BRN Ann: Proposed Issue of Restricted Stock Units - 14th Oct 2022, 10:02am

[SERA2g]

Stories are possibly for a later time! And, you can't continue to hide behind NDA's! Just my view.

They can come out more frequently and address the real concerns that shareholders who aren't insiders have. Sean has been in the chair now for some time and all we get is an odd interview which if I am correct was around the time of the AGM in May and a quarterly report that is lacking in detail.

What measueables do we have to see what his performance is like?

They are clearly not thinking from the point of view of the investor. Whether that be past, current of future for that matter.

Why can't we get a presentation that positions the company in a good light that draws attention to the company from retail and Institutional Investors alike?

Mate, before today you had posted 3 times total on these forums and your most recent post was April 2022.

You've now posted 4 times today and are adding no value other than jumping at shadows and instilling fear. Have a spell.

 

[Terroni2105]

Hi mate

I've taken this the same way as you.

In almost all cases an Employee Share Plan will have provisions that lapse options upon termination of employment. In this case, termination doesn't mean 'fired'. It is simply the ending of an employment agreement between an employee and employer.

Any half decent ESOP will have provisions for 'Good' leavers and 'Bad' leavers.

It seems to me that Hernandez has requested in good faith to allow for his options to not be exercised or lapsed. This sort of request would generally only be possible under 'Good' leaver provisions. The alternative to 'carrying over' the options would be:

a) Simply allowing the options to lapse - Use-it-or-lose-it type situation so Hernandez would lose the options completely. Given the options would be WELL in the money and the subsequent shares valued at circa $7.2M, this is simply out of the question.

b) exercising all 8,000,000 options - This would create a taxing point and would very likely be taxed-upfront under the ESS provisions. The 'discount' that Hernandez would receive when you compare the exercise price he'd pay to exercise the options to the current market value of those shares ($7.2M as above) would result in a significant tax liability. It'll make your eyes water reading about the taxed-upfront scheme but if you're interested I've linked the ATO page. The subsequent issue with option B is that Hernandez receives the shares but he will also receive a significant tax liability ($7.2M @ 49c, you do the maths) which he then needs to front up the cash to pay.

This would then likely force Hernandez to sell a huge portion of the 8M shares to cover the tax liability.

So, as above, option A is out of the question and option B results in millions of tax payable and the subsequent sale of a large portion of shares which I would hazard a guess Hernandez thinks will be worth significantly more than $7.2M in a few years and so he wouldn't want to sell those shares for 90cents to cover tax.

This then leaves us in the current position where Brainchip have agreed to allow those options to be carried over. They've then later discovered that they were unable to have done so under the ASX listing rules and so the alternative agreement they've made with Hernandez is to cancel the options and then issue new options to him. This is Brainchip showing good faith and meeting what would have been a 'Gentleman's' agreement before having realised they were unable to meet the agreement they'd made.

Whilst there is a foot note that indicates that the new share issue prevents a potential law suit from occurring, I don't think this means Hernandez has made threats - I believe this is simply an additional note given there has been an 'offer' and 'acceptance' between the two parties and so there is a potentially legally enforceable contract between the two parties which would mean Hernandez would possibly have the ability to make a claim if Brainchip now, due to unintended circumstances, allowed the options to lapse and refused to issue new options.

I'm sure @Fact Finder could expand on this further if he felt the need to do so.

This is two parties working in good faith to meet an agreement they'd previously arranged which was unintentionally not met.

Nothing to see here other than Brainchip management showing they're upstanding and honest operators.

True that, well written. I agree with @spacecadet too, when management make an agreement they should follow through with it and that is all that is happening here

 

[TasTroy77]

and these directors, chairman, CEO and other KMPs don't even think about buying on market because they get millions of dirt cheap options.
Buying on market would show their confidence in the company, not wanting to keep the options after leaving.
Why should the company amend the original conditions to suit his requirements? This is BS!

They are most likely not allowed to buy on market due to black out periods and the knowledge that the board has regarding the customers under NDA agreements would amount to insider knowledge trading.

 

[Deleted member 1270]

Nah. The fluff pieces that you're talking about very soon look stale and fake-hype and just backfire.

On the positive side - We get to see the revenue at the quarterlies. We also get to see the outgoings. Nothing about this company looks like it's hyping their prospects or wasting money. Each of the arrangements we have with our EAP customers would be highly individualized - comparing possible future revenue against the cost of helping them to market. There is simply no possibility of making an announcement to the ASX that is as open and flexible that would satisfy both investors and clients and the ASX rules. It would be a disaster.

If you like, the real culprits are us retail investors. We know if it jumps and we're not ready we'll miss out. So we load up and hope.

All we can say is that the company has everything under control and you should take comfort in that, and know that we are all in the same boat.

You're easily pleased Iseki. I'm not asking for much really. Just some clarity and more regular communication. We are in launch mode and we get radio silence. Can't help it if you find this form of comms acceptable. I for one don't.

 

[Deleted member 1270]

Mate, before today you had posted 3 times total on these forums and your most recent post was April 2022.

You've now posted 4 times today and are adding no value other than jumping at shadows and instilling fear. Have a spell.

Naughty me. I should post more to gain some respect!

I'm not shadow jumping either. There is a lack of investor focus from the company other than podcasts and interviews with companies that have agreed to resell Akida. Go take a look and tell me I am wrong? If that's shadow jumping in your opinion well thats just fine. We'll have to agree to disagree.

As for taking a spell, I'll decide if I do that or not. You won't.

 

[Iseki]

You're easily pleased Iseki. I'm not asking for much really. Just some clarity and more regular communication. We are in launch mode and we get radio silence. Can't help it if you find this form of comms acceptable. I for one don't.

No way. I've had posts on other companies taken down. I know what you're saying, but I do love this companies consistency, and that means a lot to me. WYSIWYG rules!

 

[Slade]

Voices of reason on this matter have come from @SERA2g and @Fact Finder

 

[buena suerte :-)]

Hi mate

I've taken this the same way as you.

In almost all cases an Employee Share Plan will have provisions that lapse options upon termination of employment. In this case, termination doesn't mean 'fired'. It is simply the ending of an employment agreement between an employee and employer.

Any half decent ESOP will have provisions for 'Good' leavers and 'Bad' leavers.

It seems to me that Hernandez has requested in good faith to allow for his options to not be exercised or lapsed. This sort of request would generally only be possible under 'Good' leaver provisions. The alternative to 'carrying over' the options would be:

a) Simply allowing the options to lapse - Use-it-or-lose-it type situation so Hernandez would lose the options completely. Given the options would be WELL in the money and the subsequent shares valued at circa $7.2M, this is simply out of the question.

b) exercising all 8,000,000 options - This would create a taxing point and would very likely be taxed-upfront under the ESS provisions. The 'discount' that Hernandez would receive when you compare the exercise price he'd pay to exercise the options to the current market value of those shares ($7.2M as above) would result in a significant tax liability. It'll make your eyes water reading about the taxed-upfront scheme but if you're interested I've linked the ATO page. The subsequent issue with option B is that Hernandez receives the shares but he will also receive a significant tax liability ($7.2M @ 49c, you do the maths) which he then needs to front up the cash to pay.

This would then likely force Hernandez to sell a huge portion of the 8M shares to cover the tax liability.

So, as above, option A is out of the question and option B results in millions of tax payable and the subsequent sale of a large portion of shares which I would hazard a guess Hernandez thinks will be worth significantly more than $7.2M in a few years and so he wouldn't want to sell those shares for 90cents to cover tax.

This then leaves us in the current position where Brainchip have agreed to allow those options to be carried over. They've then later discovered that they were unable to have done so under the ASX listing rules and so the alternative agreement they've made with Hernandez is to cancel the options and then issue new options to him. This is Brainchip showing good faith and meeting what would have been a 'Gentleman's' agreement before having realised they were unable to meet the agreement they'd made.

Whilst there is a foot note that indicates that the new share issue prevents a potential law suit from occurring, I don't think this means Hernandez has made threats - I believe this is simply an additional note given there has been an 'offer' and 'acceptance' between the two parties and so there is a potentially legally enforceable contract between the two parties which would mean Hernandez would possibly have the ability to make a claim if Brainchip now, due to unintended circumstances, allowed the options to lapse and refused to issue new options.

I'm sure @Fact Finder could expand on this further if he felt the need to do so.

This is two parties working in good faith to meet an agreement they'd previously arranged which was unintentionally not met.

Nothing to see here other than Brainchip management showing they're upstanding and honest operators.

Awesome ...... comprehensively covered ..cheers @SERA2g

 

[dippY22]

This is my opinion but here goes. We are a company trying to go from start up to the big time against some of the biggest companies on the planet. I think we have the goods to achieve this but you don't just need a good product you need good people or you will go nowhere fast. Due to our very limited revenue we must entice good talented people in other ways because we cannot compete with these big behemoths on wages. Therefore we need to have good incentive plans and align the interest of our people with shareholders. IMO we are just paying wages they would get elseware with incentives and that keeps good people to grow us to where we as shareholders want to be. It always looks bad from the outside but we need these employees and if we were to pay them competing wages instead of using incentives we would be a hell of a lot more diluted than just giving some options or performance rights. If we made an agreement make good on it.

SC

In light of some of the previous posting I see this as a superior post, SC. And in my opinion,... your opinion is spot on.

You are absolutely correct that we cannot compete with big behemouths on wages. To have the array of talent we have in southern Cal. is amazing and at their published salaries, a steal to boot given the cost of living there.

As annoying as seeing options fly out the door at a fledgling startup is, .... it is a fact of life that this is exactly how small fish stay alive to compete in time with the big fish. Regards, dippY

 

[Deadpool]

I can't add anything of real value to the conversation, but respect and admiration come to mind when I think of what the board must think of Mr Hernandez to offer this very generous compromise on his retirement.

A couple of very relevant quotes from some very relevant intellectuals

"Commitment is what transforms a promise into a reality.” — Abraham Lincoln

"Leadership is a two-way street, loyalty up and loyalty down." — Grace Murray Hopper

It's great to be a shareholder in such a wonderful company