Hi Mooselington, I don't think that the security trading policy...

Hi Mooselington,

I don't think that the security trading policy of the company is updated every February.

The first security trading policy was announced on ASX on july 2016.

The second on february 2021 and the third on february 2022.

And I don't think also that this to is allow everyone to sell in a takeover/transaction..

A takeover is part of the exceptions listed in 13 (d) in the 2021 document. And in any circumstance the Chairman can give a clearance to sell in any circumstance that may be be deemed exceptional by the Chairman.

That means that the chairman can allow any selling - or buying - at anytime and even during black out periodes.


Here is what I think.

These updates of the security trading policy are specialy designed for departing emplyees : Desu in 2021 and Van Buskirk in 2021.

The fact that the 20% limit was removed is probably due to the fact that this limit could be considered as an abuse.

Employees hold incentive options and incentive options are lost once the employee leaves the company.

So if Van Buskirk is deemed to leave in october 2022, there is only 3 quarter left. That means that he could exercise and sell only 60% of his options and shares ( 3 x 20%).

This is not fair, and could probably open the door to some form of litigation.

4DS is unwinding, people are leaving, they should be able to exercise and sell before leaving.

But in my opinion, this scenario only apply to employees and not to board members.

The board will stay and hold up to the end, imo.

This is because the board can change the trading policy when they want. They are not really bind by it.

It is true that this allow board members to sell more than 20%, but what for ?

If for example they want to sell all at once. What will happen ?

There are arround 80 millions options remaining. A large part of them has to be exercised at $ 0,052.

The price is $ 0,064. at the end of this week it could be at 0,06.
If 10 millions shares are added to the sell side, the share price will drop under the exercise price. Let alone if they decide to vest, exercise and sell 80 millions options.

This is just not possible.
They cant exercise and sell all options.
But they can decide to sell the shares they already own.
That would be the true signal that something is going really bad, to the point that board members want to get even a few hundred dollars left when the share price will drop under 1 cents.

DM and HD could sell a few shares if there is a serious rerate (not under 0,15, imo), otherwise, they would kill the share price and cause a severe prejudice to the company.
And they work in Australia. The reputation problem forbide them to do that.

So for me this new trading policy is linked to the departue of employees, nothing more.



But if we see board members exercising at this low price, it would be a very different story.

A very, very positve signal, because that will imply that they are expecting a rerate.

Why would they exercise now ?
Because they are submited to the US tax law (at least for WDH and GD), and the US option tax system says that you are taxed twice for your stock options :
- First when you exercise (on the difference between the exercise price and the price on market => income tax)
- Second when you sell your shares (on the deifference between the price on market at the time of the exercise and the final selling price => capital gain tax).

So, exercising now and selling later, at the time of the transaction (or rerate) could be a way to pay less taxes

But I dont expect this either.
Exercising now will force them to sell some to pay the exercise price, and that would send a bad signal to the market.

I dont expect any Exercise and selling, except by van Buskirk.

But even for him, the price is too low if he need to sell exercised shares to pay back the exercise price. He will be left with peanuts.

Exercising now is only justified for fiscal reasons and only for those how can afford to pay the exercise price and wait for a rerate to make their final sell (at $ 0,15 ?).

VB has 14 millions exercisable options at $ 0,042. It will cost him $ 588 000 to exercise.
At today price of 0,064, he would have to sell a bit more than 9 Millions share to pay back the exercise price.

That would leave him with a net $ 308 000 for all his efforts. Less if taxes are taken into account.

And even more less if his own selling drive the price down.

All in in all, I don't see any Exercise/Selling before a real rerate.

CONCLUSION : they are oppening the doors before a market rerate. => Positive















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