The guest of honouris still asleep so I thought I would finish this and post it now.
The first words ofthe reply to my three questions from Ken Scarince are as follows and providepermission for me to post his answers here on Hot Copper:
“I’ll forward theseon to a board representative, but I can address a few right now and youcan pass on as you see fit. There is nothing new or confidential below.”
So that Ken’sanswers make sense I have cut and pasted in my questions and I have included mycomment following each answer:
QUESTION ONE:
1. Resolution 7 recites that 278,162,500shares have been issued since 2018 under the employee incentive scheme which isroughly 93 million shares for each of the three years. Quite clearly thecompany has been kicking goals during this period on the back of the very hardwork of a much reduced workforce and no issue could be taken with thisnumber of bonus shares being given to the correct employees.
2. Resolution 7 also recites that if 150 millionshares is not approved this will mean that the company only has the 15%capacity guaranteed without needing to come back to shareholders. 15% of1,629,737,144 shares on issue is approximately 245 million shares.
3. Therefore if the 150 million additionalshares are approved this will bring the total to 395 million shares availableto be allocated to the employee incentive scheme without coming back toshareholders over the next 12 months.
4. It is obvious 395 million shares is 300million more shares than has been required in each of the preceding three yearswhile enormous technological advances and the first commercial sale havebeen made and employees were being appropriately rewarded from this 93million shares each year.
5. Therefore can the Board provide clarity as towhy the 300 million additional shares will be required in the next 12 months.
ANSWERONE
The company prefersnot to use any of its 15% (Listing Rule 7.1) capacityfor the employee share plan rather the intent is to set aside a shareholderapproved amount based on our best estimate of the plan needs over thenext three years. Although the option to tap the 7.1 Capacityis and always has been there for the company, we very much prefer to leave the15% capacity for its intended use of raising capital and seeking shareholderapproval for what we allocate to the plan. I don’t believe we have ever usedour 7.1 capacity for The Plan but I’ll verify that for you (at least not sinceI’ve joined).
Lastly on questionone, to assist in understanding the quantity, have a look at the RemunerationReport in the annual report. You will see that we have a former employee withsignificant option holdings, the vast majority of which unfortunately expire inthe latter half of this year. The plan trust does not have enough shares in itto accommodate that level of activity so the company will need to replenish it.This specific employee combined with our three year hiring plan get us to thatamount. Please let me know if you need more information on this one.
MY COMMENT:
I double checkedthe Annual Report and the former employee is the former CEO who hasapproximately 57 million options which clearly from the above he intends toexercise and from memory others here calculated he would need to pay about $US9million to Brainchip.
Thus of the 150 millionoptions we shareholders are being asked to approve to cover current and futureemployee incentives this will leave about 93 million. About 12 months ago thecompany had 34 employees and it has grown this number to 45 according to themost recent document I read and they are still employing.They are employing top quality engineers etc as well as a new high flying semiconductor CEO so it seems entirely reasonable number to be requesting and I will now be voting yes.QUESTION TWO
In the most recentpresentation by Mr. Anil Mankar he alluded to there being 10 plus customers forthe IP and chip. The company has for some time had Mr. Rob Telsonperforming the role of Vice President World Wide Sales. In view of thedisclosure by Anil Mankar and the time Mr. Rob Telson has been in his role,when will the Board of Directors be in a position to provide projections as tomarket penetration and the financial growth of the company?
ANSWER TWO
I’ll get togetherwith the management team and come up with an answer to question two. My onlycomment on this is that the testing process takes a long time, longer than whatI even anticipated. I’ll gather with the team here and see if we can providesome very general updates to the market but as you know, since thesecustomers view Akida as a critical and strategic differentiator, we absolutelycannot speak in specifics. It would be the fastest way to lose these customersand some have made it abundantly clear in no uncertain terms what would happen.So as much as we want to update the market, we must walk a very fine line. Letme see what the team is comfortable reporting.
MY COMMENT
I will post anyadditional information I receive and have highlighted the part of this answer Iconsider should be considered significant.I have also included the following links which I suggest you read to get the colour of what is required in this industry when working with the ‘big boys’ and have to play by their rules:
https://www.theverge.com/2019/5/3/18528865/tesla-internal-email-leaked-memo-fire-sue-felony-employees-trade-secrets
https://9to5mac.com/2021/01/14/apple-secrecy-apple-car-hyundai/
https://9to5mac.com/2021/03/24/apple-supply-chain-leaks-employees/
https://www.cnbc.com/2021/01/14/apple-insistence-on-secrecy-bites-hyundai.html
QUESTION THREE
The Board ofDirectors has announced the departure of the former CEO, and the interimappointment of Mr. Peter van der Made to fill this role pending the appointmentof a new CEO. Would the Board of Directors provide some clarity as to howthe search for a new CEO is progressing, and whether it has engaged an outsideagency to assist. Will the Board of Directors give an assurance toshareholders that it is committed to the process of finding a new CEO giventhat it previously stated that it was engaging in a search for a new managingdirector but without explanation abandoned that search?
ANSWER THREE
On Question three,the search is underway and I know that we have spoken to several candidates butas this is purely a board level initiative (for now) so unfortunately I cannotprovide more details. However I will forward your question to the board andhave them address this at the AGM. What I can say is that the company iscontinuing to execute and there has been no disruption with our progress asPeter has done an excellent job in that role. In addition, LD has been veryavailable to us and we speak with him frequently. But we do understand the needto have Peter focused solely on R&D so your question is a fair one and Iwill be sure to pass it along.
MY COMMENT
There is only onePeter van der Made and for me his brilliance is best utilised in drivingBrainchip towards the creation of true Artificial General Intelligence.They have already spoken to several potential CEO’s but I bet if they advertised for another Peter van der Made they would be waiting a very long time.Since Peter van der Made has been freed up to concentrate solely on the technology side of things this company has achieved what others simply cannot get close too despite billions upon billions of dollars and thousands of staff.I will personally be very keen to have the Board of Directors give the assurance that they are dedicated to the task of finding a replacement CEO.
By the way it does seem that the former CEO is still involved and performing for the company.
My opinion onlyDYOR
FF.
AKIDA Ballista
(20min delay)