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PRESS RELEASENASCAR drives Bugeye forwardST. LOUIS POST DISPATCH, June 25, 2006, Rachel Melcer, reprinted with permission of the St. Louis Post-Dispatch, copyright 2006.
Bugeye Technologies is coming down to Earth"It's not like putting a steering wheel on your coffee table and racing on the screen on your TV. It's much more than that," he said. "It's first class, quality. The screen engulfs you." The company, which makes video games and training simulators, spun out of Boeing Co. three years ago hoping to wow pilots and stamp all of its products "Made in America." Instead, it is focusing on driving simulators and partnering with a Chinese manufacturer. "It gives a whole new meaning to 'no gain without pain,'"…" said Michael Stockton, president of the Pacific-based firm. "We've been through a lot of pain to this point, but I can see where the gain will come in. … I feel pretty good about the company." Bugeye last month was awarded a $440,000 state loan to use as working capital while the company seeks another $660,000 from angel or institutional investors. Stockton and Bugeye's other principal, Vice President Edward Elking Jr., say that money will launch Bugeye into new markets and an expansion. The company was built around advanced video-display technology developed at Boeing and is run by engineers turned entrepreneurs. It has six employees and was profitable with "more than $1 million" in 2005 sales, Stockton said. He expects about $4 million in sales this year. But Bugeye hasn't lived up to a promise to pay Boeing minimum license fees and royalty payments of $4.45 million spread over five years, based on expected sales, according to documents filed with the Securities and Exchange Commission. It failed to pay $140,000 due in the year ended June 1, 2004, and the agreement was renegotiated, according to Boeing's 2005 proxy statement. "There were some unreal expectations in the original deal -- I don't know where they came from," Stockton said. Bugeye has struggled, he said. But the thing is, people who try out Bugeye's video games and sit behind its simulator displays rave about the experience. The company sells a three-screen computer monitor, either for a desktop or built into a simulator, that gives an immersible three-dimensional view. Its advanced simulators and deluxe arcade games have a display made of six hexagonal screens that gave Bugeye its name. "I'm really impressed with just how good it is, the machine itself," said Greg Maryniak, director of the J.S. McDonnell Plantarium and vice president of aerospace at the St. Louis Science Center, which borrowed a Bugeye unit for about six months and then bought one rather than give it up. Last summer, it gave 13 inner-city teens flying lessons on the unit and then took each one up in a real plane. On their first time in a cockpit, they all performed an unassisted takeoff; five were able to land. Last week, the top girl and boy from that group began flying lessons on Science Center scholarships and again exceeded expectations, Maryniak said. The Science Center now is testing lunar exploration software on its Bugeye unit, which visitors can use to take a simulated stroll down a canyon on the moon. Bugeye's technology compared to standard flat-screen monitors is "like reading a book about flying, versus being in a plane. That's how big the difference is," Maryniak said. Another fan is St. Louis area native and NASCAR driver Kenny Wallace, who has racked up nine Busch Series wins. He tried out Bugeye's simulator at a recent racing trade show in Florida. "It's not like putting a steering wheel on your coffee table and racing on the screen on your TV. It's much more than that," he said. "It's first class, quality. The screen engulfs you." NASCAR and other forms of racing are among Bugeye's biggest market opportunities, Stockton said. The firm sold a unit to T.J. Bell, the 2004 ARCA Re/Max Series Rookie of the Year, and this summer regularly is toting a trailer full of simulators to Gateway International Raceway as a promotion for drivers and fans. "It's military technology, made for a consumer level. … Most people don't get to play on anything that real," said Jason Dukes, business development manager at the raceway. Fans love it and "the NASCAR drivers, they won't get out." Bugeye is raising funds to exploit the racing simulator opportunity. It has a distributor in North Carolina, where many NASCAR racers are based, ready to buy hundreds of units once Bugeye strikes a deal for software featuring the major tracks, Elking said. The driving industry today is where aerospace was 30 years ago, in terms of training technology, he said. "They haven't seen anything like this" and are hungry for advances. Professional drivers are using flat-screen computers to do simulated training. On June 11, rookie Denny Hamlin won his first career Nextel Cup race at Pennsylvania's Pocono Raceway, which he had never seen. But he said in interviews that he tried out the track with a home computer and simulator software, and that gave him an edge. Wallace said of such simulators, "It's not realistic, but it gets you to a point where you know what's going on in your surroundings, and you know what this corner is like and what banking feels like on the track." If the machines progress to a point where a driver can feel the G-forces and use simulated results to help tune a car for a race, everyone will want one, he said. Also excited about Bugeye's technology is a Chinese amusement game manufacturer, Universal Space. The company liked Bugeye's driving arcade game for young children, Speeding Ticket, and recently signed a deal to manufacture a basic version. It also wants to co-develop other games. Bugeye, which had hoped to keep all of its manufacturing in Pacific, said it had to go overseas to keep up with competitors who can turn out games for less money than Bugeye spends on parts alone. Having a partner that can quickly ramp up production for a large order gives Bugeye options, Stockton said. But the company will continue to make higher-cost, deluxe versions of Speeding Ticket in Pacific. "It's a hard pill to swallow, sending your work to another country," he said. "But to be competitive, you have to drink out of the same bucket they all drink out of." Bugeye also is pursuing manufacturing certifications to ramp up its now limited program of contract rapid prototyping on military simulators, which includes work for Boeing. And within six months, it should have developed a universal card that will make its basic three-window computer display compatible with any software. When that happens, consumer and desktop training sales also could take off, Elking said. "We've got a lot going on," even if little of it harkens back to Bugeye's aerospace roots, he said. "We still like flight. We're still looking for that, but it's not the focus of the business right now." Speeding Ticket and race car simulators "are the low-hanging fruit," Stockton added. "It's where the money's at now, too." rmelcer@post-dispatch.com | 314-340-8394
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