FORM 10-K/A

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   (Mark One)
       (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended August 31, 2009.

                                        OR

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

Commission file number:  None

                          SYNERGY RESOURCES CORPORATION
                     --------------------------------------
             (Exact name of registrant as specified in its charter)

                       COLORADO                             20-2835920
             -------------------------------           -------------------
             (State or other jurisdiction of            (I.R.S.Employer
             incorporation or organization)            Identification No.)

                   20203 Highway 60
                   Platteville, CO                           80651 
               --------------------------------           -----------
               (Address of principal executive offices)    (Zip Code)

Registrant's telephone number, including area code: (970) 737-1073
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ]

Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [ ]                      Accelerated filer  [ ]

Non-accelerated filer  [ ]
 (Do not check if a smaller reporting company)    Smaller reporting company  [X]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Act):   [ ] Yes     [X] No

The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing sale price of the registrant's common stock
on February 28, 2009, as quoted on the OTC Bulletin Board, was approximately
$4,540,000.

As of October 31, 2009, the Registrant had 11,998,000 issued and outstanding
shares of common stock.

Documents Incorporated by Reference:   None



<PAGE>


                                     PART I

Cautionary Statement Concerning Forward-Looking Statements

      This report contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are
subject to risks and uncertainties and are based on the beliefs and assumptions
of management and information currently available to management. The use of
words such as "believes", "expects", "anticipates", "intends", "plans",
"estimates", "should", "likely" or similar expressions, indicates a
forward-looking statement.

      The identification in this report of factors that may affect our future
performance and the accuracy of forward-looking statements is meant to be
illustrative and by no means exhaustive. All forward-looking statements should
be evaluated with the understanding of their inherent uncertainty.

      Factors that could cause our actual results to differ materially from
those expressed or implied by forward-looking statements include, but are not
limited to:

     o    The success of our exploration and development efforts;
     o    The price of oil and gas;
     o    The worldwide economic situation;
     o    Any change in interest rates or inflation;
     o    The   willingness   and  ability  of  third  parties  to  honor  their
          contractual commitments;
     o    Our  ability to raise  additional  capital,  as it may be  affected by
          current  conditions in the stock market and competition in the oil and
          gas industry for risk capital;
     o    Our capital costs, as they may be affected by delays or cost overruns;
     o    Our costs of production;
     o    Environmental  and other  regulations,  as the same presently exist or
          may later be amended;
     o    Our   ability  to   identify,   finance  and   integrate   any  future
          acquisitions; and
     o    The volatility of the our stock price.


ITEM 1.  BUSINESS
-----------------

      We were incorporated in Colorado in May 2005 under the name Blue Star
Energy, Inc. In December 2007 we changed our name to Brishlin Resources, Inc.
Prior to the acquisition of Synergy Resources Corporation we were relatively
inactive and our only material asset was one shut-in oil well.


      On September 10, 2008 we acquired approximately 89% of the outstanding
shares of Synergy Resources Corporation in exchange for 8,882,500 shares of our
common stock and 1,042,500 Series A warrants.


                                       2

<PAGE>

      In contemplation of the acquisition, our shareholders, at a special
meeting held on September 8, 2008, approved a 10-for-1 reverse split of our
common stock and approved a resolution to change our name to Synergy Resources
Corporation. As a result of the reverse stock split, we had 1,038,000
outstanding shares of common stock at the time of the acquisition of Synergy.

      The reverse stock split and name change became effective on the OTC
Bulletin Board on September 22, 2008.

      Each of our shareholders at the close of business on September 9, 2008
received one Series A warrant for each post-split share which they owned in the
Company on that date. However, the warrants will not be issued until a
registration statement covering the warrants, as well as the shares issuable
upon the exercise of the warrants, had been declared effective by the Securities
and Exchange Commission.

      Effective December 1, 2008 we purchased 1,000,000 shares of our common
stock from one of the original Synergy shareholders for $1,000, which was the
price at which the shares were sold to the shareholder.

      On December 19, 2008 we acquired the remaining shares of Synergy for
1,077,500 shares of our common stock and 1,017,500 Series A warrants.

      Between December 1, 2008 and June 30, 2009 we sold 1,000,000 units to
investors in a private offering at a price of $3.00 per unit. Each unit
consisted of two shares of our common stock, one Series A warrant and one Series
B warrant. See Item 5 of this report for the terms of the Series A and Series B
warrants.

      Synergy Resources was incorporated in Colorado in December 2007. On the
date we acquired Synergy, its only asset was approximately $2.2 million in cash
that was raised from private investors.

      Unless otherwise indicated all references to us include the operations of
Synergy.

      We plan to evaluate undeveloped oil and gas prospects and participate in
drilling activities on those prospects, which, in the opinion of management, are
favorable for the production of oil or gas. If, through our review, a
geographical area indicates geological and economic potential, we will attempt
to acquire leases or other interests in the area. We may then attempt to sell
portions of our leasehold interests in a prospect to third parties, thus sharing
the risks and rewards of the exploration and development of the prospect with
the other owners. One or more wells may be drilled on a prospect, and if the
results indicate the presence of sufficient oil and gas reserves, additional
wells may be drilled on the prospect.



                                       3

<PAGE>

     We may also:

     o    acquire a working  interest in one or more  prospects  from others and
          participate with the other working interest owners in drilling, and if
          warranted, completing oil or gas wells on a prospect, or

     o    purchase producing oil or gas properties.

     Our activities will primarily be dependent upon available financing.

     We are an oil and gas operator in Colorado.

     Title to properties which may be acquired by us will be subject to royalty,
overriding royalty,  carried,  net profits,  working and other similar interests
and contractual arrangements customary in the oil and gas industry, to liens for
current  taxes not yet due and to other  encumbrances.  As is  customary  in the
industry,  in the case of undeveloped  properties little investigation of record
title will be made at the time of acquisition  (other than a preliminary  review
of local  records).  However,  drilling  title  opinions may be obtained  before
commencement of drilling operations.

     Our two  officers,  Ed  Holloway  and William  Scaff,  Jr.,  are  currently
involved in oil and gas exploration and development. Mr. Holloway and Mr. Scaff,
or their affiliates,  may present us with  opportunities to acquire leases or to
participate in drilling oil or gas wells.

      Any transaction between us and Ed Holloway and William E. Scaff, Jr., or
any of their affiliates (collectively the "Holloway/Scaff parties") must be
approved by a majority of our disinterested directors. In the event the
Holloway/Scaff parties are presented with or become aware of any potential
transaction which they believe would be of interest to us, they are required to
provide us with the right to participate in the transaction. The Holloway/Scaff
parties are required to disclose any interest they have in the potential
transaction as well as any interest they have in any property which could
benefit from our participation in the transaction, such as by our drilling an
exploratory well on a lease which is in proximity to leases in which the
Holloway/Scaff parties have an interest. Without our consent, the Holloway/Scaff
parties may participate up to 25% in a potential transaction on terms which are
no different than those offered to us.

      We have a letter agreement with Petroleum Management, LLC, and Petroleum
Exploration and Management, LLC, firms controlled by Ed Holloway and William E.
Scaff, Jr., which provides us with the option to acquire working interests in
oil and gas leases owned by these firms and covering lands on the
Denver-Julesburg ("D-J") basin in northeast Colorado. The oil and gas leases
cover 640 acres in Weld County, Colorado and, subject to certain conditions,
will be transferred to us for payment of $1,000 per net mineral acre. The
working interests in the leases we may acquire will vary, but the net revenue
interest in the leases, if acquired, will not be less than 75%. The option
requires an initial deposit of $100,000, which will be applied against any
leases we acquire pursuant to the Letter Agreement. The $100,000 was paid in
February 2009. As of October 31, 2009, the $100,000 deposit had been applied to
leases acquired from Petroleum Management and Petroleum Exploration and
Management.


                                       4

<PAGE>

DRILLING ACTIVITIES, OIL AND GAS PROPERTIES, AND PROVEN RESERVES

      In November 2008, we participated in an auction of oil and gas leases
conducted by the State of Colorado. We were awarded leases to 1,600 acres for
total consideration of $113,600. The leases have a term of five years. In
February, 2009, we participated in an auction of leases conducted by the Bureau
of Land Management. We were awarded leases to 2,000 acres for total
consideration of $45,000. The leases have a term of ten years. In addition, we
acquired several leases in private transactions for approximately $136,000. The
leases cover approximately 3,000 acres and have terms ranging from two to five
years. As of October 31, 2009, we had interests in oil and gas leases covering
6,670 net acres.

      Pursuant to a option agreement with Petroleum Management, LLC and
Petroleum Exploration and Management, LLC in November and December, 2008 we
participated in two wells drilled by Kerr-McGee Oil & Gas Onshore LP (KM). Both
the Gray #25-16 well and the Zabka State #33-15 well hit productive formations
at a depth of approximately 7,500 feet. We have a 37.5% working interest
(28.125% net revenue interest) in each well and our costs of drilling and
completing these wells was approximately $585,000. During the year ended August
31, 2009 these wells produced 1,730 barrels of oil and 4,386 mcf of gas net to
our interest.

      In September 2009 we began a seven well drilling program with its first
well the Meyer #8 well being drilled to a total depth of 7,580 feet. The well
exhibited four strong pay zones with the Codell and Niobrara formations the
primary target. We continued to drill the next six wells with similar success.
Three of the seven wells also showed a fifth pay zone in the J formation at
approximately 8,100 feet. The seven well drilling program was completed in
October 2009 with production casing set on all seven wells. These wells will be
stimulated and placed in production in November and December 2009. We are the
operator for the wells and have a working interest varying from 62.5% to 31.25%
(47% to 23% net revenue interest) in the wells.

      During the year ended December 31, 2007, and the eight-month transition
period ended August 31, 2008, we did not:

     o    drill or participate in the drilling of any oil or gas wells, or
     o    produce or sell any oil or gas.

      During the year ended August 31, 2009, we drilled or participated in the
drilling of the following wells:

                                         Gross           Net
                                         -----           ---
Exploratory Wells:
  Productive:
   Oil                                    --              --
   Gas                                    --              --
 Nonproductive                            --              --


                                       5

<PAGE>


                                         Gross           Net
                                         -----           ---
Development Wells:
  Productive:
   Oil                                     2            0.75
   Gas                                    --              --
  Nonproductive                           --              --

Total Wells:
  Productive:
   Oil                                     2            0.75
   Gas                                    --              --
  Nonproductive                           --              --


      The following table shows, as of October 31, 2009, by state, our producing
wells, Developed Acreage, and Undeveloped Acreage, excluding service (injection
and disposal) wells:

             Productive Wells (1)  Developed Acreage   Undeveloped Acreage (1)
      State    Gross        Net    Gross         Net    Gross           Net
      -----    -----        ---    -----         ---    -----           ---

     Colorado     2        0.75     320 (2)    120      4,350          3,990
     Nebraska    --          --      --         --      2,560          2,560

(1)  "Undeveloped Acreage" includes leasehold interests on which wells have not
     been drilled or completed to the point that would permit the production of
     commercial quantities of natural gas and oil regardless of whether the
     leasehold interest is classified as containing proved undeveloped reserves.

(2)  Does not include 160 acres associated with a shut-in gas well.

      The following table shows, as of October 31, 2009 the status of our gross
acreage.

      State                   Held by Production     Not Held by Production
      -----                   ------------------     ----------------------

      Colorado                         320                   4,350
      Nebraska                          --                   2,560

      Acres Held By Production remain in force so long as oil or gas is produced
from the well on the particular lease. Leased acres which are not Held By
Production require annual rental payments to maintain the lease until the first
to occur of the following: the expiration of the lease or the time oil or gas is
produced from one or more wells drilled on the lease acreage. At the time oil or
gas is produced from wells drilled on the leased acreage the lease is considered
to be Held By Production.

      We do not own any overriding royalty interests.



                                       6

<PAGE>

      The following table shows our net production of oil and gas, average sales
prices and average production costs for the period presented:

                                          Year Ended August 31, 2009
                                          --------------------------
   Production -
      Oil (Bbls)                                     1,730
      Gas (Mcf)                                      4,386
   Average sales price -
      Oil (Bbls)                                    $45.59
      Gas (Mcf)                                     $ 3.48
   Average production costs per
      barrel of oil equivalent (BOE)                $ 4.70


      A barrel of oil equivalent combines Bbls of oil and Mcf of gas by
converting each six Mcf of gas to one Bbl of oil.

      Production costs may vary substantially among wells depending on the
methods of recovery employed and other factors, but generally include severance
taxes, administrative overhead, maintenance and repair, labor and utilities.

      We are not obligated to provide a fixed and determined quantity of oil or
gas in the future. During the last three fiscal years, we have not had, nor do
we now have, any long-term supply or similar agreement with any government or
governmental authority.

      Below are estimates of our net Proved Reserves and the present value of
estimated future net revenues from such reserves based upon the standardized
measure of discounted future net cash flows relating to proved oil and gas
reserves in accordance with the provisions of Statement of Financial Accounting
Standards No. 69, "Disclosures about Oil and Gas Producing Activities" (SFAS No.
69). The standardized measure of discounted future net cash flows is determined
by using estimated quantities of Proved Reserves and the periods in which they
are expected to be developed and produced based on period-end economic
conditions. The estimated future production is priced at period-end prices,
except where fixed and determinable price escalations are provided by contract.
The resulting estimated future cash inflows are then reduced by estimated future
costs to develop and produce reserves based on period-end cost levels. No
deduction has been made for depletion, depreciation or for indirect costs, such
as general corporate overhead. Present values were computed by discounting
future net revenues by 10% per year.

                                                            August 31, 2009
                                                     --------------------------
                                                     Oil (Bbls)       Gas (Mcf)

      Proved Reserves                                    6,430          25,680
      Estimated future net cash flows from proved
          oil and gas reserves                              $  305,351
      Present value of future net cash flows from
          proved  oil and gas reserves                      $  232,957



                                       7

<PAGE>

      Our Proved Reserves include only those amounts which we reasonably expect
to recover in the future from known oil and gas reservoirs under existing
economic and operating conditions, at current prices and costs, under existing
regulatory practices and with existing technology. Accordingly, any changes in
prices, operating and development costs, regulations, technology or other
factors could significantly increase or decrease estimates of Proved Reserves.

      In general, the volume of production from our gas and oil properties
declines as reserves are depleted. Except to the extent we acquire additional
properties containing proved reserves or conducts successful exploration and
development activities, or both, our proved reserves will decline as reserves
are produced. Accordingly, volumes generated from our future activities are
highly dependent upon the level of success in acquiring or finding additional
reserves and the costs incurred in doing so.

GOVERNMENT REGULATION

      Various state and federal agencies regulate the production and sale of oil
and natural gas. All states in which we plan to operate impose restrictions on
the drilling, production, transportation and sale of oil and natural gas.

      The Federal Energy Regulatory Commission (the "FERC") regulates the
interstate transportation and the sale in interstate commerce for resale of
natural gas. The FERC's jurisdiction over interstate natural gas sales has been
substantially modified by the Natural Gas Policy Act under which the FERC
continued to regulate the maximum selling prices of certain categories of gas
sold in "first sales" in interstate and intrastate commerce.

      FERC has pursued policy initiatives that have affected natural gas
marketing. Most notable are (1) the large-scale divestiture of interstate
pipeline-owned gas gathering facilities to affiliated or non-affiliated
companies; (2) further development of rules governing the relationship of the
pipelines with their marketing affiliates; (3) the publication of standards
relating to the use of electronic bulletin boards and electronic data exchange
by the pipelines to make available transportation information on a timely basis
and to enable transactions to occur on a purely electronic basis; (4) further
review of the role of the secondary market for released pipeline capacity and
its relationship to open access service in the primary market; and (5)
development of policy and promulgation of orders pertaining to its authorization
of market-based rates (rather than traditional cost-of-service based rates) for
transportation or transportation-related services upon the pipeline's
demonstration of lack of market control in the relevant service market. We do
not know what effect the FERC's other activities will have on the access to
markets, the fostering of competition and the cost of doing business.

      Our sales of oil and natural gas liquids will not be regulated and will be
at market prices. The price received from the sale of these products will be
affected by the cost of transporting the products to market. Much of that
transportation is through interstate common carrier pipelines.

      Federal, state, and local agencies have promulgated extensive rules and
regulations applicable to our oil and natural gas exploration, production and
related operations. Most states require permits for drilling operations,


                                       8

<PAGE>

drilling bonds and the filing of reports concerning operations and impose other
requirements relating to the exploration of oil and natural gas. Many states
also have statutes or regulations addressing conservation matters including
provisions for the unitization or pooling of oil and natural gas properties, the
establishment of maximum rates of production from oil and natural gas wells and
the regulation of spacing, plugging and abandonment of such wells. The statutes
and regulations of some states limit the rate at which oil and natural gas is
produced from our properties. The federal and state regulatory burden on the oil
and natural gas industry increases our cost of doing business and affects its
profitability. Because these rules and regulations are amended or reinterpreted
frequently, we are unable to predict the future cost or impact of complying with
those laws.

COMPETITION AND MARKETING

      We will be faced with strong competition from many other companies and
individuals engaged in the oil and gas business, many are very large, well
established energy companies with substantial capabilities and established
earnings records. We may be at a competitive disadvantage in acquiring oil and
gas prospects since we must compete with these individuals and companies, many
of which have greater financial resources and larger technical staffs. It is
nearly impossible to estimate the number of competitors; however, it is known
that there are a large number of companies and individuals in the oil and gas
business.

      Exploration for and production of oil and gas are affected by the
availability of pipe, casing and other tubular goods and certain other oil field
equipment including drilling rigs and tools. We will depend upon independent
drilling contractors to furnish rigs, equipment and tools to drill its wells.
Higher prices for oil and gas may result in competition among operators for
drilling equipment, tubular goods and drilling crews which may affect our
ability expeditiously to drill, complete, recomplete and work-over wells.

      The market for oil and gas is dependent upon a number of factors beyond
our control, which at times cannot be accurately predicted. These factors
include the proximity of wells to, and the capacity of, natural gas pipelines,
the extent of competitive domestic production and imports of oil and gas, the
availability of other sources of energy, fluctuations in seasonal supply and
demand, and governmental regulation. In addition, there is always the
possibility that new legislation may be enacted, which would impose price
controls or additional excise taxes upon crude oil or natural gas, or both.
Oversupplies of natural gas can be expected to recur from time to time and may
result in the gas producing wells being shut-in. Imports of natural gas may
adversely affect the market for domestic natural gas.

      The market price for crude oil is significantly affected by policies
adopted by the member nations of Organization of Petroleum Exporting Countries
("OPEC"). Members of OPEC establish prices and production quotas among
themselves for petroleum products from time to time with the intent of
controlling the current global supply and consequently price levels. We are
unable to predict the effect, if any, that OPEC or other countries will have on
the amount of, or the prices received for, crude oil and natural gas.


                                       9

<PAGE>


      Gas prices, which were once effectively determined by government
regulations, are now largely influenced by competition. Competitors in this
market include producers, gas pipelines and their affiliated marketing
companies, independent marketers, and providers of alternate energy supplies,
such as residual fuel oil. Changes in government regulations relating to the
production, transportation and marketing of natural gas have also resulted in
significant changes in the historical marketing patterns of the industry.
Generally, these changes have resulted in the abandonment by many pipelines of
long-term contracts for the purchase of natural gas, the development by gas
producers of their own marketing programs to take advantage of new regulations
requiring pipelines to transport gas for regulated fees, and an increasing
tendency to rely on short-term contracts priced at spot market prices.

General
-------

      Our offices are located at 20203 Highway 60, Platteville, CO 80651. The
Platteville office telephone number is (970) 737-1073 and its fax number is
(970) 737-1045. We also maintain an office at 1200 17th Street, Suite 570,
Denver, CO 80202. The Company's telephone number at the Denver office is (303)
623-3966 and its fax number is (303) 534-0151.

      The Platteville office and equipment yard is provided to us pursuant to an
Administrative Services Agreement with Petroleum Management, LLC, a firm
controlled by our two officers. For more information concerning this rental
arrangement see Item 13 of this report.

      As of October 31, 2009 our only employees were our two officers and a
landman.


ITEM 1A.  RISK FACTORS
          ------------

    Not applicable


ITEM 1B.  UNRESOLVED STAFF COMMENTS
          -------------------------

      Not applicable


ITEM 2.   PROPERTIES
          ----------

      See Item 1 of this report.


ITEM 3.   LEGAL PROCEEDINGS
          -----------------

      None.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          ---------------------------------------------------

      Not applicable.



                                       10

<PAGE>



ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
         AND ISSUER PURCHASES OF EQUITY

      On February 27, 2008 our common stock began trading on the OTC Bulletin
Board under the symbol "BRSH." Prior to that date there was no established
trading market for our common stock.

       On September 22, 2008 a 10-for-1 reverse stock split, approved by our
shareholders on September 8, 2008, became effective on the OTC Bulletin Board
and our trading symbol was changed to "SYRG."

      Shown below is the range of high and low closing prices for our common
stock for the periods indicated as reported by the FINRA. The market quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not necessarily represent actual transactions. The market quotations for
the quarters ended May 31, 2008 and August 31, 2008 have been adjusted to
reflect the 10-for-1 reverse stock split referred to above.

      Quarter Ended            High           Low
      -------------            ----           ---

      May 31, 2008             $5.00         $1.50
      August 31, 2008          $3.40         $2.50
      November 30, 2008        $4.75         $3.10
      February 28, 2009        $3.45         $1.25
      May 31, 2009             $1.80         $1.45
      August 31, 2009          $1.80         $1.10

      As of October 31, 2009, we had 11,998,000 outstanding shares of common
stock and 130 shareholders.

      Holders of our common stock are entitled to receive dividends as may be
declared by the Board of Directors. Our Board of Directors is not restricted
from paying any dividends but is not obligated to declare a dividend. No cash
dividends have ever been declared and it is not anticipated that cash dividends
will ever be paid.

        Our Articles of Incorporation authorize our Board of Directors to issue
up to 10,000,000 shares of preferred stock. The provisions in the Articles of
Incorporation relating to the preferred stock allow our directors to issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to the holders of our common
stock. The issuance of preferred stock with these rights may make the removal of
management difficult even if the removal would be considered beneficial to
shareholders generally, and will have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers if these
transactions are not favored by our management.

      During the eight months ended August 31, 2008 we did not purchase any of
our securities. During this same period no person affiliated with us purchased
any of our securities on our behalf. On December 1, 2008 we purchased 1,000,000
shares of our common stock from the Synergy Energy Trust for $1,000, which was


                                       11

<PAGE>

the same amount which we received when the shares were sold to the Trust. During
the year ended August 31, 2009 we did not purchase any of our securities and no
person affiliated with us purchased any of our securities.

Other Shares Which May Be Issued
--------------------------------

      The following table lists additional shares of the our common stock which
may be issued as the result of the exercise of outstanding options or warrants:

                                                           Number of     Note
                                                            Shares    Reference
                                                           ---------  ---------

   Shares issuable upon exercise of Series A Warrants
   that were sold to those persons owning shares of
   our common stock prior to the acquisition of Synergy    1,038,000      A

   Shares issuable upon exercise of Series A Warrants
   sold in prior private offering.                         2,060,000      B

   Shares issuable upon exercise of Series A and Series B
   Warrants sold in private offering                       2,000,000      C

   Shares issuable upon exercise of
   Placement Agent Warrants.                                 126,932      C

   Shares issuable upon exercise of options held by
   our officers and an employee.                           4,100,000      D

A. Each shareholder of record on the close of business on September 10, 2008
will receive one Series A warrant for each post-split share which they owned on
that date. However, the warrants will not be issued until a registration
statement covering the warrants, as well as the shares issuable upon the
exercise of the warrants, is declared effective by the Securities and Exchange
Commission. Each Series A Warrant entitles the holder to purchase one share of
our common stock at a price of $6.00 per share.

B. Prior to our acquisition of Synergy, Synergy sold 2,060,000 Units to a group
of private investors. Each Unit consisted of one share of Synergy's common stock
and one Series A warrant. In connection with the acquisition of Synergy, these
Series A warrants were exchanged for 2,060,000 of our Series A warrants. The
Series A warrants are identical to the Series A warrants described in Note A
above.

C. Between December 1, 2008 and June 30, 2009 we sold 1,000,000 Units at a price
of $3.00 per Unit. Each Unit consisted of two shares of our common stock, one
Series A Warrant and one Series B Warrant. Each Series A Warrant entitles the
holder to purchase one share of our common stock at a price of $6.00 per share.
Each Series B Warrant entitles the holder to purchase one share of our common
stock at a price of $10.00 per share.


                                       12

<PAGE>

      In connection with this private offering we agreed to pay the Placement
Agent for the offering a commission of 10% of the amount the Placement Agent
raised in the offering. We also agreed to issue the Placement Agent one Warrant
(the "Placement Agent Warrants") for each five Units sold by the Placement
Agent. Each Placement Agent Warrant entitles the holder to purchase one Unit
(which Unit was identical to the Units sold in the offering) at a price of $3.60
per Unit. The Placement Agent Warrants expire on the earlier of December 31,
2012 or twenty days following written notification from us that our common stock
had a closing bid price at or above $7.00 per share for any ten of twenty
consecutive trading days.

D. See Item 11 of this report for information regarding shares issuable upon
exercise of options held by our officers and an employee.

      We may sell additional shares of its common stock, warrants, convertible
notes or other securities to raise additional capital. We have not yet
determined the amount of securities which we may sell, or the price at which the
securities may be sold. We do not have any commitments or arrangements from any
person to purchase any of our securities and there can be no assurance that we
will be successful in selling any additional securities.


ITEM 6.   SELECTED FINANCIAL DATA
          -----------------------

      Not applicable.


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

      We were incorporated in Colorado on May 11, 2005 as Blue Star Energy, Inc.
Since our formation we have been relatively inactive. We have never generated
any revenue and prior to the acquisition of Synergy Resources Corporation our
only material asset was one shut-in oil well.

      On September 10, 2008 we acquired approximately 89% of the outstanding
shares of Synergy Resources Corporation in exchange for 8,882,500 shares of our
common stock and 1,042,500 Series A warrants.

      On December 19, 2008 we acquired the remaining shares of Synergy for
1,077,500 shares of our common stock and 1,017,500 Series A warrants.

      See Item 5 of this report for information concerning the terms of these
warrants.

      Synergy was incorporated in Colorado in December 2007. As of the date of
our acquisition of Synergy, Synergy's only material asset was approximately $2.2
million in cash that it raised from private investors.

      Contingent upon the amount of capital available, we plan to explore for
oil and gas. We expect that most of our wells will be drilled in the Denver -
Julesburg ("D-J") Basin in northeast Colorado.


                                       13

<PAGE>

      Our plan of operation is disclosed in Item 1 of this report. Our future
plans will be dependent upon the amount of capital we are able to raise.

       Although from a legal standpoint we acquired a controlling interest in
Synergy on September 10, 2008, for financial reporting purposes the acquisition
of Synergy constituted a recapitalization, and the acquisition was accounted for
as a reverse merger whereby Synergy was deemed to have acquired the Company. As
a result, all financial statements for periods after August 31, 2008 reflect the
historical operations of Synergy for the period from Synergy's inception
(December 28, 2007) through September 10, 2008, and our operations combined with
those of Synergy after that date.

      Subsequent to the Synergy acquisition, we changed our fiscal year end from
December 31 to August 31.

      Included as part of this report are our audited financial statements as of
and for the year ended August 31, 2009 and for the period from inception
(December 28, 2007) to August 31, 2008.

      The following discussion analyzes our financial condition at August 31,
2009 and summarizes the results of our operations for the year ended August 31,
2009, and for the period from inception (December 28, 2007) to August 31, 2008.
This discussion and analysis should be read in conjunction with our audited
financial statements included with this report.

      As a result of the reverse merger and the change in our fiscal year end,
any comparison of our operations for the year ended August 31, 2009 with our
operations for any previous period are not meaningful.

RESULTS OF OPERATIONS

      We are in the early stages of implementing our business plan. For
financial reporting purposes, our inception date was December 28, 2007, the day
that Predecessor Synergy was incorporated in the State of Colorado. Although we
incorporated in 2007, we did not commence business activities until June 2008.
We have been in the exploration stage since inception.

      The factors that will most significantly affect our results of operations
will be (i) the sale prices of crude oil and natural gas, (ii) the amount of
production from oil or gas wells in which we have an interest, and (iii) and
lease operating expenses. Our revenues will also be significantly impacted by
our ability to maintain or increase oil or gas production through exploration
and development activities.

      Other than the foregoing, we do not know of any trends, events or
uncertainties that will have had or are reasonably expected to have a material
impact on our sales, revenues or expenses.



                                       14

<PAGE>


YEAR ENDED AUGUST 31, 2009

      For the year ended August 31, 2009, we reported a net loss of $12,351,873,
or $1.14 per share, on revenues of $94,121, compared to a net loss of $193,378,
or $0.07 per share for the period ended August 31, 2008. We are an exploration
stage company that recently commenced active operations. We expect to report
losses until such time, if ever, that we begin to generate significant revenue
from oil and gas sales and emerge from the exploration stage.

      For the year ended August 31, 2009, we recorded total oil and gas revenues
of $94,121. Our first two wells were completed and placed into production during
the year. Oil and gas sales are summarized in the following table:

                                      Oil        Gas        Total
                                      Bbls       Mcf         BOE
                                      ----       ---        -----

            Production volumes        1,730     4,386       2,461

            Revenues                $78,872   $15,249     $94,121

            Average sales price     $ 45.59   $  3.48     $ 38.25

      Barrels of oil equivalent ("boe") are calculated using a conversion factor
of 6 mcf to 1 bbl.

      We do not currently engage in any commodity hedging activities, although
we may do so in the future.

      Operating expenses for the year ended August 31, 2009 were $12,462,847,
most of which was share-based compensation ($10,296,521). Excluding share based
compensation, operating expenses for the year were $2,166,326, consisting
primarily of expenses related directly to the oil and gas properties, salaries
and benefits, amounts paid under the administrative services arrangement with
Petroleum Management LLC, consulting and professional fees. In addition, and as
discussed below, $945,079 of impairment is included in operating expenses. These
costs may increase in future periods as we implement our business plan and
expand our business activities.

      Lease operating expenses were $11,572 for the year ended August 31. 2009.
On a per unit basis, lease operating expenses were $4.70 per boe.

      Depreciation, depletion, and amortization for the year ended August 31,
2009 was $97,309. Our depletion rate for the period was 18.7%. As an exploration
stage company, our depletion rate is subject to significant fluctuation.

      We use the full cost accounting method, which requires recognition of an
impairment when the total capitalized costs of oil and gas properties exceed the
"ceiling" amount, as defined in the full cost accounting literature. During
2009, we recorded $945,079 of impairment because our capitalized costs subject
to the ceiling test exceeded the estimated future net revenues from proved
reserves discounted at 10% plus the lower of cost or market value of unevaluated


                                       15

<PAGE>

properties. We perform the ceiling test each quarter and further impairments may
be recognized in future periods.

      Operating expenses for the year ended August 31, 2009 include $10,296,521
of share-based compensation related to the issuance of stock options. When stock
options are issued, we estimate their fair value using the Black-Scholes-Merton
option-pricing model. The estimated fair value is recorded as an expense on a
pro-rata basis over the vesting period. In connection with the merger, we agreed
to issue options covering 4,000,000 shares to replace similar options that had
previously been issued. We estimate that the fair value of the replacement
options exceeded the fair value of the surrendered options by $10,185,345 and
all of the options vested during the year ended August 31, 2009. Accordingly,
the expense amount allocated to the year ended August 31, 2009 was the entire
$10,296,521 and there is no remaining amount to be recognized in future periods.
During the year ended August 31, 2009, we also recognized a pro-rata portion of
the fair value of outstanding options which will vest over multiple reporting
periods.

PERIOD FROM INCEPTION (DECEMBER 28, 2007) TO AUGUST 31, 2008

      For the period from inception (December 28, 2007) to August 31, 2008, we
recorded a net loss of $193,378, or $0.07 per share. As discussed below, we
recorded no revenues other than interest income for the period and operating
expenses were incurred to develop our business plan.

      Although we incorporated on December 28, 2007, we were dormant until June,
2008, when we commenced development of our business plan including activities
which resulted in the transaction on September 10, 2008. Operating expenses for
the period ended August 31, 2008 were $196,271, consisting primarily of salaries
and benefits, amounts paid under an administrative services arrangement with an
affiliate, Petroleum Management, LLC, professional fees and share-based
compensation.

      On June 11, 2008, we entered into two-year employment agreements with our
two executive officers. Pursuant to the terms of those agreements, the salaries
of William E. Scaff, Jr. and Ed Holloway are each $12,500 per month.

      Petroleum Management, LLC ("PM") provides us with various administrative
services. For the period ended August 31, 2008, we recorded expenses of $53,333
under the administrative services agreement.

      Operating expenses include $28,200 of share-based compensation related to
the issuance of stock options. When stock options are issued, we estimate their
fair value using the Black-Scholes-Merton option-pricing model. The estimated
fair value is recorded as an expense on a pro-rata basis over the vesting
period.

      During the period ended August 31, 2008, stock options were granted to
purchase 4,000,000 shares of common stock. Effective June 11, 2008, options
covering 2,000,000 shares were issued to our executive officers at an exercise
price of $10.00 and a term of five years. These options became fully vested in


                                       16

<PAGE>

June, 2009. The fair value of these options was determined to be nil. Effective
June 30, 2008, options covering an additional 2,000,000 shares were granted to
our executive officers at an exercise price of $1.00 and a term of five years.
These options became fully vested in June, 2009. Based upon a fair value
calculation, these options were determined to have a value of $127,000. Stock
option compensation expense of $28,200 was recorded for the period ended August
31, 2008, based on an allocation of the fair value over the vesting period.

LIQUIDITY AND CAPITAL RESOURCES

      As of August 31, 2009, our balance of cash and equivalents was $2,854,659,
an increase of $562,318 compared to the balance of $2,292,341 as of August 31,
2008. Our working capital balance at August 31, 2009 was $1,116,283, consisting
of current assets of $2,960,407 and current liabilities of $1,844,124.

      Our sources and (uses) of funds for the year ended August 31, 2009, and
the period from inception (December 28, 2007) to August 31, 2008, are shown
below:
                                                                  Inception
                                            Year Ended       (December 28, 2007)
                                          August 31, 2009    to August 31, 2008
                                          ---------------   -------------------

Cash used in operations                       $(493,454)          $(139,264)
Acquisition of oil and gas properties
    and equipment                            (2,690,720)                 --
Option on oil and gas properties               (100,000)                 --
Deposit                                         (85,000)                 --
Bank loan                                     1,161,811                  --
Proceeds from sale of common stock, net
    of offering costs                         2,766,694           2,431,605
Other                                             3,987                  --

      Net cash provided by financing activities was $3,927,505 for the year
ended August 31, 2009. Net cash proceeds from common stock transactions were
$2,765,694, after deducting offering costs. Between December 1, 2008 and June
30, 2009 we sold 1,000,000 units to investors in a private offering at a price
of $3.00 per unit. Each unit consisted of two shares of our common stock, one
Series A warrant and one Series B warrant.

      See Item 5 of this report for information concerning the terms of the
Series A and Series B warrants.

      In May, 2009 we entered into a loan agreement with a commercial bank which
allows us to borrow up to $1,161,811. The loan is collateralized primarily by
pipe used to drill and complete oil and gas wells. The maximum amount we are
allowed to borrow is reduced by the use or sale of the pipe acquired with the
borrowed funds. The loan bears interest at the prime rate plus 1/2%, payable
quarterly. The loan maturity date is May 8, 2010.


                                       17

<PAGE>

      Net cash used in investing activities was $2,871,733, primarily for the
acquisition of oil and gas properties. Pursuant to a option agreement with
Petroleum Management, LLC and Petroleum Exploration and Management, LLC in
November and December, 2008 we participated in two wells drilled by Kerr-McGee
Oil & Gas Onshore LP (KM). Both the Gray #25-16 well and the Zabka State #33-15
well hit productive formations at a depth of approximately 7,500 feet. We have a
37.5% working interest (28.125% net revenue interest) in each well and our costs
of drilling and completing these wells was approximately $585,000. During the
year ended August 31, 2009 these wells produced 1,730 barrels of oil and 4,386
mcf of gas net to our interest.

      In September 2009 we began a seven well drilling program. The drilling
program was completed in October 2009 with production casing set on all seven
wells. The wells will be stimulated and placed in production in November and
December 2009. We are the operator for the wells and have a working interest
varying from 62.5% to 31.25% (47% to 23% net revenue interest) in the wells. We
estimate that our share of the well costs for the program will approximate
$2,200,000.

     As of October 31, 2009 our operating  expenses were  approximately  $95,000
per month which amount  includes  salaries  and other  corporate  overhead.  Our
capital  requirements  for the next twelve months  include  participation  in 35
gross wells (in which our interest  will  approximate  28 net wells) and various
other projects for total costs of approximately  $15,000,000 to $18,000,000.  As
our capital  expenditure  plans  exceed our capital  resources,  we plan to seek
additional  funding.  Our  capital  expenditure  plans are  subject to  periodic
revision based upon the availability of funds and expected return on investment.

      It is expected that our principal source of cash flow will be from the
production and sale of crude oil and natural gas reserves which are depleting
assets. Cash flow from the sale of oil and gas production depends upon the
quantity of production and the price obtained for the production. An increase in
prices will permit us to finance our operations to a greater extent with
internally generated funds, may allow us to obtain equity financing more easily
or on better terms, and lessens the difficulty of obtaining financing. However,
price increases heighten the competition for oil and gas prospects, increase the
costs of exploration and development, and, because of potential price declines,
increase the risks associated with the purchase of producing properties during
times that prices are at higher levels.

      A decline in oil and gas prices (i) will reduce our cash flow which in
turn will reduce the funds available for exploring for and replacing oil and gas
reserves, (ii) will increase the difficulty of obtaining equity and debt
financing and worsen the terms on which such financing may be obtained, (iii)
will reduce the number of oil and gas prospects which have reasonable economic
terms, (iv) may cause us to permit leases to expire based upon the value of
potential oil and gas reserves in relation to the costs of exploration, (v) may
result in marginally productive oil and gas wells being abandoned as
non-commercial, and (vi) may increase the difficulty of obtaining financing.
However, price declines reduce the competition for oil and gas properties and
correspondingly reduce the prices paid for leases and prospects.


                                       18

<PAGE>

      We plan to generate profits by drilling productive oil or gas wells.
However, we will need to raise the funds required to drill new wells through the
sale of its securities, from loans from third parties or from third parties
willing to pay our share of drilling and completing the wells. We do not have
any commitments or arrangements from any person to provide us with any
additional capital. If additional financing is not available when needed, we may
need to cease operations. We may not be successful in raising the capital needed
to drill oil or gas wells. Any wells which may be drilled by us may not be
productive of oil or gas.

CONTRACTUAL OBLIGATIONS

      The following table summarizes our contractual obligations as of August
31, 2009:

                                         Total            2010

            Bank loan payable         $1,161,811     $1,161,811
            Service contracts          1,051,000      1,051,000
                                   ------------- --------------
                                    $  2,213,000  $   2,213,000
                                    ============  =============


OFF-BALANCE SHEET ARRANGEMENTS

     We do  not  have  any  off-balance  sheet  arrangements  that  have  or are
reasonable likely to have a current or future effect on our financial condition,
changes in  financial  condition,  results of  operations,  liquidity or capital
resources


I
TEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
          ----------------------------------------------------------

     Not applicable.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
          -------------------------------------------

     See the financial  statements  and  accompanying  notes  included with this
report.


ITEM  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE
          --------------------

     Not applicable


ITEM 9A AND 9A(T).  CONTROLS AND PROCEDURES
                    -----------------------

     We maintain  disclosure controls and procedures that are designed to ensure
that information required to be disclosed in our periodic reports to the SEC are
recorded,  processed,  summarized and reported within the time periods specified
in the SEC's rules and regulations, and that such information is accumulated and
communicated to our management,  including our principal  executive  officer and
principal financial officer, as appropriate, to allow timely decisions regarding


                                       19

<PAGE>

required  disclosure.  Our  disclosure  controls and  procedures are designed to
provide a  reasonable  level of  assurance  of reaching  our desired  disclosure
control objectives.

Management's Report on Internal Control Over Financial Reporting

      Our management is responsible for establishing and maintaining adequate
internal control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of our principal executive
officer and principal financial officer and implemented by our Board of
Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of our
financial statements in accordance with U.S. generally accepted accounting
principles.

      Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

      Ed Holloway, our Principal Executive Officer and Frank L. Jennings, our
Principal Financial Officer, evaluated the effectiveness of our disclosure
controls and procedures as of August 31, 2009 based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or the COSO Framework. Management's
assessment included an evaluation of the design of our internal control over
financial reporting and testing of the operational effectiveness of those
controls.

       Based on this evaluation, management concluded that our internal control
over financial reporting was effective as of August 31, 2009.
 
      There was no change in our internal control over financial reporting that
occurred during the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the our internal control over
financial reporting.

      This report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our independent
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report on internal control in this
report.


ITEM 9B.  OTHER INFORMATION
          -----------------

      None.


                                       20

<PAGE>



ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

      Our officers and directors are listed below. Our directors are generally
elected at our annual shareholders' meeting and hold office until the next
annual shareholders' meeting or until their successors are elected and
qualified. Our executive officers are elected by our directors and serve at
their discretion.

Name                    Age  Position
----                    ---  --------

Edward Holloway          57  President, Chief Executive Officer and a Director
William E. Scaff, Jr.    52  Vice President, Secretary, Treasurer and a Director
Frank L. Jennings        58  Principal Financial and Accounting Officer
Benjamin J. Barton       44  Director
Rick A. Wilber           61  Director
Raymond E. McElhaney     53  Director
Bill M. Conrad           53  Director
R.W. Noffsinger, III     35  Director

     The principal  occupations  of our officers and  directors  during the past
several years are as follows:

Edward  Holloway - Mr. Holloway has been an officer and director since September
2008. Mr.  Holloway has been an officer and director of Synergy since June 2008.
Mr. Holloway  co-founded Cache  Exploration Inc., an oil and gas exploration and
development  company that drilled over 350 wells.  In 1987 Mr. Holloway sold the
assets  of  Cache  Exploraton  to LYCO  Energy  Corporation.  He  rebuilt  Cache
Exploration  and sold the entire company to Southwest  Energy a decade later. In
1997 Mr.  Holloway  co-founded,  and since that date has  co-managed,  Petroleum
Management,  LLC, a company engaged in the exploration,  operations,  production
and  distribution of oil and natural gas. In 2001 Mr. Holloway  co-founded,  and
since that date has co-managed,  Petroleum  Exploration  and Management,  LLC, a
company  engaged in the acquisition of oil and gas leases and the production and
sale of oil and natural gas.  Mr.  Holloway  holds a degree in Business  Finance
from the University of Northern Colorado and is a past president of the Colorado
Oil & Gas Association.

William E. Scaff, Jr. - Mr. Scaff has been an officer and director since
September 2008. Mr. Scaff has been an officer and director of Synergy since June
2008. Between 1980 and 1990 Mr. Scaff oversaw financial and credit transactions
for Dresser Industries, a Fortune 50 oilfield equipment company. Immediately
after serving as a regional manager with TOTAL Petroleum between 1990 and 1997,
Mr. Scaff co-founded, and since that date co-managed, Petroleum Management, LLC,
a company engaged in the exploration, operations, production and distribution of
oil and natural gas. In 2001 Mr. Scaff co-founded, and since that date has
co-managed, Petroleum Exploration and Management, LLC, a company engaged in the
acquisition of oil and gas leases and the production and sale of oil and natural
gas. Mr. Scaff holds a degree in Finance from the University of Colorado.


                                       21

<PAGE>

Frank L. Jennings - Mr. Jennings has been our Principal Financial and Accounting
Officer since June 2007. Since 2001 Mr. Jennings has been an independent
consultant providing managing and financial services, primarily to smaller
public companies. From 2000 to 2005, he served as the Chief Financial Officer
and a director of Global Casinos, Inc., a publicly traded corporation, and from
2001 to 2005, he served as Chief Financial Officer and a director of OnSource
Corporation, now known as Ceragenix Pharmaceuticals, Inc., also a publicly
traded corporation.

Benjamin J. Barton - Mr. Barton has been one of our directors since September
2008. Mr. Barton has been a director of Synergy since June 2008. Between 2003
and 2005 Mr. Barton was a private wealth manager with Merrill Lynch. Since 1986
Mr. Barton has been active in all aspects of venture capital and public stock
offerings. Since 2005 Mr. Barton has been the Managing Director of Strategic
Capital Partners, LLC, a private investment company specializing in energy
companies. Prior to earning an MBA in Finance from UCLA, Mr. Barton received his
Bachelor of Science degree in Political Science from Arizona State University.

Rick A. Wilber - Mr. Wilber has been one of our directors since September 2008.
Since 1984 Mr. Wilber has been a private investor in, and a consultant to,
numerous development state companies. In 1974 Mr. Wilber was co-founder of
Champs Sporting Goods, a retail sporting goods chain, and served as its
President from 1974-1984. He has been a Director of Ultimate Software Group Inc.
since October 2002 and serves as a member of its audit and compensation
committees. Mr. Wilber was a director of Ultimate Software Group between October
1997 and May 2000. He served as a director of Royce Laboratories, Inc., a
pharmaceutical concern, from 1990 until it was sold to Watson Pharmaceuticals,
Inc. in April 1997 and was a member of its compensation committee.

Raymond E. McElhaney - Mr. McElhaney has been one of our directors since May
2005, and prior to the acquisition of Synergy was our President and Chief
Executive Officer. Mr. McElhaney began his career in the oil and gas industry in
1983 as founder and President of Spartan Petroleum and Exploration, Inc. Mr.
McElhaney also served as a chairman and secretary of Wyoming Oil & Minerals,
Inc., a publicly traded corporation, from February 2002 until 2005. From 2000 to
2003 he served as vice president and secretary of New Frontier Energy, Inc., a
publicly traded corporation. McElhaney is a co-founder of MCM Capital Management
Inc., a privately held financial management and consulting company formed in
1990, and has served as its president of that company since inception.

Bill M. Conrad - Mr. Conrad has been one of our directors since May 2005, and
prior to the acquisition of Synergy was our Vice President and Secretary. Mr.
Conrad has been involved in several aspects of the oil & gas industry over the
past 20 years. From February 2002 until June 2005, Mr. Conrad served as
president and a director of Wyoming Oil & Minerals, Inc., and from 2000 until
April 2003, he served as vice president and a director of New Frontier Energy,
Inc. Since June 2006, Mr. Conrad has served as a director of Gold Resource
Corporation, a publicly traded corporation engaged in the mining industry. In
1990, Mr. Conrad co-founded MCM Capital Management Inc. and has served as its
vice president since that time.


                                       22

<PAGE>

R.W. "Bud" Noffsinger, III - Mr. Noffsinger was appointed as one of our
directors in September 2009. Mr. Noffsinger has been the President/ CEO of RWN3
LLC, a company involved with investment securities, since February 2009.
Previously, Mr. Noffsinger was the President (2005 to 2009) and Chief Credit
Officer (2008 to 2009) of First Western Trust Bank in Fort Collins, Colorado.
Prior to his association with First Western, Mr. Noffsinger was a manager with
Centennial Bank of the West (now Guaranty Bank and Trust). Mr. Noffsinger's
focus at Centennial was client development and lending in the areas of
commercial real estate, agriculture and natural resources. Mr. Noffsinger is a
graduate of the University of Wyoming and holds a Bachelor of Science degree in
Economics with an emphasis on natural resources and environmental economics.

      We do not have a compensation committee. Our Board of Directors serves as
our Audit Committee. With the exception of Mr. Noffsinger none of our directors
are independent as that term is defined Section 803.A of the NYSE Amex. William
E. Scaff, Jr. acts as the financial expert for the Board of Directors.

      We have adopted a Code of Ethics applicable to our senior executive and
financial officers.


ITEM 11.  EXECUTIVE COMPENSATION
          ----------------------

      The following table shows the compensation paid or accrued to our
Principal Executive and Financial officers during the year ended August 31, 2009
and the years ended December 31, 2008 and 2007. During the periods shown two of
our officers received compensation in excess of $100,000.


<TABLE>
<S>                   <C>       <C>      <C>      <C>        <C>         <C>            <C>

                                                 Stock      Option    All Other
Name and Principal            Salary    Bonus    Awards     Awards   Compensation
 Position            Period     (1)      (2)      (3)        (4)         (5)           Total
------------------   ------   -------   -----    ------     ------   ------------      -----

Ed Holloway,           2009  $150,000     --        --   $5,092,672          --    $5,242,672
 Principal Executive
 Officer (6)

William E. Scaff, Jr.  2009  $150,000     --        --   $5,092,672          --    $5,242,672
 Vice President,
 Secretary and
 Treasurer

Frank L. Jennings,     2009  $ 63,716     --        --           --           --   $   63,716
 Principal Financial   2008        --     --        --           --     $  6,778   $    6,778
 Officer               2007        --     --        --           --     $  9,900   $    9,900
</TABLE>



(1)  The dollar value of base salary (cash and non-cash) earned.
(2)  The dollar value of bonus (cash and non-cash) earned.
(3)  The fair value of stock issued for services computed in accordance with FAS
     123R on the date of grant.


                                       23

<PAGE>

(4)  The fair value of options  granted  computed in accordance with FAS 123R on
     the date of grant.
(5)  All other  compensation  received that we could not properly  report in any
     other column of the table.
(6)  Mr. Holloway and Mr. Scaff became officers in September 2008. Mr. McElhaney
     resigned  as  our  Principal  Executive  Officer  in  September  2008.  Mr.
     McElhaney remains as one of our directors.

      The compensation to be paid to our two executive officers is based upon
their employment agreements, which are described below. All material elements of
the compensation paid to these officers is discussed below.

      We have employee agreements with Ed Holloway and William E. Scaff Jr. Each
employment agreement provides that the employee will be paid a monthly salary of
$12,500 and requires the employee to devote approximately 80% of his time to our
business. The employment agreements expire on June 11, 2010 but may be
terminated sooner by us as a result of the employee's disability or for cause.
For purposes of the employment agreements, "cause" is defined as:

          (i)  the conviction of the employee of any crime or offense involving,
               or of fraud or moral turpitude, which significantly harms us;
          (ii) the refusal of the  employee to follow the lawful  directions  of
               our Board of Directors;
         (iii) the  employee's  negligence  which  shows a reckless  or willful
               disregard for  reasonable  business  practices and  significantly
               harms us; or
          (iv) a breach of the employment agreement by the employee.

      We had a consulting agreement with Ray McElhaney and Bill Conrad which
provided that Mr. McElhaney and Mr. Conrad would render, on a part-time basis,
consulting services pertaining to corporate acquisitions and development. For
these services, Mr. McElhaney and Mr. Conrad were paid a monthly consulting fee
of $5,000. The consulting agreement expired on September 15, 2009.

      Long-Term Incentive Plans. We do not provide our officers or employees
with pension, stock appreciation rights, long-term incentive or other plans and
has no intention of implementing any of these plans for the foreseeable future.

      Employee Pension, Profit Sharing or other Retirement Plans. We do not have
a defined benefit, pension plan, profit sharing or other retirement plan,
although we may adopt one or more of such plans in the future.

      Compensation of Directors. We did not compensate any person for acting as
a director during the year ended August 31, 2009.


                                       24

<PAGE>

Stock Option and Bonus Plan
---------------------------

      We have a stock option and stock bonus plan. A summary description of the
plan follows.

      Non-Qualified Stock Option Plan. Our Non-Qualified Stock Option Plan
authorizes the issuance of shares of our common stock to persons that exercise
options granted pursuant to the Plan. Our employees, directors, officers,
consultants and advisors are eligible to be granted options pursuant to the
Plan, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with
promoting our stock or the sale of securities in a capital-raising transaction.
The option exercise price is determined by our directors.

      Stock Bonus Plan. Our Stock Bonus Plan allows for the issuance of shares
of common stock to our employees, directors, officers, consultants and advisors.
However, bona fide services must be rendered by the consultants or advisors and
such services must not be in connection with promoting our stock or the sale of
securities in a capital-raising transaction.

      Summary. The following is a summary of options granted or shares issued
pursuant to the Plans as of October 31, 2009. Each option represents the right
to purchase one share of our common stock.

                               Total      Shares
                              Shares    Reserved for   Shares       Remaining
                             Reserved   Outstanding   Issued as   Options/Shares
Name of Plan                Under Plans   Options    Stock Bonus    Under Plans
------------                ----------- ------------ -----------  --------------

Non-Qualified Stock
   Option Plan               2,000,000      100,000      N/A       1,900,000
Stock Bonus Plan               500,000          N/A       --         500,000

Options
-------

      In connection with the acquisition of Synergy, we issued options to the
persons shown below in exchange for options previously issued by Synergy. The
terms of the options we issued are identical to the terms of the Synergy
options. The options were not granted pursuant to our Non-Qualified Stock Option
Plan. As of October 31, 2009 none of these options have been exercised.

                             Grant    Shares Issuable Upon  Exercise  Expiration
Name                         Date     Exercise of Options    Price       Date
----                       -------  ----------------------  --------  ----------

Ed Holloway (1)            9-10-08          1,000,000         $ 1.00    6-11-13
William E. Scaff, Jr. (2)  9-10-08          1,000,000         $ 1.00    6-11-13
Ed Holloway (1)            9-10-08          1,000,000         $10.00    6-11-13
William E. Scaff, Jr. (2)  9-10-08          1,000,000         $10.00    6-11-13

(1)  Options are held of record by a limited liability company controlled by Mr.
     Holloway.

(2)  Options are held of record by a limited liability company controlled by Mr.
     Scaff.


                                       25

<PAGE>

      The following table shows information concerning our outstanding options
as of October 31, 2009.

                       Shares underlying unexercised
                            Option which are: 
                       -----------------------------
                        Exercise      Expiration
Name                    Exercisable   Unexercisable     Price           Date
----                    -----------   -------------    --------      ----------

Ed Holloway              1,000,000             --       $  1.00        6-11-13
William E. Scaff, Jr.    1,000,000             --       $  1.00        6-11-13
Ed Holloway              1,000,000             --       $ 10.00        6-11-13
William E. Scaff, Jr.    1,000,000             --       $ 10.00        6-11-13
Employee                       --         100,000 (1)   $  3.00       12-31-18


(1)  Options were issued pursuant to Non-Qualified Stock Option Plan in December
     2008.

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to our Non-Qualified Stock Option Plan as
of August 31, 2009. Our Non-Qualified Stock Option Plan has not been approved by
our shareholders.


<TABLE>
<S>                                     <C>              <C>                 <C>

                                                                    Number of Securities
                                      Number                        Remaining Available
                                   of Securities                    For Future Issuance
                                   to be Issued   Weighted-Average      Under Equity
                                  Upon Exercise   Exercise Price of  Compensation Plans,
                                  of Outstanding   of Outstanding   Excluding Securities
Plan category                       Options (a)        Options      Reflected in Column (a)
-------------------------------------------------------------------------------------------

Non-Qualified Stock Option Plan        100,000           $3.00             1,900,000\
</TABLE>


Transactions with Related Parties and Recent Sales of Unregistered Securities.
------------------------------------------------------------------------------

     Prior to our  acquisition of Synergy,  Synergy made the following  sales of
its securities:

Name                         Shares      Series A Warrants    Consideration
----                         ------      -----------------    -------------

Ed Holloway (1)            2,070,000                          $2,070
William E. Scaff, Jr. (1)  2,070,000                          $2,070
Benjamin Barton (1)          600,000                          $   600
John Staiano (1)             600,000                          $   600
Synergy Energy Trust       1,900,000 (2)                      $1,900
Third Parties                660,000                          $   660
Private Investors          1,000,000          1,000,000       $1.00 per Unit (3)
Private Investors          1,060,000          1,060,000       $1.50 per Unit (3)
                          ----------        -----------
                           9,960,000         2,060,000
                          ==========        ===========


                                       26

<PAGE>


(1)  Shares are held of record by entities controlled by this person.

(2)  In December 2008 we repurchased 1,000,000 shares from the Synergy Energy
     Trust.

(3)  Shares and warrants were sold as units, with each unit consisting of one
     share of our common stock and one Series A Warrant.

      In connection with our acquisition of Synergy, the 9,960,000 shares of
Synergy, plus the 2,060,000 Series A warrants, were exchanged for 9,960,000
shares of our common stock, plus 2,060,000 Series A warrants.

      In contemplation of the acquisition of Synergy, our directors declared a
dividend of Series A warrants. The dividend provided that each person owning our
shares at the close of business on September 9, 2008 will receive one Series A
warrant for each post-split share which they owned on that date. Mr. McElhaney
and Mr. Conrad, due to their ownership of our common stock on September 9, 2008,
will receive 271,000 and 247,000 Series A warrants, respectively.

      Between December 1, 2008 and June 30, 2009 we sold 1,000,000 units at a
price of $3.00 per unit. Each unit consists of two shares of our common stock,
one Series A Warrant and one Series B Warrant.

      Each Series A warrant entitles the holder to purchase one share of our
common stock at a price of $6.00 per share. The Series A warrants expire on the
earlier of December 31, 2012 or twenty days following written notification from
us that our common stock had a closing bid price at or above $7.00 for any ten
of twenty consecutive trading days.

      Each Series B warrant entitles the holder to purchase one share of our
common stock at a price of $10.00 per share. The Series B warrants expire on the
earlier of December 31, 2012 or twenty days following written notification from
us that our common stock had a closing bid price at or above $12.00 for any ten
of twenty consecutive trading days.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND 
          RELATED STOCKHOLDER MATTERS

      The following table shows, as of October 31, 2009, information with
respect to those persons owning beneficially 5% or more of our common stock and
the number and percentage of outstanding shares owned by each of our directors
and officers and by all officers and directors as a group. Unless otherwise
indicated, each owner has sole voting and investment powers over his shares of
common stock.

                                               Number           Percent
Name                                         of Shares (1)      of Class
----                                         -------------      --------

Ed Holloway                                  4,070,000 (2)        33.9%
William E. Scaff, Jr.                        4,070,000 (3)        33.9%
Frank L. Jennings                                4,000              Nil
Benjamin Barton                                600,000 (4)         5.0%


                                       27

<PAGE>

                                               Number           Percent
Name                                         of Shares (1)      of Class
----                                         -------------      --------

Rick A. Wilber                                  376,429            3.1%
Raymond E. McElhaney                            212,000            1.8%
Bill M. Conrad                                  227,000            1.9%
R.W. Noffsinger, III                            250,000            2.1%
John Staiano                                    600,000 (5)        5.0%
Steven Meyer                                    672,666            5.6%
All officers and directors
 as a group (8 persons).                      9,809,429           81.7%


(1)  Share ownership includes shares issuable upon the exercise of options held
     by the persons listed below.

                             Share Issuable      Option
                             Upon Exercise      Exercise       Expiration
     Name                       of Options        Price            Date 
     ----                    -----------------  ----------    ----------

     Ed Holloway                 1,000,000        $ 1.00        6-11-13
     Ed Hollway                  1,000,000        $10.00        6-11-13
     William E. Scaff, Jr.       1,000,000        $ 1.00        6-11-13
     William E. Scaff, Jr.       1,000,000        $10.00        6-11-13

(2)  Shares are held of record by various trusts and limited liability companies
     controlled by Mr. Holloway.

(3)  Shares are held of record by various trusts and limited liability companies
     controlled by Mr. Scaff.

(4)  Shares are held of record by a partnership controlled by Mr. Barton.

(5)  Shares are held of record by a trust and a limited liability company
     controlled by Mr. Staiano.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Pursuant to the terms of an Administrative Services Agreement with
Petroleum Management, LLC, Petroleum Management provides us with office space
and equipment storage in Platteville, Colorado, as well as secretarial, word
processing, telephone, fax, email and related services for a fee of $20,000 per
month. Either party may terminate the Administrative Service Agreement upon
30-days notice. Petroleum Management is controlled by Ed Holloway and William E.
Scaff, Jr.

      See Item 1 of this report for information concerning:

     o    an  agreement  with Ed Holloway and William E. Scaff,  Jr.  concerning
          potential  conflicts of interest concerning the acquisition of oil and
          gas properties; and


                                       28

<PAGE>


     o    an agreement  with Petroleum  Management,  LLC regarding the potential
          acquisition of oil and gas properties.


ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
          --------------------------------------

      Stark Winter Schenkein & Co., LLP served as our auditors for the year
ended December 31, 2007, the eight month period ended August 31, 2008, and the
year ended August 31, 2009. The following table shows the aggregate fees billed
to us for these periods by Stark Winter Schenkein & Co., LLP:

                                             Eight Month
                            Year Ended       Period Ended        Year Ended
                          August 31, 2009   August 31, 2008  December 31,2007
                          ---------------   ---------------  ----------------

Audit Fees                    $53,620          $18,500           $17,300
Audit-Related Fees           $  1,688               --                --
Tax Fees                     $  5,700        $   2,100          $  1,500
All Other Fees                     --               --                --

      Audit fees represent amounts billed for professional services rendered for
the audit of our annual financial statements and the reviews of the financials
statements included in our 10-Q and 10-K reports. Audit-related fees represent
amounts billed for the review of our registration statement on Form S-1. Before
Stark Winter Schenkein was engaged by us to render audit or non-audit services,
the engagement was approved by our directors. Our Directors are of the opinion
that any Audit Related Fees charged by Stark Winter Schenkein are consistent
with Stark Winter Schenkein maintaining its independence from us.


ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibits                                        Page Number
--------                                        -----------

3.1.1 Articles of Incorporation                      (1)

3.1.2 Amendment to Articles of Incorporation

3.1.2 Bylaws                                         (1)
10.1  Employment Agreement with Ed Holloway          (2)

10.2  Employment Agreement with William E.
      Scaff, Jr.                                     (2)

10.3  Administrative Services Agreement              (2)

10.4  Agreement regarding Conflicting Interest
      Transactions                                   (2)


                                       29

<PAGE>

Exhibits                                        Page Number
--------                                        -----------

10.5  Letter agreement regarding acquisition of
      oil and gas properties from Petroleum
      Management                                     (2)

14. Code of Ethics (2)

31    Rule 13a-14(a) Certifications

32    Section 1350 Certifications


(1)  Incorporated by reference to the same exhibit filed with our registration
     statement on Form SB-2, File #333-146561.
(2)  Incorporated by reference to the same exhibit filed with our report on Form
     10-K filed January 28, 2008.

                                       30


<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPLEMENTARY DATA

  Index to Financial Statements:                                              1

  Report of Independent Registered Public Accounting Firm                     2

  Balance Sheets at August 31, 2009 and 2008                                  3

  Statements of Operations for the year ended August 31, 2009,
  the period from Inception (December 28, 2007) to August 31, 2008,
  and for the period from Inception (December 28, 2007) to
  August 31, 2009                                                             4

  Statements of Changes in Shareholders' Equity for the period
  from Inception (December 28, 2007) to August 31, 2009                       5

  Statements of Cash Flows for the year ended August 31, 2009,
  the period from Inception (December 28, 2007) to August 31, 2008,
  and for the period from Inception (December 28, 2007) to
  August 31, 2009                                                             6

  Notes to Financial Statements                                               7



                                       1


<PAGE>



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Shareholders and Board of Directors
Synergy Resources Corporation

We have audited the accompanying balance sheets of Synergy Resources Corporation
(an  Exploration  Stage Company) as of August 31, 2009 and 2008, and the related
statements of operations,  changes in shareholders'  equity,  and cash flows for
the year ended August 31, 2009,  the period of inception  (December 28, 2007, to
August 31, 2008),  and the period from  inception  (December 28, 2007) to August
31, 2009.  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 the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit 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 by management, as well as evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinions.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Synergy Resources  Corporation
(an  Exploration  Stage Company) as of August 31, 2009 and 2008, and the results
of its  operations,  and its cash  flows for the for the year  ended  August 31,
2009, the period of inception  (December 28, 2007, to August 31, 2008),  and the
period from inception (December 28, 2007) to August 31, 2009, in conformity with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the Company has suffered  losses from operations and has
only  recently  commenced  revenue  generating  operations.  These factors raise
substantial  doubt about the Company's  ability to continue as a going  concern.
Management's  plans in regard to these matters are also discussed in Note 2. The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.


/s/ Stark Winter Schenkein & Co., LLP

Denver, Colorado
November 12, 2009


                                       2


<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                                 BALANCE SHEETS

                                                       August 31,   August 31,
                                                          2009        2008
                                                       ----------   ----------

                         ASSETS

Current assets:
 Cash and cash equivalents                             $2,854,659   $2,292,341
 Accounts receivable                                       84,643            -
 Other current assets                                      21,105       27,412
                                                      ------------ ------------
       Total current assets                             2,960,407    2,319,753
                                                      ------------ ------------

Property and equipment, at cost:
 Oil and gas properties, full cost method, net          1,786,120            -
 Other property and equipment, net                          1,041            -
                                                      ------------ ------------
       Property and equipment, net                      1,787,161            -
                                                      ------------ ------------
Other assets:
 Option to acquire mineral interests - related party            -            -
 Performance assurance deposit                             85,000            -
 Deferred offering costs                                        -            -
                                                      ------------ ------------
        Total other assets                                 85,000            -
                                                      ------------ ------------
        Total assets                                  $ 4,832,568  $ 2,319,753
                                                      ============ ============

          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                     $   622,734  $    12,473
 Accrued taxes and expenses                                45,379       40,853
 Bank loan payable                                      1,161,811            -
 Accrued interest                                          14,200            -
                                                      ------------ ------------
      Total current liabilities                         1,844,124       53,326
                                                      ------------ ------------
Shareholders' equity:
 Preferred stock - $0.01 par value, 10,000,000
 shares authorized:
  no shares issued and outstanding                              -            -
 CCommon stock - $0.001 par value, 100,000,000
 shares authorized:
  11,998,000 and 9,943,571shares issued and
  outstanding at August 31, 2009 and 2008,
  respectively                                             11,998        9,944
 Additional paid-in capital                            15,521,697    2,477,511
 Stock subscriptions receivable                                 -      (27,650)
 (Deficit) accumulated during the exploration stage   (12,545,251)    (193,378)
                                                      ------------ ------------
       Total shareholders' equity                       2,988,444    2,266,427
                                                      ------------ ------------
       Total liabilities and shareholders' equity     $ 4,832,568  $ 2,319,753
                                                      ============ ============

The accompanying notes are an integral part of these financial statements.


                                       3

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                            STATEMENTS OF OPERATIONS
                       for the year ended August 31, 2009,
      for the period from Inception (December 28, 2007) to August 31, 2008,
    and for the period from Inception (December 28, 2007) to August 31, 2009

                                                     Inception      Inception
                                          Year      (December 28,  (December 28,
                                          Ended       2007) to       2007) to
                                        August 31,   August 31,     August 31,
                                           2009         2008           2009
                                        ----------  ------------   ------------

Oil and gas revenues                    $  94,121    $       -      $  94,121
                                        ----------   ----------     ----------
Expenses:
 Lease operating expenses                  11,572            -         11,572
 Depreciation, depletion, and
   amortization                            97,309            -         97,309
 Impairment of oil and gas properties     945,079            -        945,079
 Administrative services contract -
   related party                          240,000       53,333        293,333
 Salaries and payroll taxes               436,667       72,382        509,049
 Consulting fees - related party          120,000            -        120,000
 Professional fees                        223,214       41,098        264,312
 Insurance                                 43,101            -         43,101
 Share based compensation - stock
   options granted                     10,296,521       28,200     10,324,721
 All other general and administrative      49,384        1,258         50,642
                                        ----------   ----------     ----------
      Total expenses                   12,462,847      196,271     12,659,118
                                        ----------   ----------     ----------

Operating (loss)                      (12,368,726)    (196,271)   (12,564,997)

    Interest income                        16,853        2,893         19,746
                                        ----------   ----------     ----------

(Loss) before taxes                   (12,351,873)    (193,378)    (12,545,251)

Provision for income taxes                      -            -               -
                                        ----------   ----------     ----------
Net (loss)                           $(12,351,873)   $(193,378)  $(12,545,251)
                                     =============   ==========  =============

Net (loss) per common share:
     Basic and Diluted               $      (1.14)   $   (0.07)
                                     =============   ==========

Weighted average shares outstanding:
     Basic and Diluted                 10,831,053    2,892,700
                                     =============   ==========

The accompanying notes are an integral part of these financial statements.



                                       4

<PAGE>


                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                            STATEMENTS OF CASH FLOWS
                       for the year ended August 31, 2009,
      for the period from Inception (December 28, 2007) to August 31, 2008,
    and for the period from Inception (December 28, 2007) to August 31, 2009


<TABLE>
<S>                                                  <C>                 <C>                     <C>

                                                     Year             Inception               Inception
                                                    Ended       (December 28, 2007) to  (December 28, 2007) to
                                               August 31, 2009     August 31, 2008         August 31, 2009
                                               ---------------  ----------------------  ----------------------

 Cash flows from operating activities:
  Net (loss)                                    $ (12,351,873)      $    (193,378)          $ (12,545,251)
                                                --------------      --------------          --------------
  Adjustments to reconcile net (loss)
   to net cash (used in) operating activities:
   Share based compensation                        10,296,521              28,200              10,324,721
   Depreciation, depletion and amortization            97,605                   -                  97,605
   Impairment of oil and gas properties               945,079                   -                 945,079
  Changes in operating assets and liabilities
   (Increase) in accounts receivable                  (84,643)                  -                 (84,643)
   Decrease (Increase) in other current assets          6,307             (27,412)                (21,105)
   Increase in accounts payable                       610,261              12,473                 622,734
   Increase in accrued taxes and expenses               4,526              40,853                  45,379
   Increase in accrued interest                        14,200                   -                  14,200
   Effect of merger on operating assets
    (liabilities)                                     (31,437)                  -                 (31,437)
                                                --------------      --------------          --------------
  Total adjustments                                11,858,419              54,114              11,912,533
                                                --------------      --------------          --------------
  Net cash (used in) operating activities            (493,454)           (139,264)               (632,718)
                                                --------------      --------------          --------------
Cash flows from investing activities:
 Acquisition of property and equipment             (2,690,720)                  -              (2,690,720)
 Option to acquire mineral interests -
  related party                                      (100,000)                  -                (100,000)
 Performance assurance deposit                        (85,000)                  -                 (85,000)
 Cash acquired in merger                                3,987                   -                   3,987
                                                --------------      --------------          --------------
  Net cash (used in) investing activities          (2,871,733)                  -              (2,871,733)
                                                --------------      --------------          --------------
Cash flows from financing activities:
 Proceeds from bank loan payable                    1,161,811                   -               1,161,811
 Cash proceeds from sale of stock                   3,052,294           2,545,605               5,597,899
 Offering costs                                      (285,600)           (114,000)               (399,600)
 Repurchase of shares                                  (1,000)                  -                  (1,000)
                                                --------------      --------------          --------------
  Net cash provided by  financing activities        3,927,505           2,431,605               6,359,110
                                                --------------      --------------          --------------
Net increase (decrease) in cash and
 equivalents                                          562,318           2,292,341               2,854,659

Cash and equivalents at beginning of period         2,292,341                   -                       -
                                                --------------      --------------          --------------
Cash and equivalents at end of period           $   2,854,659       $   2,292,341           $   2,854,659
                                                ==============      ==============          ==============
Supplemental Cash Flow Information:
 Interest paid                                  $       5,325       $           -           $       5,325
                                                ==============      ==============          ==============
 Income taxes paid                              $           -       $           -           $           -
                                                ==============      ==============          ==============
Non-cash investing and financing activities:
 Net assets acquired in merger                  $      11,675       $           -           $      11,675
                                                ==============      ==============          ==============
</TABLE>


The accompanying notes are an integral part of these financial statements.


                                       5

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
              STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY For the
          period from Inception (December 28, 2007) to August 31, 2009


<TABLE>
<S>                                                   <C>          <C>         <C>         <C>           <C>             <C>

                                                                                                      (Deficit)
                                                                                                     Accumulated
                                                   Number of               Additional      Stock        During          Total
                                                     Common       Common    Paid - In  Subscriptions Exploration    Shareholders'
                                                     Shares        Stock     Capital     Receivable      Stage          Equity
                                                   ---------      ------   ----------  ------------- ------------   -------------

Balance at Inception, December 28, 2007                    -     $      -  $       -     $       -    $       -       $       -

Founders' shares issued effective June 11, 2008    7,900,000        7,900          -        (7,900)           -               -

Shares issued for cash at $1.00 per share
 pursuant to June 20, 2008 offering memorandum     1,000,000        1,000    999,000       (19,750)           -         980,250

Share based compensation                                   -            -     28,200             -            -          28,200

Shares issued for cash at $1.50 per share
 pursuant to July 16, 2008 offering memorandum     1,043,571        1,044  1,564,311             -            -       1,565,355

Offering costs                                                              (114,000)                                  (114,000)

Net (loss)                                                 -            -          -             -     (193,378)       (193,378)
                                                  -----------  ----------- -----------  -----------  -----------     -----------
Balance, August 31, 2008                           9,943,571        9,944   2,477,511      (27,650)    (193,378)      2,266,427

Stock subscription received                                -            -           -       27,650            -          27,650

Shares issued for net assets of Brishlin
 pursuant to September 10, 2008 Exchange
 Agreement                                         1,038,000        1,038      10,637            -            -          11,675

Stock options exchanged pursuant
 to September 10, 2008 Exchange Agreement                  -            -   10,185,345           -            -      10,185,345

Shares issued for cash at $1.50 per share
 pursuant to July 16, 2008 offering memorandum        16,429           16      24,628            -            -          24,644

Shares issued for cash at two shares for $3.00
 pursuant to December 1, 2008 offering memorandum  2,000,000        2,000   2,998,000            -            -       3,000,000

Offering costs                                             -            -    (285,600)           -            -        (285,600)

Repurchase of Founder's shares at $.001           (1,000,000)      (1,000)          -            -            -          (1,000)

Share based compensation                                   -            -     111,176            -            -         111,176

Net (loss)                                                 -            -           -            -   (12,351,873)   (12,351,873)
                                                  -----------  ----------- -----------  -----------  -----------     -----------
Balance, August 31, 2009                          11,998,000   $   11,998  $15,521,697  $        -  $(12,545,251)  $  2,988,444
                                                  ===========  =========== ===========  =========== =============  =============
</TABLE>




                                       6

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)

                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

1.     Summary of Significant Accounting Policies

     Basis  of  Presentation:  Synergy  Resources  Corporation  (the  "Company")
represents  the result of a merger  transaction  on  September  10, 2008 between
Brishlin Resources, Inc. ("Predecessor Brishlin"), a public company, and Synergy
Resources Corporation ("Predecessor Synergy"), a private company. In conjunction
with the transaction, Predecessor Brishlin changed its name to Synergy Resources
Corporation.  The Company was organized  under the laws of the State of Colorado
and for  accounting  purposes,  the inception  date is deemed to be December 28,
2007,  the day that  Predecessor  Synergy was  organized.  The Company is in its
exploration  stage  and is  engaged  in oil and gas  acquisitions,  exploration,
development  and  production  activities,  primarily  in the  area  known as the
Denver-Julesburg  Basin.  The Company has adopted  August 31st as the end of its
fiscal year.

     Merger Transaction: On September 10, 2008, Predecessor Brishlin consummated
an  Agreement  to Exchange  Common  Stock  ("Exchange  Agreement")  with certain
shareholders  of  Predecessor  Synergy  to  acquire  approximately  89%  of  the
outstanding common stock of Predecessor Synergy. In subsequent transactions, all
the remaining  outstanding  common shares of Predecessor  Synergy were acquired.
Prior to September 10, 2008,  Predecessor  Brishlin had 1,038,000  common shares
outstanding,  and Predecessor  Synergy had 9,960,000 common shares  outstanding.
The merger  transaction  resulted in the Company with  10,998,000  common shares
outstanding,  with the shareholders of Predecessor Synergy holding approximately
91% of the  outstanding  shares and the  shareholders  of  Predecessor  Brishlin
holding approximately 9% of the outstanding shares.

     The  Exchange  Agreement  further  provided  that the  Company  would issue
substitute  Series A  warrants  to  replace  similar  warrants  held by  certain
shareholders of Predecessor Synergy to purchase 2,060,000 shares of common stock
at $6.00 per share. Furthermore,  the Company agreed to issue substitute options
to replace similar options  outstanding prior to the merger  transaction,  which
options  provide for the purchase of  2,000,000  shares of common stock at $1.00
per share and 2,000,000 shares of common stock at $10.00 per share.

     Immediately  prior to the  transaction,  Predecessor  Brishlin  completed a
one-for-ten  reverse stock split of its outstanding  common stock. All share and
per share data  presented in the  accompanying  financial  statements  have been
retroactively restated to reflect the reverse stock split.

     In anticipation of the merger transaction,  Predecessor Brishlin declared a
dividend to its shareholders of record as of August 28, 2008,  consisting of one
Series A warrant for each common share held.


                                       7

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

      Although the legal form of the transaction reflects the acquisition of
Predecessor Synergy by Predecessor Brishlin, the Company determined that the
accounting form of the transaction is a "reverse merger", in which Predecessor
Synergy is identified as the acquiring company and Predecessor Brishlin is
identified as the acquired company. At the time of the transaction, Predecessor
Brishlin had ceased most of its operations and liquidated most of its assets and
liabilities. In accordance with SEC regulations, the transaction was recorded as
a capital transaction rather than a business combination. The transaction is
equivalent to the issuance of common stock by Predecessor Synergy in exchange
for the net assets of Predecessor Brishlin and a recapitalization of Predecessor
Synergy. The assets and liabilities of Predecessor Brishlin were not restated to
their estimated fair market values and no goodwill or other intangible assets
were recorded. Selected financial data for Predecessor Brishlin at the
transaction date follows:

      Selected Financial Data:
      ------------------------

          Cash                                $   3,987
          Current assets                          5,129
          Oil and gas assets                     39,125
          Current liabilities                    33,907
          Net assets                           $ 11,675

      Financial information for all periods subsequent to September 10, 2008
includes the consolidated assets, liabilities and activities of both companies.
Historical financial information for periods prior to September 10, 2008,
presented for comparative purposes, includes only Predecessor Synergy.

      Condensed pro-forma information assuming that the transaction occurred on
September 1, 2008 (beginning of fiscal year for the Company) has not been
presented. As Predecessor Brishlin had substantially reduced its operations
prior to the transaction, there is no material difference between the
information presented in the accompanying financial statements and the pro-forma
information.

      Reclassifications: Certain amounts previously presented for prior periods
have been reclassified to conform with the current presentation. The
reclassifications had no effect on net loss, accumulated deficit, or net assets.

      Cash and Cash Equivalents: The Company considers cash in banks, deposits
in transit, and highly liquid debt instruments purchased with original
maturities of three months or less to be cash and cash equivalents.

      Oil and Gas Properties: The Company uses the full cost method of
accounting for costs related to its oil and gas properties. Accordingly, all
costs associated with acquisition, exploration, and development of oil and gas
reserves (including the costs of unsuccessful efforts) are capitalized into a
single full cost pool. These costs include land acquisition costs, geological


                                       8

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

and geophysical expense, carrying charges on non-producing properties, costs of
drilling and overhead charges directly related to acquisition and exploration
activities.

      All capitalized costs of oil and gas properties are amortized using the
unit-of-production method based upon estimates of proved reserves. For
amortization purposes, the volume of petroleum reserves and production is
converted into a common unit of measure at the energy equivalent conversion rate
of six thousand cubic feet of natural gas to one barrel of crude oil.
Investments in unevaluated properties and major development projects are not
amortized until proved reserves associated with the projects can be determined
or until impairment occurs. If the results of an assessment indicate that the
properties are impaired, the amount of the impairment is added to the
capitalized costs to be amortized.

      In applying the full cost method, the capitalized costs are subject to a
quarterly "ceiling test". If capitalized costs, adjusted for such items as
accumulated depletion and deferred income taxes, exceed the "ceiling amount",
the excess is charged to earnings as an impairment expense. The "ceiling" is
estimated as the present value, discounted at 10%, of the future net cash flows
from proved oil and gas reserves plus the lower of cost or net realizable value
of unevaluated properties. The calculation of future net cash flows assumes
continuation of current economic conditions, including current prices and costs.
The "ceiling" is highly sensitive to changing prices for oil and gas. Once
impairment expense is recognized, it cannot be reversed in future periods, even
if increasing prices raise the "ceiling amount".

      Oil and Gas Reserves: The determination of depreciation, depletion and
amortization expense, as well as ceiling test write-downs related to the
recorded value of the Company's oil and natural gas properties, will be highly
dependent on the estimates of the proved oil and natural gas reserves. Oil and
natural gas reserves include proved reserves that represent estimated quantities
of crude oil and natural gas which geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions. There are numerous
uncertainties inherent in estimating oil and natural gas reserves and their
values, including many factors beyond the Company's control. Accordingly,
reserve estimates are often different from the quantities of oil and natural gas
ultimately recovered and the corresponding lifting costs associated with the
recovery of these reserves

      Major Customer and Operating Region: The Company operates exclusively
within the United States. Except for cash investments, all of the Company's
assets are employed in, and all of its revenues are derived from, the oil and
gas industry. For the year ended August 31, 2009, all of the Company's sales
were to one customer, thus at August 31, 2009, the entire accounts receivable
balance was due from this customer.

      Revenue Recognition: Revenue is generally recognized for the sale of oil
and gas when there is persuasive evidence of a sale arrangement, delivery has
occurred, the price is determinable, and collection of sales proceeds is
reasonably assured. Revenue is accrued when these four conditions have been


                                       9

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

satisfied and reasonable estimates can be made. Revenue estimates are prepared
for the quantity of petroleum product delivered to the customer and the price
that will be received. Payment is received at a later date, often sixty to
ninety days after production. Revenue accruals are adjusted to reflect updated
information as it is received.

      Lease Operating Expenses: Operating expenses of producing wells are
recognized when incurred. For properties operated by third parties, expenses are
estimated based upon activity reports. Expense accruals are adjusted to reflect
updated information as it is received.

      Property Retirement Obligation: The Company follows the guidelines of SFAS
143, "Accounting for Asset Retirement Obligations." SFAS 143 requires the fair
value of a liability for an asset retirement obligation to be recognized in the
period that it is incurred if a reasonable estimate of fair value can be made.
The associated asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset.

      Stock Based Compensation: The Company accounts for stock-based
compensation in accordance with Statement of Financial Accounting Standards
(SFAS) 123(R), "Share Based Payment," requiring the Company to record
compensation costs determined in accordance with the fair value based method
prescribed in SFAS 123(R). The Company estimates the fair value of stock options
at their grant date by using the Black-Scholes-Merton option-pricing model and
provides for expense recognition over the service period, if any, of the stock
option. The Company accounts for common stock issued to employees for services
based on the fair value of the equity instruments issued, and accounts for
common stock issued to other than employees based on the fair value of the
consideration received or the fair value of the equity instruments, whichever is
more reliably measurable.

      Per Share Amounts: SFAS 128, "Earnings Per Share," provides for the
calculation of "Basic" and "Diluted" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing net income (or loss) by
the weighted-average number of shares outstanding during the period. Diluted
earnings per share reflect the potential dilution of securities that could share
in the earnings of the Company, assuming the issuance of an equivalent number of
common shares pursuant to options, warrants, or convertible debt arrangements.
Diluted earnings per share does not affect periods in which the Company incurs a
loss because it would be anti-dilutive. Similarly, potential common stock
equivalents are not included in the calculation if the effect would be
anti-dilutive. During the periods since inception, the Company has issued
9,198,000 potentially dilutive securities, all of which were excluded from the
calculation because they were anti-dilutive.

      Income Taxes: Deferred income taxes are reported for timing differences
between items of income or expense reported in the financial statements and
those reported for income tax purposes in accordance with SFAS 109, "Accounting
for Income Taxes", which requires the use of the asset/liability method of
accounting for income taxes. Deferred income taxes and tax benefits are
recognized for the future tax consequences attributable to differences between


                                       10

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases, and for tax loss and credit carry-forwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The Company provides for deferred taxes for
the estimated future tax effects attributable to temporary differences and
carry-forwards when realization is more likely than not.

      Use of Estimates: The preparation of financial statements in conformity
with US GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management
routinely makes judgments and estimates about the effects of matters that are
inherently uncertain. Management bases its estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Estimates and assumptions are revised periodically
and the effects of revisions are reflected in the financial statements in the
period it is determined to be necessary. Actual results could differ from these
estimates.

      Business Risks: The Company continually reviews the exploration and
political risks it encounters in its operations. It mitigates the likelihood and
potential severity of these risks through the application of high operating
standards. The Company's operations may be affected to various degrees by
changes in environmental regulations, including those for future site
restoration and reclamation costs. The oil and gas business is subject to
extensive licensing, permitting, governmental legislation, control and
regulations. The Company endeavors to be in compliance with these regulations at
all times.

      Fair Value of Financial Instruments: SFAS 107, "Disclosures About Fair
Value of Financial Instruments," requires disclosure of fair value information
about financial instruments. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of August 31, 2009.

      The respective carrying values of certain on-balance-sheet financial
instruments approximate their fair values. These financial instruments include
cash, cash equivalents, prepaid expenses, accounts payable, accrued liabilities
and bank loan payable. Fair values were assumed to approximate carrying values
for these financial instruments since they are short term in nature and their
carrying amounts approximate fair value, or they are receivable or payable on
demand.

      Concentration of Credit Risk: The Company's operating cash balances are
maintained in one primary financial institution and currently exceed federally
insured limits. The Company believes that the financial strength of this
institution mitigates the underlying risk of loss. To date, these concentrations
of credit risk have not had a significant impact on the Company's financial
position or results of operations.


                                       11

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

      Environmental Matters: Environmental costs are expensed or capitalized
depending on their future economic benefit. Costs that relate to an existing
condition caused by past operations with no future economic benefit are
expensed. Liabilities for future expenditures of a non-capital nature are
recorded when future environmental expenditures and/or remediation are deemed
probable and the costs can be reasonably estimated. Costs of future expenditures
for environmental remediation obligations are not discounted to their present
value.

      Recent Accounting Pronouncements: The Company evaluates the pronouncements
of various authoritative accounting organizations, primarily the Financial
Accounting Standards Board ("FASB"), the Securities and Exchange Commission
("SEC"), and the Emerging Issues Task Force ("EITF"), to determine the impact of
new pronouncements on accounting principles generally accepted in the United
States of America ("US GAAP") and the impact on the Company.

      On December 29, 2008, the SEC announced final approval of new requirements
for reporting oil and gas reserves to be effective in January 2010. The new
disclosure requirements provide for consideration of new technologies in
evaluating reserves, allow companies to disclose their probable and possible
reserves to investors, report oil and gas reserves using an average price based
on the prior 12 month period rather than year-end prices, and revise the
disclosure requirements for oil and gas operations. The accounting for the
limitation on capitalized costs for full cost companies will also be revised.
The new rule is expected to be effective for years ending on or after December
31, 2009, although the transition may be extended. The Company has not yet
evaluated the effects on its financial statements and disclosures.

      In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No. 162" ("SFAS 168"). SFAS 168 will become the
source of authoritative US GAAP to be applied by nongovernmental entities. Rules
and interpretive releases of the SEC under authority of federal securities laws
are also sources of authoritative GAAP for public companies. The Codification
will supersede all non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in the Codification
will become non-authoritative. The Codification is effective for interim and
annual periods ending on or after September 15, 2009. Management is currently
evaluating the impact of adopting this statement.

      In December 2007 the FASB issued FAS No. 141 (revised 2007), Business
Combinations ("SFAS 141R"). This statement replaces SFAS 141, Business
Combinations. The statement provides guidance for how the acquirer recognizes
and measures the identifiable assets acquired, liabilities assumed and any
non-controlling interest in the acquiree. SFAS 141R provides for how the
acquirer recognizes and measures the goodwill acquired in the business
combination or a gain from a bargain purchase. The statement determines what
information to disclose to enable users to be able to evaluate the nature and
financial effects of the business combination. The provisions of SFAS 141R will


                                       12

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

be effective for our fiscal year commencing September 1, 2009 and do not allow
early adoption. Management is currently evaluating the impact of adopting this
statement.

     In May 2009, the FASB issued SFAS No. 165,  Subsequent Events ("SFAS 165"),
which provides general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. This topic was previously addressed only in auditing
literature.  SFAS 165 is similar to the  existing  auditing  guidance  with some
exceptions  that are not intended to result in significant  changes to practice.
Entities are now required to disclose the date through which  subsequent  events
have been evaluated, with such date being the date the financial statements were
issued or  available  to be  issued.  The  Company  adopted  SFAS 165 during the
quarter ended August 31, 2009 and provided the expanded disclosure  contained in
the  Subsequent  Events  footnote.  The  adoption  had no  other  impact  on the
Company's financial position, results of operations or cash flows.

      There were various other accounting standards and interpretations issued
recently, none of which are expected to a have a material impact on the
Company's financial position, operations or cash flows.

2.     Going Concern

      The Company's financial statements are prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of obligations
in the normal course of business. Only recently has the Company commenced
revenue generating operations and it has financed operations primarily through
the sale of equity. The Company recently was successful in obtaining a bank loan
secured by oil and gas equipment. The Company has incurred losses since its
inception aggregating $12,545,251. These conditions raise substantial doubt
about the ability of the Company to continue as a going concern.

      The Company has raised cash proceeds of $5,198,299, net of offering costs,
in sales of common stock since inception. Management believes that the cash
balances of $2,854,659 at August 31, 2009 will not be sufficient to fund its
operating activities and other capital resource demands during the next twelve
months.

      The Company continues to raise capital through the sale of its common
shares and may also seek other funding or corporate transactions to achieve its
business objectives. The Company's ability to continue as a going concern is
contingent upon its ability to raise additional funds, such as (1) through the
sale of equity or sale of its assets, (2) joint venture or partnership
arrangements, or (3) issuing debt instruments, and ultimately attaining
profitable operations. The financial statements do not include any adjustments
to the amount and classification of assets and liabilities that may be necessary
should the Company not continue as a going concern.


                                       13

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

3.     Property and Equipment

      Oil and gas property primarily consists of various interests in oil and
gas leases, two producing wells, and tubular goods to be used in the development
of future wells.

      Property and equipment at August 31, 2009, consisted of the following:

Oil and Gas Properties, full cost method:
   Unevaluated costs, not subject to amortization:
      Acquisition and other costs                    $     420,478
      Tubular goods                                      1,132,685
                                                         ---------
         Subtotal, unevaluated costs                     1,553,163
                                                         ---------
Evaluated costs:                                                   
      Producing and non-producing                        1,275,345 
      Less, accumulated depletion & impairment          (1,042,388)
                                                        -----------
         Subtotal, evaluated costs                         232,957
                                                        ----------
            Oil and gas properties, net                  1,786,120
                                                         ---------

Other property and equipment:
      Office equipment                                       1,337 
      Less, accumulated depreciation                          (296)
                                                      -------------
            Other property and equipment, net                1,041
                                                      ------------

Total Property and Equipment, net                    $   1,787,161
                                                     =============


      The Company commenced depletion of its full cost pool during the year
ended August 31, 2009. Costs of oil and gas properties are depleted using the
unit of production method based on estimated reserves and the calculation is
performed quarterly. Production volumes for the quarter are compared to
estimated total reserves to calculate a depletion rate. For the year ended
August 31, 2009, depletion of oil and gas properties was $97,309, or $13.86 per
barrel of oil equivalent, and depreciation of other property and equipment was
$296.

      Under the full cost method of accounting, a ceiling test is performed each
quarter. The full cost ceiling test is an impairment test prescribed by SEC
Regulation S-X Rule 4-10. The ceiling test determines a limit on the book value
of oil and gas properties. The capitalized costs of proved oil and gas
properties, net of accumulated depreciation, depletion, and amortization, the
related deferred income taxes, and the cost of unevaluated properties, may not
exceed the estimated future net cash flows from proved oil and gas reserves
using prices in effect at the end of the period. Prices are held constant for
the productive life of each well. Net cash flows are discounted at 10%. If net
capitalized costs exceed this limit, the excess is charged to expense and
reflected as additional accumulated depreciation, depletion and amortization.


                                       14

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

For the year ended August 31, 2009, the Company made a provision for impairment
of oil and gas properties of $945,079, primarily as a result of lower production
estimates.

4.     Bank Loan Payable

      The Company entered into a credit facility with a commercial bank. The
borrowing arrangement provides for maximum borrowings up to $1,161,811 and is
collateralized by tubular goods and certain other assets. The maximum amount
that can be borrowed is reduced by usage or sale of the tubular goods. The loan
bears interest at the prime rate plus 1/2%, payable quarterly, with a minimum
interest rate of 5.5%. The loan maturity date is May 8, 2010. Interest costs of
$19,525 and loan fees of $5,917 were incurred during the year ended August 31,
2009.

      The Company capitalizes interest on expenditures made in connection with
exploration and development projects that are not subject to current
amortization. Interest is capitalizable during the period that activities are in
progress to bring the projects to their intended use. During the year ended
August 31, 2009, interest expense of $25,442, including loan fees, was
capitalized.

5.     Shareholders' Equity

      Preferred Stock The Company has authorized 10,000,000 shares of preferred
stock with a par value of $0.01 per share. These shares may be issued in series
with such rights and preferences as may be determined by the Board of Directors.
Since inception, the Company has not issued any preferred shares.

      Common Stock The Company has authorized 100,000,000 shares of common stock
with a par value of $0.001 per share.

      Issued and Outstanding The total issued and outstanding common stock at
August 31, 2009 is 11,998,000 common shares, as follows:

     i.   Effective June 11, 2008, the Company issued 7,900,000 common shares to
          its founders at $0.001 per share, for aggregate proceeds of $7,900.

     ii.  Pursuant to a Private Offering Memorandum dated June 20, 2008, the
          Company sold 1,000,000 units at $1.00 per unit. Each unit consists of
          one share of restricted common stock and one Series A warrant that
          entitles the holder to purchase one share of common stock at $6.00 per
          share through December 31, 2012.

     iii. Pursuant to a Private  Offering  Memorandum  dated July 16, 2008,  the
          Company sold 1,060,000 units at $1.50 per unit for total cash proceeds
          of  $1,590,000.  Each unit consists of one share of restricted  common
          stock and one Series A warrant  that  entitles  the holder to purchase


                                       15

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

          one share of common  stock at $6.00 per  share  through  December  31,
          2012.

     iv.  Effective  September 10, 2008, the Company  agreed to issue  1,038,000
          common  shares to the  shareholders  of  Predecessor  Brishlin,  on an
          exchange  basis of one share of Synergy common stock for each share of
          Brishlin  common stock. In addition,  the  shareholders of Predecessor
          Brishlin  will receive  1,038,000  Series A warrants  that entitle the
          holder  to  purchase  one  share of  common  stock at $6.00  per share
          through December 31, 2012.

     v.   Effective December 1, 2008, the Company  repurchased  1,000,000 shares
          of its  common  stock  from one of the  original  Predecessor  Synergy
          shareholders for $1,000, the price at which the shares were originally
          sold to the shareholder.

     vi.  Pursuant to a Private Offering  Memorandum dated December 1, 2008, the
          Company sold 1,000,000 units at $3.00 per unit for total cash proceeds
          of $3,000,000.  Offering costs associated with the offering aggregated
          $285,600,  resulting  in net cash  proceeds of  $2,714,400.  Each unit
          consists of two shares of common  stock,  one Series A warrant and one
          Series B  warrant.  Each  Series A  warrant  entitles  the  holder  to
          purchase one share of common stock at a price of $6.00 per share.  The
          Series A warrants  expire on  December  31,  2012,  or  earlier  under
          certain  conditions.  Each  Series B warrant  entitles  the  holder to
          purchase one share of common stock at a price of $10.00 per share. The
          Series B warrants  expire on  December  31,  2012,  or  earlier  under
          certain conditions.

      In addition to the warrant issuances described in the preceding
paragraphs, the Company issued 31,733 placement agent warrants in connection
with the Private Offering Memorandum dated December 1, 2008. Each placement
agent warrant entitles the holder to purchase one Unit (which Unit is identical
to the Units sold under the Private Offering Memorandum dated December 1, 2008)
at a price of $3.60. Each Unit consisted of two shares of common stock, one
Series A warrant, and one Series B warrant. To maintain comparability of the
placement agent warrants with the other warrants, we present the placement agent
warrants as 63,466 shares at an exercise price of $1.80. The Series A and Series
B warrants issuable upon exercise of the placement agent warrants are not
considered outstanding for accounting purposes until such time, if ever, that
the placement agent warrants are exercised, and are disclosed as a commitment in
the Related Party Transactions and Commitments footnote.

                                       16

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

      The following table summarizes activity for common stock warrants for the
period from inception (December 28, 2007) to August 31, 2009:

                                             Number of    Weighted average
                                              warrants     exercise price
                                             ---------    ----------------

       Outstanding, December 28, 2007              --               --
          Granted                           2,043,571            $6.00
          Exercised                                --               --
                                          ------------
       Outstanding, August 31, 2008         2,043,571            $6.00
          Granted                           3,117,895            $7.20
          Exercised                                --               --
                                          ------------
       Outstanding, August 31, 2009         5,161,466            $6.72

     The following tables summarize  information  about the Company's issued and
outstanding common stock warrants as of August 31, 2009:

                                            Remaining         Exercise
                                           Contractual       Price times
                            Number of       Life (in         Number of
        Exercise Price       Shares           years)          Shares
        --------------      ---------      -----------       -----------

             $1.80            63,466           3.4          $    114,239
             $6.00         4,098,000           3.4          $ 24,588,000
            $10.00         1,000,000           3.4          $ 10,000,000


6.     Stock Based Compensation

      The Company accounts for stock option activities as provided by SFAS
123(R), "Share-Based Payment," which requires the Company to expense as
compensation the value of grants and options as determined in accordance with
the fair value based method prescribed in SFAS 123(R). The Company estimates the
fair value of each stock option at the grant date by using the
Black-Scholes-Merton option-pricing model.

      As described in the following paragraphs, the Company recorded stock-based
compensation expense of $10,296,521 for the year ended August 31, 2009 and
$28,200 for the year ended August 31, 2008.

     During June 2008,  stock options were granted to purchase  4,000,000 shares
of common stock.  Effective June 11, 2008, grants covering 2,000,000 shares were
issued to the  executive  officers at an exercise  price of $10.00 and a term of
five years,  and these options will vest over a one year period.  The fair value
of these options was determined to be nil based upon the following  assumptions:

                                       17

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

expected  life of 2.5  years,  stock  price of $1.00 at date of  grant,  nominal
volatility, dividend yield of 0%, and interest rate of 2.63%. Effective June 30,
2008,  grants  covering  an  additional  2,000,000  shares  were  issued  to the
executive  officers at an exercise price of $1.00 and a term of five years,  and
these  options  will  vest  over a one  year  period.  Based  upon a fair  value
calculation, these options were determined to have a value of $127,000 using the
following assumptions:  expected life of 2.5 years, stock price of $1.00 at date
of grant, nominal volatility, dividend yield of 0%, and interest rate of 2.63%.


Stock option compensation expense of $98,800 was recorded for the year ended
August 31, 2009, and stock option compensation expense of $28,200 was recorded
for the period ended August 31, 2008, based on a pro-ration of the fair value
over the vesting period.

      In connection with the merger, the Company agreed to issue stock option
grants covering 4,000,000 shares to replace the similar options described in the
preceding paragraph. Using the Black-Scholes-Merton option-pricing model, the
Company estimated that the fair value of the replacement options exceeded the
fair value of the options surrendered by $10,185,345. The assumptions used in
the model were: expected life of 2.5 years, stock price of $3.50 at date of
grant, volatility of 166%, dividend yield of 0%, and interest rate of 2.63%. The
incremental expense of $10,185,345 was pro-rated over the vesting period and
stock option compensation expense for the year ended August 31, 2009 was
$10,185,345.

      Effective December 31, 2008, the Company granted stock options to an
employee to purchase 100,000 shares of common stock at an exercise price of
$3.00 and a term of ten years. These options will vest over a five year period.
Based on a fair value calculation, these options were determined to have a value
of $185,640 using the following assumptions: expected life of 5 years, stock
price of $2.00 at date of grant, volatility of 166%, dividend yield of 0%, and
interest rate of 3.13%. Stock option compensation expense of $12,376 was
recorded for the year ended August 31, 2009, based on a pro-ration of the fair
value over the vesting period.

      The estimated unrecognized compensation cost from unvested stock options
as of August 31, 2009 was approximately $173,000, which will be recognized
ratably through December 31, 2013.

      The following table summarizes activity for stock options for the period
from inception (December 28, 2007) to August 31, 2009:

                                                               Weighted
                                              Number of         average
                                                shares       exercise price
                                              ---------      --------------
 
      Outstanding, December 28, 2007                --
      Granted                                4,000,000           $5.50
      Exercised                                     --
                                           ------------
      Outstanding August 31, 2008            4,000,000           $5.50
      Granted                                  100,000           $3.00
      Exercised                                     --
                                           ------------
      Outstanding, August 31, 2009           4,100,000           $5.44
                                           ============


                                       18

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

      The following table summarizes information about outstanding stock options
as of August 31, 2009:
                              Remaining       Weighted
                             Contractual       Average
  Exercise      Number of      Life (in       Exercise        Number
   Prices         Shares        years)          Price       Exercisable
-------------   -----------  -------------   ------------   -----------

   $10.00        2,000,000        3.4           $10.00       2,000,000
   $1.00         2,000,000        3.4           $ 1.00       2,000,000
   $3.00           100,000        9.3           $ 3.00              --
                -----------                                 -----------
                 4,100,000                      $ 5.44       4,000,000
                ===========                                 ===========

7.     Related Party Transactions and Commitments
 
      The Company's executive officers control two entities that have entered
into agreements with the Company. The entities are Petroleum Management, LLC
("PM") and Petroleum Exploration and Management, LLC ("PEM"). As discussed
below, one agreement provides various services to the Company and the other
agreement provides an option to acquire certain oil and gas interests.

      Effective June 11, 2008, the Company entered into an Administrative
Services Agreement with PM. The Company will pay $10,000 per month for leasing
office space and an equipment yard located in Platteville, Colorado, and will
pay $10,000 per month for office support services including secretarial service,
word processing, communication services, office equipment and supplies.
Additional employees, independent contractors or oil and gas professionals
provided to the Company by PM will be reimbursed at actual cost. Either party
may terminate the agreement with 30 days notice. The Company paid $240,000 under
this agreement for the year ended August 31, 2009, and $60,000 for the period
from inception (December 28, 2007) to August 31, 2008.

      Effective August 7, 2008, the Company entered into a letter of intent with
the related entities that provides an option to acquire working interests in oil
and gas leases which are owned by PM and/or PEM. The oil and gas leases cover
640 acres in Weld County, Colorado, and subject to certain conditions, will be
transferred to the Company for payment of $1,000 per net mineral acre. The
working interests in the leases vary but the net revenue interest in the leases,
if acquired by the Company, will not be less than 75%. The letter of intent had
an original expiration date of November 1, 2008, but has been extended by mutual
agreement to August 31, 2010.


                                       19

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

      Effective May 13, 2009, the Company acquired oil and gas equipment
consisting of casing and tubing from PM. PM was paid $1,718,967 as reimbursement
for the original cost of the tubular goods.

      On June 11, 2008, the Company entered into two year employment agreements
with its executive officers. Pursuant to the terms of those agreements, the
salaries of William E. Scaff, Jr. and Ed Holloway are each $12,500 per month.
The Company paid $300,000 under these agreements for the year ended August 31,
2009, and $75,000 for the period from inception (December 28, 2007) to August
31, 2008.

      In June 2008, the Company sold 1,900,000 shares of its common stock to the
Synergy Energy Trust (the "Trust"). The Trust was created for the benefit of
consultants and others who have, or will in the future, benefit the Company. The
trustee is a shareholder of the Company. Effective December 1, 2008, the Company
repurchased 1,000,000 shares of its common stock from the Trust for $1,000, the
original selling price. During the year ended August 31, 2009, the Trust issued
900,000 shares to the Trustee in exchange for certain services directly related
to raising additional capital for the Company, and the Trustee terminated the
Trust.

      On June 1, 2008, the Company entered into an agreement with Energy Capital
Advisors, an entity related through common ownership interests. Energy Capital
Advisors provided certain services directly related to raising additional
capital for the Company. Compensation under the agreement was $30,000 per month
through December 31, 2008, and $10,000 per month from January 1, 2009 to May 31,
2009, when the agreement terminated. During the year ended August 31, 2009, the
Company paid $170,000 related to this agreement. During the period from
inception (December 28, 2007) to August 31, 2008, the Company paid $90,000
related to this agreement.

      On June 1, 2008, the Company entered into an agreement with J3 Energy LLC,
an entity related through common ownership interests. Pursuant to the Agreement,
J3 Energy LLC agreed to provide certain services directly related to raising
additional capital for the Company. The agreement terminated on September 30,
2008. Compensation under the agreement was $8,000 per month. During the year
ended August 31, 2009, the Company paid $8,000 related to this agreement. During
the period from inception (December 28, 2007) to August 31, 2008, the Company
paid $24,000 related to this agreement.

      In connection with the merger, the Company entered into an agreement with
two directors to provide consulting services. The initial term of the agreement
is one year. Compensation under the agreement is $10,000 per month. During the
year ended August 31, 2009, the Company paid $120,000 related to this agreement.

      The Company issued 31,733 placement agent warrants in connection with the
Private Offering Memorandum dated December 1, 2008. Each placement agent warrant
entitles the holder to purchase one Unit (which Unit is identical to the Units
sold under the Private Offering Memorandum dated December 1, 2008) at a price of


                                       20

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

$3.60. Each Unit consisted of two shares of common stock, one Series A warrant,
and one Series B warrant. The Series A and Series B warrants issuable upon
exercise of the placement agent warrants are not considered outstanding for
accounting purposes until such time, if ever, that the placement agent warrants
are exercised. In the event that the placement agent warrants are exercised, the
Company will be obligated to issue 31,733 Series A warrants and 31,733 Series B
warrants.

8.     Income Taxes

      The Company records deferred taxes in accordance with Statement of
Financial Accounting Standards 109 "Accounting for Income Taxes". The statement
requires recognition of deferred tax assets and liabilities for temporary
differences between the tax bases of assets and liabilities and the amounts at
which they are carried in the financial statements, the effect of net operating
losses, based upon the enacted tax rates in effect for the year in which the
differences are expected to reverse. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.

      The Company's deferred tax assets, valuation allowance, and change in
valuation allowance are as follows:


<TABLE>
<S>                   <C>        <C>        <C>         <C>        <C>       <C>
                   Estimated             Estimated              Change in
                   NOL carry-    NOL    tax benefit  Valuation  valuation  Net tax
Period Ending       forward    expires   from NOL    allowance  allowance  benefit
-------------      ----------  -------  -----------  ---------  ---------  -------

August 31, 2009    $1,301,000   2029     $420,000   $(420,000)  $(420,000)  $   --
August 31, 2008    $  165,000   2028     $ 61,000   $ (61,000)  $ (61,000)  $   --
</TABLE>


     Income taxes at the statutory  rate are  reconciled to reported  income tax
expense (benefit) as follows:

                                                               2009     2008
                                                               ----     ----

      Federal tax expense (benefit) at statutory rate          (34%)    (34%)
      State tax expense (benefit) at statutory rate, net        (3%)     (3%)
      Deferred income tax valuation allowance                   37%      37%
                                                               -----    -----
      Reported tax rate                                         --%      --%
                                                               =====    =====

      At this time, the Company is unable to determine if it will be able to
benefit from its deferred tax asset. There are limitations on the utilization of
net operating loss carry-forwards, including a requirement that losses be offset
against future taxable income, if any. In addition, there are limitations


                                       21

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

imposed by certain transactions which are deemed to be ownership changes.
Accordingly, a valuation allowance has been established for the entire deferred
tax asset.

9.     Supplemental Oil and Gas Information (unaudited)

      Costs Incurred: Costs incurred in oil and gas property acquisition,
exploration and development activities and related depletion per barrel of oil
equivalent for the year ended August 31, 2009 were:

                Acquisition costs            $420,478
                Exploration costs                  --
                Development costs           2,408,030
                                           ----------
                 Total Costs Incurred      $2,828,508
                                           ==========
                Depletion per barrel of
                 oil equivalent            $    13.86
                                           ==========

      Supplemental Oil and Gas Reserve Information: Reserve information for the
properties was prepared in accordance with guidelines established by the SEC.
The Company engaged Ryder Scott Company to estimate proved reserves for all
properties as of August 31, 2009.

      Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas and natural gas liquids which geological and engineering date
demonstrate with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions (prices and
costs held constant as of the date the estimate is made). Proved developed oil
and gas reserves are reserves that can be expected to be recovered through
existing wells with existing equipment and operating methods. Proved undeveloped
oil and gas reserves are reserves that are expected to be recovered from new
wells on undrilled acreage, or from existing wells where a relatively major
expenditure is required for recompletion.

      As of August 31, 2009, all of the Company's proved reserves were located
within the United States and all were considered to be proved developed
reserves.

      The following table sets forth information regarding the Company's
estimated net total proved oil and gas reserve quantities for the year ended
August 31, 2009:

                                                  Oil          Gas        BOE

      Balance, August 31, 2008                      -            -          -
      Revision of previous estimates                -            -          -
      Purchase of reserves in place                 -            -          -
      Extensions, discoveries, and
        other additions                         8,160       30,066     13,171


                                       22

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

      Sale of reserves in place                     -            -          -
      Production                               (1,730)      (4,386)    (2,461)
                                              --------     --------   --------
      Balance, August 31, 2009                  6,430       25,680     10,710
                                              ========     ========   ========

      Oil reserves are stated in barrels, gas reserves are stated in mcf, and
barrels of oil equivalent (boe) are calculated using a conversion of 6 mcf to 1
barrel.

      Standardized Measure of Discounted Future Net Cash Flows: Guidelines are
prescribed by SFAS 69, "Disclosures about Oil and Gas Producing Activities" for
computing a standardized measure of future net cash flows and changes therein
related to estimated proved reserves. Future oil and gas sales and production
and development costs have been estimated using prices and costs in effect at
the end of the fiscal year. All cash flow amounts are discounted at 10%.

      As of August 31, 2009, based on our net oil and gas prices of $61.24 per
barrel of oil and $2.05 per mcf of natural gas, the value of proved reserves did
not support the costs included in the full cost pool. Accordingly, an impairment
allowance of $945,079 was recorded for the year ended August 31, 2009.

      The following table sets forth the Company's future net cash flows
relating to proved oil and gas reserves based on the standardized measure
prescribed in SFAS 69.


            Future cash inflows                    $ 446,485 
            Future production costs                 (141,134)
            Future development costs                      --
            Future income tax expense                     --
                                              --------------
            Future net cash flows                    305,351
            10% annual discount                      (72,394) 
                                                   ---------
            Standardized measure of discounted
                future net cash flows              $ 232,957 
                                                   ==========

      The principle sources of change in the standardized measure of discounted
future net cash flows are:

            Balance, August 31, 2008           $          --
            Sales of oil and gas, net                (82,549)
            Extensions and discoveries               315,506 
                                                   ----------
            Balance, August 31, 2009                $232,957 
                                                    =========



                                       23

<PAGE>

                          SYNERGY RESOURCES CORPORATION
                         (An Exploration Stage Company)
                          NOTES TO FINANCIAL STATEMENTS
                            August 31, 2009 and 2008

10.     Subsequent Events

      The Company evaluated all events subsequent to the balance sheet date of
August 31, 2009 through the date of issuance of these financial statements and
has determined that, except as set forth below, there are no subsequent events
that require disclosure.

      After the end of the fiscal year, and through October 31, 2009, the
Company commenced a drilling program comprising seven wells with an estimated
total cost, to its interest, of approximately $2,200,000.









                                       24

<PAGE>


 
                                  SIGNATURES


      In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 16th day of November, 2009.

                                     SYNERGY RESOURCES CORPORATION

                                     By: /s/ Ed Holloway
                                         ------------------------------------
                                         Ed Holloway, President

                                     By: /s/ Frank L. Jennings
                                         ------------------------------------
                                         Frank L. Jennings, Principal Financial
                                         and Accounting Officer

     Pursuant to the  requirements of the Securities  Exchange Act of l934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

Signature                       Title                    Date

/s/ Ed Holloway                Director            November 16, 2009
----------------------
Ed Holloway


/s/ William E. Scaff, Jr.      Director            November 16, 2009
----------------------
William E. Scaff, Jr.


/s/ Benjamin Barton            Director            November 16, 2009
----------------------
Benjamin Barton


/s/ Rick Wilber                Director            November 16, 2009
----------------------
Rick Wilber


/s/ Raymond E. McElhaney       Director            November 16, 2009
----------------------
Raymond E. McElhaney


/s/ Bill M. Conrad             Director            November 16, 2009
----------------------
Bill M. Conrad


/s/ R. W. Noffsinger, III      Director            November 16, 2009
----------------------
R. W. Noffsinger, III



<PAGE>


                          SYNERGY RESOURCES CORPORATION

                                    FORM 10-K

                                    EXHIBITS



<PAGE>






                                   EXHIBIT 31




<PAGE>

                                 CERTIFICATIONS

I, Ed Holloway, certify that:

1. I have reviewed this annual report on Form 10-K/A of Synergy Resources
Corporation;

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

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

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

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

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

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

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

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

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

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


November 16, 2009                    /s/ Ed Holloway
                                     ------------------------------------
                                     Ed Holloway,
                                     Principal Executive Officer



<PAGE>

                                 CERTIFICATIONS

I, Frank L. Jennings, certify that:

1. I have reviewed this annual report on Form 10-K/A of Synergy Resources
Corporation;

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

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

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

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

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

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

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

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

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

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


November 12, 2009                    /s/ Frank L. Jennings
                                     ------------------------------------
                                     Frank L. Jennings,
                                     Principal Financial Officer



<PAGE>




                                   EXHIBIT 32





<PAGE>

     In connection with the Annual Report of Synergy Resources  Corporation (the
"Company")  on Form 10-K/A for the period  ending  August 31, 2009 as filed with
the  Securities  and  Exchange  Commission  (the  "Report"),  Ed  Holloway,  the
Company's  Principal  Executive and Frank L. Jennings,  the Company's  Principal
Financial  Officer,  certify,  pursuant to 18 U.S.C.  Section  1350,  as adopted
pursuant to Section 906 of the  Sarbanes-Oxley  Act of 2002, that to the best of
their knowledge:

     (1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

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


November 16, 2009                   By: /s/ Ed Holloway
                                        ------------------------------------
                                        Ed Holloway, Principal Executive Officer



November 12, 2009                   By: /s/ Frank L. Jennings
                                        -----------------------------------
                                        Frank L. Jennings, Principal Financial
                                        Officer