More annual reports from Audio Pixels Holdings Limited:
2023 ReportAudio Pixels Holdings Limited
ACN 094 384 273
www.audiopixels.com.au
2023
AnnUAL
RePoRt
CORPORATE DIRECTORY
Directors
Fred Bart (Chairman)
Ian Dennis (resigned 31 July 2023)
Cheryl Bart AO
Mark Ureda (appointed 31 July 2023)
Company secretary
Shawn van Boheemen
Registered off ice
Suite 3, Level 12
75 Elizabeth Street
SYDNEY NSW 2000
Australia
Israel off ice
3 Pekris Street
Rehovot
ISRAEL 76702
Telephone: +61 2 9233 3915
Facsimile: +61 2 9232 3411
Email:
shawn@audiopixels.com.au
Telephone: + 972 73 232 4444
+ 972 73 232 4455
Facsimile:
danny@audiopixels.com
Email:
Bankers
St George Bank
200 Barangaroo Avenue
Barangaroo
SYDNEY NSW 2000
Australia
Website
www.audiopixels.com.au
Auditor
Deloitte Touche Tohmatsu
Chartered Accountants
477 Collins Street
Melbourne VIC 3000
Australia
share Registry
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
GPO Box 7045
Sydney NSW 1115
Australia
Telephone: 1300 855 080 or
Facsimile:
+61 3 9415 5000 outside Australia
1300 137 341
5103 Designed and Produced by RDA Creative www.rda.com.au
Contents
Directors’ Report ��������������������������������������������������������������������������������������������������������������������������������������������������� 2
Auditor’s Independence Declaration ���������������������������������������������������������������������������������������14
Independent Audit Report ����������������������������������������������������������������������������������������������������������������� 15
Directors’ Declaration ��������������������������������������������������������������������������������������������������������������������������������� 17
Consolidated Statement of Profit or Loss and
Other Comprehensive Income ������������������������������������������������������������������������������������������������������ 18
Consolidated Statement of Financial Position ������������������������������������������������������������ 20
Consolidated Statement of Changes in Equity ���������������������������������������������������������� 21
Consolidated Statement of Cash Flows ������������������������������������������������������������������������������ 22
Notes To and Forming Part of the
Financial Statements ���������������������������������������������������������������������������������������������������������������������������������� 23
ASX Additional Information ��������������������������������������������������������������������������������������������������������������� 63
Twenty Largest Ordinary Shareholders ������������������������������������������������������������������������������� 64
1
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
The Directors of Audio Pixels Holdings Limited submit herewith the financial report of the company for the financial year
ended 31 December 2023� In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
The names and particulars of the directors of the company during or since the end of the financial year are:
name
Fred Bart
Particulars
Chairman and Chief Executive Officer� A director since 5 September 2000� He has been
Chairman and Managing Director of numerous private companies since 1980, specialising in
manufacturing, property and marketable securities� He is a member of the Audit Committee and
a member of the Nomination and Remuneration Committee�
He is also Chairman of Noxopharm Limited�
Cheryl Bart AO
Non‑executive director� Appointed to the Board on 26 November 2001� Cheryl Bart is a lawyer
and company director� She is Chairman of Tilt Renewables Limited and Ted X Sydney� Cheryl is a
non‑executive director of SG Fleet Australia Limited and the Moriah College Foundation�
Mark Ureda
She is a fellow of the Australian Institute of Company Directors, Patron of SportsConnect and a
member of Chief Executive Women� She is a member of the Audit Committee and a member of
the Nominations and Remuneration Committee�
Non‑executive director� Mr� Ureda brings to the company extensive executive experience
in audio systems, technology trends and product strategies� In 2010 he joined Harman
International as president of JBL Professional� He subsequently served as VP/CTO and then senior
vice president of Harman Professional� He retired in 2018 and joined Biamp Systems as executive
advisor and continues to serve on the boards of Loud Audio and Bose Professional�
Prior to joining Harman, Mr� Ureda was senior vice president of corporate strategy at Northrop
Grumman specializing in mergers and acquisitions and held board positions at Navia Aviation
AS, and Remotec UK Limited�
Directorships of other listed companies
Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are
as follows:
name
Fred Bart
Mark Ureda
Cheryl Bart
Company
Electro Optic Systems Holdings Limited
Weebit Nano Limited
Noxopharm Limited
Period of directorship
May 2000 to 27 July 2021
March 2018 to 27 June 2023
Since 8 May 2020
N/A
N/A
SG Fleet Australia Limited
Since February 2014
Principal activities
The principal activity of the Company is holding an investment in Audio Pixels Limited of Israel� Audio Pixels Limited is
engaged in the development of digital speakers�
Results
The net loss for the financial year ended to 31 December 2023 was $14,614,491 (31 December 2022 ‑ $2,435,719)�
Dividends
The directors recommend that no dividend be paid and no amount has been paid or declared by way of dividend since the
end of the previous financial year and up to the date of this report�
2
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Review of operations
During the reporting period the Company had made
progress advancing its revolutionary digital sound
reproduction (DSR) platform into a mass‑produced
product that meets consumer electronics manufacturers
aspirations to provide a discernibly improved
entertainment experience in future generations of devices�
Among the accomplishments, two particular noteworthy
milestones had been reported during the period:
1� At the AGM held in May‑23, the company
conducted a live demonstration of our prototype
generation (MEMS‑GEN‑I) DSR Loudspeaker Chip�
The demonstration showcased performance
that outpaced even management’s own original
ambitions, providing superior sound quality especially
when it was compared with current leading
microspeakers� In fact, the frequency response,
phase response, and nearly immeasurable distortion
throughout the full audible range were demonstrated
our chip as the only known high‑performance ‑ full
range loudspeaker (of any size or cost)�
2� On the basis of the aforementioned accomplishment,
management instructed its current fabrication
partner ‑ Earth Mountain (Suzhou) Microelectronics
Ltd� (EM) to commence fabrication of the
commercial version of the chip (“MEMS‑GEN‑II�)
The commercial version (GEN‑II) preserves the
fabrication principles and qualitative performance
capabilities demonstrated in GEN‑I with the inclusion
of evolutionary design elements that maximize the
sound pressure level (SPL) output of the chip in
order to meet the targeted commercial objectives of
our product�
As also informed during the period, EarthMountain has
invested considerable capital to support the transition
from prototype to the commercial generations, included
the (costly) addition of two 8” MEMS foundries, to the
current 6” facility that had produced our MEMS GEN‑I� As
further reported, initial delivery schedules for MEMS‑GEN‑II
chips have been hindered, as EarthMountain has been
forced to contend with capacity shortages at the 6” facility
related to an unanticipated surge in demand on the fabs
production resources; and with engineering challenges
that are typical in migrating MEMS wafer fabrication
from 6” to 8” wafers� EarthMountain management and
engineering teams are working diligently to resolve these
issues as soon as possible�
Upon receipt and characterization of MEMS‑GEN‑II, the
company will commence the next phase of customer
engagement having completed during the period the
fabrication of more advanced demonstration systems,
Software Development Kits (SDK), reference designs, the
porting of code and algorithms to be compatible and
efficient when run on commonly used device processors
and operating systems, as well as the development of
applications that will permit our customers to more
easily adopt performance and features to meet their
specific needs�
Management has and continues to work very closely with
Earth Mountain to resolve any outstanding issues that
may arise� However, as a fabless company that is wholly
dependent on its vendors to fabricate functioning devices
to specification, management had no choice but to adjust
its strategic plans involving customer engagement from
early to the latter part of Q2‑2024�
During the same period, the Company in coordination
with a number of potential customers has also been
working on porting our code to specific customer
device processors and operating environments as
well as applying considerable efforts to enhance our
demonstration systems, customers engineering sample
platform including SDK’s (Software Development Kits) and
design references to best rapid customer integration of
our products�
Placement to earthMountain
Earth Mountain committed in writing to take 308,325
ordinary shares ($4,316,550) at $14�00 per share in the
placement announced on 24 August 2022 subject to
receiving approvals from Jiangsu Province Branch of the
Ministry of Commerce, National Development and Reform
Commission and the State Administration of Foreign
Exchange to settle their commitment� As at the date of
this report and as advised by Earth Mountain in writing
on 23 January 2024, EarthMountain had yet to receive the
necessary approvals from the Jiangsu Province Branch
of the Ministry of Commerce, National Development
and Reform Commission and the State Administration of
Foreign Exchange in China to settle their commitment�
While the approval is not believed to be in jeopardy by
the company’s directors or EarthMountain management,
given that there is little informative visibility into this
bureaucratic process, it is impossible to predict an
accurate settlement date� The Company will update the
market as soon as new information is available�
3
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Review of operations (Cont.)
Convertible notes
On 25 May 2023, the Company announced it had issued
5 Convertible Notes amounting to $2,500,000 to existing
sophisticated shareholders�
These Convertible Notes were issued to mature on
31 January 2024, however were subsequently modified
to mature on 30 April 2024� The modification has not
changed any other terms, these notes are unsecured,
unlisted and attract an interest rate of 12% per annum
payable quarterly in arrears and convertible into ordinary
shares at $9�04, based on the five‑day volume weighted
average share price of Audio Pixels Holdings Limited on
the date of the agreement, unless a share capital raise is
undertaken at a lower price�
During the period, the term on certain convertible notes
were modified and the modification was determined not
to be substantial based on the change in net present
value of the modified debt based on the original effective
interest rate� The modification was an extension of the
existing debt liability as opposed to the creation of a new
liability� As the modification was not deemed substantial,
there was no requirement to derecognise the original
convertible notes and the re‑recognition of the modified
notes at fair value� The associated gain was calculated
using the valuation inputs of the other convertibles notes
issued at that time as a key input�
The 5 investors also received a total of 500,000 unlisted
options (100,000 options per $500,000 invested) at a
strike price of 20% higher than the conversion price of
$9�04, being $10�84� These unlisted options have a term of
3 years expiring on 4 May 2026�
On 27 October 2023, the Company issued a Convertible
Note amounting to $500,000 to 4F Investments Pty
Limited, an entity associated with Fred Bart� This
Convertible Note matures on 30 April 2024, is unsecured,
unlisted and attracts an interest rate of 12% per annum
payable quarterly in arrears and convertible into ordinary
shares at $9�04, based on the same terms as the May 2023
notes issued, unless a share capital raise is undertaken at a
lower price�
4F Investments Pty Limited will receive a total of 100,000
unlisted options (100,000 options per $500,000 invested)
at a strike price of 20% higher than the conversion price of
$9�04, being $10�84� These unlisted options have an expiry
date of 4 May 2026�
Unsecured Loans
Shareholder approval for the conversion of part of the
unsecured loans of $2,315,012 into 165,358 ordinary shares
was granted at the Annual General Meeting held on
Tuesday 30 May 2023� This reduced the original loan balance
outstanding with 4F Investments Pty Limited (a company
associated with the Chairman Fred Bart) to $969,988�
4F Investments Pty Limited agreed to provide an
additional unsecured funding facility of up to $1,500,000
on 28 March 2023 at an interest rate of 12% per annum,
repayable on completion of the next capital raising�
4F Investments Pty Limited advanced $150,000 on
27 February 2023, $100,000 on 16 March 2023, $500,000
on 28 March 2023, $500,000 on 26 April 2023 and
$250,000 on 25 September 2023 amounting to $1,500,000�
This new facility of $1,500,000 is in addition to the original
unsecured loan balance of $969,988 which was originally
at 6% interest� As a result of the extended delays in
receiving the Earth Mountain placement proceeds of
US$3,000,000 ($4,316,550), the interest rate on the original
unsecured loan has been increased to 12% per annum
from 1 March 2023 as part of the agreement to provide
the new loan facility� This interest rate is better than other
offers of unsecured loans and convertible notes received
from other unrelated parties�
The total unsecured loans outstanding at 31 December 2023
from 4F Investments Pty Limited was $2,469,988� The
outstanding unsecured loans attracts interest at a rate of
12% per annum (payable quarterly in arrears)�
As an incentive to the provision of this additional facility of
$1,500,000 and the continuation of the original unsecured
loans of $969,988 (whilst waiting for the Earth Mountain
placement proceeds of US$3,000,000 ($4,316,550) to
settle $969,988 in cash), the Company has provided an
incentive of 500,000 unlisted options in the company to
4F Investments Pty Limited� The exercise price of these
options is the 5‑day VWAP when the first $150,000 was
advanced on 27 February 2023 which equates to an
exercise price of $7�59 for a term of 3 years� These options
received shareholder approval at the Annual General
Meeting held on Tuesday 30 May 2023� These options
were issued and vested immediately after shareholder
approval was received, as they only relate to the loan
facility and are not employment related�
Included in the condensed statement of consolidated
profit and loss and other comprehensive income is a
financing expense of $3,355,000, which is attributable to
the issue of these options being treated as a transaction
cost related to the unsecured financing facility�
4
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Review of operations (Cont.)
Future developments
On 27 October 2023, the Company issued 8 Convertible
Notes amounting to $2,000,000 to sophisticated investors�
These Convertible Notes mature on 30 April 2024, are
unsecured, unlisted and attract an interest rate of 12%
per annum payable quarterly in arrears and convertible
into ordinary shares at $9�04, based on the same terms as
the May 2023 notes issued, unless a share capital raise is
undertaken at a lower price�
The 8 investors also received a total of 400,000 unlisted
options (100,000 options per $500,000 invested) at a
strike price of 20% higher than the conversion price of
$9�04, being $10�84� These unlisted options have a term of
3 years expiring on 4 May 2026�
Further information
Further information concerning the operations and
financial condition of the entity can be found in the
financial report and in releases made to the Australian
Stock Exchange (ASX) during the year�
Changes in state of affairs
There was no significant change in the state of affairs of
the company or the consolidated entity other than that
referred to in the financial statements or notes thereto�
significant events after balance date
At the date of this report the company has received
approval from holders of $4�25M of the total of $5M in
convertible notes on issue, to extend the maturity date
of the notes to 30 September 2024, with an option to
extend these at the request of the company for a further
six months�
The ASX suspended trading on 1 March 2024 post the
Company’s release of its Appendix 4E� At the date of this
report the Company remains suspended from trading�
Except as noted above there has not been any other
matters or circumstance that has arisen since the end of
the financial year which is not otherwise dealt with in this
report or in the financial statements, that has significantly
affected or may significantly affect the operations of the
company or the consolidated entity, the results of those
operations or the state of affairs of the company or the
consolidated entity in subsequent financial years�
The consolidated entity will continue to focus on the
development of its digital speaker technology�
environmental regulations
In the opinion of the directors the company and
the consolidated entity are in compliance with all
applicable environmental legislation and regulations�
The Directors have considered the environmental,
social and governance (ESG) aspects of the operations
of the consolidated entity and do not believe that
the consolidated entity is exposed to any material
climate‑related or other emerging risks�
Indemnification and Insurance of
officers and Auditors
The Company has agreed to indemnify the current
Directors, Company Secretary and Executive Officers
against all liabilities to other persons that may arise from
their position as Directors or Officers of the Company
and its controlled entities, except where to do so would
be prohibited by law� The agreement stipulates that the
Company will meet the full amount of any such liabilities,
including costs and expenses�
The Company has not, during or since the financial year
indemnified or agreed to indemnify an auditor of the
company or of any related body corporate against any
liability incurred as such an auditor�
Directors’ interests and benefits
The relevant interest of each director in the share capital of
the Company as notified by the directors to the Australian
Stock Exchange in accordance with Section 205G(1) of the
Corporations Act as at the date of this report are:
name
Fred Bart
Cheryl Bart
Mark Ureda
ordinary shares
5,984,480
1,282,777
Nil
5
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Remuneration report (audited)
Since the end of the previous financial year no director of the Company has received or become entitled to receive any benefit
(other than a benefit included in the aggregate amount of remuneration received or due and receivable by directors as shown
in the financial statements) because of a contract made by the Company or related corporation with the director or with a firm
of which the director is a member, or with a company in which the director has a substantial financial interest� There are no
employment contracts for any of the directors�
This report outlines the remuneration arrangements in place for Directors and key management personnel of the Company�
The Directors are responsible for remuneration policies and packages applicable to the Board members of the Company�
The entire Board makes up the Nomination and Remuneration Committee� The Board remuneration policy is to ensure the
remuneration package properly reflects the person’s duties and responsibilities�
There are currently no performance‑based incentives to directors or executives based on the performance of the Company�
There are standard employment contracts for the executives of Audio Pixels Limited including at will employment and a
notice period of three months for termination�
The key management personnel of Audio Pixels Holdings Limited during the year were:
Fred Bart
Chairman and Chief Executive Officer
Cheryl Bart
Non executive director
Ian Dennis
Non executive director and company secretary (resigned 31 July 2023)
Mark Ureda
Non‑executive director (appointed 31 July 2023)
Danny Lewin
CEO and director of Audio Pixels Limited
Yuval Cohen
Chief Technical Officer of Audio Pixels Holdings Limited
The Directors fees are not dependent on the earnings of the Company and the consequences of the Company’s
performance on shareholder wealth� On 24 September 2010, the maximum total director’s fees were increased to a
total of $250,000 per annum in line with the increased activities of the company� The actual director’s fees paid were
within the approved limit of $250,000 per annum approved by shareholders at the Annual General Meeting held on
24 September 2010�
6
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Remuneration Report (Cont.)
The table below sets out summary information about the Company’s earnings and movements in shareholder wealth for
the last 5 financial years�
Year ended
31 December
2023
$
Year ended
31 December
2022
$
Year ended
31 December
2021
$
Year ended
31 December
2020
$
Year ended
31 December
2019
$
Revenue
286,824
482,841
108,691
191,434
272,520
Net (loss) before tax
(14,614,491)
(2,435,719)
(3,309,869)
(12,102,367)
(6,231,930)
Net (loss) after tax
(14,614,491)
(2,435,719)
(3,309,869)
(12,102,367)
(6,231,930)
Year ended
31 December
2023
$
Year ended
31 December
2022
$
Year ended
31 December
2021
$
Year ended
31 December
2020
$
Year ended
31 December
2019
$
10�00
8�18
0�00
22�50
10�00
0�00
24�05
22�50
0�00
15�35
24�05
0�00
20�22
15�35
0�00
Share price at start
of year/period
Share price at end
of year/period
Dividend Paid
The following table sets out each key management personnel’s equity holdings (represented by holdings of fully paid
ordinary shares in Audio Pixels Holdings Limited)�
Balance at
1/1/23
no.
5,819,122
500,000
320,167
1,438,619
1,397,876
Granted as
remuneration
no.
Received on
exercise of
options
no.
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
Purchases/
(sales)
no.
Balance at
31/12/23
no.
165,358
5,984,480
‑
‑
‑
‑
500,000
‑
1,438,619
1,397,876
Mr Fred Bart*^
Mrs Cheryl Bart*
Mr Ian Dennis (a)
Mr Danny Lewin
Mr Yuval Cohen
* Included in the above shareholdings in respect to both Fred Bart and Cheryl Bart are 782,777 (2021: 782,777) shares in Audio Pixels Holdings Limited held by
the Bart Superannuation Fund, in respect to which each has a relevant interest�
^ the 165,358 shares acquired by 4F Investments Pty Limited (an entity associated with Fred Bart) were issued to settle $2,315,012 of the unsecured loan facility
held with 4F Investments Pty Limited�
(a) Ian Dennis resigned as a director on 31 July 2023�
7
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023
DIReCtoR’s RePoRt
Remuneration Report (Cont.)
transactions with related entities
All transactions with KMP and their related parties are made on terms equivalent for those that prevail in arm’s length
transactions�
During the year ended 31 December 2023, the Company paid a total of $109,456 (year ended
31 December 2022 ‑ $109,331) to 4F Investments Pty Limited, a company associated with Mr Fred Bart in respect of
directors’ fees and superannuation for Mr Fred Bart and Mrs Cheryl Bart�
During the year ended 31 December 2023, the Company paid a total of $24,188 (year ended 31 December 2022 ‑ $41,344)
to Dennis Corporate Services Pty Limited, a company associated with Mr Ian Dennis in respect of directors’ fees and
superannuation�
During the year, the Company paid $20,000 (31 December 2022 ‑ $30,000) to Dennis Corporate Services Pty Limited, a
company associated with Mr Ian Dennis in respect of consulting fees for company secretarial and accounting services�
Shareholder approval for the conversion of part of the unsecured loans from 4F Investments Pty Ltd of $2,315,012 into
165,358 ordinary shares was granted at the Annual General Meeting held on Tuesday 30 May 2023� This reduced the original
loan balance outstanding to $969,988, which is repayable on either the receipt of the Earth Mountain placement funds or
upon completion of a capital raise�
During the year, the company entered into unsecured loan facilities with 4F Investments Pty Limited, a company associated
with Mr Fred Bart, totalling $1,500,000 at an interest rate of 12%� The loan facility was fully drawn to $1,500,000 at
31 December 2023� The loan is repayable upon completion of a capital raise�
During the year, the company paid $135,673 (31 December 2022 ‑ $113,782) interest on the unsecured loan to
4F Investments Pty Limited� Interest has been accrued in the financial statements at 31 December 2023 of $74,709
(31 December 2022 ‑ $32,940)�
The lease in respect of office premises at Suite 3, Level 12, 75 Elizabeth Street Sydney expired on 30 March 2022� The
Company has not renewed the lease and continues to occupy the premises on a month to month basis� The Company
recharged rent and other tenancy charges of $34,790 (year ended 31 December 2022 ‑ $42,871) to 4F Investments Pty
Limited, a company controlled by Fred Bart�
8
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Remuneration Report (Cont.)
The following table sets out the remuneration of each key management personnel of the Company:
December 2023
Fred Bart
Cheryl Bart
Ian Dennis
Mark Ureda
Danny Lewin
Yuval Cohen
December 2022
Fred Bart
Cheryl Bart
Ian Dennis
Danny Lewin
Yuval Cohen
short term
Long term employee benefits
total
Directors’
fees/salary
$
non-
monetary
$
super-
annuation
$
social
security
$
Long service
leave
61,000
37,500
41,875*
20,813
170,680
255,150
587,018
61,000
37,500
67,500*
181,029
241,084
588,113
‑
‑
‑
‑
41,277
24,260
65,537
‑
‑
‑
44,130
30,153
74,283
6,925
4,031
2,313
‑
‑
27,459
40,728
6,987
3,844
3,844
‑
23,959
38,634
‑
‑
‑
‑
62,337
‑
62,337
‑
‑
‑
65,414
‑
65,414
‑
‑
‑
‑
‑
3,563
3,563
‑
‑
‑
‑
13,915
13,915
$
67,925
41,531
44,188
20,813
274,294
310,432
759,183
67,987
41,344
71,344
290,573
309,111
780,359
* The amounts disclosed for Ian Dennis include director’s fees of $24,188 and consulting fees of $20,000 (2022: directors fees $41,625 and consulting fees $30,000)�
Other non‑monetary benefits include annual leave and long service leave provision increases during the year�
Audit Committee
The Audit Committee was formally constituted on 29 August 2014 with all three directors appointed to the Audit Committee�
Mark Ureda is appointed chair of the Audit Committee�
Directors’ meetings
During the year the Company held three meetings of directors, two meetings of the Audit Committee and one meeting of
the Nomination and Remuneration Committee� The attendances of the directors at meetings of the Board were:
Directors
Mr Fred Bart
Mrs Cheryl Bart
Mr Ian Dennis
Mr Mark Ureda
Board of directors
Audit committee
nomination and
Remuneration committee
Held
Attended
Held
Attended
Held
Attended
3
3
2
1
3
3
2
1
2
2
1
1
2
2
1
1
1
1
1
0
1
1
1
0
All current board members are on the Audit Committee and the Nomination and Remuneration Committee�
9
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Ethical Labour
The consolidated entity has established measures
regarding fair labour practices and guidelines that create
a respectful and safe work environment for our employees
globally� We are committed to treat all of our employees
with respect and we strictly prohibit the use of slavery,
forced labour and human trafficking� To prevent the
occurrence of forced, compulsory or child labour, we have
implemented local labour policies and practices to comply
with the Modern Slavery Act�
Any person who applies for employment at AKP does so
on a voluntary basis and all employees are legally entitled
to leave upon reasonable notice without penalty�
In accordance with AKP’s global recruiting guidelines,
offers of employment must be conditional upon
completion of required background checks� Background
checks are required to protect the safety of employees and
to ensure that employees meet the standards of AKP�
Diversity
The Company values diversity and recognises the benefits
it can bring to the organisation’s ability to achieve its goals�
The Company’s diversity policy (“Diversity Policy”) was
updated on 31 December 2021 and outlines its diversity
policy in relation to gender, age, cultural background,
ethnicity, employment of veterans and other factors to
leverage the wides pool of available talent� A copy of the
Company’s Diversity Policy is available on the Company’s
web site�
Material Business Risks
Since its founding management has openly and frequently
delineated its assessment of the ongoing and emerging
risks, challenges and concerns that might influence
the company success and opportunities� In fact, as a
technology company engaged in transforming century
old technological conventions; continual analysis of risks
and failures have been baked into the company’s DNA as
the guiding principle of operation�
1. technological Viability
AKP is engaged in revolutionizing an incumbent
technology that has been an important and prevalent
technological staple, used extensively by mankind, since its
advent by Alexander Graham Bell roughly 150 years ago�
The industry at large has unsuccessfully spent many,
many billions of dollars over decades searching for ways
to advance sound reproduction to the modern era� AKP’s
radical approach is the best chance the industry has to
succeed in its ambition to evolve sound reproduction into
the digital era, for example in the same manner that the
LCD has completely replaced the CRT and digital memory
has replaced magnetic media for data storage�
However, this effort requires the expansion and advent
of many technological disciplines, some of which were
either unknown or not fully understood� Achieving
sufficient understanding as to the intersection of varying
physical regimes prevalent in micro‑mechanical structures
was impossible before structures of this scale could be
physically fabricated and characterized� This achievement
alone required very deep understanding of the capabilities
and limitations of available microfabrication tools
and techniques�
AKP has and continues to be engaged in a comprehensive
research and development effort to bring our
technology to fruition� As such and until completion
of the technology, its products, production methods,
fulfillment of the technological vision and mission will by
its very nature maintain certain levels of technological
uncertainties and risks� Throughout and to the best of
reason, management has tried to share its assessment
at common sense intervals of the remaining risks,
challenges and concerns, based on technical progress
actualities, competitive concerns, and in consideration of
confidentiality and intellectual property considerations�
2. Finance and Capital
The company requires additional capital to execute and
support its plans� The company’s ability to secure capital
in a timely manner depends among other factors on
its development status, investor interest, as well as the
financial state of capital markets�
The Directors have determined that the best result for a
capital raise at this stage of the company, is obtainable
after the company has the ability to properly demonstrate
its technologies to potential investors� In the interim
the Company has been funding its operations utilizing
unsecured loans from related parties and convertible
notes� The directors continue to monitor in real time the
status of achieving the demonstration milestone and
may choose to take further unsecured loans and /or
convertible notes if the capital raise is further delayed�
10
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Material Business Risks (Cont.)
3. Intellectual Property
As a pioneer, the company has managed to amass an
impressive technology portfolio covering over 200
patents (and counting) in over a dozen patent families�
Nonetheless financial and human constraints limit our
ability to:
a�
Legally protect every aspect of the technology�
b�
Limit the jurisdictions in which we are able file and
maintain patent protection
The company is extremely diligent ensuring that all
developments are originated within the company using
licensed and authorized tools� However, the very nature
of multidisciplinary development entangling a multitude
of technologies and tools might expose the company to
claims of IP infringement by various third parties�
Since its founding the company has used Israel’s leading
IP firm to advise and guide our IP strategies� To the
best of its ability and available resources the company
has developed methods, procedures and strategies
to ensure originality and or legal license as well as to
protect its IP worldwide� The company also put in place
routine procedures to investigate and react if needed
to possible infringement or unauthorized replication of
its technologies�
Furthermore, our IP portfolio includes considerable
knowhow� Inherent to the model of a fabless company is
the necessity to sharing of such knowhow with third party
partners, vendors and service providers� Given our limited
ability to control or monitor third parties Management
maintains reasonable caution when divulging certain
critical aspects and knowhow of our technology� The
sharing of critical information when required is done in a
manner that tries to minimize the risk of IP leakage, which
at time can come at the expense of elongating timelines�
4. Development timeline /
time to Market
There are a number of factors that have, and will
continue, to influence the pace of progress (beyond the
technological uncertainties associated with research and
development as stated above), namely:
Fabrication ‑ MEMS fabrication differs greatly when
compared to fabrication of “traditional” integrated
circuitry, despite the fact that they many of the
same tools, techniques and facilities are used;
mainly in that there are no rigid design rules and
highly standardized batch processing techniques in
MEMS� By its very nature MEMS designs vary in their
electro‑mechanical and operational requirements,
requiring fabrication processes flow to be tailored
to the specific materials, dimensions, tolerances,
etc� This “one design‑one process”, necessitates an
iterative, trial‑and‑error approach, whereby designs
are fabricated, results are characterized, and then
either the fabrication process flow, and or the
design or both are modified, refined, or optimized
accordingly in order to achieve the desired end
results ‑ often a cycle that needs to be repeated a
number of times�
Historically converting the company’s MEMS into
silicon has taken between 10 and 14 months for each
major integration cycle� Such timelines are more or
less confirmative with the cycle times throughout
the fabless MEMS sector, even though AKP’s
designs require extending the electromechanical
specifications beyond the conventional norms of
associated with MEMS fabrication� The Company
originally started its development works with Sony
Semiconductor as its primary MEMS fabricator, and
after evaluation of a number of additional Fabs
ultimately shifted priority to Tower Semiconductor in
attempt to reduce production cycle timelines� More
recently, the company established a relationship with
Earth Mountain a Chinese based entity having highly
advanced facilities and expansive resources� After
extensive evaluation EarthMountain was deemed
capable of delivering faster turnaround with superior
results, a collaboration that has recently borne the
success that management was hoping to achieve�
This collaboration was memorialized in Dec 2021 in
a comprehensive manufacturing agreement which
is subject to confidentiality clauses, however as has
been reported the agreement includes substantial
production capacity, which comes at a time that
the industry at large is struggling to overcome
capacity shortages�
11
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023
DIReCtoR’s RePoRt
Material Business Risks (Cont.)
Fab Prioritization ‑ The business models of silicon
foundries are rooted in volume production and
therefore the Fabs tend to avoid conducting any
kind of development work especially for innovative
and nonconforming fabless companies such as AKP�
It is understood that even when a fab undertakes
development work, such endeavors must play
“second fiddle” to production customers, influencing
timelines (always for the worse)� Exacerbating the
situation are the unprecedented global shortages
of semiconductor capacity experienced worldwide,
instigated by among other reasons, the worlds
response to the COVID‑19 pandemic� These
unprecedented shortages have impacted virtually
every industry in particular those that heavily rely
on semiconductors such as the automotive and
consumer electronic industries, forcing companies
such as Apple and Ford, to delay, suspend, or even
shutdown various aspects of their production�
A popular countermeasure by some industry
conglomerates to stockpile inventory and “acquire”
long term capacity, has put even further strain on
smaller companies, such as AKP�
Unfortunately, Silicon production cannot be turned on
or off with the flick of a switch; any change to production
lines can take months; while adding additional capacity
can take years and hundreds if not many billions of
dollars� Absent of the company owning its own silicon
foundry, the reality is that it must endure disruption and
unpredictability within its supply chain�
5. Reliance on third Parties for supply
and Production
By its very nature a fabless company such as ours is wholly
dependent on the production and assembly services that
are provided by third party suppliers� Management works
very closely with its providers, most recently with Earth
Mountain and its ASIC foundry as well as a number of
other related vendors, to ensure continuity of production
and packaging requirements, however, any disruption to
their business, for any reason, may materially impact AKP�
6. Key Personnel and Competition
for Human Resources as we
Manage Growth
As we near our commercialization objectives we anticipate
considerable attention and demand for our revolutionary
products technologies� To support this transition and
growth, additional resources will be required to be added
to the company� Traditionally the technology sector, in
Israel in particular, experience unprecedented shortages
of human capital when segments of the industry
experience unprecedented growth, or when capital
becomes capital readily available, or during expansion
cycles by multinational companies in Israel� This reality not
only makes recruiting talent extremely competitive but
induces the “poaching” of our exceptionally talented staff�
Management continues to work on ways to enhance our
employee incentive programs to better attract, recruit, and
retain the talent needed to execute our plans�
7. security
Like every company in the world AKP’s systems, data,
and networks are subject and vulnerable to malicious
attacks, including computer viruses, spyware, ransomware,
and hosts of other emerging security concerns� The
company has spent and continues to spend considerable
resources to prevent unauthorized accesses, data loss,
and cyber malicious attacks, using the best of breed
cyber security systems� As a company poised to disrupt
a multibillion‑dollar industry management must
also assume that the company is, or it will become a
heightened target for IP theft and disruption is therefore
applying every reasonable means possible to protect its
intellectual property�
8. Currency Fluctuation
As an Australian company our finances and financials are
rooted in the Australian dollar, however the overwhelming
portion of expenditures and cashflow requirements are
conducted in Israeli and US currencies� Any fluctuation in
any of these currencies may have adverse effects on the
company’s capital requirements�
9. Goods and services Costs
Global shortages throughout the semiconductors have
spurred a meaningful increase in the costs of obtaining
parts� Scarce components and services not only saw
a dramatic and continual increase in pricing, but also
demand for larger and longer‑term commitments in order
to secure product and services�
10. taxation
As an Australian resident company dealing in several
foreign jurisdictions, we need to continually assess the
taxation position of the whole group and keep abreast
of any changes in legislation which may have affect
future income�
12
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoR’s RePoRt
Non‑audit services
Details of amounts paid or payable to the auditor for
non‑audit services provided during the year by the auditor
are outlined in Note 4 to the financial statements�
The directors are satisfied that the provision of non‑audit
services, during the year, by the auditor (or by another
person or firm on the auditor’s behalf ) is compatible
with the general standard of independence for auditors
imposed by the Corporations Act 2001�
The directors are of the opinion that the services disclosed in
Note 4 to the financial statements do not compromise the
external auditors’ independence for the following reasons:
All non‑audit services have been reviewed and
approved to ensure that they do not impact the
integrity and objectivity of the auditor, and
None of the services undermine the general
principles relating to auditor independence as set
out in Code of Conduct APES 110 Code of Ethics for
Professional Accountants issued by the Accounting
Professional & Ethical Standards Board, including
reviewing or auditing the auditor’s own work, acting
in a management or decision‑making capacity for
the company, acting as advocate for the company or
jointly sharing economic risks and rewards�
Auditor’s independence
declaration
The auditor’s independence declaration is included on
page 14�
Signed in accordance with a resolution of directors made
pursuant to s�298(2) of the Corporations Act 2001�
On behalf of the Directors
Fred Bart
Director
Dated at Sydney this 28 day of March 2024
13
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 14
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 15
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 6 to 9
16
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 DIReCtoRs’ DeCLARAtIon
The directors declare that:
(a)
in the directors’ opinion, there are reasonable grounds to believe the company will be able to pay its debts as and
when they become due and payable;
(b)
in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations
Act 2001, including compliance with accounting standards and give a true and fair view of the financial position and
performance of the company and the consolidated entity;
(c)
the directors have been given the declarations required by s�295A of the Corporations Act 2001; and
(d) the attached financial statements are in compliance with International Financial Reporting Standards, as stated in
note 1 to the financial statements�
Signed in accordance with a resolution of the directors made pursuant to s�295(5) of the Corporations Act 2001�
On behalf of the Directors
Fred Bart
Director
Dated at Sydney this 28 day of March 2024�
17
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 ConsoLIDAteD stAteMent oF PRoFIt oR Loss AnD
otHeR CoMPReHensIVe InCoMe
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
Consolidated
Year ended
31 December
2023
$
Consolidated
Year ended
31 December
2022
$
note
Revenue
2
286,824
482,841
Administrative expenses
Amortisation
Depreciation
Directors fees and superannuation
Foreign exchange gains
Finance costs
Goodwill impairment
Intangible asset impairment
Loss on initial recognition of convertible notes
Gain in fair value of derivative liability
Gain on modification of convertible notes
Loss on sale of property, plant and equipment
Marketing
Research and development expenses
Share based payments
(Loss) before income tax
Income tax benefit
(Loss) for the year
Other comprehensive income/(loss)
(1,248,112)
(1,471,462)
(44,139)
(388,918)
(154,456)
(96,037)
(4,373,002)
(2,399,168)
(110,686)
(2,678,000)
373,000
162,235
‑
(3,000)
(84,267)
(376,988)
(150,675)
3,094,655
(190,491)
‑
‑
‑
‑
‑
(1,006)
(1,650)
(3,433,939)
(3,736,676)
(507,093)
‑
(14,614,491)
(2,435,719)
‑
‑
(14,614,491)
(2,435,719)
1(j)
2
3
Items that may be reclassified subsequently to profit and loss
Exchange differences arising on translation of foreign operations
19
(756)
(2,985,696)
Other comprehensive income/(loss) for the year, net of tax
(756)
2,985,696)
Total comprehensive (loss) for the year
(14,615,247)
(5,421,415)
Notes to the financial statements are included on pages 23 to 62�
18
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 ConsoLIDAteD stAteMent oF PRoFIt oR Loss AnD
otHeR CoMPReHensIVe InCoMe
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
Consolidated
Year ended
31 December
2023
$
Consolidated
Year ended
31 December
2022
$
note
(14,614,491)
(2,435,719)
(14,615,247)
(5,421,415)
23
(50�15)
(8�46)
(Loss) attributable to:
Owners of the company
Total comprehensive (loss) attributable to:
Owners of the company
Earnings per share
Basic and diluted (cents per share)
Notes to the financial statements are included on pages 23 to 62�
19
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 ConsoLIDAteD stAteMent oF FInAnCIAL PosItIon
As At 31 DeCeMBeR 2023
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayment
TOTAL CURRENT ASSETS
NON‑CURRENT ASSETS
Goodwill
Intangible asset
Right of use asset
Property, plant and equipment
Trade and other receivables
TOTAL NON‑CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Lease liabilities
Unsecured loans
Convertible notes
Provisions
TOTAL CURRENT LIABILITIES
NON‑CURRENT LIABILITIES
Lease liabilities
Provisions
TOTAL NON‑CURRENT LIABILITIES
TOTAL LIABILITIES
NET (LIABILITIES)/ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the company
Consolidated
December
2023
$
Consolidated
December
2022
$
note
5
6
7
8
9
10
11
6
12
13
14
15
16
13
16
17
19
20
2,279,051
1,339,961
336,356
619,699
260,374
586,854
3,235,106
2,187,189
‑
‑
151,430
614,153
12,771
778,354
4,013,460
1,748,977
111,286
2,469,988
4,921,037
311,578
9,562,866
45,051
17,478
62,529
2,371,014
151,818
103,162
490,940
9,180
3,126,114
5,313,303
1,490,454
91,155
3,285,000
‑
276,250
5,142,859
8,322
13,915
22,237
9,625,395
5,165,096
(5,611,935)
148,207
80,067,610
77,752,597
(18,958,038)
(25,497,374)
(66,721,507)
(52,107,016)
(5,611,935)
148,207
TOTAL DEFICIENCY IN EQUITY
(5,611,935)
148,207
Notes to the financial statements are included on pages 23 to 62�
20
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 ConsoLIDAteD stAteMent oF CHAnGes In eQUItY
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
December 2023 -
Consolidated
equity
settled
option
Reserve
$
Issued
Capital
$
exchange
translation
reserve
$
Minority
Acquisition
Reserve
$
Accumul-
ated Losses
$
total
$
Balance at 1 January 2023
77,752,597
6,385,427
(6,344,109)
(25,538,692)
(52,107,016)
148,207
Other comprehensive loss
for the year
(Loss) for the year
‑
‑
Share placements at $14�00
2,315,013
‑
‑
‑
Recognition of share
based payments
Options issued
‑
‑
507,093
6,032,999
(756)
‑
‑
(756)
‑
‑
‑
‑
‑
(14,614,491)
(14,614,491)
‑
‑
‑
‑
2,315,013
‑
‑
507,093
6,032,935
Balance at 31 December 2023
80,067,610
12,925,519
(6,344,865)
(25,538,692)
(66,721,507)
(5,611,935)
December 2022 -
Consolidated
equity
settled
option
Reserve
$
Issued
Capital
$
exchange
translation
reserve
$
Minority
Acquisition
Reserve
$
Accumul-
ated Losses
$
total
$
Balance at 1 January 2022
73,092,487
6,081,330
(3,358,413)
(25,538,692)
(49,671,297)
605,415
Other comprehensive income
for the year
(Loss) for the year
‑
‑
Share placements at $14�00
4,660,110
‑
‑
‑
Recognition of share
based payments
‑
304,097
(2,985,696)
‑
‑
‑
‑
‑
‑
‑
‑
(2,985,696)
(2,435,719)
(2,435,719)
‑
4,660,110
‑
304,097
Balance at 31 December 2022
77,752,597
6,385,427
(6,344,109)
(25,538,692)
(52,107,016)
148,207
Notes to the financial statements are included on pages 23 to 62�
21
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 ConsoLIDAteD stAteMent oF CAsH FLoWs
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
Cash flows from operating activities
Receipts from customers
Government grants
Payments to suppliers and employees
Interest paid
Interest received
Consolidated
Year ended
31 December
2023
$
Consolidated
Year ended
31 December
2022
$
notes
22,939
196,572
119,655
159,791
(4,840,177)
(5,762,741)
(456,397)
(158,753)
12,521
6,823
Net cash (used by) operating activities
21
(5,064,542)
(5,635,225)
Cash flows from investing activities
Payment for property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash (used by) investing activities
Cash flows from financing activities
Proceeds from share placement
Proceeds from unsecured loans
Repayment of unsecured loan
Proceeds from convertible notes
Repayment of lease liabilities
Net cash provided by financing activities
Net increase/ (decrease) in cash and cash equivalents held
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate fluctuations on the balances of cash held
in foreign currencies
17
14
15
(308,348)
(124,806)
‑
‑
(308,348)
(124,806)
‑
1,500,000
4,660,110
2,885,000
‑
(1,000,000)
5,000,000
(197,065)
6,302,935
930,045
1,339,961
‑
(234,198)
6,310,912
550,881
748,373
9,045
40,707
Cash and cash equivalents at the end of the financial year
5
2,279,051
1,339,961
Notes to the financial statements are included on pages 23 to 62�
22
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material Accounting Policies
1(a) statement of compliance
The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act
2001, Accounting Standards and Interpretations, and complies with other requirements of the law� Accounting Standards
include Australian equivalents to International Financial Reporting Standards (“AASBs”)� Compliance with AASBS ensures
that the financial statements and notes comply with International Financial Reporting Standards (“IFRS”)� For the purposes
of preparing the consolidated financial statements, the Company is a for profit entity�
The financial statements were authorised for issue by the Directors on 28 March 2024�
1(b) Basis of preparation
The financial report has been prepared on the basis of historical cost� Cost is based on the fair values of the consideration
given in exchange for assets� All amounts are expressed in Australian dollars�
1(c) Adoption of new and revised standards
New and amended IFRS Standards that are effective for the current year
In the current year, the consolidated entity has applied a number of amendments to AASB Standards and Interpretations
issued by the IASB that are effective for an annual period that begins on or after 1 January 2023� Their adoption has not had
any material impact on the disclosures or on the amounts reported in these financial statements�
New and revised Australian Accounting Standards and Interpretations on issue but not
yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory,
have not been early adopted by the consolidated entity for the annual reporting period ended 31 December 2023�
At the date of authorisation of the financial statements, the consolidated entity has not applied the following new and
revised Australian Accounting Standards, Interpretations and amendments that have been issued but are not yet effective:
standard/amendment
AASB 2014‑10 Amendments to Australian Accounting Standards ‑ Sale or Contribution of
Assets between an investor and its Associate or Joint Venture (as amended)
AASB 2020‑1 Amendments to Australian Accounting Standards ‑ Classification of Liabilities
as Current or Non‑current and AASB 2020‑6 Amendments to Australian Accounting
Standards ‑ Classification of Liabilities as Current or Non‑current ‑ Deferral of Effective Date
1(d) Going Concern
effective for annual
reporting periods
beginning on or after
1 January 2025
1 January 2024
The financial report has been prepared on the going concern basis which assumes the continuity of normal business
activities and the realization of assets and the settlement of liabilities in the ordinary course of business�
The consolidated entity incurred a net loss during the year of $14,614,491 (2022: $2,435,719) and used net cash in operating
activities of $5,064,542 (2022: $5,635,225)� As at 31 December 2023, the consolidated entity had net current liabilities of
$6,327,760 (2022: $2,955,670), a net asset deficiency of $5,611,935 (2022: net assets of $148,207) and cash of $2,279,051
(31 December 2022: $1,339,961) of which $61,343 (31 December 2022: $61,131) is restricted as it secures future lease
payments� In the absence of further debt or equity funding, the consolidated entity is expected to consume its existing
cash reserves through operating activities during April 2024�
23
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
On 24 August 2022 EarthMountain subscribed for 308,325
shares totaling $4,316,550 in the placement of ordinary
shares announced by the Company� The proceeds from
this share issue were originally expected to be received
in September 2022� At the date of this report, these funds
have still not been received and as a result of approvals
required from the Jiangsu Province Branch of the Ministry
of Commerce, National Development and Reform
Commission and the State Administration of Foreign
Exchange in China and limited visibility into the approval
process, the company is unable to predict an accurate
settlement date�
At balance date, the consolidated entity had fully drawn
unsecured finance facilities totaling $2,469,988 from
4F Investments Pty Limited, a company associated with
one of the Company’s directors, which are classified as
current liabilities�
An amount of $969,988 is outstanding on the original
unsecured finance facility which is repayable when the
capital raise announced in August 2022 is completed
following receipt of the Earth Mountain share placement
funds� The balance of the second unsecured finance
facility of $1,500,000 is repayable on completion of a
further successful capital raise by the Company to fund
the future development of the technology�
At balance date, the consolidated entity had unsecured
convertible notes with a face value of $5,000,000 on issue,
with a maturity date of 30 April 2024�
Working Capital
Further testing and enhancement of the technology and
the pre‑production process, which have been impacted
by significant delays, is continuing as the consolidated
entity works towards achievement of the demonstrator
milestone to begin the transition to volume production�
As a result, in the absence of further debt or equity
funding, it is anticipated that the available net working
capital will be consumed during April 2024�
Furthermore, on the basis that the initial pre‑production
packaged chips meet all the design specifications,
the consolidated entity will need to commit a further
US$9,600,000 (approx� AUD $14,769,000) for fully tested
packaged production chips over the 12 to 18 months
post receipt of the initial pre‑production packaged chips
meeting all the design specifications�
The consolidated entity will need to obtain further
funding via an equity raise or additional debt funding to
fund anticipated cash outflows for the 12 months post
the signing of the financial report� The directors intend to
continue to obtain short term funding from convertible
notes, placement of shares or additional loan facilities�
In the opinion of the directors, the ability of the
consolidated entity to continue as a going concern and
pay its debts as and when they fall due and payable is
dependent upon:
The successful negotiation of the extension of the
maturity date of the $750,000 in convertible notes
that have not yet agreed to an extension of the
maturity date to 30 September 2024, with an option
to extend by an additional 6 months;
The ability of the Company to secure additional
funding of between $3,000,000 and $6,000,000 from
existing or new shareholders to fund the working
capital requirements of the consolidated entity until
the completion of the testing and enhancement
of the technology, dependent on the deferral
of the maturity of the convertible notes beyond
30 April 2024� This may be through the issue of
additional convertible notes or other debt financing;
The successful completion of the current testing
phase of the technology during Q2 of 2024,
enabling the consolidated entity to demonstrate the
technology’s capabilities; and
Following completion of the testing and
enhancement of the technology and the
pre‑production process, the ability of the Company
to secure further funding required to fund the
consolidated entity as it gears up for production, and
to fund other working capital requirements�
If the consolidated entity is unable to achieve successful
outcomes in relation to the above matters, material
uncertainty would exist that may cast significant doubt as
to the ability of the consolidated entity to continue as a
going concern and therefore, it may be required to realise
its assets and extinguish its liabilities other than in the
normal course of business and at amounts different from
those stated in the financial report�
No adjustments have been made to the financial report
relating to the recoverability and classification of recorded
asset amounts or to the amounts and classification of
liabilities that might be necessary should the consolidated
entity not continue as a going concern�
24
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
1(e) Revenue Recognition
Interest revenue is recognised using the effective interest
rate method�
Recharged revenue is from the sublease of office space
to subtenants recognised on an accrual basis� Revenue is
invoiced monthly and receipts are within 30 days�
Government grants are assistance by the government
in the form of transfers of resources to the consolidated
entity in return for past or future compliance with certain
conditions relating to the operating activities of the
entity� Government grants include government assistance
where there are no conditions specifically relating to
the operating activities of the consolidated entity other
than the requirement to operate in certain regions or
industry sectors� Government grants relating to income
are recognised as income over the periods necessary to
match them with the related costs� Government grants
that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate
financial support to the consolidated entity with no future
related costs are recognised as income in the period in
which it becomes receivable� In 2023, the government
grants relate specifically to the Research and Development
tax incentive�
1(f) Financial assets
Classification
The consolidated entity classifies its financial assets in the
following measurement categories:
Those to be measured subsequently at fair value
(either through other comprehensive income, or
through profit or loss), and
Those to be measured at amortised cost�
The classification depends on the consolidated entity’s
business model for managing financial assets and the
contractual terms of the cash flows� For assets measured at
fair value, gains and losses will either be recorded in profit
or loss or other comprehensive income� For investments
in debt instruments, this will depend on the business
model in which the investment is held� For investments in
equity instruments that are not held for trading, this will
depend on whether the consolidated entity has made an
irrevocable election at the time of initial recognition to
account for the equity investment at fair value through
other comprehensive income� The consolidated entity
reclassifies debt investments when and only when its
business model for managing those assets changes�
Measurement
At initial recognition, the consolidated entity measures a
financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction
costs that are directly attributable to the acquisition of the
financial asset� Transaction costs of financial assets carried
at fair value through profit or loss are expensed in profit
or loss�
Debt instruments
Subsequent measurement of debt instruments depends
on the consolidated entity’s business model for managing
the asset and the cash flow characteristics of the asset�
There are two measurement categories into which the
consolidated entity classifies its debt instruments:
Amortised cost: Assets that are held for collection
of contractual cash flows where those cash flows
represent solely payments of principal and interest
are measured at amortised cost� A gain or loss on
a debt investment that is subsequently measured
at amortised cost and is not part of a hedging
relationship is recognised in profit or loss when the
asset is derecognised or impaired� Interest income
from these financial assets is included in finance
income using the effective interest rate method�
Fair value through profit or loss (FVPL): Assets that do
not meet the criteria for amortised cost or FVOCI are
measured at fair value through profit or loss� A gain
or loss on a debt investment that is subsequently
measured at fair value through profit or loss and is
not part of a hedging relationship is recognised in
profit or loss and presented net in the statement of
profit or loss within other gains/(losses) in the period
in which it arises� No such assets are currently held by
the consolidated entity�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
Equity instruments
The consolidated entity subsequently measures all equity
investments at fair value� Where the consolidated entity’s
management has elected to present fair value gains and
losses on equity investments in other comprehensive
income, there is no subsequent reclassification of fair
value gains and losses to profit or loss following the
derecognition of the investment� Dividends from such
investments continue to be recognised in profit or loss
as other income when the consolidated entity’s right to
receive payments is established� Impairment losses (and
reversal of impairment losses) on equity investments
measured at FVOCI are not reported separately from other
changes in fair value� Changes in the fair value of financial
assets at fair value through profit or loss are recognised
in other expenses in the statement of profit or loss
as applicable�
Impairment
The consolidated entity assesses on a forward looking
basis the expected credit losses associated with its debt
instruments carried at amortised cost and FVOCI� The
impairment methodology applied depends on whether
there has been a significant increase in credit risk� For
trade receivables, and lease receivables, the consolidated
entity applies the simplified approach permitted by
AASB 9, which requires expected lifetime losses to be
recognised from initial recognition of the receivables�
1(g) Financial Liabilities
Financial Liabilities
Financial liabilities are recognised in the consolidated
entity’s statement of financial position when the
consolidated entity becomes a party to the contractual
provisions of the instrument�
Financial liabilities are initially measured at fair value�
Transaction costs that are directly attributable to the
acquisition or issue of financial liabilities (other than
financial liabilities at fair value through profit or loss) are
added to or deducted from the fair value of the financial
liabilities, as appropriate, on initial recognition� Transaction
costs directly attributable to the acquisition of financial
liabilities at fair value through profit or loss are recognised
immediately in profit or loss�
All financial liabilities are measured subsequently at
amortised cost using the effective interest method or
at FVTPL�
Financial liabilities that are not (i) contingent consideration
of an acquirer in a business combination, (ii) held‑for
trading, or (iii) designated as at FVTPL, are measured
subsequently at amortised cost using the effective
interest rate method� The unsecured loans are held at
amortised cost�
The effective interest rate method is a method of
calculating the amortised cost of a financial liability and
of allocating interest expense over the relevant period�
The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees and
points paid or received that form an integral part of
the effective interest rate, transaction costs and other
premiums or discounts) through the expected life of the
financial liability, or (where appropriate) a shorter period,
to the amortised cost of a financial liability�
Derecognition of financial liabilities
The consolidated entity derecognises financial liabilities
when, and only when, the consolidated entity’s
obligations are discharged, cancelled or have expired� The
difference between the carrying amount of the financial
liability derecognised and the consideration paid or
payable is recognised in the profit and loss�
When the consolidated entity exchanges with the existing
lender one debt instrument into another one with
substantially different terms, such exchange is accounted
for as an extinguishment of the original financial
liability and the recognition of a new financial liability�
Similarly, the consolidated entity accounts for substantial
modification of terms of an existing liability or part of it
as an extinguishment of the original financial liability and
the recognition of a new liability� It is assumed that the
terms are substantially different if the discounted present
value of the cash flows under the new terms, including
any fees paid net of any fees received and discounted
using the original effective interest rate is at least 10 per
cent different from the discounted present value of the
remaining cash flows of the original financial liability� If the
modification is not substantial, the difference between:
(1) the carrying amount of the liability before the
modification; and (2) the present value of the cash flows
after modification is recognised in profit or loss as the
modification gain or loss within other gains and losses�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
1(h) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash
in banks and investments in money market instruments
maturing within less than 3 months at the date of
acquisition, net of outstanding bank overdrafts�
1(i) employee benefits
Provision is made for benefits accruing to employees
in respect of wages and salaries, annual leave, and long
service leave when it is probable that settlement will be
required and they are capable of being measured reliably�
1(k) Goods and services tax
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
i� where the amount of GST incurred is not recoverable
from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item
of expense; or
ii�
for receivables and payables which are recognised
inclusive of GST�
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables�
Cash flows are included in the Statement of Cash Flows
on a gross basis� The GST component of cash flows
arising from investing and financing activities which is
recoverable from, or payable to, the taxation authority is
classified as operating cash flows�
Provisions made in respect of short term employee benefits
are measured at their nominal values using the remuneration
rate expected to apply at the time of settlement�
1(l) Goodwill
Provisions made in respect of long term employee
benefits are measured as the present value of the
estimated future cash outflows to be made by the
consolidated entity in respect of services provided by
employees up to the reporting date�
Defined contribution plans ‑ Contributions to defined
contribution superannuation plans are expensed
when incurred�
1(j) Foreign currency
Foreign currency transactions
All foreign currency transactions during the financial year
are brought to account using the exchange rate in effect
at the date of the transaction� Foreign currency monetary
items at reporting date are translated at the exchange
rate existing at reporting date� Non‑monetary assets and
liabilities carried at historic cost that are denominated in
foreign currencies are translated using historic rates�
Exchange differences are recognised in profit and loss in
the period they arise�
Foreign operations
On consolidation, the assets and liabilities of the
consolidated entity’s overseas operations are translated at
exchange rates prevailing at the reporting date� Income and
expense items are translated at the average exchange rates
for the period unless exchange rates fluctuate significantly�
Exchange differences arising, if any, are recognised in the
foreign currency translation reserve, and recognised in
profit and loss on disposal of the foreign operation�
Goodwill arising in a business combination is recognised
as an asset at the date that control is acquired (the
acquisition date)� Goodwill is measured as the excess of the
sum of the consideration transferred, the amount of any
non‑controlling interests in the acquire, and the fair value of
the acquirer’s previously held equity interest in the acquire
(if any) over the net of the acquisition‑date amounts of the
identifiable assets acquired and the liabilities assumed�
If, after reassessment, the consolidated entity’s interest
in the fair value of the acquiree’s identifiable net assets
exceeds the sum of the consideration transferred, the
amount of any non‑controlling interests in the acquiree
and the fair value of the acquirer’s previously held equity
interest in the acquire (if any), the excess is recognised
immediately in profit or loss as a bargain purchase gain�
Goodwill is not amortised but is reviewed for impairment
at least annually� For the purpose of goodwill impairment
testing, there was one cash‑generating unit, relating to
the digital speakers segment� The cash‑generating unit is
tested for impairment annually� If the recoverable amount
of the cash‑generating unit is less than its carrying
amount, the impairment loss is allocated first to reduce
the carrying amount of any goodwill allocated to the unit
and then to the other assets of the unit pro‑rata on the
basis of the carrying amount of each asset in the unit� An
impairment loss recognised for goodwill is not reversed in
a subsequent period�
During the year, the goodwill and intangible balance were
written off� The directors made the assessment that these
balances related to the original technology that has been
superseded by the developments made since� As a result,
the goodwill was attributable to the original technology
and is not considered to represent the product that has
now been created�
On disposal of a subsidiary, the attributable amount of
goodwill is included in the determination of the profit or
loss on disposal�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
1(m) Impairment of assets
At each reporting date, the entity reviews the carrying
amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have
suffered an impairment loss� If any such indication exists,
the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any)�
Where the asset does not generate cash flows that are
independent from other assets, the entity estimates the
recoverable amount of the cash‑generating unit to which
the asset belongs�
If the recoverable amount of an asset (or cash‑generating
unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (cash‑generating unit) is
reduced to its recoverable amount� An impairment loss is
recognised in profit or loss immediately�
Where an impairment loss subsequently reverses, the
carrying amount of the asset (cash‑generating unit)
is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would
have been determined had no impairment loss been
recognised for the asset (cash‑generating unit) in prior
years� A reversal of an impairment loss is recognised in
profit or loss immediately�
The recoverable amount of the intangible asset was
assessed during the year with the balance impaired and
written off for the same reasons as outlined in Note 1(l)�
1(n) Income tax
Current tax
Current tax is calculated by reference to the amount of
income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period� It is calculated
using tax rates and tax laws that have been enacted or
substantively enacted by reporting date� Current tax for
current and prior periods is recognised as a liability (or
asset) to the extent that it is unpaid (or refundable)�
Deferred tax
Deferred tax is recognised on temporary differences
between the carrying amount of assets and liabilities in
the financial statements and the corresponding tax base
of those items�
In principle, deferred tax liabilities are recognised for
all taxable temporary differences� Deferred tax assets
are recognised to the extent that it is probable that
sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses
and tax offsets can be utilised� However, deferred tax
assets and liabilities are not recognised if the temporary
differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result
of business combination) which affects neither taxable
income nor accounting profit�
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period(s) when
the assets and liability giving rise to them are realised or
settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by reporting date�
The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from
the manner in which the entity expects, at the reporting
date, to recover or settle the carrying amount of its assets
and liabilities�
Deferred tax assets and liabilities are offset when they
relate to income taxes levied by the same taxation
authority and the company intends to settles its current
tax assets and liabilities on a net basis�
Current and deferred tax is recognised as an expense or
income in profit or loss, except when it relates to items
credited or debited directly to equity, in which case
the deferred tax is also recognised directly in equity, or
where it arises from the initial accounting for a business
combination, in which case it is taken into account in the
determination of goodwill or excess�
1(o) Intangible assets
Intangible assets acquired in a business
combination
Intangible assets acquired in a business combination are
identified and recognised separately from goodwill where
they satisfy the definition of an intangible asset and their
fair value can be measured reliably� Subsequent to initial
recognition, intangible assets acquired in a business
combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the
same basis as intangible assets acquired separately� The
intangible asset acquired is written off on a straight line
basis� Expenditure on research activities is recognised as
an expense in the period in which it is incurred�
The recoverable amount of the intangible asset was
assessed during the year with the balance impaired and
written off for the same reasons as outlined in Note 1(l)�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
The consolidated entity remeasures the lease liability
(and makes a corresponding adjustment to the related
right‑of‑use asset) whenever:
1(p) Leases
The consolidated entity assesses whether a contract
is or contains a lease, at inception of a contract� The
consolidated entity recognises a right‑of‑use asset and
a corresponding lease liability with respect to all lease
agreements in which it is the lessee, except for short‑term
leases (defined as leases with a lease term of 12 months
or less) and leases of low value assets� For these leases,
the consolidated entity recognises the lease payments
as an operating expense on a straight‑line basis over the
term of the lease unless another systematic basis is more
representative of the time pattern in which economic
benefits from the leased asset are consumed�
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted by using the rate
implicit in the lease� If this rate cannot be readily
determined, the consolidated entity uses its incremental
borrowing rate�
Lease payments included in the measurement of the lease
liability comprise:
fixed lease payments (including in‑substance fixed
payments), less any lease incentives;
variable lease payments that depend on an index or
rate, initially measured using the index or rate at the
commencement date;
the amount expected to be payable by the lessee
under residual value guarantees;
the exercise price of purchase options, if the lessee is
reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if
the lease term reflects the exercise of an option to
terminate the lease�
The lease liability is presented as a separate line in the
consolidated statement of financial position�
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the
carrying amount to reflect the lease payments made�
the lease term has changed or there is a change in
the assessment of exercise of a purchase option,
in which case the lease liability is remeasured by
discounting the revised lease payments using a
revised discount rate�
the lease payments change due to changes in an
index or rate or a change in expected payment under
a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised
lease payments using the initial discount rate (unless
the lease payments change is due to a change in a
floating interest rate, in which case a revised discount
rate is used)�
a lease contract is modified and the lease
modification is not accounted for as a separate
lease, in which case the lease liability is remeasured
by discounting the revised lease payments using a
revised discount rate�
The right‑of‑use assets comprise the initial measurement
of the corresponding lease liability, lease payments made
at or before the commencement day and any initial
direct costs� They are subsequently measured at cost less
accumulated depreciation and impairment losses�
Whenever the consolidated entity incurs an obligation for
costs to dismantle and remove a leased asset, restore the
site on which it is located or restore the underlying asset
to the condition required by the terms and conditions
of the lease, a provision is recognised and measured
under AASB 137� The costs are included in the related
right‑of‑use asset, unless those costs are incurred to
produce inventories�
Right‑of‑use assets are depreciated over the shorter period
of lease term and useful life of the underlying asset� If a
lease transfers ownership of the underlying asset or the
cost of the right‑of‑use asset reflects that the consolidated
entity expects to exercise a purchase option, the related
right‑of‑use asset is depreciated over the useful life
of the underlying asset� The depreciation starts at the
commencement date of the lease�
The right‑of‑use assets are presented as a separate line in
the consolidated statement of financial position�
The consolidated entity applies AASB 136 Impairment
of Assets to determine whether a right‑of‑use asset is
impaired and accounts for any identified impairment loss
per the accounting policy disclosed in note 1(m)�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
Variable rents that do not depend on an index or rate
are not included in the measurement the lease liability
and the right‑of‑use asset� The related payments are
recognised as an expense in the period in which the event
or condition that triggers those payments occurs and
are included in the line “administrative expenses” in the
statement of profit or loss�
As a practical expedient, AASB 16 permits a lessee not
to separate non‑lease components, and instead account
for any lease and associated non‑lease components as a
single arrangement� The consolidated entity has not used
this practical expedient�
The following estimated useful lives are used in the
calculation of depreciation:
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above�
Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases when
the Company loses control of the subsidiary� Specifically,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated
statement of profit or loss and other comprehensive
income from the date the Company gains control until the
date when the Company ceases to control the subsidiary�
All intragroup assets and liabilities, equity, expenses and
cash flows relating to transactions between members
of the consolidated entity are eliminated in full on
consolidation�
1(s) Property, plant and equipment
Office premises
Motor vehicle
1(q) Provisions
4 years
3 years
Property, plant and equipment are stated at cost
less accumulated depreciation and accumulated
impairment losses�
Depreciation is recognised so as to write off the cost or
valuation of assets less their residual values over their
useful lives, using the straight‑line method� The estimated
useful lives, residual values and depreciation method are
reviewed at each year end, with the effect of any changes
in estimate accounted for on a prospective basis�
Assets and disposal groups are classified as held for sale
if their carrying amount will be recovered principally
through a sale transaction rather than through continuing
use� This condition is regarded as met only when the sale
is highly probable and the non‑current asset (or disposal
group) is available for immediate sales in the present
condition� Management must be committed to the sale,
which should be expected to qualify as a completed
sale within one year from the date of classification�
Non‑current assets (and disposal groups) classified as
held for sale are measured at the lower of their previous
carrying amount and fair value less costs to sell� The
following estimated useful lives are used in the calculation
of depreciation:
Computers and related equipment
5 to 15 years
Leasehold improvements
3 to 4 years
Office furniture and equipment
5 to 15 years
Depreciation in relation to right‑of‑use‑assets is outlined
in Note 1(p)�
Provisions are recognised when the entity has a present
obligation as a result of a past event, the future sacrifice
of economic benefits is probable, and the amount of the
provision can be measured reliably�
When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it
is virtually certain that recovery will be received and the
amount of the receivable can be measured reliably�
The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation, taking into account the risks and uncertainties
surrounding the obligation� Where a provision is measured
using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of
those cash flows�
1(r) Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and entities controlled
by the Company� Control is achieved when the Company:
Has power over the investee;
Is exposed, or has rights, to variable returns from its
involvement with the investee; and
Has the ability to use its power to affect its returns�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
1(t) share based payments
Equity‑settled share‑based payments are measured at
fair value at the date of the grant� Fair value is measured
by use of a Black‑Scholes Option Pricing model� The
expected life used in the model has been adjusted,
based on management best estimates, for the effects of
non‑transferability, exercise restrictions and behavioural
considerations� The fair value determined at the grant date
of the equity‑settled share based payments is expensed
on a straight‑line basis over the vesting period, based
on the consolidated entity’s estimate of shares that will
eventually vest�
1(u) Critical accounting judgements
In the application of the consolidated entity’s accounting
policies, management is required to make judgements,
estimates and assumptions about carrying values of
assets and liabilities that are not readily apparent from
other sources� The estimates and associated assumptions
are based on historical experience and various other
factors that are believed to be reasonable under the
circumstance, the results of which form the basis of
making these judgements� Actual results may differ from
these estimates�
The estimates and underlying assumptions are reviewed
on an ongoing basis� Revisions to accounting estimates
are recognised in the period in which the estimate is
revised if the revision affects only that period, or in the
period of the revision and future periods if the revision
affects both current and future periods�
Key sources of estimation uncertainty
The following are the key assumptions concerning the
future, and other key sources of estimation uncertainty
at the balance sheet date, that have a significant risk of
causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year:
Intangible asset/Goodwill
The directors made a critical judgement in relation certain
assumptions used in the impairment model used to test
the value of the intangible asset included in Note 9 and
the impairment model used in assessing the carrying
amount of the goodwill (see Note 8) for impairment�
In the current reporting period, the goodwill and
intangible balance were written off� The directors made
the assessment that these balances related to the original
technology were above the recoverable values due to the
old technology being superseded by the developments
made since� As a result, the goodwill that was attributable
to the original technology is not considered to represent
the new technology and IP that has now been developed�
Deferred tax
The directors made a critical judgement in relation to
not recognising the deferred tax balances described in
Note 3(a)� Given the current stage of development, the
directors do not currently consider it’s probable that
sufficient taxable amounts will be available against which
deductible temporary differences can be utilised�
Functional Currency
The directors made a critical judgement in relation to
the functional currency of Audio Pixels Holdings Limited
taking into account the activities of the consolidated
entity� The directors consider AUD to be the appropriate
functional currency, as financing activities are of most
relevance to the current year and these occur in AUD�
Investment in subsidiary and intercompany
receivable
The directors made a critical judgement in relation to
the recoverability of the investment in subsidiary ‑ Audio
Pixels Limited and the receivable from this subsidiary� The
loan is denominated in US$ and was US$38,439,000 at
31 December 2023� The assessment of the recoverability
of these assets is considered concurrently with the
recoverability of the intangible asset/goodwill, and the
directors are of the view that the for the same reasons
as outlined in note 8, this loan balance be written off
during the reporting period� On commercialisation of
Audio Pixels Limited’s technology, this intercompany loan
recoverability will be re‑assessed� As such, the loan is
not treated part of the Company’s net investment in the
subsidiary and translation of the loan balance from USD to
AUD is through the profit and loss�
Research & Development refundable
taxation offset
The directors have calculated the estimated refundable
offset in respect of eligible research & development
expenditure incurred during the year ended
31 December 2023� An amount of $253,449 has been
recorded as other receivables and revenue in the year
ended 31 December 2023 (2022: $196,572)� Post year end,
the claim will be submitted� The Directors consider that
the entity has complied with the conditions of the R & D
scheme and as such the grant will be received once the
claim is submitted�
31
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
1. Summary of Material
Accounting Policies (Cont.)
Convertible note and option Valuation
The convertible notes and associated options were
externally valued during the reporting period� These
valuations involved a number of estimates used in the
valuation models, including the risk free interest rate
and share volatility� The risk free interest rate is estimated
based on the comparable yield on Commonwealth
Bonds matching the assumed life of the convertible
note and options� The share volatility is based on the
historical volatility of the consolidated entity’s shares
and comparable entities� These valuation estimates
can change over time, impacting the valuations of the
convertible notes and options�
The convertible note valuations at the end of the
reporting period included estimates of the risk free
interest rate of 4% and share volatility 60%�
At recognition date the value adopted for the debt portion
of the convertible note was calculated with reference to the
transaction price of the convertible note, and the fair value
of the embedded conversion option and other financial
instruments issued in conjunction with the convertible
note� As the fair value of the note exceeds the transaction
price on day 1, this generated a loss on initial recognition of
$2,678,000, which was expensed in the period�
During the period, the term on certain convertible notes
were modified and the modification was determined not
to be substantial based on the change in net present
value of the modified debt based on the original effective
interest rate� The modification was an extension of the
existing debt liability as opposed to the creation of a new
liability� As the modification was not deemed substantial,
there was no requirement to derecognise the original
convertible notes and the re‑recognition of the modified
notes at fair value� The associated gain was calculated
using the valuation inputs of the other convertibles notes
issued at that time as a key input�
The options were valued at the end of the reporting period
using the Black‑Scholes options pricing model using a risk
free interest rate of 4% and share volatility of 60%�
32
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
2. (Loss) from operations
(a) Revenue
Interest received ‑ other entities
Recharge rental income
Government grant ‑ R & D tax incentive
Total revenue
(b) expenses
Amortisation
Depreciation of property, plant and equipment
Depreciation of right‑of‑use assets
Interest expense
Employee benefits expense:
Salary and other employee benefits
Share based payments
Superannuation
Consolidated
Year ended
31 December
2023
$
Consolidated
Year ended
31 December
2022
$
12,521
20,854
253,449
286,824
44,139
183,217
205,701
4,373,002
6,823
119,655
356,363
482,841
84,267
140,197
236,791
190,491
2,710,730
2,648,721
507,093
40,728
304,097
38,634
3,258,551
2,991,452
33
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
3. Income taxes
(a) Income tax recognised in profit or loss
The Company is in a loss‑making position and therefore does not pay income tax in both Australia and Israel� Therefore
income tax payable is nil (2022: nil)�
During 2023, a government grant of $196,572 in the form of a refundable tax offset was received as part of the government
initiative to provide financial support as a result of expenditure of eligible research and development expenditure in
Australia for the year ended 31 December 2022 and an estimated grant of $253,449 in relation to eligible expenditure
incurred during the year ended 31 December 2023 has been recognised� There are no future related costs in respect of
these grants which were received solely as compensation for costs incurred in the year�
The Company does not recognise any deferred tax assets on balance sheet as management does not believe that there
will be sufficient taxable profits in the foreseeable future that deferred tax assets can be utilised against� The amount of
unrecognised deferred tax assets at reporting date is $14,159,558 (2022: $11,594,514)� $3,742,763 (2022: $2,228,746) of
these unrecognised deferred tax relate to the parent company in Australia and $10,417,132 (2022: $9,365,765) relate to the
subsidiary in Israel� These unrecognised deferred tax assets are able to be carried forward indefinitely�
A corporate tax rate of 30% is payable by Australian corporate entities on taxable profits under Australian tax law and
23% (2022:23%) under Israeli law� There has been no change in the corporate tax rate when compared with the previous
reporting period�
(b) Israeli tax Ruling
On July 16th 2012 a Tax Ruling was issued by the Israeli Tax Authorities (ITA) under which the ITA confirmed that the Merger
carried out between Audio Pixels Ltd, a private Israeli company (P�C 513853606) and Audio Pixels Holdings Limited, a public
Australian company, complied with the conditions stipulated in Section 103T of the Israeli Ordinance� Consequently, the
transfer of the rights by the transferring rights holders in exchange for the issuance of shares in the Australian company is
not taxable at the date of the Merger pursuant to the provisions of Section 103T of the Israeli Ordinance�
34
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
4. Remuneration of auditors
Deloitte and related network firms*
Audit or review of the financial reports
‑ Group
‑ Subsidiary
Statutory assurance services provided by legislation to be provided by the auditor
31 December
2023
$
31 December
2022
$
184,968
87,950
272,918
72,250
52,140
124,390
Statutory assurance services required by legislation to be provided by the auditor
6,000
5,523
Other services
‑ Taxation consulting service
*The auditor of Audio Pixels Holdings Limited is Deloitte Touche Tohmatsu (“Deloitte Australia”)�
5. Cash and cash equivalents
Unrestricted cash
Restricted cash (non‑interest bearing)
Cash on hand and at bank
6. Trade and other receivables
Current
GST receivable
Other receivables
Non Current
Other receivables
Other receivables comprise security deposits with government bodies and the
Research & Development refundable offset estimated receivable�
16,500
16,500
295,418
36,045
36,045
165,958
31 December
2023
$
31 December
2022
$
2,217,708
1,278,830
61,343
61,131
2,279,051
1,339,961
31 December
2023
$
31 December
2022
$
11,496
324,860
336,356
13,547
246,827
260,374
12,771
9,180
35
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
7. Prepayments
Prepayments other
Prepayments in respect of pre‑production chips
8. Goodwill
Being goodwill acquired on the acquisition of Audio Pixels Limited� The goodwill
is allocated to the cash generating unit of digital speakers by Audio Pixels Limited
of Israel�
Balance at 1 January
Net foreign currency exchange
Less Goodwill impairment
Balance at 31 December
31 December
2023
$
31 December
2022
$
32,845
586,854
619,699
‑
586,854
586,854
31 December
2023
$
31 December
2022
$
2,371,014
2,371,014
2,371,014
2,289,128
28,154
(2,399,168)
81,886
‑
‑
2,371,014
Movements in the value of the goodwill are a result of the retranslation of the goodwill from the functional currency of the
cash generating unit to which it is attributed�
In the current reporting period, the goodwill and intangible balance were written off� The directors made the assessment
that these balances related to the original technology that has been superseded by the developments made since� As a
result, the goodwill was attributable to the original technology and is not considered to represent the product that has now
been created�
9. Intangible asset
Being the independent valuation of In Process Research determined at the
acquisition date of 24 September 2010 by Ernst & Young, Israel in their report dated
17 August 2011�
Exchange differences on translation
Less accumulated amortisation
Less impairment
Balance at 31 December
31 December
2023
$
31 December
2022
$
868,000
159,009
(916,323)
(110,686)
868,000
200,141
(916,323)
‑
‑
151,818
The recoverable amount of the intangible asset was assessed during the reporting period with the balance impaired and
written off for the same reasons as outlined in Note 8�
36
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
10. Right of use assets
Office premises ‑ at cost
Less accumulated depreciation
Motor vehicle ‑ at cost
Less accumulated depreciation
Total net book value of Right of use assets
Cost
Office premises
Balance at 1 January
Additions
Disposals
Net foreign currency exchange differences
Balance as at 31 December
Cost
Motor Vehicles
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
Accumulated depreciation
Office premises
Balance as at 1 January
Net foreign currency exchange differences
Disposal
Depreciation expense
Balance at 31 December
31 December
2023
$
31 December
2022
$
950,614
(878,781)
71,833
128,043
(48,446)
79,597
151,430
778,223
172,348
‑
43
950,614
46,467
81,546
30
128,043
778,223
(698,628)
75,595
46,467
(22,900)
23,567
103,162
1,209,833
‑
(479,304)
47,694
778,223
43,619
‑
2,848
46,467
(698,628)
(918,978)
‑
‑
(180,153)
(878,781)
(37,161)
479,304
(221,793)
(698,628)
37
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
10. Right of use assets (Cont.)
Accumulated depreciation (cont)
Motor vehicle
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
31 December
2023
$
31 December
2022
$
(22,900)
‑
(25,546)
(48,446)
(6,957)
(945)
(14,998)
(22,900)
On 1 June 2018, the parent company exercised an option to renew a lease in respect of office premises at Suite 3, Level 12,
75 Elizabeth Street Sydney for a period of forty‑eight months from 31 March 2018 to 30 March 2022� The lease expired
on 30 March 2022 and has not been renewed� The Company continues renting on a month to month arrangement post
30 March 2022�
On 1 January 2019, the subsidiary company, Audio Pixels Limited exercised an option to renew a lease in respect of
facilities at 3 Pekris Street Rehovot, Israel for a period of twenty‑eight months to 31 May 2021� Effective on 1 June 2021,
the subsidiary company, Audio Pixels Limited exercised an option to renew a lease in respect of facilities at 3 Pekris Street
Rehovot, Israel for a period of twenty‑four months to 31 May 2023� This lease was extended on 31 May 2023 for a twelve
month period until 31 May 2024�
On 8 August 2021, the subsidiary company, Audio Pixels Limited entered into a new car lease for a period of thirty‑six
months until 7 August 2024�
On 31 May 2024, the subsidiary company, Audio Pixels Limited entered into a new car lease for a period of thirty‑six months
until 31 May 2026�
On 22 October 2023, the subsidiary company, Audio Pixels Limited entered into a new car lease for a period of thirty‑six
months until 21 October 2026�
Amounts recognised in profit and loss
Depreciation expense on right of use assets
Interest expense on lease liabilities
Expense relating to short term leases
205,701
11,500
157,350
237,791
8,705
108,713
The total cash outflow for leases amount to $197,065 including interest payments of $11,500 (Year ended
31 December 2022 $234,198)�
38
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
11. Property, Plant and Equipment
Computers and related equipment ‑ at cost
Less accumulated depreciation
Leasehold improvements ‑ at cost
Less accumulated depreciation
Office furniture and equipment ‑ at cost
Less accumulated depreciation
31 December
2023
$
31 December
2022
$
959,939
(665,925)
294,014
378,688
(307,307)
71,381
689,197
(582,614)
106,583
378,466
(293,256)
85,210
1,631,823
1,602,009
(1,383,065)
(1,302,862)
248,758
299,147
Total net book value of Property, Plant and Equipment
614,153
490,940
Cost
Computers and related equipment
Balance at 1 January
Additions
Disposals
Net foreign currency exchange differences
Balance as at 31 December
Leasehold improvements
Balance at 1 January
Additions
Net foreign currency exchange differences
Balance as at 31 December
689,197
279,487
(9,230)
485
959,939
378,466
‑
222
378,688
557,823
92,816
(868)
39,426
689,197
354,269
1,033
23,164
378,466
39
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
11. Property, Plant and Equipment (Cont.)
31 December
2023
$
31 December
2022
$
1,602,009
1,475,731
28,861
‑
953
30,957
(1,975)
97,296
1,631,823
1,602,009
(582,614)
(366)
6,987
(89,932)
(665,925)
(502,232)
(34,297)
868
(46,953)
(582,614)
(293,256)
(262,354)
(176)
(13,875)
(307,307)
(17,565)
(13,337)
(293,256)
(1,302,862)
(1,146,491)
(793)
‑
(79,410)
(77,433)
969
(79,907)
(1,383,065)
(1,302,862)
Office furniture and equipment
Balance at 1 January
Additions
Disposals
Net foreign currency exchange differences
Balance as at 31 December
Accumulated depreciation
Computers and related equipment ‑ at cost
Balance as at 1 January
Net foreign currency exchange differences
Disposal
Depreciation expense
Balance at 31 December
Leasehold improvements
Balance as at 1 January
Net foreign currency exchange differences
Depreciation expense
Balance at 31 December
Office furniture and equipment
Balance as at 1 January
Net foreign currency exchange differences
Disposal
Depreciation expense
Balance at 31 December
40
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
12. Trade and other payables
Current
31 December
2023
$
31 December
2022
$
Trade payables and accruals
1,748,977
1,490,454
The payables are non‑interest bearing and have an average credit period of 30 days�
13. Lease liabilities
Analysed as:
Current
Non‑Current
Disclosure required by AASB 16
Maturity Analysis
Year 1
Year 2
Year 3
Less: interest payable
31 December
2023
$
31 December
2022
$
111,286
45,051
156,337
111,286
73,233
9,145
(37,327)
156,337
91,155
8,322
99,477
91,155
13,365
‑
(5,043)
99,477
The consolidated entity does not face a significant liquidity risk with regard to its lease liabilities� All lease obligations in
Australia are denominated in Australian dollars and the leases in Israel are denominated in Israeli shekels�
41
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
14. Unsecured loans
Related party ‑ director
31 December
2023
$
31 December
2022
$
2,469,988
3,285,000
Shareholder approval for the conversion of part of the unsecured loans of $2,315,012 into 165,358 ordinary shares was
granted at the Annual General Meeting held on Tuesday 30 May 2023� This reduced the original loan balance outstanding
with 4F Investments Pty Limited (a company associated with the Chairman Fred Bart) to $969,988�
4F Investments Pty Limited agreed to provide an additional unsecured funding facility of up to $1,500,000 on
28 March 2023 at an interest rate of 12% per annum, repayable on completion of the next capital raising� 4F Investments
Pty Limited advanced $150,000 on 27 February 2023, $100,000 on 16 March 2023, $500,000 on 28 March 2023, $500,000 on
26 April 2023 and $250,000 on 25 September 2023 amounting to $1,500,000�
This new facility of $1,500,000 is in addition to the original unsecured loan balance of $969,988 which was originally at 6%
interest� As a result of the extended delays in receiving the Earth Mountain placement proceeds of US$3m ($4,316,550),
the interest rate on the original unsecured loan has been increased to 12% per annum from 1 March 2023 as part of the
agreement to provide the new loan facility� This interest rate is better than other offers of unsecured loans and convertible
notes received from other unrelated parties�
The total unsecured loans outstanding at 31 December 2023 from 4F Investments Pty Limited was $2,469,988� The
outstanding unsecured loan attracts an interest rate of 12% per annum (payable quarterly in arrears)�
As an incentive to the provision of this additional facility of $1,500,000 and the continuation of the existing unsecured loans
of $969,988 (whilst waiting for the Earth Mountain placement proceeds of US$3m to settle $969,988 in cash), the Company
has provided an incentive of 500,000 unlisted options in the company to 4F Investments Pty Limited� The exercise price of
these options is the 5‑day VWAP when the first $150,000 was advanced on 27 February 2023 which equates to an exercise
price of $7�59 for a term of 3 years� These options received shareholder approval at the Annual General Meeting held on
Tuesday 30 May 2023� These options were issued and vested immediately after shareholder approval was received, as they
only relate to the loan facility and are not employment related� Included in the condensed statement of consolidated
profit and loss and other comprehensive income for the 12 month period, is a financing expense of $3,355,000, which is
attributable to the issue of these options being treated as a transaction cost related to the unsecured financing facility�
42
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
15. Convertible notes
Borrowings ‑ Convertible notes
Carrying amount at start of period
Face value of notes issued
Convertible notes conversion feature on issue
Value of options issued taken to equity settled share option reserve
Add ‑ accrued interest expense
Add ‑ Loss on initial recognition of convertible notes
Less ‑ Net gain arising on the modification of convertible notes
Current Liability at end of period
Derivative liability
Carrying value at start of the period
Fair value of the convertible note feature at issue
Fair value movement to the end of the reporting period
Derivative liability
Total borrowings
Face value of convertible notes
31 December
2023
$
31 December
2022
$
‑
5,000,000
(655,000)
(2,678,000)
1,667,000
456,272
2,678,000
(162,235)
4,639,037
‑
655,000
(373,000)
282,000
4,921,037
5,000,000
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
On 25 May 2023, the Company announced it had issued 5 Convertible Notes amounting to $2,500,000 to existing
sophisticated shareholders�
These Convertible Notes mature on 30 April 2024, are unsecured, unlisted and attract an interest rate of 12% per annum
payable quarterly in arrears and convertible into ordinary shares at $9�04, based on the five‑day volume weighted average
share price of Audio Pixels Holdings Limited on the date of the agreement, unless a share capital raise is undertaken at a
lower price�
43
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
15. Convertible notes (Cont.)
The 5 investors also received a total of 500,000 unlisted options (100,000 options per A$500,000 invested) at a strike price
of 20% higher than the conversion price of $9�04, being $10�84� These unlisted options have a term of 3 years expiring on
4 May 2026�
On 27 October 2023, the Company issued a Convertible Note amounting to $500,000 to 4F Investments Pty Limited,
an entity associated with Fred Bart�
This Convertible Note matures on 30 April 2024, is unsecured, unlisted and attracts an interest rate of 12% per annum
payable quarterly in arrears and convertible into ordinary shares at $9�04, based on the same terms as the May 2023 notes
issued, unless a share capital raise is undertaken at a lower price�
4F Investments Pty Limited also received a total of 100,000 unlisted options (100,000 options per A$500,000 invested) at a
strike price of 20% higher than the conversion price of $9�04, being $10�84� These unlisted options have an expiry date of
4 May 2026�
On 27 October 2023, the Company issued 8 Convertible Notes amounting to $2,000,000 to sophisticated investors�
These Convertible Notes mature on 30 April 2024, are unsecured, unlisted and attract an interest rate of 12% per annum
payable quarterly in arrears and convertible into ordinary shares at $9�04, based on the same terms as the May 2023 notes
issued, unless a share capital raise is undertaken at a lower price�
The 8 investors also received a total of 400,000 unlisted options (100,000 options per A$500,000 invested) at a strike price
of 20% higher than the conversion price of $9�04, being $10�84� These unlisted options have a term of 3 years expiring on
4 May 2026�
See note 26 in relation to the extension of the maturity date for the convertible notes on issue�
44
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
16. Provisions
Current
Employee benefits
Non‑current
Employee benefits
17. Issued capital
Issued and paid up capital
Fully paid Ordinary Shares
Balance at the beginning of the financial year
Placements for cash at $14�00 per share
‑ 31 August 2022
‑ 29 December 2022
‑ 31 May 2023
Balance at the end of the financial year
Fully paid Ordinary Shares
Balance at the beginning of the financial year
Placements for cash at $14�00 per share
‑ 31 August 2022
‑ 29 December 2022
‑ 31 May 2023
31 December
2023
$
31 December
2022
$
311,578
276,250
17,478
13,915
31 December
2023
$
31 December
2022
$
77,752,597
73,092,487
‑
‑
2,315,013
3,183,441
1,476,669
‑
80,067,610
77,752,597
number
number
29,044,742
28,698,663
‑
‑
165,358
240,603
105,476
‑
Balance at the end of the financial year
29,210,100
29,044,742
Fully paid ordinary shares carry one vote per share and carry the rights to dividends�
45
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
18. Employee Share Option Plan
The consolidated entity has an ownership‑based compensation scheme for employees (including directors) of the
company� In accordance with the provisions of the scheme, as approved by shareholders at a previous annual general
meeting, employees with more than three months service with the company may be granted options to purchase ordinary
shares at exercise prices determined by the directors based on market prices at the time the issue of options were made�
Each share option converts to one ordinary share in Audio Pixels Holdings Limited� No amounts are paid or payable by
the recipient on receipt of the options� The options carry neither rights to dividends nor voting rights� Options may be
exercised at any time from the date of vesting to the date of expiry�
The number of options granted is determined by the directors and takes into account the company’s and individual
achievements against both qualitative and quantitative criteria�
On 13 January 2011, shareholders approved the adoption of an Employee Share Option Plan�
(a) Unlisted Options issued under the Employee Share Option Plan
2023
2022
Weighted
average
exercise price
$
19�82
16�20
‑
16�20
19�82
27�70
number
287,000
173,000
‑
(173,000)
287,000
101,260
number
295,000
165,000
‑
(173,000)
287,000
‑
Balance at the beginning of the financial
year (i)
Granted during the year (ii)
Exercised during the year (iii)
Lapsed during the year (iv)
Balance at the end of the financial year (v)
Exercisable at end of the year
(i) Balance at the beginning of the year
number
Grant date
expiry date
exercise Price
16/4/21
1/12/22
1/12/22
16/4/25
1/12/26
1/2/27
$27�70
$14�00
$14�00
Weighted
average
exercise price
$
22�60
14�00
‑
16�20
19�82
‑
Fair value at
grant date
$1,241,960
$124,800
$662,850
2023
2022
122,000
30,000
135,000
287,000
173,000
122,000
295,000
17/12/18
17/12/22*
16/4/21
16/4/25
16�20
27�70
$1,316,876
$1,241,960
Staff options carry no rights to dividends and no voting rights�
**The expiry date of the 173,000 options was extended by the Directors to 17 June 2022 and then 17 December 2022,
however these two extensions were not approved by the ASX and the options were subsequently cancelled effective
29 December 2022 and were never exercised� The Directors have re‑issued these 173,000 options with an exercise price of
$16�20 in June 2023, expiring 17 December 2023� These options subsequently lapsed on 17 December 2023�
46
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
18. Employee Share Option Plan (Cont.)
(ii) Granted during the year
2023
Staff options
2022
Staff options
Staff options
number
Grant date
expiry date
exercise Price
173,000
173,000
30,000
135,000
165,000
5/6/23
17/12/23
16�20
1/12/22
1/12/22
1/12/25
1/12/26
14�00
14�00
The following inputs were used in the model for the option grants made on 6 June 2023:
173,000 options
Dividend yield
Expected volatility (linearly interpolated)
Risk free interest rate
Expected life of options
Grant date share price
Exercise price
(iii) exercised during the year
There were no options exercised during the year�
(iv) Lapsed during the year
173,000 (31 December 2022 ‑ 173,000)�
Fair value at
grant date
$377,140
$377,140
$124,800
$662,850
$787,650
0�00%
55�00%
4�00%
194 days
$15�25
$16�20
The expiry date of the 173,000 options was extended by the Directors to 17 December 2022, however this extension
was not approved by the ASX and the options were cancelled effective 29 December 2022 and were never exercised�
The Directors re‑issued these 173,000 options with an exercise price of $16�20 on 6 June 2023, with an expiry date of
17 December 2023�
47
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
18. Employee Share Option Plan (Cont.)
(v) Balance at the end of the financial year
2023
Staff options
Staff options
Staff options
2022
Staff options
Staff options
Staff options
number
Grant date
expiry date
exercise Price
Fair value at
grant date
122,000
30,000
135,000
287,000
122,000
30,000
135,000
287,000
16/4/21
1/12/22
1/12/22
16/4/25*
1/12/26*
1/2/27*
$27�70
$14�00
$14�00
$1,241,960
$124,800
$662,850
16/4/21
1/12/22
1/12/22
16/4/25*
1/12/26*
1/2/27*
$27�70
$14�00
$14�00
$1,241,960
$124,800
$662,850
Staff options carry no rights to dividends and no voting rights�
*All options granted to staff have a vesting condition that the employee must be employed by the consolidated entity at
the time of vesting� These options start to vest after two years continuous employment on the basis of one twelfth of the
total number each month for a twelve month period�
The difference between the total fair value of the options issued during the financial year, at the date of issue, and the total
amount received from the employees (nil) is recognised in the financial statements over the vesting period as disclosed in
Note 17 to the financial statements�
48
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 The above equity‑settled option reserve relates to share options granted by the Company�
Minority acquisition reserve
Balance at the beginning of the financial year
(25,538,692)
Balance at end of financial year
(25,538,692)
Total Reserves
(18,958,038)
(25,538,692)
(25,538,692)
(25,497,374)
notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
19. Reserves
Foreign currency translation
Balance at the beginning of the financial year
Translation of foreign operations
Balance at end of financial year
Foreign currency translation
31 December
2023
$
31 December
2022
$
(6,344,109)
(3,358,413)
(756)
(2,985,696)
(6,344,865)
(6,344,109)
Exchange differences relating to the translation of the results and net assets of the consolidated entity’s foreign operations
from their functional currencies to the consolidated entity’s presentation currency (i�e� Australian dollars) are recognised
directly in other comprehensive income and accumulated in the foreign currency translation reserve� Exchange differences
previously accumulated in the foreign currency translation reserve are reclassified to profit and loss on the disposal of the
foreign operation�
Equity settled option reserve
Balance at the beginning of the financial year
Add share based payments in respect of options
Add recognition of share based payments to employees
Balance at end of financial year
The above equity‑settled option reserve relates to share options granted
by the Company�
Minority acquisition reserve
Balance at the beginning of the financial year
Balance at end of financial year
Total Reserves
6,385,427
6,032,999
507,093
6,081,330
‑
304,097
12,925,519
6,385,427
(25,538,692)
(25,538,692)
(25,538,692)
(25,538,692)
(18,958,038)
(25,497,374)
49
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
20. Accumulated losses
Balance at the beginning of the financial year
(Loss) for the year attributable to owners of the company
Balance at the end of the financial year
21. Notes to the statement of cash flows
(a) Reconciliation of cash and cash equivalents
31 December
2023
$
31 December
2022
$
(52,107,016)
(49,671,297)
(14,614,491)
(2,435,719)
(66,721,507)
(52,107,016)
For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial
institutions, investments in money market instruments maturing within less than 3 months at the date of acquisition� Cash
and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to the related
items in the statement of financial position as follows:
Cash and cash equivalents
(b) Restricted cash
2,279,051
1,339,961
Cash held as security for future lease payments
61,343
61,131
Restricted cash amounts are included in the cash and cash equivalents amounts above�
50
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
21. Notes to the statement of cash flows (Cont.)
Reconciliation of (loss) for the period to net cash outflows from operating activities
Loss after related income tax
Amortisation
Depreciation
Foreign exchange (gains)/ losses
Loss on sale of property, plant and equipment
Share based payments
Goodwill impairment
Intangible asset impairment
Gain of movement in fair value of derivative liability
Loss on initial recognition of financial liabilities measured at fair value
Gain on modification of convertible notes
Finance charges on convertible notes
Changes in assets and liabilities
(Increase)/ decrease in assets
Current trade and other receivables
Prepayments
Non‑current trade and other receivables
Increase /(decrease) in liabilities
Provisions
Current trade payables
31 December
2023
$
31 December
2022
$
(14,614,491)
(2,435,719)
44,139
388,918
(41,059)
2,243
3,862,093
2,399,168
110,686
(373,000)
2,678,000
(162,235)
456,272
84,267
376,988
(3,162,914)
1,006
304,097
‑
‑
‑
‑
‑
‑
(75,982)
(32,845)
(3,592)
(203,943)
(586,854)
(100)
38,621
258,522
19,960
(32,013)
Net cash (used in) operating activities
(5,064,542)
(5,635,225)
Reconciliation of liabilities arising from financing transactions
2023
Unsecured loans
Lease liabilities
2022
Unsecured loans
Lease liabilities
Balance as at
1 January
Cash
Movement
non Cash
Movement
Balance as at
31 December
3,285,000
1,500,000
(2,315,012)
2,469,988
99,477
(197,065)
253,925
156,337
Balance as at
1 January
1,400,000
333,675
Cash
Movement
1,885,000
(234,198)
non Cash
Movement
Balance as at
31 December
‑
‑
3,285,000
99,477
51
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
22. Related Party Transactions
(a) Directors
The Directors of Audio Pixels Holdings Limited in office during the year were Fred Bart, Ian Dennis (resigned 31 July 2023),
Cheryl Bart and Mark Ureda (appointed 31 July 2023)�
(b) KMP Remuneration
The aggregate compensation of the key management personnel of the company is set out below:
Short‑term employee benefits
Long term employee benefits
31 December
2023
$
31 December
2022
$
652,555
106,628
759,183
662,396
117,963
780,359
The remuneration above relates to directors fees, consultancy fees and superannuation paid to entities associated with
Fred Bart, Cheryl Bart and Ian Dennis and the remuneration of one senior executive of Audio Pixels Limited in Israel and one
senior executive of Audio Pixels Holdings Limited�
52
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
22. Related Party Transactions (Cont.)
transactions with related entities
During the year ended 31 December 2023, the Company paid a total of $109,456 (year ended
31 December 2022 ‑ $109,331) to 4F Investments Pty Limited, a company associated with Mr Fred Bart in respect of
directors fees and superannuation for Mr Fred Bart and Mrs Cheryl Bart�
During the year ended 31 December 2023, the Company paid a total of $24,188 (year ended 31 December 2022 ‑ $41,344)
to Dennis Corporate Services Pty Limited, a company associated with Mr Ian Dennis in respect of directors fees and
superannuation�
During the year ended 31 December 2023, the Company paid $20,000 (31 December 2022 ‑ $30,000) to Dennis Corporate
Services Pty Limited, a company associated with Mr Ian Dennis in respect of consulting fees for company secretarial and
accounting services�
During the year ended 31 December 2023, the Company paid $37,500 to Noxopharm Limited (a company that Fred
Bart is Chairman) associated with Mr Shawn van Boheemen in respect of consulting fees for company secretarial and
accounting services�
Shareholder approval for the conversion of part of the unsecured loans of $2,315,012 into 165,358 ordinary shares was
granted at the Annual General Meeting held on Tuesday 30 May 2023� This reduced the original loan balance outstanding
with 4F Investments Pty Limited (a company associated with the Chairman Fred Bart) to $969,988�
During the year, 4F Investments Pty Limited, a company associated with the Chairman, Mr Fred Bart, agreed to provide an
additional unsecured funding facility of up to $1,500,000 on 28 March 2023 at an interest rate of 12% per annum, repayable
on completion of the next capital raising� 4F Investments Pty Limited advanced $150,000 on 27 February 2023, $100,000
on 16 March 2023, $500,000 on 28 March 2023, $500,000 on 26 April 2023 and $250,000 on 25 September 2023 amounting
to $1,500,000�
This new facility of $1,500,000 is in addition to the existing unsecured loan balance of $969,988 which was originally at
6% interest� However, as a result of the extended delays in receiving the Earth Mountain placement proceeds of US$3m,
the interest rate has been increased to 12% per annum from 1 March 2023 as part of the agreement to provide the new
loan facility� This interest rate is better than other offers of unsecured loans and convertible notes received from other
unrelated parties�
The total unsecured loans outstanding at 31 December 2023 from 4F Investments Pty Limited was $2,469,988� The
outstanding unsecured loan attracts an interest rate of 12% per annum (payable quarterly in arrears)�
As an incentive to the provision of this additional facility of $1,500,000 and the continuation of the existing unsecured loans
of $969,988 (whilst waiting for the Earth Mountain placement proceeds of US$3m to settle $969,988 in cash), the Company
has provided an incentive of 500,000 unlisted options in the company to 4F Investments Pty Limited The exercise price of
these options is the 5‑day VWAP when the first $150,000 was advanced on 27 February 2023 which equates to an exercise
price of $7�59 for a term of 3 years� These options received shareholder approval at the Annual General Meeting held on
Tuesday 30 May 2023� These options were issued and vested immediately after shareholder approval was received, as they
only relate to the loan facility and are not employment related�
During the year, the company paid $135,673 (31 December 2022 ‑ $113,782) on the unsecured loan to
4F Investments Pty Limited� Interest has been accrued in the financial statements at 31 December 2023 of $74,709
(31 December 2022 ‑ $32,940) has been accrued in the financial statements�
The lease in respect of office premises at Suite 3, Level 12, 75 Elizabeth Street Sydney expired on 30 March 2022� The
Company has not renewed the lease and continues to occupy the premises on a month to month basis� The Company
recharged rent and other tenancy charges of $37,599 (year ended 31 December 2022 ‑ $42,871) to 4F Investments Pty
Limited, a company controlled by Fred Bart�
53
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
23. Earnings per Share
Basic (loss) per share
Diluted (loss) per share (b)
31 December
2023
31 December
2022
(50�15) cents
(8�46) cents
(50�15) cents
(8�46) cents
(Loss) (a)
(14,614,491)
(2,435,719)
Weighted average number of Ordinary Shares
29,141,692
28,779,662
(a)
(Loss) used in the calculation of basic earnings per share are the same as the net (loss) in the Statement of profit or loss
and other comprehensive income�
(b) There are potential ordinary shares to be issued in relation to the issue of 122,000 unlisted employee options issued on
16 April 2021 at an exercise price of $27�70� These options expire on 16 April 2025� The unlisted employee options have
not been included in dilutive EPS, as they are anti‑dilutive�
(c) There are potential ordinary shares to be issued in relation to the issue of 30,000 unlisted employee options issued on
1 December 2022 at an exercise price of $14�00� These options expire on 1 December 2026� The unlisted employee
options have not been included in dilutive EPS, as they are anti‑dilutive�
(d) There are potential ordinary shares to be issued in relation to the issue of 135,000 unlisted employee options issued
on 1 December 2022 at an exercise price of $14�00� These options expire on 1 December 2027� The unlisted employee
options have not been included in dilutive EPS, as they are anti‑dilutive�
(e) There are potential ordinary shares to be issued in relation to the issue of 500,000 unlisted options issued on
5 May 2023 at an exercise price of $7�59�
These options expire on 4 May 2026� The unlisted options have not been included in dilutive EPS, as they are
anti‑dilutive�
(f ) There are potential ordinary shares to be issued in relation to the issue of 500,000 unlisted options issued on
22 May 2023 at an exercise price of $10�84� These options expire on 4 May 2026� The unlisted options have not been
included in dilutive EPS, as they are anti‑dilutive�
(g) There are potential ordinary shares to be issued in relation to the issue of 100,000 unlisted options issued on
27 October 2023 at an exercise price of $10�84� These options expire on 4 May 2026� The unlisted options have not
been included in dilutive EPS, as they are anti‑dilutive�
(h) There are potential ordinary shares to be issued in relation to the issue of 400,000 unlisted options issued on
23 November 2023 at an exercise price of $10�84� These options expire on 4 May 2026� The unlisted options have not
been included in dilutive EPS, as they are anti‑dilutive�
54
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023
notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
24. Segment Information
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the consolidated
entity that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and
to assess performance�
The identification of the consolidated entity’s reportable segments has not changed from those disclosed in the previous
2022 report�
The consolidated entity operates in Australia and Israel�
Products and services within each segment
Digital speakers
The consolidated entity in Israel is developing a digital speaker and has not reached the stage of generating any revenue
from the technology�
Segment Revenues
Digital speakers
Total of all segments
Digital speakers
(Loss) before income tax
Income tax gain/ (expense)
(Loss) for the period
Segment Assets and Liabilities
Digital speakers
Total all segments
Unallocated
Consolidated
31 December
2023
$
31 December
2022
$
286,824
286,824
482,841
482,841
(14,614,491)
(2,435,719)
(14,614,491)
(2,435,719)
‑
‑
(14,614,491)
(2,435,719)
Assets
Liabilities
31 December
2023
$
31 December
2022
$
31 December
2023
$
31 December
2022
$
4,013,460
4,013,460
‑
5,313,303
5,313,303
‑
9,625,395
9,625,395
‑
5,165,096
5,165,096
‑
4,013,460
5,313,303
9,625,395
5,165,096
Assets used jointly by reportable segments are allocated on the basis of the revenue earned by the individual
reportable segments�
55
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
24. Segment Information (Cont.)
Other Segment Information
Depreciation and amortisation
of segment assets
Acquisition of segment assets
31 December
2023
$
31 December
2022
$
31 December
2023
$
31 December
2022
$
433,057
433,057
‑
461,255
461,255
‑
308,348
308,348
‑
124,806
124,806
‑
433,057
461,255
308,348
124,806
Digital speakers
Total all segments
Unallocated
Consolidated
Information on Geographical Segments
31 December 2023
Revenue
$
286,824
‑
286,824
Revenue
$
482,841
‑
482,841
segment
Assets
$
2,307,089
1,706,371
4,013,460
segment
Assets
$
4,001,562
1,311,741
5,313,303
Acquisition
of segment
Assets
$
‑
308,348
308,348
Acquisition
of segment
Assets
$
‑
124,806
124,806
Geographical segments
Australia
Israel
Total
31 December 2022
Geographical segments
Australia
Israel
Total
56
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
25. Financial risk management objectives and policies
The consolidated entity’s principal financial instruments held during the year comprise receivables, payables, cash and
short term deposits�
Due to the small size of the consolidated entity significant risk management decisions are taken by the board of directors�
These risks include market risk (including fair value interest rate risk, cash flow interest rate risk and price risk), credit risk
and liquidity risk� The Directors do not plan to eliminate risk altogether, rather they plan to identify and respond to risks in
a way that creates value for the company and its shareholders� Directors and shareholders appreciate that in order for the
consolidated entity to compete and grow, a long term strategy needs to involve risk taking for reward�
The consolidated entity does not use derivative financial instruments to hedge these risk exposures�
Risk exposures and Responses
(a) Interest rate risk
The consolidated entity’s exposure to market interest rates relates primarily to the consolidated entity’s cash holdings and
short term deposits�
At balance date, the consolidated entity had the following mix of financial assets exposed to Australian interest rate risk that
are not designated in cash flow hedges:
Financial assets
Cash and cash equivalents
31 December
2023
$
31 December
2022
$
2,279,051
1,339,961
The consolidated entity constantly analyses its interest rate exposure� Within this analysis consideration is given to potential
renewals of existing positions, alternative financing and the mix of fixed and variable interest rates�
At 31 December 2023, if interest rates had moved, as illustrated in the table below, with all other variables held constant,
post tax (loss) and equity would have been affected as follows:
Judgements of reasonably
possible movements
Consolidated entity
+1% (100 basis points)
‑0�24% (0�00%)
Post tax Loss
Higher/(Lower)
equity
Higher/(Lower)
31 December
2023
$
31 December
2022
$
31 December
2023
$
31 December
2022
$
22,791
(5,470)
13,400
(3,211)
22,791
(5,470)
13,400
(3,211)
The movements in losses are due to higher/lower interest rates on cash and cash equivalents balances�
57
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
25. Financial risk management objectives and policies (Cont.)
(b) Foreign currency risk
The consolidated entity has a foreign currency risk since the acquisition of Audio Pixels Limited� Audio Pixels Limited
operates in Israel and all transfer of funds to Audio Pixels Limited are denominated in US dollars� The consolidated entity
does not hedge its US dollar exposure�
The carrying amounts of the consolidated entity’s foreign currency (US$) denominated monetary assets and monetary
liabilities at the end of the reporting period are as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Liabilities
Assets
31 December
2023
$
31 December
2022
$
31 December
2023
$
31 December
2022
$
‑
‑
‑
‑
1,395,320
1,385,166
856,606
71,411
‑
658,204
52,226
‑
All US$ denominated financial instruments were translated to A$ at 31 December 2023 at the exchange rate of 0�6812
(2022: 0�6816)�
At 31 December 2023 and 31 December 2022, had the Australian Dollar moved, as illustrated in the table below, with all
other variables held constant, post tax loss and equity would have been affected as follows:
Judgements of reasonably
possible movements
2023
$
2022
$
2023
$
2022
$
Post tax Loss
Higher/(Lower)
equity
Higher/(Lower)
Consolidated
AUD/USD +10%
AUD/USD ‑5%
415,559
(4,321,543)
415,559
(4,321,543)
(240,586)
2,501,946
(240,586)
2,501,946
Management believes the balance date risk exposures are representative of risk exposure inherent in financial instruments�
58
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
25. Financial risk management objectives and policies (Cont.)
(c) Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the
consolidated entity� The consolidated entity has adopted a policy of only dealing with creditworthy counterparties which
are continuously monitored�
The credit risk on liquid funds is limited because the counterparties are major banks with high credit‑ratings assigned by
international credit agencies�
(d) Liquidity risk management
The consolidated entity’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due� The consolidated entity’s investments in money market instruments all have a
maturity of less than 3 months�
Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate risk
management framework for the management of the consolidated entity’s short, medium and long term funding and
liquidity requirements� The consolidated entity manages liquidity by maintaining adequate cash reserves by continuously
monitoring forecast and actual cash flows and managing maturity profiles of financial assets�
The following tables detail the consolidated entity’s remaining contractual maturity for its non‑derivative financial assets
and non‑derivative financial liabilities� The tables have been drawn up based on the undiscounted contractual maturities
of the financial assets and financial liabilities including interest that will be earned on these assets except where the
consolidated entity anticipates that the cash flow will occur in a different period�
Weighted
average
effective
interest rate
%
Less than
1 month
$
1-3 months
$
3 months
to 1 year
$
1-5 years
$
31 December 2023
Assets
Non interest bearing
0�00%
927,458
335,868
Liabilities
Non interest bearing
Unsecured loans
Convertible note
issued May 2023
Convertible note
issued October 2023
Convertible note issued
November 2023
0�00%
12�00%
42�05%
51�29%
53�79%
1,748,487
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
‑
2,469,988
2,348,648
460,193
1,830,196
12,772
‑
‑
‑
‑
‑
59
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
25. Financial risk management objectives and policies (Cont.)
(d) Liquidity risk management (Cont.)
Weighted
average
effective
interest rate
%
0�00%
0�004%
0�00%
6�00%
Less than
1 month
$
1,176,028
164,201
1,490,454
1-3 months
$
260,374
‑
‑
‑
3,285,000
3 months
to 1 year
$
‑
‑
‑
‑
1-5 years
$
9,180
‑
‑
‑
Assets
Non interest bearing
Fixed rate instruments
Liabilities
Non interest bearing
Unsecured loans
All financial liabilities are expected to be settled under commercial terms of within 12 months�
(e) Commodity price risk
The consolidated entity has no exposure to commodity price risk�
(f) Other price risks
The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the
financial statements approximate their fair values�
26. Subsequent events
At the date of this report the company has received approval from holders of $4�25M of the total of $5M in convertible
notes on issue, to extend the maturity date of the notes to 30 September 2024, with an option to extend these at the
request of the company for a further six months�
The ASX suspended trading on 1 March 2024 post the Company’s release of its Appendix 4E� At the date of this report the
Company remains suspended from trading�
Except as noted above, The Directors are not aware of any significant events since the end of the financial year and up to
the date of this report�
60
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
27. Parent entity disclosures
Financial position
Assets
Current assets
Non‑current assets
Total assets
Liabilities
Current liabilities
Non‑current liabilities
Total liabilities
Net (liabilities)/assets
Equity
Issued capital
Reserves
(Accumulated losses)
31 December
2023
$
31 December
2022
$
2,307,089
1,478,730
‑
56,220,589
2,307,089
57,699,319
7,744,679
3,530,069
17,478
13,915
7,926,197
3,543,984
(5,619,108)
54,155,335
80,067,610
77,752,597
(12,613,172)
(19,153,265)
(73,073,546)
(4,443,997)
Total deficiency in equity
(5,619,108)
54,155,335
Financial performance
(Loss)/Profit for the period
Other comprehensive income
(68,629,549)
2,031,429
‑
‑
(68,629,549)
2,031,429
The directors made a critical judgement in relation to the recoverability of the investment in subsidiary ‑ Audio
Pixels Limited and the receivable from this subsidiary� The loan is denominated in US$ and was US$38,439,000 at
31 December 2023� The assessment of the recoverability of these assets is considered concurrently with the recoverability
of the intangible asset/goodwill, and the directors are of the view that the for the same reasons as outlined in note 8,
this loan balance be written off during the reporting period� On commercialisation of Audio Pixels Limited’s technology,
this intercompany loan recoverability will be re‑assessed� As such, the loan is not treated part of the Company’s net
investment in the subsidiary and translation of the loan balance from USD to AUD is through the profit and loss�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 notes to AnD FoRMInG PARt oF tHe FInAnCIAL stAteMents
FoR tHe YeAR enDeD 31 DeCeMBeR 2023
28. Controlled Entity
name of entity
Parent Entity
Audio Pixels Holdings Limited
Controlled Entities
Audio Pixels Limited
Audio Pixels Technologies Pty Limited
Country of
Incorporation
31 December
2023
%
31 December
2022
%
Australia
Israel
Australia
100�00
100�00
100�00
100�00
29. Contingent Liabilities and Commitments
a) At 31 December 2023 the subsidiary company, Audio Pixels Limited of Israel has entered into agreements with strategic
suppliers for delivery of certain components which on delivery of components meeting the required specifications of the
Consolidated entity will result in final payments being due of $761,227 (31 December 2022 ‑ $521,141)�
b) Entities within the consolidated entity are involved in contractual disputes in the normal course of contracting
operations� The directors believe that the entities within the consolidated entity can settle any contractual disputes with
customers and should any customers commence legal proceedings against the company, the directors believe that any
actions can be successfully defended� As at the date of this report no legal proceedings have been commenced against any
entity within the consolidated entity�
c) On 17 December 2021, the Consolidated entity announced to the Australian Stock Exchange Limited that it had entered
into an agreement with Earth Mountain
(Shanghai) Intelligent Technology Co�, to mass produce Audio Pixels transformational digital speaker products�
d) On 29 December 2022, the parent entity entered into a pre‑production packaged chip purchase order with Earth
Mountain (Shanghai) Intelligent Technology Co�, Ltd for US$400,000 which is shown as a prepayment in the financial
statements as at 31 December 2023� On the basis that these initial pre‑production packaged chips meet all the design
specifications, the parent company will commit a further US$9,600,000 ($14,769,000) for fully tested packaged production
chips at a unit price to be finalised based on actual yields� Should the initial pre‑production packaged chips meet all the
design specifications the Directors expect a phased approach to delivery of the production chips, with details of delivery
shipments and payment arrangements to be agreed with Earth Mountain�
Entities within the consolidated entity are involved with contractual disputes in the normal course of contracting
operations� The directors believe that the entities within the consolidated entity can settle any contractual disputes with
suppliers and should any supplier commence legal proceedings against the company, the directors believe that any actions
can be successfully defended� As at the date of this report no legal proceedings have been commenced against any entity
within the consolidated entity�
30. Additional company information
Audio Pixels Holdings Limited is a listed public company, incorporated and operating in Australia�
Registered office and Principal Place of Business
Suite 3, Level 12
75 Elizabeth Street
Sydney NSW 2000
Australia
Tel: (02) 9233 3915
Fax: (02) 9232 3411
www�audiopixels�com�au
The Company has 14 (2022: 13) employees�
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Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 AsX ADDItIonAL InFoRMAtIon
Additional information required by the Australian Stock Exchange Listing Rules and not disclosed elsewhere in this report�
Home Exchange
The Company’s ordinary shares are quoted on the Australian Stock Exchange Limited under the trading symbol “AKP”� The
Home Exchange is Sydney� The Company also has a Level 1 American Depositary Receipts (ADR) program and quotation on
the OTC market in the United State of America under the code “ADPXY�
Substantial Shareholders
At 26 March 2024 the following substantial shareholders were registered:
Fred Bart Group
Link Traders (Aust) Pty Ltd
Lee Ka Lau
Voting Rights
ordinary shares
Percentage of total
ordinary shares
5,984,480
1,984,173
1,537,374
20�49%
6�79%
5�26%
At 26 March 2024 there were 2,375 holders of fully paid ordinary shares�
Rule 74 of the Company’s Constitution stipulates the voting rights of members as follows:
“Subject to any rights or restrictions for the time being attached to any class or classes of shares and to this Constitution:
(a) on a show of hands every person present in the capacity of a Member or a proxy, attorney or representative (or in more
than one of these capacities) has one vote; and
(b) On a poll every person present who is a Member or proxy, attorney or representative has member present has:
(i) For each fully paid share that the person holds or represents – one vote; and
(ii)
For each share other than a fully paid share that the person holds or represents – that proportion of one vote that
the amount paid (not credited) on the shares bears to the total amount paid and payable on the share (excluding
amounts credited)�”
Other Information
In accordance with Listing Rule 4�10�19, the Company has used the cash and assets in a form readily convertible to cash that
it had at the time of admission in a way consistent with its business objectives�
63
Audio Pixels Holdings Limited ACN 094 384 273Annual Report 2023 AsX ADDItIonAL InFoRMAtIon
Distribution Of Shareholdings
At 26 March 2024 the distribution of ordinary shareholdings were:
Range
1‑1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
ordinary
shareholders
number of
shares
Percentage
of shares
1,354
579
206
184
34
469,164
1,442,561
1,604,965
5,209,678
20,483,732
2,357
29,210,100
1�61%
4�94%
5�49%
17�84%
70�13%
100�00%
There were 331 ordinary shareholders with less than a marketable parcel�
There is no current on‑market buy‑back�
Twenty Largest Ordinary Shareholders
At 26 March 2024 the 20 largest ordinary shareholders held 63�36% of the total issued fully paid quoted ordinary shares
of 29,210,100�
shareholder
1 N & J PROPERTIES PTY LTD
2 ALTSHULER SHAHAM TRUSTS LTD
3
4
LINK TRADERS (AUST) PTY LTD
BNP PARIBAS NOMINEES PTY LTD
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