brainchip files 2016 annual report - content.equisolve.net · 3/31/2017  · technology, hardware...

PRESS RELEASE

BrainChipFiles2016AnnualReport

AlisoViejo,CA–March31,2017,BrainChipHoldingsLtd.(ASX:BRN),(“BrainChip”or“theCompany”),isaleadingdeveloperofsoftwareandhardwareacceleratedsolutionsforAdvancedArtificialIntelligenceandMachineLearningapplications.TheCompanyhasdevelopedarevolutionarynewSpikingNeuronAdaptiveProcessor(SNAP)technologythatcanlearnautonomously,evolveandassociateinformationjustlikethehumanbrain.Thetechnology,whichisproprietary,isfast,completelydigital,andconsumesverylowpower.TargetmarketsincludeCivilandCommercialSurveillance,aswellasMachineLearning.

OnMarch30,2017,theCompanyissuedits2016AnnualReport.TheAnnualReportfeaturesanoperationalreview(lettertoshareholders)bytheCompany’sPresidentandChiefExecutiveOfficerLouisDiNardo,inwhichhehighlightsthesignificantprogressBrainChiphasmadewithregardtofurthercommercializationandrevenuegrowth.Overthepastyear,theCompanyhasdevelopedasolidstrategicplan;andhasmadeimportantpracticaladvanceswithregardtomarketselection,productdefinition,andtechnologydevelopment,puttingBrainChipinanexcellentpositionforgrowthin2017.

TheAnnualReportandoperationalreviewareavailableatthefollowingURL:http://ir.brainchipinc.com/asx-announcements.

Thefulltextoftheletterfollows:

ReviewofOperations

During2016,BrainChiptooksignificantstepstodevelopastrategicplanthatfocusesonmarketselection,productdefinition,researchanddevelopmentandbuildingateamthatcanexecuteasoundcommercializationstrategy.Wehavefieldprovensoftwareandalgorithms,anextensivenewproductpipelinethatwillbringSNAPtechnologytotheforefrontofbest-in-classArtificialIntelligencesolutions,andagrowinglistofmarqueecustomersandpartners:

MarketsSelection

ThemarketforArtificialIntelligencesolutionsisbroad.CurrentsolutionsincludeDeepLearning,whichcurrentlyrequiresextremelylargedatasetsandlongtrainingregimens,AutonomousSupervisedLearningforfeatureextractionandpatternrecognitionwithsmallsamplesets,andAutonomousUnsupervisedLearningwhennosamplesetexists.WithourproprietarySpikingNeuralNetwork,BrainChipexcelsinAutonomousLearning(SupervisedorUnsupervised).Oursignificantcompetitiveadvantagesarebasedonthecombinationofwell-developedalgorithmsandourhardware-basedprocessor.Mostimportantoftheseadvantagesisthespeedatwhichwecanextractafeatureoridentifyapatternwithinaverysmallsampleset.Fromasinglescreen-shotwecanreviewinreal-time,orfromstorageofmanyhoursofvideoorimages,andidentifyafaceorpatternwithgreataccuracy.

BrainChiphasmadethedecisiontofocusoursalesandmarketingeffortinitiallyonvisualapplicationsinCivilandCommercialSurveillanceaswellasMachineLearning.Thisdecisionisbasedonthelargesizeofthemarket,themissioncriticalandimmediatedemandspresentedbythethreatofterrorismandcrime,andmanufacturingefficacy.OurSNAPtechnologyisalsowellsuitedforapplicationsinFinTech(FinancialTechnology)suchascommoditiesandhigh-frequencytradinganalysisaswellasHighPerformanceComputing(HPC)fordataanalysisingenomics,seismicanalysis,naturalresourceextractionandcybersecurity.

CivilSurveillance

CivilSurveillanceincludesAutonomousFeatureExtraction(AFE)andPatternRecognitionforLawEnforcementandHomelandSecurity,AirportSecurity,aswellasSchoolCampusSecurity.BrainChiphasexistingcustomersineachofthesecategoriesincludingtheParisDepartmentofMunicipalLawEnforcementandtheFrenchDepartmentofHomelandSecurity(theDHS).OurworkwiththeDHShasresultedintheirissuanceofastrongformalendorsementfortheCompany’sFacialandPatternRecognitionproducts.During2016webuiltuponthisendorsementandaddednewcapabilitiesthatservetheircriticalrequirementsinfightingthethreatofterrorism.WecontinuetoworkwiththeDHStoaddimprovementsinfacialrecognitionandreal-timeanalysisoflivevideostreams.

WealsohaveexistingcustomersintheAirportSecuritysector.InBordeaux,France,BrainChipservestherequirementsforperimeterintrusionandairplanesecurityattheBordeaux-MerignacAirport.Ourearlysuccessinservicingtheseneedshasresultedinastrongformalendorsementfromthiscustomer.Also,inGeneva,SwitzerlandweservetherequirementsoftheOperationsCentreforPassengerandRestrictedAreaSurveillanceattheGenevaInternationalAirport.

Finally,in2016,BrainChipmadesignificantinroadsintotheareaofSchoolCampusSecurity.WecurrentlyhaveoneschoolinNewYork,U.S.,andanothermunicipalschooldistrictinNewYork,U.S.,wheretechnicalspecificationsarebeingreviewed.Deploymentforthesecustomersisexpectedin2017.

CommercialSurveillance

CommercialSurveillanceincludesCasinoGaming,AdvertisingTracking,ConsumerBehavior,andVehicleDetection.In2016,BrainChipaddedcustomersintheCasinoGamingmarket.Thefirstofthesecustomers,locatedinLasVegas,Nevada,U.S,isoneofthelargestcasinoswithintheMGMGroup(theMGMGroupisoneofthelargestownersofcasinosinNorthAmerica).BrainChipaddedanothersignificantCasinoGamingcustomerin2016,MoheganSun,locatedinUncasville,Connecticut,U.S.MoheganSunisoneofthelargestindependentcasinooperatorsintheU.S.WehavereceivednumerousinquiriesaboutourGameOutcomesolutionfromcasinooperatorsaroundtheworldandwearepursuingnewopportunitiesinthisspace.OurGameStatisticssolutionwillbeaggressivelymarketedtonewandexistingcustomersin2017.Weestimatethatthereareover2,600casinosworldwideandover50,000gamingtablesthatwouldbenefitfromtheuseofBrainChipsolutions.

In2016,BrainChipadvanceditsinvolvementintheVehicleDetectionarena.TheCompanyiscurrentlycollaboratingwiththeCiscoInternetInnovationCenterandCurtainUniversityinWesternAustralia(CIIC)onatwo-phaseproject.Phase1involvesvehicledetectionandidentification.Phase2involvesanin-vehiclecameratohelpdriversbetterunderstandtheirdrivingbehaviorandhabits.Thisprojectisunderwayandonschedule.InadditiontoourworkwithCisco,weareworkingwithmajorautomobilemanufacturersand/ortheirsuppliersonthepotentialdeploymentofourtechnologyinconjunctionwiththeirdevelopmentofautonomousvehiclesandAdvancedDriverAssistanceSystems(ADAS).

MachineLearning

MachineLearningincludesMachineVisionandahostofotheropportunitiesindataanalyticsforfinancialtransactions,genomics,seismic,naturalresourceanalyticsandcybersecurity.In2016,theCompanymadeimportantadvanceswithregardtoMachineVision.Specifically,weareengagedwithcustomersthatrequirevisualinspectionforhighvolumemanufacturingaswellasmissioncriticalassemblies.Safran,headquarteredinParisandoneofFrance’slargestindustrialcompaniesintheaeronauticssector,usesourAutonomousFeatureExtraction(AFE)andPatternRecognitioncompetencyinacomplexassemblyprocesstoensurequalityandreliabilityofthesystem.OurcurrentstrategyistoexpandourpresenceinMachineLearningandVisualInspectionwiththedevelopmentofautonomousdronesthatcaninspectinfrastructureandlargefacilitiesaswellastransportationofproductsinthenaturalresourcesindustry.

BrainChipbelievesthattherearenumerousotheropportunitiesfortheCompanytopursueinthenaturalresourcesindustry.Inordertoadvancethisagenda,wesignedanagreementin2016withAdvisian,aconsultinggroupwithintheWorleyParsonsCorporation.TheobjectiveofthisagreementistoexploreandcapitalizeonimportantopportunitiesforourSNAPtechnology.Asourhardwaresolution,SNAPvision,becomesavailablein2017,andthismarketwillbeamajorfocus.

ProductDefinition

On15September2016,BrainChipannouncedtheacquisitionofSpikenetTechnology,locatedinToulouse,France.Spikenethasbeenaproviderofsoftware-basedneuralnetworkingtechnologysinceitsinceptionin1999.ThecompanyhaswelldevelopedrelationshipsinCivilSurveillance,CommercialSurveillance,andMachineVision.ThepurposeoftheacquisitionwastoaccelerateBrainChip’sproductdevelopmentplanbyintegratingtheSpikenetalgorithmswiththeBrainChipSpikingNeuralAdaptiveProcessor(SNAP)andlearningrules.BrainChipiswellpositionedtodemonstrateleadershipproductsinabroadrangeofArtificialIntelligenceapplications.TheCompany’sproductroadmapisdepictedasfollows:

Theintegrationofthesetechnologieswillprovideauniquehigh-speed,low-powerimageandvideoprocessingplatformforAutonomousFeatureExtraction(AFE)andpatternrecognitionapplications.TheculminationofthisintegrationwillresultinaFieldProgrammableGateArray(FPGA)SNAPsolutionthatcoversawide-rangeofcomplexityandcostpoints.BrainChiphasdefineda4-Channel,8-Channeland16-ChannelfamilyofproductsthatarePCIeplug-incardsforLinuxorWindowsvideoserverswhichshouldopenupawidevarietyofpotentialcustomerstotheCompany.ArepresentationoftheBrainChipFPGAisdepictedinthefigurebelow:

Illustrationonly–implementedonanFPGA

ResearchandDevelopment

ResearchandDevelopment(R&D)includesneuromorphicsemiconductordevelopmentandneuralcomputing,algorithmdevelopment,software,andhardwaredevelopmentaswellasintegrationengineering.BrainChipnowhastwodesigncentersinwhichtheCompany’sR&Dactivitiestakeplace.ThefirstcenterisinToulouse,Francewherewehaveateamofhighlyskilledengineersthatfocusonalgorithmandsoftwaredevelopment.ThisteamhasdevelopedFacialandPatternRecognitiontechnologythathasbeencommerciallydeployedandisbasedonseveralgenerationsofdevelopment.ThesecondR&DcenterislocatedinAlisoViejo,California,U.S.Thisteamcomprisesasimilarlyhighlyskilledgroupofengineerswhofocusonneuromorphicsemiconductortechnology,hardwaredevelopmentandsystemsolutions.During2016andcontinuingin2017,wewilladdsignificantresourcesinallareasofR&D.

Inthefirstquarterof2017,weannouncedanexclusivelicensetonext-generationlearningrules(JAST)andhardwareimplementationfortheCERCOMindandBrainCognitionResearchCenterinToulouse,France.ThisexclusivelicenseprovidesBrainChipanewplatformforAutonomousUnsupervisedLearning.ThistechnologywillbeimplementedontheBrainChipSNAPsolution.Theresultofthisintegrationwillbeanunparalleledcapabilityforreal-timeanalyticsofvideoandimages,audio,andotherdatastreams.

HumanResources

HumanResourcesincludestheestablishmentofamanagementteam,recruitingandretainingtopengineeringtalentandstrengtheningourBoardofDirectors.During2016,managementandtheBoardofDirectorshasfocusedonrecruitingafullmanagementteamandexpandingtheskillsetsalreadyrepresentedontheCompany’sBoardofDirectors.TheCompanycurrentlyemploys24peopleandhasaddedseniorengineeringtalentinAlisoViejo,California,U.S.andToulouse,France,allofwhichhavesignificantexperienceintheirrespectiveareas.

ManagementandProfessionalStaff

Inthefourthquarteroftheyear,IwashiredasCEOoftheCompany,relievingPetervanderMadewhoperformedtheCEOroleonaninterimbasisinconcertwithhisotherpermanentresponsibilitiesastheChiefTechnologyOfficer.

BrainChipalsoaddedaUS-basedseniorfinanceprofessionaltoitsteamthisyear,CossetteDrossler.Ms.DrosslerjoinedtheCompanyinNovemberof2016asVicePresidentofFinanceandAdministration.Ms.Drosslerhas30yearsofexperienceasafinanceandaccountingexecutiveintheSanFranciscoBayArea,CaliforniaU.S.

Inthefirstquarterof2017theCompanyhiredRobertBeachlerwhohasjoinedtheCompanyasSeniorVicePresidentofMarketingandBusinessDevelopment.Mr.Beachler,aSiliconValleyveteranwithover30yearsofsuccessindevelopingandmarketingcutting-edgetechnologies,isanimportanthireinsupportoftheCompany’smissionforgrowth.Hisbackgroundincludesmorethan16yearsofexperienceinavarietyofengineeringandmarketingrolesatAlteraCorporation,aleadingproviderofFieldProgrammableGateArrays(FPGA)productswhichwasacquiredbyIntelCorporationin2015foroverUS$16billion.HehasalsoservedasVice-PresidentofMarketing,Operations,andSystemsDesignatStretchInc.,aproviderofembeddedvideoprocessingsolutionsupuntilitsacquisitionbyExarCorporation.WhileatExar,Mr.BeachlerservedasVicePresidentofCorporateMarketingandBusinessDevelopment.Mostrecently,Mr.BeachlerservedatXilinxCorporation,theleadingworldwideindependentproviderofFPGAproductswhereheledthe

marketingofimaging,videoandmachinelearningsolutionsforindustrial,scientific,andmedicalmarkets.

BoardofDirectors

InNovemberof2016,theBoardofDirectorsrecruitedJulieH.Stein,ahighlyseasoned,US-basedfinanceprofessional.Ms.SteinbeganhercareeratGoldmanSachsin1981.Subsequently,shejoinedtheinvestmentbankingfirmofSalomonBrothers.Sheco-foundedtheinvestmentanddevelopmentfirmofSKSInvestmentsin1992andsuccessfullyexecutedaseriesofjointventureswithmajorglobalinstitutionalinvestors.Overthecourseofhercareer,Ms.Steinhasbeeninvolvedwiththeunderwriting,negotiating,structuringand/orplacementoffinancialtransactionsaggregatingoverUS$10billion.Inadditiontoholdinganumberofadvanceddegrees,Ms.SteinisaNationalAssociationofCorporateDirectors(NACD)LeadershipFellowandholdsaCertificatefromStanfordUniversityDirectors'College.

Conclusion

Insummary,BrainChipmadesignificantprogressin2016.TheCompanyhasdevelopedasolidstrategicplanwithregardtomarketselection,productdefinition,technologydevelopmentandbuildingateamdesignedforcommercializationandgrowth.TheCompanyhasmadeimportantpracticaladvancesineachoftheseareasin2016,puttingBrainChipinanexcellentpositionforgrowthin2017.Importantly,wehavegloballeadersworkingwithustodefineproductsandwehaveanexcellentdesignteam.Wearenowbuildingabest-in-classsalesandmarketingorganizationtodrivefurthercommercializationandrevenuegrowth.

Sincerely,

LouisDiNardo

BrainChip

PresidentandChiefExecutiveOfficer

AboutBrainChipHoldingsLtd(ASX:BRN)

BrainChipisaleadingproviderofsoftwareandhardwareacceleratedsolutionsforAdvancedArtificialIntelligenceandMachineLearningapplications.TheCompany’sSpikingNeuralAdaptiveProcessor(SNAP)canlearnautonomouslywithasmallsamplesetandprovidereal-timeinformation,dataanalyticsandknowledgeinimageandvideoprocessingapplications,highfrequencydatastreamsforfinancialanalysisandevent,speech,andspeakerrecognitionfromaudiosources.BrainChip’sSNAPtechnologycanquicklylearn,recognize,andtrackeventsinrealtimefrommultiplesourcesandidentifyrepeatingpatternsincomplexdatastreams.TheCompanycurrentlyprovidessoftwareandhardwareacceleratedsolutionsthataddresshigh-performancerequirementsinCivilSurveillance,FacialRecognition,andVisualInspectionsystems.Futuresolutionsincludeaudioanalyticsanddeeplearningforfinancialandotherdataintensiveapplications.www.brainchipinc.com.

CompanyContact:CossetteDrosslerVPFinanceandAdministration+1(949)330-6754

InvestorContact:LauraGuerrant-OiyePrincipalGuerrantAssociates+1(808)960-2642lguerrant@guerrantir.com

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