4DS Memory Limited
ACN 145 590 110
Annual Report - 30 June 2022
4DS Memory Limited
Contents
30 June 2022
Corporate directory
Directors' report
Auditor's independence declaration
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members of 4DS Memory Limited
Shareholder information
General information
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The financial statements cover 4DS Memory Limited as a Group consisting of 4DS Memory Limited and the entities it
controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is 4DS
Memory Limited's functional and presentation currency.
4DS Memory Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Level 2, 50 Kings Park Road
West Perth WA 6005
A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which
is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 August 2022. The
Directors have the power to amend and reissue the financial statements.
1
4DS Memory Limited
Corporate directory
30 June 2022
Directors
Drs. Wilbert van den Hoek
Mr. David McAuliffe
Dr. Guido Arnout
Mr. Howard Digby
Company secretary
Mr. Peter Webse
Registered and Principal Office
Share register
Auditor
Solicitors
Level 2, 50 Kings Park Road,
West Perth WA 6005
PO Box 271
West Perth WA 6872
Automic Registry Services
Level 5
191 St Georges Terrace,
Perth WA 6000
Phone: +61 8 9324 2099
Fax: +61 8 9321 2337
Email: info@automic.com.au
Web: www.automic.com.au
PKF Perth
Level 4, 35 Havelock Street,
West Perth WA 6005
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6000
Stock exchange listing
4DS Memory Limited shares are listed on the Australian Securities Exchange (ASX
code: 4DS)
Website
www.4dsmemory.com
2
4DS Memory Limited
Directors' report
30 June 2022
The directors present their report together with the consolidated financial statements of the Group comprising of 4DS
Memory Limited (the Company) and its subsidiaries for the year ended 30 June 2022 and the auditor's report thereon.
Directors
The following persons were Directors of 4DS Memory Limited during the whole of the financial year and up to the date of
this report, unless otherwise stated:
Drs. Wilbert van den Hoek
Mr. David McAuliffe
Dr. Guido Arnout
Mr. Howard Digby
Mr. Kenneth Hurley
Information on Directors
Name:
Title:
Appointed:
Qualifications:
Experience and expertise:
Executive Chairman from 15 August 2022 (Formerly Non-Executive Chairman)
Executive Director
Non-Executive Director
Non-Executive Director
Chief Executive Officer and Managing Director (appointed 14 March 2022 and
resigned on 15 August 2022)
Drs. Wilbert van den Hoek
Executive Chairman from 15 August 2022. (Formerly Non-Executive Chairman)
30 November 2020
Drs. van den Hoek graduated Cum Laude from the Rijks Universiteit Utrecht, The
Netherlands in December 1979 with a Doctorandus degree in Chemistry
Drs. van den Hoek was on the Board of Cypress Semiconductor Corporation (“Cypress”)
from 2011 to 2017. Cypress was a leader in advanced embedded solutions for the
world’s most innovative automotive, industrial, smart home appliances, consumer
electronics and medical products. Cypress was acquired by Infineon Technologies AG
at an enterprise value of approximately US$10 billion in a transaction that was
announced in June 2019 and completed in April 2020.
Drs. van den Hoek also spent 17 years of his career at Novellus Systems, Inc.
(“Novellus”). Novellus was a leading provider of advanced process equipment for the
world’s semiconductor industry. From 1999 until 2005, he served as Novellus’ Chief
Technical Officer and Executive Vice President,
Integration and Advanced
Development. From 2005 until 2008, he was President and CEO of Novellus
Development Company, LLC, the venture arm of Novellus. Novellus was acquired by
Lam Research Corp in a transaction valued at approximately US$3.3 billion, announced
in December 2011.
Drs. van den Hoek currently serves as Chairman of Jiaco Instruments BV, a member of
the board of directors of Innovent Technologies, LLC and as an Advisory Board member
of Kinetics Holding GMBH.
Other current directorships:
Director of Kinetics Holding GMBH
Chairman of Jiaco Instruments BV
Director of Innovent Technologies, LLC
Former directorships (last 3 years): Executive Chairman of Neocera, LLC
Director of Neocera Magma, LLC
Interests in shares:
Interests in options:
1,170,000 ordinary shares
18,830,000 unlisted options exercisable at $0.064 each, expiring 29 November 2025,
subject to vesting conditions
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4DS Memory Limited
Directors' report
30 June 2022
Information on Directors (continued)
Name:
Title:
Appointed:
Qualifications:
Experience and expertise:
Mr. David McAuliffe
Executive Director
7 December 2015
LLB (Hons), BPharm
Mr. McAuliffe is an experienced Company Director and Entrepreneur who has had over
23 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).
Other current directorships:
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
Non-Executive Director of Invex Therapeutics Limited (ASX: IXC)
7,328,706 ordinary shares
7,000,000 unlisted options exercisable at $0.052 each on or before 22 January 2024
Name:
Title:
Appointed:
Qualifications:
Experience and expertise:
Dr. Guido Arnout
Non-Executive Director (from 14 March 2022)
7 December 2015
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)
company.
-
Other current directorships:
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
7,230,053 ordinary shares
7,380,000 unlisted options exercisable at $0.052 each on or before 22 January 2024
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4DS Memory Limited
Directors' report
30 June 2022
Information on Directors (continued)
Name:
Title:
Appointed:
Qualifications:
Experience and expertise:
Mr. Howard Digby
Non-Executive Director
7 December 2015
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.
Other current directorships:
Non-Executive Directors of Elsight Limited (ASX: ELS)
Non-Executive Director of Spenda Limited (ASX: SPX)
Non-Executive Chairman of Singular Health Group Ltd (ASX: SHG)
Former directorships (last 3 years): Non-Executive Director of IMEXHS Limited (ASX: IME)(Formerly known as Omni Market
Tide Limited (ASX: OMT) (Resigned on 30 April 2020)
Non-Executive Chairman of Vortic Limited (ASX: VOR)( Resigned on 19 April 2021)
Interests in shares:
Interests in options:
6,388,629 ordinary shares
1,250,000 unlisted options exercisable at $0.052 each on or before 22 January 2024
Name:
Title:
Appointment and resignation:
Qualifications:
Experience and expertise:
Mr. Kenneth Hurley
Chief Executive Officer and Managing Director
14 March 2022 (appointed) 15 August 2022 (resigned)
BSC (Bachelor of Science in Commerce)
Mr. Hurley is a 40+ year veteran of the semiconductor industry with key executive roles
at Hitachi America Semiconductor and Nanya Technology Corporation Inc, a major
Taiwanese maker of dynamic random-access memory (DRAM) chips. He was CEO of
Genesis Semiconductor, a Semiconductor Design Company and President of
Memoright USA, a manufacturer of Solid State Drives and Controllers.
During his time at Nanya Technology, Mr. Hurley negotiated strategic supply
relationships with Dell, Hewlett Packard, Compaq, IBM, Apple, Google and other multi-
national companies and established product design centers in Vermont and Texas.
-
Other current directorships:
Former directorships (last 3 years): -
-
Interests in shares:
-
Interests in options:
Other current directorships quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
Former directorships (last 3 years) quoted above are directorships held in the last 3 years for listed entities only and excludes
directorships of all other types of entities, unless otherwise stated.
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4DS Memory Limited
Directors' report
30 June 2022
Company Secretary
Mr. Peter Webse
Qualifications
Experience
B.Bus, FGIA, FCIS, FCPA, MAICD
Mr. Webse has over 28 years company secretarial experience and is Director of
Governance Corporate Pty Ltd, a company specialising in company secretarial,
corporate governance and corporate advisory services.
Meetings of Directors
The number of directors meetings and the number of meetings attended by each of the directors of the Company during
the financial year are:
Drs. Wilbert van den Hoek
Mr. David McAuliffe
Dr. Guido Arnout
Mr. Howard Digby
Mr. Kenneth Hurley
Number of
eligible to attend
Number
attended
16
16
16
16
5
16
16
15
16
5
Principal activities
4DS Memory Limited (ASX: 4DS), with facilities located in Silicon Valley, is a semiconductor company pioneering the
development of a non-volatile memory technology known as Interface Switching ReRAM, for next-generation gigabyte
Storage Class Memory. Established in 2007, 4DS owns a patented IP portfolio, comprising 32 USA patents granted (of which
4 have expired) and an additional 1 patent pending , 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 ninth year. 4DS also has a development agreement with Belgium-based imec – a world-leading research and
innovation hub in nanoelectronics and digital technologies.
Review of operations
For the year ending 30 June 2022, 4DS continued in the research of its Interface Switching ReRAM technology with the
achievement of some of its key strategic and technical milestones as per technical updates below.
Technical Updates
During the 2022 financial year the Company made a number of updates to shareholders. A summary of the main updates
are summarised below.
On 17 August 2021 a Technical Update provided the following summary;
· New Process breakthroughs
· Order of magnitude decrease in cell on-resistance
· Second Platform Lot demonstrated both device scaling and memory switching
· Third Platform lot manufacture planned for Q3 2021
· HGST requests technical update
Please refer to the ASX announcement on 17 August 2021 for full details.
On 4 November 2021 a Technical Update provided the following summary;
· Extensive testing identified a potentially modest degradation in endurance
· A stack etch mask modification is needed and optimization of the etch process
· After successful completion of this a Third Platform Lot would be started
Please refer to the ASX announcement on 4 November 2021 for full details.
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4DS Memory Limited
Directors' report
30 June 2022
Review of operations (continued)
Technical Updates
On 11 April 2022 a Technical Update provided the following summary;
· Successful elimination of the etch residues that caused electrical shorting
· These results allowed for the Third Platform Lot to restart
· Out-of-fab date July 2022
Please refer to the ASX announcement on 11 April 2022 for full details.
Collaboration agreements
●
●
On 3 November 2021, the development partner, imec agreed to extend the collaboration agreement for an additional
twelve months, commencing on 1 January 2022.
On 19 May 2022, the Company reported that Western Digital Corporation subsidiary HGST renewed the joint
development agreement for the 9th consecutive year for another 12 months.
Patent portfolio
●
4DS Memory has a patented IP portfolio, comprising 32 USA patents granted (of which 4 have expired) and an
additional 1 patent pending, which have been developed in-house to create high-density Storage Class Memory. The
granted patents are 100% owned by the Company. These patents are specifically related to the operation of the
Company and are free from any royalty or licensing obligations. The 32nd patent was granted on 29 September 2021.
COVID-19
●
The ongoing of the coronavirus disease (COVID-19) has impacted the global economic markets. The Company’s share
price may be adversely affected in the short to medium term by the economic uncertainty caused by COVID-19. Further,
any governmental or industry measures are taken in response to COVID-19 may adversely impact the Company’s
operations and are likely to be beyond the control of the Company. However, as a result of the ongoing and ever-
evolving pandemic, the longer-term impacts on the Group cannot be fully determined at this time.
Corporate and Management
●
On 14 March 2022, Mr. Kenneth Hurley was appointed as the Company’s Chief Executive Officer and Managing
Director[1]. Dr. Guido Arnout remains on the Board as Non-Executive Director and as a part time advisor to the CEO.
[1] Mr. Hurley resigned on 15 August 2022.
Financial Position and Significant Changes in the State of Affairs
The net assets of the Group totalled $6,732,079 (2021: $3,944,057). Cash on hand at 30 June 2022 totalled 5,234,447 (2021:
$4,298,794).
There were no other significant changes in the state of affairs of the Group during the financial year.
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4DS Memory Limited
Directors' report
30 June 2022
●
●
●
●
Placement, Issue of Securities and Release from Escrow
●
At various dates during the financial year the Company issued ordinary share following the exercise of $0.042 unlisted
options. A total of 29,332,000 shares were issued as a result of these exercises, raising $1,231,944.
On 25 November 2021, the Company announced that it had received binding commitments from domestic and
international institutions and high net worth investors which raised $2.5 million at an issue price of $0.048 and
52,083,334 shares (“Placement”).
The Placement was followed by a share purchase plan (“SPP”) under which the Company intended to raise up to $2.5
million at the same price as the Placement, with the ability to accept subscriptions for an additional $1 million worth
of shares. The Company successfully completed its Share Purchase Plan (SPP) which closed, oversubscribed, on 14
December 2021. Based on strong support for the SPP the Company accepted oversubscriptions and on 20 December
2021 issued 72,916,667 shares at $0.048 each to raise $3.5 million under the SPP.
On 3 December 2021, the Company issued 5,000,000 unlisted options to the Lead Manager, Mac Equity Partners. The
options are exercisable at $0.08 each and expire on 3 December 2023.
On 8 June 2022, the Company announced that 1,040,000 ordinary shares were issued following the exercise of $0.052
unlisted options.
On 16 June 2022, the Company announced that 1,170,000 ordinary shares were issued following the exercise of $0.064
unlisted options.
Sales Bonus Pool
On 15 March 2022, the Company announced that the Board had reached a successful outcome with respect to Mr. Kenneth
Hurley and Dr. Arnout’s remuneration. The incentive is in the form of participation in a cash bonus pool (Sale Bonus Pool),
the size of which will be determined by the value received by shareholders upon a liquidity event, such as a takeover of the
Company or a sale of the Company’s intellectual property. The members of 4DS’ technical team, based in Silicon Valley, as
well as Drs. Wilbert van den Hoek, are eligible to participate in the Sale Bonus Pool.
Upon a liquidity event occurring, Mr. Kenneth Hurley, Dr. Guido Arnout, Drs. Wilbert van den Hoek and US-based employees
(Eligible Participants) will each be entitled to receive a proportion of the Sale Bonus Pool. Mr. Kenneth Hurley will be entitled
to receive 30%[1], Dr. Guido Arnout will be entitled to receive 15% and Drs. Wilbert van den Hoek will be entitled to receive
25%, with the balance to be allocated to Eligible Participants at the discretion of the Board.
[1] Mr. Hurley resigned on 15 August 2022 and is no longer eligible to participate in the Sales Bonus Pool.
Incentive options
On 27 May 2022, 30,000,000 unlisted options were issued to Mr. Kenneth Hurley pursuant to the terms of the Executive
Services Agreement, as approved by the shareholders at the General Meeting held on the 26 May 2022. The options were
subsequently lapsed upon his resignation on 15 August 2022.
On 31 May 2022, the Company issued 15,500,000 [2] incentive options to the US employees. The options are exercisable at
$0.10 each and expire on 31 May 2027 with 25% of options vesting after 6 months and the balance vesting quarterly over
following 10 quarters.
[2] On 22 August 2022, 5,000,000 incentive options were cancelled following the termination of an employee.
Dividends Paid or Recommended
No dividend has been declared or paid by the Company. The Directors do not recommend the payment of a dividend.
Events post 30 June 2022 and Short-Term Development Strategies
On 8 July 2022, the Company issued 2,275,000 ordinary shares following the exercise of $0.042 unlisted options to raise
$95,550.
On 15 August 2022, Mr. Kenneth Hurley resigned as Managing Director and CEO of the Company. Drs. Wilbert van den Hoek
transitioned from Non-executive Chairman to Executive Chairman.
In light of the unexpected testing outcome, and to conserve Company's existing cash reserves, the Board members have
agreed to defer their fees for three months effective from 15 August 2022.
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4DS Memory Limited
Directors' report
30 June 2022
Events post 30 June 2022 and Short-Term Development Strategies (continued)
On 16 August 2022, the Company announced that the Third Platform Lot has successfully arrived at its facilities in Fremont,
California and that extensive internal testing has successfully demonstrated that the reference memory cells on the Third
Platform Lot perform similarly to the identical reference structures on the Third Non-Platform Lot, indicating that the Lot
has been manufactured properly. However, testing of the cells used in the imec megabit memory array showed unexpected
problems with scaling the memory cell to small dimensions suitable for Storage Class Memory potential applications. These
result suggest that the memory stack etch mask modification and further optimization of the etch process utilizing this new
mask appears to have created another problem, while having resolved the root cause of the electrical shorting of the
memory devices in the Second Platform Lot.
The Company is now performing a Root Cause Corrective Action process which includes further electrical testing,
Transmission Electron Microscopy and material analysis to identify the reason for the difference in results between the
Second Platform Lot and Third Platform lot.
Until this issue is resolved, endurance and retention testing of the memory cells with imec access transistors, the primary
goal of this Third Platform Lot, cannot be successfully completed and will cause a long-term delay in achieving its strategic
goal of commercializing the Company's technology.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
Environmental Regulation and Performance
The Company is not subject to any significant environmental regulation under Australian Commonwealth or State law.
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.
Share Options
Unissued ordinary shares of 4DS Memory Limited under option at the date of this report are as follows:
Grant Date
03/11/2017
03/12/2021
22/01/2019
06/05/2019
28/08/2019
30/11/2020
31/05/2022
Expiry Date
27/10/2022
03/12/2023
22/01/2024
22/01/2024
28/08/2024
29/11/2025
31/05/2027
Exercise Price
Number under option
$0.042
$0.080
$0.052
$0.052
$0.052
$0.064
$0.100
500,000
5,000,000
8,900,000
16,880,000
1,300,000
18,830,000
10,500,000
61,910,000
All unissued shares are ordinary shares of the Company.
All unvested options expire on termination of employment unless the Board makes a determination (in its absolute
discretion) that the employee’s performance during the term and the circumstances of the termination of the employment
are such that all unvested options on the date of termination will continue to vest according to the vesting schedule and
only expire on the expiry date. Further details about share-based payments to directors and KMP are included in the
remuneration report.
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.
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4DS Memory Limited
Directors' report
30 June 2022
Share Options (continued)
Shares issued as a result of the exercise of options
During or since the end of the financial year, the Group issued ordinary shares of the Company as a result of the exercise of
options as follows :
Number of Shares
31,607,000
1,040,000
1,170,000 a
Amount paid on each share
$0.042
$0.052
$0.064
a On 16 June 2022, the Company announced that 1,170,000 ordinary shares were issued following the exercise of $0.064
unlisted options. The amount to be paid on the exercised of options was offset against accrued Director’s fees outstanding
as of 31 May 2022.
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.
Non-Audit Services
During the year, PKF Perth, the Group's auditor, has performed certain other services in addition to the audit and review of
the financial statements.
The Board of Directors has considered the non-audit services provided during the year by the auditor and 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.
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4DS Memory Limited
Directors' report
30 June 2022
Non Audit Services (continued)
Details of the amounts paid to the auditor of the Group, PKF Perth and its network firms for non-audit services provided
during the year are set out below:
Services other than audit and review of financial statements:
Other services
Taxation compliance
2022
6,250
6,250
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.
Remuneration Report (audited)
This Remuneration Report outlines the Director and Executive remuneration arrangements of the Company and the Group
in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report Key
Management Personnel (KMP) of the Group are defined as those persons having the authority and responsibility for
planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any
Director (whether executive or otherwise) of the parent company.
Remuneration Policy
The Company has adopted a remuneration policy designed to align individual and team reward and encourage Executives
to perform to their full capacity.
Remuneration packages may contain any or all of the following:
(a) Annual salary base with provision to recognise the value of the individuals’ personal performance and their ability and
experience;
(b) Rewards, bonuses, commissions, special payments and other measures available to reward individuals and teams
following a particular outstanding business contribution;
(c) Share participation - the Company proposes to put in place an equity incentive plan; and
(d) Other benefits, such as 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 Executive Chairman.
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.
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4DS Memory Limited
Directors' report
30 June 2022
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.
Termination
Termination condition with immediate effect by written notice to the Company or the Company’s shareholders may resolve
the removal by member’s resolution.
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 to reward Executives in a manner which aligns this element of remuneration with
the creation of shareholder wealth.
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4DS Memory Limited
Directors' report
30 June 2022
Details of remuneration
Directors' and executive officers' remuneration
Details of the nature and amount of each major element of remuneration of key management personnel of the Group are
set out in the following tables.
Short-term
benefits
Cash salary
and fees
$
Cash bonus
$
Post-
employment
benefits
Super-
annuation
$
Share-based
payments
Equity-
settled [A]
$
Proportion of
remuneration
performance
related
$
30 June 2022
Executive Directors:
Mr. Kenneth Hurley [B]
Mr. David McAuliffe
Non-Executive Directors:
Drs. Wilbert van den Hoek [C]
Dr. Guido Arnout [D]
Mr. Howard Digby
Other Key Management
Personnel:
Mr. Michael Van Buskirk
(resigned 30 April 2022)
Mr. Seshubabu Desu (resigned
15 October 2021)
124,769
200,000
50,000
176,841
30,000
224,086
28,640
834,336
-
-
-
-
-
-
-
-
-
18,205
429,995
726
-
-
-
658,512
765
130
-
-
-
-
-
Total
$
554,764
218,931
708,512
177,606
30,130
-
480
-
224,566
-
18,205
2,750
1,093,358
31,390
-
- 1,945,899
Notes in relation to Directors’ and Executive officers’ remuneration table
[A] The fair value of the options is calculated at the date of grant using the Black Scholes option-pricing model and allocated
to each reporting period evenly over the period from grant date to vesting date. The value disclosed is the portion of the
fair value of the option recognised as an expense in each reporting period.
[B] On 14 March 2022, Mr. Kenneth Hurley was appointed as the Company’s Chief Executive Officer and Managing Director
and subsequently resigned on 15 August 2022.
[C] On 16 June 2022, 1,170,000 ordinary shares were issued following the exercise of $0.064 unlisted options. The amount
to be paid on the exercised of options $74,880 was offset against accrued Director’s fees outstanding for the period from
December 2020 to May 2022. Of which, $45,833 related to 30 June 2022 financial year.
[D] On 14 March 2022, Dr. Guido Arnout retired as the Company's Chief Executive Office and Managing Director. Dr. Arnout
remains with the Company as a Non-Executive Director and will act on a part-time basis employee.
13
4DS Memory Limited
Directors' report
30 June 2022
Details of remuneration (continued)
Short-term
benefits
Cash salary
and fees
$
Cash bonus
$
Post-
employment
benefits
Super-
annuation
$
Share-based
payments
Equity-
settled
$
Proportion of
remuneration
performance
related
$
Total
$
394,301
200,000
-
75,000
-
21,694
40,785
38,685
-
-
435,086
335,379
29,167
32,778
30,000
-
-
-
-
-
-
1,056,340
6,908
6,908
- 1,085,507
-
39,686
-
36,908
354,066
144,234
1,184,546
-
-
75,000
-
-
21,694
29,683
14,502
1,193,811
-
383,749
-
158,736
- 2,475,051
30 June 2021
Executive Directors:
Dr Guido Arnout
Mr David McAuliffe
Non-Executive Directors:
Drs. Wilbert van den Hoek
Mr James Dorrian
Mr Howard Digby
Other Key Management
Personnel:
Mr Michael Van Buskirk
Mr Seshubabu Desu
Employment Contracts
Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details
of these agreements are as follows:
Name:
Title:
Agreement commenced:
Mr. Kenneth Hurley
Chief Executive Officer and Managing Director (resigned on 15 August 2022)
15 March 2022
Mr. Hurley is subject to an employment contract with the following conditions:
●
●
Remuneration salary of US$310,000 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)
●
Incentives
(1) On 27 May 2022, the Company issued Mr. Hurley 30,000,000 unlisted options exercisable at $0.063 each, expiring 14
March 2027, with 7,500,000 vesting following the completion of 6 months service to the Company and the remaining
22,500,000 options vesting quarterly over the following 10 quarters subject to the holder continuing to remain a
Director of the Company.
(2) Upon a liquidity event occurring, Mr. Hurley will be entitled to receive 30% of the Sale Bonus Pool if Mr. Hurley
continuously provided the services through the time of the liquidity events.
The size of the Sale Bonus Pool shall be calculated as follows:
Sales Value
US$120M to US$350M
US$350M to US$550M
Above US$550M
Sales Bonus Pool
5% of the Sales Value
US$17.5M plus 6.25% of the excess above US$350M
US$30M plus 7.5% of the excess above US$550M
Termination
Mr. Hurley employment agreement was terminated on 15 August 2022 upon his resignation and he is no longer eligible to
participate in the Sales Bonus Pool.
14
4DS Memory Limited
Directors' report
30 June 2022
Employment Contracts (continued)
Name:
Title:
Agreement commenced:
Drs. Wilbert van den Hoek
Executive Chairman from 15 August 2022 (Formerly Chairman and Non-Executive
Director)
30 November 2020 and amended on 15 August 2022
Drs. van den Hoek is subject to a letter of appointment with the following conditions:
●
Director fee of $50,000 per annum, with an option to convert to 4DS shares. If the option is taken the shares would be
convertible at the 30 June share price and approved at the Annual General Meeting.
Entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the performance of his
duties.
Remuneration payable shall be subject to review by Board of the Company on the date which is three months after 15
August 2022, and otherwise subject to annual review by the Board of the Company and approval by the shareholders
of the Company (if required).
●
●
Incentives
(1) On 30 November 2020, the Company issued Drs. van den Hoek 20,000,000 unlisted options exercisable at $0.064 each,
expiring 29 November
2025, with 5,000,000 vesting following the completion of 6 months service to the Company and the remaining
15,000,000 options vesting quarterly over the following 10 quarters subject to the holder continuing to remain a
Director of the Company.
(2) Upon a liquidity event occurring, Drs. van den Hoek will be entitled to receive 25% of the Sale Bonus Pool if Drs. van
de Hoek continuously provided the services through the time of the liquidity events.
The size of the Sale Bonus Pool shall be calculated as follows:
Sale Value
US$120M to US$350M
US$350M to US$550M
Above US$550M
Sale Bonus Pool
5% of the Sale Value
US$17.5M plus 6.25% of the excess above US$350M
US$30M plus 7.5% of the excess above US$550M
Termination
Termination condition with immediate effect by written notice to the Company or the Company’s shareholders may resolve
the removal by member’s resolution.
Name:
Title:
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.
Remuneration reviewed annually on each review date or at any other time as the Board may determine (in its absolute
discretion).
●
Termination
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.
15
4DS Memory Limited
Directors' report
30 June 2022
Employment Contracts (continued)
Name:
Title:
Agreement commenced:
Dr. Guido Arnout
Non-Executive Director from 14 March 2022 and part time adviser to the CEO from 1
April 2022 (previously Chief Executive Officer and Managing Director)
14 March 2022 (Amended Agreement)
Dr. Arnout is subject to an employment contract with the following conditions:
●
Remuneration salary of US$294,000 per annum reduced to US$48,000 per annum (for a day of service per week)
effective from 1 April 2022. Non-Executive Director's fee of A$30,000 per annum effective from 14 March 2022.
Entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the performance of his
duties.
Remuneration reviewed annually on each review date or at any other time as the Board may determine (in its absolute
discretion).
●
●
Incentive
Upon a liquidity event occurring, Dr. Arnout will be entitled to receive 15% of the Sale Bonus Pool if Dr. Arnout continuously
provided the services through the time of the liquidity events.
The size of the Sale Bonus Pool shall be calculated as follows:
Sale Value of US$120m to US$350m
Sale Value of US$350m to US$550m
Sale Value above US$550m
Sale Bonus Pool
5% of the sale value
US$17.5m plus 6.25% of the excess above US$350m
US$30m plus 7.5% of the excess above US$550m
Termination
No notice of termination required for role of part time adviser to CEO. Termination condition for Non-Executive Director
role with immediate effect by written notice to the Company or the Company’s shareholders may resolve the removal by
member’s resolution.
Equity Instruments
[A] Share holdings of Key Management Personnel
The number of shares in the Company held during the financial year by each Director and other members of key
management personnel of the Group, including their personally related parties, is set out below:
Balance at
the start of
the year
Granted
as part of
On exercise Net change
remuneration of options
other [a]
Balance at
the end of
the year
30 June 2022
Executive Directors
Mr. Kenneth Hurley (resigned 15 August
2022)
Mr. David McAuliffe
Non-Executive Directors
Drs. Wilbert van den Hoek
Dr. Guido Arnout
Mr. Howard Digby
Other Key Management Personnel
Mr. Michael Van Buskirk (resigned on 30 April
2022)
Mr. Seshubabu Desu (resigned on 15 October
2021)
-
6,975,647
-
3,030,053
6,211,954
-
-
-
-
-
353,059
-
7,328,706
1,170,000
-
- 14,000,000
-
-
-
(9,800,000)
176,675
1,170,000
7,230,053
6,388,629
1,145,852
-
9,500,000
(10,645,852)
-
5,372,000
-
-
- 30,042,000 (25,288,118) 22,117,388
(5,372,000)
-
17,363,506
16
4DS Memory Limited
Directors' report
30 June 2022
Equity Instruments (continued)
[A] Share holdings of Key Management Personnel
Balance at
the start of
the year
Granted
as part of
On exercise Net change
Remuneration of options
other [a]
Balance at
the end of
the year
30 June 2021
Executive Directors
Dr. Guido Arnout
Mr. David McAuliffe
Non-Executive Directors
Drs. Wilbert van den Hoek
Mr. James Dorrian [i]
Mr. Howard Digby [ii]
Other key management personnel
Mr. Michael Van Buskirk
Mr. Seshubabu Desu
3,030,053
13,323,295
-
52,783,831
5,777,172
-
-
-
652,173
434,782
-
-
-
-
-
-
(6,347,648)
3,030,053
6,975,647
-
(53,436,004)
-
-
-
6,211,954
1,145,852
658,984
-
-
-
4,168,000
-
(4,826,984)
1,145,852
-
76,719,187
1,086,955
4,168,000
(64,610,636) 17,363,506
[i] 652,173 fully paid ordinary shares at $0.046 in satisfaction of the Director’s fees for 2019 and 2020 financial years (being
a total of $30,000) as per shareholders’ approval on 30 November 2020.
[ii] 434,782 fully paid ordinary shares at $0.046 to Howard Digby in satisfaction of salary accrued for 2020 financial years
(being a total of $20,000) as per shareholders’ approval on 30 November 2020.
[B] Options and rights over equity instruments
The movement during the reporting period, by number of rights and options over ordinary shares in 4DS Memory Limited
held, directly, indirectly or beneficially, by each key management person, including their parties, is as follows:
Balance at
the start of
the year
Granted
as part of
Options
Remuneration Exercised
Net Change
other [a]
Balance at
the end of
the year
30 June 2022
Executive Director
Mr. Kenneth Hurley (resigned 15 August
2022)
Mr. David McAuliffe
Non-Executive Director
Drs. Wilbert van den Hoek
Dr. Guido Arnout
Mr. Howard Digby
Other key management personnel
Mr. Michael Van Buskirk (resigned on 30 April
2022)
Mr. Seshubabu Desu (resigned on 15 October
2021)
-
30,000,000
7,000,000
-
-
-
20,000,000
21,380,000
1,250,000
(1,170,000)
-
- (14,000,000)
-
-
-
-
30,000,000
7,000,000
- 18,830,000
7,380,000
-
1,250,000
-
14,500,000
-
(9,500,000)
(5,000,000)
-
5,632,000
69,762,000
(5,372,000)
30,000,000 (30,042,000)
-
(260,000)
-
(5,260,000) 64,460,000
17
4DS Memory Limited
Directors' report
30 June 2022
Equity Instruments (continued)
[B] Options and rights over equity instruments
Balance at
the start of
the year
Granted
as part
Options
Remuneration Exercised
Net Change
other [a]
Balance at
the end of
the year
30 June 2021
Executive Director
Dr Guido Arnout
Mr David McAuliffe
Non-Executive Director
Drs. Wilbert van den Hoek
Mr. James Dorrian
Mr. Howard Digby
Other key management personnel
Mr. Michael Van Buskirk
Mr. Seshubabu Desu
21,380,000
7,000,000
-
-
-
1,250,000
1,250,000
20,000,000
-
-
-
-
-
-
-
- 21,380,000
-
7,000,000
(1,250,000)
-
- 20,000,000
-
1,250,000
14,500,000
9,800,000
-
-
-
(4,168,000)
- 14,500,000
-
5,632,000
55,180,000
20,000,000
(4,168,000)
(1,250,000) 69,762,000
[a] Net change other included acquisition, disposals and cessation as KMP.
Vested and Unvested and
exercisable unexercisable
Balance at
the end of
the year
Options over ordinary shares
Mr. Kenneth Hurley [i]
Mr. David McAuliffe
Drs. Wilbert van den Hoek
Dr. Guido Arnout
Mr. Howard Digby
Mr. Michael Van Buskirk (resigned on 30 April 2022)
Mr. Seshubabu Desu (resigned on 15 October 2021) [ii]
-
7,000,000
9,830,000
7,380,000
1,250,000
5,000,000
-
30,460,000
-
-
-
7,000,000
9,000,000 18,830,000
7,380,000
1,250,000
5,000,000
-
9,000,000 39,460,000
-
-
-
-
[i] Mr. Kenneth Hurley 30,000,000 Options lapsed and has not achieved any of the vesting conditions at his resignation date
15 August 2022.
[ii] Mr. Seshubabu Desu 260,000 Options lapsed and has not achieved the vesting conditions at his resignation date 15
October 2021.
18
4DS Memory Limited
Directors' report
30 June 2022
Equity instruments granted as compensation
[C] Rights and options over equity instruments granted as compensation
Details on rights and options over ordinary shares in the Company that were granted as compensation to each key
management person during the reporting period and details on options that vested during the reporting periods are as
follows:
Name
Executive Directors
Mr. Kenneth Hurley [i]
Mr. David McAuliffe
Non-Executive Directors
Drs. Wilbert van den Hoek
Dr. Guido Arnout
Mr. Howard Digby
Other key management
personnel
Mr. Michael Van Buskirk
(resigned on 30 April 2022)
Mr. Seshubabu Desu
(resigned on 15 October
2021)
Number of
options granted
during 2021-22
Grant date
Number of
options vested
during 2021-22
Expiry date
Exercise
price per
option
Fair value
per option at
grant date
30,000,000 27 May 2022
- 24 Apr 2019
-
125,000
22 Apr 2024
22 Apr 2024
$0.063
$0.052
$0.0510
$0.0586
- 30 Nov 2020
- 24 Apr 2019
- 24 Apr 2019
6,000,000
738,000
125,000
29 Nov 2025
22 Apr 2024
22 Apr 2024
$0.064
$0.052
$0.052
$0.0997
$0.0586
$0.0586
-
22 Jan 2019
500,000
22 Jan 2024
$0.052
$0.0586
-
28 Aug 2019
390,000
28 Aug 2024
$0.052
$0.0399
All unvested options expire on termination of employment unless the Board makes a determination (in its absolute
discretion) that the employee’s performance during the term and the circumstances of the termination of the employment
are such that all unvested options on the date of termination will continue to vest according to the vesting schedule and
only expire on the expiry date.
[i] Mr. Hurley resigned on 15 August 2022 and his options lapsed at that date.
Exercise of options grated as compensation
[D] Exercise of options granted as compensation
For the year ended 30 June 2022, the following shares were issued as a result of exercise of the options previously granted
as compensation:
Dr. Guido Arnout
Mr. Michael Van Buskirk
Mr. Sheshubabu Desu
Dr. Wilbert van den Hoek[i]
Number of
Shares
Amount paid $ /
Share
14,000,000
9,500,000
4,332,000
1,040,000
1,170,000
$0.042
$0.042
$0.042
$0.052
$0.064
[i]1,170,000 ordinary shares were issued following the exercise of $0.064 unlisted options. The amount to be paid on the
exercised of options $74,880 was offset against accrued Director’s fees outstanding for the period from December 2020 to
May 2022. Of which, $45,833 related to 30 June 2022 financial year.
Voting of shareholders at last year’s annual general meeting
At the Company’s last Annual General Meeting (AGM), 26.35% of votes cast at the meeting rejected the adoption of the
remuneration report. The Company did not receive any specific feedback at the AGM or throughout the year and up to the
date of this report on its remuneration practices.
19
4DS Memory Limited
Directors' report
30 June 2022
Key Management Personnel Transactions
Loans to KMP and their related parties
There are no loans between the Group and Key Management Personnel.
Other transactions with KMP
There are no other transactions between the Group and Key Management Personnel.
This concludes the remuneration report, which has been audited.
Auditor's independence declaration
A copy of the auditor's independence declaration for the year ended 30 June 2022 as required under section 307C of the
Corporations Act 2001 has been received and can be found after this directors' report.
This report is made in accordance with a resolution of Directors, pursuant to section 298(2)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Drs. Wilbert van den Hoek
Executive Chairman
30 August 2022
20
PKF Perth
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 2022, 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
SIMON FERMANIS
SENIOR PARTNER
30 AUGUST 2022
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.
21
4DS Memory Limited
Statement of profit or loss and other comprehensive income
For the year ended 30 June 2022
Other Income
Interest Income
Expenses
Compliance and regulatory expenses
Consulting and Professional Fees
Directors and employee benefit expenses
Depreciation and amortisation expense
Write off of asset
Research and development
Share based payments
Interest expense
Unrealised / realised foreign exchange
Other expenses
Operating loss
Interest on lease liabilities
Loss before income tax expense
Income tax expense
Note 30 June 2022 30 June 2021
$
$
4
9
9
4
15
23,646
206,461
4,457
6,832
(144,823)
(214,244)
(301,122)
(224,812)
(48,605)
(4,155,124)
(1,276,268)
(6,158)
(29,906)
(343,046)
(125,953)
(178,130)
(401,138)
(200,211)
-
(4,298,974)
(1,231,464)
(5,029)
(90,005)
(318,219)
(6,716,005)
(6,635,830)
(16,074)
(22,005)
(6,732,079)
(6,657,835)
5
-
-
Loss after income tax expense for the year attributable to the owners of 4DS
Memory Limited
(6,732,079)
(6,657,835)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
14
19,100
23,465
Other comprehensive income for the year, net of tax
19,100
23,465
Total comprehensive income for the year attributable to the owners of 4DS
Memory Limited
Basic earnings per share
Diluted earnings per share
(6,712,979)
(6,634,370)
Cents
Cents
13
13
(0.48)
(0.48)
(0.51)
(0.51)
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
22
4DS Memory Limited
Statement of financial position
As at 30 June 2022
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Right-of-use assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note 30 June 2022 30 June 2021
$
$
6
8
9
5,234,447
-
55,205
5,289,652
4,298,794
16,004
46,723
4,361,521
151,646
257,001
408,647
237,502
377,851
615,353
5,698,299
4,976,874
10
11
84,945
120,313
32,778
238,036
735,108
100,911
38,611
874,630
11
51,987
51,987
158,187
158,187
290,023
1,032,817
5,408,276
3,944,057
12
14
54,826,216 47,925,286
4,326,279
(48,307,508)
5,611,267
(55,029,207)
5,408,276
3,944,057
The above statement of financial position should be read in conjunction with the accompanying notes
23
4DS Memory Limited
Statement of changes in equity
For the year ended 30 June 2022
Issued
capital
$
Share Based
Payment
Reserve
$
Foreign
Exchange
Reserve
$
Accumulated
Losses
$
Total equity
$
Balance at 1 July 2020
40,086,985
3,236,850
(36,422)
(41,670,706)
1,616,707
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Issue of share capital, net of transaction costs
(note 12)
Issue of employee options (note 15)
Issue of shares on exercise of options
Issue of shares in lieu of Director fees
Options lapsed
-
-
-
-
-
-
-
(6,657,835)
(6,657,835)
23,465
-
23,465
23,465
(6,657,835)
(6,634,370)
7,253,199
-
535,101
50,000
-
-
1,231,465
(108,045)
-
(21,032)
-
-
-
-
-
-
-
-
-
21,032
7,253,199
1,231,465
427,056
50,000
-
Balance at 30 June 2021
47,925,285
4,339,238
(12,957)
(48,307,509)
3,944,057
Issued
capital
$
Share Based
Reserve
$
Foreign
Exchange
Reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2021
47,925,285
4,339,238
(12,957)
(48,307,509)
3,944,057
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction
costs (note 12)
Share-based payments (note 15)
Issue of shares on exercised of options
Options lapsed
-
-
-
-
-
-
-
(6,732,079)
(6,732,079)
19,100
-
19,100
19,100
(6,732,079)
(6,712,979)
5,540,027
74,880
1,286,024
-
-
1,276,267
-
(10,381)
-
-
-
-
-
-
-
10,381
5,540,027
1,351,147
1,286,024
-
Balance at 30 June 2022
54,826,216
5,605,124
6,143
(55,029,207)
5,408,276
The above statement of changes in equity should be read in conjunction with the accompanying notes
24
4DS Memory Limited
Statement of cash flows
For the year ended 30 June 2022
Cash flows from operating activities
Payments to suppliers and employees
Payments for research and development
Interest received
Interest paid
Government grants
Other income
Note 30 June 2022 30 June 2021
$
$
(840,317)
(4,564,702)
(856,232)
(4,721,001)
(5,405,019)
4,457
(16,074)
-
23,646
(5,577,233)
6,832
(22,067)
34,260
-
Net cash used in operating activities
7
(5,392,990)
(5,558,208)
Cash flows from investing activities
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of capital raising costs
Issue of shares on exercise of options
Repayment of borrowings
Principal elements of lease payments
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
12
(248,660)
(40,984)
(248,660)
(40,984)
5,985,930
(428,849)
1,286,024
(127,908)
(120,509)
7,611,969
(358,770)
427,056
(102,374)
(115,888)
6,594,688
7,461,993
953,038
4,298,794
(17,385)
1,862,801
2,509,785
(73,792)
Cash and cash equivalents at the end of the financial year
6
5,234,447
4,298,794
The above statement of cash flows should be read in conjunction with the accompanying notes
25
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 1. Reporting Entity
These are the consolidated financial statements and notes of the Company and controlled entities. 4DS Memory Limited
and its subsidiaries together are referred to in these financial statements as the 'Group’. The Group is a company limited by
shares, domiciled and incorporated in Australia.
The Group is a for-profit entity and is primarily involved in semiconductor company pioneering the development of a non-
volatile memory technology known as Interface Switching ReRAM, for next-generation gigabyte Storage Class Memory.
Basis of accounting
The consolidated financial statements are general purpose financial statements have been prepared in accordance with
Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the
Corporations Act 2001. These financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board ('IASB'). They were authorised by the Board of Directors on 30 August 2022
Reporting basis and conventions
The financial statements have been prepared on accrual basis under the historical cost convention, except for, where
applicable, the revaluation of financial assets and liabilities at fair value through profit or loss, financial assets at fair value
through other comprehensive income, investment properties, certain classes of property, plant and equipment and
derivative financial instruments.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the Group only.
Supplementary information about the parent entity is disclosed in note 19.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group as at 30 June 2022
and the results of all subsidiaries for the year then ended.
Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed
to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated.
Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by
the Group.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling
interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises
the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in
profit or loss.
26
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 1. Reporting Entity (continued)
Functional and presentation currency
The financial statements are presented in Australian dollars, which is 4DS Memory Limited's functional and presentation
currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation
at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
profit or loss.
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting
date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange
rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences
are recognised in other comprehensive income through the foreign currency reserve in equity.
New Accounting Standards and Interpretations not yet mandatory or early adopted
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting
Standards or Interpretations that are not yet mandatory have not been early adopted.
Going Concern
The net assets of the Group totalled $5,408,276 (2021: $3,944,057). Cash on hand at 30 June 2022 totalled $5,233,447 (2021:
$4,298,794) and net operating cash outflow of $5,392,990 (2021: $5,558,208) for the year ended 30 June 2022.
The Group’s ability to continue as a going concern and meet its debts and future commitments as and when they fall due is
dependent on the Company’s ability to raise sufficient working capital to ensure the continued implementation of the
Group’s business plan.
The financial report has been prepared on a going concern basis. In arriving at this position, the Directors have had regard
to the fact that the Company has, or in the Directors’ opinion will have access to, sufficient cash to fund administrative and
other committed expenditure for a period of not less than 12 months from the date of this report.
In the event that the Group does not achieve the above actions, there exists a material uncertainty as to whether the Group
will be able to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business.
Note 2. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events, management
believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal
the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are
discussed below.
27
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 2. Critical accounting judgements, estimates and assumptions (continued)
Share-based payment transactions
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 Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes
model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets
and liabilities within the next annual reporting period but may impact profit or loss and equity.
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.
Impairment of property, plant and equipment
The Group assesses impairment of property, plant and equipment at each reporting date by evaluating conditions specific
to the Group and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount
of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a
number of key estimates and assumptions.
Incremental borrowing rate
Where the interest rate implicit in a lease cannot be readily determined, an incremental borrowing rate is estimated to
discount future lease payments to measure the present value of the lease liability at the lease commencement date. Such a
rate is based on what the Group estimates it would have to pay a third party to borrow the funds necessary to obtain an
asset of a similar value to the right-of-use asset, with similar terms, security and economic environment.
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).
Research costs
All research costs during the year have been expensed. The research costs have not been recognized as intangible assets as
they did not meet the criteria as set out in policy.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that COVID19 has had, or may have, on the Group based on known
information.
As the date of this report, the Group’s operations have not been materially impacted by the COVID-19 crisis during the year
ended 30 June 2022. The Group has taken action to minimise the risk that COVID19 presents and as a result of this action,
the Group has continued to maintain its operations.
The challenges presented by COVID19 are fluid and continue to change. The Group will continue to assess and update the
Group’s response.
28
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 3. 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.
internal reports reviewed by the Board and
The Company has
management. There was only one operating segment being research and development of Interface Switching ReRAM
technology for next generation storage in mobile and cloud.
its operating segments based on
identified
Note 4. Expenses
Loss before income tax includes the following specific expenses:
Salary and wages (cash settled)
Bonus (cash settled)
Superannuation (cash settled)
Annual leaves
Directors' fees (cash settled)
Directors' fees (accrued)
Director's fees (equity settled)
Total directors and employee benefits expense
Utilities
Consultants
Salary and wages
R&D partner
Other research expenses
Research and development expenses
30 June 2022 30 June 2021
$
$
200,000
-
18,205
(5,833)
27,500
15,417
45,833
200,000
75,000
21,694
12,500
30,000
61,944
-
301,122
401,138
79,600
65,798
139,196
1,759,939
1,958,349
297,640
122,794
2,150,300
1,667,789
358,090
4,155,124
4,298,973
29
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 4. Expenses (continued)
Accounting policy for 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. Superannuation
Contributions are made by the Consolidated Entity to superannuation funds as stipulated by statutory requirements and are
charged as expenses when incurred.
iii. 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.
Accounting policy for 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.
Accounting policy for 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.
30
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 5. Income tax
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 25% (2021: 26%)
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Provisions and accruals
Other permanent differences
Unrealised foreign exchange
Capital raising costs
Other non-deductible amounts
Adjustment to deferred tax balances as a result of change in statutory tax rate
Deferred tax balances not recognised
Income tax expense
30 June 2022 30 June 2021
$
$
(6,732,079)
(6,657,835)
(1,683,020)
(1,731,037)
319,067
12,694
(28,144)
3,372
(193,230)
28,015
320,181
3,415
(64,976)
22,000
(74,293)
49,091
(1,541,246)
-
1,541,246
(1,475,619)
280,299
1,195,320
-
-
Accounting policy for 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 the 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 be applied 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 at 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 entities which intend to settle simultaneously.
31
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 6. Cash and cash equivalents
Current assets
Cash and cash equivalents
30 June 2022 30 June 2021
$
$
5,234,447
4,298,794
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term with
original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to
an insignificant risk of changes in value.
Note 7. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
30 June 2022 30 June 2021
$
$
(6,732,079)
(6,657,835)
224,813
48,605
1,276,268
55,498
74,880
6,158
(23,332)
200,211
-
1,231,464
(97,203)
50,000
4,926
-
11,376
(3,854)
-
(451,832)
120,509
4,372
-
(11,943)
(282,200)
-
(5,392,990)
(5,558,208)
30 June 2022 30 June 2021
$
$
1,276,268
74,880
1,231,464
50,000
1,351,148
1,281,464
Loss after income tax expense for the year
Adjustments for:
Depreciation
Write off of asset
Share-based payments
Foreign exchange differences
Director fee - equity settled
Interest on lease liabilities
Reversal of impairment of asset
Change in operating assets and liabilities:
Decrease in trade and other receivables
Increase in prepayments
Increase in other assets
Decrease in trade and other payables
Increase in lease liabilities
Net cash used in operating activities
Non-cash investing and financing activities
Shares issued under employee share plan
Shares issued in relation to director fees
32
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 8. Right-of-use assets
Non-current assets
Land and buildings - right-of-use
30 June 2022 30 June 2021
$
$
151,646
237,502
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2020
Exchange differences
Depreciation expense
Balance at 30 June 2021
Exchange differences
Depreciation expense
Balance at 30 June 2022
Total
$
371,069
(31,022)
(102,545)
237,502
15,841
(101,697)
151,646
Accounting policy for right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which
comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the
commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in
the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and
restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful
life of the asset, whichever is the shorter. Where the Group expects to obtain ownership of the leased asset at the end of
the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted
for any remeasurement of lease liabilities.
The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms
of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as
incurred.
33
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 9. Property, plant and equipment
Non-current assets
Plant and equipment
Accumulated depreciation
Less: Impairment
30 June 2022 30 June 2021
$
$
1,091,352
(834,351)
-
1,076,618
(675,435)
(23,332)
257,001
377,851
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out
below:
Balance at 1 July 2020
Additions
Exchange differences
Depreciation expense
Balance at 30 June 2021
Additions
Exchange differences
Reversal of impairment of asset
Write off of asset
Depreciation expense
Balance at 30 June 2022
Total
$
216,763
260,384
(1,921)
(97,375)
377,851
23,482
3,959
23,332
(48,605)
(123,018)
257,001
During the year, management assessed deposition equipment as obsolete and no longer in use by the Company, as a result,
$48,605 was written off and recorded in the profit and loss. A provision of impairment provided in historical years was
reversed.
Accounting policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any
accumulated depreciation and impairment losses.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and
the net amount is restated to the revalued amount of the asset.
Plant and equipment 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.
34
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 9. Property, plant and equipment (continued)
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment
(excluding land) over their expected useful lives as follows:
Class of Assets
Computer and equipment
Plant and equipment
Depreciation Rate
33.33%
20%
The residual values, useful lives and depreciation methods 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.
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the
Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Note 10. Trade and other payables
Current liabilities
Trade payables
Other payables
30 June 2022 30 June 2021
$
$
29,149
55,796
627,087
108,021
84,945
735,108
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and
which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts
are unsecured and are usually paid within 30 days of recognition.
Accounting policy for 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.
35
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 11. Lease liabilities
Current liabilities
Lease liability
Non-current liabilities
Lease liability
Maturity analysis - contractual undiscounted cash flows
Less than one year
One to five years
More than five year
Total undiscounted lease payables
i. AASB 16 related amount recognised in the statement of profit or loss
Interest on lease liabilities
Depreciation charged related to right-of-use assets
ii. AASB related amount recognised in the statement of cash flow
Annual cash outflows for leases
Refer to note 16 for further information on financial instruments.
30 June 2022 30 June 2021
$
$
120,313
100,911
51,987
158,187
172,300
259,098
-
114,018
55,106
-
-
116,456
170,542
-
169,124
286,998
16,087
101,697
22,005
102,836
117,784
124,841
120,509
115,888
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present
value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease
or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Lease payments comprise of fixed
payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected
to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably
certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or
a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured
if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual
guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an
adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use
asset is fully written down.
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.
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.
36
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 11. Lease liabilities (continued)
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.
Short-term leases and leases of low-value assets
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 expenses on a
straight-line basis over the lease term.
Note 12. Issued capital
Issued capital
Capital raising costs
Movements in ordinary share capital
30 June 2022 30 June 2021 30 June 2022 30 June 2021
Shares
Shares
$
$
1,477,490,442 1,320,948,441 57,679,319 50,332,485
-
(2,407,199)
(2,853,103)
-
1,477,490,442 1,320,948,441 54,826,216 47,925,286
Details
Date
Shares
Issue price
$
Balance beginning of the year
Placement Shares
Share Purchase Plan
Issued Capital - in lieu of Director fees
Exercise of unlisted options
Capital raising cost
Balance beginning of the year
Placement Shares
Share Purchase Plan
Exercise of unlisted options
Exercised of unlisted options - in lieu of Director
fees
Exercise of unlisted options
Capital raising cost
1 July 2020
3 July 2020
23 July 2020
30 Nov 2020
30 June 2021
30 June 2021
30 June 2021
2 Dec 2021
20 Dec 2021
8 June 2022
16 June 2022
30 June 2022
30 June 2022
1,140,544,555
100,000,000
69,148,931
1,086,955
10,168,000
$0.045
$0.045
$0.046
$0.042
40,086,985
4,500,000
3,111,969
50,000
535,101
(358,769)
1,320,948,441
52,083,334
72,916,667
1,040,000
47,925,286
2,500,000
3,485,930
54,080
$0.048
$0.048
$0.052
1,170,000
29,332,000
$0.064
$0.042
74,880
1,231,944
(445,904)
Balance at the end of the year
30 June 2022
1,477,490,442
54,826,216
37
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 12. Issued capital (continued)
Movements in options
Details
Balance beginning of the year
Options exercised, employee options
Options expired/forfeited
Share based payment, employee options
Balance end of the year
Options exercised, employee options
Options expired/forfeited
Share based payment, employee options
Share based payment, advisor options
Date
Options
$
1 July 2020
30 June 2021
71,535,000
(10,168,000)
(880,000)
20,000,000
3,236,850
(108,045)
(21,032)
1,231,465
80,487,000
(31,542,000)
(260,000)
45,500,000
5,000,000
4,339,238
-
(10,381)
1,180,246
96,021
Balance end of the year
30 June 2022
99,185,000
5,605,124
Accounting policy for issued capital
Ordinary shares
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.
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.
Capital risk management
The 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. Net debt is calculated
as total borrowings less cash and cash equivalents.
The capital risk management policy remains unchanged from the 30 June 2021 Annual Report.
38
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 13. Earnings per share
30 June 2022 30 June 2021
$
$
Loss after income tax attributable to the owners of 4DS Memory Limited
(6,732,079)
(6,657,835)
Weighted average number of ordinary shares used in calculating basic earnings per share 1,391,855,583 1,309,439,593
Weighted average number of ordinary shares used in calculating diluted earnings per
share
1,391,855,583
1,309,439,593
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(0.48)
(0.48)
(0.51)
(0.51)
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of 4DS Memory Limited, 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 financial year.
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.
39
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 14. Reserves
Foreign currency reserve
Share-based payments reserve
30 June 2022 30 June 2021
$
$
6,142
5,605,125
(12,959)
4,339,238
5,611,267
4,326,279
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Movements in foreign currency reserve
Movements in foreign currency translation reserve during the current and previous financial year are set out below:
Balance at beginning of the year
Foreign exchange movement on translation of foreign operations
Balance at end of the year
2022
$
2021
$
(12,957)
19,100
(36,422)
23,465
6,142
(12,957)
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and Directors as part of their
remuneration, and other parties as part of their compensation for services.
Movements in share based payment reserve
Movements in share-based payment reserve during the current and previous financial year are set out below:
Balance at 1 July 2020
Options lapsed/cancelled during the year
Share-based payment
Options exercised
Balance at 30 June 2021
Options lapsed/cancelled during the year
Share-based payment - employee options
Balance at 30 June 2022
$
3,236,851
(21,032)
1,231,465
(108,045)
4,339,239
(10,381)
1,276,267
5,605,125
40
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 15. Share-based payments
Set out below are summaries of options granted under the plan:
Weighted
average
exercise price
30 June 2022 30 June 2022 30 June 2021 30 June 2021
Weighted
average
exercise price
Number of
options
Number of
options
Outstanding at the beginning of the financial year
Granted
Exercised
Expired
80,487,000
50,500,000
(31,542,000)
(260,000)
$0.051 71,535,000
$0.076 20,000,000
(10,168,000)
$0.043
(880,000)
$0.040
$0.063
$0.064
$0.042
$0.045
Outstanding at the end of the financial year
99,185,000
$0.053 80,487,000
$0.051
The weighted average share price during the financial year was $0.103 ([30 June 2021]: $0.125).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 4.45 years ([30
June 2021]: 3.42 years).
A. Description of share-based payment arrangements
The Group established share option programmes that entitle key management personnel and technical employees to
purchase shares in the Company. Under these programmes, holders of vested options are entitled to purchase shares at the
market price of the shares at grant date.
Grant date/Employees entitled
Number of
options
Vesting conditions
Contractual life
of options
Options granted to CEO and Managing
Director
On 27 May 2022
30,000,000
25% of the options will vest after 6 months of
continuous employment and the balance vest
equally over the next 10 quarters
5 years
Options granted to technical
employees
On 31 May 2022
15,500,000
25% of the options will vest after 6 months of
continuous employment and the balance vest
equally over the next 10 quarters
5 years
Total share options during the year
45,500,000
41
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 15. Share-based payments (continued)
B. Measurement of fair values - equity settled share-based payment arrangements
The fair value of the employee share options have been measured using the Black-Scholes formula. Service and non-market
performance conditions attached to the arrangements were not taken into account in measuring the fair value.
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
03/12/2021
27/05/2022
31/05/2022
03/12/2023
14/03/2027
31/05/2027
Share price
at grant date
Exercise
price
Expected
volatility
Risk-free
Fair value
interest rate at grant date
$0.048
$0.100
$0.096
$0.080
$0.063
$0.100
100.000%
90.000%
90.000%
0.550%
2.255%
3.123%
$0.0190
$0.0510
$0.0670
On 3 December 2021, the Company issued 5,000,000 unlisted options to the Lead Manager, Mac Equity Partners. The
options are exercisable at $0.08 each and expire on 3 December 2023.
On 27 May 2022, 30,000,000 unlisted options were issued to Mr. Ken Hurley pursuant to the terms of the Executive Services
Agreement, as approved by the shareholders at the General Meeting held on the 26 May 2022. The options lapsed when
Mr. Ken Hurley resigned on 15 August 2022.
On 31 May 2022, the Company issued 15,500,000 incentive options to the US employees. The options are exercisable at
$0.10 each and expire on 31 May 2027 with 25% of options vesting after 6 months and the balance vesting quarterly over
following 10 quarters.
Expected volatility has been based on evaluation of the historical volatility of the Company's share price, particularly over
the historical period commensurate with the expected term. The expected term of the instruments has been based on
historical experience and general option holder behaviour.
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the
rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash
is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the
option, the impact of dilution, 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, together with non-vesting conditions that
do not determine whether the Group receives the services that entitle the employees to receive payment. No account is
taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting
period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate
of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in
profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in
previous periods.
42
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 15. Share-based payments (continued)
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Binomial or Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was
granted. The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by
the expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An
additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value
of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as
a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting
period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense
is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award
is treated as if they were a modification.
Note 16. Financial instruments
Financial Risk Management Policies
The Group's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate
risk), credit risk and liquidity risk. The Group's financial instruments consist mainly of deposits with banks, trade and other
receivables, trade and other payables and lease liabilities.
The main purpose of non-derivative financial instruments is to raise finance for the Group's operations. The Group does not
speculate in the trading of derivative instruments.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures,
controls and risk limits. Finance identifies, evaluates and hedges financial risks within the Group's operating units. Finance
reports to the Board on a monthly basis.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are market risk (including fair value and interest
rate risk) and cash flow interest rate risk, credit risk, liquidity risk and foreign currency risk. The Group has determined that
its exposure to commodity price risk would not have a material impact on its operating results.
Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through
foreign exchange rate fluctuations.
43
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 16. Financial instruments (continued)
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
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.
The carrying amount of the Group's foreign currency denominated financial assets and financial liabilities at the reporting
date were as follows:
US dollars
Euros
Assets
Liabilities
30 June 2022 30 June 2021 30 June 2022 30 June 2021
$
$
$
$
258,519
16,717
889,078
792,196
172,300
-
260,874
-
275,236
1,681,274
172,300
260,874
The Group had net liabilities denominated in foreign currencies of $102,936 (assets of $275,236 less liabilities of $172,300)
as of 30 June 2022 (30 June 2021: $1,485,460 (assets of $1,681,274 less liabilities of $260,874)). Based on this exposure, had
the Australian dollars strengthened by 5% (30 June 2021: strengthened by 5%) against these foreign currencies with all other
variables held constant, the Group's profit before tax for the year would have been $5,147 higher (30 June 2021: $71,020
higher) and equity would have been $5,147 higher (30 June 2021: $71,020 higher). The percentage change is the expected
overall volatility of the significant currencies, which is based on management's assessment of reasonable possible
fluctuations taking into consideration movements over the last 12 months each year and the spot rate at each reporting
date. The actual foreign exchange gain for the year ended 30 June 2022 was $ 16,419 (30 June 2021: gain of $5,391).
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. The Group is not exposed to any significant price
risk.
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.
44
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 16. Financial instruments (continued)
As at the reporting date, the Group had the following variable rate interest rate :
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Lease liabilities
Net exposure to cash flow interest rate risk
30 June 2022
30 June 2021
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
0.09%
-
-
6.00%
5,234,447
-
(84,825)
(172,300)
4,977,322
0.20%
-
-
6.00%
Balance
$
4,298,794
16,004
(735,108)
(259,098)
3,320,592
An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and
setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate 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
maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any
provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial
statements. The Group does not hold any collateral.
The credit quality of the financial assets was high during the year. The table below details the credit quality of the financial
assets at the end of the year:
Cash and cash equivalents held at NAB
Cash and cash equivalents held at HSBC
Other receivables and deposits
2022
$
2021
$
5,017,484
216,962
4,866
4,209,396
89,398
16,004
5,239,312
4,314,798
Liquidity risk
Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents)
and available borrowing facilities to be able to pay debts as and when they become due and payable.
The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously
monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
45
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 16. Financial instruments (continued)
Remaining contractual maturities
The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have
been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial
liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual
maturities and therefore these totals may differ from their carrying amount in the statement of financial position.
30 June 2022
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing - variable
Lease liability
Total non-derivatives
30 June 2021
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing - variable
Lease liability
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
84,945
-
6.00%
120,313
205,258
51,987
51,987
-
-
-
-
-
-
84,945
172,300
257,245
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
735,108
-
-
-
735,108
6.00%
100,911
836,019
110,458
110,458
47,729
47,729
-
-
259,098
994,206
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair
value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date; and assumes that the transaction will take place either: in the
principal market; or in the absence of a principal market, in the most advantageous market.
Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming
they act in their economic best interests. Unless otherwise stated, the carrying amounts of financial instruments reflect their
fair value.
46
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 17. Key management personnel disclosures
Compensation
The aggregate compensation made to Directors and other members of key management personnel of the Group is set out
below:
30 June 2022 30 June 2021
$
$
834,336
18,205
1,093,358
1,259,546
21,694
1,193,811
1,945,899
2,475,051
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 18. Related party transactions
Parent entity
4DS Memory Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 20.
Key management personnel
Disclosures relating to key management personnel are set out in note 17 and the remuneration report included in the
Directors' report.
Transactions with related parties
There were no transactions with related parties during the current and previous financial year.
Receivable from and payable to related parties
There were no trade receivables from or trade payables to related parties at the current and previous reporting date.
Loans to/from related parties
There were no loans to or from related parties at the current and previous reporting date.
Note 19. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
30 June 2022 30 June 2021
$
$
(6,848,621)
(6,856,759)
(6,848,621)
(6,856,759)
47
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 19. Parent entity information (continued)
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Foreign currency reserve
Share-based payments reserve
Accumulated losses
Total equity
30 June 2022 30 June 2021
$
$
5,056,414
4,257,373
5,265,451
4,590,404
111,862
771,942
111,862
771,942
61,413,188 54,512,258
-
4,339,238
(55,033,034)
6,553
5,605,125
(61,871,277)
5,153,589
3,818,462
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2021 and 30 June 2022.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2021 and 30 June 2022.
Note 20. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in
accordance with the accounting policy described in note 1:
Name
Principal place of business /
Country of incorporation
Ownership interest
30 June 2022 30 June 2021
%
%
4D-S Pty Limited
4DS Inc.
Fitzroy Copper Pty Limited (Dormant)
Fitzroy Employee Share Plan Pty Limited (Dormant)
Australia
United States of America
Australia
Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
48
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 21. Commitments and Contingent
imec commitments
The Company entered into an agreement with imec on 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 (referred to as the “Amendment 1”) and through a second amendment, dated 1 January 2021 (referred to
as the “Amendment 2”), 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.
Under Amendment 2, the Company and imec agreed to extend the term of the agreement from 1 January 2022 until 31
December 2022. From 1 January 2022 the Company shall pay imec an additional amount of 600,000 Euro, with payments
made in January 2022 and April 2022.
Under the Amendment 3 signed on 3 November 2021, the royalty cap of 8% of the Agreement increased to 5,000,000 Euro
and the budget for deliverables of learning cycle 11 is estimated at 400,000 Euro which will be agreed and, based upon the
actual knowledge of the Project, when the decision by the Company to proceed is taken.
imec license and support agreement
The Company entered into a license and support service agreement with imec on 2 May 2022, for the grant of license and
the support services provided. The agreement is for, 50,000 Euro until the end of 2022, with an option to extend the license
to 30 June 2023 for an additional 40,000 Euro and with additional option to extend the license for 90,000 Euro's per annum
thereafter.
Sales Bonus Pool Commitments
The incentive is in the form of participation in a cash bonus pool (Sale Bonus Pool), the size of which will be determined by
the value received by shareholders upon a liquidity event, such as takeover of the Company or a sale of the Company’s
intellectual property. The members of 4DS’ technical team, based in Silicon Valley, including Mr. Kenneth Hurley and Drs.
Wilbert van den Hoek, will be participating in the Sale Bonus Pool.
Upon a liquidity event occurring, Mr. Kenneth Hurley, Drs. Wilbert van den Hoek, Dr. Guido Arnout, and US based employees
(Eligible Participants) will each be entitled to receive a proportion of the Sale Bonus Pool. Mr. Kenneth Hurley will be entitled
to receive 30%, Drs. Wilbert van den Hoek 25%, Dr. Arnout 15%, with the balance to be allocated to Eligible Participants at
the discretion of the Board.
There have been no other significant changes in commitments since the last reporting date other than reported above.
The Group has no contingent liabilities as at 30 June 2022 and 30 June 2021
Note 22. Events after the reporting period
On 8 July 2022, the Company issued 2,275,000 ordinary shares following the exercise of $0.042 unlisted options to raise
$95,550.
On 15 August 2022, Mr. Kenneth Hurley resigned as Managing Director and CEO of the Company. Drs. Wilbert van den Hoek
transitioned from Non-executive Chairman to Executive Chairman.
In light of the unexpected testing outcome, and to conserve Company's existing cash reserves, the Board members have
agreed to defer their fees for three months effective from 15 August 2022.
49
4DS Memory Limited
Notes to the financial statements
30 June 2022
Note 22. Events after the reporting period (continued)
On 16 August 2022, the Company announced that the Third Platform Lot has successfully arrived at its facilities in Fremont,
California and that extensive internal testing has successfully demonstrated that the reference memory cells on the Third
Platform Lot perform similarly to the identical reference structures on the Third Non-Platform Lot, indicating that the Lot
has been manufactured properly. However, testing of the cells used in the imec megabit memory array showed unexpected
problems with scaling the memory cell to small dimensions suitable for Storage Class Memory potential applications. These
result suggest that the memory stack etch mask modification and further optimization of the etch process utilizing this new
mask appears to have created another problem, while having resolved the root cause of the electrical shorting of the
memory devices in the Second Platform Lot.
The Company is now performing a Root Cause Corrective Action process which includes further electrical testing,
Transmission Electron Microscopy and material analysis to identify the reason for the difference in results between the
Second Platform Lot and Third Platform lot.
Until this issue is resolved, endurance and retention testing of the memory cells with imec access transistors, the primary
goal of this Third Platform Lot, cannot be successfully completed and will cause a long-term delay in achieving its strategic
goal of commercializing the Company's technology.
No other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the
consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future
financial years.
50
4DS Memory Limited
Directors' declaration
30 June 2022
In the Directors' opinion:
●
●
●
●
the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the
Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 1 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June
2022 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The Directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of Directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the Directors
___________________________
Drs. Wilbert van den Hoek
Executive Chairman
30 August 2022
51
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 2022, 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 2022
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 (including independence
requirements) (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.
Material Uncertainty Related on Going Concern
Without modifying our opinion, we draw attention to Note 6 in the financial report, which indicates that the
consolidated entity had cash on hand at 30 June 2022 of $5,234,447 (2021: $4,298,794) and a net
operating cash outflow of $5,392,990 (2021: $5,558,208) for the year ended 30 June 2022. These
conditions indicate the existence of a material uncertainty that may cast significant doubt about the
consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be
unable to realise its assets and discharge its liabilities in the normal course of business.
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.
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PKF Perth
The financial report of the consolidated entity does not include any adjustments in relation to the
recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities
that might be necessary should the consolidated entity not continue as going concern.
Key Audit Matter
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current year. This matter was addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
this matter. For the matter below, our description of how our audit addressed each matter is provided in that
context.
Value of Share Based Payments
Why significant
For the year ended 30 June 2022 the value of share
based payments expenses totalled $1,276,268, 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 15. 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
inputs used within
the
the
the
of
• Reviewed Board meeting minutes and ASX
announcements as well as enquired of relevant
personnel to ensure all share-based payments had
been recognised;
• Assessed the allocation and recognition to ensure
reasonable; and
• Assessed
the appropriateness of
the
related
disclosures in Note 15.
Other Information
Those charged with governance are responsible for the other information. The other information comprises
the information included in the consolidated entity’s annual report for the year ended 30 June 2022 but does
not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
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 and, in
doing so, 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.
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PKF Perth
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Directors’ 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 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.
• 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.
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PKF Perth
• 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
2022.
In our opinion, the Remuneration Report of 4DS Memory Limited for the year ended 30 June 2022, complies
with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
PKF PERTH
SIMON FERMANIS
SENIOR PARTNER
30 AUGUST 2022
WEST PERTH
WESTERN AUSTRALIA
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4DS Memory Limited
Shareholder information
30 June 2022
The shareholder information set out below was applicable as at 4 August 2022.
As at 4 August 2022 there were 8,564 holders of Ordinary Fully Paid Shares.
Voting rights
The voting rights attached to ordinary shares are set out below:
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.
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
% of total
shares
issued
Number held
Citicorp Nominees Pty Limited
James Dorrian
Mr John Clement Cowie Love (The JCC Love Family A/C)
HSBC Custody Nominees (Australia) Limited
BNP Paribas Nominees Pty Ltd (LB AU Noms Retail client DRP)
Kelland Munro MacCulloch
Vicex Holdings Proprietary Limited (Vicex Super A/C)
Dr Rohan Vanden Driesen
Mr Richard Stanley De Ravin
Southam Investments 2003 Pty Ltd (Warwickshire Investment A/C)
Aurelius Finance Pty Ltd (Aurelius Super Fund A/C)
JP Morgan Nominees Australia Pty Limited
Mr Peter Allan Learmont
KZ 6 Pty Ltd (KZ 5 A/C)
Mr Rodney Alan Brack
Mr John Love
Michael Hawran
Mr Brenton Charles Speechly & Mrs Margaret Mary Speechly (Brenthill Super Fund A/C)
Dongmin Chen
Dominik Schmidt
48,913,746
45,286,004
30,337,545
23,483,409
19,278,847
10,442,806
9,000,000
8,883,631
8,500,000
8,494,883
8,000,000
7,438,084
7,100,027
6,862,495
6,372,783
6,253,651
6,246,814
5,949,003
5,937,367
5,935,682
3.31
3.07
2.05
1.59
1.30
0.71
0.61
0.60
0.58
0.57
0.54
0.50
0.48
0.46
0.43
0.42
0.42
0.40
0.40
0.40
Total Top 20
278,716,777
18.84
Substantial holders
The Company has no substantial shareholders as at 4 August 2022.
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4DS Memory Limited
Shareholder information
30 June 2022
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Ordinary Fully Paid Shares
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Number
of holders
Total
units
% Issued
shares
capital
134
909
26,164
3,283,760
1,486 11,992,917
4,171 160,677,817
1,303,784,78
7
1,864
-
0.22
0.81
10.86
88.11
1,479,765,44
5
8,564
100.00
Number of shareholders holding less than a marketable parcel
856
-
-
Unquoted securities
As at 4 August 2022, the following unquoted securities are on issue:
Options expiring 27/10/2022 @ $0.042
Options expiring 3/12/2023 @ $0.08
Options expiring 22/01/2024 @ $0.052
Options expiring 28/08/2024 @ $0.052
Options expiring 29/11/2025 @ $0.064
Options expiring 14/03/2027 @ $0.063
Options expiring 31/05/2027 @ $0.10
The following person holds 20% or more of unquoted equity securities:
500,000 Options expiring 27/10/2022 @ $0.042
Holder Name
Michael Hawran
5,000,000 Options expiring 3/12/2023 @ $0.08
Holder Name
Bobarino Pty Ltd
Lobster Pot Investments Pte Ltd
25,780,000 Options expiring 22/01/2024 @ $0.052
Holder Name
Guido Arnout
Margaret Elizabeth Livingston
57
Number
on issue
Number
of holders
500,000
5,000,000
25,780,000
1,300,000
18,830,000
30,000,000
15,500,000
1
7
9
1
1
1
3
Holding
%
500,000
100.00%
Holding
%
1,900,000
1,500,000
38.00%
30.00%
Holding
%
7,380,000
7,000,000
28.63%
27.15%
4DS Memory Limited
Shareholder information
30 June 2022
1,300,000 Options expiring 28/08/2024 @ $0.052
Holder Name
Ting Yen
18,830,000 Options expiring 29/11/2025 @ $0.064
Holding
%
1,300,000
100.00%
Holder Name
Holding
%
Willibrordus Gerardus Maria van den Hoek
18,830,000
100.00%
30,000,000 Options expiring 14/03/2027 @ $0.063
Holder Name
Kenneth Michael Hurley
15,500,000 Options expiring 31/05/2027 @ $0.10
Holder Name
Ting Yen
Joseph Tzou
On Market Buy Back
There is currently no on-market buyback program.
Holding
%
30,000,000
100.00%
Holding
%
8,000,000
5,000,000
51.61%
32.26%
58