Seeing Machines Regulatory News (SEE)

3 Mar 2006 09:42

Seeing Machines Limited03 March 2006 This announcement replaces the RNS announcement (reference number 0323Z)released at 09:15am on 28th February 2006. The following statement 'The financial cost to society of vision disorders issignificant, estimated at $10billion/year in Australia alone, and a verysignificant market exists for devices capable of assisting clinicians to detect,diagnose and manage the disease,' replaces 'The financial cost to society ofthis disease is significant, estimated at $10billion/year in Australia alone,and a very significant market exists for devices capable of assisting cliniciansto detect, diagnose and manage the disease,' in the CEO Address. The full amended press release is below: Annual General meeting Seeing Machines Limited (the "Company") The Company is pleased to announce that at its annual general meeting held todayall proposed resolutions were duly passed. Set out below are the Chairman's and CEO's addresses that were given at thismeeting. Enquiries: Seeing Machines Limited Insinger de Beaufort Parkgreen CommunicationsNick Cerneaz, CEO Simon Fox Justine Howarth / Victoria Thomas+61 (0) 2 6125 6501 +44 (0) 20 7190 7018 +44 (0) 20 7493 3713www.seeingmachines.com Chairman AGM Address Welcome everyone to the first AGM of Seeing Machines as a listed public company.The 2005 financial year and the first half of 2006 have seen significantmilestones in the company's development. I will talk a little about this and then hand you over to Nick Cerneaz the CEOto present the CEO report. At the end of this report we will be happy to answerany questions that you may have. Firstly I would like to introduce you to the other directors of Seeing Machinesmost of whom are here in person or on the phone. Alex Zelinsky Appointed 18 December 2000Trent Victor Appointed 18 December 2003Rob Sale Appointed 22 May 2004David Gaul Appointed 24 August 2004Tony Kinnear Appointed 28 September 2004Nick Cerneaz Appointed 6 October 2005 During the year we have also seen a change of CEO with Tony stepping down inSeptember and Nick moving into that role having joined the company to run theglaucoma project in April 2005. The significant areas that I will comment on are: • Funding; • Financial Performance; • Product Development; and • Staff Funding In April and May 2005 the company successfully raised funds of $1.1 million fromexisting and new shareholders including a number of staff. These funds wereraised to support the business and fund the planned IPO. In June 2006 the company changed from a proprietary company to a public companyin preparation for the IPO. In July 2005 the first IPO marketing trip to London was undertaken by Alex, Roband Tony but due to the market conditions at the time we did not get the IPOaway in July as was initially planned. In October 2005 Alex, Rob and Nick again went to London to get the IPO away andthis time the float was successful in raising £1.65 million/$3.9 million infunds. At this point I would like to thank all of the shareholders in Seeing Machineswho have supported the company since it was founded in 2000. A number of youhave supported the company in a number of fund raising rounds and this has beena very important ingredient in us achieving one of the original goals of beingable to IPO the company within 5 years of its founding. I would also like to thank all the directors for their dedication and patiencethrough the IPO process and particularly thank those directors involved in themarketing trips to London. The success of last year's capital raising both the April/May round and the IPOhas provided the capital required to progress many of our key developmentprojects. Financial Performance I just wanted to make a remark or two regarding the company's performance in2004-2005, the year to which the Annual Report and this AGM relates and alsopoints about performance during the first half of the 2005-2006 financial year. Revenue for 2004-2005 was $1.61 million an increase of 28% over 2003-2004. Thiswas largely as a result of increased faceLAB sales and R&D contracts. Expenditure also increased over the previous year to $2.7 million largely dueto: • Continued strong expenditure on R&D including the commencement of the project to develop a glaucoma diagnostic device; • Development of the Noah basketball system; • Increased costs of goods sold because of the increase in faceLAB sales; • Increased travel and other costs associated with capital raising. The company made a loss of $1.082 million compared to $805,754 in 2003-2004. The company's goal is to try and reach profitability in the 2007 financial year. We are currently in the middle of a review of the accounts to December 31 2005and the results for the first half year will be announced in March. One important point to make about the first half of 2005-2006 performance is thestrong sales of faceLAB which is significantly higher than for the correspondingperiod in 2004-2005. Order intake has been particularly strong every month from October 2005including the normally quiet months of January and February. At this point I'dlike to acknowledge and commend Nick Langdale-Smith for his efforts in achievingthis result. Product Development faceLAB We continued to develop and support faceLAB which currently provides the bulk ofour revenue. A number of releases were made during the year and as I've already mentionedsales performance has been particularly strong which is very pleasing given thecosts we are going to incur progressing other projects and diversifying revenuestreams. Glaucoma We commenced this very important project in the first half of 2004-2005 aftersigning a development and licensing agreement with ANU. In December 2004 we were awarded a Biotechnology Innovation Fund grant of$250,000 to support the work on the project. We are in the process of submitting a new grant application to assist with thecosts of the project over the coming 2 years as the current BIF grant comes to aclose. With our partners at ANU namely Dr Ted Maddess and Dr Andrew James we have madesignificant progress to the point where, we have conducted a number ofscientific trials and the first clinical trial, the science underpinning thedevice has been proven. The second clinical trial is about to commence at the Canberra Eye Hospital andwe are on track to have a device on the market in early 2007. Automotive The automotive market has been a key focus for Seeing Machines since itsinception. The demand for products which can address problems of driver fatigue,distraction and inattention is growing and we believe that Seeing Machinestechnology can be a significant player in the next generation of driver safetyproducts. We have developed a strong relationship with Hella who can be a key partner forus in automotive markets and our joint project with them for a major Europeanautomotive manufacturer is going very well. We have also reached agreement with Schlumberger to conduct a trial of thefatigue product in a number of their trucks. This trial is going to start nextmonth. We are participants in the AutoCRC which includes Holden and we are also workingwith NICTA on a driver fatigue research project. New Markets Progress has been made in a number of new markets including sports with the NoahBasketball project and it's the model used for this project where we obtainroyalties from end product sales that use our core technology that we are aimingfor more of in future. Staff Seeing Machines is fortunate in having a wealth of talent developing the coretechnology and driving the key projects that are going to deliver future revenuegrowth and profits. We are focused on retaining our talented staff and continuing to attract thebrightest to the company and I'd like to thank all of the current staff for thecontributions each and every one of them make to the business. Today we have 24 staff with a number of significant additions following the IPO.By the end of March we should have around 28 staff working to deliver ourimportant projects. Lastly let me acknowledge the excellent work of the CEO Nick Cerneaz who has ledthe team with enthusiasm and commitment since taking on the position inSeptember. Nick leads a talented team who are committed to delivering theprojects that will grow the company and increase its value delivering a returnon your investment. He has excellent support from Belinda as our OperationsManager and Company Secretary. I'll now handover to Nick to deliver the CEO report. CEO Address - 2005 AGM Thank you Fulton, and good evening. As Fulton has mentioned the 2005 financialyear has indeed been a tremendous year for the company and that has provided asolid foundation for our progress in the first half of 2006. I would like to elaborate a little on Fulton's overview, particularly in regardto the major business units and projects we have underway. Perhaps the most significant event in the company's corporate history to datehas been the recent successful listing on the AIM market in London. Achievingthis milestone late last year (1 December 2005) was in significant part due tothe good financial performance of the company over the preceding financial yearand the solid technology foundation that has been established over the yearssince inception. Clearly the on-going support of key investors in the companyover the preceding years was instrumental in facilitating the company's path tothe IPO and in projecting a justifiable image of a solid company with realopportunity. Our gratitude to those early stage investors cannot beunderstated. Through FY2005 our revenue increased 28% over the previous year to $1.6 millionand can be largely attributed to increased sales of faceLABTM ($1.3 million) anda number of R&D contracts. Combining these operational revenues with theprivate equity funding of $1.1 million and a further $644 thousand from grantincome we were able to responsibly guide the company through a period of heavyinvestment in core research and development activities for our faceLABTM andautomotive businesses and to initiate new activity in the glaucoma and Noahbasketball product lines, ending the year with a net loss of approximately $1.1million. That investment in faceLABTM precipitated the release of Version 4.0 of theproduct at a number of international trade shows commencing in August 2004.This version was a radical improvement over previous versions and was atremendous success in the market, going on to generate $1.3 million in sales forFY2005. Since that time continuing investment in this core product, fundedprincipally from reinvested operational and AusIndustry grant income has seen anumber of key developments culminating in the release of versions 4.1 and 4.2during the 2005 calendar year. A new tool in the faceLABTM suite is expected to be released within the next 6weeks that adds a "Scene camera" capability to the product - an ability to embeda live video-feed of the subject's actual view into the data feed from thedevice. This feature is in great demand for those users with dynamic viewingscenes, for example, in in-car research and testing where the motion of thevehicle means that the view of the subject is changing from moment to moment. To provide continuing support to our growing user base a number of ancillarysupport tools have been developed that will make the user's task of analyzingthe data stream generated by faceLABTM somewhat easier. In response to requestsfrom that user base we have also embarked on development of a major new featurethat will greatly expand the field of view of the device by allowing just aboutany configuration and space to be monitored. This development will address amajor competitive issue and will greatly shore up the world leading reputationof the faceLABTM product. Coupled with the developments mentioned previously we expect sales of faceLABTMto continue to be strong throughout FY2006. Fulton has mentioned the strongsales figures during the first half of this new financial year. These results,to be announced in detail in March, are due in no small part to the diligentefforts of our engineering, sales and support teams. Despite the ever growingcomplexity of the product our teams have continued to build a quality productand to embrace and support the customer in their use of it to the point that wehave never yet had a single product returned. I would certainly like to take amoment to thank each member off our team that has contributed to that successand we all look forward to building on that foundation going forward. During FY2005 we commenced an ambitious project to bring to market the world'sfirst non-contact objective device for detecting and managing glaucoma.Glaucoma impacts 2-3% of the global population and is the leading cause ofblindness in the developed world. The financial cost to society of visiondisorders is significant, estimated at $10billion/year in Australia alone, and avery significant market exists for devices capable of assisting clinicians todetect, diagnose and manage the disease. Seeing Machines is bringing togetherour core face and pupil tracking technology with licensed intellectual propertyfrom the Australian National University to build a technologically superiordevice with the potential to become the new gold-standard for cliniciansmanaging this disease. Through the 18 months to December 2005 we have completed a series of scientificand clinical trials that demonstrated the viability of the fundamentaltechnology, that is that it could detect glaucoma in patients with known disease(September 2005) and then showed that the technique could discriminate betweenthose patients with and without glaucoma (early January 2006). These trialsalso identified a number of key opportunities for further refinement of thetechnology that will lead to a significant performance boost. Consequently weremain very confident of reaching our initial goal of building the world's verybest objective visual field device and are excitedly working towards realizingthat ambition. We remain on track to launch of the product in early 2007. In preparing for that deliverable, we will launch the next major clinical trialof the technology in March, to be conducted in partnership with colleagues fromthe Research School of Biological Sciences at the Australian National Universityand the Canberra Eye Hospital. That trial will evaluate the performanceimprovements that have been incorporated into the device following the trials oflast year, and capture the necessary clinical data to support the US FDAapplication for marketing clearance. Once again, we remain on track to meetthe previously stated timelines in this regard. As many of you will be aware, a long standing objective of the company has beento develop a business based on computer vision based products for automotiveapplications, particularly regarding driver fatigue and situational awareness.I am pleased to report that FY2005 has seen very significant advances towardmeeting these objectives, and through calendar 2006 we will continue to seesignificant progress. The advances have been on a number of related fronts including a collaborationwith the German Tier-1 supplier Hella for the development of a commercial gradefatigue detection device for delivery to the OEM auto industry; a partnershipwith the oil field services company Schlumberger to trial the driver statesensing systems in their transport fleet with a view to establishing theusefulness of the devices/technology prior to a wider roll-out across theirfleet; a research project with National ICT Australia (NICTA) to developsuitable measures for driver drowsiness, and involvement in the CRC for AdvancedAutomotive Technology (AutoCRC). The relationship with Hella began almost a year ago following an internationalsearch for suppliers capable of meeting exacting specifications for fatigue anddistraction systems required by the OEMs. Following extensive rounds ofevaluation of competing vendor technology and product offerings, Hella andSeeing Machines were declared to be preferred suppliers and entered intocollaboration agreements to progress the final development and commercializationof the technology. We are very satisfied with the development of this work todate and the improvements to our own base technology that have arisen. I amvery pleased to report that we filed a new patent application in November 2005for technology developed in this program by Dr Dennis Tell, Mr Grant Grubb andDr Jochen Heinzmann that relates to robust tracking of subjects wearingeye-glasses. Our partnership with Hella will continue through this year as wecollectively work toward realizing the commercial objective of delivering thisproduct into OEM serial-production. Whilst we have continued to fund this development work with the assistance ofgovernment grant income and in pursuit of a specific target market we are alsoin a position to leverage the fruits of that labour in other market segments.For instance the technology described in the recent patent filing just mentionedwill be a welcome addition to the faceLABTM product in due course. Suchsynergies between our product families are a reflection of the shared coretechnology foundation that our products are built on. That shared core technology foundation provides great business developmentopportunities for Seeing Machines as it is a basis upon which we can quicklydevelop new applications and illustrate solutions to specific issues faced byour customers. With that insight into a potential solution it is much easierfor a prospective partner/customer to see the benefits of incorporating ourtechnology into their product offering, leading to a partnership that creates alicensing or royalty based business for access to our technology. We have used this model to create a new business through FY2005 with PillarVision, a US based manufacturer of basketball training devices. Incorporatingour technology for advanced image segmentation and object tracking into theirNoah Select product has lead to a more stable and robust product and given thema significant boost in establishing their market for this unique product. There are a number of other opportunities we are pursuing based on this samebusiness model of licensed access to our technology. Internally, we haverecently expanded our team in both the engineering and business developmentsupport services to capitalize on this opportunity and it is likely we willfurther bolster our team in the short to medium term as we mature both ourproduct offering and client list. Seeing Machines has had a tremendous year through 2005 and a great start to2006. Our success is built on a dedicated team producing truly world classproducts with great back up and customer support. As I mentioned earlier wehave to date never had a product returned to us by an unsatisfied customer andthat is a record we are very keen to maintain. Our partnerships with majorindustry players such as Hella, Schlumberger and Volvo; the tremendous researchprogress to date in our glaucoma work and the successful launch of licensingbased opportunities such as Pillar Visions' Noah basketball all bode well forthe future. We are on a sound financial footing to support our on-goingengineering and business development activities as we pursue our objective ofbecoming profitable in 2007, and we very much look forward, as I am sure all ourshareholders do, to that eventuality. Thank you. Nick Cerneaz This information is provided by RNS The company news service from the London Stock Exchange