Nemex Resources is a diversified asset portfolio with interests in minerals and technology sectors, including the biometric scanner technology developer Wavefront Biometric Technologies. Watch Alan Kohler put your questions to Dr. Shanny Dyer as he discusses the company's development of a groundbreaking biometric scanning technology using the eye's corneal map.
THIS IS AN UNEDITED TRANSCRIPT
AK: G’day. Welcome to Eureka Interactive and today we have Dr Shanny Dyer who is the forthcoming Managing Director of Nemex Resources. Well, it’s about Nemex Resources, but it’s a backdoor listing of a business called WaveFront which is an identification technology business that’s being put in to Nemex and Shanny Dyer is the Managing Director of WaveFront, soon-to-be Managing Director of Nemex. Is that correct?
SD: That’s correct. Yes.
AK: So we just need to understand the transaction, Shanny, just before we get on to what WaveFront is and how it works. And so perhaps we could just go back in time a little bit, just so we can sequence this, so people can perhaps understand it. WaveFront is a company that you are Chairman and CEO of, that owns this technology, but it’s actually already 40 per cent owned by Nemex. So when did that transaction take place?
SD: So April 2014 we were approached by Nemex who were looking for technologies that they could backlist in to the company.
AK: Really? Oh, so Nemex approached you?
SD: Yes.
AK: Because they wanted to become a technology business?
SD: Yeah. So Nemex Resources, an iron ore company – iron ore prices are softening – and so they’re looking for something that’s going to revitalise their company and they found us.
AK: Yeah well, they would have been going nowhere. They had iron ore mines in Guinea.
SD: Exactly, exactly. So they approached us. We were a company that had a very significant IP portfolio in the biometric space and they really liked it, so about April last year we signed an agreement with them where they would invest up to 51 per cent in to our company for cash and we would use that cash to develop our technology.
AK: And that would be new capital rather than a sale?
SD: Yeah. So it’s new capital in to our company. So for us, it was really exciting. It reinvigorated our company, enabling us to really take the company to a new space. The biometric industry was really blossoming and really growing, so we use that money to access an amazing market that just couldn’t get enough of the sort of technologies that we have.
AK: So how much are we talking?
SD: So $4.5 million. Yeah.
AK: And what did they get for that? 51 per cent or 40 per cent?
SD: So 51 per cent.
AK: Because they’ve 40 per cent now, right?
SD: They’ve got 40 per cent now. So then what happened is we did the development and basically we’re taking a technology that is an eye based biometric and we were taking that down to miniaturise it, so it can be used on mobile platforms such as mobile phones, laptops, etcetera because we saw that that was a really big market that we could address. So when they got up to 40 per cent, we had really good results, the technology was really getting traction and we went to them and said, look, let’s not go to the 51 per cent, let’s merge the company and really put the management team in to Nemex, so that we could really drive the business forward and really make money for the shareholders.
AK: Right. So that was… And they kind of said, okay?
SD: And they did. They did. We’d been talking to them for...
AK: Because at that point, they are a mining business that owns a bit of a technology company, right?
SD: Correct. Yeah. So we had a board and management team that, you know, had the experience in biometrics over seven years, so really what they were doing is saying, okay, you know your business, you know your industry, why don’t you guys come in and take over the business. So we negotiated that, finalised the heads of agreements in June of this year and we’ve now completed the share sale agreement that was announced to the market. And because the company is going from a resource stock to a tech stock, you’ve got to do a Chapters 1 and 2 relisting. So effectively we have to produce a prospectus, go through the whole process of ASX compliance and do a capital raise with that as well.
AK: Right. I see. So who are the shareholders of WaveFront?
SD: So the shareholders of WaveFront are comprised of the original inventors, founders of the business and investors of which I was one of the original investors in the company together with a couple of other of our directors.
AK: Right. And okay, so we’ll get on to that in a moment. And Nemex owners – obviously there are a couple of larger shareholders – so are they getting diluted out or are they staying with it or what? I mean how does the transaction, the 40 per cent to a hundred per cent work? Is that a share transaction or cash?
SD: That’s a share transaction, so it’s a scrip for scrip effectively. So we anticipated that they would have had 51 per cent of our company, so we effectively would be looking to get scrip that matched to 49 per cent. And so there are approximately 220 million shares in Nemex currently, so we’d be looking to expand that share base with the shares brought in and converted in to Nemex shares.
AK: So the WaveFront owners, shareholders will end up with 49 per cent of the company?
SD: Yes.
AK: And the original Nemex shareholders will in total have 51 per cent?
SD: Correct. Yeah.
AK: Right.
SD: But then we’re going to be doing a capital raise which will be looking at another dilution of about 20 per cent, but…
AK: How much for?
SD: Yeah. So that’s about 50 million shares that they would – no, sorry – 20 per cent of the total, so that’s about 100 million shares would be…
AK: At what price? I’m just wondering how much money you’re going to raise now? You don’t know?
SD: Yeah look, I can tell you a raise of between $5 million and $9 million. The price will be released today, so I’m...
AK: Oh, I see. Okay.
SD: Yeah, yeah. So I can’t really tell you yet.
AK: Damn. Oh, well, never mind.
SD: I’m sorry. I’m sorry, but yeah, no.
AK: No, but the share price on the market is about eight cents or nine cents, right?
SD: The share price is around eight and a half cents at the moment, but the Notice of Meaning will be coming out shortly. It’s lodged with the ASX now and that information will come out for all shareholders shortly.
AK: And what happens to the iron ore businesses? They just get sold or what?
SD: So the iron ore businesses will be sold. Some of the rigs, etcetera associated with the iron ore have been already sold. And the tenements will also be sold off and the money from those tenements will come back in to the company.
AK: Yeah, right. So it will be entirely WaveFront?
SD: Yes.
AK: And presumably the name will change to WaveFront?
SD: Yeah. So we’ve put in to change the name to WaveFront Biometric Limited. It’s not very different to what we’ve got at the moment, but the name has got currency in the market now. People, particularly the investors in Nemex over the last year have really been excited about our technology, seeing what we’re doing and how we’ve been progressing, so we thought we would keep the name, WaveFront.
AK: Yeah, sure. So you had better tell us about the technology? What does it do?
SD: Yeah. So this is a technology that is a biometric, so it’s about identification. And if you think about how you interact with the world these days, it’s not just about, you know, you going and presenting yourself to the bank; it’s online transactions. You know, there’s a lot more interest in understanding who you really are, you know, as you go through border security. So there’s a whole range of things that are… It’s not just about, you know, going with a piece of paper and saying that you’re Alan Kohler; it’s about using who you are and identifying you from your characteristics. And we do that using your eye. So out in the market already there’s a thing, iris recognition. That’s been in the market…
AK: Yeah. And there are fingerprints.
SD: And there are fingerprints, so on your phone, and various other things. So what we know is that iris has been a very good biometric. Fingerprint has been a very, very well used biometric, but it doesn’t have the level of security and safety around it that the market is wanting.
AK: Why not? Every fingerprint is different, you know. I’m just wondering what’s the problem that your technology solves?
SD: Yeah. So the problem that we’re solving is you have a biometric, you have an identity, but that can be easily spoofed. So, for example, on your iPhone if you’ve got an iPhone 6, you’ve got a fingerprint; that was spoofed within 12 hours of the phone being released.
AK: Really?
SD: Yeah.
AK: Damn. No, but how? I mean my fingerprint is my fingerprint.
SD: It is your fingerprint, but when you put your finger on the button, you left your print on the button, so a copy of your fingerprint is there. But that’s not the only way of doing it. Equally, the information about your fingerprint is stored in a database. Just recently you may have heard that in the US the department of personal security, personal management [Office of Personnel Management] had their database hacked. Social security numbers together with fingerprints of 21 million people were stolen. Now, that information unfortunately because the fingerprint can be defined can then be reused. So the information is lost. So what we have is we have an eye based biometric, an eye based method for identifying people that utilises characteristics of your iris and your iris is the coloured part of your eye, so that sits in front, but in front of your iris is a structure called the cornea and so together we know that the iris has features that have been used for 20-odd years to provide a biometric, so you take a photograph of your eye using near infrared radiation which is a light outside the visible spectrum, okay, but what we’ve done is we’ve taken the iris information, we’ve captured that using visible light and we’ve combined that with the cornea which is the dome structure in front of your eye. Now, interestingly it’s a dome structure, but it has unique features and contours on it that we can capture using our technology and identify you from anybody else in the world. So, but not only that, combining those two together, because they’re in front of each other, we can capture that with one camera and a camera that you already have on your phone, your laptop or any other device.
AK: So I could be identified by my computer by just looking in to that.
SD: Yeah. It’s amazing, isn’t it?
AK: No, but that’s… because presumably that’s the deal. That’s what makes your thing useful because it’s easier to use or something, is that right?
SD: Yeah look, it’s easier to use, but more importantly it gives you that added level of security that fingerprint… because your information from your eye can’t be as easily stolen from you. There’s another aspect that makes it really exciting as well is that with the cornea… Every time you blink you put a tear film over your eye, so it keeps your eye healthy and moist, but every time you blink that moisture just changes slightly because it’s got a complex of molecules in it. The way we capture the information from the cornea is using reflected light, so each time we capture that information the information that we convert in to numbers is just slightly different every time. So you’d say, well, Janny, that’s not good because if the information is different every time, then you don’t have… aren’t able to confirm an identity. But the important thing about that is that if you have it just slightly different, it might be different, but the next closest person to you is very different, so you’ll never by confused with somebody else because your information is slightly different, but it’s always you because you’re closest match. So it’s very important because what that does is it stops people from taking an image and putting that in front of the camera and saying, well, there’s my eye because one, the information if replayed back to the database is exactly the same, we’ll know that you’ve stolen that data.
AK: Right. So it has to be slightly different?
SD: It has to be slightly different, yeah, and it is every time slightly different.
AK: And if it’s not slightly different, it will get rejected?
SD: Yeah.
AK: Right.
SD: So it gives you…
AK: That’s cool.
SD: It is really cool and if you think about it, the eye is an extension of your brain which is pretty scary, but it is very uniquely you and probably the thing that’s more unique to you than the eye would be your DNA, but of course that takes a lot longer to do. So we’re looking for something that we can give you the highest level of security captured as quickly and as easily as possible in a form that is not so easily hacked as the current technologies out there.
AK: I’m getting so many questions from the audience already. It’s great.
SD: Okay. Let’s get some questions.
AK: So the first one was from Serge, Dr Shanny, I believe we have (so he’s a ‘we’ here, so I presume he’s a shareholder) we have probably one of the best, if not the best, biometric technologies on the market at the moment. When do you believe WBT will announce or reveal who is actually trialling the technology and when can we expect these companies to take this technology on and let the public know?
SD: Yes, Serge. Look, it’s one of these things. So we have been out and we’ve spoken to partners and unfortunately they bind us up with confidentiality, so we can’t tell our shareholders right at the moment whom we’re speaking to, but…
AK: But I take it you’re not making any money at the moment, right?
SD: No, we’re pre revenue at the moment, so yeah.
AK: Pre revenue, right.
SD: Yeah, it’s sad, but look, it’s exciting, Alan, because you know we’ve… And I’ve seen from the discussions from our shareholders that they really get what we’re doing. I really appreciate that the shareholders are doing research on our company, they’re doing research on the market and they’re really understanding that what’s out there in the market has, you know, shortfalls that our technology can address.
AK: So Igs (if that’s correct, Igs) anyway has asked a question that you probably can answer hopefully, once final testing is complete, how soon do you believe the first deal will be signed? How many companies have shown interest in the technology? Can we answer that one?
SD: So how long will it take? So we’ve given ourselves a runway of between six months and nine months once we’ve completed the testing that we’re doing at the moment. How quickly will we sign up or how many companies are we dealing… We’re talking to a significant number of companies and those companies range from companies and industries that are high security down to companies that are interested in more the mass market. So if you talk about…
AK: So how many? Can we know how many? Lots? Some?
SD: Lots. I’d say we’re in active discussions with eight companies.
AK: Right. Okay. And Bay Breeze (if that’s a name) has asked, has the company been approached by any automotive companies who may be interested in incorporating the technology?
SD: We’re aware of the automotive industry. We haven’t spoken to them at this stage.
AK: This would presumably be instead of keys?
SD: Well, it’s already keyless, isn’t it, getting in to cars.
AK: No, but you’ve got to have the key in your pocket still, right?
SD: Yeah. Yeah, exactly, exactly. Yeah.
AK: So, but if… presumably if you can just look at it, a camera on the door?
SD: Yeah. Yeah. Interestingly, Alan, when we did the analysis of, you know, the market, there were so many places in the market place that we could use this sort of technology, it was overwhelming. So as part of our strategy we’ve looked across the length and breadth of the industries and we’ve selected three key areas and those key areas are kind of government and military because they’re looking for very high level security, right down to the end which is more the consumer market, your mobile platforms, your mobile devices, and in the midst of that are your enterprises and companies who are interested in securing their data because they realise that, you know, breaches of data, you know, for banks and for companies holding credit card information, for example, can be a real problem.
AK: Bay Breeze is peppering us with questions.
SD: Got to keep it fair for everybody, so that they can all get a chance.
AK: No, no. That’s true, but there are a couple of good questions here from Bay Breeze. He or she says, with the ongoing testing of performance improvements, have the technical team improved the false acceptance and rejection rates from those figures that have previously been stated?
SD: Yes. Yes, we have. So that information hasn’t been released yet, but we are in a position now that our results are comparable and moving to be comparable to the best in the market at the moment.
AK: So what is the best in the market at the moment?
SD: So at the moment iris is the best performing technology in the market and a number of companies have released already iris-only technology on mobile phones using, and to be clear, a near infrared camera, so it’s a separate camera to what you have on your device and so it’s not something that can be as easily incorporated in to a standard device.
AK: Because your thing uses the ordinary camera?
SD: Yeah. Yeah.
AK: And so it’s all about the Apple, the software inside the device?
SD: Yeah. So the other aspect of what we can do is… Currently to capture the image from the cornea, we reflect light on to your cornea and capture the light reflected back from your eye and that captures the contours and so we can mathematically then turn that in to numbers and then get a figure that will be information that we can store.
AK: So what is the false acceptance rate?
SD: So we’ve had a zero false acceptance rate.
AK: Zero?
SD: Yeah.
AK: Well, that’s okay.
SD: So that’s not bad. That’s not bad. Exactly. But the more important measure is the equal error rate, so that – and I don’t want to get too technical with this, but I know our shareholders have gotten right in to this – is the point where the false acceptance rate and the false rejection rate meet. So it’s a way of reducing those two very important figures, you know.
AK: Oh, so you do get false rejections, do you?
SD: At this stage until we’ve finished refining the technology, we have some errors there, but we know that we can address those. So everybody gets some kind of false rejection and false acceptance, but where we’re moving towards is getting an exceptionally high capability and false acceptance rate and false rejection rate and therefore an equal error rate.
AK: Someone asks, how much further is there to go before the WaveFront technology will be seen in mainstream technology? And how much cash are you burning at the moment? So that’s a good question that I should have asked beforehand. How much cash are you burning?
SD: Yeah. So currently we’re a private company, so…
AK: Oh, so you don’t have to tell me.
SD: I don’t have to tell you. That’s right.
AK: But you do because you’re becoming a public company.
SD: I’m coming in. Yeah, yeah.
AK: So tell us.
SD: So the plan is to I guess spend… Do you want monthly or…?
AK: Yeah, monthly burn rate.
SD: So our monthly burn rate would be in the order of $100,000 a month at this stage, so that will…
AK: And how long will that go on for?
SD: So we’ve set out a path, a three year path and then a two year path that we would be looking to use the funds that we’re currently looking to raise at this stage and we believe that we’ll be looking to start getting revenue in that 24 month period, so we’ll be burning...
AK: So on the current plan, is the cash that you’re raising now will be enough?
SD: So the cash we’re going to be raising is sufficient to get us through to where we need to be, but of course we’ve been conservative in that because we want to make sure that, you know, we do have sufficient cash.
AK: Ben says, is there a way to fudge someone else’s corneal map?
SD: It would be exceedingly difficult. The issue there is that the map is one thing, but it’s actually the light reflected off the tear film of the corneal topography that is how we’re capturing the information, so you might get a… you might make a mould of a cornea, but that’s exceedingly difficult to do and even if… I can imagine a question might come out around contact lenses. You know, could somebody put a contact lens on and falsify the information? In fact, the contact lens takes the contour of your cornea, so if...
AK: Oh, so if somebody has got a contact lens, it still works, your technology.
SD: Yeah, so you enrol with your contact lens on and that’s your reading, so we can still do it with a contact lens on. But you’d do it with your contact lens on or in or your contact lens out.
AK: Goodness.
SD: Too many questions?
AK: The questions are flashing past. Igs again, given so many applications for this technology, would you limit only one user at a time, so one mobile phone company or would you simply offer it to anyone?
SD: Look, that’s in our strategy and part of…
AK: What is?
SD: How we will non-exclusively licence. And those discussions are going to be important about how we can roll out our technology. We haven’t and I can’t tell you which way we’re going to go at this stage, but we’re looking at both options of doing it exclusively or non-exclusively, but our partners or the mobile phone manufacturers will obviously have a lot to say about that because, for them too, having a capability to, you know, protect their phone or protect the owner of that phone’s information is going to be a good selling point for them as well, so not only is it a security device, it’s a marketing tool.
AK: Sure.
SD: So getting a really good technology in to a phone will be a way of selling phones, so particularly as we do our financial transactions on phones and on laptops and things, that point is going to be really important for people moving forward.
AK: Tracy’s got a good question, will it work with people suffering from dry eye syndrome where the tear film is reduced? I mean and it really raises questions about having lodged your corneal map, what if you get conjunctivitis or something happens or you get dry eye?
SD: Yeah. So, you know, if you’ve got dry eye, then usually you put some kind of… you know, Systane or drops in to your… Oh, you probably can’t mention proprietary names, can you?
AK: Oh, you certainly can, whatever.
SD: It’s not the ABC, is it?
AK: No.
SD: So you put your eye drops in and that will provide sufficient moisture to affect that…
AK: Okay. But is there anything that can happen to your eye that means that you won’t be recognised?
SD: Yeah. So if you have laser surgery that changes the shape of your cornea, you’d need to re-enrol, so the information and the shape of your cornea will be different.
AK: But how would you re-enrol if you’re being recognised by your eye and it’s changed?
SD: So you would go in and say, okay, I’m Alan Kohler, I’ve just had my eyes done. You would go in and basically get your information re-established.
AK: Okay. What happens if my phone isn’t working and I can’t get in to my house or car because I can’t scan my eye?, says Hugh.
SD: Well…
AK: Yeah, so you’re probably not worried about that?
SD: No. No, not really.
AK: Eileen says, so the maps of the cornea presumably need to be stored somewhere in order for the technology to recognise you? How are you working to protect that information?
SD: So we don’t store the corneal map. What we store is the information which is light reflected off the tear film. So what we’ll have as an authentication is a series of enrolments that you do for your authentication and each time that information is slightly different. So you’ll have a set of data that’s you and they’ll all be just slightly different, so if somebody stole that information and they said, well okay, I’ll take that and I’ll replay that back and, you know, try and get in to somebody else’s phone, for example, and they replayed that information back, you know, exactly as it was, then we reject it because, again, you can never have the information exactly the same.
AK: Right.
SD: Yeah. So we’re not storing your topography, we’re storing the bouncing light off that topography and capturing the differences that that light reflects off your cornea because of the undulating patterns on the surface of your tear film.
AK: It’s a helluva thing.
SD: It’s a helluva thing. But the thing about it is that it’s not complicated; it sounds complicated, but in fact it’s really quite simple.
AK: The guy who invented it, Stephen Mason?
SD: Yeah, he’s a really clever guy.
AK: But is he still in the company?
SD: Yes, he is. Yeah, he’s still a major shareholder in the company. He’s actively involved in the company. An incredibly bright guy, he’s, you know, had a series of inventions and in fact, you know, whilst we’ve lodged a number of patents that protect our work, he’s still coming up with more ideas on how we can pull together the information from the iris and the cornea and so we will be looking to continue an R and D programme of activity that will capture all these new ideas. It’s just a font of information and ideas.
AK: So I’m going a bit over time here, but that’s okay because we’re getting good questions and I do want to give everyone a chance. So Seth says, do devices have to be fitted with the technology or is the reader just going to be a software add or download?
SD: Yeah. So that’s a really good question. So at the moment because we’re needing to project light on to the cornea to capture that information back, we have a hardware and a software component. So what we’re moving to in this next phase of funding and under the use of funds we’ll be looking to move to a software only.
AK: Can you do that?
SD: So at the moment we know how to do it, but we haven’t done it. At the moment we have…
AK: Because I would have thought you’d have to do that.
SD: Software only?
AK: Because nobody’s going to add some hardware to the phone. You know, that’s quite a big deal.
SD: Yeah, that is a big deal. Exactly. So our approach is to… But that’s for the consumer market. Certainly for markets where, you know, high assurance of identity is required, that’s just a small step because it is just one technology. But, again, it’s a biometric that’s a multifactor biometric captured by one simple camera as opposed to, you know, going through using multiple factors such as fingerprint that you do when you go through customs in the US. You’re fingerprinting here and then you’re doing facial recognition here. You’ve got a device there. You’ve got a device there. There are two things. And what we’ve got is a multifactor in one, captured in one image. So cost-wise as well, that’s going to be more efficient because you’re not having to have multiple things. So at the moment, yes, we have a hardware component, but we are looking to move to a software, so we basically put our algorithm in to the cloud and then have a business model that will enable us to deliver our technology more simply to our customers.
AK: Another good question from Rod this time – it looks to be the last of them, who are your competitors in this space? Surely other tech giants like Apple or Google are working on their own versions of something like this?
SD: Yeah. So we are talking to very large companies who are interested in our technologies. There are, as I said before, iris technologies, iris recognition already out there in the market. Obviously fingerprint is out in the market. There’s also facial recognition. There’s voice recognition. So there’s a multiple number of ways that you can gather biometric data. All of them have their strengths and their weaknesses and what we’re saying with our technology is that we’ve identified where the strengths are and where the weaknesses are and we’ve ensured that when we’ve delivered our technology, we’re covering off the weaknesses that the others have and that’s around liveness and being able to steal data and…
AK: You mean about whether someone’s alive?
SD: Yeah. Well, we call it liveness. It’s are you an avatar?
AK: You haven’t chopped off someone’s finger.
SD: Well, they do that in the movies, don’t they?
AK: They do.
SD: And I think even in, was it, “Minority Report”, they transplanted an eye and, you know, that would be a problem, but I think that’s quite extreme. So we do have a number of competitors out there. One thing we will say before we finish up is that, you know, in our trips off to the US it’s very apparent that they are much more aware of the issues of identification, authentication of identity than we are here in Australia. Major companies that we spoke to had whole departments of people whose sole responsibility was biometrics and I’m talking very big companies. So, you know, international, global players see this as a very important area, they’re investing a lot of money in it and they’re really reviewing and analysing a lot of the technologies. Because where we want to be in the future is being able to secure our information, secure our identity, you know, keep our children safe, you know, keep our money safe and by having a very good way of authenticating your identity that’s you and not anybody else is going to be really important.
AK: So perhaps just finally you should explain to us your patent protection.
SD: Yeah, yeah. So we filed our original patent around the cornea back in 2007. We filed another patent more recently in April this year that combines the cornea that we had and we’re… really we own the cornea – there are no other competing patents there, but we’ve developed our own algorithm in relation to the iris, so we’ve now got a patent that covers a multimodal biometric which covers our cornea that we’ve had before and now our features of the iris invisible light.
AK: So are you saying that nobody else can do a corneal map ID system?
SD: Nobody can use the cornea to authenticate… Corneal topography is something that’s used in optometry practices to fit contact lenses and to just understand the health of your eye, but for the biometric application we have patents that cover off the different aspects of the features of the cornea, so that nobody else can use that.
AK: I think that’s it.
SD: Okay.
AK: No more questions. Thanks very much, Shanny.
SD: That’s a pleasure. Thanks, Alan.
AK: And thank you.
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