Final Results

Seeing Machines Limited
24 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 THE
YEAR 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's
evolution. We have invested heavily in the development of a series of new
products based on our core technology as part of our continuing strategy to
broaden the channels to market for our technology. In doing so we have expanded
our product offering from essentially a single product (faceLAB) available at
the time of the Company's listing on AIM in late 2005, to a multi faceted
approach that includes the new DSS2 and generalized faceAPI products, both
products released very recently (July 2007 and May 2007 respectively).
Additionally the good progress of our TrueField Analyzer product made through
this period adds another important element to our efforts to broaden and grow
our revenue base. The full year accounts to 30 June 2007 which record a loss of
A$466,953 and a net reduction in cash reserves of A$1,031,625 to A$1,375,428
reflect the investment made in these products through this period. Alongside
those strategic investments in our product portfolio we have recorded a 7.4%
increase in total revenue over the period as a result of maintaining good
product sales through direct & channel partners and improvements in our revenue
from contracted services in association with our products and their continued
development. Through the 2007 financial year we have developed and delivered to
the market a significant series of new and improved products, including the
DSS2, faceAPI and faceLAB version 4.5 products, and continued the development
and pre-commercialization of the TrueField Analyzer. With the proceeds of the
fund raising announced separately today the Company is well placed to build on
these foundations and to accelerate the commercialization of these new products
and their businesses.'


The Seeing Machines Annual Report 2006-2007 including the audited Financial
Statements is available for download from the investor section of the Company's
website www.seeingmachines.com.


The Director's Review of Operations, Income Statement, Balance Sheet, Statement
of Changes in Equity, Statement of Recognised Income and Expense and Cash Flow
Statement follow:




Review of Operations


Financial Results


Total revenue for the year increased 7.4% to A$2,645,504. Revenue from sale of
goods 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 of
A$546,292 over the prior year (A$56,785) due to a number of automotive research
contracts. Other income decreased to A$199,259 from A$628,841 in 2006 due to the
completion of the Start Grant at 30 June 2006 and the capitalisation of the
Commercial 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 the
main area of expenditure as the company moved forward with the development of
key projects including TrueField Analyzer(R) our medical device to help doctors
detect and manage glaucoma and other eye diseases, the Driver State Sensor , our
sensing technology for automotive applications in the areas of fatigue and
distraction detection, faceLAB(R) and the faceAPITM products. Marketing costs
including 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 of
the faceLAB(R) product, and further development of manufacturing efficiencies
for the product.


The company has capitalised certain of its development costs in line with the
accounting standards.


The net loss for the year was A$466,953 - up from A$135,077 for the year ended
30 June 2006. The loss during this financial year is an indicator of the
significant product development undertaken during the year. The company will be
aggressively pursuing the commercialisation of all four product streams during
FY2008.


The company had A$1,375,428 in cash at 30 June 2007 compared to A$2,407,053 at
30 June 2006. Cash has been utilised in both the payment to suppliers and
employees 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 at
30 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 passed
the A$10 million cumulative revenue milestone. The contraction in faceLAB(R)
sales revenue in FY2007 over the previous year has been primarily due to the
relatively modest improvements in the product during the prior year. The release
of improvements made during this year, and principally the version 4.5 release
in July 2007, which marks a significant improvement in the precision mode and
high performance pupil tracking capabilities (derived from technology
developments initially made in the TrueField Analyzer product) has already lead
to a number of new sales for the product and bodes well for continued
improvements in the faceLAB(R) business ahead. As indicated above there were
several 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 which
reduces systems complexity and setup time and increases experimental
flexibility.


faceLAB-Link brings dynamically expandable field of view capability to faceLAB
(R) for the first time by enabling multiple faceLAB systems to be used
simultaneously. faceLAB-Link systems can be configured to accommodate a full 360
degrees 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 gaze
tracking algorithms that take advantage of the research undertaken for the TFA
medical device. The new algorithms track the gaze direction of each eye in true
3 dimensional space (3D), and enable a 1-click setup for subjects, including
people wearing glasses. Tracking is performed from a single camera platform
without 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 the
subject more freedom of movement. The accuracy of the head-tracking has also
been improved through the use of the precision eye-tracking data. These
improvements place us very well to take on the rapidly growing market segment
for on screen gaze tracking - a market segment outside the traditional faceLAB
markets (which have always been pure human factors and a variety of research
environments). Since the introduction of faceLAB(R) 4.5 in July 2007 initial
sales have been made into this new market segment and we are pursuing further
such 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 Naval
Academy, Cornell University and Queensland Academy of Sport.


TrueField Analyzer(R)


The company has aggressively pursued its goal to release the first production
version of the TFA during calendar year 2007. Real progress has been made and we
have been greatly assisted by the award in August 2006 of an Australian
Government Commercial Ready Grant, worth A$2.1 million over 2 years to support
the commercialization of the project.


In March 2007 the company was awarded first prize in the Secrets of Australian
ICT Innovation Award for the TrueField Analyzer(R) in the Health category. In
May 2007 the TFA debuted publicly to great acclaim at the Association for
Research in Vision and Ophthmalogy (ARVO) Annual Meeting in Florida. This was
the first public demonstration of the TFA to the Ophthalmology community which
is 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 have
completed testing of 82 glaucoma patients and 100 age matched normal subjects. A
number of scientific studies have also been undertaken with the aim of
identifying the best general testing protocol across the spectrum of normal and
mild, moderate and severe glaucoma cases. Significant progress has been made on
the software and hardware for the TFA and we have produced a series of pre
production prototypes that has been used for demonstration purposes and
extensive testing in the clinical study program at both the Canberra Eye
Hospital and the Australian National University's Research School of Biological
Sciences.


The company submitted an application for 510k marketing clearance to the United
States Food and Drug Administration (FDA) during the year. We were advised on
the 15th August 2007 that 510k Marketing Clearance had been granted for the
Truefield Analyzer, permitting the introduction and marketing of the device for
commercial sale within the US markets. This regulatory clearance marks a
significant hurdle for the commercialisation of the TFA.


The company has achieved trademark protection for the TFA in Australia, the
United States and a number of European and Asian countries. The TFA website was
launched for the ARVO meeting. The company is in discussion with several of the
leading OEM companies in the medical devices field who are interested in
securing the rights to take the TFA to market.


The company is intending to launch the TFA commercially in the United States
later this year and the next milestone in that plan will be the American Academy
of Ophthalmology Annual Meeting in New Orleans in November 2007. This conference
held annually is the largest US ophthalmology conference and a significant event
for showcasing TFA to the industry.


Automotive


The last year has seen a number of very significant developments in the
automotive business segment in both product development and commercialisation.
The Driver State Sensor (DSS) product/technology has been evaluated by a number
of independent groups through the year and has consistently demonstrated its
superior performance in the market (as a platform for driver monitoring to
detect driver distraction and fatigue).


Trent Victor of Volvo Technology, and a director of Seeing Machines, who has
been 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 performance
previously unseen and the technology now becomes a real contender for serial
production systems.'


The company has continued its collaboration through the year with Hella KGaA
Heuck & Co (Hella) to bring an Original Equipment Manufacturer (OEM) version of
the DSS to market. Hella is seeking to develop and supply advanced driver
assistance systems to the global OEM passenger and freight vehicle markets and
is looking to introduce the DSS for supply into these markets. The relationship
has borne significant engineering development through the year and these product
innovations have in turn supported significant product demonstrations and market
development efforts with them OEM vehicle manufacturers in the market (Hella's
customers). The parties continue to work together in a mutually beneficial
approach to developing this market and realizing a return to the parties.


The company has continued its work with global oilfield services provider
Schlumberger Inc., with DSS systems installed in trucks in Texas and Canada.
Schlumberger is currently seeking to expand the deployment of DSS systems to
their operations in other parts of the world.


The first commercial version of the product, the DSS2, was released to the
market 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 markets
and since its release it has generated initial sales and very strong interest
from the target markets and will enable the company to diversify its revenue
base in 2008.


The company is a research participant in the Co-operative Research Centre for
Advanced Automotive Technology Ltd. ('AutoCRC') and the leader of the Vision
Based Collison Avoidance Project. The initial development undertaken under the
banner of this project has been a speed sign recognition system and an in-car
demonstrator version of this was delivered during the year and is currently
being evaluated. The project will continue to run through FY2008 and beyond, and
provides a platform for the company to both generate contract revenue and also
to leverage the resources of the project participants to assist in the
development of support technologies that enhance the offering of our other
automotive products.


faceAPITM /SDK


Seeing Machines has released the first version of a generalized Application
Programming Interface (API) which packages its core head, eye and facial
tracking technology for sale to third party developers and OEMs. The launch of
this product extends the initial business opportunities established by the
company in previous years supplying our core technology within bespoke
applications for use within a variety of markets, including robotics systems
developers and sports training products. We will also release in the near future
a developer version of the API, providing a platform for third party developers
to rapidly integrate the technology into their products, enhancing the
attractiveness of this solution system, and additionally providing an additional
revenue stream for the company.


A licence agreement for the new faceAPITM product was signed in May 2007 with a
North American computer vision company who is using the company's head tracking
technology in their application. Seeing Machines receives a royalty payment for
each system sold.


Seeing Machines is currently pursuing several business development opportunities
for this product.


Patents and Trademarks


The company has continued its strategy to protect its core intellectual property
through patents and trademarks.


Trademarks for the TFA have been sought and obtained in a number of
jurisdictions including:

   • Australia
   • United States
   • Europe
   • Asia.


During the year the company lodged a patent for a new generation of head
tracking technology (already incorporated into the DSS2 product). The company is
currently lodging a number of key application patents, especially in the
faceAPITM business sector.


Chief Executive Officer


The Company's Chief Executive Officer for the full financial year to 30 June
2007 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 2007
and at the date of this report is Belinda Burgess. Belinda has over 10 years
experience as a Commercial Manager of private and public corporations. She is
currently Operations Manager of Seeing Machines. Prior to this, she was General
Manager Commercial Services of a publicly listed technology company for four
years.


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 the
product development activities. The company continues to optimize the staff
resources to meet the needs of the business and moving forward expects to
further supplement our sales and marketing team to support the growth in
saleable product coming online as a result of the product development work of
this and the previous financial year.


In recognition of the key role played by staff in the success of the company the
Board implemented an Employee Share Option Scheme in June 2006. In July 2006 20
staff 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      2,407,228
Contract Income                                               603,077         56,785
Revenue                                         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 progress
Employee 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              0
Other 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 ASSETS
Cash and cash equivalents                       8(b)     1,375,428   2,407,053
Trade and other receivables                       9        350,813     639,373
Inventories                                      10        136,571     129,370
Other                                            11         34,825      39,381
TOTAL CURRENT ASSETS                                     1,897,637   3,215,177

NON-CURRENT ASSETS
Property, plant and equipment                    12        244,953     251,648
Intangible assets                                13        277,962     221,240
Capitalised development costs                    13      3,719,471   1,404,971
Other                                                        3,586       3,312
TOTAL NON-CURRENT ASSETS                                 4,245,972   1,881,171
TOTAL ASSETS                                             6,143,609   5,096,348

CURRENT LIABILITIES
Trade and other payables                         15        756,736     705,966
Deferred revenue                                         1,661,193     408,450
TOTAL CURRENT LIABILITIES                                2,417,929   1,114,416

NON-CURRENT LIABILITIES
Provisions                                       16         97,251      68,693
TOTAL NON-CURRENT LIABILITIES                               97,251      68,693
TOTAL LIABILITIES                                        2,515,180   1,183,109
NET ASSETS                                               3,628,429   3,913,239

EQUITY
Contributed equity                                       6,553,932   6,528,748
Accumulated losses                                     (3,605,225) (3,138,272)
Other reserves                                             679,722     522,761
TOTAL 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)       41,768
Issues of ordinary shares during
the year
Issue of share capital               3,848,550                            3,848,550
Transaction costs                  (1,234,880)                          (1,234,880)
Conversion of Convertible Notes        450,000                              450,000
Cost 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)        4,816
Cost 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             0
Loss 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) OPERATING
ACTIVITIES
Receipts from customers                                  3,232,553   2,367,014
Grants received                                          1,301,390     930,843
Payments to suppliers and employees                    (3,016,722) (2,561,378)
Interest received                                           87,902      59,168
Finance costs paid                                               0    (83,421)
NET CASH FLOWS FROM/(USED IN) OPERATING         8(a)     1,605,123     712,226
ACTIVITIES

CASH FLOWS USED IN INVESTING ACTIVITIES
Purchases of plant and equipment                         (150,707)   (179,057)
Payments for intangible assets                            (76,762)           0
Payments 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      41,769
Issue of shares                                                  0   3,848,550
Costs 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)   1,743,840
Cash and cash equivalents at beginning of                2,407,053     663,213
period
CASH AND CASH EQUIVALENTS AT END OF PERIOD      8(b)     1,375,428   2,407,053



--- ENDS ---





Enquiries:
Seeing Machines Limited   Insinger de Beaufort   Parkgreen Communications
Nick Cerneaz, CEO         Peter Ward             Ben Knowles

                                                 Erica Nelson
[phone]       [phone]   [phone]
www.seeingmachines.com


Notes to editors:


About Seeing Machines


Seeing Machines is an award winning Technology Company which focuses on vision
based human machine interfaces. Formed in 2000 in Canberra, Australia, Seeing
Machines' purpose is to commercialise its computer-vision across a range of
industries and applications.

Seeing Machines deliver advanced computer vision solutions for researches and
developers 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, it
solves the problem of observing human behaviour naturally, non-intrusively and
with a high degree of accuracy and usability. Building on these unique face
tracking and pupil measurement and monitoring capabilities, the TrueField
Analyzer(R) is new medical device to assist clinicians detect and manage eye
diseases such as glaucoma.

The TrueField Analyzer(R) offers a new objective method to help doctors diagnose
and manage a range of eye diseases including glaucoma, age related macular
degeneration and diabetic retinopathy. Glaucoma affects about 2-3% of the
population over 40 years of age and is a leading source of blindness. Unlike
most other devices available to the clinician the TrueField Analyzer is a
completely objective test and it is quick and easy for patients and technicians
alike. The device measures both eyes concurrently and due to the reliability
that arises from the objective nature of the test, it has the potential to
become a new standard in the measurement of visual field defects and thus in the
diagnosis and management of disease such as glaucoma.

More generally Seeing Machines' computer vision systems are able to measure the
orientation and position of a human head, estimate eye-gaze direction, detect
eye blinks and track other facial features. This functionality is achieved
entirely though visual means, using video cameras connected to advanced image
processing software, with no attachments required on the subject. Products such
as faceLAB(R) are designed to allow human factors researchers and designers to
assess the interaction of an operator in an environment and this finds
application in designing operator environments, such as cockpits for cars,
trucks, trains, and aeroplanes for instance, and other industrial design
applications, as well as medical and psychological research situations. The
technology has been developed into the Driver State Sensor (DSS2) product for
application in monitoring vehicle drivers and if it detects drowsiness (fatigue)
or that the driver is distracted and their attention has been diverted from the
road, alarms are raised to alert the driver to these events. In larger
deployments, such as in fleet and mining equipment operations, the data is
available in both real-time and off-line modes for fleet management, driver
training and awareness programs

The systems work in real-time, enabling the behaviour of subjects to be tracked
in real-time. This technology is paving the way in promoting safer driving
conditions and works to enhance the driving experience and to eliminate
accidents caused through driver drowsiness or distraction.

There are many different sectors that can benefit from this revolutionary
software, for which it has been developed, including: automotive; academic
research; medicine/healthcare; defence; autostereoscopy (next generation
displays); sport; and games.



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