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4DS Memory (ASX:4DS) at the Stocks Down Under Semiconductor Conference on 30 November 2021

December 1, 2021

4DS, 4DS Memory, video

4DS Memory Director David McAuliffe presented at Stocks Down Under’s Semiconductor Conference on 30 November 2021.


Read all of Pitt Street Research’s reports on 4DS here


Marc: And that brings us to our next presenter. If I could invite Dave McAuliffe to the stage to talk about 4DS Memory. And this is another company developing a rear-end technology. There we go. Good morning, Dave. It’s great to have you here. You’ve been, I think, without any exception, you’ve been at all our semiconductor conferences, I think. So it’s good to have you back for this one. Yeah, it’s been turbulent times for 4DS, so I’ll give the floor over to you.

Dave: Okay. Thanks very much. I just can’t see my slides at the moment. There we go, thanks very much. Welcome, everybody. Good morning. I’m calling in from Perth in Western Australia. Thanks to all the sponsors of the Stocks Down Under Semiconductor Conference. And it’s a pleasure to be here again and give you an update on where 4DS is traveling at the moment.

Just to get on with the boring stuff. We have a disclaimer here, which I’ll just give everyone a second to read. But just as a bit of a background, I’d like to sort of go back to why I’ve been involved, and I’ve been involved now for since 2013. For a biotechnology investor, it’s quite unusual for me, I think, to have gotten involved. But the opportunity was too attractive when I first looked at it back in 2013. And one of the reasons I was very keen to get involved was because of the global opportunity that we’re addressing, which currently has an unmet need in the area that we’re particularly looking to develop our technology.

Secondly, for me, it’s an engineering company. It’s not like a biotechnology company, where the readout of your information is black and white. And the readout is quite often quite lengthy periods of time before you can get information to make a decision to go forward. With this particular opportunity, it’s a daily or weekly or monthly readout of information, you don’t have to wait for extended period of times to get information to make decisions which move your technology in the direction you’d like it to go. So, that is also attractive for me.

And also, we didn’t have any data back in 2013. So I thought it was an ideal opportunity to get in when the company was relatively significantly undervalued. And also, for me, it’s a hard opportunity, it’s a hard thing to do that we’re doing. So it means that you probably have limited competitors in the area working in, which we think we do. So, that’s one of the main reasons I got back in 2013, I got involved. And I think seven or eight years on from that time, it’s even more exciting in terms of being involved in the industry. Because of what we’re seeing happening at the moment in terms of the demand for semiconductor components has exploded, it’s at an all-time high. I apologize if other presenters have been through this already, but I have to sort of just go through it for my shareholders and any shareholders that might look at this on a subsequent video on a website.

So, outside of the pandemic, I think the semiconductor industry is under pressure in terms of demand. Production facilities cannot keep up with that. And there’s billions of dollars being spent in new production facilities, which will obviously have a lag. And these facilities are very expensive to build and do take some time. And you also have jurisdictional issues with, you know, conflicts between different countries in terms of semiconductor components, with massive investments going into, you know, particularly into the United States and China to ramp up their own semiconductor industries.

One of the problems has been, though, is the limited innovation that’s taken place over the last little while. We’ve got three main things that we use, being SRAM, DRAM, and NAND. And these are the dominant things that are in most of our devices that we use on a daily basis. And they’re decades old, most of them now. So there hasn’t been a lot of significant innovation over the last decades. And that’s one of the rate-limiting facts for computing related to mobile phones and data centers. And that’s something that we’re looking to try and address with, you know, bringing in new innovation in an area that has high demand.

So, a quick overview of 4DS. If you were to look at the ReRAM space, it’s quite a populated space. There are a number of companies working with ReRAM, and some with varying degrees of success and others not. But it is becoming an area that people are increasingly looking towards for innovation. One of the things about us is that we sort of sit outside the band of ReRAM companies, a number of them work in this sort of similar area. But for us, we’re developing a technology which we call interface switching ReRAM, which means that we use the entire surface area of our cell. So it’s an area-based memory to create the resistance, which creates the memory. And for us, that gives us a number of significant advantages going forward in terms of, you know, the way we look at endurance, which is the number of times a cell can cycle without failure. The ability for the information to be retained. And also the speed for which you can access the information.

So, for us, being an area-based memory technology gives us some advantages in terms of the area we’re looking to get involved with. And we don’t create an atomic wire in terms of what we do. So we’re very specific about utilizing the whole cell to do that. That means that we are quite advanced in terms of what we’re doing. We’ve got heaps of initial data, and quite compelling data, which I’ll talk about what we produce in terms of 2021. And we think we’re one of the most advanced interface switching technologies in the world.

We don’t think we have significant competitors in the area. We’ve done lots of research in terms of trying to establish if we had competitors in this area, and I think we’re sort of unique in terms of, we don’t think we do in the area of ReRAM that we work in. The area we’re targeting, which I’ll talk about shortly is called storage class memory. It’s a new form of memory that the industry is looking to be created to fit into the hierarchy, which sits between DRAM and NAND flash. We’re looking more to sort of sit down close to DRAMs, and augment DRAM and complement it rather than replace it. And the characteristics which we’ve been able to show with our technology shows that we are able to get down into that DRAM type area, and not replace, but augment it going forward.

Importantly, we’ve got a couple of partners who’ve recognized the uniqueness of what we do. We’ve been working with Western Digital subsidiary, HGST, for a number of years now. I’ll talk about them a little later. But importantly, they came on board when we actually didn’t have any data back in 2014, or very limited data, but recognized the opportunity that we potentially have ahead of us, which we’ve been able to show them. And they’ve been a really great partner in terms of, we’ve been able to use their research facilities, which in kind of has saved us millions of dollars a year in the initial few years of the company’s formation.

Following working in their research facility, we got to a point where we needed to get onto production equipment. So then working with IMEC for a number of years now, I’ll talk about the importance of them a little bit later in my presentation. They’re a great organization to work with. And they complement us very well in terms of their engineering skills and our engineering skills. So that’s been a great partnership.

Importantly, you know, if you’re looking to extract value from your technology, the two most important things are your patents and your people. So, we have 32 granted patents. Four have expired because they’re non-core in our very early stage patents we had at the beginning. So for a smallish company, that’s a, you know, a robust, defendable set of patents that we possess. And we’re quite pleased with the position we have, we’re quite uniquely placed in the interface switching space. And we have one more patent which is currently going through examination.

So, when we talk about storage class memory, it’s something I mentioned that the industry is looking for. It’s in its infancy. There is one product at the moment from Micron and Intel called Optane, which is currently selling but it’s really…the space has yet to be really quite defined and have multiple products go into it. But it will come. So the two main things we look at at the moment if we look at the graph on the right is DRAM and NAND flash, they’re the two main things we use in our devices.

So, one is volatile, which is DRAM, and one is non-volatile, which is NAND flash. So a volatile memory doesn’t have the ability to retain information when the power is off. So that’s what DRAM is. So, to give you an example in your operating system, if you’re in the process of writing a Word document or sending me a text, you’re operating in DRAM. And it’s very, very fast. And the cells don’t have the ability to remember anything, so they refresh themselves every 0.1 of a second. It also doesn’t have the ability to retain the information when the power is off. So, if you turn your computer off, or you don’t send that Word doc or that text to me, when you restart your device, that information won’t be there.

If you do send that information to me, it then goes and it’s stored, and it’s stored in NAND flash. So NAND is a great technology, it’s been around for a long time. It has the ability to retain the information when the power is off, so it’s non-volatile. And it stores the information for a very long time. But the access speed is…we wouldn’t think it using the device, but it’s quite slow.

So they’re the two main things we use. But what the industry is looking for is a combination of those three technologies. So it’s looking for something that’s a lot faster, so it has DRAM-like speed. We don’t get a lot of DRAM in our devices because it’s quite expensive. So we’re looking for a technology which has cheaper big costs than DRAM at the moment, and clearly something which is non-volatile and retains the information when the power is off. So these are all the attributes that we think our technology has.

We’ve been able to show that we have all these attributes in the data we’ve got. So we are moving sort of into the storage class memory space. And it’s something we’ve been working on for a long time and think that it’s a really unique opportunity for us to get involved in going forward, and would be something which is attractive to not only Western Digital, but other multiple parties who are working in the space and trying to make this space become something of a reality.

In terms of the market, the market is massive in terms of, this is another option, this is another reason why I wanted to get involved. The market last year was $470 billion in sales. And DRAM and NAND occupy a big proportion of that, about 25% of that worldwide, which is a very large number. They have a significant influence over the whole sector, it’s involved in every device we have. And for me, I don’t see that these two…any technology that goes into this space would actually cannibalize either DRAM or NAND. In fact, I think it would complement it, and just fit nicely within the hierarchy of the memories that we have at the moment. So, it’s a big market, it’s something to really chase after. And that’s what we identified back in 2013, and shifted our focus away from a replacement flash to move more towards augmenting DRAM, and our technology is very complementary to that.

So, a snapshot of 2021. It’s been an interesting year for us, development companies don’t always go on a straight line. But we’ve had some great success during the year. We’ve been working with IMEC and have had to cycles through their production equipment. We’ve made multiple wafers both times. We’ve got our processes quite right in terms of our end in terms of how we manufacture ourselves. And that’s all worked really nicely from the last sets of data we’ve got off, we call it our NAND platform, lots of it doesn’t have an access device on it. But we’ve been able to show we’re getting significant repeatable results each time we’re coming off the production line. So, that’s very pleasing for us.

In terms of what we’ve been able to replicate, in terms of endurance, many years…a couple of years ago, we announced that we’ve had tens and tens of millions of endurance cycles. So, that means we’ve got tens of millions of cycles where the cell is still active, it doesn’t decay. And we were able to repeat that at beginning this year, and have two to three times that level. So, you know, we’ve got orders of magnitude of endurance better than NAND at the moment, which is extremely pleasing. And that’s what you have to have if you want to be augmenting DRAM.

In terms of speed, we’ve been able to show that we’ve got DRAM-like speed. And one of the reasons we’ve been able to do that is because back in 2017, we announced that we don’t have any requirement for error correction. So a lot of memory suffered from the requirement to correct. And then you have to correct for errors, that means you can’t be ultimately, you know, super, super fast. So that’s a very significant thing for us and was well recognized by the industry and has formed the basis of a couple of filings for patents which have gone to grant, which run fast track to grant so the examiners recognize the significance of that.

And in terms of retention, we do have retention and, you know, if you look at DRAM, as I mentioned before, it has retention of 0.1 of a second. So if you are able to get retention of a day, it’s about 1.5 million times better than DRAM at the moment. A week is 10 million times better, and a month would be 44 million times better than DRAM at the moment.

So, the issue with… Not the issue, I think that in making a technology or a memory, you have to sacrifice different things to make it work. So, what DRAM does is it sacrifices retention in order to get speed and endurance. And so, with all these things, you have to sacrifice one thing to get the other. And that probably leads me on to the next bullet point, where we recently continued to have significant orders of magnitude better than DRAM in terms of NAND, sorry, in terms of our endurance. But following on from the announcement in August, we did lots of additional work, and showed a potential degradation, it is a potential degradation in endurance, but not something that we’re overly concerned about. We think it was in relation to our fully crystalline PCMI, which we were able to produce for the first time. And that significantly increased the speed.

So, therefore, as I mentioned, you get a sacrifice of one characteristic against the other. And that’s not unusual to see. And so we think moving on to the IMEC platform, which we plan to do next year, with an access device or a transistor, we will overcome that. Because you can much better control the current once you’ve got an access device on it. Importantly, investors obviously would have seen that there’s been a drop in the share price over the last little while. We’ve had a good year up to that point. We managed to get the market cap of the company up to about $370 million at the beginning of the year. We made a good announcement in February, whether investors understood it or misinterpreted it, I think the share price sort of came off a little bit back down to about $170 million market cap.

We then announced our results in August, on the 17th of August, which were really good results, repeatable results, again, around speed, endurance, and retention. And so, the company sort of stabilized around about 150 million market cap around that level. But unfortunately for us, you know, we had IMEC come to us in October when we were planning to sort of start to make an announcement around, you know, the potential around the degradation. And we’re going to announce that we’re starting wafers in November. And they came and said, “Look, we’ve got to change the way we do this.” That forced us into a negotiation with them for three weeks, and unfortunately, caused the stock to be suspended, which is not in the best interest of any shareholder. But we had to ensure that we had a sensible logical forward development plan for 2022.

And although it doesn’t feel like it, that was a rather quick negotiation with a big organization. So, Wilbert and Guido did a fantastic job sort of bringing that all together. And we eventually came out of suspension in early November. And, you know, shareholders reacted, I think probably overreacted to the news. It’s one of those things that happen in development companies. But it’s something, as we go forward, I don’t think we’ll have any problem reestablishing value from a market cap of $73 million where we stand today.

Sorry. Just this year, we also extended the HGST joint development agreement. That normally expires in June, on June 30. Again, this year, Western Digital extended that early, which is a positive sign for us. We’ve had three more patents granted during the year. And one of the consequences of our suspension with IMEC and going into negotiations was that we had to complete a capital raise in order to ensure that we had sufficient funds for 2022. So we completed that at 4.8 cents just recently, raised $3.5 million and we currently have a share purchase plan open to all shareholders to invest up to about $30,000 in that plan, and that’s open now, and it has the ability to take an extra $1 million if the appetite for shareholders, the current shareholders, is there as well.

So, touching on IMEC. So, we approached IMEC back in 2016. It took about a year to sort of get a negotiation, an agreement with them. Importantly, it’s important to understand that they’re a not-for-profit organization. They’re a very large organization, but they’re driven by innovation. They’re not fiscally driven. So we have a very good deal with them in terms of our fiscal responsibilities to them. They’re the number one organization in the world. So they only take on innovation technologies which are really innovative and difficult, and have, you know, the ability to change the world. So, fortunately for us, we’re out to strike a collaboration with them. And we’ve been working with them really well for two or three years now.

As I said, they’re a big organization, not-for-profit. They turn over €600 million a year. Importantly for us, they’ve got production equipment, and getting on production equipment at the moment is quite a difficult thing because of the state of the semiconductor industry. So, being on production equipment is really important for us, because it’s the same production equipment that all the manufacturers have. So we’re able to produce information off that production equipment. People who have production equipment themselves will look at that and think, “Well, if they can do it at IMEC, we can do it out in our own facility.” So, that’s a very important thing for us to be able to do.

They collaborate with the who’s who in the world too. All the major semiconductor companies are there because they have the production equipment which you can do development work on. I mean, all the elements of all the manufacturers can’t start to get their production equipment to use for development work because they’re too busy making stuff. So, you know, getting in there, it’s very, very important. That’s why a lot of the bigger organizations there, and Western Digital, our partners, are even there themselves.

So, it’s a great place to be. It’s in a really an innovative place. And lots and lots of very, very smart engineers working there, not only in semiconductor, but in the various different industries as well. Importantly for us, they have a platform which has been proven, a megabit platform which is proven, which has the ability to fast track to get to megabit arrays. And so, that’s really important for us. We’ve had two attempts on the megabit platform and for various different reasons, the first didn’t work for processing issues, the second the same, but we managed to get some really important information off the second round that we did there. And now we have a joint agreement with them going forward in terms of what we need to do to give us the best chance of ultimately getting to what we are striving to achieve, which is a megabit array in 2022. And that will set the company up very nicely for discussions with other parties, including Western Digital during 2022. So, IMEC have been a great partner for us, and we look forward to working with them in 2022.

So our objectives for next year, we’re going through over the next quarter, and that’ll be finished at the end of Q1, 2022. Complacent process optimization, which we’ve identified. So we’ll be making some changes to the stack in terms of a mask, which is just changing the pattern so you can simplify the pattern on the surface of the material, and do some etching around that. So that’s a process that will take sort of two or three months. So we’re getting starting to gear up for that now. That will start in January, and should be completed by the end of Q1.

We’ll then look to start taking those, what we’ve learned from that into the production room in IMEC. And it will take three months for that to actually be manufactured, and we’ll make a number of different wafers doing that. And then the outer fab will be in early Q3, 2022, with some readout not long thereafter, and hopefully, you know, demonstrating that we have a megabit macro at that period in time. So, between now and then, I think we’ll see a significant increase in the valuation of the company. And obviously, our end goal in 2022 is to show that we’ve got our interface switching technologies available to be put on a megabit array, which I think the industry will be very interested to have a look at.

So that’s the goals for 2022. They’re challenging, but achievable. And we have a very well defined plan outlined with IMEC, which all the parties involved from either side, and their engineers and our engineers, and our managers and their managers have agreed to a very tight schedule. And we think it’s achievable within the constraints of time and money, which we’ve been able to rise to in order to achieve that. Just touching briefly on HGST. We’ve been with them for eight years now. As I mentioned, importantly, they came on board when we had very limited data. They could see our vision going forward. For the first few years, they were instrumental in allowing us to use their research facilities. And in lieu, that saved us maybe a million and a half or two million dollars a year. So, it kept us out of the capital markets, it kept our burn quite low.

They do have an option to take a semi-exclusive license to the technology, and that was executed back in 2014. And they’ve renewed that agreement every year for the last eight years. And I expect that they would be in a position to execute or extend that agreement for another year moving into 2022. So, they’re an interesting company, they do give us great insights to what’s going on around the world. They’re very interested in getting updates with where we’re at. We don’t disclose discussions with them, all discussions with our partners are confidential, clearly. But, you know, we meet with them regularly to give them updates on what progress we’ve made. And they welcome those updates and give us advice on a go forward position.

So they’ve been really useful in sort of setting parameters that they think we need to achieve in order to be able to show that we can augment DRAM, and we’ve been able to, in general, meet all those parameters that they set for us. So they’ve been instrumental in sort of giving us advice on what direction and what sort of sets of parameters that not only they, but industry would be interested in. So they’ve been a terrific partner for the last eight years. In terms of our board and management, Wilbert recently came on about, well, a year ago, not recent, seems like recently. And he’s a very experienced individual within the semiconductor industry and in Silicon Valley.

He’s an interesting guy in terms of he has two sets of skills, which are very important to us. One is, very corporately savvy. He’s had great business experience and sat on some major boards of some big semiconductor businesses in the United States and in the Netherlands. And he also is very technically savvy. He has a great understanding of what we do, what direction we should be moving in. And he did a lot of due diligence on the company before he joined. So we welcomed Wil with open arms.

He sat as the CTO on Novellus Systems for a long, long time, that was eventually sold to Lam Research for about three billion U.S. dollars. And he sat on the board of Cyprus for many, many years, which, I think a couple of years ago closed down a deal with Intheon for $10 billion. So, he’s been involved in some organizations, which have gone through some M&A, and purchased, so his skill set’s really important to us.

Guido is an electrical engineer. He set the agenda when he first came on back in 2014. He was responsible for convincing Western Digital to get involved with us. So his contribution to the company has been invaluable over the last sort of eight years and continues to be going forward. Tim got involved back in 2017 when he learnt that we had no requirement for error correction, which was actually discovered by Michael, our Chief Technology Officer. So he found that extremely interesting, and one of the reasons he got involved. He’s a process guy, so he’s very important for our relationship with IMEC. And he will be responsible for managing that relationship during 2022 to make sure it’s seamless, and that everyone is on the same page, going forward, as we move into production and optimization first, and then move into production of a new set of wafers in 2022 and Q2 of 2022. So he’s got a very significant role within the company. And that becomes more important as we move into 2022.

I think everyone’s got a flavor for my background. I’m an ex-lawyer, an ex-pharmacist. Mainly been involved in the biotechnology space with listing half a dozen biotechnology companies on the Australian Stock Exchange, and more recently Invex Therapeutics. But as I mentioned before, this opportunity for me was unique in that it’s a global opportunity. It’s not like a biological company where you have, you know, a binary result. You have to wait for the end of the clinical trial and it’s you’ve either treated diabetes or you haven’t.

For me, this is a unique opportunity in terms of not looking to trade a subset of the population, it’s the whole population that we’re looking to put our technology into their devices. It’s not 300 million diabetics that we’re trying to treat, you know, 75% of the people in the world have a device. So that’s what really attracted me to the company and the industry. And that’s why hence I’m still involved sort of eight years later.

Mike has come from a background in ReRAM. He was at Adesto, which had some ReRAM technology. He recognized the importance of our area-based ReRAM technology, and the uniqueness that it brings to the space. And so he came over, I think in about 2016. And I remember sitting with him in California, in the office when he was talking about there was no requirement for error correction. So, that was a really important point for the company. And it really helps distinguish our technology in the ReRAM space.

So we’ve got a good team, they’re very loyal, they’ve very hard working. I forgot to mention Howard. Howard brings a lot of non-executive skills. Howard’s got a number of roles with various different listed companies in Australia. And he brings a lot of, you know, corporate governance and compliance skills to the board, which is important, clearly.

Capital structure, we’ve got about 1.3 billion shares on issue, that’ll increase subject to the SPP being completed. That will be open for a couple of weeks. So if shareholders have an appetite for more investments, I’ll encourage them to do that. I think the SPP might, we have the discretion to close it off early. And at current levels on the…we bring in the SPP for 2.5 million and the 2.5 million placement recently. We have about 6.5 million in cash, so we’ve got enough cash to get us comfortably through 2022 and hopefully hit some significant milestones and have a significant rewrite and company from where it is today.

So the value proposition for us going forward, I think at the moment, the value proposition couldn’t be even better, unfortunately, from the position we find ourselves in. But, you know, with all the tasks we’ve got planned for next year, I think we do offer significant value at these levels. We are a breakthrough in interface switching technology. We’re unique, we don’t think we have many competitors or any competitors in this space. We sit outside the bulk of ReRAM because of the way we operate ourselves. We’ve had replication of data of wafers during 2021, we’ve been able to do that twice. So that means we’ve got our processes under control, which is very, very important.

We have two very, very important technical relationships with HGST, and that’s not only technical, but corporate. And we have a very important production relationship with IMEC, who bring not only production capability, but also intellectual skills and experience which are complementary to our team, and really help us to find what we need to do for 2022.

Again, as I mentioned, you know, you don’t have anything without patents and people. So we’ve got a world class team of people, which is supported by a very broad portfolio of intellectual property. And we have very, very significant intellectual property around our capabilities, the way we operate ourselves, the area-based operation of ourselves. And so, we think for a small company, it’s a very strong portfolio which is very defendable, going forward.

The board, I think, has got a lot of experience, particularly being bolstered with Wilbert, Jim Dorian, who has recently left our board, he was the chairman for many years. And Jim brings a lot of experience in terms of corporate and transactions. So, if we get to the point where we’re able to sort of start discussing a corporate transaction, I’m sure that Jim would be welcome to come back in and assist with that. Just for shareholders knowledge, he has sold some shares, but only because he came off the board, wanted to recoup a little bit of his investment. He’s given me his undertaking. He doesn’t have any intention to sell any more shares at the moment. And he remains our largest shareholder at the moment, and he continue to will be because he has a great belief in the company, going forward.

But back to the board, we’ve got a really good board, a really good management team. They really understand how to, you know, utilize our technology to get the best out of it. And hopefully it comes in 2022. And importantly, you know, we have to have sufficient cash to do that. I think the market was always aware, in the last few weeks that we will come right. So we’ve sort of put that behind us now. So we’re in a position to sort of have enough cash to meet our expectation and our goals, which have been very firmly set between us and IMEC. And so we look forward to, you know, 2022 having great success. Thanks, Marc.

Marc: Thanks, Dave.

Dave: Yep. Sorry.

Marc: We’ve got a number of questions, so let’s jump straight into those. So there’s one question here, actually two that I’d like to sort of mix up into one. And it’s basically asking the best case scenario for incoming revenue. And I’d like to add to that, what is the ultimate goal into the monetization of the technology? Because I think there’s different scenarios here, right?

Dave: Yeah. So maybe I can give you an analogy of a biotech. So, most biotechnology companies will complete a phase two study. So you’re doing a study in 100 patients who have got a certain type of disease. And if you can show…if the clinical outcome of that is that you’ve improved that disease, and it cites Alzheimer’s for example, it’s highly likely that you’re going to either do a major licensing deal, or the company ultimately will be bought. Probably if it’s an Alzheimer’s disease, it will get bought because there’s no cure or treatment for Alzheimer’s disease. So that’s just called a proof of concept. So, generally, that would get bought, that company. So they’re not going to produce revenue, they’re not gonna go into a 3,000-patient study in 50 centers around the world to prove to the FDA that this technology works for Alzheimer’s disease.

It’s the same here, we’re just gonna do a proof of concept. We’re not gonna build a facility, a $10 billion facility. We won’t be the manufacturer of the chips. We’re simply providing the technology and proof of concept, and as Jim Dorian used to call it, the cookbook, and this is what you need to do to make this work. So, ultimately, we would be looking for a purchase of the technology from a major semiconductor company around the world. So, we won’t generate revenue, I don’t think, unless we’re generating revenue off licensing deals. But that’s not the strategy of the company. It’s been to ultimately have a sale of the business.

Marc: Right. And looking at the timeline, sort of the renewed timelines for 2022, I think you mentioned a few things at the AGM as well. Can you talk a little bit about that, and also the challenges that you’re seeing right now in that respect?

Dave: It’s all about the challenges, Marc. I mean, it’s a development company, so, you can’t get away from the challenges. I think it’s how you best manage those challenges. So we’ve sat down with IMEC, and had lengthy discussions over the course of the period we have suspended, and have come up with a sensible technology plan, a development timeline, which I think makes sense. We have to go into some optimization over the next quarter. That just improves our chances of success. So that’s just on a stack of material, doing certain types of optimization before you then go into production with a transistor actually on the platform. And so, ultimately, we need to get to that position to be able to show industry we have something that’s gonna be applicable storage class memory.

So the timelines are pretty firmly set. Optimization over the next quarter. And then in Q2 2022, we’ll move back onto the production equipment at IMEC and make 20 or 30 wafers, I can’t give you the exact number at the moment, but that’s up for debate between the two groups. But there’s certainly a well-defined plan over the next six months to get to the point where ultimately we want to be able to display, we’ve got a megabit array utilizing our technology on IMEC’s platform. So the timeline is pretty firmly set. And it’s our responsibility now to use our resources and our manpower at IMEC and within 4DS to ultimately make that happen in a timely manner.

Marc: Okay. We’ve got a question about the joint development agreement with the HGST. Why that renews every year. And I guess the underlying question there is, why would you have an agreement that sort of rolls over for year after year or have an agreement for, say, five years?

Dave: That’s just the way it’s set, Marc. It was set back in 2014. So, it just is always set at a one-year agreement. We haven’t gone back to try and renegotiate it. It’s a very big organization, too, you have to remember. So, getting that agreement with them in the first place was really…it was slow. And when we renew the agreement every year, it’s a simple two-page document but it takes two months to get through legals, even though the only change really on that document is the date. But it’s a very slow moving base. So, we don’t, sort of, wanna upset the applecart or go and try and renegotiate something else. I think a rolling one-year agreement is fine. And again, we update them all the time about where we’re at. And I think if there wasn’t any interest in what we’re doing, or they’ve moved, their focus has moved away to a different area, they wouldn’t renew.

But at the moment, you know, storage class memory is something that everyone’s interested in, it’s talked about a lot. People refer to it as the Holy Grail, which I don’t really like that word because no one’s ever found that. But it is a significant area. We’re not trying to be a me-too technology. We’re trying to create a new space within the hierarchy that currently exists that will be complementary to whatever is out there. We’re not looking to cannibalize anyone’s market in terms of NAND or DRAM, we’re actually looking to complement it and actually make the memory hierarchy better than it is today. Bearing in mind there’s been very little innovation over the last 20, 30 years.

Marc: All right. Last question before we go to our final presenter. Last week in the announcement for the capital raise, you talked a little bit about new instors, institutional investors coming on board. Can you talk a little bit maybe about the type of investors that came on board? The type of instors and maybe, if you can, mention names? That’s always interesting to hear the type of instor that comes on board.

Dave: I can’t mention names. I’m not allowed to do that. But there was one from overseas and a couple of local ones, and then the rest was high-net-worth. So, I mean, I think those individuals have seen the value that’s probably in the stock at the moment. They all understand the path forward for us, and I think that path forward will create the value that’s been lost, purely because I think the discussion with IMEC came as a surprise to us, it came, obviously, as a surprise to shareholders.

But in reality, all it means is that we’ve got a three-month delay. And I understand people don’t like delays, clearly I understand that. I don’t like the delay. I mean, personally, for me, it’s been a value destructor for me and shareholders, and no one likes that. But, you know, it’s our responsibility now to pick that up, fix that, move forward. We’ve got the cash, and we think we can restore the value moving into 2022.

Marc: All right. Excellent. Dave, thank you very much for joining us today.

Dave: Thank you for having us, Marc.


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