Announcement PDF Annual Financial Report 4DS Memory Limited ABN 43 145 590 110 30 June 2025 4DS Memory Limited Contents 30 June 2025 1 Corporate directory ..........................................................................................................................................................2 Directors' report ...............................................................................................................................................................3 Auditor's independence declaration...............................................................................................................................21 Consolidated statement of profit or loss and other comprehensive income.................................................................22 Consolidated statement of financial position.................................................................................................................23 Consolidated statement of changes in equity ................................................................................................................24 Consolidated statement of cash flows............................................................................................................................25 Notes to the consolidated financial statements.............................................................................................................26 Note 1. Material Accounting Policy Information........................................................................................................26 Note 2. Critical accounting judgements, estimates and assumptions........................................................................27 Note 3. Expenses ........................................................................................................................................................29 Note 4. Remuneration of auditors..............................................................................................................................30 Note 5. Income tax .....................................................................................................................................................30 Note 6. Cash and cash equivalents.............................................................................................................................31 Note 7. Cash flow information ...................................................................................................................................31 Note 8. Right-of-use assets.........................................................................................................................................32 Note 9. Trade and other payables..............................................................................................................................32 Note 10. Lease liabilities.............................................................................................................................................32 Note 11. Employee benefits .......................................................................................................................................33 Note 12. Issued capital ...............................................................................................................................................33 Note 13. Earnings per share .......................................................................................................................................36 Note 14. Reserves.......................................................................................................................................................36 Note 15. Share-based payment..................................................................................................................................37 Note 16. Financial instruments...................................................................................................................................40 Note 17. Key management personnel disclosures .....................................................................................................43 Note 18. Related party transactions...........................................................................................................................43 Note 19. Parent entity information............................................................................................................................44 Note 20. Interests in subsidiaries ...............................................................................................................................45 Note 21. Commitments and Contingent ....................................................................................................................45 Note 22. Events after the reporting period................................................................................................................46 Consolidated entity disclosure statement ......................................................................................................................47 Directors' declaration .....................................................................................................................................................48 Independent auditor's report to the members of 4DS Memory Limited .......................................................................49 Shareholder information ................................................................................................................................................54 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 3155, Skyway Court, West Perth WA 6005 Fremont CA 94539 AUSTRALIA 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 29 August 2025. 4DS Memory Limited Corporate directory 30 June 2025 2 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 8, 905 Hay Street, Perth WA 6000 Solicitor Steinepreis Paganin Level 14, QV1 Building 250 St Georges Terrace Perth WA 6000 Stock exchange listing 4DS Memory Limited shares are listed on the Australian Securities Exchange (ASX code: 4DS) Website www.4dsmemory.com 4DS Memory Limited Directors' report 30 June 2025 3 The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of 4DS Memory Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2025. 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 Executive Chairman Dr. Guido Arnout Non-Executive Director Mr. Howard Digby Non-Executive Director Information on Directors Name: Mr. David McAuliffe Title: Executive Chairman Appointed: 7 December 2015 Qualifications: LLB (Hons), BPharm Experience and expertise: 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). Other current directorships: Non-Executive Chairman of Invex Therapeutics Limited (ASX: IXC) Former directorships (last 3 years): - Interests in shares: 10,061,042 ordinary shares Interests in options: 6,000,000 unlisted options exercisable at $0.037 each on or before 27 February 2028 Name: Dr. Guido Arnout Title: Non-Executive Director Appointed: 7 December 2015 Qualifications: PhD Electrical Engineering Experience and expertise: 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. Other current directorships: - Former directorships (last 3 years): - Interests in shares: 8,000,000 ordinary shares Interests in options: - 4DS Memory Limited Directors' report 30 June 2025 4 Name: Mr. Howard Digby Title: Non-Executive Director Appointed: 7 December 2015 Qualifications: BE (Mechanical, Hons) Experience and expertise: 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. Other current directorships: Non-Executive Chairman of Singular Health Group Ltd (ASX: SHG) Non-Executive Director of Elsight Limited (ASX: ELS) Former directorships (last 3 years): Non-Executive Director of Spenda Limited (ASX: SPX) - resigned 21 November 2024 Interests in shares: 6,688,629 ordinary shares Interests in options: 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 Name: Mr. Peter Webse Qualifications B.Bus, FGIA, FCIS Experience 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: Attended Held Mr. David McAuliffe 9 9 Dr. Guido Arnout 9 9 Mr. Howard Digby 9 9 Held: represents the number of meetings held during the time the Director held office. 4DS Memory Limited Directors' report 30 June 2025 5 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 three important industry relationships: a development agreement with Belgium based imec, a world leading research and innovation hub in nano electronics and digital technologies; a design agreement with Infineon Technologies AG, Germany's largest semiconductor manufacturer and one of the ten largest semiconductor manufacturers worldwide; and a joint development agreement with Western Digital subsidiary HGST, a global leader in storage solutions. 5. Review of operations Financial Review The loss for the Group after providing for income tax amounted to $9,678,176 (30 June 2024: $5,450,713). Operating Review On 10 October 2024, the Company informed shareholders the Fifth Platform Lot had been shipped from imec to its facilities in Fremont, USA, and analysis would commence immediately upon arrival. The Fifth Platform Lot with 60nm memory cells was seeking to optimise and repeat the unique characteristics of the results seen in the Fourth Platform Lot as announced on 23 August 2023 and optimise the construction process of memory cell arrays to de-risk the manufacturing of the first 4DS 20nm memory cell array incorporated in the Sixth Platform Lot. Development of the Sixth Platform Lot comprising 20nm continued during the year. On 24 October 2024 the Company announced that its Chief Strategic Officer, Mr Peter Himes, will be presenting at Semiconductor Australia 2024. The inaugural event brings together Australia’s deep-tech entrepreneurs, industry experts, innovation policy makers, and investor community to explore opportunities and chart the roadmap to secure Australia’s semiconductor future. On 17 December 2024, the Company announced a trading halt in relation to development agreement, capital raise and Company Update. Following the request for a trading halt, the Company announced it had entered into a Design Agreement whereby Infineon Technologies LLC will assign resources to design a custom ReRAM memory test chip for 4DS, based on 4DS requirements. The Company remained in a trading halt until the 19 December 2024. On 19 December 2024, the Company announced that it had elected not to proceed with a capital raise because the offering wasn’t reflective of what the Board considers to be in the best interests of shareholders and that the Company intends to raise capital in early 2025 to enable it to fund its obligations under the Design Agreement with Infineon Technologies LLC. It added that the Company would provide an update in January 2025 in relation to the nature and size of its planned capital raising activities and endeavour to make sure existing shareholders will have the right to participate. On 15 January 2025, the Company requested a trading halt in relation to a pending capital raise. Following the request for a trading halt, the Company released a second announcement on 15 January 2025 to advise shareholders that it had successfully completed characterization and testing of the Fifth Platform Lot with key areas of optimisation identified and shared with the imec engineering team working on the Sixth Platform Lot 20nm memory cell array. The Company remained in a trading halt until 17 January 2025. The key process learnings from the Fifth Platform Lot that were necessary for scaling of the memory cell array from 60nm cells to 20nm cells (9 times smaller in area) and that are now in the process of being implemented to the Sixth Platform Lot are: ● Memory cell array patterning and etching: new process tuning modifications for the construction of 20nm cells. ● Memory stack adjustment: the advanced memory stacks which are necessary for the construction of 20nm cells have shown functionality and which de-risks the Sixth Platform Lot with similar memory cell stack constructions. ● Memory array process integration: the best options of the post-patterning backend processes of the advanced memory cells were selected and implemented to the Sixth Platform Lot. 4DS Memory Limited Directors' report 30 June 2025 6 These new learnings and optimizations from the Fifth Platform Lot were critically important for the successful processing of 4DS’s first 20nm memory cell array in the Sixth Platform Lot, expected to be manufactured and analysed in 1H 2025. On the 17 January 2025, 4DS announced it had received binding commitments from institutional and high net worth investors for a placement of $6 million (Placement). The Placement, led by Bell Potter as the sole lead manager, comprised the issue of a total of 166.7 million shares, priced at $0.036 per share, (a 12.2% discount to the closing price as at 14 January 2025 and 24.5% to the 15 day volume weighted average price “VWAP”) with 1 free attaching option for every 1 share issued under the placement. The announcement also outlined details of a share purchase plan (SPP) of $2 million to eligible shareholders under the same terms of the Placement with shareholders eligible to acquire up to $30,000 of New Shares. Each issued share would have a 1:1 attached unlisted option with an exercise price of $0.36, expiring on 28 February 2025. The Company outlined it would use funds raised for working capital requirements under the design and services agreement with Infineon, ongoing investment in development with imec, general working capital and offer costs On 20 February 2025, the Company announced that it has successfully completed its Share Purchase Plan (SPP) and Placement. After receiving valid applications from eligible shareholders for approximately $4.76 million, the SPP applications were scaled back to $2.6 million with refunds issued by direct credit to shareholders. On 28 April 2025, the Company announced that imec had successfully completed the manufacturing and processing of the Sixth Platform Lot. This Lot was received at the 4DS facilities in Fremont on 6 May 2025 and electrical testing started the next day. On 16 June 2025, the Company detailed the results of the Sixth Platform Lot outlining that while electrical testing and characterization of the Sixth Platform Lot is still incomplete and remains ongoing, the initial analysis of the wafers within the entire Lot indicates that the necessary process modifications and optimizations introduced into the Sixth Platform Lot have not yielded the expected electrical testing and characterization results the Company was expecting. The Company is in the process of completing a root cause analysis using the recently received analytics, which includes physical analytics and chemical analysis to identify the reasons for the unexpected initial analysis in the 20nm Sixth Platform Lot to date. If this imminent root cause analysis identifies the reasons for the initial unexpected results, announced on 16 June 2025, the Company will meet with its partners at the earliest opportunity to discuss the strategic options going forward. Material agreements On 17 December 2024, the Company signed a design agreement with Infineon Technologies LLC to design a custom RERAM chip for the Company, based on the Company's requirements. In consideration for Infineon Technologies LLC services, the Company will pay a total of US$4.5 million, with an upfront payment of US$1.5 million with the balance payable monthly at various amounts. For the full terms regarding material agreement please refer to the Company announcements page on its website. 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 34 patents are specifically related to the operation of the Company and are free from any royalty or licensing obligations. 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. 4DS Memory Limited Directors' report 30 June 2025 7 6. 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 Group'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 Group's ability to continue as a going concern and meet its debts and future commitments as and when they fall due is dependent on the Company’s ability to raise sufficient working capital to ensure the continued implementation of the Group’s business plan. (b) Development risk The Group'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 Group 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 Group's results and viability. (c) Intellectual Property risk There can be no assurance that the Group's patent portfolio will afford the Group commercially significant protection of the Group's technology, or that competitors will not develop competing technologies that circumvents such intellectual property. Although the Group 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 Group operates is subject to competition. Current or future competitors may come up with new, better or cheaper products and solutions. The Group's competitors include both small and medium enterprises and large, established corporations or multinationals. Those may decide to enter the Group's target markets and be able to fund aggressive marketing strategies. They may also have stronger financial capabilities than the Group which may negatively affect the operating and financial performance of the business. (e) Technology Risk The Group's market involves rapidly evolving products and technological change. The Group cannot guarantee that it will be able to engage in research and development at the requisite levels. The Group 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 Group's products and services obsolete or non-competitive. 7. Dividends No dividend has been declared or paid by the Company. 8. Placement and issue of securities For the financial year ended 30 June 2025, the Company issued 297,463,800 ordinary shares and 270,888,640 options as below: ● On 17 January 2025, 4DS announced it had received binding commitments from institutional and high net worth investors for a placement of $6 million (Placement). The Placement attracted strong interest in excess of the shares available to allocate and will be followed by a share purchase plan (SPP) of $2 million. The Placement comprises the issue of 166,666,666 ordinary shares in 4DS (New Shares), at an issue price of $0.036 per New Share. 4DS Memory Limited Directors' report 30 June 2025 8 ● On 21 January 2025, the following securities were issued: - 72,221,974 SPP Shares - 72,221,974 SPP Options - 166,666,666 Placement Options - 12,000,000 Broker Options All of the options are exercisable at $0.036 and expire 28 February 2028. ● On 22 April 2025, the Company issued 20,000,000 unlisted options to employee exercisable at $0.036 and expire 30 December 2027. ● During May and June 2025, a total of 58,075,160 ordinary shares were issued following the exercise of options at $0.036 per share, and an additional 500,000 shares were issued at $0.055 per share. ● On June 30, 2025, 3,000,000 unlisted options with an exercise price of $0.20 expired. 9. Matters subsequent to the end of financial year On 18 August 2025, the Company announced the completion of a comprehensive root cause analysis of the 20nm Sixth Platform Lot, employing both physical and chemical techniques. The analysis confirmed that etch residues introduced during manufacturing led to electrical shorting of the memory devices. The Company is now engaging with its partners to review these findings and jointly assess the most effective strategic and technical development pathways and shareholders will be updated as these initiatives progress. Also on the same day, the Company announced that Hitachi Global Storage Technologies (HSGT) had signed the 12th consecutive renewal of its Joint Development Agreement with the Company. On 28 August 2025, the Company entered into a trading halt pending the release of an announcement in relation to the outcome of the engagement with the Company’s development partners to jointly assess the most effective pathway forward for the Company’s technology for 2025 and beyond. No other matter or circumstance has arisen since 30 June 2025 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. 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. 4DS Memory Limited Directors' report 30 June 2025 9 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 31/05/2027 $0.100 10,500,000 19/12/2022 19/12/2027 $0.037 13,500,000 27/02/2023 27/02/2028 $0.037 7,000,000 23/03/2023 31/03/2026 $0.055 5,107,184 05/02/2024 05/02/2029 $0.073 10,000,000 08/01/2025 28/02/2028 $0.036 192,813,480 17/04/2025 30/12/2027 $0.036 20,000,000 258,920,664 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 29,260,645 $0.036 7,569,692 $0.036 3,789,017 $0.036 500,000 $0.055 17,383,332 $0.036 72,474 $0.036 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. 4DS Memory Limited Directors' report 30 June 2025 10 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