UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D,C, 20549
FORM 10 - SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
AXION SPATIAL IMAGING INC.
______________________________________________
(Name of Small Business Issuer in its charter)
Nevada -
_______________________________ ___________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Suite 700, 9925 - 109 Street
Edmonton, Alberta, Canada T5K 2J8
_______________________________________ ________________
(Address of principal executive offices (Postal Code)
Tel: 780-423-4413 Fax: 780-423-4468
____________________________________________
Registrant's telephone numbers
Securities to be registered under Section 12(b) of the Act:
None
____
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 par value per share, 50,000,000 shares authorized,
12,902,239 issued and outstanding as of December 31, 1999.
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TABLE OF CONTENTS
___________________________________________________________________
Page
Cross Reference of Item Numbers for Part 1 2
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 3
PART I.
Item 1. Description of Business . . . . . . . . . . . . . . . 3
Item 2. Description of Property . . . . . . . . . . . . . . . 24
Item 3. Directors, Executive Officers and
Significant Employees . . . . . . . . . . . . . . . 24
Item 4. Remuneration of Directors and Officers . . . . . . . 27
Item 5. Security Ownership of Management and Certain
Securityholders . . . . . . . . . . . . . . . . . . 30
Item 6. Interest of Management and Others in Certain
Transactions . . . . . . . . . . . . . . . . . . . . 32
Item 7. Description of Securities being Registered . . . . . 33
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Stockholder Matters. . . . . 36
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . . 37
Item 3. Changes in and Disagreements with Accountants . . . . 38
Item 4. Recent Sales of Unregistered Securities. . . . . . . 38
Item 5. Indemnification of Directors and Officers . . . . . . 39
PART F/S
Audited Financial Statements
for the year ended December 31, 1997 . . . . . . . . . . . . . F-1
for the year ended December 31, 1998 . . . . . . . . . . . . . F-19
Unaudited Financial Statements
for the year ended December 31, 1999 . . . . . . . . . . . . . F-37
PART III
Item 1. Index to Exhibits . . . . . . . . . . . . . . . . . . 44
SIGNATURES
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Cross Reference of Item Numbers for Part 1
This Registration Statement Form 1-A
___________________________ ________
Item 1. Description of Business . . . . . . . Item 6.
Item 2. Description of Property . . . . . . . Item 7.
Item 3. Directors, Executive Officers
and Significant Employees . . . . . Item 8.
Item 4. Remuneration of Directors and
Officers . . . . . . . . . . . . . . Item 9.
Item 5. Security Ownership of Management
and Certain Securityholders . . . . Item 10.
Item 6. Interest of Management and Others
in Certain Transactions. . . . . . . Item 11.
Item 7. Description of Securities being
Registered . . . . . . . . . . . . . Item 12.
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INTRODUCTION
This Form 10-SB follows the general format outlined under
Alternative 2 for Part 1 of the document.
This filing, including financial statements and all exhibits,
consists of ___ sequentially numbered pages in paper format.
The financial statements included herein for the year ended
December 31, 1999 have not yet been audited by the Registrant's
independent accounting firm, PricewaterhouseCoopers LLP. The
Registrant, however, believes that they do represent, fairly, its
financial condition as of December 31, 1999 and properly reflect
the results of its operations for the year then ended. Audited
financial statements for December 31, 1999 will be filed with
Amendment 1 to this Registration Statement.
Because the Registrant operates exclusively through its
Canadian subsidiary, the Canadian dollar is the principal currency
in which its business is conducted. Unless otherwise indicated, all
monetary amounts referred to in this registration are in Canadian
dollars. On December 31, 1999, one U.S. dollar equalled
approximately Canadian $1.4519. The following table sets forth a
history of the exchange rates for the US dollar vs. Canadian dollar
during the Registrant's past five fiscal years.
Year Average Low/High December 31
____ ______ _____________ ___________
1999 1.4858 1.4505/1.5298 1.4519
1998 1.4831 1.4096/1.5765 1.5305
1997 1.3844 1.3403/1.4392 1.4291
1996 1.3636 1.3306/1.3868 1.3696
1995 1.3726 1.3282/1.4235 1.3652
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CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
Axion Spatial Imaging, Inc., ("Axion," or the "Company" or the
"Registrant") cautions readers that certain important factors may
affect the Company's actual results and could cause such results to
differ materially from any forward-looking statements that may be
deemed to have been made in this Registration Statement Document or
that are otherwise made by or on behalf of the Company. For this
purpose, any statements contained in this Document that are not
statements of historical fact constitute, or may be deemed to be
"forward-looking statements."
These forward-looking statements can be identified by the use
of predictive, future-tense or forward-looking terminology, such as
"believes," "anticipates," "expects," "estimates," "plans," "may,"
"will," or similar terms. These statements appear in a number of
places in this Registration and include statements regarding the
intent, belief or current expectations of the Company, its
directors or its officers with respect to, among other things: (i)
trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and
growth strategies; (iii) the Company's financing plans.
Readers are cautioned that any such forward-looking statements
are not guarantees of future performance and involve significant
risks and uncertainties, and that actual results may differ
materially from those projected in the forward-looking statements
as a result of various factors. Factors that could adversely
affect actual results and performance include, among others, the
Company's limited operating history since achieving positive cash
flow, potential fluctuations in quarterly operating results and
expenses, government regulation, and, perhaps most significantly,
technological change and competition.
The accompanying information contained in this Registration
Statement, including, without limitation, the information set forth
under the heading "Management's Discussion and Analysis of Finan-
cial Condition and Results of Operations" and "Business" identifies
important additional factors that could materially adversely affect
actual results and performance. All of these factors should be
carefully considered and evaluated. All forward-looking statements
attributable to the Company are expressly qualified in their
entirety by the foregoing cautionary statement. Any forward-
looking statements in this report should be evaluated in light of
these important risk factors. The Company is also subject to other
risks detailed herein or set forth from time to time in the
Company's filings with the Securities and Exchange Commission.
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Item 1. Description of Business
Introduction
The Registrant was organized under the laws of the State of
Nevada on September 27, 1984 as Numeric Two Incorporated. On July
10, 1985, its name was changed to Beta Tech Robotics Inc. On August
14, 1996, shareholders approved a name change to Axion Spatial
Imaging Inc. Other than issuing shares to its initial shareholder
group, the Registrant did not engage in any business activities
until it entered into an agreement on January 1, 1997 to exchange
4,000,000 shares of its Common Stock for all of the outstanding
common shares of Axion Spatial Imaging Ltd., (ASIL) a corporation
formed and existing under the laws of the Province of Alberta,
Canada. The Registrant then had 8,900,000 shares outstanding.
ASIL was organized under the laws of the Province of Alberta
on July 12, 1984 and, since inception, has been involved in the
development of software technologies and providing consulting
services related to graphic data compression and display.
Since its acquisition by the Registrant, ASIL initially
concentrated on the development of new compression and
decompression technologies with a view to de-emphasizing its
reliance on consulting contracts. Starting in 1999, ASIL began to
sell these new services and products based on these technologies.
The Company's principal offices are located at Suite 700, 9925
109th Street, Edmonton, Alberta Canada T5K 2J8. Its telephone
number is (780) 423-4413 and its telefacsimile number is (780) 423-
4468.
(a) Narrative description of business.
(1) Business done and to be done
(i) Principal products and markets
The Registrant, through its wholly-owned Canadian subsidiary,
Axion Spatial Imaging Ltd. ("ASIL) is a high technology company
engaged in the business of providing software and service solutions
for the fast-growing Geographic Information Systems (GIS) market.
GIS is that branch of information technology which deals with the
acquisition, processing, storage, retrieval, analysis and
application of data related to geographic information, such as maps
and other graphic portrayal of physical features of the surface and
subsurface of the earth. Its primary applications are in describing
the location of physical features and objects, and their relation
to each other.
ASIL's primary products are a suite of Advanced Digital
Mapping Tools (ADMT) designed to enhance the ability of users to
efficiently store, display, distribute and transform geographic
image data. ASIL's solutions have been optimized for delivery over
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the Internet, intranets, and wireless communications. This,
combined with a team of highly experienced GIS professionals, gives
ASIL the ability to provide its clients with complete solutions to
a wide variety of problems and requirements related to compression,
decompression and utilization of large digital image files.
ASIL has provided solutions for the following market sectors:
resource management; municipal, state, provincial and federal
governments; public and private utilities; the defense industry;
internet applications; and educational software development.
ASIL's solutions are designed to enhance existing GIS
software, provide cost-effective distribution of data, enterprise-
wide, and aid in the development of third party applications. ASIL
understands the underlying image data needs, as well as the
importance of integrating GIS with an organization's existing
information technology (IT).
Display Technology
ASIL has developed display technology which it believes to be
among the fastest generally available without use of custom
designed hardware. There are many factors other compression
schemes do not take into account when touting speed. Because speed
is a key factor for users even if their applications use tiles,
(breaking images into smaller pieces), have vector layers, or have
a server pushing images over a network, barriers to this speed need
to be minimized or eliminated.
In mapping applications, ASIL display tools use the
georeferencing information stored with each image to locate its
position on the Globe. This is independent of size, shape or
resolution. This means that any number of georeferenced images can
be tiled, regardless of set, type, or scale. ASIL's display tools
will automatically load adjacent images where possible to cover the
view extents on the screen when zooming or panning. The result
produced provides seamless coverage of a resource base.
ASIL tools are designed to read native files in their original
format such as .SHP or .DGN (specific formats relating to GIS
imaging just as .DOC of .TXT relate to a designation for a word
processing format), thereby requiring no translation and therefore,
no data loss.
ASIL has developed viewers for most of the leading GIS and CAD
(Computer Aided Design) software packages available. Efficient use
of imagery can be incorporated into existing GIS, increasing the
use and value of both the imagery and other information. ASIL also
provides a complete development kit with the decompression DLL's,
(Dynamic-link library - an operating system feature which allows
executable routines to be stored separately as files, and can be
loaded only when the needed program call them), and libraries
required to incorporate the viewer into virtually any mainstream
software product operating on most computer platforms.
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3-D Visualization
Any tool which adds context to geographic data can be expected
to aid in interpretation and expand the use of that data. ASIL's
powerful visualization tools provide users with more information
which is intended to lead to less guesswork and better decisions.
Digital Elevation Models (DEMs) can be used very effectively
in GIS- if the proper tools are available. Combining this with
ASIL's compression, any image can be transformed on the fly (as the
image moves). DEMs can be used to create very realistic 3D
renderings of the earth's surface. Using ASIL's 3D transformation
tools, interactive fly-thoughs can be calculated on the fly, and
displayed in near-realtime, providing very powerful visual effects.
ASIL also provides tools needed for generating accurate models
of the topography. These tools include: setting sun angles which
create shadow maps to give the 3D look to an image; rendering
colors to provide a touch of realism; rotating the axis for better
visualization of the terrain and draping vectors and other 2D
images over the DEM; slope analysis for mission planning; cross
sections; realtime interactive fly-throughs over the terrain; and
intervisibility calculations showing all networked units areas that
are hidden by the terrain.
Tracking & GPS
GPS (Global Positioning Systems) are vital for efficient real
time asset management of mobile vehicles. Using advanced
communication and management tools, ASIL has developed systems to
link all mobile units together, at the central control office and
at the individual asset level, thereby allowing each user to know
where all the other units are in real time. These can be used
effectively in applications such as fighting forest fires, search
and rescue operations, or management of a fleet of delivery trucks.
Storage
Digital imagery generally involves a compromise between detail
and file size. ASIL has developed compression tools that provide
GIS professionals with both high detail and lower file sizes. Users
can store and manage images efficiently without sacrificing the
most important part of an image - what it looks like. As a result,
30 gigabytes of TIFF format imagery can be compressed to less than
3 gigabytes and still retain almost all of the clarity of the
original image.
In order to make this possible, ASIL has developed a very
specific compression engine that will determine the type of image
that it is compressing. The compression routine then adjusts the
parameters of compression, allowing the software to retain sharp
edge features throughout many different types of imagery. When
compressed at a ratio of between 10:1 and up to 25:1, there is
little visible loss of detail. Axion compression tools can compress
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DEM files, shadow maps, multi-spectral, grayscale and 24-bit color
images. ASIL's technology supports TIFF, GEOTIFF, BMP, RAW, and
TIFF with TFW file formats.
Geographic Information Systems need to deal with change
effectively. Without the ability to update quickly, many advantages
of creating a digital GIS are lost. ASIL develops powerful tools
for managing dynamic imagery. This compression does not merge all
images within a mosaic into one larger image when compressing. Many
compression formats require this limit be imposed in order to
accommodate tiling. ASIL compression tools store images separately
and tiling is thereby handled `on-the-fly' for viewing.
This approach gives ASIL's users the greatest degree of
flexibility. Single images can be updated without recompressing
entire data sets, users have control over how images are combined
when viewing, and processing times are greatly reduced.
The advantages to avoiding the combining of images when
compressing are important to users. By not combining images it is
possible to superimpose multiple images to and thereby track
changes by viewing images consecutively, opening additional
windows, or using the slide show animation option. It is also
possible to add or remove images from the mosaic at any time; set
permission controls to control access to imagery; store, manage and
access images though a database, such as Oracle, and retrieve
images using queries based on attributes such as date, time,
resolution, version and source.
Axion addresses the problem of data storage and image
management through the use of intelligent and effective digital
mapping tools.
Transformation
Because the world isn't flat but the computer screen is, ASIL
has developed the tools needed to accurately display geographic
data in the most meaningful ways possible. This includes
transformation between over 70 different types of map projections,
including UTM, Plate Caree, and geographic. Using these ASIL tools,
it is possible to convert scanned maps into a useful digital
reference layer with accurate positional coordinates. Image
rotation is a powerful tool for moving map displays. The
application of this technology appears to be far reaching in the
GPS industry and can even include tracking and orientation with a
moving object. The map can be continuously centered on the position
of the object and also rotated to match its direction of motion.
Delivery
ASIL believes in the importance of distribution and delivery
of information to those who benefit most by having it. This is the
basic function of any Geographic Information System. However, most
GIS tools make this either too difficult or too slow to be
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practical. Because of the huge file sizes associated with
geographic data, distribution of the data is usually limited to
expensive software, high-end hardware and fast network and Internet
connections.
ASIL's solutions are designed to convert existing data into
formats that can be optimized for realistic distribution using
everyday computer systems, even as obsolete as 386 PC's. Internet
or intranet data distribution is a reality which GIS departments
are facing already.
Distributing large, detailed images efficiently over the
Internet is necessary in today's market. ASIL's compressed images
have been shown to display and update faster online than other
software products can usually display locally stored data. In order
to increase the flexibility and ease of use, ASIL's web distributed
images can provide, there is no plug-in or special software
required for a user's browser or any other special hardware on the
client machine.
CD ROM Applications
One of the most cost effective way of distributing large
amounts of information to specific users is by CD ROM. Axion has
created stand alone viewers for imagery that can be optimized,
stored and distributed using CD ROM based applications.
Enhanced Printing Options
ASIL has developed tools with built-in support for standard
printers and plotters using the much smaller and visually
comparable compressed image to create a plot file.
Third Party Support for Major CAD and GIS Packages
ASIL's tools are available as stand alone combinations but, in
keeping with the open GIS concepts, ASIL's tools are designed to
also work within existing GIS/CAD software products. ASIL's tiling,
viewing and image management tools can be accessed directly from
MicroStation or ArcView (two major GIS/CAD products) thereby giving
users a powerful image storage and instant display environment.
CD-Rom Consumer Software Products
ASIL's range of advanced data mapping technology tools are
also ideally suited to multimedia CD-ROM applications. Based upon
these tools, ASIL has developed a range of products in this area.
"Axion 3D World Atlas" is a product which is the Registrant
believes to be the most comprehensive atlas available on CD-ROM.
It won the 1998 Canadian Information Processing Society Award for
Excellence in Software.
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"The Humanscope/Humanscope Professional", considered by
experts to be the most advanced visual reference of the human male
anatomy, gives the user access to view each of the 4,500 three-
dimensional 24-bit color cross sections of the human body in three
views.
"Cartographic Map Projections of the World" is a program which
allows the user to bring the art and science of map making to his
or her own desktop using 76 of the most popular map projections.
"Under African Skies" provides a virtual safari through three
of Africa's greatest game preserves, the Kruger, Etosha and
Kalahari Gemsbok.
Distribution and licensing agreement signed in 1999 provide
for retail sales of these products in North America and Europe.
However, a new concentration in ASIL's current business plan on
technology and software development, has resulted in a decision to
scale back CD-ROM multimedia as a focus area for long-term growth.
Recent Developments
On October 15, 1998, ASIL announced the release of its latest
software product, AxionImage(tm), a powerful digital image
compression engine that features what ASIL believes to be the
world's fastest image display capabilities. AxionImage is aimed at
Geographic Information Systems organizations where large digital
images are used to effectively manage their resources.
Using AxionImage, files are compressed by a ratio of between
10:1 and 25:1 with virtually no loss of detail. To view the images,
decompression is accomplished in less than 2 megabytes of system
resources, and is integrated to run seamlessly with most major GIS
and CAD software products commercially available today such as
ArcView or MicroStation. Adjacent images are automatically clipped
and displayed when panning or zooming across image boundaries. The
extremely fast display times remain relatively constant, regardless
of the size or the number of compressed images accessed at once.
Images compressed with AxionImage are also optimized for
Internet or intranet distribution through standard Web browsers
with no additional software or hardware required when viewing. With
AxionImage, organizations are able to display, pan and zoom
multiple digital images in seconds, even with file sizes in the
gigabytes.
There are two basic components to the software: image
compression and image\display. Compression is offered as a service
from ASIL's Edmonton Office. The price to compress images is
between C$0.45 and $0.50 per megabyte, depending on volume. Image
display uses AxionView or AxionView PRO. AxionView is a free
software package used to efficiently view most common image
formats, including Axion compressed images. AxionImage PRO is an
image viewer which includes many upgrades for AxionView designed to
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effectively manage and display large dynamic image libraries.
AxionImage, AxionView, AxionImage PRO and AxionView PRO are regis-
tered trademarks of Axion Spatial Imaging, Ltd. ArcView is a regis-
tered trademark of Environmental Systems Resources Institute, Inc.
MicroStation is a registered trademark of Bentley Systems, Inc.
Between February 14th and March 7th, 1999, ASIL, in a world
first, provided up-to-the-minute location coverage of the Cable and
Wireless attempt to circumnavigate the world in a balloon. CW's
balloon, which lifted off from Spain at 9:00 am GMT on February 17,
was the second such attempt in the previous two months. The first
balloon piloted by Richard Branson, was forced to land Christmas
day off of the coast of Hawaii.
Axion provided interactive digital route maps on the Cable and
Wireless balloon website, www.cwballoon.com. These maps continually
tracked the balloon's last position and were downloaded to the web
site for viewing. Using the Axion on-line Atlas, maps depicting
entire continents, down to several kilometers, were posted.
Axion's comprehensive on-line digital atlas, contains 3D imagery,
transportation routes, rivers, lakes, complete statistics on every
country, and over 5 million place names to search and locate.
The ability to track the balloon allowed viewers all over the world
to participate in the experience and to see the barren desert
terrain of northern Africa, the dangerous mountain passes of the
Himalayas, and the vast stretches of water in the Pacific
As a result of it participation in this event, ASIL was able
to receive an average of over 16,500 hits per day on its website
during the course of the balloon's voyage before it came down on
March 7th off the coast of Japan. While not providing any
significant revenues to ASIL, the publicity received as a result of
its participation in the event is believed to be of great value
from the standpoint of creating increased awareness of ASIL and its
technologies by both potential customers and investors.
On February 25, 1999, Axion Spatial Imaging Ltd., announced
the signing of a five-year exclusive partnership agreement with
Computing Devices Canada Ltd., Canada's largest defense electronics
company, and a wholly owned subsidiary of General Dynamics
Corporation. Under the terms of the agreement, Axion and Computing
Devices' Calgary Operations agreed to share technology and jointly
develop new products for the military market. The partnership
begins with Axion providing its state-of-the-art map storage and
rapid display technology to be integrated into Computing Devices'
recently launched battleWEB(tm) battlefield command and control
software.
battleWEB is currently being fielded with the Canadian Army as
part of Computing Devices' $1.5-billion Iris Tactical Command,
Control, and Communications System. It is a state-of-the-art
military asset management and communications package which allows
the commander on the battlefield to track and direct all his assets
in near real-time, using GPS. Axion will provide the software
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engine for instantaneous moving map manipulation and display on a
theater-wide scale.
battleWEB is one of the first and most advanced situation
awareness and battlefield management systems to be fielded in the
world. battleWEB provides state-of-the-art command and control
through common "core" software and varying "user interfaces" which
allow it to be employed at every level from individual vehicles and
personnel to formation headquarters. Axion's ADMT provides the
software engine for instantaneous moving map manipulation, 2D/3D
image display and analysis on a theater-wide scale. Within
battleWEB, detailed maps are scanned and will be stored in Axion's
advanced image compression format. This boosts by a factor of up to
25 times the amount of geographic information available to the
soldier on the battlefield, without requiring expensive computer
upgrades.
On June 1, 1999, Axion Spatial Imaging Ltd. announced the
signing of nine new US distributors, each of whom specialize in
sales to the US Educational/Reference markets. These distributors
are located in California, New York, Pennsylvania, North Carolina,
Arizona, Illinois, Missouri, Tennessee and North Dakota and sell
through various channels including retail, direct, catalogue sales
and e-commerce sites. Products available for sales include our
award winning Axion 3D World Atlas (CD-ROM and Network Versions),
Humanscope and Humanscope Professional, Axion Cartographic Map
Projections of the World. Axion Multimedia Products - "Learning
without Limits" are targeted toward Grades 5-12, College, and
University with subjects in Sciences, Social Studies and Geography.
Axion also signed agreements with ATR Multimedia in Brazil and
Opera Multimedia in Italy for translated versions of the Axion 3D
World Atlas. A German version of the Product is currently sold in
Germany, Switzerland, and Austria and the English version sold in
Holland using local publishers.
On May 31, 1999 ASIL signed an extension to its agreement with
Telus Multimedia; a division of Telus/BCTel (CA:TI300:BCT.TELUS).
This agreement licensed the use of Axion Multimedia products to
Telus Multimedia for distribution to households over high speed
Internet access. This is part of a $65 million (CND) trial approved
by the Canadian Radio and Telecommunications Commission (CRTC) to
provide interactive Multimedia content directly to 3,400
households.
On June 7, 1999, Axion Spatial Imaging Ltd. announced the
signing of the first contract under its five-year exclusive
partnership agreement with Computing Devices Canada Ltd., a General
Dynamics company. The contract covers the integration of Axion's
Advanced Digital Mapping Technologies (ADMT) into Computing
Devices' battleWEB battlefield command and control software. This
contract, with royalties to be received on the sale of the
battleWEB software, is part of a multi-year, multi-million dollar
sale for Axion.
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ASIL's conservative estimate for sales of battleWEB exceeds
75,000 units over the term of the agreement, which ASIL has been
informed, represents a fraction of the actual potential market.
On June 14, 1999, Axion Spatial Imaging Ltd. announced that
one of its' clients iDc, (international Datashare corporation)
expanded its International GeoOffice product line into the USA by
signing an agreement with PennPoint of Houston, Texas wherein it
will bundle its GeoOffice information management and analysis
software with PennPoints' general well and production data. Axion
receives gross royalties on the sales of International GeoOffice;
these royalties are expected to exceed $500,000 a year.
GeoOffice uses Axion's Advanced Digital Mapping Technologies
(ADMT) to display topographic maps with oil and gas data. Axion's
integrated technologies allow for large volumes of data to be
efficiently stored and displayed quickly. GeoOffice has been
referred to as "An Oil Company in a Box". GeoOffice offers over 20
databases tightly integrated with over a dozen analytical
applications, all available through an easy to use GIS-type
interface. With Axion's ADMT, GeoOffice provides a powerful tool
for the fast generation of high quality oil and gas prospects.
PennPoint is a division of Pennwell Publishing Company which was
recently awarded a copy of the Dwight's Energy data general well
and production databases as a result of a Federal Trade Commission
order to restore competition in the energy information marketplace
in the United States. PennPoint will deliver International
GeoOffice exclusively as its standard application interface.
On July 23, 1999, Axion Spatial Imaging Inc. announced that
one of its strategic partners, Boyd GeoMatics Ltd, of Calgary, has
signed an exclusive licensing agreement with The WhiteStar
Corporation, of Denver, Colorado. This agreement expands the use
of Axion's Advanced Digital Mapping Technologies (ADMT) into web
enabled applications, serving terabytes of geo-imagery (one
terabyte = 1,000 gigabyte).
Boyd's ENCOMPASS exclusively uses Axion's ADMT to retrieve,
view, integrate and process large amounts of geo-imagery. This
licensing agreement gives The Whitestar corporation exclusive
rights to market and distribute ENCOMPASS web-based mapping
technology software to the US Oil and Gas Industry. Axion will
receive a monthly royalty on each unit of ENCOMPASS sold.
Axion's ADM technology will allow Boyd to create and store a
seamless library of high resolution aerial photography on its web
server and provide instantaneous access demanded by its users.
Under terms of the ENCOMPASS licensing agreement, Whitestar and
Boyd will expand into the U.S. market.
As a result of this agreement, over 70,000 USGS quad geo-
images and scanned map sheets totaling over four terabytes of geo-
imagery for the entire state of Texas, will be distributed online.
Axion will also receive payment for providing compression services.
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Using ADMT, ENCOMPASS will provide users with the ability to
instantly view or download geo-imagery over the internet.
ENCOMPASS works directly with common, existing installed
software within oil and gas companies such as Oracle Corp's
database products and also takes advantage of the powerful Spatial
Data Engine (SDE) offered by Environmental Systems Research
Institute (ESRI), Redlands, CA. According to Boyd GeoMatic's CEO
Larry Herd, "the integration of Axion's ADMT into ENCOMPASS
provides us with the most unique and efficient web-based mapping
technology software in the marketplace today."
The Whitestar Corporation, with offices in Colorado and Texas,
is a leading supplier of digital cartographic data to oil and gas,
pipeline, forestry, and governmental agencies. It was established
as a home-based consulting firm in 1990, and now has a market share
of approximately 25% in its existing market. WhiteStar products
are installed in multi-billion dollar revenue pipeline companies
and well service companies and it has approximately 5,000 clients.
On August 3, 1999, Axion Spatial Imaging Inc. announced the
provision of its Advanced Digital Mapping Technology (ADMT) to Boyd
GeoMatics Ltd., of Calgary, Alberta, in a deal under which the two
companies will join forces again to provide Internet mapping
services to government, industry and the general public via the
Internet, in the Province of Alberta, Canada.
This is part of a significant expansion into the Canadian
market through an ongoing strategic cooperation between the two
firms. With this initiative, named "VISION 2000", Boyd GeoMatics
will effectively become the primary source for geo-imagery in the
Province of Alberta - a market currently worth in excess of $4
million per year. Larry Herd, President of Boyd GeoMatics said,
"The VISION 2000 initiative is the continuation of Boyd GeoMatic's
plan to be the largest single window source for integrated digital
surface planning information. Axion's technology is a fundamental
component to achieving that goal."
In addition to provision of its ADMT software, for which Axion
will receive royalty fees for each license sold, Axion's portion of
this project will include image compression services related to
gathering, storage and manipulation of geo-imagery data. Government
agencies, companies, and individuals which currently use geo-
imagery will now be able to utilize Boyd Geomatics' web-based
ENCOMPASS mapping technology software, coupled with Axion's ADMT,
to instantly retrieve, analyze, and process large amounts of very
detailed geo-imagery, lines and database tables for all resource-
based applications throughout the province, beginning with forest
resources planning and firefighting, applications, as well as
municipal district planning. In effect, ENCOMPASS will provide to
Alberta's resource planners instant access to detailed geo-imagery
and related map data of the entire province via the Internet.
On January 27, 2000 - the Registrant announced the signing of
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a contract between ASIL and Audio International, a subsidiary of
DeCrane Aircraft Holdings Inc. representing an expansion into the
customized aircraft cabin information systems business.
Under the terms of this contract and royalty agreement, valued
at over half a million dollars (CDN) for the year 2000, ASIL is
supplying MAP.net, a new software application for Audio
International's e-CABIN comprehensive electronic cabin information
system. MAP.net is an interactive mapping program that combines a
very attractive blend of geographical, topographical, and local
maps and data with flight information to create a comprehensive
tool for the airborne passenger.
MAP.net gives each individual passenger control over a map
display that is integrated with the aircraft's navigation system
through GPS. MAP.net lets passengers zoom, track, and retrieve
statistics, and search for information from a vast library of
satellite images, Internet links to travel sites and other
databases of information about the land below.
In the new release, Larry Girard, Vice-President of Audio
International stated, "Axion's compression technology, its ability
to combine GPS, 3D image presentation, and instant display of
extremely large satellite image files, and then to integrate them
all into a single, user-friendly product is what forms the core of
MAP.net's appeal and success." " We are delighted with the
flexibility and innovation which Axion brought to the table in
developing this new addition to our line of quality audio/video and
cabin management systems for the executive aircraft industry".
"This contract with Audio International represents a
significant milestone in Axion's growth strategy for 2000 and
beyond", said Ian Basford, President of Axion Spatial Imaging Ltd.
"More and more industries are looking for ways to use, display,
distribute, and manipulate GIS and positional data to increase
their core business capability. Axion has the tools to make that
an affordable reality for our clients. We are delighted with this
opportunity to establish our presence in the aviation industry with
Audio International".
This 3-year, exclusive deal encompasses an initial contract
for software development by ASIL, followed by a royalty percentage
for each installation of the program by Audio International
thereafter.
The CIT Group, a New Jersey-based aircraft financier has noted
that sales of new corporate aircraft are expected to increase 3.3
percent in 2000 despite higher prices, representing orders of some
490 new aircraft for this year, as well as over 2,230 used aircraft
projected for retrofit. Audio International, a company with
notable experience providing total solutions for audio, video, and
cabin management systems for aircraft, believes that it has been
successful in capturing a significant percentage of the market for
equipping business jets, both in installations on new aircraft, as
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well as in the expanding retrofit market.
(ii) Description of Product Status
ASIL has not announced any new product or service which it
believes will require the expenditure of a material amount of its
own assets in order to be commercialized.
(iii) Research and Development Expenditures
The basic research and development work on the Registrant's
products has been completed and most ongoing development involves
tailoring the existing technology to new applications. In virtually
all cases, this specific application development work is done on a
consulting-for-fee basis in which the customer enters into a
project contract with ASIL.
During the year ended December 31, 1998, the Registrant,
through ASIL, estimates that it expended approximately C$500,000
of its own funds on the development of new products and services
and approximately C$50,000 of funds provided under customer-
sponsored development contracts.
During the year ended December 31, 1999, the Registrant,
through ASIL, estimates that it expended approximately C$75,000 of
its own funds on the development of new products and services and
approximately C$200,000 of funds provided under customer-sponsored
development contracts.
The Registrant and ASIL have no current plans for research and
development expenditures to be made during the coming twelve
months, solely from its own funds, for development of any new
products or applications. The Registrant believes that it has
adequate potential business available from new and existing clients
through the utilization and adaptation of its existing technology
to specific applications required by such clients. The Registrant
may receive contracts from customers for development work which
would be paid for by those customers, in the course of providing
the products which they require under such contracts.
The Registrant recognizes that such an approach may leave it
vulnerable to new and improved technologies in the field of
compression, decompression and display of large GIS and related
types of files, however, it does not have the financial resources
to commit to substantial on-going research and development on its
own. In this respect, its situation is not unlike most companies
involved in the rapidly-evolving information technology industry
where what is considered state-of-the-art today may rapidly become
obsolete in a matter of months, as a new or improved technology
comes along, and is widely adopted.
The Registrant believes that the key to its potential future
success is to provide creative solutions utilizing its existing
core technology, and to improve upon that technology through
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customer-funded application development.
(iv) Number of Employees
The Registrant currently has 12 full-time employees. It
expects to hire additional employees for those positions which it
deems necessary to fill, as needs arise. Most additional employees
are expected to be in technical positions.
(v) Environmental Control Expenditures
At the present time there is no direct financial or
competitive effect upon the Registrant's business as a result of
any need to comply with any Federal, State, Provincial or local
provisions which have been enacted or adopted regulating the
discharge of materials into the environment, or otherwise relating
to the protection of the environment.
(vi) Marketing
ADMT
ASIL has employed very limited marketing efforts to sell its
products and services to date. Most of the sales of its ADMT
products and services have resulted from word-of-mouth and free
exposure through trade publications and other trade channels. As a
result, a specifically dedicated marketing effort was not
implemented because ASIL has been gearing up for increased levels
of business and has had all the business it could reasonably handle
with available manpower. Most of 1999 was a year during which ASIL
established processes and systems for being able to expand and
build its business in the future.
That infrastructure is now in place and ASIL has included in
its business plan, strategies to increase formal marketing efforts
through 2000 and beyond. These strategies are partially based upon
ASIL's continued success in the latter portion of 1999 in winning a
series of contracts among a broadening range of market sectors.
Thus, ASIL's planned marketing efforts are characterized by a
focus on target customers in the resource management, asset
management, government, utilities, and military sectors, which have
a specific need for fast access, display, manipulation, and
distribution of positional data information. Tactical objectives
within this marketing strategy include and aggressive presence and
demonstrations at major trade shows, target niche-marketing to
specific industry clients, and expansion of ASIL's website
interactivity and capabilities.
CD-ROM Products
The marketing of ASIL's CD-ROM products has not been
particularly successful in the past, due mainly to a lack of
adequate capital for both marketing campaigns and development of
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product inventory. Although new marketing agreements have been
established during 1999, ASIL is considering the possibility of
selling of its CD-ROM product line in order to concentrate its
efforts on its ADMT business, although no decision as to a course
of action had been made as of the date of this Registration
Statement.
(2) Special Factors Which May Impact Financial Performance
(i) Dependence upon Key Customers
The Registrant, through ASIL, has, as of the date of this
registration statement, four key customers who together accounted
for approximately 66% of its total revenues during the year ended
December 31, 1999. Among these customers, the largest accounted for
approximately 39% of 1999 revenues, the second largest accounted
for approximately 15%, and the third largest approximately 7%.
Because of the contractual nature of the Registrant's business, the
rankings of its largest customers can and will change from quarter
to quarter and year to year. Some contracts may extend over longer
periods of time and produce revenues for several years, while
others may be completed in a period of several weeks or months.
Generally, however, if the Registrant's business continues along
its current lines in the future, it can be expected that a limited
number of customers will account for a majority of its revenues.
Such dependence could prove to be risky in the event that one
or more such existing and/or potential customers were to be lost
and not replaced by others of comparable size and profit potential.
(ii) Raw Materials
The Registrant is involved in what is essentially a service
business which does not require the input of raw materials in a
manufacturing sense. At this time, there do not appear to be any
foreseeable problems with obtaining any materials, supplies or
components which may be required in the provision of its services
or any physical materials which may be provided to customers in
connection with its services and related software.
(iii) Patent Information
Neither the Registrant directly, nor through ASIL, holds any
patents related to the technology which it employs in its software
products and services. The Registrant does not believe that, in
light of the rapid technological changes in the industry in which
it is involved, there would be significant value in attempting to
seek patents for its proprietary technology, nor is there any
assurance that it would be successful in obtaining any such
patents. The Registrant believes that it has adequate protection
through licensing its technology and providing the compression
services for the large graphic data files which it handles for its
customers as part of their contracts.
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(iv) Seasonality of Business
At this time, and based upon previous operating results, it
does not appear that there has been, nor will, in the future be,
any significant seasonal factor in the Registrant's business.
(v) Working Capital Requirements
Until the second half of 1999, and during the past several
years, the Registrant and ASIL were dependent, to a significant
extent, upon both equity and debt capital infusions in order to
remain in business, because revenues and profits were not
sufficient to maintain ongoing operations and develop new products.
The Registrant believes, that during the last quarter of 1999, it
was finally able to achieve levels of ongoing operations and
revenues which should be sufficient to provide adequate working
capital for at least the coming twelve month period. Due to the
nature of its current business, there is no assurance that such
adequate working capital will necessarilly be available from
operations in periods beyond the coming twelve months. There is no
assurance that, should such adequate working capital not be
available from operations, the Registrant would be able to obtain
equity and debt capital infusions on reasonable terms from other
sources, as it had in the past.
(vi) Backlog
The backlog of business, as of the date of this Registration
Statement, totals approximately $500,000. The Registrant expects
all of this amount to be recognized as revenues during the year
ending December 31, 2000. Of this amount, approximately 95% is with
one customer, and the balance is divided between two other
customers.
There is no assurance at this time, that this projection will
necessarilly be met, due to various risk factors inherent in the
Registrant's business, and economic conditions in general which may
have adverse effects upon its operations.
(vii) Business Subject to Renegotiation
There is no business or contract subject to renegotiation with
any agency of the U.S. Government or any other foreign government.
(viii) Competitive Conditions
The Registrant, through ASIL currently faces, and will
continue to face competition in the future from established
companies as well as new competitors which may arrive upon the
scene with similar or perhaps greater capabilities than those of
ASIL. Some competitors are already well established in the market
and have substantially greater resources than the Registrant.
While not highly competitive in terms of numbers of
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competitors, the business of developing and adapting applications
for large graphic data files and similar uses of data compression
and decompression does still involve providing the best combination
of price, performance and reliability.
Some potential customers are most influenced by price and may
be willing to sacrifice performance and/or reliability, while
others may find that performance and/or reliability are of far
greater importance than price in their particular application.
The Registrant believes that in order to be successful in
meeting or overcoming competition which currently exists or may
develop in the future, it will need to offer superior performance
and/or cost advantages over competitive technologies used in the
various applications and industries where it currently competes or
new ones into which it may seek entry.
(b) Segment data
The Registrant has operated in two industries over the past
five years: data compression technology products and services, and;
the production and sale of Compact Disk-ROM products of an
educational nature utilizing the Registrant's data compression
technology in their production. Although the latter has produced
acceptable levels of revenue since inception, the product line may
be sold off in the future.
The financial statements contained herein describe its
operations in both industries however the revenues have not been
segmented in a separate table.
The Registrant operates through its Canadian subsidiary which
accounts for all of the Registrant's revenues, whether resulting
from sales in Canada, the United States or anywhere else in the
world.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
In the past, the Registrant has derived most of its
development and operating capital primarily from the issuance of
capital stock, convertible debt and bank borrowings.
Liquidity and Capital Resources
1999 compared to 1998
The Registrant derived most of its development and operating
capital during 1999 from the issuance of capital stock.
During the year ended December 31, 1999, the Registrant
issued 2,887,498 shares of Common Stock, of which 929,739 are still
in escrow and will be released when all of the required financing
is received. The Registrant received $988,064 from the issuance of
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1,957,768 shares of Common Stock at an average price of C$0.51 per
share in 12 private placement transactions. A total of 948,218
shares were sold in seven separate transactions at C$0.37; 325,000
shares were sold in one transaction at C$0.30, 270,270 shares were
sold in one transaction at C$0.54, 166,667 shares were sold in one
transaction at C$0.43; 150,000 shares were sold in one transaction
at C$0.20; and 97,613 shares were issued at C$3.05 on conversion of
debentures.
As a result of all of the above activities, the Registrant's
cash position increased by $85,670 as the end of 1999, compared to
a bank indebtedness figure of $90,300 at the end of 1998
The Company's investment in research and development
activities decreased by approximately $425,000 to $75,000 during
1999, down 85% from the approximate $500,000 in expenditures made
in 1998. This reflected the fact that development work was being
completed and more efforts were being placed upon implementing
existing technology into marketable applications.
At yearend 1999, current assets stood at $70,011, down 60%
from the $175,522 figure at 1998 yearend. The most significant
factor accounting for the change was the decrease in accounts
receivable from $121,691 in 1998 to $63,019 at 1999 yearend.
Inventories dropped from $46,231 in 1998 to just $73 in 1999
related to the de-emphasis of the CR-ROM business.
Current liabilities decreased to $420,044 from $674,562 in
1998 due largely to: a paydown in bank debt which totaled $90,300
at 1998 yearend, compared to $4,630 at the end of 1999, and; the
conversion of convertible debentures which showed a current portion
of $236,000 at 1998 yearend, versus $106,000 at 1999 yearend.
Accounts payable decreased 10% from $305,040 at 1998 yearend to
$273,978 at the end of 1999. Long-term debt was paid off at the end
of 1999, compared to a balance of $12,612 at 1998 yearend.
As a result of the changes described above, the working
capital position decreased from a negative $499,040 at the end of
1998, to a negative $350,033 at 1999 yearend. The shareholders'
equity position improved to a negative $681,056, from a negative
$1,024,862 in 1998.
Fiscal 1998 compared to 1997
During the year ended December 31, 1998, the Registrant
continued to derive a significant portion of its development and
operating capital primarily from the issuance of capital stock.
The Registrant issued a total of 787,741 common shares during
the year. Of this total, the conversion of outstanding debentures
resulted in the issuance of 409,363 unregistered shares of Common
Stock at a conversion price of US$1.00 per share. As a result, a
total of C$577,295 of debt was retired by the Registrant.
Additionally, 378,378 unregistered shares of Common Stock were
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issued in exchange for settlement of debt in the amount of
C$536,029.
The Company made an investment of approximately $500,000 in
research and development activities during 1998, compared to
approximately C$450,000 in the previous year.
At 1998 year end, current assets stood at $175,522, compared
to $211,955 at the end of 1997. There were no investment tax
credits available at the end of 1998, compared to $139,454 at 1997
yearend. This was, however, partially offset by an increase of
$75,169 in accounts receivable to $121,691 at 1998 yearend, from
$46,522 in 1997, as a result of increased levels of business.
Additionally, inventories increased by $21,093 to $46,231 in 1998
along with growing sales of CD-ROM products.
Current liabilities decreased to $674,562 from $1,128,070 in
1997 due mainly to the $495,394 decrease in the current portion of
convertible debentures. The working capital deficit decreased to a
negative $400,040, from a negative $916,115 at the end of 1997.
The negative shareholders' equity was decreased by nearly 33% to
1,024,862 at 1998 yearend from a $1,527,208 deficit in 1997 as a
result of debt-to-equity conversions and a smaller operating loss.
All figures are reported in Canadian dollar under US GAAP.
Results of Operations
1999 compared to 1998
During the year ended December 31, 1999 the Registrant
received $596,177 in revenues from operations. $114,190, or
approximately 19%, came from product sales, and $481,987, or 81%
resulted from contract revenues. This compared to total revenues of
$383,282 in 1998, consisting of $296,073 (77%) from product sales
and $87,209 (23%) from contract revenues.
The chief reason for the significant changes in revenues between
the two sectors is that in 1999 the retail CD-ROM multimedia market
saw a significant drop in sales and greatly reduced prices for
product. As a result, ASIL reduced the impact of it multimedia
products to revenue by placing more emphasis on contract and
royalty sales. It is expected that most of the contracts entered
into by ASIL in 1999 will result in royalty revenues starting in
the year 2000.
The cost of goods sold dropped from $99,445 in 1998 to $60,971
in 1999, due mainly to a $32,723 decrease is commissions and
royalties paid relative to lower product sales. As a result, the
gross profit rose from $283,837 in 1998 to $535,206 in 1999, with
comparative gross margins of 74% in 1998, and nearly 90% in 1999.
Operating expenses rose from $876,058 in 1998 to $1,179,464 in
1999 along with the increase in revenues. The most significant
contributing factors to the increased operating expenses were:
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higher wages, salaries and subcontract labor which rose to $704,960
in 1999 from $617,521 in 1998; higher professional fees, increasing
to $108,391 in 1999 from $30,681 in 1998 as a result of increased
accounting and legal fees related to public market participation;
increased interest on long-term debt from $6,973 in 1998 to $29,055
in 1999; a finance charge of $81,284 in 1999 versus none in 1998 as
a result of raising financing; and a $39,340 bad debt expense in
1999, compared to $331 in 1998 resulting from a distributor and
contract client going bankrupt.
The net loss for 1999, totaled $644,258, compared to a
slightly lower $610,978 loss in 1998. Due to the higher average
number of shares outstanding during 1999, the loss per share
dropped to $0.05 from $0.07 per share in 1998.
1998 compared to 1997
The Registrant received $383,282 in revenues from operations.
during the year ended December 31, 1998 with $296,073 (77%) coming
from product sales and $87,209 (23%) from contract revenues. This
compared to total revenues of $148,935 in 1997, consisting of
$95,560 (64%) in product sales and $53,375 (36%) from contract
revenues. The revenues from product sales rose significantly due to
the addition of new CD-ROM products and increased marketing efforts
related to those new products.
The cost of goods sold rose to $99,445, in 1998 from $25,893
in 1997, reflecting the increased product sales. The gross profit
rose to $283,837 in 1998 from $123,042 in 1997, with comparative
gross margins of 74% in 1998, and nearly 83% in 1997. The margin
slipped as a result of costs increasing ahead of revenues.
Operating expenses decreased to $876,058 in 1998 from
$982,965 in 1997 along with the increase in revenues. The most
significant contributing factors to the decrease in operating
expenses were: lower wages, salaries and subcontract labor which
totaled $689,245 in 1997, and dropped to $617,521 in 1998, as a
result of completion of CD-ROM product development in 1997 and a
reduction of staff in 1998; lower professional fees, decreasing
from $47,579 in 1999 to $30,681 in 1998, and a $17,090 drop in
office, postage and courier costs from $61,447 in 1997 to $44,357
in 1998. Changes in other less significant expense components
essentially balanced out.
The most significant expense item in 1997 was product
development costs which were written off, in order to comply with
U.S. GAAP. These totaled $344,393, compared to no such write-offs
during 1998.
The net loss for 1998 totaled $610,978, compared to a nearly
double $1,206,603 figure in 1997. The loss per share in 1998 was
cut nearly in half to a fully diluted $0.07 from $0.13 in 1997.
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Year 2000 Concerns and Compliance
During the past two years, the Registrant and ASIL identified
and reviewed all of its internal computer systems for Year 2000
compliance, including its accounting system, office computers and
related equipment. All of its critical and non-critical systems
were tested and found to be in compliance, or were brought into
compliance, if found not to be. To mitigate any risk to the
Registrant from external parties, the Registrant made every effort
to ensure that all current financial, legal and administrative
information on the Registrant is maintained by the Registrant, both
on paper and on its computers. The costs of preparation and
remediation were not material.
The Registrant and ASIL neither had nor have any material
relationships with third-party suppliers which were believed to
have a potentially significant adverse effect upon its operations.
As with most businesses which took appropriate steps to prepare for
possible contingencies, the Registrant has experienced no material
adverse effects in its operations as a result of the turnover to
the year 2000. Neither has the Registrant become aware of any
problems which its customers have encountered as a result of their
use of the ASIL's products and/or services.
Item 2. Description of Property
The Registrant owns no properties. The Registrant currently
utilizes office space leased by ASIL, its subsidiary in a
office tower building located in downtown, Alberta, Canada. The
monthly rent for this 3929 square foot space is C$3,859 with the
present lease expiring on July 31, 2001. ASIL also rents a small
163 square foot office space in Calgary on a month-to-month basis
at a rate of C$550 per month, including certain secretarial
services. The present facilities are believed to be adequate for
meeting the Company's needs for the immediate future, however,
management expects that the Registrant may need to acquire
additional space should the level of business activity require it
to do so in the future. The Registrant does not anticipate that it
will have any difficulty in obtaining such additional space at
favorable rates. There are no current plans to purchase or
otherwise acquire any properties in the near future.
Item 3. Directors, Executive Officers and Significant Employees
(a) The following is a list of the names of all of the
directors of the Registrant and ASIL. Other than Dr. Darryl Stewart
who became a director of ASIL in July 1999, each of the directors
listed below served in the respective capacities during the years
ended December 31, 1998 and 1999. Other than Ian Basford, who
resigned effective July 1999, they will serve until the next annual
meeting of the shareholders.
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Name Title
______________________ ________________________________
Ian Basford, age 47 Director of the Registrant
Director of ASIL (former)
Tomislav Milinusic, age 47 Director of the Registrant
Director of ASIL
Dr. Darryl Stewart, age 46 Director of ASIL
Members of the Board of Directors hold office and serve until
the next annual meeting of the shareholders of the Registrant or
until their respective successors have been elected and qualified.
Executive officers are appointed by and serve at the discretion of
the Board of Directors. The Registrant's directors currently do
not receive any direct cash compensation for service on the Board
of Directors save for the reimbursement of travel and accommodation
expenses directly associated with the attendance of Board meetings.
Mr. Basford has held his position since August 1996, Mr.
Milinusic since August 1996 for the Registrant and since July 1999
for ASIL, and Dr. Stewart since July 1999.
Additional officers and directors may be added as the
Company's operations require.
The Registrant is scheduled to hold its annual meetings on
April 15 of each year, although no annual meetings have been held
since 1996, as permitted under Nevada corporation rules.
(b) The following is a list of the names of all of the exec-
utive officers of the Registrant. The executive officers have
employment contracts and serve at the pleasure of the Board of
Directors.
Name Title
______________________ ________________________________
Ian Basford, age 47 President and CFO of Registrant
President of ASIL
Markus Lemke, age 36 CEO of the Registrant (current)
Charles Martin, age 71 CEO of the Registrant (former)
Shawna Sundal, age 30 Secretary of the Registrant and
of ASIL
Milton Lemke, age 34 Vice President of ASIL
(c) The following is a list of the names of all of the
significant employees of the Registrant.
Name Title
______________________ ________________________________
Ian Basford, age 47 President and CFO of the
Registrant, President of ASIL
Markus Lemke, age 36 CEO of the Registrant (current)
Charles Martin, age 71 CEO of the Registrant (former)
Shawna Sundal. age 30 Secretary of the Registrant and
also of ASIL
Milton Lemke, age 34 Vice President of ASIL
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(d) There are no family relationships between any director or
executive officer and any other director or executive officer
except Markus Lemke and Milton Lemke who are first cousins.
(e) Business Experience:
Ian Basford has been the President of the Registrant since
August 1996 and of ASIL since May 1996. He first joined ASIL in
July 1994 in a managerial capacity. Prior to that time he was
employed in various managerial capacities with Stewart Weir Land
Data Inc. in Edmonton. He joined that company in 1977.
Charles Martin was Chief Executive Officer of the Registrant
from August 1996 to November 30, 1999. Prior to that time and
during the previous 20 years, Mr. Martin had been a private
investor and also an officer and director of several public
companies in Canada engaged in mineral development and mining
operations.
Markus Lemke was appointed Chief Executive Officer of the
Registrant in effective December 1, 1999. Between October 1997 and
November 1999, he served as Manager of Communications for Computing
Devices Canada, a subsidiary of General Dynamics Company, located
in Calgary. Between February 1996 and August 1997 he served as
Manager of International Relations for Canada 2005 Exposition
Corporation in Calgary and between June 1993 and February 1996, he
served as Director of Marketing for Mix Bros. Tank Services, a
petroleum industry servicing business located in Edmonton.
Tomislav Milinusic is the founder, and has served as a Direc-
tor of ASIL since 1984. He was the president of ASIL from founding
until 1996 when he left to start a scientific consulting business.
He has been a Director of the Registrant since August 1996.
Milton Lemke has been Vice President of ASIL since August
1999. He joined ASIL in June 1998 in the capacity of GIS Manager.
Between September 1997 and May 1998, he was employed by Transport
Canada where he was involved in privatization of airport maintained
and operated by that government agency. Between September 1996 and
August 1997, he was employed as Production and Business Development
Manager by GWN Systems, an engineering software development firm in
Edmonton. Between May 1994 and August 1996 he was employed by
Transport Canada as a Quality Control Officer coordinating digital
mapping of 80 airports in Western and Northern Canada.
Dr. Darryl Stewart has served as a Director of ASIL since
July 1999. Dr. Stewart has been a practicing physician in Canada
since 1978. He is currently employed full time in the emergency
department at Royal Alexandra Hospital in Edmonton and is also a
Clinical Lecturer at the University of Alberta in Edmonton.
Shawna Sundal has served as Corporate Secretary of the
Registrant and ASIL since May 1999. She has also been the office
manager of ASIL since September 1997. Between March 1991 and June
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1997 she was a personal banker with Capital City Saving in
Edmonton.
Involvement in Certain Material Legal Proceedings During the Last
Five Years.
(1) No director, officer, significant employee or consultant
has been convicted in a criminal proceeding, exclusive of traffic
violations.
(2) No bankruptcy petitions have been filed by or against any
business or property of any director, officer, significant employee
or consultant of the Company nor has any bankruptcy petition been
filed against a partnership or business association where these
persons were general partners or executive officers.
(3) No director, officer, significant employee or consultant
has been permanently or temporarily enjoined, barred, suspended or
otherwise limited from involvement in any type of business,
securities or banking activities.
(4) No director, officer or significant employee has been con-
victed of violating a federal or state securities or commodities
law.
(5) The directors serve for a term of one year, as stated in
the Company's By-laws, the directors are elected at the annual
meeting of the stockholders which is scheduled to be held on April
15, 2000.
Item 4. Remuneration of Directors and Officers
Name of individual or Capacities in which Aggregate
identity of group remuneration was received remuneration
__________________ _____________________________ ____________
Ian Basford President, CFO & Director
President, CFO & Director of ASIL C$144,000
Markus Lemke* CEO (current) C$100,000*
Charles Martin CEO (former) -
Milton Lemke Vice President ASIL C$ 80,000
Shawna Sundal Secretary &
Secretary ASIL C$ 40,000
Tomislav Milinusic Director &
Director ASIL -
Darryl Stewart Director ASIL -
________________________
* C$8,333 since date of employment through December 31, 1999
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No other compensation has been paid directly or accrued to any
other officer or director of the Registrant during the past two
years. On December 1, 1999 the Registrant entered into a
consulting agreement with Charles Martin under which it retained
Mr. Martin to provide certain management, administrative, and
financial consulting services to the Registrant at the rate of
US$5,000 per month, during a transition period of twelve months.
Neither the Registrant not ASIL have any other current or
contemplated agreement with any officer or director, regarding
employment with or compensation by the Registrant or ASIL for
services other than herein described. Compensation of officers and
directors is determined by the Company's Board of Directors and is
not subject to shareholder approval.
1999 Stock Option Plan
The Company's 1999 Stock Option Plan ("1999 Plan") is intended
to serve as an equity incentive program for management, qualified
employees, nonemployee members of the Board of Directors, and
independent advisors or consultants. The 1999 Plan became effective
on August 20, 1998 upon adoption by the Board of Directors, and
will he presented to shareholders for ratification at the next
annual meeting. Under the 1999 Plan, the total number of shares of
common stock reserved for issuance is 1,300,000, which may be
Incentive Stock Options ("ISOs") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended, or nonqualified
stock options
The 1999 Plan contains two separate components: (i) a
discretionary option grunt program under which eligible individuals
in the Company's employ or service (including officers and other
employees, non-employee Board members and independent advisors or
consultants) may, at the discretion of the Plan Administrator, be
grunted options to purchase shares of common stock; and (ii) an
automatic option grant program under which option grants will
automatically he made at periodic intervals to eligible non-
employee Board members to purchase shares of Common Stock at an
exercise price equal to their fair market value on the grant date.
The discretionary option grant program will be administered by
the Board of Directors or a committee of two or more members of the
Board. Plan administrators have sole authority to prescribe the
form, content and status of options to he granted, select the
eligible recipients, determine the timing of option grants,
determine the number of shares subject to each grant, the exercise
price, vesting schedule, and term for which any option will remain
outstanding. The Board of Directors has the authority to correct
any defect, supply any omission or reconcile any inconsistency in
the Plan, determine the terms and restrictions on all restricted
option awards granted under the Plan, and in general, to construe
and interpret any provision of the 1999 Plan or of any option
granted thereunder. The administration of the automatic option
grant program will be self-executing in accordance with the
provisions of the 1999 Plan.
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Current factors considered by the Plan Administrators in
granting stock options under the discretionary option grant program
include, but are not limited to the following: grants made to
employees and executive officers upon initial employment; grants
upon promotion to a new, higher level position that entails
increased responsibility and accountability, in connection with the
execution of a new employment agreement; and/or when all previously
granted stock options have either fully vested or are within twelve
months of full vesting. With respect to independent consultants and
advisors, options may be granted in lieu of cash fees as
consideration to achieve specified milestones. Typically grants to
employees are made in connection with the negotiation of the
individual's initial salary level, and range between 2,000 to
80,000 options. Using these factors, the Company's managers, under
the direction of the President, recommend the number of options to
be granted and present this recommendation to the Plan
Administrators for review and approval. Management may make
recommendations that deviate from the historical guidelines where
they deem it appropriate. Options are granted at not less than the
current market value as of the date of grant, and typically vest
over a five-year period. In some instances a graduated range of
exercise prices may be established. In these circumstances the
Company intends to use a formula of 50% of the total granted
options at the market value at the time of grant, 25% at 150% of
market value and 25% at 200% of market value.
The exercise price for outstanding option grants under the
1999 Plan may be paid in cash or, upon approval of the Plan
administrators, in shares of common stock valued at fair market
value on the exercise date. The option may also be exercised
through a same-day cashless exercise program or a reduction in the
amount of any Company liability to the optionee.
Under the automatic option grant program, immediately after
each annual meeting of shareholders, each elected non-employee
director of the Company shall automatically be granted a
nonqualified stock option to purchase 15,000 shares of common stock
for each year included in the term for which such he or she was
elected, provided that individual has not previously received an
option grant from the Company in connection with his or her Board
service which remains unvested.
Under the 1999 Plan, no stock option can be granted for a
period longer than ten years or for a period longer than five years
for ISOs granted to optionees possessing more than 10% of the total
combined voting power of all classes of stock of the Company.
Following the effective date of any registration of the Company's
securities under the Exchange Act, the per share exercise price for
any option granted may not be less than the fair market value of
the Company's securities on the grunt date. Unless extended by the
Plan administrators until a date not later than the expiration date
of the option, the right to exercise an option terminates ninety
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days after the termination of an optionee's employment, contractual
or director relationship with the Company. If the optionee dies or
is disabled, the option will remain exercisable for a period of one
year after the termination of employment or relationship with the
Company.
At the sole discretion of the Plan administrators, options
granted under the 1999 Plan may contain resale provisions pursuant
to which the purchaser of the common stock issued upon exercise of
the option may he limited to sales of common stock in an amount
which may not exceed 1% of the outstanding Company shares during
any three-month period.
The 1999 Plan includes options granted by the Company prior to
its effective date, m accordance with the effective date of grant
and other terms of each agreement with option holders. As of August
20, 1999, the Company had granted options to purchase an aggregate
of 687,000 shares of common stock under the 1999 Plan, of which
130,000 were issued to directors of the Company and 300,000 to
officers of the Company.
Item 5. Security Ownership of Management and Certain
Securityholders
The following table sets forth the amount and the percentage
of the Company's Common Stock owned of record or beneficially by
each officer, director and holder of more than five percent of the
voting interest in the Registrant.
As of December 31, 1999
Title Amount and Nature
of Name and address of of Beneficial Percent of
Class Beneficial Owner Ownership Class*
______ ___________________ _________ _____
Common Ian Basford - -
Suite 700 - 9925 109th St.
Edmonton, AB, T5K 2J8, Canada
Common Charles Martin 2,250,000 17.43%
2680 Cambridge St.
Vancouver, BC, V8K 1L8, Canada
Common Marcus Lemke - -
400, 609-14th St. N.W.
Calgary, AB, T2N 2A1, Canada
Common Tomislav Milinusic 469,700 3.64%
11 Paradise Estate
Paradise Island
Nassau, Bahamas
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Title Amount and Nature
of Name and address of of Beneficial Percent of
Class Beneficial Owner Ownership Class*
______ ___________________ _________ _____
Common Tachyon Scientific Corp. 2,040,000 15.81%
In Trust for Tomislav Milinusic
P.O. Box N-3950
2 Charlotte House, Charlotte St.
Nassua, Bahamas
Common Dr. Darryl Stewart 1,090,052** 8.45%
Suite 700 - 9925 109th St.
Edmonton, AB, T5K 2J8, Canada
Common Milton Lemke 10,500 0.08%
Suite 700 - 9925 109th St.
Edmonton, AB, T5K 2J8, Canada
Common Shawna Sundal - -
Suite 700 - 9925 109th St.
Edmonton, AB, T5K 2J8, Canada
Common Banakor Swisse S.A.*** 1,800,000 13.95%
West Bay St.
P.O. Box N10601
Nassau, Bahamas
Common Cede & Co.**** 2,763,900 21.42%
55 Water St.
New York, NY 10041
Common David Fraser 1,150,599 8.92%
1200 - 999 West Hastings St.
Vancouver, BC, V6C 2W2, Canada
Common All officers and directors
as a group 5,860,252 45.42%
___________
* Based upon shares outstanding prior to exercise of any
options.
** Includes 62,000 held by Darryl Stewart individually, and
1,027,052 held jointly with Dolores Nord, his wife.
*** The Registrant has requested Banakor Swisse S.A. to disclose
the names of its beneficial owners, but they have declined.
**** The Registrant has no knowledge as to the beneficial ownership
of street name shares held in this depository institution.
As part of a private placement of a US$100,000 principal
amount convertible debenture on September 1, 1999 with an unrelated
investor t he Registrant issued a Option to that investor to
purchase 80,000 shares of its Common Stock at US$0.62 per share
through August 1, 2002.
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The Registrant has entered into Common Stock purchase option
agreements with the following officers, directors and 10% or more
voting rights holders under the terms indicated:
No. of
Common Exercise Expiration
Name of Holder Title Shares Price Date
______________ ___________ _______ _______ _______
Ian Basford President & 200,000 $0.25 6/01/03
Director 50,000 $0.25 5/05/04
Charles Martin CEO (former) 400,000 $0.25 12/01/04
Markus Lemke CEO (current) 200,000 $0.25 12/01/04
Tomislav Milinusic Director & 50,000 $0.25 5/05/04
Director ASIL 15,000 $0.25 8/20/04
Darryl Stewart Director ASIL 15,000 $0.25 8/20/04
Shawna Sundal Secretary & 10,000 $0.25 8/20/04
Secretary ASIL
Item 6. Interest of Management and Others in Certain
Transactions
The following is a description of transactions which have
taken place during the past two years, and any proposed
transactions up to the date of this Registration Statement, which
involve the Registrant and/or ASIL, and any of their officers,
directors, principal shareholders, as described in Item 6., spouses
of any of the above listed persons or relatives of any such persons
or spouses living in the same residence as any such person.
On October 8, 1999 the Registrant entered into a stock
purchase agreement with Banakor Swisse S.A. (Banakor) of Nassau,
Bahamas, an "accredited investor", pursuant to which the Registrant
agreed to sell 1,200,000 restricted shares of its Common Stock, as
defined in Rule 144, to Banakor Swisse S.A. at a price of US$0.25
per share in seven separate transactions due to be paid for as
follow: $16,000 on October 24, 1999, $27,000 on November 24, 1999,
$41,000 on December 24, 1999, $30,000 on January 24, 2000, $15,000
on February 24, 2000, $24,000 on March 24, 2000 and $121,000 on
April 24, 2000. In the event that the $300,000 full payment is not
received by the Registrant by April 24, 2000, the US$0.25 per share
purchase price will immediately be adjusted to US$0.37 per share.
As of the date of this registration statement, the Registrant has
received all the required payments on time.
On October 14, 1999, the Registrant entered into a services
agreement with Banakor Swisse S.A., pursuant to which the
Registrant agreed to retain Banakor to act as a public relations
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consultant for the Registrant outside of North America, in
consideration of the payment to Banakor of US$150,000 by the
Registrant in the form of 600,000 restricted shares of its Common
Stock, as defined in Rule 144, at a price of US$0.25 per share.
These shares were issued January 2, 2000, and are identified in
"Item 5. Security Ownership of Management and Certain Security-
holders", however, they do no appear in the financial statements of
1999 as the transaction did not occur until this year.
On October 14, 1999, the Registrant also entered into an
agreement with ChaseGlobal Capital, an affiliate of Banakor Swisse
S.A., pursuant to which ChaseGlobal was retained for a period of
seven months, beginning in April 2000, upon the completion of
Banakor's $300,000 investment in the Registrant, described above,
to act as financial advisor and consultant to the Registrant, and
agreed to nominate the controller of ChaseGlobal as a member of the
Registrant's Board of Directors. Payment for these services will
be made in the form of restricted shares of the Registrant, as
defined in Rule 144, at the rate of 20,000 shares per month at a
deemed price of US$0.25 per share for a total of 140,000 shares.
On November 24, 1999 the Registrant entered into a separation
agreement with Charles Martin, former CEO, under which it retained
Mr. Martin, through Martech Industries, a company owned by Mr.
Martin, to provide certain management, administrative, and
financial consulting services to the Registrant at the rate of
US$5,000 per month, during a transition period of twelve months
beginning December 1, 1999. In addition, and in consideration of
the fact that Mr. Martin had served as the CEO of the Registrant
from September 1996 through November 1999, at no salary, the
Registrant granted to Mr. Martin an option to acquire 400,000
shares of the Registrant's Common Stock at an exercise price of
US$0.25 per share, expiring December 1, 2004. The agreement also
specifies a repayment plan by the Registrant to Mr. Martin of a
number of interest-free loans made by Mr. Martin to the Registrant
over a period of years, the unpaid principal amount of which
totalled C$90,852 at November 31, 1999.
Item 7. Description of Securities being Registered.
A. Common Stock
The Registrant is authorized to issue 50,000,000 shares of
Common Stock, at $0.001 par value, of which, as of December 31,
1999, 12,902,239 shares are issued and outstanding and held of
record by approximately 363 stockholders, per information as
supplied by the Registrant's Transfer Agent, CJB Transfer Services
of Englewood, Colorado. The Registrant cannot indicate, with any
degree of accuracy, the number of shareholders which exist outside
of those who have requested physical delivery of shares or are
trading the stock on a daily basis.
Holders of shares of Common Stock are entitled to one vote per
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share on all matters to be voted upon by the stockholders
generally. The approval of proposals submitted to stockholders at
a meeting other than for the election of directors requires the
favorable vote of a majority of the shares voting, except in the
case of certain fundamental matters (such as certain amendments to
the Certificate of Incorporation, and certain mergers and
reorganizations), in which cases Nevada law and the Registrant's
By-Laws require the favorable vote of at least a majority of all
outstanding shares.
Stockholders are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds
legally available therefor, and in the event of liquidation,
dissolution or winding up of the Company to share ratably in all
assets remaining after payment of liabilities.
The holders of shares of Common Stock have no preemptive,
conversion, subscription or cumulative voting rights.
(1) Description of Rights and Liabilities of Common
Stockholders
i. Dividend Rights - The holders of outstanding shares of
common stock are entitled to receive dividends out of assets
legally available therefore at such times and in such amounts as
the Board of Directors of the Registrant may from time to time
determine. The board of directors of the Registrant will review
its dividend policy from time to time to determine the desirability
and feasibility of paying dividends after giving consideration the
Company's earnings, financial condition, capital requirements and
such other factors as the board may deem relevant.
ii. Voting Rights - Each holder of the Company's common
stock are entitled to one vote for each share held of record on all
matters submitted to the vote of stockholders, including the
election of directors. All voting is noncumulative, which means
that the holder of fifty percent (50%) of the shares voting for the
election of the directors can elect all the directors. The board
of directors may issue shares for consideration of previously
authorized but unissued common stock without future stockholder
action. Shares of Common Stock do not have cumulative voting
rights, which means that the holders of a majority of the
shareholder votes eligible to vote and voting for the election of
the Board of Directors can elect all members of the Board of
Directors. There are a total of 50,000,000 authorized regular
common shares.
iii. Liquidation Rights - Upon liquidation, the holders of
the common stock are entitled to receive pro rata all of the assets
of the Registrant available for distribution to such holders.
iv. Preemptive Rights - Holders of common stock are not
entitled to preemptive rights.
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v. Conversion Rights - No shares of common stock are
currently subject to outstanding options, Options, or other
convertible securities.
vi. Redemption rights - no redemption rights exist for
shares of common stock.
vii. Sinking Fund Provisions - No sinking fund provisions
exist.
viii. Further Liability For Calls - No shares of common
stock are subject to further call or assessment by the issuer.
(2) Potential Liabilities of Common Stockholders to State and
Local Authorities
No material potential liabilities are anticipated to be
imposed on stockholders under state statutes. Certain Nevada
regulations, however, require regulation of beneficial owners of
more than 5% of the voting securities. Stockholders that fall into
this category, therefore, may be subject to fines if non-compliance
with these regulations are established.
B. Preferred Stock
There is no Preferred Stock authorized or issued.
C. Debt Securities
There are outstanding, at the date of this registration
statement, US$100,000 principal amount of Convertible Redeemable
Debentures bearing interest at the rate of 10% per annum and
convertible into the Common Stock of the Registrant at a price of
US$0.43 per share and due on October 14, 2002. In the event that
the price of the Common Stock of the Registrant trades at a price
equal to or exceeding US$2.00 per share for a period of 15
consecutive trading days, the Registrant shall have the right to
convert all or part of the Debentures into Common Stock at its
discretion, upon written notice to the holders. In connection with
the above described Debentures, the Registrant also issued Options
entitling the holder to purchase 80,000 shares of Common Stock at
US$0.62 expiring October 15, 2002. The Registrant is not seeking
to register, at the present time, either the Debentures described
above nor the underlying shares into which they and/or the Options
may be converted.
D. Other Securities To Be Registered
The Registrant is not registering any security other than its
Common Stock.
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PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Related Stockholder Matters.
There is currently a limited public market in the Registrant's
Common Stock which is traded on the National Quotation Bureau's
"Pink Sheet" system. Prior to August 1999, the Registrant's Common
Stock was traded on the NASD's OTC Bulletin Board but was among the
first group of stocks delisted from that trading medium in August
because it did not become a reporting company with the Securities
and Exchange Commission by the deadline established by the NASD.
The Registrant believes that its common stock falls under the
classification of a "penny stock", as that term is defined by Rule
3a51-1 of the Securities Exchange Act of 1934. This rule imposes
additional sales practice requirement on broker-dealers who sell
such securities to persons, other that established customers and
accredited investors, which are generally defined as institutions
with assets in excess of US$5,000,000, or individuals with net
worths in excess of US$1,000,000, or annual incomes exceeding
US$200,000 or US$300,000 jointly with their spouse. For
transactions covered by this rule, the broker-dealer must first
make a special suitability determination for the purchaser and the
transaction, prior to the sale. Consequently, the rule may affect
the ability of brokers-dealers to sell the Registrant's securities
and may also have a potentially adverse effect upon the ability of
existing shareholders and new purchasers of the Registrant's
securities to sell their shares in the secondary market.
The following table provides information regarding the trading
market for the Common Stock of the Registrant since it commenced
trading on August 28, 1998 on the OTC Bulletin Board, and has since
continued to trade on the Pink Sheet system.
Reported
Quarter Ended High Low Close Volume*
_____________ ________ ________ ________ _________
9/30/98 $0.60 $0.125 $0.520 255,000
12/31/98 0.60 0.15625 0.21875 1,829,000
3/31/99 0.375 0.125 0.21875 1,594,400
6/30/99 1.0625 0.09375 0.875 6,136,400
9/30/99 1.03125 0.125 0.1875 2,014,200
12/31/99 0.35 0.22 0.28 458,900
______________________
*The reported volume is not necessarily a true indicator of
the actual number of shares which have changed hands between
retail buyers and sellers. Unlike an exchange, which operates
as an auction market, the over-the-counter market is a dealer
market in which securities broker/dealer firms act as
marketmakers. As such, they generally buy shares at the bid
price or some negotiated higher price from sellers, and resell
those same shares to retail customers or other brokerage firms
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acting for their retail customers, at the offering price, or
some lower negotiated price. As a result of how this market
operates, the volumes indicated above are likely to represent
approximately twice the actual number of shares traded, since
marketmakers must count each purchase and each sale as a
separate transaction, even though the same shares may be
involved in both the purchase and the sale; or vice versa, if
the dealer first sold shares he did not have in inventory in a
short sale on the offer, and subsequently covered that short
position through a purchase transaction. By comparison,
stocks listed on an exchange are bought and sold in an auction
market where the transactions generally take place at the best
prices then available to the buyer and seller. As a result,
the volumes shown for exchange-listed stocks generally
represent actual numbers of shares traded between buyers and
sellers, since most transactions result from matching of buy
and sell orders entered by retail customers, and not between
marketmakers and other dealers.
The Registrant has not paid any cash dividends on its Common
Stock since its inception. The Registrant anticipates that in the
foreseeable future, earnings, if any will be retained for use in
the business and it is not anticipated that any cash dividends will
be paid.
Item 2. Legal Proceedings
On June 26, 1998 the Registrant and ASIL were served with a
"Statement of Claim" (Complaint in a civil action) and were named
as defendants along with Charles Martin, Martech Industries Inc., a
corporation incorporated in British Columbia, Axion Software Inc. a
corporation incorporated in Colorado, Tomislav Milinusic, Ian
Basford and Brian Shearer. The Statement of Claim was filed in the
Court of the Queen's Bench of Alberta in Edmonton by six
plaintiffs, namely: Dirk Hiel, a former director of ASIL; John
Pierce, Robert McNally, Donald Dixon, Ivan Dixon and Marlene Ray,
all of whom are or were shareholders of the Registrant seeking
damages from the defendants involving transactions entered into in
1995 and 1996 relating the initial acquisition of ASIL by the
Registrant. The total damages for loss of investment and loss of
profit alleged and sought against the group which includes the
Registrant and ASIL total C$4,527,000. In essence, the plaintiffs
claim that they were and are entitled to ownership of a greater
number of shares of stock in the Registrant than they received at
the time of the acquisition of ASIL by the Registrant because the
final terms of the transaction were changed from what they believed
them to be when they made their initial and subsequent investments
relative to the acquisition transaction.
The defendants filed their "Statement of Defence" (answer and
counterclaim) on September 22, 1998, alleging that the plaintiffs
were or should have been fully aware of all relevent facts related
to their transactions and that the former director of ASIL who is
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one of the plaintiffs, acted improperly in his dealings with some
of the other plaintiffs. The defendants seek C$21,057,500 in
counterclaims against the plaintiffs.
During the past 16 months, some progress has been made on the
case but no settlement talks have taken place and no court date has
been set. The management of the Registrant and ASIL do not believe
that the claim has any merit and, as the outcome of this dispute is
not determinable, no liability has been accrued at December 31,
1999.
Item 3. Changes in and Disagreements with Accountants
None
Item 4. Recent Sales of Unregistered Securities.
Between January 1, 1997 and the date of this Registration
Statement, the Registrant has sold or issued the following
securities, none of which were registered under the Securities Act
of 1933 (the "Act"):
On January 1, 1997 the Registrant entered into a share
exchange agreement with the shareholders of ASIL. The Registrant
issued 4,000,000 shares of its Common Stock to the shareholders of
ASIL in exchange for 100% of the 10,000 issued and outstanding
shares of ASIL. At that point there were 8,900,000 shares of the
Registrant's Common Stock outstanding. During the year ended
December 31, 1997 the Registrant issued 152,000 shares for
consideration of C$152,000 and 125,000 shares for consideration of
US$125,000 (recorded at the exchange rate in effect at the time of
issue equal to C$176,050). All of the securities issued in these
transactions were and are believed to be exempt from registration
under the Act, by reason of Section 4(2) thereof.
On May 5, 1999, the Registrant issued 475,000 "restricted
shares" of its Common Stock in consideration of C$126,091 to an
"accredited investor" in the United States subject to Rule 144 of
the Securities Act of 1933. The securities issued in this
transaction were and are believed to be exempt from registration
under the Act, by reason of Section 4(2) thereof.
On October 8, 1999 the Registrant entered into a stock
purchase agreement with Banakor Swisse S.A. of Nassau, Bahamas, an
"accredited investor", pursuant to which the Registrant agreed to
sell 1,200,000 restricted shares of its Common Stock, as defined in
Rule 144, to Banakor Swisse S.A. at a price of US$0.25 per share in
seven separate transactions due to be paid for as follow: $16,000
on October 24, 1999, $27,000 on November 24, 1999, $41,000 on
December 24, 1999, $30,000 on January 24, 2000, $15,000 on February
24, 2000, $24,000 on March 24, 2000 and $121,000 on April 24, 2000.
In the event that the $300,000 full payment is not received by the
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Registrant by April 24, 2000, the US$0.25 per share purchase price
will immediately be adjusted to US$0.37 per share. As of the date
of this registration statement, the Registrant has received all the
required payments on time.
On October 14, 1999, the Registrant entered into a services
agreement with Banakor Swisse S.A., pursuant to which the
Registrant agreed to retain Banakor to act as a public relations
consultant for the Registrant outside of North America, in
consideration of the payment to Banakor of US$150,000 by the
Registrant in the form of 600,000 restricted shares of its Common
Stock, as defined in Rule 144, at a price of US$0.25 per share.
These shares were issued January 2, 2000, and are identified in
"Item 5. Security Ownership of Management and Certain Security-
holders", however, they do no appear in the financial statements of
1999 as the transaction did not occur until this year.
On December 24, 1999 the Registrant approved the issuance of
1,172,498 shares of its Common Stock to seven investors. Of the
total, 275,700 were issued to Tomislav Milinusic, a director of the
Registrant, of which 65,000 were an exercise of director's options,
and the balance exchanged for debt; 15,000 were issued to Darryl
Stewart for an exercise of director's options; and the balance of
1,092,498 were issued in exchange for debt as disclosed elsewhere
herein
Item 5. Indemnification of Directors and Officers
Article 15 of the By-Laws of the Registrant provides for
indemnification of each Officer and Director by the Registrant
against suits by shareholders, other Directors or creditors of the
Registrant unless such Officer or Director shall have been
adjudicated in a court of law to have committed fraud or willful
malfeasance. This indemnification shall not apply to suits filed
under the Securities and Exchange Act of 1934 and amendments
thereto, and is not to be construed in any manner which would run
counter to the policy as set forth by the Securities and Exchange
Commission.
Section 78.751 of the Nevada General Corporation Laws provides
as follows:
78.751 Indemnification of officers, directors, employees and
agents; advance of expenses.
1) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by
or in the right of the corporation, by reason of the fact that
he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
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<PAGE>
another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorney's fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action,
suitor proceeding if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equiva-
lent, does not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct
was unlawful.
2. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corpora-
tion to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against expenses, including amounts paid in settle-
ment and attorneys' fees actually and reasonably incurred by
him in connection with the defense or settlement of the action
or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interests of the corporation. Indemnification may not be made
for any claim, issue or matter as to which such a person has
been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corp-
oration or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the
action or suit was brought or other court of competent juris-
diction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of
a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in sub-
sections 1 and 2, or in defense of any claim, issue or matter
therein, he must be indemnified by the corporation against
expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless
ordered by a court or advanced pursuant to subsection 5, must
be made by the corporation only as authorized in the specific
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<PAGE>
case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The
determination must be made: (a) By the stockholders: (b) By the
board of directors by majority vote of a quorum consisting of
directors who were not parties to act, suit or proceeding; (c)
If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or (d) If a
quorum consisting of directors who were not parties to the act,
suit or proceeding cannot to obtained, by independent legal
counsel in a written opinion; or
5. The Articles of Incorporation, the Bylaws or an agreement
made by the corporation may provide that the expenses of
officers and directors incurred in defending a civil or
criminal, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking
by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent juris-
diction that he is not entitled to be indemnified by corpo-
ration. The provisions of this subsection do not affect any
rights to advancement of expenses to which corporate personnel
other than the directors or officers may be entitled under any
contract or otherwise by law.
6. The indemnification and advancement of expenses authorized
in or ordered by a court pursuant to this section: (a) Does not
exclude any other rights to which a person seeking indemnifi-
cation or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for
either an action in his official capacity or an action in
another capacity while holding his office, except that indemni-
fication, unless ordered by a court pursuant to subsection 2 or
for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a
final adjudication establishes that his act or omissions
involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action. (b)
Continues for a person who has ceased to be a director,
officer, employee or agent and endures to the benefit of the
heirs, executors and administrators of such a person. Insofar
as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemni-
fication is against public policy as expressed in the Securi-
ties Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
-41-
<PAGE>
asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appro-
priate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such
issue.
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<PAGE>
PART F/S
Page
Audited Financial Statements for the year
ended December 31, 1997. . . . . . . . . . . . . . . . . . . . F-1
Audited Financial Statements for the year
ended December 31, 1998. . . . . . . . . . . . . . . . . . . . F-19
Unaudited Financial Statements for the year
ended December 31, 1999. . . . . . . . . . . . . . . . . . . . F-37
-43-
<PAGE>
Consolidated Financial Statements of:
AXION SPATIAL IMAGING INC.
For the year endedn December 31, 1997
F-1
<PAGE>
James J. Keiller
Professional Corporation
Chartered Accountant
232 Ormsby Road East
Edmonton, Alberta T5T 5X5
AUDITOR'S REPORT
To the Shareholders of:
Axion Spatial Imaging Inc.
I have audited the consolidated balance sheet of Axion Spatial Imaging
Inc. as at December 31, 1997 and the consolidated statements of loss
and deficit and changes in financial position for the year then ended.
These consolidated financial statements are the responsibility of the
company's management. My responsibility is to express an opinion on
these consolidated financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards in Canada. Those standards require that I plan and perform
an audit to obtain reasonable assurance whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation.
In my opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the company as at
December 31, 1997 and the results of its operations and changes in its
financial position for the year then ended in accordance with
generally accepted accounting principles in Canada.
The comparative figures of the company's wholly owned subsidiary,
Axion Spatial Imaging Ltd., were audited by another firm of Chartered
Accountants.
/s/ James J. Keiller
Chartered Accountant
Edmonton, Alberta
May 29, 1998
F-2
<PAGE>
AXION SPATIAL IMAGING INC.
Consolidated Balance Sheet
As at December 31, 1997
(Expressed in Canadian dollars)
1997 1996
ASSETS
Current assets
Cash $ 169,290 $
Accounts receivable 46,522 9,305
Inventories 25,138 -
Investment tax credits receivable (Note 5) 139,454 178,654
Prepaid expenses 841 4,973
__________ __________
211,955 362,222
Deferred development costs (Note 6) - 305,193
Investment tax credits receivable (Note 5) 16,757 16,757
Investment in PPM 2000 Inc. (Note 7) 7,908 7,908
Capital assets (Note 8) 28,886 38,729
__________ ________
$ 265,506 $ 730,809
========== ==========
LIABILITIES
Current liabilities
Bank indebtedness (Note 9) $ 78,043 $ 48,704
Short-term loans (Note 10) 53,610 -
Accounts payable and accrued liabilities 248,164 98,483
Current portion of long-term debt (Note 11) 16,859 20,319
Current portion of convertible debentures (Note 12) 731,394 -
__________ __________
1,128,070 167,506
Long-term debt (Note 11) 9,656 23,954
Convertible debentures (Note 12) 47,911 731,394
Advances from shareholders (Note 13) 573,087 424,709
__________ __________
1,758,724 1,347,563
========== ==========
SHARE CAPITAL AND DEFICIT
Equity component of convertible debentures (Note 14) 33,990 31,901
Share capital (Note 15) 335,766 7,716
Deficit (1,862,974) (656,371)
___________ ___________
(1,493,218) (616,754)
___________ ___________
$ 265,506 $ 730,809
========== ==========
Approved by the Board:
/s/ Ian Basford Director
F-3
<PAGE>
AXION SPATIAL IMAGING INC.
Consolidated Statement of Loss and Deficit
For the year ended December 31
(Expressed in Canadian dollars)
1997 1996
__________ ___________
Four Months
(Note 22)
Revenue (Note 21)
North American product sales $ 44,551 $ -
German license revenue 51,009 -
Consulting services 53,375 4,160
___________ _________
148,935 4,160
___________ _________
Cost of goods sold
Production costs 3,605 -
Commissions 16 -
Royalties 22,272 -
___________ _________
25,893 -
Gross profit 123,042 4,160
Operating expenses - Schedule 1 982,965 182,803
____________ __________
Loss from operations (859,923) (178,643)
Other income (expense)
Gain (loss) on disposal of capital assets - (3,686)
Investment tax credits receivable - 5,994
Deferred development costs written off (Note 6) (344,393) -
Foreign exchange (loss) (2,287) -
Net loss for the period (1,206,603) (176,335)
Deficit, beginning of period (656,371) (480,036)
____________ __________
Deficit, end of period $(1,862,974) $(656,371)
============ ==========
Basic and fully diluted loss per share (Note 17) $(0.13) $(0.04)
============ ==========
Pro-forma basic loss per share (Note 17) $(0.13)
============ ==========
F-4
<PAGE>
AXION SPATIAL IMAGING INC.
Consolidated Statement of Changes in Financial Position
For the year ended December 31
(Expressed in Canadian dollars)
1997 1996
___________ ___________
Four Months
(Note 22)
Cash provided by (used in):
Operating activities
Net loss for the period $(1,206,603) $(176,335)
Items not affecting cash:
Amortization of capital assets 19,879 5,713
Amortization of incorporation costs - 6,716
Loss on disposal of capital assets - 3,686
Deferred development costs written off 344,393 -
___________ _________
(842,331) (160,220)
Net change in non-cash working capital
Accounts receivable (37,217) 23,184
Inventories (25,138) -
Investment
tax credits receivable - 69,091
Prepaid expenses 4,132 (201)
Accounts payable and accrued liabilities 149,681 12,422
___________ _________
(750,873) (55,724)
___________ _________
Financing activities
Proceeds from short-term loans 53,610 -
Proceeds from long-term debt - 8,400
Repayment of long-term debt (17,758) (11,369)
Issuance of convertible debentures 50,000 763,295
Advances from shareholder 148,378 -
Issuance of common shares 328,050 -
___________ _________
562,280 760,326
___________ _________
Investing activities
Purchase of capital assets (10,036) (12,771)
Advances to related companies - (381,416)
Development costs deferred - (119,528)
Investment tax credits receivable - (1,675)
___________ _________
(10,036) (515,390)
Net change in cash position (198,629) 189,212
Cash position, beginning of period 120,586 (68,626)
___________ _________
Cash position, end of period (78,043) 120,586
=========== =========
Represented by:
Cash - 169,290
Bank indebtedness (78,043) (48,704)
$ (78,043) $ 120,586
=========== =========
F-5
<PAGE>
AXION SPATIAL IMAGING INC.
Notes to Consolidated Financial Statements
For the year ended December 31, 1997
(Expressed in Canadian dollars)
1. Description of Business
Axion Spatial Imaging Inc. (the "company" or "Axion Inc.") was
incorporated on September 24, 1984 as Beta Tech Robotics Inc. in the
State of Nevada. The company changed it's name on August 14, 1996.
The company's principal business is the development and marketing of
innovative software applications.
2. Going Concern
These financial statements have been prepared on the basis of a going
concern, which contemplates that the company will be able to realize
assets and discharge liabilities in the normal course of business.
However, the company has had recurring operating losses and the
ability of the company to meet it's obligations will be dependent upon
achieving profitable operations and/or obtaining additional working capital.
3. Accounting Policies
These financial statements have been prepared in accordance with
generally accepted accounting principles in Canada (GAAP). The
preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting
period. These estimates are subject to measurement uncertainty. Actual
results could differ from and affect the results reported in these
consolidated financial statements. The following accounting policies
have been adopted where there are alternatives available under GAAP:
Principles of consolidation
The consolidated financial statements of the company include the
accounts of the company and it's wholly owned subsidiary Axion Spatial
Imaging Ltd. ("Axion Ltd.") which is incorporated under the Business
Corporations Act (Alberta, Canada).
Revenue recognition
The company recognizes revenue and profits from software development
contracts using the percentage of completion method.
Inventories
Inventories are recorded at the lower of cost, determined on a first-
in, first-out basis, and net realizable value.
Deferred development costs
The company has incurred costs on activities which relate to research
and development of new products. Research costs are expensed as they
are incurred. Development costs are also expensed unless they meet
specific criteria related to technical, market and financial
feasibility.
F-6
<PAGE>
3. Accounting Policies (continued)
Long-term investments
The company follows the cost method of accounting for investments over
which it does not exercise significant influence. If there is an
other than temporary decline in value, these investments are written
down to provide for the loss.
Capital assets
Capital assets are recorded at original cost. The company provides
for amortization using the declining balance method applying rates
which will amortize the original cost to the estimated salvage value
over the useful life of each asset. The annual rates used are as
follows:
Office equipment 20%
Computer equipment 50%
Computer software 50%
Automotive 30%
Income taxes
Income taxes are accounted for by the deferral method of income tax
allocation.
Foreign currency translation
As the company's operations are conducted principally in Canada and transactions
are primarily denominated in Canadian dollars, the
company reports in Canadian dollars.
Foreign currency amounts are translated to Canadian dollars using the
temporal method as follows:
- monetary assets and liabilities at the exchange rate prevailing at the
balance sheet date;
- revenues and expenses at the average exchange rates for the year except for
provisions for amortization which are translated on the same basis as the
related assets; and
- other assets and liabilities at historical rates.
Gains or losses resulting from such conversions are charged to
operations except that gains or losses on conversion to Canadian
dollars of long-term monetary assets and liabilities are deferred and
amortized over the remaining lives of the assets or liabilities.
Earnings per share
Basic earnings per share is calculated using the weighted average
number of common shares outstanding.
Fully diluted earnings per common share reflects the dilutive effect
of the conversion of the convertible debentures and the exercise of
the stock options.
F-7
<PAGE>
4. Acquisition of Axion Spatial Imaging Ltd.
On January 1, 1997 the company entered into an Agreement for Stock
Exchange with the shareholders of Axion Ltd., a company incorporated
in the province of Alberta, Canada, to acquire 100% of the shares of
Axion Ltd. in exchange for 4,000,000 common shares of the company
(representing 45% of post exchange shares outstanding). Management
has determined the fair value of the 4,000,000 shares to be the cost
amount of the Axion Ltd. shares exchanged which is $1,000. Axion
Ltd.'s principal business is the development and marketing of
innovative software applications.
The combination of these businesses has been accounted for using the
pooling of interests method effective January 1, 1997, since an
acquirer can not be identified. The following net liabilities were
brought into the company by each of the combining companies:
Axion Inc. Axion Ltd.
_________ _________
Cash $ 169,110 $ -
Accounts receivable and prepaid expenses 769 192,162
Deferred development costs - 305,193
Due from Axion Ltd. 593,416 -
Capital and other assets - 63,394
________ ________
Total assets 763,295 560,749
________ ________
Less:
Current liabilities (6,542) (140,464)
Long-term debt - (44,273)
Convertible debentures (763,295) -
Due to Axion Inc. - (593,416)
Advances from shareholders - (424,709)
________ __________
Total liabilities (769,837) (1,202,862)
Net liabilities $ (6,542) $ (642,113)
========= ===========
5. Investment Tax Credits Receivable
Subsequent to year end the company's claim for Scientific Research and
Experimental Development investment tax credits was accepted by
Revenue Canada for a reduced amount, resulting in a reduction to the
refundable investment tax credits receivable of $39,200. Since the
investment tax credits originally claimed were recorded as a reduction
of deferred development costs, the reduction of the claim has been
recorded as an increase to the deferred development costs.
F-8
<PAGE>
6. Deferred Development Costs
1997 1996
_________ ________
Deferred development costs, beginning of period $ 305,193 $ 225,782
Development costs deferred during the period - 119,528
Investment tax credits receivable reduction
(claimed) (Note 5) 39,200 (40,117)
Development costs written off during the period (344,393) -
_________ ________
Deferred development costs, end of period $ - $305,193
========= ========
As a result of the uncertainty of predicting the success and the future benefits
of new projects in a highly volatile market the company has written off
previously deferred costs and is expensing current costs as incurred.
7. Investment in PPM 2000 Inc.
The company owns 51,059 Class A common shares in PPM 2000 Inc. representing a 5%
interest. PPM 2000 Inc.'s primary business is the development and marketing of
software for the security and protection industry.
8. Capital Assets
1997 1996
_____________________________________________
Accumulated
Cost Amortization Net Net
__________ ____________ _______ _______
Office equipment 1,673 6,830 4,843 5,289
Computer equipment 128,091 106,832 21,259 31,910
Computer software 2,284 571 1,713 -
Automotive 2,000 929 1,071 1,530
__________ ____________ _______ _______
$144,048 $115,162 $28,886 $38,729
9. Bank Indebtedness
1997 1996
_______ _______
Bank indebtedness consists of:
Cash
Cheques issued in excess of bank balance $18,043 $28,704
Revolving bank loan 60,000 20,000
_______ _______
$78,043 $48,704
======= =======
The revolving bank loan bears interest at Bank of Nova Scotia prime
rate ("Prime"), (6 % at December 31, 1997) plus 2% and is
collateralized by a Registered General Security Agreement providing a
floating charge over the assets of the company.
F-9
<PAGE>
10. Short-term Loans
1997 1996
_______ ________
Short-term loans consist of:
Demand promissory note $25,000 $ -
U.S. $20,000 loan 28,610 -
_______ ________
$53,610 $ -
======= ========
The demand promissory note bears interest at the Toronto Dominion Bank
Select Line Base Rate (6.25% at December 31, 1997) minus .5%, payable
quarterly. Collateral for the loan is a claim on the Scientific
Research and Experimental Development investment tax credits receivable.
The loan is payable on demand to a shareholder of the company. The company
plans to repay the loan upon receipt of the investment tax credits.
The U.S. $20,000 loan has no collateral, is non-interest bearing with
no fixed terms of repayment.
11. Long-Term Debt
1997 1996
_______ ________
Bank of Nova Scotia loan repayable at $340 per month
plus interest at Prime (6% at December 31, 1997)
plus 1%, due October 1999 $ 7,480 $11,560
Bank of Nova Scotia loan repayable at $417 per month
plus interest at Prime plus 2%, due March 1999 6,250 11,250
Bank of Nova Scotia loan repayable at $194 per month
plus interest at Prime plus 1.75% due November 1999 4,644 6,972
Bank of Nova Scotia demand loan repayable at $235 per
month plus interest at Prime plus 2% 5,580 8,400
Promissory note payable bearing interest at 12%,
unsecured, and due on demand 2,561 6,091
________ _______
26,515 44,273
Less amounts due within one year (16,859) (20,319)
________ _______
Balance due in 1999 $9,656 $23,954
======== =======
Collateral for long-term debt is provided by:
a. a general security agreement over all the company's assets,
b. a personal guarantee from one of the company's shareholders,
c. chattel mortgages over specific equipment, and
d. assignment of insurance.
F-10
<PAGE>
12. Convertible Debentures
The convertible, redeemable debentures bear interest which is to
be calculated annually and paid quarterly in arrears at the prime
rate as expressed in the Wall Street Journal on the last business
day of the month. The debentures are convertible into common
shares at a conversion price of U.S. $2.00 when the company
becomes listed on a stock exchange. The debentures have the
following face amounts and maturity dates:
1997 1996
_________ _________
U.S. $50,000 debenture due September 25, 1998 $ 68,095 $ 68,095
Canadian debentures due September 25, 1998 695,200 695,200
Canadian debenture due March 20, 1999 50,000 -
_________ _________
813,295 763,295
Less debentures presented as shareholders'
equity (Note 14) (33,990) (31,901)
Less amounts due within one year (731,394) -
_________ ________
Balance due in 1999 $ 47,911 $731,394
========= ========
In accordance with generally accepted accounting principles for compound
financial instruments, $33,990 was ascribed to shareholders' equity.
Included in accounts payable and accrued liabilities is unpaid interest in
arrears on debentures of $25,192 (1996 - $5,542).
During the period February 5, 1998 to March 7, 1998 the company offered the
holders of the convertible debentures the option to convert their debentures at
a price of U.S. $1.00 per share and waive their right to receive any unpaid or
future interest payable. At the time of the offer no interest had been paid on
the debentures. This conversion offer was exercised by debenture holders as
follows:
$68,095 (U.S. $50,000) of debentures were converted resulting in 50,000 new
shares.
$509,200 of debentures were converted resulting in 359,363 new shares.
13. Advances from Shareholders
Advances from shareholders are non-interest bearing, unsecured and due on
demand. However, the shareholders have indicated that repayment will not be
requested within the next fiscal year. Consequently, these advances have been
classified as a non-current liability in the financial statements.
F-11
<PAGE>
14. Financial Instruments
(a) Foreign currency rate risk:
The company is exposed to foreign currency risk to the extent that
transactions and balances are denominated in currencies other than
Canadian dollars.
(b) Credit risk:
The company is exposed to credit risk to the extent of non-performance
by third parties in the payment of amounts receivable.
(c) Interest rate risk:
The company is exposed to interest rate risk to the extent that
certain short and long-term liabilities bear interest at variable
rates. For each 1% change in the rate of interest on variable rate
loans, the change in annual interest expense is $9,403.
(d) Fair value:
The company has estimated the fair value of its financial instruments
which include cash, accounts receivable, investment tax credits receivable,
investments, bank indebtedness, short-term loans, accounts payable and
accrued liabilities, long-term debt, convertible debentures and amounts due
to shareholders. The company has used valuation methodologies and market
information available as of year end and has determined that for such
financial instruments, the carrying amounts approximate fair value in all
cases except the following:
Advances from shareholders
The company's $573,087 obligation to shareholders is non-interest bearing.
As a result, the company believes the fair value of this obligation to be
less than the carrying value at December 31, 1997. However, due to the
uncertainty as to the eventual repayment date of this obligation, the
company is unable to estimate the fair value.
(e) Convertible debentures:
The company has adopted the new accounting recommendations of the Canadian
Institute of Chartered Accountants for the presentation and disclosure of
compound financial instruments whereby the equity and liability components
of the convertible debentures are presented separately. The company has
estimated that the fair value of the conversion feature associated with the
convertible debentures on the date of issuance was $33,990, which has been
reflected as "Equity component of convertible debentures". The company's
obligation to the convertible debenture holders for future interest and
principal has been reflected as long-term debt carried at amortized cost.
F-12
<PAGE>
15. Share Capital
Authorized:
50,000,000 common shares with a par value of U.S. $.001 per share
Issued:
December 31, 1997 December 31, 1996
Number Amount Number Amount
_________ ________ _________ _______
Balance, beginning of period (a) 4,910,000 $ 7,716 4,910,000 $7,716
Share for share exchange (b) 3,990,000 - - -
Shares issued for cash (c) 277,000 328,050 - -
Shares issued for intellectual
property (d) 50,000 - - -
_________ _______ __________ _______
Total issued during the period 4,317,000 328,050 - -
_________ _______ __________ _______
Balance, end of period 9,227,000 $335,766 4,910,000 $7,716
========= ======== ========== =======
(a) Share capital at December 31, 1996 includes the following:
Axion Spatial Imaging Inc. - 4,900,000 shares with stated capital of $6,716
Axion Spatial Imaging Ltd. - 10,000 shares with stated capital of $1,000
(b) On January 1, 1997 the Company entered into a share for share exchange with
the shareholders of Axion Ltd. The Company issued 4,000,000 shares to the
shareholders of Axion Ltd. in exchange for 100% of the 10,000 issued and
outstanding shares of Axion Ltd.
(c) During the year the company issued 152,000 shares for consideration of
$152,000 and 125,000 shares for consideration of U.S. $125,000 (recorded at
exchange rate in effect at the time of issue - $176,050).
(d) Pursuant to an assignment of intellectual property rights agreement, the
company has issued 50,000 shares in exchange for rights to a 3 dimensional
LCD Glasses unit (the "invention"). Due to a dispute with the vendor, the
company has not received the invention and the vendor has not accepted the
shares. Management is attempting to settle the dispute by returning
property rights to the vendor in exchange for the vendor's release of claim
on the shares. The shares will then be cancelled, accordingly, these shares
have been presented with no stated capital until such time as the company
can settle the dispute.
(e) Subsequent to year end 409,363 new shares were issued upon conversion of
$577,295 of convertible debentures (note 12).
Options outstanding are as follows:
Date of Grant Number of Shares Exercise Price Expiry Date
March 10, 1997 350,000 1.00 April 1, 1999
March 7, 1997 57,000 1.00 April 1, 1999
F-13
<PAGE>
16. Income Taxes
The company has accumulated unutilized non-capital loss carry forwards of
$1,741,393, the potential benefit of which has not been recognized in these
financial statements. These losses, which may be carried forward and used to
reduce future income taxes, expire as follows:
2000 $ 11,347
2001 286,805
2002 334,163
2003 211,899
2004 897,179
__________
$1,741,393
==========
In addition, the company has Scientific Research and Experimental Development
expenditures of $96,130 which are available for the reduction of future years'
taxable income. These expenditures can be carried forward indefinitely.
17. Loss Per Share
The weighted average number of shares outstanding for purposes of calculating
the loss per share is 8,954,304 (1996 - 4,910,000). Fully diluted loss per
share does not reflect the potential dilution of convertible debentures and
share options as the effect would be anti-dilutive.
The weighted average number of shares outstanding for purposes of calculating
the pro-forma basic loss per share is 9,363,667. This figure reflects the
shares issued on the convertible debentures after year end as if they had been
converted at the beginning of the current year.
18. Royalty Commitments
The company is committed to pay royalties of 50% of net sales of it's 3D Atlas
product. Royalties paid during the year under this agreement aggregated $22,272
(1996 - NIL). In addition the company is committed to pay royalties of 49% of
net sales of it's Under African Skies product. Royalties paid during the year
under this agreement aggregated NIL (1996 - NIL).
F-14
<PAGE>
19. Lease Obligations
The company is obligated under the terms of a lease agreement for it's premises
which expires on July 31, 2000. The minimum annual rental is $11,787 until
August 1, 1999, at which time the rent increases to $13,752 for the remainder of
the lease, plus a proportionate share of the operating costs and property taxes,
which for 1998 are estimated by the landlord to be $24,996.
The company is obligated under the terms of various operating leases with
various expiry dates for office equipment. The minimum annual lease payments
are as follows:
1998 $11,859
1999 8,691
2000 1,277
20. Related Party Transactions
During the year the company paid wages of $56,863 (1996 - NIL) to a director who
controls a company owning 22% of the outstanding shares of Axion Inc. These
transactions are in the normal course of business and are measured at exchange
amount, which is the amount of consideration established and agreed to by the
related parties.
21. Segmented Information
The company is active primarily in Canada. However, a significant portion of
the company's revenues are derived from sales, to customers in Germany of the 3D
Atlas product sold under license by a German distributor. There is no cost of
goods sold associated with these sales since the distributor bears all costs for
producing and packaging the product.
22. Comparative Figures
The comparative figures include only the four months ended December 31, 1996 for
Axion Ltd. due to a change in year end from August to December. Certain of the
comparative figures have been reclassified to conform to the presentation
adopted for the current year.
23. Differences Between Canadian and United States Generally Accepted Accounting
Principles
The company prepares its consolidated financial statements in accordance with
generally accepted accounting principles in Canada ("Canadian GAAP") which
differ in certain respects from those principles that the company would have
followed had its consolidated financial statements been prepared in accordance
with accounting principles generally accepted in the United States ("U.S.
GAAP"). The significant differences between Canadian and U.S. GAAP as they
relate to the preparation of these financial statements are described below.
F-15
<PAGE>
The effect of the differences between Canadian and U.S. GAAP on the company's
net loss for the years ended December 31 is summarized as follows:
1997 1996
____________ ___________
Four Months
(Note 22)
Net loss for the period under Canadian GAAP $(1,206,603) $ (176,335)
U.S. GAAP
Deferred development costs (a) 305,193 (79,411)
___________ __________
Net loss for the period under U.S. GAAP $ (901,410) $ (255,746)
=========== ==========
Loss per share
Primary $(0.10) $(0.05)
Fully diluted $(0.10) $(0.05)
Weighted average number of shares outstanding
Primary 8,954,304 4,910,000
Fully diluted $ 9,363,667 $4,910,000
============ ==========
The cumulative effect of these adjustments on shareholders' equity at
December 31 is as follows:
1997 1996
____________ ___________
Four Months
(Note 22)
Shareholders' equity (deficiency) under
Canadian GAAP $(1,493,218) $ (616,754)
U.S. GAAP
Deferred development costs (a) - (305,193)
Convertible debentures (b) (33,990) (31,901)
___________ __________
Shareholders' equity (deficiency) under U.S. GAAP $(1,527,208) $ (953,848)
=========== ==========
(a) Deferred development costs
U.S. GAAP requires that development costs be expensed as incurred.
(b) Convertible debentures
Canadian GAAP requires a portion of the convertible debentures to be
classified as equity in accordance with the substance of the contractual
arrangement at the time the debenture is issued. U.S. GAAP would classify
the entire amount as a liability of the company.
F-16
<PAGE>
23. Differences Between Canadian and United States Generally Accepted Accounting
Principles (continued)
(c) Stock based compensation
Stock based compensation is measured using the fair value based method of
accounting under which compensation cost is measured at the grant date of
the option based on the value of the award; compensation cost is recognized
over the service period. Management estimates the fair value of options
granted to be nil at the grant date and accordingly no compensation cost has
been recognized.
(d) Income taxes
The major components of the net deferred tax asset are as follows:
1997 1996
_________ __________
Unutilized losses $ 771,992 $ 386,271
Scientific Research and Experimental Development
expenditures 42,893 61,905
Valuation allowance (814,885) (448,176)
Net deferred tax asset $ - $ -
========= =========
(e) Other disclosures
Accounts receivable at December 31, 1997 include amounts of $23,642 and $7,463
due from single customers.
Accounts payable and accrued charges consists of:
1997 1996
__________ ___________
Trade accounts payable $ 79,726 $ 31,779
Accrued compensation 89,974 50,162
Accrued royalties 22,272 -
Accrued interest on debentures 25,192 5,542
Accrued professional fees 31,000 11,000
__________ _________
$ 248,164 $ 98,483
========== =========
(f) Impact of new and impending U.S. GAAP accounting standards
For 1998, new accounting standards concerning the reporting of segmented
information and comprehensive income were issued in the United States.
These new standards which will require increased disclosure will be
effective beginning in 1998. The impact of these standards has not yet been
determined.
F-17
<PAGE>
Schedule 1
AXION SPATIAL IMAGING INC.
Consolidated Schedule of Operating Expenses
For the year ended December 31
(Expressed in Canadian dollars)
1997 1996
____________ ___________
Four Months
(Note 22)
Operating expenses
Wages and salaries $689,245 $214,719
Office supplies 61,447 13,676
Professional fees 47,579 7,582
Rent and occupancy costs 42,603 13,720
Automotive and travel 25,199 16,306
Amortization of capital assets 19,879 5,713
Interest on convertible debentures 19,650 5,542
Telephone 14,211 2,103
Equipment rental 13,114 2,674
Advertising and promotion 9,812 4,162
Bank charges and interest 8,360 1,749
Licenses and permits 7,927 -
Meals and entertainment 6,774 -
Dues and memberships 6,416 2,992
Insurance 5,734 3,015
Interest on long-term debt 2,457 1,662
Miscellaneous 2,084 -
Technical support 474 -
Amortization of incorporation costs - 6,716
________ ________
982,965 302,331
Development costs deferred during the period - (119,528)
________ ________
$982,965 $182,803
======== ========
F-18
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Financial Statements
December 31, 1998
F-19
<PAGE>
PricewaterhouseCoopers LLP
Chartered Accountants
Edmonton, Alberta Canada
April 23, 1999
Auditors' Report
To the Shareholders of
Axion Spatial Imaging Inc.
We have audited the consolidated balance sheet of Axion Spatial
Imaging Inc. as at December 31, 1998 and the consolidated statements
of loss and deficit and cash flows for the year then ended. These
financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
company as at December 31, 1998 and the results of its operations and
its cash flows for the year then ended in accordance with United
States generally accepted accounting principles.
The financial statements as at December 31, 1997 and for the year then
ended were audited by other auditors who expressed an opinion without
reservation on those statements in their report dated May 29, 1998.
F-20
<PAGE>
Comments by Auditors for U.S. Readers on Canada-U.S. Reporting
Difference
In the United States, reporting standards for auditors require the
addition of an explanatory paragraph (following the opinion paragraph)
when the financial statements are affected by conditions and events
that cast substantial doubt on the company's ability to continue as a
going concern, such as those described in note 2(a) to the financial
statements. Our report to the shareholders dated April 23, 1999 is
expressed in accordance with Canadian reporting standards which do not
permit a reference to such events and conditions in the auditor's
report when these are adequately disclosed in the financial
statements.
/s/ PricewaterhouseCoopers LLP
Chartered Accountants
F-21
<PAGE>
Consolidated Balance Sheet
as at December 31st, 1998
________________________________________________________________________________
1998 1998 1997
US$ Can$ Can$
(note 2 (b))
Assets
Current assets
Accounts receivable $ 79,511 $ 121,691 $ 46,522
Inventories 30,208 46,231 25,138
Prepaid expenses 4,966 7,600 841
Investment tax credits recoverable - - 139,454
__________ ___________ __________
114,685 175,522 211,955
Investment tax credits recoverable - - 16,757
Investment in PPM 2000 Inc. (note 5) 5,167 7,908 7,908
Capital assets (note 6) 13,623 20,850 28,886
__________ ___________ ___________
133,475 204,280 265,506
========== =========== ===========
Liabilities
Current liabilities
Bank indebtedness (note 7) 59,000 90,300 78,043
Short-term loans (note 8) 20,000 30,610 53,610
Accounts payable and accrued liabilities 199,307 305,040 248,164
Current portion of long-term debt (note 8,240 12,612 16,859
Current portion of convertible debenture 154,199 236,000 731,394
__________ ___________ ___________
440,746 674,562 1,128,070
Long-term debt (note 9) - - 9,656
Convertible debentures (note 10) - - 81,901
Advances from shareholders (note 11) 362,362 554,580 573,087
__________ ___________ ___________
803,108 1,229,142 1,792,714
Shareholders Equity __________ ___________ ___________
Share capital (note 13) 946,836 1,449,090 335,766
__________ ___________ ____________
Deficit 1,616,471) (2,473,952) (1,862,974)
__________ ___________ ____________
(669,635) (1,024,862) (1,527,208)
$ 133,473 $ 204,280 $ 265,506
========== =========== ============
Approved by the Board of Directors
/s/ Ian Basford Director Milinusic, Tomislav Director
F-22
<PAGE>
Consolidated Statement of Loss and Deficit
for the year ended December 31st, 1998
________________________________________________________________________________
1998 1998 1997
US$ Can$ Can$
(note 2(b))
Revenue
Product sales $ 193,449 $ 296,073 $ 95,560
Consulting services 56,981 87,209 53,375
___________ ___________ ___________
250,430 383,282 148,935
___________ ___________ ___________
Cost of goods sold
Production costs 38,166 58,411 3,605
Commissions and royalties 26,812 41,034 22,288
___________ ___________ ____________
64,978 99,445 25,893
___________ ___________ ____________
Gross profit 185,452 283,837 123,042
Operating expenses (schedule 1) 572,400 876,058 982,965
___________ ___________ ____________
Loss from operations (386,948) (592,221) (859,923)
___________ ___________ ____________
Other income (expense)
Investment tax credits written off (10,949) (16,757) -
Product development costs written - - (344,393)
off (note 5)
Foreign exchange loss (1,307) (2,000) (2,287)
___________ ___________ ___________
(12,256) (18,757) (346,680)
____________ ____________ ___________
Net loss for the year (399,204) (610,978) (1,206,603)
Deficit - Beginning of year (1,217,267) (1,862,974) (656,371)
____________ ____________ ___________
Deficit - End of year $(1,616,471) $(2,473,952) $(1,862,974)
=========== =========== ===========
Basic & fully diluted loss per
share (note 15) $ (0.04) $ (0.07) $ (0.13)
=========== =========== ===========
Pro-forma basic loss per share (note 15) $ N/A $ N/A $ (0.13)
=========== =========== ===========
F-23
<PAGE>
Consolidated Statement of Cash Flows
for the year ended December 31, 1998
________________________________________________________________________________
1998 1998 1997
US$ Can$ Can$
(note 2 (b))
Cash provided by (used in)
Operating activities
Net loss for the year $(399,204) $ (610,978) $(1,206,603)
Items not affecting cash
Amortization of capital assets 8,881 13,592 19,879
Investment tax credits written off 10,949 16,757 -
Deferred development costs written off - - 344,393
_________ _________ ____________
(379,374) (580,629) (842,331)
Net change in non-cash working capital items
Accounts receivable (49,114) (75,169) (37,217)
Inventories (13,782) (21,093) (25,138)
Investment tax credits receivable 91,119 139,454 -
Prepaid expenses (4,416) (6,759) 4,132
Accounts payable & accrued liabilities 37,162 56,876 149,681
_________ _________ ____________
(318,405) (487,320) (750,873)
========= ========= ============
Financing activities
Proceeds from (repayment of) short-
term loans (15,028) (23,000) 53,610
Repayment of long-term debt (9,084) (13,903) (17,758)
Issuance (conversion) of
convertible debentures (361,430) (553,168) 50,000
Advances from shareholders (12,092) (18,507) 148,378
Issuance of common shares 711,661 1,089,197 328,050
_________ __________ ___________
314,027 480,619 562,280
Investing activities
Purchase of capital assets (3,631) (5,556) (10,036)
_________ __________ ____________
Increase in bank indebtedness (8,009) (12,257) (198,629)
Bank indebtedness - Beginning of year (50,991) (78,043) 120,586
_________ __________ ____________
Bank indebtedness - End of year $ (59,000) $ (90,300) $ (78,043)
========= ========== ============
F-24
<PAGE>
Axion Spatial Imaging Inc.
Notes to Consolidated Financial Statements
December 31, 1998
________________________________________________________________________________
1 Description of business
Axion Spatial Imaging Inc. (the "company" or "Axion Inc.") was
incorporated on September 24, 1984 as Beta Tech Robotics Inc. in the State
of Nevada. The company changed its name on August 14, 1996. The
company's principal business is the development and marketing of
innovative software applications.
2 Basis of presentation
a) Going concern
These financial statements have been prepared on the basis of a going concern,
which contemplates that the company will be able to realize assets and discharge
liabilities in the normal course of business. However, the company has had
recurring operating losses; has a working capital deficiency at December 31,
1998 of $499,040 (US$326,063) and, is overdue on the redemption of convertible
debentures and accrued interest in the amount of $294,577 (US$192,471).
Subsequent to December 31, 1998, the company obtained additional financing to
retire convertible debentures and accrued interest in the amount of $169,142
(US$110,514). The ability of the company to meet its obligations will be
dependent upon achieving profitable operations and/or obtaining additional
working capital.
b) Translation of convenience The consolidated financial statements presented
herein are expressed in Canadian dollars, and, solely for the convenience of the
reader, have been translated into United States dollars for 1998 at the rate of
CAN$1.5305 = US$1.00, the noon day rate at the Federal Reserve Bank of New York
on December 31, 1998. This transaction should be construed as a representation
that the Canadian dollar amounts shown could be so converted into United States
dollars at CAN$1.5305 = US$1.00 or at any other rate.
3 Accounting policies
These financial statements have been prepared by management in accordance with
United States generally accepted accounting principles. Because the precise
determination of many assets, liabilities, revenues and expenses are dependent
on future events, the preparation of financial statements for a period
necessarily includes the use of estimates and approximations which have been
made using careful judgement. Actual results could differ from those estimates.
These financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
accounting policies summarized below.
F-25
<PAGE>
a) Principles of consolidation
The consolidated financial statements of the company include the accounts of the
company and it's wholly-owned subsidiary Axion Spatial Imaging Ltd. ("Axion
Ltd.") which is incorporated under the Business Corporations Act (Alberta,
Canada).
b) Revenue recognition
The company recognizes revenue and profits from software development contracts
using the percentage of completion method.
c) Inventories
Inventories are recorded at the lower of cost, determined on a first in, first
out basis, and net realizable value.
d) Development costs
The company incurs costs on activities which relate to research and development
of new products. Research and development costs are expensed as they are
incurred.
e) Long-term investments
The company follows the cost method of accounting for investments over which it
does not exercise significant influence. If there is an other than temporary
decline in value, these investments are written down to provide for the loss.
f) Capital assets
Capital assets are recorded at original cost. The company provides for
amortization using the declining balance method applying rates which will
amortize the original cost to the estimated salvage value over the useful life
of each asset. The annual rates used are as follows:
Office equipment 20%
Computer equipment 50%
Computer software 50%
Automotive 30%
g) Income taxes
Income taxes are accounted for by the asset and liability method whereby future
tax assets and liabilities are recognized for the future tax consequences
attributable to the differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases.
F-26
<PAGE>
h) Foreign currency translation
As the company's operations are conducted principally in Canada and transactions
are primarily denominated in Canadian dollars, the company reports in Canadian
dollars.
Foreign currency amounts are translated to Canadian dollars using the temporal
method as follows:
- monetary assets and liabilities at he exchange rate prevailing
at the balance sheet date,
- revenues and expenses at he average exchange rates for the year
except for provisions for amortization which are translated on
the same basis as the related assets; and
- other assets and liabilities at historical rates.
Gains or losses resulting from such conversions are charged to operations.
i) Earnings per share
Basic earnings per share is calculated using the weighted average number of
common shares outstanding.
Fully diluted earnings per common share reflects the dilutive effect of the
conversion of the convertible debentures and the exercise of the stock
options.
4 Acquisition of Axion Spatial Imaging Ltd.
On January 1, 1997, the company entered into a Agreement for Stock Exchange
with the shareholders of Axion Ltd., a company incorporated in the Province
of Alberta, Canada, to acquire 100% of the shares of Axion Ltd. in exchange
for 4,000,000 common shares of the company (representing 45% of post exchange
shares outstanding). Management determined the fair value of the 4,000,000
shares to be the cost amount of the Axion Ltd. shares exchanged which is
$1,000 (US$653). Axion Ltd.'s principal business is the development and
marketing of innovative software applications.
The combination of these businesses was accounted for using the pooling of
interest method effective January 1, 1997. The following net liabilities
were brought into the company by each of the combining companies:
F-27
<PAGE>
Axion Inc. Axion Ltd.
__________________ ____________________
US$ Can$ US$ Can$
Cash $ 110,496 $ 169,110 $ - $ -
Accounts receivable and 503 769 125,559 192,162
prepaid expenses
Deferred development costs - - 199,413 305,193
Due from Axion Ltd. 387,738 593,416
Capital and other assets - - 41,421 63,394
_________ _________ _________ ___________
498,737 763,295 366,393 560,749
_________ _________ _________ ___________
Less
Current liabilities (4,275) (6,542) (91,779) (140,464)
Long-term debt - - (28,928) (44,273)
Convertible debentures (498,737) (763,295)
Due to Axion Inc. - - (387,738) (593,416)
Advances from shareholders - - (277,505) (424,709)
_________ _________ _________ ___________
(503,012) (769,837) (785,950) (1,202,862)
_________ _________ _________ ___________
$ (4,275) $ (6,542) $(419,557) $ (642,113)
======== ========= ========= ===========
5 Investment in PPM 2000 Inc.
The company owns 51,059 Class A common shares in PPM 2000 Inc. representing a 5%
interest. PPM 2000 Inc.'s primary business is the development and marketing of
software for the security and protection industry.
6 Capital assets
1998 1998 1997
_______________________________________________________
accumulated
cost amortization net net net
$ $ Can$ US$ Can$
Office equipment 15,493 8,181 7,312 4,778 4,843
Computer equipment 129,828 117,896 11,932 7,796 21,259
Computer software 2,284 1,428 856 559 1,713
Automotive 2,000 1,250 750 490 1,071
_______ _______ ______ ______ ______
149,605 128,755 20,850 13,623 28,886
======= ======= ====== ====== ======
F-28
<PAGE>
7 Bank indebtedness
Bank indebtedness consists of:
1998 1998 1997
US$ Can$ Can$
Cheques issued in excess of bank balance 19,796 30,300 18,043
Revolving bank loan 39,204 60,000 60,000
______ ______ ______
59,000 90,300 78,043
====== ====== ======
The revolving bank
loan bears interest at Bank of Nova Scotia prime rate
("Prime"), (6% at December 31, 1998) plus 2% and is collateralized by a
Registered General Security Agreement providing a floating charge over the
assets of the company.
8 Short-term loans
Short-term loans consist of:
1998 1998 1997
US$ Can$ Can$
Demand promissory note 25,000
US dollar loan 20,000 30,610 28,610
______ ______ ______
20,000 30,610 53,610
====== ====== ======
The US dollar loan has no collateral, is non-interest bearing and has no
fixed terms of repayment.
F-29
<PAGE>
9 Long-term debt
1998 1998 1997
US$ Can$ Can$
Bank of Nova Scotia loan, repayable at $340
per month, plus interest at prime (6% at
December 31, 1998) plus 1%, due October 1999 2,222 3,400 7,480
Bank of Nova Scotia loan, repayable at $417
per month, interest at prime plus 2%, due
March 1999 817 1,250 6,250
Bank of Nova Scotia loan, repayable at $194,
plus interest at prime plus 1.75%, due
November 1999 1,512 2,316 4,644
Bank of Nova Scotia demand loan, repayable
at $235 per month, interest at prime plus 2% 1,803 2,760 5,580
Promissory note payable bearing interest at
12%, unsecured and due on demand 1,886 2,886 2,561
_____ ______ ______
8,240 12,612 26,515
Less: Amounts due within one year 8,240 12,612 16,859
_____ ______ ______
- - 9,656
===== ====== ======
Collateral for long-term debt is provided by:
a. a general security agreement over all the company's assets,
b. a personal guarantee form one of the company's shareholders,
c. chattel mortgages over specific equipment, and
d. assignment of insurance.
F-30
<PAGE>
10 Convertible debentures
The convertible, redeemable debentures bear interest which is to be calculated
annually and paid quarterly in arrears at the prime rate as expressed in the
Wall Street Journal on the last business day of the month. The debentures are
convertible into common shares at a conversion price of U.S. $2.00 per share.
The debentures have the following face amounts and maturity dates:
1998 1998 1997
US$ Can$ Can$
US$50,000 debenture, due September 25, 1998 - - 68,095
Canadian debentures, due September 25, 1998 154,199 236,000 695,200
Canadian debenture, due March 20, 1999 - - 50,000
_______ _______ _______
154,199 236,000 813,295
Less: Long-term amounts - - (81,901)
_______ _______ _______
154,199 236,000 731,394
Included in accounts payable and accrued liabilities is unpaid interest in
arrears on debentures of $58,577 (1997 - $25,192).
During the period February 5, 1998 to March 7, 1998 the company offered the
holders of the convertible debentures the option to convert their debentures at
a price of U.S. $1.00 per share and waive their right to receive any unpaid or
future interest payable. At the time of the offer no interest had been paid on
the debentures. This conversion offer was exercised by debenture holders as
follows:
- $68,095 (US$50,000) of debentures were converted resulting in 50,000
new shares
- $509,200 (US$332,711) of debentures were converted resulting in 359,363 new
shares
Subsequent to December 31, 1998, the company retired an additional $130,000
(US$84,940) of convertible debentures plus accrued interest of $39,142
(US$25,574) as described in note 21.
F-31
<PAGE>
11 Advances from shareholders
Advances from shareholders are non-interest-bearing, unsecured and due on
demand. However, the shareholders have indicated that repayment will not be
requested within the next fiscal year. Consequently, these advances have been
classified as a non-current liability in the financial statements.
12 Financial instruments
a) Foreign currency rate risk
The company is exposed to foreign currency risk to the extent that
transactions and balances are denominated in currencies other than
Canadian dollars.
b) Credit risk
The company is exposed to credit risk to the extent of non-performance
by third parties in the payment of amounts receivable.
c) Interest rate risk
The company is exposed to interest rate risk to the extent that certain
short and long-term liabilities bear interest at variable rates, For
each 1% change in the rate of interest on variable rate loans, the
change in annual interest expense is $3,372 (US$2,203).
d) Fair value
The company has estimated the fair value of its financial instruments
which include cash, accounts receivable, investment tax credits
receivable, investments, bank indebtedness, short-term loans, accounts
payable and accrued liabilities, long-term debt, convertible debentures
and amounts due to shareholders. The company has used valuation
methodologies and market information available as of year end and has
determined that for such financial instruments, the carrying amounts
approximate fair value in all cases except the follows:
e) Advances from shareholders
The company's $554,580 (US$362,362; 1997 - $573,087)) obligation to
shareholders is non-interest-bearing. As a result, the company believes the
fair value of this obligation to be less than the carrying value at December
31, 1998. However, due to the uncertainty as to the eventual repayment date
of this obligation, the company is unable to estimate the fair value.
F-32
<PAGE>
13 Share capital
Authorized
50,000,000 common shares with a par value of U.S. $.001 per share
Issued
1998 1997
_________________________________________________
# US$ Can$ # Can$
Balance Beginning of period 9,227,000 219,390 335,766 4,910,000 7,716
__________ _______ ________ _________ _______
Shares issued on conversion of
convertible debentures as
described in note 11 409,363 377,205 577,295 - -
Shares issued in exchange for
debt 378,378 350,241 536,029 - -
Share for share exchange - - - 3,990,000 -
Shares issued for cash - - - 277,000 328,050
Shares issued for intellectual
property - - - 50,000 -
787,741 727,446 1,113,324 4,317,000 328,050
__________ _______ _________ _________ _______
Balance End of year 10,014,741 946,836 1,449,090 9,227,000 335,766
========== ======= ========= ========= =======
On January 1, 1997 the company entered into a share for share exchange with the
shareholders of Axion Ltd. The company issued 4,000,000 shares to the
shareholders of Axion Ltd. in exchange for 100% of the 10,000 issued and
outstanding shares of Axion Ltd.
During the year ended December 31, 1997, the company issued 152,000 shares for
consideration of $152,000 and 125,000 shares for consideration of US$125,000
(recorded at exchange rate in effect at the time of issued -$176,050).
Pursuant to an assignment of intellectual property rights agreement, the company
has issued 50,000 shares in exchange for rights to a 3 dimensional LCD Glasses
unit (the "invention"). Due to a dispute with the vendor, the company has not
received the invention and the vendor has not accepted the shares. Management
is attempting to settle the dispute by returning property rights to the vendor
in exchange for the vendor's release of claim on the shares. The shares will
then be cancelled, accordingly, these shares have been presented with no stated
capital until such time as the company can settle the dispute.
Options outstanding are as follows:
Date of Grant Number of shares Exercise price Expiry date
# US$
March 10, 1997 350,000 1.00 April 1, 1999
March 7, 1997 57,000 1.00 April 1, 1999
F-33
<PAGE>
14 Income taxes
The company has accumulated unutilized non-capital loss carry forwards of
approximately $1,394,214 (US$910,969); the potential benefit of which has not
been recognized in these financial statements. These losses, which may be
carried forward and used to reduce future income taxes, expire as follows:
US$ Can$
2001 7,414 11,347
2002 187,398 286,805
2003 218,342 334,163
2004 138,455 211,899
2005 359,360 550,000
________ _________
910,969 1,394,214
======== =========
In addition, the company has Scientific Research and Experimental Development
expenditures of $96,130 (US$62,811) which are available for the reduction of
future years' taxable income. These expenditures can be carried forward
indefinitely.
15 Loss per share
The weighted average number of shares outstanding for purposes of calculating
the loss per share is 9,630,796 (1997 - 8,954,304). Fully diluted loss per share
does not reflect the potential dilution of convertible debentures and share
options as the effect would be anti-dilutive.
The weighted average number of shares outstanding for the purpose of calculating
the pro-forma basic loss per share in 1997 is 9,363,667. This figure reflects
the shares issued after year end on the conversion of debentures as if they had
been converted at the beginning of the year.
16 Lease obligations
The company is obligated under the terms of the lease agreement for it's
premises which expires on July 31, 2001. The minimum annual rental is $11,787
(US$7,702) until August 1, 1999, at which time the rent increases to $13,752
(US$8,986) for the remainder of the lease, plus a proportionate share of the
operating costs and property taxes, which for 1999 are estimated by the landlord
to be $24,996 (US$16,332).
The company is obligated under the terms of various operating leases with
various expiry dates for office equipment. The minimum annual lease payments
are as follows:
US$ Can$
1999 7,749 11,859
2000 5,679 8,691
2001 834 1,277
F-34
<PAGE>
17 Contingent liability
On June 26, 1998, the company was served with a statement of claim alleging that
certain shares of the company are beneficially owned by the plaintiffs. The
amount of the claim is $4,527,000 (US$2,957,942). The company has filed a
statement of defence and a counterclaim. As management does not believe that
the claim has any merit and as the outcome of this dispute is not determinable,
no liability has been accrued at December 31, 1998.
18 Subsequent event
Subsequent to December 31, 1998, the company issued a Convertible Debenture in
the amount of $166,850 (US$109,020) due April 14, 2000. The debenture bears
interest at 8% per annum and is convertible, at the option of the holder, to
common shares at a price of US$0.50 per share. Proceeds from the debenture were
used to retire existing debentures as described in note 11 and accrued interest
in the amount of $169,142 (US$110,514).
19 Comparative figures
The comparative figures for the year ended December 31, 1997, were reported
on by another chartered accountant. Certain of the comparative figures have
been reclassified to conform to the presentation adopted for the current year.
F-35
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Schedule of Operating expenses
For the year ended December 31, 1998
________________________________________________________________________________
1998 1998 1997
US$ Can$ Can$
(note2 (b))
Operating expenses
Wages, salaries and subcontract $403,477 $617,521 $689,245
Office, postage and courier 28,983 44,357 61,447
Rent and occupancy costs 25,925 39,678 42,603
Interest on convertible debentures 21,813 33,385 19,650
Professional fees 20,046 30,681 47,579
Automotive and travel 12,238 18,731 25,199
Equipment rental 10,672 16,333 13,114
Bank charges and interest 10,259 15,702 8,360
Telephone 8,899 13,620 14,211
Amortization of capital assets 8,881 13,592 19,879
Interest on long-term debt 4,556 6,973 2,457
Advertising and promotion 3,679 5,630 9,812
Meals and entertainment 3,630 5,555 6,774
Miscellaneous 3,454 5,287 2,558
Insurance 3,385 5,181 5,734
Licenses and permits 1,358 2,079 2,973
Education 689 1,055 -
Dues and memberships 240 367 11,370
Bad debts 216 331 -
________ ________ ________
$572,400 $876,058 $982,965
======== ======== ========
F-36
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Financial Statements
(Unaudited)
December 31st, 1999
F-37
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Balance Sheet
(Unaudited)
As at December 31st, 1999
______________________________________________________________________________
1999 1999 1998
US$ Can$ Can$
(Note 1)
Assets
Current assets
Accounts receivable $ 43,401 $ 63,019 $ 121,691
Inventories 50 73 46,231
Prepaid expenses 4,765 6,919 7,600
___________ ___________ ___________
48,217 70,011 175,522
Investment in PPM 2000 Inc. 5,446 7,908 7,908
Capital assets 10,901 15,828 20,850
___________ ___________ ___________
64,564 93,747 204,280
=========== =========== ===========
Liabilities
Current liabilities
Bank indebtedness $ 3,189 $ 4,630 $ 90,300
Accounts payable and
accrued liabilities 188,689 273,978 305,040
Notes payable 24,405 35,436 30,610
Current portion of long
term debt - - 12,612
Current portion of
convertible debentures 73,002 106,000 236,000
___________ ___________ ___________
289,284 420,044 674,562
Convertible debentures 102,141 148,310 -
Advances from shareholders 152,396 206,449 554,580
___________ ___________ ___________
543,821 774,803 1,229,142
___________ ___________ ___________
Shareholders' Equity
Share capital 1,668,254 2,437,154 1,449,090
Deficit (2,147,511) (3,118,210) (2,473,952)
___________ ___________ ___________
(479,257) (681,056) (1,024,862)
___________ ___________ ___________
$ 64,564 $ 93,747 $ 204,280
=========== =========== ===========
F-38
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Statement of
Loss and Deficit
(Unaudited)
As at December 31st, 1999
1999 1999 1998
US$ CAN$ CAN$
(Note 1)
Revenue
Product sales $ 78,643 $ 114,190 $ 296,073
Contract sales 331,944 481,987 87,209
___________ ___________ ___________
410,587 596,177 383,282
___________ ___________ ___________
Cost of goods sold
Production Costs 36,267 52,660 58,411
Commissions and Royalties 5,724 8,311 41,034
___________ ___________ ___________
41,991 60,971 99,445
___________ ___________ ___________
Gross profit 368,596 535,206 283,837
Operating expenses (schedule1) 812,297 1,179,464 894,815
___________ ___________ ___________
Net loss for the period (443,700) (644,258) (610,978)
___________ ___________ ___________
Deficit - Beginning of
Period (1,703,811) (2,473,952) (1,862,974)
___________ ___________ ___________
Deficit - End of Period (2,147,511) (3,118,210) (2,473,952)
=========== =========== ===========
Basic loss per share (0.03) (0.05) (0.07)
=========== =========== ===========
Diluted loss per share $ N/A $ N/A $ N/A
=========== =========== ===========
F-39
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Statement of Cash Flows
(Unaudited)
As at December 31st, 1999
______________________________________________________________________________
1999 1999 1998
US$ Can$ Can$
(Note 1)
Cash provided by (used in)
Operating activities
Net loss for the period $(443,700) $(644,258) $(610,978)
Items not effecting cash
Amortization of capital assets 4,722 6,856 13,592
Investment tax credits written off - - 16,757
_________ _________ _________
(438,979) (637,402) (580,629)
Net change in non-cash working
capital items
Accounts receivable 40,407 58,671 (75,169)
Inventories 31,788 46,157 (21,093)
Investment tax credits - - 139,454
Prepaid expenses 469 681 (6,759)
Accounts payable and accrued
liabilities (21,393) (31,063) 56,876
_________ _________ _________
(387,708) (562,956) (487,320)
Financing activities
Proceeds from (repayment of)
short-term debt 3,326 4,829 (23,000)
Proceeds from (repayment of)
long-term debt (8,686) (12,612) (13,903)
Proceeds from (repayment of)
convertible debentures 12,610 18,310 (553,168)
Advances from (to) shareholders (229,544) (348,131) (18,507)
Issuance of common shares 670,266 988,064 1,089,197
_________ _________ _________
447,972 650,460 480,619
_________ _________ _________
Investing activities
Purchase of capital assets (1,263) (1,834) (5,556)
_________ _________ _________
Increase in cash 59,001 85,670 (12,257)
(Bank indebtedness) - Beginning of
period (62,190) (90,300) (78,043)
_________ _________ _________
(Bank indebtedness) - End of period $ (3,189) $ (4,630) $ (90,300)
========= ========= =========
F-40
<PAGE>
Axion Spatial Imaging Inc.
Consolidated Statement of Changes in Shareholders' Equity
(Unaudited)
As at December 31st, 1999
______________________________________________________________________________
1999
Share Deficit Total
Capital # Can$ Can$ Can$
__________ __________ ____________ ____________
1999
Balance - Begin of period 10,014,741 $1,449,090 $(2,473,952) $(1,024,862)
issued on conversion of
debentures 0 0 0 0
issued in exchange of debt 1,282,498 716,935 0 716,935
issued in exchange of finance 595,270 241,742 0 241,742
issued on exercise of options 80,000 29,387 0 29,387
issued to escrow (note 2) 929,730 0 0 0
Net loss for the period 0 0 (644,258) (644,258)
__________ __________ ____________ ___________
Balance - End of Period 12,902,239 $2,437,154 $(3,118,210) $ (681,056)
========== ========== ============ ===========
1998
Share Deficit Total
Capital # Can$ Can$ Can$
__________ __________ ____________ ____________
1998
Balance - Begin of period 9,227,000 335,766 (1,862,974) (1,527,208)
issued on conversion of debent 409,363 577,295 0 577,295
issued in exchange of debt 378,378 536,029 0 536,029
issued in exchange of finance 0 0 0 0
issued on exercise of options 0 0 0 0
Net loss for the period 0 0 (610,978) (610,978)
__________ __________ ____________ ____________
Balance - End of Period 10,014,741 $1,449,090 $(2,473,952) $(1,024,862)
========== ========== ============ ============
F-41
<PAGE>
Axion Spatial Imaging Inc. Schedule 1
Consolidated Schedule of Operating Expenses
(Unaudited)
As at December 31st, 1999
______________________________________________________________________________
1999 1999 1998
US$ Can$ Can$
(Note 1)
Operating expenses
Wages, salaries and subcontract $485,506 $704,960 $617,521
Office, postage and courier 15,799 22,941 44,357
Rent and occupancy costs 31,984 46,441 39,678
Interest on convertible debentures 21,263 30,874 33,385
Professional fees 74,649 108,391 30,681
Automotive and travel 7,169 10,410 18,731
Equipment rental 20,058 29,125 16,333
Bank charges and interest 17,771 25,803 15,702
Telephone 10,877 15,794 13,620
Amortization of capital assets 4,722 6,856 13,592
Interest on long-term debt 20,010 29,055 6,973
Advertising and promotion 12,390 17,991 5,630
Meals and entertainment 1,514 2,198 5,555
Miscellaneous (384) (558) 5,287
Insurance 3,442 4,998 5,181
Licenses and permits 2,417 3,509 2,079
Education 75 109 1,055
Dues and memberships (39) (57) 367
Finance Charge 55,980 81,284 0
Bad debts 27,093 39,340 331
_______ _________ ________
$812,297 $1,179,464 $876,058
======== ========== ========
F-42
<PAGE>
Axion Spatial Imaging Inc.
Note to Consolidated Financial Statements
(Unaudited)
As at December 31st, 1999
______________________________________________________________________________
1 Basis of presentation
These financial statements have been prepared by management in accordance
with United States generally accepted accounting principles. The
consolidated financial statements presented herein are expressed in
Canadian dollars, and, solely for the convenience of the reader, have been
translated into United States dollars for 1999 at the rate of Can$1.4519 =
US$1.00, the interbank day rate on December 31st, 1999. This presentation
should not be contrued as a representation that the Canadian dollar
amounts shown could be so converted into United States dollars at
Can$1.4519 = US$1.00 or any other rate.
2 Shares in escrow
929,730 shares were placed in escrow in the name of Banakor Swisse, these
shares will be fully released from escrow by April 24th, 2000 as financing
is received by the company.
F-43
<PAGE>
PART III
Exhibit Index
Exhibit Name and/or Identification
# of Exhibit
_______ __________________________
2. Charter and By-Laws
2.1 Articles of Incorporation of the Registrant as
Numeric Two Incorporated, filed September 27,
1984
2.2 Amendment to the Articles of Incorporation filed
July 10, 1985 changing name to Beta Tech
Robotics, Inc.
2.3 Certificate of Amendment of Articles of Incorpo-
ration filed August 14, 1996 changing name to
Axion Spatial Imaging Inc.
2.4 By-Laws of Axion Spatial Imaging Inc. (formerly
Beta Tech Robotics, Inc.)
3. Instruments Defining the Rights of Security Holders
Those included in exhibit 2
5. Voting Trust Agreement and Amendments
None. Not Applicable
6. Material Contracts
6.1 Compensation Plans
6.11 Employment Agreement for Ian Basford, President
of Axion Spatial Imaging Inc., President of
Axion Spatial Imaging Ltd.
6.12 Employment Agreement for Markus Lemke
6.2 Axion Spatial Imaging, Inc. 1999 Stock Option Plan
6.3 Convertible Debenture Agreement
(general form)
6.4 Stock Purchase Agreement between Axion Spatial
Imaging Inc. and Banakor Swisse S.A. dated
October 8, 1999
6.5 Agreement between Axion Spatial Imaging Inc. and
Banakor Swisse S.A. dated October 14, 1999
6.6 Agreement between Axion Spatial Imaging Inc. and
ChaseGlobal Capital dated October 14, 1999
-44-
<PAGE>
6.7 Separation Agreement for Charles Martin dated
Nov. 24, 1999
6.8 Axion Spatial Imaging, Inc. Stock Purchase Option
(general form)
7. Material Foreign Patents
None. Not Applicable
12. Additional Exhibits
None.
27. Financial Data Schedule
-45-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the Registrant caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Axion Spatial Imaging Inc.
___________________________________________________________________
(Registrant)
February 16, 2000
Date ________________________
Ian Basford
_______________________________
Ian Basford
President and Chief Financial Officer
Markus Lemke
_______________________________
Markus Lemke
Chief Executive Officer
-46-
<PAGE>
EXHIBIT 2.1
FILED BY: STATE AGENT AND TRANSFER SYND.
IN THE OFFICE OF THE PO BOX 2152
SECRETARY OF STATE OF THE CARSON CITY, NEVADA 89702
STATE OF NEVADA
SEP 27, 1984
SECRETARY OF STATE
File # 6557-84
-----------
ARTICLES OF INCORPORATION
OF
NUMERIC TWO CORPORATION
The undersigned proposes to form a corporation under the laws of the State of
Nevada, relating to private corporations, and to that end hereby adopts
articles of incorporation as follows:
ARTICLE ONE
NAME
The name of the corporation is Numeric Two Corporation.
ARTICLE TWO
LOCATION
The principal office of the corporation is to be located at 123 Lake Glen
Drive, City of Carson City, State of Nevada. Mailing address: Post Office
Box 2152, Carson City, Nevada 89702.
ARTICLE THREE
PURPOSES
The nature of the business, or objects or purposes proposed to be transacted,
promoted, or carried on by the corporation are as follows:
To engage in any lawful activity, subject to no expressed limitations, except
as may be expressed from time to time specifically by the statutory laws of
the State of Nevada. In order that all lawful activities shall be within the
objects and purposes of the incorporation.
ARTICLE FOUR
CAPITAL STOCK
The total number of shares that the corporation may issue is 50 million
shares of Common Stock having a par value of $ .001 each.
Said voting common stock shall be paid in at such time and upon such
conditions as the Board of Directors may, by Resolution, direct (until and
unless otherwise prescribed by Resolution of the stockholders adopted by a
majority vote of voting shares
1
<PAGE>
outstanding as represented at such meeting, either in person or by proxy, at
any regular meeting of voting shareholders or
any at special meting of voting shareholders called therefore and held upon
due notice) either in cash or by services rendered to the corporation, or by
real or personal property transferred to it. Shares of voting common stock
issued in exchange for property or services pursuant to a Resolution of the
Board of Directors, shall thereupon become and be fully paid for, and shall be
non-assessable forever, and determination of the Board of Directors as to the
value of any property or services rendered by the corporation in exchange for
stock shall be conclusive in the absence of actual fraud.
The stock of this corporation shall be issued by the corporation from time to
time for such consideration as may be fixed by the Board of Directors thereof.
When so issued and determined by the Board of Directors to have been fully
paid for, then the holders of the stock of this corporation shall not be held
individually responsible as such for any debts, contracts, liabilities, or
engagements of the corporation and shall not be liable for assessments to
restore impairments in capital of the corporation, nor shall stock of this
corporation be liable to assessment for any purpose.
Unless otherwise determined by the shareholders in regular or special meeting
assembled by two-thirds (2/3) majority of all stockholders eligible to vote,
voting by written ballot, no holder of stock of the corporation shall be
entitled as such, as a matter of right, to purchase or subscribe for any stock
of any class which the corporation may issue or sell, whether or not
exchangeable for any stock of the corporation of any class or classes and
whether out of unissued shares authorized by the articles of incorporation of
the corporation as originally filed or by any amendment thereof or out of
shares of stock of the corporation acquired by it after the issue thereof and
whether issued for cash, labor done, personal property, or real property, or
leases therefore. Nor, unless otherwise determined by the stockholders as
set forth above, shall any holder of any shares of capital stock of the
corporation, be entitle, as a matter of right, to purchase or subscribe for
any obligation which the corporation may issue or sell that shall be
convertible into or exchangeable for any shares of stock of the corporation,
of any class or classes, or to which shall be attached or appurtenant any
warrant or warrants or any other instrument or instruments that shall confer
upon the holder or holders of such obligation the right to subscribe for or
purchase from the corporation any shares of its capital stock of any class or
classes.
ARTICLE FIVE
DIRECTORS
The numbers of the governing board of the corporation shall be named and
styled as directors. The number of directors constitu-
2
<PAGE>
ting the first Board of Directors is three and the names and post office
addresses of the first Board of Directors are:
1. Loula Mirando, 25 Jarvis Street, Fort Erie, Ontario, Canada
2. Cathy Mirona, 25 Jarvis Street, Fort Erie, Ontario, Canada
3. Betty Block, 123 Lake Glen Drive, Carson City, Nevada 89701
ARTICLE SIX
ASSESSMENT OF STOCK
The capital stock of the corporation shall not be subject to pay debts of the
corporation and no paid up stock and no stock issued as fully paid up shall
ever be assessable or assessed.
ARTICLE SEVEN
INCORPORATORS
The name and post office address of the incorporator is:
Elizabeth R. Block, 123 Lake Glen Drive, Carson City, NV 89701.
ARTICLE EIGHT
PERIOD OF EXISTENCE
The period of existence of this corporation shall be perpetual.
ARTICLE NINE
GENERAL POWERS
To carry out the purposes of this corporation, within or without the State of
Nevada, the United State of America, or any state, territory or subdivision
thereof, without limitation, this corporation shall have the power to do by
itself, as principal, as agent, whether so identified or not, as principal,
surety, or guarantor, and in conjunction with any individual partnership,
corporation, or other business entity, to exercise to the fullest all of the
rights, powers and abilities without limitation except as provided
by law. Should the laws of any domestic, foreign, or alien state, territory,
country or political subdivision allow a broader scope of purposes, powers,
and activities then should the laws of the State of Nevada, at any particular
time, then the corporation shall have, as to all business done in such
domestic, foreign or alien state, territory, country, or political
subdivision, all such additional powers.
ARTICLE TEN
AMENDMENT OF ARTICLES OF INCORPORATION
Except as provided by law of the State of Nevada, articles of incorporation of
the corporation may be amended from time to time by a majority vote of all
shareholders voting by written ballot
3
<PAGE>
in person or by proxy held at any general or special meeting of shareholders
upon lawful notice.
ARTICLE ELEVEN
STATUTORY RESIDENT AGENT
The corporation does hereby name, constitute and appoint as its statutory
resident agent within the State of Nevada for receipt of process and any other
lawful purposes State Agent and Transfer Syndicate, Incorporated, 123 Lake
Glen Drive, Carson City, Nevada, mailing address: Post Office Box 2152,
Carson City, NV 89702, telephone number (702) 882-1013. This appointment of
statutory resident agent shall be continuous unless otherwise changed by the
Board of Directors of the corporation acting pursuant to the laws of the State
of Nevada.
ARTICLE TWELVE
VOTING OF SHARES
In any election participated in by the shareholde4rs of this corporation, be
it for election of a Board of Directors, or any member thereof, for amendment
to these articles of incorporation, for a change of stock or otherwise to a
alter that capital structure of the corporation, or for any other purpose,
each shareholders shall have one vote for each share of stock he owns; either
in person or by proxy as provided by law, and no more. Cumulative voting
shall not prevail in any election by the shareholders of this corporation.
ARTICLE THIRTEEN
REGULATION OF CORPORATE AFFAIRS
The regular affairs of the corporation shall be managed and controlled by the
Board of Directors who shall be elected annually at a regular meeting of the
shareholders to be held at the principal office of the corporation or at such
other location within or without the State of Nevada, within or without any
state or territory of the United States, as the Board of Directors shall
determine upon thirty (30) days' notice.
Each director shall, upon his election, serve until his successor is duly
elected or appointed, and has replaced him. The Board of Directors shall
appoint such executive officers including a President, one or more Vice-
Presidents, a Secretary and a Treasurer, none of who need to be shareholders
or directors, and any one of who may hold more than one office, but not more
than three such offices. The Board of Directors may, from time to time, adopt
By-laws for the control and operation of the affairs of the corporation which
said by-laws, once adopted, not be amended unless by written vote of the
majority of all the directors eligible to vote thereupon.
4
<PAGE>
IN WITNESS WHEREOF the undersigned, Elizabeth R. Stock has hereunto set her
hand this 25 day of September, 1984.
INCORPORATOR:
/s/ Elizabeth R. Block
_____________________
Elizabeth R. Block
STATE OF NEVADA
COUNTY OF CARSON CITY
On Sept. 25, 1984, Elizabeth R. Block personally appeared before me,
a notary public, and executed the above instrument.
/s/ Mary Ann Dickens
___________________________
Signature of Notary
Notary stamp or seal
STAMP
5
<PAGE>
EXHIBIT 2.2
FILED BY:
STATE AGENT & TRANSFER
POST OFFICE BOX 2152
CARSON CITY, NEVADA 89702
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
JUL 10 1985
AMENDMENT TO THE
ARTICLES OF INCORPORATION OF
6557-84 NUMERIC TWO INCORPORATED
BE IT KNOWN, the above named corporation was originally filed with the
Secretary of State of Nevada on September 25, 1984 and with the Clerk of the
City of Carson City on December 31, 1984 and
BE IT KNOWN, the undersigned Incorporator of the above named corporation
declares that that no stock has been sold in the corporation and resolves to
change the name of the corporation:
RESOLVED, that Article One of the Articles of Incorporation, be, and the same
is hereby amended to read as follows:
The name of this corporation is BETA TECH ROBOTICS INC.
IN WITNESS WHEREOF the undersigned, Elizabeth R. Block has hereunto set her
hand this 10th day of July, 1985.
INCORPORATOR:
/s/ Elizabeth R. Block
__________________
Elizabeth R. Block
STATE OF NEVADA
COUNTY OF CARSON CITY
On July 10, 1985, Elizabeth R. Block personally appeared before me, a notary
public, and executed the above instrument.
/S/ Nancy A. Graham
STAMP ______________________
Notary stamp or seal
SIGNATURE OF NOTARY
<PAGE>
EXHIBIT 2.3
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
(after issuance of stock)
BETA TECH ROBOTICS, INC.
We, the undersigned President and Secretary of Beta Tech Robotics,
Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly
convened and held on the 14th day of August, 1996, adopted a
resolution to amend the original articles as follows:
Article One is hereby amended to read as follows:
The name of the corporation is to be Axion Spatial Imaging, Inc.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is Four
million, nine hundred thousand (4,900,000), that said change and
amendment have been consented to and approved by a majority vote of
the stockholders holding at least a majority of each class of stock
outstanding and entitled to vote thereon.
/s/
_______________________
President and Secretary
State of Arizona )
)ss.
County of Maricopa )
On this 14th day of August, 1996, personally appeared before me, a
Notary Public, Robert J. Grill who acknowledged that he executed
the above instrument.
/s/ ????
__________________
Notary Public
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
AUG 28, 1996
DEAN HELLER SECRETARY OF STATE
C 6557-84
<PAGE>
EXHIBIT 2.4
BY-LAWS OF AXION SPATIAL IMAGING INC.
(FORMERLY BETA TECH ROBOTICS, INC.)
ARTICLE I - OFFICES
The registered office of the corporation shall be located in the
State of Nevada at the office of the current resident agent. The
corporation may have such other offices, either within or without
the State of Nevada, as the Board of Directors may designate or as
the business of the corporation may from time to time require.
ARTICLE II - SHAREHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on lOth of
April in each year, at 2:00 o'clock p.m. , or such other time or
such other day as shall be fixed by the Board of Directors, for the
purpose of electing Directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the
annual meeting shall be a Sunday or a legal holiday such meeting
shall be held on the next succeeding business day. If the election
of directors shall not be held on the day designated herein for the
annual meeting, the Board of Directors shall cause the election to
be held at a special meeting of shareholders as soon thereafter as
conveniently possible.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by
the President or by a minimum of two members of the Board of
Directors, and shall be called by the President at the request of
the holders of not less than fifty (50%) per cent of all the
outstanding shares of the corporation entitled to vote at the
meetings.
3. PLACE OF MEETING.
The Directors may designate any place, either within or without the
State of Nevada, unless otherwise prescribed by statute, as the
place of meeting for any annual meeting or for any special meeting
called by the Directors. If no cdesignation is made, or if a
special meeting be otherwise called, the place of meeting shall be
the principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than
ten (10) nor more than forty five (45) days before the date of the
meeting, either personally or by mail, by an officer of the
corporation at the direction of the President, the Secretary, or
the person or persons calling the meeting, to each stockholder or
record entitled to vote at such meeting. If mailed, such notice
shall be deemed to be delivered
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when deposited in the United States mail, addressed to the stockholder at
his address as it appears onthe stock transfer books of the corporation,
with postage thereon prepaid.
5. FIXING DATE FOR DETERMINATION OF SHAREHOLDERS OF RECORD.
In order that the corporation may determine the shareholders
entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express written consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or allotment
of any rights or entitled to exercise any rights in respect of any
change conversion or exchange of shares or for the purpose of any
other lawful action, the Board of Directors of the corporation may
provide that the stock transfer books shall be closed for a stated
period but not to exceed, in any case, ten (10) days. If the stock
transfer books shall be closed for the purpose of determining
stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten (10) days
immediately preceding such meeting. In lieu of closing the stock
transfer books, the Directors may fix in advance a date as the
record date for any such determination of stockholders, such date
in any case to be not more than sixty (60) days and, in case of a
meeting of stockholders, not less than ten (10) days prior any
other action.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books
for shares of the corporation shall make, at least ten (10) days
before each meeting of stockholders, a complete list of the
stockholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order with the address of and the
number of shares held by each, which list, for a period of ten (10)
days prior to such meeting, shall be kept on file at the principal
office of the corporation and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list
shall also be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any stockholder
at any time during the meeting. The original stock transfer book
shall be prima facie evidence as to those stockholders entitled to
examine such list or transfer book or to vote at the meeting of
stockholders. Failure to comply with the requirements of this
section does not affect the validity of any action taken at the
meeting.
7. QUORUM.
At any meeting of stockholders fifty per cent (50%) of the
outstanding shares of the corporation entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of
stockholders. If less than said number of the outstanding shares
are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
The stockholders present at a duly organized meeting may continue
to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
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8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized
attorney in fact. Such proxy shall be filed with the Secretary of
the corporation before or at the time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms
and provisions of the certificate of incorporation and these by-
laws shall be entitled to one vote, in person or by proxy, for each
share of stock entitled to vote held by such stockholders. Upon the
demand of any stockholder, the vote for Directors and upon any
question before the meeting shall be by ballot. All elections for
Directors shall be decided by plurality vote\\; all other questions
shall be decided by majority vote except as otherwise provided by
the Certificate of Incorporation or the laws of the State of
incorporation. Voting for any matter need not be by written ballot.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be
as follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be
taken at a meeting of the shareholders, or any other action which
may be taken at a meeting of the shareholders, may be taken without
a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the shareholders entitled to vote
with respect to the subject matter thereof.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its
Board of Directors. The Directors shall in all cases act as a
Board, and they may adopt such rules and regulations for the
conduct of their meetings and the management of the corporation, as
they may deem proper, not inconsistent with these by-laws and the
laws of the State of incorporation.
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2. NUMBER, TENURE AND QUALIFICATIONS.
The number of Directors of the corporation shall be at least
one (1) and not more than thirty five (35). Each Director shall
hold office until the next annual meeting of stockholders and until
his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the Directors, shall be held without other
notice than this by-law immediately after, and at the same place
as, the annual meeting of stockholders. The Directors may provide,
by resolution, the time and place for the holding of additional
regular meetings without other notice than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the Directors may be called by or at the
request of the President or a majority of the remaining Directors.
The person or persons authorized to call special meetings of the
Directors may fix the place for holding any special meeting of the
Directors called by them, provided that the place of the meeting is
approved by the President of the corporation. Meetings may be held
by conference telephone calls.
5. NOTICE.
Notice of any special meeting shall be given at least ten (10) days
previously thereto by written notice delivered personally, or by
telegram or mailed to each Director at his business address. If
mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the
telegraph company. The attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting.
6. QUORUM.
At any meeting of the Directors fifty one per cent (51%) shall
constitute a quorum for the transaction of business, but if less
than said number is present at a meeting, a majority of the
Directors present may adjourn the meeting.
7. MANNER OF ACTING.
The act of the majority of the Directors present at a meeting at
which a quorum is present shall be the act of the Directors.
8. NEWLY CREATED DIRECTORSHIPS
The Board of Directors may increase the number of Directors by a
two thirds (2/3) majority vote, subject to the ratification of the
shareholders. Newly created directorships resulting from an
increase in the number of Directors may be filled by a vote of a
two thirds (2/3) majority of the Directors then in office, subject
to a ratification of the shareholders. The term of any newly
created directorship shall be determined by the Board of Directors.
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9. REMOVAL OF DIRECTORS.
Any of the Directors may be removed for cause by vote of the
stockholders or by action of the Board.
10. RESIGNATION.
A Director may resign at any time by giving written notice to the
Board, the President or the Secretary of the corporation. Unless
otherwise specified in the notice, the resignation shall take
effect upon receipt thereof by the Board or such officer, and the
acceptance of the resignation shall not be necessary to make it
effective.
11. VACANCIES
Directors shall be elected to fill any vacancy by simple majority
vote of the Board of Directors. A Director elected to fill a
vacancy caused by resignation, death or removal shall be elected to
hold office for the unexpired term of his or her successor.
12. COMPENSATION.
Compensation may be paid to Directors, as such, for their services,
by resolution of the Board. A fixed sum and expenses for actual
attendance at each regular or special meeting of the Board may also
be authorized. Nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other
capacity and receiving compensation therefore.
13. PRESUMPTION OF ASSENT.
A Director of the corporation who is present at a meeting of the
Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as
the Secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of
the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a Director who voted in
favor of such action.
14. EXECUTIVE AND OTHER COMMITTEES.
The Board, by resolution, may designate 'from among its members an
executive committee and other committees, each consisting of one
(1) or more Directors. Each such committee shall serve at the
pleasure of the Board.
15. INDEMNIFICATION.
Each Officer and/or Director shall be indemnified by the
corporation from suits by Shareholders, other Directors or
creditors of the corporation unless such Officer or Director shall
have been adjudicated in a court of law to have committed fraud or
willful malfeasance. This indemnification shall not apply to suits
filed under the Securities Exchange Act of 1934 and amendments
thereto. Nothing in this paragraph shall be construed to run
counter to public policy as set forth by the United States
Securities and Exchange Commission.
ARTICLE IV -OFFICERS
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1. NUMBER.
The officers of the corporation shall be a President, a Secretary
and a Treasurer, each of whom shall be elected by the Directors.
Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the Directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the Directors
shall be elected annually at the first meeting of the Directors
held after each annual meeting of the stockholders. Each officer
shall hold office until his successor shall have been duly elected
and shall have qualified or until his death or until he shall
resign or shall have been removed in the manner hereinafter
provided.
3. REMOVAL.
Any officer or agent elected or appointed by the Directors may be
removed by the Directors whenever in their judgment the best
interests of the corporation would be served thereby, but such
removal shall be without prejudice to the contract right, if any,
of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Directors for
the unexpired portion of the term.
5. PRESIDENT.
The President shall be the principal executive officer of the
corporation and, subject to the control of the Directors, shall in
general supervise and control all of the business and affairs of
the corporation. He shall, when present, preside at all meetings of
the stockholders and of the Directors. He may sign, with the
Secretary or any other proper officer of the corporation authorized
by the Directors, certificates for shares of the corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the
Directors have authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the
Directors or by these by-laws to some other officer or agent of the
corporation, or shall be required by law to be otherwise signed or
executed; and in general shall perform all duties incident to the
office of President and such other duties as may be prescribed by
the Directors from time to time.
7. SECRETARY.
The Secretary shall keep the minutes of the stockholders' and of
the Directors' meetings in one or more books provided for that
purpose, see that all notices are duly given in accordance with the
provisions of these by-laws or as required, be custodian of the
corporate records and of the seal of the corporation and keep a
register of the post office address of each stockholder which shall
be furhished to the Secretary by such stockholder, have general
charge of the stqck transfer books of the corporation and in
general perform all duties incident to the office of Secretary,
preside at meetings in the absence of the President perform such
other duties as from time to time may be assigned to him by the
President or by the Directors.
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8. TREASURER.
If required by the Directors, the treasurer shall give a bond for
the faithful discharge of his duties in such sum and with such
surety as the Directors shall determine. He shall have charge and
custody of and be responsible for all funds and securities of the
corporation; receive and give receipts for moneys due and payable
to the corporation from any source whatsoever, and deposit all such
monies in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident
to the office of treasurer and such other duties as from time to time
may be assigned to him by the President or by the Directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by
the Directors and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a Director of the
corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The Directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the coy'poration and no
evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Directors. Such authority may be
general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers, agent or
agents of the corporation and in such macflner as shall from time
to time be determined by resolution of the Directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be
deposited from time to time to the credit of the corporation in
such barlks, trust companies or other depositories as the Directors
may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates represerlting shares of the corporation shall be in
such form as shall be determined by the Directors. Such certificates
shall be signed by the President and by the Secretary or by such other
officers authorized by law and by the Directors. All certificates for
shares shall be consecutively numbered or otherwise identified. The
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name and address of the stockholders, the number of shares and date
of issue, shall be entered on the stocktransfer books of the corporation.
All certificates surrendered to the corporation for transfer shall be
canceled and no new certificate shall be issued until the former certificate
for a like number of shares shall have been surrendered and canceled, except
that in case of a lost destroyed or mutilated certificate a new one may be
issued there for upon such terms and indemnity to the corporation as the
Directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of
the corporation of a certificate for shares duly endorsed or
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accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the corporation to
issue a new certificate to the person entitled thereto, and cancel
the old certificate; every such transfer shall be entered on the
transfer book of the corporation which shall be kept at its
principal office.
(b) The corporation shall be entitled to treat the holder of record
of any share as the holder in fact thereof, and, accordingly, shall
not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or
not it shall have express or other notice thereof, except as
expressly provided by the laws of the state of incorporation.
ARTICLE VII -FISCAL YEAR
The fiscal year of the corporati'on shall begin on the lst day of
January in each year.
ARTICLE VIII -DIVIDENDS
The Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and upon
the terms and conditions provided bylaw.
ARTICLE IX -SEAL
The Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
corporation, the state of incorporation, year of incorporation and
the words, "Corporate Seal".
ARTICLE X -WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required
to be given to any stockholder, or Director of the corporation
under the provisions of these by-laws or under the provisions of
the articles of incorporation, a waiver thereof in writing, signed
by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the
giving of such notice.
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ARTICLE XI -AMENDMENTS
These by-laws may be altered, amended or appealed and new by-laws
may be adopted by a vote of the stockholdels representing a
majority of all the shales issued and outstanding, at any annual
stockholders' meeting or at any special stockholders' meeting when
the proposed amendment has been set out in the notice of such
meeting.
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EXHIBIT 6.11
Agreement for Ian Basford
President of Axion Spatial Imaging Inc.
President of Axion Spatial Imaging Ltd.
1. Effective Period
This agreement is in effect from June 1st, 1998. Salary increase
will be retroactive to June 1st, 1998 until funding from OTC has
been received. The funding is expected some time in June 1998.
2. Salary
The Minimum Salary will be $144,000.00 CND per year.
If Gross sales projections are met, salary increases by 10%. If
Gross sales projections are exceeded by 5%, salary increases by
15%.
3. Shares
Employee stock option of 200,000 shares at $1.00 USD granted,
option open for exercise for five years from June 1st, 1998.
4. Severance
On termination of employment, a minimum of two years salary will be
paid as severance compensation. If severance is without cause,
expiration period for options after termination will be extended to
full term.
5. Responsibilities
The primary responsibilities of the President are running the
operations of the two companies, reporting to the Directors and the
CEO. Secondary responsibilities are assisting the CEO with issues
relating to the public market and securities.
6. Approval
The Board of Directors, with Ian abstaining from voting has
approved this agreement.
The CEO, Charles Martin, has approved this Agreement. Charles
Martin has informed the new investment group of this agreement.
Date: 8 June 98
/s/ Milinusic, Tomislav /s/ Brian Shearer
_________________________ _________________________
Tomislav Milinusic Brian Shearer
Director Director
/s/ Charles Martin /s/ Ias Basford
_________________________ _________________________
Charles Martin Ian Basford
CEO President
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EXHIBIT 6.12
EMPLOYMENT AGREEMENT
This Employment Agreement ( Employment Agreement ) is made between
Markus Lemke ( Employee ) and Axion Spatial Imaging Ltd. (the
Company ) and shall become effective on December 1, 1999 (the
Effective Date ).
1. Term of Employment. Pursuant to the terms and conditions set
forth herein, the Company agrees to employ Employee from the
Effective date until December 1, 2002 (the Term), provided that
the Company retains the right to terminate Employee for cause as
set forth in this Employment Agreement.
2. Services to be rendered by Employee. During the term of this
Employment Agreement, Employee will be responsible for Strategic
Marketing and Communications Planning, Corporate and Contracting
Documents (legal), Investor Relations and issues relating to the
Public Market and the Securities Commission. Employee shall
observe and comply with all lawful directions and instructions by
and on the part of the Company's management and endeavor to promote
the interests of the Company to the extent consistent with his
responsibilities and duties to the Company. Employee shall report
to the President and the Board of Directors during the first year
of the term. Immediately upon Employee completing the first year
of the term, the Board of Directors shall assess Employee's
performance during the first year and if Employee has performed his
duties in a diligent manner, the Board of Directors shall promote
Employee to a status in the Company which is equal to the President
in the Company hierarchy.
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2
3. Compensation
A. For the first twelve-month period commencing on the Effective
Date of this Employment Agreement, the Company shall pay Employee
an annual base salary of $100,000.00. For the second twelve-month
period commencing on the first anniversary of the Effective date of
this Employment Agreement, the Company shall pay Employee an annual
base salary of $120,000.00. Employee shall be paid on a monthly
basis. The Company agrees to pay Employee his Base Compensation in
priority to all other financial liabilities of the Company.
Employee shall be entitled to a salary increase for the second
twelve month period calculated as follows:
The Company will set targets for gross sales of the Company
at the beginning of each calendar year. If the targets are
met, Employee shall receive a 10% salary increase on his
salary then in effect. If the targets are met and exceeded
by greater than 5% of the target amount, Employee shall
receive a 15% salary increase on his salary then in effect.
B. At the commencement of the term Employee shall be entitled to
participate in the Company s then existing Stock Option Plan. The
Employee shall receive an option to acquire 200,000 of the
Company's authorized but unissued, or reacquired, Common Stock at
an Option Price of USD - 25 cents and the Option shall expire on
the fifth anniversary of the commencement date of the term. This
Option shall be evidenced by a written agreement approved by both
the Plan Administrators and Employee.
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3
C. During the Term, Employee shall be eligible to participate in
such other employee benefits, policies or programs (such as health
insurance, disability insurance, life insurance, pension and other
retirement benefits, and vacation and sick time) under the same
circumstances that those policies or programs are available to
comparable employees of the Company. The Company reserves the
right and complete discretion to modify or alter those policies or
programs, and any such modifications or alterations will be
applicable to Employee as they apply to other similarly situated
employees.
D. The Company shall reimburse Employee for all of the reasonable
fees, costs and expenses incurred by Employee in connection with,
or as a result of, the performance of his duties and responsibi-
lities for the Company including but not limited to travel expenses
between Calgary and Edmonton and the costs of operating an office
in Calgary.
4. Termination for Cause.
The Company has the right to terminate the employment relationship
without notice for cause, as defined below, and upon such
termination for cause the obligations of the Company under this
Employment Agreement shall cease. The Company may terminate the
employment relationship upon a determination that the Employee has
(i) been convicted of any criminal charge or pleaded guilty to any
criminal charge; (ii) willfully or intentionally caused injury to
the Company, its property, or it assets; (iii) engaged in any
occupation, activity or business, whether personal or professional,
in competition with the Company; (vi) committed a material breach
of this Employment Agreement; or, (v) is subject to any arbitration
award of order
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4
of a court that prevents him from materially performing his duties
hereunder for a period of more than six months from the date of such
award or order.
5. Termination of Employment - General Provisions.
In the event that Employee shall at any time terminate his
employment hereunder or if the Company terminates his employment
for cause, Employee shall have no right to receive any compensation
or benefit hereunder attributable to any period after the date of
such termination saving and except that the right to exercise
Employee's stock options shall continue for a period of 90 days
after the date of such termination. In the event Employer
terminates the employment relationship without cause, severance
compensation will be paid as follows: (i) no compensation for the
first 6 months, (ii) 6 months salary if employed from 6 months to
one year, (iii) 1 year salary if employed more than one year.
Employee s rights under the Company's Stock Option Plan continue
for the balance of the unexpired term referred to in the
aforementioned clause 3 B.
6. Covenant to Protect Trade Secrets and Confidential Information.
It is contemplated by the parties hereto that Employee will be
furnished with and will acquire confidential and proprietary
information and knowledge pertaining to the operations of the
businesses of the Company, as well as confidential and proprietary
knowledge and information pertaining to the Company s contracts
with customers, prices and methods of operations, including but not
limited to proprietary pricing structures, identities of customers,
contract expiration dates,
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5
and positions created by certain transactions. As part of the
consideration of this Employment Agreement, Employee agrees that
he will not at any time disclose or use, either during or subsequent
to his employment, any information, knowledge or data which he receives
or develops during his employment that is considered proprietary by the
Company or that relates to the trade secrets of the Company. Notwith-
standing the foregoing, (A) Employee shall not be precluded from disclosing
information that (i) has become known to the public or persons that
compete with the Company by means other than Employee's disclosure,
or (ii) is required to be disclosed by law, legal process or any
judicial or administrative order and (B) Employee may disclose
confidential information to (i) directors, officers, employees,
advisors, authorized agents or representatives of the Company or
its affiliates, and (ii) any other person if such disclosure is at
the request of an officer of the Company. Employee shall provide
advance notice to Employer of any disclosure of confidential and
proprietary information under subpart A(ii).
7. Employee's Covenant Not to Compete.
Employee acknowledges that the covenant not to compete set forth
below is an agreement that is designed to enforce and is ancillary
to the Employee s agreement to protect and not to disclose the
Company's trade secrets and other confidential information as set
forth above. Employee further agrees to be bound by this covenant
not to compete in order to enforce his obligation to the Company to
refrain from the disclosure of confidential or proprietary inform-
ation. Employee acknowledges that the Company has established a
valuable and extensive trade in the services it provides, which has
been developed at considerable expense to the Company. Employee
agrees that, by virtue of the special training and knowledge that he will
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6
receive from the Company, and the relationship of trust and
confidence between Employee and the Company, Employee will obtain
certain information and knowledge of the business and operations of
the Company that are confidential and proprietary in nature,
including, without limitation, information about equipment,
processes, technology, customers, and customer contracts.
A. Consideration: In consideration for the Covenant Not to Compete
contained in the Employment Agreement, Employee acknowledges that
he has received the following consideration:
i) In return for the covenants set forth in this Employment Agreement,
the Company has provided Employee with a term of employment
expressed in Paragraph 1 of this Employment Agreement;
ii) In return for the covenants set forth in this Employment Agreement,
the Company has agreed to hire Employee and to pay him the
compensation and bonuses specified in this Employment Agreement; and
iii)In return for the covenants set forth in this Employment Agreement,
the Company has agreed to provide Employee with access to its
confidential or proprietary information, and will facilitate
contacts between Employee and customers of the Company with the
benefit of the goodwill possessed by the Company.
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7
B. Scope of Temporal Restriction on Employee's Ability to Compete:
Employee agrees that Employee will not, during the Term and for a
period of 6 months after the term, compete with the Company
directly or indirectly, for himself or as an agent or employee of
others.
C. Scope of Activities Constituting Competition with The Company,
Prohibited by this Employment Agreement:
Within the time period specified in Paragraph 7.B Employee will
not, by any means or for any cause, directly or indirectly, for
himself or as an agent, representative or employee of others: (i)
engage in or attempt to engage in the business of, or (ii) be
employed by, work for, or provide services or advice to another
company, business, entity, or person engaged in or attempting to
engage in (whether exclusively or only partially) a similar
business or enterprise that would be directly or indirectly in
competition with any business of the Company.
D. Agreement Not to Solicit or Recruit Other Employees of the Company.
Prior to the expiration of the Term, Employee further agrees to
refrain from soliciting, recruiting, encouraging, or initiating
contact with any of the Company's employees in any way for the
purpose of offering them employment, either as an employee or as a
consultant or adviser, with Employee, directly or indirectly, for
himself or with or for others. Employee further agrees to refrain
from authorizing, directing, or advising any third persons or
entities to solicit, recruit, encourage, or
<PAGE>
8
initiate contact with any of the Company's employees in any way for
the purpose of offering them employment, either as an employee or as
a consultant or adviser, with Employee, directly or indirectly, for
himself or with or for others.
In the event that the provisions of Paragraph 8 should ever be
deemed to exceed limitations permitted by the applicable laws, then
the parties agree that such provisions shall be reformed to the
maximum limitations permitted by the applicable laws.
8. Enforcement of Covenants.
It is expressly understood and agreed by Employee that the
covenants contained in Paragraphs 7 and 8 of this Employment
Agreement represent a reasonable and necessary protection of the
legitimate interests of the Company and that Employee s failure to
observe and comply with his covenants and agreements in Paragraphs
7 and 8 will cause irreparable harm to the Company. It is
expressly understood and agreed by Employee that it is and will
continue to be difficult to ascertain the nature, scope and extent
of the harm resulting from breach of these covenants and that a
remedy at law for such breach by Employee will be inadequate.
Accordingly, it is the intention of the parties that, in addition
to any other right's and remedies which the Company may have in the
event of any breach of Paragraphs 7 and 8 of this Employment
Agreement, the Company shall be entitled, and is irrevocably
authorized by Employee, to demand and obtain specific performance,
including without limitation all appropriate injunctive and other
equitable relief against Employee, in order to enforce against
Employee, or to prevent any breach or any threatened breach by
Employee of, the covenants and agreements contained in Paragraphs 7
and 8 of this Employment Agreement.
<PAGE>
9
9. Notice.
A notice given by the Company to the Employee under this Employment
Agreement shall be sufficient if in writing and either (1) hand
delivered at work during working hours or (2) mailed, return
receipt requested, to Employee at the address as found in Employee
s personal file.
10. Assignment.
The rights of the Company hereunder may be assigned by the Company
to any parent, subsidiary, affiliate or successor of the Company.
This Employment Agreement, is not assignable by Employee. Any
attempt by Employee to assign this Employment Agreement, or any
portion thereof, shall be deemed null and void and of no force and
effect.
11. Severability.
Any provision of this Employment Agreement prohibited by or
unenforceable under any applicable law of any jurisdiction shall as
to such jurisdiction be deemed ineffective and deleted herefrom
without affecting any other provision of this Employment Agreement.
It is the desire of the parties hereto that this Employment
Agreement be enforced to the maximum extent permitted by law, and
should any provision contained herein be held unenforceable, the
parties hereby agree and consent that such provision shall be
reformed to make it a valid and enforceable provision to the
maximum extent permitted by applicable law.
12. Choice of Law.
This Employment Agreement shall be construed and governed by the
laws of the Province of Alberta, and jurisdiction and venue of any
action in respect of this Employment Agreement shall lie in
Edmonton, Alberta.
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10
13. Entire Agreement and Amendment.
This Employment Agreement supersedes any and all other agreements,
either oral or in writing, between the parties hereto with respect
to the employment of Employee by the Company. This Employment
Agreement contains the entire agreement of the parties with respect
to the subject matter covered hereby and may be amended, waived or
terminated only by an instrument in writing executed by both
parties hereto.
14. Miscellaneous
A. Any reference to a specific plan in this Employment Agreement
shall be deemed to include any similar plan or program of the
Company then in effect that is the predecessor or the successor to,
or the replacement for, such specific plan.
B. This Agreement may be amended or modified only by a written
agreement duly executed by the parties hereto.
Accepted and Agreed:
Markus Lemke Axion Spatial Imaging Inc.
/s/ Markus Lemke /s/ Ina Basford
_______________________________ _______________________
Employee Company
November 11, 1999 Ian Basford
Date:_________________________ Name:___________________
President
Title:___________________
15/Nov/1999
Date:____________________
<PAGE>
EXHIBIT 6.2
AXION SPATIAL IMAGING, INC.
1999 STOCK OPTION PLAN
This 1999 Stock Option Plan ("Plan") provides for the grant of options to
acquire shares of common stock, .001 par value ("Common Stock") of AXION
SPATIAL IMAGING, INC., a Nevada corporation ("Company"). Stock options
granted under this Plan are referred to in this Plan as "Options." Options
that qualify under Section 422 of the Internal Revenue Code of 1986, as
amended ("Code"), are referred to in this Plan as "Incentive Stock Options."
Options granted under this Plan that do not qualify under Section 422 of the
Code are referred to as "Nonqualified Stock Options."
1.0 PURPOSES
1.1 The purposes of this Plan are (i) to retain the services of a management
team, qualified employees of the Company and non-employee advisors or
consultants as the Plan Administrators shall select in accordance with this
Plan; (ii) to retain the services of valued non-employee directors pursuant to
Section 5.15 below; (iii) to provide these persons with an opportunity to
obtain or increase a proprietary interest in the Company, to provide
incentives for effective service and high-level performance, to strengthen
their incentive to achieve the objectives of the shareholders of the Company;
and (iv) to serve as an aid and inducement in the hiring or recruitment of new
employees, consultants, non-employee directors and other persons needed for
future operations and growth of the Company. Employees, non-employee advisors
and consultants are referred to in this Plan as "Service Providers."
2.0 ADMINISTRATION
2.1 This Plan shall be administered by, or in accordance with the
recommendation of, the Board of Directors of the Company ("Board"). The
Board may, in its discretion, establish a committee composed of two or more
members of the Board to administer this Plan ("Committee") which may be an
executive, compensation or other committee, including a separate committee
especially created for this purpose. The Committee shall have the powers and
authority as the Board may delegate to it, including the power and authority
to interpret any provision of this Plan or of any Option. The members of the
Committee shall serve at the discretion of the Board. The Board, and/or the
Committee if one has been established by the Board, are referred to in this
Plan as the "Plan Administrators."
2.2 Following registration of any of the Company's securities under Section
12 of the Securities Exchange Act of 1934, as amended ("Exchange Act"), the
Plan Administrators shall not take any action which is not in full compliance
with the exemption from Section 16(b) of the Exchange Act provided by Rule
16b-3, as amended, or any successor rule or rules, and any other rules or
regulations of the Securities and Exchange Commission, a national exchange,
the Nasdaq Stock Market, the NASD Bulletin Board, or any other applicable
regulatory authorities, and any such action shall be void and of no effect.
2.3 Except as limited by Section 5.15 below, and subject to the provisions
of this Plan, and with a view to effecting its purpose, the Plan Administra-
tors shall have sole authority, in their absolute discretion, to:(i) construe
and interpret this Plan;(ii) define the terms used in this Plan;(iii) prescribe,
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amend and rescind rules and regulations relating to this Plan;
(iv) correct any defect, supply any omission or reconcile any inconsistency in
this Plan;
(v) select the Service Providers to whom Options shall be granted under this
Plan and whether the Option is an Incentive Stock Option or a Nonqualified
Stock Option;
(vi) determine the time or times at which Options shall be granted under this
Plan;
(vii) determine the number of shares of Common Stock subject to each Option,
the exercise price of each Option, the duration of each Option and the times
at which each Option shall become exercisable;
(viii) determine all other terms and conditions of Options;
(ix) approve the forms of agreement to be used under the Plan;
(x) to determine the "Fair Market Value", as defined in Section 2.4 below;
(xi) to reduce the exercise price of any Option to the then current Fair
Market Value if the Fair Market Value of the Common Stock covered by the
Option shall have declined since the date the Option was granted;
(xii) to institute a program whereby outstanding options are surrendered in
exchange for options with a lower exercise price;
(xiii) to provide financial assistance to Optionees in the exercise of their
outstanding options by allowing the individuals to deliver a full-recourse,
interest-bearing promissory note in payment of the exercise price and any
associated withholding taxes incurred in connection with the exercise;
(xiv) to allow Optionees to satisfy withholding tax obligations by electing to
have the Company withhold from the shares of Common Stock to be issued upon
exercise of an Option that number of shares having a Fair Market Value equal
to the amount required to be withheld. The Fair Market Value of the shares to
be withheld shall be determined on the date that the amount of tax to be
withheld is to be determined. All elections by an Optionee to have shares
withheld for this purpose shall be made in such form and under such conditions
as the Plan Administrators may deem necessary or advisable;
(xiv) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously granted by the
Plan Administrators; and
(xv) make all other determinations necessary or advisable for the
administration of this Plan. All decisions, determinations and
interpretations made by the Plan Administrators shall be binding and
conclusive on all participants in this Plan and on their legal
representatives, heirs and beneficiaries. None of the Plan Administrators
shall be liable for any action taken or determination made in good faith with
respect to the Plan or any grant.
2.4 "Fair Market Value" shall be deemed to be, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange or a
national market system, or if the principal market for the Common Stock is
the over-the-counter market, including without limitation Nasdaq NMS or
Nasdaq SmallCap of the Nasdaq Stock Market, as the case may be, its Fair
Market Value shall be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system for the
last market trading day immediately preceding the date of determination, as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable. If the principal market for the Common Stock is the NASD
Electronic Bulletin Board or other over-the-counter market other than Nasdaq
NMS or Nasdaq SmallCap of the Nasdaq Stock Market, its Fair Market Value shall
be the mean between the closing bid and asked quotations for the Common Stock
for the 20 trading days last preceding the date of conversion.
(ii) In the absence of an established market for the Common Stock, the Fair
Market Value shall be determined in good faith by the Administrator.
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3.0 ELIGIBILITY
3.1 Incentive Stock Options may be granted to any individual who, at the
time the Option is granted, is an employee of the Company or any parent,
subsidiary or other corporation permitted by the Code, including employees
who are directors of the Company ("Employees"). Nonqualified Stock Options
may be granted to Service Providers as the Plan Administrators shall select,
and to non-employee directors of the Company pursuant to the formula set
forth in Section 5.15 below. Options may be granted in substitution for
outstanding Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
between such other corporation and the Company or any subsidiary of the
Company. Options also may be granted in exchange for outstanding Options.
Any person to whom an Option is granted under this Plan is referred to as an
"Optionee."
4.0 NUMBER OF SHARES AVAILABLE
4.1 The Plan Administrators are authorized to grant Options to acquire up
to a total of One Million Five Hundred Thousand (1,500,000) shares of the
Company's authorized but unissued, or reacquired, Common Stock. The number
of shares with respect to which Options may be granted hereunder is subject
to adjustment as set forth below in Section 5.14. If any outstanding Option
expires or is terminated for any reason, the shares of Common Stock allocable
to the unexercised portion of such Option may again be subject to an Option
to the same Optionee or to a different person eligible under this Plan.
5.0 TERMS AND CONDITIONS OF OPTIONS
5.1 Each Option granted under this Plan shall be evidenced by a written
agreement approved by the Plan Administrators ("Agreement"). Agreements may
contain such additional provisions, not inconsistent with this Plan, as the
Plan Administrators in their discretion may deem advisable. All Options
also shall comply with the following requirements.
5.2 Number of Shares and Type of Option. Each Agreement shall state the
number of shares of Common Stock to which it pertains and designate whether
the Option is intended to be an Incentive Stock Option or a Nonqualified
Stock Option. In the absence of action or designation to the contrary by
the Plan Administrators in connection with the grant of an Option, all Options
shall be Nonqualified Stock Options. The aggregate Fair Market Value,
determined at the Date of Grant, as defined below, of the stock with respect
to which Incentive Stock Options are exercisable for the first time by the
Optionee during any calendar year, granted under this Plan and all other
Incentive Stock Option plans of the Company, a related corporation or a
predecessor corporation, shall not exceed $100,000, or such other limit as may
be prescribed by the Code as it may be amended from time to time. Any Option
which exceeds the annual limit shall not be void but rather shall be a
Nonqualified Stock Option.
5.3 Date of Grant. Each Agreement shall state the date the Plan
Administrators have deemed to be the effective date of the Option for
purposes of, and in accordance with, this Plan ("Date of Grant").
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<PAGE>
5.4 Option Price. Each Agreement shall state the price per share of Common
Stock at which it is exercisable. The exercise price shall be fixed by the
Plan Administrators at whatever price the Plan Administrators may determine
in the exercise of its sole discretion; provided, that the per share exercise
price for any Option granted following the effective date of registration of
any of the Company's securities under the Exchange Act shall not be less than
the Fair Market Value per share of the Common Stock at the Date of Grant as
determined by the Plan Administrators in good faith; provided further, that
with respect to Incentive Stock Options granted to greater than 10 percent
shareholders of the Company, as determined with reference to Section 424(d)
of the Code, the exercise price per share shall not be less than 110 percent
of the Fair Market Value per share of the Common Stock at the Date of Grant;
and, provided further, that Incentive Stock Options granted in substitution
for outstanding Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted Option of the other corporation, subject to any adjustment
consistent with the terms of the transaction pursuant to which the
substitution is to occur.
5.5 Duration of Options. At the time of the grant of the Option, the Plan
Administrators shall designate, subject to paragraph 5.8 below, the
expiration date of the Option, which date shall not be later than 10 years
from the Date of Grant; provided, that the expiration date of any Incentive
Stock Option granted to a greater-than-10 percent shareholder of the Company
(as determined with reference to Section 424(d) of the Code) shall not be
later than five years from the Date of Grant. In the absence of action to
the contrary by the Plan Administrators in connection with the grant of a
particular Option, and except in the case of Incentive Stock Options as
described above, all Options granted under this Plan shall expire 10 years
from the Date of Grant.
5.6 Vesting Schedule. No Option shall be exercisable until it has vested.
The vesting schedule for each Option shall be specified by the Plan
Administrators at the time of grant of the Option; provided, that if no
vesting schedule is specified at the time of grant or in the Agreement, the
entire Option shall vest according to the following schedule:
NUMBER OF YEARS PERCENTAGE OF TOTAL OPTION
FOLLOWING DATE OF GRANT TO BE EXERCISABLE
1 25%
2 50%
3 75%
4 100%
5.7 Acceleration of Vesting. The vesting of one or more outstanding Options
may be accelerated by the Plan Administrators at such times and in such
amounts as it shall determine in its sole discretion. The vesting of Options
also shall be accelerated under the circumstances described below in Section
5.14.
5.8 Term of Option.
5.8.1 Vested Options shall terminate, to the extent not previously exercised,
upon the occurrence of the first of the following events: (i) the expiration
of the Option, as designated by the Plan Administrators; (ii) the expiration
of 90 days from the date of an Optionee's termination of employment, contractual
or director relationship with the Company or any Related Corporation for any
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<PAGE>
reason whatsoever other than death or Disability, as defined below, unless,
in the case of a Nonqualified Stock Option, the
exercise period is otherwise defined by terms of an agreement with Optionee
entered into prior to the effective date of the Plan, or the exercise period
is extended by the Plan Administrators until a date not later than the
expiration date of the Option; or (iii) the expiration of one year from (A)
the date of death of the Optionee or (B) cessation of an Optionee's
employment, contractual or director relationship with the Company or any
Related Corporation by reason of Disability (as defined below) unless, in the
case of a Nonqualified Stock Option, the exercise period is extended by the
Plan Administrators until a date not later than the expiration date of the
Option. If an Optionee's employment, contractual or director relationship
with the Company or any Related Corporation is terminated by death, any
Option held by the Optionee shall be exercisable only by the person or
persons to whom such Optionee's rights under such Option shall pass by the
Optionee's will or by the laws of descent and distribution of the state or
county of the Optionee's domicile at the time of death. "Disability" shall
mean that a person is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that can
be expected to result in death or that has lasted or can be expected to last
for a continuous period of not less than 12 months. The Plan Administrators
shall determine whether an Optionee has incurred a Disability on the basis of
medical evidence acceptable to the Plan Administrators. Upon making a
determination of Disability, the Committee shall, for purposes of the Plan,
determine the date of an Optionee's termination of employment, contractual or
director relationship.
5.8.2 Unless accelerated as set forth above, unvested Options shall terminate
immediately upon termination of Optionee's employment, contractual or
director relationship with the Company or any Related Corporation for any
reason whatsoever, including death or Disability. If, in the case of an
Incentive Stock Option, an Optionee's relationship with the Company changes
(e.g., from an employee to a non-employee, such as a consultant, or a non-
employee director), such change shall not necessarily constitute a
termination of an Optionee's contractual relationship with the Company but
rather the Optionee's Incentive Stock Option shall automatically be converted
into a Nonqualified Stock Option. For purposes of this Plan, transfer of
employment between or among the Company and/or any Related Corporation shall
not be deemed to constitute a termination of employment with the Company or
any Related Corporation. For purposes of this subsection with respect to
Incentive Stock Options, employment shall be deemed to continue while the
Optionee is on military leave, sick leave or other bona fide leave of absence
as determined by the Plan Administrators. The foregoing notwithstanding,
employment shall not be deemed to continue beyond the first 90 days of such
leave, unless the Optionee's re-employment rights are guaranteed by statute
or by contract.
5.8.3 Unvested Options shall terminate immediately upon any material breach,
as determined by the Plan Administrators, by Optionee of any employment, non-
competition, non-disclosure or similar agreement by and between the Company
and Optionee.
5.9 Exercise of Options. Options shall be exercisable, either all or in
part, at any time after vesting, until the Option terminates for any reason
set forth under this Plan, unless the exercise period is extended by the Plan
Administrators until a date not later than the expiration date of the Option.
If less than all of the shares included in the vested portion of any Option
are purchased, the remainder may be purchased at any subsequent time prior to
the expiration of the Option term. No portion of any Option for less than
one thousand (1,000) shares, as adjusted pursuant to Section 5.14 below, may
be exercised; provided, that if the vested portion of any Option is less than
one thousand (1,000) shares, it may be exercised with respect to all shares
for which it is vested. Only whole shares may be issued pursuant to an
Option, and to the extent that an Option covers less than one share, it is
unexercisable. Options or portions thereof may be exercised by giving
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<PAGE>
written notice to the Company, which notice shall specify the number of shares
to be purchased, and be accompanied by payment in the amount of the aggregate
exercise price for the Common Stock so purchased, which payment shall be in
the form specified in this Plan. The Company shall not be obligated to issue,
transfer or deliver a certificate of Common Stock to any Optionee, or to his
personal representative, until the aggregate exercise price has been paid for
all shares for which the Option shall have been exercised and adequate
provision has been made by the Optionee for satisfaction of any tax
withholding obligations associated with such exercise. During the lifetime of
an Optionee, Options are exercisable only by the Optionee.
5.10 Payment upon Exercise of Option. Upon the exercise of any Option, the
aggregate exercise price shall be paid to the Company in cash or by certified
or cashier's check. In addition, upon approval of the Plan Administrators,
an Optionee may pay for all or any portion of the aggregate exercise price by
(i) delivering to the Company shares of Common Stock previously held by
Optionee which have been owned by Optionee for more than six (6) months on the
date of surrender; (ii) having shares withheld from the amount of shares of
Common Stock to be received by the Optionee; (iii) delivery of an irrevocable
subscription agreement obligating the Optionee to take and pay for the shares
of Common Stock to be purchased within eighteen months of the date of
exercise, to be accompanied by a full-recourse, interest-bearing promissory
note in payment of the exercise price and any associated withholding taxes
incurred in connection with the exercise; (iv) consideration received by the
Company under a cashless exercise program implemented by the Company in
connection with the Plan; (v) a reduction in the amount of any Company
liability to the Optionee, including any liability attributable to the
Optionee's participation in any Company-sponsored deferred compensation
program or arrangement; or (vi) such other consideration and method of
payment for the issuance of shares to the extent permitted by Applicable Laws.
The shares of Common Stock received or withheld by the Company as payment for
shares of Common Stock purchased upon the exercise of Options shall have a
Fair Market Value at the date of exercise (as determined by the Plan
Administrators) equal to the aggregate exercise price (or portion thereof) to
be paid by the Optionee upon such exercise.
5.11 Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any shares covered by an Option until such
Optionee becomes a record holder of the shares, irrespective of whether such
Optionee has given notice of exercise. Subject to the provisions of Section
5.14 of this Plan, no rights shall accrue to an Optionee and no adjustments
shall be made on account of dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights declared
on, or created in, the Common Stock for which the record date is prior to the
date the Optionee becomes a record holder of the shares of Common Stock
covered by the Option, irrespective of whether such Optionee has given notice
of exercise.
5.12 Transfer of Option. Options granted under this Plan and the rights and
privileges conferred by this Plan may not be transferred, assigned, pledged
or hypothecated in any manner, whether by operation of law or otherwise,
other than by will or by applicable laws of descent and distribution or,
with respect to Nonqualified Stock Options, except to "family members" (as
the term "family members" is defined in Form S-8 under the Securities Act)
who acquire the options through a gift or a domestic relations order. With
respect to Nonqualified Stock Options, Options may not be transferred for
"value." For the purpose of this restriction, the following transactions are
not deemed to be transfers for "value": (i) a transfer under a domestic
relations order in settlement of marital property rights; and (ii) a transfer
to an entity in which more than fifty percent of the voting interests are
owned by family members (or the service provider) in exchange for an interest
in that entity. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of any Option or of any right or privilege conferred by
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this Plan contrary to the provisions hereof, or upon the sale, levy or any
attachment or similar process upon the rights and privileges conferred by
this Plan, such Option shall thereupon terminate and become null and void.
5.13 U.S. Securities Regulation and Tax Withholding.
5.13.1 Shares shall not be issued with respect to an Option unless the
exercise of such Option and the issuance and delivery of such shares shall
comply with all relevant provisions of law, including, without limitation,
any applicable state securities laws, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations thereunder and the requirements
of any stock exchange upon which such shares may then be listed. The issuance
shall be further subject to the approval of counsel for the Company with
respect to such compliance, including the availability of an exemption from
registration for the issuance and sale of such shares. The inability of the
Company to obtain from any regulatory body the authority deemed by the
Company to be necessary for the lawful issuance and sale of any shares under
this Plan, or the unavailability of an exemption from registration for the
issuance and sale of any shares under this Plan, shall relieve the Company of
any liability with respect to the non-issuance or sale of such shares.
5.13.2 As a condition to the exercise of an Option, in order to comply with
federal or state securities laws the Plan Administrators may require the
Optionee to represent and warrant in writing at the time of such exercise that
the shares are being purchased only for investment and without any then-
present intention to sell or distribute such shares. At the option of the
Plan Administrators, a stop-transfer order against such shares may be placed
on the stock books and records of the Company, and a legend indicating that
the stock may not be pledged, sold or otherwise transferred unless an opinion
of counsel is provided stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on the certificates representing
such shares in order to assure an exemption from registration. The Plan
Administrators also may require such other documentation as may from time to
time be necessary to comply with federal and state securities laws. THE
COMPANY HAS NO OBLIGATION TO UNDERTAKE REGISTRATION OF OPTIONS OR THE SHARES
OF STOCK ISSUABLE UPON THE EXERCISE OF OPTIONS.
5.13.3 As a condition to the exercise of any Option granted under this
Plan, the Optionee shall make such arrangements as the Plan Administrators
may require for the satisfaction of any federal, state or local withholding
tax obligations that may arise in connection with such exercise.
Alternatively, the Plan Administrators may provide that a Grantee may elect,
to the extent permitted or required by law, to have the Company deduct
federal, state and local taxes of any kind required by law to be withheld
upon such exercise from any payment of any kind due to the Grantee. Without
limitation, at the discretion of the Plan Administrators, the withholding
obligation may be satisfied by the withholding or delivery of shares of Common
Stock.
5.13.4 The issuance, transfer or delivery of certificates of Common Stock
pursuant to the exercise of Options may be delayed, at the discretion of the
Plan Administrators, until the Plan Administrators are satisfied that the
applicable requirements of the federal and state securities laws and the
withholding provisions of the Code have been met.
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5.14 Stock Dividend, Reorganization or Liquidation.
5.14.1 If (i) the Company shall at any time be involved in a transaction
described in Section 424(a) of the Code (or any successor provision) or any
"corporate transaction" described in the regulations thereunder; (ii) the
Company shall declare a dividend payable in, or shall subdivide or combine,
its Common Stock or (iii) any other event with substantially the same effect
shall occur, the Plan Administrators shall, with respect to each outstanding
Option, proportionately adjust the number of shares of Common Stock and/or
the exercise price per share so as to preserve the rights of the Optionee
substantially proportionate to the rights of the Optionee prior to such
event, and to the extent that such action shall include an increase or
decrease in the number of shares of Common Stock subject to outstanding
Options, the number of shares available under Section 4.0 of this Plan shall
automatically be increased or decreased, as the case may be, proportionately,
without further action on the part of the Plan Administrators, the Company or
the Company's shareholders.
5.14.2 If the Company is liquidated or dissolved, the Plan Administrators
shall allow the holders of any outstanding Options to exercise all or any part
of the unvested portion of the Options held by them; provided, however, that
such Options must be exercised prior to the effective date of such liquidation
or dissolution. If the Option holders do not exercise their Options prior to
such effective date, each outstanding Option shall terminate as of the
effective date of the liquidation or dissolution.
5.14.3 The foregoing adjustments in the shares subject to Options shall be
made by the Plan Administrators, or by any successor administrator of this
Plan, or by the applicable terms of any assumption or substitution document.
5.14.4 The grant of an Option shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge, consolidate or
dissolve, to liquidate or to sell or transfer all or any part of its business
or assets.
5.15 Option Grants to Non-Employee Directors.
5.15.1 Automatic Grants. Upon the initial appointment of a Non-Employee
Director, as defined below, the Plan Administrators are authorized to grant
initial Options ("Initial Options") to each Non-Employee Director in such
amounts and upon such terms, provisions and vesting schedule as determined
in the sole discretion of the Plan Administrators. After the Initial Options
are fully vested, or in the event no Initial Options are granted to a Non-
Employee Director, Options shall be granted to Non-Employee Directors under
the terms and conditions of this Section 5.15 of this Plan. Unless the number
of shares available under Section 4.0 of this Plan shall have been decreased
to less than 100,000, immediately after each annual meeting of shareholders
at which he or she is elected a director, each Non-Employee Director, as
defined below, of the Company shall automatically be granted a Nonqualified
Stock Option to purchase 15,000 shares of Common Stock for each year included
in the term for which such he or she was elected a director at such meeting;
provided, however, that if a director is appointed to fill a vacancy in the
Company's Board of Directors, a Non-Employee Director shall be granted a
Nonqualified Stock Option to purchase that number of shares of Common Stock
equal to 15,000 multiplied by a fraction, the numerator of which shall be
equal to the number of months from the date of his or her appointment until
the next regularly scheduled annual meeting of shareholders at which
directors are to be elected (as determined by the Company's bylaws and
rounded to the nearest whole number) and the denominator of which shall be
twelve (12). "Non-Employee Director" shall have the meaning set forth in
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Rule 16b-3 under the Exchange Act as such rule is in effect on the date this
Plan is approved by the shareholders of the Company, as it may be amended
from time to time, or any successor rule or rules.
5.15.3 Vesting Schedule. No Option shall be exercisable by a Non-Employee
Director until it has vested. For Options granted in connection with the
election of a director at an annual meeting of shareholders, each Option shall
vest as to 15,000 shares of Common Stock for each year of service as a
director on each anniversary date of the annual meeting. For Options granted
in connection with the appointment of a director, each Option shall vest as to
15,000 shares of Common Stock for each year of service as a director on each
anniversary date of such appointment.
6.0 EFFECTIVE DATE; TERM
6.1 This Plan shall be effective as of August 20, 1999. The Plan shall
include all options granted by Plan Administrators prior to the effective
date of the Plan, in accordance with the effective Date of Grant and other
terms of each agreement with Optionee. Incentive Stock Options may be
granted by the Plan Administrators from time to time thereafter until August
20, 2004. Nonqualified Stock Options may be granted until this Plan is
terminated by the Board in its sole discretion. Termination of this Plan shall
not terminate any Option granted prior to such termination. Any Incentive
Stock Options granted by the Plan Administrators prior to the approval of this
Plan by a majority of the shareholders of the Company shall be granted subject
to ratification of this Plan by the shareholders of the Company within 12
months after this Plan is adopted by the Board, and if shareholder
ratification is not obtained, each and every Incentive Stock Option shall
become a Nonqualified Stock Option.
7.0 NO OBLIGATIONS TO EXERCISE OPTION
7.1 The grant of an Option shall impose no obligation upon the Optionee to
exercise such Option.
8.0 NO RIGHT TO OPTIONS OR TO EMPLOYMENT, CONTRACTUAL OR DIRECTOR RELATIONSHIP
8.1 Except as provided in Section 5.15 above, whether or not any Options
are to be granted under this Plan shall be exclusively within the discretion
of the Plan Administrators, and nothing contained in this Plan shall be
construed as giving any person or Service Provider any right to participate
under this Plan. The grant of an Option shall in no way constitute any form
of agreement or understanding binding on the Company or any Related
Corporation, express or implied, that the Company or any Related Corporation
will employ, contract with, or use any efforts to cause to continue service as
a director by, an Optionee for any length of time.
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9.0 APPLICATION OF FUNDS
9.1 The proceeds received by the Company from the sale of Common Stock issued
upon the exercise of Options shall be used for general corporate purposes,
unless otherwise directed by the Board.
10.0 INDEMNIFICATION OF PLAN ADMINISTRATOR
10.1 In addition to all other rights of indemnification they may have as
members of the Board, members of the Plan Administrators shall be indemnified
by the Company for all reasonable expenses and liabilities of any type or
nature, including attorneys' fees, incurred in connection with any action,
suit or proceeding to which they or any of them are a party by reason of, or
in connection with, this Plan or any Option granted under this Plan, and
against all amounts paid by them in settlement thereof, provided that such
settlement is approved by independent legal counsel selected by the Company,
except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrators member is liable for willful
misconduct; provided, that within 15 days after the institution of any such
action, suit or proceeding, the Plan Administrator member involved therein
shall, in writing, notify the Company of such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to
prosecute or defend the same.
11.0 AMENDMENT OF PLAN
11.1 Except as otherwise provided above in Section 5.15, the Plan
Administrators may, at any time, modify, amend or terminate this Plan and
Options granted under this Plan; provided, that no amendment with respect to
an outstanding Option shall be made over the objection of the Optionee
thereof; and provided further, that if required in order to keep the Plan in
full compliance with the exemption from Section 16(b) of the Exchange Act
provided by Rule 16b-3, as amended, or any successor rule or rules, or any
other rules or regulations of the Securities and Exchange Commission, a
national exchange, the Nasdaq Stock Market, the NASD Bulletin Board, or other
regulatory authorities, amendments to this Plan shall be subject to approval
by the Company's shareholders in compliance with the requirements of any such
rules or regulations.
Without limiting the generality of the foregoing, the Plan Administrators may
modify grants to persons who are eligible to receive Options under this Plan
who are foreign nationals or employed outside the United States to recognize
differences in local law, tax policy or custom.
Date Approved by Board of Directors of Company: August 20, 1999
Axion Spatial Imaging, Inc.
by: Shawna Sundal
Corporate Secretary
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EXHIBIT 6.3
CONVERTIBLE DEBENTURE AGREEMENT
DATED: October 14, 1999
BETWEEN: ("Investor")
AND: Axion Spatial Imaging, Inc. ("Company")
9925 - 109th Street, Suite 700
Edmonton, Alberta T5K 2J8
Canada
Fax: (780) 423-4468
1.0 RECITALS
1.1 This Convertible Debenture Agreement ("Agreement") is
entered into this date by and between_______________ ("Investor")
and Axion Spatial Imaging, Inc., a Nevada corporation ("Company").
Subject to the terms and conditions of this Agreement, the Company
also agrees to issue to Investor a warrant to purchase common stock
of the Company, in substantially the form attached to this
Agreement as Exhibit B (the "Warrant").
1.2 The purpose of this Agreement is to set out the terms of the
arrangement by which Investor agrees to invest in a Convertible
Debenture ("Debenture") of the Company. All dollar amounts
contained in this Agreement are stated in U.S. funds.
2.0 DEFINITIONS
2.1 "Agreement" means this Convertible Debenture Agreement and
all attached Exhibits and Schedules, the terms of which are
incorporated by reference herein.
2.2 "Closing" or "Closing Date" means the date and time as of
which the issuance of the Debenture actually takes place and
consideration is paid, which shall occur immediately following the
execution of this Agreement at the offices of the Company, or at
such other time or place as the Investor and Company may mutually
agree upon.
2.3 "Common Stock" means shares of the class designated as
common stock, $.001 par value, of the Company at the date of this
Agreement.
2.4 "Company" has the meaning set forth in the Recitals section
above.
2.5 "Conversion Price" means $.43 per share.
2.6 "Conversion Shares" means that number of shares of the
Company's Common Stock issuable upon conversion of the Debenture,
valued at the Conversion Price, provided, however, that if an
adjustment is required under Section 5.5 of this Agreement, that
"Conversion Shares" means, after each such adjustment, the number
of shares of Common Stock issuable upon the conversion of this
Debenture immediately after the last such adjustment.
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2.7 "Investor" has the meaning set forth in the Recitals section
above.
2.8 "Maturity" means the earlier of (i) 5:00 pm Pacific Daylight
Time on the date thirty-six (36) months after the Closing Date; or
(ii) the date of complete conversion (if any) as provided in this
Agreement.
2.9 "Principal" means the amount of money loaned to the
Company by Investor, ________________________, payable in lawful
money of the United States.
3.0 PURCHASE AND SALE OF DEBENTURE
3.1 Investor agrees, on the terms of and subject to the
conditions specified in this Agreement, to lend to the Company the
Principal. Investor's loan shall be evidenced by a convertible
debenture ("Debenture") in the form of Exhibit A dated the Closing
Date, and will provide that for value received, unless previously
converted, the Company will pay to Investor on or before Maturity
the amount of the Principal in lawful money of the United States
with interest on the Principal from the Closing Date. The interest
rate will be calculated on basis of a simple interest rate of
10% (ten percent) per annum, and shall be payable annually.
3.2 At the Closing, Investor shall deliver to the Company: (1)
the Principal in United States dollars in immediately available
funds by wire transfer to an account designated in writing by the
Company prior to Closing; and (2) all documents, instruments and
writings required to have been delivered at or prior to Closing by
the Investor pursuant to this Agreement.
3.3 At the Closing, subject to the provisions of this Agreement,
the Company shall deliver to Investor: (1) the Debenture in the
form of Exhibit A. The Debenture and the Conversion Shares shall
carry the restrictive legend set forth in Section 7.4 below; and
(2) all documents, instruments and writings required to have been
delivered at or prior to Closing by the Company pursuant to this
Agreement.
4.0 THE WARRANT
4.1 Subject to the terms and conditions of this Agreement, the
Company agrees to issue to Investor a warrant, in substantially the
form attached to this Agreement as Exhibit B (the "Warrant"), to
purchase common stock of the Company at an exercise price of U.S
$.62 per share.
5.0 CONVERSION PRIVILEGE
5.1 The Debenture shall be convertible at any time at the option
of Investor into Common Stock of the Company at the Conversion
Price, upon not less than ten (10) nor more than ninety (90) days
notice. The number of Conversion Shares is subject to adjustment
in certain events as set forth in Section 5.5 below. Investor may
elect to convert the entire Principal of the Debenture into
Conversion Shares or a portion thereof at the Conversion Price,
provided however, that in the event of any partial conversion, at
least $25,000 of the Principal must be converted at any given time.
Partial conversion of the Debenture shall result in a proportional
reduction of the Principal.
5.2 To convert, Investor shall within the conversion period
tender notice of conversion to the agent designated by the Company.
Conversion eliminates all rights and obligations resulting from the
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Debenture. No fractional share of Common Stock or scrip
representing a fractional share will be issued upon conversion, but
if the conversion results in a fractional share the Company will
round the fractional share upward to the next whole integer. As
soon as practicable after receipt of a request by the Investor to
convert, the Company shall deliver a certificate for the number of
whole Conversion Shares issuable upon the conversion. The Company
agrees to reserve a sufficient number of shares of its Common Stock
to satisfy its obligation to Investor in the event Investor elects
to convert. If Investor elects to convert, Investor may also elect
to convert any accrued and unpaid interest into Common Stock at the
Conversion Price.
5.3 The Conversion Shares will not be registered under the
United States Securities Act of 1933, as amended ("Securities
Act"), and shall be issued as restricted common stock as the term
"restricted" is defined in Rule 144 under the Securities Act.
Generally, under Rule 144 the Conversion Shares must be held for a
period of at least one year from the date full consideration was
given for the Debenture, and may be resold in broker's transactions
only in accordance with the terms and limitations of Rule 144.
5.4 Automatic Conversion. The Debenture shall automatically be
converted into shares of Common Stock at the Conversion Price upon
the earlier of (1) immediately upon the closing of the sale of the
Company's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act, at a public offering
price (prior to underwiter's discounts and expenses) equal to or
exceeding $2.00 per share of Common Stock (as adjusted for any
stock dividends, combinations or splits with respect to the shares)
and the aggregate proceeds to the Company (after deduction for
underwriter discounts and expenses relating to the issuance) exceed
$1,000,000, or (2) if the average common stock trading price
("Average Market Price") for the fifteen (15) trading days last
preceding the date of conversion is equal to or exceeds $1.88 per
share. For purposes of calculating the Average Market Price, the
market price per share of the common stock at any date shall be (i)
if the principal trading market for such securities is an exchange,
the closing bid price on the exchange on that day, provided if
trading of the common stock is listed on any consolidated tape, the
price shall be the closing bid price set forth on the consolidated
tape, or (ii) if the principal market for the securities is the
over-the-counter market, the closing bid price on that date as set
forth by NASDAQ NMS, NASDAQ SmallCap, the NASD Electronic Bulletin
Board or over-the-counter, as the case may be, or (iii) if the
security is not quoted over-the-counter, the closing bid price as
reported by the National Quotation Bureau (or similar organization
or agency succeeding to its functions of reporting prices).
Notwithstanding the foregoing, if there is no reported closing
price or closing bid price, as the case may be, on a date prior to
the event requiring a computation or adjustment hereunder, then the
market price shall be determined as of the latest date prior to the
day for which the closing price or closing bid price is available.
5.5 The number of Conversion Shares is subject to adjustment
upon the occurrence of certain events, including (i) stock
dividends, stock splits or combinations, (ii) rights offerings for
shares of common stock at less than the then current market price
to existing holders of common stock, and (iii) recapitalizations,
mergers and reorganizations. However, in the event of a merger or
reorganization in which the Company is not the surviving
corporation, including one following an acquisition of
substantially all of the Company's outstanding voting securities by
another corporation, the right of Investor to convert the Debenture
into Common Stock of the Company shall, at the sole discretion of
Investor, be converted into the right to receive whatever
securities or other property, including cash, the holders of Common
Stock received upon such merger or acquisition.
6.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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6.1 The Company represents and warrants to Investor as follows
that the statements contained in this Section 6.0 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Section), except as set forth in the disclosure
schedule accompanying this Agreement as Schedule A and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 6.0.
6.2 The execution and delivery to Investor by the Company of
this Agreement, constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms. The Company has the absolute
and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and any of the Company's closing
documents, if required, and to perform its obligations under this
Agreement and the Company's closing documents.
6.3 To the best of the Company's knowledge, information and
belief, neither the execution and delivery of this Agreement nor
the compliance with and fulfillment of the terms and provisions of
this Agreement:
(a) will result in the breach of any term or provision of, or
constitute a default under or conflict with the charter documents,
Articles of Incorporation or Bylaws of the Company;
(b) is prohibited by or requires any notification, consent,
authorization, or any judgment, order, writ, injunction, or decree
which is binding upon the Company, except for such approvals or
other action or inaction as may be required under the securities or
corporate laws of the various states or other jurisdictions.
6.4 The Company is not or will not be required to give any
notice to or obtain any consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or
performance of any of its terms and provisions.
7.0 REPRESENTATIONS AND WARRANTIES OF INVESTOR
7.1 Investor represents and warrants to the Company as follows
that the statements contained in this Section 7.0 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Section), except as set forth in the disclosure
schedule accompanying this Agreement as Schedule B and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 7.0.
7.2 This Agreement, together with the Promissory Note of even
date, attached to this Agreement as Addendum A, constitutes the
legal, valid, and binding obligation of Investor, enforceable
against Investor in accordance with its terms. Investor has the
full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its
obligations hereunder unless otherwise stated in this Agreement.
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7.3 Neither the execution nor the delivery of this Agreement,
nor the compliance with and fulfillment of its terms and
provisions:
(a) will result in the breach of any term or provision of, or
constitute a default under or conflict with the Articles of
Incorporation or Bylaws of Investor; and
(b) is prohibited by or requires any notification, consent,
authorization, or any judgment, order, writ, injunction, or decree
which is binding upon Investor, except for such approvals or other
action or inaction as may be required under the securities or
corporate laws of the various states or other jurisdictions.
7.4 With respect to the purchase of the Debenture and the under-
lying Conversion Shares, Investor warrants and represents the
following:
(a) Investor has been fully advised of the financial condition
of the Company, has been allowed to review all relevant financial,
business and legal documentation sufficient to enable it to
evaluate its investment in the Debenture and the underlying
Conversion Shares;
(b) Investor has been provided with all materials and
information requested by Investor or its representatives, including
any information requested to verify any information furnished, and
Investor has had an opportunity to discuss the Company's business,
management and financial affairs with the Company's senior
management and an opportunity to review the Company's facilities.
The Investor understands that such discussions, as well as the
written information issued by the Company, were intended to
describe the aspects of the Company's business and prospects which
it believes to be material but were not necessarily a thorough or
exhaustive description.
(c) Investor has sufficient knowledge and experience in
financial and business matters and is capable of evaluating the
merits and risks of this investment and of making an informed
investment decision with respect to the investment;
(d) Investor is able to bear the economic risk of an investment
in the Shares and, at the present time, is able to afford a
complete loss of such investment;
(e) Investor was not solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio
or television advertisement, or any other form of general
advertising or solicitation in connection with the offer, sale, or
purchase of Company securities;
(f) Investor is investing in the securities for Investor's
account and not with a view for resale and Investor does not intend
to divide Investor's participation with others;
(g) Investor understands and acknowledges that the Shares will
be "restricted securities" as that term is defined in Rule 144 pro-
mulgated under the Securities Act, and that the certificate(s) rep-
resenting the Shares will bear a legend similar to the following:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act")
and are "restricted securities" as that term is defined
in Rule 144 as promulgated under the Act. The securities may
not be sold or transferred for value without an effective
registration statement under the Act, pursuant to the
provisions of Rule 144 under the Act, or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company;
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The Investor acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available.
The Investor is aware of the provisions of Rule 144 promulgated
under the Act which permits limited resale of securities purchased
in a private placement subject to the satisfaction of certain
conditions, including, in case the Investor has held the securities
for less than two years or is an affiliate of the Company, among
other things: the availability of certain current public
information about the Company, the resale occurring not less than
one year after a party has purchased and paid for the securities to
be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker," and the number of
shares being sold during any three-month period not exceeding
specified limitations."
(h) At the time Investor was offered the Shares, Investor was,
and at the date of this Agreement is, and at the Closing Date it
will be, an "accredited investor" as that term is defined in Rule
501(a) under the Securities Act.
(i) Investor understands that no established public market now
exists for any of the securities issued by the Company and there
has been and can be no assurance that a public offering will be
successfully completed by the Company or that an established public
market will ever exist for the Common Stock.
8.0 DEFAULTS AND REMEDIES
8.1 Events of Default. The occurrence of one or more of the
following events shall constitute an event of default with respect
to each Debenture:
(a) Nonpayment of the Principal or accrued interest on the
Debenture when the same shall become due and payable, whether at
maturity or at a date fixed for prepayment or by acceleration or
otherwise, and such failure is not cured within 45 days after the
Company receives written demand from the Holder to remedy the same;
(b) The Company becomes insolvent, a receiver is appointed to take
possession of all or a substantial part of its properties, the
Company makes an assignment for the benefit of creditors or files a
voluntary petition in bankruptcy, or the Company is the subject of
an involuntary petition of bankruptcy.
8.2 Remedies. Upon the occurrence of an Event of Default under
Section 8.1 above, at the option and upon the declaration of the
Investor, (i) the entire unpaid Principal and accrued interest on
the Debenture held by Investor shall, without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly
waived, be forthwith due and payable, and the Investor may,
immediately and without expiration of any period of grace, enforce
payment of all amounts due and owing under the Debenture and
exercise any and all other remedies granted to it at law, in
equity, or otherwise.
9.0 WAIVERS AND AMENDMENTS
9.1 This Agreement shall not be modified, amended or terminated
except by written amendment signed by the parties. With the writ-
ten consent of the parties, the obligations of the Company and the
rights of the Investor under this Agreement may be waived either
generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or
indefinitely.
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10.0 NOTICES
10.1 Any notice, request, demand, claim, instruction, or other
document to be given to any party pursuant to this Agreement shall
be in writing delivered personally or sent by mail, registered or
certified, postage fully prepaid, as follows:
If to the Company, to the address set forth on the first page of
this Agreement, with a copy to:
Tollefsen Business Law P.C.
2707 Colby Ave., Ste. 901
Everett, Washington 98201
Attn: Stephen N. Tollefsen
If to Investor, to the address set forth on the first page of this
Agreement.
10.2 Any party may give any notice, request, demand, claim,
instruction, or other document under this section using any other
means (including expedited courier, messenger service, telecopy,
facsimile, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, instruction, or other document
shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended.
Any party may change its address for purposes of this section by
giving notice of the change of address to the other party in the
manner provided in this section.
11.0 GENERAL PROVISIONS
11.1 The Parties agree to furnish upon request to each other such
further information, and to execute and deliver to each other such
other documents, and to do such other acts and things, all as the
other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this
Agreement.
11.2 This Agreement supersedes all prior agreements between
the parties with respect to its subject matter and constitutes
(along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to
be charged with the amendment.
11.3 Neither party may assign any of its rights under this
Agreement without the prior consent of the other parties, except
that Investor may assign any of its rights under this Agreement to
any subsidiary or affiliate of Investor. This Agreement will apply
to, be binding in all respects upon, and inure to the benefit of
the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal
or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and
all of its provisions and conditions are for the sole and exclusive
benefit of the parties to this Agreement and their successors and
assigns.
11.4 If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
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Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.5 The headings in this Agreement are provided for convenience
only and will not affect its construction or interpretation.
11.6 With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
11.7 This Agreement will be construed in accordance with its
terms and governed in all respects by the laws of the State of
Washington.
11.8 This Agreement may be signed in as many counterparts is as
necessary and all signatures so executed shall constitute one
Agreement, binding on all Parties as if each was a signatory on the
original.
11.9 In the event an arbitration, suit or action is brought by
any party under this Agreement to enforce any of its terms, or in
any appeal therefrom, it is agreed that the prevailing party shall
be awarded and receive from the non-prevailing party all costs and
expenses, including all reasonable attorneys fees to be fixed by
the arbitrator, trial court, and/or appellate court, in the action
and on appeal.
11.10 The addenda, exhibits and schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.
12.0 SIGNATURES
12.1 IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
Investor:
/s/ Ben House
__________________________________________
Ben House
The Company:
AXION SPATIAL IMAGING, INC.
/s/ Ian Basford
_________________________________________
By: Ian Basford, President
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SCHEDULE A
DISCLOSURE SCHEDULE
(pursuant to Section 6.0)
[This page intentionally left blank]
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SCHEDULE B
DISCLOSURE SCHEDULE
(pursuant to Section 7.0)
[This page intentionally left blank]
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EXHIBIT A
CONVERTIBLE DEBENTURE
This Debenture and the common shares of the Company issuable upon
the conversion of this Debenture, have not been registered under
the Securities Act of 1933, as amended (the "Securities Act") or
applicable state securities laws and are "restricted securities" as
that term is defined in rule 144 under the Securities Act. The
securities may not be sold or transferred for value without an
effective registration statement under the Securities Act and
applicable state securities laws, or pursuant to exemption from
registration under the Securities Act, the availability of which is
to be established to the satisfaction of the Company.
FOR VALUE RECEIVED, AXION SPATIAL IMAGING, INC. ("Company"), a
company incorporated under the laws of the State of Nevada and
having an office at #700 9925-109 Street, Edmonton, Alberta, T5K2J8
Canada, hereby acknowledges itself indebted and promises to pay to
("Holder"), on or before Maturity, one hundred thousand $$100,000)
("Principal") in lawful money of the United States with interest on
the Principal from the date of funding. The interest rate will be
calculated on the basis of a simple interest rate of 10% (ten percent)
per annum. Interest is cumulative from the date of issue and is payable
annually on the 1st day of August, beginning August 2000.
Unless previously converted as described below, the Company
shall repay the Principal and any accrued and unpaid interest
thereon to the Holder at the address of the Company set forth above
on the "Repayment Date."
DEFINITIONS
- - "Agreement" means the Convertible Debenture Agreement of even
date, and all attached Exhibits and Schedules, the terms of which
are incorporated by reference herein, and in accordance with said
terms this Debenture is being issued. All capitalized terms used
in this Debenture and not defined herein shall have the meanings
ascribed to them in the Agreement.
- - "Common Stock" means shares of the class designated as common
stock, $.001 par value, of the Company at the date of this
Agreement.
- - "Conversion Price" means $0.43 per share.
- - "Conversion Shares" means that number of shares of the Company's
Common Stock issuable upon conversion of the Debenture, valued at
the Conversion Price, provided, however, that if an adjustment is
required under Section 5.5 of this Agreement, that "Conversion
Shares" means, after each such adjustment, the number of shares of
Common Stock issuable upon the conversion of this Debenture
immediately after the last such adjustment.
- - "Maturity" means the earlier of (i) 5:00 pm Pacific Daylight Time
on the date thirty-six (36) months after the Closing Date; or (ii)
the date of complete conversion (if any) as provided in this
Agreement.
- - "Principal" means the amount of money loaned to the Company by
Holder, one hundred thousand dollars($100,000) payable in lawful
money of the United States.
CONVERSION
The Debenture shall be convertible at any time at the option of
Holder into Common Stock of the Company at the Conversion Price,
upon not less than ten (10) nor more than ninety (90) days notice.
The number of Conversion Shares is subject to adjustment in certain
events as set forth below. Holder may elect to convert the entire
Principal of the Debenture into Conversion Shares or a portion
thereof at the Conversion Price, provided however, that in the
event of any partial conversion, at least $25,000 of the Principal
must be converted at any given time. Partial conversion of the
Debenture shall result in a proportional reduction of the
Principal.
To convert, Holder shall within the conversion period tender
notice of conversion to the agent designated by the Company.
Conversion eliminates all rights and obligations resulting from the
Debenture. No fractional share of Common Stock or scrip
representing a fractional share will be issued upon conversion, but
if the conversion results in a fractional share the Company will
round the fractional share upward to the next whole integer. As
soon as practicable after receipt of a request by the Holder to
convert, the Company shall deliver a certificate for the number of
whole Conversion Shares issuable upon the conversion. The Company
agrees to reserve a sufficient number of shares of its Common Stock
to satisfy its obligation to Holder in the event Holder elects to
convert. If Holder elects to convert, Holder may also elect to
convert any accrued and unpaid interest into Common Stock at the
Conversion Price.
The Conversion Shares will not be registered under the United
States Securities Act of 1933, as amended ("Securities Act"), and
shall be issued as restricted common stock as the term "restricted"
is defined in Rule 144 under the Securities Act.
Automatic Conversion. The Debenture shall automatically be
converted into shares of Common Stock at the Conversion Price upon
the earlier of (1) immediately upon the closing of the sale of the
Company's Common Stock in a firm commitment, underwritten public
offering registered under the Securities Act, at a public offering
price (prior to underwiter's discounts and expenses) equal to or
exceeding $2.00 per share of Common Stock (as adjusted for any
stock dividends, combinations or splits with respect to the shares)
and the aggregate proceeds to the Company (after deduction for
underwriter discounts and expenses relating to the issuance) exceed
$1,000,000, or (2) if the average common stock trading price
("Average Market Price") for the fifteen (15) trading days last
preceding the date of conversion is equal to or exceeds $1.88 per
share. For purposes of calculating the Average Market Price, the
market price per share of the common stock at any date shall be (i)
if the principal trading market for such securities is an exchange,
the closing bid price on the exchange on that day, provided if
trading of the common stock is listed on any consolidated tape, the
price shall be the closing bid price set forth on the consolidated
tape, or (ii) if the principal market for the securities is the
over-the-counter market, the closing bid price on that date as set
forth by NASDAQ NMS, NASDAQ SmallCap, the NASD Electronic Bulletin
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EXHIBIT A
Board or over-the-counter, as the case may be, or (iii) if the
security is not quoted over-the-counter, the closing bid price as
reported by the National Quotation Bureau (or similar organization
or agency succeeding to its functions of reporting prices).
Notwithstanding the foregoing, if there is no reported closing
price or closing bid price, as the case may be, on a date prior to
the event requiring a computation or adjustment hereunder, then the
market price shall be determined as of the latest date prior to the
day for which the closing price or closing bid price is available.
ADJUSTMENTS
The number of Conversion Shares is subject to adjustment upon the
occurrence of certain events, including (i) stock dividends, stock
splits or combinations, (ii) rights offerings for shares of common
stock at less than the then current market price to existing
holders of common stock, and (iii) recapitalizations, mergers and
reorganizations. However, in the event of a merger or
reorganization in which the Company is not the surviving
corporation, including one following an acquisition of
substantially all of the Company's outstanding voting securities by
another corporation, the right of Holder to convert the Debenture
into Common Stock of the Company shall, at the sole discretion of
Holder, be converted into the right to receive whatever securities
or other property, including cash, the holders of Common Stock
received upon such merger or acquisition.
So long as this Debenture shall be outstanding, if the Company
proposes to take any action that would cause an adjustment to be
made pursuant to this section, the Company shall mail by certified
mail to the Holder, at least 10 days prior to the day on which such
adjustment would become effective, a notice setting forth in
reasonable detail the action to be so taken.
EVENTS OF DEFAULT AND REMEDIES
Events of Default. The occurrence of one or more of the
following events shall constitute an event of default with respect
to each Debenture:
1. Nonpayment of the Principal or accrued interest on the Debenture
when the same shall become due and payable, whether at maturity or
at a date fixed for prepayment or by acceleration or otherwise, and
such failure is not cured within 45 days after the Company receives
written demand from the Holder to remedy the same;
2. The Company becomes insolvent, a receiver is appointed to take
possession of all or a substantial part of its properties, the
Company makes an assignment for the benefit of creditors or files a
voluntary petition in bankruptcy, or the Company is the subject of
an involuntary petition of bankruptcy.
Remedies. Upon the occurrence of an Event of Default under
Section 8.1 above, at the option and upon the declaration of the
Holder, (i) the entire unpaid Principal and accrued interest on the
Debenture held by Holder shall, without presentment, demand,
protest, or notice of any kind, all of which are hereby expressly waived,
be forthwith due and payable, and the Holder may, immediately and
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EXHIBIT A
without expiration of any period of grace, enforce
payment of all amounts due and owing under the Debenture and
exercise any and all other remedies granted to it at law, in
equity, or otherwise.
DISCHARGE OF DEBENTURE
Upon repayment, conversion or redemption, in whole or in part,
this Debenture shall be surrendered by the Holder to the Company
for cancellation.
LOSS OF DEBENTURE
If the Holder claims that this Debenture has been lost,
destroyed or wrongfully taken, the Company shall issue a
replacement Debenture upon: (1) receipt of an indemnity bond or
other assurance requested by the Company to protect it from any
loss which it may suffer by reason of such replacement or
subsequent presentment of the original Debenture; and
(2) payment by the Holder of any expenses incurred by the Company
in replacing the Debenture.
AMENDMENTS AND WAIVERS
The Debenture and its terms may only be amended by agreement in
writing duly executed by the Company and the Holder. With the
written consent of the parties, the obligations of the Company and
the rights of the Investor under this Debenture may be waived
either generally or in a particular instance, either retroactively
or prospectively and either for a specified period of time or
indefinitely.
The Company may require the Holder to surrender this Debenture
so that an appropriate notation concerning an amendment may be
placed thereon or a new debenture, reflecting the amendment or
waiver. Even if such a notation is not made or such a new
debenture is not issued, such amendment or waiver and any consent
given thereto by the Holder shall be binding according to its terms
on any subsequent holder of this Debenture.
IN WITNESS WHEREOF, AXION SPATIAL IMAGING, INC. has caused its
corporate seal to be hereunto affixed and this Debenture to be
signed by an authorized signing officer of the Company this
1st day of October, 1999.
AXION SPATIAL IMAGING, INC.
/s/ Ian Basford
_________________________________________
By: Ian Basford, President
AXION SPATIAL IMAGING, INC.
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EXHIBIT B
AXION SPATIAL IMAGING, INC.
STOCK PURCHASE WARRANT
This Warrant and the common shares of the Company issuable upon its
exercise have not been registered under the Securities Act of 1933,
as amended (the "Securities Act") or applicable state securities
laws and are "restricted securities" as that term is defined in
rule 144 under the Securities Act. The securities may not be sold
or transferred for value without an effective registration
statement under the Securities Act and applicable state securities
laws, or pursuant to exemption from registration under the
Securities Act, the availability of which is to be established to
the satisfaction of the Company.
Void after October 15, 2002
No. of Shares 80,000
Exercise Price $.62
THIS CERTIFIES THAT, for value received, Ben House
and his registered assigns (hereinafter called the "Holder") is
entitled to purchase from Axion Spatial Imaging, Inc. ("Company"),
at any time after the Closing Date and ending at 5:00 p.m. Seattle,
Washington Time on the Expiration Date, as such term is defined in
Section 1.0 below, up to eighty thousand (80,000) shares of the
Company's Common Stock (the "Warrant Shares"). The Exercise Price
per share of this warrant shall be the price per share of $.62,
payable inlawful money of the United States. This Warrant may be
exercised in whole or in part, at the option of the Holder. Unless
otherwise defined herein, all capitalized terms used in this Warrant
shall have the meanings ascribed to them in the Convertible Debenture
Agreement of even date, to which this Warrant is attached as an
exhibit.
1.0 Term
1.1 This Warrant shall be exercisable at any time after the
Closing Date and ending at 5:00 p.m. Seattle, Washington Time on
October 15, 2002 (the "Expiration Date").
2.0 Method of Exercise; Payment; Issuance of New Warrant
2.1 Subject to Section 1.0 hereof, the purchase right represented
by this Warrant may be exercised by the Holder, in whole or in
part, by:
(a) the surrender of this Warrant (with the notice of
exercise form attached hereto as Attachment A duly executed)
at the principal office of the Company; and
(b) the payment to the Company, by check or wire, of an amount
equal to the applicable Warrant Price per share multiplied
by the number of Warrant Shares then being purchased;
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EXHIBIT B
provided, however, that this Warrant may not be exercised in
increments representing a purchase of less than 20,000 shares
at one time.
2.2 If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant, execute and deliver a new
Warrant evidencing the rights of the Holder thereof to purchase the
balance of the Warrant Shares purchasable hereunder. Upon receipt
by the Company of this Warrant and such notice of exercise,
together with, if applicable, the aggregate Warrant Price, at its
principal executive office, the Holder shall be deemed to be the
holder of record of the applicable Warrant Shares, notwithstanding
that the stock transfer books of the Company shall then be closed
or that certificates representing such Warrant Shares shall not
then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Warrant Shares
to the registered owner of this Warrant.
3.0 Stock Fully Paid; Reservation of Warrant Shares
3.1 All shares of stock which may be issued upon the exercise of
the rights represented by this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period
within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and
reserved for the purpose of issue upon exercise of the purchase
rights evidenced by this Warrant, a sufficient number of shares of
its stock to provide for the exercise of the rights represented by
this Warrant. In the event that there is an insufficient number of
Warrant Shares reserved for issuance pursuant to the exercise of
this Warrant, the Company will take appropriate action to authorize
an increase in the capital stock to allow for such issuance or
similar issuance acceptable to the Holder.
4.0 Adjustment of Warrant Price and Number of Warrant Shares
4.1 The number and kind of Warrant Shares purchasable upon the
exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification; Merger. In case of any reclassification
or change of outstanding securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which
the Company is a continuing corporation and which does not result
in any reclassification or change of outstanding securities
issuable upon exercise of this Warrant), or any other corporate
reorganization in which the Company shall not be the continuing or
surviving entity of such consolidation, merger or reorganization,
or any transaction in which in excess of 50% of the Company's
voting power is transferred, or any sale of all or substantially
all of the stock or assets of the Company, the Company shall, as
condition precedent to such transaction, execute a new Warrant or
cause such successor or purchasing corporation, as the case may be,
to execute a new Warrant, providing that the Holder shall have the
right to exercise such new Warrant and upon such exercise to
receive, in lieu of each share of stock theretofore issuable upon
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<PAGE>
EXHIBIT B
exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such
reclassification, change, merger or acquisition by a holder of one
share of stock. Such new Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The provisions of this
Section shall similarly apply to successive reclassifications,
changes, mergers and acquisitions.
(b) Subdivision or Combination of Warrant Shares. If the
Company at any time while this Warrant remains outstanding and
unexpired shall subdivide or combine its stock, the Warrant Price
shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend with
respect to stock payable in stock, or make any other distribution
with respect to stock of stock (except any distribution
specifically provided for in the foregoing Sections 4.1(a) and
(b)), then the Warrant Price shall be adjusted, from and after the
date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the
total number of shares of stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which
shall be the total number of shares of stock outstanding
immediately after such dividend or distribution.
(d) Adjustment of Number of Warrant Shares. Upon each
adjustment in the Warrant Price, the number of shares of stock
purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Warrant
Shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the
Warrant Price immediately prior to such adjustment and the
denominator of which shall be the Warrant Price immediately
thereafter.
(e) Fractional Warrant Shares. No fractional Warrant Shares
will be issued in connection with any exercise hereunder, but in
lieu of such fractional shares the Company shall, in its sole
discretion, either make a cash payment therefor upon the basis of
the Warrant Price then in effect or round the fractional share
upward to the next whole integer.
5.0 Compliance with Securities Act; Non-transferability of Warrant;
Disposition of Shares
5.1 Compliance with Securities Act. The Holder, by acceptance
hereof, agrees that this Warrant and the Warrant Shares are being
acquired for investment and that he will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares except
under circumstances which will not result in a violation of the
Securities Act of 1933, as amended ("Securities Act"). Upon
exercise of this Warrant, the Holder hereof shall confirm in
writing, in a form of Attachment B, that the Warrant Shares so
purchased are being acquired for investment and not with a view
toward distribution or resale. In addition, the Holder shall
provide such additional information regarding such Holder's
financial and investment background as the Company may reasonably
request. This Warrant and all Warrant Shares (unless registered
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EXHIBIT B
under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act")
and are "restricted securities" as that term is defined in Rule 144
as promulgated under the Act. The securities may not be sold or
transferred for value without an effective registration statement
under the Act, pursuant to the provisions of Rule 144 under the
Act, or pursuant to an exemption from registration under the Act,
the availability of which is to be established to the satisfaction
of the Company.
6.0 Transferability of Warrant
6.1 This Warrant may not be transferred or assigned in whole or in
part without (i) the prior written consent of the Company and (ii)
compliance with applicable federal and state securities laws;
provided, however, that the Warrant may be transferred without the
prior written consent of the Company in the following transactions:
(a) A transfer of the Warrant in whole by a Holder
who is a natural person during such Holder's lifetime or on death
by will or intestacy to such Holder's immediate family or to any
custodian or trustee for the account of such Holder or such
Holder's immediate family. "Immediate family" as used herein shall
mean spouse, lineal descendant, father, mother, brother, or sister
of the Holder;
(b) A transfer of the Warrant in whole pursuant to
and in accordance with the terms of any merger, consolidation,
reclassification of shares or capital reorganization of the
corporate shareholder or pursuant to a sale of all or substantially
all of the stock or assets of a corporate shareholder; or
(c) A transfer of the Warrant in whole to a parent,
subsidiary or affiliate of a Holder.
7.0 Rights of Shareholders
7.1 No Holder of this Warrant shall be entitled to vote or receive
dividends or be deemed the holder of stock or any other securities
of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Warrant, as such, any
of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until this
Warrant has been exercised and the Warrant Shares shall have become
deliverable, as provided herein.
8.0 General Provisions
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EXHIBIT B
8.1 This Agreement will be construed in accordance with its terms
and governed in all respects by the laws of the State of
Washington.
8.2 The headings in this Agreement are provided for convenience
only and will not affect its construction or interpretation. The
Warrant and its terms may only be amended, changed, waived,
discharged or terminated by agreement in writing duly executed by
the Company and the Holder.
AXION SPATIAL IMAGING, INC.
/s/ Ian Basford
_________________________________________
By: Ian Basford, President
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ATTACHMENT A
NOTICE OF EXERCISE
TO: Axion Spatial Imaging, Inc.
1. The undersigned hereby elects to purchase _________ shares of
stock of Axion Spatial Imaging, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase
price of such shares in full, together with all applicable transfer
taxes, if any.
1. The undersigned hereby elects to convert the attached Warrant
into Warrant Shares in the manner specified in Section 2.2 of the
Warrant. This conversion is exercised with respect of _________ of
the Shares covered by the Warrant.
[STRIKE PARAGRAPH ABOVE THAT DOES NOT APPLY.]
2. Please issue a certificate or certificates representing said
shares of stock in the name of the undersigned or in such other
name as is specified below:
__________________________________
Legal Name
___________________________________________________________________
Permanent Home Residence Address
___________________________________________________________________
City State Zip Code
3. The undersigned represents that the aforesaid shares of stock
are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection
with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares.
___________________________________________________
WARRANTHOLDER
Date: _________________________
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EXHIBIT 6.4
STOCK PURCHASE AGREEMENT
Date: October 5, 1999
BETWEEN: Banakor Swisse S.A. ("Buyer")
West Bay St.
P.O. Box N10601
Nassau, Bahamas
AND: Axion Spatial Imaging, Inc. ("Company")
9925 - 109th Street, Suite 700
Edmonton, Alberta T5K 2J8
Canada
1.0 RECITALS
1.1 The Company is a Nevada corporation in the business of
providing geographic information systems and digital mapping
technologies.
1.2 Subject to specified conditions, the Company has agreed
to sell and Buyer agreed to purchase 1,200,000 shares ("Shares") of
the common stock of the Company, for the consideration and on the
terms set forth in this Agreement. It is the intention of the
parties that the Shares be deposited with Escrow Agent and released
in increments against installment payments until the obligation of
Buyer under this Agreement is satisfied and the purchase price
fully paid.
1.3 In consideration of the premises and the mutual
promises herein made, and in consideration of the representations,
warranties, and covenants herein contained, the Parties agree as
follows:
2.0 DEFINITIONS
2.1 "Agreement" means this Stock Purchase Agreement and all
attached Exhibits and Schedules, the terms of which are
incorporated by reference herein.
2.2 "Buyer" has the meaning set forth in the Recitals section
above.
2.3 "Closing" or "Closing Date" means the date and time as of
which the issuance of shares actually takes place and consideration
is paid, which shall occur immediately following the execution of
this Agreement, or at such other time or place as the Buyer and
Company may mutually agree upon.
2.4 "Company" has the meaning set forth in the Recitals
section above.
2.5 "Company Common Stock" means the common stock of Axion
Spatial Imaging, Inc., $.001 par value per share.
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2.6 "Effective Date" means the date of this Agreement.
2.7 "Escrow Agent" means the firm which holds the Shares in
escrow, in this Agreement the firm of Tollefsen Business Law P.C. ,
2707 Colby Ave., Ste. 901, Everett, Washington 98201; Tel 425-353-
8883; Fax 425-353-9415.
2.8 "Person" means any natural person, corporation, firm,
association, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
2.9 "Purchase Price" means the total consideration to be
paid for the Shares pursuant to Section 3.0 of this Agreement.
"Initial Purchase Price" and "Adjusted Purchase Price" have the
meanings set forth in Section 3.3 of this Agreement.
2.10 "Securities Act" means the U.S. Securities Act of
1933, as amended, together with applicable regulations promulgated
thereunder.
2.11 "Shares" means shares of Company Common Stock,
consisting of one million two hundred thousand (1,200,000) shares,
issued pursuant to this Agreement.
2.12 "Transfer Agent" means the transfer agent, CJB
Transfer Services, #200 400 Inverness Drive South, Englewood, CO
80112, or any other entity designated to transfer Company
securities.
3.0 PURCHASE AND SALE OF SHARES
3.1 Subject to the terms and conditions of this Agreement,
Buyer agrees to buy and the Company shall issue and sell to Buyer
the Shares for the payment to the Company of an aggregate purchase
price of three hundred thousand ($300,000) dollars, payable in
lawful money of the United States, which purchase price is subject
to adjustment pursuant to section 3.3 below ("Purchase Price").
3.2 Payments. The Purchase Price shall be payable in
accordance with the following schedule, with payment in full due on
or before April 24, 2000, which payment schedule is subject to
adjustment pursuant to section 3.3 below:
3.2.1 $16,000 will be paid at Closing;
3.2.2 The balance of $284,000 shall be payable in monthly
installments, with payment in full due on or before April 24, 2000.
The amount of the monthly installment shall be at least equal to
the amounts set forth below, not to exceed $50,000
during any month, with the exception of the month of April
2000 during which the entire outstanding balance is due and
payable. Installment payments shall be due on the 24th day of each
month, until the balance of the Purchase Price is paid,
as follows:
- October 24, 1999 $ 16,000
- November 24, 1999 $ 27,000
- December 24, 1999 $ 41,000
- January 24, 2000 $ 30,000
- February 24, 2000 $ 15,000
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<PAGE>
- March 24, 2000 $ 34,000
- April 24, 2000 $121,000
3.3 Adjustments to Amount and Payment of Purchase Price.
3.3.1 The initial aggregate purchase price of $300,000 is
based on a per share consideration of $.25 ("Initial Purchase
Price"). The Initial Purchase Price is expressly conditioned upon
the timely payment to the Company of the entire Purchase Price on
or before April 24, 2000. In the event full payment for the Shares
is not received by the Company by April 24, 2000, the Purchase
Price will be immediately adjusted from $.25 per share to $.37 per
share, for an aggregate consideration of up to $444,000 ("Adjusted
Purchase Price"), which shall be immediately due and payable.
3.3.2 The amounts of the scheduled monthly installment
payments set forth above are based upon the cash flow forecasts of
the Company as of the date of this Agreement. The installment
amounts may be increased in the sole discretion of the Company to
make up additional projected cash flow deficits, as determined by
the Company from time to time, after ten (10) days written notice
to Buyer, but in an amount not to exceed $50,000 during any month
(with the exception of the month of April 2000 during which the
entire outstanding balance is due and payable).
3.4 Closing. The Closing of the sale and purchase of the
Shares shall take place at the offices of the Escrow Agent,
Tollefsen Business Law P.C., immediately following the execution of
this Agreement, or at such other time or place or on such other
date as the Company and the Buyer may agree to in writing.
3.4.1 At the Closing, subject to the provisions of this
Agreement, the Company shall surrender to Escrow Agent (1) an
outstanding certificate or certificates representing the Shares of
the Company, free and clear of all liens, pledges, encumbrances,
defect of title, charge or claim of any nature whatsoever. The
certificates representing the Shares shall carry the restrictive
legend set forth in Section 5.6 below, and shall be in negotiable
form, duly endorsed, in form acceptable to the Transfer Agent; and
(2) all documents, instruments and writings required to have been
delivered at or prior to Closing by the Company pursuant to this
Agreement.
3.4.2 At the Closing, Buyer shall deliver to the Escrow
Agent: (1) that portion of the Purchase Price payable upon Closing
($16,000) as determined pursuant to this Agreement in United States
dollars in immediately available funds by wire transfer to an
account designated in writing by the Escrow Agent prior to Closing;
and (ii) all documents, instruments and writings required to have
been delivered at or prior to Closing by the Buyer pursuant to this
Agreement.
3.5 Default by Buyer, Partial Payment. If the Buyer shall
fail or refuse to tender the complete Purchase Price, in accordance
with the terms of this Agreement; the Buyer shall be entitled to
purchase and retain that pro rata portion of the Shares for which
it has advanced funds to the Company prior to default under the
terms of this Agreement at the Adjusted Purchase Price. A purchase
of a portion of the Shares shall result in a proportional reduction
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<PAGE>
of the Purchase Price. The Company at its option and without
prejudice to its rights against defaulting Buyer, may instruct the
Escrow Agent to refuse to release the balance of the Shares in
Escrow to the Buyer.
4.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 The Company represents and warrants to Buyer as follows
that the statements contained in this Section 4.0 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Section), except as set forth in the disclosure
schedule accompanying this Agreement as Schedule A and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.0.
4.2 The execution and delivery to Buyer by the Company of
this Agreement, constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in
accordance with its respective terms. The Company has the absolute
and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and any of the Company's closing
documents, if required, and to perform its obligations under this
Agreement and the Company's closing documents.
4.3 To the best of the Company's knowledge, information and
belief, neither the execution and delivery of this Agreement nor
the compliance with and fulfillment of the terms and provisions of
this Agreement:
(a) will result in the breach of any term or provision
of, or constitute a default under or conflict with the charter
documents, Articles of Incorporation or Bylaws of the Company;
(b) is prohibited by or requires any notification,
consent, authorization, or any judgment, order, writ, injunction,
or decree which is binding upon the Company, except for such
approvals or other action or inaction as may be required under the
securities or corporate laws of the various states or other
jurisdictions.
4.4 The Company is not or will not be required to give any
notice to or obtain any consent from any Person in connection with
the execution and delivery of this Agreement or the consummation or
performance of any of its terms and provisions.
5.0 REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Buyer represents and warrants to the Company as follows
that the statements contained in this Section 5.0 are correct and
complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement
throughout this Section), except as set forth in the disclosure
schedule accompanying this Agreement as Schedule B and initialed by
the Parties (the "Disclosure Schedule"). The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 5.0.
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<PAGE>
5.2 Buyer is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation.
5.3 This Agreement, together with the constitutes the legal,
valid, and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms. Buyer has the full power and
authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder
unless otherwise stated in this Agreement.
5.4 Neither the execution nor the delivery of this
Agreement, nor the compliance with and fulfillment of its terms and
provisions:
(a) will result in the breach of any term or provision
of, or constitute a default under or conflict with the Articles of
Incorporation or Bylaws of Buyer; and
(b) is prohibited by or requires any notification,
consent, authorization, or any judgment, order, writ, injunction,
or decree which is binding upon Buyer, except for such approvals or
other action or inaction as may be required under the securities or
corporate laws of the various states or other jurisdictions.
5.5 With respect to the purchase of the Shares, Buyer
warrants and represents the following:
(a) Buyer has been fully advised of the financial
condition of the Company, has been allowed to review all relevant
financial, business and legal documentation sufficient to enable it
to evaluate its investment in the Shares. No representation or
inducement has been made to Buyer which conflicts with this
information;
(b) Buyer has been provided with all materials and
information requested by Buyer or its representatives, including
any information requested to verify any information furnished, and
Buyer has been provided the opportunity for direct communication
with the Company and its representatives regarding the purchase
made by this Agreement, including the opportunity to ask questions
of and receive answers from the executive officers and directors of
the Company;
(c) Buyer has sufficient knowledge and experience in
financial and business matters and is capable of evaluating the
merits and risks of this investment and of making an informed
investment decision with respect to the investment;
(d) Buyer is able to bear the economic risk of an
investment in the Shares and, at the present time, is able to
afford a complete loss of such investment;
(e) Buyer was not solicited by any leaflet, public
promotional meeting, circular, newspaper or magazine article, radio
or television advertisement, or any other form of general
advertising or solicitation in connection with the offer, sale, or
purchase of Company securities;
(f) Buyer is investing in the securities for Buyer's
account and not with a view for resale and Buyer does not intend to
divide Buyer's participation with others;
(g) Buyer understands and acknowledges that the Shares
will be "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act, and that the certificate(s)
representing the Shares will bear a legend similar to the
following:
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<PAGE>
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act") and are "restricted securities" as that term is defined
in Rule 144 as promulgated under the Act. The securities may
not be sold or transferred for value without an effective
registration statement under the Act, pursuant to the
provisions of Rule 144 under the Act, or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company;
(h) At the time Buyer was offered the Shares, it was,
and at the date of this Agreement is, and at the Closing Date it
will be, an "accredited investor" as that term is defined in Rule
501(a) under the Securities Act.
6.0 OTHER COVENANTS OF THE PARTIES
6.1 The Parties agree as follows with respect to the period
from and after the execution of this Agreement, that each of the
Parties will use its reasonable best efforts to take all action and
to do all things all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement.
6.2 Escrow. The Parties agree to enter into the escrow
agreement attached and made part of this Agreement as Addendum B.
The Company agrees to issue the Shares into escrow certificates to
be held by Escrow Agent registered in the names of Buyer pursuant
to the terms of the Escrow Agreement. These certificates shall be
in denominations of 135,135 shares.
6.3 Attorney-in-Fact. To effectuate the terms and provisions
of this Agreement, and the Escrow Agreement, the Company hereby
designates and appoints the Escrow Agent and each of its designees
or agents as attorney-in-fact of the Company, irrevocably and with
power of substitution, with authority to carry out any acts and
things necessary or advisable in the sole discretion of the Escrow
Agent to carry out and enforce this Agreement, and the Escrow
Agreement. All acts done under the foregoing authorization are
hereby ratified and approved and neither the Escrow Agent nor any
designee or agent shall be liable for any act of commission or
omission for any error of judgment or for any mistake of fact or
law. This power of attorney being coupled with an interest is
irrevocable while any any portion of the Shares remain unreleased
from escrow or the Escrow Agreement remains unsatisfied.
7.0 ESCROW SHARES, DIVIDENDS, VOTING
7.1 The stock certificate(s) representing the Shares shall
be held in trust by Escrow Agent.
7.2 As the installment payments of the Purchase Price are
made in accordance with Section 3.2 of this Agreement, the Shares
shall be released to Buyer, except, however, the Shares shall be
released in blocks of not less than 135,135 shares based on the
Adjusted Purchase Price of $.37 per share, so that 135,135 Shares
will be released to Buyer for each $50,000 received by the Company
in payment of the Purchase Price. In the event full payment for
the Shares is received by the Company by April 24, 2000, the
balance of the Shares will be released to Buyer in accordance with
the Initial Purchase Price. In the event full payment for the
Shares is not received by the Company by April 24, 2000, any and
all Shares released to Buyer will be sold only at the Adjusted
Purchase Price.
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<PAGE>
7.3 If Buyer shall become entitled to receive or shall
receive, in connection with any of the Shares, any:
(a) Stock certificate, including without limitation, any
certificate representing a stock dividend or in connection with any
increase or reduction of capital, reclassification, merger,
consolidation, sale of assets, combination of shares, stock split,
spin-off or split-off;
(b) Option, warrant, or right, whether as an addition to
or in substitution or in exchange for any of the Shares or
otherwise;
(c) Dividend or distribution payable in property,
including securities issued by other than the issuer of any of the
Shares; then the Company shall accept the same in trust for Buyer,
and shall deliver them forthwith to the Escrow Agent in the exact
form received.
7.4 Unless an event of default shall have occurred and be
continuing, Buyer shall be entitled to receive for its own use cash
dividends on the Shares paid out of earned surplus. Upon the
occurrence of an event of default, the Company may require any such
cash dividends to be delivered to the Company as additional
security or applied toward the satisfaction of Buyer's obligation.
7.5 The Shares shall not be voted by either party so long as
they remain in escrow. As each block of shares is released from
escrow based on the Adjusted Purchase Price, Buyer shall have the
right to vote these shares immediately upon release from escrow.
Should, however, Buyer fail to make full payment for the Shares by
April 24, 2000 as provided in Section 3.2 of this Agreement, Buyer
thereafter shall only vote those shares previously released from
escrow under the provisions of this Agreement.
7.6 Should Buyer fail to make full payment for the Shares by
April 24, 2000 as provided in Section 3.2 of this Agreement, at the
sole discretion of the Company those shares not released from
escrow may be retired and restored to the status of authorized and
un-issued shares, or may be disposed of for such consideration as
the board of directors may determine.
8.0 TERMINATION
8.1 This Agreement may, by written notice given prior to or
at the Closing, be terminated as follows:
(a) by either Buyer or the Company if a material breach
of any provision of this Agreement has been committed by the other
party and such breach has not been waived; or
(b) by mutual written consent of Buyer and the Company.
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<PAGE>
8.2 Each Party's right of termination is in addition to any
other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of
remedies; provided, however, that if this Agreement is terminated
by a party because of a breach of the Agreement by the other party
or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of
the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal
remedies will survive such termination unimpaired.
9.0 INDEMNIFICATION
9.1 All representations, warranties, covenants, and
obligations in this Agreement, and any other certificate or
document delivered pursuant to this Agreement will survive the
Closing. The right to indemnification, payment of damages or other
remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted
with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and
delivery of this Agreement or the Closing Date, with respect to the
accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of
any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant
or obligation, will not affect the right to indemnification,
payment of damages, or other remedy based on such representations,
warranties, covenants, and obligations.
9.2 The Company, jointly and severally, and Buyer mutually
agree to indemnify and hold each other harmless along with their
respective representatives, stockholders, controlling persons, and
affiliates (collectively, the "Indemnified Persons") for, and will
pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and
reasonable attorneys' fees) or diminution of value, whether or not
involving a third-party claim, arising, directly or indirectly,
from or in connection with any breach of any representation,
warrant, covenant or obligation made by the other Party in this
Agreement.
9.3 Buyer understands and acknowledges that the Shares are
being sold without registration under the Securities Act in a
private placement that is exempt from the registration provisions
of the Securities Act, and the availability of that exemption,
depends in part, on the accuracy and truthfulness of the
representations made by Buyer in this Agreement. Buyer agrees to
indemnify the Company, and any person participating in the offering
and to hold them harmless from and against any and all liability,
damage, cost, or expense (including, but not limited to, reasonable
attorneys' fees) incurred on account of or arising out of:
(a) Any inaccuracy in the declarations, representations,
and warranties set forth above in Section 5.0 made by Buyer to the
Company in connection with its subscription;
(b) The disposition of any of the securities which Buyer
will receive, contrary to Buyer's declarations, representations,
and warranties set forth in this Agreement; and
(c) Any action, suit, or proceeding based on (i) the
claim that Buyer's declarations, representations, or warranties
were inaccurate or misleading or otherwise cause for obtaining
damages or redress from the Company, or (ii) the disposition of any
or any part of the securities.
-8-
<PAGE>
10.0 NOTICES
10.1 Any notice, request, demand, claim, instruction, or
other document to be given to any party pursuant to this Agreement
shall be in writing delivered personally or sent by mail,
registered or certified, postage fully prepaid, as follows:
If to the Company, to the address set forth on the first page of
this Agreement, with a copy to:
Tollefsen Business Law P.C.
2707 Colby Ave., Ste. 901
Everett, Washington 98201
Attn: Stephen N. Tollefsen
If to Buyer, to the address set forth on the first page of this
Agreement.
10.2 Any party may give any notice, request, demand, claim,
instruction, or other document under this section using any other
means (including expedited courier, messenger service, telecopy,
facsimile, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, instruction, or other document
shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended.
Any party may change its address for purposes of this section by
giving notice of the change of address to the other party in the
manner provided in this section.
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<PAGE>
11.0 GENERAL PROVISIONS
11.1 Except for the fees and expenses of the Company's
counsel, Buyer will bear its own expenses incurred in connection with
the execution, and performance of this Agreement and its terms and
conditions, including all fees and expenses of agents, representatives,
counsel, and accountants.
11.2 The Parties agree to furnish upon request to each other
such further information, and to execute and deliver to each other
such other documents, and to do such other acts and things, all as
the other party may reasonably request for the purpose of carrying
out the intent of this Agreement and the documents referred to in
this Agreement.
11.3 The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any
delay by any party in exercising any right, power, or privilege
under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege
will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may
be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to
take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.4 This Agreement supersedes all prior agreements between
the parties with respect to its subject matter and constitutes
(along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to
be charged with the amendment.
11.5 Neither party may assign any of its rights under this
Agree-ment without the prior consent of the other parties, except
that Buyer may assign any of its rights under this Agreement to any
subsidiary or affiliate of Buyer. This Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the suc-
cessors and permitted assigns of the parties. Nothing expressed or
referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
11.6 If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only
in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.7 The headings in this Agreement are provided for
convenience only and will not affect its construction or
interpretation.
11.8 With regard to all dates and time periods set forth or
referred to in this Agreement, time is of the essence.
11.9 This Agreement will be construed in accordance with its
terms and the laws of the State of Washington.
11.10 This Agreement may be signed in as many counterparts is
as necessary and all signatures so executed shall constitute one
Agreement, binding on all Parties as if each was a signatory on the
original. 11.11 In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its
terms, or in any appeal therefrom, it is agreed that the prevailing
party shall be awarded and receive from the non-prevailing party
all costs and expenses, including all reasonable attorneys fees to
be fixed by the arbitrator, trial court, and/or appellate court, in
the action and on appeal.
11.12 The addenda, exhibits and schedules identified in this
Agreement are incorporated herein by reference and made a part
hereof.
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<PAGE>
12.0 SIGNATURES
12.1 IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first written above.
Buyer:
BANAKOR SWISSE S.A.
/s/ Joseph Castiglione
__________________________________________
By: Joseph Castiglione, Director
The Company:
AXION SPATIAL IMAGING, INC.
/s/ Ian Basford
_________________________________________
By: Ian Basford, President
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<PAGE>
SCHEDULE A
DISCLOSURE SCHEDULE
(pursuant to Section 4.0)
[This page intentionally left blank]
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<PAGE>
SCHEDULE B
DISCLOSURE SCHEDULE
(pursuant to Section 5.0)
[This page intentionally left blank]
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<PAGE>
EXHIBIT 6.5
Agreement between Axion Spatial Imaging Inc.
And
Banakor Swisse S.A.
Axion retains the services of Banakor Swisse to act as an overseas
(outside North America) public relations consultant. Banakor Swisse
agrees to perform the following services:
a) A mail-out to 50,000 individual potential investors;
b) Banakor Swisse must show evidence of the mail-out to Axion;
c) Keep these potential investors informed of any new press
releases occurring during the year;
d) Provide Axion a written monthly report on public relations
activities and feedback from potential/actual overseas
investors.
1. In consideration of the above services, Axion agrees to pay to
Banakor Swisse a total fee of $150,000.00 USD payable only in
shares of common stock of the Company at $.25 USO per share.
a) The shares will not be issued until the evidence of the mail-
out has been shown to Axion and Axion receives a proper
invoice.
b) The maximum shares to be paid out under this agreement are
600,000 shares. The shares shall be "restricted securities'
as that term is defined in Rule 144 under the Securities Act
of 1933, as amended.
2. With respect to the purchase of the Shares, Buyer warrants and
represents the following:
a) Buyer has been fully advised of the financial condition of
the Company, has been allowed to review all relevant
financial, business and legal documentation sufficient to
enable it to evaluate its investment in the Shares. No
representation or inducement has been made to Buyer which
conflicts with this information;
b) Buyer has been provided with all materials and information
requested by Buyer or its representatives, including any
information requested to verify any information furnished,
and Buyer has been provided the opportunity for direct
communication with the Company and its representatives
regarding the purchase made by this Agreement, including the
opportunity to ask questions of and receive answers from the
executive officers and directors of the Company;
c) Buyer has sufficient knowledge and experience in financial
and business matters and is capable of evaluating the merits
and risks of this investment and of making an informed
investment decision with respect to the investment,
d) Buyer is able to bear the economic risk of an investment in
the Shares and, at the present time, is able to afford a
complete loss of such investment;
<PAGE>
e) Buyer was not solicited by any leaflet, public promotional
meeting, circular, newspaper or megamzine article, radio or
television advertisement, or any other form of general
advertising or solicitation in connection with the offer,
sale, or purchase of Company securities;
f) Buyer understands and acknowledges that the Shares will be
'restricted securities' as that term is defined in Rule 144
promulgated under the Securities Act, and that the
certificate(s) representing the Shares will bear a legend
similar to the following:
The securities represented by this certificate have not
been registered under the Securities Ad of 2933, as
amended the 'Act') and are 'restricted securities' as that
term is defined in Rule 244 as promulgated under the Act.
The securities may not be sold of transferred for value
without an effective registration statement under the
Act;, pursuant to the provisions of Rule 144 under the
Act, or pursuant to an exemption from registration under
the Act, the availability of which is to be established to
the satisfaction of the Company;
h) At the time Buyer was offered the Shares, it was, and at the
date of this Agreement is, and at the Closing Date it will
be, an accredited investor' as that term is defined in Rule
501(a) under the Securities Act.
3. This agreement will not take effect until the Stock Purchase
agreement between Axion and Banakor Swisse S.A. has been signed and
the first payment due in that agreement; has been received by
Axion. Banakor Swisse will be notified in writing when this
condition has been met.
4. This agreement shall inure for the benefit of and be binding
upon both the parties hereto and their respective successors and
assigns.
For Axion Spatial Imaging For Banakor Swisse S.A.
/s/ Ian Basford /s/ Joseph Castiglione
10/14/99 10/12/99
Date: ___________________ Date: ____________________
<PAGE>
EXHIBIT 6.6
Agreement between Axion Spatial Imaging Inc.
And
ChaseGlobal Capital
Axion retains the services of ChaseGlobal for a period of seven
months from the date of this agreement to perform the following
services:
a) Act as financial advisor and consultant to Axion;
b) Place Hendrik F. Vandervelde, ChaseGlobal Comptroller on the
Board of Directors of Axion for a term of one year. This
will need to be ratified by shareholders. ChaseGlohal will
provide a resume (cv), no later than October 31, 1999.
1. In consideration of the above services, Axion agrees to pay to
ChaseGlobal a fee of $35,000.00 USD payable only in shares
of common stock of the Company in monthly installments of
20,000 shares. The shares of common stock shall be valued at
$.25 USD per share.
a) The shares will be paid monthly upon receipt of a
monthly invoice for $5000.00 USD from ChaseGlobal.
b) The maximum shares to be paid out under this agreement
are 140,000 shares. The shares shall he "restricted
securities" as that term is defined in Rule 144 under
the Securities Act of 1933, as amended.
c) No additional compensation will be due to the Director
position.
2. This agreement will expire without notice or compensation if
the minimum monthly payments in the Stock Purchase agreement
between Axion and Banakor Swisse S.A. have not been received by
Axion as agreed.
3. With respect to the purchase of the Shares, Buyer warrants and
represents the following:
a) Buyer has been fully advised of the financial condition of
the Company, has been allowed to review all relevant
financial, business and legal documentation sufficient to
enable it to evaluate its investment in the Shares. No
representation or inducement has been made to Buyer which
conflicts with this information;
b) Buyer has been provided with all materials and information
requested by Buyer or its representatives, including any
information requested to verily any information furnished,
and Buyer has been provided the opportunity for direct
communication with the Company and its representatives
regarding the purchase made by this Agreement, including
the opportunity to ask questions of and
receive answers from the executive officers and directors
of the Company;
c) Buyer has sufficient knowledge and experience in financial
and business matters and is capable of evaluating the
<PAGE>
merits and risks of this investment and of making an
informed investment decision with respect to the
investment;
d) Buyer is bale to bear the economic risk of an investment in
the Shares ands, at the present time, is able to afford a
complete loss of such investment.
e) Buyer was not solicited by any leaflet, public promotional
meeting, circular, newspaper or megamzine article, radio or
television advertisement, or any other form of general
advertising or solicitation in connection with the offer,
sale, or purchase of Company securities;
f) Buyer understands and acknowledges that the Shares will be
'restricted securities' as that term is defined in Rule 144
promulgated under the Securities Act, and that the
certificate(s) representing the Shares will bear a legend
similar to the following:
The securities represented by this certificate have not
been registered under the Securities Ad of 2933, as
amended the 'Act') and are 'restricted securities' as
that term is defined in Rule 244 as promulgated under the
Act. The securities may not be sold of transferred for
value without an effective registration statement under
the Act;, pursuant to the provisions of Rule 144 under
the Act, or pursuant to an exemption from registration
under the Act, the availability of which is to be
established to the satisfaction of the Company;
h) At the time Buyer was offered the Shares, it was, and at
the date of this Agreement is, and at the Closing Date it
will be, an accredited investor' as that term is defined in
Rule 501(a) under the Securities Act.
4. This agreement shall inure for the benefit of and be binding
upon both the parties hereto and their respective successors and
assigns.
For Axion Spatial Imaging For ChaseGlobal Capital
/s/ Ian Basford /s/ Joseph Castiglione
___________________________ _____________________________
10/14/99 10/12/99
Date: ___________________ Date: ____________________
<PAGE>
EXHIBIT 6.7
SEPARATION AGREEMENT
BETWEEN: AND:
Charles Martin ("CM") Axion Spatial Imaging, Ltd. ("Company")
2680 Cambridge St. An Alberta Company
Vancouver, BC V5K 1L5
1.0 On the resignation of CM on the 30th November 1999, the
company has agreed to the following severance compensation.
2.0 The company recognizes that CM has held the position of CEO
since September 1996 and has not received a salary for his efforts.
3.0 In recognition of the services rendered the company agrees to
grant CM a stock option of 400,000 shares of Axion Inc. at $.25 USD
per share (see attached stock option agreement for details). The
first time the company files a form S-8 with the SEC the company
agrees to register the shares.
4.0 In return for compensation of $5,000 USD per month, payable on
the first of each month starting December 1st 1999 and ending
November 1st 2000 (twelve payments) CM agrees to act as a
consultant to the President and New CEO for this period of one
year.
5.0 The payment will be payable to Martech Industries.
6.0 The company agrees to pay CM's shareholders loan to Axion Inc.
out by the end of the year 2000. Expenses that were incurred and
invoiced during 1999 will be paid as soon as possible. Any amounts
owing after April 30th 2000 bearing interest at 10% per annum.
7.0 The company acknowledges that CM may be required to travel as
part of his consulting duties. Where the company is notified in
writing and gives prior written approval to the expense then the
company undertakes to be solely responsible for payment of listed
expenses.
8.0 By signing this agreement CM acknowledges that he is in full
agreement with this separation agreement and will not hold the
company or Axion Spatial Imaging Ltd. responsible for any further
compensation; unless CM can produce documentation that shows add-
itional shareholder loans were made by CM to the company over and
above existing amounts, in which case they will be paid as per 6.0
above.
9.0 The company agrees to pay CM legal fees that result from
actions taken as an officer or on behalf of the companies since
August 1995; as covered in the articles of Axion Spatial Imaging
Inc. 10.0 Both parties agree that a signed fax copy of this
agreement by both parties is legal and binding.
Axion Spatial Imaging, Inc. Charles Martin
/s/ Ian Basford /s/ Charles Martin
By: ________________________ ______________________
Authorized Representative Signature
Nov 24 Nov 24
Dated____________________, 1999 Dated__________________,1999
<PAGE>
EXHIBIT 6.8
AXION SPATIAL IMAGING, INC.
STOCK PURCHASE OPTION
This Option and the common shares of the Company issuable upon its
exercise have not been registered under the Securities Act of 1933,
as amended (the "Securities Act") or applicable state securities
laws and are "restricted securities" as that term is defined in
rule 144 under the Securities Act. The securities may not be sold
or transferred for value without an effective registration
statement under the Securities Act and applicable state securities
laws, or pursuant to exemption from registration under the
Securities Act, the availability of which is to be established to
the satisfaction of the Company.
Void after December 1, 2004
No. of Shares 400,000
Exercise Price $.25 USD per share
THIS CERTIFIES THAT, for value received, Charles Martin
and his registered assigns (hereinafter called the "Holder") is
entitled to purchase from Axion Spatial Imaging, Inc. ("Company"),
at any time after the Closing Date and ending at 5:00 p.m. Seattle,
Washington Time on the Expiration Date, as such term is defined in
Section 1.0 below, up to eighty thousand (400,000) shares of the
Company's Common Stock (the "Option Shares"). The Exercise Price
per share of this Option shall be the price per share of $.25, USD
payable inlawful money of the United States. This Option may be
exercised in whole or in part, at the option of the Holder. Unless
otherwise defined herein, all capitalized terms used in this Option
shall have the meanings ascribed to them in the Convertible Debenture
Agreement of even date, to which this Option is attached as an
exhibit.
1.0 Term
1.1 This Option shall be exercisable at any time after the
Closing Date and ending at 5:00 p.m. Seattle, Washington Time on
October 15, 2002 (the "Expiration Date").
2.0 Method of Exercise; Payment; Issuance of New Option
2.1 Subject to Section 1.0 hereof, the purchase right represented
by this Option may be exercised by the Holder, in whole or in
part, by:
(a) the surrender of this Option (with the notice of
exercise form attached hereto as Attachment A duly executed)
at the principal office of the Company; and
(b) the payment to the Company, by check or wire, of an amount
equal to the applicable Option Price per share multiplied
by the number of Option Shares then being purchased;
provided, however, that this Option may not be exercised in
increments representing a purchase of less than 20,000 shares
at one time.
2.2 If this Option should be exercised in part only, the Company
shall, upon surrender of this Option, execute and deliver a new
Option evidencing the rights of the Holder thereof to purchase the
balance of the Option Shares purchasable hereunder. Upon receipt
by the Company of this Option and such notice of exercise,
together with, if applicable, the aggregate Option Price, at its
principal executive office, the Holder shall be deemed to be the
holder of record of the applicable Option Shares, notwithstanding
<PAGE>
that the stock transfer books of the Company shall then be closed
or that certificates representing such Option Shares shall not
then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of the Option Shares
to the registered owner of this Option.
3.0 Stock Fully Paid; Reservation of Option Shares
3.1 All shares of stock which may be issued upon the exercise of
the rights represented by this Option will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and
charges with respect to the issue thereof. During the period
within which the rights represented by this Option may be
exercised, the Company will at all times have authorized and
reserved for the purpose of issue upon exercise of the purchase
rights evidenced by this Option, a sufficient number of shares of
its stock to provide for the exercise of the rights represented by
this Option. In the event that there is an insufficient number of
Option Shares reserved for issuance pursuant to the exercise of
this Option, the Company will take appropriate action to authorize
an increase in the capital stock to allow for such issuance or
similar issuance acceptable to the Holder.
4.0 Adjustment of Option Price and Number of Option Shares
4.1 The number and kind of Option Shares purchasable upon the
exercise of this Option and the Option Price shall be subject to
adjustment from time to time upon the occurrence of certain events,
as follows:
(a) Reclassification; Merger. In case of any reclassification
or change of outstanding securities of the class issuable upon
exercise of this Option (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which
the Company is a continuing corporation and which does not result
in any reclassification or change of outstanding securities
issuable upon exercise of this Option), or any other corporate
reorganization in which the Company shall not be the continuing or
surviving entity of such consolidation, merger or reorganization,
or any transaction in which in excess of 50% of the Company's
voting power is transferred, or any sale of all or substantially
all of the stock or assets of the Company, the Company shall, as
condition precedent to such transaction, execute a new Option or
cause such successor or purchasing corporation, as the case may be,
to execute a new Option, providing that the Holder shall have the
right to exercise such new Option and upon such exercise to
receive, in lieu of each share of stock theretofore issuable upon
exercise of this Option, the kind and amount of shares of stock,
other securities, money and property receivable upon such
reclassification, change, merger or acquisition by a holder of one
share of stock. Such new Option shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The provisions of this
Section shall similarly apply to successive reclassifications,
changes, mergers and acquisitions.
(b) Subdivision or Combination of Option Shares. If the
Company at any time while this Option remains outstanding and
unexpired shall subdivide or combine its stock, the Option Price
shall be proportionately decreased in the case of a subdivision or
increased in the case of a combination.
(c) Stock Dividends. If the Company at any time while this
Option is outstanding and unexpired shall pay a dividend with
respect to stock payable in stock, or make any other distribution
<PAGE>
with respect to stock of stock (except any distribution
specifically provided for in the foregoing Sections 4.1(a) and
(b)), then the Option Price shall be adjusted, from and after the
date of determination of shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying
the Option Price in effect immediately prior to such date of
determination by a fraction (i) the numerator of which shall be the
total number of shares of stock outstanding immediately prior to
such dividend or distribution, and (ii) the denominator of which
shall be the total number of shares of stock outstanding
immediately after such dividend or distribution.
(d) Adjustment of Number of Option Shares. Upon each
adjustment in the Option Price, the number of shares of stock
purchasable hereunder shall be adjusted, to the nearest whole
share, to the product obtained by multiplying the number of Option
Shares purchasable immediately prior to such adjustment in the
Option Price by a fraction, the numerator of which shall be the
Option Price immediately prior to such adjustment and the
denominator of which shall be the Option Price immediately
thereafter.
(e) Fractional Option Shares. No fractional Option Shares
will be issued in connection with any exercise hereunder, but in
lieu of such fractional shares the Company shall, in its sole
discretion, either make a cash payment therefor upon the basis of
the Option Price then in effect or round the fractional share
upward to the next whole integer.
5.0 Compliance with Securities Act; Non-transferability of Option;
Disposition of Shares
5.1 Compliance with Securities Act. The Holder, by acceptance
hereof, agrees that this Option and the Option Shares are being
acquired for investment and that he will not offer, sell or
otherwise dispose of this Option or any Option Shares except
under circumstances which will not result in a violation of the
Securities Act of 1933, as amended ("Securities Act"). Upon
exercise of this Option, the Holder hereof shall confirm in
writing, in a form of Attachment B, that the Option Shares so
purchased are being acquired for investment and not with a view
toward distribution or resale. In addition, the Holder shall
provide such additional information regarding such Holder's
financial and investment background as the Company may reasonably
request. This Option and all Option Shares (unless registered
under the Act) shall be stamped or imprinted with a legend in
substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act")
and are "restricted securities" as that term is defined in Rule 144
as promulgated under the Act. The securities may not be sold or
transferred for value without an effective registration statement
under the Act, pursuant to the provisions of Rule 144 under the
Act, or pursuant to an exemption from registration under the Act,
the availability of which is to be established to the satisfaction
of the Company.
6.0 Transferability of Option
6.1 This Option may not be transferred or assigned in whole or in
part without (i) the prior written consent of the Company and (ii)
compliance with applicable federal and state securities laws;
provided, however, that the Option may be transferred without the
prior written consent of the Company in the following transactions:
<PAGE>
(a) A transfer of the Option in whole by a Holder
who is a natural person during such Holder's lifetime or on death
by will or intestacy to such Holder's immediate family or to any
custodian or trustee for the account of such Holder or such
Holder's immediate family. "Immediate family" as used herein shall
mean spouse, lineal descendant, father, mother, brother, or sister
of the Holder;
(b) A transfer of the Option in whole pursuant to
and in accordance with the terms of any merger, consolidation,
reclassification of shares or capital reorganization of the
corporate shareholder or pursuant to a sale of all or substantially
all of the stock or assets of a corporate shareholder; or
(c) A transfer of the Option in whole to a parent,
subsidiary or affiliate of a Holder.
7.0 Rights of Shareholders
7.1 No Holder of this Option shall be entitled to vote or receive
dividends or be deemed the holder of stock or any other securities
of the Company which may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be
construed to confer upon the Holder of this Option, as such, any
of the rights of a shareholder of the Company or any right to vote
for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent
to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value
or change of stock to no par value, consolidation, merger,
conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until this
Option has been exercised and the Option Shares shall have become
deliverable, as provided herein.
8.0 General Provisions
8.1 This Agreement will be construed in accordance with its terms
and governed in all respects by the laws of the State of
Washington.
8.2 The headings in this Agreement are provided for convenience
only and will not affect its construction or interpretation. The
Option and its terms may only be amended, changed, waived,
discharged or terminated by agreement in writing duly executed by
the Company and the Holder.
AXION SPATIAL IMAGING, INC.
/s/ Ian Basford
_________________________________________
By: Ian Basford, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The data presented in this schedule is derived from unaudited financial
statement prepared by management for the year ended 12/31/99. All of
this data is subject to amendment upon completion of the annual audit by
the Registrant's independent auditors. Such audit is expected to be
completed prior to March 31, 2000.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 43,401
<ALLOWANCES> 0
<INVENTORY> 50
<CURRENT-ASSETS> 48,217
<PP&E> 10,901
<DEPRECIATION> (4,722)
<TOTAL-ASSETS> 64,564
<CURRENT-LIABILITIES> 289,284
<BONDS> 102,141
0
0
<COMMON> (479,257)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 64,564
<SALES> 410,587
<TOTAL-REVENUES> 410,487
<CGS> 41,991
<TOTAL-COSTS> 812,297
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 97,253
<INCOME-PRETAX> (443,700)
<INCOME-TAX> 0
<INCOME-CONTINUING> (443,700)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (443,700)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
