Where Drake & SMN both got it wrong.Faillace (Drake) wanted SMN...

Where Drake & SMN both got it wrong.

Faillace (Drake) wanted SMN to raise no more than $10 million @ 62c or higher without any warrants or options attached or any additional share sales be $1.25 or over.

Drake had offered to underwrite the share issue or even sub-underwrite it in an effort to maintain their percentage ownership of SMN. They wanted $3 million to go to professional investors who operate on behalf of funds or institutions & no more than $7 million to be raised by means of a rights issue.

Drake wanted SMN to not take on any acquisition greater than $2 million.

SMN should not have agreed to all 8 points wanted by Faillace without amendment.

Drake wanted Andrew Roberto added to the board & if done they would drop their insistence of an E.G.M.

SMN should have insisted that options be attached to the rights issue because the rights price would be higher, the share price would not collapse if a lower rights price was offered & the options strike price should have been no more than $1 & rights issue would have been more attractive.

The removal of directors & the C.E.O. meant that there were plenty of shares that would be potentially sold on market.

SMN went ahead with the rights offer & did not have Drake as an underwriter. Big mistake. Drake did not take up shortfall of rights issue thus pissing off McLarty.

Limiting SMN to no more than a $2 million acquisition was too restrictive given the recent acquisition.

I am not sure if Bryant McLarty ever agreed in writing to Drake's 8 points.

It appears that there is conflict between Roberto & McLarty as the latter blocked further communication between them.

I understood McLarty's appointment to the board was only to be transitional, meaning he would step aside when board replacements were found.

If that was the case then McLarty should step down & be replaced by Roberto with Faillace probably dropping the insistence of an E.G.M.