BrainChip Holdings Ltd
Annual Report
2024
For personal use only
Content
BrainChip Annual Report 2024
1
Page
Page
CEO’s Letter
2
Notes to the consolidated
financial statements
44
Directors’ Report
4
Consolidated entity
disclosure statement
76
Auditor’s Independence
declaration
39
Directors’ declaration
77
Consolidated statement of profit
or loss and other comprehensive
income
40
Independent Auditor’s
Report
78
Consolidated statement of
financial position
41
Shareholder information
82
Consolidated statement of
changes in equity
42
Corporate Directory
84
Consolidated statement of cash
flows
43
For personal use only
CEO’s Letter
BrainChip Annual Report 2024
2
Dear Shareholder,
The next major economic revolution is underway, as entire industry sectors are boosting their productivity
by using Artificial Intelligence (AI). This new revolution is creating a seismic shift that rivals the impact of
the Industrial Revolution back in the 18th century. The global technology market has always been dynamic,
but the rate of change due to the impact of AI has been stratospheric. The benefits of AI are seen across
all levels of the market, from early technology development to consumer products. BrainChip continues
to be at the forefront of advances in the development and innovation in Edge AI.
2024 witnessed remarkable changes and innovations in the AI market. The advent of Large Language
Models (LLMs) such as OpenAI’s ChatGPT, which runs on huge data center computer networks, has
enabled the next paradigm shift in human-to-computer interaction. This shift is best seen in the
generation of written or voiced language, where we see sophisticated responses in a fraction of a
second.
State Space Models (SSM) are a mathematical method to describe dynamic systems. SSMs are integral
to artificial intelligence, especially when it comes to systems that need to make decisions or predictions
based on evolving situations. SSMs are used in speech recognition, speech generation, and the analysis
of other sequential information from physical processes. The rapid evolution of SSMs is challenging
incumbent computer systems to improve performance, scale, accuracy and system efficiency. Along
with new silicon architectures, SSMs are at the core of next generation computing capabilities.
The rapid innovation in edge AI computing is driven by an overwhelming demand for differentiating
product features. Complex data-center-based models are being ported to Edge AI devices to provide
sophisticated functions in edge products. This is driving innovation, both in next generation models and
more efficient silicon. A large number of silicon providers support older legacy models and are struggling
to keep up.
Older incumbent technologies are often “good enough,” until they simply are not. BrainChip, as a leader
in the development of innovative technologies, has developed more efficient silicon architecture to
support the emerging shift to SSMs.
Last year, we coupled performance-leading silicon architecture (IP) with dedicated edge models. This
was achieved by offering AI acceleration with our latest Akida™ IP and our proprietary TENNs models
(Temporal Event-based Neural Network models). 2024 also saw notable commercial wins with leading
organisations including Frontgrade-Geisler, Air Force Research Laboratory and Bascom Hunter. These
organisations collectively acquired Akida IP and TENNs model development to fuel their innovations in
advanced sensing, mobile, radar and space applications.
To protect our most important asset, we added 5 more patents to our portfolio and filed 14 more
applications last year. Human capital remains critical in the AI market and BrainChip strengthened the
engineering, research and executive ranks with outstanding hires and a new industry-leading Scientific
Advisory Board.
For personal use only
CEO’s Letter
BrainChip Annual Report 2024
3
We enter 2025 with the most robust product offering and detailed roadmap in the history of our
company. The entire organisation is focused on capitalising on our product strength, and aggressively
executing our roadmap plans. To support these objectives, expect a very prescriptive roadmap with tight
committed timelines which will further strengthen our product offering for both silicon IP and edge-
dedicated models. BrainChip will intensify its operational rigor on several fronts, in particular product
planning, engineering focus and drive release. BrainChip has always been and always will be about
technology excellence and leadership.
We are pleased with the progress we made in 2024: we accelerated market adoption and revenue
scaling. 2025 is about building on these achievements, extending those efforts and capitalising with more
commercial wins. The market opportunities are clear, and our capabilities are aligned well with market
needs. As a Board we remain very positive about the future of BrainChip’s market penetration and the
broader adoption of our technology.
Thank you for being a shareholder. We appreciate your continued support as we shape the future of the
Edge AI industry, and we look forward to speaking with each of you at our Annual General Meeting.
Thank you
Sean Hehir, CEO and the BrainChip Board of Directors
For personal use only
Directors’ report
BrainChip Annual Report 2024
4
The directors submit their report of the consolidated entity, being BrainChip Holdings Ltd (“BrainChip
Holdings” or “Company” or “BrainChip”) and its controlled entities (“Group” or “Consolidated Entity”), for the
year ended 31 December 2024.
Directors
The names and details of the Company’s directors in office during the financial period and until the date of
this report are as follows:
Antonio J. Viana
Non-Executive Director and Chair
Sean Hehir
Executive Director, Chief Executive Officer
Peter van der Made
Non-Executive Director
Geoffrey Carrick
Non-Executive Director
Pia Turcinov
Non-Executive Director
Duy-Loan Le
Non-Executive Director
The name of the Company’s Secretary in office during the year and until the date of this report is:
Kim Larkin
Principal activities
The principal activity of the Group is the development of software and hardware accelerated solutions for
advanced artificial intelligence (“AI”) and machine learning applications, with a primary focus on the
development of its Akida Neuromorphic Processor to provide a complete ultra-low power and fast AI Edge
Network for vision, audio, olfactory and smart transducer applications.
Dividends
No dividends have been paid or declared by the Company during the financial year or up to the date of
this report.
Significant changes in the state of affairs
On 29 December 2023, BrainChip, together with LDA Capital Limited and LDA Capital LLC (“LDA Capital”)
executed a Third Amendment to the Put Option Agreement (“POA”) (refer to ASX announcements dated 13
August 2020 and 26 October 2020), extending the agreement for a one-year period. The amendment also
provided an option to extend the POA for two additional years under the same terms upon mutual consent.
Under the terms of the renewal, the Company was required to fulfil its obligations under the Second
Amendment to draw down the remaining A$2.7M in addition to an amount no less than A$12M by 31
December 2024.
On 4 December 2023, BrainChip submitted a capital call notice in accordance with the POA to subscribe for
up to 25 million shares. The capital call notice was closed and cash funds of US$2,535,623 (A$3,850,488)
were received on 23 January 2024.
On 27 March 2024, BrainChip submitted a capital call notice to LDA Capital in accordance with the Third
Amendment to the POA to subscribe for 40 million shares. The formula used to determine LDA Capital’s
purchase price remained set at 91.5% of the average of the daily Volume Weighted Average Price for each
day that shares were sold throughout the pricing period. Cash funds were received in two instalments,
comprising US$1,810,792 (A$2,820,000) on 19 April 2024, and US$3,645,104 (A$5,465,128) on 3 July 2024. The
purchase price per share ranged from A$0.2194 to A$0.3664 during the capital call period.
On 25 July 2024, the Company announced an equity capital raise of A$25 million, comprising a fully
underwritten share placement to professional and sophisticated investors raising A$20 million before
costs (“Placement”), the sale of A$2 million (before costs) of existing securities from LDA Capital (“Existing
Share Sale”) and a non-underwritten share purchase plan (“SPP”) to be offered to eligible Australian and
New Zealand shareholders to raise a further A$3 million.
For personal use only
Directors’ report
BrainChip Annual Report 2024
5
Significant changes in the state of affairs (continued)
The Placement, Existing Share Sale and SPP were completed with a share price of A$0.193 representing a:
•
3.5% discount to the last close of A$0.20 per share on 22 July 2024;
•
4.5% discount to the 5-day VWAP of A$0.2022 per share up to and including 22 July 2024; and
•
4.0% discount to the 10-day VWAP of A$0.2011 per share up to and including 22 July 2024.
The Company received US$14,219,293 (A$21,880,000) (before costs) on 31 July 2024 to close out the
Placement and the Existing Share Sale transactions and 103,245,355 shares were issued on 1 August 2024.
Under the SPP, shareholders with a registered address in Australia or New Zealand on 24 July 2024 were
eligible to apply for a maximum of A$30,000 of new shares free of fees and at the same price offered
through the Placement. The offer closed on 15 August 2024 resulting in the issue of 3,274,604 shares on 22
August 2024 and cash received by BrainChip of US$425,838 (A$632,013).
On 31 December 2024, the Company signed a Fourth Amendment to the POA with LDA Capital. Total
funding increased to A$140M (Total Commitment Amount), of which A$68 million in gross proceeds has
been drawn since inception in 2020. Under the new terms, BrainChip has agreed to an additional Minimum
Drawdown Amount of A$20 million to be drawn no later than 30 June 2026. BrainChip will issue 40 million
Collateral Shares by the earlier of the next Capital Call or 30 June 2025, subject to Listing Rule 7.1 placement
capacity. The purchase price remains set at 91.5% of the average daily Volume Weighted Average Price for
each day shares are sold throughout the pricing period.
There have been no other significant changes in the state of affairs of the Group.
Review of operations
The financial results of the Group are presented in US dollars unless otherwise referenced.
Overview
The Group made a net loss after income tax for the year ended 31 December 2024 of $24,431,185 (2023:
$28,881,041).
Revenues for the year ended 31 December 2024 of $398,011 increased 72% from $232,004 in 2023, reflecting
that the Company did not deliver on its goal to achieve significant growth in license and product revenue.
Total operating expenses for the year ended 31 December 2024 of $23,868,799 decreased 17% from
$28,829,188 incurred in the prior year. This decrease was attributable to:
•
Research & development (R&D) expenses of $7,699,968 for the current period increased 9%, or
$665,951 from a year ago. R&D costs in the current period comprised employee expenses,
contractor and other research and development costs, and the amortisation/impairment of
capitalised R&D intangible assets. Movements in R&D costs are summarised as follows:
o
2% increase in employee expenses reflecting the expansion of headcount in the USA, offset
by the effect of the redundancy of the Australian R&D team;
o
72% reduction in grant revenue recognised as a result of the change of work completed by
the Australian R&D team prior to their redundancies.
o
No third-party pre-development services incurred in the current period (2023: $636,493);
o
Impairment of capitalised intangible assets of $576,037 as reported at the half-year after
consideration of current impairment indicators.
•
Selling & marketing (S&M) expenses of $4,605,111 for the current period decreased 3%, or $140,800
from a year ago. Management is continuing to focus on targeting potential customers worldwide
and the promotion and marketing of current and future products;
For personal use only
Directors’ report
BrainChip Annual Report 2024
6
Review of operations (continued)
Overview (continued)
•
General & administrative (G&A) expenses of $6,113,371 for the current period increased 7% overall, or
$418,345 from the same period a year ago as a result of:
o
An increase of 22% of employee expenses due to the addition of Peter van der Made as a
non-executive director on the Board, plus an increase of accrued short-term incentive
payments based on performance criteria approved by the Board as well as payment of
2023 short-term incentives to KMPs not accrued in the prior year;
o
reduced legal and professional costs;
o
Impairment of a receivable from a customer of $29,970; and
•
Share-based payment expense of $5,450,349 for the current period decreased 52%, or $5,903,885
from the same period a year ago. Share-based payments expense is non-cash in nature and
represents the current period vesting expense for equity instruments (Options, Performance Rights
(“PRs”), Restricted Stock Units (“RSUs”) and Services Rights (“SRs”)) issued to directors, employees
and consultants, offset by the value of equity units that have been forfeited during the year. The
prior year period included the issue of 8 million RSUs to former Chairman Mr Manny Hernandez, fair
valued at $2,224,068 (as presented and approved by shareholders at the 2023 AGM). The current
year included a vesting credit of $4,085,053 (2023: Nil) resulting from the reassessment of the
achievement of the maximum performance criteria for equity units granted in 2022 that vest on 28
February 2025.
The current year loss also includes:
•
Finance income, comprising Interest income earned $635,246 (2023: 491,508) on cash balances
invested;
•
Finance expense of $1,008,048 (2023: 154,121) comprising unrealised foreign exchange losses on
revaluation of non-USD cash balances of $981,104, other foreign exchange gains (unrealised and
realised) of $54,693 and interest expense of $81,636 (2023: $104,111).
•
non-cash gains totalling $13,575 (2023: non-cash losses of $364,248) resulting from the fair value
of the LDA financial liabilities recognised due to the agreed pricing mechanism and the put option
premium.
Balance Sheet and Cashflows
At the end of the year, the Group had consolidated net assets of $19,826,520 (2023: $16,834,321), including
cash and cash equivalents of $20,000,422 (2023: $14,343,381).
Trade and other Receivables decreased to $947,994 from $2,422,006 in the prior year, driven mainly by a
decrease in Research Tax Credits recognised in the current year and the recognition of both a receivable of
$921,792 and a derivative asset of $41,215 related to the LDA capital call notice in the prior year.
Cash outflows used in operating activities totaled $15,884,799 (2023: $17,532,390), as noted in the
Consolidated Statement of Cash Flows, and reflects a transition from a focus on product development to
bringing products to market.
Cash inflows from Financing Activities included $7,991,520 from the issue of shares to LDA Capital (2023:
$8,210,972), a further $14,645,131 raised (before costs) from the issue of shares via a placement to investors
and a share purchase plan to shareholders. A further cash inflow of $1,435,102 was received from the
exercise of BrainChip Equity Plan options into issued shares (2023: $1,029,013). The Company incurred share
issue costs of $1,033,498 (2023: 56,791).
For personal use only
Directors’ report
BrainChip Annual Report 2024
7
Review of operations (continued)
Operational Highlights
Throughout 2024, the Company focused on executing its commercial strategy with a drive to secure
royalty-bearing IP sales agreements, develop a pipeline of new business opportunities and expand its
product offering through constant technical innovation.
This focus yielded several important commercial agreements, including a royalty-bearing IP sales
agreement with Frontgrade Gaisler, one of Europe’s leading aerospace and defence technology
companies, which was announced in December. This agreement followed an earlier announcement in
August which detailed two agreements totaling €190,000 for projects with Frontgrade Gaisler and Airbus to
provide customers with AI capabilities for space applications using Akida 1.0 technology.
Another significant win included the award of a US$1.8 million Small Business Innovation Research (SBIR)
contract with the United States Air Force Research Laboratory (US AFRL) for mapping complex sensor signal
processing algorithms onto neuromorphic chips.
These achievements demonstrate BrainChip’s ability to leverage its revolutionary neuromorphic
technology products into a range of Edge AI applications across a number of industry verticals, and
provide an insight into the commercial strategy that will drive revenue generation.
BrainChip further expanded its technology industry ecosystem partnerships to include many of the world’s
largest and most innovative technology enablers and innovators. These ecosystem partnerships are a
vitally important element of the Company’s ”go-to-market” strategy, and are essential to establishing
commercial relationships that have the potential to lead to sales and revenue generation. Ecosystem
partnerships enable Brainchip to build and establish trusting relationships with customers and enable
customers to evaluate and test BrainChip products prior to acquiring them under an IP licence agreement.
Ecosystem partnerships have the potential to convert into future commercial partnerships generating
revenues for BrainChip through royalty-bearing IP licencing agreements, licence fees and product sales.
In terms of product innovation, the major new product released in 2024 was the proprietary TENNs
(Temporal Event-based Neural Network) algorithm which, when combined with the second-generation
Akida 2.0 neuromorphic AI product, delivers exceptional performance and power efficiency.
TENNs with Akida 2.0 was designed and developed with extensive customer input and market feedback to
address a broader range of Edge AI user applications, specifically focusing on live-streaming services such
as audio and video data streaming applications. This innovation further enhances BrainChip’s
differentiation in the market and opens opportunities to engage with a significantly larger segment of the
addressable market for Edge AI applications, especially in areas such as audio de-noising for hearing aids,
closed-circuit security cameras, and other consumer electronics products.
As of 31 December 2024, BrainChip is proud to have a total of 52 issued and pending patents,
demonstrating our commitment to innovation and intellectual property. These patents span a wide range
of technologies, underscoring our continued efforts to develop cutting-edge solutions that drive progress
in our industry in key global markets. We remain focused on fostering a culture of creativity and excellence,
ensuring that BrainChip remains at the forefront of technological advancements for years to come.
In 2024, BrainChip saw the planned retirement of the second of BrainChip’s two co-founders, Anil Mankar,
from his position as Chief Development Officer (CDO). Anil’s transition to full retirement comes after the
planned retirement of founder Peter van der Made in 2023.
BrainChip also welcomed the appointment of Mr Steve Brightfield to the critically important role of Chief
Marketing Officer (CMO), to drive our global sales team, develop an effective customer engagement
strategy, and manage key messaging to the market, potential customers and industry influencers.
For personal use only
Directors’ report
BrainChip Annual Report 2024
8
Review of operations (continued)
As reported earlier, the Company secured a Placement to Australian institutional investors to raise A$20
million to ensure funding of the Company’s operations for the foreseeable future. In addition, the Company
offered a Share Purchase Plan (SPP) to existing shareholders at the same price as the placement, to
provide shareholders with an opportunity to minimise dilution. The capital raise was intended to reduce
financial risk and ensure management had the financial runway to execute its planned rollout of new
products and continue funding ongoing research & development and new product innovation.
Risks
Factors that may impact the Company’s performance include the commercial viability of, and potential
delays in the delivery of, new products and technology, delays in the establishing of an effective sales
organisation and disruption in the global economy. Some of the risks related to this include:
•
Risks of competitors addressing the Company’s markets and customers with advanced products
with similar or better performance.
•
Delays in customer adoption of new products, caused by disruption to, or our inability to provide
adequate training and education, collateral materials, application engineering and customer
support.
•
Risks of delays in new product development, including delayed internal development, slower than
expected development by partners, and delays in the integration of our technology with third party
providers of intellectual property.
•
Risks of delays in new product introductions, including delays to wafer fabrication, assembly of
products and test operations.
•
Inability to recruit and retain appropriately skilled and experienced human resources in a timely
fashion, or at all.
The Company’s performance and success are dependent upon the ability to effectively identify, protect
and defend its intellectual property through patents or trade secrets. Some of the risks related to this
include:
•
Risks of intellectual property or other claims, which are costly to defend, and which could result in
significant damage awards, and/or limit the Company’s ability to use certain technologies in the
future.
•
Risks of successful intellectual property infringement claims that may have an adverse effect on
the Company’s consolidated financial position, results of operations, or cash flows.
•
Risks that intellectual property infringement protection for the Company’s patents, trademarks,
trade secrets and copyrights may not be available or feasible in every country in which our
products and services could be distributed.
•
Risks that all reasonable efforts by the Company to protect proprietary rights may not be sufficient
or effective, including risks that intellectual property may not have adequate patent or copyright
protection for certain innovations, that the scope of available protections is insufficient, or that an
issued patent may be deemed invalid or unenforceable in certain jurisdictions.
•
Risks that intellectual property held as trade secrets could be compromised by outside parties, or
by our employees.
•
Risks that change to government rules governing the export of artificial intelligence-related
products and technologies may prohibit the sale of our products or licensing of our technology in
some areas of the world.
For personal use only
Directors’ report
BrainChip Annual Report 2024
9
Review of operations (continued)
Risks (continued)
Other key risks the Company has identified include:
•
Risks of an information technology breach that may damage our intellectual property, our
reputation, or litigation and potential liability.
•
Risks of international operations exposure that could harm our business, operating results, and
financial condition, including changes in local political, economic, and foreign currency
fluctuations, regulatory, tax, social, labour conditions and health and safety issues, which may
adversely harm our business.
Significant events after the balance date
Subsequent to the end of the year, the following events occurred:
Since 1 January 2025 and to the date of this report, 1,450,000 options, 204,813 PRs and 476,465 RSUs held by
BrainChip Equity Plan participants converted to shares upon vesting. The Company also granted 270,000
options and 87,500 RSUs to new participants.
No other matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state
of affairs of the Group in subsequent financial years.
Likely development and expected results
It is expected that the Group will further develop the Akida Neuromorphic System-on-Chip (NSoC).
Environmental regulation and performance
The Group is not subject to any significant environmental regulation under Australian Commonwealth of
State Law.
Employees
The Group employed 63 employees as of 31 December 2024 (2023: 78).
For personal use only
Directors’ report
BrainChip Annual Report 2024 10
Information on directors
Name:
Antonio J. Viana
Title:
Non-Executive Director and Chair
Qualifications:
Mr Viana holds a Bachelor of Science with Honors from California Polytechnic
State University, San Luis Obispo in Industrial and Systems Engineering.
Experience and
expertise:
Antonio J. Viana has over 30 years of experience in the global semiconductor
industry and has served as a member of our board of directors since 2021. Mr.
Viana is also a non-executive director of Arteris (Nasdaq: AIP). He has served on
the Arteris board since 2016. At Arteris, he is chairman of the Nominations and
Governance Committee and member of both the Audit and Compensation
Committees. Recently, Mr. Viana was appointed as a non-executive director of
PQShield, a privately-held British cybersecurity company specializing in
cryptography solutions for software and hardware. Mr Viana is also a non-
executive director of Parsley360, an emerging enterprise-level, empathetic AI,
performance optimization provider. Previously, from 2016-2021, Mr. Viana served
as the Executive Chairman of QuantalRF, an emerging Swiss RF semiconductor
company. In 1999, Mr. Viana joined ARM Holdings, the global leader in
semiconductor IP, serving in a number of leadership positions, most notably as
the Global Director of the ARM Foundry Program and President of Commercial
and Global Development. He was appointed to the ARM executive team as
Executive VP of worldwide sales in 2007. At the beginning of 2013, his executive
duties were expanded to include all of commercial and global development. Mr.
Viana has also worked with Hughes Aircraft, Silicon Graphics, Encore Industries
and was Senior VP of worldwide sales at Tensilica Inc.
Other current
directorships:
Arteris Inc. (NASDAQ: AIP) - Non-Executive Director (Nov 2016 - present).
Former listed
directorships (last
3 years):
None
Special
responsibilities
Mr Viana resigned from the Company’s Remuneration & Nomination Committee
15 March 2024.
Name:
Sean Hehir
Title:
Chief Executive Officer
Qualifications:
Mr Hehir holds a Bachelor of Science from the University of Massachusetts and
MBA from Georgia State University.
Experience and
expertise:
Mr Hehir has managed large global teams and been responsible for significant
revenue growth for global enterprise organisations such as Compaq and HP, as
well as smaller, fast-growing companies like Fusion-io. Mr Hehir is industry-
recognized as a builder of trusted customer relationships and Strategic Alliances
across diverse partners such as Systems Integrators, ISVs, and OEMs
Other current
directorships:
None
Former listed
directorships (last
3 years):
None
Special
responsibilities
None
For personal use only
Directors’ report
BrainChip Annual Report 2024 11
Information on directors (continued)
Name:
Peter van der Made
Title:
Non-Executive Director
Qualifications:
Experience and
expertise:
Mr van der Made has been at the forefront of computer innovation for over 40
years. He is the inventor of a computer immune system at vCIS Technology
where he served as Chief Technology Officer, and then Chief Scientist when it
was acquired by Internet Security Systems, and subsequently IBM. Previously, he
designed a high resolution, high speed colour Graphics Accelerator chip for IBM
PC graphics at PolyGraphics Systems. He was the founder of PolyGraphics
Systems, vCIS Technology, and BrainChip Inc.
Mr van der Made previously held the position of Chief Technical Officer (10
September 2015 to 31 December 2023) and Executive Director of BrainChip
Holdings Ltd (10 September 2015 to 1 January 2018).
Other current
directorships:
None
Former listed
directorships (last
3 years):
None
Special
responsibilities
None
Name:
Pia Turcinov AM
Title:
Non-Executive Director
Qualifications:
Ms Turcinov holds a Bachelor of Laws and Bachelor of Arts degrees from the
University of NSW and is a Graduate of the Australian Institute of Company
Directors. In 2023, Ms Turcinov was appointed as a Member of the Order of
Australia in the King's Birthday 2023 Honours List for her significant service to
technology, innovation and women in STEM.
Experience and
expertise:
Ms Turcinov has more than 30 years of commercial and corporate experience
across multiple industries, including technology, energy, resources, consumer
goods and professional services. Having practised in corporate, commercial and
IP law in NSW and Western Australia, Ms Turcinov transitioned into commercial
advisory work in the private and public sectors.
Other current
directorships:
Ms. Turcinov is currently a General Partner at Fund WA Pty Ltd. She also holds
positions as a Non-Executive Director at the Centre of Decommissioning
Australia and the Lyn Beazley Academy, in addition to serving as Chair of the East
Metropolitan Health Service.
Former listed
directorships (last
3 years):
None
Special
responsibilities
Ms Turcinov is a member of the Company’s Audit & Governance Committee and
a member and Chair of the Remuneration & Nomination Committee.
For personal use only
Directors’ report
BrainChip Annual Report 2024 12
Information on directors (continued)
Name:
Geoffrey Carrick
Title:
Non-Executive Director
Qualifications:
Mr Carrick is a graduate of the University of Sydney B.Ec, LLB.
Experience and
expertise:
Mr Carrick is an experienced capital markets executive, having held the position
of Head of Corporate Finance at Shaw and Partners Limited from March 2016
through July 2019 and Head of Equity Capital Markets at Commonwealth Bank
from 2012 – 2015. Prior to joining CBA, Mr Carrick was a senior member of
Macquarie Capital’s Equity Capital Markets team, from 1999 to 2011. Mr Carrick
currently serves as Executive Chairman of VCF Capital Partners Pty Limited.
Other current
directorships:
SmartPay Holdings Limited (ASX:SMP) - Non-Executive Director (18 May 2022 -
present).
Former listed
directorships (last
3 years):
None
Special
responsibilities
Mr Carrick is a member of the Company’s Remuneration & Nomination
Committee and a member and Chair of the Audit & Governance Committee.
Name:
Duy-Loan Le
Title:
Non-Executive Director
Qualifications:
Experience and
expertise:
Ms. Le has an impressive professional history, both technologically and in
executive management, having retired from Texas Instruments (TI) as a Senior
Fellow after 35 years. While at TI, she led global R&D and advanced technology
manufacturing from concept to high volume production for TI’s multi-billion-
dollar memory, DSP, and base station product lines. She has global business
experience, including overseeing joint ventures, foundries and OSAT (Outsourced
Semiconductor Assembly and Test) partnerships. Ms. Le holds 24 patents and
serves on the board of two universities.
She is the President and sole partner of DLE Management Consulting LLC, a
management consulting firm. Ms Le was inducted into the Women in
Technology Hall of Fame (WITI) in 2001, was the first engineer inducted into the
Asian Hall of Fame in 2017 and in 2021 was named to “NACD Directorship 100”, a
recognition by the National Association of Corporate Directors for her excellence
in leadership & corporate governance. She received numerous recognitions for
her philanthropic contributions worldwide, including Congressional Special
Recognition. She currently serves on the Board of two non-profit organisations
which promote education and support social economic development projects in
the third world.
Other current
directorships:
- Wolfspeed, Inc. (NASDAQ: NATI): Non-executive director – Oct 2018 to present
- Atomera Inc. (NASDAQ: ATOM) - Non-executive director – Oct 2019 to present
- Cirrus Logic Inc. (NASDAQ: CRUS) – Non-executive director – Jul 2023 to present
Former listed
directorships (last
3 years):
- National Instruments Corp. (NASDAQ: NATI): Non-executive director – Sep 2002
to Oct 2023
- Ballard Power Systems: (NASDAQ: BLDP) Non-executive director – Feb 2017 to
Feb 2023
Special
responsibilities
Ms Le is a member of the Company’s Remuneration & Nomination Committee
and Audit & Governance Committee.
For personal use only
Directors’ report
BrainChip Annual Report 2024 13
Company secretary
Kim Larkin is an experienced business professional with 22 years’ experience in the Banking and Finance
industries and 6 years as a Company Secretary (in-house) of an ASX300 company. Her experience
includes debt and capital raising, risk management, mergers and acquisitions, compliance and
governance. Ms. Larkin currently acts as Company Secretary to various ASX listed and unlisted companies
in Australia and is the Head of Corporate Services for Boardroom Pty Limited’s Queensland office, a position
she has held since April 2013. Ms Larkin holds a certificate III in Financial Services, Graduate Certificate in
Commerce and a Certificate of Banking.
Directors’ meetings
The number of meetings of directors (including meetings of committees of directors) held during the year
and the number of meetings attended by each director was as follows:
Directors Meetings
Audit & Governance
Committee Meetings (1)
Remuneration &
Nomination Committee
Meetings (1)
Eligible
to
Attended
Eligible
to
Attended
Eligible
to
Attended
A Viana
7
7
6
6
4
4
S Hehir
7
7
-
-
-
-
P van der Made
7
7
-
-
-
-
G Carrick
7
7
6
6
4
4
P Turcinov
7
7
6
6
4
4
D Le
7
6
6
5
4
4
(1)
Directors who are not members of the Audit & Governance Committee or Remuneration &
Nomination Committee may be invited to attend meetings of the Committees.
Committee Memberships
The Board maintained an Audit & Governance Committee and a Remuneration & Nomination Committee
during the year. The membership of each Committee is listed below:
Audit & Governance Committee
Remuneration & Nomination Committee
G Carrick (Chair)
P Turcinov
D Le
P Turcinov (Chair)
G Carrick
D Le
A Viana (resigned 15 March 2024)
For personal use only
Directors’ report
BrainChip Annual Report 2024 14
Interests in the equity of the company
As at the date of this report, the interests of the directors in the shares, options and performance rights of
the Company were:
Director
Fully Paid
Ordinary
Shares
Options
over
Ordinary
Shares
Restricted
Stock Units
Performance
Rights
Service
Rights
A Viana
2,432,344
-
697,674
-
-
S Hehir
2,972,017
-
6,517,470
-
-
P van der Made
156,805,823
-
-
1,262,635
697,674
G Carrick
187,344
2,500,000
-
-
697,674
P Turcinov
565,031
-
-
69,125
697,674
D Le
495,986
-
851,995
-
-
Total
163,253,732
2,500,000
8,067,139
1,536,573
2,093,022
Remuneration Report (Audited)
This remuneration report for the year ended 31 December 2024 outlines the remuneration arrangements of
the Group in accordance with the requirements of the Corporations Act 2001 (“the Act”) and its regulations.
This information has been audited as required by section 308(3C) of the Act.
The remuneration report is presented under the following sections:
1.
Executive summary
2.
Remuneration governance
3.
Non-executive Director remuneration arrangements
4.
Executive remuneration arrangements
5.
Equity instruments granted as part of remuneration
6.
Executive contractual arrangements
7.
Equity instruments disclosures
8.
Other transactions and balances with Key Management Personnel (“KMP”)
For personal use only
Directors’ report
BrainChip Annual Report 2024 15
Remuneration Report (Audited)
1.
Executive summary
The Remuneration Report details the remuneration arrangements for KMP who are defined as those
persons having authority and responsibility for planning, directing, and controlling the major activities of
the Group, including any director of the parent entity.
For the purposes of this Remuneration Report, the term ‘executive’ includes the executive directors and
senior executives of the Parent and the Group.
Details of KMP of the Group are set out below:
Key Management Personnel
Name
Position
Date of
appointment
Date of
resignation
Country
of
Residence
Directors
A Viana
Non-Executive Director
28 Jun 2021
-
USA
S Hehir
Executive Director & Chief
Executive Officer
29 Nov 2021
-
USA
P van der Made
Non-Executive Director
10 Sep 2015
-
Australia
G Carrick
Non-Executive Director
23 Nov 2020
-
Australia
P Turcinov
Non-Executive Director
4 Jan 2022
-
Australia
D Le
Non-Executive Director
1 Nov 2022
-
USA
Other Key Management Personnel
A Mankar
Chief Development Officer
1 Oct 2014
31 Dec 2024
USA
K Scarince
Chief Financial Officer
11 Mar 2019
-
USA
Financial performance 2024
A summary of the Group’s financial results and movement in shareholder value is presented in the table
below for the past five years up to and including the current financial year:
2024
2023
2022
2021
2020
Revenue in US$ million
$0.40
$0.23
$5.07
$1.59
$0.12
Net loss after tax US$ million
$24.43
$28.88
$22.09
$20.98
$26.82
Closing share price AUD
$0.390
$0.170
$0.745
$0.680
$0.430
Closing share price USD
$0.242
$0.113
$0.507
$0.494
$0.331
Loss per share (US cents)
1.24c
1.57c
1.24c
1.22c
1.76c
Net tangible assets US cents per share
0.96c
0.83c
1.24c
1.10c
0.90c
No dividends were issued in the past five years including the current financial year.
For personal use only
Directors’ report
BrainChip Annual Report 2024 16
Remuneration Report (Audited)
1.
Executive summary (continued)
Compensation highlights
BrainChip is at the forefront of AI technology innovation. The Company operates on a global scale and
requires an executive team capable of maintaining our competitive advantage, seeking the top talent in the
geographical regions in which we compete. As a result, our compensation practices and policies are
generally consistent with the executive’s location. For example, each of our Executive KMPs resides and
operates in the United States, a key market for BrainChip. In turn, our executive compensation for these
employees must align with standard U.S. technology sector practices in order to attract and retain talent.
Failure to align our remuneration program with market standards for these individuals would hamper our
retention and recruitment efforts.
For all KMPs and employees, our compensation programs focus on the alignment between pay and
performance. In 2024, this was demonstrated by the following:
•
2024 Short-term incentive (“STI”) awards based on bookings and operational performance of the
Company, as well as the achievement of individual goals resulting in STI awards accrued at 52% of
Target.
•
Long-term incentive (“LTI”) awards with financial performance targets based on Revenue, Bookings and
Share Price (“SP”) at the end of two performance periods, Fiscal Year 2024 (FY 2024) and the period from
1 January 2024 to 31 December 2026. A minimum of 50% of the performance target was achieved for the
LTI award based on the FY 2024 targets, with vesting to occur on 28 February 2025.
For the Chief Executive Officer, the compensation structure was similarly designed to align with both pay and
performance. The Board ensures the CEO's accountability through a defined set of performance metrics
aligned with the role's assigned responsibilities. Performance is evaluated annually through a review process
led by the Chair.
•
In 2024, the Board approved an incentive payout at 52% of the annual target for the Chief Executive
Officer which aligned with the STI plan and the performance against operational goals and bookings.
•
The 2024 LTI award granted to the Chief Executive Officer under the terms of the 2024 LTIP was limited
to the minimum level, equating to 50% of the target award. This minimum award of RSUs is scheduled
to vest on 1 March 2025.
•
The Board did not approve any additional awards, as the higher financial performance targets were not
achieved.
2. Remuneration governance
Remuneration & Nomination Committee
The Board of Directors has overall responsibility for BrainChip’s remuneration principles, practices,
strategies and approach to ensure they support the Company’s business strategy and are appropriate for
a listed company given the size and nature of BrainChip’s business. The Remuneration & Nomination
Committee (R&NC) is responsible for advising the Board on the compensation of the Board and its
committees, amongst other roles.
For personal use only
Directors’ report
BrainChip Annual Report 2024 17
Remuneration Report (Audited) (continued)
2. Remuneration governance (continued)
Determining Executive Compensation
The Committee undergoes a thorough year-long process in determining compensation for senior
executives. The Committee seeks input from multiple parties when determining the structure, size, and
method of compensation.
Role of the Remuneration &
Nomination Committee
The R&NC operated throughout the year with the purpose of assisting
the Board in establishing the Group’s remuneration philosophy, guiding
principles and practices for monitoring their effectiveness. The principal
objective of the Company’s remuneration program is to attract, retain
and motivate highly talented individuals who can deliver competitive
results and financial returns to our shareholders while accomplishing
both our short and long-term plans and goals. The R&NC is specifically
tasked with reviewing and making recommendations to the Board in
respect of the Group’s remuneration policies, short and long-term
incentives, and equity remuneration, including the structure and amount
of remuneration of Executives and Non-Executive Directors. The R&NC is
also responsible for overseeing the succession planning of the Chief
Executive Officer and other top executives.
Role of Executive Officers
Mr. Hehir makes recommendations to the Committee regarding
program design and remuneration levels for KMPs other than himself. In
addition, the KMPs are responsible for performance and remuneration
programs for all other employees.
Mr. Hehir and other members of management provide input to the
Committee to assist in establishing the performance objectives. At the
end of the fiscal year, the Committee reviews and discusses the
performance and compensation of the Chief Executive Officer and
makes its recommendations to the Board. Mr. Hehir is not part of the
R&NC and does not participate in decisions regarding his own
compensation.
Role
of
Compensation
Consultants
In 2024, the Committee retained Korn Ferry as an independent
remuneration consultant for a fee of $68,500 to conduct a review of, and
provide advice regarding, the design of the Company’s executive
compensation plan and related compensation advice.
Remuneration approval process
The Board approves, subject to a recommendation from the R&NC the remuneration arrangements of the
Non-Executive Directors, Executive Directors, and executives and all awards made under the BrainChip
Equity Plan (“LTIP”) (previously named the 2018 Long Term Incentive Plan). Aggregate fees paid to Non-
Executive Directors are paid within the total remuneration fee pool approved by shareholders.
For personal use only
Directors’ report
BrainChip Annual Report 2024 18
Remuneration Report (Audited) (continued)
2. Remuneration governance (continued)
Adoption of 2023 Remuneration Report
At the Annual General Meeting of Shareholders on 21 May 2024, greater than 25% of Shareholders voted
against the adoption of the 2023 Remuneration Report, which constituted a Second Strike for the purposes
of s250U of the Corporations Act (Cth) 2001. Shareholders however voted against the Board Spill Resolution
as presented to the Annual General Meeting as a result of the Second Strike. Based on shareholder
feedback received at the 2024 Annual General Meeting, the R&NC and the Board have continued to review
the approach taken to the Company’s overall remuneration and its appropriateness to the Company’s
circumstances, its performance and overall market conditions.
To address concerns raised by shareholders, the R&NC recommended to the Board, and the Board
approved changes to the Non-Executive Director Remuneration Policy. These included the introduction of:
•
a set of Non-Executive Director (NED) evaluation criteria against which each NED is annually held
accountable; and
•
a NED Minimum Shareholding Policy requiring each NED to establish and hold a minimum shareholding
based on 1 year of the NED base cash remuneration.
The updated remuneration policies and practices, formally adopted by the Board of Directors, reflect
current market and stakeholder expectations, being:
•
transparent;
•
globally benchmarked; and
•
aligned with the interest of shareholders.
The Remuneration Policy and the Non-Executive Director Remuneration Policy are both available on the
Company’s website.
The Company believes that the appropriate balance has been struck in the current remuneration
arrangements set out in this Report.
Peer Group Information
During 2024 the R&NC, with assistance from its independent remuneration consultant, selected a peer group
for comparison and benchmarking purposes. Prior to 2024, the Committee did not primarily rely on
benchmarking for setting remuneration. Rather, the Committee relied on various surveys purchased from
independent third parties.
The Committee generally targets the median of the peer group, but may deviate, up or down, from the
median based on a variety of factors, including, but not limited to, experience levels, retention needs, and
job responsibilities.
The Committee, in consultation with the independent remuneration consultant, established two peer groups
based on identical selection criteria. One peer group focused on Australian companies while the other was
made up of U.S. based companies. Use of both peer groups allowed the Committee to balance the
remuneration standards in each market while designing an incentive program intended to meet the
Company’s strategic needs.
In establishing the two 2024 benchmarking peer groups, the Committee applied the same criteria to each:
•
Industry scope: Publicly traded companies in application software and information technology, in
general;
•
Geographic scope: Publicly traded companies in Australia and the United States (12 selected of each).
For personal use only
Directors’ report
BrainChip Annual Report 2024 19
Remuneration Report (Audited) (continued)
2. Remuneration governance (continued)
Peer Group Information (continued)
•
Size: Companies with a market capitalisation generally between 0.5 and 2.5 times BrainChip’s market
capitalisation; and
•
Business fit: Peer group companies’ business models and structures broadly reflect those of BrainChip.
This peer group will be reflected in pay decisions for Fiscal Year 2025 (FY 2025).
Share Ownership Guidelines
For FY2025, the Committee intends to establish share ownership guidelines to further align our executives
with shareholders. The Committee intends to progressively implement these guidelines to give executives a
greater stake in the long-term outcome of the Company, but also to strengthen the governance of our
remuneration program.
BrainChip Equity Plan - Forfeiture Conditions
Within the BrainChip Equity Plan Rules the Company may, in the event of certain circumstances and at the
discretion of the Board, recover certain long-term incentive Share Awards granted to an LTIP participant if
the individual engaged in fraud or wilful misconduct, wilful breach of the Company’s Code of Conduct, or
wilful breach of the individual’s terms of employment with the Company (Forfeiture Condition). The BrainChip
Equity Plan Rules further stipulates that, in such an event, the surrender and recovery of Share awards held
by the participant to the Company may be sold to a third party or subject to a Buy-Back for a nominal
consideration.
Compensation Risk
In reviewing our compensation policies and practices each year, the Committee seeks to ensure the
executive compensation program provides an appropriate balance of risk and reward consistent with the
risk profile of our Company. The Committee also seeks to ensure our compensation practices do not
encourage excessive risk-taking behaviour by the executive team. The BrainChip Equity Plan was designed
to align executive compensation with our long-term performance, and to discourage executives from taking
excessive risks in order to achieve short-term, unsustainable performance. The Company’s BrainChip Equity
Plan Forfeiture Conditions and the proposed Share Ownership Guidelines are designed to achieve the same
objectives.
All BrainChip’s executives, other employees and Directors are subject to our insider trading policy, which
prohibits trading in our securities while in possession of material undisclosed information about the
Company. Under this policy, such individuals are also prohibited from entering into hedging transactions
involving our securities, such as short sales, puts and calls. Furthermore, all Directors and officers of the
Company, as well as direct reports to the Chief Executive Officer and other persons identified by the
Company from time to time, are only eligible to trade in our securities during prescribed trading windows
and subject to the prior approval of the Company’s trading officer.
For personal use only
Directors’ report
BrainChip Annual Report 2024 20
Remuneration Report (Audited) (continued)
3. Non-Executive Director Remuneration Arrangements
The Board seeks to set aggregate remuneration for Non-Executive Directors at a level that enables the
Company to attract and retain highly skilled directors with exceptional ethical standards and diverse
experience, while maintaining a cost that remains competitive.
The Company’s constitution and the ASX listing rules specify that the Non-Executive Director fee pool shall
be determined from time to time by a general meeting. The last determination was at the Company’s 2022
Annual General Meeting, held on 24 May 2022, where shareholders approved an aggregate fee pool of
A$700,000 per year.
Structure
The remuneration of Non-Executive Directors consists of cash and participation in the BrainChip Equity Plan
at the Board’s discretion and subject to approval by shareholders.
In general, the Board seeks to increase Directors’ shareholding and overall alignment with investors. As
such, a critical component of the Non-Executive Director compensation program is in the form of equity.
This practice is consistent with non-executive director compensation arrangements in the United States
and Australia. Importantly, our Board talent is sourced from multiple markets, and we strive to create a
unified fee structure that suits the needs and expectations of all directors. With help from our independent
remuneration consultant, the cash and equity fees were sized after consideration of peers operating in
both Australia and the United States. The Board viewed this as appropriate given that our directors reside
and perform their oversight duties in both of these markets.
With effect from 11 February 2019, each non-executive member of the Board received a base fee of A$90,000
per year, the Non-Executive Chair received an additional fee of A$60,000 per year; the Audit & Governance
Committee Chair and the R&NC Chair each received a fee of A$15,000 per year and each member of those
Committees received A$10,000 per year.
In addition, as outlined in the Notice of Meeting for the 2022 AGM, which was approved by shareholders,
each Non-Executive Director will, on appointment, receive an initial grant of Restricted Stock Units,
Performance Rights or Service Rights valued at A$400,000 using the average closing share price of the 30
trading days preceding the appointment date. This grant would vest annually on the anniversary of the
appointment date over a three-year period. Additionally, each year the Non-Executive Directors will also
receive an annual grant at each Annual General Meeting valued at A$135,000 based on the share price,
being the volume-weighted average price (VWAP) for the 60 trading days (for shares traded on the ASX)
up to and including 31 December annually. This package is based on market data, including guidance
provided by a third-party consulting firm specialising in executive and director remuneration retained by
the Company in 2021.
The total remuneration received by each Director during the reporting period is disclosed in Section 6.
4. Executive remuneration arrangements
The remuneration strategy is designed to support our long-term growth, with accountability for key annual
results and long-term shareholder value. In turn, the Committee’s executive remuneration decisions were
made after careful consideration of several factors, including the talent market in which BrainChip
operates, shareholder input on incentive design, best practices in remuneration across multiple regions,
and strategic alignment.
For personal use only
Directors’ report
BrainChip Annual Report 2024 21
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
The Company’s remuneration strategy consists of the following key objectives:
Alignment with
Shareholder
interests
The Group’s current use of equity as a part of its remuneration structure
enhances alignment between directors and executives’ interests with those of
our shareholders. Achievement of the Group’s objectives are aimed at
creating shareholder value, thus directly benefiting Executives and Non-
Executive Directors as well.
Pay for
Performance
The Group instituted short term and long-term incentive programs for all
executives in 2024. The 2024 short-term incentive program is based on the
achievement of Company and individual performance targets, with payouts
focused on the achievement of target bookings, product development
milestones and adherence to budget. The long-term incentive program
performance metrics are focused on bookings, the conversion of bookings to
revenue and the Company share price.
Market
Comparisons
The Company’s remuneration program must be competitive with those of our
peer companies in both Australia and the United States in order to attract and
retain our executives and employees. As a general rule, we target the market
median (50th percentile) though we may deviate, up or down, from the
median from time to time due to a variety of factors.
Retention
The Company’s remuneration program is designed to attract and retain
highly talented individuals critical to our success by providing programs with
retentive features. The Group’s use of equity, both performance and time
based, not only aligns with global compensation practices, but also with the
interests of our shareholders. Furthermore, it provides the Company with the
appropriate remuneration tools to attract, retain, and reward our employees.
Achieving our objectives should lead to creation of shareholder value which
in turn would benefit Executives and Non-Executive Directors as their equity
grants vest over time.
Separate
Remuneration
Structures
The structure of Executive and Non-Executive Directors’ remuneration is
separate and distinct.
Risk Analysis
The R&NC considers the potential for unacceptable risk-taking in its
remuneration design. We believe that the design of our executive
remuneration does not unduly incentivise our executives to take actions that
may conflict with the long-term best interests of the Company and its
shareholders. Specifically, the Company provides executives with an
appropriate mix of pay elements between cash and equity, with
compensation not overly weighted towards any one remuneration
component.
For personal use only
Directors’ report
BrainChip Annual Report 2024 22
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
The Company recognises that if it is to be successful in a relatively nascent industry with its pioneering
technology, it must recruit and retain highly talented individuals. Considering the stage of our technology
and business development, these individuals also bear the incremental risk of joining an early-stage public
company. Although it is not the only factor, remuneration plays a key part in determining the Company’s
ability to compete for human resources and retain executives, particularly in the technical fields. In doing
so, the R&NC, the Board and management aim to design competitive remuneration programs
commensurate with executives’ positions, responsibilities and experience, and incentivise them to drive
towards the achievement of the Company’s short and long-term objectives.
The Committee is also cognisant of the talent markets in which BrainChip operates and the compensation
standards of each. The Company strives to balance the compensation standards based in Australia and
those in the United States. The remuneration program is heavily weighted towards performance-based
outcomes. However, the program also utilizes a retention component more in line with U.S. standards,
through the use of time-vesting RSUs representing 45% of target equity awards. This mix of awards is critical
to not only retain and attract the finest talent in each market, but keep our executive team focused on
long-term shareholder growth.
The chart below indicates the breakdown of total direct compensation for the KMPs by percentage, and
the proportion of total compensation which is performance conditioned. At target, 49% of average
compensation for all KMPs is performance-conditioned and is only received upon achievement of financial,
operational, or share price performance targets, except for the CEO whose compensation above target is
limited to 31% and subject to further consideration by the Board.
31%
26%
31%
18%
31%
37%
25%
CEO
KMP Average
Target Total Direct Compensation by Component
Time-Vesting RSUs
Performance-based
RSUs (Target)
Annual Incentive
Base Salary
31%
Performance-
Conditioned
49%
Performance-
Conditioned
For personal use only
Directors’ report
BrainChip Annual Report 2024 23
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
Elements of Our Executive KMP Remuneration Program
The BrainChip remuneration program consists of two key elements: fixed and variable pay. The chart below
shows the elements of the Company’s executive remuneration program for FY 2024:
Component
Description
Measurement /
Vesting Period
Rationale
Fixed
Base
salary
Fixed cash
compensation to
provide a stable
source of income.
One year
Competitive base salaries attract
and retain talent. Salaries reflect the
role,
responsibilities,
capabilities,
geographical
location,
and
experience of individual executives.
Variable
Short-term
Incentive
Program
(STIP)
Variable cash earned
upon achievement of
financial and
operational goals. FY
2024 goals include
•
Bookings
•
Operational goals
•
Individual goals
One year
Rewards
executives
when
organisational goals are achieved.
The incentive program is designed
to focus on key measures of
corporate growth.
Long-term
Incentive
Plan (LTIP)
Equity-based
compensation in the
form of
•
Restricted stock
units
One and three
years
The objective of the LTIP is to attract
and retain key employees and
consultants. It is considered that the
LTIP, through the issue of equity
instruments, will provide eligible
participants with the opportunity to
participate in the future growth of
the
Company
and
align
their
interests with shareholders.
Base Salary
Base salary is the fixed cash component of the remuneration program and is provided for running the day-
to-day operations of the Company. In addition, the base salary is set at a level intended to attract and
retain talented executives in the competitive markets in which the individuals operate.
In FY 2024, executives received fixed base salaries, and their contracts did not include any guaranteed base
pay increases. Fixed remuneration is reviewed annually by the Board. This process consists of a review of
the Company’s results, individual performance, and relevant comparative remuneration internally and
externally.
Executive
2023 Base ($) (1)
2024 Base ($) (1)
YoY % Change
•
Sean Hehir
450,000
450,000
0.0%
•
Anil Mankar
375,000
375,000
0.0%
•
Ken Scarince
325,000
325,000
0.0%
(1) In U.S. dollars. Salary packages are exclusive of superannuation, employee benefits, practices,
policies and programs provided by BrainChip.
For personal use only
Directors’ report
BrainChip Annual Report 2024 24
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
Short-term Incentive Program (STIP)
The STIP allows for cash awards upon the achievement of financial, operational and individual
performance goals. The potential STI awards under the FY 2024 STIP were determined to be market
competitive based on an assessment of the peer group, employee location, industry surveys, and input
from the independent remuneration consultant, Korn Ferry. As previously noted, individual target awards
are set with consideration of common practices within geographic regions. As such, target awards may be
higher than is typical of Australian practice. The STI target awards for senior executives listed as KMPs are
noted below:
Executive
2024 Base
($)1
STI Target
%
STI Target
$
•
Sean Hehir
450,000
100%
450,000
•
Anil Mankar
375,000
50%
187,500
•
Ken Scarince
325,000
50%
162,500
At the beginning of the year an STI ‘scorecard’ is established for the senior executives, made up of the key
objectives, STI Awards and performance levels set by the R&NC. Results are compared against this
scorecard at the end of the year to assess performance.
Half of the FY 2024 STI scorecard is based on Bookings, with a range of potential outcomes set by the R&NC
and approved by the Board. Executives may earn 100% of the STI Awards for achieving the Target level of
performance, as demonstrated in the table below. If the performance result falls short of the Target
expectation, a minimum Threshold award is paid out. Conversely, performance results above the STI Target
level for Bookings may earn a higher payout which is capped at 150% of the STI Target (“Maximum”). The
potential payouts between performance levels (Threshold, Target, Maximum) are determined on a linear
basis.
For 2024, the STI scorecard included the following key metrics:
Performance Levels
Metric
Weighting
Threshold
(50% Payout)
Target
Maximum
(150%
Payout)
Actual
Achievement
%
Bookings
50%
50%
100%
--
27%
Operational
Goals
45%
See description below
20%*
Individual Goals
5%
0%
100%
--
5%
Subtotal:
52%
Bookings
Outperformance
Multiplier
--
100%
150%
0.0%
Total:
52%
*KMP average
The Threshold, Target, and Maximum performance levels are not disclosed as this may lead to competitive
harm.
For personal use only
Directors’ report
BrainChip Annual Report 2024 25
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
Operational Goals
In addition to the Bookings goal, the R&NC and the Board established multiple operational goals necessary
for the execution of corporate strategy. Payout of each operational goal is earned at 100% of Target if the
performance target is achieved, or at 0% if Target performance is not met.
The following table sets out the short-term operational goals used for purposes of the FY 2024 STI
scorecard:
Operational Goals
Weighting
Outcome
Edge Box sales
10%
Not Achieved
Strategic Development Goals (5 goals, weighted 5% each)
25%
60% Achieved
Corporate culture improvements as measured by quantitative
survey
5%
Not Achieved
Risk register compliance and reporting
5%
Achieved
Despite success with respect to several operational and individual goals, the Company fell short of the
Booking Target performance level. Review of the overall FY 2024 STI scorecard resulted in an eligible STI
Award of 52% of Target being approved by the Board.
STI - FY 2025
For the FY 2025 Incentive Program, the R&NC has maintained a similar set of metrics and weightings for the
FY2025 Company scorecard, which has been updated to reflect new goals that are aligned with
operational and strategic initiatives and priorities. The R&NC has also implemented a change to the
Bookings performance levels, with the Threshold being set at 80% and Maximum at 120%, in line with the
intention to add further rigor to the performance requirements in our remuneration program.
Long-term Incentive Program (LTIP)
The Company grants equity pursuant to the LTIP (previously named BrainChip Long-term Incentive Plan.
Under the LTIP, the Committee may grant employees a variety of equity instruments to accomplish its
compensation objectives. The granting of equity instruments is a critical element of the Company’s
remuneration program for executives as it aligns their interests directly with those of the Company and its
shareholders. The realisation of value from these equity grants over time are highly dependent on the
success of the Company. As a result, equity grants incentivise our executives to drive towards the
achievement of our short and long-term objectives.
The objective of the LTIP is to attract and retain key employees and consultants. It is considered that the
LTIP, through the issue of shares, share options, performance rights, restricted stock units and service rights
(“LTIP equity instruments”), will provide eligible participants with the opportunity to participate in the future
growth of the Company. Share options offered under the LTIP must be offered at no more than a nominal
value and under terms to be determined by the Board from time to time. It is not the intention of the
Company to apply for quotation of any of the share options which are issued under the LTIP.
LTIP equity instruments issued to eligible participants are issued in accordance with the BrainChip Equity
Plan and, historically, in accordance with the 2015 LTIP. The number of LTIP equity instruments issued is
determined by the policy set by the Board upon recommendation by the R&NC and is based on each
eligible participant’s role and position within the Group.
For personal use only
Directors’ report
BrainChip Annual Report 2024 26
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
The LTIP equity instruments will vest over periods as determined by the Board, and eligible participants are
able to exercise or convert the LTIP equity instruments any time after vesting and before the expiry date.
Where an eligible participant ceases employment prior to the vesting of their LTIP equity instrument, the
LTIP equity instrument will generally lapse automatically and be forfeited, unless otherwise determined by
the Board. Where an eligible participant ceases employment after the vesting but before the exercise (if
applicable) of their LTIP equity instrument, unless the eligible participant has been terminated for cause
(when their LTIP equity instrument will immediately lapse), the LTIP equity instrument may generally be
exercised by the eligible participant within a period after cessation of employment prescribed either under
the applicable Plan or offer documentation, or a longer period as determined by the Board. Any LTIP equity
instruments not exercised within such period will automatically lapse and be forfeited, unless otherwise
determined by the Board.
Remuneration in the form of share-based payments awarded to executives included performance criteria
linked to certain financial performance conditions, and service conditions which are in recognition of the
service provided. The following table summarises the awards granted in 2024 to executives:
Equity Type
Purpose and Award Detail
Performance-
Based RSUs
The Committee provides Performance-Based RSUs as an incentive to achieve
financial growth and other corporate goals. Achievement of these goals is
intended to align with the interests of shareholders. Additionally, a portion of the
awards are subject to time-based vesting to promote executive retention.
The performance criteria were approved by the R&NC and the Board for grant in the relevant year and
require the Company to achieve financial performance targets based on Revenue, Bookings and Share
Price (“SP”) at the end of two performance periods. One-third of the 2024 RSUs will be measured as of 31
December 2024. The remaining two-thirds of the 2024 RSU grant will measure cumulative performance
over the three-year period ending 31 December 2026.
Participants will receive a minimum award equal to 50% of Target shares for each of the Bookings and
Revenue components regardless of performance. For Bookings and Revenue results between 50% and 100%
of target, participants will earn awards equivalent to the percentage of target achieved. For the Share Price
component, participants will receive 50% of target shares if performance (measured by 60-day VWAP at
the end of each performance period) falls between the Threshold and Target share price objectives and
will receive 100% of Target shares if the share price is at or above the target level of performance. If the
Share Price falls below the Threshold, participants will not receive any award.
Participants may earn above-target payouts provided “stretch” goals are met for Bookings only. Up to 150%
of the Bookings portion of the award may be earned for achieving between 100% and 150% of the Bookings
target.
For personal use only
Directors’ report
BrainChip Annual Report 2024 27
Remuneration Report (Audited) (continued)
4. Executive remuneration arrangements (continued)
Achievement of the LTI award is measured based on the percentage of performance level achieved. Metric
weightings and requirements are as follows:
Performance Levels
Metric
Weighting
Threshold
(0-50%
Payout)
Target
(51-100%
Payout)
Maximum
(101-150%
Payout)
Period 1
Period 2
Bookings
50%
50%
100%
150%
2024
2024-2026
Revenue
40%
50%
100%
--
2024
2024-2026
Share price
10%
0-100%
100%
--
2024
2024-2026
For FY 2024, with the exception of the Executive Director, senior executives were granted Performance-
Based RSUs, one-third of which will vest one year after grant and two-thirds will vest after three years. 45%
of the Target RSUs will vest regardless of performance outcomes, while the remaining 55% will vest only
upon achievement of certain financial and share price performance conditions. The blend of service-
based and performance-based equity awards is aligned with competitive U.S. market practices, and
balances driving long-term performance with ensuring executive retention.
The Executive Director received Threshold RSUs with no performance criteria attached, one-third of which
will vest one year after grant and two-thirds will vest after three years. The Board may consider further
award if higher financial performance targets are achieved.
The fair value of the 2024 grants of RSUs to executives split by the vesting periods are included in the tables
below:
Executive – 1 year vesting
Bookings RSUs
(50%)
Revenue RSUs
(40%)
SP RSUs
(10%)
Aggregate
RSUs
•
Sean Hehir –Threshold award
$90,354
$72,283
$18,071
$180,708
•
Anil Mankar – Maximum award
$170,640
$136,512
$19,025
$326,177
•
Ken Scarince – Maximum award
$147,888
$118,311
$16,488
$282,687
Executive – 3 year vesting
Bookings RSUs
(50%)
Revenue RSUs
(40%)
SP RSUs
(10%)
Aggregate
RSUs
•
Sean Hehir –Threshold award
$179,359
$143,487
$35,872
$358,718
•
Anil Mankar – Maximum award
$341,281
$273,025
$64,102
$678,408
•
Ken Scarince – Maximum award
$295,777
$236,621
$55,556
$587,954
Refer to Section 5 for equity instruments granted as part of remuneration to KMPs, including historical
grants of options, restricted stock units and performance rights.
For FY 2025 the R&NC has maintained the same set of metrics and weightings, as the metrics continue to
be well aligned with our operational and strategic initiatives and priorities. The performance range for
Bookings will be set at 80% at Threshold and 120% at Maximum, furthering the rigor of the LTIP’s
performance requirements.
For personal use only
Directors’ report
BrainChip Annual Report 2024 28
Remuneration Report (Audited) (continued)
5. Equity instruments granted as part of remuneration (continued)
Options, performance rights, restricted stock units and service rights linked to performance criteria
Grant Date
Unit
granted
Maximum
awarded
Vested in
current
year
Cancelled
in current
year
End of
Vesting
Period
Fair value
per RSU/PR
(1)
Total Fair
Value
(3)
Expiry
date
Number
Number
Number
US$/unit
US$
S Hehir
25/5/2022
RSU
1,081,730
-
-
28/2/2025
0.814
880,539
1/3/2025
S Hehir
25/5/2023
RSU
2,264,493
-
-
28/2/2026
0.278
629,529
1/3/2026
P van der Made
25/5/2022
PR
1,250,000
-
-
28/2/2025
0.814
1,017,513
1/3/2025
P van der Made
25/5/2023
PR
1,287,906
-
-
28/2/2026
0.278
358,038
1/3/2026
A Mankar
29/4/2022
RSU
1,250,000
-
-
28/2/2025
0.702
877,216
1/3/2025
A Mankar
21/4/2023
RSU
1,572,564
-
-
28/2/2026
0.278
437,173
1/3/2026
A Mankar
22/5/2024
RSU
2,039,125
-
-
28/2/2025
0.1600 (2)
326,177
1/3/2025
A Mankar
22/5/2024
RSU
4,078,250
-
-
28/2/2027
0.1663 (2)
678,408
1/3/2027
K Scarince
29/4/2022
RSU
1,000,000
-
-
28/2/2025
0.702
702,773
1/3/2025
K Scarince
21/4/2023
RSU
1,362,889
-
-
28/2/2026
0.278
378,883
1/3/2026
K Scarince
22/5/2024
RSU
1,767,242
-
-
28/2/2025
0.1600 (2)
282,687
1/3/2025
K Scarince
22/5/2024
RSU
3,534,484
-
-
28/2/2027
0.1663 (2)
587,954
1/3/2027
(1) The fair value per unit is rounded for disclosure purposes. For details on the valuation of the units issued in the current year, including models and
assumptions used, are included in Note 26 of the Financial Report.
(2) Weighted average of the fair value per unit of market and non-market performance criteria.
(3) Total Fair value is calculated at the date of grant based on the maximum target award.
r personal use only
Directors’ report
BrainChip Annual Report 2024 29
Remuneration Report (Audited) (continued)
5. Equity instruments granted as part of remuneration (continued)
Options, performance rights, restricted stock units and service rights with no linked performance criteria
RSUs, PRs and SRs over ordinary shares in the Company were provided as remuneration to KMPs during the financial year with no performance conditions
other than a service condition of between 1 to 10 years and vesting period in tranches of varying time periods to encourage the retention of staff, as detailed
in the table below:
Grant Date
Unit
granted
Awarded in
2024
Vested in
2024
Lapsed in
2024
End of Vesting
Period
Fair value
per unit (1)
Total Fair
Value (2)
Expiry
date
Number
Number
Number
US$
US$
A J. Viana
25/5/2022
RSU
-
666,667
-
28/6/2024
0.814
1,628,000
29/6/2024
A J. Viana
25/5/2022
RSU
-
250,000
-
1/11/2025
0.814
814,000
2/11/2025
A J. Viana
26/5/2023
RSU
-
187,344
-
26/5/2024
0.278
52,082
27/5/2024
A J. Viana
22/5/2024
RSU
697,674
-
-
23/5/2025
0.1701
118,674
24/5/2025
S Hehir
25/5/2022
RSU
-
2,000,000
-
29/11/2025
0.814
4,884,000
30/11/2024
S Hehir
22/5/2024
RSU
1,062,368
-
-
1/3/2025
0.1701
180,708
2/3/2025
S Hehir
22/5/2024
RSU
2,108,879
-
-
1/3/2027
0.1701
358,718
2/3/2027
D-L Le
26/5/2023
RSU
-
187,344
-
26/5/2024
0.278
52,082
27/5/2024
D-L Le
26/5/2023
RSU
-
154,321
-
1/11/2025
0.278
128,704
2/11/2025
D-L Le
22/5/2024
RSU
697,674
-
-
23/5/2025
0.1701
118,674
24/5/2025
P Turcinov
25/5/2022
PR
-
69,124
-
25/5/2025
0.814
168,802
26/5/2025
P Turcinov
25/5/2022
PR
-
204,813
-
4/1/2025
0.814
500,153
5/1/2025
P Turcinov
26/5/2023
PR
-
187,344
-
26/5/2024
0.278
52,082
27/5/2024
P Turcinov
22/5/2024
SR
697,674
-
-
23/5/2025
0.1701
118,674
24/5/2025
G Carrick
26/5/2023
PR
-
187,344
-
26/5/2024
0.278
52,082
27/5/2024
G Carrick
22/5/2024
SR
697,674
-
-
23/5/2025
0.1701
118,674
24/5/2025
P van der Made
22/5/2024
SR
697,674
-
-
23/5/2025
0.1701
118,674
24/5/2025
(1) The fair value per unit is rounded for disclosure purposes. For details on the valuation of the units issued in the current year, including models and
assumptions used, please refer to Note 26 of the Financial Report.
(2) Total Fair value is calculated at the date of grant based on the number awarded.
r personal use only
Directors’ report
BrainChip Annual Report 2024 30
Remuneration Report (Audited) (continued)
5. Equity instruments granted as part of remuneration (continued)
Options, performance rights, restricted stock units and service rights with no linked performance criteria (continued)
In prior years, options over ordinary shares have been issued to KMPs with no performance criteria other than a service condition of between 1 to 10 years
vesting period in tranches of varying time periods. These are listed in the table below:
Grant Date
Unit
granted
Awarded
during
2024
Vested
during
2024
Exercised
during
2024
Forfeited
during
2024
Lapsed
during
2024
End of
Vesting
Period
Fair
value
per
option
Total
Fair
Value
Exercise
price
per
option
Expiry
date
Number
Number
Number
Number
Number
US$
US$
US$
K Scarince
11/3/2019
Options
-
-
7,200,000
-
-
11/3/2023
0.038
381,370
0.047
11/3/2029
K Scarince
23/7/2020 Options
-
4,000,000
-
-
-
10/8/2024
0.079
316,000
0.125
06/8/2030
G Carrick
23/11/2020 Options
-
625,000
-
-
-
23/11/2024
0.395
987,736
0.279
27/5/2031
The value of options over ordinary shares granted, exercised, forfeited and lapsed for KMPs as part of compensation during the current year are set out
below:
Value of options
granted during
2024
Value of options
exercised
during 2024
Value of options
forfeited during
2024
Value of options
lapsed during
2024
Remuneration
consisting of
options for the
year
US$
US$
US$
US$
%
K Scarince
-
1,676,593
-
-
70%
r personal use only
Directors’ report
BrainChip Annual Report 2024 31
Remuneration Report (Audited) (continued)
6. Executive contractual arrangements
Details for executive contractual arrangements for KMP are noted below:
Name
Sean Hehir
Title
Chief Executive Officer and Executive Director
Term of
agreement
Open agreement with no fixed term
Details
Salary package of $450,000 including any salary sacrifice and superannuation, health
and welfare benefit plans, practices, policies and programmes provided by BrainChip
Inc.
Mr Hehir will be eligible for discretionary annual incentive plans, the terms of which are
at the absolute discretion of the Board.
Mr Hehir will be eligible to receive a STI payout of up to 100% of base salary in respect of
each financial year in which he is employed by the Company, subject to performance
metrics determined by the Board. During 2024, a STI payout of $123,750 was awarded in
relation to the 2023 financial year (2023: Nil), and a further amount of $232,283 is
payable in relation to the 2024 STIP.
Termination
Terminated by 12 months’ notice by the Company or Mr Hehir, except that the
Company may terminate employment without notice in certain circumstances. On
termination of employment by either Mr Hehir or the Company, the Company will pay
all fixed remuneration and any statutory entitlements owing to Mr Hehir, and any STI
or LTI not vested may be paid or granted at the discretion of the Board.
Name
Anil Mankar
Title
Chief Development Officer
Term of
agreement
Open agreement with no fixed term however Mr Mankar retired effective 31 December
2024.
Details
Base fee of $375,000 plus benefits under health and welfare benefit plans, practices,
policies and programmes provided by BrainChip Inc.
Mr Mankar will be eligible to receive an STI payout on such terms and conditions as
determined from time to time by the Board. The STI payout may be an amount up to
fifty percent (50%) of the base salary in effect at the end of any fiscal year. During 2024,
a STI payout of $51,563 was awarded in relation to the 2023 financial year (2023: Nil),
and a further amount of $96,784 is payable in relation to the 2024 STIP.
Termination
Terminated at any time with or without cause or notice by either himself or BrainChip
Inc. Mr Mankar is entitled to 24 months’ severance pay upon termination by BrainChip
Inc. at any time without cause. The amount is payable over 24 months from the date of
termination.
For personal use only
Directors’ report
BrainChip Annual Report 2024 32
Remuneration Report (Audited) (continued)
6. Executive contractual arrangements (continued)
Name
Ken Scarince
Title
Chief Financial Officer
Term of
agreement
Open agreement with no fixed term
Details
Base fee of $325,000 plus benefits under health and welfare benefit plans, practices,
policies and programmes provided by BrainChip Inc.
Mr Scarince will be eligible to receive an STI payout on such terms and conditions as
determined from time to time by the Board. The STI payout may be an amount up to
fifty percent (50%) of the base salary in effect at the end of any fiscal year. During
2024, a STI payout of $44,688 was awarded in relation to the 2023 financial year
(2023: Nil), and a further amount of $83,880 is payable in relation to the 2024 STIP.
Termination
Terminated at any time with or without cause or notice by either himself or
BrainChip Inc. Mr Scarince is entitled to 12 months’ severance pay upon termination
by BrainChip Inc. at any time without cause. The amount is payable over 12 months
from the date of termination.
There are no other formalised KMP employment agreements.
For personal use only
Directors’ report
BrainChip Annual Report 2024 33
Remuneration Report (Audited) (continued)
6. Executive contractual arrangements (continued)
The table below shows the realised remuneration of the Group’s KMPs received during 2024:
Short Term
Post-
Employment
Share-
based
Payment
(4)
2024
Salary
and
Fees
STIP
(3)
Annual
leave
Super-
annuation
Equity
Instruments
Total
Perform
-ance
related
US$
US$
US$
US$
US$
US$
%
Directors
A Viana
105,429
-
-
-
290,501
395,930
-
S Hehir
457,195
356,033
34,614
10,350
861,817
1,720,009
24%
P van der Made (1)
62,593
-
-
-
(22,125)
40,468
-
G Carrick
82,366
-
-
-
148,606
230,972
-
P Turcinov
82,366
-
-
-
188,123
270,489
-
D Le
72,482
-
-
-
135,750
208,232
-
Other KMPs
A Mankar (2)
390,494
148,347
11,538
10,350
247,998
808,727
49%
K Scarince
332,195
128,568
24,998
9,210
234,845
729,816
43%
Totals
1,585,120
632,948
71,150
29,910 2,085,515
4,404,643
(1) Salary and fees for Mr van der Made includes $3,290 of consulting services as a BrainChip
Scientific Board member, of which $1,630 is payable at year end.
(2) Mr Mankar retired as Chief Development Officer on 31 December 2024 and ceased being a
KMP of the Company. He has continued providing services as a consultant.
(3) STI payouts to executive KMPs during the year related to the 2023 performance comprised: Mr
Hehir $123,750, Mr Mankar $51,563 and Mr Scarince $44,688. STIs payable at year end related
to the 2024 performance comprised: Mr Hehir $232,283, Mr Mankar $96,784 and Mr Scarince
$83,880.
(4) Share-based payment remuneration represents the current period expense in respect of
options and performance rights issued, offset by the value of options and performance rights
that have been forfeited during the year. Management has assessed the likelihood of
achieving the performance criteria of the 2022 and the 2024 “one year vest” grants which
vest on 28 February 2025 and has recognised appropriate vesting credits in the current
financial year for Mr Hehir, Mr van der Made, Mr Mankar and Mr Scarince.
For personal use only
Directors’ report
BrainChip Annual Report 2024 34
Remuneration Report (Audited) (continued)
6. Executive contractual arrangements (continued)
The table below shows the realised remuneration of the Group’s KMPs received during the prior year:
Short Term
Post-
Employment
Share-
based
Payment
(3)
2023
Salary
and
Fees
STIP
(2)
Annual
leave
Super-
annuation
Equity
Instruments
Total
Perform-
ance
related
US$
US$
US$
US$
US$
US$
%
Directors
A Viana
111,255
-
-
-
698,146
809,401
-
S Hehir
456,781
-
34,614
9,900
2,079,506
2,580,801
5%
P van der Made (1)
294,073
-
22,476
17,483
196,757
530,789
37%
G Carrick
82,782
-
-
-
166,541
249,323
-
P Turcinov
82,782
-
-
-
270,050
352,832
-
D Le
72,848
-
-
-
102,661
175,509
-
Other KMPs
A Mankar
389,343
-
13,224
9,900
415,255
827,722
50%
K Scarince
331,781
-
24,998
9,750
344,547
711,076
48%
Totals
1,821,645
-
95,312
47,033
4,273,463
6,237,453
(1) Mr van der Made retired as Chief Technology Officer on 31 December 2023 and was
appointed non-executive director effective 1 January 2024
(2) No STI payouts were accrued related to KMPs during the year.
(3) Share-based payment remuneration represents the current period expense in respect of
options and performance rights issued, offset by the value of options and performance rights
that have been forfeited during the year.
For personal use only
Directors’ report
BrainChip Annual Report 2024 35
Remuneration Report (Audited) (continued)
7. Equity instruments disclosures
Shareholdings of Key Management Personnel (including nominees)
Shares held in BrainChip Holdings by KMP are summarised as follows:
Balance at
1 January
2024
Acquired /
Disposed
Shares issued
as
remuneration
Net change
other (3)
Balance at
31 December
2024
Directors
A Viana
1,413,333
(85,000)
-
1,104,011
2,432,344
S Hehir
1,989,017
(1,017,000)
-
2,000,000
2,972,017
P van der Made (3)
156,805,823
-
-
-
156,805,823
G Carrick
-
-
-
187,344
187,344
P Turcinov
273,937
(375,000)
-
461,281
360,218
D Le
154,321
-
-
341,665
495,986
Other KMPs
A Mankar (1)
84,999,833
(9,999,833)
-
(75,000,000)
-
K Scarince (2)
222,100
(7,400,000)
-
7,200,000
22,100
Total
245,858,364
(18,876,833)
-
(63,705,699)
163,275,832
(1)
Mr Mankar’s fully paid ordinary shares are held by Merrill Lynch (Australia) Nominees Pty Ltd
on behalf of Mr Mankar, who ceased to be a KMP upon his retirement at 31 December 2024
(2)
Mr Scarince holds 100 BRCHF shares and 300 BCHPY (ADR) shares (which represent 40 BRN
shares) on the US stock markets.
(3)
Other than the adjustment for Mr Mankar upon ceasing to be a KMP, this column comprises
shares issued on conversion of Restricted Stock Units or Performance Rights.
Options holdings of Key Management Personnel (including nominees)
The table below summarises the options granted to KMPs and exercised during the current year. Refer to
section 5 for the terms of the options granted to KMP in the current and prior years. There were no
alterations to the terms and conditions of options awarded as remuneration since their award date. No
options were lapsed during the current year.
Balance at
1 January
2024
Granted as
remuner-
ation
Exercised
Balance at
31
December
2024
Vested and
not exercis-
able
Vested and
exercise-
able
Directors
A Viana
-
-
-
-
-
-
S Hehir
-
-
-
-
-
-
P van der Made
-
-
-
-
-
-
G Carrick
2,500,000
-
-
2,500,000
-
2,500,000
P Turcinov
-
-
-
-
-
-
D Le
-
-
-
-
-
-
Other KMPs
A Mankar
-
-
-
-
-
-
K Scarince
21,700,000
-
(7,200,000)
14,500,000
-
14,500,000
Total
24,200,000
-
(7,200,000)
17,000,000
-
17,000,000
For personal use only
Directors’ report
BrainChip Annual Report 2024 36
Remuneration Report (Audited) (continued)
7. Equity Instruments Disclosure (Continued)
Restricted Stock Unit (RSU) holdings of Key Management Personnel (including nominees)
The table below summarises the RSUs granted to KMP and converted to shares during the current year.
Refer to section 5 for the terms of the RSUs granted to KMP in the current and prior years. There were no
alterations to the terms and conditions of RSUs awarded as remuneration since their award date.
Balance at
1 January
2024
Granted as
remuneration
Converted
Net change
other (1)
Balance 31
December
2024
Directors
A Viana (1)
1,104,011
697,674
(1,104,011)
-
697,674
S Hehir
5,346,223
3,171,247
(2,000,000)
-
6,517,470
P van der Made
-
-
-
-
-
G Carrick
-
-
-
-
-
P Turcinov
-
-
-
-
-
D Le
495,986
697,674
(341,665)
-
851,995
Other KMPs
A Mankar
2,822,564
6,117,375
-
(8,939,939)
-
K Scarince
2,362,889
5,301,726
-
-
7,664,615
Total
12,131,673
15,985,696
(3,445,676)
(8,939,939)
15,731,754
(1)
Mr Mankar ceased to be a KMP upon his retirement on 31 December 2024
Performance Right (PR) holdings of Key Management Personnel (including nominees)
The table below summarises the PRs granted to KMPs and converted during the current year. Refer to
section 5 for the terms of the PRs granted to KMP in the current and prior years. There were no alterations
to the terms and conditions of the PRs awarded as remuneration since their award date.
Balance at
1 January
2024
Granted as
remuneration
Converted
Net change
other
Balance at
31 December
2024
Directors
A Viana
-
-
-
-
-
S Hehir
-
-
-
-
-
P van der Made
1,262,635
-
-
-
1,262,635
G Carrick
187,344
-
(187,344)
-
-
P Turcinov
735,219
-
(461,281)
-
273,938
D Le
-
-
-
-
-
Other KMPs
A Mankar
-
-
-
-
-
K Scarince
-
-
-
-
-
Total
2,185,198
-
(648,625)
-
1,536,573
For personal use only
Directors’ report
BrainChip Annual Report 2024 37
Remuneration Report (Audited) (continued)
7. Equity Instruments Disclosure (Continued)
Service Right (SR) holdings of Key Management Personnel (including nominees)
The table below summarises the SRs granted to KMPs and converted during the current year. Refer to
section 5 for the terms of the SRs granted. There were no alterations to the terms and conditions of the
SRs awarded as remuneration since their award date.
Balance at
1 January
2024
Granted as
remuneration
Converted
Net change
other
Balance at
31 December
2024
Directors
A Viana
-
-
-
-
-
S Hehir
-
-
-
-
-
P van der Made
-
697,674
-
-
697,674
G Carrick
-
697,674
-
-
697,674
P Turcinov
-
697,674
-
-
697,674
D Le
-
-
-
-
-
Other KMPs
A Mankar
-
-
-
-
-
K Scarince
-
-
-
-
-
Total
-
2,093,022
-
-
2,093,022
8. Other transactions and balances with KMP
Mr Viana – business development consulting services
Mr Antonio J. Viana entered into an agreement with BrainChip Inc on 1 November 2021 to provide business
development consultancy services on a rolling 6-month period, renewed up to four years. The
consideration, as approved by shareholders at the 2022 AGM was valued at $6,000 per month and was
satisfied by the issue of 1 million RSUs, vesting 25% annually upon the anniversary of the original
agreement (1 Nov 2021).
In light of key executive appointments made by the Company in 2023, Mr Hehir as CEO of the Company
determined that the business development consultancy services provided by Mr Viana were no longer
required. The consultancy agreement was terminated by the Company effective 31 December 2023.
Consistent with the terms of the agreement Mr Viana received 250,000 RSUs on 1 November 2024.
Mr van der Made – Scientific Advisory Board consulting services
Mr Peter van der Made was engaged to provide consulting services to BrainChip as a member of the
Scientific Advisory Board on 22 July 2024 for a period of 12 months commencing 25 July 2024.
Consideration awarded to Mr van der Made for such services is A$2,500 per quarter.
There were no other transactions with other Key management personnel have been incurred, other than
reported above.
End of Audited Remuneration Report.
For personal use only
Directors’ report
BrainChip Annual Report 2024 38
Corporate governance
The Directors of the Group support and adhere to the principles of corporate governance, recognising
the need for the highest standard of corporate behaviour and accountability. Please refer to the 2024
Corporate Governance Statement dated 27 February 2025 released to the ASX and posted on the
Company website which outlines the Group’s approach to corporate governance and sets out the key
charters and policies of the Group.
Indemnification and insurance of directors and officers
During the financial year, the Company paid a premium in respect to a contract of insurance to insure
directors and officers of the Company and related bodies corporate against those liabilities for which
insurance is permitted under section 199B of the Corporations Act 2001. Disclosure of the nature of the
liabilities and the amount of the premium is prohibited under the conditions of the contract of insurance.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, HLB Mann Judd, as
part of the terms of its audit engagement agreement against claims by third parties arising from the
audit (for an unspecified amount). No payment has been made to indemnify HLB Mann Judd during or
since the financial year.
Auditor Independence
The Directors received the Independence Declaration, as set out on page 39, from HLB Mann Judd.
Non-audit services
No non-audit services were provided by the entity’s auditor, HLB Mann Judd during the current and the
prior year.
Signed in accordance with a resolution of the Directors.
Antonio J. Viana
Chair
California, U.S.A., 27 February 2025
For personal use only
39
AUDITOR’S INDEPENDENCE DECLARATION
As lead auditor for the audit of the consolidated financial report of BrainChip Holdings Limited for
the year ended 31 December 2024, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
a)
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
b)
any applicable code of professional conduct in relation to the audit.
Perth, Western Australia
27 February 2025
B G McVeigh
Partner
For personal use only
Consolidated statement of profit and loss and other
comprehensive income
For the year ended 31 December 2024
BrainChip Annual Report 2024 40
Note
2024
US$
2023
US$
Continuing operations
Revenue from contracts with customers
5
398,011
232,004
Cost of goods sold
(532,925)
(140,564)
Gross profit
(134,914)
91,440
Expenses
Research & development
6(a)
(7,699,968)
(7,034,017)
Sales & marketing
6(b)
(4,605,111)
(4,745,911)
General & administrative
6(c)
(6,113,371)
(5,695,026)
Share-based payment expense
26(a)
(5,450,349)
(11,354,234)
Operating loss
(24,003,713)
(28,737,748)
Finance income
7(a)
635,246
491,508
Finance expense
7(b)
(1,008,048)
(154,121)
Net fair value (loss)/gain through profit and loss
7(c)
13,575
(364,248)
Loss from continuing operations before income tax
(24,362,940)
(28,764,609)
Income tax expense
9(c)
(68,245)
(116,432)
Net loss for the year
(24,431,185)
(28,881,041)
Other comprehensive income/(loss)
Other
comprehensive
income/(loss)
not
to
be
reclassified to profit or loss in subsequent periods (net
of tax):
Remeasurement gain/(loss) on defined benefit plans
19,066
(6,453)
Items that may be reclassified subsequently to profit or
loss (net of tax):
Exchange differences on translation of foreign
operations
(219,990)
138,210
Other comprehensive (loss)/income for the year, net of
tax
(200,924)
131,757
Total comprehensive loss for the year, net of tax
(24,632,109)
(28,749,284)
Loss per share attributable to ordinary equity holders
of the Company
US cents per
share
US cents per
share
Basic loss per share
10
(1.24)
(1.57)
Diluted loss per share
10
(1.24)
(1.57)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
For personal use only
Consolidated statement of financial position
As at 31 December 2024
BrainChip Annual Report 2024 41
Note
2024
US$
2023
US$
Current Assets
Cash and cash equivalents
12
20,000,422
14,343,381
Trade and other receivables
13
947,994
2,422,006
Inventory
240,723
482,960
Other assets
441,916
309,638
Total Current Assets
21,631,055
17,557,985
Non-Current Assets
Right-of-use assets
14
894,856
1,334,641
Plant and equipment
15
346,225
427,737
Intangible assets
16
-
608,772
Other assets
174,962
253,088
Total Non-current Assets
1,416,043
2,624,238
TOTAL ASSETS
23,047,098
20,182,223
Current Liabilities
Trade and other payables
17
1,373,294
853,642
Deferred revenue
48,342
58,185
Financial liabilities
20
-
34,701
Lease liabilities
19
454,956
446,751
Employee benefits liabilities
18
456,403
553,173
Total Current Liabilities
2,332,995
1,946,452
Non-current Liabilities
Financial liabilities
20
45,455
68,213
Lease liabilities
19
669,914
1,147,470
Defined benefit plan
22
172,214
185,767
Total Non-current Liabilities
887,583
1,401,450
TOTAL LIABILITIES
3,220,578
3,347,902
NET ASSETS
19,826,520
16,834,321
Equity
Contributed equity
23(a)
167,800,215
145,626,256
Share-based payments reserve
24
50,169,446
44,719,097
Foreign currency translation reserve
24
36,811
256,801
Other equity reserve
24
-
247,872
Accumulated losses
25
(198,179,952)
(174,015,705)
TOTAL EQUITY
19,826,520
16,834,321
The above consolidated statement of financial position should be read in conjunction with the
accompanying notes.
For personal use only
Consolidated statement of changes in equity
For the year ended 31 December 2024
BrainChip Annual Report 2024 42
Contributed
equity
Share-
based
payment
reserve
Other
reserves
Foreign
currency
reserve
Accumulated
losses
Total equity
At 1 January 2023
135,115,291
33,364,863
247,872
118,591
(145,128,211)
23,718,406
Loss for the year
-
-
-
-
(28,881,041)
(28,881,041)
Other
comprehensive loss
-
-
-
138,210
(6,453)
131,757
Total
comprehensive loss
for the period
-
-
-
138,210
(28,887,494)
(28,749,284)
Issue of share
capital
9,507,156
-
-
-
-
9,507,156
Converted treasury
shares
1,056,803
-
-
-
-
1,056,803
Share issue costs
(52,994)
-
-
-
-
(52,994)
Share-based
payment (Note
26(a))
-
11,354,234
-
-
-
11,354,234
At December 2023
145,626,256
44,719,097
247,872
256,801
(174,015,705)
16,834,321
At 1 January 2024
145,626,256
44,719,097
247,872
256,801
(174,015,705)
16,834,321
Loss for the year
-
-
-
-
(24,431,185)
(24,431,185)
Other
comprehensive loss
-
-
-
(219,990)
19,066
(200,924)
Total
comprehensive loss
for the period
-
-
-
(219,990)
(24,412,119)
(24,632,109)
Transfer of reserves
to accumulated
losses
-
-
(247,872)
-
247,872
-
Issue of share
capital
21,792,953
-
-
-
-
21,792,953
Converted treasury
shares
1,407,248
-
-
-
-
1,407,248
Share issue costs
(1,026,242)
-
-
-
-
(1,026,242)
Share-based
payment (Note
26(a))
-
5,450,349
-
-
-
5,450,349
At December 2024
167,800,215
50,169,446
-
36,811
(198,179,952)
19,826,520
The above consolidated statement of changes of equity should be read in conjunction with the accompanying
notes.
For personal use only
Consolidated statement of cash flows
For the year ended 31 December 2024
BrainChip Annual Report 2024 43
Note
2024
US$
2023
US$
Cash flows used in operating activities
Receipts from customers
232,911
1,672,784
Payments to suppliers and employees
(17,369,980)
(19,866,071)
Interest received
635,246
491,508
Interest paid
(77,078)
(100,030)
Grants and R&D credits received from third parties
695,199
411,619
Income taxes paid
(1,097)
(142,200)
Net cash flows used in operating activities
12
(15,884,799)
(17,532,390)
Cash flows used in investing activities
Payments for property, plant and equipment
(72,652)
(132,602)
Net cash flows used in investing activities
(72,652)
(132,602)
Cash flows used in financing activities
Receipts from the issue of shares
22,636,651
8,210,972
Payment of share issue costs
(1,033,498)
(56,791)
Receipts from the exercise of unlisted options
1,435,102
1,029,013
Payment to reduce lease liabilities
19
(442,659)
(342,305)
Net cash flows generated from financing activities
22,595,596
8,840,889
Net increase /(decrease) in cash and cash
equivalents
6,638,145
(8,824,103)
Net foreign exchange differences
(981,104)
2,196
Cash at the beginning of the financial period
14,343,381
23,165,288
Cash and cash equivalents at the end of the period
20,000,422
14,343,381
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 44
Note 1. Corporate information
The annual financial report of BrainChip Holdings Ltd (“BrainChip Holdings” or “Company”) and its controlled
entities (“Consolidated Entity” or “Group”) for the year ended 31 December 2024 was authorised for issue in
accordance with a resolution of the Directors on 27 February 2025, California, U.S.A.
BrainChip Holdings is a for-profit Company limited by shares, incorporated and domiciled in Australia, and
whose shares are publicly traded on the Australian Securities Exchange.
The address of the registered office is Level 8, 210 George Street, Sydney NSW 2000, Australia.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
Note 2. Summary of material accounting policies
a)
Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001 and Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. The financial report has
been prepared on a historical cost basis except for certain financial assets and liabilities that have
been measured at fair value.
Notwithstanding the operating loss and the net operating cash outflows recognised in the current year,
the Directors are confident that the Company will continue operating as a going concern based on
the current available cash resources and capital raising obligations of the LDA Capital facilty.
The financial report is presented in US dollars, being the functional currency of the Company.
New standards, interpretation and amendments adopted by the Group
The Group has adopted all of the new or amended Accounting Standards and Interpretations issued
by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting
period.
AASB 2021-2 Amendments to Australian Accounting Standard – Disclosure of Accounting Policies and
Definition of Accounting Estimates makes amendments to various Australian Accounting Standards
and AASB Practice Statement 2 Making Materiality Judgements change the way in which accounting
policies are disclosed in financial reports. The amendments require disclosure of material accounting
policy information rather than significant accounting policies and are effective for annual reporting
periods beginning on or after 1 January 2023. Accounting policy disclosure has been updated in line
with this standard. All other new standards had no material effect.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not
been early adopted.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but
are not yet mandatory, have not been early adopted by the Group for the annual reporting period
ended 31 December 2024. The Group has not yet assessed the impact of these new or amended
Accounting Standards and Interpretations.
b)
Statement of compliance
The financial report complies with Australian Accounting Standards as issued by the Australian
Accounting Standards Board. The financial report also complies with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board.
c)
Basis of consolidation
The consolidated financial statements comprise the financial statements of the parent entity and its
subsidiaries (the ‘Group') as at 31 December each year. Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Specifically, the Group controls an investee if and
only if the Group has:
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 45
Note 2. Summary of material accounting policies (continued)
c)
Basis of consolidation (continued)
•
Power over the investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee)
•
Exposure, or rights, to variable returns from its involvement with the investee, and
•
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
•
The contractual arrangement with the other vote holders of the investee;
•
Rights arising from other contractual arrangements;
•
The Group’s voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins
when the Group obtains control over the subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the statement of comprehensive income from the date the Group gains control
until the date the Group ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the equity holders
of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements
of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-
Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
d)
Foreign currency translation
i)
Functional and presentation currency
The functional currency of each entity within the Group is the currency of the primary economic
environment in which that entity operates. The consolidated financial statements are presented in
United States Dollars which is the functional and presentation currency of the parent entity and the
subsidiary, BrainChip Inc. The functional currency of all remaining subsidiaries is the same as their
respective local currencies: BrainChip SAS - Euros, BrainChip Research Institute Pty Ltd - AUD and
BrainChip Systems India Private Limited - Indian Rupee.
ii)
Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the
exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange at the reporting date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction. All exchange differences arising from
the above policies are recognised in the profit and loss.
iii) Translations of subsidiary Companies’ functional currency to presentation currency
The results of non-US$ reporting subsidiaries, if any, are translated into United States Dollars
(presentation currency). Income and expenses are translated at the average exchange rates for the
month. Assets and liabilities are translated at the closing exchange rate for each balance sheet date.
Share capital, reserves and accumulated losses are converted at applicable historical rates.
Exchange variations resulting from the translation are recognised in the foreign currency translation
reserve in equity. On consolidation, exchange differences arising from the translation of monetary items
considered to be part of the net investment in subsidiaries are taken to the foreign currency translation
reserve. If a subsidiary were sold, the proportionate share of the foreign currency translation reserve
would be transferred out of equity and recognised in the statement of comprehensive income.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 46
Note 2. Summary of material accounting policies (continued)
e)
Financial instruments – initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
i)
Financial assets
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI) and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s business model for managing them. With the exception of
trade receivables that do not contain a significant financing component or for which the Group has
applied the practical expedient, the Group initially 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. Trade receivables that
do not contain a significant financing component or for which the Group has applied the practical
expedient are measured at the transaction price determined under AASB 15. Refer to the accounting
policies in section (h) Revenue from contracts with customers.
In order for a financial asset to be classified and measured at amortised cost or fair value through OCI,
it needs to give rise to cashflows that are ‘solely payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an
instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial assets
in order to generate cash flows. The business model determines whether cash flows will result from
collecting contractual cash flows, selling the assets, or both. Financial assets classified and measured
at amortised cost are held within a business model with the objective to hold financial assets in order
to collect contractual cash flows while financial assets classified and measured at fair value through
OCI are held within a business model with the objective of both holding to collect contractual cash flows
and selling.
Gains and losses on initial recognition.
When the transaction price of a financial asset differs from the fair value on initial recognition and the
fair value is evidenced by a quoted price in an active market for an identical asset or based on a
valuation technique that uses only data from observable markets, the difference between the
transaction price and fair value is recognised immediately in profit or loss. If fair value is based on
models for which some of the inputs are not observable, the difference between the transaction price
and the fair value is deferred and recognised in profit or loss when the inputs become observable or
when realised through settlement.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
•
Financial assets at amortised cost (debt instruments)
•
Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments)
•
Financial assets designated at fair value through OCI with no recycling of cumulative gains and
losses upon derecognition (equity instruments)
•
Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method
and are subject to impairment. Gains and losses are recognised in profit or loss when the assets is
derecognised, modified or impaired. The Group’s financial assets at amortised cost include trade
receivables and other receivables.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 47
Note 2. Summary of material accounting policies (continued)
e)
Financial instruments – initial recognition and subsequent measurement (continued)
i)
Financial assets (continued)
Financial assets at fair value through OCI (debt instruments)
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and
impairment losses or reversals are recognised in the statement of profit or loss and computed in the
same manner as for financial assets measured at amortised cost. The remaining fair value changes
are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is
recycled to profit or loss.
The Group’s debt instruments at fair value through OCI includes investments in quoted debt instruments
included under other current financial assets.
Financial assets designated at fair value through OCI (equity instruments)
Upon initial recognition, the Group can elect to classify irrevocably its equity investments as equity
instruments designated at fair value through OCI when they meet the definition of equity under IAS 32
Financial Instruments: Presentation and are not held for trading. The classification is determined on an
instrument -by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised
as other income in the statement of profit or loss when the right of payment has been established,
except when the Group benefits from such proceeds as a recovery of part of the cost of the financial
asset, in which case, such gains are recorded in OCI. Equity instruments designated at fair value through
OCI are not subject to impairment assessment.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the statement of financial position at
fair value with net changes in fair value recognised in the statement of profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial
position) when:
•
The rights to receive cash flows from the asset have expired, or
•
The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and
rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks
and rewards of the asset but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the
asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the
extent of its continuing involvement. In that case, the Group also recognises an associated liability. The
transferred asset and the associated liability are measured on a basis that reflects the rights and
obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at
the lower of the original carrying amount of the asset and the maximum amount of consideration that
the Group could be required to repay.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 48
Note 2. Summary of material accounting policies (continued)
e)
Financial instruments – initial recognition and subsequent measurement (continued)
i)
Financial assets (continued)
Impairment
Further disclosures relating to impairment of financial assets are also provided in the following notes:
•
Disclosures for significant assumptions Note 3.
•
Trade receivables Note 13.
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held
at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows
due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The expected cash flows will
include cash flows from the sale of collateral held or other credit enhancements that are integral to the
contractual terms.
ECLs are recognised in two stages. For credit exposures for which there has not been a significant
increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default
events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for
which there has been a significant increase in credit risk since initial recognition, a loss allowance is
required for credit losses expected over the remaining life of the exposure, irrespective of the timing of
the default (a lifetime ECL).
For trade receivables, the Group applies a simplified approach in calculating ECLs. Therefore, the Group
does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at
each reporting date. The Group has established a provision matrix that is based on its historical credit
loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
ii)
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs. The Group’s financial liabilities include trade
and other payables, Convertible Securities recognised as financial liabilities, and derivative financial
instruments.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two categories:
•
Financial liabilities at fair value through profit or loss
•
Financial liabilities at amortised cost (loans and borrowings)
Financial liabilities at fair value through profit or loss include embedded derivatives designated upon
initial recognition as at fair value through profit or loss.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host, is separated
from the host and accounted for as a separate derivative if: the economic characteristics and risks
are not closely related to the host; a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative; and the hybrid contract is not measured at fair
value through profit or loss. Embedded derivatives are measured at fair value with changes in fair
value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of
the contract that significantly modifies the cash flows that would otherwise be required or a
reclassification of a financial asset out of the fair value through profit or loss category.
Financial liabilities designated upon initial recognition at fair value through profit or loss are
designated at the initial date of recognition, and only if the criteria in AASB 9 are satisfied.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 49
Note 2. Summary of material accounting policies (continued)
e)
Financial instruments – initial recognition and subsequent measurement (continued)
ii)
Financial liabilities (continued)
Financial liabilities at amortised cost (loans and borrowings)
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss.
iii) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities
simultaneously.
f)
Share-based payment transactions
The Group provides benefits to employees, consultants and service providers (including Directors)
(“eligible participants”) in the form of share-based payment transactions, whereby employees render
services in exchange for shares or rights over shares (equity-settled transactions).
The BrainChip Equity Plan (“LTIP”) was adopted by shareholders on 10 May 2018. The Company had
share options and performance rights that were issued under the plans current at the time of offer
(Performance Rights Plan, 2015 Long Term Incentive Plan and Directors and Officers Option Plan)
however all new awards post 10 May 2018 have been issued under the LTIP.
The cost of these equity-settled transactions is measured by reference to the fair value at the date at
which they are granted. The fair value of options granted is determined by using a Black Scholes model,
further details of which are given in Note 26. The fair value of equity instruments with a performance
condition linked to a market condition is measured on the date of grant using a Monte-Carlo
simulation with multiple implied share price targets.
In valuing equity-settled transactions, no account is taken of any vesting conditions, other than
conditions linked to the price of the shares of the Company (market conditions) if applicable.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity,
over the period in which the performance and/or service conditions are fulfilled (the vesting period),
ending on the date on which the relevant employees become fully entitled to the award (the vesting
date).
At each subsequent reporting date until vesting, the cumulative charge to the statement of
comprehensive income is the product of (i) the grant date fair value of the award; (ii) the current best
estimate of the number of awards that will vest, taking into account such factors as the likelihood of
employee turnover during the vesting period and the likelihood of non-market performance conditions
being met; and (iii) the expired portion of the vesting period.
The charge to the statement of comprehensive income for the period is the cumulative amount as
calculated above less the amounts already charged in previous periods. There is a corresponding
credit to equity.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 50
Note 2. Summary of material accounting policies (continued)
f) Share-based payment transactions (continued)
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer
awards vest than were originally anticipated to do so. Any award subject to a market condition is
considered to vest irrespective of whether or not the market condition is fulfilled, provided that all other
conditions are satisfied.
If a non-vesting condition is within the control of the Group, Company or the eligible participant, the
failure to satisfy the condition is treated as a cancellation. If a non-vesting condition within the control
of neither the Group, Company nor eligible participant is not satisfied during the vesting period, any
expense for the award not previously recognised is recognised over the remaining vesting period,
unless the award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the
terms had not been modified. An additional expense is recognised for any modification that increases
the total fair value of the share-based payment arrangement, or is otherwise beneficial to the
employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and
any expense not yet recognised for the award is recognised immediately. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award,
as described in the previous paragraph.
Share-based payments to non-employees are measured at the fair value of goods or services
received or the fair value of the equity instruments issued if it is determined the fair value of the goods
or services cannot be reliably measured and are recorded at the date the goods or services are
received. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the
computation of earnings per share.
g)
Employee benefits
i)
Wages, salaries and annual leave
A liability is recognised for benefits accruing to employees in respect of wages and salaries in the
period the related service is rendered at the undiscounted amount of the benefits expected to be paid
in exchange for that service.
Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted
amount of the benefits expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee benefits are measured at the present
value of the estimated future cash outflows expected to be made by the Group in respect of services
provided by employees up to the reporting date.
ii)
Superannuation
Contributions made by the Group to employee superannuation funds, which are defined contribution
plans, are charged as an expense when incurred.
iii) Defined benefit plan
The Group’s net obligation in respect of defined benefits plans is calculated by estimating the
discounted amount of future benefit that employees have earned in the current and prior periods. The
calculation of defined benefit plan obligations is performed annually by a qualified actuary using the
projected unit credit method, taking into account staff turnover and mortality probability.
Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, are
recognised immediately in OCI. The Group determines the net interest expense on the defined benefit
liability for the period by applying the discount rate used to measure the net defined benefit obligation.
Net interest expense and other expenses related to defined benefit plans are recognised in profit or
loss.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 51
Note 2. Summary of material accounting policies (continued)
g)
Employee benefits (continued)
i)
Defined benefit plan
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit
that relates to past service or the gain or loss on curtailment is recognised immediately in profit or
loss.
h)
Revenue from contracts with customers
The Group accounts for a contract when it has approval and commitment from both parties, the rights
of the parties are identified, payment terms are identified, the contract has commercial substance
and collectability of the consideration is probable.
Revenues from license and product sales are recognised when an identified performance obligation
is satisfied, and the customer obtains and accepts control of the Company’s product. This means that
the customer can direct the use, and obtain substantially all of the remaining benefits, from the use of
the license and product. Sales of product and licenses generally occur at a point in time, typically upon
delivery to the customer. In instances where the Group has significant obligations to maintain or
update licences, the revenue is recognised over time.
Revenue from development service is generally recognised as the Company creates or enhances an
asset that the customer controls.
The Group determined that the input method is the best method in measuring progress of the
development services revenue because there is a direct relationship between the Group’s effort (i.e.,
labour hours incurred) and the transfer of service to the customer. The Group recognises revenue on
the basis of the time lapsed as a percentage compared to total expected service.
Taxes collected from customers relating to product and service sales and remitted to governmental
authorities are excluded from revenues. The Company expenses incremental costs of obtaining a
contract as and when incurred because the expected amortisation period of the asset that the
Company would have recognised is one year or less.
i)
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be
received and all attached conditions will be complied with. When the grant relates to an expense item,
it is recognised as a credit on a systematic basis over the periods that the related costs, for which it is
intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income
in equal amounts over the expected useful life of the related asset.
When the Group receives grants of non-monetary assets, the asset and the grant are recorded at
nominal amounts and released to profit or loss over the expected useful life of the asset, based on the
pattern of consumption of the benefits of the underlying asset by equal annual instalments.
j)
Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable
income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred
tax assets and liabilities attributable to temporary differences and to unused tax losses.
Deferred income tax is provided for using the full liability, balance sheet method.
Deferred income tax liabilities are recognised for all taxable temporary differences, except:
•
when the deferred income tax liability arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither
the accounting profit nor taxable profit or loss; and
•
when the taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, except where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not reverse in the
foreseeable future.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 52
Note 2. Summary of material accounting policies (continued)
j) Income tax (continued)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry-forward of unused tax
assets and unused tax losses can be utilised, except:
•
when the deferred income tax asset relating to the deductible temporary difference arises from the
initial recognition of an asset or liability in a transaction that is not a business combination and, at
the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
•
when the deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are only recognised to the extent that it is
probable that the temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced
to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised
to the extent that it has become probable that future taxable profit will allow the deferred tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at the reporting date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in the
Statement of comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set
off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to
the same taxable entity and the same taxation authority.
Note 3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts in the financial statements. Management continually
evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and
expenses. Management bases its judgements and estimates on historical experience and on other various
factors it believes to be reasonable under the circumstances, the result of which form the basis of the
carrying values of assets and liabilities that are not readily apparent from other sources.
Management has identified the following critical accounting policies for which significant judgements,
estimates and assumptions are made. Actual results may differ from these estimates under different
assumptions and conditions and may materially affect financial results or the financial position reported
in future periods.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to
the financial statements.
•
Revenue from contracts with customers
Judgement was applied in determining whether applicable contracts were considered a contract with a
customer, where goods and/or services are delivered in exchange for consideration, or a co-
development agreement where the risks and benefits that result from the activity are shared. In all
instances, management concluded that a contract with a customer had been negotiated and AASB 15
was applicable.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 53
Note 3. Significant accounting judgements, estimates and assumptions (continued)
•
Revenue from contracts with customers (continued)
The revenue recognition standard states that if a contract has more than one performance obligation,
judgement is required in determining the allocation of the transaction price to each performance
obligation (or distinct good and service) in an amount that depicts the amount of consideration to which
the entity expects to be entitled in exchange for transferring the promised goods or services to the
customer.
Determining the performance obligation in a contract comprising license revenue and development
service revenue
The Group determined that both license and development service revenue is capable of being distinct
and identifiable in a specific contract, comprising the delivery of the perpetual license and the
engineering services provided to specifically enhance the license to the specifications of the customer.
Determining the timing of satisfaction of the development service revenue
The Group concluded that development service revenue is to be recognised over time because the
customer simultaneously receives and consumes the benefits provided by the Group; BrainChip is
enhancing an asset that the customer controls, and the work completed does not create an alternative
use to the Group.
In the absence of clearly identified phases or project milestones that are associated with progress and
payments, the Group determined that the input method is the best method in measuring progress of the
development services revenue because there is a direct relationship between the Group’s effort (i.e.,
labour hours incurred) and the transfer of service to the customer. The Group recognises revenue on the
basis of the labour hours expended relative to the total expected labour hours to complete the service.
•
Share-based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value of options is determined
by using a Black Scholes model, using the assumptions as discussed in Note 26. The accounting estimates
and assumptions relating to equity-settled share-based payments would have no impact on the
carrying amounts of assets and liabilities in the next annual reporting period but may impact expenses
and equity.
•
Impairment of non-financial assets other than goodwill
The Group assesses all non-financial assets other than goodwill for impairment at each reporting date
by evaluating the carrying value of the asset against the recoverable amount, which is the higher of fair
value less costs to sell and its value in use. This requires assessment of conditions specific to the Group
and to the particular asset which may lead to an impairment being recognised.
•
Defined benefit plan
The cost of the defined benefit pension plan and the present value of the pension obligation are
determined using actuarial valuations. An actuarial valuation involves making various assumptions that
may differ from actual developments in the future. These includes the determination of the discount rate,
future salary growth, mortality rates and employee turnover rate. Due to the complexities involved in the
valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each reporting date. Further details about defined benefit
plans are provided in Note 22.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 54
Note 3. Significant accounting judgements, estimates and assumptions (continued)
•
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the statement of financial
position cannot be measured based on quoted prices in active markets, their fair value is measured using
valuation techniques including the monte carlo model. The inputs to these models are taken from
observable markets where possible, but where this is not feasible, a degree of judgement is required in
establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and
volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial
instruments. See Note 21 for further disclosure.
Further details of the nature of these assumptions and conditions may be found in the relevant notes to the
financial statements.
Note 4. Financial risk management objectives and policies
Overview
This note presents information about the Group’s exposure to credit, liquidity and market risks, its
objectives, policies and processes for measuring and managing risk, and the management of capital.
Other than derivatives associated with the Put Option Premium in the previous years, the Group does not
use any form of derivatives as it is not at a level of exposure that requires the use of derivatives to hedge
its exposure. Exposure limits are reviewed by management on a continuous basis. The Group does not
enter into or trade financial instruments, including derivative financial instruments, for speculative
purposes.
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework. Management monitors and manages the financial risks relating to the
operations of the Group through regular reviews of the risks.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations and arises principally from the Group’s cash and cash equivalents
and receivables from customers.
Presently, the Group undertakes technology development activities in the USA, Australia, India and France
and is exposed to credit risk from its operating activities (primarily trade and other receivables).
Cash and cash equivalents and investment securities
The Group limits its exposure to credit risk by only investing in liquid securities and only with counterparties
that have an acceptable credit rating.
Trade and other receivables
The Group operates primarily in technology development and has trade receivables. There is risk that
these receivables may not be recovered however the Group does not consider this to be likely. The Group
reviews the collectability of trade and other receivables on an ongoing basis and measures the expected
credit loss at each reporting date (see Note 13).
Credit risk associated with the financial asset is considered low due to its short-term nature and the ability
to offset the financial asset against any outstanding liability recognised in relation to the Put Option
Premium.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Carrying amount
2024
2023
Note
US$
US$
Cash and cash equivalents
12
20,000,422
14,343,381
Trade and other receivables
13
947,994
2,422,006
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 55
Note 4. Financial risk management objectives and policies (continued)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate cash reserves from funds raised in the market
and by continuously monitoring forecast and actual cash flows. The Group completed a capital raise in
2024 and entered into a Put Option Agreement in 2020, with amendments agreed in 2021, 2022, 2023 and
2024 resulting in cash inflows to the Group in those years. The following are the contractual maturities of
financial assets and liabilities, including estimated interest payments and excluding the impact of netting
agreements:
Carrying
amount
Contractual
cash flows
6 mths
or less
6-12
mths
1-5
years
US$
US$
US$
US$
US$
31 December 2024
Financial Assets
Trade and other
receivables
947,994
947,994
947,994
-
-
947,994
947,994
947,994
-
-
Financial Liabilities
Trade and other
payables
1,373,294
1,373,294
1,373,294
-
-
Financial liabilities
45,455
45,455
-
-
-
Lease liabilities
1,124,870
1,144,890
261,321
251,465
632,104
2,543,619
2,563,639
1,634,615
251,465
632,104
Carrying amount
Carrying
amount
Contractual
cash flows
6 mths
or less
6-12
mths
1-5
years
31 December 2023
Financial Assets
Trade and other receivables
2,422,006
2,422,006
2,422,006
-
-
2,422,006
2,422,006
2,422,006
-
-
Financial Liabilities
Trade and other payables
853,642
853,642
853,642
-
-
Financial liabilities
102,914
102,914
-
-
102,914
Lease liabilities
1,594,221
1,755,124
260,983
263,363
1,230,778
2,550,777
2,711,680
1,114,625
263,363
1,333,692
Market risk
Market risk is the risk that changes in market prices, such as foreign currency exchange rates and interest
rates, will affect the Group’s income or the value of its holdings of financial instruments. The objective of
market risk management is to manage and control market risk exposures within acceptable parameters,
while optimising the return. The Group is not exposed to material market risk at period end.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 56
Note 4. Financial risk management objectives and policies (continued)
Foreign currency risk
The Group is exposed to fluctuations in foreign currencies arising from the purchase of goods and services
in currencies other than the transacting entity’s functional currency. The legal parent, BrainChip Holdings,
holds cash balances in AUD. As a result of this, the Group’s statement of financial position can be affected
by movements in the USD/AUD exchange rate when translating to the USD functional currency.
In respect of other monetary assets and liabilities denominated in foreign currencies (AUD), the Group’s
policy is to ensure that its net exposure is kept to an acceptable level by buying or selling foreign currencies
at spot rates when necessary to address short-term imbalances.
The Group is exposed to foreign currency risk on the derivative liability recognised in the balance sheet.
Equity price risk
The Group is exposed to equity price risk associated with unlisted options.
Interest rate risk
The Group is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that
a financial instrument’s value will fluctuate as a result of changes in the market interest rates on interest-
bearing financial instruments. The Group does not use derivatives to mitigate these exposures.
The Group adopts a policy of ensuring that as far as possible it maintains excess cash and cash
equivalents in interest bearing accounts.
The Group’s exposure to interest rate risk at the balance sheet date was negligible.
Fair values
Fair values versus carrying amounts
The Group compares the carrying amount and fair values of the Group’s financial instruments. Cash and
short-term deposits, trade and other receivables, trade and other payables and current financial liabilities
are short term in nature. As a result, the fair value of these instruments is considered to approximate their
fair value.
Capital Management
Capital managed by the Board includes contributed equity totalling $167,800,215 and other equity reserves
of $Nil at 31 December 2024 (2023: $145,626,256 and $247,872 respectively). When managing capital,
management’s objective is to ensure the entity continues as a going concern as well as to maintain
optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain
a capital structure that ensures the lowest cost of capital available to the entity. Managed capital is
disclosed on the face of the Statement of financial position and comprises contributed equity and
reserves.
Management may adjust the capital structure to fund the continued development of the Company’s
pioneering AI technology and keep the Company operational. As the market is constantly changing,
management may issue new shares or sell assets to raise cash, change the amount of dividends to be
paid to shareholders (if at all) or return capital to shareholders.
During the financial year ending 31 December 2024, management did not pay a dividend and does not
expect to pay a dividend in the foreseeable future (31 December 2023: Nil).
The Group encourages employees to be shareholders through the BrainChip Equity Plan.
There were no changes in the Group’s approach to capital management during the year. Risk
management policies and procedures are established with regular monitoring and reporting.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 57
Note 5. Revenue from contracts with customers
Revenue is disclosed by type of goods and services and timing of recognition. Refer to Note 11 for the
disaggregation of revenue from contracts with customers by geographical region.
2024
US$
2023
US$
Types of good and services
Product revenue
207,108
174,000
Development services revenue
190,903
58,004
Total revenue from contracts with customers
398,011
232,004
Timing of revenue recognition
Services transferred over time
98,555
48,004
Sale of product and license transferred at a point in
time
299,456
184,000
Total revenue from contracts with customers
398,011
232,004
Note 6. Expenses
(a)
Research & development expenses
Employee expenses
6,541,445
6,406,084
Government grants received (1)
(280,762)
(1,001,013)
Third party development services
-
636,493
Patent application fees
145,644
145,815
Software/hardware IT expenses
368,569
430,281
Amortisation of intangible assets
32,735
65,470
Impairment of intangible assets
576,037
-
Depreciation of plant & equipment
14,196
14,170
Depreciation of right-of-use assets
68,771
69,527
Other expenses
233,333
267,190
Total research & development expenses
7,699,968
7,034,017
(b)
Selling & marketing expenses
Employee expenses
3,494,052
3,526,836
Promotional advertising
664,425
698,269
Other expenses
446,634
520,806
Total selling & marketing expenses
4,605,111
4,745,911
(c)
General & administration expenses
Employee expenses
3,493,989
2,863,041
Legal and professional fees
638,625
687,342
Corporate and listing fees
355,118
349,242
Recruiting fees
109,877
288,829
Travel and accommodation expenses
152,230
144,518
Depreciation of plant & equipment
136,947
126,991
Depreciation of right of use assets
353,759
348,753
Impairment of trade receivables
29,970
-
Office rent
12,529
7,751
Software lease and hardware expense
401,508
356,246
Other
428,819
522,313
Total general & administration expenses
6,113,371
5,695,026
(1) The Group recognised research credits from the French and Australian regulatory authorities in
accordance with local tax regulations. There are no unfulfilled conditions attached to amounts
recognised.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 58
Note 7. Finance income and finance expense
2024
US$
2023
US$
(a)
Finance income
Interest received
635,246
491,508
Total finance income
635,246
491,508
(b)
Finance expense
Other interest expense
81,636
104,111
Foreign exchange loss
926,412
50,010
Total finance expense
1,008,048
154,121
(c)
Fair value gain/(loss) through profit and loss
Net gain/(loss) from financial assets and liabilities
measured at fair value through profit and loss (i) (ii)
13,575
(364,248)
Net fair value gain/(loss) through profit and loss
13,575
(364,248)
(i) On 4 December 2023, BrainChip submitted a capital call notice to LDA Capital Limited and LDA Capital
LLC (“LDA Capital”) in accordance with the Put Option Agreement (POA) dated 13 August 2020 to
subscribe for up to 25 million shares. The capital call notice was closed with cash funds of
US$2,535,623 (A$3,850,488) received on 23 January 2024. A net loss from financial assets measured at
fair value through profit and loss of $44,654 was recognised in the current year after consideration of
the purchase price per capital call share ranging from A$0.1642 to A$0.1891 and the pricing
mechanism, reconciled as follows:
2024
US$
Cash received on settlement
2,535,623
Reversal of receivable and derivative asset recognised at 31 December 2023
(963,007)
Net (gain)/loss from financial assets and liabilities measured at fair value through
the profit and loss (Note 7(c) above)
44,654
Foreign currency gain recognised due to timing of cash receipt and closure of
capital call.
886
Value of shares issued on exercise of LDA Capital put option premium (Note 23(b))
1,618,156
(ii) On 27 March 2024, BrainChip submitted a capital call notice to LDA Capital in accordance with the
Third Amendment to the POA to subscribe for 40 million shares. The formula used to determine LDA
Capital’s purchase price remains set at 91.5% of the average of the daily Volume Weighted Average
Price for each day shares are sold throughout the pricing period. Cash funds were received in two
instalments, comprising US$1,810,792 (A$2,820,000) on 19 April 2024, and US$3,645,105 (A$5,465,128) on
3 July 2024 after the call notice was closed on 28 June 2024. The purchase price per capital call share
ranged from A$0.2194 to A$0.3664 during the capital call period. A net gain from financial assets and
liabilities measured at fair value through the profit and loss of $58,229 was recognised. Refer below for
the reconciliation of cash and issued capital.
2024
US$
Cash received on settlement
5,455,897
Net (gain)/loss from financial assets and liabilities measured at fair value through
the profit and loss (Note 7(c) above)
(58,229)
Foreign currency gain recognised due to timing of cash receipt and closure of
capital call.
70,076
Value of shares issued on exercise of LDA Capital put option premium (Note 23(b))
5,467,744
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 59
Note 8. Dividends paid and proposed
No dividends have been paid or declared by the Company during the current or prior financial years or up
to the date of this report.
Note 9. Income tax
2024
US$
2023
US$
(a)
Major components of income tax expense
Consolidated income statement
Current income tax:
Current income tax expense/(benefit)
68,245
116,432
Tax losses previously not recognised
-
-
Deferred tax asset not recognised
-
-
Income tax (benefit)/expense reported in the statement
of comprehensive income
68,245
116,432
(b)
Amounts charged or credited directly to equity
Current income tax related to items charged or credited
directly to equity
-
-
Deferred income tax related to items charged or credited
directly to equity
-
-
Total research & development expenses
-
-
(c)
A reconciliation between tax expense and the
product of accounting loss before income tax
multiplied by the Group's applicable income tax rate
is as follows:
Accounting loss before tax
24,362,940
28,764,609
At statutory income tax rate of 30% (2023: 30%)
(7,308,882)
(8,629,383)
Foreign provision
49,579
116,432
Non-deductible expenses
186,311
(1,380,325)
Effect
of
lower/(higher)
taxation
rates
of
foreign
subsidiaries
53,473
(255,981)
Other
1,976,192
4,006,052
Unrecognised tax losses and deferred income tax assets
5,111,572
6,259,637
Income tax expense/(benefit) reported in statement of
profit or loss and other comprehensive income
68,245
116,432
Effective income tax rate
0.28%
0.17%
(d)
Deferred tax relates to the following:
Accrued expenses
112,996
145,901
Tax losses
30,897,818
26,965,468
Share-based compensation
7,775,829
7,297,683
Intangible assets
1,829,790
1,216,940
Other
349,894
228,764
Not recognised
(40,966,327)
(35,854,756)
Net deferred tax liability
-
-
Deferred tax income/(expense)
-
-
(e)
Unrecognised losses
At 31 December 2024, there are unrecognised deferred taxes on losses of $30,897,818 (tax effected)
(2023: $26,965,468 (tax effected)), and other temporary differences of $10,068,510 (2023: $8,889,288)
for the Group.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 60
Note 10. Loss per share
2024
US$
2023
US$
Net loss attributable to ordinary shareholders for basic
and diluted earnings per share
(24,431,185)
(28,881,041)
US cents per
share
US cents per
share
Basic and diluted loss per share
(1.24)
(1.57)
Number
Number
Weighted average number of ordinary shares for basic
loss per share (2)
1,964,216,080
1,844,752,633
Effect of the dilution of share options and performance
rights (1)
-
-
Weighted average number of ordinary shares adjusted
for the effect of dilution
1,964,216,080
1,844,752,633
(1) At 31 December 2024, the Company had on issue 45,418,318 share options (2023: 63,451,314), 5,122,329
performance rights (2023: 4,234,609), 97,417,448 restricted stock units (2023: 39,049,960), and
2,093,022 service rights (2023: Nil) that are excluded from the calculation of diluted loss per share for
the current period as they are considered anti-dilutive.
(2) Weighted average number of ordinary shares has been adjusted by a factor of approximately 1.02 as
a result of rights issued to institutional and sophisticated investors since 2017.
Note 11. Operating segments
For management purposes, the Group is organised into one operating segment, being the technological
development of designs that can be licensed to OEM (Original Equipment Manufacturer) Customers, End
Users and System Integrators based on Artificial Neural Networks.
All the activities of the Group are interrelated, and each activity is dependent on the others. Accordingly,
all significant operating disclosures are based upon analysis of the Group as one segment. The financial
results from this segment are equivalent to the financial statements of the Group as a whole.
The Group currently derives revenue from BrainChip Inc., located in the USA, and BrainChip SAS, its France
based subsidiary.
Geographically, the Group has the following revenue information based on the location of its customers
and non-current assets from where its investing activities are managed.
2024
US$
2023
US$
Non-current assets
North America
1,043,470
2,033,021
Oceania
187,065
261,759
Europe, Middle East & Asia (EMEA)
185,508
329,458
Total
1,416,043
2,624,238
Revenue from external customers
North America
106,943
132,933
Oceania
-
29,970
Europe, Middle East & Asia (EMEA)
291,068
69,101
Total
398,011
232,004
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 61
Note 11. Operating segments (continued)
Customers representing more than 10% of revenues in the current year amounted to $203,301 (2023:
$115,813) comprising $60,953 from USA based customers comprising product and development
services revenue, and $142,348 from EMEA based customers comprising development service
revenue (2023: USA based customers comprising product and development service revenue).
Note 12. Cash and cash equivalents
2024
US$
2023
US$
Cash at bank and in hand
19,987,439
14,301,026
Term deposits
12,983
42,355
Total
20,000,422
14,343,381
Reconciliation of the net loss after tax to net cash flows
from operations
(24,431,185)
(28,881,041)
Loss after tax
Non-cash adjustment to reconcile loss after tax to net
cash flows:
Depreciation
573,673
559,440
Amortisation
32,735
65,470
Impairment of intangible assets
576,037
-
Impairment of inventory
223,533
-
Grant revenue recognised
(508)
(12,027)
Share-based payments
5,450,349
11,354,234
(Gain)/loss from financial liabilities measured at fair
value through the profit or loss
(13,575)
364,248
Interest expense
4,495
4,033
Foreign exchange loss/(gain) - unrealised
944,292
132,003
Working capital adjustments:
Decrease in trade and other receivables
389,074
1,083,780
Decrease/(Increase) in inventory
18,704
(85,524)
Increase in prepayments
(132,279)
(105,582)
Decrease/(Increase) in other assets
27,002
(47,686)
Decrease in deferred revenue
(9,843)
(147,759)
Increase in defined benefits plan
17,800
16,327
(Decrease)/Increase in employee provisions
(96,770)
11,033
Increase/(Decrease) in trade and other payables
541,667
(1,843,339)
(15,884,799)
(17,532,390)
Refer to Note 21 for changes in liabilities arising from financing activities.
Note 13. Trade and other receivables
2024
US$
2023
US$
Current
Trade receivables (1)
179,704
60,803
R&D refundable tax offset
743,839
1,347,203
Receivable from the issue of shares – refer Note 7
-
921,792
Derivative asset – refer Note 7
-
41,215
Other receivables
24,451
50,993
947,994
2,422,006
(1) Trade receivables are non-interest bearing and generally on terms of 30-90 days. As at year end,
there is no allowance for expected credit loss recorded.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 62
Note 14. Right-of-use assets
2024
US$
2023
US$
Cost
2,224,324
2,264,325
Accumulated depreciation
(1,329,468)
(929,684)
Total
894,856
1,334,641
Movement in right-of-use assets
At 1 January
1,334,641
1,750,405
Depreciation
(422,530)
(418,279)
Foreign exchange movements
(17,255)
2,515
At 31 December
894,856
1,334,641
Note 15. Plant & equipment
Cost
1,150,237
1,089,288
Accumulated depreciation
(804,012)
(661,551)
Total
346,225
427,737
Movement in plant & equipment assets
At 1 January
427,737
434,934
Additions
72,652
132,602
Depreciation
(151,143)
(141,161)
Foreign exchange movements
(3,021)
1,362
At 31 December
346,225
427,737
Note 16. Intangible assets
Patents & licenses with finite useful life – at cost
1,040,312
1,040,312
Accumulated amortisation
(464,275)
(431,540)
Impairment
(576,037)
-
Total
-
608,772
Movement in patents & licenses
At 1 January
608,772
674,242
Amortisation
(32,735)
(65,470)
Impairment
(576,037)
-
At 31 December
-
608,772
Management identified certain impairment indicators, comprising high global interest rates and the
challenge of inconsistent revenue streams which required an assessment of the recoverable amount
of the Group’s assets at 30 June 2024. Management completed a value-in-use calculation using a
discounted cash flow model, based on a 5-year projection period approved by management, together
with a terminal value.
Key assumptions used in the value-in-use calculations are those to which the recoverable amount of
an asset or cash-generating unit is most sensitive. The following key assumptions were used in the
discounted cash flow model:
•
21.8% pre-tax discount rate;
•
BrainChip secures sale contracts resulting in a growth rate in revenue of 777% in 2025, recognising
the small base reported at 30 June 2024. Subsequent annual revenue growth rates of 95% in 2026
and 100% in 2027 were used, followed by 3.5% per annum projected long term revenue growth rate
used in calculating the terminal value; and
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 63
Note 16. Intangible assets (continued)
•
Growth rates of operating costs and overhead used in calculating the terminal value of 27% in 2025
and 5% in both 2026 and 2027, followed by 3.5% per annum increase thereafter.
The discount rate reflects management’s estimate of the time value of money and the Group’s weighted
average cost of capital, the risk-free rate and the volatility of the share price relative to market movements.
Upon completion of the assessment at the half-year, management determined that an impairment charge
of $576,037 be applied to the carrying amount of the intangible assets.
Note 17. Trade and other payables
2024
US$
2023
US$
Current
Trade creditors and accruals
1,373,294
803,952
Income tax payable to foreign authorities
-
49,690
1,373,294
853,642
Note 18. Employee benefits liabilities
Current
Annual leave liability
456,403
553,173
456,403
553,173
The nature of the liability is described in Note 2(g).
Note 19. Lease liabilities
Current
454,956
446,751
Non-current
669,914
1,147,470
Total
1,124,870
1,594,221
Movement in lease liabilities
At 1 January
1,594,221
1,936,093
Reduction in lease liabilities
(442,659)
(342,305)
Foreign exchange movements
(26,692)
433
At 31 December
1,124,870
1,594,221
Note 20. Financial liabilities
Current
Advance from third parties
-
34,701
-
34,701
Non-current
Advance from third parties
45,455
68,213
Total
45,455
68,213
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 64
Note 20. Financial liabilities (continued)
2024
US$
2023
US$
Movement in Advance from third parties (1)
At 1 January
102,914
111,172
Additions
-
(12,027)
Forgiveness of liability, offset to non-current other assets
(47,165)
-
Reduction in financial liabilities
(508)
-
Foreign exchange movements
(9,786)
3,769
At 31 December
45,455
102,914
(1)
Non-current advances include loans from various French government agencies which are
granted without any interest and are to be repaid under certain conditions. The benefit of the
government loan at a below-market rate of interest is treated as a government grant.
Note 21. Financial assets & liabilities
Set out below is an overview of financial assets (other than cash and short-term deposits) and
financial liabilities held by the Group as at 31 December 2024. Changes in liabilities arising from
financing activities are disclosed within individual notes:
2024
US$
2023
US$
Financial assets at amortised cost
Trade and other receivables
947,994
2,422,006
Total financial assets
947,994
2,422,006
Current
947,994
2,422,006
Total financial assets
947,994
2,422,006
Financial liabilities at amortised cost
Trade and other payables
1,373,294
853,642
Financial liabilities
- Advances from third parties
45,455
102,914
Total financial liabilities
1,418,749
956,556
Current
1,373,294
888,343
Non-current
45,455
68,213
Total financial liabilities
1,418,749
956,556
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 65
Note 22. Defined benefit plan
2024
US$
2023
US$
Non-current
Net employee defined benefit liabilities
172,214
185,767
172,214
185,767
BrainChip SAS has a defined benefit pension plan which is governed by the employment laws of France.
Pension plans that are defined benefit schemes (in which the Company guarantees an amount or
defined level of benefits) are recognised on the balance sheet based on an actuarial valuation of the
obligations at period-end.
This valuation uses the projected unit credit method, taking into account staff turnover and mortality
probability.
The defined benefit plan is administered by the French regulatory authority and is legally separated
from the Group. The authority is required by law to act in the best interests of the plan participants and
is responsible for setting certain policies (e.g., investment, contribution and indexation policies) of the
fund.
The defined benefit plan exposes the Group to actuarial risks, such as longevity risk, currency risk,
interest rate risk, and market (investment) risk.
2024
US$
2023
US$
Movement in net defined benefit liability
At 1 January
185,767
151,551
Included in profit or loss
Current services costs
17,800
16,327
Finance costs
4,495
4,033
Included in OCI
Actuarial (gains)/losses
(22,497)
8,739
Foreign exchange movements
(13,351)
5,117
At 31 December
172,214
185,767
Defined benefit obligation
The following were the principal actuarial assumptions
at the reporting date:
Discount rate
3.4%
3.2%
Future salary growth
2.0%
1.5%
Retirement at employee’s initiative
45.0%
45.0%
Turnover rate (weighted average)
1.23%
1.0%
Assumptions regarding future mortality have been based on published statistics and morality tables
provided by the French government.
Sensitivity analysis
Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions,
holding other assumptions constant, would have affected the defined benefit obligation by the
amounts shown below:
Increase
US$
Decrease
US$
Discount rate (+/-1% movement)
21,353
(17,569)
Future salary growth (+/-1.0 % movement)
(17,258)
21,356
Although the analysis does not take account of the full distribution of cashflows expected under the
plan, it does provide an approximation of the sensitivity of the assumptions shown.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 66
Note 23. Contributed equity
2024
US$
2023
US$
(a) Fully paid ordinary shares
Issued and fully paid
167,800,215
145,626,256
167,800,215
145,626,256
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at shareholder meetings. In the event of winding up the Company the
holders are entitled to participate in the proceeds from the sale of all surplus assets in proportion to
the number of and amounts paid up on shares held.
Number
US$
(b) Movement in ordinary shares on issue
At 1 January 2023
1,726,862,144
135,115,291
Issue of shares to the Trustee of the BrainChip Equity Plan
25,000,000
-
Shares allocated on exercise of LDA Capital put option
premium
30,000,000
8,560,424
Shares allocated on exercise of LDA Capital put option
premium
15,756,540
946,732
Issue of shares to third party on conversion of restricted
stock units
8,196,001
-
Treasury shares issued on conversion of options
-
1,056,803
Share issue costs incurred
-
(52,994)
At 31 December 2023
1,805,814,685
145,626,256
Issue of shares to the Trustee of the BrainChip Equity Plan
20,000,000
-
Value of shares issued in December 2023 to LDA Capital -
refer Note 7 (c)(i)
-
1,618,156
Shares allocated on exercise of LDA Capital put option
premium – refer Note 7(c)(ii)
40,000,000
5,467,744
Value of existing shares held by LDA Capital transferred
to underwriter and included as Placement shares (1)
-
1,275,145
Placement shares issued on completion of capital raise (1)
103,245,355
13,006,070
Shares issued on completion of Share Purchase Plan (1)
3,274,604
425,838
Issue of shares to third party on conversion of restricted
stock units
133,332
-
Treasury shares issued on conversion of options
-
1,407,248
Share issue costs incurred
-
(1,026,242)
At 31 December 2024
1,972,467,976
167,800,215
(1)
On 25th July 2024, BrainChip announced an equity capital raise to professional and sophisticated
investors resulting in the issue of 103,245,355 Placement shares; a fully underwritten sale of 10,122,521
existing shares from LDA Capital included as Placement shares, and a non-underwritten Share
Purchase Plan offered to eligible shareholders resulting in the issue of 3,274,604.
Cash received totalled $14,281,215 (A$21,880,000) and a foreign exchange gain of $61,922 was
recognised due to the timing of the receipt of cash and the date the shares were issued.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 67
Note 23. Contributed equity (continued)
2024
Number
2023
Number
(c) Treasury shares
Fully paid shares issued to the Trustee of the BrainChip
Equity Plan (“LTIP”)
6,082,693
11,459,234
6,082,693
11,459,234
The BrainChip Equity Plan (previously named the 2018 Long Term Incentive Plan) (LTIP) was established
on 2 August 2018. Certane CT Pty Ltd was appointed the Plan Trustee effective 16 August 2021. The
Company issues shares to the Trust at no value to be held available for the conversion of vested
options, performance rights and restricted stock units held by LTIP participants.
2024
Number
2023
Number
(d) Movement in treasury shares
At 1 January
11,459,234
3,393,490
Shares issued to the Trust from BrainChip Holdings Ltd
20,000,000
25,000,000
Shares Issued on exercise of share options
(15,925,000)
(9,964,167)
Shares issued by Trustee on conversion of performance
rights
(742,958)
(418,270)
Shares Issued on conversion of restricted stock units
(8,708,583)
(6,551,819)
At 31 December
6,082,693
11,459,234
(e) Equity instruments issued as share based payments
Unissued ordinary shares in the form of options, restricted stock units, performance rights and services
rights are issued to participants of the BrainChip Equity Plan or directly to third parties at the discretion
of the Board. These unissued ordinary shares are summarised as follows:
2024
Number
2023
Number
Unlisted options – refer note 26 (c)
45,418,318
63,651,314
Unlisted performance rights – refer note 26 (e)
5,122,329
4,234,609
Unlisted restricted stock units – refer note 26 (g)
97,417,448
39,049,960
Unlisted service rights – refer note 26 (i)
2,093,022
-
150,051,117
106,935,883
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 68
Note 24. Reserves
Foreign currency reserve
36,811
256,801
Share-based payment reserve
50,169,446
44,719,097
Other equity reserve
-
247,872
Total
50,206,257
45,223,770
Movement in reserves
Consolidated
Foreign
currency
US$
Share-based
payment
US$
Other
equity
US$
Total
US$
At 1 January 2023
118,591
33,364,863
247,872
33,731,326
Share-based payments
-
11,354,234
-
11,354,234
Translation of foreign
operations
138,210
-
-
138,210
At 31 December 2023
256,801
44,719,097
247,872
45,223,770
Share-based payments
-
5,450,349
-
5,450,349
Translation of foreign
operations
(219,990)
-
-
(219,990)
Transfer of reserves to
accumulated losses
-
-
(247,872)
(247,872)
At 31 December 2024
36,811
50,169,446
-
50,206,257
Nature and purpose of reserves
Share-based payment reserve
The share-based payment reserve is used to record the value of share-based payments provided to
Directors, employees and third parties as part of their remuneration.
Other equity reserve
This reserve arises from the issue of shares in BrainChip Holdings Ltd to extinguish the liability owing to
Convertible Securities holders in BrainChip Inc., on 10 September 2015. This reserve has been transferred to
accumulated losses in the current year.
Foreign currency translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of foreign operations.
Note 25. Accumulated losses
2024
US$
2023
US$
At 1 January
(174,015,705)
(145,128,211)
Re-measurement losses on defined benefit plans
19,066
(6,453)
Net loss in current period attributable to members of the
Company
(24,431,185)
(28,881,041)
Transfer of reserves to accumulated losses
247,872
-
At 31 December
(198,179,952)
(174,015,705)
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 69
Note 26. Share-based payments
2024
US$
2023
US$
(a) Share-based payment expense:
(2)
Equity instruments issued to third parties
110,922
2,393,227
Equity instruments issued under the BrainChip Equity Plan
9,424,480
8,961,007
Vesting credit recognised (1)
(4,085,053)
-
Total share-based payment expense
5,450,349
11,354,234
(1)
Management assessed the likelihood of achievement of certain performance conditions and
recognised a vesting credit in the current year where it is not considered probable that the vesting
conditions will be met.
(2)
The comparative information has been restated to be in line with the current year disclosure.
(b) BrainChip Equity Plan
The BrainChip Equity Plan (LTIP) (previously named the 2018 Long Term Incentive Plan) was adopted by
shareholders in May 2018. Options issued under the 2015 LTIP remain exercisable until their expiry.
The objective of the LTIP is to attract and retain key employees and consultants. It is considered that the
LTIP, through the issue of equity instruments, will provide selected employees and consultants with the
opportunity to participate in the future growth of the Company. Equity instruments offered under the LTIP
must be offered at no more than a nominal value and under terms to be determined by the Board from
time to time. It is not the intention of the Company to apply for quotation of any of the equity instruments
which are issued under the LTIP.
(c) Share options granted as share-based payments:
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements
in, share options issued as share-based payments during the year:
2024
Number
2024
WAEP
US$
2023
Number
2023
WAEP
US$
At 1 January
63,451,314
0.163
71,493,281
0.153
Granted during the period
7,036,661
0.177
2,372,200
0.263
Exercised during the period
(15,925,000)
(0.095)
(9,964,167)
(0.113)
Forfeited during the period
(5,801,324)
(0.193)
(450,000)
(0.318)
Lapsed during the period
(143,333)
(0.389)
-
-
Expired during the period
(3,200,000)
(0.169)
-
-
At 31 December
45,418,318
0.183
63,451,314
0.163
Exercisable (vested and unrestricted)
at the end of the period
36,124,114
0.168
44,637,446
0.138
The weighted average remaining contractual life for the share options outstanding at year end is 6.133 years
(2023: 6.828 years).
The weighted average fair value of options granted during the year was $0.130 (2023: $0.553).
The range of exercise prices for options at year end was $0.038 to $0.663 (2023: $0 to $0.711).
The above options are exercisable after vesting and at any time on or before the expiry date.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 70
Note 26. Share-based payments (continued)
(c) Share options granted under the BrainChip Equity Plan:
Set out below are summaries of options on issue under the BrainChip Equity Plan:
Grant
date
Expiry
date
Exercise
price
Balance
at start of
year
Granted
Exercised
Expired/
forfeited/
lapsed
Balance
at end of
year
31/05/2017 (3)
31/1/2024
0.138
2,000,000
-
-
(2,000,000)
-
31/05/2017 (4)
1/2/2024
0.182
1,000,000
-
-
(1,000,000)
-
31/05/2017 (4)
1/2/2025
0.182
1,550,000
-
(100,000)
-
1,450,000
31/05/2017 (4)
1/2/2026
0.182
1,000,000
-
-
-
1,000,000
5/03/2018 (6)
13/3/2028
0.147
1,603,000
-
-
-
1,603,000
5/03/2018 (1)
13/3/2028
0.171
200,000
-
-
-
200,000
30/04/2018 (1)
8/6/2028
0.136
443,138
-
-
-
443,138
11/03/2019 (5)
13/3/2029
0.047
17,500,000
-
(7,000,000)
-
10,500,000
18/03/2019 (6)
18/3/2029
0.042
207,976
-
-
-
207,976
13/06/2019 (1)
30/5/2029
0.037
2,700,000
-
(700,000)
-
2,000,000
23/09/2019 (1)
23/9/2029
0.031
125,000
-
(125,000)
-
-
10/8/2020 (7)
6/8/2030
0.125
7,550,000
-
(700,000)
-
6,850,000
26/8/2020 (1)
17/8/2030
0.144
10,800,000
-
(7,300,000)
(3,500,000)
-
7/10/2020 (1)
7/10/2030
0.250
600,000
-
-
-
600,000
3/12/2020 (1)
3/12/2030
0.256
2,550,000
-
-
(325,000)
2,225,000
07/12/2020 (1)
7/12/2030
0.262
2,900,000
-
-
-
2,900,000
09/04/2021 (1)
9/4/2031
0.446
280,000
-
-
-
280,000
09/04/2021 (1)
9/4/2031
0.411
2,700,000
-
-
(200,000)
2,500,000
04/06/2021 (1)
04/6/2031
0.460
1,000,000
-
-
-
1,000,000
23/11/2020 (8)
27/5/2031
0.279
2,500,000
-
-
-
2,500,000
10/08/2021 (1)
10/8/2031
0.400
540,000
-
-
(150,000)
390,000
20/04/2022 (2)
21/4/2032
0.711
450,000
-
-
-
450,000
28/04/2022 (9)
28/4/2032
0.659
280,000
-
-
(83,000)
197,000
18/09/2022 (2)
19/9/2032
0.618
300,000
-
-
-
300,000
23/12/2022 (2)
23/12/2032
0.453
300,000
-
-
(300,000)
-
21/04/2023 (10)
21/4/2033
0.278
1,762,200
-
-
(452,302)
1,309,898
14/12/2023 (2)
14/12/2032
0.243
130,000
-
-
(130,000)
-
18/08/2023 (2)
17/8/2033
0.214
480,000
-
-
-
480,000
20/05/2024 (9)
20/5/2034
0.177
-
2,345,553
-
(334,785)
2,010,768
20/05/2024 (11)
20/5/2034
0.177
-
4,691,108
-
(669,570)
4,021,538
63,451,314
7,036,661
(15,925,000)
(9,144,657)
45,418,318
(1)
Issued to employees and consultants vesting equally over 4 years on each grant date anniversary.
(2)
Issued to employees and consultants vesting equally over 3 years on each grant date anniversary.
(3)
Issued to Directors, of which 25% of the options vest on each anniversary date of the offer date (1
February 2017) and expire five years from each vesting date.
(4)
Issued to Directors of which 25% of the options vest on each anniversary date of the offer date (7 July
2017) expire five years from each vesting date.
(5)
7,500,000 options vest on the first grant date anniversary, with 1/36th monthly thereafter; 2,500,000
options will vest each grant date anniversary.
(6)
7,500,000 options vest on the first grant date anniversary, with 1/36th monthly thereafter; 3,000,000
options will vest each anniversary of the grant date.
(7)
Options vest on the 4th anniversary of the grant date.
(8)
2,500,000 unlisted options were issued to a Non-executive director, of which 25% of the options vest on
each anniversary date of the offer date (23 November 2020) and expire 27 May 2031.
(9)
Options vest on 28 Feb 2025 upon the achievement of performance criteria.
(10) Options vest on 28 Feb 2026 upon the achievement of performance criteria
(11) Options vest on 28 Feb 2027 upon the achievement of performance criteria
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 71
Note 26. Share-based payments (continued)
(d) Options pricing model
The fair value of the equity-settled share options granted under the LTIP is estimated on the date of the offer
of the grant using a Black Scholes Option Pricing model. Share options granted with market conditions
(“MC”) are valued using a Monte-Carlo simulation. The following table lists the inputs to the models used
for the valuation of options during the current and prior years:
Number
of options
Fair value at
measurement
date
US$
Share
price at
grant
date
US$
Exercise
Price
US$
Expected
volatility
(%)
Risk-free
interest
rate
(%)
Expected
life of
options in
years
2024
Employees
6,473,724
0.152
0.167
0.177
100.0
4.41
10.0
Empl – MC1
187,645
0.056
0.167
0.177
100.0
4.41
10.0
Empl – MC2
375,292
0.083
0.167
0.177
100.0
4.41
10.0
2023
Employees
1,762,200
0.251
0.278
0.278
100.0
3.49
10.0
Employees
130,000
0.209
0.233
0.243
100.0
4.10
10.0
Employees
480,000
0.194
0.214
0.214
100.0
4.22
10.0
The expected dividend yield for all options granted during the period was nil. The expected life of the share
options is based on historical data and is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical volatility over a period similar to the life
of the options is indicative of future trends, which may not necessarily be the actual outcome.
(e) Performance rights granted as share-based payments
The following table summarises the movement in Performance Rights issued as share-based payments:
2024
Number
2023
Number
At 1 January
4,234,609
2,864,812
Issued during the year
2,777,022
3,155,185
Converted during the year
(742,958)
(418,270)
Cancelled during the year
(1,146,344)
(1,367,118)
At 31 December
5,122,329
4,234,609
(f) Performance rights valuation model
The fair value of the performance rights granted under the LTIP is estimated using the share price and the
exchange rate on the date of the offer of the grant. Performance rights granted with market conditions
(“MC”) are valued using a Monte-Carlo simulation. The following table lists the fair value of performance
rights issued during the current and prior years:
Number
granted
Grant
date
Fair value
US$
2024
Employees
2,094,859
20/5/2024
0.167
Employees - MC 1
60,721
20/5/2024
0.101
Employees - MC 2
121,442
20/5/2024
0.110
2023
Employees
1,492,591
20/4/2023
0.277
Directors
1,662,594
26/5/2023
0.278
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 72
Note 26. Share-based payments (continued)
(g) Restricted Stock Units granted as share-based payments
The following table summarises the movement in RSUs issued as share-based payments:
2024
Number
2023
Number
At 1 January
39,049,960
21,495,446
Issued during the year under LTIP
81,574,600
27,550,530
Converted under LTIP
(8,708,583)
(6,551,819)
Cancelled under LTIP
(15,629,165)
(3,769,690)
Issued during the year to third parties (non-LTIP)
1,397,302
8,521,494
Converted during the year to third parties (non-LTIP)
(133,332)
(8,196,001)
Cancelled during the year to third parties (non-LTIP)
(133,334)
-
At 31 December
97,417,448
39,049,960
(h) Restricted Stock Units valuation model
The fair value of the restricted stock units granted is estimated using the share price and exchange rate
on the date of the offer of the grant. RSUs granted with market conditions (“MC”) are valued using a
Monte-Carlo simulation. The RSUs are subject to various vesting periods effective from date of grant. The
following table lists the fair valuation of the RSUs issued during the current and prior years:
Number
granted
Grant
date
Fair value
US$
2024
Employees
6,483,210
30/4/2024
0.189
Employees
54,674,470
20/5/2024
0.167
Employees – MC1
1,572,775
20/5/2024
0.083
Employees – MC2
3,117,550
20/5/2024
0.110
Contractors
1,397,302
20/5/2024
0.167
Directors
4,566,595
22/5/2024
0.170
Employees
260,000
3/7/2024
0.144
Employees
3,750,000
14/8/2024
0.116
Employees
6,000,000
12/9/2024
0.110
Contractor
400,000
24/9/2024
0.116
Employees
750,000
29/11/2024
0.166
2023
Employees
600,000
27/1/2023
0.466
Employees
13,138,711
21/4/2023
0.278
Employees
1,359,675
12/5/2023
0.292
Directors
3,102,144
26/5/2023
0.278
Employees
150,000
31/5/2023
0.295
Employees
1,600,000
23/6/2023
0.231
Employees
150,000
29/6/2023
0.241
Employees
600,000
2/10/2023
0.114
Employees
850,000
14/11/2023
0.127
Employees
6,000,000
29/11/2023
0.152
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 73
Note 26. Share-based payments (continued)
(i) Service rights granted as share-based payments
The following table summarises the movement in Service Rights issued as share-based payments:
2024
Number
2023
Number
At 1 January
-
-
Issued during the year
2,093,022
-
At 31 December
2,093,022
-
(j) Service rights valuation model
The fair value of the service rights granted under the BrainChip Equity Plan is estimated using the share
price and the exchange rate on the date of the offer of the grant. The following table lists the fair value of
service rights issued during the current and prior years:
Number
Issued
Grant
date
Fair value
US$
2024
Directors
2,093,022
26/5/2024
0.170
Note 27. Contingent assets & liabilities
The Group had no contingent assets or liabilities at 31 December 2024 (31 December 2023: $Nil).
Note 28. Events after the balance sheet date
Subsequent to the end of the year, the following events occurred:
Since 1 January 2025 and to the date of this report, 1,450,000 options, 204,813 PRs and 476,465 RSUs held by
BrainChip Equity Plan participants converted to shares upon vesting. The Company also granted 270,000
options and 87,500 RSUs to new participants.
No other matters or circumstances have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state
of affairs of the Group in subsequent financial years
Note 29. Auditor’s remuneration
2024
US$
2023
US$
Amounts received or due to be receivable by HLB Mann
Judd for:
An audit or review of the financial reports of the entity
59,644
59,260
59,644
59,260
Amounts received or due and receivable by non-HLB
Mann Judd (WA Partnership) for:
An audit or review of the financial report of the entity
10,819
11,096
10,819
11,096
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 74
Note 30. Related party disclosures
Parent entity
The ultimate legal parent entity of the Group is BrainChip Holdings Ltd.
Subsidiaries
The consolidated financial statements include the financial statements of BrainChip Holdings and the
subsidiaries listed in the following table:
Country of
incorporation
Beneficial interest
2024
2023
Subsidiaries of BrainChip Holding Ltd
BrainChip Inc.
USA
100%
100%
BrainChip Research Institute Pty Ltd
Australia
100%
100%
Subsidiaries of BrainChip Inc.
BrainChip SAS
France
100%
100%
BrainChip Systems India Private Limited (1)
India
100%
100%
(1) BrainChip Holdings Ltd holds 1%, and BrainChip Inc. holds 99%, of the shares of BrainChip Systems
India Private Limited, effective from 22 July 2020.
Other entities
The consolidated financial statements include the BrainChip Equity Plan (previously the BrainChip Long
Term Inventive Plan Trust), an entity executed on 2 August 2018 and controlled by BrainChip Holdings. The
Company appointed Certane CT Pty Limited as the Plan Trustee on 3 August 2021.
Key management personnel compensation:
2024
US$
2023
US$
Short-term employee benefits
2,319,128
1,963,990
Share-based payment expense
4,162,760
4,273,463
Share-based payment vesting credit
(2,077,245)
-
4,404,643
6,237,453
Key Management Personnel received restricted stock units and service rights to the value of $4,162,760 (31
December 2023: $4,273,463). Management assessed the likelihood of achievement of the performance
conditions related to the maximum award of grants for executive KMP that vest on 28 February 2025 and
determined that a vesting credit of $2,077,245 should be recognised in the current year.
Related party transactions with KMPs of the Group:
Mr Viana – business development consulting services
Mr Antonio J. Viana entered into an agreement with BrainChip Inc on 1 November 2021 to provide business
development consultancy services on a rolling 6-month period, renewed up to four years. The
consideration, as approved by shareholders at the 2022 AGM, was valued at $6,000 per month and was
satisfied by the issue of 1 million RSUs, vesting 25% annually upon the anniversary of the agreement.
In light of key executive appointments made by the Company in 2023, Mr Hehir as CEO of the Company
determined that the business development consultancy services provided by Mr Viana were no longer
required. The consultancy agreement was terminated effective 31 December 2023. Consistent with the
terms of the agreement Mr Viana received 250,000 RSUs on 1 November 2024.
For personal use only
Notes to the consolidated financial statements
BrainChip Annual Report 2024 75
Note 30. Related party disclosures (continued)
Related party transactions with KMPs of the Group (continued)
Mr van der Made – Scientific Advisory Board consulting services
Mr Peter van der Made was engaged to provide consulting services to BrainChip as a member of the
Scientific Advisory Board on 22 July 2024 for a period of 12 months commencing 25 July 2024. Consideration
awarded to Mr van der Made for such services is A$2,500 per quarter.
There were no other related party transactions with KMPs of the Group.
Transactions with other related parties:
There were no transactions with other related parties.
Loans to/from related parties:
There were no outstanding loans arising to or from related parties (31 December 2023: $Nil).
Note 31. Parent entity information
2024
US$
2023
US$
Information relating to BrainChip Holdings Ltd:
Current assets
17,362,460
12,966,270
Non-current assets
-
4,567,848
Total assets
17,362,460
17,564,118
Current liabilities
854,766
754,973
Total liabilities
854,766
754,973
Net assets
16,507,694
16,809,145
Issued capital
193,419,222
171,329,522
Other contributed equity
2,025,617
2,025,617
Share-based payment reserve
67,812,007
63,553,068
Option premium reserve
480,731
480,731
Other reserves
-
(251,028)
Accumulated losses
(247,229,883)
(220,328,765)
Net equity
16,507,694
16,809,145
Net loss of the parent entity (1)
26,650,090
28,195,304
Total comprehensive loss of the parent entity
26,650,090
28,195,304
(1) At the reporting date investments and loans receivable from controlled entities net of provision for
impairment totalled $Nil (2023: $4,518,730). Impairment expense of $20,324,078 (2023: $16,113,586)
was recognised for the year ended 31 December 2024.
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries: Nil
Contingent liabilities of the parent entity: Nil
Contractual commitments by the parent entity for the acquisition of property, plant or equipment: Nil
For personal use only
Consolidated entity disclosure Statement
BrainChip Annual Report 2024 76
Basis of preparation
The consolidated entity disclosure statement (CEDS) has been prepared in accordance with the
Corporations Act 2001 and includes information for each entity that was part of the Group as at the
end of the financial year in accordance with AASB 10 Consolidated Financial Statements.
Determination of tax residency
Section 295 (3A)(vi) of the Corporations Act 2001 defines tax residency as having the meaning in the
Income Tax Assessment Act 1997. The determination of the tax residency involves judgement as there
are different interpretations that could be adopted, and which could give rise to a different conclusion
on residency.
In determining tax residency, the Group has applied the following interpretations:
Australian tax residency
The Group has applied current legislation and judicial precedent, including having regard to the Tax
Commissioner’s public guidance.
Foreign tax residency
Where appropriate, independent tax advisers have been engaged to assist in the determination of
tax residence to ensure applicable foreign tax legislation has been complied with.
Name of
entity
Entity
type
Trustee,
partner or
JV
participant
Country of
incorporation
Ownership
interest
Australian
resident?
Foreign
jurisdiction(s)
BrainChip
Holdings Ltd
Body
Corporate
n/a
Australia
n/a
Yes (1)
USA (1)
BrainChip Inc.
Body
Corporate
n/a
USA
100%
No
USA
BrainChip
Research
Institute Pty
Ltd
Body
Corporate
n/a
Australia
100%
Yes
n/a
BrainChip SAS
Body
Corporate
n/a
France
100%
No
France
BrainChip
Systems India
Private
Limited
Body
Corporate
n/a
India
100%
No
India
BrainChip
Equity Plan (2)
Trust
Yes
Australia
0%
Yes
n/a
(1)
Dual tax resident under the domestic tax laws of Australia and the USA. The relevant Tax Treaty
does not have a tie breaker rule on residency.
(2)
BrainChip Equity Plan is controlled by BrainChip Holdings Ltd. Certane CT Pty Ltd is the appointed
Trustee.
For personal use only
Directors’ declaration
BrainChip Annual Report 2024 77
In accordance with a resolution of the Directors of BrainChip Holdings Ltd, I state that:
In the opinion of the Directors:
(a)
the attached financial statements and notes comply with the Corporations Act 2001,
the Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements;
(b)
the attached financial statements and notes comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board as
described in note 2(b) to the financial statements;
(c)
The attached financial statements and notes give a true and fair view of the
consolidated entity’s financial position as at 31 December 2024 and of its
performance for the financial year ended on that date;
(d)
there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable;
(e)
the information disclosed in the attached consolidated entity disclosure statement
is true and correct.
The directors have been given the declarations required by section 295A of the Corporations Act
2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the
Corporations Act 2001.
On behalf of the Board.
Antonio J. Viana
Chair
California, U.S.A., 27 February 2025
For personal use only
78
INDEPENDENT AUDITOR’S REPORT
To the Members of BrainChip Holdings Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of BrainChip Holdings Limited (“the Company”) and its controlled
entities (“the Group”), which comprises the consolidated statement of financial position as at 31 December
2024, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes
to the financial statements, including material accounting policy information, the consolidated entity
disclosure statement and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act
2001, including:
(a) giving a true and fair view of the Group’s financial position as at 31 December 2024 and of its financial
performance for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report. We are independent of the Group in accordance with the auditor independence requirements
of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current period. These matters were addressed in the context of our audit
of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
For personal use only
79
Key Audit Matter
How our audit addressed the key audit matter
Financial instruments
Refer to Note 7,23
During the period, the Group continued to drawdown
on their Put Option Agreement with LDA Capital
Limited and LDA Captial LLC (together LDA Capital).
The accounting treatment, classification and valuation
of the financial instruments was complex due to the
significant judgements involved in identifying and
valuing the possible derivative asset and derivative
liability at balance date
Our procedures included, but were not limited to the
following:
•
Examining
the
original
and
extension
agreements to understand the key terms and
conditions;
•
Evaluating the Group’s accounting treatment of
the financial instruments in accordance with the
applicable Australian Accounting Standards;
•
Assessing the adequacy of management’s
expert who was engaged to perform the
valuations
and
assess
the
accounting
treatment;
•
Testing the calculation of the fair value
movements on the financial instruments; and
•
Assessing the adequacy of the presentation
and disclosure in the financial statements,
including
whether
the
classification
and
disclosures were presented in accordance with
the
applicable
Australian
Accounting
Standards.
Intangible assets
Refer to Note 16
In accordance with AASB 136 Impairment of Assets,
the Group was required to assess at balance date
whether there was any indication that the intangible
assets may have been impaired. If any such
indication existed, the Group was required to estimate
the recoverable amount of the asset.
As a result of this assessment, the Group determined
that their intangible assets were impaired.
We focused on this area as the intangible assets
represent significant assets of the Group. We planned
our work to address the audit risk that the intangible
assets may have been impaired.
Our procedures included, but were not limited to the
following:
•
We reviewed management’s assessment of
whether any impairment indicators existed
that would require the assets to be tested for
impairment, as well as performing our own
assessment;
•
We critically evaluated the assumptions used
in management’s value-in-use model;
•
We reviewed the mathematical accuracy of
the value-in-use model;
•
We performed sensitivity analyses around the
key inputs used in the model;
•
We ensured that the Group’s impairment
expense had been recognised appropriately;
and
•
We ensured that the disclosures required by
AASB 138 were made in the financial report.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 31 December 2024, but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
For personal use only
80
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report, or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
(a) the financial report (other than the consolidated entity disclosure statement) that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001; and
(b) the consolidated entity disclosure statement that is true and correct in accordance with the Corporations
Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
(a) the financial report (other than the consolidated entity disclosure statement) that gives a true and fair
view and is free from material misstatement, whether due to fraud or error; and
(b) the consolidated entity disclosure statement that is true and correct and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
−
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
−
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
For personal use only
81
−
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
−
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
−
Evaluate the overall presentation, structure and content of the financial report, including the disclosures,
and whether the financial report represents the underlying transactions and events in a manner that
achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats
or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected
to outweigh the public interest benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included within the Directors’ Report for the year ended 31
December 2024.
In our opinion, the Remuneration Report of BrainChip Holdings Limited for the year ended 31 December
2024 complies with Section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
HLB Mann Judd
B G McVeigh
Chartered Accountants
Partner
Perth, Western Australia
27 February 2025
For personal use only
Additional shareholder information
As at 11 February 2025
BrainChip Annual Report 2024 82
(a)
Top 20 Shareholders
Number of
Shares
%
MR PETER ADRIAN VAN DER MADE
156,805,823
7.950
CITICORP NOMINEES PTY LIMITED
125,072,112
6.341
BNP PARIBAS NOMINEES PTY LTD
119,036,145
6.035
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
102,541,192
5.199
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
97,807,386
4.959
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
73,646,613
3.734
BNP PARIBAS NOMS PTY LTD
40,352,914
2.046
BNP PARIBAS NOMINEES PTY LTD
12,144,061
0.616
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
11,603,749
0.588
CERTANE CT PTR LTD
11,534,497
0.585
FINCLEAR PTY LTD
9,138,478
0.463
NATIONAL NOMINEES LIMITED
7,676,496
0.389
Mr LINPING FU
7,000,000
0.355
CROSSFIELD INTECH NOMINEES PTY LTD
6,575,757
0.333
UBS NOMINEES PTY LTD
6,486,010
0.329
MR PAUL GLENDON HUNTER
6,250,000
0.317
MRS REBECCA OSSEIRAN-MOISSON
6,155,672
0.312
MR DAVID JAMES EVANS
5,555,555
0.282
MR JEFFREY BRIAN WILTON
5,550,000
0.281
MR HUGH KENT ELLIOT & MS PENELOPE ANN ELLIOT
5,000,000
0.253
Total Shares - Top 20 Holdings
815,932,460
41.367
Total Shares
1,972,467,976
(b)
(i) Distribution of quoted fully paid ordinary shares
Size of parcel
Number of
share
holders
Number of
shares
%
1 to 1,000
7,684
4,930,730
0.25
1,001 to 5,000
17,079
45,202,320
2.29
5,001 to 10,000
6,436
50,145,267
2.54
10,001 to 100,000
10,366
332,602,017
16.86
100,001 and over
1,909
1,539,587,642
78.06
Total
43,474
1,972,467,976
100.0
There are 12,199 holders with less than a marketable parcel of ordinary shares based on the
Company’s closing market price of A$0.30 on 11 February 2025.
For personal use only
Additional shareholder information
As at 11 February 2025
BrainChip Annual Report 2024 83
(ii) Distribution of unquoted securities
Size of parcel
Number
of
Option
holders
Number
of
options
Number
of
perfor-
mance
rights
holders
Number
of
perform-
ance
rights
Number
of
restricted
stock unit
holders
Number
of
restricted
stock units
Number
of
service
right
holders
Number
of
service
rights
1 to 1,000
-
-
-
-
-
-
-
-
1,001 to 5,000
-
-
-
-
-
-
-
-
5,001 to 10,000
-
-
-
-
-
-
-
-
10,001 to 100,000
1
100,000
1
69,125
1
87,500
-
-
100,001 and over
33
44,138,318
5
4,848,391
49
95,363,681
3
2,093,022
Total
34
44,238,318
6
4,917,516
50
95,451,181
3
2,093,022
(c) Substantial Shareholders
%
Number of
shares
MR PETER AJ VAN DER MADE
7.950
156,805,823
(d) Voting Rights
The voting rights for each class of security on issue are:
Ordinary fully paid shares
Each ordinary shareholder is entitled to one vote for each share held.
Options
The holders of options have no voting rights. Upon exercise of the option, the holders will be
holders of fully paid ordinary shares and therefore will have voting rights as afforded to
shareholders of these securities.
Performance Rights
The holders of performance rights have no voting rights. Upon vesting of the performance
rights, the holders will be holders of fully paid ordinary shares and therefore will have voting
rights as afforded to shareholders of these securities.
Restricted Stock Units
The holders of restricted stock units have no voting rights. Upon vesting of the restricted
stock units, the holders will be holders of fully paid ordinary shares and therefore will have
voting rights as afforded to shareholders of these securities.
Service Rights
The holders of service rights have no voting rights. Upon vesting of the service rights, the
holders will be holders of fully paid ordinary shares and therefore will have voting rights as
afforded to shareholders of these securities.
For personal use only
Corporate directory
BrainChip Annual Report 2024 84
Board of Directors
Antonio J. Viana
Non-Executive Director and Chair
Sean Hehir
Executive Director, Chief Executive Officer
Peter van der Made
Non-Executive Director
Geoffrey Carrick
Non-Executive Director
Pia Turcinov
Non-Executive Director
Duy-Loan Le
Non-Executive Director
Company Secretary
Kim Larkin
Registered Office
Level 8, 210 George Street Sydney NSW 2000 Australia
Telephone: +61 2 9290 9606
Facsimile: +61 2 9279 0664
Postal Address
PO Box 3993, Sydney NSW 2001 Australia
Website
http://www.brainchip.com
Auditors
HLB Mann Judd (WA) Partnership
Level 4, 130 Stirling Street, Perth WA 6000
Telephone: +61 8 9227 7500
Share Registry
Boardroom Pty Ltd
Level 8, 210 George Street Sydney NSW 2000
Telephone: +61 2 9290 9600
Facsimile: +61 2 9290 9664
Online: www.clientonline.com.au
Securities Exchange
Australian Securities Exchange Limited
Exchange Centre, 20 Bridge St, Sydney NSW 2000
Code: BRN
OTCQX Best Market – OTC Markets Groups
Codes: BRCHF, BCHPY
ABN: 64 151 159 812
For personal use only