4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
4DS MEMORY LIMITED
and Controlled Entities
ACN: 145 590 110
Annual Report
For the year ended 30 June 2018
2
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CONTENTS
Corporate Directory
Directors' Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes In Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditors’ Report
Corporate Governance Statement
ASX Additional Information
2
3
21
22
23
24
25
26
56
57
61
69
1
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE DIRECTORY
4DS Memory Limited
Directors
Mr James Dorrian
Dr Guido Arnout
Mr David McAuliffe
Mr Howard Digby
Non-Executive Chairman
Chief Executive Officer and Managing Director
Executive Director
Non-Executive Director
Company Secretary
Mr Peter Webse
Registered and Principal Office
Level 2, 50 Kings Park Road
West Perth WA 6005
AUSTRALIA
PO Box 271
West Perth WA 6872
AUSTRALIA
Phone +61 8 6377 8043
Email
Web
david@4dsmemory.com
www.4dsmemory.com
Website
www.4dsmemory.com
Share Registry
Automic Registry Services
Level 2
267 St Georges Terrace
Perth WA 6000
AUSTRALIA
Phone +618 9324 2099
+61 8 9321 2337
Fax
info@automic.com.au
Email
www.automic.com.au
Web
Auditors
PKF Mack Chartered Accountants
Level 5, 35 Havelock Street,
West Perth WA 6005
Solicitors
GTP Legal
68 Aberdeen Street
Northbridge WA 6003
Securities Exchange Listing
Australian Securities Exchange
Home Exchange: Perth, Western Australia
Code: 4DS
2
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
The Directors of 4DS Memory Limited (“the Company”) (“4DS Memory”) and its controlled entities (“the Group” or
“Consolidated Group”) submit the following report for the year ended 30 June 2018 (“Financial Period”).
Directors
The names and the particulars of the Directors of the Company during or since the end of the financial year are:
Mr James Dorrian
Dr Guido Arnout
Mr David McAuliffe
Mr Howard Digby
Non-Executive Chairman
Chief Executive Officer and Managing Director
Executive Director
Non-Executive Director
Qualifications, Experience and Special Responsibilities of Directors
Mr James Dorrian
Qualifications
Experience
-
-
-
Non-Executive Chairman
BA (Economics and Communications)
Mr Dorrian is former partner at Crosspoint Venture Partners, a Silicon Valley based
early stage venture capital firm. He has served as both CEO and Director of several
Silicon Valley companies and has in depth M&A and IPO experience gained through
founding and managing successful technology exits. Prior to these roles, Mr Dorrian
was the Founder and CEO of Arbor Software and has held management roles with
a number of multinational IT companies. He is a founding member of the OLAP
Council, an industry consortium for On-Line Analytical Processing.
Directorships held in other
listed entities
-
Nil
Dr Guido Arnout
Qualifications
Experience
-
-
-
Chief Executive Officer and Managing Director
PhD Electrical Engineering
Dr Arnout has specific expertise with over 30 years in commercialising electronics
technology from concept to product. He was the founding President & CEO of
PowerEscape, which introduced the first tools for the development of low-power
software executing on multicore devices. He was also founding President & CEO of
CoWare, which pioneered system-level design tools for hardware-software co-
design and the time-based licensing business model. Dr Arnout co-founded the Open
SystemC Initiative (OSCI), an industry consortium to standardise a language for
system level design, and as its President submitted the SystemC language to IEEE.
He served as VP of Engineering and later senior VP of marketing of CrossCheck
Technology. He co-founded and later became VP of Engineering of Silvar-Lisco, the
first commercial EDA (electronic design automation).
Directorships held in other
listed entities
-
Nil
3
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Mr David McAuliffe
Qualifications
Experience
-
-
-
Executive Director
LLB (Hons), BPharm
Mr McAuliffe is an experienced company Director and entrepreneur who has had
over 20 years’ experience, mostly in the international biotechnology field. During that
time, he was involved in numerous capital raisings and in licensing of technologies.
He is a founder of several companies in Australia, France and the United Kingdom,
many of which have become public companies. He is President of the Dyslexia-Speld
Foundation WA (Inc).
Directorships held in other
listed entities
-
Nil
Mr Howard Digby
Qualifications
Experience
-
-
-
Non-Executive Director
BE (Mechanical, Hons)
Mr Digby started his career at IBM and has spent over 25 years managing technology
related businesses across the Asia Pacific region, of which 12 years were spent in
Hong Kong. More recently, he was with The Economist Group as Regional Managing
Director. Prior to this he held senior management roles at Adobe and Gartner where
his clients included major semiconductor players including Samsung, Hynix and
TSMC.
Directorships held in other
listed entities
-
Non-Executive Directors of Elsight Limited (ASX: ELS), Non-Executive Director of
HearMeOut Limited (ASX: HMO) and Non-Executive Director of Omni Market Tied
Limited (ASX: OMT).
Directorships held in other listed entities in the last three years - Estrella Resources
Limited (July 2015 to April 2017) and Dimerix Bioscience Limited (January 2013 to
November 2015).
Interests in the shares and options of the Company
Number of
Ordinary
Shares at 30
June 2018
Number of
Options over
Ordinary
Shares at 30
June 2018
Number of
Ordinary
Shares
as at the date of
this report
Number of
Options over
Ordinary
Shares as at
the date of this
report
50,086,751
-
50,086,751
-
1,918,942
50,458,333
1,918,942
50,458,333
Mr James
Dorrian
Dr Guido
Arnout
Mr Howard
Digby
Mr David
McAuliffe
Non-Executive
Chairman
Chief Executive
Officer and Managing
Director
Non-Executive
Director
Executive Director
12,026,474
4,554,950
-
-
4,554,950
12,026,474
-
-
Company Secretary
Mr Peter Webse
Qualifications
Experience
-
-
B.Bus, FGIA, FCIS, FCPA, MAICD
Mr Webse has over 25 years' company secretarial experience and is the Managing
Director of Platinum Corporate Secretariat Pty Ltd, a company specialising in
providing company secretarial, corporate governance and corporate advisory
services.
4
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Principal Activities
4DS Memory Limited (ASX: 4DS), with facilities located in Silicon Valley, is a semiconductor development company of
non-volatile memory technology, pioneering Interface Switching ReRAM, for next generation gigabyte Storage Class
Memory. Established in 2007, 4DS owns a patented IP portfolio, comprising 20 US patents granted and 3 patents
pending, which has been developed in-house to create high density Storage Class Memory. 4DS has a joint
development agreement with Western Digital subsidiary HGST, a global storage leader, which accelerates the evolution
of 4DS’ technology. 4DS also has a development agreement with Belgium based imec.
Operating Results
The loss of the Consolidated Group after providing for income tax amounted to $5,203,078 (2017: $2,569,557 loss).
Review of Operations
(A) Patent Grant - The Company announced the granting of its 19th patent in the USA
(B) Incentive Options - Incentivised US based employees
(C) Imec Agreement – The Company entered into a development agreement with imec
(D) The Company completed a successful placement, including an A$250,000 investment from 4DS Chairman
(E) Undertook an Open Briefing Presentation in four capital cities in Australia
(A) Patent Grant
On 16 August 2017 announced the granting of its 19th USA patent. The invention relates generally to the fabrication
processes of resistive and magnetic memory cells. The Company continues to ensure that the intellectual property is
patent protected with four more patents pending and others are in the process of being drafted.
(B) Incentive Options
4DS employees are one of the most important assets the Company and it is a policy of 4DS to ensure they are
incentivised so as to help the Company achieve its goals and also retain employees.
On 30 October 2017, the Company issued 28,275,000 incentive options to its US based employees and consultants.
The options are exercisable at $0.042 each, 30% of which vest up front and the reminder at the rate of 10% per quarter,
with the options expiring on 27 October 2022. On 22 January 2018, the Company issued 14,000,000 employee
incentive options to the Managing Director, granted on 8 January 2018 and on the same terms as the incentive options
to employees and consultants.
(C) Imec agreement
On 1 November 2017, the Company announced an agreement with imec to develop a transferrable production-
compatible process flow for its interface Switching ReRAM technology and to demonstrate this process on imec’s
megabit test chip.
Imec is the world-leading research and innovation hub in nanoelectronics and digital technologies. The combination of
their widely acclaimed leadership in microchip technology and profound software and ICT expertise is what makes
them unique. By leveraging the imec world-class infrastructure and local and global ecosystem of partners across a
multitude of industries, they create groundbreaking innovation in application domains such as healthcare, smart cities
and mobility, logistics and manufacturing, energy and education.
As a trusted partner for companies, start-ups and universities they bring together close to 3,500 brilliant minds from
over 70 nationalities. Imec is headquartered in Leuven, Belgium and has distributed R&D groups at a number of Flemish
universities, in the Netherlands, Taiwan, USA, China, and offices in India and Japan. In 2016, imec's revenue (P&L)
5
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
totaled 496 million euro. They are a not for profit organisation. Further information on imec can be found at www.imec-
int.com.
Dr Arnout attended the imec Technology Forum entitled “Semiconductor and system scaling beyond tomorrow” in San
Francisco on 3 December 2017.
(D) Placement, Issue of Securities and Release from Escrow
On 3 November 2017, the Company announced a placement of 86,250,000 ordinary shares at an issue price of $0.04
per share to professional and sophisticated investors to raise $3.45 million. As part of the placement, the 4DS Chairman
invested $250,000 towards the placement total.
On 3 November 2017, the Company issued the following:
•
•
•
630,630 fully paid ordinary shares at $0.037 in satisfaction of 100% of the Director’s fees owed to Mr James
Dorrian until 30 June 2017 as per shareholders’ approval on 31 October 2017.
328,886 fully paid ordinary shares at $0.037 to David McAuliffe in satisfaction of salary accrued from 11
November 2016 until 30 June 2017 as per shareholders’ approval on 31 October 2017.
5,416,667 shares following the exercise of 5,416,667 unlisted options with an expiry of 10 May 2018.
The Placement shares were issued on 10 November 2017 as follows:
•
•
80,125,000 ordinary shares issued;
5,000,000 unlisted options issued to the lead manager exercisable at $0.07 each, expiring 30 June 2020.
The remaining 6,250,000 placement shares were issued to the Chairman on 22 January 2018 at an issue price of
$0.04, on the same terms as the placement.
On 10 November 2017, 10,416,667 shares were issued following the exercise of unlisted options with an expiry of 10
May 2018.
On 1 December 2017, the Company announced the release of the following securities from escrow on the 17 December
2017:
•
•
•
131,323,365 ordinary shares
30,000,000 options exercisable at $0.05, expiring 30/06/2020
36,458,333 options exercisable at $0.02 expiring 30/06/2020
On 18 January 2018, 3,000,000 shares were issued following the exercise of unlisted options with an expiry of 18
October 2019.
Unlisted options expiring on 10 May 2018 were exercised as follows:
• On 6 February 2018, 5,416,667 shares were issued following the exercise of unlisted options; and
• On 9 May 2018, 5,416,667 shares were issued following the exercise of unlisted options.
On 25 June 2018, 2,000,000 shares were issued following the exercise of unlisted options with an expiry of 25 June
2018. The remaining 1,000,000 25 June 2018 options have expired.
(E) Open Briefing Presentations
The Company held meetings in Hong Kong with institutional and sophisticated investors on 15 and 16 November 2017.
4DS Chairman Jim Dorrian and Executive Director David McAuliffe undertook an Open Briefing presentation in four
capital cities in Australia during February 2018. The briefings were extremely well received and attended with close to
200 people registering.
Financial Position and Significant Changes in the State of Affairs
The net assets of the Consolidated Group totalled $3,174,842 (2017: $2,547,983). Cash on hand at 30 June 2018
totalled $2,932,232 (2017: $2,576,100).
Material changes to issued share capital include:
• Exercise of options during the year to the value of $1,652,377 and,
• Capital raising to the value of $3,455,000, refer to review of operations for additional detail.
6
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Dividends Paid or Recommended
No dividend has been declared or paid by the Company. The Directors do not recommend the payment of a dividend.
After Reporting Date Events
On 18 July 2018, the Company announced the granting of its 20th patent in the USA: “Heterojunction Oxide Non-
Volatile Memory Device”. The Company believes the 20th patent further strengthens our robust intellectual property
position in the field of Interface Switching ReRam.
On 23 July 2018, the Company issued 880,000 unlisted options to a corporate advisor, exercisable at $0.045 on or
before 23 July 2020, with 50% vesting on issue and 50% vesting after 3 months.
There have been no other matters or circumstances that have arisen since 30 June 2018 that have significantly
affected or may significantly affect:
•
the Group’s operations in future years; or
•
•
the results of those operations in future years; or
the Group’s state of affairs in future years.
Future Developments, Prospects and Business Strategies
4DS Memory Limited will concentrate on the production process and expects to receive the first imec wafers in
September 2018. In addition the Company recently announced the appointment of a New York based boutique
investment bank and is planning to conduct a marketing roadshow in the USA within a month.
Environmental Regulation and Performance
The Company aims to comply with the identified regulatory requirements in each jurisdiction in which it operates. There
have been no known material breaches of the environmental regulations.
7
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Share Options
Unissued shares
At the date of this report, the unissued ordinary shares of 4DS Memory Limited under option are as follows
Grant Date
Expiry Date
Exercise Price
Number under option
10 December 2015
30 June 2020
10 December 2015
30 June 2020
18 December 2015
30 June 2020
2 May 2017
31 December 2019
2 May 2017
31 December 2019
2 May 2017
31 December 2019
2 May 2017
31 December 2019
2 May 2017
31 December 2019
2 May 2017
31 December 2019
2 May 2017
31 December 2019
30 October 2018
27 October 2022
10 November 2017
30 June 2020
22 January 2018
27 October 2022
23 July 2018
23 July 2020
$0.02
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.05
$0.042
$0.07
$0.042
$0.045
36,458,333
30,000,000
2,500,000
2,000,000
500,000
500,000
500,000
500,000
500,000
500,000
28,275,000
5,000,000
14,000,000
880,000
122,113,333
Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any
related body corporate.
Shares issued as a result of the exercise of options
During the financial year ended 30 June 2018, 31,666,668 shares were issued from the exercise of options.
8
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Indemnification and Insurance of Directors and Officers
Indemnification
The Company indemnifies each of its Directors, Officers and Company Secretary. The Company indemnifies each
Director or Officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except
where the liability arises out of conduct involving lack of good faith, and in defending legal and administrative
proceedings and applications for such proceedings.
The Company must use its best endeavours to insure a Director or Officer against any liability, which does not arise
out of conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must
also use its best endeavours to insure a Director or Officer against liability for costs and expenses incurred in defending
proceedings whether civil or criminal.
The Company has not entered into any agreement with its current auditors indemnifying them against any claims by
third parties arising from their report on the financial report.
Insurance premiums
During the year the Company paid insurance premiums to insure Directors and Officers against certain liabilities arising
out of their conduct while acting as an Officer of the Group. Under the terms and conditions of the insurance contract,
the nature of the liabilities insured against and the premium paid cannot be disclosed.
Meetings of Directors
The number of formal meetings of Directors (including committees of Directors) held during the year and the number
of meetings attended by each Director was as follows:
DIRECTORS’
MEETINGS
Number eligible to attend
Number attended
Mr James Dorrian
Dr Guido Arnout
Mr Howard Digby
Mr David McAuliffe
12
12
12
12
11
11
12
12
Proceedings on Behalf of Company
No person has applied for leave of Court under section 237 of the Corporations Act 2001 for leave to bring proceedings
on behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
9
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Non Audit Services
The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the
services disclosed below did not compromise the external auditors’ independence for the following reasons:
-
-
All non-audit services are reviewed and approved by the Directors prior to commencement to ensure they do not
adversely affect the integrity and objectivity of the audit; and
The nature of the services provided do not compromise the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and
Ethical Standards Board.
The following fees to PKF Mack were recognised for non-audit services provided during the year ended 30 June 2018.
Taxation compliance and advice services
$7,040
$7,040
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2018 has been received and can be found on page
21.
10
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
This Remuneration Report outlines the Director and executive remuneration arrangements of the Company and the
Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this
report Key Management Personnel (KMP) of the Group are defined as those persons having the authority and
responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or
indirectly, including any Director (whether executive or otherwise) of the parent company.
Remuneration Policy
The Company has adopted a remuneration policy designed to align individual and team reward and encourage
executives to perform to their full capacity.
Remuneration packages may contain any or all of the following:
(a) annual salary base with provision to recognise the value of the individuals’ personal performance and their
ability and experience;
(b) rewards, bonuses, commissions, special payments and other measures available to reward individuals and
teams following a particular outstanding business contribution;
(c) share participation - the Company proposes to put in place an equity incentive plan; and
(d) other benefits, such as a holiday leave, sickness benefits, superannuation payments and long service benefits.
The Board will determine the appropriate level and structure of remuneration of the executive team and such
consideration will occur each year on the recommendation of the Managing Director.
Remuneration of executives will be reviewed annually by the Board. Determination of Non-Executive Director’s fees is
with regard to the long term performance of the Company.
Remuneration structure
In accordance with best practice corporate governance, the structure of non-executive Director and executive
remuneration is separate and distinct.
Non-executive Director remuneration
Objective
The Board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and
retain Directors to the highest calibre, whilst incurring a cost which is acceptable to shareholders.
Structure
The Constitution and the ASX Listing Rules specify that the aggregate Directors' fees payable to non-executive
Directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined
is then divided between the Directors as agreed. Shareholders’ have approved aggregate Directors' fees payable of
$300,000 per year.
The amount of aggregate Directors’ fees sought to be approved by shareholders and the manner in which it is
apportioned amongst Directors is reviewed annually. The Board may consider advice from external consultants as well
as the fees paid to non-executive Directors of comparable companies when undertaking the annual review process.
Each Non-Executive Director receives a fee for being a Director of the Company. However, if a Director performs extra
or special services beyond their role as a Director, the Board may resolve to provide additional remuneration for such
services.
11
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
Fees for Directors are not linked to the performance of the Group however, to align all Directors’ interests with
shareholder interests, Directors are encouraged to hold shares in the Company and may receive options. This
effectively links Directors’ performance to the share price performance and therefore to the interests of shareholders.
For this reason, there are no performance conditions prior to grant, but instead an incentive to increase the value to all
shareholders.
Executive Remuneration
Objective
The Company aims to reward executives with a level and mix of remuneration commensurate with their position and
responsibilities within the Company and so as to:
− Reward executives for Company performance;
−
−
−
Align the interest of executives with those of shareholders;
Link reward with the strategic goals and performance of the Company; and
Ensure total remuneration is competitive by market standards.
Structure
Executive remuneration may consist of both fixed and variable elements.
Fixed Remuneration
Objective
The level of fixed remuneration is set so as to provide a base level of remuneration which is both appropriate to the
position and is competitive in the market.
Fixed remuneration is reviewed annually or upon renewal of fixed term contracts by the Board and the process consists
of a review of Company and individual performance, relevant comparative remuneration in the market and internal
policies and practices.
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash and fringe
benefits. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost
for the Company.
Variable Remuneration
Objective
Variable remuneration may be provided in to reward executives in a manner which aligns this element of remuneration
with the creation of shareholder wealth.
Employment Contracts
Dr Guido Arnout, Chief Executive Officer and Managing Director:
Dr Arnout is subject to an employment contract with the following conditions:
•
•
•
remuneration salary of US$270,000 per annum;
entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the
performance of his duties; and
remuneration reviewed annually on each review date or at any other time as the Board may determine (in its
absolute discretion).
12
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
Employment Contracts
Termination conditions are as follows:
•
•
six months’ written notice or pay the Executive six months; and
six months’ termination pay in the event of a Change of Control;
Mr David McAuliffe, Executive Director:
Mr McAuliffe is subject to an employment contract with the following conditions:
•
•
•
•
•
remuneration salary of AUD$125,000 per annum plus statutory superannuation;
an equity package to be determined by the Board (subject to shareholder approval);
performance bonuses (if any) as may be approved by the Board from time to time;
entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the
performance of his duties; and
remuneration reviewed annually on each review date or at any other time as the Board may determine (in its
absolute discretion).
Termination of employment can be provided by the Company with three months’ written notice or by the Executive with
three month’s written notice. The notice period can be waived if there is sufficient cause.
Mr Michael Van Buskirk, Chief Engineering Officer:
Mr Buskirk is subject to an employment contract with the following conditions:
•
•
•
•
•
remuneration salary of US$240,000 per annum;
provision with both a Health and Dental Plan;
participation in any employee incentive scheme;
entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the
performance of his duties; and
remuneration reviewed annually on each review date or at any other time as the Board may determine (in its
absolute discretion).
Termination of employment can be provided by the Company with three months’ written notice or by the employee with
three month’s written notice. The notice period can be waived if there is sufficient cause.
Mr Seshubabu Desu, Chief Technology Officer:
Mr Desu is subject to an employment contract with the following conditions:
•
•
•
•
•
remuneration salary of US$200,000 per annum;
provision with both a Health and Dental Plan;
participation in any employee incentive scheme;
entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the
performance of his duties; and
remuneration reviewed annually on each review date or at any other time as the Board may determine (in its
absolute discretion).
Termination of employment can be provided by the Company with three months’ written notice or by the employee with
three month’s written notice. The notice period can be waived if there is sufficient cause.
13
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
Key Management Personnel Remuneration
The following table of benefits and payment details, in respect to the financial year, the components of remuneration
for each member of KMP of the Group and is prepared on the following bases:
TABLE 1: REMUNERATION FOR THE YEAR ENDED TO 30 JUNE 2018
Short Term
Salary, Fees
&
Commissions
Other
Termination
benefits
Post-
Employment
Superannuati
on
Share
Based
Payment
Options 1
Total
Performance
based
remuneration
Executive Director
Dr Guido Arnout 2
346,378
-
Mr David McAuliffe
95,000
30,000
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
Mr Michael Van
Buskirk2
Mr Seshubabu Desu2
40,000
30,000
307,891
258,713
-
-
-
-
Total
1,077,982
30,000
-
-
-
-
-
-
-
-
9,025
-
-
-
-
685,247
1,031,625
-
-
-
134,025
40,000
30,000
267,179
575,070
239,055
497,768
9,025
1,191,481
2,308,488
-
-
-
-
-
-
1 Employee options issued during the financial year.
2 Conversion to AUD of US equivalent.
14
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
Key Management Personnel Remuneration
TABLE 2: REMUNERATION FOR THE YEAR ENDED TO 30 JUNE 2017
Short Term
Salary, Fees
&
Commissions
Other
Termination
benefits
Post-
Employment
Superannuati
on
Share
Based
Payment
Options
Total
Performance
based
remuneration
Executive Director
Dr Guido Arnout 1
Mr David McAuliffe
Non-Executive
Director
Mr James Dorrian 2
Mr Howard Digby
Mr David McAuliffe 3
Other key
management
personnel
Ms Melanie Buffier 4
Mr Michael Van
Buskirk1
Mr Seshubabu Desu1
264,259
79,514
40,000
30,000
-
-
-
-
10,833
30,000
-
-
-
-
-
-
7,554
-
-
-
100,599
318,292
21,746
-
-
-
125,000
19,333
-
-
-
-
Total
865,243
30,000
125,000
26,887
-
-
-
-
-
-
-
-
-
264,259
87,068
40,000
30,000
40,833
244,932
318,292
21,746
1,047,130
-
-
-
-
73%
-
-
-
1 Conversion to AUD of US equivalent.
2 Mr Dorrian requested to be paid in ordinary shares, on 30 November 2016 for FY 2017 $16,666 was settled in ordinary shares and
FY 2016 $22,631 was settled in ordinary shares as approved at the Annual General Meeting on 30 November 2016.
3 Other fees paid to Mr McAuliffe relate to investor relation services provided whilst Non-Executive Director up until 11 November
2016.
4 Ms Buffier resigned on 11 November 2016. Melanie received an annual remuneration salary of $250,000 plus statutory
superannuation.
15
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL
Vested at 30 June 2018
Balance at
beginning
of year
Granted as
remuner-
ation
Options
exercise
d
Net
change
other
Balance at
end of year
Total
Exercisable
Not
Exercis-
able
30 June 2018
Executive
Director
Dr Guido Arnout
36,458,333
14,000,000
Mr David
McAuliffe
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
Mr Michael Van
Buskirk
Mr Seshubabu
Desu
-
-
-
-
-
-
-
-
9,500,000
8,500,000
Total
36,458,333
32,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,458,333
50,458,333
43,458,333
7,000,000
-
-
-
-
-
-
-
-
-
-
-
-
9,500,000
9,500,000
4,750,000
4,750,000
8,500,000
8,500,000
4,250,000
4,250,000
68,458,333
68,458,333
52,458,333
16,000,000
16
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
OPTION HOLDINGS OF KEY MANAGEMENT PERSONNEL
Vested at 30 June
2017
30 June 2017
Balance at
beginning
of period
Granted
as
remuner-
ation
Options
exercise
d
Net change
other
Balance at
end of
period
Total
Exercis-
able
Not
Exercis
-able
Executive
Director
Dr Guido Arnout
36,458,333
Mr David
McAuliffe
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
-
-
-
Mr Peter Webse 1
1,000,000
Ms Melanie
Buffier 2
Mr Michael Van
Buskirk
Mr Seshubabu
Desu
10,000,000
-
-
Total
47,458,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
(10,000,000)
-
-
36,458,333
36,458,333
36,458,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(11,000,000)
36,458,333
36,458,333
36,458,333
-
-
-
-
-
-
-
-
-
1 On 1 July 2017, the Board of Directors determined that Mr Webse is no longer KMP.
2 Ms Buffier ceased employment on 11 November 2016 and therefore no longer a KMP. Accordingly, the net change in options and
share-holdings reflects that she is no longer a KMP.
17
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
SHARE HOLDINGS OF KEY MANAGEMENT PERSONNEL
30 June 2018
Executive Director
Balance
1 July 2017
Granted as
remunerati
on
On exercise
of options
On
conversion of
performance
share
Net change
other
Balance
30 June 2018
Dr Guido Arnout
1,918,942
-
Mr David McAuliffe
11,697,588
328,886
Non-Executive Director
Mr James Dorrian
44,206,121
630,630
Mr Howard Digby
4,554,950
Other key management
personnel
Mr Michael Van Buskirk
1,145,852
Mr Seshubabu Desu
658,984
-
-
-
Total
64,182,437
959,516
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,918,942
12,026,474
5,250,000
50,086,751
-
-
-
4,554,950
1,145,852
658,984
5,250,000
70,391,953
30 June 2017
Executive Director
Balance
1 July 2016
Granted as
remunerati
on
On exercise
of options
On
conversion of
performance
share
Net change
other
Balance
30 June 2017
Dr Guido Arnout
1,617,394
Mr David McAuliffe
10,840,825
-
-
Non-Executive Director
Mr James Dorrian
35,045,806
1,155,764
Mr Howard Digby
3,966,715
Other key management
personnel
Mr Peter Webse 1
Ms Melanie Buffier 2
1,166,667
3,500,000
Mr Michael Van Buskirk
965,790
Mr Seshubabu Desu
-
-
-
-
-
-
Total
57,103,197
1,155,764
-
-
-
-
-
-
-
-
-
301,548
-
1,918,942
156,763
700,000
11,697,588
6,533,962
1,470,589
44,206,121
-
-
-
588,235
4,554,950
(1,166,667)
(3,500,000)
-
-
180,062
-
1,145,852
-
658,984
658,984
7,172,335
(1,248,859)
64,182,437
1 On 1 July 2017, the Board of Directors determined that Mr Peter Webse was no longer KMP.
2 Ms Buffier ceased employment on 11 November 2016 and therefore no longer a KMP. Accordingly, the net change in options and
share-holdings reflects that she is no longer a KMP.
18
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
PERFORMANCE SHARE HOLDINGS OF KEY MANAGEMENT PERSONNEL
For the year ended 30 June 2018 the Performance Shareholdings balances of key management personnel were nil.
30 June 2017
Executive Director
Dr Guido Arnout
Mr David McAuliffe
Non-Executive Director
Mr James Dorrian
Mr Howard Digby
Other key management personnel
Ms Peter Webse
Ms Melanie Buffier
Mr Michael Van Buskirk
Mr Seshubabu Desu
Total
Balance
1 July 2016
Granted as
remuneration
On
conversion of
performance
share
Net change
other
Balance
30 June 2017
301,548
156,763
6,533,962
-
-
-
180,062
-
7,172,335
-
-
-
-
-
-
-
-
-
(301,548)
(156,763)
(6,533,962)
-
-
-
(180,062)
-
(7,172,335)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ REPORT
Remuneration Report (Audited)
Loans to Key Management Personnel
There are no loans between the entity and Key Management Personnel.
Employee Share Acquisition Plan
There were no equity issues under the Company’s Employee Share Acquisition Plan during the financial year.
Principles of Compensation
The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and
executives by the issue of options to the Directors to encourage the alignment of personal and shareholder interests.
The Company believes this policy will be effective in increasing shareholder wealth.
Remuneration Report - End
Signed in accordance with a resolution of the Directors.
Dr Guido Arnout
Managing Director
24 August 2018
20
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF 4DS MEMORY LIMITED
In relation to our audit of the financial report of 4DS Memory Limited for the year ended 30 June 2018, to the
best of my knowledge and belief, there have been no contraventions of the auditor independence requirements
of the Corporations Act 2001 or any applicable code of professional conduct.
PKF MACK
SIMON FERMANIS
PARTNER
24 AUGUST 2018
WEST PERTH
WESTERN AUSTRALIA
21
4DS Memory Limited and Controlled Entities
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
For the year ended 30 June 2018
Revenue and other income
Directors fees
Employee benefits expense
Travel and accommodation
Rent and utilities
Research and development
Legal and professional fees
Note
2
3
3
3
3
2018
$
2017
$
32,468
69,421
(70,000)
(80,833)
(143,146)
(339,629)
(105,307)
(153,110)
(122,862)
(115,221)
(2,453,390)
(1,266,475)
(380,412)
(420,563)
Share based payment
13
(1,690,355)
(31,793)
Depreciation and amortisation expense
(50,363)
(12,994)
Unrealised / realised foreign exchange
(13,961)
(18,381)
Other expenses
Loss before income tax
Income tax expense
(205,750)
(199,979)
(5,203,078)
(2,569,557)
4
-
-
Loss for the year after income tax
(5,203,078)
(2,569,557)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax)
(11,568)
(9,327)
Total comprehensive loss for the year
(5,214,646)
(2,578,884)
Basic and diluted loss per share (dollars per share)
5
(0.006)
(0.003)
The accompanying notes form part of these financial statements.
22
4DS Memory Limited and Controlled Entities
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Other current liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
The accompanying notes form part of these financial statements.
Note
2018
$
2017
$
7
8
9
10
11
2,932,232
2,576,100
7,938
43,194
7,458
51,297
2,983,364
2,634,855
374,087
374,087
36,107
36,107
3,357,451
2,670,962
170,929
116,556
8,507
3,173
6,423
-
182,609
122,979
182,609
122,979
3,174,842
2,547,983
12(a)
12(e)
31,836,715
26,936,180
3,244,195
2,352,588
(31,906,068)
(26,740,785)
3,174,842
2,547,983
23
4DS Memory Limited and Controlled Entities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2018
Balance at 1 July 2016
Total Comprehensive Income
Loss attributable to members
Foreign currency translation of
subsidiary
Total comprehensive loss for the
period
Transactions with owners in their capacity
as owners:
Conversion of performance shares into
ordinary shares
Issue of share capital net of costs
Issue of shares in lieu of Director fees
Share-based payment advisor options
Options issued
Options cancelled
Issued Capital
Accumulated
Losses
$
$
20,733,292
(24,237,088)
Share Based
Payment
Reserve
$
4,864,732
Foreign
Exchange
Reserve
$
(66,990)
Total
$
1,293,946
-
-
-
(2,569,557)
-
(2,569,557)
-
-
-
-
(2,569,557)
(9,327)
(9,327)
(9,327)
(2,578,884)
2,467,547
3,696,045
39,296
-
-
-
-
-
-
-
(2,467,547)
-
-
65,787
31,793
65,860
(65,860)
-
-
-
-
-
-
-
3,696,045
39,296
65,787
31,793
-
Balance at 30 June 2017
26,936,180
(26,740,785)
2,428,905
(76,317)
2,547,983
Issued Capital
Accumulated
Losses
$
$
26,936,180
(26,740,785)
Share Based
Payment
Reserve
$
2,428,905
Foreign
Exchange
Reserve
$
(76,317)
Total
$
2,547,983
Balance at 1 July 2017
Total Comprehensive Income
Loss attributable to members
Foreign currency translation of
subsidiary
Total comprehensive loss for the
period
-
-
-
(5,203,078)
-
(5,203,078)
Transactions with owners in their capacity
as owners:
Issue of share capital net of costs
3,212,656
Share-based payment advisor options
Issue of shares in lieu of Director fees
Issue of shares in lieu of Salary
Issue of employee options
-
23,333
12,169
-
Issue of shares on exercise of options
1,652,377
-
-
-
-
-
-
-
37,795
Options lapsed
Balance at 30 June 2018
-
-
-
-
241,893
-
-
1,480,455
(781,378)
(37,795)
-
(5,203,078)
(11,568)
(11,568)
(11,568)
(5,214,646)
-
-
-
-
-
-
-
3,212,656
241,893
23,333
12,169
1,480,455
870,999
-
31,836,715
(31,906,068)
3,332,080
(87,885)
3,174,842
The accompanying notes form part of these financial statements.
24
4DS Memory Limited and Controlled Entities
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Payments for research and development
Interest received
Note
2018
$
2017
$
-
(850,059)
(1,357,179)
(2,520,764)
(1,145,688)
24,373
10,203
Net cash used in operating activities
7 (b)
(3,346,450)
(2,492,664)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Proceeds from sale of fixed assets
Proceeds from sale of shares
Proceeds from sale of mining tenements
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from lender
Repayment to lender
Proceeds from issue of shares and options
Payment of capital raising cost
Issue of shares on exercise of options
Net cash from financing activities
(373,532)
(25,927)
6,420
-
-
(367,112)
-
52,626
60,000
86,699
-
-
26,715
(31,589)
3,455,000
3,995,721
(242,344)
(233,888)
870,999
-
4,083,655
3,756,959
Net increase/ (decrease) in cash and cash equivalents
370,093
1,350,994
Cash and cash equivalents at the beginning of the financial year
2,576,100
1,243,487
Foreign Exchange
(13,961)
(18,381)
Cash and cash equivalents at the end of the financial year
7 (a)
2,932,232
2,576,100
The accompanying notes form part of these financial statements.
25
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies
have been consistently applied to all years presented, unless otherwise stated.
These are the consolidated financial statements and notes of 4DS Memory Limited (4DS or the Company) and
controlled entities (collectively the Group). 4DS is a company limited by shares, domiciled and incorporated in Australia.
The separate financial statements of 4DS, as the parent entity, have not been presented with this financial report as
permitted by the Corporations Act 2001 (Cth).
The financial statements were authorised for issued on 24 August 2018 in accordance with a resolution by the Directors
of the Company. The Directors have the power to amend and reissue the financial statements.
a. Basis of Preparation
i.
Statement of Compliance
The financial report is a general purpose financial report that has been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations and other authoritative pronouncements as
issued by the Australian Accounting Standards Board and the Corporations Act 2001, as appropriate for “for-
profit” oriented entities. The consolidated financial report of the Group complies with International Financial
Reporting Standards (IFRSs) as issued by the International Accounting Standards Board.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a
financial report containing relevant and reliable information about transactions, events and conditions to which
they apply.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency.
b. Critical Accounting estimates and judgements
The Directors evaluate estimates and judgements incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both externally and within the Group.
i.
Impairment - General
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period
in which the estimate is revised if it affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
ii. Share Based Payments
The grant date fair value of share-based payment is recognised as an expense with a corresponding increase in equity,
over the period that the recipient unconditionally become entitled to the awards.
The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and
non-market vesting conditions are expected to be met, such that, the amount ultimately recognised as an expense is
26
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
based on the number of awards that do not meet the related service and non-market performance conditions at the
vesting date.
The Company follows the guidelines of AASB 2 ‘Share-based payments’ and takes into account all performance
conditions and estimates the probability and expected timing of achieving these performance conditions. Accordingly,
the expense recognised over the vesting period may vary based upon information available and estimates made at
each reporting period, until the expiry of the vesting period.
During the year, the Company engaged an external expert to perform share based payment valuations. See note 12
for valuation assumptions and inputs.
iii. Research and Development Costs
All research and development costs during the year have been expensed. The research and development costs have
not been recognised as intangible assets as they did not meet the criteria as set out in policy at note 1(k)
c. Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 30 June
2018. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls
an investee if and only if the Group has:
-
-
-
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee);
Exposure, or rights, to variable returns from its involvement with the investee, and
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant
facts and circumstances in assessing whether it has power over an investee, including:
The contractual arrangement with the other vote holders of the investee,
-
- Rights arising from other contractual arrangements,
The Group’s voting rights and potential voting rights.
-
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control
over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses
of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from
the date the Group gains control until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the
parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a
deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their
accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,
expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If
the Group loses control over a subsidiary, it:
- De-recognises the assets (including goodwill) and liabilities of the subsidiary
- De-recognises the carrying amount of any non-controlling interests
- De-recognises the cumulative translation differences recorded in equity
27
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
- Recognises the fair value of the consideration received
- Recognises the fair value of any investments retained
- Recognises any surplus or deficit in profit and loss
- Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained
earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or
liabilities
d.
Income Tax
The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the
applicable income tax rate for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted,
except for:
- When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and that, at the time of the transaction, affects
neither the accounting nor taxable profits; or
- When the taxable temporary difference is associated with interests in subsidiaries, associates or joint
ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable
that future taxable amounts will be available to utilise those temporary differences and losses.
The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date. Deferred
tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be
available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the
extent that it is probable that there are future taxable profits available to recover the asset.
Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets
against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable
authority on either the same taxable entity or different taxable entity's which intend to settle simultaneously
e. Going Concern
The Group has net assets of $3,174,842 (2017: $2,547,983) as at 30 June 2018 and incurred a loss of $5,203,078
(2017: $2,569,557) and net operating cash outflow of $3,346,450 (2017: $2,492,664) for the year ended 30 June 2018.
The Group’s ability to continue as a going concern and meet its debts and future commitments as and when they fall
due is dependent on the Company’s ability to raise sufficient working capital to ensure the continued implementation
of the Group’s business plan.
The financial report has been prepared on a going concern basis. In arriving at this position, the Directors have had
regard to the fact that the Company has, or in the Directors’ opinion will have access to, sufficient cash to fund
administrative and other committed expenditure for a period of not less than 12 months from the date of this report.
f. Foreign currency transactions and balances
Functional and presentation currency
The functional currency of each entity within the Group is measured using the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in Australian dollars
which is the parent entity’s functional and presentation currency.
Transaction and balances
28
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date
of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary
items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-
monetary items measured at fair value are reported at the exchange rate at the date when fair values were
determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive
income to the extent that the underlying gain or loss is recognised in other comprehensive Income; otherwise the
exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the Group’s
presentation currency are translated as follows:
- assets and liabilities are translated at year-end exchange rates prevailing at that reporting period;
-
-
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than Australian
dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the
statement of financial position. These differences are recognised in the profit or loss in the period in which the
operation is disposed of.
g. Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any
accumulated depreciation and impairment losses.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset
and the net amount is restated to the revalued amount of the asset.
Plant and equipment
Plant and equipment are measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash
flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have
been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Group includes the cost of materials, direct labour, borrowing costs and
an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. All other repairs and maintenance are charged to the statement of profit or loss and other
comprehensive income during the financial period in which they are incurred.
h. Depreciation
The depreciable amount of all fixed assets, is depreciated on a diminishing value basis over the asset’s useful life to
the Consolidated Entity commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Depreciation Rate
30%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
29
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are included in the statement of comprehensive loss. When revalued assets are sold, amounts included in the
revaluation reserve relating to that asset are transferred to retained earnings.
i. Financial Instruments
Initial recognition and measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes
a party to the contractual provisions of the instrument.
Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified
as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit
or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out
below.
Classification and subsequent measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants. The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the assets or liability, assuming the market participants acts in their economic
best interests.
(i) Loans and receivables
Loans and receivables are included in current assets, except for those which are not expected to mature within
12 months after the end of the reporting period. (All other loans and receivables are classified as non-current
assets.)
(ii) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised
cost. Gains or losses are recognised in profit and loss through the amortisation process and when the financial
liability is derecognised.
Derivative instruments
The Group does not trade or hold derivatives.
Financial guarantees
The Group has no material financial guarantees.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial
instrument has been impaired. An impairment exists if one or more events that has occurred since the initial
recognition of the asset (an incurred ‘loss event’) has an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications
that the debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest
or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable
data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
30
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flow expires or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and
benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The
difference between the carrying value of the financial liability extinguished or transferred to another party and the fair
value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or
loss.
j.
Impairment of Non-Financial Assets
At the end of each reporting date, the Directors assess whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information, including dividends
received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits.
If any such indication exists, an impairment test is carried out on the asset by comparing the asset’s recoverable
amount, being the higher of its fair value less costs to sell and its value in use, to the asset’s carrying amount. Any
excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss. Where it
is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount
of the cash generating unit to which the asset belongs.
k. Research and development costs
The technical feasibility of completing the intangible asset so that the asset will be available for use or sale
Its intention to complete and its ability to use or sell the asset
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an
intangible asset when the Group can demonstrate:
•
•
• How the asset will generate future economic benefits
The availability of resources to complete the asset
•
The ability to measure reliably the expenditure during development
•
The ability to use the intangible asset generated
•
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is
complete and the asset is available for use. It is amortised over the period of expected future benefit. During the period
of development, the asset is tested for impairment annually.
l. Employee Benefits
Wages, salaries and annual leave
i.
Liabilities for wages, salaries and annual leave expected to be settled within one year of the reporting date are
recognised in respect of employees’ services up to the reporting date and are measured at the amounts expected to
be paid when the liabilities are settled.
Superannuation
ii.
Contributions are made by the Consolidated Entity to superannuation funds as stipulated by statutory requirements
and are charged as expenses when incurred.
Employee benefit on costs
iii.
Employee benefit on costs, including payroll tax, are recognised and included in employee benefits liabilities and costs
when the employee benefits to which they relate are recognised as liabilities.
Options
iv.
The fair value of options granted is recognised as an employee benefit expense with a corresponding increase in equity.
The fair value is measured at grant date.
31
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The fair value at grant date is independently determined using the Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-
tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the
expected dividend yield and the risk-free interest rate for the term of the option.
Equity-settled Compensation
v.
The Group operates equity-settled share-based payment employee share and option schemes. The fair value of the
equity to which employees become entitled is measured at grant date and recognised as an expense over the vesting
period, with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid
price. The fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market
vesting conditions. The number of shares and options expected to vest is reviewed and adjusted at each reporting
date such that the amount recognised for services received as consideration for the equity instruments granted shall
be based on the number of equity instruments that eventually vest.
m. Cash and Cash Equivalents
Cash in the statement of financial position comprises cash at bank.
For the purposes of the statement of cash flow, cash and cash equivalents consist of cash and cash equivalents as
defined above.
n. Revenue and other Income
Interest
Interest revenue is recognised as it accrues.
Other revenue
Other revenue is recognised when it is received or when the right to receive payment is established.
o. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing
and financing activities, which are disclosed as operating cash flows.
p. Trade and other Receivables
Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off. A provision for impairment is raised when some doubt as to collection exists.
q. Trade and other Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of consideration to be paid in
the future for goods and services received, whether or not billed to the Company.
Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as
an expense on an accrual basis.
32
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
r. Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a right to use the asset.
Group as a lessee
Operating lease payments, where substantially all the risk and benefits remain with the lessor, are recognised as an
expense in the statement of profit or loss and other comprehensive income on a straight-line basis over the lease term.
Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease
payments between rental expense and reduction of the liability.
s. Operating Segments
Operating segments are identified and segment information disclosed on the basis of internal reports that are regularly
provided to, or reviewed by, the Group’s chief operating decision maker which, for the Group, is the Board of Directors.
In this regard, such information is provided using similar measures to those used in preparing the statement of profit or
loss and other comprehensive income and statement of financial position.
t. Earnings Per Share
Basic earnings per share
i.
Basic earnings per share is determined by dividing the net loss after income tax attributable to members of the
Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of
ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the
year.
Diluted earnings per share
ii.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and
the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
u. Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of
tax, from the proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the
acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.
Shares issued by the Company to a trust, the Group controls are shown as a reduction in equity. Administration
expenses of the trust are expensed to the statement of profit or loss and other comprehensive income.
Where any controlled entity purchases the Company’s equity share capital as treasury shares, the consideration paid
is deducted from equity attributable to the Company’s equity holders until those shares are cancelled, reissued or
disposed of. Where such shares are subsequently sold or reissued, any consideration received, net of any directly
attributable increment transactions costs and the related income tax effects, is included in equity attributable to the
Company’s equity holders.
33
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
v. New Accounting Standards and Interpretations that are not yet mandatory
The following Australian Accounting Standards have been issued or amended and are applicable to the annual financial
statements of the consolidated group (or the company) but are not yet effective. This assumes the following have not
been adopted in preparation of the financial statements at the reporting date.
AASB No.
Title
Application
date of
standard *
Issue date
AASB 9
Financial Instruments
1 January 2018
December 2014
AASB 2010-7
Amendments arising from Accounting Standards arising from
AASB 9 (December 2010)
1 January 2018
AASB 2014-1
Amendments to Australian Accounting Standards
Part E - Financial Instruments
Part E - 1 January
2018
September
2012
June 2014
AASB 2014-5
Amendments to Australian Accounting Standard Arising
From AASB 15
1 January 2018
December 2014
AASB 2014-7 Amendments to Australian Accounting Standard Arising
1 January 2018
December 2014
From AASB 9 (December 2014)
AASB 2014-10 Amendments to Australian Accounting Standard – Sale of
1 January 2018
December 2014
Contribution of Assets Between Investors and its Associates
or Joint Venture
AASB 2015-8
Amendments to Australian Accounting Standards – Effective
Date of AASB 15
1 January 2018
October 2015
AASB 2015-10 Amendments to Australian Accounting Standards – Effective
1 January 2018
December 2015
Date of Amendments to AASB 10 and AASB 128.
AASB 2016-5
AASB 2016-6
Amendments to Australian Accounting Standards –
Classification and Measurement of Share-based Payment
Transactions [AASB 2]
Amendments to Australian Accounting Standards – Applying
AASB 9 Financial Instruments with AASB 4 Insurance
Contracts [AASB 4]
1 January 2018
July 2016
1 January 2018
October 2016
AASB 2017-3
Amendments to Australian Accounting Standards –
Clarifications to AASB 4
1 January 2018
July 2017
AASB 2017-4
Amendments to Australian Accounting Standards –
Uncertainty over Income Tax Treatments
1 January 2019
July 2017
AASB 2017-5
AASB 2017-6
Amendments to Australian Accounting Standards – Effective
Date of Amendments to AASB 10 and AASB 128 and
Editorial Corrections
Amendments to Australian Accounting Standards –
Prepayment Features with Negative Compensation
1 January 2018
December 2017
1 January 2019
October 2017
AASB 2017-7
Amendments to Australian Accounting Standards – Long-
term Interests in Associates and Joint Ventures
1 January 2019
December 2017
AASB 2018-1
Amendments to Australian Accounting Standards – Annual
Improvements 2015-2017 Cycle
1 January 2019
February 2018
AASB 2018-2
Amendments to Australian Accounting Standards – Plan
Amendment, Curtailment or Settlement
1 January 2019
March 2018
AASB 15
Revenues from Contracts with Customers
1 January 2018
October 2015
34
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
AASB No.
Title
Application
date of
standard *
Issue date
AASB 16
Leases
1 January 2019
February 2016
AASB 1059
Service Concession Arrangements: Grantors
1 January 2019
July 2017
AASB
Interpretation
22
AASB
Interpretation
23
Not yet issued
by the AASB
Foreign Currency Transactions and Advance Consideration
1 January 2018
February 2017
Uncertainty over Income Tax Treatments
1 January 2019
June 2017
Conceptual Framework for Financial Reporting#
1 January 2020
March 2018
* Annual reporting periods beginning after
# The IASB issued the revised conceptual framework in March 2018. The AASB are yet to issue the equivalent
pronouncement.
Please note that the above is a full list of Australian Accounting Standards issued but not yet effective. However, if a
particular standard or interpretation is clearly not relevant because it is out of scope for that type of entity. For example,
a for-profit entity is not required to disclose those standards or interpretations relating to not-for-profit or government
entities. Where a standard or interpretation is industry-specific and the entity clearly does not operate in that industry,
the entity is not required to disclose the standard or interpretation. For example, a standard or interpretation that affects
only entities in the superannuation industry would not need to be included in the disclosure by an entity that does not
have operations in that industry.
w. New, revised or amending Accounting Standards and Interpretations adopted
The Consolidated Group has adopted all of the new, revised or amending Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period
there has been no significant impact on the application of those standards.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted. The most significant new standards AASB 9, AASB 15 and AASB 16 for subsequent reporting periods have
been assessed and the Company believes there will be no material impact on the financial statements as a result of
the new standards.
35
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
x. Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is current when: it is expected to be realised or intended to be sold or consumed in normal operating cycle; it
is held primarily for the purpose of trading; it is expected to be realised within twelve months after the reporting period;
or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least
twelve months after the reporting period. All other assets are classified as non-current.
A liability is current when: it is expected to be settled in normal operating cycle; it is held primarily for the purpose of
trading; it is due to be settled within twelve months after the reporting period; or there is no unconditional right to defer
the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as
non-current.
Deferred tax assets and liabilities are always classified as non-current.
36
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
2. REVENUE AND OTHER INCOME
Interest revenue
- Realised/Fair value - (Loss)/gain on financial asset
- Gain on sale of tenement
- Gain on sale of fixed asset
Other Income
30 June 2018
30 June 2017
$
$
26,048
11,795
-
-
6,420
6,420
(2,374)
60,000
-
57,626
Revenue and Other Income
32,468
69,421
3. LOSS FOR THE YEAR
Loss before income tax from continuing operations includes
the following specific expenses:
- Director fees (cash settled)
- Director fees (equity settled)1
- Director fees
Directors fees
- Salary and wages
- Superannuation
- Worker Compensation Insurance
Employee benefits expense
- Office rent
- Utilities
Rent and utilities
- Lease expense
- Consultants
- Salary and wages
- R&D partner
- Other research expenses
Research and development
Interest expense
-
-
70,000
70,000
126,897
10,802
5,447
143,146
100,600
22,262
122,862
115,560
215,699
1,394,230
623,886
104,015
2,453,390
64,166
16,667
-
80,833
303,985
26,887
8,757
339,629
97,219
18,002
115,221
120,787
51,520
1,022,646
-
71,522
1,266,475
1,674
1,592
1 Mr Dorrian requested to be paid in ordinary shares. On 30 November 2016 the equity settlement for FY 2017 $16,666.
37
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
4.
INCOME TAX
The components of tax expense comprise:
Current tax
Deferred tax
The prima facie income tax expense/(benefit) on pre-tax
accounting profit/(loss) from operations reconciles to the
income tax expense/(benefit) in the financial statements as
follows:
30 June 2018
30 June 2017
$
$
-
-
-
-
-
-
Accounting loss before income tax
(5,203,078)
(2,569,557)
At the group’s statutory income tax rate of 27.5% (2017:
27.5%)
Add/(Less): tax effect of non-deductible amounts
Share based payments
Provisions and accruals
Other permanent differences
Unrealised foreign exchange
Capital raising costs
Effect of difference in overseas tax rate
Deferred tax balances not recognised
Income tax expense/(benefit)
(1,430,846)
(706,628)
464,848
(1,509)
(34,824)
(5,055)
(49,345)
(57,109)
1,113,840
-
8,743
2,389
26,780
(7,502)
(37,553)
(40,113)
753,884
-
38
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
4. INCOME TAX
The following deferred tax balances have not been recognised:
Deferred Tax Assets:
Carry forward revenue losses
Capital raising costs
Other
Total Deferred Tax Assets
30 June 2018
$
30 June 2017
$
1,621,679
125,472
5,982
1,753,133
589,313
108,173
12,546
710,032
The tax benefits of the above losses will only be obtained if:
(a)
the consolidated group derives future assessable income of a nature and of an amount sufficient to enable
the benefits
(b)
the consolidated group complies with the conditions for deductibility imposed by law; and
(c) no changes in income tax legislation adversely affect the consolidated group in utilising the benefits.
Deferred Tax Liabilities:
Other
Total Deferred Tax liabilities
-
-
-
-
The above Deferred Tax Liabilities have not been recognised as they have given rise to the carry-forward
revenue losses for which the Deferred Tax Asset has not been recognised.
39
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
5. LOSS PER SHARE (EPS)
a) Reconciliation of loss to profit and loss
Loss for the year
b) Weighted average number of ordinary shares outstanding
during the year used in the calculation of EPS
30 June 2018
30 June 2017
$
$
(5,203,078)
(2,569,557)
No.
No.
841,411,612
772,331,279
c) Loss per share
($0.006)
($0.003)
d) The Group does not report diluted earnings per share with options on annual losses as it is anti-dilutive in
nature.
40
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
6. PARENT ENTITY – 4DS MEMORY LIMITED
As at 30 June 2018 the legal parent of the Group was
4DS Memory Limited
30 June 2018
30 June 2017
$
$
Statement of financial position
Current assets
Non current assets
Total Assets
Current Liabilities
Total Liabilities
Shareholders’ Equity
Share Capital
Reserves
Accumulated losses
Total Shareholders’ Equity
Statement of comprehensive income
Loss for the period
Other Comprehensive Income
Total Comprehensive Loss
2,694,601
2,510,273
342,833
-
3,036,894
2,510,273
163,319
163,319
97,510
97,510
38,423,688
33,523,153
3,332,081
2,428,905
(38,882,194)
(33,539,295)
2,873,575
2,412,763
(5,363,194)
(2,602,214)
-
-
(5,363,194)
(2,602,214)
The Parent Company 4DS Memory Limited has no contingent liabilities as at 30 June 2018 and 30 June 2017,
other than contingent liabilities in Note 17.
41
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
7. CASH AND CASH EQUIVALENTS
30 June 2018
30 June 2017
(a) Total cash and cash equivalents in the Statement of Cash
Flows
Cash at bank
(b) Reconciliation of net loss after income tax to cash flows
used in operations
Net loss after income tax
Non-cash adjustments
Share based payments
Director fee – equity settled
Executive salary – equity settled
Realised/ Unrealised movement in financial assets
Depreciation
Gain on sale of mining tenement
Gain on sale of fixed asset
Unrealised foreign exchange
Changes in assets and liabilities
$
$
2,932,232
2,576,100
2,932,232
2,576,100
(5,203,078)
(2,569,557)
1,722,347
23,333
12,169
-
50,363
31,793
39,296
-
2,374
12,994
-
(60,000)
(6,420)
(9,244)
-
9,054
Decrease/(Increase) in other receivable
(480)
253
Increase/(Decrease) in trade and other payables and
provisions
Decrease/(Increase) in prepayments
56,457
8,103
36,111
5,018
Net cash used in operations
(3,346,450)
(2,492,664)
42
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
8. TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Other receivables
5,031
2,907
7,938
7,364
94
7,458
None of the receivables are past due. Receivables are therefore not impaired and are within initial trade terms.
9. PLANT AND EQUIPMENT
Plant and equipment – at cost
Less: Accumulated depreciation
30 June 2018
30 June 2017
722,815
322,508
(348,728)
(286,401)
374,087
36,107
Reconciliations:
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set
out below:
Consolidated
Balance 1 July 2016
Additions
Foreign exchange movements
Depreciation expense
Balance 30 June 2017
Additions
Disposals
Foreign exchange movements
Depreciation expense
Balance 30 June 2018
Plant and
equipment
23,173
26,482
(554)
(12,994)
36,107
374,087
(6,420)
20,676
(50,363)
374,087
43
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
10. TRADE AND OTHER PAYABLES
30 June 2018
30 June 2017
CURRENT
Trade payables and accruals
170,929
116,556
Trade creditors are non-interest bearing and are normally settled on 30-day terms.
11. PROVISONS
Provision for employee benefits
8,507
6,423
44
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
12. ISSUED CAPITAL AND RESERVES
(a) Movements in ordinary share
capital
Note
2018
2017
2018
2017
Shares
Shares
$
$
Balance at beginning of year
845,563,360
659,156,514
26,936,180
20,733,292
Tranche 1 – Placement shares (2017)
Tranche 2 – Placement shares (2017)
-
-
88,873,477
28,773,582
-
-
3,021,686
974,034
Tranche 1 – Placement shares (2018)
86,375,000
-
3,455,000
Issued capital – in lieu of Director fees
Issued capital – in lieu of Salary
Issued capital – conversion of Class 1
performance shares
Issued capital – on cancellation of
performance shares
Exercise of unlisted options
Capital raising costs
Balance at end of year
Ordinary shares
630,630
1,155,764
328,886
-
23,333
12,169
-
-
31,666,668
-
67,604,019
4
-
-
-
-
1,652,377
964,564,544
845,563,360
31,836,715
26,936,180
(242,344)
(299,675)
-
39,296
-
2,467,547
-
-
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value
and the company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
Share buy-back
There is no current on-market share buy-back scheme.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern,
so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital
structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. The consolidated
entity does not have any external debt.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
45
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
12. ISSUED CAPITAL AND RESERVES (continued)
(b) Movements in options
Note
2018
2017
Option
Options
2018
$
2017
$
Balance at beginning of year
106,625,001
106,125,001
2,428,905
2,397,185
Options exercised, 4DS Memory Limited
options on issue at acquisition date
Options expired, 4DS Memory Limited
options on issue at acquisition date
Options exercised, advisor options
(28,666,668)
(1,000,000)
-
-
(715,591)
-
(37,795)
(3,000,000)
3,000,000
(65,787)
65,787
Share based payment, adviser options
Note 13
Options cancelled/lapsed during the year
-
-
5,000,000
31,993
31,793
(7,500,000)
-
(65,860)
Share based payment, employee options
Note 13
Share based payment, adviser options
Note 13
42,275,000
5,000,000
-
-
1,480,455
209,900
-
-
Balance at end of year
121,233,333
106,625,001
3,332,080
2,428,905
(c) Movements in performance
shares
Note
Balance at beginning of year
Performance shares issued
Conversion to ordinary shares
Balance at end of year
(i) Performance shares
2018
No.
2017
No.
-
-
-
-
67,604,019
-
(67,604,019)
-
2018
$
-
-
-
-
2017
$
2,467,547
-
(2,467,547)
-
Last financial year, the following performance shares were converted:
•
67,604,019 Class 1 Performance Shares as consideration for the acquisition.
Details of the issue are:
Class 1 Performance shares
The Class 1 Performance Share are shares that will each convert into Share on a one for one basis upon
satisfaction of a performance milestone, being 4DS Memory announcing that the Expert has delivered a report
to 4DS Memory confirming that it has achieved “endurance consistency” (the Milestone). Endurance
consistency will be achieved on the first successful duplication of PDR cells in two wafers on one or more lots
(that are different lots from the lot that define the PQR), as measured by either:
•
•
linear scale endurance yields for 400 cycles where the state current is read after each cycle; or
logarithmic scale endurance yields for 10,000 cycles where the state current is read 4 times per decade.
That are higher than or equal to 90% for each of the 2 wafers where including all POR cells with sizes up
to 3 times the smallest cell size in at least 2 die per wafer.
46
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
12. ISSUED CAPITAL AND RESERVES (continued)
The Class 1 Performance Share expire on 31 December 2018. To the extent that the Milestone has not been
achieved on or before the expiry date, then the Class 1 Performance Shares will automatically consolidate to
a nominal number which the Milestone will be taken to have been met:
•
• All silicon products used in mobile devices (smartphones, tablets, laptops) and date centres (cold storage
and the cloud) are very complex high-volume semiconductor products that need a very high degree of
manufacturing consistency and operating consistency to be profitable for the chip maker and affordable
for the chip buyer.
Today’s high-density memory chips contain billions of memory cells together with the control circuits to
select certain cells, read their state (“0” or “1”), or write a different state. The smaller the cells, the more
data that can be packed into a single chip. Many memory chips are manufactured together on a wafer
through a complex sequence of depositing super thin materials and etching away certain sections of the
depositions. When all process steps are completed, the wafer is cut into lots of individual memory chips
which are then tested, packaged and sold.
4DS Memory’s initial focus was to establish a baseline process that could manufacture individual memory
cells of various sizes that perform the desire function consistently cell-to-cell on the same wafer on the
same lot (manufactured together). The first goal was to demonstrate that 4DS Memory had a repeatable
process that could manufacture cells on wafers in a new lot that behave very similar to cells on wafers
manufactured in an earlier lot (i.e. lot-to-lot consistency).
•
• Having achieved, lot-to-lot consistency, 4DS Memory’s focus is to gradually improve the process in
incremental steps to improve the fundamental behaviour of the cell (reading, writing, storing) while
maintains lot-to-lot consistency. The Milestones is specially focused on 4DS Memory ReRam cells
reaching a certain endurance level: how many times the state of the cell can be changed reliably from a
“0” to a “1”.
4DS has entered into the Joint Development Agreement with HGST Netherlands B.V., to investigate the
scaling of 4DS ReRam cells to small cell geometries for memory applications.
•
•
•
Following the achievement of the Milestone, 4DS Memory will be well positioned to develop array of cells
and test chips.
The Milestone is further detailed in the necessary technical terms in the full terms and conditions of the
Class 1 Performance Shares to ensure that the Milestone can be verified and audited using clear metrics
by an independent expert.
The deemed value per performance share is $0.0365. The company was in voluntary suspension on the grant
date therefore the deemed value is based on the 30-day average of the closing price of the Company’s
securities after relisting. Total value of $2,467,547 vested immediately and expensed as excess consideration.
All the Class 1 Performance Shares were converted to ordinary shares for the year ending 30 June 2017.
47
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
12. ISSUED CAPITAL AND RESERVES (continued)
(d) Share based payment reserve
Balance at beginning of year
2,428,905
4,864,732
Conversion of performance shares to ordinary shares
-
(2,467,547)
30 June 2018
30 June 2017
$
$
Options lapsed during the year
Share based payment expense
Exercise of options
Balance at end of year
(37,795)
(65,860)
1,722,347
97,580
(781,377)
-
3,332,080
2,428,905
The option reserve is used to record the value of share based payments provided to employees, including Key
Management Personnel, as part of their remuneration. Refer to Note 15 for further details.
(e) Foreign exchange translation reserve
Balance at beginning of year
(76,317)
(66,990)
Foreign exchange movement on translation of foreign operations
(11,568)
(9,327)
Balance at end of year
(87,885)
(76,317)
The purpose of the foreign exchange translation reserve is to recognise exchange differences arising from the
translation of foreign operations to Australian dollars.
Share based payment reserve
Foreign exchange translation reserve
Total reserves
3,332,080
2,428,905
(87,885)
(76,317)
3,244,195
2,352,588
48
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
12. ISSUED CAPITAL AND RESERVES (continued)
(f) Options
Summary of options granted
The following table illustrates the number (No.) and weighted
average exercise prices (WAEP) of, and movements in, share
options issued during the year:
Outstanding at 1 July 2017
Exercised during the year
Expired during the year
Granted during the year
Outstanding at the 30 June 2018
WAEP
No.
0.036
106,625,001
(0.018)
(31,666,668)
(0.001)
(1,000,000)
0.045
47,275,000
0.062
121,233,333
49
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
13. SHARE BASED PAYMENTS
The following share based payment arrangements were entered into during the year ended 30 June 2018:
For the period from 2 July 2017 until 2 November 2017 tranches 3 to 7 of 5,000,000 advisor options issued on 2
May 2017 vested. The 5,000,000 options were issued in 7 tranches on 2 May 2017 at an exercise price of $0.05
each expiring 31 December 2019, pursuant for services provided in relations to promoting the Company. During
the year ended 30 June 2018 an investor relations expense of $31,993 was recognised for tranches 3 to 7.
On 30 October 2017, the Company issued 28,275,000 employee incentive options to key management personnel.
The options exercisable at $0.042 and expiring 27 October 2022 with 30% of the options vesting immediately on
grant and 70% vesting at 10% per quarter commencing 27 January 2018. During the year ended 30 June 2018 a
share based payment expense of $795,208 was recognised.
On 10 November 2017, the Company issued 5,000,000 advisor options, exercisable at $0.07 and expiring 30 June
2020, pursuant for services provided in relation to the placement. During the year ended 30 June 2018 a share
based payment expense of $209,900 was recognised.
On 22 January 2018, the Company issued 14,000,000 employee incentive options the Managing Director. The
options exercisable at $0.042 and expiring 27 October 2022 with 30% of the options vesting immediately on grant
date and 70% vesting at 10% per quarter commencing 27 January 2018. During the year ended 30 June 2018 a
share based payment expense of $685,247 was recognised.
Fair value of options
The fair value of share options granted have been valued using a Black Scholes Methodology, taking into account the
terms and conditions upon which the unlisted share options were granted.
A summary of the inputs used in the valuation of the options is as follows:
Unlisted Share Options
Employee Incentive
Options
Advisor Options
Employee Incentive
Options
Exercise price
Share price at date of issue
$0.042
$0.050
$0.070
$0.051
$0.042
$0.079
Grant date
30 October 2017
10 November 2017
8 January 2018
Expected volatility
85%
175%
100%
Expiry date
27 October 2022
30 June 2020
27 October 2022
Risk free interest rate
Value per option
Number of options
Total value of options
2.22%
$0.0354
28,275,000
$1,001,501
1.96%
$0.0419
5,000,000
$209,900
2.46%
$0.0646
14,000,000
$904,120
For the year ending 30 June 2018 a share based payment expense of $1,690,355 was recognised in line with
option vesting periods. An additional $31,993 was recognised as a vesting expense to investor relations from
options issued in a prior period.
50
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
14. RELATED PARTY DISCLOSURE
(a) Controlled Entities
% Interest
Country of Incorporation
2018
2017
Australia
United States of America
Australia
Australia
100
100
100
100
100
100
100
100
4D-S Pty Limited
4DS Inc.
Fitzroy Copper Pty Limited
Fitzroy Employee Share Plan Pty Limited
(b) Key Management Personnel (“KMP”)
Details relating to KMP, including remuneration paid, are included in Note 13 and the audited remuneration
report section of the Directors’ report.
(c) Transactions with Other Related Parties
Other than the above, there were no transactions with other related parties during the financial year.
15. KEY MANAGEMENT PERSONNEL
Compensation for Key Management Personnel
Short term employee benefits
Post-employment benefits
Equity settled
Other payments
Termination benefits
Total compensation
16. FINANCIAL INSTRUMENTS
Financial Risk Management
30 June 2018
30 June 2017
1,077,982
9,025
1,191,481
30,000
-
2,308,488
865,243
26,887
-
30,000
125,000
1,047,130
The Group’s financial instruments consist mainly of deposits with banks equity instruments and accounts receivable
and payable. The main purpose of non-derivative financial instruments is to raise finance for the Group’s operation.
The Group does not speculate in the trading of derivative instruments.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial
asset and financial liability are disclosed in Note 1.
Specific Financial Risk Exposures and Management
The Group’s activities expose it to a variety of financial risks; market risk (including interest rate risk, price risk and
foreign currency risk), credit risk and liquidity risk.
(i)
Market Risk
The board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury
management strategies in the context of the most recent economic conditions and forecasts.
51
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
16. FINANCIAL INSTRUMENTS (Continued)
Interest rate risk
Exposure to interest rate risk arises on financial assets and liabilities recognised at the end of the reporting period
whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial
instruments. The Group is also exposed to earnings volatility on floating rate instruments.
Interest rate risk is not material to the Group as no interest-bearing debt arrangements have been entered into
Price risk
Price risk relates to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices. The Group is exposed to securities price risk on investments classified as available for
sale. The investment in listed equities has been valued at the market price prevailing at reporting date. Management
of this investment’s price risk is by ongoing monitoring of the value with respect to any impairment
Foreign Exchange Risk
Exposure to foreign exchange risk may result in the fair value or future cash flows of a financial instrument fluctuating
due to movement in foreign exchange rates of currencies in which the Group holds financial instruments which are
other than the AUD functional currency of the Group.
With instruments being held by overseas operations, fluctuations in foreign currencies may impact on the Group’s
financial results. The Group’s exposure to foreign exchange risk is monitored by the board. The majority of the
Group’s funds are held in Australian and United States dollars.
At 30 June, the Group has financial assets denominated in the foreign currencies detailed below:
2018
2017
Foreign
Currency
AUD
Equivalent
Foreign
Currency
AUD
Equivalent
USD
$341,045
$460,642
$858,683
$1,117,922
A 5% movement in foreign exchange rates would increase or decrease the loss before tax by $23,032 (2017:
$55,896).
At 30 June, the Group has financial liabilities denominated in the foreign currencies detailed below:
2018
2017
Foreign
Currency
AUD
Equivalent
Foreign
Currency
AUD
Equivalent
USD
$14,281
$19,291
$6,125
$7,970
A 5% movement in foreign exchange rates would not have a material increase or decrease on the loss before tax
(2017: No material movement).
52
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
16. FINANCIAL INSTRUMENTS (Continued)
(ii)
Credit Risk
Credit exposure represents the extent of credit related losses that the group may be subject to on amounts to be
received from financial assets. Credit risk arises principally from trade and other receivables. The objective of the
Group is to minimise the risk of loss from credit risk. Although revenue from operations in minimal, the Group trades
only with creditworthy third parties. In addition, receivable balances are monitored on an ongoing basis with the result
that the Group’s exposure to bad debts is insignificant. The Group’s maximum credit risk exposure is limited to the
carrying value of its financial assets as indicated on the Statement of Financial Position and notes to the financial
statements.
The credit quality of the financial assets was high during the year. The table below details the credit quality of the
financial assets at the end of the year:
Cash and cash equivalents held at NAB
Cash and cash equivalents held at HSBC
Other receivables and deposits
2018
$
2017
$
2,651,772
2,460,040
280,460
116,060
7,938
7,458
2,940,170
2,583,558
Cash flow and fair value interest rate risk
From time to time the Group has significant interest-bearing assets, but they are as a result of the timing of equity
raisings and capital expenditure rather than a reliance on interest income. The interest rate risk arises on the rise
and fall of interest rates. The Group’s income and operating cash flows are not expected to be materially exposed to
changes in market interest rates in the future and the exposure to interest rates is limited to the cash and cash
equivalents balances.
At reporting date, the Group had the following financial assets exposed to interest rate risk:
Interest rate risk
Cash and cash equivalents (i)
(i) The weighted average interest rate of cash and cash equivalents is 0.95%
None of the Group’s financial liabilities are interest bearing.
2018
$
2017
$
2,932,232
2,576,100
2,932,232
2,576,100
53
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
16. FINANCIAL INSTRUMENTS (Continued)
(iii)
Liquidity Risk
The Group currently does not have major funding in place. However, the Group continuously monitors forecasts and
actual cash flows and the maturity profiles of financial assets and financial liabilities to manage its liquidity risk.
Net fair value of financial assets and liabilities
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their
respective net fair values, determined in accordance with accounting policies disclosed in Note 1.
17. CONTINGENT LIABILITIES
The Company completed the winding up of Premier Coking Coal, LLC including surrendering the relevant leases during
a previous period and accordingly has no ongoing commitments in this required. However, the Group remains a party
to a claim with a third party in relation to a claim on a small portion of the Emmaus property lease above the Gilbert
Seam. The Company considers the claim to be immaterial.
The Directors are not aware of any other contingent liabilities as at 30 June 2018.
18. SEGMENT REPORTING
The Company has identified its operating segments based on internal reports are reviewed by the Board and
management. There was only one operating segment being research and development of non-volatile memory
technology. ReRam for next generation storage in mobile and cloud.
19. EVENTS AFTER THE REPORTING DATE
On 18 July 2018, the Company announced the granting of its 20th patent in the USA: “Heterojunction Oxide Non-
Volatile Memory Device”. The Company believes the 20th patent further strengthens our robust intellectual property
position in the field of Interface Switching ReRam.
On 23 July 2018, the Company issued 880,000 unlisted options to a corporate advisor, exercisable at $0.045 on or
before 23 July 2020, with 50% vesting on issue and 50% vesting after 3 months.
There have been no other matters or circumstances that have arisen since 30 June 2018 that have significantly
affected or may significantly affect:
•
the Group’s operations in future years; or
•
•
the results of those operations in future years; or
the Group’s state of affairs in future years.
54
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
NOTES TO THE FINANCIAL STATEMENTS
20. AUDITORS REMUNERATION
The auditor of 4DS Memory Limited for the year ended 30 June
2018 is PKF Mack Chartered Accountants
Amounts received or due and receivable by PKF Mack for:
- Audit and review of financial statements
- Other services
30 June 2018
30 June 2017
$
$
27,950
27,850
7,040
6,630
34,990
34,480
21. COMMITMENTS
Material commitments
The Company entered into an agreement with imec on the 31 October 2017 to develop a transferrable production
compatible process flow for its interface Switching ReRAM technology and to demonstrate this process on imec’s
megabit test chip.
From 1 Janaury 2018 the Company shall pay imec a total of 1,595,000 Euro, with payments made quarterly until 1
October 2019. The remaining contractual commitment at 30 June 2018 was 1,196,250 Euro.
Operating lease commitments
Non-cancellable operating lease commitments contracted for but not
capitalised in the financial statements
Minimum lease payments
- Not later than one year
- Greater than one year
30 June 2018
30 June 2017
102,710
79,490
43,281
116,485
145,991
195,975
The property lease is for the period 1 December 2015 to 30 November 2019, with rent payable monthly in advance.
55
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
(a)
(b)
2
3.
4.
the financial statements, notes and additional disclosures included in the Directors’ report designated as
audited, of the Consolidated Group are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
giving a true and fair view of the Company’s and Consolidated Group’s financial position as at 30 June 2018
and of their performance for the year ended on that date.
The financial report also complies with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1(a) (i) to the financial report.
In the Directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended to 30 June 2018.
This declaration is made in accordance with a resolution of the Board of Directors.
Managing Director
Dr Guido Arnout
24 August 2018
56
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF 4DS MEMORY LIMITED
Report on the Financial Report
Opinion
We have audited the accompanying financial report of 4DS Memory Limited (the company), which
comprises the consolidated statement of financial position as at 30 June 2018, the consolidated statement
of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration of the company and the
consolidated entity comprising the company and the entities it controlled at the year’s end or from time to
time during the financial year.
In our opinion the financial report of 4DS Memory Limited is in accordance with the Corporations Act 2001,
including:
i)
Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018
and of its performance for the year ended on that date; and
ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to
obtain reasonable assurance about whether the financial report is free from material misstatement. Our
responsibilities under those standards are further described in the Auditor’s Responsibility section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Emphasis of Matter
Without modifying our opinion, we draw attention to Note 1(e) in the financial report, which indicates that the
consolidated entity incurred a loss of $(5,203,078) (2017: $(2,569,557)) during the year ended 30 June
2018. This condition, along with other matters as set out in note 1, indicate the existence of a material
uncertainty that may cast significant doubt about the company and consolidated entity’s ability to continue
as a going concern and therefore, the company and consolidated entity may be unable to realise its assets
and discharge its liabilities in the normal course of business.
The financial report of the consolidated entity and the company does not include any adjustments in relation
to the recoverability and classification of recorded asset amounts or to the amounts and classification of
liabilities that might be necessary should the company and/or the consolidated entity not continue as going
concerns.
57
Independence
We are independent of the consolidated entity in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the code) that are relevant to our audit of the financial report in Australia. We
have also fulfilled our other ethical responsibilities in accordance with the Code.
Key Audit Matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current year. This matter was addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
this matter. For the matter below, our description of how our audit addressed the matter is provided in that
context.
Value of Share Based Payments
Why significant
How our audit addressed the key audit matter
issued
For the year ended 30 June 2018 the value of share
totalled $1,690,355, as
based payments
disclosed in Note 13. This amount has been expensed.
In addition, $31,993 was recognised as a vesting
expense to investor relations from options issued in a
prior period.
The consolidated entity’s accounting judgement and
estimates in respect of share based payments is
outlined in Note 1(b). Significant judgement is required
in relation to:
The valuation method used in the model; and
The assumptions and inputs used within the
model.
Our work included, but was not limited to, the following
procedures:
Reviewed the independent expert’s valuations of
options issued, including:
o
o
o
o
ensuring the independence of the independent
expert;
assessing the credentials of the independent
expert;
assessing the appropriateness of the valuation
method used; and
assessing
assumptions and
valuation model.
reasonableness
of
inputs used within
the
the
the
Reviewed Board meeting minutes and ASX
announcements as well as enquired of relevant
personnel to ensure all share based payments had
been recognised;
Assessed the allocation and recognition to ensure
reasonable; and
Assessed
the appropriateness of
disclosures in Note 12(b) and Note 13.
the
related
Other Information
Other Information is financial and non-financial information in the Annual Report of the consolidated entity
which is provided in addition to the Financial Report and Auditor’s Report. The Directors are responsible for
the Other Information in the Annual Report.
The Other Information we obtained prior to the date of this Auditor’s Report is the Director’s Report. The
remaining Other Information, if any, is expected to be made available to us after the date of the Auditor’s
Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, the auditor does
not and will not express as audit opinion or any form of assurance conclusion thereon, with the exception of
the Remuneration Report.
58
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information in
the Financial Report and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Directors’ Responsibilities for the Financial Report
The Directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the Directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note
1(a), the Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of
Financial Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the Directors are responsible for assessing the consolidated entity’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using a
going concern basis of accounting unless the Directors either intend to liquidate the consolidated entity or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to
obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individual or in aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report.
The procedures selected depend on the auditor’s judgement, including assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true
and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
report.
We conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the consolidated entity’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the consolidated entity to cease to continue as a going concern.
59
We evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the consolidated entity to express an opinion on the financial report. We are responsible for
the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.
We communicate with the Directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
The Auditing Standards require that we comply with relevant ethical requirements relating to audit
engagements. We also provide the Directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore key audit matters. We
describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated
in our report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
Report on the Remuneration Report
Opinion
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2018.
In our opinion, the Remuneration Report of 4DS Memory Limited for the year ended 30 June 2018, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
PKF MACK
SIMON FERMANIS
PARTNER
24 AUGUST 2018
WEST PERTH
WESTERN AUSTRALIA
60
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement is current as at 26 September 2018 and has been approved by the
Board of the Company.
This Corporate Governance Statement discloses the extent to which the Company will follow the
recommendations set by the ASX Corporate Governance Council in its publication Corporate Governance
Principles and Recommendations 3rd Edition (Recommendations). The Recommendations are not
mandatory, however the Recommendations that will not be followed have been identified and reasons for
not following them, along with what (if any) alternative governance practices have been adopted in lieu of
the Recommendation.
The Company has adopted Corporate Governance Policies which provide written terms of reference for the
Company’s corporate governance practices. The Board of the Company has not yet formed an audit
committee, nomination committee, risk management committee or remuneration committee.
The Company’s Corporate Governance Policies are available on
www.4dsmemory.com.
the Company’s website at
Principle 1: Lay solid foundations for management and oversight
Roles of the Board & Management
The Board of Directors is responsible for guiding and monitoring the Company on behalf of shareholders by
whom they are elected and to whom they are accountable.
The Board is responsible for, and has the authority to determine all matters relating to the strategic direction,
policies, practices, establishing goals for management and the operation of the Company. The Managing
Director is responsible to the Board for the day-to-day management of the Company.
The principal functions and responsibilities of the Board include, but are not limited to, the following:
•
•
•
Appointment, evaluation, rewarding and if necessary the removal of the Managing Director (or
equivalent), the Company Secretary and senior management personnel;
In conjunction with members of the senior management team, develop corporate objectives, strategies
and operations plans and approve and appropriately monitor plans, new investments, major capital and
operating expenditures, use of capital, acquisitions, divestitures and major funding activities;
Establishing appropriate levels of delegation to the executive Directors to allow them to manage the
business efficiently;
• Monitoring actual performance against planned performance expectations and reviewing operating
information at a requisite level to understand at all times the financial and operating conditions of the
Company;
• Monitoring the performance of senior management, including the implementation of strategy and
ensuring appropriate resources are available;
•
Identifying areas of significant business risk and ensure that the Company is appropriately positioned
to manage those risks;
• Overseeing the management of safety, occupational health and environmental issues;
•
•
•
Satisfying itself that the financial statements of the Company fairly and accurately set out the financial
position and financial performance of the Company for the period under review;
Satisfying itself that there are appropriate reporting systems and controls in place to assure the Board
that proper operational, financial, compliance, and internal control processes are in place and
functioning appropriately;
Ensuring that appropriate internal and external audit arrangements are in place and operating
effectively;
61
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
•
•
Authorising the issue of any shares, options, equity instruments or other securities within the constraints
of the Corporations Act and the ASX Listing Rules; and
Ensuring that the Company acts legally and responsibly on all matters and assuring itself that the
Company has adopted, and that its practice is consistent with, a number of guidelines including:
− Code of Conduct;
− Continuous Disclosure Policy;
− Diversity Policy;
− Performance Evaluation Practices Policy;
− Procedures for Selection and Appointment of Directors;
− Remuneration Policy;
− Risk Management and Internal Compliance and Control Policy;
− Securities Trading Policy; and
− Shareholder Communication Policy.
Subject to the specific authorities reserved to the Board under the Board Charter, the Board delegates to the
Managing Director responsibility for the management and operation of 4DS. The Managing Director is
responsible for the day-to-day operations, financial performance and administration of 4DS within the powers
authorised to him from time-to-time by the Board. The Managing Director may make further delegation within
the delegations specified by the Board and will be accountable to the Board for the exercise of those
delegated powers.
Further details of Board responsibilities, objectives and structure are set out in the Board Charter on the 4DS
website.
Board Committees
The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to
justify the formation of separate committees at this time including audit, risk, remuneration or nomination
committees, preferring to manage the Company through the full Board of Directors. The Board assumes the
responsibilities normally delegated to the audit, risk, remuneration and nomination Committees.
If the Company’s activities increase, in size, scope and nature, the appointment of separate committees
will be reviewed by the Board and implemented if appropriate.
Board Appointments
The Company undertakes comprehensive reference checks prior to appointing a Director, or putting that
person forward as a candidate to ensure that person is competent, experienced, and would not be impaired
in any way from undertaking the duties of Director. The Company provides relevant information to
shareholders for their consideration about the attributes of candidates together with whether the Board
supports the appointment or re-election.
The terms of the appointment of a non-executive Director, executive Directors and senior executives are
agreed upon and set out in writing at the time of appointment.
The Company Secretary
The Company Secretary is accountable directly to the Board, through the Chairman, on all matters to do with
the proper functioning of the Board, including agendas, Board papers and minutes, advising the Board and
its Committees (as applicable) on governance matters, monitoring that the Board and Committee policies
and procedures are followed, communication with regulatory bodies and the ASX and statutory and other
filings.
62
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
Diversity
The Board has adopted a Diversity Policy which provides a framework for the Company to establish and
achieve measurable diversity objectives, including in respect to gender diversity. The Diversity Policy allows
the Board to set measurable gender diversity objectives (if considered appropriate) and to assess annually
both the objectives (if any have been set) and the Company’s progress towards achieving them.
The Board considers that, due to the size, nature and stage of development of the Company, setting
measurable objectives for the Diversity Policy at this time is not appropriate. The Board will consider setting
measurable objectives as the Company increases in size and complexity.
The participation of women in the Company at the date of this report is as follows:
• Women employees in the Company
• Women in senior management positions
• Women on the Board
0%
0%
0%
The Company’s Diversity Policy is available on its website.
Board & Management Performance Review
On an annual basis, the Board conducts a review of its structure, composition and performance.
The annual review includes consideration of the following measures:
• comparing the performance of the Board against the requirements of its Charter;
• assessing the performance of the Board over the previous 12 months having regard to the corporate
strategies, operating plans and the annual budget;
reviewing the Board’s interaction with management;
reviewing the type and timing of information provided to the Board by management;
reviewing management’s performance in assisting the Board to meet its objectives; and
identifying any necessary or desirable improvements to the Board Charter.
•
•
•
•
The method and scope of the performance evaluation will be set by the Board and may include a Board self-
assessment checklist to be completed by each Director. The Board may also use an independent adviser
to assist in the review.
The Chairman has primary responsibility for conducting performance appraisals of Non-Executive Directors,
in conjunction with them, having particular regard to:
• contribution to Board discussion and function;
• degree of independence including relevance of any conflicts of interest;
• availability for and attendance at Board meetings and other relevant events;
• contribution to Company strategy;
• membership of and contribution to any Board committees; and
• suitability to Board structure and composition.
The Board conducts an annual performance assessment of the Managing Director against agreed key
performance indicators.
Board and management performance reviews were conducted during the year in accordance with the above
processes.
Independent Advice
Directors have a right of access to all Company information and executives. Directors are entitled, in fulfilling
their duties and responsibilities, to obtain independent professional advice on any matter connected with the
discharge of their responsibilities, with prior notice to the Chairman, at 4DS’s expense.
63
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
Principle 2: Structure the board to add value
Board Composition
During the financial year and to the date of this report the Board was comprised of the following members:
Mr James Dorrian
Dr Guido Arnout
Mr David McAuliffe
Mr Howard Digby
Non-Executive Chairman (appointed 7 December 2015);
CEO and Managing Director (appointed 7 December 2015);
Executive Director (appointed 7 December 2015); and
Non-Executive Director (appointed 7 December 2015).
The Board currently consists of two Executive Directors and two Non-Executive Directors.
4DS has adopted a definition of 'independence' for Directors that is consistent with the Recommendations.
The Board does not consist of a majority of independent Directors. The Company’s Non-Executive
Chairman, Mr James Dorrian, is not considered to be an independent Director as he is a substantial
shareholder of the Company and both Dr Guido Arnout and Mr David McAuliffe are not considered to be
independent as they are executives of the Company.
Mr Howard Digby is considered to be independent as he is not a member of management and is free of any
business or other relationship that could materially interfere with – or could reasonably be perceived to
materially interfere with – the independent exercise of his judgement.
Board Selection Process
The Board considers that a diverse range of skills, backgrounds, knowledge and experience is required in
order to effectively govern 4DS. The Board believes that orderly succession and renewal contributes to
strong corporate governance and is achieved by careful planning and continual review.
The Board is responsible for the nomination and selection of Directors. The Board reviews the size and
composition of the Board regularly and at least once a year as part of the Board evaluation process.
The Board has established a Board Skills Matrix. The Board Skills Matrix includes the following areas of
knowledge and expertise:
• Strategic expertise;
• Specific industry knowledge;
• Accounting and finance;
• Risk management;
• Experience with financial markets; and
•
Investor relations.
Induction of New Directors and Ongoing Development
New Directors are issued with a formal Letter of Appointment that sets out the key terms and conditions of
their appointment, including Director's duties, rights and responsibilities, the time commitment envisaged,
and the Board's expectations regarding involvement with any Committee work.
An induction program is in place and new Directors are encouraged to engage in professional development
activities to develop and maintain the skills and knowledge needed to perform their role as Directors
effectively.
Principle 3: Act ethically and responsibly
The Company has implemented a Code of Conduct, which provides guidelines aimed at maintaining high
ethical standards, corporate behaviour and accountability within the Company.
All employees and Directors are expected to:
64
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
•
respect the law and act in accordance with it;
• maintain high levels of professional conduct;
•
•
•
•
respect confidentiality and not misuse Company information, assets or facilities;
avoid real or perceived conflicts of interest;
act in the best interests of shareholders;
by their actions contribute to the Company’s reputation as a good corporate citizen which seeks the
respect of the community and environment in which it operates;
perform their duties in ways that minimise environmental impacts and maximise workplace safety;
exercise fairness, courtesy, respect, consideration and sensitivity in all dealings within their workplace
and with customers, suppliers and the public generally; and
act with honesty, integrity, decency and responsibility at all times.
•
•
•
An employee that breaches the Code of Conduct may face disciplinary action including, in the cases of serious breaches,
dismissal. If an employee suspects that a breach of the Code of Conduct has occurred or will occur, he or she must
report that breach to the Company Secretary. No employee will be disadvantaged or prejudiced if he or she reports in
good faith a suspected breach. All reports will be acted upon and kept confidential.
Principle 4: Safeguard integrity in corporate reporting
The Board as a whole fulfils to the functions normally delegated to the Audit Committee as detailed in the
Audit Committee Charter.
The Board is responsible for the initial appointment of the external auditor and the appointment of a new
external auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate
complete independence from the Company through the engagement period. The Board may otherwise
select an external auditor based on criteria relevant to the Company’s business and circumstances. The
performance of the external auditor is reviewed on an annual basis by the Board.
The Board receives regular reports from management and from external auditors. It also meets with the
external auditors as and when required.
The external auditors attend 4DS's AGM and are available to answer questions from security holders
relevant to the audit.
Prior approval of the Board must be gained for non-audit work to be performed by the external auditor. There
are qualitative limits on this non-audit work to ensure that the independence of the auditor is maintained.
There is also a requirement that the audit partner responsible for the audit not perform in that role for more
than five years.
CEO and CFO Certifications
The Board, before it approves the entity’s financial statements for a financial period, receives from its CEO
and CFO (or, if none, the persons fulfilling those functions) a declaration provided in accordance with Section
295A of the Corporations Act that, in their opinion, the financial records of the entity have been properly
maintained and that the financial statements comply with the appropriate accounting standards and give a
true and fair view of the financial position and performance of the entity and that the opinion has been formed
on the basis of a sound system of risk management and internal control which is operating effectively.
Principle 5: Make timely and balanced disclosure
The Company has a Continuous Disclosure Policy which outlines the disclosure obligations of the Company
as required under the ASX Listing Rules and Corporations Act. The policy is designed to ensure that
procedures are in place so that the market is properly informed of matters which may have a material impact
on the price at which Company securities are traded.
65
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
The Board considers whether there are any matters requiring disclosure in respect of each and every item
of business that it considers in its meetings. Individual Directors are required to make such a consideration
when they become aware of any information in the course of their duties as a Director of the Company.
The Company is committed to ensuring all investors have equal and timely access to material information
concerning the Company.
The Board has designated the Company Secretary as the person responsible for communicating with the
ASX. The Chairman, Managing Director and the Company Secretary are responsible for ensuring that:
a) Company announcements are made in a timely manner, that announcements are factual and do not
omit any material information required to be disclosed under the ASX Listing Rules and Corporations
Act; and
b) Company announcements are expressed in a clear and objective manner that allows investors to
assess the impact of the information when making investment decisions.
Principle 6: Respect the rights of security holders
The Company recognises the value of providing current and relevant information to its shareholders.
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights
the Company is committed to:
•
communicating effectively with shareholders through releases to the market via ASX, the company
website, information mailed or emailed to shareholders and the general meetings of the Company;
giving shareholders ready access to clear and understandable information about the Company; and
•
• making it easy for shareholders to participate in general meetings of the Company.
The Company also makes available a telephone number and email address for shareholders to make
enquiries of the Company. These contact details are available on the “Contact” page of the Company’s
website.
Shareholders may elect to, and are encouraged to, receive communications from 4DS and 4DS's securities
registry electronically. The contact details for the registry are available on the “Investors” page of the
Company’s website.
The Company maintains information in relation to its Constitution, governance documents, Directors and
senior executives, Board and committee charters, annual reports and ASX announcements on the
Company’s website.
Principle 7: Recognise and manage risk
The Board is committed to the identification, assessment and management of risk throughout 4DS's business
activities.
The Board is responsible for the oversight of the Company’s risk management and internal compliance and
control framework. The Company does not have an internal audit function. Responsibility for control and
risk management is delegated to the appropriate level of management within the Company with the
Managing Director having ultimate responsibility to the Board for the risk management and internal
compliance and control framework. 4DS has established policies for the oversight and management of
material business risks.
4DS's Risk Management and Internal Compliance and Control Policy recognises that risk management is
an essential element of good corporate governance and fundamental in achieving its strategic and
operational objectives. Risk management improves decision making, defines opportunities and mitigates
material events that may impact security holder value.
4DS believes that explicit and effective risk management is a source of insight and competitive advantage.
To this end, 4DS is committed to the ongoing development of a strategic and consistent enterprise wide risk
management program, underpinned by a risk conscious culture.
66
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
4DS accepts that risk is a part of doing business. Therefore, the Company’s Risk Management and Internal
Compliance and Control Policy is not designed to promote risk avoidance. Rather 4DS's approach is to
create a risk conscious culture that encourages the systematic identification, management and control of
risks whilst ensuring we do not enter into unnecessary risks or enter into risks unknowingly.
4DS assesses its risks on a residual basis; that is it evaluates the level of risk remaining and considering all
the mitigation practices and controls. Depending on the materiality of the risks, 4DS applies varying levels
of management plans.
The Board has required management to design and implement a risk management and internal compliance
and control system to manage 4DS’s material business risks. It receives regular reports on specific business
areas where there may exist significant business risk or exposure. The Company faces risks inherent to its
business, including economic risks, which may materially impact the Company’s ability to create or preserve
value for security holders over the short, medium or long term. The Company has in place policies and
procedures, including a risk management framework (as described in the Company’s Risk Management and
Internal Compliance and Control Policy), which is developed and updated to help manage these risks. The
Board does not consider that the Company currently has any material exposure to environmental or social
sustainability risks.
The Company’s process of risk management and internal compliance and control includes:
•
•
identifying and measuring risks that might impact upon the achievement of the Company’s goals and
objectives, and monitoring the environment for emerging factors and trends that affect those risks;
formulating risk management strategies to manage identified risks, and designing and implementing
appropriate risk management policies and internal controls; and
• monitoring the performance of, and improving the effectiveness of, risk management systems and
internal compliance and controls, including regular assessment of the effectiveness of risk management
and internal compliance and control.
The Board review’s the Company’s risk management framework at least annually to ensure that it continues
to effectively manage risk.
Management reports to the Board as to the effectiveness of 4DS’s management of its material business risks
on at each Board meeting.
Principle 8: Remunerate fairly and responsibly
The Board as a whole fulfils to the functions normally delegated to the Remuneration Committee as detailed
in the Remuneration Committee Charter.
4DS has implemented a Remuneration Policy which was designed to recognise the competitive environment
within which 4DS operates and also emphasise the requirement to attract and retain high calibre talent in
order to achieve sustained improvement in 4DS’s performance. The overriding objective of the
Remuneration Policy is to ensure that an individual’s remuneration package accurately reflects their
experience, level of responsibility, individual performance and the performance of 4DS.
The key principles are to:
•
•
link executive reward with strategic goals and sustainable performance of 4DS;
apply challenging corporate and individual key performance indicators that focus on both short-term
and long-term outcomes;
• motivate and recognise superior performers with fair, consistent and competitive rewards;
•
•
•
remunerate fairly and competitively in order to attract and retain top talent;
recognise capabilities and promote opportunities for career and professional development; and
through employee ownership of 4DS shares, foster a partnership between employees and other
security holders.
67
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
CORPORATE GOVERNANCE STATEMENT
The Board determines the Company’s remuneration policies and practices and assesses the necessary and
desirable competencies of Board members. The Board is responsible for evaluating Board performance,
reviewing Board and management succession plans and determines remuneration packages for the
Managing Director, Non-Executive Directors and senior management based on an annual review.
4DS’s executive remuneration policies and structures and details of remuneration paid to Directors and
senior managers where appointed) are set out in the Remuneration Report.
Non-Executive Directors receive fees (including statutory superannuation where applicable) for their
services, the reimbursement of reasonable expenses and, in certain circumstances options.
The maximum aggregate remuneration approved by shareholders for Non-Executive Directors is $300,000
per annum. The Directors set the individual Non-Executive Directors fees within the limit approved by
shareholders.
The total Directors fees paid to Non-Executive Directors during the reporting period were $80,833.
Executive Directors and other senior executives (where appointed) are remunerated using combinations of
fixed and performance based remuneration. Fees and salaries and set at levels reflecting market rates and
performance based remuneration is linked directly to specific performance targets that are aligned to both
short and long term objectives.
In accordance with the Company’s Securities Trading policy, participants in an equity based incentive
scheme are prohibited from entering into any transaction that would have the effect of hedging or otherwise
transferring the risk of any fluctuation in the value of any unvested entitlement in the Company’s securities
to any other person.
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report,
within the Directors’ report.
68
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
ASX ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 3 October 2018.
As at 3 October 2018 there were 1,341 holders of Ordinary Fully Paid Shares
VOTING RIGHTS
The voting rights of the ordinary shares are as follows:
Subject to any rights or restrictions for the time being attached to any shares or class of shares of the Company, each
member of the Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of members
will be decided by a show of hands unless a poll is demanded. On a show of hands each eligible voter present has one
vote. However, where a person present at a general meeting represents personally or by proxy, attorney or
representation more than one member, on a show of hands the person is entitled to one vote only despite the number
of members the person represents.
On a poll each eligible member has one vote for each fully paid share held.
There are no voting rights attached to any of the options that the Company currently has on issue. Upon exercise of
these options, the shares issued will have the same voting rights as existing ordinary shares.
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest holders of each class of listed securities are listed below:
Ordinary Full Paid Shares
Name
James Dorrian
BNP Paribas Nominees Pty Ltd
BNM Holdings Pty Ltd
Citicorp Nominees Pty Limited
John Clement Cowie Love
Vicex Holdings Proprietary Limited
Southam Investments 2003 Pty Ltd
Surfit Capital Pty Ltd
Kurt Pfluger
HSBC Custody Nominees (Australia) Limited
Rohan Vanden Driesen
Kelland Munro MacCulloch
David Jerimiah McAuliffe
Dr Winston O Pty Ltd
Monterey Domes Pty Ltd
National Nominees Limited
B & M Beresford Pty Ltd
Dan Brors
Michael Hawran
Dongmin Chen
Total Top 20
Others
Total Ordinary Shares on Issue
No of Ordinary
Shares Held
50,086,751
43,517,719
30,484,591
24,990,194
22,046,168
21,000,000
18,494,883
18,150,000
15,691,862
12,147,985
8,311,641
8,283,846
7,501,188
7,009,876
7,000,000
6,887,491
6,795,178
6,604,379
6,246,814
5,937,367
327,186,933
648,627,611
975,814,544
Percentage of
Issued Shares
5.13%
4.46%
3.12%
2.56%
2.26%
2.15%
1.90%
1.86%
1.61%
1.24%
0.85%
0.85%
0.77%
0.72%
0.72%
0.71%
0.70%
0.68%
0.64%
0.61%
33.54%
66.46%
100.00%
69
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
ASX ADDITIONAL INFORMATION
SUBSTANTIAL HOLDERS
The names of the substantial shareholders disclosed to the Company as substantial shareholders as at 3 October 2018
are:
Name
Mr James Dorrian
No of Shares Held % of Issued Capital
5.37%
51,086,751
DISTRIBUTION OF EQUITY SECURITIES
Ordinary Fully Paid Shares
Holding Ranges
Holders
Total Units
% Issued Share
Capital
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 9,999,999,999
Totals
Unmarketable Parcels – 536 Holders
UNQUOTED SECURITIES
47
142
792
2,879
993
4,853
11,362
567,367
6,803,070
115,529,630
852,903,115
975,814,544
0.00%
0.06%
0.70%
11.84%
87.40%
100.00%
As at 3 October 2018, the following unquoted securities are on issue:
36,458,333 Options Expiring 30/06/2020 @ $0.02 – 1 Holder
Holders with more than 20%
Holder Name
Guido Arnout
18,750,000 Options expiring 30/06/2020 @ $0.05 – 3 Holders
Holders with more than 20%
Holder Name
Oaktone Nominees Pty Ltd
Melanie Buffier
Tisia Nominees Pty Ltd
2,500,000 Options expiring 30/06/2020 @ $0.05 – 1 Holder
Holders with more than 20%
Holder Name
Melanie Buffier
5,000,000 Options expiring 31/12/2019 @ $0.05 – 4 Holders
Holders with more than 20%
Holder Name
Bobarino Pty Ltd
Jason Paul Skinner
Holding
36,458,333
% IC
100.00%
Holding
3,750,000
7,500,000
7,500,000
% IC
20.00%
40.00%
40.00%
Holding
2,500,000
% IC
100.00%
Holding
1,750,000
1,675,000
% IC
35.00%
33.50%
70
4DS Memory Limited and Controlled Entities
For the year ended 30 June 2018
ASX ADDITIONAL INFORMATION
5,000,000 Options expiring 30/06/2020 @ $0.07 – 4 Holders
Holders with more than 20%
Holder Name
Bobarino Pty Ltd
Jason Paul Skinner
880,000 Options expiring 23/07/2020 @ $0.045 – 1 Holder
Holders with more than 20%
Holder Name
Jett Capital Advisors, LLC
42,275,000 Options expiring 27/10/2022 @ $0.045 – 6 Holders
Holders with more than 20%
Holder Name
Guido Arnout
Michael Van Buskirk
Seshubabu Desu
ON-MARKET BUY BACK
There is currently no on-market buyback program.
Holding
2,500,000
1,425,000
% IC
50.00%
28.50%
Holding
880,000
% IC
100.00%
Holding
14,000,000
9,500,000
8,500,000
% IC
33.12%
22.47%
20.11%
71