Seeing Machines Regulatory News (SEE)

24 Sep 2007 13:12

Seeing Machines Limited24 September 2007 24 September 2007 Seeing Machines Limited ("Seeing Machines" or the "Company") Audited Financial Results for the Year Ended 30 June 2007 SEEING MACHINES (AIM:SEE) TODAY ANNOUNCES ITS AUDITED FINANCIAL RESULTS FOR THEYEAR ENDED 30 JUNE 2007. Financial Highlights • Total revenue up by 7.4% to A$2,645,504; • Revenue from sale of goods A$2,042,427; • Contract income of A$546,292 a ninefold increase over 2006; • Net expenditure at A$3,311,716; and • Net loss at A$466,953. Operational Highlights •excellent progress across all product development streams including faceLAB(R), TrueField Analyzer(R) (TFA), Driver State Sensor (DSS) and faceAPI; •award of a Commercial Ready Grant worth A$2.1 million over 2 years for TrueField Analyzer(R) in August 2006; •achieved A$2 million in sales for faceLAB the company's flagship product; •several new versions of faceLAB(R) released; •first prize award of the Secrets of Australian ICT Innovation Award in the Health category for TrueField Analyzer(R) (TFA); •successful debut of the TrueField Analyzer(R) at the Association for Research in Vision and Ophthmalogy (ARVO) Annual Meeting in Florida in May 2007; •release of the DSS-R automotive product in November 2006 and DSS 2 in July 2007; •the development of the next generation head tracking technology (the company's core vision processing technology) and filing of relevant patents to protect the new intellectual property; •the release of the first generalized faceAPI product to the market, that makes our head and face tracking technology available to third parties under license and signing of a license agreement for that product. Commenting on the results Nick Cerneaz, Chief Executive of Seeing Machines said"the year to 30 June 2007 represents an important period in the Company'sevolution. We have invested heavily in the development of a series of newproducts based on our core technology as part of our continuing strategy tobroaden the channels to market for our technology. In doing so we have expandedour product offering from essentially a single product (faceLAB) available atthe time of the Company's listing on AIM in late 2005, to a multi facetedapproach that includes the new DSS2 and generalized faceAPI products, bothproducts released very recently (July 2007 and May 2007 respectively).Additionally the good progress of our TrueField Analyzer product made throughthis period adds another important element to our efforts to broaden and growour revenue base. The full year accounts to 30 June 2007 which record a loss ofA$466,953 and a net reduction in cash reserves of A$1,031,625 to A$1,375,428reflect the investment made in these products through this period. Alongsidethose strategic investments in our product portfolio we have recorded a 7.4%increase in total revenue over the period as a result of maintaining goodproduct sales through direct & channel partners and improvements in our revenuefrom contracted services in association with our products and their continueddevelopment. Through the 2007 financial year we have developed and delivered tothe market a significant series of new and improved products, including theDSS2, faceAPI and faceLAB version 4.5 products, and continued the developmentand pre-commercialization of the TrueField Analyzer. With the proceeds of thefund raising announced separately today the Company is well placed to build onthese foundations and to accelerate the commercialization of these new productsand their businesses." The Seeing Machines Annual Report 2006-2007 including the audited FinancialStatements is available for download from the investor section of the Company'swebsite www.seeingmachines.com. The Director's Review of Operations, Income Statement, Balance Sheet, Statementof Changes in Equity, Statement of Recognised Income and Expense and Cash FlowStatement follow: Review of Operations Financial Results Total revenue for the year increased 7.4% to A$2,645,504. Revenue from sale ofgoods was A$2,042,427, a decrease of A$364,801 (15%) over the previous year(A$2,407,228). Contract Income of A$603,077 represents a 9-fold increase ofA$546,292 over the prior year (A$56,785) due to a number of automotive researchcontracts. Other income decreased to A$199,259 from A$628,841 in 2006 due to thecompletion of the Start Grant at 30 June 2006 and the capitalisation of theCommercial Ready Grant. Net expenditure for the year was A$3,311,716 up by A$83,786 on the prior year(A$3,227,930). Product development and technology research continued to be themain area of expenditure as the company moved forward with the development ofkey projects including TrueField Analyzer(R) our medical device to help doctorsdetect and manage glaucoma and other eye diseases, the Driver State Sensor , oursensing technology for automotive applications in the areas of fatigue anddistraction detection, faceLAB(R) and the faceAPITM products. Marketing costsincluding travel increased during the year mainly in support of the faceLAB(R)business. The cost of goods sold reduced in line with the decrease in sales ofthe faceLAB(R) product, and further development of manufacturing efficienciesfor the product. The company has capitalised certain of its development costs in line with theaccounting standards. The net loss for the year was A$466,953 - up from A$135,077 for the year ended30 June 2006. The loss during this financial year is an indicator of thesignificant product development undertaken during the year. The company will beaggressively pursuing the commercialisation of all four product streams duringFY2008. The company had A$1,375,428 in cash at 30 June 2007 compared to A$2,407,053 at30 June 2006. Cash has been utilised in both the payment to suppliers andemployees in the generation of operating income and for the purchases of plant,equipment, intangible assets and development costs capitalised during the year.Net assets decreased to A$3,628,429 at 30 June 2007 compared to A$3,913,237 at30 June 2006. This decrease is primarily due to the reported loss for the year. Operational Highlights Highlights for the year ended 30 June 2007 included: •excellent progress across all product development streams including faceLAB(R), TrueField Analyzer(R) (TFA), Driver State Sensor (DSS) and faceAPI; •award of a Commercial Ready Grant worth A$2.1 million over 2 years for TrueField Analyzer(R) in August 2006; •achieved A$2 million in sales for faceLAB(R) the company's flagship product; •introduction of a new version (v4.3) and an ancillary tool (faceLAB-LINK) for faceLAB(R) during the year (and a very significant new version v4.5 released in July 2007); •first prize award of the Secrets of Australian ICT Innovation Award in the Health category for TrueField Analyzer(R) (TFA); •successful debut of the TrueField Analyzer(R) at the Association for Research in Vision and Ophthmalogy (ARVO) Annual Meeting in Florida in May 2007; •execution of a Master Development and Commercialization Agreement with the Australian National University giving the company first access rights to commercialize all future intellectual property that was developed within the University with any assistance provided by the company; •release of the DSS-R automotive product in November 2006 generating both initial sales and promoting market interest and OEM negotiations for the technology (note also the new commercial version, the DSS 2, was released in July 2007); •continuing strong relationship and progress with Hella KGaA Heuck & Co on the development of the driver monitoring system (for the detection of fatigue and distraction) targeted at the automotive Original Equipment Manufacturer (OEM) market; •delivery of a Speed Sign Recognition System as part of the Automotive Cooperative Research Centre (AutoCRC) Vision Based Collision Avoidance Project; •the development of the next generation head tracking technology (the company's core vision processing technology) and filing of relevant patents to protect the new intellectual property; •the release of the first generalized faceAPI product to the market, that makes our head and face tracking technology available to third parties under license; and •the signing of a licence agreement for the faceAPI product with a North American computer vision company. faceLAB(R) faceLAB(R) achieved sales of A$2 million during the year and in July 2007 passedthe A$10 million cumulative revenue milestone. The contraction in faceLAB(R)sales revenue in FY2007 over the previous year has been primarily due to therelatively modest improvements in the product during the prior year. The releaseof improvements made during this year, and principally the version 4.5 releasein July 2007, which marks a significant improvement in the precision mode andhigh performance pupil tracking capabilities (derived from technologydevelopments initially made in the TrueField Analyzer product) has already leadto a number of new sales for the product and bodes well for continuedimprovements in the faceLAB(R) business ahead. As indicated above there wereseveral releases of faceLAB(R) during the year: • faceLAB(R) 4.3 released in October 2006 • faceLAB-Link released in March 2007 • and immediately following the close of the year, faceLAB(R) 4.5 was released in July 2007. faceLAB(R) 4.3 introduced a new smaller form-factor hardware platform whichreduces systems complexity and setup time and increases experimentalflexibility. faceLAB-Link brings dynamically expandable field of view capability to faceLAB(R) for the first time by enabling multiple faceLAB systems to be usedsimultaneously. faceLAB-Link systems can be configured to accommodate a full 360degrees of head rotation - a world first for non-invasive eye tracking systems. Most recently, faceLAB(R) 4.5 has introduced a new class of precision gazetracking algorithms that take advantage of the research undertaken for the TFAmedical device. The new algorithms track the gaze direction of each eye in true3 dimensional space (3D), and enable a 1-click setup for subjects, includingpeople wearing glasses. Tracking is performed from a single camera platformwithout the need for additional light sources to be placed around the screen.The volume of the tracking zone has been more than doubled, and this allows thesubject more freedom of movement. The accuracy of the head-tracking has alsobeen improved through the use of the precision eye-tracking data. Theseimprovements place us very well to take on the rapidly growing market segmentfor on screen gaze tracking - a market segment outside the traditional faceLABmarkets (which have always been pure human factors and a variety of researchenvironments). Since the introduction of faceLAB(R) 4.5 in July 2007 initialsales have been made into this new market segment and we are pursuing furthersuch opportunities as we seek to grow the revenue base for faceLAB(R) generally. During the year faceLAB(R) was purchased by organisations such as Ford, MIT,Volvo, Nissan, Audi AG, US Department of the Air Force, United States NavalAcademy, Cornell University and Queensland Academy of Sport. TrueField Analyzer(R) The company has aggressively pursued its goal to release the first productionversion of the TFA during calendar year 2007. Real progress has been made and wehave been greatly assisted by the award in August 2006 of an AustralianGovernment Commercial Ready Grant, worth A$2.1 million over 2 years to supportthe commercialization of the project. In March 2007 the company was awarded first prize in the Secrets of AustralianICT Innovation Award for the TrueField Analyzer(R) in the Health category. InMay 2007 the TFA debuted publicly to great acclaim at the Association forResearch in Vision and Ophthmalogy (ARVO) Annual Meeting in Florida. This wasthe first public demonstration of the TFA to the Ophthalmology community whichis the key initial market for the device when it is released commercially. Key areas of work on the TFA throughout the year have been: • scientific and clinical studies; • software development; • hardware design and development; • regulatory approval; • intellectual property protection; • marketing and business development activities. The main clinical study CT2 has continued at Canberra Eye Hospital we havecompleted testing of 82 glaucoma patients and 100 age matched normal subjects. Anumber of scientific studies have also been undertaken with the aim ofidentifying the best general testing protocol across the spectrum of normal andmild, moderate and severe glaucoma cases. Significant progress has been made onthe software and hardware for the TFA and we have produced a series of preproduction prototypes that has been used for demonstration purposes andextensive testing in the clinical study program at both the Canberra EyeHospital and the Australian National University's Research School of BiologicalSciences. The company submitted an application for 510k marketing clearance to the UnitedStates Food and Drug Administration (FDA) during the year. We were advised onthe 15th August 2007 that 510k Marketing Clearance had been granted for theTruefield Analyzer, permitting the introduction and marketing of the device forcommercial sale within the US markets. This regulatory clearance marks asignificant hurdle for the commercialisation of the TFA. The company has achieved trademark protection for the TFA in Australia, theUnited States and a number of European and Asian countries. The TFA website waslaunched for the ARVO meeting. The company is in discussion with several of theleading OEM companies in the medical devices field who are interested insecuring the rights to take the TFA to market. The company is intending to launch the TFA commercially in the United Stateslater this year and the next milestone in that plan will be the American Academyof Ophthalmology Annual Meeting in New Orleans in November 2007. This conferenceheld annually is the largest US ophthalmology conference and a significant eventfor showcasing TFA to the industry. Automotive The last year has seen a number of very significant developments in theautomotive business segment in both product development and commercialisation.The Driver State Sensor (DSS) product/technology has been evaluated by a numberof independent groups through the year and has consistently demonstrated itssuperior performance in the market (as a platform for driver monitoring todetect driver distraction and fatigue). Trent Victor of Volvo Technology, and a director of Seeing Machines, who hasbeen working with driving monitoring systems for over 10 years at Volvo,recently said of the DSS: "This technology has redefined state-of-the-art.Operating fully automatically, the DSS2 achieves a level of performancepreviously unseen and the technology now becomes a real contender for serialproduction systems." The company has continued its collaboration through the year with Hella KGaAHeuck & Co (Hella) to bring an Original Equipment Manufacturer (OEM) version ofthe DSS to market. Hella is seeking to develop and supply advanced driverassistance systems to the global OEM passenger and freight vehicle markets andis looking to introduce the DSS for supply into these markets. The relationshiphas borne significant engineering development through the year and these productinnovations have in turn supported significant product demonstrations and marketdevelopment efforts with them OEM vehicle manufacturers in the market (Hella'scustomers). The parties continue to work together in a mutually beneficialapproach to developing this market and realizing a return to the parties. The company has continued its work with global oilfield services providerSchlumberger Inc., with DSS systems installed in trucks in Texas and Canada.Schlumberger is currently seeking to expand the deployment of DSS systems totheir operations in other parts of the world. The first commercial version of the product, the DSS2, was released to themarket in July 2007 at the Driving Assessment Conference in Washington state,US. This version of the DSS is targeted at the fleet, OEM and research marketsand since its release it has generated initial sales and very strong interestfrom the target markets and will enable the company to diversify its revenuebase in 2008. The company is a research participant in the Co-operative Research Centre forAdvanced Automotive Technology Ltd. ("AutoCRC") and the leader of the VisionBased Collison Avoidance Project. The initial development undertaken under thebanner of this project has been a speed sign recognition system and an in-cardemonstrator version of this was delivered during the year and is currentlybeing evaluated. The project will continue to run through FY2008 and beyond, andprovides a platform for the company to both generate contract revenue and alsoto leverage the resources of the project participants to assist in thedevelopment of support technologies that enhance the offering of our otherautomotive products. faceAPITM /SDK Seeing Machines has released the first version of a generalized ApplicationProgramming Interface (API) which packages its core head, eye and facialtracking technology for sale to third party developers and OEMs. The launch ofthis product extends the initial business opportunities established by thecompany in previous years supplying our core technology within bespokeapplications for use within a variety of markets, including robotics systemsdevelopers and sports training products. We will also release in the near futurea developer version of the API, providing a platform for third party developersto rapidly integrate the technology into their products, enhancing theattractiveness of this solution system, and additionally providing an additionalrevenue stream for the company. A licence agreement for the new faceAPITM product was signed in May 2007 with aNorth American computer vision company who is using the company's head trackingtechnology in their application. Seeing Machines receives a royalty payment foreach system sold. Seeing Machines is currently pursuing several business development opportunitiesfor this product. Patents and Trademarks The company has continued its strategy to protect its core intellectual propertythrough patents and trademarks. Trademarks for the TFA have been sought and obtained in a number ofjurisdictions including: • Australia • United States • Europe • Asia. During the year the company lodged a patent for a new generation of headtracking technology (already incorporated into the DSS2 product). The company iscurrently lodging a number of key application patents, especially in thefaceAPITM business sector. Chief Executive Officer The Company's Chief Executive Officer for the full financial year to 30 June2007 and at the date of this report is Dr Nicholas Cerneaz. Company Secretary The Company Secretary of the Company for the full financial year to 30 June 2007and at the date of this report is Belinda Burgess. Belinda has over 10 yearsexperience as a Commercial Manager of private and public corporations. She iscurrently Operations Manager of Seeing Machines. Prior to this, she was GeneralManager Commercial Services of a publicly listed technology company for fouryears. Staff At 30 June 2007 the company had 39 employees (up from 34 at 30 June 2006)including 31 fulltime staff. Additional staff were employed during the year to augment the sales team and theproduct development activities. The company continues to optimize the staffresources to meet the needs of the business and moving forward expects tofurther supplement our sales and marketing team to support the growth insaleable product coming online as a result of the product development work ofthis and the previous financial year. In recognition of the key role played by staff in the success of the company theBoard implemented an Employee Share Option Scheme in June 2006. In July 2006 20staff members were granted options under this scheme. Income Statement FOR THE YEAR ENDED 30 JUNE 2007 30 June 2007 30 June 2006 Note A$ A$ Sale of goods 2,042,427 2,407,228Contract Income 603,077 56,785Revenue 4(a) 2,645,504 2,464,013 Other income 4(b) 199,259 628,841 Change in inventories of finished goods and 4(c) (561,055) (713,770)work in progressEmployee benefits expense 4(d) (1,395,088) (1,548,728)Depreciation and amortisation expense 4(e) (286,947) (140,437)Research costs written-off 4(f) 0 0Other expenses 4(g) (1,068,626) (763,100)Finance costs 4(h) 0 (61,895) Loss before income tax (466,953) (135,077) Income tax relating to operations 5 - - Loss after tax from operations attributable to (466,953) (135,077)members Loss per share (cents per share) 6 • basic for loss for the year (0.182) (0.059) attributable to ordinary equity holders of the company • diluted for loss for the year (0.182) (0.059) Balance Sheet AS AT 30 JUNE 2007 As at As at 30 June 30 June 2007 2006 Note A$ A$ CURRENT ASSETSCash and cash equivalents 8(b) 1,375,428 2,407,053Trade and other receivables 9 350,813 639,373Inventories 10 136,571 129,370Other 11 34,825 39,381TOTAL CURRENT ASSETS 1,897,637 3,215,177 NON-CURRENT ASSETSProperty, plant and equipment 12 244,953 251,648Intangible assets 13 277,962 221,240Capitalised development costs 13 3,719,471 1,404,971Other 3,586 3,312TOTAL NON-CURRENT ASSETS 4,245,972 1,881,171TOTAL ASSETS 6,143,609 5,096,348 CURRENT LIABILITIESTrade and other payables 15 756,736 705,966Deferred revenue 1,661,193 408,450TOTAL CURRENT LIABILITIES 2,417,929 1,114,416 NON-CURRENT LIABILITIESProvisions 16 97,251 68,693TOTAL NON-CURRENT LIABILITIES 97,251 68,693TOTAL LIABILITIES 2,515,180 1,183,109NET ASSETS 3,628,429 3,913,239 EQUITYContributed equity 6,553,932 6,528,748Accumulated losses (3,605,225) (3,138,272)Other reserves 679,722 522,761TOTAL EQUITY 3,628,429 3,913,237 Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2007 Issued Accumulated Employee Total Equity Capital Losses Equity Benefits Reserve A$ A$ A$ A$ At 1 July 2005 3,394,946 (3,003,195) 51,066 442,817 Loss for the year (135,077) (135,077)Exercise of options 70,131 (28,363) 41,768Issues of ordinary shares duringthe yearIssue of share capital 3,848,550 3,848,550Transaction costs (1,234,880) (1,234,880)Conversion of Convertible Notes 450,000 450,000Cost of share based payment 500,058 500,058 At 30 June 2006 6,528,748 (3,138,272) 522,761 3,913,237 Loss for the year (466,953) (466,953)Exercise of options 15,000 (10,184) 4,816Cost of share based payment 10,184 167,145 177,329 At 30 June 2007 6,553,932 (3,605,225) 679,722 3,628,429 Statement of Recognised Income and Expense FOR THE YEAR ENDED 30 JUNE 2007 30 June 2007 30 June 2006 A$ A$ Net income recognised directly in equity 0 0Loss for the year (466,953) (135,077)Total recognised income and expense for the (466,953) (135,077)year Attributable to equity holders of the company (466,953) (135,077) Cashflow Statement FOR THE YEAR ENDED 30 JUNE 2007 30 June 30 June 2007 2006 Note A$ A$ CASH FLOWS FROM /(USED IN) OPERATINGACTIVITIESReceipts from customers 3,232,553 2,367,014Grants received 1,301,390 930,843Payments to suppliers and employees (3,016,722) (2,561,378)Interest received 87,902 59,168Finance costs paid 0 (83,421)NET CASH FLOWS FROM/(USED IN) OPERATING 8(a) 1,605,123 712,226ACTIVITIES CASH FLOWS USED IN INVESTING ACTIVITIESPurchases of plant and equipment (150,707) (179,057)Payments for intangible assets (76,762) 0Payments for research and development costs (2,424,279) (1,444,768)NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (2,651,748) (1,623,825) CASH FLOWS FROM FINANCING ACTIVITIES Exercise of options 15,000 41,769Issue of shares 0 3,848,550Costs of listing on AIM 0 (1,234,880)NET CASH FLOWS FROM FINANCING ACTIVITIES 15,000 2,655,439 NET INCREASE IN CASH AND CASH EQUIVALENTS (1,031,625) 1,743,840Cash and cash equivalents at beginning of 2,407,053 663,213periodCASH AND CASH EQUIVALENTS AT END OF PERIOD 8(b) 1,375,428 2,407,053 --- ENDS --- Enquiries:Seeing Machines Limited Insinger de Beaufort Parkgreen CommunicationsNick Cerneaz, CEO Peter Ward Ben Knowles Erica Nelson+61 (0) 2 6125 6501 +44 (0) 20 7190 7015 +44 (0) 20 7851 7480www.seeingmachines.com Notes to editors: About Seeing Machines Seeing Machines is an award winning Technology Company which focuses on visionbased human machine interfaces. Formed in 2000 in Canberra, Australia, SeeingMachines' purpose is to commercialise its computer-vision across a range ofindustries and applications. Seeing Machines deliver advanced computer vision solutions for researches anddevelopers in human factors, transportation safety, computer human interaction,robotics, medical research and psychology. The flagship product faceLAB(R)provides an automated and contact-free gaze and head tracking technology, itsolves the problem of observing human behaviour naturally, non-intrusively andwith a high degree of accuracy and usability. Building on these unique facetracking and pupil measurement and monitoring capabilities, the TrueFieldAnalyzer(R) is new medical device to assist clinicians detect and manage eyediseases such as glaucoma. The TrueField Analyzer(R) offers a new objective method to help doctors diagnoseand manage a range of eye diseases including glaucoma, age related maculardegeneration and diabetic retinopathy. Glaucoma affects about 2-3% of thepopulation over 40 years of age and is a leading source of blindness. Unlikemost other devices available to the clinician the TrueField Analyzer is acompletely objective test and it is quick and easy for patients and techniciansalike. The device measures both eyes concurrently and due to the reliabilitythat arises from the objective nature of the test, it has the potential tobecome a new standard in the measurement of visual field defects and thus in thediagnosis and management of disease such as glaucoma. More generally Seeing Machines' computer vision systems are able to measure theorientation and position of a human head, estimate eye-gaze direction, detecteye blinks and track other facial features. This functionality is achievedentirely though visual means, using video cameras connected to advanced imageprocessing software, with no attachments required on the subject. Products suchas faceLAB(R) are designed to allow human factors researchers and designers toassess the interaction of an operator in an environment and this findsapplication in designing operator environments, such as cockpits for cars,trucks, trains, and aeroplanes for instance, and other industrial designapplications, as well as medical and psychological research situations. Thetechnology has been developed into the Driver State Sensor (DSS2) product forapplication in monitoring vehicle drivers and if it detects drowsiness (fatigue)or that the driver is distracted and their attention has been diverted from theroad, alarms are raised to alert the driver to these events. In largerdeployments, such as in fleet and mining equipment operations, the data isavailable in both real-time and off-line modes for fleet management, drivertraining and awareness programs The systems work in real-time, enabling the behaviour of subjects to be trackedin real-time. This technology is paving the way in promoting safer drivingconditions and works to enhance the driving experience and to eliminateaccidents caused through driver drowsiness or distraction. There are many different sectors that can benefit from this revolutionarysoftware, for which it has been developed, including: automotive; academicresearch; medicine/healthcare; defence; autostereoscopy (next generationdisplays); sport; and games. This information is provided by RNS The company news service from the London Stock Exchange