Announcement PDF 4DS Memory Limited and its controlled entities Appendix 4E Preliminary final report 1. Company details Name of entity: ACN: Reporting period: Previous period: 4DS Memory Limited 145 590 110 For the year ended 30 June 2024 For the year ended 30 June 2023 2. Results for announcement to the market 30 June 2024 30 June 2023 $ $ Revenues from ordinary activities Change $ Change % 382,226 41,037 341,189 831% Loss from ordinary activities after tax attributable to the owners of 4DS Memory Limited (5,450,713) (5,794,241) 343,528 (6%) Loss for the year attributable to the owners of 4DS Memory Limited (5,450,713) (5,794,241) 343,528 (6%) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the Group after providing for income tax amounted to $5,450,713 (30 June 2023: $5,794,241). 3. Net tangible assets Reporting period Cents Net tangible assets per ordinary security 4. Control gained over entities Not applicable. 5. Loss of control over entities Not applicable. 6. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Previous period There were no dividends paid, recommended or declared during the previous financial period. 0.45 Previous period Cents 0.35 4DS Memory Limited and its controlled entities Appendix 4E Preliminary final report 7. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements have been audited and an unmodified opinion has been issued. 8. Attachments Details of attachments (if any): The Annual Report of 4DS Memory Limited for the year ended 30 June 2024 is attached. 9. Signed Signed ___________________________ Mr. David McAuliffe Executive Chairman Date: 30 August 2024 4DS Memory Limited and its controlled entities ACN 145 590 110 Annual Report - 30 June 2024 4DS Memory Limited and its controlled entities Contents 30 June 2024 Corporate directory ................................................................................................................................................................. 2 Directors' report ...................................................................................................................................................................... 3 Auditor's independence declaration ..................................................................................................................................... 20 Consolidated statement of profit or loss and other comprehensive income ....................................................................... 21 Consolidated statement of financial position ....................................................................................................................... 22 Consolidated statement of changes in equity ....................................................................................................................... 23 Consolidated statement of cash flows .................................................................................................................................. 24 Notes to the consolidated financial statements ................................................................................................................... 25 Consolidated entity disclosure statement ............................................................................................................................ 46 Directors' declaration ............................................................................................................................................................ 47 Independent auditor's report to the members of 4DS Memory Limited .............................................................................. 48 Shareholder information ....................................................................................................................................................... 52 General information The financial statements cover 4DS Memory Limited as a Group consisting of 4DS Memory Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is 4DS Memory Limited's functional and presentation currency. 4DS Memory Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are: Registered office Principal place of business Level 2, 50 Kings Park Road West Perth WA 6005 AUSTRALIA 3155, Skyway Court, Fremont CA 94539 UNITED STATES A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of Directors, on 30 August 2024. 1 4DS Memory Limited and its controlled entities Corporate directory 30 June 2024 Directors Mr. David McAuliffe Dr. Guido Arnout Mr. Howard Digby Company secretary Mr. Peter Webse Registered and Principal Office Level 2, 50 Kings Park Road, West Perth WA 6005 PO Box 271 West Perth WA 6872 Share register Automic Registry Services Level 5 191 St Georges Terrace, Perth WA 6000 Phone: +61 8 9324 2099 Fax: +61 8 9321 2337 Email: [email protected] Web: www.automic.com.au Auditor PKF Perth Level 4, 35 Havelock Street, West Perth WA 6005 Solicitors Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth WA 6000 Stock exchange listing 4DS Memory Limited shares are listed on the Australian Securities Exchange (ASX code: 4DS) Website www.4dsmemory.com 2 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 The Directors present their report together with the consolidated financial statements of the Group comprising of 4DS Memory Limited (the Company) and its subsidiaries for the year ended 30 June 2024 and the auditor's report thereon. 1. Directors The following persons were Directors of 4DS Memory Limited during the whole of the financial year and up to the date of this report, unless otherwise stated: Mr. David McAuliffe Dr. Guido Arnout Mr. Howard Digby Information on Directors Name: Title: Appointed: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in options: Name: Title: Appointed: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in options: Executive Chairman effective from 18 September 2023 Interim Executive Chairman effective from 14 February 2023 to 17 September 2023 Non-Executive Director Non-Executive Director Mr. David McAuliffe Executive Chairman (from 18 September 2023) 7 December 2015 LLB (Hons), BPharm Mr. McAuliffe is an experienced Company Director and Entrepreneur who has had over 25 years’ experience, mostly in the international biotechnology field. During that time, he was involved in numerous capital raisings and in licensing of technologies. He is a founder of several companies in Australia, France and the United Kingdom, many of which have become public companies. He is President of the Dyslexia-Speld Foundation WA (Inc). Non-Executive Chairman of Invex Therapeutics Limited (ASX: IXC) 10,061,042 ordinary shares 6,000,000 unlisted options exercisable at $0.037 each on or before 27 February 2028 Dr. Guido Arnout Non-Executive Director 7 December 2015 PhD Electrical Engineering Dr. Arnout has specific expertise with over 30 years in commercialising electronics technology from concept to product. He was the founding President and CEO of PowerEscape, which introduced the first tools for the development of low-power software executing on multicore devices. He was also founding President and CEO of CoWare, which pioneered system-level design tools for hardware-software co-design and the time-based licensing business model. Dr. Arnout co-founded the Open SystemC Initiative (OSCI), an industry consortium to standardise a language for system level design, and as its President submitted the SystemC language to IEEE. He served as VP of Engineering and later senior VP of marketing of CrossCheck Technology. He co-founded and later became VP of Engineering of Silvar-Lisco, the first commercial EDA (electronic design automation) company. 8,000,000 ordinary shares - 3 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 Name: Title: Appointed: Qualifications: Experience and expertise: Other current directorships: Former directorships (last 3 years): Interests in shares: Interests in options: Mr. Howard Digby Non-Executive Director 7 December 2015 BE (Mechanical, Hons) Mr. Digby began his career at IBM and has spent 25 years managing technology related businesses across the Asia Pacific region, of which 12 years were spent in Hong Kong ending with The Economist Group as Regional Managing Director. Prior to this he held senior management roles at Adobe and Gartner where his clients included major semiconductor players inclusive of Samsung, Hynix and TSMC. Upon returning to Perth, Howard served as Executive Editor of WA Business News and now spends his time as a company director, advisor and investor, having played key roles in several M&A and reverse takeover transactions. Non-Executive Chairman of Singular Health Group Ltd (ASX: SHG) Non-Executive Director of Elsight Limited (ASX: ELS) Non-Executive Director of Spenda Limited (ASX: SPX) 6,688,629 ordinary shares 1,000,000 unlisted options exercisable at $0.037 each on or before 27 February 2028 Other current directorships quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Former directorships (last 3 years) quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 2. Company secretary Mr. Peter Webse Qualifications Experience B.Bus, FGIA, FCIS, FCPA Mr. Webse has over 30 years company secretarial experience and is Director of Governance Corporate Pty Ltd, a company specialising in company secretarial, corporate governance and corporate advisory services. 3. Directors' meetings The number of Directors meetings and the number of meetings attended by each of the Directors of the Company during the financial year are: Mr. David McAuliffe Dr. Guido Arnout Mr. Howard Digby Number of eligible to attend Number attended 8 8 8 8 8 8 4. Principal activities 4DS Memory Limited (ASX: 4DS), with facilities located in Silicon Valley, is a semiconductor technology company bringing high bandwidth, high endurance, persistent non-volatile memory to advanced CMOS process nodes. Its technology, known as Interface Switching ReRAM, features tuneable persistence and low energy per bit for today’s most challenging compute intensive and AI processor applications. Established in 2007, 4DS owns a patented IP portfolio, comprising 34 USA patents, and is the first company to develop PCMO ReRAM, on an advanced CMOS processing node. 4DS has a development agreement with Belgium based imec – a world leading research and innovation hub in nano electronics and digital technologies, as well as a joint development agreement with Western Digital subsidiary HGST, a global leader in storage solutions. 4 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 5. Review of operations Financial Review The loss for the Group after providing for income tax amounted to $5,450,713 (30 June 2023: $5,794,241). Operating Review On 3 July 2023, the Company announced that imec had successfully completed the manufacture of the Fourth Platform Lot and shipped the Lot to 4DS' facilities in Fremont, California. On 23 August 2023, the Company announced that, as a consequence of all the development activities which had taken place since 5 October 2022, it had now demonstrated the successful transfer of all new process improvements and learning cycles developed at the Stanford Nanofabrication Facility into imec’s megabit array. These process improvements included modification of the PCMO etch process and the composition of the memory cells, and it validated that the technology optimization was transferable from fab to fab. After extensive analysis 4DS showed, for the first time, a fully functioning megabit array with 60nm memory cells, access transistors and write circuitry. The Company confirmed that following testing within the megabit array 4DS had shown: - Read and write speeds at 27 nanoseconds; - Endurance well in excess of 2 billion cycles; and - Retention is persistent and tuneable. The results seen were significant as they were on a known and well understood megabit array from imec. Upon achieving this Company milestone, further analysis and strategic planning was conducted. On 18 September 2023, the Company successfully completed further analysis of the Fourth Platform Lot and the results obtained were significantly better as compared to results announced on 23 August 2023. The Company confirmed that following additional testing within the megabit array 4DS had shown: - Write speeds at 9.5 nanoseconds which were significantly superior to DRAM - Endurance in excess of 3 billion cycles - DRAM read speed; and - Retention is persistent and tuneable 4DS’s ReRAM performance profile to suitably meet these outcomes had again been clearly demonstrated on the Fourth Platform Lot via the additional testing. On 29 November 2023, following lengthy strategic discussions, 4DS announced that it had finalised the terms of the collaboration extension with imec, to run from 1 January 2024 to the end of 2024, and that they had agreed to additional collaboration activities to be undertaken during 2024. Also on 29 November 2023, 4DS announced that process optimization and short loop analysis would take place into early 2024. The Fifth and Sixth Platform Lots would again be manufactured on imec’s unique Dory platform on 60nm and significantly for the first time 20nm memory cells. Manufacturing of the Fifth and Sixth Platform Lots would commence during Q1 2024 and Q2 2024 respectively with delivery to 4DS expected during Q3 2024. The Fifth Platform Lot is seeking to further optimise the unique characteristics of the results already seen on the 60nm memory cells prior to undertaking manufacturing of the Sixth Platform Lot on 20nm memory cells. 5 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 On 5 February 2024, the Company successfully completed further analysis of the Fourth Platform Lot and the results obtained were significantly better as compared to results announced on 18 September 2023. The focus of the additional testing was to investigate the speed and power efficiency of the 60nm memory cells in the megabit array. Specifically, analysis of the Fourth Platform Lot verified that 4DS had demonstrated: - Reliable write speeds of 4.7 nanoseconds That memory cell programming is due to the phenomenon of Electric Pulse Induced Resistance switching, or EPIR Variable cell level writing by voltage or time pulse modification Persistent memory with low energy consumption Collaboration agreements ● On 10 and 11 October 2023, following the success of 4DS’s Fourth Platform Lot, 4DS’ Board members and Chief Technology Officer met with imec’s Chief Operating Officer and a number of senior imec personnel in Belgium for lengthy strategic discussions and a tour of imec’s facilities. ● On 29 November 2023, 4DS and imec finalised the terms of the collaboration extension which commenced on 1 January 2024 and runs to the end of the same year. 4DS and imec agreed to additional collaboration activities to be undertaken during 2024. The consideration for all collaboration activities is 1.92 million Euro. ● On 11 May 2024, the Company renewed the joint development agreement with Western Digital Corporation subsidiary HGST for the 11th consecutive year for another 12-months. Patent portfolio 4DS Memory has a patented IP portfolio, comprising 34 USA patents granted, which have been developed in-house to create high-density Storage Class Memory. The granted patents are 100% owned by the Company. These patents are specifically related to the operation of the Company and are free from any royalty or licensing obligations. The 33rd patent was granted on 23 November 2022 and 34th patent was granted on 8 March 2023. Corporate and Management Changes ● On 1 December 2023, Mr Peter Himes was appointed as a strategic advisor to the 4DS Board. Peter is an experienced senior executive in high growth technology firms, with extensive general management responsibilities. He is agile at building winning teams, defining and addressing new markets, building key relationships and partnerships all across the value chain, and promoting and evangelizing for business opportunities. Peter is consistently recognized as a thought leader across multiple industries with a strong focus on innovation systems and strategic alliances over the past 10 years. ● On 15 April 2024, as a valued member of the 4DS team and a critical decision maker in how the Company determines commercialisation strategies on the back of potential positive results in 2024 on both 60nm and 20nm memory cells, Mr Peter Himes was appointed as Chief Strategic Officer. Significant changes in the state of affairs Refer to the operating review and placement and issue of securities for significant changes in the state of affairs of the Group during the financial year. 6. Dividends No dividend has been declared or paid by the Company. 7. Placement and issue of securities For the financial year ended 30 June 2024, the Company issued 130,891,698 ordinary shares as a result of exercising unlisted options. Details regarding each class of options exercised are below: 6 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● On 25 August 2023, the Company issued 43,852,572 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $2,411,891. On 30 August 2023, the Company issued 13,596,971 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $747,833; and 1,500,000 fully paid ordinary shares following the exercising of $0.08 unlisted options expiring on 3 December 2023 to raise $120,000. On 4 September 2023, the Company issued 9,575,180 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $526,635; and 7,450,000 fully paid ordinary shares following the exercising of $0.052 unlisted options expiring on 22 January 2024 to raise $387,400; and 1,300,000 fully paid ordinary shares following the exercising of $0.052 unlisted options expiring on 28 August 2024 to raise $67,600. On 8 September 2023, the Company issued 2,000,000 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $110,000. On 11 September 2023, the Company issued 3,432,971 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $188,813. On 18 September 2023, the Company issued 3,606,582 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $198,362. On 19 September 2023, the Company issued 1,372,727 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $75,500. On 26 September 2023, the Company issued 1,803,029 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $99,167; and 7,380,000 fully paid ordinary shares following the exercising of $0.052 unlisted options expiring on 22 January 2024 to raise $383,760; and 4,000,000 fully paid ordinary shares following the exercising of $0.037 unlisted options expiring on 19 December 2027 to raise $148,000. On 4 October 2023, the Company issued 12,830,000 fully paid ordinary shares following the exercising of $0.064 unlisted options expiring on 29 November 2025 to raise $821,120. On 12 October 2023, the Company issued 400,000 fully paid ordinary shares following the exercising of $0.08 unlisted options expiring on 3 December 2023 to raise $32,000. On 25 October 2023, the Company issued 500,000 fully paid ordinary shares following the exercising of $0.08 unlisted options expiring on 3 December 2023 to raise $40,000. On 7 November 2023, the Company issued 500,000 fully paid ordinary shares following the exercising of $0.08 unlisted options expiring on 3 December 2023 to raise $40,000. On 15 November 2023, the Company issued 941,666 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $51,792. On 4 December 2023, the Company issued 500,000 fully paid ordinary shares following the exercising of $0.08 unlisted options expiring on 3 December 2023 to raise $40,000. On 11 January 2024, the Company issued 9,450,000 fully paid ordinary shares following the exercising of $0.052 unlisted options expiring on 22 January 2024 to raise $491,400. On 17 January 2024, the Company issued 300,000 fully paid ordinary shares following the exercising of $0.052 unlisted options expiring on 22 January 2024 to raise $15,600. On 8 February 2024, the Company issued 4,000,000 fully paid ordinary shares following the exercising of $0.037 unlisted options expiring on 19 December 2027 to raise $148,000. On 7 March 2024, the Company issued 600,000 fully paid ordinary shares following the exercising of $0.055 unlisted options expiring on 31 March 2026 to raise $33,000. For the financial year ended 30 June 2024, the following options expired. ● On 3 December 2023, 1,600,000 options excisable at $0.08 expired. ● On 22 January 2024, 1,200,000 options excisable at $0.052 expired. 7 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 For the financial year ended 30 June 2024, the following options were issued. ● On 5 February 2024, the Company issued 10,000,000 unlisted options exercisable at $0.073 expiring 5 February 2029 to Mr. Peter Himes with 25% to vest 6 months following the date of options issued and the remaining vesting quarterly over the following 10 quarters. ● On 2 April 2024, the Company issued 3,000,000 unlisted options exercisable at $0.20 expiring 30 June 2025 to Lodge Corporate Pty Ltd. 8. Material business risks There are a number of material risks that, either individually or in combination, may materially and adversely affect the future operating and financial performance and prospects of the Company and the value of its shares. Some of these risks may be mitigated by the Company’s internal controls and processes but some are outside the control of the Company, its Directors and management. The material risks identified by management are described below: (a) Going concern The Company’s ability to continue as a going concern and meet its debts and future commitments as and when they fall due is dependent on the Company’s ability to raise sufficient working capital to ensure the continued implementation of the Group’s business plan. (b) Development risk The Company’s technology is the subject of continuous development and needs to be substantially developed further in order to gain and maintain competitive and technological advantage, and to improve the products’ usability, scalability and accuracy. There are no guarantees that the Company will be able to undertake such development successfully. Failure to successfully undertake such research and development, anticipate technical problems, or estimate research and development costs or timeframes accurately will adversely affect the Company’s results and viability. (c) Intellectual Property risk There can be no assurance that the Company’s patent portfolio will afford the Company commercially significant protection of the Company’s technology, or that competitors will not develop competing technologies that circumvents such intellectual property. Although the Company will implement all reasonable endeavours to protect its intellectual property, there can be no assurance that these measures will be sufficient. (d) Competition The semiconductor memory industry in which the Company operates is subject to competition. Current or future competitors may come up with new, better or cheaper products and solutions. The Company’s competitors include both small and medium enterprises and large, established corporations or multinationals. Those may decide to enter the Company’s target markets and be able to fund aggressive marketing strategies. They may also have stronger financial capabilities than the Company which may negatively affect the operating and financial performance of the business. (e) Technology Risk The Company’s market involves rapidly evolving products and technological change. The Company cannot guarantee that it will be able to engage in research and development at the requisite levels. The Company cannot assure investors that it will successfully identify new technological opportunities and continue to have the needed financial resources to develop new products in a timely or cost-effective manner. At the same time, products, services and technologies developed by others may render the Company’s products and services obsolete or non-competitive. 9. Matters subsequent to the end of financial year No matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. 10. Likely developments and expected results of operations Information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Group. 8 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 11. Environmental regulation and performance The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law. The Group aims to comply with the identified regulatory requirements in each jurisdiction in which it operates. There have been no known material breaches of the environmental regulations. 12. Share options Unissued ordinary shares of 4DS Memory Limited under option at the date of this report are as follows: Grant Date Expiry Date Exercise Price Number under option 31/05/2022 19/12/2022 27/02/2023 23/03/2023 05/02/2024 02/04/2024 31/05/2027 19/12/2027 27/02/2028 31/03/2026 05/02/2029 30/06/2025 $0.100 $0.037 $0.037 $0.055 $0.073 $0.200 10,500,000 13,500,000 7,000,000 5,607,184 10,000,000 3,000,000 49,607,184 All unissued shares are ordinary shares of the Company. All unvested options expire on termination of employment unless the Board makes a determination (in its absolute discretion) that the employee’s performance during the term and the circumstances of the termination of the employment are such that all unvested options on the date of termination will continue to vest according to the vesting schedule and only expire on the expiry date. Further details about share-based payments to Directors and Key Management Personnel (KMP) are included in the remuneration report. Option holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate. Shares issued as a result of the exercise of options During or since the end of the financial year, the Company issued ordinary shares of the Company as a result of the exercise of options as follows: Number of shares Amount paid on each share 80,781,698 3,400,000 8,000,000 12,830,000 25,880,000 $0.055 $0.080 $0.037 $0.064 $0.052 9 4DS Memory Limited and its controlled entities Directors' report 30 June 2024 13. Indemnification and insurance of Directors, Officers and Auditors Indemnification The Company indemnifies each of its Directors, Officers and Company Secretary. The Company indemnifies each Director or Officer to the maximum extent permitted by the Corporations Act 2001 from liability to third parties, except where the liability arises out of conduct involving lack of good faith, and in defending legal and administrative proceedings and applications for such proceedings. The Company must use its best endeavours to insure a Director or Officer against any liability, which does not arise out of conduct constituting a wilful breach of duty or a contravention of the Corporations Act 2001. The Company must also use its best endeavours to insure a Director or Officer against liability for costs and expenses incurred in defending proceedings whether civil or criminal. The Company has not entered into any agreement with its current auditors indemnifying them against any claims by third parties arising from their report on the financial report. Insurance premiums During the year the Company paid insurance premiums to insure Directors and Officers against certain liabilities arising out of their conduct while acting as an Officer of the Group. Under the terms and conditions of the insurance contract, the nature of the liabilities insured against, and the premium paid cannot be disclosed. 14. Non-audit services During the year, PKF Perth, the Group's auditor, performed certain other services in addition to the audit and review of the financial statements. The Board of Directors has considered the non-audit services provided during