Ann: Executive Leadership Change, page-207

Interesting take in the Financial review

Brainchip CEO exits immediately

Mar 16, 2021 – 11.41am

Shares in $1 billion internet stock-tipping favourite BrainChip Holdings have plunged 10 per cent in early trade after the abrupt termination of chief executive Louis DiNardo “without cause, effective immediately” days after the company was added to the ASX300 index.

Louis DiNardo has agreed to leave Brainchip effective immediately.

Mr DiNardo had been with the company since 2016 but was replaced on an interim basis by current chief technology officer and co-founder Peter van der Made according to an announcement to the ASX on Tuesday morning.

In a statement, Brainchip said Mr DiNardo’s role as chief executive and managing director would be terminated immediately in a decision that was “mutually agreed” after the boss decided he would leave the company “to pursue other interests”.

Mr DiNardo will receive a severance payment of $US300,000 ($388,000) to be paid in equal monthly instalments over 12 months.

BrainChip non-executive chairman Emmanuel Hernandez thanked Mr DiNardo for his years of service and for taking the company “from concept to silicon”.

“We wish him best in future endeavours,” Mr Hernandez said.

Termination without cause occurs when a company ends a staff member’s employment not because they have necessarily done anything wrong, but because the group has decided it no longer needs the employee’s services.

Shares in BrainChip have surged more than 1000 per cent over the past 12 months, taking the company to a valuation of more than $1 billion in September. Tuesday’s announcement of Mr DiNardo’s departure wiped about $100 million off the market capitalisation.

The Alex Waislitz, Regal Funds Management and Metals X-backed “pure-play AI company” is developing a neural processor that it claims mimics brain architecture for edge computing applications.

The stock, a poster-child favourite of less sophisticated Robinhood-style retail investors on social media, was last week added to the ASX300 index.

The artificial intelligence chipmaker’s story has proven extremely popular among retail investors, some of whom entered the sharemarket for the first time in 2020, as government stimulus payments and lockdowns encourage speculation.

Brainchip’s US institutional investors have regularly been cashing in cheap options to help the company raise cash.

Late last month, Brainchip reported an operating loss of $US11.2 million on revenue of $US121,000. Its statutory loss more than doubled from $US11.3 million to $US26.8 million for the 2020 calendar year.

It's almost impossible to short the stock because there aren't enough institutional investors on the register.

Louis DiNardo, the Brainchip CEO, says the company is targeting commercialisation of its neural network processor by 2021.

At the end of December, Brainchip had $US19 million worth of cash and cash equivalents on its books and recorded accumulated losses of $US101 million.

The company booked $US55,000 in receipts from customers last year and currently employs 42 staff.

“Notwithstanding the operating loss and the net operating cash outflows recognised in the current year, the directors are confident that the company will continue operating as a going concern based on the current available cash resources,” a note in the company’s annual report says.

Mr DiNardo’s previous roles include chief executive of NYSE-listed Exar Corporation, where he helped turn around the struggling mid-cap semiconductor company.