2.8M Management Options Expire Today & a Conspiracy?One year ago today, management received 3.4M options with a C$0.12/sh strike price and a one year expiry. There were 2,845,595 warrants remaining from this batch as of June 30, 2017.
Here is a quote from the Q3/2016 financials (link). On July 13, 2016, the Company granted options to purchase up to 3,405,595 common shares to its executive officers and directors. The options granted vested immediately and may be exercised at a price of $0.12 per share expiring on July 13, 2017.
Given the above, there should be some elevated activity on SEDI. But assuming management is aligned with shareholders, I would expect few of those options to result in the outright sale of shares. Otherwise, this may raise eyebrows. I can only assume that a new batch of options will be issued as "long term" compensation to management to replace the ones expiring today. I put "long term" in quotes because a one year grant is not truly a long term incentive in my books. I have written previously about my belief that the governance (Board of Directors) needs to be strengthened in order to separate management from the Board to hopefully put a stop to some of this questionable behaviour. With some luck, this will happen in due course.
If I wanted to be cynical, I could make a case for management intentionally delaying good news until they had a chance to issue another batch of options at current (low) prices.
This brings me to another interesting dynamic management is facing. You may recall in the May 4 press release (link), the company stated: LDS has agreed to purchase the sole membership interest of each of NHMC and CSPA in exchange for 3,000,000 common shares of LDS and US$1,400,000 in cash, each (6,000,000 LDS common shares and US$2,800,000 in cash total). If the Certificates of Occupancy are not granted on or prior to August 31, 2017, the members of NHMC and CSPA will forfeit their rights to the share consideration, and the purchase price for each will consist solely of the cash consideration.
This presents an odd incentive for LDS to delay its effort to receive the COO until after August 31 to minimize shareholder dilution. I'm not clear why NHMC and CSPA would have agreed to such a clause. Normally you would argue to have the clause work backwards whereby you receive more compensation if a delay occurs.
So here we are today, exactly 7 weeks from August 31. Is management dragging it's heels on the COO to avoid diluting current shareholders by 6M LDS shares? I'm sure that is nothing than a far out conspiracy theory.
~S