The facial recognition specialist Seeing Machines (LON: SEE) has recruited a leading figure in Australian commerce to the post of non-executive chairman.

He is Terry Winters, 67, who is currently chairman of Australian Home Care Services, Converge International and Intelledox and is a director of Future Fibre Technologies and Many Rivers Microfinance.

He led the team which created Optus Communications, Australia's second telecommunications carrier from 1989-1992 and remained on the board until 1995. Before that he founded Link Telecommunications. 

Seeing Machines chief executive Ken Kroeger said: "We are delighted to have attracted someone of Terry's calibre. 

“Terry has a track record of building highly effective businesses and his depth of experience will be invaluable to Seeing Machines. 

“Terry's appointment comes at a key time for Seeing Machines as the business continues to focus on commercialisation."

In the interim report covering the final six months of 2011, Seeing Machines said total revenues reached A$3.8 million compared with A$4.1 million a year earlier and net losses stood at A$936,801, up from A$748,934 for the first half of the previous year.

The DSS and faceAPI revenues reached A$1.98 million and A$205,317 respectively with the faceLAB product accounting for A$861,697.

Despite the decline in total revenues, Seeing Machines believes the first half represented a “sequential increase” over the previous six month period.

The company, which ended the year with A$1.1 million in the bank, also noted that revenues from Australian customers jumped more than fivefold, soaring 464 percent to A$942,057.

“It's particularly pleasing to see the growth of the DSS business in Australia and the revenue that has resulted from that,” said managing director and CEO of Seeing Machines Ken Kroeger.

“We expect that in this current period, a number of opportunities will be converted and that we will continue on our growth trajectory.”

Seeing Machines expects to see further growth across the DSS and API businesses and that “this will provide a strong foundation for the remainder of 2012 and into 2013”.

The company has high hopes for its DSS product, which it says has become the accepted standard in the area of fatigue detection and management for mine vehicle operators.

During the period, Seeing Machines expanded the DSS pipeline with new and existing customers across all regions, while also identifying new partnership opportunities that would expand its routes to the market.

In January, the company launched the latest version of DSS, which incorporated improvements based on extensive testing and field trials with customers. The company has also introduced a new service in response to the mining industry's requirement to reduce the impact of fatigue on operations. 

The group’s Fatigue Consulting Services will see a team of experienced consultants advice customers on ways to improve their mining operations by tackling fatigue.

At the API business, Seeing Machines has signed additional production license deals with Spatial View and Monster Media, which will deliver annual royalties to the company.

The company said it is progressing faceAPI licensing opportunities, expecting the technology to generate significant revenues.

Seeing Machines is currently developing the next generation of its gaze technology, which will feature in its existing and future products.

Meanwhile, researchers at the Australian National University (ANU) are working on refining and proving the scientific methods on which the TrueVision product for vision testing devices is based with the results expected in the second half of calendar year 2012.

The ANU researchers believe that the product will have applicability beyond glaucoma, the initial eye disease targeted.

Facial recognition specialist Seeing Machines (LON:SEE) has appointed Jennifer Barnes to the position of chief financial officer with immediate effect.

She has held a number of senior finance positions in the private and public sector both here and in Australia and is a qualified certified practising accountant.

Managing director Ken Kroeger said: "We are delighted to welcome Jennifer to the Seeing Machines team. 

“The skills and experience she brings to the company will be critical for our success in this current phase of growth and in transitioning to profitability."

Seeing Machines is at the cutting edge of facial recognition and eye-tracking. Its technology is being used in the world’s first laptop with a three-dimensional screen, and it has also produced an in-cab system that monitors how alert lorry drivers are.

Seeing Machines, which specialises in face and eye-tracking software for a variety of applications, said its revenue increased to A$7.2 million (2010: A$4.5 million). Gross profit for the firm’s 2011 financial year also improved, to A$4.9 million from A$3.2 million but operational expenses incurred increased to A$6.7 million (2010: A$5.2 million) on account of investments in R&D for its Drive State Solution offering that uses face-tracking techniques to deliver information on driver (or operator) fatigue and distraction, as well as investments in the firm’s sales and marketing function and support staff.

As a result, Seeing Machines' net loss for its 2011 financial year came in at A$2.2 million (2010: A$1.8 million loss). The firm’s cash position was also down, at A$1.6 million compared with A$3.9 million on June 30 2010, mainly due to investments made in DSS.

Highlights during the year included Seeing Machines’ DSS offering almost quadrupling revenue to A$4.3 million (2010: A$1.1 million). The firm said that its pipeline of customers continues to grow, and its strategy for DDS remains focused on the global mining and resource sectors through direct sales and channel partners; blue chip customers for DSS currently include Freeport-McMoRan, BHP Billiton, Newmont Mining Corporation, Toll Mining Services and Xstrata.

The firm also signed a significant production licensing deal for its faceAPI technology for glasses-free 3D displays for consumer electronics. faceAPI achieved revenue during the period of A$484,446 (2010: $A506,555)

For its 2012 financial year, Seeing Machines plans to significantly expand its customers for DSS in Australia as well as directly grow installations of the product in countries where that it directly services and supports, including the US, Canada and Indonesia, it said. It also plans to expand through channel partners in Africa and South America.

"2011 has been a period of considerable investment for Seeing Machines as we move forward with our strategy of commercialising our products and technology,” said Bill Mobbs, Seeing Machines’ chairman.

“During the period we have expanded our sales teams, improved our technology and further developed our service offerings. As a result, we are seeing an increasing number of opportunities and this in turn is leading to an expanding pipeline. As such, we are confident of continued revenue growth in 2012 along with an improved financial performance.”

When he took over the share price was bumping around 1.86 pence. Yet within days it had rocketed to 4.23 pence and, and remains around 3 pence.

The blue touch-paper was lit under the stock by a technology paradigm shift – the launch by Toshiba of their first glasses-free 3D laptop, which could pave the way for similar innovations in television.

The excitement for followers of Seeing Machines is that the Toshiba Qosmio F750 incorporates the company’s faceAPI technology, which allows the computer’s camera to track the face and eye movements of the user.

This is important as today’s high-tech screens trick the brain into thinking it is viewing pictures in three dimensions. The current success with Toshiba is based on a chip produced by a Chinese 3D technology company called SuperD.

“What our software is actually doing is allowing the web camera on the computer to track where the person’s eyes and head are so that the 3D screen images can be directed to the eyes of the viewer by the SuperD technology,” Kroeger tells Proactive Investors.

“You think of the Nintendo 3DS…you have to have the device at the right angle from the face to get the effect. 

“FaceAPI software allows the computer to know where you are in relation to the screen.”

The Seeing Machines algorithms have been successfully deployed in another device, called the Driver State Sensor, which detects whether drivers are literally falling asleep on the job.

The DSS is attracting a great deal of interest from the world’s largest miners which operate fleets of giant earth movers.

Driver fatigue is a problem yet safety is of paramount importance, so the DSS has a ready market with no competitors offering a “non-intrusive” or “off-body” solution – other solution tether the driver with special headgear or glasses.

This cab-based box and warning system has, to use a pun, been the driving force behind Seeing Machines and its push towards profitability. 

Success for Seeing Machines has, however, created problems. Problems other high-tech minnows would love to have, but problems nonetheless.

The first is that Seeing Machines is effectively two businesses in one.

There’s the relatively capital intensive DSS business, which produces the in-cab gear needed to check on our dozy drivers.

And there’s the face and eye tracking technology, which works on the licence and royalty model adopted by the likes of ARM, Wolfson and Imagination Technologies here in the UK.

The second is the potential need for new finance sooner, rather than later. Of course this is the bane of any small, but growing firm.

But there are also opportunities, massive opportunities. Kroeger says the company has developed multiple face tracking that would make it possible to create the world’s first dynamic glasses-free 3D TVs. This is quite a game-changer because the current technology doesn’t really apply to TV as we often don’t watch TV by ourselves.

“The other thing that is special about the technology is you can watch 2D and 3D on different parts of the screen at the same time.”

“What’s about to happen in the next 18 to 24 months is we are going to see the first releases of consumer-focused cameras that take 3D pictures,” the Seeing Machines chief reveals. We hope to play part in that technology.

However the real fireworks will come if it can shoe-horn its IP into the chips used in smart-phones - something Seeing Machines is actively pursuing. 

“This FaceAPI thing is kinda crazy,” Kroeger says. “Right now the Toshiba deal is significant for us. It runs on an Intel processor. 

“But if we had the money and a bit of engineer time, we could migrate this to less powerfull processors. 

“So in 12-18 months it is realistic to believe we could have this on smart handheld device – iPad, iPhone … you name it. 

“Anything that has a camera can be 3D and driven by this little piece of technology. I think the platform has got some legs.”

It has been a roller coaster few months for investors in the group, which was rocked by an earnings alert in June which wiped over a third off the company’s market value in a couple of days.

Delays to a major order for the DSS and challenges with the technology were at the root of the problem, which had a consequent impact on the company’s results for the year to June 30.

However these are delays, not cancellations and business will be picked up in the current year.

More to the point the DSS division is in rude health dealing with about as many sales leads as it can comfortably handle and site installation is becoming a challenge.

And while he isn’t specific, Kroeger says there’s at least one substantial DSS order in the offing.

“Every day there’s three or four requests for further information on our products,” he adds. 

“And this smells and feels like the right activity that leads to sales. They are global customers, big companies with significant operations all around the world.” 

There are two other products in the portfolio. The first is Facelab, a device that tracks eye gaze, which Kroeger describes as a quiet performer bringing in a “couple of million dollars a year”. 

The other, the newest product, Truefield, is a very specialist eye test device for disorders such as macular degeneration.

“The final clinical trials will commence later this year and we are eager to see the results.”

What Kroeger must do now is consolidate on the work of the predecessor Nick Cerneaz and provide the company with some real focus.

Dealing with the likes of Toshiba, or if it ever happened, perhaps even Apple or Intel, will require commercial acumen as much as the technical brilliance the company has displayed. 

So there are what the professionals call execution risks associated with Seeing Machines – that it won’t actually capitalise on the huge opportunities it has created. 

You sense the sheer enormity of the challenge is starting to sink in.  “It is very hard to measure the market, because the market doesn’t exist yet,” Kroeger tells me. 

“There are so many uses for this technology that we haven’t even thought about yet.

“We are talking to all the big players in the handheld device space. There are some technical challenges there moving it to low output devices, but be if we can get there it will be big.”

“If you can move it into an area where you are selling tens or twenty million devices – even at a fraction of dollar a time you are still talking a lot of money.”

Seeing Machines’ s core technology has much wider applications, including road transport, healthcare and computer gaming, it added.

The research house issued a note in reaction to Seeing Machines announcement earlier this week two contract wins to install its proprietary DSS driver monitoring equipment in the haul truck fleets at two North American open-pit mines.

The contract includes the fit-out of 43 haul trucks at two mine sites for an existing client, but further details were not disclosed.

Mining giant BHP Billiton (LON:BLT, ASX:BHP, NYSE:BHP & BBL) is a customer of Seeing Machines, as is America’s Freeport McMoRan (NYSE:FXC).

In Edison’s view, Seeing Machines’ enterprise value of around £12 million - £14.2 million equity less around £2.4m in cash - is underpinned by the immediate DSS opportunity in the mining sector.  “Nevertheless, we see strong potential for positive surprises from across a spectrum of opportunities, from reopening of the road transport sector, to TrueField Analyzer’s commercialisation progress and possible significant faceAPI licensing deals,” it said.

The TrueField Analyzer is a desktop device that enables visual field testing in a clinical environment, and faceAPI provides a suite of image-processing modules created specifically for tracking and understanding faces and facial features.

Seeing Machines’ s core technology has much wider applications, including road transport, healthcare and computer gaming, it added.

The research house issued a note in reaction to Seeing Machines announcement earlier this week two contract wins to install its proprietary DSS driver monitoring equipment in the haul truck fleets at two North American open-pit mines.

The contract includes the fit-out of 43 haul trucks at two mine sites for an existing client, but further details were not disclosed.

Mining giant BHP Billiton (LON:BLT, ASX:BHP, NYSE:BHP & BBL) is a customer of Seeing Machines, as is America’s Freeport McMoRan (NYSE:FXC).

In Edison’s view, Seeing Machines’ enterprise value of around £12 million - £14.2 million equity less around £2.4m in cash - is underpinned by the immediate DSS opportunity in the mining sector.  “Nevertheless, we see strong potential for positive surprises from across a spectrum of opportunities, from reopening of the road transport sector, to TrueField Analyzer’s commercialisation progress and possible significant faceAPI licensing deals,” it said.

The TrueField Analyzer is a desktop device that enables visual field testing in a clinical environment, and faceAPI provides a suite of image-processing modules created specifically for tracking and understanding faces and facial features.

Shares in Seeing Machines soared from 3 pence to 3.63 pence on Wednesday after the company announced two contract wins to install its proprietary DSS driver monitoring equipment in the haul truck fleets at two North American open-pit mines.

Seeing Machines managed to hold on to yesterday's gains as shares in the company were unmoved in late morning in today's session.

The broker reiterated its forecasts and targets for the stock.

The contract includes the fit-out of 43 haul trucks at two mine sites for an existing client.

While the financial terms of the deals were not disclosed, according to the broker they inspired more confidence in the investor community that Seeing Machines will live up to the high expectations set for what will likely be the breakout year for the company.

This sentiment was reflected in the share price jump, putting it closer to DS&C’s current target of 6.8 pence.
The broker upheld its 'buy' recommendation for the stock, giving it an upside of 127%.

DS&C is currently projecting Seeing Machines to post revenues of US$9.4 million in the financial year to June 2011, more than double the US$4.2 million in 2010. This would go up to US$10.7 million in 2012.

Most importantly, the broker expects the company to turn profitable in the current financial year. Pre-tax profits are expected to reach US$US$1.4 million in 2011 and US$1.9 million in 2012 compared to last year’s loss of US$1.7 million.

The firm’s products are based around computer vision processing that allows machines to see and track human faces – hence the name Seeing Machines.

The deal is for the fit out of 43 vehicles for an existing client. There were no other details.

Nick Cerneaz, CEO of Seeing Machines, said: "We are very pleased to be announcing these two new DSS contracts in North America.  

“Our DSS pipeline continues to grow and includes opportunities in a number of countries across North and South America, Africa and Asia-Pacific and we will announce further deals at the appropriate time."

The DSS, or driver safety system, monitors the driver of a vehicle for signs of distraction and fatigue that can lead to accidents.

It is also the product that will lead the company’s drive towards profitability in the current financial year.

Mining giant BHP Billiton (LON:BLT, ASX:BHP, NYSE:BHP & BBL) is a customer of Seeing Machines, as is America’s Freeport McMoRan (NYSE:FXC).

“The DSS is what’s transforming our business,” chief executive Nick Cerneaz told Proactive Investors recently.

“The contracts we are getting are driving a very big change. In the first month of this new financial year we had exceeded the revenue for the entire previous year for the DSS business. 

“This is a fairly transformational change. And it really is driving our belief that this year is going to be quite different to last year. 

“What it comes out to be, well only time will tell. But it is a transformational year. 

“Using last year’s numbers as a guide to this year is going to leave people lacking in detail. 

“It is a different year and a different business now. The business is moving along very well.”

The company’s broker Daniel Stewart says revenues for the 12 months to June 30 2011 will jump US$5.2 million to US$9.2 million. This would give a pre-tax profit of US$1.4 million compared with a loss US$1.7 million.

At 9am, the shares were up 0.38p at 3.38p.

The next year should be one of massive transformation for the technology firm Seeing Machines (LON:SEE).

Analysts expect its sales to more than double in that period, which means the group will be cash generative and profitable.

It will be the culmination of years of hard work, first for the researchers who perfected the science on which SM’s products are based, and management and staff, who have diligently prepared the groundwork for commercial success.

The firm’s products are based around computer vision processing that allows machines to see and track human faces – hence the name Seeing Machines.

The technology is used in cutting-edge devices that manage eye disease. However the ramp-up in sales is based around a different application of the company’s scientific know-how.

For SM has created an in-cab device that monitors the face and eyes of drivers of the trucks and heavy tonne earth movers used by mining companies.

It is not immediately obvious why one would need a machine to do this, even in today’s Big Brother society, until you realise that tiredness and distraction leads to hundreds of accidents per year on the road.

You see, SM’s machines – called driver state sensors - are able to automatically detect the warning signs of fatigue which set off an in-cab alert, while the data is also electronically monitored by the dispatcher. 

It is sales of these DSS systems that are expected to power the group’s drive to profitability this year.

Mining giant BHP Billiton (LON:BLT, ASX:BHP, NYSE:BHP & BBL) is a customer of Seeing Machines, as is America’s Freeport McMoRan (NYSE:FXC).

“The DSS is what’s transforming our business,” chief executive Nick Cerneaz told Proactive Investors.

“The contracts we are getting are driving a very big change. In the first month of this new financial year we had exceeded the revenue for the entire previous year for the DSS business. 

“This is a fairly transformational change. And it really is driving our belief that this year is going to be quite different to last year. 

“What it comes out to be, well only time will tell. But it is a transformational year. 

“Using last year’s numbers as a guide to this year is going to leave people lacking in detail. 

“It is a different year and a different business now. The business is moving along very well.”

The company’s broker Daniel Stewart says revenues for the 12 months to June 30 2011 will jump US$5.2 million to US$9.2 million. This would give a pre-tax profit of US$1.4 million compared with a loss US$1.7 million.

However it has taken almost 14 years to get to this point, according to Cerneaz, who is taking nothing for granted.

This risk now is the strategy is poorly executed and that the projected top-line growth doesn’t filter down to the bottom line.

A placing of shares in March raised £3.3 million, which is expected to see the company through to the point it can fund its growth from its own resources.

The cash is being used to employ staff to support the DSS and for product development. 

“Our issue is not sales, it is being able to support (the sales push),” Cerneaz said. 

“Growing for an extended period comes with many pitfalls. 

“We did this fundraising to build our capability to service the market.  The market is big and geographically spread. 

“We are trying to create enough capability in our business to address and deliver a solution and most importantly the after-sales support to bring in new clients around the world.

“There are also pricing and market opportunities. It is important for us to reduce the cost of goods and generate a better margin.

“But it really requires service support. This is one of our crucial tasks going forward.” 

Mining is a geographically diverse business, which means Seeing Machines needs a support presence in many regions of the world.

It sells directly into the Australian market as well as the US and Canada, while it has employed sales and support agents in Africa and South America.

“Big miners are giant international companies, so we need to be able to go where they go,” Cerneaz says.

“We are certainly tracking orders in most continents – not so much in Europe.

“Our own direct efforts are in Australia, US and Canada, and we are working with agents in Africa and South America. We are not trying to do everything ourselves. We are happy with our partners as agents.”

But he warns: “We must avoid being overwhelmed by the stream of new business by being ready to support the new installations as they come online.”

The next 12 months ought to see a stream of new order announcements, though it is hard to predict when they will arrive. “They will come in spurts,” Cerneaz says.  

“We are at a tipping point. The mining industry is showing all the right signs of buying our equipment. 

“Miners recognise the have an issue and they want to solve it. And we have the solution.”

However, Seeing Machines sales were boosted around the reporting cut-off date, with new contracts worth over US$1.2m, approximately A$1.27m, won during June and July. These sales will be recognised in the 2011 financial year.

“It was just unfortunate that the contract signed in June for supply of the DSS to the mining industry had not come in earlier to offset the delays,” Mobbs added.

Margins improved in the 2010 financial year, with cost of goods reduced by 9%, which are now at 25% of revenue (FY09:34%), also gross profit now represents 75% of revenue (FY09: 66%).

The DSS product, which monitors distraction and fatigue among large vehicle drivers, has provided the company with considerable traction since management focused on the mining sector – where giant multi-million dollar haulage vehicles are essential to metal production.

During FY2010, Seeing Machines signed a ‘Master Purchasing Agreement’ with Freeport McMoRan (NYSE:FXC), which set out the framework for a roll-out to Freeport's group of operating companies. The first Freeport contract was completed with the DSS installation at the Safford mine in Arizona.

The company also landed a contract with BHP Energy Coal for the Navajo and San Juan mines in New Mexico.

In the current year, it has won three contracts to supply the DSS to mines in North America and Peru.

To support the DSS sales drive, Seeing Machines raised £3.3m through a share placing, priced at a 22% premium, back in April.

Looking ahead the company emphasised that it has a "strong pipeline of DSS opportunities" in the resource sector across Africa, Australia, North and South America.

Edison investment research published a report on Seeing Machines in the wake of today's announcement, saying that the group’s enterprise value of approximately £10m (£12.2m equity less  approximately £2.4m in cash) is underpinned by the immediate DSS opportunity in the mining sector.

"Nevertheless, there are other potential big winners, not only for DSS in roadtransport/fleet management market and the OEM channel but also for TrueField in healthcare and faceAPI across a range of sectors, most notably in computer gaming," the research house added.

With a remote sensor on the dashboard, the vision-based, DSS system measures the eyelid opening of the driver and based on this data derives the drowsiness state. The DSS also monitors the driver's head movements and positioning, when the driver has not been focused on the roadway ahead for a period, the DSS-IVS detects this event and generates instant alarms including audio alerts and seat vibration feedback.

Earlier this year, Seeing Machines secured two separate framework deals with major mining groups - BHP Billiton (LON:BLT, ASX:BHP) and Freeport McMoRan - to roll-out the DSS across their respective fleets of mining vehicles.

In reference to today’s deals, the company was unable to reveal details of either the mining company or the particulars of the sites involved, due to confidentiality agreements between the parties.

In recent months, Seeing Machines has installed the DSS at several mining operations. In June it landed a contract with Freeport-McMoRan to install the driver monitoring equipment in the haul truck fleet at the Morenci mine in Arizona. Previously in April, the company also agreed to install the product at Freeport’s the Safford mine, also in Arizona.

In March, the company won its first contract under the Freeport Framework deal, to supply the DSS equipment to the Grasberg mine in Indonesia - the world’s largest gold mine and the third largest copper mine.

Also in March, Seeing Machines signed a contract to fit-out the entire haul truck fleet at BHP’s Navajo mine in New Mexico. At the time, the company also highlighted that it was engaged in talks over further DSS deployments across other mines within the BHP Billiton Energy Coal business unit.

In today’s statement, the company noted that the two contracts form part of the delayed series of orders, which it initially expected in the full year ended 30 June 2010.

On the 24 June, Seeing Machines shares took a hit after the company reported that the delay of a series of orders would cause FY2010 revenue to fall significantly below market expectations. Despite the share-price reaction, Edison Investment Research & London-based stockbroker Daniel Stewart & Co, remained upbeat about the sales pipeline and the company’s commercial prospects.

Edison said that there has been no weakening in the sales pipeline, the group remains well capitalised and the significant scope of opportunity for business is undiminished. Indeed today’s orders, plus the Freeport Morenci contract - which was also carried over from FY2010 - reinforces the analyst's view.

Aside from the DSS, the company has a number of other product lines, based on its proprietary image tracking technology. Notably, through an API (application programming interface) package, Seeing Machines makes its suite of image-processing modules available to software and technology developers. Through the development and production licenses the company generates additional revenues from its proprietary technology.

The API licensing business landed two new contracts in July. Firstly, a deal with Di-O-Matic Inc marked Seeing Machines' first production license to be sold into the computer graphics (CG) animation sector.

Di-O-Matic has integrate the face tracking modules into its new Maskarad family of CG animation tools. Di-O-Matic’s high-end character animation software is due for release later this year. The Montreal-based company’s client list includes many major players in both the movie and computer games industry such as Disney, RockStar Games and SEGA, and the software has enhanced and animated CG characters such as Batman, Garfield, Spider-Man, and SpongeBob SquarePants.

Later, in a deal last week, Pillar Vision licensed the API suite for its Noah Select basketball training aid. The Noah training aid works by tracking the flight of the basketball once the player shoots the ball, and analyses the ‘arc’ with the angle and distance of the shot recorded, and transmitted to a linked laptop for further analysis by the player and coaches.

At last year’s AGM, in November, Seeing Machines said that  the software licensing and royalty based business model has exceeded its budgeted revenue expectations in the first full financial year since its release.