4DS MEMORY LIMITED — Interim / Quarterly Report 2017

Jan 30, 2017

4DS Memory Limited | ABN 43 145 590 110 Level 2, 50 Kings Park Road, West Perth WA 6005 PO Box 271, West Perth WA 6872

+61 8 6377 8043 | info@4dsmemory.com | www.4dsmemory.com

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ASX RELEASE

31 January 2017

DECEMBER QUARTER TECHNICAL ACHIEVEMENTS AND FINANCIAL RESULTS

4DS Memory Limited (ASX: 4DS) ( 4DS ) (the Company ) today announced financial results and technical achievements for the December 2016 quarter. Full details of the Company’s cash flow and cash position are included in the Appendix 4C attached.

40nm Geometries

In October 2016 4DS announced it has successfully developed and tested 40 nanometre ( nm ) Interface Switching resistive random access memory ( ReRAM) cells.

This milestone was a significant breakthrough as it represents a digital memory cell size which is smaller than the current large scale volume production sizes of existing non-volatile memory technology, 3D NAND Flash ( 3D Flash )

The ability to scale down 4DS’ technology is vital for the creation of stacked ReRAMs into 3D structures, which are essential for mobile and cloud gigabyte Storage Class Memory (SCM). SCM is required for high capacity data storage applications, such as cloud and data storage, which require low energy consumption and high endurance rates.

4DS’ patented technology is well suited to SCM due to its advantages over traditional and other emerging non-volatile memory storage technologies. These advantages include scalability of cells, low power consumption and high endurance levels

Capital Raise

In October 2016 4DS successfully completed a placement of approximately 117.6 million new ordinary shares at an issue price of A$0.034 per share to professional and sophisticated investors to raise A$4.0 million.

Shaw and Partners acted as the lead manager and bookrunner to the oversubscribed Placement.

Endurance

In December 2016, 4DS announced the achievement of a key endurance milestone.

Endurance – defined as how often the state of a memory cell can be changed without failure – is an important characteristic relevant to global storage class memory manufacturers in the US$40 billion market. Furthermore, to be viable for storage class memory applications, endurance needs to be highly consistent across a statistically significant number of cells and reproducible on different wafers.

4DS has now measured the endurance yield of more than 1,000 cells of 5 different cell sizes (ranging from 50nm to 140nm) on 2 different wafers. The cell currents were measured after each state change to ensure correct memory operation (a step often omitted when testing and reporting endurance). In total, nearly 1 million cell states were changed and measured in this endurance yield analysis

The endurance yield result has been verified by an independent technical expert who certified that more than 97% of the memory cells tested achieved the required endurance goal, significantly exceeding the target of 90% endurance yield.

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4DS Memory Limited | ABN 43 145 590 110 Level 2, 50 Kings Park Road, West Perth WA 6005 PO Box 271, West Perth WA 6872

+61 8 6377 8043 | info@4dsmemory.com | www.4dsmemory.com

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ReRAM is the memory of choice

At a broker briefing in California in December 2016 Western Digital, the global memory storage leader, confirmed again that 3D ReRAM is its memory technology of choice for SCM. ReRAM offers improved scalability and efficiency, together with lower latency, lower cost and superior endurance.

4DS has been developing its patented Interface Switching ReRAM, with Western Digital subsidiary HGST for the past two years under a joint development agreement ( JDA ). The JDA was renewed in July 2016 for a further 12 months and is focused on optimising scalability and cycling endurance of ReRAM cells for the mobile and cloud gigabyte silicon storage market.

Financial results

The cash burn for the December quarter is higher than forecast due to the expenses associated with the capital raising in October 2016 together with a significant payment associated with management changes made in October 2016.

Following a review of all budgetary items the last half of the financial year will see the company’s burn rate come back into line with the full year budget.

Outlook for 2017

Having achieved scalability to 40nm cells and the important endurance milestone, together with the Company’s strengthened cash position, 4DS is now focused on optimising the performance and reliability of its Interface Switching ReRAM technology. The Company looks forward to informing shareholders of further technical developments, aimed at demonstrating commercial viability for storage class memory, as they occur in 2017.

-END-

Investors: David McAuliffe Media: Harrison Polites Executive Director Media & Capital Partners +61 408 994 313 +61 409 623 618 david@4dsmemory.com harrison.polites@mcpartners.com.au

About 4DS

4DS Memory Limited (ASX: 4DS), with facilities located in Silicon Valley, is a semiconductor development company of non-volatile memory technology, pioneering Interface Switching ReRAM (Non-Filamentary ReRAM), for next generation gigabyte storage in mobile and cloud. Established in 2007, 4DS owns a patented IP portfolio, comprising 17 US patents granted and 6 patents pending, which has been developed in-house to create high density storage class memory. 4DS has a joint development agreement with Western Digital subsidiary HGST, a global storage leader, which accelerates the evolution of 4DS’ technology.

For more information, please visit www.4dsmemory.com.

Disclaimer

This release contains certain forward looking statements that are based on the Company’s management’s beliefs, assumptions and expectations and on information currently available to management. Such forward looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results or performance of 4DS to be materially different from the results or performance expressed or implied by such forward looking statements. Such forward looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the political and economic environment in which 4DS will operate in the future, which are subject to change without notice. Past performance is not necessarily a guide to future performance and no representation or warranty is made as to the likelihood of achievement or reasonableness of any forward looking statements or other forecast. To the full extent permitted by law, 4DS and its directors, officers, employees, advisers, agents and intermediaries disclaim any obligation or undertaking to release any updates or revisions to information to reflect any change in any of the information contained in this release (including, but not limited to, any assumptions or expectations set out in the release).

You should not place undue reliance on these forward- looking statements. Except as required by law or regulation (including the ASX Listing Rules) we undertake no obligation to update these forward- looking statements.

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

4DS MEMORY LIMITED (4DS)

ABN

43 145 590 100

Quarter ended (“current quarter”)

31 December 2016

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) business development (c) advertising and marketing (d) leased assets (e) staff and board remuneration (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash (used in) operating activities	- (334) (96) - - (219) (153) - 3 - - - -	(644) (183) - - (290) (306) - 4 - - - -
	(799)	(1,419)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets	(19) - - - -	(19) - 112 - -

• See chapter 19 for defined terms 31 December 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (6 months) $A’000
2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments - shares (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from investing activities	- - - - - - -	- - - - - - -
	(19)	93
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	4,000 - - (234) 27 (12) - - -	4,000 - - (234) 27 (12) - - -
	3,781	3,781
4. Net increase/(decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash (used in) operating activities (item 1.9 above) 4.3 Net cash from investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	716 (799) (19) 3,781 109	1,243 (1,419) 93 3,781 89
	3,788	3,788

• See chapter 19 for defined terms

31 December 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	3,788 - - -	716 - - -
	3,788	716

6.	Payments to directors of the entity and their associates	Current quarter
		$A'000
6.1	Aggregate amount of payments to these parties included in item 1.2	113
6.2	Aggregate amount of cash flow from loans to these parties included	-
	in item 2.3
6.3	Include below any explanation necessary to understand the transactions included in items 6.1
	and 6.2

Payment to Directors are for Non Executive and Chief Executive Officer fees and reimbursement expenses

7.	Payments to related entities of the entity and their	Current quarter
	associates	$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2	-
7.2	Aggregate amount of cash flow from loans to these parties included	-
	in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in items 7.1
	and 7.2

None

• See chapter 19 for defined terms 31 December 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

8. Financing facilities available Add notes as necessary for an understanding of the position 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify)	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	-	-
	-	-
	-	-

• 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

None

9. Estimated cash outflows for next quarter	$A’000
9.1 Research and development 9.2 Product manufacturing and operating costs 9.3 Advertising and marketing 9.4 Leased assets 9.5 Staff board remuneration 9.6 Administration and corporate costs 9.7 Other (provide details if material) 9.8 Total estimated cash outflows	323 - - - 34 197 -
	554

10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 Name of entity	-	-
10.2 Place of incorporation or registration	-	-
10.3 Consideration for acquisition or disposal	-	-
10.4 Total net assets	-	-
10.5 Nature of business	-	-

• See chapter 19 for defined terms 31 December 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 January 2017 (Company secretary)

Print name: Peter Webse

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 31 December 2016

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