Announcement PDF Annual Report 2024 A new standard in premium metal powders Ti 7.867 Titanium Nb Niobium 92.906 Re Rhenium Mo Molybdenum W Ta 186.207 183.84 Tungsten 95.94 180.948 Tantalum Annual Report 2024 Amaero International Ltd ABN 82 633 541 634 Contents 2 Chairman and Chief Executive Officer Report 8 Board of Directors 10 Key Management Personnel 12 Corporate Governance 14 Directors’ Report 34 Auditor’s Independence Declaration 36 Statement of Profit or Loss and Other Comprehensive Income 38 Statement of Financial Position 39 Statement of Changes in Equity 40 Statement of Cash Flows 41 Notes to the Financial Statements 77 Consolidated Entity Disclosure Statement 78 Directors’ Declaration 79 Independent Auditor’s Report 83 ASX Additional Information 86 Corporate Directory The highest-quality metal powder, for the most demanding applications We specialise in making refractory metals and speciality alloy powders that are designed to address the intensive demands of aviation, pace, defense – and beyond 1 Annual Report 2024 Amaero International Ltd Chairman and Chief Executive Officer Report Dear shareholders, The 2024 financial year was a transformative period for Amaero International Limited as we completed the corporate re-structuring and strategically re-positioned Amaero to be the largest and most responsive U.S. domestic supplier of C103, refractory and titanium alloy powder for additive manufacturing of critical components utilized by the defense and space industries. Importantly, Amaero is on track to address gaps in the defense production supply chain and to enhance the resiliency, scalability and agility of the U.S. domestic supply chain. Amaero’s capability and capacity will advance manufacturing readiness levels and address a legacy impediment to the insertion of additive manufacturing. Moreover, the flexibility of Amaero’s production will enable more responsive collaboration with Department of Defense laboratories, defense prime contractors and 1st Tier suppliers to test and commercialize development alloys that are more cost effective and have improved material properties. Three Pillars of Amaero’s Business Specialty Metal Powders Production of refractory, specialty and titanium powders for the defense, aerospace and industrial manufacturing sectors As-HIP Near Net Shape Parts Leveraging the Amaero team’s decades of PM HIP manufacturing experience to accommodate parts too large to print via AM 2 AMAERO Special Development Projects In-house development of various highperformance alloys During the year, we made important progress in a number of important areas, including: Relocated operations and HQ from Australia to the U.S In July 2023, Amaero announced that it would re-locate its manufacturing and corporate headquarters to the United States. The decision reflected financial, operational and strategic advantages. The State of Tennessee acted decisively to coordinate and to commit economic incentives from multiple stakeholders to attract the re-location of the flagship facility, as well as the Group’s research & development and corporate headquarters. The economic incentives included cash payments of approximately A$1.2 million and a 10-year subsidized electricity agreement at approximately A$0.09/kWh. Also, Amaero signed a 15-year lease with options to extend for additional 10 years for a “nearing completion” 100,000 square foot manufacturing facility in the Spring Branch Industrial Park near Chattanooga, Tennessee. The opportunity to lease a “nearing completion” facility accelerated the company’s go-tomarket strategy by approximately two years and saved Amaero approximately A$33 million in working capital. In September 2023, the Company announced that it had value engineered the facility design to install the atomizers in the existing facility, without modification, and that the change would result in a savings of approximately A$15 million. In October 2023, Amaero announced it would cease operations in Australia to focus on operations in the U.S. and to prudently manage operating expenses. Executive hires Importantly, the re-location to the U.S. enabled Amaero to attract key technical and operations executives. In August 2023 Amaero hired Eric Bono as President & Chief Technology Officer. In September 2023 Mr. Bono was appointed as a Director of the Company. Eric brings extensive experience and relationships in powder metallurgy, additive manufacturing (“AM”), and near-net shape Isostatic Powder Processing (IPP) manufacturing. Over the past 29 years, Eric has held leadership roles across technical and sales functions for various industry leaders, including 6K, Carpenter Technology, Puris, Summit Materials and Crucible Research. His education includes a Bachelor of Science and a Master of Science in Mechanical Engineering from University of Pittsburgh, and an MBA from Carnegie Mellon. 3 Annual Report 2024 Amaero International Ltd Chairman and Chief Executive Officer Report continued In September 2023, Chris Scanlon was appointed as Chief Financial Officer in September 2023 and brings extensive accounting, corporate finance, capital markets and FP&A experience at venture capital-backed, high growth businesses, as well as middle market and Fortune 200 companies. He began his career as an audit manager at EY and has since held accounting and finance positions at five (5) publicly listed companies, including CFO and Corporate Controller/Chief Accounting Officer for NASDAQ and NYSE listed companies. He received his bachelor’s degree in accounting from Florida State University and his M.S. in Taxation from Robert Morris University. He is a Certified Public Accountant. Also in September 2023, Jay Chandran was hired as VP of Operations and subsequently promoted to Chief Operating Officer. Jay brings a wealth of operational and procurement experience. His prior experience includes senior operational and commercial roles at Consolidated Precision Products and Precision Castparts Corp. He received a Bachelor’s degree in Production Engineering from Nagpur University and Master of Science in Industrial Engineering from the University of Oklahoma. In November 2023, the Company hired Dr. Ronald Aman. Ron, who serves as Vice President Engineering, previously served as the senior technology leader and principal engineer at EWI, where he led the engineering team to deliver applied research and development focused on additive manufacturing and advanced materials for industrial clients, primarily in aerospace, nuclear, and industrial application markets. He also served as manager for the Additive Manufacturing Technology 4 Centre at Carpenter Technology Corporation. He was also a principal investigator on numerous US Department of Defense and Department of Energy programs involving niobium, molybdenum, titanium, and other refractories, as well as research related to the qualification and certification of materials and AM components. He also held numerous faculty positions at his alma mater, North Carolina State University, and at Rochester Institute of Technology, and has authored numerous research articles on additive manufacturing and metal properties. He received B.S., M.S. and PhD in Industrial Engineering from North Carolina State University. Other important hires included Fred Yolton and Dr. David Schmidt. Mr. Yolton brings decades of pioneering experience in powder metallurgy and is credited with inventing the gas atomization process for titanium alloys. Dr. Schmidt is a leading authority in numerical modelling and computational fluid dynamics for the atomization process and for Isostatic Powder Processing(IPP) manufacturing. Subsequent to 30 June 2024, Amaero also confirmed that former U.S. National Security Advisor Lieutenant General (ret.) H.R. McMaster joined the Company as Special Advisor to the Chairman and CEO. Hank Holland noted, “I’ve had the privilege of knowing H.R. McMaster and I know firsthand his passion for addressing U.S. domestic supply chain vulnerabilities and to buttressing the most strategic industrial base capabilities. McMaster’s experience in the U.S. Army, the Pentagon and the White House, coupled with the trust and respect that he has established on Capitol Hill and in the private sector uniquely position him to provide thoughtful and highly relevant advice pertaining to strategic and commercial matters.” Fairmont Consulting comprehensive market study Once the Company re-located to the United States, Amaero began to receive inbound interest for C103 and refractory alloy powder. Given the high melting temperature of refractory alloys and given the necessity of traceability of feedstock, Amaero’s gas atomization technology and the team’s technical knowhow differentiate Amaero as a U.S. domestic supplier of C103, refractory and titanium alloy powder; moreover, the Company has ordered a 2nd atomizer which is expected to be commissioned by end of FY2025. The capital investment coupled with the knowhow, position Amaero to be the largest and the most responsive U.S. domestic producer. The Company announced that it would prioritize the production of C103 and that it would focus exclusively on specialty alloy powders including C103, refractory and titanium alloys. As there is an inadequate supply of U.S. domestic titanium powder production and given that the price of titanium powder is approximately 5x higher than the stainless steel powder, it’s an attractive market. As C103 AM powder is priced approximately 20x higher than titanium AM powder, the production prioritization is expected to accelerate revenue growth and the achievement of EBITDA breakeven. Based on the high-temperature properties of C103 and the complex geometry of the end-parts, additive manufacturing parts from C103 is well suited for thermal protection and for propulsion applications in defense and space; examples include hypersonic weapon systems, strategic missiles, space launch and satellites. Given that many of the programs are advancing from development and demonstration phases to serial production and given the classified nature of the programs, it was important to engage a consulting firm with deep defense and space expertise to research the programs, to assess the probable insertion of additive manufacturing with C103 and to estimate the demand signal. Amaero retained Fairmont Consulting Group, a leading consulting firm that specializes in the defense and space industries, and a comprehensive study was completed in February 2024. The Company lodged an ASX announcement that summarized the research insights pertaining to the supply landscape, pricing dynamics, as well as anticipated future demand. Based on the extensive and well-supported findings from the market study, the Company updated its production planning and its financial planning and analysis model. Amaero continues to pursue a strategy of prioritising production of C103, development refractory alloys, other high value specialty alloys and Ti-64 powder production, to uniquely position the Company as a U.S. domestic, agile and scalable producer of high-value, specialty powder for additive manufacturing of mission-critical components for the defense, space and aviation industries. Securing a binding offtake and preferred supplier agreement for C103 AM powder As previously disclosed on 27 March 2024, Amaero entered into a binding offtake and preferred supply agreement for C103 additive manufacturing (“AM”) powder. This agreement was contingent on successful qualification according to the counterparty’s specifications. As announced on 9 September 2024 (Subsequent to financial year end), the Company completed the qualification of Niobium C103 in accordance with ADDMAN Group and its subsidiary Castheon’s technical specifications. Since announcing the strategic offtake and preferred supplier agreement on March 27, Amaero and ADDMAN moved deliberately. Commissioning of the atomizer was completed ahead of guidance and delivery C103 AM powder to ADDMAN for testing was completed ahead of guidance. The achievement of qualification with a leading technical and manufacturing authority, and doing so ahead of guidance, is Amaero’s most significant milestone. With qualification having been achieved, Amaero is now the largest capacity and most responsive U.S. domestic producer of C103, refractory and specialty alloy powders for additive manufacturing. Amaero’s successful qualification of C103 AM powder triggers ADDMAN’s obligation to purchase no less than 2.25 tonnes of C103 at a fixed price with 0.25 tonnes expected to be shipped in CY2024 and 2.0 tonnes expected to be shipped in CY2025. The attributable revenue is material to Amaero. Having had an entity with ADDMAN’s technical authority and role in the market with defense primes and DoD funded labs qualify its C103 AM powder, Amaero expects this will be looked upon favourably by other potential customers with whom it is speaking about potential new commercial agreements. Further, the agreement establishes Amaero as the preferred and primary supplier of C103, refractory, and titanium alloy AM powders to ADDMAN Group including its Castheon and KAM subsidiaries. The preferred supplier agreement is for a period of five (5) years and does not establish a minimum order threshold. Amaero has confidence that its qualification in combination with its capacity and responsiveness will provide the foundation for Amaero to make additional future sales of C103 to ADDMAN. The expected future sales to ADDMAN are material to Amaero’s revenue; moreover, the attributable revenue is a key assumption underpinning Amaero’s expectation that it will achieve EBITDA breakeven in FY2026. Commissioning of atomiser completed ahead of schedule At the time of announcing offtake and preferred supplier agreement, Amaero announced that it expected to commission its 1st atomizer by 30 June 2024. Subsequently, the Company announced that it completed final acceptance and commissioning of the atomizer in accordance with technical specifications in the Purchasing Agreement between Amaero and ALD Vacuum Technology GmbH a month ahead of schedule. Immediately upon finishing the commissioning, ALD’s technicians left the facility and Amaero’s technical and manufacturing team commenced proprietary modifications of the atomization process and optimization of the operating parameters. Capital raising and financials During the 2024 financial year, Amaero successfully completed two equity capital raises totaling A$30 million, including a A$10 million placement in December 2023 that was led by Pegasus Growth Capital and A$20 million institutional placement in April 2024 that was led by Fidelity International (holds 5.6% ISC), IFM Investors and a leading Sydney-based investment management firm. Funds from these activities were utilized to fund budgeted capital investment and to supplement ongoing cash requirements for operations. Amaero estimates that the capital expense budget for FY2025 will total A$43 million and the Company has provided guidance that it expects to achieve EBITDA breakeven in FY2026. In the 2024 financial year, the Company reported a net loss of A$14.2 million (FY23: A$12.5 million). Amaero held A$12.0 million in cash and equivalents as of 30 June 2024. 5 Annual Report 2024 Amaero International Ltd Chairman and Chief Executive Officer Report continued 6 2024 Accomplished in CY2024 to date Amaero Milestones Fairmont study completed Binding C103 offtake agreement A$20M institutional capital raise Commissioning of Atomizer #1 Commissioned on June 4th, ahead of scheduled June 30th commissioning Pegasus Growth Capital becomes largest shareholder Commence Ti-64 and C103 powder production EBITDA breakeven FY2026E A$25M institutional capital raise Completed September 2024 Argon gas recycler Successful qualification of C103 AM powder to ADDMAN Group Completed September 2024 EIGAs #3 and #4 2013 Founded as a University spin-off 2026 & Onward 2022 Hank Holland becomes Chairman and CEO Commences corporate restructuring and strategy reset Ti-64 powder qualification Ti-64 qualification expected final quarter of CY 2024 Expand C103 production Order Atomizer #3 Listed on ASX Ordered First Atomizer EIGA 100-1000 Premium 2019 2021 Amaero relocates to Tennessee Signs 15-year lease on 100,000 square foot facility Commence commercial sales of C103, specialty and Ti-64 powder Expected start of year Amaero hires leading technical and operating team Complete Tennessee facility fitout Expected by mid year Amaero announces it will prioritize production on C103 and specialty alloy powders Commission Atomizer #2 Atomizer #1 is delivered Atomizer #2 is ordered Atomizer #1 at capacity production Expected by year end 2025 2023 Subsequent to the 2024 financial year, in September 2024, Amaero successfully completed an upsized institutional placement raise of A$25 million following strong support from existing cornerstone institutional shareholders as well as from new Australian and international institutions. Net proceeds from this placement will primarily be used to fund the purchase of capital equipment including the second atomizer and improvements to the Company’s headquarters in Tennessee. Outlook The Company enters the 2025 financial year with momentum and with transformative milestones on the horizon. In the near term, we achieved qualification of C103, the most significant event in the Company’s’ brief history – the Company will have demonstrated differentiated technical capabilities that are derived from stateof-art technology coupled with leadership’s technical and manufacturing know-how that been established over decades of pioneering experience. In FY2025, we expect to commence commercial sales in the 3rd quarter and to commission the 2nd atomizer by June 30. Importantly, we expect to transition from a bold, entrepreneurial start-up to a strategic advanced materials business with both a first mover advantage and with defensive moats. Amaero’s team is relentlessly focused on two objectives – 1) execute, execute, execute and 2) establish Amaero as a valued and trusted partner to our customers including the DoD laboratories, the defense prime contractors and the Tier 1 suppliers. Finally, Amaero is fortunate to have an incredibly supportive group of investors that include cornerstone institutional support and high net worth individual investors. As Amaero’s largest shareholder, my financial interests are aligned with our shareholders – our partners. We are committed to communicating in a transparent and balanced manner with the objective of under promising and over delivering. On behalf of the Board, I would like to thank the entire Amaero team, our customers, our shareholders and other stakeholders at large. We made important progress in 2024, but there is much work to be done. I look forward to advancing our aspirational goals in 2025 and to delivering tangible results for our customers and for our shareholders. Thank you for your continued trust and confidence. Hank J. Holland Chairman and Chief Executive Officer 7 Annual Report 2024 Amaero International Ltd Board of Directors Hank J. Holland Eric Bono Omer Granit Robert Latta Appointed on 1 Nov 2022 Appointed on 14 Sep 2023 Appointed on 12 Jan 2023 Appointed on 4 Sep 2023 Mr. Holland serves as Managing Partner of Pegasus Growth Capital (“Pegasus”), a U.S. based private equity firm, where he oversees deal origination, transaction structure and investment execution, and leads the strategy and general management of the fund. With 35 years of experience in investment, finance and capital market management across public and private markets, he has successfully sourced, structured and led investments in earlystage growth businesses. In addition to Amaero, Holland has led successful investment in LogicSource, Inc. and Trifecta, Inc. Eric Bono brings extensive experience and relationships in powder metallurgy, additive manufacturing, and near-net shape Hot Isostatic Pressing (HIP) manufacturing. Over the past 28 years, Eric has held leadership roles across technical and sales functions for various industry leaders, including 6K, Carpenter Technology, Puris, Summit Materials and Crucible Research. His education includes a Bachelor of Science and a Master of Science in Mechanical Engineering from University of Pittsburgh, and an MBA from Carnegie Mellon. Omer Granit joined Amaero’s Board to assist with the group’s global expansion and capital markets engagement. He began his career as a practicing attorney at White & Case in New York City, specializing in corporate and M&A groups. Omer later transitioned to finance, managing a multi-million dollar family office in London and serving as a Managing Director and senior member at Migdal Capital Markets, the asset management arm of the Migdal Group, where he was responsible for alternative investments. Robert “Bob” Latta was a Senior Partner at Wilson Sonsini Goodrich & Rosati, one of the U.S.’ leading technology and growth business law firms, from 1979 until 2019, and was Senior of Counsel at the firm from 2019 until his retirement in 2024. He served on the firm’s Executive, Policy, Compensation and WS Investments Committees during that time, and his practice covered a broad range of general corporate and transactional matters, including company formations, venture capital financings, public offerings, and mergers and acquisitions. He received a B.A. in Economics from Stanford University (where he was selected Phi Beta Kappa) and a J.D. from the Stanford Law School. Chairman and Chief Executive Officer President and Chief Technical Officer Pegasus has led three capital raises for Amaero and owns approximately 35% of fully paid ordinary shares. On a fully converted, fully diluted basis, Pegasus ownership is approximately 42%. Holland has previously held senior roles at First Republic Investment Management, Merrill Lynch and Sanford C. Berstein. He received a B.S. in Civil Engineering from Southern Methodist University and a Master’s in Agriculture from Colorado State University. See pages 19 to 22 for further information 8 Non-Executive Director He is the co-founder and former co-CEO of the high-end co-working company, Mixer Global, and the managing partner and founder of West 4 Capital, a leading hedge fund registered in London under the FCA. Omer currently serves as a partner at EnPar Capital, a private investment firm based in New York. His previous positions include board directorships at the Monte Rosa Private Equity Fund, The Dragon Variation Fund, and the MGT hedge fund. Omer holds an LLM (Master of Law) from New York University School of Law, where he was elected to the Student Bar Association and was valedictorian for the class of 2007. He also holds LLB (Law) and BA (Finance) degrees from Reichman University, earned between 2000 and 2004. Non-Executive Director Erik Levy Jamie Levy Lucy Robb Vujcic Appointed on 31 Mar 2023 Appointed on 28 Sep 2023 Appointed on 25 Nov 2022 Based in New York City, Mr. Levy is an experienced director and investor who brings a depth of expertise in global capital markets, M&A and corporate strategy. He is Managing Partner of EnPar Capital and prior to that, he was a Founding Partner and Managing Director of BlackRock’s Direct Private Equity business. Mr. Levy is a senior corporate lawyer and international business leader who has developed a unique combination of legal, commercial and advisory skills gained through working closely with some of the world’s leading investment organisations over 20+ years, both in the private and public sectors. Presently, Jamie serves as Senior Advisor to the Abu Dhabi Investment Office (ADIO), the central government hub supporting private sector investment in the Emirate of Abu Dhabi. Jamie is also appointed by the United Arab Emirates to serve as an Advisory Board Member of the Australia UAE Business Council, with a focus on increasing bilateral trade and investment. Prior to joining ADIO, Jamie was a Corporate Law Partner in KPMG Law’s Sydney office, advising on corporate transactions, corporate governance and legal technology adoption. Jamie spent over 8 years living and working in Abu Dhabi, and was General Counsel at Mubadala Investment Company, advising Aerospace, Defence, ICT, Private Equity and Healthcare business units, before returning to Sydney and taking up the position with KPMG.His formative legal years were spent at King & Wood Mallesons (Sydney) and New York Law firm, Debevoise & Plimpton (London) where he obtained significant experience in advising private equity fund sponsors and investors in relation to establishment and investment into private equity funds. Lucy is a non-executive director and Chair of the Audit and Risk Committee. She is a commercial barrister specialising in the resolution of complex disputes involving corporate governance, defence procurement, government contracts and international arbitration. Non-Executive Director Prior, he spent over 11 years with CPP Investment Board building the firm’s Direct Private Equity business and with Bain & Co prior to that. Over the years, he has served on numerous corporate boards including Skype, Informatica, Acelity, Suddenlink, etc. He received a BSc in Actuarial Mathematics from Concordia University and a Masters in Business Administration (MBA) from the University of Toronto - Rotman School of Management. Non-Executive Director Non-Executive Director Before coming to the Bar, Lucy was an associate at U.S. law firm Skadden,Arps, Slate, Meagher & Flom LLP, where she acted for multinational corporations in bilateral investor state disputes. Lucy started her career as a member of the team defending Momcilo Krajisnik, a Bosnian Serb civilian leader charged with genocide, conspiracy and crimes against humanity at the International Criminal Tribunal for the Former Yugoslavia. She has lectured extensively in commercial law subjects and constitutional law at the University of Sydney. Lucy has a Bachelor of Arts and a Bachelor of Laws with first class honours from the University of Sydney. She completed her Masters of Law as a Vanderbilt Scholar at New York University. Lucy is a Fellow of the Governance Institute of Australia and a reserve officer in the Royal Australian Navy. 9 Annual Report 2024 Amaero International Ltd Key Management Personnel Hank J. Holland Eric Bono Chris Scanlon Appointed on 1 Nov 2022 Appointed on 28 Aug 2023 Appointed on 4 Sep 2023 Mr. Holland serves as Managing Partner of Pegasus Growth Capital (“Pegasus”), a U.S. based private equity firm, where he oversees deal origination, transaction structure and investment execution, and leads the strategy and general management of the fund. With 35 years of experience in investment, finance and capital market management across public and private markets, he has successfully sourced, structured and led investments in earlystage growth businesses. In addition to Amaero, Holland has led successful investment in LogicSource, Inc. and Trifecta, Inc. Eric Bono brings extensive experience and relationships in powder metallurgy and additive/alternative manufacturing. Over the past 28 years, Eric has held leadership roles across technical and sales functions for various industry leaders, including 6K, Carpenter Technology, Puris, Summit Materials and Crucible Research. His education includes a Bachelor of Science and a Master of Science in Mechanical Engineering from the University of Pittsburgh, and an MBA from Carnegie Mellon. Chris Scanlon brings extensive accounting, corporate finance, capital markets and FP&A experience at venture capital-backed, high growth businesses, as well as middle market and Fortune 200 companies. He began his career as an audit Manager at EY and has since held accounting and finance positions at five (5) publicly listed companies, including CFO and Corporate Controller /Chief Accounting Officer for NASDAQ and NYSE listed companies. He received his bachelor’s degree in accounting from Florida State University and his M.S. in Taxation from Robert Morris University. He is a Certified Public Accountant. Chairman and Chief Executive Officer Pegasus has led three capital raises for Amaero and owns approximately 35% of fully paid ordinary shares. On a fully converted, fully diluted basis, Pegasus ownership is approximately 42%. Holland has previously held senior roles at First Republic Investment Management, Merrill Lynch and Sanford C. Berstein. He received a B.S. in Civil Engineering from Southern Methodist University and a Master’s in Agriculture from Colorado State University. 10 President and Chief Technical Officer Chief Financial and Administrative Officer Jay Chandran Ron Aman Appointed on 11 Sep 2023 Appointed on 27 Nov 2023 Jay Chandran has strong operational and general manager experience with leading industrial companies, Consolidated Precision Products Corp. (CPP) and Precision Castparts Corp. (PCC). He has been the General Manager for highly complex castings operations with revenues of $550 million per annum, as well as managing the predevelopment, development, and commissioning of greenfield manufacturing operations. He has worked with end customers in the automotive and the aerospace & defence sectors. He received his Bachelor of Science in Production Engineering from Nagpur University and a Master of Science in Industrial Engineering from the University of Oklahoma. Ron Aman previously served as the senior technology leader and principal engineer at EWI, where he led the engineering team to deliver applied research and development focused on additive manufacturing and advanced materials for industrial clients, primarily in aerospace, nuclear, and industrial application markets. He also served as manager for the Additive Manufac