4DS Memory Limited
ACN 145 590 110
Annual Report - 30 June 2023
4DS Memory Limited
Contents
30 June 2023
Corporate directory
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated 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 are:
Registered office
Principal place of business
Level 2, 50 Kings Park Road
West Perth WA 6005
AUSTRALIA
3155, Skyway Court,
Fremont CA 94539
UNITED STATES
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 28 August 2023. The
Directors have the power to amend and reissue the financial statements.
1
4DS Memory Limited
Corporate directory
30 June 2023
Directors
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 2023
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 2023 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:
Mr. David McAuliffe
Dr. Guido Arnout
Mr. Howard Digby
Drs. Wilbert van den Hoek
Mr. Kenneth Hurley
Interim Executive Chairman effective from 14 February 2023
(Formerly Executive Director)
Non-Executive Director
Non-Executive Director
Executive Chairman from 16 August 2022 to 13 February 2023 (Formerly Non-
Executive Chairman)
Chief Executive Officer and Managing Director from 14 March 2022 to 15 August 2022
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 34 USA patents granted 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 tenth year. 4DS also has a development
agreement with Belgium-based imec – a world-leading research and innovation hub in nanoelectronics and digital
technologies.
Dividends
No dividend has been declared or paid by the Company.
Review of operations
Financial Review
The loss for the Group after providing for income tax amounted to $5,794,241 (30 June 2022: $6,732,079).
3
4DS Memory Limited
Directors' report
30 June 2023
Operating Review
On 4 August 2022, the Company announced that the Third Platform Lot had successfully arrived in Fremont, California. In
addition, the Company stated it had adopted a new test system and that extensive internal testing had commenced.
On 16 August 2022, 4DS announced it had undertaken a memory stack etch mask change and further performed etch
process optimization using a short loop, to seek to resolve the etch residue problem that had resulted in the partial failure
of the Second Platform Lot as announced on 17 August 2021. On 29 April 2022, the Company informed shareholders that
additional characterization of these short loop wafers confirmed the decision to undertake the modified etch process.
The Company communicated that final verification of the efficacy of these process changes required electrical testing, which
could only be performed on the Third Platform Lot. This Third Platform Lot was designed with the purpose of enabling more
precise measurements of endurance and retention at the higher currents that resulted from the process changes in the
Third Non-Platform Lot.
4DS stated the testing to date had successfully demonstrated that the reference memory cells on the Third Platform Lot
performed similarly to the identical reference structures on the Third Non-Platform Lot, indicating that the Lot had been
manufactured properly. However, testing of the memory 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
results suggested that the memory stack etch mask modification and further optimization of the etch process utilizing this
new mask had created another problem, while having resolved the root cause of the electrical shorting of the memory
devices in the Second Platform Lot.
The Company stated it was performing a Root Cause Corrective Action process which included further electrical testing,
Transmission Electron Microscopy and material analysis to identify the reason for the difference in results between the
Second Platform Lot and the Third Platform Lot.
Until this issue was resolved, endurance and retention testing of the memory cells with imec access transistors, the primary
goal of this Third Platform Lot, could not be successfully completed.
The Company further stated it was likely that this analysis of the root cause of the problem would result in it having to
perform further process modifications at imec. The Company intended to have extensive discussions with imec about 4DS
Memory’s on-going activities at their facilities, including transferring process improvements demonstrated at the Stanford
Nanofabrication Facility.
Based on the analysis and its discussions with imec, the Company intended to create an updated strategic plan for the on-
going development of the Interface Switching ReRAM to achieve its objectives. The Company believed that the results from
the Third Platform Lot would likely cause a long-term delay in achieving its strategic goal of commercializing the Company’s
technology.
On 5 October 2022 the Company announced it had completed its analysis and had identified the modified etch process as
the most likely cause of the poor electrical performance of the memory cells used in the imec megabit memory array. 4DS
believes that the etch process had induced damage to the crystallinity of 4DS’s PCMO layer resulting in the write voltage
needed to program the cell exceeding the write voltage that the circuitry of the imec megabit memory array could provide.
Since prior wafers had shown successful programming of cells of the same size as present in the megabit memory array, the
focus was on further optimizing the etch process to ensure both residue free etching and no crystalline damage to 4DS’s
PCMO layer.
In line with the 2022 agreement with imec, the Company had started discussions with imec to plan the manufacturing of
another megabit memory array Platform Lot. Prior to running this Lot, further optimization of the etch process was planned
to use another short loop. However, it was important to realize, as previously stated, that successful resolution of the etch
process could only be demonstrated by electrical tests performed on the Platform Lot after it had been successfully
manufactured and delivered to 4DS facilities in Fremont, California. The goal of the next Platform Lot remained the
demonstration of the cell operation in a megabit memory array environment and to explore optimized programming
conditions to improve both the endurance and retention of 4DS Interface Switching ReRAM cells. Access to the write circuitry
of the megabit memory array remained critical to achieve these goals.
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4DS Memory Limited
Directors' report
30 June 2023
Alternatives to the etch process were explored in parallel, as the probability of a successful optimization of the etch process
was unknown. Additional improvements to the memory cell that were demonstrated on wafers processed at the Stanford
Nanofabrication Facility were incorporated in this next Platform Lot, as well.
On 27 February 2023, the Company stated that since the ASX announcement on 5 October 2022, 4DS had undertaken a
number of optimization changes which were being incorporated into the schedule for manufacturing of the Fourth Platform
Lot at imec.
During the same period, the Company also significantly enhanced its test capabilities and re-tested the Third Platform Lot
in preparation for the Fourth Platform Lot.
The Company reported that it had now achieved cell operation in the megabit memory array of the Third Platform Lot
utilising the improved test capabilities. This allowed further exploration of optimized programming conditions with the
access transistors and write circuitry of imec’s megabit memory platform.
These results indicated that the 4DS Interface Switching ReRAM cells were potentially more likely to be compatible with
imec’s megabit memory platform which de-risked the testing of the Fourth Platform Lot.
Collaboration agreements
●
On 7 December 2022, the Company entered into an amendment to continue collaboration on the project with imec
until mid-2023.
On 19 June 2023, the Company renewed the joint development agreement with Western Digital Corporation subsidiary
HGST for the 10th consecutive year for another 12 months.
●
Patent portfolio
●
4DS Memory has a patented IP portfolio, comprising 34 USA patents granted, 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 33rd
patent was granted on 23 November 2022 and 34th patent was granted on 8 March 2023.
Corporate and Management Changes
●
On 15 August 2022, Mr. Hurley resigned as Managing Director and CEO of the Company. On 16 August 2022, Drs. van
den Hoek transitioned from Non-Executive Chairman to Executive Chairman.
On 5 October 2022, Mr. Yen was appointed as Chief Technology Officer of the Company.
On 13 February 2023, Drs. van den Hoek ceased to be Executive Chairman and a Director of the Company.
On 14 February 2023, Mr. McAuliffe was appointed as Interim Executive Chairman whilst the Company undertakes a
search for a USA based Chairman.
Placement and issue of securities
●
On 8 July 2022, the Company issued 2,275,000 ordinary shares following the exercise of $0.042 unlisted options to
raise $95,554.
On 20 March 2023, the Company successfully completed a placement for $5.5 million by issuing 152,777,778 of the
new shares at an issue price of $0.036 per share and 76,388,882 free attaching unlisted options exercisable at $0.055
and expiring 31 March 2026.
The Company also issued 10,000,000 unlisted options exercisable at $0.055 and expiring 31 March 2026 to 180 Markets
Pty Ltd in consideration for services provided as lead manager to the placement.
Sales bonus pool
On 15 March 2022, the Company announced that the Board had reached a successful outcome with respect to Mr. 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.
van den Hoek, are eligible to participate in the Sale Bonus Pool.
5
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4DS Memory Limited
Directors' report
30 June 2023
Upon a liquidity event occurring, Mr. Hurley, Dr. Arnout, Drs. van den Hoek and US-based employees (Eligible Participants)
will each be entitled to receive a proportion of the Sale Bonus Pool. Mr. Hurley will be entitled to receive 30%[1], Dr. Arnout
will be entitled to receive 15%, Drs. van den Hoek will be entitled to receive 25%[2], and Mr. Yen will be entitled to receive
10% 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.
[2] Drs. van den Hoek resigned on 13 February 2023 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. 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 lapsed
upon his resignation 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. On 22 August 2022, 5,000,000 incentive options were cancelled following the termination of an
employee.
On 27 October 2022, 500,000 incentive options exercisable at $0.042 expired.
On 19 December 2022, the Company issued 21,500,000 incentive options exercisable at $0.037 expiring 19 December 2027
to management and consultant.
On 14 February 2023, 6,000,000 unlisted options exercisable at $0.064 expiring 29 November 2025 issued to Drs. van den
Hoek lapsed as the conditions incapable of being satisfied.
On 27 February 2023, the Company issued 7,000,000 unlisted options exercisable at $0.037 expiring 27 February 2028 issued
to Mr. McAuliffe and Mr. Digby with 25% to vest following the completion of 6 months service to the Company and the
remaining vesting quarterly over the following 10 quarters subject to the holder continuing to remain a Director.
Material business risks
There are a number of material risks that, either individually or in combination, may materially and adversely affect the
future operating and financial performance and prospects of the Company and the value of its shares. Some of these risks
may be mitigated by the Company’s internal controls and processes but some are outside the control of the Company, its
directors and management. The material risks identified by management are described below:
(a) Going concern
The Company’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.
(b) Development risk
The Company’s technology is the subject of continuous development and need to be substantially developed further in
order to gain and maintain competitive and technological advantage, and to improve the products’ usability, scalability and
accuracy. There are no guarantees that the Company will be able to undertake such development successfully. Failure to
successfully undertake such research and development, anticipate technical problems, or estimate research and
development costs or timeframes accurately will adversely affect the Company’s results and viability.
(c) Intellectual Property risk
There can be no assurance that the Company’s patent portfolio will afford the Company commercially significant protection
of the Company’s technology, or that competitors will not develop competing technologies that circumvents such
intellectual property. Although the Company will implement all reasonable endeavours to protect its intellectual property,
there can be no assurance that these measures will be sufficient.
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4DS Memory Limited
Directors' report
30 June 2023
(d) Competition
The semiconductor memory industry in which the Company operates is subject to competition. Current or future
competitors may come up with new, better or cheaper products and solutions. The Company’s competitors include both
small and medium enterprises and large, established corporations or multinationals. Those may decide to enter the
Company’s target markets and be able to fund aggressive marketing strategies. They may also have stronger financial
capabilities than the Company which may negatively affect the operating and financial performance of the business.
(e) Technology Risk
The Company’s market involves rapidly evolving products and technological change. The Company cannot guarantee that it
will be able to engage in research and development at the requisite levels. The Company cannot assure investors that it will
successfully identify new technological opportunities and continue to have the needed financial resources to develop new
products in a timely or cost-effective manner. At the same time, products, services and technologies developed by others
may render the Company’s products and services obsolete or non-competitive.
Significant Changes in the State of Affairs
There were no significant changes in the state of affairs of the Group during the financial year.
Matters subsequent to the end of financial year
On 3 July 2023, the Company announced that imec had successfully completed the manufacture of the Fourth Platform Lot
and shipped the Lot to 4DS facilities in Fremont, California.
On 23 August 2023, the Company reported that after extensive analysis, the Fourth Platform Lot had been successful in
showing, for the first time, a fully functioning megabit array with 60nm memory cells, access transistors and write circuitry.
●
●
●
read and write speeds at 27 nanoseconds
endurance well in excess of 2 billion cycles; and
retention which is persistent and tuneable
The results seen are significant as they are on a known and well understood megabit array from imec. Upon achieving this
Company milestone, further analysis and strategic planning will be conducted over the coming months.
On 25 August 2023, the Company issued 43,852,572 fully paid ordinary shares following the exercise of $0.055 unlisted
options expiring on 31 March 2026 to raise $2,411,891.
No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the Group and the expected results of operations have not been
included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group.
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.
7
4DS Memory Limited
Directors' report
30 June 2023
Information on Directors
Name:
Title:
Appointed:
Qualifications:
Experience and expertise:
Mr. David McAuliffe
Interim Executive Chairman (from 14 February 2023)
7 December 2015
LLB (Hons), BPharm
Mr. McAuliffe is an experienced Company Director and Entrepreneur who has had over
24 years’ experience, mostly in the international biotechnology field. During that time,
he was involved in numerous capital raisings and in licensing of technologies.
Other current directorships:
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
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).
Interim Non-Executive Chairman 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
6,000,000 unlisted options exercisable at $0.037 each on or before 27 February 2028
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
8
4DS Memory Limited
Directors' report
30 June 2023
Name:
Title:
Appointed:
Qualifications:
Experience and expertise:
Other current directorships:
Mr. Howard Digby
Non-Executive Director
7 December 2015
BE (Mechanical, Hons)
Mr. Digby started his career at IBM and spent over 25 years managing technology
related businesses across the Asia Pacific region, of which 12 years were spent in Hong
Kong. Prior to returning to Australia, he was with The Economist Group as Regional
Managing Director. Before 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.
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 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
1,000,000 unlisted options exercisable at $0.037 each on or before 27 February 2028
Name:
Title:
Appointment and resignation:
Qualifications:
Experience and expertise:
Drs. Wilbert van den Hoek
Executive Chairman from 15 August 2022
30 November 2020 (appointed as Non-Executive Chairman) 13 February 2023
(resigned)
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:
Former directorships (last 3 years): -
Interests in shares:
Interests in options:
Not applicable as no longer a director
Not applicable as no longer a director
9
4DS Memory Limited
Directors' report
30 June 2023
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:
Not applicable as no longer a director
Not applicable as no longer a director
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.
Company secretary
Mr. Peter Webse
Qualifications
Experience
B.Bus, FGIA, FCIS, FCPA
Mr. Webse has over 29 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:
Mr. David McAuliffe
Dr. Guido Arnout
Mr. Howard Digby
Drs. Wilbert van den Hoek
Mr. Kenneth Hurley
Number of
eligible to attend
Number
attended
13
13
13
9
4
12
13
12
9
4
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.
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4DS Memory Limited
Directors' report
30 June 2023
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 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.
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
The termination of a Director is effective on receipt of a resignation notice. Alternatively, shareholders have the power to
remove the Directors by way of a Members 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:
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4DS Memory Limited
Directors' report
30 June 2023
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●
●
●
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.
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
Short-term
benefits
Cash salary
and fees
$
Bonus
$
Post-
employment
benefits
Superannuatio
n
$
Post-
employment
benefits
Long Service
Leave
$
Share-
based
payments
Equity-
settled
$
Total
$
203,349
61,964
37,054
50,000
-
-
26,250
-
-
22,010
-
-
70,266
-
-
371,875
61,964
37,054
270,253
30,000
18,889
-
-
-
-
-
-
-
-
-
-
11,711
45,640
270,253
41,711
64,529
310,841
932,350
-
50,000
-
26,250
-
22,010
593,090
903,931
720,707 1,751,317
30 June 2023
Executive Directors:
Mr. D McAuliffe
Mr. K Hurley [A]
Drs. W van den Hoek [B]
Non-Executive Directors:
Dr. G Arnout [D]
Mr. H Digby
Drs. W van den Hoek [B]
Other Key Management
Personnel:
Mr. T Yen [C]
12
4DS Memory Limited
Directors' report
30 June 2023
Notes in relation to Directors’ and Executive officers’ remuneration table FY 2023
[A] On 15 August 2022, Mr. Hurley resigned as the Company’s Chief Executive Officer and Managing Director.
[B] Remuneration as NED from 1 July 2022 to 14 August 2022 and Executive Chairman from 15 August 2022 to 13 February
2023.
[C] On 5 October 2022, Mr. Yen appointed as Company's Chief Technology Officer.
[D] Included $240,253 of consultancy fees.
30 June 2022
Executive Directors:
Mr. K Hurley [A]
Mr. D McAuliffe
Non-Executive Directors:
Drs. W van den Hoek [B]
Dr. G Arnout [C]
Mr. H Digby
Other Key Management Personnel:
Mr. M Van Buskirk [D]
Mr. S Desu [E]
Short-term
benefits
Cash salary
and fees
$
Post-
employment
benefits
Superannuation
$
Share-based
payments
Equity-
settled
$
Proportion of
remuneration
performance
related
$
124,769
194,167
50,000
176,841
30,000
224,086
28,640
828,503
-
18,205
429,995
726
-
-
-
658,512
765
130
-
-
18,205
480
2,750
1,093,358
-
-
-
-
-
-
-
-
Total
$
554,764
213,098
708,512
177,606
30,130
224,566
31,390
1,940,066
Notes in relation to Directors’ and Executive officers’ remuneration table FY 2022
[A] On 14 March 2022, Mr. Hurley was appointed as the Company’s Chief Executive Officer and Managing Director and
subsequently resigned on 15 August 2022.
[B] 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.
[C] On 14 March 2022, Dr. 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 as an employee.
[D] On 30 April 2022, Mr. Buskirk resigned as the Company's Chief Engineering Officer.
[E] On 15 October 2021, Mr. Desu resigned as the Company's Chief Technology Officer.
13
4DS Memory Limited
Directors' report
30 June 2023
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. David McAuliffe
Executive Director (Now Interim Executive Chairman under the same terms)
7 December 2015
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.
Name:
Title:
Agreement commenced:
Dr. Guido Arnout
Adviser of Executive Chairman
from 1 September 2022
Dr. Arnout is subject to an employment contract with the following conditions:
●
●
handle the G&A function for 4DS Inc. for a total of 32 hours per month at a rate of US$125 per hour.
collection of test data for an extraction of data from 4DS Inc. test data base for no more than 68 hours of work per
month at a rate of US$125 per hour, unless more time is expressly authorised in writing by the Executive Chairman.
Title:
Agreement commenced:
Adviser to CEO
From 14 March 2022 to 31 August 2022
●
●
Remuneration salary of US$4,000 for a day of service per week.
Entitlement to be reimbursed for all reasonable out of pocket expenses necessarily incurred in the performance of his
duties.
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
14 days notice of termination is required for the role of 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.
Name:
Title:
Agreement commenced:
Term of agreement:
Mr. Ting Yen
Chief Technology Officer
5 October 2022
VP contract terms continued with the appointment as Chief Technology Officer
14
4DS Memory Limited
Directors' report
30 June 2023
Mr. Yen is subject to an employment contract with the following conditions:
●
●
●
Remuneration salary of US$264,000 per annum subject to normal statutory deductions by the Company.
Participation in any employee incentive scheme.
Entitlement to be reimbursed for all reasonable out-of-pocket expenses necessarily incurred in the performance of his
duties and,
Remuneration reviewed annually on each review date or at any other time as the Board may determine (in its absolute
discretion).
●
Incentive
Upon a liquidity event occurring, Mr. Yen will be entitled to receive 10% of the Sale Bonus Pool if Mr. yen 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
Sales 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 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.
[C] Shares granted as compensation
Issue of shares
There were no shares issued to Directors and other key management personnel as part of compensation during the year
ended 30 June 2023.
[D] Options over equity instruments granted as compensation
Details on 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
Mr. D McAuliffe
Mr. H Digby
Mr. T Yen
No. of
options
granted
6,000,000
1,000,000
20,000,000
27,000,000
Grant Date
20/02/2023
20/02/2023
16/12/2022
No. of
options
vested
-
-
5,000,000
5,000,000
Expiry Date
Exercise Price Fair value per
option grant
date
27/02/2028
27/02/2028
19/02/2027
$0.037
$0.037
$0.037
$0.0334
$0.0334
$0.0237
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.
15
4DS Memory Limited
Directors' report
30 June 2023
Values of options over ordinary shares granted, exercised and lapsed for Directors and other key management personnel as
part of compensation during the year ended 30 June 2023 are set out below:
Value of
options
granted
and vested
during the
year
$
70,266
11,711
-
593,090
45,640
-
Value of
Value of
Remuneration
options
exercised
during the
year
$
options
lapsed
during the
year
$
consisting of
options
for the
year
%
-
-
-
-
-
-
-
-
-
-
(481,090)
(429,995)
19%
28%
-
66%
71%
-
Mr. D McAuliffe
Mr. H Digby
Dr. G Arnout
Mr. T. Yen
Drs. W van den Hoek (resigned 13 February 2023)
Mr. K Hurley (resigned 15 August 2022)
Key Management Personnel Transactions
Loans to KMP and their related parties
There are no loans between the Group and KMP.
Other transactions with KMP and their related parties
Purchases from and sales to KMP and their related parties are made on terms equivalent to those that prevail in arm’s length
transactions. The Group acquired the following services from entities that are controlled by members of the Group’s KMP.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
Entity
Bandra Consulting
Pty Ltd
Dr Guido Arnout
Nature of
transaction
KMP and their
related parties
Director fee
Howard Digby
Consultancy fee
Guido Arnout
Total expense
Payable
balance
Total expense
Payable
balance
30 June 2023 30 June 2023 30 June 2022 30 June 2022
30,000
240,253
-
-
30,000
25,184
-
-
Voting of shareholders at last year's annual general meeting
At the Company’s last Annual General Meeting (AGM), 4.95% 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.
This concludes the remuneration report, which has been audited.
16
4DS Memory Limited
Directors' report
30 June 2023
Share options
Unissued ordinary shares of 4DS Memory Limited under option at the date of this report are as follows:
Grant Date
03/12/2021
22/01/2019
06/05/2019
28/08/2019
30/11/2020
31/05/2022
19/12/2022
27/02/2023
20/03/2023
Expiry Date
03/12/2023
22/01/2024
22/01/2024
28/08/2024
29/11/2025
31/05/2027
19/12/2027
27/02/2028
31/03/2026
Exercise Price
Number under option
$0.080
$0.052
$0.052
$0.052
$0.064
$0.100
$0.037
$0.037
$0.055
5,000,000
8,900,000
16,880,000
1,300,000
12,830,000
10,500,000
21,500,000
7,000,000
86,388,882
170,298,882
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.
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
2,275,000
Amount paid on each share
$0.042
17
4DS Memory Limited
Directors' report
30 June 2023
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:
30 June 2023
Executive Directors
Mr. D McAuliffe
Mr. K Hurley (resigned 15 Aug 2022)
Non-Executive Directors
Dr. G Arnout
Mr. H Digby
Drs. W van den Hoek (resigned 13 Feb 2023)
Other Key Management Personnel
Mr. T Yen (appointed 5 October 2022)
Balance at
the of the
year
or at date of
commencing
as KMP
7,328,706
-
7,230,053
6,388,629
1,170,000
-
22,117,388
Granted as
part of
remuneration
On exercise
of options
Net change
other
Balance at
the end of
year
or at date of
ceasing as
KMP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,328,706
-
7,230,053
6,388,629
1,170,000
-
22,117,388
[B] Options holdings of Key Management Personnel
The movement during the reporting period, by number of options over ordinary shares in 4DS Memory Limited held, directly,
indirectly or beneficially, by each key management person, including their parties, is as follows:
30 June 2023
Executive Director
Mr. D McAuliffe
Mr. K Hurley (resigned 15 August 2022)
Non-Executive Director
Dr. G Arnout
Mr. H Digby
Drs. W van den Hoek (resigned 13 Feb 2023)
Other key management personnel
Mr. T Yen (appointed 22 October 2022)
Options over ordinary shares
Mr. D McAuliffe
Dr. G Arnout
Mr. H Digby
Mr. T Yen
Balance at
the of the
year
or at date of
commencing
as KMP
Granted as
part of
remuneration
On exercise
of options
Net change
other
Balance at
the end of
year
or at date of
ceasing as
KMP
7,000,000
30,000,000
6,000,000
-
7,380,000
1,250,000
18,830,000
-
1,000,000
-
10,500,000
74,960,000
20,000,000
27,000,000
-
-
-
-
-
-
-
-
(30,000,000)
13,000,000
-
-
-
(6,000,000)
7,380,000
2,250,000
12,830,000
-
(36,000,000)
30,500,000
65,960,000
Vested and Unvested and
exercisable unexercisable
Balance at
the end of
the year
7,000,000
7,380,000
1,250,000
10,776,190
26,406,190
6,000,000
-
1,000,000
19,723,810
26,723,810
13,000,000
7,380,000
2,250,000
30,500,000
53,130,000
18
4DS Memory Limited
Directors' report
30 June 2023
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.
Proceedings on behalf of Company
No person has applied for leave of Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit services
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.
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
2023
4,300
4,300
Auditor's independence declaration
A copy of the auditor's independence declaration for the year ended 30 June 2023 as required under section 307C of the
Corporations Act 2001 has been received and can be found after this directors' report.
19
4DS Memory Limited
Directors' report
30 June 2023
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
___________________________
Mr. David McAuliffe
Interim Executive Chairman
28 August 2023
20
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF 4DS MEMORY LIMITED
In relation to our audit of the financial report of 4DS Memory Limited for the year ended 30 June 2023, 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
28 AUGUST 2023
WEST PERTH
WESTERN AUSTRALIA
21
4DS Memory Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 30 June 2023
Other Income
Interest Income
Expenses
Compliance and regulatory expenses
Consulting and professional Fees
Directors and employee benefit expenses
Depreciation and amortisation expense
Written off of asset
Research expenses
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 2023 30 June 2022
$
$
4
4
10
4
17
-
23,646
41,037
4,457
(139,703)
(269,475)
(417,552)
(189,745)
(7,292)
(3,487,056)
(849,034)
-
(29,163)
(435,675)
(144,823)
(214,244)
(301,122)
(224,812)
(48,605)
(4,155,124)
(1,276,268)
(6,158)
(29,906)
(343,046)
(5,783,658)
(6,716,005)
(10,583)
(16,074)
(5,794,241)
(6,732,079)
6
-
-
Loss after income tax expense for the year attributable to the owners of 4DS
Memory Limited
(5,794,241)
(6,732,079)
Other comprehensive income (loss)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
16
(36,673)
19,100
Other comprehensive income (loss) for the year, net of tax
(36,673)
19,100
Total comprehensive income loss for the year attributable to the owners of 4DS
Memory Limited
Basic loss per share
Diluted loss per share
(5,830,914)
(6,712,979)
Cents
Cents
15
15
(0.38)
(0.38)
(0.48)
(0.48)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
22
4DS Memory Limited
Consolidated statement of financial position
As at 30 June 2023
Assets
Current assets
Cash and cash equivalents
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 2023 30 June 2022
$
$
7
5,599,537
61,536
5,661,073
5,234,447
55,205
5,289,652
9
10
39,894
151,782
191,676
151,646
257,001
408,647
5,852,749
5,698,299
11
12
13
12
81,809
53,964
58,137
193,910
84,945
120,313
32,778
238,036
-
-
51,987
51,987
193,910
290,023
5,658,839
5,408,276
14
16
59,853,160 54,826,216
5,611,268
(55,029,208)
5,790,396
(59,984,717)
5,658,839
5,408,276
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
23
4DS Memory Limited
Consolidated statement of changes in equity
For the year ended 30 June 2023
Issued
capital
$
Share Based
Payment
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 (loss) for the year
-
-
-
-
-
-
-
(6,732,079)
(6,732,079)
19,100
-
19,100
19,100
(6,732,079)
(6,712,979)
Transactions with owners in their capacity as
owners:
Issue of share capital, net of transaction costs
(note 14)
Share-based payments (note 17)
Issue of shares on exercised of options
Options lapsed
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
Issued
capital
$
Share Based
Payment
Reserve
$
Foreign
Exchange
Reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 July 2022
54,826,216
5,605,124
6,143
(55,029,207)
5,408,276
Loss after income tax expense for the year
Other comprehensive income loss for the year,
net of tax
Total comprehensive income loss for the year
-
-
-
-
-
-
-
(5,794,241)
(5,794,241)
(36,673)
-
(36,673)
(36,673)
(5,794,241)
(5,830,914)
Transactions with owners in their capacity as
owners:
Contributions of equity, net of transaction
costs (note 14)
Share-based payments (note 14)
Issue of shares on exercised of options (note
14)
Options lapsed (note 14)
5,136,889
(205,499)
-
1,054,533
95,554
-
-
(838,730)
-
-
-
-
-
-
5,136,889
849,034
-
838,730
95,554
-
Balance at 30 June 2023
59,853,160
5,820,927
(30,530)
(59,984,718)
5,658,839
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
24
4DS Memory Limited
Consolidated statement of cash flows
For the year ended 30 June 2023
Cash flows from operating activities
Payments to suppliers and employees
Payments for research and development
Interest received
Interest paid
Other income
Note 30 June 2023 30 June 2022
$
$
(1,233,817)
(3,502,173)
(840,317)
(4,564,702)
(4,735,990)
41,037
(10,583)
-
(5,405,019)
4,457
(16,074)
23,646
Net cash used in operating activities
8
(4,705,536)
(5,392,990)
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
14
-
-
(248,660)
(248,660)
5,500,000
(377,139)
95,554
-
(133,742)
5,985,930
(428,849)
1,286,024
(127,908)
(120,509)
5,084,673
6,594,688
379,137
5,234,447
(14,047)
953,038
4,298,794
(17,385)
Cash and cash equivalents at the end of the financial year
7
5,599,537
5,234,447
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
25
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
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 the semiconductor industry 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 and 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 28 August 2023.
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 21.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the Group as at 30 June 2023
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.
Functional and presentation currency
The financial statements are presented in Australian dollars, which is 4DS Memory Limited's functional and presentation
currency.
26
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. Reporting Entity (continued)
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.
Investments and other financial assets
Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial
measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at
either amortised cost or fair value depending on their classification. Classification is determined based on both the business
model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an
accounting mismatch is being avoided.
Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group
has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering
part or all of a financial asset, its carrying value is written off.
Financial assets at amortised cost
A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business
model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the
financial asset represent contractual cash flows that are solely payments of principal and interest.
Investments
Investments includes non-derivative financial assets with fixed or determinable payments and fixed maturities where the
Group has the positive intention and ability to hold the financial asset to maturity. This category excludes financial assets
that are held for an undefined period. Investments are carried at amortised cost using the effective interest rate method
adjusted for any principal repayments. Gains and losses are recognised in profit or loss when the asset is derecognised or
impaired.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised
cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's
assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly
since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to
obtain.
Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected
credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable
to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where
it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit
losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of
anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.
For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is
recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss
allowance reduces the asset's carrying value with a corresponding expense through profit or loss.
27
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 1. Reporting Entity (continued)
New Accounting Standards and Interpretations not yet mandatory or early adopted
The Group has adopted all 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 $5,658,839 (30 June 2022: $5,408,276). Cash on hand at 30 June 2023 totalled
$5,599,537 (30 June 2022: $5,234,447) and net operating cash outflow was $4,705,536 (30 June 2022: $5,392,990) for the
year ended 30 June 2023.
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, which
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.
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 becomes 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.
28
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 2. Critical accounting judgements, estimates and assumptions (continued)
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.
Employee benefits provision
As discussed in note 1, the liability for employee benefits expected to be settled more than 12 months from the reporting
date are recognised and measured at the present value of the estimated future cash flows to be made in respect of all
employees at the reporting date. In determining the present value of the liability, estimates of attrition rates and pay
increases through promotion and inflation have been taken into account.
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.
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.
The Company has
internal reports reviewed by the Board and
management. There was only one operating segment being research and development of Interface Switching ReRAM
technology for next generation storage in mobile and cloud.
its operating segments based on
identified
29
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 4. Expenses
Loss before income tax includes the following specific expenses:
Depreciation
Plant and equipment
Buildings right-of-use assets
Total depreciation
Salary and wages (cash settled)
Bonus (cash settled)
Superannuation (cash settled)
Annual leaves
Long service leaves
Directors' fees (cash settled)
Directors' fees (accrued)
Director's fees (equity settled)
Total directors and employee benefits expense
Consultants
Salary and wages
R&D partner
Other research expenses
Total research expenses
30 June 2023 30 June 2022
$
$
93,999
95,746
123,018
101,794
189,745
224,812
200,000
50,000
26,250
3,349
22,010
115,943
-
-
200,000
-
18,205
(5,833)
-
27,500
15,417
45,833
417,552
301,122
205,801
1,483,921
1,484,756
312,578
139,196
1,759,939
1,958,349
297,640
3,487,056
4,155,124
30
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 4. Expenses (continued)
Accounting policy for employee benefits expense
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. Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.
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 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.
31
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 5. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by PKF Perth, the auditor of the
Company:
Audit services - PKF Perth
Audit or review of the financial statements
Other services - PKF Perth
Preparation of the tax return
Note 6. 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%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Other non-deductible amounts
Deferred tax balances not recognised
Income tax expense
Deferred tax assets not recognised
Deferred tax assets not recognised comprises temporary differences attributable to:
Transaction costs arising on shares issued
Carried forward revenue losses - Domestic
Other than
Deferred tax liabilities not recognised
Prepayments
Total net deferred tax assets not recognised
30 June 2023 30 June 2022
$
$
37,700
34,500
4,300
3,500
42,000
38,000
30 June 2023 30 June 2022
$
$
(5,794,241)
(6,732,079)
(1,448,560)
(1,683,020)
259,296
318,938
(1,189,264)
1,189,264
(1,364,082)
1,364,082
-
-
30 June 2023 30 June 2022
$
$
202,887
4,367,926
25,363
163,912
3,405,637
40,302
(9,576)
(8,683)
4,586,600
3,601,168
The above potential tax benefit, which excludes tax losses, for deductible temporary differences has not been recognised in
the statement of financial position as the recovery of this benefit is uncertain.
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.
32
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 6. Income tax (continued)
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.
Note 7. Cash and cash equivalents
Current assets
Cash and cash equivalents
30 June 2023 30 June 2022
$
$
5,599,537
5,234,447
Accounting policy for cash and cash equivalents
Cash and cash equivalents include 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.
33
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 8. Cash flow information
Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
Adjustments for:
Depreciation
Written 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/(decrease) in trade and other payables
Increase in employee benefits
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
Note 9. Right-of-use assets
Non-current assets
Land and buildings - right-of-use
34
30 June 2023 30 June 2022
$
$
(5,794,241)
(6,732,079)
189,745
7,292
849,034
(10,109)
-
10,583
-
224,813
48,605
1,276,268
55,498
74,880
6,158
(23,332)
14,023
(6,330)
22,224
25,359
(13,116)
11,376
(3,854)
(451,832)
-
120,509
(4,705,536)
(5,392,990)
30 June 2023 30 June 2022
$
$
849,034
-
1,276,268
74,880
849,034
1,351,148
30 June 2023 30 June 2022
$
$
39,894
151,646
39,894
151,646
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 9. Right-of-use assets (continued)
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 2021
Exchange differences
Depreciation expense
Balance at 30 June 2022
Exchange differences
Depreciation expense
Balance at 30 June 2023
Total
$
237,502
15,841
(101,697)
151,646
(16,006)
(95,746)
39,894
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.
Note 10. Property, plant and equipment
Non-current assets
Plant and equipment
Accumulated depreciation
30 June 2023 30 June 2022
$
$
1,038,183
(886,401)
1,091,352
(834,351)
151,782
257,001
35
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 10. Property, plant and equipment (continued)
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 2021
Additions
Exchange differences
Reversal of impairment of asset
Write off of asset
Depreciation expense
Balance at 30 June 2022
Exchange differences
Write off of asset
Depreciation expense
Balance at 30 June 2023
Total
$
377,851
23,482
3,959
23,332
(48,605)
(123,018)
257,001
(3,928)
(7,292)
(93,999)
151,782
Accounting policy for property, plant and equipment
Plant and equipment are 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.
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.
36
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 11. Trade and other payables
Current liabilities
Trade payables
Other payables
30 June 2023 30 June 2022
$
$
35,134
46,675
29,149
55,796
81,809
84,945
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.
37
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 12. 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 years
Total undiscounted lease payables
i. AASB 16 related amounts 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
Finance cost on lease liability
Refer to note 18 for further information on financial instruments.
30 June 2023 30 June 2022
$
$
53,964
120,313
-
51,987
53,964
172,300
-
57,202
-
-
-
114,018
55,106
-
57,202
169,124
10,583
95,746
16,074
101,697
106,329
117,771
133,742
10,583
120,509
16,074
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.
38
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 12. 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 payments 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 13. Provisions
Current liabilities
Provisions for annual leaves
Long service leave
30 June 2023 30 June 2022
$
$
36,127
22,010
32,778
-
58,137
32,778
Accounting policy for employee benefits
Short-term employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leaves and long service leaves expected to be
settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities
are settled.
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes all unconditional entitlements where employees have completed the
required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The
entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. However,
based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require
payment within the next 12 months.
Other long-term employee benefits
The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are
measured at the present value of expected future payments to be made in respect of services provided by employees up to
the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels,
experience of employee departures and periods of service. Expected future payments are discounted using market yields at
the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible,
the estimated future cash outflows.
39
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 14. Issued capital
Issued capital
Capital raising costs
Movements in ordinary share capital
30 June 2023 30 June 2022 30 June 2023 30 June 2022
Shares
Shares
$
$
1,632,543,220 1,477,490,442 63,288,928 57,679,319
-
(2,853,103)
(3,435,768)
-
1,632,543,220 1,477,490,442 59,853,160 54,826,216
Details
Date
Shares
Issue price
$
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 2021
2 Dec 2021
20 Dec 2021
8 June 2022
16 June 2022
30 June 2022
30 June 2022
1,320,948,441
52,083,334
72,916,667
1,040,000
47,925,286
2,500,000
3,485,944
54,080
$0.048
$0.048
$0.052
1,170,000
29,332,000
$0.064
$0.042
74,880
1,231,944
(445,918)
Balance beginning of the year
Placement Shares
Exercise of unlisted options
Capital raising cost
30 June 2022
20 March 2023
8 July 2022
30 June 2023
1,477,490,442
152,777,778
2,275,000
$0.036
$0.042
54,826,216
5,500,000
95,554
(568,610)
Balance at the end of the year
30 June 2023
1,632,543,220
59,853,160
Movements in options
Details
Balance beginning of the year
Options exercised, employee options
Options expired/forfeited
Share based payment, employee options
Share based payment, advisor options
Balance end of the year
Options exercised, employee options
Options expired/forfeited
Options issued
Options issued in prior years vested
Share based payment, employee options
Share based payment, consultant options
Share based payment, broker options
Date
Options
$
1 July 2021
30 June 2022
80,487,000
(31,542,000)
(260,000)
45,500,000
5,000,000
99,185,000
(2,275,000)
(41,500,000)
76,388,882
-
27,500,000
1,000,000
10,000,000
4,339,238
-
(10,381)
1,180,246
96,021
5,605,124
-
(838,730)
-
508,993
328,038
12,003
205,499
Balance end of the year
30 June 2023
170,298,882
5,820,927
40
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 14. Issued capital (continued)
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 2022 Annual Report.
Note 15. Earnings per share
30 June 2023 30 June 2022
$
$
Loss after income tax attributable to the owners of 4DS Memory Limited
(5,794,241)
(6,732,079)
Weighted average number of ordinary shares used in calculating basic earnings per share 1,522,409,643 1,391,855,583
Weighted average number of ordinary shares used in calculating diluted earnings per
share
1,522,409,643
1,391,855,583
Number
Number
Basic loss per share
Diluted loss per share
Cents
Cents
(0.38)
(0.38)
(0.48)
(0.48)
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.
41
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 15. Earnings per share (continued)
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.
Note 16. Reserves
Foreign currency reserve
Share-based payments reserve
30 June 2023 30 June 2022
$
$
(30,530)
5,820,926
6,143
5,605,125
5,790,396
5,611,268
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
30 June 2023 30 June 2022
$
$
6,143
(36,673)
(12,957)
19,100
(30,530)
6,143
Accounting Policy for 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 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 2021
Options lapsed/cancelled during the year
Share-based payment
Balance at 30 June 2022
Options lapsed/cancelled during the year
Share-based payment
Balance at 30 June 2023
$
4,339,238
(10,381)
1,276,267
5,605,124
(838,730)
1,054,533
5,820,927
Accounting policy for 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.
42
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 17. Share-based payments
A share option plan has been established by the Group and approved by shareholders at a general meeting, whereby the
Group may grant options over ordinary shares in the Company to certain key management personnel of the Group. The
options are issued for nil consideration and are granted in accordance with performance guidelines established by the
Group.
Set out below are summaries of options granted under the plan:
Weighted
average
exercise price
30 June 2023 30 June 2023 30 June 2022 30 June 2022
Weighted
average
exercise price
Number of
options
Number of
options
Outstanding at the beginning of the financial year
Granted
Forfeited
Exercised
Expired
99,185,000
114,888,882
(41,000,000)
(2,275,000)
(500,000)
$0.066
$0.051
$0.068
$0.042
$0.042
80,487,000
50,500,000
-
(31,542,000)
(260,000)
$0.051
$0.076
$0.000
$0.043
$0.040
Outstanding at the end of the financial year
170,298,882
$0.056
99,185,000
$0.066
Set out below are movement of options during the year:
30 June 2023
Grant date
Expiry date
30/10/2017
22/04/2019
24/04/2019
30/11/2020
03/12/2021
31/03/2022
16/12/2022
09/01/2023
20/03/2023
27/05/2022
27/10/2022
28/02/2024
22/01/2024
29/11/2025
03/12/2023
31/05/2027
19/12/2027
27/02/2028
31/03/2026
14/03/2027
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
$0.042
$0.052
$0.052
$0.064
$0.080
$0.100
$0.037
$0.037
$0.055
$0.063
-
2,775,000
-
1,300,000
-
25,780,000
-
18,830,000
-
5,000,000
-
15,500,000
21,500,000
-
7,000,000
-
86,388,882
-
30,000,000
-
99,185,000 114,888,882
(2,275,000)
-
-
-
-
-
-
-
-
-
(2,275,000)
-
(500,000)
-
-
-
1,300,000
25,780,000
(6,000,000) 12,830,000
5,000,000
(5,000,000) 10,500,000
21,500,000
-
7,000,000
-
86,388,882
-
(30,000,000)
-
(41,500,000) 170,298,882
Weighted average exercise price
$0.066
$0.051
$0.042
$0.067
$0.061
The weighted average share price during the financial year was $0.039 (30 June 2022: $0.103).
The weighted average remaining contractual life of options outstanding at the end of the financial year was 2.1 years (30
June 2022: 4.45 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.
43
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 17. Share-based payments (continued)
Grant date/Employees entitled
Number of
options
Vesting conditions
Contractual life
of options
Options granted to Directors
On 9 January 2023/Mr. David McAuliffe
6,000,000
On 9 January 2023/Mr. Howard Digby
1,000,000
Options granted to technical
employees/consultant
25% of the options will vest after 6 months of
continuous employment and the balance vest
equally over the next 10 quarters.
25% of the options will vest after 6 months of
continuous employment and the balance vest
equally over the next 10 quarters.
5 years
5 years
On 16 December 2022/USA employees
and company secretary
21,500,000
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 granted during the
year
28,500,000
B. Measurement of fair values - equity settled share-based payment arrangements
The fair value of the employee share options has 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:
No. of options
Share price
at grant
Exercise
Expected
volatility
Risk free
interest
rate
Fair value
at
Grant Date
16/12/2022
09/01/2023
20/03/2023
granted
Expiry Date
date
price
%
%
grant date
21,500,000 19/12/2027
7,000,000 27/02/2028
10,000,000 31/03/2026
$0.033
$0.030
$0.037
$0.037
$0.037
$0.055
95%
95%
100%
3.08%
3.23%
2.95%
$0.0237
$0.0334
$0.0205
On 16 December 2022, the Company granted 21,500,000 incentive options exercisable at $0.037 expiring 19 December 2027
to management and consultant.
On 9 January 2023, the Company granted 7,000,000 unlisted options exercisable at $0.037 expiring 27 February 2028 issued
to Mr. McAuliffe and Mr. Digby with 25% vest following the completion of 6 months service to the Company and the
remaining vesting quarterly over the following 10 quarters subject to the holder continuing to remain a Director.
On 20 March 2023, the Company granted 10,000,000 unlisted options exercisable at $0.055 expiring on 31 March 2026 to
consultants in relation to the equity raising undertaken during the year valued at $205,499.
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.
44
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 17. Share-based payments (continued)
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 is 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.
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.
45
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 18. 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.
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 2023 30 June 2022 30 June 2023 30 June 2022
$
$
$
$
53,426
18,036
258,519
16,717
63,549
-
172,300
-
71,462
275,236
63,549
172,300
The Group had net assets denominated in foreign currencies of $7,913 (assets of $71,462 less liabilities of $63,549) as of 30
June 2023 (30 June 2022: $102,936 (assets of $275,236 less liabilities of $172,300)). Based on this exposure, had the
Australian dollars strengthened by 5% (30 June 2022: 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 $396 higher (30 June 2022: $5,147
higher) and equity would have been $396 higher (30 June 2022: $5,147 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 2023 was $ 15,117 (30 June 2022: gain of $16,419).
46
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 18. Financial instruments (continued)
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.
As at the reporting date, the Group had the following variable rate interest rate:
Cash and cash equivalents
Trade and other payables
Lease liabilities
30 June 2023
30 June 2022
Weighted
average
interest rate
%
Weighted
average
interest rate
%
Balance
$
Balance
$
0.76%
-
6.00%
5,599,537
(81,809)
(53,964)
0.09%
-
6.00%
5,234,447
(84,825)
(172,300)
Net exposure to cash flow interest rate risk
5,463,764
4,977,322
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 with financial institutions
Other receivables and deposits
47
30 June 2023 30 June 2022
$
$
5,599,567
4,979
5,234,446
4,866
5,604,546
5,239,312
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 18. Financial instruments (continued)
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.
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 2023
Non-derivatives
Non-interest bearing
Trade payables
Interest-bearing - variable
Lease liability
Total non-derivatives
30 June 2022
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
$
-
81,809
6.00%
53,964
135,773
-
-
-
-
-
-
-
-
-
81,809
53,964
135,773
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
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.
48
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 19. 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 2023 30 June 2022
$
$
932,350
26,250
22,010
720,707
50,000
828,503
18,205
-
1,093,358
-
1,751,317
1,940,066
Short-term employee benefits
Post-employment benefits
Long-term benefits
Share-based payments
Bonus payments
Note 20. Related party transactions
Parent entity
4DS Memory Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 22.
Key management personnel
Disclosures relating to key management personnel are set out in note 19 and the remuneration report included in the
Directors' report.
Transactions with related parties
Purchases from and sales to KMP and their related parties are made on terms equivalent to those that prevail in arm’s length
transactions. The Group acquired the following services from entities that are controlled by members of the Group’s KMP.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those
available to other parties unless otherwise stated.
The following transactions occurred with related parties:
Entity
Bandra Consulting
Pty Ltd
Dr Guido Arnout
Nature of
transaction
KMP and their
related parties
Director fee
Howard Digby
Consultancy fee
Guido Arnout
Total expense
Payable
balance
Total expense
Payable
balance
30 June 2023
30 June 2023
30 June 2022
30 June 2022
30,000
240,253
-
-
30,000
25,184
-
-
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.
49
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 21. 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 loss
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 2023 30 June 2022
$
$
(5,626,122)
(6,848,621)
(5,626,122)
(6,848,621)
30 June 2023 30 June 2022
$
$
5,587,502
5,056,414
5,721,030
5,265,451
130,362
111,862
130,362
111,862
66,440,133 61,413,188
6,553
5,605,124
(61,871,277)
(11,626)
5,820,927
(66,658,765)
5,590,669
5,153,588
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 2022 and 30 June 2023.
Contingent liabilities
The parent entity had no contingent liabilities as at 30 June 2022 and 30 June 2023.
Note 22. 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 2023 30 June 2022
%
%
4DS Inc.
4D-S Pty Limited (Dormant)
Fitzroy Copper Pty Limited (Dormant)
Fitzroy Employee Share Plan Pty Limited (Dormant)
United States of America
Australia
Australia
Australia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
50
4DS Memory Limited
Notes to the consolidated financial statements
30 June 2023
Note 23. Commitments and Contingent
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 Dr. Guido Arnout, will be
participating in the Sale Bonus Pool.
Upon a liquidity event occurring, Dr. Guido Arnout, and US based employees (Eligible Participants) will each be entitled to
receive a proportion of the Sale Bonus Pool. Dr. Arnout 15% and Mr. Yen 10%, with the balance to be allocated to Eligible
Participants at the discretion of the Board.
The size of the Sales 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
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 2023 and 30 June 2022
Note 24. Events after the reporting period
On 3 July 2023, the Company announced that imec had successfully completed the manufacture of the Fourth Platform Lot
and shipped the Lot to 4DS facilities in Fremont, California.
On 23 August 2023, the Company reported that after extensive analysis, the Fourth Platform Lot had been successful in
showing, for the first time, a fully functioning megabit array with 60nm memory cells, access transistors and write circuitry.
●
●
●
read and write speeds at 27 nanoseconds
endurance well in excess of 2 billion cycles; and
retention which is persistent and tuneable
The results seen are significant as they are on a known and well understood megabit array from imec. Upon achieving this
Company milestone, further analysis and strategic planning will be conducted over the coming months.
On 25 August 2023, the Company issued 43,852,572 fully paid ordinary shares following the exercise of $0.055 unlisted
options expiring on 31 March 2026 to raise $2,411,891.
No matter or circumstance has arisen since 30 June 2023 that has significantly affected, or may significantly affect the
Group's operations, the results of those operations, or the Group's state of affairs in future financial years.
51
4DS Memory Limited
Directors' declaration
30 June 2023
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
2023 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
___________________________
Mr. David McAuliffe
Interim Executive Chairman
28 August 2023
52
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) and its
subsidiaries (consolidated entity), which comprises the consolidated statement of financial position as at 30
June 2023, 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 2023
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.
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, 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.
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.
53
PKF Perth
Value of Share Based Payments
Why significant
How our audit addressed the key audit matter
For the year ended 30 June 2023 the value of share
based payments totalled $1,054,533, as disclosed in
Note 14, 16 and 17. A total of $849,034 has been
expensed to the profit or loss statement, and $205,499
has been recognised as a cost associated with the
capital raising.
The consolidated entity’s accounting judgement and
estimates in respect of share-based payments is
outlined in Note 17. 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.
Our work included, but was not limited to, the following
procedures:
• Reviewed the independent expert’s valuations of
options issued, including:
o
o
o
o
ensuring the independence of the independent
expert;
assessing the credentials of the independent
expert;
assessing the appropriateness of the valuation
method used; and
assessing
assumptions and
valuation model.
reasonableness
of
inputs used within
the
the
the
• Reviewed Board meeting minutes and ASX
announcements as well as enquired of relevant
personnel to ensure all share-based payments had
been recognised;
• Assessed the allocation and recognition to ensure
reasonable; and
• Assessed
the appropriateness of
the
related
disclosures in Note 14, 16 and 17.
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 2023 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.
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.
54
PKF Perth
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.
• 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.
55
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
2023.
In our opinion, the Remuneration Report of 4DS Memory Limited for the year ended 30 June 2023, 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
28 AUGUST 2023
WEST PERTH
WESTERN AUSTRALIA
56
4DS Memory Limited
Shareholder information
30 June 2023
The shareholder information set out below was applicable as at 25 August 2023.
There were 7,968 holders of Ordinary Fully Paid Shares
VOTING RIGHTS
The voting rights of the ordinary shares are as follows:
Subject to any rights or restrictions for the time being attached to any shares or class of shares of the Company, each
member of the Company is entitled to receive notice of, attend and vote at a general meeting. Resolutions of members will
be decided by a show of hands unless a poll is demanded. On a show of hands each eligible voter present has one vote.
However, where a person present at a general meeting represents personally or by proxy, attorney or representation more
than one member, on a show of hands the person is entitled to one vote only despite the number of members the person
represents.
On a poll each eligible member has one vote for each fully paid share held.
There are no voting rights attached to any of the options that the Company currently has on issue. Upon exercise of these
options, the shares issued will have the same voting rights as existing ordinary shares.
Equity security holders
TWENTY LARGEST SHAREHOLDERS
The names of the twenty largest security holders of quoted equity securities are listed below:
Ordinary shares
Number held % of total
shares
issued
Citicorp Nominees Pty Limited
James Dorrian
Mr John Clement Cowie Love (The JCC Love Family A/C)
Morsec Nominees Pty Ltd
Mr Kelland Munro MacCulloch
BNP Paribas Nominees Pty Ltd (LB AU Noms Retail client DRP)
Mr Sam Huu Hai Nguyen
Comsec Nominees Pty Limited
Vicex Holdings Proprietary Limited (Vicex Super A/C)
HSBC Custody Nominees (Australia) Limited
Mr John Love
Mr Richard Stanley De Ravin
Mat Consulting Pty Ltd
Mr Peter Allan Learmont
Mr Kevin Martin McGuire
Dr Rohan Vanden Driesen
KZ 6 Pty Ltd (KZ 5 A/C)
Mr Brenton Charles Speechly & Mrs Margaret Mary (Speechly Brenthill Super Fund A/C)
Southam Investments 2003 Pty Ltd (Warwickshire Investment A/C)
JP Morgan Nominees Australia Pty Limited
95,667,667
45,286,004
30,691,397
24,800,778
21,063,494
17,391,520
15,742,873
14,869,320
14,000,000
13,973,771
12,295,657
10,400,000
10,335,746
9,300,027
9,209,312
8,883,631
8,848,854
8,473,382
7,994,883
7,479,605
5.71
2.70
1.83
1.48
1.26
1.04
0.94
0.89
0.84
0.83
0.73
0.62
0.62
0.55
0.55
0.53
0.53
0.51
0.48
0.45
Total Top 20
386,707,921
23.09
SUBSTANTIAL HOLDERS
The Company has no substantial shareholders.
57
4DS Memory Limited
Shareholder information
30 June 2023
DISTRIBUTION OF EQUITY SECURITIES
Analysis of number of equitable security holders by size of holding:
Ordinary Fully Paid Shares
Number
of holders
Total
units
% Issued shares
capital
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
22,801
145
2,970,596
822
10,257,926
1,263
3,886
152,443,992
1,852 1,510,695,725
-
0.18
0.61
9.09
90.12
7,968 1,676,395,792
100.00
Number of shareholders holding less than a marketable parcel
579
-
-
UNQUOTED SECURITIES
The following unquoted securities are on issue:
UMARKETABLE PARCELS
The number of shareholders holding less than a marketable parcel is 579.
Options expiring 3/12/2023 @ $0.08
The following person(s) holds 20% or more of unquoted equity securities:
5,000,000 Options expiring 3/12/2023 @ $0.08 - 7 Holders
Holder Name
Bobarino Pty Ltd
Lobster Pot Investments Pte Ltd
25,780,000 Options expiring 22/01/2024 @ $0.052 - 9 Holders
Holder Name
Guido Arnout
Margaret Elizabeth Livingston
1,300,000 Options expiring 28/08/2024 @ $0.052
Holder Name
Ting Yen
58
Number
on issue
Number
of holders
5,000,000
7
Holding
%
1,900,000
1,500,000
38.00%
30.00%
Holding
%
7,380,000
7,000,000
28.63%
27.15%
Holding
%
1,300,000
100.00%
4DS Memory Limited
Shareholder information
30 June 2023
12,830,000 Options expiring 29/11/2025 @ $0.064 - 1 Holder
Holder Name
Willibrordus Gerardus Maria van den Hoek
42,536,310 Options expiring 31/03/2026 @ $0.055 – 20 Holders
No Holders with more than 20%
15,500,000 Options expiring 31/05/2027 @ $0.10 - 3 Holders
Holder Name
Ting Yen
Joseph Tzou
21,500,000 Options expiring 19/12/2027 @ $0.037 - 3 Holders
Holder Name
Ting Yen
7,000,000 Options expiring 27/02/2028 @ $0.037 – 2 Holders
Holder Name
Margaret Elizabeth Livingston
On Market Buy Back
There is currently no on-market buyback program.
Holding
%
12,830,000
100.00%
Holding
%
8,000,000
5,000,000
51.61%
32.26%
Holding
%
20,000,000
93.02%
Holding
%
6,000,000
85.71%
59