PEB - Pacific Edge Ltd

[CJ]

I don't have a problem with it either. ... I don't know the reason he has sold these shares but part of it may well be to reduce some of his exposure to risk. I would do the same.

I agree that a CEO selling down is reason for a second look, but it is not a reason for panic. People sell for many reasons, school fees, paying an ex-wife, building a new home, building a diversified portfolio etc.

I will try to put a positive spin on it aswell.

If the options were granted as part of his remuneration, he is taxable on the difference of the exercise price and the market price at the time of exercise (ie. the benefit from the options is treated as taxable income). Therefore it is in a employees best interest to exercise as soon as possible if they believe the share price is going to increase in the future. However, that crystalises a tax liability to it also force them to sell them to pay the tax.

Therefore exercising the otions rather than letting them run is a positive sign and selling up is just a natural consequence for tax reasons and the other reasons that I quote above.

[barney]

I would also make the point that David Darling has been the CEO at PEB for nine years, after which time you would not think it unreasonable to cash up some shares. At times over that nine years it must have been pretty tough going, especially trying to secure funding to keep operating and to attract and retain good quality staff. As we all know, many other tech/biotech stocks have fallen by the wayside, yet Darling has managed to get the company through to the point where it will hopefully start generating serious revenue. There is still a long way to go but by getting the company to this point, the CEO must take a lot of credit.

[Balance]

Probably refering to both Xero and DIL. The fact is both of those have a viable product and an expanding customer base. It is still unclear whether PEB will get a viable product (though I think this is more likely than not now) and then whether doctors will be happy to change to it. Anyone who held on to Xero or DIL (in the early days) know that it is expensive to grow sales rapidly. So even once they get their viable product on the shelf, the cash burn will still be high for years to come.

All comes down to market and investors' confidence.
Too many start-ups with promise and potential falter and fail because they run out of cash. Too greedy and/or naive, the promoters either want too much and/or come to the market too early.

The ones which go through to their potential tend to be well funded with realistic promoters and backers.

XRO and DIL are good examples of what happens when you get proper backers behind the company.

GEN and BLT are 'bad' examples of companies running out of cash.

With funding in place now and with backers like Masfen and Superlife, and revenues to flow from 2013 (assuming all goes to plan), I think PEB is more like DIL and XRO, than GEN or BLT.

Cash of $18m as at 30 June 2012 is plenty to last the company until 2015.

Meanwhile, Superlife buying on market tells you that this company does not see a need to do another placement anytime soon.

[janner]

Thank you CJ.. Your knowledge is appreciated..

[RRR]

I would stay away from this company. One trick pony this one is! And things change too quickly in the medical world. I wish them well.

[Balance]

I would stay away from this company. One trick pony this one is! And things change too quickly in the medical world. I wish them well.

Obviously has not heard of Cochlear on ASX.

[karen1]

The one trick pony comment required, for me, clarification, as there was none in the post by RRR, so a search provided me with the probable origin of the comment, and I found a good article from NBR on the first link in the list.

http://http://www.nbr.co.nz/tags/david-darling

I have followed this company for over a year, and recently took a small position. Yes, there is risk, but where in the market does one not take risk?

I am very interested to see where this company goes over the next few years, and wish a Kiwi company well.

[Dubdee]

If the gain from sale is taxable as part of your compensation arrangments suggests that David gifting to the good old Family trust might be in order. No gift duty these days and any further share upside quarantined from tax?

[zs_cecil]

If the gain from sale is taxable as part of your compensation arrangments suggests that David gifting to the good old Family trust might be in order. No gift duty these days and any further share upside quarantined from tax?

In terms of the announcement, David only sold small amount 7k+ of his own shares. The rest of them sold are belonging to his Tamaki Trust. So, I guess he has already avoid paying a lot of tax. Can anyone explain how the tax works for trustee?

[zs_cecil]

No matter why CEO is selling his share, he would either sell it in a good time or a bad time. Of course he knows whether the company is or will be in the good time or the bad time. If he knew that the company is or will be in the bad time, he would probably risk himself to be suspected to do insider trading by selling his shares. However he is compeletedly legal to excise his share option. If he is selling his shares if he knew it is or will be the good time for the company, he might has just sold his shares in the right time in order to award himself. It might be less chance to put himself and the company under the scrutiny by the media if he sold his shares before the good time. For example, Rod Dury has done this once for his Xero. Again, it is his legal right to excise his options. We can not complain if he did it. If, he does not know whether the company will be in a good time or a bad time, we should be worried. He is just doing gambling on the company for everything including building the labs in the US. Once again, he is legal to exercise his options. Wish he did it before the good time.