The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: the CRG Loan had critical undisclosed terms and conditions that prevented the Company from accessing funds "when needed," and that all but assured that Synergy would be required to conduct a dilutive secondary equity offering or offerings to fund its operations through 2019 and achieve its business objectives and secure the second $100 million tranche of the CRG Loan.

On November 9, 2017, after market hours, Synergy filed with the SEC its Quarterly Report on Form 10-Q for the third quarter ending September 30, 2017 and attached as an exhibit the underlying CRG Loan. The Form 10-Q reported that net cash used in operating activities over the entire nine month period was slightly over $180 million, double the amount expended for the same period in the prior year.

On November 10, 2017, the very next day, Synergy's share price plunged to as low as $2.68, closing at $2.72 per share.

On November 13, 2017, Synergy filed with the SEC an automatic shelf registration statement on Form S-3 (the "Registration Statement") allowing future offerings of securities to the public from time to time (pursuant to Rule 415 of the SEC's General Rules and Regulations), as needed and authorized by the Board of Directors over the ensuing three years, including shares of common stock, preferred stock, debt, warrants and units.

On the very next day, November 14, 2017, the end of the Class Period, the Company filed a takedown prospectus supplement to the prior day's shelf registration, disclosing completion of a secondary offering of approximately 22 million Synergy shares at $2.58 per share, with warrants to purchase another 22 million shares in the future at $2.86 per share, for gross proceeds of approximately $56 million and net proceeds of $52.4 million, after deducting underwriting discounts and commissions and estimated offering expenses. The effect of this secondary offering was to increase the Company's outstanding stock and thereby dilute the prior stockholders' equity interests by approximately 10%, resulting in an immediate 10% drop in the Company's stock price, which fell below $2.50 per share.

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SOURCE: Pomerantz LLP