 30, 2000, we spent $407,952 on the development of this technology.

(11) Costs and Effects of Compliance with Environmental Laws. Synergy has incurred no costs associated with compliance with any environmental laws in connection with the construction or operation of any of its plants.

(12) Number of Total Employees and Number of Full-Time Employees. Currently we have 14 employees all of which are full-time employees. We also have seven consultants who have contracted to provide certain services for us but not on a full-time basis. One of these consultants, Jacqueline Danforth, is an officer of Synergy and another of these consultants, Mr. Thomas Cooley, is Synergy's Director of Technology Development.

Synergy Technologies Corporation, a Colorado company, has developed two new and promising technologies that can help meet particular challenges facing the energy industry. These challenges include the supply of products and very stringent emission specification required for diesel, gasoline and other fuels. Firstly, Synergy offers a unique gas-to-liquids process for license that converts stranded natural gas reserves to clean burning fuels free of sulfur and aromatics. Secondly, Synergy is completing the development of a heavy oil upgrading process that can economically convert bitumen and/or heavy oil reserves to lighter, more valuable and more easily refineable synthetic crude oils. "Bitumen" is the heaviest heavy oil and does not flow in its naturally occurring state.

The hallmark of the first process, of converting natural gas into clean burning fuels, is a low cost route to synthesis gas, compared to conventional partial oxidation or steam reforming. Syngen is a cold plasma technique of passing a natural gas combined with an oxidant through an electric discharge to promote the partial oxidation of the natural gas, resulting in the production of the synthesis gas.

With the addition of electric energy (and optionally steam and/or carbon dioxide), the synthesis gas of a desired composition can be easily obtained from almost any natural gas feedstock. In addition, any oxidant can be used from air up to and including pure oxygen.

Synergy has constructed a demonstrative Syngen unit and installed it next to a privately owned gas plant located about 200 kilometers east of Calgary. This unit will facilitate demonstration of the various applications for Syngen: synthesis gas for gas-to-liquids applications, synthesis gas for petrochemical applications, and hydrogen rich fuel for stationary fuel cell applications. A process referred to as "commissioning" of this plant began in May 2000 and will be completed shortly. At that point, Syngen will be ready for commercial type sale and uses.

Electrically assisted synthesis gas production from natural gas in a Syngen reactor is based upon the gliding arc principle called GlidArc. GlidArc is a technical principle that has been in existence since the early 1900's. It is the method by which natural gas or other fossil fuels in the presence of oxygen are passed through a special electrical discharge called cold plasma. Through the special technique of producing the cold plasma called GlidArc, the plasma is generated between the electrodes such that the point to point contact from one electrode to another continuously moves one end to the other end of the electrodes and is therefore not stationary. In Syngen, we use the GlidArc principle by immersing at least two diverging knife shaped electrodes into a fast flow of feed gas, natural gas fed into a reactor. A high voltage and relatively low current discharge is generated across the fast gas flow between the electrodes. The electric discharge forms at the closest point, spreads along the knife-edges of the electrodes and disappears. Another discharge immediately reforms at the initial spot. The path of the discharge is determined by geometry of the electrodes, flow conditions, and characteristics of the power supply. The discharge performs its own maintenance on the electrodes, preventing chemical corrosion and erosion. The electrodes are made from stainless steel, nickel or sometimes carbon steel and do not need to be cooled so the electric energy is directly and totally transferred to the processed gas.

Syngen reactors can be easily sized and modularized. Utilizing powerful multi-electrode configurations, they are relatively inexpensive and easily controllable. They can be easily upscaled for the large reactors required for gas-to-liquids plants or downscaled to suit onboard fuel cell applications. Syngen reactors can be installed in either the horizontal or vertical configuration. A relatively small increase in inlet feed gas temperature allows for better integration of the Syngen process into industrial processes as a whole. The technology does not require noble materials but rather utilizes classical steels. The electric power supply of the Syngen reactors is non-sophisticated and is therefore operator friendly.

Once the natural gas has been converted into synthetic gas, a Fischer-Tropsch reaction is used to convert the synthetic gas into synthetic diesel and naptha, which refineries use to make gasoline. The Fischer-Tropsch process was used by Germany during World War II to produce fuels and has been commercially employed by Russia and South Africa for the past 50 years. The Russians used synthetic gas produced from natural gas in their reactors from 1952 onward. What is unique about Synergy's Fischer-Tropsch technology is that a proprietary catalyst is used that limits the carbon chain growth of the liquid fuels. Whereas other players in the gas-to-liquids field produce wax and then hydrocrack back to naphtha/diesel, Synergy directly produces about a 70-diesel/30-naphtha mix from its reactors, eliminating the necessity for refining units. This results in not only savings in capital costs and operating costs, but also results in a much simpler plant, which is very important for remote locations where most of the world's stranded gas reserves are found.

With the demand by regulatory bodies in both the European Union and the United States that sulfur levels be drastically reduced in both gasoline and diesel, gas-to-liquids sulfur free are in high demand as blending stocks and in some urban jurisdictions as the fuels themselves. These policies are quickly bringing gas-to-liquids products to the forefront of energy-related issues. While for the most part, these plants will be outside North America as they require cheap natural gas, their products will be extremely valuable in helping refiners and marketers meet the fuel demands while also meeting the new regulations.

Synergy intends to market the Syngen technology in a number of ways: (a) as a process by which natural gas can be converted to hydrogen for the purpose of providing the fuel for fuel cell plants; (b) as a process by which natural gas can be converted into synthetic gas for the purpose of then being converted into liquid fuels via our proprietary Fischer-Tropsch catalyst; (c) as a process by which natural gas can be converted into synthetic gas for the purpose of production of petrochemicals, such as methane and other alcohols.

Synergy presently anticipates that it will license the Syngen technology for fuel cell applications in exchange for licensing fees and royalties. A similar plan is intended for petrochemical applications. With regards to the production of liquid fuels, Synergy expects to take equity positions in gas-to-liquid plants in areas that the natural gas provided to such plants is free or at a very low cost. In other circumstances, Synergy would provide a license to this technology in exchange for licensing fees and royalties.

Synergy Technologies, through a foreign corporation jointly owned with Texas T Petroleum Ltd., a Colorado corporation, has acquired and tested a new technology for upgrading heavy petroleum fractions to more valuable higher API gravity oils. The process, called CPJ after its inventor, Dr. Pierre Jorgensen, can be applied at the point of production to the upgrading of bitumen, heavy oils and other oils that are by-products of refinery processes. Developed in France, the French patent has been granted and the United States and appropriate international patents are pending.

The CPJ process is a unique process that has been run on refinery fractions and Alberta bitumen/heavy oils as low as 7.5 API and has produced 30 plus API gravity synthetic crude oil. With liquid volume yields exceeding 90% of the original source of heavy oil, the CPJ process uses no hydrogen and no catalyst. This is significant since other conventional methods of upgrading are known in the industry to have yields of no more than 70% to 80% volume. This means that the amount of synthetic crude oil upgraded by CPJ is 12% to 30% greater than the amount upgraded by conventional processes. The CPJ process has the additional advantage of allowing the operator adjust process conditions to optimize relative to the vacuum gas oils the production of fuel products, such as high octane gasoline, light fuel oils, jet fuel, kerosene and diesel in the synthetic crude oils to suit the refiner.

Crude oils can be thought of as bitumen in the 5 B10 API range and heavy oil in the 10 B 20 API range. Refinery atmospheric tower bottoms and/or vacuum tower bottoms also fall into these categories. These petroleum streams all have one thing in common, huge molecules having molecular weights often in excess of 2,000, as compared to gasoline which has a molecular weight of approximately 150 and light crude oil which has a molecular weight of approximately 400. In order to convert these streams to lighter more desirable petroleum fractions, these huge molecules must be broken. The manner in which these molecules are broken dictates not only the yields but also the amount of soot and accompanying gas that are produced. Conventional processes usually result in low yields of approximately 70%, meaning that the resulting amount of synthetic crude oil being equal to 70% of the heavy oil feed stock by liquid volume. Conventional processes also produce a large amount of soot and accompanying gas.

There are huge reserves of bitumen/heavy oil in the world. The decline of light crude reserves along with the increasing world demand have led analysts to believe that the use of bitumen reserves must increase. The world consumption of crude oil is expected to increase from 75 to 100 million barrels per day. Bitumen/heavy oil production will have to fill much of this demand. However, their high viscosity and temperature at which they are capable of flowing through a pipeline makes them difficult and expensive to produce. In addition, they have an inordinately high content of asphalt like materials which are less desirable refinery feed stocks. Therefore, in order to maximize the use of this abundant resource, the bitumen/heavy oil must be upgraded near its place of production into a lighter, more desirable synthetic crude oil. Upgrading facilities ranging in capacity from 5,000 to 25,000 barrels per day appear to fit the requirement of most producers.

The underlying principle of the CPJ Process is to apply an instantaneous thermal shock to the bitumen molecule using superheated steam. The bitumen/heavy oil feedstock is preheated to near its thermal cracking point and contacted with superheated steam in a proprietary injector where most of the reaction takes place. Contact time is a matter of seconds. The hot reactants then are allowed to "stabilize" in a soaker vessel with adequate void space to achieve a minimum residence time. Soaker effluent is then flashed through the control valve to a separator where the heaviest product stream is drawn off and used as fuel. The overhead from this separator is cooled and flowed to another flash tank where the vacuum gas oil fraction is drawn off and pumped back to the reactor for additional upgrading. The overhead stream is further cooled and condensed water is drawn off and the upgraded synthetic crude or SCO is pumped to tankage. The CPJ process does not require vacuum separation.

The uniqueness of the CPJ process is threefold. First, it can produce synthetic crude oil yields from the feed stock in excess of 90% by liquid volume with the gasoline, diesel, and gas oil ratios adjusted to suit the refiner. Secondly, the nature of the process is to cause the huge molecules to break almost in half producing very little soot and gas. Thirdly, the CPJ process requires no catalyst or hydrogen.

The CPJ process offers great flexibility to produce a synthetic crude oil composition to suit the refiner. The composition of a sample Lloydminster (Alberta) 13.0 API bitumen is compared to two different synthetic crude oil's. In the Base Case (API 27.2) the heaviest fraction of the sample oil is reduced to virtually zero (0.5 LV%) from 41.8 LV% while the distillate to gas oils ratio increases from 0.64 to 0.96. In the High API Case, a stream, chiefly comprised of gas oils (46 LV%) is recycled back to the CPJ reactor whereby a 31.3 API SCO is produced having a distillate/gas oil ratio of 2.24.

Analysis of samples from test runs on the 2 bpd CPJ pilot unit located in our Calgary facility, including process water and gas, is performed by the National Centre for Upgrading Technology (NCUT) located near Edmonton, Alberta. A full assay of all SCO cuts and pitch is performed. Some characteristics of the High API SCO versus the feed stock heavy oil are shown in Fig. 5. Mass balances show that not only is the carbon/hydrogen ratio increased in the SCO relative to the heavy oil, but also that the hydrogen content is increased some 10% (total outlet versus inlet balance) by the CPJ process.

The CPJ Process is a unique thermally driven process that converts high boiling petroleum fractions into lighter, more desirable fractions with liquid volume yields in excess of 90%. There are three general ways of using the process. First, bitumen and heavy crudes taken from the tank farm can be upgraded from a 7.5 B 15 API to 25 B 35 API to suit the refiner. Secondly, the atmospheric heaviest stream from the refinery crude oil can be fed to the CPJ Process. The upgraded oil can then be given back to the refiner as feed to the same atmospheric tower or another unit as it suits the refiner. Thirdly, the heaviest vacuum stream can be fed to the CPJ Process. Again, the SCO can be sent back to its crude unit of origin or to another.

The CPJ process has a lot to offer the producer as a field upgrader. First, it is believed, based on observations from our one-half barrel per day plant, that CPJ's capital costs and expecting costs are low enough to justify its use even for relatively low production rates. Secondly, the process can be easily scaled to suit the application. Field units in the 3,000-5,000 barrel per day capacity range should be attractive as well as units in the 20,000 barrel per day plus range. As CPJ is steam driven, it integrates very well with a typical bitumen production process such as SAGD. The recycle streams of the CPJ process are easily adjusted to not only produce the desired synthetic crude oil but also to produce the internal fuel demand of the overall production/upgrading facility.

Although not on the scale of Alberta or Venezuela, the US is blessed with large deposits of bitumen and even tar sands. CPJ can make it possible to monetize these reserves. As crude supplies become tighter, these deposits could become crucial to the US national interest.

Capital costs for a nominal 20,000 barrel per day (feed) CPJ facility have been estimated to be in the $4,000USD per barrel range, or in other words, $80,000,000USD total capital cost. Costs are for a "Greenfield" site inclusive of sulfur removal from the produced gas and process water treating. The heaviest product is nominally more than enough to supply the fuel requirement to operate a CPJ process unit and, coupled with the light gases also produced in the process, can be a source of export fuel to a steam assisted gravity drainage (SAGD) or other bitumen/heavy oil production technique. Operating costs, which include labor, maintenance and power ($0.05USD/KWH) are in the $1.04USD/per barrel range. Both capital costs and operating costs can be reduced by combining the CPJ process with other process units in a refinery or a bitumen/heavy oil production facility such as a SAGD site.

As a joint owner of Carbon Resources, Synergy has agreed with its equal partner, Texas T Petroleum, to manage the development and commercialization of the CPJ technology through a six-person management committee. Synergy and Texas T Petroleum are also in the process of drafting a shareholders agreement whereby ownership of all of the shares of Carbon Resources shall be governed. The management committee of the CPJ technology presently includes three individuals who are officers and members of the Board of Directors of Synergy. The management committee has appointed Mr. Thomas E. Cooley to be its managing director, who shall have the responsibility and authority to manage the day-to-day operation of the CPJ Technology. Mr. Cooley is a member of the Board of Directors of Synergy, its Director of Technology Development and the President of Carbon Resources.

The other members of the CPJ management committee include two representatives of Texas T Petroleum and a representative of Synergy's largest shareholder, Laxarco Holding. Mr. Cooley is also a shareholder of Laxarco Holding.

Synergy expects that its commercialization of the CPJ technology will provide it with opportunities to builds and jointly own heavy oil upgrading plants. Synergy expects that it, along with its partner, Texas T Petroleum, will enter into the first joint venture agreement for such a facility, from which it will share in the profits from the sale of heavy oil upgraded to synthetic crude oil at roughly the same price as regular light crude oil.

Synergy also expects that it will be able to sell licenses to the CPJ technology to oil companies that own heavy oil reserves and wish to upgrade their product to lighter crude oils to take advantage of the cost differential between heavy oil and light oil. Synergy has also received indications that oil refineries are also interested in this technology to assist it in the handling of heavy oil sold to it and to acquire greater amounts of the lower cost heavy oil.

As discussed above, the cost of a nominal 20,000 barrel per day CPJ plant is expected to cost approximately $80,000,000USD. Synergy anticipates that funding for a CPJ plan will come from the other joint venture partner. However, this cannot be guaranteed due to the fact that factors such as the chemical composition of the feed heavy oil, location of the plant, the cost of transporting or delivery of the processed synthetic crude oil and the acquisition cost of the heavy oil to be upgraded.

Synergy cannot guarantee the amount of licensing fees or royalties that it will be able to charge companies that wish to purchase a license to use the CPJ technology. It presently projects a royalty rate of approximately $1.25USD per barrel of synthetic crude, based on a current price differential of $8.50USD between heavy crude oil and light crude oil. Synergy also expects to charge licensing or technology transfer fees in an amount to be determined.

(i) Synergy's property holdings are as follows:

(1) 335 - 25th Street, S.E.
Calgary, Canada T2A 7H8

Synergy leases this property from Capital Reserve Corporation at the combined rate of $12,848USD per month pursuant to a written, five (5) year lease agreement. Synergy subleases 8,287 square feet of office space at the rate of $8.00USD per square foot per annum and 4,394 square feet of laboratory space at the rate of $20.00USD per square foot per annum. These facilities serve as headquarters and laboratory space for its research and development activities on its technologies.

(3) 5215 Spanish Oak
Houston, Texas 77066

This space is made available to Synergy in connection with its consulting agreements with GlidArc Technologies.

(4) 8 Bellevue Road
London, England SW177EG

This space is made available to Synergy in connection with its consulting agreements with Dow's Port Technical Services.

Synergy is a publicly reporting company under the Securities Exchange Act of 1934 and as such is required to file periodic reports with the SEC, including but not limited to annual reports, quarterly reports and current reports. Copies of all materials Synergy files with the SEC may be read and copied at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains, proxy and information statements, and other information regarding issuers that file electronically with the SEC; the address of that site is http://www.sec.gov. Synergy also maintains some information on its web site located at http://www.synergytechnologies.com.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

In connection with Synergy's audit of its financial statements for the period ended December 31, 1999, Synergy's financial statements for the periods ended prior to 1999 were restated to exclude certain contracts for the acquisition of two proprietary and patented technologies due to the fact that the issuance of shares in connection with such acquisitions were contingent upon verification that Synergy's technologies have reached specific levels of commercial viability. As a result, previously recorded assets and liabilities associated with the technologies have also been excluded from the financial statements. See Notes 9 and 10 to the Unaudited Consolidated Financial Statements included herewith for a discussion of these contingent agreements.

Synergy's business is the development and licensing of technologies related to the oil and gas industry. Capital from equity issues or borrowings or partnering with industry is necessary to fund Synergy's future operations and technology development. Therefore the financial statements included in this report for the nine month periods ended September 30, 2000 and 1999 are not necessarily indicative of Synergy's future operations.

Synergy, as of September 30, 2000, had limited cash resources. Synergy needs to raise additional funds to meet its cash requirements for the next twelve (12) months. Synergy intends to raise such funds from the sale of equity securities through private placements, borrowings, government grants and partnering with industry in the development of its technologies.

Synergy has advanced funds during the quarter ended September 30, 2000 to its subsidiaries, Carbon Resources, Lanisco Holdings Limited, and Syngen Technologies Limited, to fund research and development on its patented and proprietary heavy oil upgrading technology and its patented and proprietary gas-to-liquids technology. Subsequent to the quarter ended September 30, 2000, Carbon Resources was no longer a wholly-owned subsidiary of Synergy as shares equal to fifty percent of the outstanding shares of Carbon Resources were issued to Texas T Petroleum, as discussed further in the next paragraph. Syngen Technologies Limited will become a wholly-owned subsidiary of Synergy upon the release from escrow of all of the outstanding shares of Syngen Technologies Limited. The amounts advanced were for (a) the design, development and marketing of a one-half barrel per day heavy oil upgrading unit in Calgary, Alberta to test client oils; and (b) the design, development and marketing of a 4 barrel per day demonstration facility in the Province of Alberta utilizing the Syngen Technology. See below "Results of Operations".

Synergy completed installation of its one-half barrel per day heavy oil upgrading test unit unit in its laboratory in Calgary in the first quarter of 2000. In April 2000, it commenced testing heavy oil samples in the heavy oil upgrading test unit and commenced testing client samples after completing its own internal testing to optimize operating conditions. Synergy expects that $500,000USD will be expended by the end of March 2001 towards the operation and testing of the one-half barrel per day heavy oil upgrading test unit. Synergy expects to receive one-half of such amount from its heavy oil upgrading technology partner, Texas T Petroleum. On June 25, 1999, Synergy entered into an option agreement with Texas T Petroleum whereby Texas T Petroleum was obligated to expend a total of $1,000,000 towards the development of the heavy oil upgrading technology and to issue 2,000,000 of its units to Synergy, with each unit consisting of one share of common stock of Texas T Petroleum and a warrant entitling Synergy to purchase one additional share of common stock of Texas T Petroleum at $1.00 per share at any time during the three-year period from issuance of the units. Subsequent to the quarter ended September 30, 2000, T Petroleum Ltd. had fulfilled the terms of the agreement. Pursuant to the agreement, shares representing fifty percent of the issued and outstanding shares of Carbon Resources Limited were issued to Texas T Petroleum. Title to the heavy oil upgrading technology is owned by Carbon Resources. Synergy and Texas T Petroleum are presently finalizing the terms of a shareholders agreement to govern the operations of Carbon Resources.

During the fiscal year 2001, Synergy intends to begin the detailed engineering of a heavy oil commercial plant, with a capacity of between 1,000 and 5,000 barrels per day, with construction to begin sometime in 2001. The total cost of this commercial plant is approximated at $10 millionUSD to $25 millionUSD, depending on various factors, including, the available infrastructure of the site at which this plant will be located. Synergy and its joint venture partner will look to potential users of the technology and government grants and/or loans to assist in funding the costs of construction of this commercial plant.

Synergy has completed the construction and installation of its 4 barrel per day Syngen demonstration plant. The plant is presently in commissioning and Synergy will be conducting various tests of the demonstration plant throughout the current fiscal year. Synergy will also build a Fischer-Tropsch system, which will be installed next to the Syngen demonstration plant to create a gas-to-liquids system. Synergy and its funding partner, Stone Canyon Canada, expect to expend $1.9USD million on the construction of the Fischer-Tropsch system and operation of the completed 4 barrel per day gas-to-liquids demonstration plant during the next twelve (12) months.

During the next twelve (12) months, Synergy expects to complete the detailed engineering and commence construction of a 500 barrel per day Syngen reactor at the estimated cost of $1.5 millionUSD, to be placed at a site to be determined.

Synergy expects that the total number of people employed by Synergy and its subsidiaries will increase as the above-described pilot plants and demonstration units are in operation.

Cash flows from continuing operations during 1999 and 1998 reflect net cash used of ($253,709) and ($667,569), respectively while cash flows provided by investing activities for the same periods were ($243,191) and ($90,690), respectively. Cash flows from financing activities for the periods ended December 31, 1999 and 1998 were $487,843 and $770,161, respectively.

Cash flows from continued operations during the period ended September 30, 2000 and 1999 reflect new cash used of $(2,839,754USD) and $(163,100USD) respectively, while cash flows provided by investing activities for the same periods were $(52,679USD) and $(276,154USD) and cash flows provided by financing activities were $3,604,081USD and $449,909USD, respectively.

At December 31, 1999 and 1998, Synergy had working capital of ($1,351,796) and ($579,823) respectively. At September 30, 2000 and 1999, Synergy had working capital of $587,530USD and $(984,590USD), respectively. Synergy's working capital will decrease during fiscal year 2000, unless additional equity and/or debt financing is obtained. Synergy hopes to obtain such financing and also hopes to receive funding from potential users of its technologies. If either of the foregoing are obtained, Synergy believes it will have sufficient resources to meet its operating expenses for the next twelve months. Synergy has received preliminary inquiries from possible funding sources, but no indication of commitment or firm interest has been received. Moreover, Synergy has held preliminary discussions with potential users of its technologies, but none of such discussions have progressed to the point that it would be reasonable to conclude that funding from such potential users will occur prior to the end of the current fiscal year or during the next twelve (12) months. If we are unsuccessful in securing any of these types of financings, it is possible that Synergy would have to liquidate assets to try to meet its operating and development needs. Since its most valuable assets are intangibles, it would be very difficult to locate a buyer that puts only significant value on such assets. In the event that assets could not be liquidated and no further funding is obtained, it is possible that Synergy would cease operations and cease to be a going concern.

As at December 31, 1999, Synergy had total assets of $182,191 compared to total assets of $764,544 at December 31, 1998. This represents a decrease of $582,353 which is mostly attributable to Synergy's write down of its oil and gas assets from its balance sheet, due to a dry well expense.

As at September 30, 2000 Synergy had total assets of $2,993,188USD compared to total assets of $232,256USD at September 30, 1999. This represents an increase of $2,760,532USD, which is attributable to an increase in cash due to deposits from a private placement conducted by Synergy and an increase to accounts receivable and the addition of a royalty reduction valued at $1,062,500USD. Total assets as at September 30, 2000 consist of $685,987USD in cash, related party receivables of $563,435USD, other receivables of $472,204USD, prepaid expenses of $63,606USD, and office equipment net of accumulated depreciation of $9,330USD, of $45,456USD.

As of the date of this filing, Synergy has limited sources of income. During the fiscal year ended December 31, 1999 and the nine month period ended September 30, 2000, Synergy relied entirely upon the sale of securities to pay its operating expenses. Synergy also relied upon funds from its technology funding partners to pay for most of the research and development costs incurred during the fiscal year ended December 31, 1999 and the nine (9) month period ended September 30, 2000. (See the last paragraph of this section "Results of Operations" below). Management expects to earn some income from testing of heavy oil samples for clients, however the amount of the fees charged will be minimal as compared to the funds which will be required for the ongoing development of Synergy's technologies.

As discussed above under "Plan of Operation", Synergy has a joint venture partner for the heavy oil upgrading technology, Texas T Petroleum. Texas T Petroleum is obligated to funding fifty percent of the ongoing development costs of the heavy oil upgrading technology. Synergy must be able to raise additional funds for development of both of its technologies by way of borrowings, equity financings, licensing agreements or joint ventures to continue to fund the development of its' technologies.

Synergy's net operating loss for fiscal year 1999, as compared to 1998, increased by approximately 108% due to increases in salaries, rent, marketing, acquisition reviews, legal expenses and consulting fees.

Synergy's net operating loss for the nine (9) months ended September 30, 2000 of $2,570,933USD, as compared to the net operating loss for the nine (9) months ended September 30,1999 of $1,448,634USD increased by 77.5% due to an increase in Synergy's general and administrative expenses and amortization of charges related to stock option compensation granted in the first quarter of the year 2000 of $658,438USD (see Note 7 to the Unaudited Financial Statements for the period ended September 30, 2000, included herewith). Synergy had dry-well expenses in the first quarter of 1999 of $551,095USD with no such expenses in the first quarter of this fiscal year. Synergy's net loss from continuing operations during first nine (9) months of this fiscal year was $4,820,933USD, compared to a loss of $1,448,634USD for the same period in the preceding year.

Synergy's operating expenses for fiscal year 1999 were comprised primarily of oil and gas drilling costs and write off of oil and gas assets of $551,191, technology development of $764,857 and general and administrative expenses of $725,704.

Synergy's operating expenses for the nine (9) months ended September 30, 2000, were comprised of general and administrative expenses of $1,289,344USD, stock option compensation of 784,333 and technology development of $516,103 USD for a total of $2,589,780USD. While Synergy's total expenses for the nine(9) months ended September 30, 2000, increased by 57% from the same period from the preceding year, general and administrative expenses for the same periods increased by 149% due to increased personnel and investor relation activities.

Synergy's present business does not generate sufficient revenues to cover its operating expenses. Synergy may not be able to continue unless it can raise additional funds or source industry partners.

As of September 30, 2000, a total of $4,007,546USD, has been expended in the development of Synergy's two proprietary and patented technologies by Synergy, its subsidiaries and its joint venture partners. Of the total amount expended, Texas T Petroleum, Synergy's joint venture partner in the heavy oil upgrading technology has advanced $884,023USD and $1,763,255USD has been advanced by Stone Canyon Resources Ltd., a related corporation, for the Syngen technology, which amount includes a loan in the amount of $123,953USD from Synergy.

Effective May 20, 1998, Stone Canyon Resources Ltd., the Canadian corporation, a corporation of which Ms. Danforth and Mr. Haworth are each a director and officer, of which Ms. Danforth is a greater than 5% shareholder, acquired 200,000 Units of Synergy, pursuant to an offering pursuant to Regulation S under the Securities Act of 1933. The Units were acquired at $0.50USD per Unit each Unit consisting of one common share and one share purchase warrant entitling the holder to acquire one additional share of common stock at $1.00USD per share.

Effective July 2, 1998, Stone Canyon Resources Ltd., the Canadian corporation, a corporation of which Mr. Haworth and Ms. Danforth are each a director and officer, of which Ms. Danforth is a greater than 5% shareholder, acquired 10,000 Units of Synergy pursuant to pursuant to Regulation S under the Securities Act of 1983. The Units were acquired at $0.50USD per Unit each Unit consisting of one common share and one share purchase warrant entitling the holder to acquire one additional share of common stock at $1.00USD per share.

Effective September 30, 1998, Stone Canyon Resources Ltd., the Canadian corporation, a private Canadian corporation of which Mr. Haworth and Ms. Danforth are each a director and officer, and of which Ms. Danforth is a greater than 5% shareholder, and Synergy executed an agreement whereby Stone Canyon Resources Ltd., the Canadian corporation was required to pay the costs of development of a 4barrel/day test facility for a gas-to-liquids technology currently under development by Synergy in return for the Canadian licensing and marketing rights to the technology.

On February 10, 1999,Synergy commenced a private placement of its common stock under Rule 504 of Regulation D at $0.50USD per Unit. Each Unit consisted of one (1) share of common stock and one (1) warrant exercisable during the next two (2) years. The Units were priced at $0.50USD US per Unit. Synergy completed this offering on April 6, 1999, with proceeds of $750,000USD for 1.5 million units. No commissions fees, underwriting fees, discounts or other selling expenses were paid.

Effective February 17, 1999, CMJ Consulting Ltd., a corporation of which Ms. Danforth is a director, officer and nominee holder of one-third of the outstanding stock, acquired 470,000 Units of Synergy pursuant to an offering made pursuant to Regulation D under the Securities Act of 1933. The Units were acquired at $0.50USD per Unit, each Unit consisting of one common share and one share purchase warrant entitling the holder to acquire one additional share of common stock.

Effective April 5, 1999, CMJ Consulting Ltd., a corporation of which Ms. Danforth is a director, officer and nominee holder of one-third of the outstanding stock, acquired 124,686 Units of Synergy pursuant to an offering made pursuant to Regulation D under the Securities Act of 1933. The Units were acquired at $0.50USD per Unit, each Unit consisting of one common share and one share warrant entitling the holder to acquire one additional share of common stock.

Ms. Jacqueline Danforth receives $250.00USD per month for administrative services from Stone Canyon Resources Inc., the Colorado Corporation.

During the fiscal year ended December 31, 1999, Synergy was charged a total of $211,040USD in consulting fees by Glidarc Technologies Inc. (a Texas corporation) for process management services provided by Mr. Thomas Cooley. Mr. Thomas Cooley is the President of Glidarc Technologies and a Director of Carbon Resources, a private Cyprus corporation which is a subsidiary of Synergy. As at December 31, 1999, an amount of $190,720USD for services rendered remained due and payable to Glidarc Technologies.

During the fiscal year ended December 31, 1999, Synergy was charged $60,000USD for management services (1998 - $60,000USD) and $15,000USD for rent (1998 - $4,500USD) by CMJ Consulting Ltd, a private Alberta corporation which shares a common officer and director to both Synergy and its wholly owned subsidiary, Stone Canyon Resources Inc. In addition, during the 1998 fiscal year, CMJ Consulting advanced to Synergy investor deposits totaling $156,500USD, which amount remained outstanding as at December 31, 1998. During fiscal 1999, CMJ Consulting advanced an additional $31,383USD to Synergy and converted $166,000USD of the outstanding investor deposits to 332,000 shares of the common stock of Synergy at $0.50USD per Unit under a Regulation D Offering. A further $69,000USD from the outstanding accounts payable was also converted to 138,000 shares of common stock of Synergy at $0.50USD per Unit under the Offering to February 17, 1999. CMJ purchased an additional 124,686 common shares of Synergy under the Offering for $62,343USD in April 1999. As at December 31, 1999 an amount of $13,143USD of investor deposits (1998 - $156,500USD) and $76,861USD recorded in the Synergy's accounts payable (1998 - $64,618USD) remained due to CMJ Consulting Ltd. Please note the accounts payable figures reported above include particular invoiced expenses incurred during the general course of business.

During the fiscal year ended December 31, 1998, Synergy received cash advances totaling $200,770USD from Stone Canyon Resources Ltd., a private Alberta corporation and former majority shareholder of Synergy, which also shares two common officers and directors. Amounts advanced were recorded on the financial statements as loans payable. In September 1998 Stone Canyon Resources Ltd. elected to convert $105,000USD of the loans outstanding to 210,000 Units of common stock under Synergy's Regulation S offering at $0.50USD per Unit.

In September 1998 Stone Canada and Synergy entered into a letter agreement under which Stone Canada agreed to fund the development of a 4-barrel/day gas to liquids demonstration facility under development by Carbon Resources in return for the Canadian marketing and licensing rights to the technology. Pursuant to this agreement, at the fiscal year ended December 31, 1998, Carbon Resources issued an invoice to Stone Canada in the amount of $370,799USD for reimbursement of all costs incurred by Carbon Resources in respect of the development of the 4-barrel/day facility.

During the fiscal year ended December 31, 1998, Stone Canyon received cash advances from Stone Canada of $90,492USD. Stone Canyon retired $40,982USD of the outstanding loans payable over fiscal 1998.

As of December 31, 1998, the consolidated receivable which remained due from Stone Canada totaled $282,351USD.

During the fiscal year ended December 31, 1999, Stone Canada advanced funds to Synergy and its subsidiaries to reduce the amount outstanding at December 31, 1998. In addition, as at December 31, 1999, Syngen (the Synergy subsidiary to which the Gas-to-liquids Technology was transferred from Carbon Resources) invoiced Stone Canada an additional $65,646USD for reimbursement of 4-barrel/day facility expenses incurred over the year. As at December 31, 1999 the consolidated receivable which remained due from Stone Canada totaled $32,067USD.

Synergy's common stock is traded on the Over-The-Counter Bulletin Board under the symbol "OILS". High and low bid prices for the last two (2) fiscal years are set forth below; these quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions:

As of September 19, 2000, there were 18 market makers in Synergy's stock. The last available reported trade by the OTCBB prior to the filing of this report was October 2, 2000, at $1.96875USD per share.

As of August 21, 2000, there were approximately 1,918 record holders of Synergy's stock.

During the last two fiscal years, no cash dividends have been declared on Synergy's stock.

The following table sets forth information for the individuals who served as the chief executive officer ("CEO") of Synergy during any portion of the last three (3) fiscal years. No disclosure need be provided for any executive officer, other than the CEO, whose total annual salary and bonus for the last completed fiscal year did not exceed $100,000USD. Accordingly, no other executive officers of Synergy are included in the table.

*Mr. Haworth received options for 100,000 shares of common stock in exchange for his services as President and a member of the Board of Directors for the years 1998 and 1999. Since the exercise price for such options exceeded the market price for the shares during the time that they were earned, no value has been ascribed to such options.

Ms. Danforth received $3,750.00USD per month for administrative services. Mr. Cooley receives compensation for his services through a consulting agreement between Synergy and Glidarc Technologies (see "CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS").

None; no stock appreciation rights or warrants exist.

Synergy does not pay non-officer directors for their services as such, nor does it pay any director's fees for attendance at meetings. Directors are reimbursed for any expenses incurred by them in their performance as directors.

The following pages include:

1. Annual Financial Statements for the period ended December 31, 1999, including Auditor's Report.
2. Interim Financial Statements for the period ended September 30, 2000.

December 31, 1999 and 1998

Report of Independent Certified Public Accountants
Financial Statements:
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations for the Years Ended
December 31, 1999 and 1998 and for the Period from
November 7, 1996 (Date of Inception) to December 31, 1999
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for the Cumulative Period from November 7, 1996
(Date of Inception) to December 31, 1999
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998 and for the Period from
November 7, 1996 (Date of Inception) to December 31, 1999
Notes to Consolidated Financial Statements

(801) 532-2200
Member of AICPA Division of FirmsFax (801) 532-7944
Member of SECPS345 East 300 South, Suite 200
Member of Summit International AssociatesSalt Lake City, Utah 84111-2693

To the Stockholders and the Board of Directors

Synergy Technologies Corporation

We have audited the accompanying consolidated balance sheet of Synergy Technologies Corporation and subsidiaries (a company in the development stage) as of December 31, 1999 and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the two years then ended and for the cumulative period from November 7, 1996 (date of inception) through December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Synergy Technologies Corporation and subsidiaries as of December 31, 1999 and the results of their operations and their cash flows for the two years then ended and for the cumulative period from November 7, 1996 (date of inception) through December 31, 1999, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered losses from operations and has had negative cash flows from operating activities during the years ended December 31, 1999 and 1998 and cumulative from inception through December 31, 1999. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to those matters are also described in Note 1. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

March 17, 2000

Salt Lake City, Utah