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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10K-SB
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For The Fiscal Year Ended DECEMBER 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) JULY 6, 1999
BRAINTECH, INC.
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(Exact name of Registrant as specified in its charter)
NEVADA 98-0168932
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(State or jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
930 West 1st Street #102, North Vancouver, B.C., Canada, V7P 3N4
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(Address of Principal Executive offices)
Issuer's Telephone Number: (604) 988-6440
Securities registered pursuant to section 12(b) of the Act:
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None
Securities registered pursuant to section 12(g) of the Act:
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Common Stock, $0.001 par value
(Title of Class)
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Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes No x
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Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. ____________
State issuer's revenues for the most recent fiscal year: $57,510
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates, computed by reference to the closing price for
trading of the issuer's stock on the OTC-Bulletin Board as at July 6, 1999:
$8,113,137.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 34,771,333 Common shares,
par value $0.001, as at July 6, 1999.
Index to Exhibits on Page 44
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the Microsoft Corporation's Windows '95 platform. The consortium will carry
on business through a private company called Concurrent Adaptive Recognition
Research Corp. ("Carr Corp."). Each of the Company, Sideware Systems Inc.
and NetMedia Systems Inc. owns one-third of the shares of Carr Corp., subject
to adjustment for funds actually provided to Carr Corp. by each participant.
In addition, each member of the consortium has the right to use technology
developed by Carr Corp. to develop specified products.
As at the date of this Annual Report Carr Corp. has not commenced
operation.
On May 27, 1998, Grant Sutherland beneficially acquired 780,000 private
placement shares in the Company at price of $0.25 per share.
On September 29, 1998 Grant Sutherland beneficially acquired 300,00
private placement shares in the Company at a price of $0.20 per share.
Subsequent to the December 31, 1998, directors of the Company have
acquired the following private placement shares:
- Owen Jones beneficially acquired 1,000,000 shares at a price of $0.15.
- Grant Sutherland beneficially acquired 1,000,000 shares at a price of
$0.15.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER EXHIBIT
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<S> <C>
3.1 Articles of Incorporation, dated February 27, 1987
3.2 Articles of Amendment, dated July 14,1998
3.3 Articles of Amendment, dated June 28, 1990
3.4 Articles Of Amendment of the Company, dated February 8, 1993
3.5 Articles of Amendment of the Company, dated April 6, 1993
3.6 Articles of Amendment of the Company, dated December 6, 1993
3.7 By-Laws of the Company
4.1 Specimen Stock Certificate
10.1 License Agreement between the Company and Willard W. Olson,
dated January 5, 1995.
10.2 Product Development Agreement between the Company and United
Technologies Microelectronic Systems Inc., dated July 6, 1998.
10.3 Manufacturing and Sales Agreement between the Company and
United Technologies Microelectronic Systems Inc., dated July 6,
1998.
10.4 Operating Agreement between the Company and Sideware Systems
Inc., dated November 1, 1995
10.5 Worldwide Non-Exclusive License Agreement between the Company
and NetMedia Systems Inc., dated November 2, 1995.
10.6 Joint Venture Agreement by and among the Company, Sideware
Systems Inc., and NetMedia Systems Inc., dated November 23,
1995.
10.7 Assignment of Lease and Modification of Lease Agreement dated
August 17, 1998 between HOOPP Realty Inc., Techwest Management
Inc., Sideware Systems Inc., and BrainTech, Inc.
11.1 Computation of net loss per share
21.1 Subsidiaries of the Registrant
27.1 Financial Data Schedule for the Fiscal Year Ended December 31, 1997
27.2 Financial Data Schedule for the Fiscal Year Ended December 31, 1998
</TABLE>
44
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All of the above Exhibits with the exception of Exhibit 10.7, Exhibit 11.1,
Exhibit 27.1, and Exhibit 27.2 are already on file as a result of the Company
filing a Form 10-SB.
The Company did not file any reports on Form 8-K during the last quarter of
the period covered by this Annual Report.
45
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SIGNATURES
In accordance with Section 13 of the Securities Exchange Act of 1934, the
registrant caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: July 6, 1999 BrainTech, Inc.
"Owen L.J. Jones" "W. Grant Sutherland"
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Owen L.J. Jones W. Grant Sutherland
Director Director
President and Chief Chairman of the Board of Directors
Executive Officer Chief Financial Officer
46
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Exhibit 10.7 - Assignment of Lease and Modification of Lease
Agreement dated August 17,1998 between HOOPP Realty Inc., Techwest
Management Inc., Sideware Systems Inc., and BrainTech, Inc.
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ASSIGNMENT OF LEASE AND
MODIFICATION OF LEASE AGREEMENT
This Assignment of Lease and Modification of Lease Agreement dated as of the
17th day of August, 1998.
BETWEEN:
HOOPP REALTY INC. by its duly appointed agent EDGECOMBE REALTY ADVISORS
INC. of 1704-1166 Alberni Street, Vancouver, B.C. V6E 2Z3
(the "Landlord")
AND:
TECHWEST MANAGEMENT INC. #102 - 930 West 1st Street, North Vancouver,
B.C. V7P 3P7
(the "Tenant")
AND:
SIDEWARE SYSTEMS INC. #102 - 930 West 1st Street, North Vancouver, B.C.
V7P 3P7
(the "Assignor")
AND:
SIDEWARE SYSTEMS INC. and BRAINTECH INC. #102-930 West First Street,
North Vancouver, B.C., V7P 3P7
(the "Co-Covenantors")
WHEREAS
A. The Landlord and the Assignor are parties to a lease (the "Original
Lease") whereby the Assignor leased from the Landlord Suite 102 and the upper
portion of Suite 103 - 930 West 1st Street, North Vancouver, B.C. for a term
expiring August 31, 2001, a copy of which is attached hereto as Schedule A.
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B. By a Modification of Lease Agreement dated the 12th day of August,
1996 (the "First Modification") the Assignor and the Landlord agreed to extend
the term of the Lease, additionally lease the lower portion of Suite 103 and
modify the Lease on the terms and conditions as therein set forth, a copy of
which is attached as Schedule B.
C. The Original Lease and the First Modification taken together are
hereinafter referred to as the Lease, and Suite 102 and 103 - 930 West 1st
Street, North Vancouver, B.C. are hereinafter referred to as the Existing
Premises.
D. The Tenant performs maintenance functions for Co-Covenantors and the
Lease is to be assigned to the Tenant.
E. The Tenant wishes to lease additional space described as Suites 100
and 101 (lower) and 104 and 105 (upper) (the "Expansion Premises") from the
Landlord and to modify the Lease as herein set forth and the Landlord wishes to
lease such Expansion Premises to the Tenant and modify the Lease as herein set
forth.
F. The Existing Premises and the Expansion Premises take together shall
hereinafter be referred to as the Leased Premises.
NOW THEREFORE THIS MODIFICATION OF LEASE AGREEMENT WITNESSES that in
consideration of the sum of $10.00 now paid by each party to the other (the
receipt and sufficiency of which is hereby acknowledged by each of the parties),
the rents, covenants, conditions and agreements herein reserved and contained
and other good and valuable consideration, the parties covenant and agree with
each other as follows:
1. All capitalized terms not otherwise defined herein or in the
recitals hereto shall have the respective meanings attributed to them in the
Lease.
2. Effective September 1, 1998 (the "Effective Date") the Assignor
hereby grants and assigns unto the Tenant the Existing Premises together with
the residue of the unexpired term of the Lease and the said Lease as they relate
to the Existing Premises and all the benefit and advantage to be derived
therefrom subject to the payment of Minimum Rent and Additional Rent and the
performance of the covenants and agreements contained in the Lease with respect
to the Existing Premises.
3. The Tenant hereby covenants with the Assignor and the Landlord to
abide by the terms and conditions of the Lease with respect to the Existing
Premises and to pay Minimum Rent and Additional Rent and observe and perform the
covenants and obligations in the Lease and this Agreement.
4. The Assignor hereby covenants to continue to abide by the terms and
conditions of the Lease and observe and perform the covenants and conditions in
the Lease.
5. The Landlord hereby consents to the assignment of the Lease on the
terms and conditions contained herein without releasing the Assignor from its
obligations under or in
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respect of the Lease.
6. The Landlord hereby leases to the Tenant, the Expansion Premises on
the terms and conditions set out in the Lease and the parties hereby agree to be
bound by the terms and conditions of the Lease subject to the amendments,
modifications and additions contained herein effective the Effective Date.
7. Article 1.01 of the Lease is deleted in its entirety and replaced
with the following:
ARTICLE 1
BASIC TERMS. SCHEDULES. DEFINITIONS
1.01 BASIC TERMS
(a) (i) Landlord: HOOPP REALTY INC. by its duly appointed
agent EDGECOMBE REALTY ADVISORS INC.
(ii) Address of Landlord: c/o Edgecombe Realty Advisors
Inc., Suite 1704, 1166 Alberni Street, Vancouver,
B.C. V6E 2Y3
(b) (i) Tenant: TECHWEST MANAGEMENT INC.
(ii) Description of Tenant: Computer Software
Development
(iii) Address of Tenant: 102-930 West 1st Street, North
Vancouver, B.C. V7P 317
(iv) Operating Name: N/A
(c) (i) Co-Covenantor: SIDEWARE SYSTEMS INC. and BRAINTECH
INC.
(ii) Description of Co-Covenantor: Computer Software
Developer
(iii) Address of Co-Covenantor: 102-930 West 1st Street,
North Vancouver, B.C.,
V7P 317
(d) Address of Premises: Suites 100, 101, 102,
103(lower), 102, 103, 104, 105
(upper) - 930 West 1st Street,
North Vancouver, B.C. V7P 3P7
(e) Floor Area: 14,867 square feet.
(f) (i) Term: 5 years.
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(ii) First Day of Term: September 1, 1998
(iii) Termination Date: August 31, 2003
(g) Minimum Rent (per square foot):
<TABLE>
<CAPTION>
Lease Year Minimum Rent Per Monthly Minimum Annual Minimum
Square Foot of Rent Rent
Floor Area
<S> <C> <C> <C>
I $13.00 $16,105.92 $193,271.00
2 $13.25 $16,415,65 $196,987.75
3 $13.50 $16,725.38 $200,704.50
4 $13.75 $17,035.10 $204,421.25
5 $14.00 $17,344.83 $208,138.00
</TABLE>
(h) Use of Premises: Office for conduct of Tenant's business
(i) Fixturing Period: N/A
The foregoing Basic Terms are hereby approved by the parties and each
reference in this Lease to any of the Basic Terms shall be construed to include
the provisions set forth.
8. The Landlord shall complete at its own cost and expense all of
the Landlord's work described in Schedule C hereto. Any work not described in
Schedule C hereto shall be Tenant's work hereunder and shall be the Tenant's
responsibility and to be performed by the Tenant.
9. Article 17.19 of the Lease entitled "Tenant's Improvements" is
deleted in its etitirety and replaced with the following:
"17.19 Tenant's Improvements
The Landlord shall reimburse the Tenant for
improvements to the Leased Premises
completed and paid for by the Tenant, to a
maximum amount of $80,000.00. Such money
shall be due and payable upon execution of
this Lease by all parties, occupancy of the
Leased Premises by the Tenant and receipt
by the Landlord of paid invoices from the
Tenant's contractor. All Tenant's
improvements shall be completed in a good
and workmanlike manner in accordance with
plans and specifications submitted to the
Landlord for approval and in accordance
with the provisions of the Lease.
Notwithstanding anything to the contrary,
if the Landlord's work and the Tenant's
work are completed prior to the first day
of the term such that the Tenant is able-
to take early possession of the Leased
Premises and conduct its business
operations there in, all provisions of this
Lease shall apply and
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the Tenant shall commence payments of
Minimum Rent and Additional Rent as of such
date.
10. Page 2 of Schedule A of the Lease is arnended by deleting it in
its entirety and replacing it with the floor plan attached hereto as Schedule
D.
11. Schedule E of the Lease is deleted in its entirety and replaced
with the Offer to Lease attached as Schedule B hereto.
12. The Tenant shall have the use of 21 parking stalls in the
Development.
13. This Agreement as of and from the Effective Date will be read and
construed along with the Lease and treated as a part thereof; and the Lease
as modified hereby will continue to be of full force and effect with respect
to the Leased Premises.
14. This Agreement will enure to the benefit of and be binding upon
each of the Landlord, the Tenant, the Assignor and the Covenantors and their
respective successors and permitted assigns.
15. The parties will execute promptly such further assurances and do
all such further things as may be required in order to effect or perfect the
terms of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the date first above written.
HOOPP REALTY INC. by its duly
appointed agent EDGECOMBE REALTY ADVISORS
INC. by its authorized signatories:
"signed"
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Name:
"signed"
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Name:
TECHWEST MANAGEMENT INC. by its authorized
signatories:
"signed"
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Name:
"signed"
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Name:
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SIDEWARE SYSTEMS INC. by its authorized
signatories:
"signed"
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Name:
"signed"
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Name:
BRAINTECH INC. by its authorized signatories:
"signed"
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Name:
"signed"
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Name:
