CORPORATE DIRECTORY
4DS MEMORY LIMITED
and Controlled Entities
ACN: 145 590 110
Annual Report
For the year ended 30 June 2020
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 1
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
18
19
20
21
22
23
57
58
64
72
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 1
CORPORATE DIRECTORY
Directors
Mr James Dorrian
Dr Guido Arnout
Mr David McAuliffe
Mr Howard Digby
Company Secretary
Mr Peter Webse
Non-Executive Chairman
CEO and Managing Director
Executive Director
Non-Executive Director
Registered and Principal Office
Level 2, 50 Kings Park Road,
West Perth WA 6005
PO Box 271
West Perth WA 6872
Phone +61 8 6377 8043
Email david@4dsmemory.com
Website
www.4dsmemory.com
Share Registry
Automic Registry Services
Level 2
267 St Georges Terrace,
Perth WA 6000
Phone +618 9324 2099
+61 8 9321 2337
Fax
info@automic.com.au
Email
Web www.automic.com.au
Auditors
PKF Perth
Level 4, 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
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 2
DIRECTORS’ REPORT
The Directors of 4DS Memory Limited (“the Company”) (“4DS”) and its controlled entities (“the Group” or
“Consolidated Group”) submit the following report for the year ended 30 June 2020 (“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
CEO and Managing Director
Executive Director
Non-Executive Director
Qualifications, Experience and Special Responsibilities of Directors
Mr James Dorrian
-
Non-Executive Chairman
Qualifications
Experience
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
Dr Guido Arnout
Qualifications
Experience
-
-
-
-
Nil
CEO 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
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
-
Non-Executive Director of Invex Therapeutics Limited (ASX: IXC)
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 3
DIRECTORS’ REPORT
Mr Howard Digby
- Non-Executive Director
Qualifications
Experience
- 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
inclusive of Samsung, Hynix and TSMC. Upon returning to Perth, Howard served
as Executive Editor of WA Business News and now spends his time as an advisor
and investor, having played key roles in several M&A and reverse takeover
transactions.
Directorships held in other
listed entities
- Non-Executive Directors of Elsight Limited (ASX: ELS)
Non-Executive Director of Omni Market Tied Limited (ASX: OMT)
Non-Executive Director of Cirralto Limited (ASX: CRO)
Non-Executive Director of Vortic Limited (ASX: VOR)
Interests in shares and options of the Company
Number of
Ordinary Shares
at 30 June 2020
Number of
Options over
Ordinary Shares
at 30 June 2020
Number of
Ordinary Shares
as at the date of
this report
Number of Options
over Ordinary Shares
as at the date of this
report
52,783,831
1,250,000
52,783,831
1,250,000
3,030,053
21,380,000
3,030,053
21,380,000
5,777,172
1,250,000
5,777,172
13,323,295
7,000,000
13,656,628
1,250,000
7,000,000
Mr James
Dorrian
Dr Guido
Arnout
Mr Howard
Digby
Mr David
McAuliffe
Non-Executive
Chairman
CEO and Managing
Director
Non-Executive
Director
Executive Director
Company Secretary
Mr Peter Webse
Qualifications
Experience
- B.Bus, FGIA, FCIS, FCPA, MAICD
- Mr Webse has over 27 years' company secretarial experience and is the Managing
Director of Platinum Corporate Secretarial Pty Ltd, a company specialising in
company secretarial, corporate governance and corporate advisory services.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 4
DIRECTORS’ REPORT
Principal Activities
4DS Memory Limited (“the Company”) (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
26 US patents granted and an additional 6 patents pending or being filed, which have 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 is now in its seventh year. 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 $5,469,276 (2019: $5,782,665
loss).
Review of Operations
For the year ended 30 June 2020, 4DS made significant progress in the development of its Interface Switching
ReRAM technology with the consistent achievement of key strategic and technical milestones.
COVID-19
• On 18 March 2020, the counties of the San Francisco Bay Area issued a COVID-19 shelter-in-place
ordinance with exceptions for a short list of essential business activities
• As a consequence of COVID-19, the Company undertook an extensive review of its operations and
significantly cut expenses from 1 April 2020 to 30 June 2020
• On 28 May 2020, the counties of the San Francisco Bay Area started easing the strict social-density and
physical-distancing guidelines
• On May 11, 2020, the Company received a loan of US$131,542 equivalent to AU$191,543 under the
Paycheck Protection Program (“PPP”). The PPP, established as part of the US Coronavirus Aid, Relief
and Economic Security Act (“CARES Act”), provides loans to qualifying businesses for amounts up to 2.5
times the average monthly payroll expenses of the qualifying business. The loans are forgivable after
eight weeks as long as the borrower uses the loan proceeds for eligible purposes, maintains its payroll
levels, and keeps salary reductions in compliance with PPP
The Company believes that its use of the loan proceeds will meet the conditions for full forgiveness of
the loan
•
Operational Highlights
• Development partner imec agreed to extend its collaboration agreement for an additional twelve
months, commencing 1 January 2020
• Renewed joint development agreement with Western Digital Corporation subsidiary HGST for another
12 months, the seventh consecutive yearly renewal was announced on 1 May 2020
• On 22July 2019, 14 October 2019 and 15 April 2020 the Company was granted its 21st, 22nd and 23rd
patents in the USA. These patents specifically relate to the operation of the Company’s fully owned
Interface Switching ReRAM technology required for high-speed Storage Class Memory with read speeds
near to DRAM
During the COVID-19 lockdown, the Company received:
•
The Initial Platform Lot of 300mm wafers, fabricated prior to HGST joining the 4DS/imec collaboration, to
validate the integration of 4DS’ memory cells on imec’s megabit platform
• A set of 300mm Additional Wafers Lot, fabricated with process condition contributions from HGST and
imec – after HGST joined the 4DS/imec collaboration – to accelerate the Company’s stated goals of (i)
developing a repeatable process for producing 4DS’ memory using state-of-the-art production
equipment, and (ii) demonstrating this process by fabricating a 4DS megabit memory on imec’s
platform with high endurance and read speed comparable to DRAM
As soon as local COVID-19 ordinances started to be eased, the Company reconfigured its testing lab in
compliance with local COVID-19 social-density and social-distancing requirements so that wafer testing could
resume safely in early June. The results of this testing are outlined below.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 5
DIRECTORS’ REPORT
Review of Operations (Continued)
Additional Wafers Lot
The Company confirmed that it had measured the highest speed and endurance in the Additional Wafers Lot
that had ever been recorded by the Company:
•
The best recorded speed at near DRAM speed exceeded Storage Class Memory requirements without
the need for speed crippling error correction
• Endurance was two to three times better than previously reported. Actual endurance may be
significantly higher but is currently not quantified due to available lab time and test equipment capacity
The Company also measured retention and the results remain confidential to the Company and its
partners until such time the upper limits of retention can be more accurately defined.
•
Initial Platform Lot
•
Testing of the Initial Platform Lot validated the integration process steps required to integrate 4DS
memory cells with imec’s megabit platform. The information gathered from this testing enabled 4DS to
identify which process steps will be further tuned, to benefit future platform iterations.
Placement, Issue of Securities and Release from Escrow
On 17 July 2019, the Company announced a placement of 65 million ordinary shares at an issue price of $0.05
per share to professional and sophisticated investors raising $3.25 million.
On 25 July 2019, the Company issued 15 million ordinary shares at an issue price of $0.05 pursuant to a Share
Sale Purchase Plan to raise $750,000.
On 28 August 2019, the Company issued 2,600,000 incentive options to its USA based employees and
consultants. The options are exercisable at $0.052 each, of which 10% vest on a quarterly basis over ten quarters,
with the options expiring on 28 August 2024.
On 24 September 2019, 750,000 ordinary shares were issued following the exercise of unlisted options with expiry
of 31 December 2019.
On 7 October 2019, 350,000 ordinary shares were issued following the exercise of unlisted options with expiry of
31 December 2019.
On 7 October 2019, 1,675,000 ordinary shares were issued following the exercise of unlisted options with expiry
of 31 December 2019.
On 29 November 2019, the Company issued the following:
•
•
655,737 fully paid ordinary shares at $0.061 in satisfaction of the Director’s fees owed to Mr. James
Dorrian from 1 July 2018 until 30 June 2019 (being a total of $40,000) as per shareholders’ approval on
29 November 2019
245,901 fully paid ordinary shares at $0.061 to David McAuliffe in satisfaction of salary accrued from 1
July 2018 until 31 December 2018 (being a total of $15,000) as per shareholders’ approval on 29
November 2019
On 24 December 2019, 350,000 ordinary shares were issued following the exercise of unlisted options with expiry
of 31 December 2019.
On 31 December 2019, 1,875,000 unlisted options having an exercise price of $0.05 each expired.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 6
DIRECTORS’ REPORT
Review of Operations (Continued)
On 9 June 2020, 1,500,000 ordinary shares were issued following the exercise of unlisted options with expiry of 30
June 2020.
On 30 June 2020, 36,458,333 unlisted options having an exercise price of $0.02 each expired.
On 30 June 2020, 16,000,000 unlisted options having an exercise price of $0.05 each expired.
On 30 June 2020, 5,000,000 unlisted options having an exercise price of $0.07 each expired.
Financial Position and Significant Changes in the State of Affairs
The net assets of the Consolidated Group totalled $1,616,707 (2019: $2,403,402). Cash on hand at 30 June 2020
totalled $2,509,785 (2019: $2,167,613).
Material changes to issued share capital include:
• Exercise of options during the year to the value of $279,526
• Capital raising to the value of $4,000,000, additional detail included under review of operations
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 29 June 2020, the Company announced binding commitments to raise $4.5 million via placement of 100
million shares at $0.045 per share of which the proceeds were received subsequently in July 2020.
On 2 July 2020, the Company announced an invitation to eligible Shareholders to participate in a Share
Purchase Plan (SPP).
On 23 July 2020, the Company announced 880,000 unlisted options having an exercise price of $0.045 each
expired.
On 28 July 2020, the Company successfully completed its Share Purchase Plan (SPP) at $0.045 per share and
raised $3.1 million which will be used to progress the development of 4DS Interface Switching ReRam technology
with imec and Western Digital/HGST.
On 4th August 2020, the Company was granted its 24th, 25th and 26th patents in the USA. These patents specifically
relate to the operation of the Company’s fully owned Interface Switching ReRAM technology required for high-
speed Storage Class Memory with read speeds near to DRAM.
The impact of the Coronavirus ('COVID-19') pandemic is ongoing for the Consolidated Group up to 30 June
2020, and therefore it is not practicable to estimate the potential impact, positive or negative, after the reporting
date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government
and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
There have been no other matters or circumstances that have arisen since 30 June 2020 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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 7
DIRECTORS’ REPORT
Future Developments, Prospects and Business Strategies
The above results formed the basis of discussions on development strategies which need to be undertaken over
the next six months to put the Company in a position to potentially deliver a megabit chip and/or a corporate
transaction during 2021.
As such, the Company now proposes to start fabrication of two sets of wafers in Q3 2020 on imec production
equipment. Development partner imec will manufacture one lot of twenty-three (23) Non-Platform Wafers
(Second Non-Platform Lot) and one lot of twelve (12) Platform Wafers (Second Platform Lot).
The manufacture of these two lots of wafers is a priority for imec.
Second Non-Platform Lot
The Company is defining the process conditions for each of these 23 wafers in collaboration with its partners.
These wafers are less complex, faster to fabricate, and easier to test than Platform Wafers, yet can provide
valuable input on which process conditions exhibit the biggest improvements in speed, endurance and
retention.
Second Platform Lot
Testing process integration in incremental steps is important to define refinements which are needed to reach
the Company’s goal of manufacturing a fully functional megabit chip with Storage Class Memory
characteristics.
The objective of the Initial Platform Lot was to test the integration of dense memory arrays without the complexity
of transistors. 4DS validated the integration process, and recent meetings and discussions have identified
process steps and conditions that are designed to benefit the fabrication of the Second Platform Lot.
Significantly, the outcome of development discussions is that the Second Platform Lot will be fabricated to
contain dense memory arrays with transistors that are able to select memory cells.
This is a major strategic decision to better ensure success in 2021 when, based on the results of this Second
Platform Lot, 4DS and its partners will potentially progress to fabricate wafers with all the control logic necessary
to read and write selected bits and bytes, and therefore be able to operate as a fully functional megabit
memory.
Both lots of wafers will be fabricated with variations of the process conditions from the best wafer in the
Additional Wafers Lot, which had exhibited the biggest improvements in speed and endurance in the
Company’s history.
Timing
The fabrication of both lots of wafers will commence in Q3 2020. Barring any unforeseen equipment problems
or new COVID-19 government ordinances, the Second Non-Platform wafers should be available for analysis in
mid to late Q4 2020. Due to fabrication complexities related to the inclusion of transistors in the Second Platform
Lot, the wafers from the Second Platform Lot are expected to be available for testing in early Q1 2021.
The results from both wafer lots will define the Company’s 2021 strategic development plan to achieve its goal
of fabrication of a megabit chip and/or a corporate transaction.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 8
DIRECTORS’ REPORT
Share Options
Unissued shares
At the date of this report, the unissued ordinary shares of 4DS under option are as follows
Grant Date
Expiry Date
Exercise Price
Number under option
30 October 2017
27 October 2022
22 January 2018
27 October 2022
22 January 2019
22 January 2024
6 May 2019
22 January 2024
29 Nov 2018
28 Aug 2024
$0.042
$0.042
$0.052
$0.052
$0.052
28,275,000
14,000,000
8,900,000
16,880,000
2,600,000
70,655,000
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 2020, 4,625,000 shares were issued from the exercise of options.
Indemnification and Insurance of Directors, Officers and Auditors
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 9
DIRECTORS’ REPORT
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
9
11
11
11
Number attended
9
11
11
11
Mr James Dorrian
Dr Guido Arnout
Mr Howard Digby
Mr David McAuliffe
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.
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 Perth were recognised for non-audit services provided during the year ended 30 June
2020.
Taxation compliance and advice services
$7,300
$7,300
Auditor’s Independence Declaration
The auditor’s independence declaration for the year ended 30 June 2020 has been received and can be found
on page 18.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 10
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
b)
their ability and experience;
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 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 CEO and Managing Director.
Remuneration of Executives and Non-Executives will be reviewed annually by the Board.
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.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 11
DIRECTORS’ REPORT
Remuneration Report (Audited)
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 into reward Executives in a manner which aligns this element of
remuneration with the creation of shareholder wealth.
Employment Contracts
Dr Guido Arnout, CEO and Managing Director:
Dr Arnout is subject to an employment contract with the following conditions:
remuneration salary of US$294,000 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)
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
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 12
DIRECTORS’ REPORT
Remuneration Report (Audited)
Employment Contracts
Mr David McAuliffe, Executive Director:
Mr McAuliffe is subject to an employment contract with the following conditions:
remuneration salary of $200,000 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 months 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$264,000 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 months 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, effectively from 1 September remuneration salary of
US$208,000 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 months written notice. The notice period can be waived if there is sufficient cause.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 13
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 2020
Short Term
Salary, Fees &
Commissions
Other
Termination
benefits
Post-Employment
Superannuation
Share Based
Payment
Options 1
Total
Performance
based
remuneration
Executive Director
Dr Guido Arnout2
Mr David McAuliffe
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
Mr Michael Van
Buskirk2
Mr Seshubabu Desu2
Total
364,889
150,000
30,000
22,500
331,546
260,415
1,159,350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,250
159,507
147,195
524,396
311,445
-
-
-
-
26,285
26,285
56,285
48,785
114,082
445,628
35,929
296,344
14,250
509,283
1,682,883
-
-
-
-
-
-
-
Table 2: Remuneration for the year ended to 30 June 2019
Short Term
Salary, Fees &
Commissions
Other
Terminatio
n benefits
Post-Employment
Superannuation
Share Based
Payment
Options
Total
Performance
based
remuneration
Executive Director
Dr Guido Arnout2
394,867
-
Mr David McAuliffe
162,500
50,0003
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
Mr Michael Van
Buskirk2
Mr Seshubabu Desu
40,000
30,000
352,881
282,156
-
-
-
-
Total
1,262,404
50,000
-
-
-
-
-
-
-
-
21,612
302,969
420,814
697,836
654,926
-
7.63%
-
-
-
-
14,976
14,976
54,976
44,976
67,883
420,764
60,737
342,893
21,612
882,355
2,216,371
-
-
-
-
1 Employee options were issued in the financial year which are not performance related..
2 Conversion to AUD of US equivalent.
3 A bonus paid for successfully completed capital raisings undertaken by the Company in years 2017 and 2018.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 14
DIRECTORS’ REPORT
Remuneration Report (Audited)
Table 1: Option holdings of Key Management Personnel for the year ended to 30 June 2020
Balance at
beginning
of year
Granted as
remuner-
ation
Options
exercised
Net change
other
Vested at 30 June 2020
Balance at
end of
year
Exercisable
Not
Exercis-
able
30 June 2020
Executive Director
Dr Guido Arnout
Mr David McAuliffe
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
Mr Michael Van
Buskirk
Mr Seshubabu Desu
57,838,333
7,000,000
1,250,000
1,250,000
14,500,000
-
-
-
-
-
8,500,000
1,300,0001
Total
90,338,333
1,300,000
-
-
-
-
-
-
-
(36,458,333)
-
21,380,000
7,000,000
17,690,000
6,375,000
3,690,000
625,000
-
-
-
-
1,250,000
625,000
625,000
1,250,000
625,000
625,000
14,500,000
12,000,000
2,500,000
9,800,000
8,890,000
910,000
(36,458,333)
55,180,000
46,205,000
8,975,000
Table 2: Option holdings of Key Management Personnel for the year ended to 30 June 2019
Balance at
beginning
of year
Granted as
remuner-
ation
Options
exercised
Net
change
other
Balance at
end of year
Vested at 30 June 2019
Not
Exercis-
able
Exercisable
30 June 2019
Executive Director
Dr Guido Arnout
50,458,333
Mr David McAuliffe
Non-Executive
Director
Mr James Dorrian
Mr Howard Digby
Other key
management
personnel
Mr Michael Van
Buskirk
Mr Seshubabu Desu
Total
7,380,000
7,000,000
1,250,000
1,250,000
-
-
-
9,500,000
5,000,000
8,500,000
-
68,458,333
21,880,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
57,838,333
7,000,000
49,796,333
5,875,000
8,042,000
1,125,000
1,250,000
1,250,000
125,000
125,000
1,125,000
1,125,000
14,500,000
9,440,000
5,060,000
8,500,000
7,650,000
850,000
90,338,333
73,011,333
17,327,000
1 Employee options were issued in the financial year which are not performance related.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 15
DIRECTORS’ REPORT
Remuneration Report (Audited)
Share holdings of Key Management Personnel
30 June 2020
Balance 1
July 2019
Granted as
remuneration
On exercise
of options
On
conversion of
performance
share
Net change
other
Balance
30 June
2020
Executive Director
Dr Guido Arnout
3,030,053
-
Mr David McAuliffe
13,077,394
245,9011
Non-Executive Director
Mr James Dorrian
52,128,094
655,7372
Mr Howard Digby
5,777,172
Other key management
personnel
Mr Michael Van Buskirk
Mr Seshubabu Desu
1,145,852
658,984
-
-
-
Total
75,817,549
901,638
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,030,053
13,323,295
52,783,831
5,777,172
1,145,852
658,984
76,719,187
30 June 2019
Balance 1
July 2018
Granted as
remuneration
On exercise
of options
On
conversion of
performance
share
Net change
other
Balance 30
June 2019
Executive Director
Dr Guido Arnout
Mr David McAuliffe
Non-Executive Director
Mr James Dorrian
Mr Howard Digby
Other key management
personnel
Mr Michael Van Buskirk
Mr Seshubabu Desu
Total
1,918,942
12,026,474
-
495,365
50,086,751
930,232
4,554,950
1,222,222
1,145,852
658,984
70,391,953
-
-
2,647,819
-
-
-
-
-
-
-
-
-
-
1,111,111
555,555
3,030,053
13,077,394
1,111,111
-
-
-
2,777,777
52,128,094
5,777,172
1,145,852
658,984
75,817,549
Performance Share holdings of Key Management Personnel
For the year ended 30 June 2020 and 30 June 2019 the Performance Shareholdings balances of key
management personnel were nil.
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.
1 245,901 fully paid ordinary shares at $0.061 to David McAuliffe in satisfaction of salary accrued from 1 July 2018 until 31
December 2018 (being a total of $15,000) as per shareholders’ approval on 29 November 2019.
2 655,737 fully paid ordinary shares at $0.061 in satisfaction of the Director’s fees owed to Mr. James Dorrian from 1 July 2018
until 30 June 2019 (being a total of $40,000) as per shareholders’ approval on 29 November 2019.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 16
DIRECTORS’ REPORT
Remuneration Report (Audited)
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.
Voting of shareholders at last year’s annual general meeting
4DS Memory Limited received more than 90% of “yes” votes on its remuneration report for the 2019 financial
year. The Company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
Signed in accordance with a resolution of the Directors.
Dr Guido Arnout
Managing Director
31 August 2020
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 17
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 2020, 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 PERTH
SHANE CROSS
PARTNER
31 AUGUST 2020
WEST PERTH
WESTERN AUSTRALIA
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA 6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or
liability for the actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
18
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2020
Revenue and other income
Directors fees
Employee benefits expense
Interest on lease liabilities
Travel and accommodation
Rent and utilities
Research and development
Legal and professional fees
Note
2020
$
2019
$
2
3
3
3
3
33,511
17,774
(52,500)
(70,000)
(181,103)
(246,071)
(14,719)
-
(84,086)
(120,964)
(104,977)
(144,173)
(3,781,280)
(3,418,221)
(201,222)
(311,033)
Share based payments
15
(633,350)
(1,091,054)
Depreciation and amortisation expense
(176,471)
(123,250)
Impairment of asset
-
(23,332)
Unrealised / realised foreign exchange
27,096
38,863
Other expenses
Loss before income tax
Income tax expense
(300,175)
(291,204)
(5,469,276)
(5,782,665)
4
-
-
Loss for the year after income tax
(5,469,276)
(5,782,665)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (net of tax)
36,409
15,054
Total comprehensive loss for the year
(5,432,867)
(5,767,611)
Basic and diluted loss per share (dollars per share)
5
(0.0048)
(0.006)
The accompanying notes form part of these financial statements.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 19
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Right-of-use asset
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
Other current liabilities
Lease liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Lease liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
Note
2020
$
2019
$
7
8
9
12
10
11
13
12
12
2,509,785
2,167,613
5,478
49,677
5,868
47,289
2,564,940
2,220,770
216,763
371,069
587,832
318,162
-
318,162
3,152,772
2,538,932
935,715
26,111
191,543
99,506
121,294
14,236
-
-
1,252,875
135,530
283,190
283,190
-
-
1,536,065
135,530
NET ASSETS
1,616,707
2,403,402
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
14(a)
14(d)
40,086,985
36,025,887
3,200,428
4,066,248
(41,670,706)
(37,688,733)
1,616,707
2,403,402
The accompanying notes form part of these financial statements.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 20
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
Issued
Capital
Accumulated
Losses
$
$
Share Based
Payment
Reserve
$
Foreign
Exchange
Reserve
$
Total
$
Balance at 1 July 2018
31,836,715
(31,906,068)
3,332,080
(87,885)
3,174,842
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:
Issue of share capital net of costs
Share-based payment advisor
options
Issue of employee options
-
-
-
(5,782,665)
-
(5,782,665)
-
-
-
-
21,032
1,070,022
(284,055)
-
-
-
(5,782,665)
15,054
15,054
15,054
(5,767,611)
-
-
-
-
-
-
3,038,816
21,032
1,070,022
750,000
95,000
21,301
-
-
-
-
-
3,038,816
-
-
Issue of shares on exercise of options
1,034,055
Issue of shares in lieu of Director fees
Issue of shares in lieu of Salary
95,000
21,301
Balance at 30 June 2019
36,025,887
(37,688,733)
4,139,079
(72,831)
2,403,402
Issued
Capital
Accumulated
Losses
$
$
Share
Based
Payment
Reserve
$
Foreign
Exchange
Reserve
Total
$
$
Balance at 1 July 2019
36,025,887
(37,688,733)
4,139,079
(72,831)
2,403,402
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:
Issue of share capital net of costs
Issue of employee options
Issue of shares on exercise of
options
Issue of shares in lieu of Director fees
Issue of shares in lieu of Salary
-
-
-
(5,469,276)
-
(5,469,276)
3,726,572
-
279,526
40,000
15,000
-
-
-
-
-
-
-
-
-
633,350
(48,276)
-
-
Options lapsed
-
1,487,303
(1,487,303)
-
(5,469,276)
36,409
36,409
36,409
(5,432,867)
-
-
-
-
-
-
3,726,572
633,350
231,250
40,000
15,000
-
Balance at 30 June 2020
40,086,985
(41,670,706)
3,236,850
(36,422)
1,616,707
The accompanying notes form part of these financial statements.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 21
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Payments for research and development
Interest received
Interest paid
Insurance recovery relating to PPE
Note
2020
$
2019
$
(715,653)
(987,710)
(3,069,869)
(3,540,995)
11,090
17,588
(14,884)
22,419
-
-
Net cash used in operating activities
7 (b)
(3,766,897)
(4,511,117)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of plant and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Payment of capital raising costs
Issue of shares on exercise of options
Proceeds from PPP loan
Principal elements of lease payments
Net cash from financing activities
(10,861)
(96,029)
(10,861)
(96,029)
4,000,000
3,276,250
(273,428)
(237,434)
231,250
191,543
(49,651)
750,000
-
-
4,099,714
3,788,816
Net increase/ (decrease) in cash and cash equivalents
321,956
(818,330)
Cash and cash equivalents at the beginning of the financial year
2,167,613
2,932,232
Foreign Exchange
20,216
53,711
Cash and cash equivalents at the end of the financial year
7 (a)
2,509,785
2,167,613
The accompanying notes form part of these financial statements.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 22
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 the Company and controlled entities. 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 31 August 2020 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
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 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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 23
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
During the year, the Company engaged an external expert to perform share based payment valuations. See
note 15 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).
iv. Lease term
In determining the lease term, management considers all facts and circumstances that create an economic
incentive to exercise an option, or not exercise option a termination option. Extension options (or period after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated).
v. Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had,
or may have, on the consolidated entity based on known information. This consideration extends to the nature
of the products and services offered, customers, supply chain, staffing and geographic regions in which the
consolidated entity operates. Other than as addressed in specific notes, there does not currently appear to be
either any significant impact upon the financial statements or any significant uncertainties with respect to events
or conditions which may impact the consolidated entity unfavorably as at the reporting date or subsequently
as a result of the Coronavirus (COVID-19) pandemic.
c. Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at
30 June 2020. 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 and
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 24
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c. Principles of Consolidation (Continued)
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
• 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
On 9 December 2015, 4DS Memory Limited (formerly Fitzroy Resources Limited), the legal parent, completed
the acquisition of 4D-S Pty Limited (“4D-S”). 4D-S (the legal subsidiary) was deemed to be the acquirer for
accounting purposes as it had obtained control over the operations of the legal acquirer 4DS Memory
(accounting subsidiary). Accordingly, the consolidated financial statements of 4DS Memory were prepared as
a continuation of the financial statements of 4D-S. 4D-S (as the accounting acquirer) accounted for the
acquisition of 4DS Memory from 9 December 2015.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 25
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
e. Going Concern
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
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 26
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
g. Property, Plant and Equipment (Continued)
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.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 27
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
i.
Financial Instruments (Continued)
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
The Group recognises a loss allowance for expected credit losses on financial assets which are either
measured at amortised cost or fair value through other comprehensive income. The measurement of the loss
allowance depends upon the Group’s assessment at the end of each reporting period as to whether the
financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and
supportable information that is available, without undue cost or effort to obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12 month
expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit
losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset
has become credit impaired or where it is determined that credit risk has increased significantly, the loss
allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss
recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls
over the life of the instrument discounted at the original effective interest rate.
For financial assets measured at fair value through other comprehensive income, the loss allowance is
recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or
loss.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 28
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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
Research costs are expensed as incurred. Development expenditures on an individual project are recognised
as an intangible asset when the Group can demonstrate:
•
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
•
• 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
i. Wages, salaries and annual leave
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.
ii.
iii.
Superannuation
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
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.
iv. Options
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.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 29
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
l.
Employee Benefits (Continued)
v.
Equity-settled Compensation
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
i.
Interest
Interest revenue is recognised as it accrues.
ii. 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.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 30
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
r.
Leases (Continued)
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.
From 1 January 2019, leases are recognised as a right-of-use asset and corresponding liability at the date at
which the leased asset is available for use by the Group. Each lease payment is allocated between the liability
and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
•
•
•
•
•
Fixed payments (including in-substance fixed payments), less any lease incentives receivable
Variable lease payment that are based on an index or a rate
Amount expected to be payable by the lessee under residual value guarantees
The exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
Payments of penalties for termination the lease, if the lease term reflects the lessee exercising that
option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions.
Right-of-use of assets are measured at cost comprising the following:
•
•
•
•
The amount of the initial measurement of lease liability
Any lease payments made at or before the commencement date less any lease incentives received
Any initial direct costs
Restoration cost
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short term leases have a lease term of 12 months or less. Low-value assets comprise
IT equipment and office furniture.
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.
i.
Earnings Per Share
Basic earnings per share
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 31
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
t.
Earnings Per Share (Continued)
ii. Diluted earnings per share
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.
v. Adoption of new and revised accounting standards
The Group leases office space. Rental contract is typically made for a fixed period of 4 years, with extension
options available on the office lease. Lease terms are negotiated on an individual basis and contain a range of
terms and conditions. The rental contract was renewed with the lease starting from December 2019 and a month
rental waiver was granted.
Until the 2019 financial year, leases were classified as operating leases. Payments made under the Group’s
operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line
basis over the period of the lease.
From 1 July 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which
the leased asset is available for use by the Group. Each lease payment is allocated between the liability and
finance cost. The finance cost is charged to profit or loss over the lease period to produce a constant periodic
rate of interest on the remaining balance of the liability for each period. The right of use asset is depreciated
over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of fixed lease payments (including in-substance fixed payments), less any lease incentive
receivable.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and
conditions.
Right of use assets are measured at cost comprising the following:
•
The amount of the initial measurement of lease liability
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 32
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
v. Adoption of new and revised accounting standards (Continued)
•
•
•
Any lease payments made at or before the commencement date less any lease incentives received
Any initial direct costs
Restoration costs
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis
as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value
assets may comprise IT-equipment and small items of office furniture.
Impact of the New Accounting Policy on Amounts Recognised in the Financial Statements
The change in accounting policy affected the following items in the statement of financial position on 1 July
2019:
•
•
Lease liabilities – increased by $382,695
Right of use assets – increased by $371,069
The net impact on accumulated losses on 1 July 2019 was nil.
Impact on the statement of cash flows
The application of AASB 16 has an impact on the consolidated statement of cash flows of the Group.
Under AASB 16, leases must present:
•
•
•
Short-term lease payments, payments of leases of low-value assets and variable lease payments not
included in the measurement of the lease liabilities as part of the operating activities (the Group has
included these payments as part of payments to suppliers and employees)
Cash paid for the interest portion of lease liabilities as either operating activities or financing activities as
permitted by AASB 107 Statement of Cash Flows (The Group has opted to include interest paid as part
of operating activities)
Cash payments for principal portion of leases liabilities, as part of financing activities
Impact on segment disclosures and earnings per share
The adoption of AASB 16 had no impact on the Group’s segment disclosures.
The adoption of AASB 16 did not have significant impact on the Company’s earnings per shares.
Lease liabilities
The lease liability of $382,695 recognised at 30 June 2020 is comprised of minimum lease payments over the
lease contract.
The value of the right of use asset at 30 June 2020 has been determined solely with direct reference to the lease
liability value at the same date. There are no leases with initial direct costs or removal and restoration costs
requiring an adjustment to the value of the right of use asset.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 33
NOTES TO THE FINANCIAL STATEMENTS
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
w. Adoption of new and revised accounting standards (Continued)
Right of use assets
Right of use assets are subsequently measured using the cost model, that is, right of use asset less accumulated
amortisation and accumulated impairment losses, adjusted for any remeasurements. Leases are to be
remeasured upon occurrence of any of the following events:
•
•
•
Change in original assessment of lease term or purchase/termination options
Change in estimate of residual guarantee
Change in index or rate affecting payments
Practical expedients applied
In applying AASB 16 for the first time, the Group has used the following practical expedients permitted by the
standard:
•
•
The use of a single discount rate to a portfolio of leases with reasonably similar characteristics
The use of hindsight in determining the lease term where the contract contains options to extend or
terminate the lease
The Group has also elected not to reassess whether a contract is, or contains a lease, at the date of initial
application. Instead, for contracts entered into before the transition date the Group relied on its assessment
made applying AASB 117 and Interpretation 4 Determining whether an Arrangement contains a Lease.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 34
NOTES TO THE FINANCIAL STATEMENTS
2. REVENUE AND OTHER INCOME
Interest revenue
30 June 2020
30 June 2019
$
$
11,091
17,774
Other Income – Insurance recovery on PPE
22,420
-
-
Revenue and Other Income
33,511
17,774
3.
LOSS FOR THE YEAR
Loss before income tax from continuing operations
includes the following specific expenses:
- Director fees (cash settled)
- Director fees (accrued)
Directors fees
- Salary and wages (cash settled)
- Salary and wages (equity settled)1
- Bonus (cash settled)
- Superannuation (cash settled)
- 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
12,500
40,000
52,500
161,875
-
-
14,250
4,978
181,103
50,080
54,897
104,977
-
319,945
1,660,665
1,470,365
330,305
3,781,280
10,000
60,000
70,000
153,229
15,000
50,000
21,612
6,230
246,071
116,219
27,954
144,173
(12,914)
419,233
1,592,439
1,273,357
146,106
3,418,221
1 Mr McAuliffe elected for partial salary to be settled in equity, subject to shareholder approval.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 35
NOTES TO THE FINANCIAL STATEMENTS
4.
INCOME TAX
The components of tax expense comprise:
Current tax
Deferred tax
30 June 2020
30 June 2019
$
$
-
-
-
-
-
-
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:
Accounting loss before income tax
(5,469,276)
(5,782,665)
At the Group’s statutory income tax rate of 27.5% (2019:
27.5%)
Add/(Less): tax effect of non-deductible amounts
(1,504,051)
(1,590,233)
Share based payments
Provisions and accruals
Other permanent differences
Unrealised foreign exchange
Capital raising costs
Other non-deductible amounts
Effect of difference in overseas tax rate
Deferred tax balances not recognised
Income tax expense/(benefit)
174,171
(5,068)
(7,245)
7,463
(66,983)
52,417
(62,442)
1,411,738
-
300,040
(6,090)
32,775
(10,687)
(56,505)
6,416
(62,505)
1,386,789
-
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 36
NOTES TO THE FINANCIAL STATEMENTS
4. INCOME TAX (CONTINUED)
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 2020
$
30 June 2019
$
2,954,049
2,274,518
155,530
23,016
134,262
16,655
3,132,595
2,425,435
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
(c) no changes in income tax legislation adversely affect the Consolidated Group in utilising the benefits
Deferred Tax Liabilities:
Prepayments
Unrealised forex gain
Total Deferred Tax liabilities
10,193
7,463
17,656
10,347
10,687
21,034
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 37
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 2020
30 June 2019
$
$
(5,469,276)
(5,782,665)
No.
No.
1,132,865,628
1,020,359,171
c) Loss per share
($0.0048)
($0.006)
d) The Group does not report diluted earnings per share with options on annual losses as it is anti-dilutive in
nature.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 38
NOTES TO THE FINANCIAL STATEMENTS
6. PARENT ENTITY – 4DS MEMORY LIMITED
As at 30 June 2020 the legal parent of the Group was
4DS Memory Limited
Statement of financial position
Current assets
Non-current assets
Total Assets
Current Liabilities
Total Liabilities
Net Assets
Shareholders’ Equity
Share Capital
Reserves
Accumulated losses
Total Shareholders’ Equity
30 June 2020
30 June 2019
$
$
2,463,100
2,039,211
195,857
281,162
2,658,957
2,320,373
945,454
120,696
945,454
120,696
1,713,503
2,199,677
46,673,959
42,612,860
3,236,851
4,139,080
(48,197,307)
(44,552,263)
1,713,503
2,199,677
Statement of comprehensive income
Loss for the year
(5,132,346)
(5,670,069)
Other Comprehensive Income
-
-
Total Comprehensive Loss
(5,132,346)
(5,670,069)
The Parent Company 4DS Memory Limited has no contingent liabilities as at 30 June 2020 and 30 June 2019,
other than contingent liabilities in Note 19.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 39
NOTES TO THE FINANCIAL STATEMENTS
7. CASH AND CASH EQUIVALENTS
30 June 2020
30 June 2019
(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 foreign currency
Depreciation
Impairment of asset
Changes in assets and liabilities
$
$
2,509,785
2,167,613
2,509,785
2,167,613
(5,469,276)
(5,782,665)
633,350
1,091,054
40,000
15,000
(41,739)
176,471
-
95,000
21,301
(33,285)
123,250
23,332
Decrease/(Increase) in other receivables
553
107
Increase/(Decrease) in trade and other payables and
provisions
881,295
(47,081)
Decrease/(Increase) in prepayments
(2,551)
(2,130)
Net cash used in operations
(3,766,897)
(4,511,117)
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 40
NOTES TO THE FINANCIAL STATEMENTS
8.
TRADE AND OTHER RECEIVABLES
CURRENT
GST receivable
Other receivables
30 June 2020
30 June 2019
$
$
4,372
1,106
5,478
4,925
943
5,868
None of the receivables are past due. Receivables are therefore not impaired and are within initial trade
terms.
9. PLANT AND EQUIPMENT
30 June 2020
30 June 2019
Plant and equipment – at cost
Less: Accumulated depreciation
Less: Provision for impairment
$
$
852,940
831,718
(612,845)
(490,224)
(23,332)
(23,332)
216,763
318,162
Reconciliations:
Reconciliations of the written down values at the beginning and end of the current and previous financial year
are set out below:
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 41
NOTES TO THE FINANCIAL STATEMENTS
9. PLANT AND EQUIPMENT (CONTINUED)
Consolidated
Balance 30 June 2018
Additions
Disposals
Foreign exchange movements
Depreciation expense
Balance 30 June 2019
Additions
Disposals
Foreign exchange movements
Depreciation expense
Balance 30 June 2020
10. TRADE AND OTHER PAYABLES
CURRENT
Plant and
equipment
$
374,087
96,029
-
(28,704)
(123,250)
318,162
10,861
-
2,934
(115,194)
216,763
30 June 2020
30 June 2019
$
$
Trade payables and accruals
935,715
121,294
Trade creditors are non-interest bearing and are normally settled on 30-day terms.
11. PROVISIONS
Provision for employee benefits
26,111
14,236
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 42
NOTES TO THE FINANCIAL STATEMENTS
12. LEASES
The right of use asset and lease liabilities have arisen upon adoption of AASB 16 Leases from 1 July 2019.
(i) AASB 16 related amounts recognised in the statement of financial position
Right of use assets
Leased buildings:
Opening balance
Additions
Depreciation expense
Foreign currency exchange
Net carrying amount
Lease liabilities
Maturity analysis – contractual undiscounted cash
flows
Less than one year
One to five years
More than five years
Total undiscounted leases liabilities at 30 June 2020
Lease liabilities included in the statement of financial
position as at 30 June 2020
Current
Non-current
Total
30 June 2020
$
-
428,164
(58,837)
1,742
371,069
113,147
324,109
-
437,256
99,506
283,190
382,696
(ii) AASB 16 related amounts recognised in the statement of profit or loss
Depreciation charge related to right-of-use assets
Interest expense on lease liabilities (under finance cost)
Short-term leases expense
Low-value asset leases expense
2020
$
61,277
14,719
50,080
30 June
2019
$
-
-
-
-
-
-
-
-
-
-
-
-
2019
$
-
-
-
-
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 43
NOTES TO THE FINANCIAL STATEMENTS
12. LEASES (CONTINUED)
(iii) AASB 16 related amounts recognised in the statement of cash flows
Total yearly cash outflows for leases
Short-term leases and leases of low-value assets
2020
$
49,651
2019
$
-
During the year, the Group had a rental lease of $50,080. The lease expense related to rental leases ended 30
November 2019.
The Group applies the low-value assets recognition exemption to leases of office equipment that are
considered low value ($10,000 or less). Lease payments on short-term leases and leases of low-value assets are
recognised as expense on straight-line basis over the lease term.
Significant judgment in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered
by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Group applied judgment in evaluating whether it is reasonable certain to exercise the option to renew,
That is, it considered all relevant factors that create an economic incentive to exercise the renewal.
13. BORROWINGS
The United States Small Business Administration (“SBA”) has provided a Paycheck Protection Program (“PPP”)
loan as a direct incentive for small business to keep their workers on payroll to helps the business keep their
workforce employed during the Coronavirus (“Covid-19”) crisis.
SBA will forgive loans if all employee retention criteria are met and the funds are used for eligible expenses. The
loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities (due to
likely high subscription, at least 60% of the forgiven amount must have been used for payroll).
Terms and conditions of the loan as per below:
•
PPP loans have an interest rate of 1%
•
Loans issued prior to 5th June 2020 have a maturity of 2 years
•
Loans issued after 5th June 2020 have a maturity of 5 years
•
Loan payments will be deferred for six months
• No collateral or personal guarantees are required
• Neither the government nor lenders will charge small businesses any fees
Loan Forgiveness
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.
Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan
forgiveness form and instructions include several measures to reduce compliance burdens and simplify the
process for borrowers, including:
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 44
NOTES TO THE FINANCIAL STATEMENTS
13. BORROWINGS (CONTINUED)
• Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns
•
•
•
•
with borrowers’ regular payroll cycles
Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the 24-week period
after receiving their PPP loan
Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility
for loan forgiveness
Borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring
by June 30
Addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-
faith, written offer to rehire workers that was declined
On 11 May 2020, the Company received USD$131,500 PPP loan from SBA, equivalent to AUD$191,543 and an
application for loan forgiveness was submitted on 5 July 2020. The fair value of the loan is equivalent to the
carrying value of the loan as at 30 June 2020.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 45
NOTES TO THE FINANCIAL STATEMENTS
14. ISSUED CAPITAL AND RESERVES
(a) Movements in ordinary share capital
2020
2019
2020
2019
Balance at beginning of year
1,055,017,917
964,564,544
36,025,887
31,836,715
Shares
Shares
$
$
Placement shares
Share Purchase Plan
Issued capital – in lieu of Director fees
Issued capital – in lieu of Salary
Issued capital
Exercise of unlisted options
Capital raising costs
65,000,000
70,027,777
3,250,000
3,151,250
15,000,000
-
750,000
655,737
2,152,454
245,901
495,365
40,000
15,000
-
95,000
21,301
-
2,777,777
-
125,000
4,625,000
15,000,000
279,526
1,034,055
-
-
(273,428)
(237,434)
Balance at end of year
1,140,544,555 1,055,017,917
40,086,985
36,025,887
Ordinary shares
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 Group'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 Group does not have any external debt.
In order to maintain or adjust the capital structure, the Consolidated Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 46
NOTES TO THE FINANCIAL STATEMENTS
14. ISSUED CAPITAL AND RESERVES (CONTINUED)
(b) Movements in options
2020
2019
Option
Options
2020
$
2019
$
Balance at beginning of year
132,893,333
121,233,333
4,139,079
3,332,080
Options exercised, advisor options
(4,625,000)
(15,000,000)
(48,277)
(284,055)
Options expired
Share based payment, employee options
Share based payment, employee options
Share based payment, adviser options
(59,333,333)
2,600,000
-
-
(1,487,302)
633,350
-
-
-
-
25,780,000
880,000
-
-
1,070,022
21,032
Balance at end of year
71,535,000
132,893,333
3,236,850
4,139,079
30 June 2020
30 June 2019
$
$
(c) Share based payment reserve
Balance at beginning of year
4,139,079
3,332,080
Options lapsed during the year
(1,487,302)
-
Share-based payment expense
Exercised of options
Balance at end of year
633,350
1,091,054
(48,277)
(284,055)
3,236,850
4,139,079
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 17 for further details.
(d) Foreign exchange translation reserve
Balance at beginning of year
Foreign exchange movement on translation of foreign
operations
Balance at end of year
(72,831)
(87,885)
36,409
15,054
(36,422)
(72,831)
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
3,236,850
4,139,079
(36,422)
(72,831)
3,200,428
4,066,248
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 47
NOTES TO THE FINANCIAL STATEMENTS
14. ISSUED CAPITAL AND RESERVES (CONTINUED)
(e) Options
Summary of options granted
The following table illustrates the number and weighted
average exercise prices of, and movements in, share
options issued during the year:
Outstanding at 1 July 2019
Exercised during the year
Expired during the year
Granted during the year
Outstanding at the 30 June 2020
The following table illustrates the number and weighted
average exercise prices of, and movements in, share
options issued during the year:
Outstanding at 1 July 2018
Exercised during the year
Granted during the year
Outstanding at the 30 June 2019
WAEP
No.
0.078
132,893,333
(0.015)
(4,625,000)
(0.052)
(59,333,333)
0.052
0.063
2,600,000
71,535,000
WAEP
0.062
No.
121,233,333
(0.028)
(15,000,000)
0.044
0.078
26,660,000
132,893,333
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 48
NOTES TO THE FINANCIAL STATEMENTS
15. SHARE-BASED PAYMENTS
The following share-based payment arrangements were entered into during the year ended 30 June 2020:
On 22 January 2018, the Company issued 14,000,000 employee incentive options to the CEO and 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 2020 a share-based payment expense of $4,321 was recognised.
On 22 January 2018, the Company issued 28,275,000 employee incentive options. 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 2020 a share-based
payment expense of $4,251 was recognised.
On 22 January 2019, the Company issued 8,900,000 incentive options to its USA based employees and
consultants. The options are exercisable at $0.052 each, of which 10% vest on a quarterly basis over ten
quarters, with the options expiring on 22 January 2024. During the year ended 30 June 2020 a share-based
payment expense of $200,524 was recognised.
On 24 April 2019, the Company issued 16,880,000 incentive options to the Directors as per shareholder
approval, on the same terms as the incentive options to employees and consultants, except for the vesting
conditions of the options that are to be issued to Mr McAuliffe. Of the 7,000,000 options to be issued to Mr
McAuliffe, 5,750,000 will vest immediately upon grant and the balance of 1,250,000 will vest quarterly over ten
quarters. During the year ended 30 June 2020 a share-based payment expense of $354,951 was recognised.
On 28 August 2019, the Company issued 2,600,000 incentive options to its USA based employees and
consultants. The options are exercisable at $0.052 each, of which 10% vest on a quarterly basis over ten
quarters, with the options expiring on 28 August 2024. During the year ended 30 June 2020 a share-based
payment expense of $69,303 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
Exercise price
Employee Incentive
Options
$0.052
Share price at date of issue
$0.052
Grant date
Expected volatility
Expiry date
Risk free interest rate
Value per option
Number of options
Total value of options
28 August 2019
105.86%
28 August 2024
0.70%
$0.0399
2,600,000
$103,805
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 49
NOTES TO THE FINANCIAL STATEMENTS
15. SHARE-BASED PAYMENTS (CONTINUED)
For the year ended 30 June 2020 a share-based payment expense of $633,350 was recognised in line with
option vesting periods. The amount included $564,047 recognised as a vesting expense to employee incentive
options issued in a prior period.
16. RELATED PARTY DISCLOSURE
(a) Controlled Entities
4D-S Pty Limited
4DS Inc.
Fitzroy Copper Pty Limited
Fitzroy Employee Share Plan Pty Limited
(b) Key Management Personnel (“KMP”)
% Interest
Country of Incorporation
2020
2019
Australia
United States of America
Australia
Australia
100
100
100
100
100
100
100
100
Details relating to KMP, including remuneration paid, are included in Note 17 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.
17. KEY MANAGEMENT PERSONNEL
Compensation for Key Management Personnel
Short term employee benefits
Post-employment benefits
Equity settled
Other payments
Termination benefits
Total compensation
30 June 2020
30 June 2019
1,159,350
14,250
509,283
-
-
1,682,883
1,262,404
21,612
882,355
50,000
-
2,216,371
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 50
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS
Financial Risk Management
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.
ii.
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.
iii. 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.
iv. 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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 51
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS (CONTINUED)
At 30 June, the Group has financial assets denominated in the foreign currencies detailed below:
2020
2019
Foreign
Currency
AUD
Equivalent
Foreign
Currency
AUD Equivalent
USD
58,392
85,026
$691,219
$984,410
A 5% movement in foreign exchange rates would increase or decrease the loss before tax by $4,251 (2019:
$49,220).
At 30 June, the Group has financial liabilities denominated in the foreign currencies detailed below:
2020
2019
Foreign
Currency
AUD
Equivalent
Foreign
Currency
AUD Equivalent
USD
402,599
586,239
$6,950
$9,909
A 5% movement in foreign exchange rates would increase or decrease on the loss before tax by 29,312 (2019:
No material movement).
v.
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 is
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:
2020
$
2019
$
Cash and cash equivalents held at NAB
2,425,021
2,000,738
Cash and cash equivalents held at HSBC
Other receivables and deposits
84,764
166,874
5,478
5,868
2,515,263
2,173,480
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 52
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS (CONTINUED)
vi. 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 cash and cash equivalents
balances and borrowings.
The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result
of changes in market interest rates and the effective weighted average interest rates on classes of financial assets
and financial liabilities, is below:
Floating
Interest
Rate
Fixed
Interest
Bearing
Non-
interest
bearing
2020
Total
Floating
Interest
Rate
Non-
interest
bearing
2019
Total
$
$
$
$
$
$
$
Financial assets
Cash and cash
equivalents
Trade and other
receivables
2,509,785
-
Total financial assets
2,509,785
Weighted average
interest rate
Financial Liabilities
Trade and other
payables
Other liabilities
0.47%
-
-
-
-
-
-
191,543
Lease liabilities
382,696
-
-
2,509,785
2,167,613
-
2,167,613
5,478
5,478
-
5,868
5,868
5,478
2,515,263
2,167,613
5,868
2,173,481
0.07%
935,715
935,715
-
-
191,543
382,696
-
-
-
-
121,294
121,294
-
-
-
-
121,294
121,294
Total financial liabilities
382,696
191,543
935,715
1,509,954
Weighted average
interest rate
6%
1%
Net financial assets
2,127,089
(191,543)
(930,237)
1,005,309
2,167,613
(115,426)
2,052,187
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 53
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS (CONTINUED)
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.
vii. Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities. The Group’s approach to managing liquidity is to ensure, as
far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and
actual cash flows.
The Group has no access to credit standby facilities or arrangements for further funding or borrowings in place.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the Statement of
Financial Position. All trade and other payables are non-interest bearing and due within 12 months of the
reporting date.
2020
Interest
rate
1 year
1-2 years
2-5 years
Over 5
years
Total
contractual
cash flows
$
$
$
$
$
Carrying
amount
assets/
(liabilities)
$
Financial
liabilities at
amortised
cost
Trade and
other
payables
PPP loan
Lease
liabilities
- Office lease
N/A
1%
6%
(935,715)
(103,752)
-
(87,791)
-
-
(99,506)
(1,138,973)
(110,598)
(198,389)
(172,592)
(172,592)
-
-
-
-
(953,715)
(191,543)
(935,715)
(191,543)
(497,977)
(1,643,235)
(382,696)
(1,509,954)
2019
Interest
rate
1 year
1-2 years
2-5 years
Over 5
years
Total
contractual
cash flows
$
$
$
$
$
Carrying
amount
assets/
(liabilities)
$
Financial
liabilities at
amortised
cost
Trade and
other
payables
N/A
(121,294)
(121,294)
-
-
-
-
-
-
(121,294)
(121,294)
(121,294)
(121,294)
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 54
NOTES TO THE FINANCIAL STATEMENTS
19. 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. 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 2020.
20. SEGMENT REPORTING
The Company has identified its operating segments based on internal reports reviewed by the Board and
management. There was only one operating segment being research and development of Interface Switching
ReRAM technology for next generation storage in mobile and cloud.
21. EVENTS AFTER THE REPORTING DATE
On 29 June 2020, the Company announced binding commitments to raise $4.5 million via placement of 100
million shares at $0.045 per share of which the proceeds were received subsequently in July 2020.
On 2 July 2020, the Company announced an invitation to eligible Shareholders to participate in a Share
Purchase Plan (SPP).
On 23 July 2020, the Company announced 880,000 unlisted options having an exercise price of $0.045 each
expired.
On 28 July 2020, the Company successfully completed its Share Purchase Plan (SPP) at $0.045 per share and
raised $3.1 million which will be used to progress the development of 4DS Interface Switching ReRam technology
with imec and Western Digital/HGST.
On 4th August 2020, the Company was granted its 24th, 25th and 26th patents in the USA. These patents specifically
relate to the operation of the Company’s fully owned Interface Switching ReRAM technology required for high-
speed Storage Class Memory with read speeds near to DRAM.
The impact of the Coronavirus ('COVID-19') pandemic is ongoing for the Consolidated Group up to 30 June
2020, and therefore it is not practicable to estimate the potential impact, positive or negative, after the reporting
date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government
and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any
economic stimulus that may be provided.
There have been no other matters or circumstances that have arisen since 30 June 2020 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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 55
NOTES TO THE FINANCIAL STATEMENTS
22.
AUDITORS REMUNERATION
The auditor of 4DS Memory Limited for the year ended 30 June
2020 is PKF Perth Chartered Accountants
Amounts received or due and receivable by PKF Perth for:
- Audit and review of financial statements
- Other services
30 June 2020
30 June 2019
$
34,160
7,300
41,460
$
29,050
7,800
36,850
23. 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. On 31 October 2019, an amendment to the collaboration agreement
was signed where both parties agreed to add extra activities to the project and therefore extend the
duration of the agreement and additional payment terms.
From 1 January 2020 the Company shall pay imec a total of 1,000,000 Euro, with payments made quarterly
until 1 October 2020.
There have been no other significant changes in commitments since the last reporting date other than
reported above.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 56
DIRECTORS DECLARATION
The Directors of the Company declare that:
1.
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:
(a)
(b)
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 2020 and of their performance for the year ended on that date.
2
3.
4.
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
2020.
This declaration is made in accordance with a resolution of the Board of Directors.
Managing Director
Dr Guido Arnout
31 August 2020
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 57
PKF Perth
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 2020, 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 2020
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. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the consolidated entity in accordance with the auditor independence requirements of
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.
Level 4, 35 Havelock Street, West Perth, WA 6005
PO Box 609, West Perth, WA 6872
T: +61 8 9426 8999 F: +61 8 9426 8900 www.pkfperth.com.au
PKF Perth is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility
or liability for the actions or inactions of any individual member or correspondent firm or firms.
Liability limited by a scheme approved under Professional Standards Legislation.
58
Key Audit Matters
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. These matters were 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 matters below, our description of how our audit addressed each matter is
provided in that context.
1. Value of Share Based Payments
Why significant
For the year ended 30 June 2020 the value of share
based payments expenses
totalled $633,350, as
disclosed in Note 15. This amount has been expensed.
The consolidated entity’s accounting judgement and
estimates in respect of share based payments is
outlined in Note 1(b). We consider this to be a key audit
matter due to significant judgement required in relation
to:
The valuation method used in the model; and
The assumptions and inputs used within the
model.
How our audit addressed the key audit matter
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
disclosures in Note 14(b), 14(c) and Note 15.
the appropriateness of
related
2. Funding and Liquidity
Why significant
As detailed in note 1(e), the consolidated entity has
recorded a loss before tax from continuing operations
of $5,469,276 (2019: $5,782,665) and net cash
outflows
(2019:
from operations of $3,766,897
$4,511,117).
How our audit addressed the key audit matter
We evaluated the consolidated entity’s funding and
liquidity position at 30 June 2020 and the ability of the
consolidated entity to repay its debts as and when they
fall due for a minimum of 12 months from the date of
signing the financial report.
The consolidated entity has prepared a forecast which
demonstrates that there will be sufficient funding to
operate for a period that is not less than twelve months
beyond the date that these financial statements are
approved. The forecast takes into account the available
cash on hand at year-end, combined with the forecast
cash flows from operations and capital raised post 30
June 2020.
Given the judgement involved in determining the
forecast cash flows from operations, we have included
In order to assess the funding and liquidity position, we:
Reviewed the process undertaken to determine the
appropriateness of the going concern basis;
Reviewed the cash flow forecast for the consolidated
entity to achieve its future operational and program
development needs; and
Obtained external confirmation of the consolidated
entity’s cash and short-term deposits and sighted
subsequent
supporting
documentation.
capital
raises
to
59
the funding and liquidity position as a key audit matter.
3.
Implementation of AASB 16 Leases
Why significant
The 30 June 2020 financial year was the first year of
adoption of Australian Accounting Standard AASB 16
Leases. The consolidated entity has recognised right of
use asset of $371,068 and lease liability of $382,695
as at 30 June 2020.
AASB 16 replaces the existing standard AASB 117 and
specifies how a Company will recognise, measure,
present and disclose leases.
The Standard provides a single lessee accounting
model, requiring lessees to recognise assets and
liabilities for all leases unless the lease term is 12
months or less or the underlying asset has a low value.
The implementation of AASB 16 is considered a key
audit matter due to:
the complexity and judgements involved in the
application of AASB 16; and
the material adjustment to the entity’s assets and
liabilities as at 30 June 2020 and 1 July 2019 as a
result of the implementation of AASB 16.
The modified retrospective approach was applied for
the conversion to AASB 16. The comparable figures
from the prior year’s periods were not adjusted.
The consolidated entity has disclosed its adoption of
AASB 16, including key judgements, in the note 1 (u) to
the consolidated financial statements.
How our audit addressed the key audit matter
We have evaluated the application of AASB 16 and
the consolidated
tested
statement of
financial position and consolidated
statement of profit or Loss and other comprehensive
income.
impact on
resulting
the
We have assessed whether the accounting regarding
leases is consistent with the definitions of AASB 16
including factors such as lease term, discount rate and
measurement principles.
Specifically, our work in this area included:
Discussions with management regarding the first-
time
checking
calculations on transition, including adjustments to
opening balances;
adoption methodology
and
Assessing the integrity of the consolidated entity’s
AASB 16 lease workings and calculations prepared
by management;
Assessing key judgements, including the internal
borrowing rate and renewal dates;
For the relevant leases, we agreed the consolidated
entity’s inputs in the AASB 16 lease calculation
model in relation to those leases to the relevant
terms of the underlying signed lease agreements;
Substantive testing of capitalised lease calculations
and the relevant unwinding of the lease asset and
lease liability; and
Assessing the adequacy of the disclosures made
financial
the consolidated
in
by management
statements.
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.
60
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.
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 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. We also:-
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. 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.
Obtain an understanding of internal control relevant to the audit 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 consolidated entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
61
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.
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.
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 group financial report. We are
responsible for the direction, supervision and performance of the group 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.
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, actions taken to eliminate
threats or safeguards applied.
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 the 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
2020.
In our opinion, the Remuneration Report of 4DS Memory Limited for the year ended 30 June 2020, complies
with section 300A of the Corporations Act 2001.
62
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 PERTH
SHANE CROSS
PARTNER
31 AUGUST 2020
WEST PERTH
WESTERN AUSTRALIA
63
CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement is current as at 31 August 2020 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 will be reporting against the Corporate Governance Principles and
Recommendations 4th Edition for the financial year ending 30 June 2021.
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
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 64
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 65
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 66
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 was, until recently, 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.
Strategic expertise
Specific industry knowledge
The Board has established a Board Skills Matrix. The Board Skills Matrix includes the following areas of knowledge
and expertise:
•
•
• 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:
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
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 67
CORPORATE GOVERNANCE STATEMENT
•
•
•
•
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 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.
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
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 68
CORPORATE GOVERNANCE STATEMENT
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.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 69
CORPORATE GOVERNANCE STATEMENT
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 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
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 or payable to Non-Executive Directors during the reporting period were $70,000.
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.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 70
CORPORATE GOVERNANCE STATEMENT
Further details in relation to the company’s remuneration policies are contained in the Remuneration Report,
within the Directors’ report.
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 71
ASX ADDITIONAL INFORMATION
The shareholder information set out below was applicable as at 12 October 2020.
As at 12 October 2020 there were 5,277 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 Fully Paid Shares
Name
James Dorrian
John Clement Cowie Love
Citicorp Nominees Pty Limited
BNM Holdings Pty Ltd
Vicex Holdings Proprietary Limited
BNP Paribas Nominees Pty Ltd
Southam Investments 2003 Pty Ltd
Dr Jason Michael Spencer & Dr Carolyn Jean Nelson
National Nominees Limited
Monterey Domes Pty Ltd
Dr Rohan Vanden Driesen
Mr Richard Stanley De Ravin
David Jerimiah McAuliffe
HSBC Custody Nominees (Australia) Limited
Kelland Munro MacCulloch
DHU Holdings Pty Ltd
Aurelius Finance Pty Ltd
Mr Ian Brizee & Mrs Suzanne Brizee
J P Morgan Nominees Australia Pty Limited
Dr Winston O Pty Ltd
Total Top 20
Others
Total Ordinary Shares on Issue
No of Ordinary
Shares Held
52,783,831
Percentage of
Issued Shares
4.03%
30,482,988
28,990,899
21,984,591
21,000,000
19,571,555
15,494,883
13,500,000
9,300,095
9,000,000
8,883,631
8,833,333
8,390,076
8,370,769
8,137,505
7,530,242
7,502,289
7,500,000
7,106,321
7,009,876
2.33%
2.21%
1.68%
1.60%
1.49%
1.18%
1.03%
0.71%
0.69%
0.68%
0.67%
0.64%
0.64%
0.62%
0.58%
0.57%
0.57%
0.54%
0.54%
301,372,884
1,008,320,602
23.01%
76.99%
1,309,693,486
100.00%
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 72
ASX ADDITIONAL INFORMATION
SUBSTANTIAL HOLDERS
The Company has no substantial shareholders as at 12 October 2020.
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
73
108
796
2,797
1,503
5,277
16,523
402,400
6,826,620
110,546,926
1,191,901,017
1,309,693,486
0.00%
0.03%
0.52%
8.44%
91.01%
100.00%
There are 373 shareholders with less than a marketable parcel.
UNQUOTED SECURITIES
As at 12 October 2020, the following unquoted securities are on issue:
42,275,000 Options expiring 27/10/2022 @ $0.042 – 6 Holders
Holders with more than 20%
Holder Name
Guido Arnout
Michael Van Buskirk
Seshubabu Desu
25,780,000 Options expiring 22/01/2024 @ $0.052 – 9 Holders
Holders with more than 20%
Holder Name
Guido Arnout
Margaret Elizabeth Livingston
2,600,000 Options expiring 28/08/2024 @ $0.052 – 9 Holders
Holders with more than 20%
Holder Name
Seshubabu Desu
Ting Yen
ON-MARKET BUY BACK
There is currently no on-market buyback program.
Holding
% IC
14,000,000 33.12%
9,500,000
22.47%
8,500,000
20.11%
Holding
% IC
7,380,000
28.63%
7,000,000
27.15%
Holding
% IC
1,300,000
50.00%
1,300,000
50.00%
4DS Memory Limited ACN 145 590 110 – Annual Report 30 June 2020 | 73