SEEING MACHINES LIMITED Dear shareholder,
Thank-you for your time and patience awaiting the release of our first Seeing Machines Group Update. We are making big strides every day across all our chosen sectors of execution: automotive, commercial fleet, rail, mining (via Caterpillar), aerospace and research. This update will provide you with key milestones and operational highlights across our sectors - for readers of the 'Fleet Update', we have streamlined the content into this publication to give you a complete overview of our progress in pursuing our multi-sector strategy.
Our continued execution of the multi-sector strategy is gaining momentum with recent news of our term- sheet signing behind the fund raising of an automotive spin-off company. We are building an impressive roster of investors that will help position the new company
to capitalise upon the market opportunity for driver monitoring. We've all seen and possibly experienced the first raft of 'autonomous' vehicles - which are truly incredible. Seeing Machines is positioned at the forefront of the revolution that's happening on our roads and highways.
Guardian is our largest direct to market product which has seen a recent overhaul in our branding and communication culminating in an intense series of
tradeshows in the U.S.. Our focus has been on securing assessments with enterprise-level commercial fleets whom share the goal of protecting all their drivers against the risks of drowsy driving. With over 30 active assessments globally in large carriers and the signing of a new distributor to expand into Asia, we are making solid progress.
Our work in the automotive sector is continuing to gain
momentum with the term sheet signing announced in May. We're working tirelessly with our advisors to close the funding round whilst our pursuit to secure OEM customers and further develop our automotive-grade driver monitoring platform continues.
Our aerospace market engagement has accelerated much faster than we had originally anticipated. As a result of our previous decade of work - intellectual property, brand equity, and collaborative projects; our team was able to initiate discussions and pilot programs with some of the world's largest aviation companies.
Paul Angelatos, Chief Operations Officer, will update you on the work we're pursuing with our partner, Electro-Motive Diesel and the successful transition of our DSS business to Caterpillar which is already yielding strong royalty payments as announced in the
May trading update. We end the issue with an interview with Tim Crane from CAT Safety Services.
Our corporate communications continues to evolve. We are a dynamic company built upon a unique capability and technology with a strong commercialisation team around it. What has been achieved in just over 3 years is astonishing as we continue from strength to strength and turn the possible into reality. You can preview our corporate positioning here: www.seeingmachines.com/see
Key Operational HighlightsTerm-sheet signed for automotive spin-out
Major distribution deal for Guardian
CAT licensing royalties exceed expectations
Aerospace makes progress with key assessments
Contact Seeing Machines investors@seeingmachines.com
www.seeingmachines.com
Accelerating AutomotiveIn 2014 when we created the multi-sector transportation strategy for Seeing Machines, we had no idea that the journey towards automotive integration of our technology would happen so quickly.
Demand for 'driver monitoring systems' (DMS), a category that Seeing Machines created, is being driven by the largest automotive manufacturers needing a reliable and robust way to sense the driver's attention state.
We are working closely with most of the major car OEMs in one way or another. Our capacity to meet their demand has brought foward plans to finance and support our technical and market leadership. As announced on May 16, we have taken the first major step towards this end by signing a term sheet with a lead-investor.
Technical work has only accelerated as we onboard new talent to work on our DMS platform that cements our value-proposition for the automotive OEMs and Tier
1s. Working closely with our manufacturing partners to miniturise our visual processing algorithms to
provide the world's only automotive grade eye-tracking solution, our vision is to become the de facto DMS platform for all automotive applications.
Whilst we are working to spin-out the automotive business, it will remain closely aligned with the Seeing Machines Group with significant bi-directional transfer of IP, knowledge, data, and talent. This will be reflected in the commercial agreement for Seeing Machines to retain a significant stake in the new company.
Building upon the successful 2nd generation contract with one of the largest US automotive manufacturers, we are working with Takata to adjust our commercial arrangement to explore the fastest and most cost- effective commercial paths to getting our DMS technology into the broader automotive market whilst still supporting Takata's DMS business.
AerospaceThe last quarter has seen significant growth in terms of capability, profile, activity and reach. We are
continuing to provide our leading edge technology and solutions to support a major aircraft manufacturer in the development of a state of the art Aircrew Training capability.
Some of our new engagements across the aerospace industry include; carriers from within freight, commercial and helicopter, and potential engagements with air navigation services providers supporting training and operations within the high growth
industry of air traffic control. We also have increased our exposure to military aerospace collaboration initially in support of training services in a simulated environment.
Seeing Machines' eye-tracking installed in a 737 cockpit simulatorBy the end of this calendar year we plan to have our capability and solutions in aircraft and air traffic simulators in the US, UK / Europe, UAE and Australia. As we continue to develop both our capability and our global footprint, we are working closely with the relevant regulators in each of our regions as we look to move through after market solutions, embedded solutions toward our ultimate target of mandated aerospace systems, both simulated and operational.
Contact Seeing Machines investors@seeingmachines.com
www.seeingmachines.com
Fleet Sector Update Paul Angelatos, Chief Operating OfficerWhen Ken Kroeger and I visited London to speak with our institutional investors back in April of this year, I took away a couple of key things from these meetings:
Our investors believe in and support our multi- sector transportation strategy;
Investors recognise the challenges of bringing new technologies to a sector that operates on low margins and has an extended buying cycle;
And, we need to share our progress with investors whilst respecting customer privacy and disclosure laws.
What I would like to share with you is a summary of a recent visit to the US. Following up the successful launch activities where we exhibited at three of
the major trucking shows; I met with a number of customers, prospective customers and partners. My aim is to leave you with confidence that considerable progress is being made, the strategy is being executed as planned and that the results will follow. The foundations are being laid for success.
Platform IntegrationOur strategy to address the volume commercial fleet market is largely dependant on our ability to integrate the Guardian Solution with existing fleet telematics providers. Fleet telematics technologies are helping companies track their vehicles, monitor diagnostics, and ensure drivers are not engaging in risky behaviours while driving. Market research estimates
a compounded annual growth rate of 19% as more countries introduce mandates for this technology. All the providers we are currently engaged with believe in our technology, are not currently offering fatigue and distraction capability, and have large existing customer bases that they believe will want to adopt this technology providing the solution is integrated, simple to use and affordable. Discussions with a number of these providers are well progressed with MoU's in place to advance the development of an integrated platform. This reaffirms that we are on the correct technology and commercial path.
Customer ValidationWhile we build the capability to integrate our technology with telematics partners we also continue to engage directly with transport companies. I was fortunate to be able to spend time with three large customers in the US who have all recently signed up to conduct assessments of our technology as well
as better understand their own current risk exposure to driver fatigue. Three of the customers I met with have a combined fleet of more than 25,000 vehicles and are absolutely focussed on providing the safest environment possible for their drivers.
These meetings were also an opportunity for me to personally test our assumptions and to understand the safety issues that are pertinent to our customers. We are an organisation that listens and we are also nimble enough to adapt and incorporate customers' feedback into our product and services offering. At last count we have 34 customers undergoing assessments of the Guardian Solution (all in various stages). This positions us strongly for the new financial year and is a great basis for achieving our own high expectations. The
challenge for me and the sales team is to convert these assessments (or a significant percentage of them) into sales. The signs are positive.
Contact Seeing Machines investors@seeingmachines.com
www.seeingmachines.com
USAThe past quarter has seen a huge amount of activity for the US sales team with a strong presence at three major trucking shows: Truckload Carriers Association in Las Vegas, the Mid-America Trucking Show in Louisville, and the National Private Truck
Carriers Association in Cinncinatti. Combined with an effective lead-generation campaign, Seeing Machines generated significant interest in Guardian. This joint effort by our sales and marketing teams has led to an unprecedented number of assessments in the region.
The most promising assessment is with one of the world's largest freight logistics providers with both an aviation and ground transport requirement.
Seeing Machines' SVP Sales, Mirza Kozarcanin demonstrating the Guardian Solution at MATS Middle East and EuropeThe Public Transport Authority of Dubai has progressed Seeing Machines' technology from capability trial (Nov. 2015) to tender. The process takes several months as they establish future technology platforms for their public bus networks.
We are in the final stages of negotiation with a local distributor of vehicle technology. A local presence is required to market and sell any technology in the region and we look forward to finalising this partnership
shortly.
Latin AmericaWith the help of our distributor in the region, Seeing Machines Andes (formerly Seeing Machines LATAM), we have sold and are installing 40 units at Transportes EME BUS in Chile.
We have recently been certified with the Center for
Experimentation and Road Safety Mexico (CESVI), an organisation funded by all of the major insurance companies in México. They test and accredit automotive technologies. With this certification, Seeing Machines has gained access to commercial departments of GNP, Atlas, MAPFRE, AXA, Inbursa
and Qualitas, all insurance companies that work with CESVI in identifying ways to prevent accidents and determining costs involved in vehicle accidents.
Seeing Machines is also extending its relationship with global key accounts like DP World and Praxair into LATAM with initial assessments. Building upon the successful assessments with DP World Korea & Phillipines, Seeing Machines is making a strong case with multi-national companies to protect every driver, every truck.
Asia-PacificAnnounced on16th June 2016, we are extremely pleased to welcome Guardian South-East Asia (SEA) as a regional distributor with an initial order for 1,000 units in anticipation of significant demand from the public transport sector. We look forward to working with the team at Guardian SEA.
Continued success in Australia with recent sales to Kalari (150 systems) and contracts for over 200
units to Pacific National; our first customer to install units in service vehicles (4WDs) that perform track maintenance and shuttle drivers to and from their shifts. We continue to encourage companies to think about where fatigue is often overlooked and to protect every driver, every shift.
Other regional assessments include Fonterra in New Zealand, a safety conscious dairy goods distributor and Kiattana, a hazardous materials transporter in Thailand.
We are proud to be working with NZI Insurance, one of New Zealand's largest insurance brands. NZI will be offering their fleet customers Guardian System
units for trial - covering the installation, hardware and SafeGuard program cost for 6 weeks. If the customer then implements for their entire fleet, NZI will broker a discounted rate.
Our continued work with insurance partners is an example of how we are proving the value of our life- saving technology.
Contact Seeing Machines investors@seeingmachines.com
www.seeingmachines.com
Seeing Machines Limited published this content on 27 June 2016 and is solely responsible for the information contained herein.
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