Dangerous products: what are your rights?

[This is the original text of an article published in The Guardian under the title: ‘Dangerous business: what to do if a product you use has been recalled’.]

Overheating Samsung Galaxy Note 7 phones are just the latest in a never-ending stream of products released that aren’t safe for use: from exploding car airbags to Whirlpool tumble dryers that catch light.

These items have all necessitated product recalls but it can be a messy, long drawn-out process that is unlikely to catch all the offending products in time to prevent inconvenience, injury or even death.

For example, the exploding airbags supplied by Japan’s Takata to multiple car manufacturers across the globe necessitated one of the largest product recalls in history. It began in 2008 and is still ongoing, affecting 100 million airbag inflaters in more than 40 million cars. Globally, the death toll connected to Takata airbags stands at an estimated 16 people.

While recalls are rarely on this scale they’re an important means of safeguarding consumers from dangerous ‘white goods’, domestic electrical appliances such as tumble dryers, washing machines and fridges. Hence, there has been much anger and surprise at Whirlpool’s decision (it owns the Hotpoint, Indesit and Creda brands), to recommend consumers continue using some dangerous models before they’re repaired.

In contrast London Fire Brigade has recommended customers stop using Hotpoint, Indesit and Creda tumble dryers made between April 2004 and September 2015. Indeed, it is campaigning to make white goods safer.

According to an early day motion tabled in October by Andy Slaughter, Labour MP for Hammersmith, the London Fire Brigade has attended over 2000 incidents since 2011 to tackle fires involving white goods, with an estimated cost to the public purse of over £118 million and “devastating consequences” for those involved.

So what are product recalls?

Product recalls are essentially safety alerts issued by a manufacturer, importer or retailer and can either be issued on a voluntary or compulsory basis by a ‘Market Surveillance Authority’ (MSA), which monitors and enforces legal safety standards on consumer products. In the UK the bulk of this work is undertaken by Trading Standards departments.

When issued on a voluntary basis the manufacturer admits the product is potentially dangerous and that it may present a hazard to consumers. So, as a precautionary measure, they’ll usually recall the product by issuing a recall notice to inform customers of the batch number, product code and model of the item concerned. In most cases, products will either have to be returned to the store or distributor who will organise for the repair or replacement of the item.

If agreement can’t be reached then compulsory measures are taken by Trading Standards, and can include one or more of the following:

  • a ‘ Requirement to Warn’ the public that it may present a hazard when used under certain circumstances;
  • a ‘Requirement to Mark’ the product with a warning that it may present a hazard;
  • a ‘Suspension Notice’, which can be issued, temporarily removing the product from sale while safety tests are carried out;
  • a ‘Recall Notice’. This is issued when a product is already on the market and there is reasonable evidence it is dangerous;
  • a ‘Withdrawal Notice’. This is the permanent withdrawal of a dangerous product from the market.

If the product is sold in more than one EU state, the UK authorities must also notify Brussels so that the product can be placed on RAPEX, the European rapid alert system for dangerous products. It ensures that information about dangerous products withdrawn from the market and/or recalled from consumers anywhere in Europe is quickly circulated between Member States and the European Commission, so that appropriate action can be taken everywhere in the EU.

The problem for consumers is that there isn’t any central database where you can go to find out about all the products that have been recalled. According to Gavin Reese, a Partner at law firm RPC: “There are currently over 30 web sites that list product recalls including the Chartered Trading Standards Institute, RAPEX and Electrical Safety First. It is considered that consumers and businesses alike would be much better served if there was a central system that was easy to follow, which enabled both consumers and businesses to know what procedure to follow with recalling a product and what products have been recalled.”

Worryingly,  resources to enforce standards have also been cut: a spokesperson for Electrical Safety First told The Guardian: “We are extremely concerned at the impact of Trading Standard staffing cuts, which we believe will severely impact on consumer safety. It is particularly ironic that this essential service is being decimated – with staff cuts totalling 53% since 2009 – at a time when there have been a host of high-profile product safety scandals, from exploding hover boards to tumble-dryer fires.”

Food recalls

Food recalls are handled by the Food Standards Agency (FSA) in England & Wales
and by Foods Standards Scotland (FSS). In 2015 they were together notified of and
investigated 1,514 foods, feed and environmental contamination incidents across the UK. The four largest contributors to the total number of recorded incidents in 2015 were: Pathogenic micro-organisms, such as salmonella, (18%); allergens (14%), chemical contamination (12%); and residues of veterinary medicinal products (8%).

Meat and meat products (other than poultry) were the most common food type (254 incidents), followed by shellfish (107), fruit and vegetables (97), cereals and bakery products (87) and milk and milk products (70).

If you do injure yourself using a consumer product or become ill from consuming a foodstuff you should contact the seller/manufacturer of the product and notify them of the problem.

You can also contact other agencies responsible as MSAs for the relevant area – such as, Trading Standards, Electrical Safety First or the relevant local authority (in respect of alleged food poisoning) who can carry out their own investigations.

Legal rights

As for your legal rights, Gavin Reese from RPC explains: “Depending upon when the item was purchased, you can either bring a claim under the Sale of Goods Act 1979 (for items purchased prior to 1 October 2015) or under the Consumer Rights Act 2015 (for items purchased after 1 October 2015) on the basis that the goods are not of satisfactory quality and/or fit for purpose. In addition, it is necessary for the product to carry appropriate warnings about the use of the product or, in relation to food, its ingredients. Failure to provide either warnings or confirmation of the ingredients which give rise to injury can give rise to a civil claim for damages.”

If you don’t take a product back following a recall, or allow it to be repaired, and are subsequently injured by the fault that you were notified about Reese states that you’ll not be entitled to make a claim in relation to that injury. “However, if you sustain an injury as a result of a different fault which is unconnected to the notified fault, even if you refuse to return the product in relation to the notified fault, you may then be entitled to make a claim,” he adds.

Nevertheless, while around 400 products are recalled each year, only 10-20% are returned by customers with many remaining unaware that certain products are in their homes and are potentially unsafe.

Therefore, Electrical Safety First, which specialises in consumer protection and product safety, advises consumers to always register their electrical appliances at this website: ‘Register My Appliance’. (http://www.registermyappliance.org.uk)

Useful websites to check for recalls

Here are some useful sites to check for recent product/food recalls:

For all products:

Chartered Trading Standards Institute  (http://www.tradingstandards.uk/advice/advice-recall-list.cfm)

For electric goods:

Electrical Safety First (http://www.electricalsafetyfirst.org.uk/product-recalls/)

For non-food products:

EU Rapid Alert System for dangerous non-food products (RAPEX)  (http://ec.europa.eu/consumers/consumers_safety/safety_products/rapex/alerts/main/?event=main.search)

For foods:

Food Standards Agency (FSA) (https://www.food.gov.uk/enforcement/alerts)

Food Standards Scotland (http://www.foodstandards.gov.scot/news-events)

The EU Rapid Alert System for Food and Feed (RASFF)

(https://webgate.ec.europa.eu/rasff-window/portal/?event=notificationsList&StartRow=1)

For cars and vehicles: 

Driver & Vehicle Standards Agency
(http://www.dft.gov.uk/vosa/apps/recalls/default.asp)

Revenge of the Killer Zombie Government

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Killer ZombieOur ‘Their’ UK Government is clearly incompetent, too ideologically obsessed with cutting regulations and implementing muddle-headed, ’balance the books’ austerity to care for us peeps.

That much we know after Grenfell Tower fire burnt down the last remaining veil hiding the Tories’ duplicity and selfishness. The exact number of dead in that fire is probably well into triple figures – but don’t expect a realistic death toll until the heat of the summer is long past. Tempers might combust and the establishment don’t want their stage-managed democracy torched by the angry masses.

But I digress: up and down the country most people can increasingly smell the stink of this Tory Government’s rotting corpse. With every passing week the stench gets stronger. Even the DUP’s futile attempt to give it the kiss of life won’t revive it.

What is especially shocking is that this Zombie Government cares more for the dead than the living. Theresa’s May’s wet dream would be the death of Corbyn. I imagine she’d happily splurge on a state funeral if it meant her failing grip on the cliff edge of power became a little tighter. She might not be alone in twisting and turning in orgasmic delight at such a fantasy – but Boris doesn’t kiss and tell in public.

How do I justify that statement? Well, first I’d cite the ‘fact’ that I believe it to be true. Okay, that’s too weak – though I think you may believe it also.

Secondly, they’re doing little to prevent pollution from diesel vehicles that is sending many to an early grave and damaging the lungs of children.

Lastly, what else can explain the fact that, while •thousands are injured and many killed in road accidents every year caused by driver fatigue and inattention, ‘our’ Government is doing little to encourage the adoption of technology that could drastically reduce those numbers.

Yes, that’s right. The technology to warn drivers when they’re falling asleep at the wheel or distracted (for example, by using a mobile) exists.

Yet the Government does nothing to encourage its adoption: it doesn’t test it or mandate it on UK roads.

Noblesse ought to oblige the Government to do the decent thing but this mob in power don’t give a fig for the living.

• According to figures from the Department of Transport, in 2015, driver distraction was cited as a factor in 2,920 crashes, which resulted in 61 fatalities and 384 serious injuries. Similarly, driver fatigue was a contributory factor in 1,784 car accidents in 2015, resulting in 58 fatalities and 331 serious injuries.

Is Seeing Machines a takeover target?

Seeing Machines interims yesterday were slightly disappointing in so far as Fleet sales have yet to take off, although they are progressing.

I’m not going to rehash the numbers here, except to say that with nearly A$40m in cash it isn’t in any immediate danger of needing a fundraise to fund the further development of Fovio.

My hope is that the V2 version of Guardian which apparently costs around US$625 vs US$1000, together with Mix Telematics’ product incorporating the integrated SEE system should boost Fleet sales. I anticipate both will be ready within 3-6 months.

Still, I could be wrong about the timeframes and therein lies the risk. Although the spending on Fovio is capable of being scaled back SEE is trying to grab OEM automotive market share in the hottest sector of the automotive market. The funding to cover this is intended to come from Fleet and Mining sales.

Only if Fleet doesn’t scale up and make a substantial contribution, might SEE require a further fundraise before it reaches profitability — unless it chose to scale back spending on Fovio.

That said, I don’t expect this will happen. I believe that an imminent deal with Progress Rail, along the lines of the it struck with Caterpillar should provide short term funding to avoid even the slight risk that they might need to raise more money further down the line, before it becomes profitable.

That a deal with Progress is close at hand was confirmed in the interim statement yesterday, when SEE stated: “The company is in final negotiation stage for a global agreement with Progress Rail. We expect an agreement to be in place during 2017.”

Lorne Daniels

Analyst Lorne Daniels, in a note issued yesterday from house broker finnCap, reduced his sales estimates for Financial Year (FY) 2017 to A$13.4m with a pre-tax loss of A$33m, with estimated sales of A$52m for FY2018 and a pre-tax loss of A$17.3m. Only in FY 2019 is SEE forecast to deliver a pre-tax profit of A$2.8m on sales of A$117.8m.

I’d urge caution on the numbers as there are a lot of unknowns, but the direction of travel is clear.

More importantly, I think investors need to appreciate the bigger picture here, as Lorne Daniels eloquently stated:

“The struggle with Fleet sales is disappointing but solvable and should not detract from the overall focus on the goal Seeing Machines is working towards. While new competitors like Tobii, SmartEye and EyeTech are seeking entry to the market, Seeing Machines remains well ahead in terms of product development, routes to market, experience and proof of success in the field; already deployed in thousands of mining vehicles where its rivals can point to no real-world use at all. Seeing Machines is deliberately investing heavily to capitalise on its leadership by deploying its cheap and easy to adopt SiP solution. This will entrench its market leadership across a wide range of operator monitoring markets but primarily that huge automotive market.”

Nevertheless, as SEE’s share price languishes at a pitiful 3.5p, despite all the progress made in a variety of end markets, the company is easy prey for a speculative offer.

Indeed, given the recent purchase of Mobileye for $15bn by Intel, you have to wonder how long it will be before one of the big players (perhaps Google, Apple?) will make Seeing Machines an offer they can’t refuse.

Lorne Daniel estimates that applying the 42x sales multiple (on which the Intel bid for Mobileye was based) to Seeing Machines’ 2017 sales forecast provides a valuation of A$563m (£353m) or 24p a share.

I’m sure that would satisfy many private investors frustrated at the current share price. And yet…apply that to the projected sales for only one year later in 2018 and you end up with A$2184m (£1,370m) or 92p a share.

In my view, a little more patience is required while realising that investing isn’t risk free.

The writer holds stock in Seeing Machines.

Seeing a CES bonanza for Fovio

This year’s CES show in Las Vegas has demonstrated strong interest in driver monitoring systems (DMS), from automotive manufacturers and their Tier 1 suppliers. All good news for Seeing Machines’ Fovio division, which is fast becoming the dominant supplier of driver monitoring systems to guard against driver fatigue and distraction.

It was at CES in 2015 that Seeing Machines first showed its driver monitoring car technology with Jaguar. In addition, Seeing Machines has confirmed that Bosch, Takata and Volkswagen are showcasing Fovio tech at this year’s CES.

  • Bosch’s vehicle demonstrates new intelligent driver interaction capabilities enabled by Fovio
  • Volkswagen demonstrates a vehicle cockpit concept with integrated Fovio DMS
  • Takata demonstrates steering-wheel integrated DMS

I think it is only a matter of time before many other OEMs and Tier 1 suppliers are linked with Seeing Machines as the auto industry introduces advanced semi-autonomous vehicles, then fully autonomous vehicles.

As Mike McAuliffe, ceo of Fovio has noted: “We’re seeing a groundswell of demand in the industry for our Driver Monitoring technology.”

Tesla, Jaguar, Land Rover and Porsche are all marques that I personally think are likely to adopt its technology. For instance, Elon Musk would be in ‘ludicrous’ mode if he didn’t appreciate what Seeing Machines DMS could do to enhance safety features in his cars.

Ludicrous valuation

What is undeniably ludicrous is that this stock languishes at a market cap of £45m when it is about to crack not only the auto market with Fovio but the fleet market with its Guardian product. (Caterpillar liked its driver monitoring product for the mining industry so much it bought the whole operation in return for an upfront payment and ongoing license and royalty stream for Seeing Machines).

Seeing Machines now has only to lie back and wait for the money to roll in from the Caterpillar sales team. Similarly, holders of this stock who hold it for a couple more years should make a stellar return.

According to projections from Lorne Daniels, a well respected analyst at house broker FinnCap, Seeing Machines will deliver sales of Aussie Dollars 141m (£84m) in 2019 with pre-tax profits of A$22m (£13m). I expect this figure to be revised sharply upwards along with his target price of 12p by the end of this year.

Any lingering doubts about the take up Seeing Machines offering in the fleet space were certainly dispelled with its tie up with Mix-Telematics, a global telematics provider in late December.

Following its fundraise this month, I’m convinced Seeing Machines is set to rise steadily.

However, don’t take my word for it. Do your own research and then make your own mind up.

The writer holds stock in Seeing Machines

Seeing Machines gains global partner to boost fleet sales

Today’s announcement by Seeing Machines (AIM: SEE) that it has signed a non-exclusive global distribution partnership with telematics provider Mix Telematics is great news on a number of levels.

Firstly, it provides a ringing endorsement of SEE’s Fleet technology, designed to drastically reduce accidents due to driver fatigue and distraction. Moreover, as a major player in the global fleet industry, with 578,000 subscribers across 120 countries MiX Telematics will enable SEE to leverage its global distribution and installation network.

As Lorne Daniels, analyst at house broker FinnCap notes: “Fatigue and distraction is a huge and growing issue for both private drivers and fleets, particularly with the growing mobile functionality and dependency. Telematics is vital for modern fleet management. Yet installing and subscribing for a number of different in-cab systems is difficult for fleet managers. Combining telematics and driver monitoring solutions in one device and from one supplier clearly makes sense, reducing cost and complexity.”

It should be a win for customers of both customers and Lorne confidently states: “…we expect a substantial increase in Guardian sales volumes over the next few years.”

I’m therefore very optimistic that within the next 6-12 months we should see substantial upward revision of sales estimates for Fleet.

Exclusive interview

Today, in an exclusive interview with Paul Angelatos, Chief Operating Officer at Seeing Machines, I put a few questions to him regarding this latest development. I’ve provided the full text in Q&A format below:

Chris Menon:  Given the amount of injuries and deaths caused by driver fatigue and distraction in trucks/lorries etc, how great an impact do you think the combined offering will have in reducing accidents among your customers?

Paul Angelatos: We have shown (peer reviewed paper written by Prof Mike Lenne and presented at this years ITS Conference in Melbourne) that when our Guardian solution is implemented, coupled with real time monitoring, we can reduce the occurrence of fatigue events and distraction by up to 91%.  When we integrate with MiX telematics, who are industry leaders in fleet safety in their own right, we will also have a greater understanding of what is occurring in front of the vehicle, how the vehicle is being driven (based on data MiX take from the vehicle), and then provide detailed analysis of a whole range of factors, including the driver’s state, in a single report.  This is a powerful tool for fleet operators who are focussed on safety.

Chris: What are the projected sales of the new offering over the next 1-2 years?

Paul: That is difficult to put a figure on this. What both companies know is that we are independently increasing our sales each year and both companies have identified demand for the other parties services with current and prospective customers. We already have overlapping customers that present opportunities for integration and we have a product that is complementary (rather than competing with each other). Even small percentages of the addressable market (both companies existing sales pipelines) will lead to solid returns.

Chris: Is it an exclusive global agreement across the world or is it restricted to certain territories?

Paul: It is a Global non-exclusive agreement. This is the first stage in our relationship and it is important for both companies to pursue opportunities as they see fit. As we progress and demonstrate our relative value to each other, the relationship may take a different shape.

Chris: Have you committed to a minimum order immediately?

Paul: There is no minimum commitment from either party.  This is an agreement that has been a long time in the making. We have developed a strong degree of trust with each other and are comfortable that our cultures a well aligned and we share the same motivation. An arbitrary minimum commitment from either party wasn’t deemed necessary.

Chris: What will be the approximate cost of the combined product in terms of upfront purchase and then monthly fees?

Paul: We will shortly be undertaking some joint marketing with MiX. We will save the release of our pricing for that occasion.  Needless to say, our customers will receive greater value by installing our combined integrated offering than they would by taking the two solutions independently.

The writer holds stock in Seeing Machines.

Sensible shift in strategy

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Following the news this week that Seeing Machines (AIM: SEE) is to raise £17m to fund the development of Fovio, its auto-focused division, I wanted to give my immediate reaction.

I view this as a positive development as my fear that SEE itself might risk losing control over its IP in spinning out the division with external funding appears to have been well founded.

If you want chapter and verse on this I’d recommend you read an excellent note published this week by Lorne Daniels, the analyst at SEE’s house broker FinnCap.

To be honest, though, the timing took me slightly by surprise: I’d half expected such a move in October when the finals were announced but had been reassured that funding was in place until June 2017.

Why raise now?

So why are they raising now and not at the end of the first quarter of 2017, given that SEE had sufficient cash till June 2017? Well, my guess is that funding concerns may have been holding up negotiations on some contracts.

That SEE is in negotiation for some big deals appears to have been confirmed in Lorne Daniels’ note this week, in which he wrote: “…fleet sales of Guardian v.1 have been sluggish but are set to be boosted by several large deals under negotiation”.

Certainly, the local Dubai media have quoted officials in Dubai appearing to confirm that SEE has won 2 separate tenders to supply its Fleet technology in both taxis and buses. However, SEE has not been officially named and so I’m guessing the contracts are still to be signed.

It’s also possible that other successful trials and negotiations (in auto/trains and aerospace) will move more swiftly as a results of this fundraise. Let’s hope so.

The timing of this raise could also prove to be very fortunate if stock markets do plummet by the end of the first quarter of 2017.

Despite the ‘Trump reflation’ effect that has boosted stock markets, which expect a huge US$1trillion stimulus and tax cuts, I’ve a strong feeling it will end in tears by the end of the first quarter of 2017.

This is because, as Jim Rickards has pointed out, the stimulus effect will be far less than the market expects (due to Republican opposition), while the Fed appears to be likely to further tighten monetary policy with another rate rise in March 2017.

When the market realises this, you can expect a fall, possibly even a crash. Raising money then will be much harder.

Now that SEE’s immediate funding concerns have been put to bed, I’m confident positive news flow will move this much higher over the next few months. According to Lorne Daniels SEE should now be funded to profitability.

However, if CAT and Fleet sales disappoint next year, it is conceivable that SEE might need to raise more funds. Hopefully, that won’t happen: as any such raise would then give rise to fears of a share consolidation, which rarely ends well for private investors.

I’ll certainly be keeping a keen eye on the news flow over the next 3-6 months.

Of course, this is a personal view and shouldn’t be taken as financial advice.

The writer holds stock in Seeing Machines.

Top 15 institutional holders of SEE shares

The top 15 institutional shareholders of Seeing Machines (AIM: SEE), as at 30th September 2016, were:

Hargreaves Lansdown, stockbrokers 7.06%

Miton Asset Management 6.68%

Fidelity International 5.4%

Hunter Hall Investment Management 4.26% (updated following RNS 28/11/16)

TD Waterhouse, stockbrokers 4.01%

HSDL, stockbrokers 3.04%

Barclays, stockbrokers 2.93%

Bell Potter Securities 2.78%

AJ Bell, stockbrokers 2.30%

Legal & General Investment 2.25%

Polar Capital 2.17%

Australian National University Investment Office 1.87%

Herald Investment Management 1.67%

Phillip Securities 1.66%

HSBC 1.48%

Totall 49.56%

With VSI holding 12.08%, it appears that over 60% of SEE is quite tightly held. Therefore, on positive news flow the share price is likely to accelerate very quickly.

The writer holds stock in SEE.

Seeing Machines at a crossroads

Regular readers of this blog will know I’m very keen on Seeing Machines. However, its would-be spin-off, Fovio has been delayed for a few months now (it was intended to spin it off by July 1, 2016) and the costs are still being borne by the main business. Therefore, while Monday’s results show great progress in many areas I wanted to concentrate on the likelihood of its being ‘forced’ to raise cash in the very near future.

From my discussions with management it appears that the cash position is now A$11m. The present cash holding will be boosted by an in principle agreement with CAT to bring forward  US$7M by Christmas (for although the revenue was recognised in the 2016 accounts, the actual cash is spread out). In addition, there should be around A$4-$5m coming in from fleet sales to assist working capital.

Even if SEE were to carry the full cost of auto, which is estimated by the Lorne Daniel, analyst at house broker finnCap as A$14m, overall net spend will be A$25m in FY 2017. This means that although finance would be tight by next June the company isn’t compelled to fundraise immediately. 

According to SEE’s interim CFO, James Palmer: “The plan is still to spin off Fovio by Christmas. However, we can comfortably carry Fovio until June 30, 2017, which would give us ample time to go to a plan B if we need to. That is if plan A wasn’t working in the best interests of the shareholders and we had to look at an alternative structure.”

Chief Executive Ken Kroeger stressed: “The only thing that would change that is if we decided that a spin-out isn’t the best thing for current shareholders. We have invested another A$4m into automotive since year end and we’re not necessarily going to get more equity for that. In parallel to that, that $4m has delivered a whole lot of outcomes that we might not want to give away to somebody else and we are out there pursuing business that we could win between now and Christmas that would increase the value of the company, and which we might not want to give away at the current valuation.”

“Our view is that the delay, while consuming cash, is increasing the value of our business and unless that is properly recognised in the spin out, we have the ability to reshape that if we choose to,” added Kroeger.

Certainly, SEE seems keen to let potential investors know that it isn’t desperate for cash and its trump card is that the auto industry is desperate for its technology. Indeed, among auto OEMS, I understand that it’s only the Koreans that are not using its DMS technology. All the rest they are doing something with.

Fleet

Fleet is very important as aside from CAT it is the only part of the business currently generating revenues. In the year, ended 30 June 2016 it sold 1,666 units and already in the first quarter of its 2017 financial year it has managed to ramp up sales by approximately 3000 units, with a cumulative total of now 6,000 units sold.

Moreover, its pipeline of assessments continues to grow. At the end of June it had 34 on the go but when I sat down with Chief Operating Officer Paul Angelatos this week he joked: “We’ve not been sitting on our hands since the year end and in fleet we now have 45 assessments underway.” The total number of units this potentially represents is roughly 160,000. 

In addition, part of the strategy is to work with telematics providers in order to get sales in very large volumes as he explained: 

“Most of the large fleets we are working with already have a telematics solution installed, (tracking the vehicle, tracking driver behaviour in terms of harsh braking, cornering, acceleration, etc., with GPS and an ability to transmit data)…Our product development is now focused on being able to integrate with the existing technology, stripping further cost out of our product, reducing the complexity of installation but more importantly allowing us to access existing customer bases with these partners.”

SEE now has memorandums of understanding (MOU) with 3 telematics providers and is having preliminary discussions with a fourth. As Angelatos commented: “The strategic telematics partners that we are now talking to effectively give us access to an installed base of over 2m vehicles.”

“We should be able to return some revenue from these strategic partnerships this financial year. It won’t be significant but it does set us up for FY18, where we have the new product, we’ve proven the integration, we’ve proven that our technology works together, so we’ll be able then to access that volume market.”

In this financial year (2017), fleet revenues will be derived largely from direct sales and distributors.

“Typically our model now is selling as a service, so we are looking at a bundled subscription fee per vehicle each month which is in competitive with other Mobile Resource Management (MRM) solutions. This provides a customer with a hardware solution and the full suite of analytics and monitoring of their fleet,” added Angelatos.

“We have expectations of a certain number of units this financial year and next financial year it is an exponential increase based on the fact that we are going to be able to access some existing installed base with those partners plus new sales, ” he concluded.

Conclusion

It appears to me that that there is a possibility that if SEE doesn’t get the deal it wants for the auto spin-off very soon, one option could be to fund this division itself with a smallish capital raise in order to retain more value and control.

While this might appear fanciful, if revenues from Fleet continue to increase over the next few months, the amount to be raised for auto needn’t be hugely dilutive to existing shareholders. 

There certainly wouldn’t be any shortage of Silicon Valley VC capital willing to invest in SEE itself, not to mention mutual funds and private investors.

Moreover the upside it would be capturing and retaining for investors might well outweigh the short term effect of any dilution. Indeed, if a fund or company bought in at a premium that would be a very bullish sign.

What I would hate to see would be a dilutive fundraise followed by a share consolidation that wipes out long term private investors such as myself. Yet, I get no indication such a move is on the cards.

Certainly, concerns over cashflow have been holding it back for a good while now and it makes strategic sense to keep Fovio in-house, in my opinion.

An eventual flotation of the whole company on Nasdaq could then set it up for a meteoric rise. For example, just look at the mouth watering (US$9.2bn) valuation of Mobileye and ask yourself where SEE is likely to be a year from now.

This last thought is pure speculation on my part and there are a lot of hurdles to be surmounted before then. Still, whichever plan SEE chooses to  follow it is very much undervalued at its current share price.

As always, I’d advise that investors do their own research and not rely on the thoughts of others.

The writer holds stock in Seeing Machines.