Product category:
Embedded Software and Operating Systems
News Release from: InPlay Technologies, Duraswitch Division
Edited by the Electronicstalk Editorial
Team on 27 April 2004
Duraswitch practices the ART of
acquisition
Duraswitch has entered into a definitive agreement to acquire all of the shares of privately held Active Recognition Technologies, a developer of vehicle and licence plate recognition software.
Duraswitch has entered into a definitive agreement to acquire all of the shares of privately held Active Recognition Technologies (ART), a developer and licensor of vehicle and licence plate recognition software The stock acquisition is subject to ART meeting future revenue and profit conditions and is expected to close in 2005
This article was originally published on Electronicstalk on 30 Apr 2003 at 8.00am (UK)
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As the Duraswitch technologies are designed into various products, our royalty revenue source grows", said Bob Brilon, Duraswitch CEO.
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Brilon added: "With this acquisition, we leverage our NASDAQ company exposure, existing licensing structure and to expand the source for potential licensing revenue.
We pursued this acquisition opportunity because we believe there are upside prospects of licensing this technology through various licensee partners that will resell, install or integrate the recognition technology to add a layer of automated security".
ART licence plate recognition (LPR) software is licensed through resellers on a fee-per-lane basis with margins estimated at 85-95%.
The company is also exploring a transaction based revenue model for certain applications.
Additional revenue is derived from annual maintenance fees, consulting services and engineering fees.
Arthur Lawida, CEO of ART, said: "ART technology is attracting attention because it solves a major issue facing security managers worldwide: finding and identifying potential threats before they occur.
Applications include area surveillance, stolen vehicle detection, border control, amber alert automation, access control and threat detection.
This technology provides a solution to the main issues facing this relatively early-stage industry, including accurately finding and reading the licence plate and automatically adjusting to varying environmental conditions.
These challenges are particularly difficult in North America with the huge variety of plate styles.
The ART system can be set up in minutes and can be used for both portable and fixed lane surveillance.
By combining with Duraswitch's existing licensing model and culture, we expect to gain greater exposure faster and capitalise on this emerging marketplace opportunity to develop a strong foothold in this market".
ART software establishes the identity of a vehicle based on the licence plate, vehicle colour and other shape characteristics as required, and matches that information to a database in real time.
Used for security applications, revenue control and marketing data collection, the current market for LPR software is a growing multi-million-dollar industry worldwide.
Growth in the market is being driven by increased governmental and commercial security measures, enforcement applications, productivity needs, new legislation and increased desire for targeted marketing and customer service.
Unlike typical LPR software, ART's technology offers total vehicle identification through a unique shape map.
ART's LPR technology is the first product to identify vehicles by a combination of colour, shape, texture and licence plate.
Licence plates are like other security tokens in that they can be lost, faked, stolen or shared.
ART's LPR technology analyses that the right licence plate is present on the correct vehicle and can automatically send an alarm to e-mails, pagers or be integrated with standards-based command and control systems.
ART's LPR technology offers superior operating performance worldwide and is particularly suited to the North American market where there are a wide range of licence plate templates, fonts and colours.
ART's LPR works in controlled or adverse environments, regardless of lighting and weather conditions and with stationary or moving vehicles.
ART's LPR technology employs a unique combination of vehicle matching algorithms, which enables vehicle identification with a high degree of accuracy even if the licence plate is partially obscured.
The software is easily integrated with existing hardware and software systems.
Under the terms of the deal revenue and profit for ART must include two consecutive quarters of at least $400,000 in revenue and $100,000 average EBIT prior to 30th July 2005.
Prior to closing, Duraswitch will commit funding to ART over the first 12 months in the form of convertible debt up to a maximum of $500,000.
The debt instrument has a principal conversion into 12.5% ART ownership.
ART will relocate to Duraswitch offices and will pay a referral fee to Duraswitch for any direct or relationship referrals.
Brilon stated: "We believe that this deal structure mitigates the significant risk associated with an emerging technology.
ART believes they will hit their revenue and profitability projections, and we believe that success will equate to a success for ART and Duraswitch shareholders.
Duraswitch's Board of Directors has the right to expedite the closing by waiving the revenue and profit requirement".
Upon a closing event, ART shareholders will receive the following: 950,000 shares of restricted Duraswitch stock with registration rights no earlier than 31st March 2005; and an earn-out of 850,000 restricted shares with standard piggyback registration rights, or a prorated portion thereof, will be issued on accumulated EBIT of the ART division of $4 million over a three-year period (these share amounts may be reduced, depending on the amount of convertible debt converted on closing).
"We believe this technology has broad market appeal.
ART's existing partnership with Extreme CCTV, a leading security camera manufacturer, has already opened doors for our technology worldwide.
ART's current targets include security system integrators and resellers such as ADT, Pelco, Northrup Gruman, General Dynamics, Boeing, Haliburton and Computer Sciences Corporation.
We are also targeting firms selling and producing digital video recorders (DVR) including Lenel, Loronix, Fast and American Dynamics as well as security product manufacturers such as Sony, Toshiba, Sanyo and Panasonic", said Alex Parrish, Vice President of Business Development, ART.
"Test reports coupled with feedback from current users demonstrate how well this technology works", Lawida continued.
"The next step is awareness and commercialisation through a network of partners to license and integrate this software solution for a variety of needs".
"By bringing ART technologies into the fold, we are leveraging our existing public company exposure and relationships, and licensing infrastructure to create additional opportunities for shareholder value.
Duraswitch technologies are supported internally, and through the efforts of a worldwide base of over 30 licensees and strategic partners.
ART's technology is seeing initial acceptance in the security industry, and we believe this is the time to capitalise on this technology's advantages in the marketplace", added Brilon.
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