Edgar Filing: SYNERGY TECHNOLOGIES CORP

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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SYNERGY TECHNOLOGIES CORPORATION
--------------------------------
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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SYNERGY TECHNOLOGIES CORPORATION

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders
of Synergy Technologies Corporation which will be held at our offices at 1689
Hawthorne Drive, Conroe, Texas on Friday, July 19, 2002 at 10:30 a.m. We look
forward to greeting as many of our shareholders as possible. Details of business
to be conducted at the Annual Meeting are provided in the attached Notice of
Annual Meeting and Proxy Statement. Whether or not you attend the Annual
Meeting, it is important that your shares be represented and voted at the
meeting. Therefore, we urge you to sign, date and promptly return the enclosed
proxy in the envelope provided. If you decide to attend the Annual Meeting, you
will of course be able to vote in person, even if you have previously submitted
your proxy.

On behalf of the Board of Directors, we would like to express our
appreciation for your continued interest in the affairs of the Company.

On Behalf of the Board of Directors,
/s/ Kelly Warrack
Corporate Secretary

NOTICE OF ANNUAL MEETING

NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Meeting") of the
shareholders of SYNERGY TECHNOLOGIES CORPORATION ("we," "us" or the "Company")
will be held at the offices of Synergy Technologies Corporation located at 1689
Hawthorne Drive, Conroe, Texas at 10:30 o'clock in the AM (Calgary time) on
Friday, the 19th day of July, 2002 for the following purposes:

(1) to elect seven directors to serve until the next meeting of
shareholders and until their successors have been elected and qualified
(the affirmative vote of a plurality of the outstanding shares entitled
to vote thereon is required to elect each nominee for election as
directors);

(2) to ratify the selection of KPMG LLP as our independent public
accountants for the year ending December 31, 2002 (the affirmative vote
of a majority of the shares represented at the meeting and entitled to
vote thereon is required to ratify this proposal);

(3) to consider such other business as may properly come before the
meeting.

RECORD DATE: You are entitled to vote if you were a shareholder of record at the
close of business on May 17, 2002.

ATTENDANCE IN PERSON: If you were a shareholder of record on the record date,
you are entitled to, and we would be delighted if you would, come to and vote at
the meeting in person.

VOTING BY PROXY: Please send in your proxy (or voting instructions to your
broker) as soon as possible so that your shares can be voted at the meeting in
accordance with your instructions. Please refer to the questions and answers
beginning on page 2 and the instructions on the proxy card.

By order of the Board of Directors
Kelly Warrack,
Corporate Secretary
June 20, 2002

SYNERGY TECHNOLOGIES CORPORATION
1689 Hawthorne Drive
Conroe, TX 77301-3284

PROXY STATEMENT

YOUR VOTE IS VERY IMPORTANT. PLEASE SEND IN YOUR PROXY AS SOON AS POSSIBLE SO
THAT YOUR SHARES CAN BE VOTED AT THE MEETING IN ACCORDANCE WITH YOUR
INSTRUCTIONS, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF
SHAREHOLDERS IN PERSON. THIS PROXY STATEMENT DESCRIBES THE MATTERS TO BE VOTED
ON AND CONTAINS SPECIFIC INSTRUCTIONS TO FACILITATE YOUR VOTING.

Synergy Technologies Corporation ("Synergy" or the "Company"), through
its Board of Directors, is soliciting proxies for the 2002 Annual Meeting of
Shareholders of Synergy Technologies Corporation to be held on July 19, 2002
(the "Annual Meeting"). We are mailing this Proxy Statement on or about June 21,
2002. We are sending to you our annual report on Form 10-K, for the year ending
December 31, 2001, including audited financial statements for the year ended
December 31, 2001, and our quarterly report on Form 10-Q for the three months
ended March 31, 2002 which includes unaudited financial statements for the three
months then ended, together with this Proxy Statement.

SOME QUESTIONS AND ANSWERS

WHAT AM I BEING ASKED TO VOTE ON?

You are being asked to vote on:

(1) the election of seven directors to serve until the next meeting of
shareholders and until their successors have been elected and qualified
(the affirmative vote of a plurality of the outstanding shares entitled
to vote thereon is required to elect each nominee for election as
directors);

(2) ratify the selection of KPMG LLP as our independent public
accountants for the year ending December 31, 2002 (the affirmative vote
of a majority of the shares represented at the meeting and entitled to
vote thereon is required to ratify this proposal);

(3) To consider such other business as may properly come before the
meeting.

HOW DOES THE BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?

The Board recommends a vote FOR each of its nominees for election as directors
and FOR ratification of the Board's selection of KPMG LLP as our auditors.

WHO IS ENTITLED TO VOTE?

You are entitled to vote if you were the owner of shares of our common stock at
the close of business on May 17, 2002, the record date for voting. This includes
(1) shares held on that date

directly by you as the shareholder of record and (2) shares held on that date
for your account as beneficial owner by a broker, bank or other nominee.

WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS
A BENEFICIAL OWNER?

If the shares are registered directly in your name on the records maintained by
our transfer agent, American Stock Transfer & Trust Company, you are the
shareholder of record of those shares and we are sending the proxy materials
directly to you. As the shareholder of record, you are entitled to vote these
shares in person at the meeting or to designate a proxy to vote for you. We have
enclosed a proxy card to permit you to instruct the proxy holder on how to vote
your shares. If your shares are held in a brokerage account or by a bank or
other nominee, those shares are registered on the records maintained by the
transfer agent in the name of the broker, bank or other nominee. The broker,
bank or other nominee shares held like that are frequently referred to as being
held in "street name." If your shares are held in street name, the broker, bank
or other nominee is the holder of record and will get the proxy materials from
us in sufficient quantities to pass on a set to you. You, as the beneficial
owner, have the right to direct the broker, bank or other nominee on how to vote
and you are invited to attend the meeting if you want to. Nevertheless, if you
do attend, you will be entitled to vote only if the record holder of these
shares appoints you as its proxy. Your broker, bank or other nominee has
enclosed a voting instruction card so that you can give instructions on how to
vote your shares.

HOW DO I VOTE?

Shareholders may vote their shares at the Annual Meeting either in person or by
proxy. Since many shareholders may be unable to attend the meeting in person, we
send to all shareholders of record cards that permit them to designate proxies
to represent them at the meeting and to direct the designated proxies on how to
vote. Brokers, banks and nominees also send cards to beneficial owners to permit
them to provide instructions as to how they wish their shares to be voted.

HOW DO I VOTE BY MAIL?

Shareholders of record who wish to vote by mail should complete the enclosed
proxy card to indicate their voting instructions and then sign, date and mail
the proxy card in the postage-paid envelope provided. Beneficial owners may
direct their vote by mail by completing, signing and returning the voting
instruction card provided by their broker, bank or nominee.

HOW DO I VOTE AT THE ANNUAL MEETING?

We will pass out ballot papers to any shareholder of record who wants to vote in
person at the Annual Meeting rather than by proxy. If you hold your shares
through a broker, bank or nominee, you must obtain a proxy from that institution
to enable you to vote in person at the meeting.

WHOM AM I DESIGNATING AS MY PROXY?

You will be designating Marc Cernovitch, our Vice President, and Kelly Warrack,
our Secretary/Treasurer, as proxies to vote your shares in accordance with your
instructions. Alternatively, a shareholder has the right to appoint a person to
attend and act for him on his behalf at the Meeting other than the persons named
in the enclosed Instrument of Proxy. To exercise this right, a shareholder shall
strike out the names of the persons named in the Instrument of Proxy and insert
the name of his nominee in the blank space provided, or complete another
Instrument of Proxy. The completed Instrument of Proxy should be deposited with
its registrar and transfer agent, American Stock Transfer & Trust Company, at 59
Maiden Lane, New York, NY 10038, fax to (718) 921-8145, or with the offices of
the Company at 1689 Hawthorne Drive, Conroe, Texas 77301-3284, fax to (936)
788-8221, at least 72 hours before the time of the Meeting or any adjournment
thereof, excluding Saturdays, Sundays and holidays.

HOW WILL MY PROXY VOTE MY SHARE?

The designated proxies will vote according to your instructions as indicated on
the proxy card. If you sign your proxy card but do not indicate voting
instructions on one or more of the business matters listed, the proxies will
vote all uninstructed shares in accordance with the recommendations of the
Board.

MAY I REVOKE MY PROXY?

You may revoke or amend your proxy, in addition to revocation in any other
manner permitted by law, in any one of the following ways:

(1) By attending the Annual Shareholders Meeting in person, revoking your proxy
at that time and either voting the shares yourself or appointing a new person to
act as your proxy; or

(2) By signing a Proxy bearing a later date and forwarding it to the company at
the address of its offices located at 1689 Hawthorne Drive, Conroe, Texas
77301-3284. Any such new proxy must be received by the Company by July 17, 2002;
or

(3) By sending a letter to the company at its offices located at 1689 Hawthorne
Drive, Conroe, Texas 77301-3284 signed by each of the registered shareholders
indicating the shareholder's intention to revoke or amend the proxy. If you
intend to amend the proxy, please advise us as to the exact amendments you wish
to make. Letters intended to revoke or amend a proxy must be received by the
Company by July 17, 2002.

HOW MANY SHARES CAN VOTE?

As of the record date, we had 39,119,395 issued and outstanding shares of common
stock available to vote at the meeting. The holders of these shares are each
entitled to one vote for each share held.

HOW MANY SHARES NEED TO BE REPRESENTED FOR THE MEETING TO CONDUCT BUSINESS?

The meeting can conduct business only if the holders of a majority of the shares
outstanding on the record date are present at the meeting in person or by proxy.
Both abstentions and broker non-votes are counted as present for the purpose of
determining the presence of a quorum. Abstentions are also counted as shares
present and entitled to be voted. Broker non-votes, however, are not counted as
shares present and entitled to be voted with respect to the matter on which the
broker has expressly not voted. Generally, a broker will not vote shares that it
holds for a beneficial owner for or against a particular proposal if (1) the
broker has not received voting instructions from the beneficial owner and (2)
under the rules applicable to the broker it is not allowed to vote on the
particular proposal without voting instructions.

HOW MANY VOTES ARE NEEDED FOR MATTERS TO BE ADOPTED AT THE MEETING?

The matters to be voted on will be declared adopted if they receive the
affirmative vote of a majority of the shares present or represented at the
meeting.

IS CUMULATIVE VOTING ALLOWED IN THE ELECTION OF DIRECTORS?

No. Each share is entitled to one vote in the election of directors as on every
other matter.

WHO WILL COUNT THE VOTES?

Your Corporate Secretary or an inspector appointed specifically for the Meeting
will count the votes unless a shareholder present at the meeting requests count
by inspectors of election, in which event the Chairman of the meeting will
appoint two inspectors, who may but need not be shareholders, to effect the
count.

WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?

The Chairman will announce the results of the meeting. In addition, we will
publish them on our web site - www.synergytechnologies.com - and in our report
on Form 10-QSB for the quarter ended September 30, 2002 that we expect to file
with the SEC by November 14, 2002.

WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE MEETING?

The Company will pay the entire cost of preparing, assembling, printing, mailing
and distributing these proxy materials. In addition to mailing these proxy
materials, our directors and officers, who will not receive any additional
compensation for their soliciting activities, may seek to contact shareholders
by telephone or other electronic means. We will also reimburse brokers, and
other custodians, nominees and fiduciaries for their reasonable out-of-pocket
expenses incurred by them in forwarding proxy materials to shareholders.

MAY I PROPOSE ACTIONS FOR CONSIDERATION AT FUTURE SHAREHOLDER MEETINGS,
INCLUDING DIRECTOR NOMINATIONS?

You may submit proposals for consideration at future shareholder meetings,
including director nominations.

PROPOSALS:

In order for a shareholder proposal to be considered for inclusion in the proxy
statement for our next year's Annual Meeting, our Corporate Secretary must
receive the written proposal by no later than March 31, 2003. Any such proposal
will need to comply with SEC regulations regarding the inclusion or shareholder
proposals in company-sponsored proxy materials. You may also move the adoption
of proposed resolutions from the floor at the Annual Meeting, but then you
should not expect proxies to vote in favor of it.

NOMINATIONS OF DIRECTOR CANDIDATES:

You may suggest director candidates for consideration by our Board. Any such
suggestion should be addressed to our Corporate Secretary. You may also make a
director nomination from the floor at the Annual Meeting, but then you should
not expect proxies to be voted in favor of your nominee.

ITEM OF BUSINESS NO. 1
ELECTION OF DIRECTORS

At the Annual Meeting, seven persons are to be elected to the Board to
hold office until the next annual meeting of the shareholders of Synergy and
until their respective successors are duly elected and qualified. The Board has
nominated each of the persons named below and it is the intention of the persons
named in the enclosed proxy to vote FOR the election of all the nominees named
below. Each of the nominees has consented to serve as a director if elected. If
any of the nominees named below becomes unable or unwilling to serve as a
director, shares represented by valid proxies will be voted FOR the election of
such other person as the Board may nominate, or the number of directors that
constitutes the full Board may be reduced to eliminate the vacancy.

INFORMATION CONCERNING THE NOMINEES FOR ELECTION AS DIRECTORS

The seven persons who receive the highest number of the votes cast by
shareholders present at the meeting in person or by proxy will be elected
directors of Synergy, to hold office until the next annual meeting and until
their successors are elected and qualified.

The chart below identifies persons who currently serve or are being
nominated to serve as directors.

NAME AGE POSITION
Barry Coffey 50 Chairman, President and CEO
Thomas E. Cooley 61 Chief Technology Officer and member of the Board of
Directors
Duane F. Baumert 61 Member of the Board of Directors and Audit Committee
Cameron Haworth 42 Member of the Board of Directors
James E. Nielson 70 Member of the Board of Directors and Audit Committee
James Shone 27 Member of the Board of Directors and Audit Committee
Graham K. Batcheler 57 Member of the Board of Directors

The members of Synergy's Board of Directors are elected by the holders
of Synergy's common stock. Cumulative voting for directors is not permitted. The
term of office of directors of Synergy ends at the next annual meeting of
Synergy's shareholders or when the successors are elected and qualified. The
annual meeting of shareholders is specified in Synergy's bylaws to be held
within six months of the end of each fiscal year and the last annual meeting was
held on June 15, 2001. The term of office of each officer of Synergy ends at the
next annual meeting of the Synergy's Board of Directors, expected to take place
immediately after the next annual meeting of shareholders, or when his or her
successor is elected and qualified. Except as otherwise indicated below, no
organization by which any officer or director previously has been employed is an
affiliate, parent, or subsidiary of Synergy.

Mr. Barry Coffey - Chairman, CEO and President

Mr. Coffey was elected to the position of CEO effective January 1, 2002
in addition to his position on the Board of Directors since January 2001. Mr.
Coffey is a senior human resources and operations executive with broad domestic
and international experience spanning more than 20 years. He has held several
senior management positions including RJR Nabisco (1984-1991), Sony Corporation
(1991-1995), and QED Consulting (1995-2001), a global management-consulting firm
of which he was a founder and managing partner. In addition, Mr. Coffey has
extensive experience with the operation of both start-up and growth stage
corporations. Mr. Coffey earned a B.A. degree and a M.A. degree from Scarritt
College in 1976 and 1977 and a Ph.D. (ABD) from Drew University in 1980.

Mr. Thomas E. Cooley - Chief Technology Officer and Director

Mr. Cooley has been Synergy's technology director since October 1997,
became a member of the Board of Directors on August 2, 2000 and was appointed
Chief Executive Officer from January 16, 2001 until December 31, 2001. Mr.
Cooley previously served as President of Kvaerner Membrane Systems, Inc. from
August 1994 through October 1997. Prior to that, from 1984 through August 1994,
Mr. Cooley was the General Manager - Marketing and Engineering for Grace
Membrane Systems, which was acquired by Kvaerner in August 1994. Mr. Cooley is a
registered professional engineer in the State of Texas and the Province of
Alberta, Canada. Mr. Cooley holds three U.S. patents and two Canadian patents
and has eight published papers. Mr. Cooley is one of the pioneers of the
development application of gas permeable membranes for natural gas processing.
Mr. Cooley earned a B.A. degree in Chemical Engineering from Rice University in
1963 and a B.S. degree in Chemical Engineering from Rice University in 1964.

Mr. Graham K. Batcheler - Director

Mr. Batcheler graduated from Loughborough University of Technology in
England with a Bachelor of Technology degree in 1974. He served for seven years
in the merchant marines. In 1981, he joined Texaco and held various engineering
and supervisory positions in Aberdeen, Scotland until 1983, when he was
appointed Assistant to the Chairman of Texaco Ltd. in London. In 1988, he was
named Assistant to the Senior Vice President of Texaco Canada Resources Ltd. In
1989, he was appointed Assistant General Manager of Texaco Europe located at
Texaco's Headquarters in Harrison, New York. In 1991, Mr. Batcheler was named
Director of Exploration and Producing of Texaco Europe. In 1993, he was named
President of Texaco Natural Gas and was based in Texaco's Houston headquarters.
He assumed the responsibility of President of Texaco Natural Gas International
in 1997. He was appointed to the position of President of Texaco Global Gas and
Power's International Marketing & Business Development group later in 1997.
Following a corporate reorganization in 1999, he established TESI to focus on
opportunities related to fuel cell energy systems, hydrocarbon to liquids
processing and alternate fuels.

Mr. Duane F. Baumert - Director and Audit Committee Member

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

Mr. Cameron Haworth - Director

Mr. Haworth who has been with Synergy since December 1997, obtained his
B.Sc. Petroleum Engineering in December 1987 from the University of Wyoming and
a Degree in Petroleum Technology from Southern Alberta Institute of Technology
in 1984. Mr. Haworth was previously employed by Schlumberger (formerly REDA
Services) as sales manager. Mr. Haworth has several years of experience in the
oil and gas industry supervising and coordinating the marketing, sales and field
services and order initiation for the Canadian market. Mr. Haworth has extensive
experience in preparing business plans and presentation material.

Mr. James E. Nielson - Director and Audit Committee Member

Mr. Nielson served on Synergy's Advisory Board from January 2000 until his
election to the Board of Directors in September 2000. Mr. Nielson has been a
member of the Audit Committee since March 16, 2001. With an extensive career as
an oil and gas executive, Mr. Nielson brings an understanding of the industry to
Synergy. Mr. Nielson was President and Chief Executive Officer of Husky Oil of
Calgary, Alberta, Canada, from 1973 to 1979, during which time Husky Oil
experienced tremendous growth, a four-fold increase in operating revenues and a
six-fold increase in profits. He also began the planning that led to the
development of Husky's heavy oil

upgrader at Lloydminster, Alberta. Upon his return to Wyoming in 1979, Mr.
Nielson formed JN Oil and Gas, a privately owned exploration and production
Company. After 12 years at the helm of JN Oil and Gas, he formed Nielson and
Associates. Mr. Nielson, currently serves as a director at the American
Petroleum Institute, the Shoshone First Bank of Cody, Wyoming, Y-Tex Corporation
of Cody, Wyoming and Ultra Petroleum Corp.

Mr. James Shone - Director and Audit Committee Member

Mr. Shone has been with Synergy since December 1997 and has been a member of the
Audit Committee since March 16, 2001. Mr. Shone is currently employed by the
Business Development Bank of Canada (BDC) in the finance department. Previously
employed with the Trust Company of the Bank of Montreal as a client service
officer, Mr. Shone understands the review and assessment of the financial
operations of corporate operations. Mr. Shone takes an active role in the
management of Synergy's financial operations and annual corporate expenditures.
Mr. Shone has knowledge of financial statement review and preparation, budgeting
and financial forecasting. Mr. Shone is a graduate of McGill University with a
bachelor's degree in finance in 1996.

BOARD RECOMMENDATION AND VOTE REQUIRED FOR APPROVAL:

THE AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF THE OUTSTANDING
SHARES OF SYNERGY ENTITLED TO VOTE IS REQUIRED TO ELECT EACH NOMINEE FOR
ELECTION AS DIRECTORS. UNLESS OTHERWISE DIRECTED, PROXIES WILL BE VOTED "FOR"
THE NOMINEES FOR DIRECTOR.

THE BOARD RECOMMENDS TO THE SHAREHOLDERS THAT THEY VOTE FOR THE
PROPOSAL TO APPROVE ALL OF THE NOMINEES FOR ELECTION AS DIRECTORS.

INFORMATION REGARDING ANY ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO
ELECTION OF DIRECTORS OR OTHER MATTERS

On January 1, 2002, we entered into an agreement with Barry Coffey to
serve as our Chief Executive Officer and President for a period of 3 years,
automatically renewable for successive 12-month periods thereafter unless a
party gives notice of its intention not to renew the agreement 60 days prior to
an expiration date. We have agreed to pay to Mr. Coffey a base salary equal to
$240,000 per year and to make him eligible for a bonus equal to up to 100% of
that amount based upon the achievement of certain milestones to be agreed upon
between Mr. Coffey and the Board of Directors. In addition, we granted Mr.
Coffey options under the 2002 Stock Option Plan to purchase up to 4,500,000
options at a price of $0.72 per share. An aggregate of 1,500,000 options vest to
Mr. Coffey in each of the three years of the employment agreement. We also have
agreed to furnish Mr. Coffey with payments to cover expenses for insurance not
to exceed $20,000 per annum and to reimburse him for all reasonable expenses
incurred by him in connection with maintaining his home office in New York City.
The employment agreement contains customary confidentiality and non-competition
clauses.

On May 2, 2002, we granted to Graham Batcheler options to purchase up
to 200,000 shares of our common stock at a price of $1.00 per share for a period
of ten years in connection with his agreement to stand for nomination and serve
as a director of Synergy, if elected. Mr. Batcheler shall be entitled to
exercise options to acquire 66,667 shares during the first year after the date
of the option agreement, options to acquire 66,667 shares during the second year
after the date of the option agreement, and options to acquire 66,666 shares
during the third year after the date of the option agreement.

INFORMATION REGARDING THE BOARD AND COMMITTEES THEREOF

Board of Directors Meetings.

The Board of Directors held nine formal directors meetings during 2001
(one of which was the annual meeting of directors). In addition, the Board took
twenty formal actions by unanimous written consent. The directors were, however,
in frequent touch with one another and with management by telephone. The Board
has two committees, the Audit Committee and the Governance and Compensation
Committee. Each director attended at least 75% of all Board meetings held.

Audit Committee.

The Audit Committee of the Board of Directors reviews and discusses
with the Company's auditors and management Synergy's audited financial
statements and whether the auditors' performance of non-audit related duties is
compatible with maintaining proper independence. Two of three members of the
Audit Committee, James E. Nielson and James Shone, do not have vested interests
in the Company either through financial, family or other material ties to
management, which would hamper or influence their ability to evaluate
objectively the propriety of management's accounting, internal control and
reporting practices. Although the third member of the Audit Committee, Duane
Baumert, indirectly received compensation of $138,674 in 2001 from the Company
for consulting services rendered through an entity he controls, which entity
will receive compensation in 2002, the Company's Board of Directors has
determined Mr. Baumert's appointment is necessary to comply with the
three-member Audit Committee requirement and is in the best interests of the
Company and its shareholders. The Company's Board of Directors determined that
Mr. Baumert would not be hampered or influenced in his ability to evaluate
objectively the propriety of management's accounting, internal control, and
reporting practices. The Audit Committee has adopted a written charter, a copy
of which has been filed within the last three years. The Audit Committee held
four meetings in 2001, and each of the Audit Committee members attended at least
75% of such meetings.

Set forth below is a copy of the Report of the Audit Committee to the
Board of Directors:

SYNERGY TECHNOLOGIES CORPORATION
AUDIT COMMITTEE REPORT
MARCH 28, 2002

This disclosure statement is being provided to inform our shareholders
of the Audit Committee's oversight with respect to the financial reporting of
Synergy Technologies Corporation ("Company"). The Board of Directors adopted a
written charter for the Audit Committee on March 16, 2001.

The Audit Committee of the Company's Board of Directors has thoroughly
reviewed and discussed the audited financial statements and the footnotes
thereto with the Company's management and independent auditors. Based on these
discussions, the Audit Committee believes the Company's financial statements are
fairly presented in conformity with Generally Accepted Accounting Principles
(GAAP) in all material respects. The Audit Committee has not been apprised of
any misstatements or omissions in the financial statements. In addition, the
Audit Committee discussed with the independent auditors the matters required to
be discussed by Statement of Auditing Standards No. 61, COMMUNICATION WITH AUDIT
COMMITTEES, that included the auditor's judgment as to the quality of the
Company's financial statements, any changes in accounting policy, and sensitive
accounting estimates.

The Audit Committee discussed with the Company's auditors, KPMG LLP,
the independence of such auditors from the Company and its management, and
received the written disclosures concerning the auditors' independence as
required by the Independence Standards Board Standard No. 1, INDEPENDENCE
DISCUSSIONS WITH AUDIT COMMITTEES, to be made by its auditors to the Company.
Two of three members of the Audit Committee, James E. Nielson and James Shone,
do not have vested interests in the Company either through financial, family or
other material ties to management, which would hamper or influence their ability
to evaluate objectively the propriety of management's accounting, internal
control and reporting practices. Although the third member of the Audit
Committee, Duane Baumert, indirectly received compensation of $138,674 in 2001
from the Company for consulting services rendered through an entity he controls,
which entity will receive compensation in 2002, the Company's Board of Directors
has determined Mr. Baumert's appointment is necessary to comply with the
three-member Audit Committee requirement and is in the best interests of the
Company and its shareholders. The Company's Board of Directors determined that
Mr. Baumert would not be hampered or influenced in his ability to evaluate
objectively the propriety of management's accounting, internal control, and
reporting practices.

In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended 31
December 2001 for filing with the Securities and Exchange Commission.

/s/ James E. Nielson /s/ Duane F. Baumert /s/ James Shone
-------------------- -------------------- ---------------
James E. Nielson Duane F. Baumert James Shone
Chairman, Audit Committee Audit Committee Audit Committee
Board of Directors Board of Directors Board of Directors

Compensation Committee.

During 2001, the Compensation Committee consisted of Messrs. Barry Coffey
(Chairman), Jim Nielson and Duane Baumert. The Compensation Committee reviews
and determines the compensation of the Company's executive officers and
recommends the granting of awards to eligible employees pursuant to the
Company's 2002 Stock Option Plan. During 2001, the Compensation Committee did
not meet at all. The Board made all decisions regarding the compensation of the
directors and executive officers during 2001 without input from that Committee.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers, and any other persons who own 10% or more of
our common stock, to file with the SEC initial reports of ownership and reports
of changes in ownership of our stock. Such persons are required by SEC
regulations to furnish us with copies of all Section 16(a) forms they file. To
our knowledge, based solely on review of the copies of such reports furnished to
us and written representations that no other reports were required during the
year ended on December 31, 2001, all such Section 16(a) filing requirements were
met.

EXECUTIVE OFFICERS

In addition to Messrs. Coffey and Cooley, the following individuals
currently serve as executive officers of Synergy:

Mr. Marc Cernovitch - Vice President, Corporate Development

Mr. Cernovitch has been actively involved in the management and financing of
Synergy since the Company's inception. Marc began his career as a broker in the
financial services industry. He has extensive experience in the financing of new
technology and energy companies. Marc manages investor relations, planning and
administration for Synergy. Mr. Cernovitch was awarded a bachelor of arts in
Economics from McGill University, Montreal, Canada.

Mr. Kelly Warrack - Controller, Secretary/Treasurer

Mr. Warrack has been Synergy's Controller since January 2000 and was appointed
Secretary-Treasurer on July 1, 2001. Mr. Warrack previously served as Divisional
Controller for Tesco Corporation from June 1995 through December 1999. Prior to
that, from 1988 through 1995, Mr. Warrack held positions as Accounting
Supervisor and Budget Coordinator for Texaco Canada Petroleum Inc. Mr. Warrack
became a Certified Management Accountant in the Province of Alberta, Canada in
1991.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Director Compensation.

Directors do not receive any compensation for serving in such capacity.
Directors are entitled to be reimbursed for expenses incurred in connection with
attending or participating in meetings of the board.

Executive Compensation.

The following table shows the compensation of the current Chief
Executive Officer, former Chief Executive Officer, and all other executive
officers who received compensation in excess of $100,000 during 2001 and 2000.

Summary Compensation Table.

Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Compensation Options Compensation

Cameron Haworth, 2000 $66,134 - -
President and Director
Director

John Gradek, Chief
Executive Officer and
Director 2000 $44,018 - - -

Thomas E. Cooley, Chief 2000 $140,000 (2) $10,673 250,000 $1,583
Technical Officer

Thomas E. Cooley, Chief 2001 $140,000 (2) $6,588 - $18,583
Technical Officer and
Chief Executive Officer

1. Mr. Haworth received options to purchase 250,000 shares of common stock
in exchange for his services as President and a member of the Board of
Directors for the years 1998 and 1999. Since the exercise price for
such options exceeded the market price for the shares during the time
that they were earned, no value has been ascribed to such options.

2. Represents that portion of compensation paid to Glidarc Technologies
Inc. for services rendered pursuant to a consulting agreement which was
received by Mr. Cooley. During 2001 and 2000, the Company paid to
Glidarc an aggregate of $196,210 and 146,919, respectively, for
services rendered. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS"
on page 38 for a complete discussion of the Company's arrangement with
Glidarc.

OPTION GRANTS IN THE LAST FISCAL YEAR

The following table provides information concerning grants of options
to purchase shares of our Common Stock made during the year ended December 31,
2001.

PLAN A PLAN B PLAN PLAN PLAN E
1998 1999 C 1999 D 2001
2000
------------- -------------- -------------- -------------- --------------

Total shares authorized under plan: 900,000 1,000,000 1,100,000 1,500,000 1,000,000
Options/awards granted:
Employees 250,000 340,000 - 131,573 30,907
Directors 400,000 425,000 400,000 36,315 106,674
Non-employees, consultants 250,000 200,000 - 1,316,175 232,563
Advisory Board members - - 500,000 - -
------------- -------------- -------------- -------------- --------------
Total options granted 900,000 965,000 900,000 1,484,063 370,144
Expired or cancelled (a) - 35,000 200,000 15,937 -
------------- -------------- -------------- -------------- --------------

Available for grant at December 31, 2001 - - - - 629,856
============= ============== ============== ============== ==============

OPTION AND WARRANT EXERCISES AND 2001 FISCAL YEAR-END OPTION VALUES

The following table provides information concerning the exercise of
stock options during the year ended December 31, 2001.

WEIGHTED AVERAGE
SHARES EXERCISE PRICE
---------------- -----------------

Balance at December 31, 1999 - -
Granted during year 3,035,000 1.10
Canceled during year (135,000) 2.03
Exercised during year (105,000) 1.00
---------------- ---------------

Outstanding at end of year, December 31, 2000 2,795,000 $ 1.05
---------------- ---------------
Granted during period 325,000 1.31
Cancelled during period (335,000) 1.10
Exercised during period (5,500) 1.00
---------------- ---------------

Outstanding at end of year, December 31, 2001 2,779,500 $ 1.08
================ ===============

Options exercisable at end of year 2,505,998 1.06
Weighted average fair value of options $ 0.63
Weighted remaining contractual life 5.57 years
Range of exercise prices $ 1.00 - 1.56

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On January 3, 2002, we entered into a settlement agreement with John
Gradek, our former Chief Executive Officer, which extinguished a lawsuit filed
by Mr. Gradek against us on February 27, 2001. In that suit, Mr. Gradek claimed
that Synergy breached its employment agreement with him by terminating him
without cause and asserted that Synergy owed him his monthly salary of $10,000
for 32 months plus paid vacation days and attorney fees of up to $80,000.
Pursuant to the settlement agreement, we agreed to (i) pay to Mr. Gradek the sum
of $100,000 in two installments of $50,000 each, the first on or before February
1, 2002 which sum was paid and the second by May 1, 2002, and (ii) issue to Mr.
Gradek 150,000 shares of common

stock. In addition, each party released the other from all actions or claims
with respect to Mr. Gradek's employment with Synergy.

During the fiscal years ended December 31, 2001 and 2000, we paid an
aggregate of $196,210 and $146,919, respectively, to Glidarc Technologies Inc.
for process management services and technical personnel. Mr. Thomas Cooley is an
officer of Glidarc Technologies and is also our Chief Technology Officer and a
member of our Board of Directors. Mr. Cooley also serves on the Board of
Directors of Syngen Technologies Limited and Carbon Resources Limited, wholly
owned subsidiaries of the Company. At December 31, 2001 and 2000, we owed
Glidarc $30,783 and $23,515, respectively, for services rendered.

On October 19, 2000, we issued a three-year promissory note in the
principal amount of $1,000,000 in favor of Stone Canyon Resources, Inc., a
former affiliate of Synergy by virtue of common officers, directors and
shareholders, in settlement of the terms of a certain Share Exchange Agreement,
previously filed with, and described in, past filings made by Synergy with the
Securities and Exchange Commission. We issued the promissory note to Stone
Canyon to settle what Stone Canyon alleged was a breach of the Share Exchange
Agreement resulting from our inability to develop certain oil and gas producing
properties. On February 9, 2001, Stone Canyon converted the promissory note into
shares of common stock at the price of $1.00 per share.

On July 1, 2001, Synergy entered into a Management and Consulting
Agreement with Huntingtown Associates LLC wholly owned by Mr. Duane Baumert, a
member of our Board of Directors. Pursuant to this agreement, Synergy engaged
Huntingtown Associates for a minimum of 40 days during 2001 and a minimum of 80
days up to a maximum of 120 days during 2002 to provide assistance with the
development of product licensing, business and patent strategies, business plan
development and certain other matters. The agreement provides that during 2001
we would compensate Huntingtown Associates at the rate of $1,500 per day payable
in stock options valued at 33% of the higher of $1 or the average market price
for our common stock during the month in which the services were rendered.
During 2002, we have agreed to compensate Huntingtown Associates at the rate of
$1,500 per day payable $350 in cash and the balance ($1,150) in stock options
valued at 33% of the higher of $1 or the average market price for our common
stock during the month in which the services were rendered. We have agreed to
register the common stock issued to Huntingtown Associates pursuant to the
agreement for public resale under the Securities Act of 1933. During the fiscal
year ended December 31, 2001, we incurred $138,674 consulting services and
reimbursement of actual expenses pursuant to the agreement in favor of
Huntingtown Associates LLC for, $25,631 of which remained outstanding at
December 31, 2001. Thus far during 2002, we have not incurred any charges for
consulting fees or expenses to Huntingtown Associates. Mr. Duane Baumert is the
sole proprietor of Huntingtown Associates. At March 31, 2001, we owed
Huntingtown Associates $25,631 in respect of the fees payable to him during
2001.

On January 14, 2000, James Nielson and the Wood River Trust entered
into a Financing and Security Agreement with Synergy whereby the parties loaned
Synergy $300,000, of which $125,000 is attributable to Mr. Nielson. The loan
accrued interest at the rate of 8% per annum and was convertible into shares of
Synergy's common stock at the rate of $0.50 per share. Upon

conversion of the loan, all accrued interest thereon would be forgiven. On June
13, 2000, the loan was converted and Mr. Nielson received 250,000 shares of
Synergy's common stock. Mr. Nielson became a member of Synergy's Board of
Directors on September 27, 2000.

COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

On May 17, 2002, there were 39,119,395 shares of our common stock
outstanding. The following table tells you, as of May 17, 2002, about:

o Each beneficial owner of more than 5% of our common stock;

o Beneficial ownership of shares of our common stock by each of
our current directors and officers; and beneficial ownership
of shares of our common stock by all of our directors and
officers as a group; and

o Beneficial ownership of shares of our common stock by all of
our directors and officers as a group.

For the purpose of this table, the beneficial ownership of a person
includes shares as to which that person has sole or shared voting or investment
power as well as shares that the person has the right to acquire within 60 days
(such as upon conversion of convertible securities or exercise of warrants or
options) as of May 17, 2002. For the purpose of calculating the ownership
percentages for each person listed, we have considered to be outstanding both
the total number shares actually outstanding on May 17, 2002 and the total
number of shares that various people then had the right to acquire within 60
days.

BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
Barry Coffey (1) 1,025,000 2.6%
Thomas Cooley (2) 1,093,159 2.8%
Duane F. Baumert(3) 501,158 1.3%
Marc Cernovitch(4) 1,701,622 4.3%
Cameron Haworth (5) 275,537 0.7%
James E. Nielson(6) 823,846 2.1%
James Shone(7) 124,400 0.3%
Kelly Warrack(8) 210,300 0.5%
Laxarco Holding Limited 14,793,510 37.8%

Officers and Directors as a group (8 persons) 5,755,022 13.4%

1. Mr. Coffey's total shareholdings are all options to purchase 1,025,000
shares.

2. Mr. Cooley's total shareholdings includes options to purchase 250,000
shares. Mr. Cooley is also a shareholder of Laxarco Holding Limited but
disclaims any investment control over or beneficiary interest in the
shares of Synergy owned by Laxarco Holding Limited, for purposes
hereof.

3. Mr. Baumert's total shareholdings include options to purchase 497,658
shares; his wife Dorothy T. Baumert, owns 3,500 shares in her
retirement plan.

4. Mr. Cernovitch's total shareholdings include options to purchase
235,000 shares. 247,936 shares owned directly; 549,600 shares owned by
CMJ Consulting Ltd. of which Mr. Cernovitch is the sole officer,
director and shareholder; warrants to purchase 669,086 shares
subscribed for by CMJ Consulting Ltd. but unissued as of the date
referenced above.

5. Mr. Haworth's total shareholdings include options to purchase 244,500
shares.

6. Mr. Nielson's total shareholdings include options to purchase 170,000
shares.

7. Mr. Shone's total shareholdings include options to purchase 100,000
shares.

8. Mr. Warrack's total shareholdings include options to purchase 170,000
shares.

ITEM OF BUSINESS NO. 2
SELECTION OF KPMG LLP
AS INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002

In addition to retaining KPMG LLP ("KPMG"), to audit its financial
statements for 2001, Synergy retained KPMG to provide various consulting
services in 2001, and expects to continue to do so in the future. The aggregate
fees billed for KPMG's professional services in 2001 for these various services
were:

AUDIT FEES: $43,225 for services rendered for the annual audit of the
Company's financial statements for 2001 and the reviews of the
quarterly financial statements for 2001 included in the Company's Forms
10-Q;

ALL OTHER FEES: $8,300 for tax services; and

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION. KPMG did not
provide any services related to financial information systems design
and implementation during 2001.

YOUR BOARD RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
KPMG LLP AS OUR INDEPENDENT ACCOUNTANTS FOR THE YEAR 2002. If the appointment is
not ratified, the Board will consider whether it should select other independent
accountants.

VOTE REQUIRED

RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT AUDITORS
FOR FISCAL YEAR 2002 REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE VOTES
CAST BY SHAREHOLDERS PRESENT AT THE MEETING IN PERSON OR BY PROXY. UNLESS
OTHERWISE DIRECTED, PROXIES WILL BE VOTED "FOR" APPROVAL OF THIS PROPOSAL.

DOCUMENTS INCORPORATED BY REFERENCE

This Proxy Statement incorporates by reference documents relating to
Synergy which are not included in these proxy materials. Documents relating to
Synergy (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference) are available to any person, including
any beneficial owner, to whom this Proxy Statement is delivered, on written or
oral request, without charge, from Synergy Technologies Corporation, 1689
Hawthorne Drive Conroe Texas, 77301-3284, Attention: Secretary, Telephone (403)
269-2274. In order to ensure timely delivery of the documents, any such request
should be made by June 18, 2002. Copies of documents so requested will be sent
by first class mail, postage paid within one business day of the receipt of such
request.

The following documents of Synergy are incorporated by reference
herein:

1. Annual report on Form 10-KSB, as amended, for the year ended
December 31, 2001 (copy enclosed);

2. Quarterly report on Form 10-Q for the three months ended March 31,
2002.

All documents filed by Synergy with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior
to the date of the Annual Meeting shall be deemed to be incorporated by
reference herein and shall be a part hereof from the date of filing of such
documents. Any statements contained in a document incorporated by reference
herein or contained in this Proxy Statement shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any other subsequently filed document which also is incorporated by
reference herein) modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed to constitute a part hereof except as
so modified or superseded.

ITEM OF BUSINESS NO. 3
OTHER BUSINESS

We do not know of any other item of business that may come before the
meeting, except a motion to adjourn. If at the meeting a sufficient number of
votes are not cast to adopt one or more of the items proposed for adoption, the
persons named in the accompanying form of proxy may vote to adjourn the meeting
to another specific date and time to permit continued solicitation of proxies.

REPORTS

A copy of our Annual Report on Form 10-KSB for the year ended December
31, 2001, AND THE form 10-QSB for the quarter ended March 31, 2002, each as
filed with the Securities and Exchange Commission, are being sent to you
together with this Notice of Annual Meeting and Proxy Statement.

AVAILABLE INFORMATION

The Company reports the information requirements of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, NW, Washington, DC
20549. Copies of such material can also be obtained from the Commission at
prescribed rates. Written requests for such material should be addressed to the
Public Reference Section, Securities and Exchange Commission, 450 Fifth Street,
NW, Washington, DC 20549. The Commission maintains a Web site that contains
reports, proxy statements and other information filed electronically by the
Company with the Commission which can be accessed over the internet at
http://www.sec.gov.

By order of the Board of Directors

/s/ Kelly Warrack
Kelly Warrack,
Corporate Secretary