March 12, 2010
Image Metrics Goes Public With Reverse Merger

Image Metrics Inc., whose facial animation software was used to reverse-age Brad Pitt in "The Curious Case of Benjamin Button," has entered into a reverse merger agreement with a publicly held shell company and secured $8 million in new financing.

A reverse merger has been the 10-year-old company's strategy for about two years. It believes that operating as a public entity will enable it to grow through acquisition - allocating stock to its targets - and improve the business' status in the eyes of customers and potential investors.

The public shell, International Cellular Accessories, or ICLA, had no meaningful business operations, revenue or executives. To reflect the new direction, ICLA will change its name to Image Metrics. The company will announce the completion of the name change and a new stock symbol in the near future.

Image Metrics was previously based in Manchester, U.K., but has moved operations to Santa Monica, Calif. The company has raised about $14 million from Acorn Capital, Axiomlab, Close Brothers Investment, Digital Animation Group, MC Capital Europe and Saffron Hill Ventures.

Chief Executive Michael Starkenburg said no investors are cashing out in the deal. Saffron Hill Managing Director Ranjeet Bhatia will remain on the board.

"Over the last two years, [Image Metrics] has been breaking into new customer areas and proving out the technology," Bhatia said. "They started getting great acceleration. Our sense was that the company didn't need more venture financing. What it needed was a larger platform."

Bhatia said Image Metrics was valued at about $50 million as a private company. "It's hard to predict how the markets will respond, but we believe we'll get that as a public company," he said.

The company has raised $8 million in new money and expects to secure another $4.2 million soon. Of that $12.2 million, a third is expected to come from previous shareholders and the rest from high net worth individuals. People involved with the shell company are also becoming investors in the new business.

"You have to deal with people you trust," Bhatia said. "The people on the shell side were people we knew who had [arranged reverse mergers] many times."

Image Metrics offers facial animation software that enables animators to 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.

For Pitt in "Benjamin Button," the company recorded him acting out scenes to create a "digital head" that could be altered by a computer animator to reflect his character's reverse-aging process in the movie.

"My mom thought the movie was done with makeup, which was a great compliment," said Starkenburg.

Movies are a small part of the company's efforts. Over the past two years, Image Metrics' animation technologies have been utilized in a variety of high-profile, top-selling videogames from customers including Activision-Blizzard Inc., Electronic Arts Inc., Sega Corp., Sony Corp., Take-Two Interactive Software Inc., Ubisoft Entertainment SA and Warner Brothers Entertainment Inc.

Starkenburg said the company is already in talks with potential acquisition targets, which would provide an additional suite of technology to offer to customers. He declined to identify specific companies.

Image Metrics reported revenue of $4 million in its fiscal year ended Sept. 30, 2009, and entered fiscal 2010 with a backlog of firm contracts of more than $5 million, Starkenburg said. Its revenue grew to $2.5 million in its first quarter ended Dec. 31, 2009, and the company recorded revenue of more than $800,000 in January, the first month of its fiscal 2010 second quarter.