About EDGAR Online | Login
 
Enter your Email for a Free Trial:
The following is an excerpt from a 10QSB/A SEC Filing, filed by BRAINTECH INC/BC on 7/5/2001.
Next Section Next Section Previous Section Previous Section
BRAINTECH INC - 10QSB/A - 20010705 - MANAGEMENT_ANALYSIS

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Our financial statements are presented in United States dollars, and dollar figures stated in this quarterly report refer to United States dollars, except where specified otherwise. As our head office is in Canada, many of our transactions, including payment of salaries to our employees, are completed in Canadian dollars ("Cdn$"). For purposes of this quarterly report, other than amounts extracted from our financial statements, Canadian dollar amounts have been converted to United States dollars at an exchange rate of Cdn$1.00 = US$0.65, being the average exchange rate for the quarter ending March 31, 2001.

OVERVIEW

As of March 31, 2001, we have incurred aggregate net losses of approximately $7.9 million since entering the technology field in 1994. We expect to continue to incur significant operating losses over the foreseeable future. Operating losses may fluctuate from quarter to quarter as a result of differences in the timing of expenses incurred and revenue recognized.

RESULTS OF OPERATIONS

THREE-MONTH PERIOD ENDED MARCH 31, 2001 COMPARED WITH THE THREE- MONTH PERIOD ENDED MARCH 31, 2000

We recorded no revenue from operations during the three-month period ended March 31, 2001.

During the three month period ended March 31, 2000, we recorded revenue from operations of $69,886. This amount included:

- $58,429 for a brake shoe sorting and inspection system developed for Satisfied Brake Products Inc.; and
- $11,387 for the Wizmaster program developed for Sideware Systems Inc.

As we had no revenue during the three month period ended March 31, 2001, we recorded no cost of sales during that period either.

Cost of sales for the three-month period ended March 31, 2000 was $31,199. This amount consisted of:

- $26,105 paid to a systems integrator working on the Satisfied Brake Products Inc. project; and
- Approximately $5,000 for equipment for our transmission casing inspection project with ABB.

Research and development expenses for the three-month period ended March 31, 2001 were $118,271, compared with $151,027 for the three-month period ended March 31, 2000. This change resulted principally from the following factors:

9

- Salaries allocated to research and development increased from approximately $90,000 for the three-month period ended March 31, 2000 to approximately $100,000 for the three-month period ended March 31, 2001, principally as a result of hiring an additional employee during the first quarter of 2001 to work in research development.
- Payments to North Shore Circuit Design for work on the IMPAC accelerator board decreased from approximately $47,000 to nil. Our work on the IMPAC board ceased during 2000, and as a result, payments to North Shore Circuit have ceased.

Selling, general, and administrative expenses increased from $215,512 for the three-month period ended March 31, 2000 to $292,183 for the three-month period ended March 31, 2001. Several factors contributed to the change. The principal factors were as follows:

- Amortization expenses increased from 14,275 to 31,333.
- Legal expenses decreased from $56,400 to $47,180.
- Filing and transfer fees decreased from $11,307 to $1,020, principally as a result of a decrease in fees paid on the filing of a registration statement on Form S-1 to qualify up to 11,900,003 shares for resale under the Securities Act of 1933.
- During the three-month period ended March 31, 2000, we incurred a foreign exchange loss of $18,903. The comparative figure for 2001 was $1,301. Our foreign exchange losses result principally from adjusting entries made in respect of transactions recorded in United States dollars, but actually carried out in Canadian dollars.
- During the three-month period ended March 31, 2001, we paid $7,714 for public relations services. There were no similar payments during the three-month period ended March 31, 2000.
- Travel and promotion expenses decreased from $10,331 to $2,673, principally as a result of reduced trade show participation.
- Accounting and audit fees increased from $9,450 to $22,598.
- General and administrative salaries increased from approximately $62,000 to approximately $160,000, principally because we increased our workforce during the first quarter of 2001.

LIQUIDITY AND CAPITAL RESOURCES

During the first quarter of 2001, we completed a private placement of 7,600,000 shares at a price of $0.15 per share. In addition, for every two shares purchased, each purchaser received one share purchase warrant. Each share purchase warrant entitles the holder to purchase one additional share for one year at $0.20 per share. Net proceeds from the private placement were approximately $1.1 million.

As of March 31, 2001, inclusive of the private placement and option proceeds described above, our cash balance was approximately $812,000. As of May 11, 2001, our cash balance is approximately $680,000.

At our current level of operation, we estimate that our cash expenses are approximately $164,000 per month. We base this estimate on the following data:

- As at April 30, 2001, we employ 22 people either as officers, employees or contractors. Our monthly salary costs are approximately $90,000 per month.
- For the period ended March 31, 2001 our average monthly general, overhead and administrative costs, exclusive of salary costs, were approximately $74,000 per month.
- During the year ended December 31, 2000 we incurred capital expenditures of approximately $136,000, principally for leasehold improvements, furniture and fixtures, and computer equipment. Between December 31, 2000 and May 11, 2001, we incurred capital expenditures of approximately $75,000, principally for leasehold improvements, furniture and fixtures, computer equipment and computer software related to the expansion of our

10

staff and to our move into new premises.
We do not expect to incur significant capital expenditures during the remainder of 2001 unless they result from an increase in our level of operation.

Based on the foregoing, we estimate that our total cash expenditures for the period May 15, 2001 to September 30, 2001, will be approximately $738,000. Accordingly, at our current level of operation, our existing cash balances should be sufficient to pay our anticipated cash expenditures to approximately September 15, 2001.

PLAN OF OPERATION

Our first priority during the balance of 2001 is to build upon our relationship with ABB Flexible Automation, a division of ABB Inc. for the purpose of becoming a principal supplier of vision systems to ABB and its customers. If we are able to obtain additional contracts for the design and installation of our custom machine vision systems through ABB, we believe we could generate sufficient sales revenue to achieve positive cash flow.

Our second priority during the balance of 2001 is to continue development of our Internet based service and support system and the eVisionFactory program. eVision Factory is a computer program that performs functions similar to those functions performed by Odysee Development Studio. We expect eVision Factory will support the development of new vision systems by integrating different components through a "drag and drop" procedure. We plan to configure eVision Factory so that it will provide for efficient integration of vision systems with robotic and other industrial control systems. Components of eVision Factory will likely include:

- Our Internet based service and support system; and
- Maintenance and support features to monitor the performance of vision systems to detect errors and to notify operators when an error has been detected.

Taking into account our current cash balance and our anticipated cash expenditures for the remainder of 2001, we are working towards releasing a final production version of the eVisionFactory program, including our Internet based service and support system, by the fourth quarter of 2001. We currently use eVision Factory as a development tool and we plan to sell certain components of the program in conjunction with our customized machine vision systems.

We do not plan to increase our operating expenses significantly, or to incur substantial capital expenditures, unless we begin to generate sales revenue or unless we raise additional capital. At present, we do not have specific plans to raise additional capital. We believe that if we identify additional development projects that we consider worth pursuing, we will likely try to raise additional private placement financing.

11

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this amended report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: July 3, 2001                    BrainTech, Inc.

                                       "W. Grant Sutherland"

                                       By: W. Grant Sutherland
                                       Chairman of the Board of
                                       Directors

BROKERAGE PARTNERS