Areograph, of Dunedin, is in talks with Italian-based defence giant Finmeccanica - the maker of military technology and equipment and employer of 73,000 people - about converting Areograph's camera technology for military use.
Areograph chief executive Luke Reid, of Dunedin, confirmed Finmeccanica had asked for a "proof of concept" example of how his company's technology could work.
Two Areograph staff in London were meeting Finmeccanica representatives "almost every week", and Mr Reid was hopeful a joint development agreement could be signed as early as next month.
A deal could see the Dunedin company's camera design added to unmanned aerial vehicles (UAVs) or other military platforms and used to help photograph targets in conflict zones, he said.
The images could then be used in a battlefield simulator being developed by Finmeccanica for military training purposes, and used by special forces preparing for assaults, he said.
Areograph's design allowed thousands of images of an object or environment to be captured from each angle quickly, allowing photo-realistic environments to be simulated.
The technology was already being used in the development of computer games, and was recognised at the United Nations' World Summit Award in India in April.
An initial meeting between the two companies came about in Washington, DC in August, as part of a five-week promotional trip which saw Mr Reid travel to the United States, Europe and the United Kingdom supported by New Zealand Trade and Enterprise (NZTE).
NZTE regional manager Ken Aitcheson, of Dunedin, confirmed details of the trip, which included meetings with other military representatives in the US and defence and security contractors operating in the US and European markets.
Areograph was one of about 500 companies assisted by NZTE, using staff in international centres to arrange meetings and other promotional activities to stimulate New Zealand's economy.
An email from Finmeccanica to Mr Reid, shown to the Otago Daily Times, also confirmed the company was "very impressed and excited" by the camera technology and requested a proof of concept.
Mr Reid said he had also met New Zealand Army representatives, who requested a similar demonstration of the technology's possible use in modelling sensitive sites for counter-terrorism purposes during the Rugby World Cup in 2011.
He also met with Microsoft and Sony representatives in the United Kingdom and Europe to discuss the use of the technology in driving games.
However, it was the Finmeccanica deal that was generating the most excitement, Mr Reid said.
The company invested 1.8 billion annually in research and development in the aerospace, defence and security sectors.
Finmeccanica's new simulator would compete with existing simulators using traditional computer graphics, and Areograph was "hoping our technology could be the thing that tips it over the edge for them", Mr Reid said.
"Ours is only a small component, but it gives them leverage," he said.
It was too early to say what a deal could be worth for the Dunedin company.
