Ann: Orthocell Appoints Non-Executive Director Dr Ravi Thadhani, page-35

I like it Coads. Good observation. There are three very different ways to exercise options.

Ordinarily, lets say OCC is trading $0.50. He borrows 1.5million x $0.40 from the bank. Has 1.5 million shares, sells the bloody stock down to $0.46 offloading, averaging $0.48. He recoups 1.5 million x $0.08 (after paying the bank back $0.40 x 1.5 million)

Company options premium lending scheme mark 1 (the most common now), same as above, but the company lends the employee the money in effect (all just a slight of hand via accounting) and same thing happens.

Company options scheme mark 2 (the new thing). I did explain this in previous entries, as OCC appears to now be practicing (its a disgrace ASIC/ASX don't make firms very, very clearly point this out). The company delta adjusts the options (via a Black and Scholes volatility model). The employee foregoes some options, gets a load theoretically, the company reimburses the difference, does some wizardry in its accounting and removes the options financial liabilities from its balance sheet and reimburses the employee cash.

i.e. lets say in a years time the stock trading $0.50 and these options a 60 delta. He writes off 40% of the shares, but exercises the 60% at $0.40 vs $0.50 so gets $0.10 on 0.6 x 1.5 million worth of shares. The company basically amends its financial liabilities and outstanding options and shares and far fewer, if any, shares actually hit the market.

Its a disgraceful example of financial wizardry where Directors feed at the altar of share holder ignorance (its complicated by design, to evade). However for our purposes, a load of employee exercised shares don't suddenly hit the secondary market being sold by the employee/executive and pushing down the share price.