U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

            [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                 o FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. 0-28423

                              VALIDIAN CORPORATION
                 (Name of Small business issuer in its charter)

             State of Nevada                                 58-2541997
        ------------------------------                    ------------------
       (State or other jurisdiction of                   (I.R.S. Employer
        Incorporation or organization)                    Identification No.)

30 Metcalfe St. Suite 620 Ottawa, Ontario, Canada             K1P 5L4
-------------------------------------------------            ----------
(Address of principal executive offices)                     (Zip Code)

Issuer's telephone number, including area code: 613-230-7211

Securities registered under Section 12(b) of the Exchange Act: none
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par
value $.001 per share

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulations S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year. $ NIL

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average between the closing bid
($0.14) and asked ($0.18) price of the issuer's Common Stock as of March 27,
2002, was $1,596,489, based upon the average between the closing bid and asked
price ($0.16) multiplied by the 9,978,055 shares of the issuer's Common Stock
held by non-affiliates. (In computing this number, issuer has assumed all record
holders of greater than 5% of the common equity and all directors and officers
are affiliates of the issuer.)

The number of shares outstanding of each of the issuer's classes of common
equity as of March 27, 2003: 15,737,786.

                   DOCUMENTS INCORPORATED BY REFERENCE: None.

          Transitional Small Business Disclosure Format: Yes [ ] No [X]


<PAGE>

                              VALIDIAN CORPORATION
                                   Form 10-KSB
                                December 31, 2001

Table of Contents                                                       Page No.
-----------------                                                       --------

                                     Part I

Item 1.     Description of Business.                                         3

Item 2.     Description of Properties.                                      18

Item 3.     Legal Proceedings.                                              18

Item 4.     Submission of Matters to a Vote of                              19
            Security Holders.
                                     Part II

Item 5.     Market for Common Equity and                                    20
            Related Stockholder Matters.

Item 6.     Management's Discussion and Analysis or                         22
            Plan of Operation.

Item 7.     Financial Statements.                                           28

Item 8.     Changes in and Disagreement With Accountants                    28
            on Accounting and Financial Disclosure.

                                    Part III

Item 9.     Directors, Executive Officers, Promoters                        30
            and Control Persons; Compliance with
            Section 16(a) of the Exchange Act.

Item 10.    Executive Compensation.                                         31

Item 11.    Security Ownership of Certain Beneficial                        32
            Owners and Management.

Item 12.    Certain Relationships and Related Transactions.                 34

Item 13.    Exhibits and Reports on Form 8-K                                34

Signatures                                                                  36
Supplemental Information                                                    37


<PAGE>

                                     PART I

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

We caution readers that certain important factors may affect our actual results
and could cause such results to differ materially from any forward-looking
statements that we make in this report. For this purpose, any statements that
are not statements of historical fact may be deemed to be forward-looking
statements. This report contains statements that constitute "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 report and include
statements regarding our intent, belief or current expectations with respect to
many things. Some of these things are:

      o     trends affecting our financial condition or results of operations
            for our limited history;

      o     our business and growth strategies;

      o     our technology;

      o     the Internet; and

      o     our financing plans.

We caution readers that any such forward-looking statements are not guarantees
of future performance and involve significant risks and uncertainties. In fact,
actual results most likely will differ materially from those projected in the
forward-looking statements as a result of various factors. Some factors that
could adversely affect actual results and performance include:

      o     our limited operating history;

      o     our lack of sales to date;

      o     our need for additional capital funding;

      o     if our technology and products do not perform as specified;

      o     if use of the Internet does not continue to grow;

      o     if new adverse government regulations are enacted;

      o     if better technology and products are developed by others.

The information contained in the following sections of this report identify
important additional factors that could materially adversely affect actual
results and performance:


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<PAGE>

      o     "Part I. Item 1. Description of Business" especially the disclosures
            set out under the heading "Risk Factors"; and

      o     "Part II. Item 6. Management's Discussion and Analysis or Plan of
            Operation"

You should carefully consider and evaluate all of these factors. In addition, we
do not undertake to update forward-looking statements after we file this report
with the Securities and Exchange Commission, even if new information, future
events or other circumstances have made them incorrect or misleading.

Item 1. Description of Business.

Summary

We are an Internet software company. We design, develop and have initiated the
marketing of software products based on our "technology." Products based on our
technology:

      o     facilitate secure, reliable data communications between any two
            application processes through the Internet or any private networks,

      o     allow customers to develop distributed applications that run on
            different platforms.

Our technology will enable corporations, institutions and individuals to develop
secure interactive, distributed applications (like electronic commerce) running
either through wired or wireless networks, with ease of implementation and
operation.

Our Technology

Our technology is based upon the following:

      o     Our Intellectual Property

Our intellectual property includes an addressing scheme, authentication process
and key exchange process for mutually authenticating parties to a communication
or transaction, to establish trust for a secure exchange. It also includes an
encryption function using standard algorithms that encrypts data from within an
originating application and decrypts within the receiving application.

      o     Our Application Security Infrastructure (ASI)

Our Application Security Infrastructure is a transport infrastructure based on
our intellectual property, which combines into a single platform major transport
and control protocols as well as recent encryption methodologies. This is a
major difference from current security approaches that tend to add layers over
the Internet transport


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<PAGE>

mechanisms. ASI integrates transport and security for secure communication over
the Internet.

      o     Our Software Development Kit (SDK)

Our Software Development Kit is an environment for rapidly and simply developing
and operating secure interactive, distributed applications on the Internet. Our
SDK facilitates the implementation of enhanced security of applications using
client/server, server-to-server or peer-to-peer communication models, all with
equal ease. Our SDK includes a complete, integrated and built-in set of control,
transport and security features, which are automatically inherited by any
application developed under our SDK or linked to ASI with the SDK.

      o     Our Secure Instant Messenger (SIM)

Our Secure Instant Messenger system is comparable with some consumer instant
messaging systems such as AOL's ICQ and MSN Messenger. However, it offers a
degree of security that makes it suitable for the business environment. Because
SIM has been developed using our SDK and is based on our ASI, it inherits all of
the ASI security features including uniting a closed community of authenticated
users and providing the highest level of security available on the Internet for
the exchange of data. Using SIM, the members of such a community can exchange
text messages, files, URLs, audio files, video files, software or any type of
data in a highly secure environment of trusted users.

Our technology provides benefits, by enabling users:

      o     to integrate security and transport in all communication and
            document exchanges through an integrated approach, and

      o     to develop and use existing interactive, distributed applications
            (like e-commerce, e-banking, e-health and e-loyalty) where it
            enhances their security.

Target Market

We plan to license our technology either directly or through distribution
channels to medium to large organizations that develop, market, sell, distribute
or use software products where interaction with a distributed customer, employee
and/or partner base is essential. This includes:

      o     Corporate IT departments who serve their corporation with a variety
            of applications and implementation environments, according to the
            needs of the various internal departments. This may imply having to
            write applications for more than one platform or to migrate, at one
            point in time, from one platform to another; and

      o     Independent Software Vendors and developers serving a relatively
            large group of customers, on a regional or national basis and who
            must respond to a variety of


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<PAGE>

            conditions and platforms, as imposed by their customers in specific
            industrial sectors

Potential customer industrial sectors include, among others:

      o     Manufacturers

      o     Health care

      o     Financial institutions

      o     Internet service providers,

      o     Distribution services,

      o     Government agencies,

      o     E-tailers.

Marketing Strategy and Distribution Channels

The Company has initiated a marketing program in North America, Europe and Asia
Pacific to bring its products to the marketplace. This program has two
components: Direct and Channel Sales.

      o     Direct Sales

The Direct Sales approach entails our officers and sales representatives making
high-level contacts within the organizations of target customers to present the
benefits and competitive advantages of our products. Leads to such presentations
are generated through existing contacts of management and sales representatives,
and through attendance at and participation in specialized e-commerce and
computer security trade shows.

      o     Channel Sales

In order to penetrate the market for our products, we are attempting to partner
with independent software vendors, value-added resellers ("VARs"), system
integrators and application service providers. Potential partners are being
identified based upon their ability to penetrate specific markets more easily
than us. We believe major customers also will act as VARs in their sector.

Sales representatives and sales agents are promoting our products within these
two channels. The representatives are responding to queries and expressions of
interest from those interested in becoming early adopters of our working models
when they become available, in order to generate implementation sites in the
earliest timeframe possible. These early customers and distributors may have an
impact on the product development schedule, as we will develop interfaces with
users' existing systems in response to their feedback and individual
requirements.


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<PAGE>

The representatives are supported by technical literature on specific topics
such as:

      o     security,

      o     features and benefits,

      o     integration into current systems,

      o     openness of the architecture,

      o     future developments and

      o     implementation procedures.

We expect that individual sales cycles will be from four to eight months in
duration. The territory where most potential clients reside is expected to be in
North America, Europe and Asia Pacific. Two sales representatives were hired in
the third quarter of 2002 and two sales agents were engaged in the fourth
quarter of 2002. Market research began in the United States and Western Europe
in the second quarter of 2000 and has been furthered in these and other
potential markets during the fourth quarter of 2002 and the first quarter of
2003.

We anticipate that the main expense factors for continuing this marketing
campaign will be for:

      o     personnel;

      o     buying or renting lists of potential customers for direct marketing
            campaigns;

      o     direct marketing to potential customers;

      o     banner advertising on vertical industry websites;

      o     participation in trade shows;

      o     travel and living expenses;

      o     Web site development and maintenance; and

      o     literature preparation and distribution.

For more information, please see "Part II. Item 6. Management's Discussion and
Analysis or Plan of Operation; Plan of Operations."

OUR PRODUCTS

At this point in time, our products are in the development stage, and are not
ready for commercial implementation.

Competition

Security Measures. We compete with a host of suppliers of security measures
products and with internal systems developed by potential clients to prevent
unauthorized access.


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<PAGE>

Security measures include:

      o     Symmetrical key encryption algorithms such as DES;

      o     Private and public key encryption algorithms such as RSA and public
            key infrastructure products offered by companies such as Entrust;

      o     Browser level protection such as secure socket layer offered by
            Netscape and Microsoft;

      o     System level protection such as the secure electronic transaction
            developed by Visa and MasterCard and offered by the credit card
            industry and the banking system; and

      o     Network level protection such as private networks and virtual
            private networks.

Our technology provides security features for communication over the Internet,
extranet or intranet as well as on private and public networks. We combine all
the functionality required to automatically perform secure, reliable Internet
communications between any two distributed application processes under ASI
control. Our technology is based on common, accepted standards. We enable
developers to implement secure communications channels, resistant to intrusion,
rapidly and with minimal maintenance.

We know of no other supplier who has implemented a security infrastructure for
distributed applications based on this approach. However, we cannot assure that
competitive products do not exist or will not be developed or that our products
will be saleable in the marketplace.

Research and Development

We spent the following amounts during the periods mentioned on research and
development activities:

                                            Year ended December 31,
                                            -----------------------
                                               2002        2001

                                             $405,597   $1,015,043

For more information, see: "Part II. Item 6. Management's Discussion and
Analysis or Plan of Operation; Plan of Operations."

Intellectual Property Protection

We rely on trade secrets and confidentiality agreements. We claim copyright in
specific software products and various elements of the core Technology. We have
registered trademarks in North America and in Europe to cover specific products
described herein, as well as some graphic identification and the VALIDIAN name
itself.

We believe, but we cannot assure, that our Technology and its implementation may
be patentable. We are preparing a patent application covering its approach and
preferred


                                       7
<PAGE>

implementation. The initial patent applications will cover the U.S. and be
expanded to other countries as and when we penetrate new markets. We have
defined migration paths for the various products and developed schedules for
that migration. This defines the requirement for additional patent, trademarks
and copyright protection, which we plan to apply for as required in order to
prevent unauthorized use of our technology.

We cannot assure that we will be able to obtain or to maintain the foregoing
intellectual property protection. We also cannot assure that our technology does
not infringe upon the intellectual property rights of others. In the event that
we are unable to obtain the foregoing protection or our technology infringes
intellectual property rights of others, our business and results of operations
could be materially and adversely affected. For more information please see
"Risk Factors; Proprietary Rights" below.

Employees

As of March 27, 2003, we had 14 personnel, including 1 executive officer, 9
software developers and programmers, 3 in marketing and sales, and 1 in
administration. 9 of the personnel are located in Europe, 4 are located in
Ottawa, Canada, and 1 is located in Philadelphia, USA. In addition, we regularly
engage technical consultants and independent contractors to provide specific
advice or to perform certain administrative or technical functions.

Risk Factors

Our business operations and our securities are subject to a number of
substantial risks, including those described below. If any of these or other
risks actually occur, our business, financial condition and operating results,
as well as the trading price or value of our securities could be materially
adversely affected.

Our limited operating history makes evaluating our business and prospects
difficult.

Our limited operating history makes it difficult to evaluate our current
business and prospects or to accurately predict our future revenues or results
of operations. Our revenue and income potential are unproven, and our business
plan is constantly evolving. Because the Internet is constantly changing and
software technology is constantly improving, we may need to modify our business
plan to adapt to these changes. Companies in early stages of development,
particularly companies in new and rapidly evolving computer technology and
Internet industry segments, are generally more vulnerable to risks,
uncertainties, expenses and difficulties than more established companies.

We have a history of operating losses and we anticipate losses and negative cash
flow for the foreseeable future. Unless we are able to generate profits and
positive cash flow we may not be able to continue operations.


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<PAGE>

We incurred an operating loss of $879,184 and negative cash flow from operations
of $763,099 during the year ended December 31, 2002. During the year ended
December 31, 2001, we incurred an operating loss of $1,636,157 and negative cash
flow from operations of $739,681. We expect operating losses and negative cash
flow to continue for the foreseeable future and to increase significantly from
current levels as we increase expenditures for:

      o     sales and marketing,

      o     technology,

      o     infrastructure research and development and

      o     general business enhancement.

With increased on-going operating expenses, we will need to generate significant
revenues to achieve profitability. Consequently, we may never achieve
profitability. Even if we do achieve profitability, we may not sustain or
increase profitability on a quarterly or annual basis in the future. If we are
unable to achieve or sustain profitability in the future, we may be unable to
continue our operations.

Our financial statements for the year ended December 31, 2002 have been prepared
on the basis of accounting principles applicable to a going concern. Our
auditors' report on these financial statements includes an additional
explanatory paragraph following the opinion paragraph on our ability to continue
as a going concern. Note 2(a) to these financial statements describes the
reasons why there is substantial doubt about our ability to continue as a going
concern and our plans to address this issue. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Our inability to continue as a going concern would require a restatement of
assets and liabilities on a liquidation basis, which would differ materially
from the going concern basis on which our financial statements were prepared.

We have an immediate need for additional capital to proceed with our business
plan. If we are unable to obtain such capital we may be unable to proceed with
our business plan and we may be forced to limit or curtail our operations.

We have an immediate need for additional working capital to maintain our current
operations and to proceed with our business plan. For a discussion of our
capital requirements, see the disclosure in "Part II. Item 6. Management's
Discussion and Analysis or Plan of Operation; Plan of Operations." We currently
do not have a commitment from any third party to provide financing and may be
unable to obtain financing on reasonable terms or at all. Furthermore, if we
raise additional working capital through equity, our shareholders will
experience dilution. If we are unable to raise additional financing when needed,
we may be unable to grow or maintain our current level of business operations
and, in fact, we may be forced to limit or curtail our operations.


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<PAGE>

The loss of any of our key personnel would likely have an adverse effect on our
business.

Our future success depends, to a significant extent, on the continued services
of our key contractual personnel. Our loss of any of these key personnel most
likely would have an adverse effect on our business. At present, we have a
contractual agreement with these personnel but we do not have key man life
insurance on them. In addition, competition for personnel throughout the
industry is intense and we may be unable to retain our current contractors or
attract, integrate or retain other highly qualified personnel in the future. If
we do not succeed in retaining our current contractors or in attracting and
motivating new personnel, our business could be materially adversely affected.

The market is highly competitive and we may not be able to compete successfully
against our current and future competitors

The market for our products and technology is highly competitive and subject to
rapid change. We face competitive pressures from numerous actual and potential
competitors. Competition is likely to increase significantly as new companies
enter the market and current competitors expand their services. Many of our
current and potential competitors have substantial competitive advantages,
including:

      o     longer operating histories,

      o     significantly greater financial, technical and marketing resources,

      o     greater brand name recognition and

      o     larger existing customer bases.

These competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements and to devote greater
resources to develop, promote and sell their products or services. Services
offered by existing and potential competitors may be perceived by users or
advertisers as being superior to ours. We cannot assure that the Company will be
able to compete.

If we are unable to develop brand recognition, we may be unable to generate
significant revenues and our results of operations may be materially adversely
affected.

To attract customers we may have to develop a brand identity and increase public
awareness of our technology and products. To increase brand awareness, we may
advertise to the extent that we have adequate financial and other resources to
do so. However, these activities may not result in significant revenue and, even
if they do, any revenue may not offset the expenses incurred in building brand
recognition. Moreover, despite these efforts, we may not be able to increase
public awareness of our brands, which would have a material adverse effect on
our results of operations.


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<PAGE>

If we are unable to respond to rapid technological change and improve our
products and services, our business could be materially adversely affected.

The market for Internet solutions and software products and services is
characterized by rapid change, evolving industry standards and frequent
introductions of new technological developments. These new standards and
developments could make our existing or future products or technology obsolete.
Keeping pace with the introduction of new standards and technological
developments could result in significant additional costs or prove difficult or
impossible. Our failure to keep pace with these changes and to continue to
enhance and improve the responsiveness, functionality and features of our
technology and products could harm our ability to attract and retain customers.
If

      o     we are not able to improve and expand our technology and products to
            keep them state-of-the-art or

      o     current competitors or new market entrants succeed in developing and
            introducing new or enhanced technology and/or products superior to,
            or more effective than ours, our business could be materially and
            adversely affected.

We may not be able to protect and enforce our intellectual property rights,
which could result in the loss of our rights, loss of business or increased
costs.

Our success and ability to compete depend, to a large degree, on our current
technology and, in the future, technology that we might develop or license from
third parties. To protect our technology, we enter into confidentiality and/or
intellectual property agreements with our employees, consultants and suppliers.
We also plan to rely on patent, trademark, trade secret, and copyright law.

Despite these precautions, it may be possible for unauthorized third parties to
copy or otherwise obtain and use our products, technology or proprietary
information. In addition, effective patent, trademark, trade secret, and
copyright protection may be unavailable or limited in certain foreign countries.
We have registered trademarks in the United States, Canada and Europe. We are
also preparing patent applications. Litigation may be necessary in the future:

      o     to enforce our intellectual property rights,

      o     to defend the validity of any patents that we may obtain,

      o     to protect our trade secrets or

      o     to determine the validity and scope of the proprietary rights of
            others.

Such misappropriation or litigation could result in substantial costs and
diversion of resources and the potential loss of intellectual property rights,
which could impair our financial and business condition. Although currently we
are not engaged in any form of litigation proceedings, in the future we may
receive notice of claims of infringement of


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<PAGE>

other parties' proprietary rights. Such claims may involve internally developed
technology or technology and enhancements that we may license from third
parties. Moreover, although we sometimes may be indemnified by third parties
against claims that licensed third-party technology infringes the proprietary
rights of others, indemnity may be limited, unavailable, or, where the third
party lacks sufficient assets or insurance, ineffectual. Any such claims could
require us to spend time and money defending against them, and, if they were
decided adversely to us, could cause us:

      o     to pay damages,

      o     to be subject to injunctions or

      o     to halt distribution of our products while we re-engineer them or
            seek licenses to necessary technology, which necessary technology
            will increase our costs and might not be available on reasonable
            terms.

Moreover, we could be subject to claims for indemnification resulting from
infringement claims made against our customers, which could increase defense
costs and potential damages. We currently do not have liability insurance to
protect against the risk that our technology or future licensed third-party
technology infringes the proprietary rights of others. Any of these factors
could have a materially adverse effect on our financial condition and business.

If our electronic security devices were breached, our business would be
materially adversely affected.

A key element of our technology and products is our Internet security feature.
If anyone is able to circumvent our security measures, they could misappropriate
proprietary information or cause interruptions or problems with hardware and
software of customers using our products. Any such security breaches could
significantly damage our reputation. In addition, we could be liable to our
customers for the damages caused by such breaches or we could incur substantial
costs as a result of defending claims for those damages. We may need to expend
significant capital and other resources to protect against such security
breaches or to address problems caused by such breaches. Security measures taken
by us may not prevent disruptions or security breaches. We believe that the
three-level architecture of our security system totally prevents security
breaches. In the event that we are incorrect or future events or developments
result in a compromise or breach of the technology we use to protect a
customer's personal information, our financial condition and business could be
materially adversely affected.

We may need to change the manner in which we conduct our business if government
regulation increases or changes.

There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. Laws and regulations may be adopted
in the future, however, that address issues such as user privacy, pricing,
taxation, content, copyrights, distribution, security, and the quality of
products and services. For example, the Telecommunications Act of 1996 sought to
prohibit transmitting certain types of


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<PAGE>

information and content over the Web. Several telecommunications companies have
petitioned the Federal Communications Commission to regulate Internet service
providers and online services providers in a manner similar to long distance
telephone carriers and to impose access fees on these companies. Any imposition
of access fees could increase the cost of transmitting data over the Internet.
In addition, the growth and development of the market for online commerce may
lead to more stringent consumer protection laws, both in the United States and
abroad, that may impose additional burdens on us. The United States Congress
recently enacted Internet laws regarding children's privacy, copyrights,
taxation and the transmission of sexually explicit material. The law of the
Internet, however, remains largely unsettled, even in areas where there has been
some legislative action. Moreover, it may take years to determine the extent to
which existing laws relating to issues such as property ownership, libel and
personal privacy are applicable to the Web. Any new, or modifications to
existing, laws or regulations relating to the Web could adversely affect our
business. If one or more states or any foreign country successfully asserts that
we should collect sales or other taxes on the provision of our technology or
products, our net sales and results of operations could be harmed. One or more
states may seek to impose sales tax collection obligations on companies that
engage in or facilitate the provision of services on the Internet. A number of
proposals have been made at the state and local level that would impose
additional taxes on the sale of products and services through the Internet. Such
proposals, if adopted, could substantially impair the growth of electronic
commerce and could adversely affect our opportunity to derive financial benefit
from the provision of our products and technology. Legislation limiting the
ability of the states to impose taxes on Internet-based transactions has been
enacted by Congress. However, this legislation, known as the Internet Tax
Freedom Act of 1998, imposes only a three-year moratorium that ended on October
21, 2001 on state and local taxes on electronic commerce where such taxes are
discriminatory and on Internet access unless such taxes were generally imposed
and actually enforced before October 1, 1998. Failure to renew this legislation
would allow various states to impose taxes on Internet-based commerce.

Our operating results may prove unpredictable, and may fluctuate significantly.

Our operating results are likely to fluctuate significantly in the future due to
a variety of factors, many of which are outside of our control. Because our
operating results may be volatile and difficult to predict, future operating
results may fall below the expectations of securities analysts and investors. In
this event, the trading price of our common stock may fall significantly.
Factors that may cause operating results to fluctuate significantly include the
following:

      o     new technology or products introduced by us or by our competitors;

      o     the timing and uncertainty of sales cycles and seasonal declines in
            sales; and

      o     general economic conditions, as well as economic conditions specific
            to users of our products and technology.


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<PAGE>

Our common stock price may be volatile.

The market prices of securities of Internet and technology companies are
extremely volatile and sometimes reach unsustainable levels that bear no
relationship to the past or present operating performance of such companies.
Factors that may contribute to the volatility of the trading price of our common
stock include, among others:

      o     our quarterly results of operations;

      o     the variance between our actual quarterly results of operations and
            predictions by stock analysts;

      o     financial predictions and recommendations by stock analysts
            concerning Internet companies and companies competing in our market
            in general, and concerning us in particular;

      o     public announcements of technical innovations relating to our
            business, new products or technology by us or our competitors, or
            acquisitions or strategic alliances by us or our competitors;

      o     public reports concerning our products or technology or those of our
            competitors; and

      o     the operating and stock price performance of other companies that
            investors or stock analysts may deem comparable to us.

In addition to the foregoing factors, the trading prices for equity securities
in the stock market in general, and of Internet-related companies in particular,
have been subject to wide fluctuations that may be unrelated to the operating
performance of the particular company affected by such fluctuations.
Consequently, broad market fluctuations may have an adverse effect on the
trading price of our common stock, regardless of our results of operations.

There is a limited market for our common stock. If a substantial and sustained
market for our common stock does not develop, our shareholders' ability to sell
their shares may be materially and adversely affected.

Our common stock is tradable in the over-the-counter market and is quoted on the
OTC Bulletin Board. There is only a limited market for our common stock and
there can be no assurance that this market will be maintained or broadened. If a
substantial and sustained market for our common stock does not develop, our
shareholders' ability to sell their shares may be materially adversely affected.

Substantial Sales of our common stock could cause stock price to fall.

As of March 27, 2003, we had outstanding 15,737,786 shares of common stock of
which approximately 9,914,862 shares were "restricted securities" as that term
is defined under Rule 144 promulgated under the Securities Act of 1933. These
restricted shares are eligible for sale under Rule 144 at various times. No
prediction can be made as to the effect, if any, that sales of shares of common
stock or the availability of such shares for sale will have on the market prices
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of our common stock may be sold in the public


                                       14
<PAGE>

market may adversely affect prevailing market prices for the common stock and
could impair our ability to raise capital through the sale of our equity
securities.

We do not intend to pay dividends in the near future.

Our board of directors determines whether to pay dividends on our issued and
outstanding shares. The declaration of dividends will depend upon our future
earnings, our capital requirements, our financial condition and other relevant
factors. Our board does not intend to declare any dividends on our shares for
the foreseeable future.

Our common stock may be deemed to be a "penny stock." As a result, trading of
our shares may be subject to special requirements that could impede our
shareholders' ability to resell their shares.

Our common stock is a "penny stock" as that term is defined in Rule 3a51-1 of
the Securities and Exchange Commission because it is selling at a price below
five dollars per share. In the future, if we are unable to list our common stock
on NASDAQ or a national securities exchange, or the per share sale price is not
at least $5.00, our common stock may continue to be deemed to be a "penny
stock". Penny stocks are stocks:

      o     with a price of less than five dollars per share;

      o     that are not traded on a recognized national exchange;

      o     whose prices are not quoted on the NASDAQ automated quotation system
            ; or

      o     of issuers with net tangible assets less than

      o     $2,000,000 if the issuer has been in continuous operation for at
            least three years; or

      o     $5,000,000 if in continuous operation for less than three years, or

      o     of issuers with average revenues of less than $6,000,000 for the
            last three years.

Section 15(g) of the Exchange Act, and Rule 15g-2 of the Securities and Exchange
Commission, require broker-dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks and to obtain a
manually signed and dated written receipt of the document before effecting any
transaction in a penny stock for the investor's account. Moreover, Rule 15g-9 of
the Securities and Exchange Commission requires broker-dealers in penny stocks
to approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer:


                                       15
<PAGE>

      o     to obtain from the investor information concerning his or her
            financial situation, investment experience and investment
            objectives;

      o     to determine reasonably, based on that information, that
            transactions in penny stocks are suitable for the investor and that
            the investor has sufficient knowledge and experience as to be
            reasonably capable of evaluating the risks of penny stock
            transactions;

      o     to provide the investor with a written statement setting forth the
            basis on which the broker-dealer made the determination in (ii)
            above; and

      o     to receive a signed and dated copy of such statement from the
            investor, confirming that it accurately reflects the investor's
            financial situation, investment experience and investment
            objectives.

Compliance with these requirements may make it more difficult for holders of our
common stock to resell their shares to third parties or to otherwise dispose of
them.

Our current and former executive officers, directors and major shareholders own
a significant percentage of our voting stock. As a result, they exercise
significant control over our business affairs and policy.

As of March 27, 2003, our current and former executive officers, directors and
holders of 5% or more of our outstanding common stock together beneficially
owned approximately 45 % of the outstanding common stock if they exercised all
of the warrants held by them. These shareholders are able to significantly
influence all matters requiring approval by shareholders, including the election
of directors and the approval of significant corporate transactions. This
concentration of ownership may also have the effect of delaying, deterring or
preventing a change in control and may make some transactions more difficult or
impossible to complete without the support of these shareholders.

We expect to generate some revenues and incur some operating expenses outside of
the United States. If applicable currency exchange rates fluctuate our revenues
and results of operations may be materially and adversely affected.

We expect that some portion of our revenues will be based on sales provided
outside of the United States. In addition, we expect that a significant portion
of our operating expenses will be incurred outside of the United States. As a
result, our financial performance will be affected by fluctuations in the value
of the U.S. dollar to foreign currency. At the present time, we have no plan or
policy to utilize forward contracts or currency options to minimize this
exposure, and even if these measures are implemented there can be no assurance
that such arrangements will be available, be cost effective or be able to fully
offset such future currency risks.

Other risks associated with international operations could adversely affect our
business operations and our results of operations.

There are certain risks inherent in doing business on an international level,
such as:


                                       16
<PAGE>

      o     unexpected changes in regulatory requirements, export and import
            restrictions, export and import controls relating to encryption
            technology that may limit sales sometime in the future;

      o     tariffs and other trade barriers;

      o     difficulties in staffing and managing foreign operations;

      o     longer payment cycles;

      o     problems in collecting accounts receivable;

      o     political instability;

      o     fluctuations in currency exchange rates;

      o     software piracy;

      o     seasonal reductions in business activity during the summer months in
            Europe and elsewhere; and

      o     potentially adverse tax consequences.

Any of these factors could adversely impact the success of our international
operations. One or more of such factors may impair our future international
operations and our overall financial condition and business prospects.

Our Corporate History

We were incorporated in Nevada on April 12, 1989 as CCC Funding Corp. to seek
out one or more potential business ventures. We changed our name as follows:

Date                           New Name

February 3, 1992        American Gold Group Inc.
August 26, 1992         American Group, Inc.
December 23, 1993       Global Science Corp.
August 9, 1999          Sochrys.com Inc.
January 28, 2003        Validian Corporation

Our articles of incorporation were revoked by the State of Nevada effective
January 1, 1996 for failure to file a list of officers and directors and pay the
requisite filing fees. The State of Nevada reinstated our articles of
incorporation on February 10, 1999.

On February 24, 1999, we acquired certain mining property located in Fresno,
California known as the Jack Thorn Property from Western Continental, Inc. for
$27,500 worth of our common stock - 92,591 post reverse split shares.


                                       17
<PAGE>

On April 6, 1999, we effected a reverse split of our issued and outstanding
shares of common stock on a one-for-300 basis. All references to our shares of
common stock in this annual reportretroactively give effect to this reverse
split unless the text specifically indicates otherwise.

On June 23, 1999, our former directors and the holders of a majority of our
issued and outstanding shares of common stock, determined not to maintain the
Jack Thorn Property and to write off the costs of acquiring the property.

On August 3, 1999, our former directors and the holders of a majority of our
issued and outstanding shares of common stock, approved the acquisition of 100%
of the issued and outstanding shares of stock of Graph-O-Logic, S.A. for
8,459,000 shares of our common stock and warrants to purchase an aggregate of
2,000,000 shares over a four year period. 1,000,000 of the warrants were
exercisable at $2.00 per share and have been exercised and the other 1,000,000
warrants were exercisable at $5.00 per share, and have since been cancelled. In
addition, Jean Pierre Hofman and Andre Hensler, two Executive Officers of
Graph-O-Logic, S.A., were elected to our board of directors.

We consummated the acquisition of Graph-O-Logic, S.A. on August 30, 1999 at
which time all of our former executive officers and directors other than Messrs.
Hofman and Hensler resigned and were replaced by a slate chosen by
Graph-O-Logic, S.A., which consisted of Messrs. Hofman, Hensler and Claverie.

Mr. Hofman resigned as an officer of the Company on April 1, 2001
Mr. Hensler resigned as an officer of the Company on September 25, 2001
Mr. Claverie resigned as an officer of the Company on September 25, 2001

Item 2. Description of Properties.

Our Canadian office is located at 30 Metcalfe St., Suite 620, Ottawa, Canada,
K1P 5L4. The telephone number is 613-230-7211. Our United States office is
located at 4651 Roswell Road, Suite B-106, Atlanta, Georgia 30342. The telephone
number is (404) 256-1963.

Our Ottawa office is leased from a non-affiliated party per oral arrangement on
a month-by-month basis. The lease provides shared access to and use of 2,500
square feet. Our Atlanta office is leased from a non-affiliated party per oral
arrangement on a month-by-month basis. The lease provides shared access to and
use of 1,000 square feet.

Item 3. Legal Proceedings.

We are not presently a party to any material litigation.


                                       18
<PAGE>

Item 4. Submission of Matters to a Vote of Security holders.

No matters were submitted to a vote of our shareholders during the fourth
quarter of the year ended December 31, 2002. On January 28th, 2003 a majority of
the Company's shareholders passed a shareholders' resolution approving an
amendment to the Company's Articles of Incorporation changing the Company's name
to Validian Corporation.


                                       19
<PAGE>

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

(a) Marketing Information -- The principal U.S. market in which our common
stock, all of which are of one class, $.001 par value per share, is traded or
will trade is in the over-the-counter market. Our stock is quoted on the OTC
Bulletin Board and our symbol as of January 28 2003 is "VLDI". Prior to
effecting our name change to Validian Corporation on January 28, 2003 our symbol
was "SOCH". Our stock is not traded or quoted on any Automated Quotation System.

The following table sets forth the range of high and low bid quotes of our
common stock per quarter for the past two fiscal years as reported by the OTC
Bulletin Board. These quotes reflect inter-dealer prices without retail mark-up,
markdown or commission and may not necessary represent actual transactions.

                          MARKET PRICE OF COMMON STOCK

                                                        BID

        Quarter Ending                             High      Low
                                                   ----      ---
        2001
        January 1 to March 31                      2.50     1.30
        April 1 to June 30                         1.75     0.65
        July 1 to September 30                     1.35     0.65
        October 1 to December 31                   1.25     0.40

        2002
        January 1 to March 31                       .80      .48
        April 1 to June 30                         0.53     0.33
        July 1 to September 30                     0.46     0.15
        October 1 to December 31                   0.28     0.07

        2003
        January 1 to March 31                      0.27     0.07

(b) Holders -- There were approximately 151 holders of record of our common
stock as of March 27, 2003, inclusive of those brokerage firms and/or clearing
houses holding our securities for their clientele, with each such brokerage
house and/or clearing house being considered as one holder. The aggregate number
of shares of common stock outstanding as of March 27, 2003 was 15,737,786
shares.

Capital Stock Issuance - During the three months ended September 30 2001,
pursuant to


                                       20
<PAGE>

section 4 (2) of the Securities Act of 1933, we issued 2,774,362 shares of
common stock at $0.80 per share plus 2,150,000 warrants exercisable at $1.00 per
share to creditors for $2,219,493 of consideration as payment for debt. We also
issued 500,000 warrants to our Executive Vice President (now Chairman,
President, Chief Executive Officer, Secretary and Director), Andre Maisonneuve,
exercisable at $1.00 per share. 1,000,000 warrants exercisable at $5.00 per
share were cancelled upon agreement between the Company and the holders. During
the period January 1, 2002 through March 28, 2002, pursuant to section 4 (2) of
the Securities Act of 1933, we issued 340,500 shares of our common stock to
creditors as payment for services rendered and to be rendered.

On February 20, 2003, pursuant to section 4 (2) of the Securities Act of 1933,
we issued 10,000 shares of our common stock to creditors as payment for services
rendered.

(c) Dividends -- We have not paid or declared any dividends upon our common
stock since inception and, by reason of its present financial status and its
contemplated financial requirements, we do not contemplate or anticipate paying
any dividends in the foreseeable future.

(d) Securities Authorized for Issuance Under Equity Compensation Plans: The
following table sets forth details regarding our common stock authorized for
issuance under equity compensation plans as at December 31, 2002:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                  Number of securities         Weighted average        Number of securities
                                     to be issued upon        exercise price of     remaining available for
                                             excercise              outstanding       future issuance under
                                        of outstanding        options, warrants   equity compensation plans
                                 options, warrants and      warrants and rights       (excluding securities
                                                rights                                            reflected
                                                                                             in column (a))
-----------------------------------------------------------------------------------------------------------
                                             (a)                      (b)                          (c)
-----------------------------------------------------------------------------------------------------------
<S>                                          <C>                         <C>                             <C>
Equity compensation
plans approved by                                   --                       --                          --
security holders
-----------------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by                        3,380,000                   $ 1.43                          --
security holders
-----------------------------------------------------------------------------------------------------------
Total                                        3,380,000                   $ 1.43                          --
-----------------------------------------------------------------------------------------------------------
</TABLE>


                                       21
<PAGE>

Item 6. Management's Discussion and Analysis or Plan of Operations.

General

In this section, we explain our consolidated financial condition and results of
operations for the years ended December 31, 2002 and December 31, 2001. As you
read this section, you may find it helpful to refer to our Consolidated
Financial Statements at the end of this annual report.

Until we acquired our former subsidiary, Graph-O-Logic, S.A. in August 1999, we
had no material or substantive business operations. Since then, our business has
been as more fully described in " Part I, Item 1: Description of Business".
Accordingly, in this section we focus solely on the historical business
operations of the subsidiary and our current business plan and operations.

Plan of Operations

We are a development stage enterprise. As such, our historic results of
operations are unlikely to provide a meaningful understanding of the activities
expected to take place during the period through December 31, 2003. Our products
have not reached the stage of being saleable and we have yet to make a
commercial sale. Our major initiatives through December 31, 2003 are:

      o     completing the development of our products;

      o     obtaining commercial sales of our products, and continuing our
            current marketing program; and

      o     developing and improving product agents to perform specialized
            functions common to many e-commerce sites.

For more information, please see "Part 1. Item 1: Description of Business;
Technology."

Marketing Plans: We started the marketing process in the second quarter of 2000,
with our original focus being potential customers located in the United States
and Western Europe. The potential customers and our current marketing program
are more fully described in "Part 1. Item 1: Description of Business; The Target
Market." Marketing activities are multi-faceted.

Marketing leads are being developed by direct identification of potential
customers, through trade shows and through personal contacts of management and
the marketing representatives. We expect to spend $40,000 in attending and
exhibiting at trade shows through December 31, 2003. We anticipate that
preparation of additional promotional literature, including technical
evaluations of the products and testimonials from users of the products, and
distribution of promotional literature at the trade shows and by direct


                                       22
<PAGE>

mailings to the individuals identified as the decision makers and decision
influencers will cost $540,000 during the year ended December 31, 2003.

Sales representatives, who are compensated on a salary and commission basis,
will continue to follow up these leads, with the objective of more fully
explaining the products and their benefits to the potential customer. We
estimate the cost of this initiative, including travel and sales support, to be
$320,000 for the year ended December 31, 2003.

Pilot projects to demonstrate the utility and benefits of the products to the
customer are expected to be funded at a break-even level by customers, once our
working models are completed.

In summary, the marketing program is expected to cost between $900,000 and
$1,000,000 through December 31, 2003, subject to sufficient financing or cash
flow.

Developing and Improving Product Agents: While we direct a considerable portion
of our activities and budget to marketing, we will continue developing the core
functions of the products and additional product agents and improving existing
ones. For more information please see "Part I. Item 1. Description of Business;
Our Technology."

We will improve and further develop our products based upon responses from
potential customers. The cost associated with this development is primarily a
function of the activity currently planned and thus will be subject to a high
degree of control. We estimate that the cost of this continued research and
development effort will be $800,000 through December 31, 2003, subject to
sufficient financing or cash flow. In addition, we expect to spend $400,000 on
general and administrative expenses through December 31, 2003, subject to
sufficient financing or cash flow.

In the past, we obtained financing from the exercise of our Series A warrants,
which are now fully exercised, and the proceeds from loans. Until such time as
we generate sufficient revenues from the licensing of our software applications
we will continue to be dependent on raising substantial amounts of additional
capital through any one of a combination of debt offerings or equity offerings,
including but not limited to:

      o     debt instruments, including demand notes similar to those discussed
            below in "Liquidity and Capital Resources";

      o     private placements of common stock;

      o     exercise of Series `B' warrants at an exercise price of $3.00 per
            share;

      o     exercise of Series `D' warrants at an exercise price of $1.00 per
            share; or

      o     funding from potential clientele or future industry partners.

There can be no assurance that any such financings can be obtained. In the event
that we are not able to raise sufficient funds to conduct all of the foregoing
activities, we will scale back the level of activities we undertake to match the
funds available. In this


                                       23
<PAGE>

regard, please see "Risk Factors; Immediate need for Additional Capital" in Item
1 above.

Selected Financial Data

The selected financial data set forth below with respect to our consolidated
statements of operations for each of the two fiscal years in the period ended
December 31, 2002 and with respect to the consolidated balance sheets as at
December 31, 2002 and 2001, are derived from our audited consolidated financial
statements included at the end of this report. The following selected financial
data should be read in conjunction with our consolidated financial statements
and the notes thereto.

                                                       Year Ended December 31
                                                        2002            2001

       Operations Data
Selling, general and administrative                 $  473,306      $  516,829
Research and development                               405,597       1,015,043
Amortization                                               281          45,761
Loss on write-off of assets, net                            --          58,524
Other expenses, net                                     27,657         103,835
Extraordinary gain on settlement of debt                    --        (291,507)
Net loss                                            $  906,841      $1,448,485




                                                       Year Ended December 31
                                                        2002            2001

       Flows Data
Net cash from (used in) operations                    (763,099)     $ (739,681)
Net cash from (used in) investing activities           (10,106)        179,069
Net cash from financing activities                     929,151         480,377
Effects of exchange rates on cash                           --          71,257
Net increase (decrease) in cash                     $  155,946      $   (8,978)

       Balance Sheet Data
Cash                                                $  156,650      $      704
Total current assets                                   371,358             840
Fixed Assets                                             9,825              --
Total assets                                           381,183             840
Total current liabilities                            1,379,775         312,529
Stockholders' equity (deficiency)                     (998,592)       (311,689)

Results of Operations

In this section, we discuss our earnings for the periods indicated and the
factors affecting


                                       24
<PAGE>

them that resulted in changes from one period to the other.

Through September 30, 2001, our principal operations were conducted in
Switzerland. Our expenses were incurred in Swiss francs. Subsequent to September
30, 2001 our principal operations were conducted in Canada and Europe. However
the majority of our expenses were incurred in United States dollars. Our
financial statements have been conformed to US GAAP and presented in US dollars
for purposes of this annual report. The rates of exchange between the Swiss
franc and US dollar set out below were used to convert the various financial
statement balances from Swiss francs to US dollars. In the following tables we
set forth:

      o     the rates of exchange for the US dollar, expressed in Swiss francs
            (CH), in effect at the end of each of the periods indicated;

      o     the average of the exchange rates in effect during such periods

                                   Years ending December 31

                                                         2002            2001
                  Rate at end of Period                  1.39CH          1.61CH
                  Average Rate During Period             1.56CH          1.69CH

The fiscal year ended December 31, 2002 compared to the fiscal year ended
December 31, 2001

Revenue: We generated no revenues during the year ended December 31, 2002, nor
did we generate any revenues during the year ended December 31, 2001.

Selling, General and Administrative Expenses: Selling, general and
administrative expenses consist primarily of personnel costs, professional fees,
communications, occupancy costs and other miscellaneous costs associated with
supporting our research and development and sales and marketing activities.
During the year ended December 31, 2002 we spent $473,306 as compared to
$516,829 during the year ended December 31, 2001. This decrease of $43,523 (8%)
is a reflection of our efforts to consolidate our administrative activities.

Research and Development Expenses: Research and development expenses consist
primarily of personnel costs and consulting expenses directly associated with
the development of our software applications. During the year ended December 31,
2002, we spent $405,597, a decrease of $609,446 (60%) from the $1,015,043 spent
in developing our Technology, and implementing it into products during 2001. In
addition, we continued to develop related software applications. During the year
ended December 31, 2002 we had an average of 11 people working directly on the
project, compared to an average of 17 people during the comparable period in
2001. This decrease in staffing is the primary reason for the decrease in
research and development costs.


                                       25
<PAGE>

Amortization: Amortization expense was $281 during the year ended December 31,
2002, a decrease of $45,480 (99%), over the $45,761 charged to expense during
the year ended December 31, 2001. As a result of the insolvency of two of our
Swiss subsidiaries all of our leased computer equipment and office furniture was
returned to the lessors during 2001. Since that time, the use of computer
equipment has been provided under arrangements with our contractors. The use of
office furniture and equipment is provided under the terms of our arrangements
for leased premises as described above. This decrease in property and equipment
is the reason for the decrease in amortization expense.

Gain on Sale of Assets: During the year ended December 31, 2001 we sold our
computer and office equipment, which provided us with $176,890 in cash and
generated a gain on sale of these assets of $7,442. We did not have a comparable
transaction during the year ended December 31, 2002.

Loss on Write-off of Assets: In July and September 2001, two of our Swiss
subsidiaries were determined to be insolvent and put under the protection of the
Swiss courts. We recorded losses of $65,966 as a result of the uncollectibility
or impairment in value of assets held by the subsidiaries at the date of their
insolvency. No assets were written off during 2002.

Extraordinary Gain on Settlement of Debt: In July and September 2001, two of our
Swiss subsidiaries were determined to be insolvent and put under the protection
of the Swiss courts. As a result of this situation we recorded a $291,507 gain
on the settlement of the debts of these two subsidiaries. There was no
comparable event during the year ended December 31, 2002.

Effects of Exchange Rates on Cash: The reporting currency for our financial
statements is the United States dollar. The functional currency for our wholly
owned subsidiary, Evolusys S.A., is the Swiss franc. This subsidiary became
inactive during 2002. Prior to their insolvencies during 2001, the functional
currency for our other operating subsidiaries was also the Swiss franc. Expenses
were translated from Swiss francs to United States dollars at the average
monthly exchange rates during the period. The exchange rates used are disclosed
above. Translation gains and losses were accumulated as a separate component of
shareholders' equity.

As a result of the discontinuance of the operations of Evolusys S.A. during
2002, we have changed our method of accounting for foreign currency translations
relating to this subsidiary. Commencing in 2002, exchange gains and losses are
included in the statement of operations as other income or expense. During the
year ended December 31, 2002, we recorded translation gains of $2,209 relating
to exchange rate changes during the year. During the year ended December 31,
2001 we recorded $62,202 in translation gains as a component of stockholders'
equity.


                                       26
<PAGE>

Net Loss: We incurred a loss of $906,841 (($0.06) per share) for the year ended
December 31, 2002, compared to a loss of $1,448,485 (($0.11) per share) for the
year ended December 31, 2001. Our loss before extraordinary items was $906,841
(($0.06) per share) for the year ended December 31, 2002, compared to a loss of
$1,739,992 (($0.13) per share) for the year ended December 31, 2001. Our
revenues and future profitability and future rate of growth are substantially
dependent on our ability to:

      o     identify clients willing to install beta sites for our products;

      o     operate successfully these beta sites, integrating our technology
            into their operations;

      o     modify the software applications based on the results of the beta
            site results;

      o     license the software applications to a sufficient number of clients;

      o     modify the successful software applications, over time, to provide
            enhanced benefits to existing users; and

      o     successfully develop related software applications.

Liquidity and Capital Resources

At December 31, 2002, we had negative working capital of $1,008,417 compared to
negative working capital of $311,689 at December 31, 2001. This significant
decrease in working capital occurred primarily as a result of an increase of
$929,151 in debt financing, which we used to fund our operations for the period.
We had $156,650 of cash on hand at December 31, 2002 compared to $704 at
December 31, 2001.

Net Cash Flow from Operations: During the year ended December 31, 2002, we used
$763,099 in operations, compared to using $739,681 during the year ended
December 31, 2001. The use of cash in operations during the year ended December
31, 2002 resulted primarily from a net loss of $906,841, which was partially
offset by depreciation of $281, consulting fees of $71,775 and interest of
$48,185, which did not involve the use of cash, and by a net change in non-cash
operating working capital of $49,713. During the year ended December 31, 2001,
the use of cash in operations resulted from a net loss of $1,448,485 and unusual
non-cash adjustments totaling $232,983, which occurred as a result of the
insolvency of two of our Swiss subsidiaries. These amounts were partially offset
by depreciation of $45,761 and interest of $91,655, which did not involve the
use of cash, and by a net change in non-cash operating working capital of
$804,371.

Net Cash Used in Investing Activities: During the year ended December 31, 2002,
we invested $10,106 in computer equipment. During the year ended December 31,
2001 we sold our computer equipment and office furniture, which provided us with
$176,890 in cash. We also applied $18,109 of the cash we had pledged as
collateral on an operating lease to our obligations under that operating lease.

Net Cash From Financing Activities: During the year ended December 31, 2002 we
raised $929,151 from the issuance promissory notes. During the year ended
December 31, 2002 we raised $496,377 from the issuance of promissory notes and
repaid $16,000


                                       27
<PAGE>

of these notes. In addition during 2001, promissory notes payable in the amount
of $1,370,614, including accrued interest, accounts payable in the amount of
$591,520 and accrued liabilities in the amount of $257,356 were converted to
2,774,362 common shares of the Company at a conversion price of $0.80 per share.
These debt holders also received 2,150,000 Series D warrants.

For information concerning our capital requirements see "Plan of Operations"
above.

Item 7. Financial Statements.

For the Financial Statements required by Item 7 see the Financial Statements
included at the end of this Form 10-KSB.

Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosures.

There have been no changes in or disagreements with accountants with respect to
accounting and/or financial statements.


                                       28
<PAGE>

                  Consolidated Financial Statements of

                  VALIDIAN CORPORATION
                  (formerly SOCHRYS.com Inc.)

                  (A Development Stage Enterprise)

                  Years ended December 31, 2002 and 2001

                                                                           Page

Auditors' Report to the Board of Directors                                  F-2

Consolidated Balance Sheets as at December 31, 2002 and 2001                F-3

Consolidated Statements of Operations for the years ended
December 31, 2002 and 2001 and for the period from
August 3, 1999 to December 31, 2002                                         F-4

Consolidated Statements of Changes in Stockholders' Deficiency
and Comprehensive Loss for the years ended December 31, 2002 and 2001       F-5

Consolidated Statements of Cash Flows for the years ended
December 31, 2002 and 2001 and for the period from August 3, 1999 to
December 31, 2002                                                           F-7

Notes to Consolidated Financial Statements                                  F-8


                                      F-1
<PAGE>

AUDITORS' REPORT TO THE BOARD OF DIRECTORS

We have audited the accompanying consolidated balance sheets of Validian
Corporation (formerly SOCHRYS.com Inc.) and subsidiaries (a Development Stage
Enterprise) as of December 31, 2002 and 2001 and the related consolidated
statements of operations, changes in stockholders' deficiency and comprehensive
loss and cash flows for the years then ended and the period from August 3, 1999
to December 31, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about 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. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Validian Corporation
and subsidiaries as of December 31, 2002 and 2001, and the results of their
operations and their cash flows for the years then ended and the period from
August 3, 1999 to December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2(a) to the
consolidated financial statements, the Company has no revenues, has negative
working capital at December 31, 2002, and has incurred a loss for the year, as
well as negative cash flow from operating activities in the same period. The
Company has accumulated a deficit and a deficiency in stockholders' equity and
its economic viability is dependent on its ability to finalize the development
of its principal products, generate sales and finance operational expenses which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2(a).
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

Chartered Accountants

Ottawa, Canada
January 14, 2003 (except for note 5(a) which
  is as of February 20, 2003)


                                      F-2
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Consolidated Balance Sheets

December 31, 2002 and 2001
(In U.S. dollars)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
                                                                        2002                   2001
-----------------------------------------------------------------------------------------------------
<S>                                                                 <C>                   <C>
Assets

Current assets:
     Cash and cash equivalents                                      $   156,650           $       704
     Prepaid expenses                                                   214,708                   136
-----------------------------------------------------------------------------------------------------
                                                                        371,358                   840

Property and equipment (note 3)                                           9,825                    --

-----------------------------------------------------------------------------------------------------
                                                                    $   381,183           $       840
-----------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Deficiency

Current liabilities:
     Accounts payable                                               $   180,910           $   110,798
     Accrued liabilities                                                156,714                88,731
     Promissory notes payable (note 4)                                1,042,151               113,000
-----------------------------------------------------------------------------------------------------
                                                                      1,379,775               312,529

Stockholders' deficiency:
     Common stock ($0.001 par value.  Authorized 50,000,000
       shares; Issued and outstanding 15,727,786 shares in 2002
       and 15,387,286 shares in 2001) (note 5(a))                        15,726                15,386
     Additional paid-in capital                                       5,045,282             4,799,472
     Accumulated other comprehensive income                                  --                26,212
     Deficit accumulated during the development stage                (6,031,166)           (5,124,325)
     Retained earnings prior to entering development stage               21,304                21,304
     Treasury stock (7,000 shares in 2002 and 2001 at cost)             (49,738)              (49,738)
-----------------------------------------------------------------------------------------------------
                                                                       (998,592)             (311,689)

Basis of presentation (note 2(a))
Subsequent event (note 5(a))
-----------------------------------------------------------------------------------------------------
                                                                    $   381,183           $       840
-----------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Consolidated Statements of Operations

Years ended December 31, 2002 and 2001
and The Period from August 3, 1999 to December 31, 2002
(In U.S. dollars)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
                                                                                                          Period from
                                                                                                            August 3,
                                                                                                              1999 to
                                                                                                         December 31,
                                                                        2002                 2001                2002
---------------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>                  <C>                  <C>
Expenses:
     Selling, general and administrative (note 5(a))            $    473,306         $    516,829         $ 2,458,674
     Research and development                                        405,597            1,015,043           3,436,080
     Depreciation of property and equipment                              281               45,761             190,269
     Gain on sale of property and equipment                               --               (7,442)             (7,442)
     Write-off of accounts receivable                                     --               16,715              16,715
     Write-off of due from related party                                  --               12,575              12,575
     Loss on cash pledged as collateral
       for operating lease                                                --               21,926              21,926
     Write-down of property and equipment                                 --               14,750              14,750
     ----------------------------------------------------------------------------------------------------------------
                                                                     879,184            1,636,157           6,143,547

---------------------------------------------------------------------------------------------------------------------
Operating loss                                                      (879,184)          (1,636,157)         (6,143,547)

Other income (expenses):
     Interest                                                        (45,978)             (91,655)           (170,219)
     Other                                                            18,321              (12,180)             (8,907)
     ----------------------------------------------------------------------------------------------------------------
                                                                     (27,657)            (103,835)           (179,126)

---------------------------------------------------------------------------------------------------------------------
Loss before extraordinary item                                      (906,841)          (1,739,992)         (6,322,673)

Extraordinary item:
     Gain on extinguishment of debt (note 6)                              --              291,507             291,507

---------------------------------------------------------------------------------------------------------------------
Net loss                                                        $   (906,841)        $ (1,448,485)        $(6,031,166)
---------------------------------------------------------------------------------------------------------------------

Loss per common share before extraordinary
   item - basic and diluted (note 7)                            $      (0.06)        $      (0.13)
---------------------------------------------------------------------------------------------------------------------

Loss per common share after extraordinary
   item - basic and diluted (note 7)                            $      (0.06)        $      (0.11)
---------------------------------------------------------------------------------------------------------------------

Weighted average common shares outstanding                        15,690,779           13,306,515
---------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Consolidated Statements of Changes in
Stockholders' Deficiency and Comprehensive Loss

For the four years ended December 31, 2002
(In U.S. dollars)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     Retained
                                                                     earnings
                                                                        prior        Deficit    Accumulated
                                                                           to    accumulated          other
                                             Common   Additional     entering         during  comprehensive
                                              stock      paid-in  development    development         income   Treasury
                                    Number   amount      capital        stage          stage         (loss)      stock        Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>        <C>      <C>              <C>        <C>               <C>        <C>       <C>
Balances at December 31, 1998       61,333  $    61  $    23,058      $ 30,080   $        --       $ (7,426)  $     --  $    45,773

Issued for mining claims            92,591       92       27,408            --            --             --         --       27,500
Issued for cash                  3,000,000    3,000       27,000            --            --             --         --       30,000
Reverse acquisition              8,459,000    8,459       21,541            --            --             --         --       30,000
Fair value of warrants
 issued to unrelated
 parties                                --       --      130,000            --            --             --         --      130,000
Shares issued upon
 exercise of warrants              380,000      380      759,620            --            --             --         --      760,000
Share issuance costs                    --       --      (34,750)           --            --             --         --      (34,750)
Comprehensive loss:                     --
   Net loss                             --       --           --        (8,776)     (743,410)            --         --     (752,186)
   Currency translation
     adjustment                         --       --           --            --            --         11,837         --       11,837
-----------------------------------------------------------------------------------------------------------------------------------
   Comprehensive loss                                                                                                      (740,349)

-----------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 1999   11,992,924   11,992      953,877        21,304      (743,410)         4,411         --      248,174

Shares issued upon
 exercise of warrants              620,000      620    1,239,380            --            --             --         --    1,240,000
Share issuance costs                    --       --      (62,000)           --            --             --         --      (62,000)
Acquisition of common
 stock                                  --       --           --            --            --             --    (49,738)     (49,738)
Comprehensive loss:
   Net loss                             --       --           --            --    (2,932,430)            --         --   (2,932,430)
   Currency translation
     adjustment                         --       --           --            --            --        (40,401)        --      (40,401)
-----------------------------------------------------------------------------------------------------------------------------------
   Comprehensive loss                                                                                                    (2,972,831)

-----------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2000   12,612,924   12,612    2,131,257        21,304    (3,675,840)       (35,990)   (49,738)  (1,596,395)

Shares  issued in  exchange
 for debt (note 4)               2,774,362    2,774    2,216,715            --            --             --         --    2,219,489
Fair value of warrants
 issued to unrelated
 parties (note 5)                       --       --      451,500            --            --             --         --      451,500
Comprehensive loss:


   Net loss                             --       --           --            --    (1,448,485)            --         --   (1,448,485)
   Currency translation
     adjustment                         --       --           --            --            --         62,202         --       62,202
-----------------------------------------------------------------------------------------------------------------------------------
   Comprehensive loss                                                                                                    (1,386,283)

-----------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2001   15,387,286   15,386    4,799,472        21,304    (5,124,325)        26,212    (49,738)    (311,689)
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Consolidated Statements of Changes in Stockholders'
Deficiency and Comprehensive Loss

For the four years ended December 31, 2002
(In U.S. dollars)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                     Retained
                                                                     earnings
                                                                        prior        Deficit    Accumulated
                                                                           to    accumulated          other
                                             Common   Additional     entering         during  comprehensive
                                              stock      paid-in  development    development         income   Treasury
                                    Number   amount      capital        stage          stage         (loss)      stock        Total
-----------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>        <C>       <C>             <C>        <C>               <C>        <C>       <C>
Balances at December 31, 2001   15,387,286  $15,386   $4,799,472      $21,304    $(5,124,325)      $ 26,212   $(49,738)   $(311,689)

Shares issued in
 consideration of
 marketing services
 (note 5(a))                       340,500      340      245,810           --             --             --         --      246,150
Comprehensive loss:
 Net loss                               --       --           --           --       (906,841)            --         --     (906,841)
 Currency translation
   adjustment on
   liquidation of
   investment in
   foreign subsidiary                   --       --           --           --             --        (26,212)        --      (26,212)
-----------------------------------------------------------------------------------------------------------------------------------
 Comprehensive loss                                                                                                        (933,053)

-----------------------------------------------------------------------------------------------------------------------------------
Balances at December 31, 2002   15,727,786  $15,726   $5,045,282      $21,304    $(6,031,166)      $     --   $(49,738)   $(998,592)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows

Years ended December 31, 2002 and 2001 and The Period from
August 3, 1999 to December 31, 2002
(In U.S. dollars)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
                                                                                                            Period from
                                                                                                              August 3,
                                                                                                                1999 to
                                                                                                           December 31,
                                                                           2002                2001                2002
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>               <C>                 <C>
Cash flows from operating activities:
     Net loss                                                         $(906,841)        $(1,448,485)        $(6,057,580)
     Items not involving cash:
         Depreciation of property and equipment                             281              45,761             190,269
         Consulting fees (note 5(a))                                     71,775                  --             201,775
         Interest expense                                                48,185              91,655             173,300
         Currency translation adjustment on liquidation
           of investment in foreign subsidiary                          (26,212)                 --                  --
         Gain on sale of property and equipment                              --              (7,442)             (7,442)
         Gain on extinguishment of debt                                      --            (291,507)           (291,507)
         Write-off of accounts receivable                                    --              16,715              16,715
         Write-off of due from related party                                 --              12,575              12,575
         Loss on cash pledged as collateral
           for operating lease                                               --              21,926              21,926
         Write-down of property and equipment                                --              14,750              14,750
     Change in non-cash operating working
       capital (note 11)                                                 49,713             804,371           1,807,704
     ------------------------------------------------------------------------------------------------------------------
     Net cash used in operating activities                             (763,099)           (739,681)         (3,917,515)

Cash flows from investing activities:
     Purchase of property and equipment                                 (10,106)            (15,930)           (319,846)
     Proceeds on sale of property and equipment                              --             176,890             176,890
     Cash pledged as collateral for operating lease                          --              18,109             (21,926)
     ------------------------------------------------------------------------------------------------------------------
     Net cash used in investing activities                              (10,106)            179,069            (164,882)

Cash flows from financing activities:
     Increase in promissory notes                                       929,151             496,377           2,305,528
     Repayment of promissory notes                                           --             (16,000)            (16,000)
     Increase in due from a related party                                    --                  --              12,575
     Issuance of common stock                                                --                  --           2,030,000
     Share issuance costs                                                    --                  --             (96,750)
     Acquisition of common stock                                             --                  --             (49,738)
     ------------------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities                          929,151             480,377           4,185,615

Effects of exchange rates on cash and cash equivalents                       --              71,257              18,633

-----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                    155,946              (8,978)            121,851

Cash and cash equivalents, beginning of period                              704               9,682              34,799

-----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                              $ 156,650         $       704         $   156,650
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-7
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

1.    General:

      Validian Corporation (the "Company") was incorporated in the State of
      Nevada on April 12, 1989 as CCC Funding Corp. The Company, formerly
      Sochrys.com Inc., was renamed to Validian Corporation on January 28, 2003.

      Since August 3, 1999, the efforts of the Company have been devoted to the
      development of a high speed, highly secure method of transacting business
      using the internet. As of the date of these financial statements, no
      software applications were ready for commercial use. Prior to August 3,
      1999, the Company provided consulting services for web site
      implementation, multimedia CD design, computer graphic publication, as
      well as implementation of dedicated software solutions used in connection
      with the French Minitel and the internet. As the Company commenced
      development activities on this date, it is considered for financial
      accounting purposes to be a development stage enterprise and August 3,
      1999 is the commencement of the development stage.

2.    Summary of significant accounting policies:

      (a) Basis of presentation:

      These consolidated financial statements are prepared in accordance with
      generally accepted accounting principles in the United States of America
      and include the accounts of Validian Corporation and its wholly-owned
      subsidiaries, Sochrys Technologies Inc. and Evolusys S.A. The Company's
      wholly-owned subsidiaries, Graph-O-Logic S.A. and Sochrys Technologies
      S.A. were dissolved on September 25, 2001 and July 9, 2001, respectively.
      The consolidated financial statements include the accounts of these
      entities until their dissolutions.

      The consolidated financial statements have been prepared assuming that the
      Company will continue as a going concern. The Company has no revenues, has
      negative working capital of $1,008,417 as at December 31, 2002, and has
      incurred a loss of $906,841 and negative cash flow from operations of
      $763,099 for the year then ended. Cumulatively, the Company has an
      accumulated deficit of $6,031,166 and has a stockholders' deficiency of
      $998,592. In addition, the Company expects to continue to incur operating
      losses for the foreseeable future and has no lines of credit or other
      financing facilities in place. To date, the Company has been able to
      finance its operations on a month-to-month basis from investors who
      recognize the advancement of the Company's research and development
      activities.


                                      F-8
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

2.    Summary of significant accounting policies (continued):

      (a) Basis of presentation (continued):

      If the Company obtains further financing, it expects to incur research and
      development expenditures of approximately $800,000 for the year ending
      December 31, 2003 and anticipates further growth in operations,
      infrastructure and personnel. The Company also anticipates an increase in
      operating expenses to support its growth plans. In the event the Company
      cannot raise the funds necessary to finance its research and development
      activities, it may have to cease operations.

      All of the factors above raise substantial doubt about the Company's
      ability to continue as a going concern. Management's plans to address
      these issues include raising capital through the private placement of
      equity and renegotiating the repayment terms of accounts payable, accrued
      liabilities and promissory notes payable. The Company's ability to
      continue as a going concern is subject to management's ability to
      successfully implement the above plans. Failure to implement these plans
      could have a material adverse effect on the Company's position and or
      results of operations and may result in ceasing operations. The
      consolidated financial statements do not include adjustments that would be
      required if the assets are not realized and the liabilities settled in the
      normal course of operations.

      Even if successful in obtaining financing in the near term, the Company
      cannot be certain that cash generated from its future operations will be
      sufficient to satisfy its liquidity requirements in the longer term and it
      may need to continue to raise capital by selling additional equity or by
      obtaining credit facilities. The Company's future capital requirements
      will depend on many factors, including, but not limited to, the market
      acceptance of its products and the level of its promotional activities and
      advertising required to generate product sales. No assurance can be given
      that any such additional funding will be available or that, if available,
      it can be obtained on terms favourable to the Company.

      (b) Principles of consolidation:

      The consolidated financial statements include the financial statements of
      the Company and its wholly owned subsidiaries. All intercompany balances
      and transactions have been eliminated.

      (c) Cash and cash equivalents:

      Cash and cash equivalents include liquid investments with original
      maturity dates of three months or less.

      (d) Property and equipment:

      Property and equipment held at December 31, 2002 is stated at cost less
      accumulated depreciation. Computer hardware and software is depreciated on
      a straight-line basis over its estimated useful life of three years.


                                      F-9
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

2.    Summary of significant accounting policies (continued):

      (e) Income taxes:

      Deferred income taxes are determined using the asset and liability method,
      whereby deferred income tax is recognized on temporary differences using
      enacted tax rates that are expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. Temporary differences between the carrying values of assets or
      liabilities used for tax purposes and those used for financial reporting
      purposes arise in one period and reverse in one or more subsequent
      periods. In assessing the realizability of deferred tax assets, management
      considers known and anticipated factors impacting whether some portion or
      all of the deferred tax assets will not be realized. To the extent that
      the realization of deferred tax assets is not considered to be more likely
      than not, a valuation allowance is provided.

      (f) Research and development:

      Costs related to research, design and development of software products are
      charged to research and development expenses as incurred. Software
      development costs are capitalized beginning when a product's technological
      feasibility has been established, which generally occurs upon completion
      of a working model, and ending when a product is available for general
      release to customers. To date, completion of a working model of the
      Company's product has not occurred. As a result, the Company has not
      capitalized any software development costs.

      (g) Foreign currency translation:

      The reporting currency for the financial statements of the Company is the
      United States dollar. The functional currency for the Company's
      wholly-owned subsidiary, Evolusys S.A., is the Swiss franc. Prior to 2002,
      the subsidiary's assets and liabilities were translated into U.S. dollars
      at the exchange rates applicable at the end of the reporting period. The
      statements of operations and cash flows were translated at the average
      monthly exchange rates during the year. The resulting translation gains or
      losses were accumulated as a separate component of stockholders'
      deficiency. The operations of Graph-O-Logic S.A. and Sochrys Technologies
      S.A. were accorded similar treatment until their dissolution in 2001.

      During 2002, Evolusys S.A. became an inactive subsidiary of the Company.
      As a result, it was reclassified as an integrated foreign operation and
      the temporal method was adopted commencing in the period of the change. As
      a result, the currency translation adjustment account was crystallized and
      has been reported in other income. The translated amounts for non-monetary
      items at the end of the prior period have become the historical basis for
      those items in the period of the change and subsequent periods. The
      resulting foreign exchange gains or losses for monetary items were
      included in the statement of operations.


                                      F-10
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

2.    Summary of significant accounting policies (continued):

      (h) Stock-based compensation:

      The Company applies the intrinsic value-based method of accounting
      prescribed by Accounting Principles Board ("APB") Opinion No. 25,
      "Accounting for Stock Issued to Employees", and related interpretations
      including FASB Interpretation No. 44, "Accounting for Certain Transactions
      involving Stock Compensation an interpretation of APB Opinion No. 25"
      issued in March 2000, to account for its stock options for employees.
      Under this method, compensation expense is recorded on the date of grant
      only if the current market price of the underlying stock exceeded the
      exercise price. Statement of Financial Accounting Standards ("SFAS") No.
      123, "Accounting for Stock-Based Compensation," established accounting and
      disclosure requirements using a fair value-based method of accounting for
      stock-based employee compensation plans. These provisions are required to
      be applied to stock compensation granted to non-employees. As allowed by
      SFAS No. 123, the Company has elected to continue to apply the intrinsic
      value-based method of accounting described above, and has adopted the
      disclosure requirements of SFAS No. 123.

      (i) Impairment or disposal of long-lived assets:

      The Company accounts for long-lived assets in accordance with SFAS No.
      144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
      This Statement requires that long-lived assets be reviewed for impairment
      whenever events or changes in circumstances indicate that the carrying
      amount of an asset may not be recoverable. Recoverability of assets to be
      held and used is measured by a comparison of the carrying amount of an
      asset to future net cash flows expected to be generated by the asset. If
      the carrying amount of an asset exceeds its estimated future cash flows,
      an impairment charge is recognized by the amount by which the carrying
      amount of the asset exceeds the fair value of the asset. Assets to be
      disposed of are reported at the lower of the carrying amount or fair value
      less costs to sell.

      (j) Use of estimates:

      The preparation of financial statements requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities, as well as disclosures of contingent assets and liabilities
      at the date of the financial statements and the reported amounts of
      revenues and expenses during the reporting periods. Actual results may
      differ from those estimates.


                                      F-11
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

3.    Property and equipment:

      --------------------------------------------------------------------------
                                                                            2002
                                                         Accumulated    Net book
                                               Cost     depreciation       value
      --------------------------------------------------------------------------

      Computer hardware and software        $10,106      $      281    $  9,825
      --------------------------------------------------------------------------

      During 2001, the Company disposed of most of its property and equipment
      for cash consideration of $176,890. A gain of $7,442 was recognized on the
      disposition. The remaining property and equipment of $14,750 was
      considered impaired and written off.

4.    Promissory notes payable:

      --------------------------------------------------------------------------
                                                             2002        2001
      --------------------------------------------------------------------------

      Promissory notes payable, bearing interest
        at 12%, due on demand, unsecured                 $  542,151    $113,000

      Promissory notes payable, bearing interest at 5%,
        maturing on October 7, 2003, convertible into
        common shares at any time, unsecured                500,000          --

      --------------------------------------------------------------------------
                                                         $1,042,151    $113,000
      --------------------------------------------------------------------------

      During 2001, promissory notes payable in the amount of $1,370,614,
      including accrued interest, accounts payable in the amount of $591,520 and
      accrued liabilities in the amount of $257,356 were converted to 2,774,362
      common shares of the Company at a conversion price of $0.80 per share. In
      addition, the debtholders received 2,150,000 Series D warrants (note
      5(b)).

      The holder of the 5% promissory notes may, at any time, convert all or
      part of the outstanding principal and accrued interest into common shares
      at the lesser of (i) the ratio of 1 common share for each $0.33 of
      obligation converted; or (ii) the ratio of shares with a value equal to
      the price per share at which common shares have last been issued to a
      third party dealing at arms length with the Company.


                                      F-12
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

5.    Stockholders' deficiency:

      (a) Common stock:

      During the year ended December 31, 2002, the Company issued 61,500 shares
      of its common stock, valued at $36,900 to an unrelated company in
      consideration for marketing services rendered prior to December 31, 2002.
      In addition, the Company issued 279,000 shares of its common stock, valued
      at $209,250 to an unrelated company in consideration for marketing
      services rendered and to be rendered. As of December 31, 2002, the Company
      had received marketing services valued at $34,875 from this company.

      In relation to these transactions, an expense of $71,775 has been included
      in selling, general and administrative expenses for the year ended
      December 31, 2002. The remaining $174,375 is recorded as a prepaid
      expense, to be expensed as additional marketing services are received, the
      scheduling of which will occur at the discretion of management. The
      Company expects that the remaining marketing services contemplated under
      this contract will be received in full by June 30, 2003.

      On February 20, 2003, the Company issued 10,000 common shares to an
      unrelated company for consulting services valued at $2,000.

      (b) Warrants:

      During 1999, the Company issued 340,000 Series B warrants to directors,
      officers and employees and 390,000 Series B warrants to unrelated parties
      to purchase a total of 730,000 common shares at an exercise price of $3
      per share. The Series B warrants are exercisable at any time and expire
      August 31, 2003.

      During 2001, all of the Series C warrants were cancelled.

      In addition, during 2001, in connection with the conversion of debt to
      equity (note 4) the Company issued 2,150,000 Series D warrants and in
      connection with service rendered by a director, the Company issued 500,000
      Series D warrants. The Series D warrants entitle the holders to purchase a
      total of 2,650,000 common shares at an exercise price of $1.00 per share.
      The Series D warrants are exercisable at any time. The warrants issued
      upon the conversion of debt expire September 28, 2005 and the warrants
      issued to a director expire October 1, 2005. The extraordinary gain is net
      of $451,500 which represents the fair value of the warrants issued on
      conversion of debt. The payment by way of warrants was calculated using
      the Black Scholes option-pricing model with the following weighted average
      assumptions: expected dividend yield 0%; risk-free interest rate of 5.34%;
      expected volatility 50%; and an expected life of 4 years.


                                      F-13
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

5.    Stockholders' deficiency (continued):

      (b) Warrants (continued):

      The per share weighted-average fair value of warrants granted to employees
      during 2001 was $0.21 on the date of grant using the Black Scholes
      option-pricing model with the same weighted-average assumptions noted
      above. The Company applies APB Opinion No. 25 in accounting for warrants
      issued to directors, officers and employees and, accordingly, no
      compensation cost has been recognized for these warrants in the
      consolidated financial statements. Had the Company determined compensation
      costs based on the fair value at the grant date for its stock options
      under SFAS No. 123, the Company's net loss and basic net loss per share
      would have been reduced to the pro forma amounts indicated below.

      --------------------------------------------------------------------------
                                                          2002           2001
      --------------------------------------------------------------------------

      Net loss   As reported                          $ (906,841)  $ (1,448,485)
                 Pro forma                              (906,841)    (1,553,485)

      Net loss per common share - basic and diluted
                 As reported                          $   (0.06)   $      (0.11)
                 Pro forma                                (0.06)          (0.12)
      --------------------------------------------------------------------------

6.    Extraordinary item:

      On July 9, 2001 and September 25, 2001, the Company's wholly-owned
      subsidiaries Sochrys Technologies SA and Graph-O-Logic SA were dissolved,
      resulting in a forgiveness of debt. As a result, an extraordinary gain on
      the extinguishment of debt in the amount of $291,507 has been recognized
      in the consolidated statement of operations.

7.    Net loss per share:

      As the Company incurred a net loss during the years ended December 31,
      2002 and 2001, the loss per common share is based on the weighted average
      common shares outstanding. The following outstanding instruments could
      potentially dilute loss per share for the periods presented:

      --------------------------------------------------------------------------
                                                    2002                 2001
      --------------------------------------------------------------------------

      Series B warrants                            730,000              730,000
      Series D warrants                          2,650,000            2,650,000
      --------------------------------------------------------------------------


                                      F-14
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

8.    Financial instruments:

      The carrying value of cash and cash equivalents, accounts payable, accrued
      liabilities and promissory notes payable approximate fair value due to the
      short term to maturity of these instruments.

9.    Income taxes:

      Deferred income taxes reflect the impact of temporary differences between
      amounts of assets and liabilities as reported for financial reporting
      purposes and such amounts as measured by tax laws. The tax effects of
      temporary differences that gave rise to significant portions of the
      deferred tax asset and deferred tax liability are as follows:

      --------------------------------------------------------------------------
                                                        2002            2001
      --------------------------------------------------------------------------

      Deferred tax asset:
          Net operating loss carryforwards           $  845,000      $  549,000
          Capital loss carryforwards                  1,050,000       1,050,000
          ----------------------------------------------------------------------
          Financing fees                                 28,000          16,000
          Total gross deferred tax asset              1,923,000       1,615,000

          Valuation allowance                         1,923,000       1,615,000

      --------------------------------------------------------------------------
      Net deferred taxes                             $       --      $       --
      --------------------------------------------------------------------------

      Income tax expense attributable to loss before income taxes was $Nil (2001
      - $Nil) and differed from the amounts computed by applying the U.S.
      federal income tax rate of 34% (2001 - 34%) to the net loss as a result of
      the following:

      --------------------------------------------------------------------------
                                                        2002            2001
      --------------------------------------------------------------------------

      Expected tax rate                                      34%             34%

      Expected tax recovery applied to net
        loss before income taxes                      $(308,326)     $ (492,483)

      Increase (decrease) in taxes resulting from:
          Change in valuation allowance                 308,000       1,031,000
          Foreign tax differential                           --        (654,000)
          Share issue costs                                  --         153,000
          Other                                             326         (37,517)

      --------------------------------------------------------------------------
                                                      $      --      $       --
      --------------------------------------------------------------------------


                                      F-15
<PAGE>

VALIDIAN CORPORATION
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements

Years ended December 31, 2002 and 2001
(In U.S. dollars)

--------------------------------------------------------------------------------

9.    Income taxes (continued):

      The Company has net operating losses of $2,484,000 (2001 - $1,587,000)
      which are available to reduce U.S. taxable income and which expire as
      follows:

      2019                              $  391,000
      2020                                 675,000
      2021                                 521,000
      2022                                 897,000

      --------------------------------------------------------------------------
                                        $2,484,000
      --------------------------------------------------------------------------

10.   Rent expense:

      Rent expense for operating leases during 2002 and 2001 was $Nil and
      $86,477, respectively.

11.   Change in non-cash operating working capital:

      --------------------------------------------------------------------------
                                           2002                      2001
      --------------------------------------------------------------------------

      Accounts receivable               $      --                $ (16,715)
      Prepaid expenses                    (40,197)                   6,699
      Accounts payable                     70,112                  714,842
      Accrued liabilities                  19,798                   99,545

      --------------------------------------------------------------------------
                                        $  49,713                $ 804,371
      --------------------------------------------------------------------------


                                      F-16
<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

The following table sets forth certain information concerning our directors and
executive officers:

Name                       Age              Position
----                       ---              --------

Dr. Andre Maisonneuve      56               Chairman, President
                                            Chief Executive Officer and
                                            Chief Financial Officer

Andre Maisonneuve has been our Chairman, President, Chief Executive Officer,
Chief Financial Officer, Secretary and Director since January 2002 and prior to
this, he was Executive Vice President, Secretary and a director since July 2001.
He oversees key management and strategic decisions as well as marketing and
sales activities and interacts with major customers and suppliers to define the
marketing and development strategies, focusing on customers' requirements. He
has over 30 years of experience in launching and managing information technology
companies, both private and public. He founded and managed a successful
international information technology and management consulting company. He
pioneered the use of distributed image databases in the real estate industry and
implemented an international distribution network for a public spatial database
company. He has a Ph.D. in Engineering and holds a PMD in management from
Harvard Business School.

Andre Hensler and Paul Claverie resigned on September 25, 2001 as officers and
directors of the Company. Jean Pierre Hofman resigned on April 1, 2001 as an
officer and director of the Company.

Compliance with Section 16(a) of The Securities Exchange Act of 1934

To our knowledge, based solely on a review of such materials as are required by
the Securities and Exchange Commission, none of our officers, directors or
beneficial holders of more than ten percent of our issued and outstanding shares
of common stock failed to timely file with the Securities and Exchange
Commission any form or report required to be so filed pursuant to Section 16(a)
of the Securities Exchange Act of 1934.


                                       29
<PAGE>

Item 10. Executive Compensation.

The following table shows all the cash compensation paid or to be paid by us or
our subsidiaries, as well as certain other compensation paid or accrued, during
the fiscal years indicated, to our chief executive officer for such period in
all capacities in which he served. No other executive officer received total
annual salary and bonus in excess of $100,000.

<TABLE>
<CAPTION>
                                          Summary Compensation Table
----------------------------------------------------------------------------------------------------------------------
                                                                             Long Term Compensation
----------------------------------------------------------------------------------------------------------------------
                                     Annual Compensation
----------------------------------------------------------------------------------------------------------------------
       (a)            (b)        (c)          (d)       (e)            (f)          (g)          (h)        (i)
----------------------------------------------------------------------------------------------------------------------
                                                         Other                     Securities                All
Name and                                                 Annual       Restricted   Underlying     LTIP       Other
Principal                                                Compensa-    Stock        Options/       Payouts    Compensa-
Position                 Year     Salary ($)   Bonus($)  tion ($)     Award ($)    SARs           ($)        tion
----------------------------------------------------------------------------------------------------------------------
<S>                      <C>      <C>            <C>       <C>          <C>          <C>           <C>        <C>
Hofman, Jean Pierre      2001     $ 30,000       0         0            0            0             0          0
Chairman, CEO &          2000     $235,000       0         0            0            0             0          0
Pres                     1999     $ 80,000       0         0            0            0             0
----------------------------------------------------------------------------------------------------------------------
Maisonneuve, Andre       2002     $ 70,375       0         0            0            0             0          0
Executive Vice           2001*    $ 45,000       0         0            0            0             0          0
President
----------------------------------------------------------------------------------------------------------------------
</TABLE>

*     Since July 16, 2001

The following table sets forth information with respect to our chief executive
officer concerning the grants of options and Stock Appreciation Rights ("SAR")
during the past fiscal year:

<TABLE>
<CAPTION>
                                       Option/SAR Grants In Last Fiscal Year

------------------------------------------------------------------------------------------------------------------
                          Options/SARs      Percent of Total Options/SARs     Exercise or Base     Expiration Date
Name                      Granted           Granted to Employees in Fiscal    Price ($/Sh)
                                            Year
------------------------------------------------------------------------------------------------------------------
<S>                       <C>               <C>                                <C>                 <C>
Maisonneuve, Andre        0                 --
------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       30
<PAGE>

The following table sets forth information with respect to our chief executive
officer concerning exercise of options during the last fiscal year and
unexercised options and SARs held as of the end of the fiscal year:

<TABLE>
<CAPTION>
                    Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Values

-----------------------------------------------------------------------------------------------------------------
                                                            Number of Securities        Value of Unexercised
                          Shares Acquired   Value           Underlying  Unexercised     In-The-Money Options/SARs
                          on Exercise (#)   Realized ($)    Options/SARs at             at
Name                                                        FY-End (#)                  FY-End ($)
-----------------------------------------------------------------------------------------------------------------
<S>                        <C>               <C>             <C>                         <C>
Maisonneuve, Andre        -0-               -0-             -0-                         -0-
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The following table sets forth information with respect to our chief executive
officer concerning awards under long term incentive plans during the last fiscal
year:

<TABLE>
<CAPTION>
                            Long-Term Incentive Plans - Awards In Last Fiscal Year

-------------------------------------------------------------------------------------------------------------
Name                  Number of Shares,     Performance or           Estimated Future Payouts under Non-Stock
    (a)               Units or              Other Period Until       Price Based Plans.
                      OtherRights (#)       Maturation or Payout
                              (b)                     (c)
-------------------------------------------------------------------------------------------------------------
                                                                     Threshold      Target       Maximum
                                                                     ($ or #)       ($ or #)     ($ or #)
                                                                     --------       --------     --------
                                                                        (d)           (e)           (f)
-------------------------------------------------------------------------------------------------------------
<S>                    <C>                    <C>                      <C>           <C>            <C>
Maisonneuve, Andre    -0-
-------------------------------------------------------------------------------------------------------------
</TABLE>

Directors are not compensated for acting in their capacity as directors.
Directors are reimbursed for their accountable expenses incurred in attending
meetings and conducting their duties.

There is no employment agreement between us and our executive officer. See "Part
1. Item 1. Description of Business; Risk Factors-Dependence on Key Personnel."

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth information as of March 26, 2003, with respect to
any person known by us to own beneficially more than 5% of our common stock;
common stock beneficially owned by each of our officers and directors; and the
amount of common stock beneficially owned by our officers and directors as a
group.


                                       31
<PAGE>

<TABLE>
<CAPTION>
                                                             Approximate Percent
Name & Address of                        Number of Shares      of Common Stock
Beneficial Owner                         Beneficially Owned      Outstanding(1)
----------------                         ------------------      --------------

<S>                                      <C>                        <C>
Jean Pierre Hofman (3)(6)                3,400,000                  21.6%

Andre Hensler (4)(6)                     3,525,325(2)               22.4%

Paul Claverie (4)(6)                     3,528,139(2)               22.4%

Antoine Veit (5)(6)                      3,500,000(2)               22.1%

Waycross Corp.                           3,400,000                  21.6%
29 Rue des Deux Communes
1226 Thonex-Geneva
Switzerland

Valdosta Corp. (7)                       2,400,000                  15.3%
P.O. Box 30592
Cayside, 2nd Floor, Harbour Drive
Georgetown, Grand Cayman
Cayman Islands, BWI

Andre Maisonneuve*                         500,000                   3.1%

All Executive Officers and Directors
 As a Group  (One Person)                  500,000(8)                3.1%
</TABLE>

*     Executive Officer and Director.

(1)   Based upon 15,737,786 shares of common stock issued and outstanding as of
      March 28, 2003 and includes for each person the shares issuable upon
      exercise of the warrants owned by them.

(2)   Includes 100,000 shares of common stock issuable to each of Messrs.
      Hensler, Claverie and Veit upon exercise of the warrants owned by them.
      Andre Hensler and Paul Claverie resigned as officers and directors of the
      Company as of September 25, 2001. Until then, they were executive officers
      and directors with an address at our Geneva, Switzerland office.

(3)   Jean Pierre Hofman resigned as an officer and director as of April 1,
      2001. Until then he was an executive officer and director of the Company,
      with an address at our Geneva, Switzerland office.


                                       32
<PAGE>

(4)   Andre Hensler and Paul Claverie resigned as officers and directors of the
      Company as of September 25, 2001. Until then, they were executive officers
      and directors with an address at our Geneva, Switzerland office.

(5)   Antoine Veit was an employee of the Company until February 2001, with an
      address at our Geneva, Switzerland office.

(6)   Waycross Corporation is a corporation incorporated under the laws of the
      Cayman Islands. Jean Pierre Hofman, Andre Hensler, Paul Claverie and
      Antoine Veit have beneficial interests in Waycross Corporation.
      Accordingly, the 3,400,000 shares owned of record by Waycross Corporation
      have been included as beneficially owned by each of the foregoing
      individuals.

(7)   A portfolio management corporation incorporated under the laws of the
      Cayman Islands.

(8)   500,000 shares of common stock are issuable to Andre Maisonneuve upon
      exercise of the warrants owned by him.

Item 12. Certain Relationships and Related Transactions.

During the year ended December 31, 2002, there were no related party
transactions. During the year ended December 31, 2001, there were no related
party transactions.

Item 13. Exhibits and Reports on Form 8-K.

      Exhibits

2.a.  Our Articles of Incorporation (1) 2.b. Amendments to our Articles of
      Incorporation (1) 2.c. Our By-Laws (1) 2.d. Translation summary of
      material terms of Articles of Incorporation for Graph-O-Logic S.A. (1)

2.e.  Articles of Incorporation of Sochrys Technologies Inc. (2)

2.f.  Translation summary of material terms of Articles of Incorporation for
      Sochrys Technologies S.A.(2)

3.a.  Text of Common Stock Certificate (2)

4.a.  Text of Class A Warrants (1) 4.b. Text of Class B Warrants (1) 4.c. Text
      of Class D Warrants (1)

6.a.  Translation summary of Lease Agreement for Geneva Offices (1)


                                       33
<PAGE>

6.b.  Consulting Agreement dated August 30, 1999 between the Company and Capital
      House A Finance and Investment Corporation. (1)

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(1) Previously filed as an Exhibit to our Registration Statement on Form 10-SB,
SEC File No. 0-28423, filed with the Commission on December 9, 1999, and
incorporated herein by reference.

(2) Previously filed as an Exhibit to Amendment No. 1 to our Registration
Statement on Form 10-SB, SEC File No. 0-28423, filed with the Commission on
October 10, 2000 and incorporated herein by reference.

Reports on Form 8-K

We did not file any reports on Form 8-K with the Commission during the last
quarter of the fiscal year ended December 31, 2002. We did file a report on Form
8-K with the Commission on February 6, 2003 and incorporated herein by
reference.

Statements contained in this Form 10-KSB as to the contents of any agreement or
other document referred to are not complete, and where such agreement or other
document is an exhibit to this Report or is included in any forms indicated
above, each such statement is deemed to be qualified and amplified in all
respects by such provisions.

Item 14. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of a date within 90 days prior to the filing date of this annual report (the
"Evaluation Date"), under the supervision and with the participation of our
management, including our Chief Executive Officer and our Chief Financial
Officer, we evaluated the effectiveness of the design and operation of our
disclosure controls and procedures, (as such term is defined in Rules 13a -
14(c) and 15d - 14(c) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")). Based upon such evaluation, our Chief Executive Officer and
our Chief Financial Officer have concluded that, as of the Evaluation Date, our
disclosure controls and procedures were adequate to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms.

Changes in Internal Controls

Additionally, our Chief Executive Officer and Chief Financial Officer have
determined that there have been no significant changes in our internal controls
or in other factors that could significantly affect our internal controls,
subsequent to the Evaluation Date.


                                       34
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Validian Corporation

By: /s/ Andre Maisonneuve
    ---------------------
        Andre Maisonneuve
        President, Chief Executive Officer and Chief Financial Officer

Dated: April 10, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

SIGNATURES                 TITLE                                  DATE
----------                 -----                                  ----

/s/ Andre Maisonneuve      President, Chief Executive Officer
---------------------      & Chief Financial Officer              April 10, 2003
Andre Maisonneuve


                                       35
<PAGE>

                            SUPPLEMENTAL INFORMATION

Supplemental Information to be Furnished With Reports Filed Pursuant to Section
15(d) of the Act by Non-Reporting Issuers.

NOT APPLICABLE.

                                 CERTIFICATIONS

Certifications pursuant to Securities and Exchange Act of 1934 Rule 13a-14 as
adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002:

I, Andre Maisonneuve, Chief Executive Officer of Validian Corporation (the
"Company") certify that:

      (1) I have reviewed this annual report on Form 10-KSB of the Company;

      (2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

      (3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this annual report;

      (4) The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

      (5) The Registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the audit
committee of Registrant's


                                       36
<PAGE>

board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrant's ability to record, process,
summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and

      (6) The Registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

/s/ Andre Maisonneuve
---------------------
Andre Maisonneuve
Chief Executive Officer
April 10, 2003

I, Andre Maisonneuve, Chief Financial Officer of Validian Corporation (the
"Company") certify that:

      (1) I have reviewed this annual report on Form 10-KSB of the Company;

      (2) Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

      (3) Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this annual report;

      (4) The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;


                                       37
<PAGE>

b) evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

      (5) The Registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the Registrant's auditors and the audit
committee of Registrant's board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the Registrant's ability to record, process,
summarize and report financial data and have identified for the Registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and

      (6) The Registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

/s/Andre Maisonneuve
--------------------
Andre Maisonneuve
Chief Financial Officer
April 10, 2003


                                       38
<PAGE>

                                    Exhibits

Number            Description

99.1        Certification of Chief Executive Officer pursuant to 18 U.S.C.
            Section 1350, as Adopted Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

99.2        Certification of Chief Financial Officer pursuant to 18 U.S.C.
            Section 1350, as Adopted Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.