Synodon Inc SYXXF

RE:RE:Rights offering

[nostril]

I think PVE is a smart investor who would know when to cut his losses. Yet he plans to subcribe to the rights issue and "possibly exercise his additional subscription privilege".

This is a lot of speculation, but I my view is:

• Syd was operating at capacity with one machine and so reached the point where signing any substantial additional contracts was/is difficult. The former CEO should have been much more open about the need for new financing and the contraints the company was facing with just one machine.
   
• If they get all the money from the rights issue they will have substantial additional capacity on the way giving potential clients comfort that syd can deliever on any contracts that are signed. I think the money will itself be the catalyst for new contracts.
   
• The rights issue prospectus is quite negative in tone. Plus there has been little or no marketing by the company to pursuade shareholders to subscribe. Why is this? Well this really is heavy speculation, but I think that maybe PVE would rather shareholders don't take up their rights, such that he can mop up the shares with his additional subscription privilege. If this is right, and the company gets all of the money mainly from PVE, then we could expect the news flow to change significantly after the rights issue is complete.
   
• A big area of doubt for me is the risk that PVE may take a lot of the outstanding shares through the rights issue (in theory up to 60% is possible) and then force the company to go private, with small shareholders, like myself, being forced to accept an offer that is way below its fair value. I don't know if he would really do this, but in any case I hope that enough shareholders subcribe to keep his ownership below the 50% mark.

For what its worth, I plan to take up my basic subscription rights and probably also take up some of the additional rights. If they get all the money, I think this will mark the low point for the stock.

N.