@Slew

I've seen it before. It is most common for micro caps. Whether it is good or bad depends on the context, and I am not read into MX1.

If the share price is at lows and there is adequate cash in the bank, it can be a unneeded share dilution.

It can be a way of reducing cash burn in the short term, thus keeping the early stage company afloat longer, and avoiding more cap raises.

If the percentage of shares issued is minuscule, ie 200k new shares issued and there is already 1 bil shares on the register... it may be inconsequential to dilution, and more an indicator of leadership style/risk appreciation/or attitudes.

It can be a good sign, that directors want shares, because they believe the price will go up... but it can also be a 'narrative play', ie the board is trying to signal that to the market but don't believe it.

I hope those examples (including but not limited to) give you ideas with which to overlay against the context and situation that you know as part of your MX1 thesis.

Thanks reddogaustin

I was also wondering if receiving shares counted as income?  I could see a benefit for directors if personal income tax was not applicable at this point.

In the case of MX1 the amount of shares issued is negligible, although I was curious about the timing of the share issue as the current price is depressed. Is there any flexibility in the timing of the issue?

@Slew

hahaha. yeah good point. It could also help the directors avoid income tax. Receipting shares is not a CGT event - disposal is, so yes, reducing one's income can be achieved by the receipt of shares.

As for the timing. It is hard to say and harder to prove. Boards have absolute discretion within the confines of their constitutions and the law of the land in which they are incorporated... so if they can jusitfy it, then they can do it. It takes money, lawyers and time to prove otherwise.

My offer would be that if you see it occur and you as an investor think that's not how one plays cricket, then it may be a confidence fail in leadership and therefore a busted thesis and sell out.

I've always viewed this as a good thing as it increases management ownership and alignment with shareholders. With the condition that management isn't overpaid and therefore getting an oversized equity stake and that they're not selling shortly afterwards. I couldn't think of any negatives but @reddogaustin makes some good points.

My understanding is when shares are issued, the value of the shares are taxable income the same way cash payment is taxable income (otherwise this would be a massive loophole and everyone would want to be paid in shares). Just because it is not cash does make it except from income tax. CGT tax on gains will be paid on disposal.

Any accountants able to confirm how this works?

@Maaxweell @Dominator

Thanks Team, I learned something today. Time to down tools and stop for the day. Mission accomplished.