Closed $8 million in funding to help market facial animation software.
SANTA MONICA, CA - Mar. 11, 2010 - Image Metrics, Inc. (OTC BB: ICLA), a leading provider of facial animation software and services for the entertainment industry, today announced the closing of an $8.0 million financing that will enable the Company to expand the sales and marketing efforts for its core software and services business, to support the launch of facial animation software such as FACEWARE™ to expand its customer and project reach, and to explore opportunities in new online markets such as virtual worlds, gaming and social networks.
Simultaneous with the fundraising, Image Metrics has completed an exchange offer with International Cellular Accessories (OTC BB: ICLA) through which it has exchanged all of its outstanding shares to become a wholly owned subsidiary of ICLA and a publicly traded company. To reflect this new direction, ICLA, which has no active operations, will change its name to Image Metrics, Inc. and its stock symbol. The Company will announce the completion of the name change and the new stock symbol in the near future.
Founded in 2000, Image Metrics is a leading provider of advanced facial animation technology and services to the videogame and feature film industries. The Company has invested over $14 million and 60 man-years in developing its proprietary technology, for which it has been granted a U.S. patent and has filed claims for four other patents. Image Metrics' proprietary software, algorithms and processes enable animators to cost effectively create lifelike human facial movements by processing digital video of an actor's face. The process eliminates the need for expensive, time-consuming methods such as digital hand animation and motion capture, which are generally unable to match the realism, nuance and efficiency of Image Metrics' process.
Over the past two years, Image Metrics' animation technologies have been utilized in a variety of high profile, award-winning and top-selling videogame and feature film projects for customers including Activision-Blizzard, Bethesda, Electronic Arts, Sega, Sony Computer Entertainment, Take Two Interactive, Ubisoft and Warner Brothers. A sampling of projects (with links to online demos) includes:The Curious Case of Benjamin Button - Feature Film (2008 Academy Award for Best Visual Effects) Grand Theft Auto - Video Game Assassin's Creed II - Video Game NBA 2K10 - Video Game Rock Band 2 - Video Game Trailer Boom Boom Pow - Black Eyed Peas - Music Video (2010 Grammy Award for Best Short Form Music Video) Michael Starkenburg, Image Metrics' Chief Executive Officer, commented, "Our proven animation technology allows video game studios to significantly improve the time to market for their games while simultaneously reducing development costs. The Image Metrics process enables artists to create believable facial animation that captures the subtleties of human facial movement in a fraction of the time needed for traditional methods. Gamers are seeking increasingly realistic and immersive experiences and believable facial performances. We are now staffing up sales and marketing to take advantage of a growing base of client testimonials, awards, press and word of mouth to grow both the size of the facial animation market and our market share.
"In addition, we are working to package our technology into a software service offering that we can deploy to customers. This will create a hybrid software/service business model which should expand our market opportunity and favorably impact profit margins and our future financial performance."
Improving Top- and Bottom-Line Performance
Image Metrics reported revenue of $4.0 million in its fiscal year-ended September 30, 2009 and entered fiscal 2010 with a backlog of firm contracts of over $5 million. Image Metrics' revenue grew to $2.5 million in its first quarter ended December 31, 2009, and the Company has already recorded revenue of over $800,000 in January 2010, the first month of its fiscal 2010 second quarter.
Seasonality and the variability of contract timing and scale will likely lead to fluctuations in year-over-year and sequential comparisons for the next few years. Nonetheless, the Company believes it is on track to deliver significant revenue growth and improved bottom line performance in fiscal 2010 and beyond.
With ramping revenue, Image Metrics anticipates improved gross profit margins on a relatively fixed overhead, though planned increases in sales & marketing, product development and some G&A expense could have an offsetting impact on profitability. While Image Metrics reported a net loss of $6.8 million for fiscal 2009, its net loss for Q1 '10 improved to $1 million.
Financing and Capital Structure
The financing consisted of 8.0 million Units priced at $1.00 each which are comprised of one share of Series A Convertible Preferred Stock and one detachable Warrant to purchase one-half share of Image Metrics Common Stock at $1.50 per share. The financing included a combination of new capital and the conversion of existing debt, and Image Metrics has the right, over the next 30 days, to sell up to an additional 4.8 million Units pursuant to the same terms.
Pro-forma for today's transaction, Image Metrics has approximately 27.0 million shares of common stock outstanding (including shares underlying the Series A Preferred) and 35.5 million diluted shares outstanding as indicated in the table below. Proceeds from the funding will be used to accelerate the Company's sales and marketing and product development efforts, as well as for working capital and general corporate purposes, including possible acquisitions.
About Image Metrics ( www.image-metrics.com)
Image Metrics provides facial animation software and services to the interactive entertainment and film industries. Developed by a team of computer vision Ph.D.s, Image Metrics' proprietary software rapidly re-creates facial performances without markers or makeup, achieving unparalleled levels of realism and fidelity. Image Metrics' solutions enjoy widespread and growing adoption by some of the leading production studios in the entertainment world, including Digital Domain, Rockstar Games and Sony Computer Entertainment.
Safe Harbor for Forward Looking Statements - This press release contains forward-looking statements about the Company's business prospects that involve substantial risks and uncertainties. Actual results may differ materially from the statements made as a result of various factors, including, but not limited to the market acceptance of the Company's products and services, the Company's ability to maintain client relationships and deliver projects in a timely manner, concentration of the Company's business with certain customers, the impact of technological changes, competition or other factors within the facial animation market, the ability of the Company to establish and protect its intellectual property, the ability of the Company to execute its expanded sales and marketing and product development strategy, and other risks, including those identified in the most recent documents filed by Image Metrics with the U.S. Securities and Exchange Commission. All information in this press release is as of its published date and Image Metrics undertakes no duty to update this information.
Jaffoni & Collins
James Leahy, David Collins
Shannon McPhee (On site at GDC)