There is an old saying that goes something like ‘history...

There is an old saying that goes something like ‘history teaches us that we learn nothing from history.’

In the present debate about the merits of Board Members it is clear that many have not learnt a thing from the history of this Company. Below are two announcements made by this Company. The first announced an agreement with a prominent Tier-1 automotive manufacturer which is still ongoing did not name the Tier-1 automotive manufacturer. The ASX however forced the Company to provide the name of this company and the following day in a further announcement it revealed that it was Ford Motor Company:

Aliso Viejo, California – 24, May 2020 –BrainChip Holdings Ltd (ASX: BRN), a leading provider of ultra-low power highperformance AI technology announced the signing of a joint agreement forevaluation of the Akida neural network System-on-Chip (SoC) for Advanced DriverAssistance Systems (ADAS) and Autonomous Vehicle (AV) applications with aprominent Tier-1 automotive manufacturer. BrainChip is manufacturing anadvanced neural networking processor that brings artificial intelligence to theedge in a way that exceeds the capabilities of other neural network devices.This innovative, event-based, neural network processor is inspired by theevent-based nature of the human brain. The resulting technology is highperformance, small, ultra-low power and enables a wide array of edgecapabilities including inference and incremental learning. In ADAS and AVapplications, real-time processing of imaging and other sensor data is criticalfor the safety, reliability and performance of many systems. The partner inthis collaboration has recognized that due to the advanced and highly efficientneuromorphic nature of the Akida NSoC, it provides a wide range of potentialsolutions to difficult problems such as driver behavior analyses and real timeobject detection. The unique combination of extreme low power, high performanceand on-chip learning allows for real time processing at the sensor combinedwith continuous learning. The objective is to enable personalization of eachdriver’s experience in real time and continuous updates to the system asenvironmental conditions change. “Our neural network technology enablesultra-low power AI technology to be implemented effectively in a wide range ofedge applications such as ADAS and AV,” said Louis DiNardo, CEO of BrainChip.“Automotive applications have size and power consumption constraints thatrequire a high degree of integration in integrated circuit and sensorsolutions. We are excited to work with our partner who has world classengineering and is an innovation leader in the automotive field, where ourjoint efforts can yield some exciting applications, use-cases and potentiallygame-changing experience for drivers.” This announcement is authorised forrelease by the BRN Board of Directors.

Aliso Viejo, California – 25 May 2020 –BrainChip Holdings Ltd (ASX: BRN), a leading provider of ultra-low power highperformance AI technology yesterday announced the signing of a joint agreementfor evaluation of the Akida neural network System-on-Chip (SoC) for AdvancedDriver Assistance Systems (ADAS) and Autonomous Vehicle (AV) applications witha prominent Tier-1 automotive manufacturer. BRN provides the followingadditional information in relation to this evaluation agreement. The evaluationagreement, which was binding on execution, has been entered into with The FordMotor Company and is not the subject of a fixed term. The agreement is basedupon a collaboration to evaluate Akida as it pertains to the automotiveindustry with payments under the agreement intended to cover associated expensesand received periodically during the evaluation process. The engagement isconsidered by BRN to be a significant in the ongoing development of the Akidaproduct. This announcement is authorised for release by the BRN Board ofDirectors.

This naming of Ford Motor Company was clearly embarrassing for Brainchip and might well have led to an end to the relationship but luckily it survived. This is not the only example if you are interested as a similar issue arose with the announcement regarding MegaChips. I will not reproduce the announcements but briefly the first while naming MegaChips did not detail the amount Brainchip was to be paid for the IP licence. The ASX once again intervened and a further announcement had to be made revealing what Brainchip had charged and was to receive. Once again being forced to reveal pricing is embarrassing for Brainchip and restricts what it can charge other customers as they have been given insider information on this subject by the ASX.

Taking these lessons from history I would suggest thefollowing hypothetical:

1. Non Executive Director uses industry contacts to secure a contract/agreement with a prominent Tier 1 company. The agreement similarly to the one entered with Ford Motor Company prescribes strong non disclosure conditions regarding the company’s name and contract/agreement terms.

2. The CEO of Brainchip in response to demands from shareholders to reveal exactly what this Non Executive Director has done which justified the salary and bonuses paid to said Non Executive Director states that they were responsible for using their industry contacts to secure a contract/agreement with a prominent Tier 1 company.

3. This information so pleases the shareholders that the price of its shares goes up and the ASX makes enquiries and informs itself of what the CEO has publicly stated and issues a direction to the CEO to reveal the name of this Tier-1 and the terms of the agreement.

4. The Board of Brainchip complies with the direction and reveals the requested information.

5. The prominent Tier-1 becomes aware of this breach and unlike Ford Motor Company rescinds the agreement and claims loss and damages from Brainchip.

No one here knows what is happening behind the scenes at Board level but it is clear that not knowing does not evidence failure by any individual Non Executive Director and that past history teaches that sound reasons exist to believe that details of specific achievements are unlikely to be made known to shareholders.

One thing I do know is that in Western Australia Brainchip has been awarded grants by the West Australian Government and that those grants do not happen by chance. Applications need to be made and much lobbying at high levels goes on. So unless you believe the preparation of the applications and the lobbying was done by a junior member of staff in Western Australia then the prime suspects would be the Non Executive Directors based in Western Australia and or Mr. Tony Dawe though his role as Investor Relations Manager but given his role he is less likely to be the prime mover.

As for Peter van der Made he is likely still the number one shareholder and founder of the company. He finalised the AKIDA 2.0 in 2023 and was instrumental in the signing of the deal with EDGX last year and photos of his achievement were posted here including photographs taken at the time and downloaded by a poster from LinkedIn. He was also working on the cortical column and AKIDA 3.0 throughout that period and knows more about the AKIDA technology and its roadmap to Artificial General Intelligence than any living person. Having someone with his understanding on the Board should make sense as it would permit the Board to take credible invaluable advice each time one of the engineers and or scientists at Brainchip suggest a new idea requiring the allocation of scarce resources.

My opinion only DYOR

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