BRN Discussion Ongoing

[Diogenese]

In light of the Company’s stance on this matter, my personal recommendation is (for what that's worth ).

Vote No to Resolution 8!

I don't see why Emmanuel Hernandez should get 8 million free shares (remembering that he would have had to have paid 1 million dollars of much needed funds, to the Company, to convert the original options).

Sure, he can have the 8 million shares, for 1 million dollars, which is still a steal and what he was originally entitled to.

I don't see why he should be gifted them.

It seems for all intents and purposes, that this was some kind of "buddy" deal.

A million dollars is still much needed funding for the Company, I'm invested in.

Hi DB,

Can't agree with you.

I don't see anything to support your suggestion that this is a buddy deal.

The options were part of MH's employment package. For reasons to which we are not privy, MH requested that the exercise period be allowed to remain as the original expiry period. The company entered into good faith negotiations with MH with a view to resolving this issue, but, again for reasons we do not know, the options lapsed before the negotiations were finalized.

As per your post, the explanatory memorandum explains the company's thinking on the matter:

The Company agreed to work with Mr Hernandez to
find an alternative to exercising the Options as this was considered to be in the best interest of
the Company and Shareholders. In so doing, the parties entered into discussions relating to
deferring the exercise of the Options. However, at the time of his resignation, it was
determined that the Company could not modify the terms of the Options without shareholder
approval or a waiver from ASX in relation to Listing Rule approval requirements for any such
modification. During the time required to investigate the proper method of modifying the
Options and negotiating the terms with Mr Hernandez, the Options ultimately lapsed. As this
occurred whilst Mr Hernandez was engaging with the Company on the process for exercise,
the Company considers it appropriate to award Mr Hernandez with the new RSUs.

Sections 200B and 200E of the Corporations Act prohibit the Company from giving a benefit
to a person who holds (or has held in the previous 3 years) a managerial or executive office
with the Company or its subsidiaries, if that benefit is given in connection with that person's
retirement from office and is in excess of that person's average annual base salary over the
relevant period, unless the benefit is approved by shareholders.

The issuance and subsequent vesting of the Restricted Stock Units will amount to the giving
of a termination benefit requiring shareholder approval in accordance with the Corporations
Act. Approval is therefore sought under sections 200B and 200E of the Corporations Act.
The Board does not consider that the issue of the Restricted Stock Units will materially
prejudice the Company or other Shareholders.

Brainchip also considers the issue of the New Rights to Mr Hernandez to be a necessary step
in the prevention of any potential claim by Mr Hernandez.

This does not read to me like a buddy deal. There was a process involving investigating the proper method of modifying the options and negotiating the terms with MH, and it was during this process that the options lapsed. This suggests that MH may have had a reasonable expectation that the matter was in the process of being resolved. Again, we do not know the specific factors which lead to the lapsing other than it appears the negotiations were ongoing at the time of lapse.

I'm not an equity lawyer, but the concept of basic fairness suggests to me that the loss of rights under these circumstances would be unfair.

Given the potential for litigation (assuming MH has an arguable case), which would be both expensive and distracting, I think the company has taken a prudent and fair course.

However, each SH is free to make their own decision on this matter and I won't presume to tell others how to vote.

 

[Quatrojos]

Yeah the innovations appear to tick a lot of Gen 1 boxes. We just need MB to say to BRN 'OK you can now tell everyone that your product is in our cars'

Que ASX price sensitive announcement

I think the hastily recorded quarterly SH's report was preparing us for an underwhelming quarterly. I'm not expecting any lumps...

 

[Xray1]

Quite likely that is what had been vetted by legal and the board and he is being careful.
I don't blame him.
Who needs a shitestorm a month out from the AGM?
Undoubtedly the board has taken advise on this matter and decided on what they consider to be the best course of action.
Regardless of the opinions of all the amateur Perry Mason's here, they are just trying to get on with their job of making us all filthy rich, rather than getting sidelined by some irrelevant waste of their time and Company resources.

Like I have previously stated ...... this issue of the 8 Million RSU to Manny is imo basically a non event .... given the situation, that the top say ~50 share holders hold the majority s/holding votes of the Co to pass this resolution. I'm fairly confident that Peter and Anil will support Manny's position fairly and in the best interests of the Co.

I'm also fairly confident in believing that if Peter and Anil weren't satisfied with Sean H current position and stewardship of the Co overall, that he would have been asked politely to leave.

 

[Dr E Brown]

The latest newsletter has some great confirmation.
Firstly, that TWO companies will be incorporating Akida into their products. That is two companies that will give us confirmed revenue. This follows on from Renesas taping out a chip ready for the year end. THREE confirmed revenue sources.

Arm are jointly presenting with us to demonstrate the power of Akida and Arm technologies when combined. Including in the area of vital signs prediction. Not bad for a tinpot company to share and demonstrate the power of Akido.

Then there are some nice little fluffy bits on blogs and industry podcasts and rocking up to events.
Yep, Sean and the team have done FA in the last 12 months, eh!

 

[DK6161]

I think the hastily recorded quarterly SH's report was preparing us for an underwhelming quarterly. I'm not expecting any lumps...

Bloody hope not. I am getting very frustrated now with the SP. And if you say it is s great time to accumulate, well I have been averaging down in the last 18 months and have no further intention to buy more

 

[JDelekto]

I received an e-mail reply from Tony Dawe regarding acquiring the voting materials before the AGM. I should point out two things: a) I am in the United States, and b) I purchased my shares of BrainChip stock from the OTC markets through Fidelity Investments.

He referred the e-mail to their share registry, who advised that because my shares were held in a custodial account by Fidelity Investments, they did not have visibility to the level of every beneficial holder and could not confirm my status as an individual shareholder to determine voting rights.

He also noted according to the registry, holders of OTC shares should receive a copy of the AGM documentation via the holding entity and recommended that I contact them (Fidelity Investments) for the documents I need.

I have sent an inquiry through the Fidelity site messaging system with the PDF of the most recent announcement about the AGM from the ASX. I typically find they take very long to reply through those channels, and I might have better luck posting something on their official Reddit.

Tony also noted that he was going to be on a call with Ken Scarince and will inquire about the DTC eligibility, he will share the information with me as soon as he has a response, and I will convey that to the forum.

 

[Dr E Brown]

I think the hastily recorded quarterly SH's report was preparing us for an underwhelming quarterly. I'm not expecting any lumps...

Why do you say it was hastily recorded. I see no evidence. Tony had already intimated that we were going to hear more from Sean a couple of weeks ago.
It is the start of a new chapter in SH communication. I suggest we take advantage. Based upon the structure of this one we could send in questions and suggestions to Tony, for Sean to answer in the next one.
Who knows we all might learn something rather than second guessing and getting all worked up about our Akido product range.

 

[Deleted member 118]

Must be the BrainChip bus



And if you can’t laugh at the current position the sp is in then what can you do.

 

[jtardif999]

Wow, that was difficult to get through for my little brain, didn't pick up any reference to Brainchip or AKIDA but plenty of AI stuff. Is AKIDA simply too good and other options are being used by potential customers because they are more fit for purpose? There was a time where posters here were saying that AKIDA is science fiction and customers would be crawling over each other to get hold of the revolutionary tech but this hasn't happened yet (Gen 2 might change this as it was supposedly developed to address customer requests?). It seems that a 3 year lead doesn't account for much if customers continue to opt for lesser but still sufficient alternatives. If Merc's new 'Hey Mercedes' that has just been released doesn't have AKIDA (why the hell wouldn't it?) then we are in trouble I think. Alternatively, if it is in the latest model cars I'd expect to see an uptick in revenue in the next 4C, unless BRN has decided to let these developers use the tech for free.

I'd like to hear more about the company who's board decided not to proceed with AKIDO (sic). Have they gone in a different direction now or will they rejuvenate negotiations with Brainchip? I still see this as a failure of our sales team to get a contract across the line, like many I suspect.

It appears as though we have the best racecar on the track, but the pit crew Is letting us down.

My musings only.

FACT: Renesas taped out a chip with Akida inside last December and are going into full production of this chip reportedly in the 4th quarter this year.

FACT: Mercedes used Akida in their EQXX voice assistant. Mercedes have stated that the EQXX is more than a concept, that they would be using much of the tech in their production EVs from 2024. Why wouldn’t that use include the voice assistant which they stated was 5 to 10 times better than anything in the market.

FACT: Ford and Valeo signed joint development agreements back in 2020 that were announced as price sensitive on the ASX. There has been no communication to say that anything regarding Ford and Valeo has changed since then.

FACT: Megachips licences of BRN IP for their customers amounted to 4 million dollars in 2022. We probably won’t ever know who/how many of these customers there were, but they were signed in the first half of 2022 - so they will be well into development by now.

 

[Dr E Brown]

FACT: Renesas taped out a chip with Akida inside last December and are going into full production of this chip reportedly in the 4th quarter this year.

FACT: Mercedes used Akida in their EQXX voice assistant. Mercedes have stated that the EQXX is more than a concept, that they would be using much of the tech in their production EVs from 2024. Why wouldn’t that use include the voice assistant which they stated was 5 to 10 times better than anything in the market.

FACT: Ford and Valeo signed joint development agreements back in 2020 that were announced as price sensitive on the ASX. There has been no communication to say that anything regarding Ford and Valeo has changed since then.

FACT: Megachips licences of BRN IP for their customers amounted to 4 million dollars in 2022. We probably won’t ever know who/how many of these customers there were, but they were signed in the first half of 2022 - so they will be well into development by now.

Megachips were involved in the backend design of Akida 2.0 - wonder why they would bother if nothing was happening in this area? Maybe our pit crew were so useless that the Megachips boys need to sort it! Or maybe, just maybe the two heads are better than one collaboration of partners for a successful project completion for customers was the aim of both pit crews.
Just spitballing here!

 

[Xray1]

I sent this email to Tony Dawe and received a quick reply, at 10:30pm! Which is a huge credit, to his work ethic.

Hi Tony, hope you are all doing well there
I've got a bit of a problem with the 8 million RSUs for MH.

The original options were 12.5 cents to exercise, why does he now get the RSUs which convert to full shares, for nothing?

The reasons given by the Company at the time, him not exercising, don't add up.

The Company has for a long time, stated that progress was more important than the share price (which I agree with) so why would it say, that him not exercising, benefitted shareholders, as the only reason I can think of, was the selling pressure of MH's tax selling (which we would still get now, but with a much pressured share price_________redacted_________________).

Sounds more like he simply didn't have a million on hand to convert at the time and him no longer being an employee, he would have had to convert straight away.

The Company's agreement, to keep his original expiry date, seems like just a favor to him, so why is the Company now open to legal repercussions, from not awarding him with the RSUs, at zero cost?

Were there some particular circumstances surrounding MH's departure, that make this a special case?

Sounds like the Company, agreeing to extend the expiry past him leaving, to the original date, has put the Company and its shareholders, at a disadvantage (no million dollars in funds).

How does this all work out, smells a bit off to me?

I think shareholders deserve a better explanation, than was given in the podcast.

His reply was

Thankyou for your email.

Please read the Explanatory Memorandum provided with the Notice of Meeting, released to the ASX last week.

You will find there a detailed description of the rationale for the resolution to award RSU’s to Mr Hernandez and the circumstances that gave rise to his options lapsing. I have nothing further to add to what’s provided in the Explanatory Memorandum.

Regards
Tony


The Explanatory Memorandum, which I had already read, is as follows..


RESOLUTION 8 - ISSUE OF 8,000,000 RESTRICTED STOCK UNITS TO
EMMANUEL HERNANDEZ
Background
As announced to ASX on 13 October 2022, the Company has entered into an agreement to
issue 8,000,000 Restricted Stock Units to Mr Emmanuel Hernandez, a previous Non-
Executive Director and Chair of the Company, following his resignation and the lapse of
options previously granted to him by the Company on 7 July 2017, subject to receipt of the
approval of Shareholders at this Annual General Meeting. The Restricted Stock Units are to
be issued in accordance with the terms of the Equity Incentive Plan the general terms of
which are contained at Appendix A, with the additional specific terms outlined below.
The Options granted to Mr Hernandez lapsed on 1 March 2022, following his resignation
from the Company.
Mr Hernandez expressed interest in reaching an agreement with the Company to avoid
exercising his Options at the same time and instead to continue holding the Options beyond
his resignation date up to expiration. The Company agreed to work with Mr Hernandez to
find an alternative to exercising the Options as this was considered to be in the best interest of
the Company and Shareholders. In so doing, the parties entered into discussions relating to
deferring the exercise of the Options. However, at the time of his resignation, it was
determined that the Company could not modify the terms of the Options without shareholder
approval or a waiver from ASX in relation to Listing Rule approval requirements for any such
modification. During the time required to investigate the proper method of modifying the
Options and negotiating the terms with Mr Hernandez, the Options ultimately lapsed. As this
occurred whilst Mr Hernandez was engaging with the Company on the process for exercise,
the Company considers it appropriate to award Mr Hernandez with the new RSUs.
Sections 200B and 200E of the Corporations Act prohibit the Company from giving a benefit
to a person who holds (or has held in the previous 3 years) a managerial or executive office
with the Company or its subsidiaries, if that benefit is given in connection with that person's
retirement from office and is in excess of that person's average annual base salary over the
relevant period, unless the benefit is approved by shareholders.
The issuance and subsequent vesting of the Restricted Stock Units will amount to the giving
of a termination benefit requiring shareholder approval in accordance with the Corporations
Act. Approval is therefore sought under sections 200B and 200E of the Corporations Act.
The Board does not consider that the issue of the Restricted Stock Units will materially
prejudice the Company or other Shareholders.
Brainchip also considers the issue of the New Rights to Mr Hernandez to be a necessary step
in the prevention of any potential claim by Mr Hernandez.
Specific terms of the Hernandez Restricted Stock Units
Grant Date: On or before the latest date specified by the ASX Listing Rules,
following receipt of all required shareholder approvals under the
ASX Listing Rules and Corporations Act.
Vesting of
RSUs
RSUs will vest and be automatically exercised on the last date of the
month in the month that the Grant Date occurs.
Value of
RSUs
The total value of the Restricted Stock Units cannot be ascertained at
the date of this Notice given the change of share price in market
listed shares from time to time.
The value will be equal to the market price of the Shares on the date
of vesting multiplied by the number of Restricted Stock Units
granted.
For example, if the Restricted Stock Units had been exercised on 22
March 2023 with a market price of $0.43, the Restricted Stock Units
would have had a value of $3,440,000 (being 8,000,000 multiplied by
$0.43).
Expiry Date: The date that is one business day after the last date of the month in
the month in which the Grant Date occurs.
Leavers: For the purposes of the Equity Incentive Plan, Mr Hernandez will be
regarded as an Eligible Participant and actively employed by the
Company until the date of exercise of the RSUs.
This Resolution seeks Shareholder approval for the issue of 8,000,000 Restricted Stock Units
under ASX Listing Rule 7.1 on such terms and conditions more particularly described below.
ASX Listing Rule 7.1 provides that a Company must not, subject to specified exceptions
under ASX Listing Rule 7.2, issue or agree to issue equity securities during any 12-month
period in excess of 15% of the number of Shares on issue at the commencement of that 12-
month period without Shareholder approval.
The effect of the resolution will be to allow the Company to issue the Restricted Stock Units,
the subject of this Resolution, no later than 3 months after the date of the meeting without
using the Company’s 15% annual placement capacity granted under ASX Listing rule 7.1. If
this Resolution is not approved by Shareholders, the Company will either not be able to issue
the Restricted Stock Units, the subject of this Resolution, in the event that Resolution 8 is not
passed by Shareholders, or will be required to issue the Restricted Stock Units, the subject of
this Resolution, by using a portion of the Company’s 15% placement capacity that will be
available if Resolution 8 is passed by Shareholders.
This Resolution is an ordinary resolution requiring it to be passed by a simple majority of
votes cast by the Shareholders entitled to vote on it.
In accordance with ASX Listing Rule 7.3 the following information is provided to
Shareholders:
(c) Number and Class of securities to be issued:
8,000,000 Restricted Stock Units
(d) Date on which securities will be issued:
The Restricted Stock Units will be issued within 3 business days of this Annual
General Meeting.
(e) Issue price of securities:
$nil.
(f) Allottees of the securities:
Mr Emmanuel Hernandez (or his nominee).
(g) Terms of securities:
On vesting of the Restricted Stock Units, the Shares, when issued, will rank
equally with all other Shares on issue at the time and have the same rights and
entitlements as the currently issued Shares.
Directors’ recommendation
The Directors unanimously recommend that Shareholders vote in favour of this Resolution.
The Chairman intends to exercise all available proxies in favour of this Resolution.
A voting exclusion statement for this Resolution is included in the Voting Exclusions.

Personally I'm not happy with that response and stance by the Company, on this matter.

I personally think, that there is a whole lot more to the story but can't be told for now by the Co for possible priviledged legal reasons ........ The Co imo/view seems wanting to avoid any potential legal claims/proceedings brought by Mr E H in the best interests of the Co .................. what would significantly worry me if I was the Co would be the issue of " what if Mr EH " was to legally claim that had he had received the 8million options that he potentially lost the opportunity to sell those shares at the top of the share market pricing being $2.34 /share ..( 8mill x $2.34 =
$18.7 Mill ) ...... now that imo would put a dent in our Co's current financial position and this current situation of granting him free shares would imo equate to a amicable and quick resolution of the matter.

 

[Quatrojos]

Why do you say it was hastily recorded. I see no evidence. Tony had already intimated that we were going to hear more from Sean a couple of weeks ago.
It is the start of a new chapter in SH communication. I suggest we take advantage. Based upon the structure of this one we could send in questions and suggestions to Tony, for Sean to answer in the next one.
Who knows we all might learn something rather than second guessing and getting all worked up about our Akido product range.

There was no prior mention of this podcast. Tony could've been intimating that we would hear more via Q or AGM. I think they did it to slow-boil us...

 

[Bravo]

Nice post.. 1. Breaking into Healthcare is like trying to turn the Titanic, it’s not often the best product available that wins out, but the cheapest. That’s where BRN should have a huge advantage.. The other factor is once you get a product in, it’s an exhaustive process for change..

So healthcare could be a real sweet spot for BRN once they break in. The paradox of it though is that it could be the most difficult sector to crack into..

Hi @Schnitzel lover, this is where our relationship with Teksun is going to come in handy IMO.

If you have a look at the video below, it describes "Teksun's Tejas Care device which "demonstrates how edge computing and machine vision capabilities can provide health monitoring via in-home cameras including temperature monitoring, heart rate monitoring, fall detection, intruder detection, stress monitoring and much more."

The following is an extract from our partnership announcement with Teksun.

"Teksun focuses on end-to-end IoT & AI product development and enables differentiated intelligent solutions, such as predictive and preventative maintenance in industrial applications, analytics and diagnostics for digital healthcare, automotive, and vision-based devices for security and surveillance, to name a few. The partnership between the two companies will demonstrate and proliferate BrainChip’s technology through Teksun product development channels."

So, I see it as being eminently feasible therefore that AKIDA will find it's way into Teksun's products, including this Teksun Tejas Care device for healthcare tech (amongst other things).

What is also very interesting IMO is all of the other connections that can be found here. For example, aside from being one of our partners, Teksun is also partnered with Renesas, Edge Impulse, MegaChips, Qualcomm and Quectel (to name a few).

The Teksun Tejas Care unit and SoMs use Quectel's SC600T module and Quectel's SC20 modules and it says "These solutions are using edge computing and machine intelligence to support a wide range of applications for Smart Cities, HealthCare Tech, Automotive, Industry 4.0, Home Automation, and Logistics".

Speaking of Quectel, in another "connection," last year Morse Micro struck a deal with IoT module maker Quectel Wireless Solutions to bring Wi-Fi HaLow solutions to market. And, Morse Micro received US$94M in funding in a Series B financing round led by Japan’s MegaChips and obviously we have an important relationship with with MegaChips.

What I thought was very interesting about the Teksun Tejas Care device is how incredibly versatile it is. It can be used in multiple industries like medical, mining, transport, education, smart city and home automation, smart door access, smart parking, surveying etc. It also has Wi-Fi & LTE
capabilities, which may mean in future it could have the potential to incorporate Wi-Fi HaLow in the device, which may be able to go through walls and around equipment.

IMO. DYOR.

BrainChip expands its Ecosystem with Teksun to Bring the Akida Processor to Next-Generation AIoT Devices.

Learn how BrainChip is expanding its ecosystem in collaboration with Teksun to bring the Akida processor to next-generation AIoT devices.

brainchip.com

 

[Quatrojos]

I personally think, that there is a whole lot more to the story but can't be told for now by the Co for possible priviledged legal reasons ........ The Co imo/view seems wanting to avoid any potential legal claims/proceedings brought by Mr E H in the best interests of the Co .................. what would significantly worry me if I was the Co would be the issue of " what if Mr EH " was to legally claim that had he had received the 8million options that he potentially lost the opportunity to sell those shares at the top of the share market pricing being $2.34 /share ..( 8mill x $2.34 =
$18.7 Mill ) ...... now that imo would put a dent in our Co's current financial position and this current situation of granting him free shares would imo equate to a amicable and quick resolution of the matter.

I agree there's more to the story but it's nobody's fault but EH's that he didn't get his house in order before retiring...

 

[Foxdog]

FACT: Renesas taped out a chip with Akida inside last December and are going into full production of this chip reportedly in the 4th quarter this year.

FACT: Mercedes used Akida in their EQXX voice assistant. Mercedes have stated that the EQXX is more than a concept, that they would be using much of the tech in their production EVs from 2024. Why wouldn’t that use include the voice assistant which they stated was 5 to 10 times better than anything in the market.

FACT: Ford and Valeo signed joint development agreements back in 2020 that were announced as price sensitive on the ASX. There has been no communication to say that anything regarding Ford and Valeo has changed since then.

FACT: Megachips licences of BRN IP for their customers amounted to 4 million dollars in 2022. We probably won’t ever know who/how many of these customers there were, but they were signed in the first half of 2022 - so they will be well into development by now.

Good points jt. I think of all of your examples we will see first revenue from the Merc engagement. I'm pinning some hope on Merc using AKIDA in the current release. This could show through on the soon to be released 4C. If not then royalties from early sales by the end of the year.

 

[Dr E Brown]

There was no prior mention of this podcast. Tony could've been intimating that we would hear more via Q or AGM. I think they did it to slow-boil us...

Well if this is the first in a new series of podcasts with the next one in June, it’s going to be a very slow boil. Best get out of the pot now eh!

 

[Dr E Brown]

Just a thought, but what if EH was quietly asked to retire by the board so the new Chairman could take over, and it wasn’t all that friendly.
I have nothing to back this up, but the smell of legal issues makes me ponder.

 

[Bravo]

Does this mean the conference will be spoken in the German language?

 

[Kachoo]

In my opinion it's pretty easy for the shorters to drive the price this low.

They basicly pumped it up got shorts in higher.

With negative campaigns they have managed to scare away any speculative buyers to invest as a result of the chaos they created on these forms.

Then kept pushing the price down with continued scare mongering false comments. Knowing the development process and macro economics are challenging.

With no new money comming in you just keep dropping the price.

I do believe they are losing time and ammo as this drop is pre release which will keep longs short tempered now edgy and likely to cave at points and sell not all but some with little pain to the shorter.

This drive obviously not supported by management but also not assisted with all the issues on ASX announcements has driven any new money till revenue kicks in.

All on my opinion.

This pre C4 drop may be their last punt IMO

All my speculation

But fear can do lots that people would not imagine.

 

[Cirat]

I sent this email to Tony Dawe and received a quick reply, at 10:30pm! Which is a huge credit, to his work ethic.

Hi Tony, hope you are all doing well there
I've got a bit of a problem with the 8 million RSUs for MH.

The original options were 12.5 cents to exercise, why does he now get the RSUs which convert to full shares, for nothing?

The reasons given by the Company at the time, him not exercising, don't add up.

The Company has for a long time, stated that progress was more important than the share price (which I agree with) so why would it say, that him not exercising, benefitted shareholders, as the only reason I can think of, was the selling pressure of MH's tax selling (which we would still get now, but with a much pressured share price_________redacted_________________).

Sounds more like he simply didn't have a million on hand to convert at the time and him no longer being an employee, he would have had to convert straight away.

The Company's agreement, to keep his original expiry date, seems like just a favor to him, so why is the Company now open to legal repercussions, from not awarding him with the RSUs, at zero cost?

Were there some particular circumstances surrounding MH's departure, that make this a special case?

Sounds like the Company, agreeing to extend the expiry past him leaving, to the original date, has put the Company and its shareholders, at a disadvantage (no million dollars in funds).

How does this all work out, smells a bit off to me?

I think shareholders deserve a better explanation, than was given in the podcast.

His reply was

Thankyou for your email.

Please read the Explanatory Memorandum provided with the Notice of Meeting, released to the ASX last week.

You will find there a detailed description of the rationale for the resolution to award RSU’s to Mr Hernandez and the circumstances that gave rise to his options lapsing. I have nothing further to add to what’s provided in the Explanatory Memorandum.

Regards
Tony


The Explanatory Memorandum, which I had already read, is as follows..


RESOLUTION 8 - ISSUE OF 8,000,000 RESTRICTED STOCK UNITS TO
EMMANUEL HERNANDEZ
Background
As announced to ASX on 13 October 2022, the Company has entered into an agreement to
issue 8,000,000 Restricted Stock Units to Mr Emmanuel Hernandez, a previous Non-
Executive Director and Chair of the Company, following his resignation and the lapse of
options previously granted to him by the Company on 7 July 2017, subject to receipt of the
approval of Shareholders at this Annual General Meeting. The Restricted Stock Units are to
be issued in accordance with the terms of the Equity Incentive Plan the general terms of
which are contained at Appendix A, with the additional specific terms outlined below.
The Options granted to Mr Hernandez lapsed on 1 March 2022, following his resignation
from the Company.
Mr Hernandez expressed interest in reaching an agreement with the Company to avoid
exercising his Options at the same time and instead to continue holding the Options beyond
his resignation date up to expiration. The Company agreed to work with Mr Hernandez to
find an alternative to exercising the Options as this was considered to be in the best interest of
the Company and Shareholders. In so doing, the parties entered into discussions relating to
deferring the exercise of the Options. However, at the time of his resignation, it was
determined that the Company could not modify the terms of the Options without shareholder
approval or a waiver from ASX in relation to Listing Rule approval requirements for any such
modification. During the time required to investigate the proper method of modifying the
Options and negotiating the terms with Mr Hernandez, the Options ultimately lapsed. As this
occurred whilst Mr Hernandez was engaging with the Company on the process for exercise,
the Company considers it appropriate to award Mr Hernandez with the new RSUs.
Sections 200B and 200E of the Corporations Act prohibit the Company from giving a benefit
to a person who holds (or has held in the previous 3 years) a managerial or executive office
with the Company or its subsidiaries, if that benefit is given in connection with that person's
retirement from office and is in excess of that person's average annual base salary over the
relevant period, unless the benefit is approved by shareholders.
The issuance and subsequent vesting of the Restricted Stock Units will amount to the giving
of a termination benefit requiring shareholder approval in accordance with the Corporations
Act. Approval is therefore sought under sections 200B and 200E of the Corporations Act.
The Board does not consider that the issue of the Restricted Stock Units will materially
prejudice the Company or other Shareholders.
Brainchip also considers the issue of the New Rights to Mr Hernandez to be a necessary step
in the prevention of any potential claim by Mr Hernandez.
Specific terms of the Hernandez Restricted Stock Units
Grant Date: On or before the latest date specified by the ASX Listing Rules,
following receipt of all required shareholder approvals under the
ASX Listing Rules and Corporations Act.
Vesting of
RSUs
RSUs will vest and be automatically exercised on the last date of the
month in the month that the Grant Date occurs.
Value of
RSUs
The total value of the Restricted Stock Units cannot be ascertained at
the date of this Notice given the change of share price in market
listed shares from time to time.
The value will be equal to the market price of the Shares on the date
of vesting multiplied by the number of Restricted Stock Units
granted.
For example, if the Restricted Stock Units had been exercised on 22
March 2023 with a market price of $0.43, the Restricted Stock Units
would have had a value of $3,440,000 (being 8,000,000 multiplied by
$0.43).
Expiry Date: The date that is one business day after the last date of the month in
the month in which the Grant Date occurs.
Leavers: For the purposes of the Equity Incentive Plan, Mr Hernandez will be
regarded as an Eligible Participant and actively employed by the
Company until the date of exercise of the RSUs.
This Resolution seeks Shareholder approval for the issue of 8,000,000 Restricted Stock Units
under ASX Listing Rule 7.1 on such terms and conditions more particularly described below.
ASX Listing Rule 7.1 provides that a Company must not, subject to specified exceptions
under ASX Listing Rule 7.2, issue or agree to issue equity securities during any 12-month
period in excess of 15% of the number of Shares on issue at the commencement of that 12-
month period without Shareholder approval.
The effect of the resolution will be to allow the Company to issue the Restricted Stock Units,
the subject of this Resolution, no later than 3 months after the date of the meeting without
using the Company’s 15% annual placement capacity granted under ASX Listing rule 7.1. If
this Resolution is not approved by Shareholders, the Company will either not be able to issue
the Restricted Stock Units, the subject of this Resolution, in the event that Resolution 8 is not
passed by Shareholders, or will be required to issue the Restricted Stock Units, the subject of
this Resolution, by using a portion of the Company’s 15% placement capacity that will be
available if Resolution 8 is passed by Shareholders.
This Resolution is an ordinary resolution requiring it to be passed by a simple majority of
votes cast by the Shareholders entitled to vote on it.
In accordance with ASX Listing Rule 7.3 the following information is provided to
Shareholders:
(c) Number and Class of securities to be issued:
8,000,000 Restricted Stock Units
(d) Date on which securities will be issued:
The Restricted Stock Units will be issued within 3 business days of this Annual
General Meeting.
(e) Issue price of securities:
$nil.
(f) Allottees of the securities:
Mr Emmanuel Hernandez (or his nominee).
(g) Terms of securities:
On vesting of the Restricted Stock Units, the Shares, when issued, will rank
equally with all other Shares on issue at the time and have the same rights and
entitlements as the currently issued Shares.
Directors’ recommendation
The Directors unanimously recommend that Shareholders vote in favour of this Resolution.
The Chairman intends to exercise all available proxies in favour of this Resolution.
A voting exclusion statement for this Resolution is included in the Voting Exclusions.

Personally I'm not happy with that response and stance by the Company, on this matter.

From the Notice of Annual General Meeting in regards to Mr Hernandez -
"Brainchip also considers the issue of the New Rights to Mr Hernandez to be a necessary step in the prevention of any potential claim by Mr Hernandez."
I personally do not agree with the free gift of 8,000,000 RSU to Mr Hernandez and am definitely not a supporter of Mr Hernandez, quite the opposite.
However, I will vote yes to the resolution in the prevention for any potential claim which I believe is the crux of the problem and why a resolution!
The deck will be cleaned and we are moving forward with a much better Brainchip Team.

This is not financial advice, DYOR