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6.1¢ cirrus networks holdings limited

Ann: App 2A - Application for Quotation on Exercise of Options, page-16

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JPGuru

4,660 Posts.

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04/06/21

18:45

Post #: 53658898
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Originally posted by TerribleTadpole: ↑

"So you agree that options are COST. Obviously not the actual cash cost but it is the cost to the company on the books." – agreed, although I will not agree that it has any impact on the company's ability to trade. The cost is capitalised, which leads into your next point...

"Also you agree that every additional shares issued dilute the shareholder value" – also agreed.

"CNW granted way too many options and that is also significantly lower price (1.7c) then actual price (3c)" – This is not quite right. The options were granted on 22-Apr-2020 at a time when the share price was around 2c. So you are correct to say the the options were already in the money when they were granted, which is unusual. But think about the date... it was a seriously unusual time! Here is a little context:
The potential impact of the global pandemic had hit home: dead people piling up in the streets of New York, international trade stopped, and no sign of how or even whether the situation could be controlled.
The share price of CNW had slumped from a steady range centred around 4c to a low of 1.4c and again nobody knew what the future had in store.
The Federal Government was yet to announce Jobkeeper or the Jobseeker supplement, or anything like a coherent economic or health management plan.

So it is reasonable to assume that critically important staff were considering their alternatives to protect themselves, their families and their wealth. These options were granted on a one-off basis – never done before, and not repeated since – as a way to keep these people on board. This is clear from the vesting dates of these options: 30-Sep-2020 and 30-Nov-2020. The board was saying to these staff "hang in there, stick with us and see it through, and if the company survives there'll be a profit in it for you for helping us make it".

So now these people are collecting their rewards, and in the process tipping in some valuable cash. It's win/win situation for the company, and a cheap win for you as a shareholder. If the board had not retained these people then there's every possibility that your undiluted holding would be worth less than the 3c you currently enjoy... possibly considerably less... possibly nothing at all.

I'm going to take this opportunity to bow out again now. I'm an ex-holder who checks in from time to time to see if I might chance my hand again. I didn't intend to get hooked into a deep, time-consuming discussion involving hours of research.

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See below company's announcement abstract and just read second paragraph which clearly says options are given free and there is no "Cash in Bank"... IMO ... but let's forget out this topic... !

Also regarding your notice issued on 22 April 2020, if you read that announcement it then refers you to announcement made in 2018 by the company when company got approval to grant option (way before COVID... so i am only guessing that company is best astrologer to forecast covid and make arrangement that they could use in 2020)... This company has been talking about DESPO in almost all AGM so it is not COVID that they used it.... if it wasn't Covid then they would have used for something else..IMO... ! Also I don't have many stock in IT service industry but which other company granted 60m million option below market price during covid to hold off staff or was it only required for CNW?

I made a point before, CNW don't employ nuclear scientist or biologist who holds the key to cancer / Alzheimer / Covid treatment that you can not hire again... !!! During covid employees made a deal with their employer just to stay on payroll on part-time basis as it isn't the perfect time for one to find new job when "dead people piling up in the streets of New York" ... unless you are in healthcare field or facebook CEO.... IMO... !!

Company is doing business either do it for the benefit of the shareholders and grow the company or run private company where you can issue millions of shares or option at your own will to whoever you choose and pay people double wages during covid if that suits you ... !

Options are not the reason for significantly poor share price performance of the company over last 5 years, however with millions of option on the book do fence of some of the insto who looks for investment.... IMO... unless you are insider or naive investor it will be hard to ignore 96m outstanding options with strike price close or below share price... ( yes i was naive as i didn't read it before investing)... !

This management got 5 years with millions of option up their sleeve but still company stand without any capital growth in share price or dividend or any benefit to shareholders... and hence the person who takes the responsibility in corporate world is CEO or the board as market react to good performance and DTL is a good example of the performance IMO.

Did I read today's change in substantial notice correctly where Wilson sold off few million shares?
CNW Price at posting: 3.0¢ Sentiment: None Disclosure: Held
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