** **

**U.S. SECURITIES AND EXCHANGECOMMISSION**

**Washington,D.C. 20549**

** **

**FORM 10-KSB**

 

**ý****          ****Annualreport under Section 13 or 15 (d) of the Securities Exchange Act of 1934 forthe fiscal year ended June 30, 2003**

** **

**o****          ****Transitionreport under Section 13 or 15 (d) of the Securities Exchange Act of 1934 forthe transition period   from                   to                   **

** **

**Commission File Number: 000-27869**

 

**AUTHORISZOR INC.**

(Name of Small Business Issuer in its Charter)

 
| **Delaware**                                                                     | ** ** | **75-2661571**                        |
|----------------------------------------------------------------------------------|------------|---------------------------------------|
| (State or Other  Jurisdiction of  Incorporation or Organization)                 |       | (I.R.S. Employer  Identification No.) |
|                                                                             |       |                                  |
| **WRDCLogsys, First Floor  Ebor Court, Westgate, Leeds  LS1 4ND United Kingdom** |       | **LS1 4ND**                           |
| (Address of Principal  Executive Offices)                                        |       | (Zip code)                            |

 
| **011-44-113-245-4788**                                         |
|-----------------------------------------------------------------|
| (Issuer’s Telephone  Number, Including Area Code.)         |
|                                                            |   |   |
| Securities  registered under Section 12(b) of the Exchange Act: |
|                                                            |   |   |
| **Title of Each Class**                                         | ** ** | **Name of Each Exchange  on Which Registered** |
| NONE                                                            |   | N/A |
|                                                            |   |   |
| Securities  registered under Section 12(g) of the Exchange Act: | ** ** | **Common Stock, $0.01 par value** |
|                                                            |   | (Title of class) |

 

Checkwhether the issuer:  (1) filed allreports required to be filed by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for past 90 days.       Yes   o   No   ý

 

Indicateby checkmark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-B is not contained in this form, and will not be contained, to thebest of registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or any amendment tothis Form 10-KSB.   ý

 

Stateissuer’s revenues for its most recent fiscal year:  $0

 

Theaggregate market value of the voting and non-voting stock held bynon-affiliates of the registrant as of January 10, 2005 was approximately$143,380.  For purposes of thiscomputation, all executive officers, directors and 10% stockholders were deemedaffiliates.  Such a determination shouldnot be construed as an admission that such executive officers, directors or 10%stockholders are affiliates.

 

As ofJanuary 10, 2005, there were 20,768,511 shares of the common stock, $0.01 parvalue, of the Company issued and outstanding.

 

TransitionalSmall Business Disclosure Format:   Yes   o   No   ý

 

 

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**AUTHORISZOR INC.**

 
| **PART I**            |                                                                                                                         |
|-----------------------|------------------------------------------------------------------------------------------------------------------------------|
|                  | ITEM 1: DESCRIPTION OF  BUSINESS                                                                                             |   |
|                  | ITEM 2: DESCRIPTION  OF PROPERTIES                                                                                           |   |
|                  | ITEM 3: LEGAL PROCEEDINGS                                                                                                    |   |
|                  | ITEM  4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                 |   |
| **PART II**           |                                                                                                                         |
|                  | ITEM  5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL  BUSINESS INSSUER PRUCHASES OF EQUITY SECURITIES |   |
|                  | ITEM  6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS                                                     |   |
|                  | ITEM 7. FINANCIAL STATEMENTS                                                                                                 |   |
|                  | ITEM 8. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL  DISCLOSURE                                                 |   |
|                  | ITEM 8A. CONTROLS AND PROCEDURES.                                                                                            |   |
|                  | ITEM 8B. OTHER  INFORMATION                                                                                                  |   |
| **PART  III**         |                                                                                                                         |
|                  | ITEM  9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                                  |   |
|                  | ITEM 10. EXECUTIVE  COMPENSATION                                                                                             |   |
|                  | ITEM  11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND  REALTED MATTERS                                |   |
|                  | ITEM  12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                     |   |
| **PART IV**           |                                                                                                                         |
|                  | ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K                                                                                   |   |
| **SIGNATURES**        |                                                                                                                         |
| **INDEX TO EXHIBITS** |                                                                                                                         |

 

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# **PART I**

#  

This reportcontains forward-looking statements within the meaning of Section 27A of theSecurities Act of 1933, as amended (the “Securities Act”), and Section 21E ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”). Theseforward-looking statements are subject to certain risks and uncertainties thatcould cause actual results to differ materially from historical results oranticipated results, including those set forth under “Management’s Discussionand Analysis of Financial Condition and Results of Operations” and elsewherein, or incorporated by reference into, this report.

 

Unless the contextotherwise requires, “Authoriszor,” the “Company,” “we,” “our,” “us” and similarexpressions refers to Authoriszor Inc., and its predecessors.

 

This report is beingfiled late. All matters stated in this report are stated as of the date of thisreport, which is June 30, 2003, even though this Report has been filed at alater time.  Events that have taken placeafter June 30, 2003, are covered in our filings after this date based on whenthey happened.

 

## **ITEM 1: DESCRIPTION OF BUSINESS**

## ** **

**History**

 

Our predecessor wasincorporated as a Colorado corporation on January 20, 1989 under the nameStarlight Acquisitions Inc.  On May 10,1996, Starlight Acquisitions, it acquired Toucan Mining Plc (then named ToucanMining Ltd.), incorporated in the Isle of Man, the holding company of a mininggroup operating in South America.

 

On July 29, 1996,Starlight Acquisitions, Inc. was reincorporated as a Delaware corporation onJuly 22, 1996 under the name Toucan Gold Corporation.  Effective June 30, 1999, Toucan Mining Plcsold its sole operating subsidiary to Minmet Plc, a company listed on the IrishStock Exchange and the London Stock Exchange, in consideration for the issue ofMinmet ordinary shares, the grant of warrants and other consideration.  Funding of the consideration for thetransaction was completed on July 15, 1999.

 

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On July 22, 1999, weacquired all of the outstanding capital stock of Authoriszor Limited, which wasthen named ITIS Technologies Limited, whose, business consisted primarily ofdeveloping internet security software. On August 25, 1999, our name was changed from Toucan Gold Corporation toAuthoriszor Inc., and the name of our subsidiary (ITIS Technologies Limited)was changed to Authoriszor Limited

 

On January 12, 2000,Authoriszor Holdings Limited, our newly created wholly-owned subsidiary,acquired the whole of the issued share capital of Authoriszor Limited as partof an intra-group reorganization.

 

On January 27, 2000, wesold our wholly-owned subsidiary, Toucan Mining Plc, to Golden Ridge GroupLimited for an aggregate consideration of $809,750 (£500,000) in cash.  On the same date, Toucan Mining Plc agreed totransfer to us the beneficial interest in 2,000,000 shares in Minmet for aconsideration of £1.  Subsequently, wehave exercised such warrants and sold all of the Minmet shares beneficiallyowned by us.

 

On February 22,2000, we acquired a 27.2% (25.1% on a fully diluted basis) interest in WRDCLimited (WRDC), a private UK company, for a purchase price of $604,800. Thepurchase price of WRDC exceeded the Company’s proportionate share of the netassets acquired by $584,400, which was being amortized on a straight line basisover ten years.  WRDC provides a broadarray of strategic services and a number of strategic technologies, such as,electronic messaging, directory services, security architectural and interesttechnologies, and the combination of these technologies and concepts to itscustomers.

 

On May 8, 2001, we purchased an additional equityinterest in WRDC, increasing its ownership interest from 27.2% to 66.4%.  We issued 929,914 shares of common stock,paid cash of approximately $1,716,000 and issued 237,000 stock options (fairvalued at $248,900) to WRDC employees for the additional equity interest.  We also committed to issue an additional195,000 shares of our common stock to the shareholders of WRDC subject to therealization of certain of WRDC’s accounts receivable.  Also on this date, we committed to acquirethe remaining 33.6% interest in WRDC upon the occurrence of certain events, butin no event later than January 1, 2002. For further information concerning the terms and conditions upon whichwe 

 

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acquired WRDC, please see our Current Report on Form8-K/A that was filed on September 17, 2001.

 

As of May 8, 2001,we changed from the equity method to the consolidation method to account forour ownership of WRDC.

 

On July 3, 2001,our wholly owned subsidiary, Authoriszor Holdings Limited, initially acquiredapproximately a 68% interest in Logsys Solutions Limited (Logsys) in exchangefor a cash payment of approximately $237,000, and, if certain conditions weremet, the issuance of 186,453 shares of our common stock.  These shares were issued in January2002.  In addition, our ownershipinterest in Logsys has increased to approximately 99.75% of the outstandingcapital stock of Logsys as we have purchased the stock held by certain formerLogsys employees in exchange cash payable by us at the same price per share wepaid at the time of our initial acquisition of capital stock of Logsys.

 

In December 2001,we acquired the remaining equity in WRDC increasing our ownership interest to100% of the outstanding capital stock of WRDC for total consideration equal tothe following: (i) $1,236,650 payable in cash, (ii) the issuance of 2,125,360shares of our common stock, par value $.01 per share, and (iii) the issuance of389,794 shares of our Series A Cumulative Redeemable Preferred Stock, par value$.01 per share.

 

As reported in our Form10-QSB for the quarter ended March 31, 2002, in the absence of additionalfinancing we and our subsidiaries would not have sufficient working capital tocontinue to operate substantially beyond the end of fiscal year June 30, 2002.

 

After exploring multiplepotential options and strategies, our Board of Directors determined after muchdeliberation to raise additional working capital through Authoriszor HoldingsLimited to satisfy our existing liabilities and, thereby relinquish controlof  our Authoriszor Ltd, WRDC and Logsyssubsidiaries.

 

To do this, on July 18,2002, we consummated an investment agreement (the “Investment Agreement’), withAuthoriszor Holdings Limited, Roy Williams, Garcia Hanson, Zalcany Limited andNoblepoint Limited and 

 

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collectively withWilliams, Hanson and Zalcany, (the “Investors”), pursuant to which wetransferred our capital stock in WRDC, which constituted approximately 69.7% ofthe outstanding shares of capital stock of WRDC, and its capital stock inAuthoriszor Limited, which constituted approximately 74.8% of the outstandingshares of capital stock of Authoriszor Limited, to Authoriszor Holdings Limitedfor a nominal sum and the Investors purchased Preferred Ordinary Shares ofAuthoriszor Holdings Limited a subsidiary, for an aggregate purchase price of£574,994.94 ($902,684.56).  As a result,our equity interest in Authoriszor Holdings Limited, which was in the form ofordinary shares of Authoriszor Holdings Limited, decreased from 100% to 35%.  Authoriszor Holdings Limited owns all of thecapital stock of WRDC, Authoriszor Limited, Logsys Solutions Limited and,indirectly through WRDC, over 75% of the stock of PAD (London) Limited and WRDCAG. On August 1, 2002, Authoriszor Holdings Limited changed its name toWRDCLogsys Limited.

 

In connection with theInvestment Agreement transaction, our Board of Directors adopted resolutionspursuant to Rule 3a-2 (a)(2) of the Investment Company Act of 1940 (the “40 Act”)for the Company to be treated as a transient investment company under the 40Act. These resolutions evidenced our intent to be engaged as soon as isreasonably possible (but in no event later than one year) in a business otherthan owning or holding securities. We no longer believe that we are a transientinvestment company since we no longer own any of the securities of our formersubsidiaries and the composition of our assets, and other exemptions containedin the 40 Act.

 

Following the InvestmentAgreement of July 18, 2002 our financial ability to meet our creditorobligations worsened significantly because our sub-tenant defaulted on therental agreement for the premises we leased in Burlington, Massachusetts.  Prior to this increased liability, webelieved that we would be able to satisfy our financial obligations.

 

Once it became clear thatthis might not be the case we entered into a series of Settlement Agreementsand Pledge Agreements dated March, April and May of 2003, which provided ourcreditors who are set out in the table below (the “Creditors”), with acontinuing and unconditional security interest in all of the stock held by usin WRDCLogsys Limited, to secure the prompt, timely and complete payment of allobligations and liabilities we. have to the Creditors. The Pledge Agreementsunder their terms were to remain in force 

 

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until the earlier of thepayment in full of the debt within 100 days from the date of signature of thepledge agreement, or the Creditors realization of the collateral provided.

 

The proportion ofWRDCLogsys Limited shares pledged is proportional to the amount owed, and inthe case of WRDCLogsys Limited all creditors have consented that WRDCLogsysLimited has shares pledged at twice the proportion in view of the cash that hascontinued to be provided to us by WRDCLogsys Limited.  The Creditors, have consented to receiveshares in WRDCLogsys Limited in the following proportions upon a default of ourobligations to them:

 

 
| **Creditor**                                 | ** ** | **Amount Owed** | ** **    | **No. of Shares Pledged as  Security** | ** **     |
|----------------------------------------------|------------|-----------------|---------------|----------------------------------------|----------------|
| Alec Karys  (former employee)                |       | $               | 26,130        |                                   | 152,221        |   |
| Decherts  (Lawyers)                          |       | $               | 53,479        |                                   | 311,546        |   |
| Massachusetts  Mutual Life Insurance Company |       | $               | 475,000       |                                   | 2,767,112      |   |
| WRDCLogsys  Limited*                         |       | $               | 618,892       |                                   | 7,210,713      |   |
| **Totals**                                   | ** ** | **$**           | **1,173,502** | ** **                             | **10,441,592** | ** ** |

 

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*In addition, on May 2,2003, $618,892 of debt owed to WRDCLogsys Limited was assigned to a consortiumof investors, which included Pelican Capital Limited, which Ian McNeill, adirector of WRDCLogsys Limited is the controlling party of. Theproposal has been for us to settle the debt we owe to WRDC Logsys, bytransferring shares to this consortium because of the provisions of Section 151of the UK Companies Act 1985, in which it would be deemed illegal for a companyto receive its own shares in settlement of a debt, and would be considered “financialassistance” under the provisions of that Act.

 

We defaulted on ourobligations owing under the pledge agreements by the due date, i.e. 100 daysfrom the signing of the Pledge Agreements (March, April and May 2003). As aresult, our Creditors called up their shares based on the provisions of theagreements, and we no longer have a minority ownership interest in WRDCLogsysLimited, as these shares are now held by the Creditors.  The call was made by Massachusetts Mutual onJuly 24, 2003, 

 

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WRDCLogsys Ltd on August12, 2003, Alec Karys on October 16, 2003, and Decherts on March 10, 2004.

 

**Overview of the Business**

 

As of the date of thisreport (June 30, 2003) we no longer own any capital stock of WRDCLogsys Limitedor any of WRDCLogsys Limited’s subsidiaries, other than 463,767 shares thathave been pledged but not called after our default under the Pledge Agreements.

 

**Research and Development**

 

Forthe one-year period ending June 30, 2003, neither we nor Authoriszor HoldingsLimited incurred any costs of including professional services, directly relatedto research and development.  No furthercosts are expected to be incurred.

 

**Employees**

 

As of June 30, 2003 therewere no operational staff employed by us on a full-time basis.

 

## **ITEM 2:  DESCRIPTION OF PROPERTIES**

 

**Facilities**

 

Our executive offices arecurrently located in the offices of WRDCLogsys Limited in Leeds, England.

 

In May 2001, we subleasedthe office space of our prior U.S. headquarters in Burlington, Massachusetts toDirectech, Inc. The sublease with Directech called for monthly payments to bemade to us in the amount of $31,400 per month, which was substantially equal tothe monthly payments and term of our underlying lease.

 

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On July 19, 2002Directech defaulted on its sublease with us we were told due to their largestcustomer, WorldCom defaulting on the payment of its debts to Directech.  We entered into discussions with the landlordand Directech with the objective of resolving this matter, but Directech hasnot able to make any further payments on the sublease since its default on thelease.

 

The landlord drew down onour letter of credit that we had supporting the lease of $220,000 in September2002 as payment of rentals in advance for part of the period remaining underthe lease and we entered into a series of Settlement Agreements and PledgeAgreements described in Item 1 of this report, which provided our landlord,Massachusetts Mutual Life with a continuing and unconditional security interestin all of the stock held by us in WRDCLogsys Limited, to secure the prompt,timely and complete payment of all obligations and liabilities we had to it.

 

**Investment Policies**

 

We have no funds toinvest and no current investment policy as a result.

 

## **ITEM 3: LEGAL PROCEEDINGS**

## ** **

On May 14, 2002,Authoriszor Holdings Limited served a writ in the Leeds District Registry inthe United Kingdom upon the former owners of Logsys Solutions Limited (Mr.Stewart Lesley Ashton and Logsys Holdings Limited) in the sum of approximately$950,000 relating to certain indemnities that we allege were covered andprovided for in the Sale and Purchase agreement, dated July 3, 2001, relatingto the acquisition of Logsys Solutions Limited, which includes an amount of$345,000 relating to software development work carried out for a major client.Legal expenses with regard to this action may be significant.

 

On August 8, 2002, withthe consent of the parties, the Court ordered a six month stay of theproceedings.   The proceedings will notbe re-instated if certain agreed obligations are performed by Mr. StewartLeslie Ashton and/or Logsys Holdings Limited for the benefit of AuthoriszorHoldings Limited and/or Logsys Solutions Limited by February 1, 2003.

 

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Based on the advice ofcounsel, the Board determined that no further actions were to be taken in viewof the uncertainty and mounting costs involved. Therefore on April 8, 2003 a ‘drophands’ agreement was reached between both parties.

 

 A ‘letter before action’ had been sent toReveda Limited on July 23, 2002 in respect of $345,000 owed to the AuthoriszorHoldings Limited, and now considered a bad debt and a writ was subsequently issuedagainst Reveda Limited on November 1, 2002 in respect of the amount owing tous.

 

In respect of this actionand on January 13, 2003 the defendant’s lawyers demanded that the AuthoriszorHoldings Limited place $135,000 into Court which was an estimate of theircosts. At this time we had also learnt informally that Reveda Limited was at ornear to liquidations, or at least in a wind down mode.

 

In light of these factsand based on the advice of counsel, the Board determined that no furtheractions were to be taken.

 

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## **ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS**

## ** **

There have been nomatters submitted for vote to the security holders through the solicitation ofproxies or otherwise in the fourth quarter of the fiscal year (2003) covered bythis report.

 

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# **PART II**

#  

## **ITEM 5. MARKET FOR COMMON EQUITY ANDRELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITYSECURITIES**

## ** **

Until March 2, 2002 ourcommon stock was quoted on the NASDAQ National Market System under the symbol “AUTH.”Thereafter, and until November 19, 2003, our common stock was quoted on the OTCBulletin Board under the symbol “AUTH.OB.” Due to the delinquency of our SEC filings, we were suspended fromquotation on the OTC have been quoted on the “pink sheets” since November 20,2002.  The following table sets forth,for the periods indicated, the range of high and low closing price informationper share of our common stock. These quotations reflect inter-dealer prices,without retail mark-up, mark-down or commission and may not represent actualtransactions.

 
| ** **          | ** ** | **Closing Price** | ** ** |
|---------------------|------------|-------------------|------------|
| **Calendar Period** | ** ** | **High ($)**      | ** ** | **Low ($)** | ** ** |
|                |       |              |       |   |   |
| **2002**            |       |              |       |   |   |
| First Quarter       |       | 0.38              |       | 0.05 |   |
| Second Quarter      |       | 0.12              |       | 0.01 |   |
| Third Quarter       |       | 0.03              |       | 0.01 |   |
| Fourth Quarter      |       | —            |       | — |   |
| **2003**            |       |              |       |   |   |
| First Quarter       |       | 0.01              |       | 0.00 |   |
| Second Quarter      |       | 0.01              |       | 0.01 |   |
| Third Quarter       |       | 0.01              |       | 0.00 |   |
| Fourth Quarter      |       | 0.01              |       | 0.00 |   |

 

As ofJune 30, 2003, there were 20,768,511 shares of common stock outstanding, heldby approximately 421 holders of record.

 

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**Dividend Policy**

 

We have not declared orpaid any dividends on our common stock since our inception and do not anticipatedeclaring or paying dividends in the foreseeable future.  Any future payment of dividends will dependon the results of operations, financial condition, and other factors that wedeem relevant and will be at the sole discretion of our Board of Directors.

 

**Recent Sales of UnregisteredSecurities**

 

We did not sell any ofits securities during the fiscal year ended June 30, 2003; however we did makean assignment of certain debts noted above under Part I.

 

**ITEM 6. MANAGEMENT’S DISCUSSIONAND PLAN OF OPERATIONS**

 

The followingdescription of “Management’s Plan of Operation” contains forward-lookingstatements for purposes of the Securities Act and the Exchange Act and as suchinvolves known and unknown risks, uncertainties and other factors that maycause our actual results to be materially different from future resultsexpressed or implied. The words “expect”, “estimate”, “anticipate”, “predict”, “believes”,“plan”, “seek”, “objective” and similar expressions are intended to identifyforward-looking statements elsewhere in this report.  There are important factors that could causethe actual results to differ materially from our expectations. The factorsinclude the following: 1) one or more of the assumptions or other factorsdiscussed in connection with particular forward-looking statements or elsewherein this report prove not to be accurate; 2) in our cost estimates and costoverruns; 3) our inability to obtain financing for operations; 4) if weexperience unanticipated problems and/or force majeure events (including butnot limited to accidents, fires, acts of God etc.).  All written or oral forward-lookingstatements attributable to us are expressly qualified in their entirety by suchfactors.

 

Thefollowing discussion should be read in conjunction with the FinancialStatements, including the notes thereto.

 

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**Overview**

 

Followingour default under the Pledge Agreements discussed in further detail below  all of the shares of WRCDLogsys that werepledged as security, may be called by its creditors under the provisions ofthose agreements.  On July 24, 2003,Massachusetts Mutual called the 2,767,112 shares held by it. WRDCLogsys onAugust 12, 2003 called in the 7,210,713 shares. Alec Karys on October 16, 2003called in the 152,221 shares. Decherts on March 10, 2003 called in the 311,546shares.

 

Followingthe resignation of our former Chief Executive Officer and Chief FinancialOfficer in March 2002, our Board has implemented a further aggressiverestructuring and cost reduction program. As we have been unable to support the ongoing development costs ofPositive ID, a component of the Authoriszor software suite we entered into theagreement with Sandford Technology to have Sandford be the exclusivedistributor of the product.

 

Wehave continually sought inward investment opportunities and have continued aprogram of meetings and engagements in connection with these efforts andengaged professional advisors to help us with this. We have however had nomeaningful interest from potential investors and have exhausted our efforts inthis regard at this point. We have concluded that, because of the marketconditions, the track record of the Company, and the resulting sentiments ofthe investor community, that no inward investment is likely at this criticalperiod.

 

We have no plans toemploy any staff in future and, in addition to the rentals payable to our U.S.landlord we expect that expenses will be limited to payments for ongoingprofessional services, franchise taxes and insurance premiums.

 

**Results of Operations**

 

**FISCAL YEAR ENDED JUNE 30, 2003 COMPARED TO FISCALYEAR ENDED JUNE 30, 2002**

 

**Revenues and Cost of Revenues**

 

Revenues and Cost of Revenues for the year ended June 30, 2003 were nil compared to $6,880,483 and $2,230,549 respectively for the year 

 

14

 

ended June 30, 2002.  The revenues and cost of revenues for the year ended June 30, 2002 resulted primarily from consolidating the operations of Logsys and WRDC. Following the reduction in our holding of these companies to 35% on July 18, 2002 their results were accounted for under the equity method of accounting up until the fourth quarter of fiscal 2003, at which time the company pledged its remaining interest to certain creditors. As such, their revenues and cost of revenues are no longer consolidated with ours.

 

15

 

**Operating Expenses**

 

Administrative expenses for the fiscal year ended June 30, 2003 fell to $0.7million compared to $11.6 million in the fiscal year ended June 30, 2002.  The reduction was attributable to the following expenses:

 

•      Salary and benefits fell to $53,632 for the fiscal year ended June 30, 2003 compared to $6,594,030 for the fiscal year ended June 30, 2002.  The reduction is primarily due to continuing to reduce the number of staff  during the fiscal year, and the fact that the salary costs of Logsys and WRDC are no longer consolidated into our results. There were no staff within the group as of June 30, 2003.

 

•      Travel expenses were $15,782 in the fiscal year ended June 30, 2003 compared to $613,159 in the previous fiscal year.  The restructuring and the change in staff numbers described above resulted in very little travel being required in the fiscal year ended June 30, 2003.

 

•      Occupancy and office costs were $348,437 for the fiscal year ended June 30, 2003 compared to $919,529 for the fiscal year ended June 30, 2002.  The reduction is primarily a result of the change from consolidated to equity accounting for WRDC and Logsys.

 

•      Recruitment costs were nil for the fiscal year ended June 30, 2003 compared $61,868 in the previous fiscal year. Headcount was steadily decreased due to cost cutting measures.

 

•      Professional fees were $311,086 in the fiscal year ended June 30, 2003 compared to $970,206 in the fiscal year ended June 30, 2002. This reduction is due to the reduced activity by the Company and the change from consolidated to equity accounting for WRDC and Logsys.

 

**Marketing and Advertising**

 

Marketingand advertising expenses were $2,054 for the fiscal year ended June 30, 2003compared to $261,318 in the previous fiscal year.  This 

 

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decrease is due to discontinuing our US operations andthe change in the method of accounting for WRDC and Logsys.

 

**Other Income and Expense**

 

Interestincome was $83 for the fiscal year ended June 30, 2003 compared to $169,212 inthe previous fiscal year.  The decreaseis a result of the reduction in cash balances over the fiscal year.

 

Weincurred losses on foreign exchange transactions of $19,695 for the year endedJune 30, 2003 compared to gains of $405,265 in the previous fiscal year.  The losses were due primarily to differencesarising on the conversion of short term loans held in sterling.

 

In the fiscal year ended June 30, 2003 there was again of $579,108 arising from the amounts due from affiliates that wereprovided for previously. No such gains arose in the prior year.

 

There were write-downs in the carrying value of theinvestments in WRDC and Logsys totaling $6,447,181 in the fiscal year endedJune 30, 2002. There are no such write-downs in the current year.

 

The pledge arrangements described earlier resulted ina gain on write-off, of creditors, of $1,067,502 in the fiscal year ended June30, 2003.

 

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**FinancingManagement’s Plan of Operation**

 

OnJuly 3, 2001, our wholly owned subsidiary, Authoriszor Holdings Limited.,initially acquired approximately a 68% interest in Logsys in exchange for acash payment of approximately $237,000, an, if certain conditions were met, theissuance of 186,453 shares of our common stock. These shares were issued in January 2002.  In addition, our ownership interest in Logsyshas increased to approximately 99.75% of the outstanding capital stock ofLogsys as a result of the solicitation by Logsys of holders of its capitalstock, other than shares of capital stock already owned by us, to tender theirrespective shares of capital stock in exchange for cash consideration payableby us at the same price per share as our initial acquisition of capital stockof Logsys.

 

In December 2001,we acquired the remaining equity in WRDC Limited., increasing its ownershipinterest to 100% of the outstanding capital stock of WRDC for totalconsideration equal to the following: (i) $1,236,650 payable in cash, (ii) theissuance of 2,125,360 shares of common stock, par value $.01 per share, and(iii) the issuance of 389,794 shares of Series A Cumulative RedeemablePreferred Stock, par value $.01 per share.

 

For moreinformation concerning the our acquisition of the remaining capital stock ofWRDC, please see the our Current Report on Form 8K/A filed with the SEC onJanuary 30, 2002.

 

Asreported in out Quarterly Report for the quarter ending December 31, 2001,further funds were required by us in order to avoid a severe curtailment of ouroperations. During the three months between November 2001 and February 2002,the management team spent a considerable time seeking funds for the Companyfrom the financial markets but failed to secure any financing or equityparticipation. Accordingly, management executed a further round of overheadcuts and intensified its efforts to seek working capital funds from suitablesources.

 

Inorder to manage the Company’s cash resources and to support its capital raisingactivities, the management team in March 2002 produced a new business plan,including profit and loss and cash flow forecasts based on the continuation of theservice-based businesses of WRDC and Logsys. We 

 

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continued to make overhead cuts and made certainfavorable payment arrangements with its creditors in order to reduce cashoutlays.

 

DuringFebruary 2002, our then President and Chief Executive Officer, Paul Ayres,evaluated the present and future market conditions, and the forecast revenueperformance from all parts of the business, and concluded that the businessrequired further restructuring and overhead cutbacks. This was required toright size the overheads to match the forecast and likely revenues from the nowessentially service-based businesses of WRDC and Logsys.

 

Aspart of a restructuring plan approved by our Board of Directors, Paul Ayres hasresigned as our President and Chief Executive Officer, and from other variousexecutive and director positions that he had held with us and our subsidiaries.Mr. Ayres has entered into a Compromise Agreement with us.  Also, Mr. Ayres will continue for a limitedtime to be retained as a non-executive director on a no fee basis for a limitedtime. Pursuant to the terms of the Compromise Agreement, we have paid Mr. Ayres£15,000 on execution of the agreement and an additional payment of £5,000 wasmade in June 2002. We also issued to Mr. Ayres 40,142 shares of our Series ACumulative Redeemable Preferred Stock (“Preferred Stock”). The provision of acompany car and healthcare benefits continued in force for Mr. Ayres untilDecember 31, 2002. Additionally, 400,000 stock options previously granted toMr. Ayres were vested immediately on execution of the agreement.

 

Inaddition as part of these restructuring plans, our Chief Financial Officer andSecretary, Andrew Cussons, resigned from the various executive officer anddirector positions that he had held with us and our subsidiaries. Mr. Cussonshas entered into a Compromise Agreement with us. Pursuant to the terms of theCompromise Agreement, we have paid Mr. Cussons $15,000 on the execution of theagreement and have made additional payments of $14,250 in June 2002 and $15,000in July 2002. We also issued to Mr. Cussons 61,952 shares of our PreferredStock. The provision of healthcare benefits continued in force for Mr. Cussonsuntil December 31, 2002. Additionally, 300,000 stock options previously grantedto Mr. Cussons vested immediately on execution of the agreement.

 

We  entered into a Consultancy Agreement, datedas of May 23, 2002, with a company owned by Mr. Ayres and Mr. Cussons that hasagreed 

 

19

----

 

to provide certainconsulting services to us for six (6) months following the effective date ofthe Consultancy Agreement. We agreed to pay the consulting company paymentsaggregating $75,750. The sum of $15,000 was paid in June 2002 and the balanceof $60,750 was paid in July 2002. In addition it was agreed that a furtherpayment would be made to the consulting company exclusively dependent on, andreceipt by us of, anticipated funds in relating to a tax credit we wereseeking. Application was made to the UK Inland Revenue in the amount of$261,385 with respect to the tax credit (the “First Tax Credit”) and the sum of$120,000 was to be paid to the consulting company on receipt by the company ofthe First Tax Credit. The proceeds of the tax credit were received in July2002. The receipt by the Company of funds with respect to the Second Tax Creditis subject to the Inland Revenue approving the amount of the applicable taxcredit claimed by the Company. The Inland Revenue subsequently approved theSecond Tax Credit and the consulting company invoiced the Company £26,133.50 inDecember 2002 and it was paid in October 2003 as a result of receiving thefunds from the Inland Revenue. In addition, the consulting company is entitledto receive a further payment of £20,000 if the Company (or any subsidiary)receives funding in the sum of £250,000 or more from a specified private UKinvestment company as a result of the consulting company’s services.

 

Inconnection with these restructuring plans the Board of Directors appointed ourcurrent Chief Operating Officer, Garcia Hanson, as President, Chief ExecutiveOfficer, Chief Financial Officer and Secretary of the Company and appointedPeter Hughes, the Operations Director of WRDC, as our Chief Operations Officer.

 

As reported in ourForm 10-QSB for the quarter ended March 31, 2002, in the absence of additionalfinancing we and our subsidiaries would not have sufficient working capital tocontinue to operate substantially beyond the end of fiscal year June 30, 2002.As a result, after exploring multiple potential options and strategies, ourBoard of Directors determined after much deliberation to raise additionalworking capital through Authoriszor Holdings Limited to satisfy our existingliabilities and, thereby relinquish control of our Authoriszor Ltd, WRDC andLogsys subsidiaries.

 

To do this, on July 18,2002, we consummated an investment agreement (the “Investment Agreement’), withAuthoriszor Holdings Limited,

 

20

----

 

Roy Williams, Garcia Hanson, Zalcany Limited and Noblepoint Limited andcollectively with Williams, Hanson and Zalcany, (the “Investors”), pursuant towhich we transferred our capital stock in WRDC, which constituted approximately69.7% of the outstanding shares of capital stock of WRDC, and its capital stockin Authoriszor Limited, which constituted approximately 74.8% of theoutstanding shares of capital stock of Authoriszor Limited, to AuthoriszorHoldings Limited for a nominal sum and the Investors purchased PreferredOrdinary Shares of Authoriszor Holdings Limited a subsidiary, for an aggregatepurchase price of £574,994.94 ($902,684.56). As a result, our equity interest in Authoriszor Holdings Limited, whichwas in the form of ordinary shares of Authoriszor Holdings Limited, decreasedfrom 100% to 35%.  Authoriszor HoldingsLimited owns all of the capital stock of WRDC, Authoriszor Limited, LogsysSolutions Limited and, indirectly through WRDC, over 75% of the stock of PAD(London) Limited and WRDC AG. On August 1, 2002, Authoriszor Holdings Limitedchanged its name to WRDCLogsys Limited. For additional information concerningthe Investment Agreement and the related transactions, please see the Company’sReport on Form 8-K filed with the Securities and Exchange Commission on August2, 2002.

 

TheInvestment Agreement restricts Authoriszor Holdings Limited from makingpayments to us without the consent of the Investors however, approximately$68,992.38 of the investment proceeds were paid to us by Authoriszor HoldingsLimited in payment of certain inter-company indebtedness that was owed tous.  In connection with this transaction,we redeemed 117,742.5 shares of our Series A Cumulative Redeemable PreferredStock owned by Hanson, our Chief Executive Officer and Authoriszor HoldingsLimited, for the aggregate redemption price set forth in the Series A PreferredStock Certificate of Designation of $235,485. Hanson utilized all the proceeds from the redemption to purchase   Authoriszor Holdings Limited OrdinaryShares.

 

TheInvestment Agreement also prohibits from issuing shares of its stock withoutthe consent of the Investors, except that Authoriszor Holdings Limited mayissue a certain number of additional shares (the “Additional Shares”) at apurchase price not less than the price paid by the Investors.  If all the Additional Shares are issued, ourequity interest in Authoriszor Holdings Limited would be reduced to 32.4%.  The Investment Agreement provides that

 

21

----

 

the board ofdirectors of Authoriszor Holdings Limited shall consist of not more than fourpersons, including two persons nominated by the Investors.  The current members of the board of directorsof Authoriszor Holdings Limited are Hanson, Ian McNeill, and Peter Hughes.  We do not have the right to nominate adirector.

 

Furtherinformation concerning the Investment Agreement and the related transaction isin our Current Report on form 8K filed with the SEC on August 2, 2002.  The powers, preferences and rights of the AHLOrdinary Shares and AHL Preferred Shares are set forth in the Articles ofAssociation of Authoriszor Holdings Limited (“AHL Articles”), which is filed asExhibit 2.2 to the Current Report.  TheAHL Articles contain a right of first refusal provision that grants to anyshareholder of Authoriszor Holdings Limited, which currently consists of us andthe Investors (collectively, the “AHL Shareholders”), the first right topurchase the shares of Authoriszor Holdings Limited that another AHL Shareholderdesires to sell to a third-party.  Theprice of such purchase will be determined by either a mutual agreement betweenthe directors of AHL and the transferring AHL Shareholder or by an independentaccountant.

 

In connection with thistransaction, the Board adopted resolutions pursuant to Rule 3a-2(a)(2) of theInvestment Company Act of 1940 (the “40 Act”) for the Company to be treated asa transient investment company under the 40 Act.  These resolutions evidenced our intent to beengaged as soon as is reasonably possible (but in no event later than one year)in a business other than owning or holding securities.  Accordingly, the Board explored transactionspursuant to which the Company could dispose of its Authoriszor Holdings Limitedstock or acquire sufficient assets that are not securities in order for it notto be deemed an investment company as that term is defined Section 3(a)(1) ofthe 40 Act.  Due to the fact that we nolonger owned any of the securities of our former subsidiaries and thecomposition of our assets, and other exemptions contained in the 40 Act, we nolonger believe we are a transient investment company.

 

As reported in our Form10-QSB for the quarter ended March 31, 2002, in the absence of additionalfinancing we and our subsidiaries would not have sufficient working capital tocontinue to operate substantially beyond the end of its fiscal year, June 30,2002, which would result in severe curtailment of our and oursubsidiaries.  Management has produceddetailed cashflows to

 

22

----

 

June 2003, basedon the current position and the business plan for 2002/03 and believed thatthis financing transaction provides Authoriszor Holdings Limited sufficientworking capital to continue operations for the remainder of the fiscal year2002/03 and enhances our ability to meet our obligations to our creditorssubject to uncertainties regarding the remaining payments on our lease on ourprior U.S. headquarters in Burlington, Massachusetts.

 

In May 2001, webegan subleasing the office space of its prior U.S. headquarters toDirectech.  The sublease called formonthly payments in the amount of $31,400 per month through April 2005, whichis equal to the monthly payments and term of the underlying lease. However inJuly 2002 Directech defaulted on the sublease agreement we were told because ofthe status of their largest customer, WorldCom. Directech has defaulted on boththe rent and the renewal of the rental guarantee.  Directech has not made any payments on thesublease since July 2002. The landlord has drawn down on the letter of creditsupporting the lease of $220,000 in September 2002.  It is assumed that this is taken as paymentof rentals in advance for part of the period remaining under the lease.

 

The default onthis sublease has had a material and adverse effect on our financial conditionsand severely impaired our ability to meet our financial obligations.  As a result we entered into a series ofSettlement Agreements and Pledge Agreements dated March, April and May of 2003,which provided our creditors which are set out in the table below (the “Creditors”),with a continuing and unconditional security interest in all of the stock heldby us in WRDCLogsys Limited, to secure the prompt, timely and complete paymentof all obligations and liabilities we had to the creditors. The PledgeAgreements remain in force until the earlier of the payment in full of the debtwithin 100 days from the date of signature of the Pledge Agreement, or theCreditors’ realization of the collateral provided.

 

The proportion ofWRDCLogsys shares pledged is proportional to the amount owed, and in the caseof WRDCLogsys all creditors have consented that WRDCLogsys has shares pledgedat twice the proportion in view of the cash that has continued to be providedto us by WRDCLogsys.. The creditors have consented to receive shares inWRDCLogsys Limited in the following proportions upon default of our obligationsto them.

 

23

----

 
| **Creditor**                                 | ** ** | **Amount Owed** | ** **       | **No. of Shares Pledged as  Security** | ** **     |
|----------------------------------------------|------------|-----------------|------------------|----------------------------------------|----------------|
| Alec Karys  (former employee)                |       | $               | 26,130.06        |                                   | 152,221        |   |
| Decherts  (Lawyers)                          |       | $               | 53,479.81        |                                   | 311,546        |   |
| Massachusetts  Mutual Life Insurance Company |       | $               | 475,000          |                                   | 2,767,112      |   |
| WRDCLogsys  Limited*                         |       | $               | 618,892.24       |                                   | 7,210,713      |   |
| **Totals**                                   | ** ** | **$**           | **1,173,502.11** | ** **                             | **10,441,592** | ** ** |

 

----

*We defaulted on theobligations owing under the Pledge Agreements. As a result, the Creditorscalled up their shares based on the provisions of the agreements, and no longerhave a minority ownership interest in WRDCLogsys Limited, as these shares arenow held by the Creditors.  The call wasmade by Massachusetts Mutual on July 24, 2003, WRDCLoysys Limited on August 12,2003, Alec Karys on October 16, 2003 and by Decherts on March 10, 2004.

 

In addition, on May 2,2003, $618,892.24 of debt owing by us to WRDCLogsys Limited was assigned to aconsortium of investors, which included Pelican Capital Limited, which IanMcNeill, a director of WRDCLogsys Limited is the controlling party of. Theproposal has been for us to settle the debt we owe to WRDC Logsys, by movingshares to this consortium because of the provisions of Section 151 of the UKCompanies Act 1985, in which it would be deemed illegal for a company toreceive it’s own shares in settlement of a debt, and would be considered “financialassistance” under the provisions of that Act.

 

On March 15, 2004 weentered into a Loan and Warrant Agreement with Commercial Technology Limited (“CTL”)to which CTL has agreed, in consideration for a warrant to purchase 7,000,000shares of our common stock, to provide us with a loan up to $70,000 availablein tranches to be drawn down by December 31, 2004. The express purpose of thisAgreement is to provide funding for the Company to bring it’s SEC filings up todate. The purpose of this is to achieve a re-instatement to theOver-the-Counter Market.

 

24

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| **Item 7.  Financial Statements.**                           |       |
|--------------------------------------------------------------|------------|
| ** **                                                   |       |
| **Report  of Independent Registered Public Accounting Firm** |       |
| ** **                                                   |       |
| **Financial Statements**                                     | ** ** |
| ** **                                                   | ** ** |
| Balance Sheet                                                |       |
|                                                         |       |
| Statements of Operations                                     |       |
|                                                         |       |
| Statement  of Stockholders’ Equity (Deficiency)         |       |
|                                                         |       |
| Statements of Cash Flows                                     |       |
|                                                         |       |
| Notes to Financial  Statements                               |       |

 

25

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| **AUTHORISZOR  INC.**                 |
|---------------------------------------|
| ** **                            |
| ** **                            |
| Contents                              |
| *Years  Ended June 30, 2003 and 2002* |

** **

**Report of Independent Registered Public Accounting Firm**

 

Board of Directors

Authoriszor Inc.

 

We have audited the accompanying balance sheet of Authoriszor Inc. as of June 30, 2003, and the related statements of operations, stockholders’ equity (deficiency) and cash flows for the years ended June 30, 2003 and 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 audits provide a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Authoriszor Inc. as of June 30, 2003 and the results of its operations and its cash flows for the years ended June 30, 2003 and 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. During fiscal 2003, the Company’s interest in its subsidiaries was eliminated as a result of a series of transactions. As of June 30, 2003, the Company is no longer an operating entity. These factors, among others, as discussed in Note 1 to the financial statements, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

As stated in Note 1 to the financial statements, on July 18, 2002, the Company was restructured such that Authoriszor Inc. no longer controls the UK operating companies. These UK operating companies generated all revenue and cash flows for the Company prior to the restructuring.

 

Holtz Rubenstein Reminick LLP

 

 

Melville, New York

November 16, 2004

 

F-1

----

 

**Balance Sheet**

* *

*June30, 2003*

 
| **Assets**                                           |   |        |   |
|------------------------------------------------------|--------|-------------|--------|
|                                                 |   |        |   |
| Current Assets:                                      |   |        |   |
| Other                                                |   | $           | 1,848  |   |
|                                                 |   |        |   |
| Total Current  Assets                                |   | 1,848       |   |
|                                                 |   |        |   |
| Total Assets                                         |   | $           | 1,848  |   |
|                                                 |   |        |   |
| **Liabilities  and Stockholders’ Deficiency**   |   |        |   |
|                                                 |   |        |   |
| Current  Liabilities:                                |   |        |   |
| Accounts payable                                     |   | $           | 5,816  |   |
| Accrued expenses                                     |   | 247,017     |   |
|                                                 |   |        |   |
| Total Current  Liabilities                           |   | 252,833     |   |
|                                                 |   |        |   |
| Total  Liabilities                                   |   | 252,833     |   |
|                                                 |   |        |   |
| Mandatorily  Redeemable Preferred Stock              |   | 753,856     |   |
|                                                 |   |        |   |
| Commitments and  Contingencies                       |   |        |   |
|                                                 |   |        |   |
| Stockholders’  Deficiency:                      |   |        |   |
| Common stock                                         |   | 207,685     |   |
| Additional  paid-in-capital                          |   | 36,903,135  |   |
| Deficit                                              |   | (38,115,661 | )      |
| Total  Stockholders’ Deficiency                 |   | (1,004,841  | )      |
| Total  Liabilities and Stockholders’ Deficiency |   | $           | 1,848  |   |

 

*See notesto financial statements.*

 

F-2

----

 

**Statementsof Operations**

** **
| **Years Ended June 30,**                       | ** ** | **2003**       | ** **  | **2002**    | ** ** |
|------------------------------------------------|------------|----------------|-------------|-------------|------------|
|                                           |       |           |        |        |       |
| Revenue                                        | ** ** | **$**          | **—**  | ** **  | $          | 6,880,483 |   |
| Cost of Revenue                                | ** ** | **—**     | ** **  | 2,230,549   |       |
| Gross Profit                                   | ** ** | **—**     | ** **  | 4,649,934   |       |
|                                           |       | ** **     | ** **  |        |       |
| Operating  Expenses:                           |       | ** **     | ** **  |        |       |
| Marketing and  advertising                     | ** ** | **2,054**      | ** **  | 261,318     |       |
| General and  administrative expenses           | ** ** | **722,443**    | ** **  | 11,540,417  |       |
| Impairment of  goodwill                        | ** ** | **—**     | ** **  | 6,447,181   |       |
| Restructuring  and exit costs                  | ** ** | **—**     | ** **  | 1,331,226   |       |
| ** **                                     |       | **724,497**    | ** **  | 19,580,142  |       |
|                                           |       | ** **     | ** **  |        |       |
| Loss from  Operations                          | ** ** | **(724,497**   | **)**       | (14,930,208 | )          |
|                                           |       | ** **     | ** **  |        |       |
| Other Income  (Expense):                       |       | ** **     | ** **  |        |       |
| Interest income,  net                          | ** ** | **83**         | ** **  | 169,212     |       |
| Gain on sale of  investments                   | ** ** | **—**     | ** **  | 283,018     |       |
| (Loss)/gain on  foreign exchange transactions  | ** ** | **(19,695**    | **)**       | 405,265     |       |
|                                           | ** ** | ** **     | ** **  |        |       |
| Equity in  earnings of WRDCLogsys Ltd          | ** ** | **106,000**    | ** **  | —      |       |
| Gain on amounts  due from affiliates           | ** ** | **579,108**    | ** **  | —      |       |
| Gain on write  off of amounts due to creditors | ** ** | **1,067,502**  | ** **  | —      |       |
| Other                                          | ** ** | **7,954**      | ** **  | (8,424      | )          |
| Net  Profit/(Loss)                             | ** ** | **1,016,455**  | ** **  | (14,081,137 | )          |
| Preferred  Dividend                            | ** ** | **(81,538**    | **)**       | (45,479     | )          |
| Net  Profit/(Loss) Applicable to Common Stock  | ** ** | **$**          | **934,917** | ** **  | $          | (14,126,616 | ) |
|                                           |       | ** **     | ** **  |        |       |
| Weighted average  shares outstanding:          |       | ** **     | ** **  |        |       |
| Basic and  diluted                             | ** ** | **20,768,511** | ** **  | 19,761,955  |       |
| Profit/(Loss)  per common share:               |       | ** **     | ** **  |        |       |
| Basic and  diluted                             | ** ** | **$**          | **0.05**    | ** **  | $          | (0.71 | ) |

 

*See notesto financial statements.*

 

F-3

----

 

**Statementof Stockholders’ Equity (Deficiency)**

* *

*YearsEnded June 30, 2003 and 2002*

 
| ** **                                          | ** ** | ** **  | ** ** | **Common Stock** | ** ** | **Additional  Paid-In** | ** ** | ** **  | ** ** | **Accumulated  Comprehensive** | ** ** |
|-----------------------------------------------------|------------|-------------|------------|------------------|------------|-------------------------|------------|-------------|------------|--------------------------------|------------|
| ** **                                          | ** ** | **Total**   | ** ** | **Shares**       | ** ** | **Amount**              | ** ** | **Capital** | ** ** | **Deficit**                    | ** ** | **Income** | ** ** |
| ** **                                          | ** ** | ** **  | ** ** | ** **       | ** ** | ** **              | ** ** | ** **  | ** ** | ** **                     | ** ** | ** ** | ** ** |
| Balance, June  30, 2001 (Unaudited)                 |       | $           | 12,782,400 |             | 18,456,698 |                    | $          | 184,567     |       | $                              | 36,174,317 |   | $ | (24,923,962 | ) | $ | 1,347,478 |   |
| Issuance of  common stock for acquisition of WRDC   |       | 743,072     |       | 2,125,360        |       | 21,254                  |       | 721,818     |       | —                         |       | — |   |
| Issuance of  common stock for acquisition of Logsys |       | 1,864       |       | 186,453          |       | 1,864                   |       | —      |       | —                         |       | — |   |
| Fair value  adjustment on stock options             |       | 7,000       |       | —           |       | —                  |       | 7,000       |       | —                         |       | — |   |
| Comprehensive  income (loss):                       |       |        |       |             |       |                    |       |        |       |                           |       |   |   |
| Foreign currency  translation adjustment            |       | (982,753    | )          | —           |       | —                  |       | —      |       | —                         |       | (982,753 | ) |
| Reclassification  of gains on sale                  |       | (364,725    | )          | —           |       | —                  |       | —      |       | —                         |       | (364,725 | ) |
| Net loss during  the year                           |       | (14,126,616 | )          | —           |       | —                  |       | —      |       | (14,126,616                    | )          | — |   |
| Total  comprehensive loss                           |       | (15,474,094 | )          |             |       |                    |       |        |       |                           |       |   |   |
| Balance, June  30, 2002                             |       | (1,939,758  | )          | 20,768,511       |       | 207,685                 |       | 36,903,135  |       | (39,050,578                    | )          | — |   |
|                                                |       |        |       |             |       |                    |       |        |       |                           |       |   |   |
| Net profit during  the year                         |       | 934,917     |       | —           |       | —                  |       | —      |       | 934,917                        |       |   |   |
|                                                |       |        |       |             |       |                    |       |        |       |                           |       |   |   |
| Balance, June  30, 2003                             |       | $           | (1,004,841 | )                | 20,768,511 |                    | $          | 207,685     |       | $                              | 36,903,135 |   | $ | (38,115,661 | ) | $ | — |   |

 

*Seenotes to financial statements.*

 

F-4

----

 

**Statementsof Cash Flows**

 
| **Years Ended June 30,**                                                     | ** ** | **2003**       | ** **    | **2002**   | ** ** |
|------------------------------------------------------------------------------|------------|----------------|---------------|------------|------------|
|                                                                         |       | ** **     | ** **    |       |       |
| Cash Flows from  Operating Activities:                                       |       | ** **     | ** **    |       |       |
|                                                                         |       | ** **     | ** **    |       |       |
| Net  profit/(loss)                                                           | ** ** | **$**          | **1,016,455** | ** ** | $          | (14,081,137 | ) |
| Adjustments to  reconcile net loss to net cash used in operating activities: |       | ** **     | ** **    |       |       |
| Change in  ownership of WRDCLogsys Ltd                                       | ** ** | **662,507**    | ** **    | —     |       |
| Gain on amounts  due from affiliates, previously written off                 | ** ** | **-579,108**   | ** **    | —     |       |
| Gain on write  off of amounts due to creditors                               | ** ** | **-1,067,502** | ** **    | —     |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Loss on write  down and sale of fixed assets                                 | ** ** | **—**     | ** **    | 30,362     |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Gain on foreign  exchange                                                    | ** ** | **—**     | ** **    | 405,265    |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Gain on sale of  investments                                                 | ** ** | **—**     | ** **    | (283,018   | )          |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Impairment of  goodwill                                                      | ** ** | **—**     | ** **    | 6,447,181  |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Amortization of  intangibles                                                 | ** ** | **—**     | ** **    | 539,802    |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Depreciation                                                                 | ** ** | **5,671**      | ** **    | 409,224    |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Bad debts                                                                    | ** ** | **—**     | ** **    | 555,976    |       |
| Changes in  operating assets and liabilities:                                |       | ** **     | ** **    |       |       |
| (Increase)  decrease in operating assets:                                    |       | ** **     | ** **    |       |       |
| Accounts  receivable                                                         | ** ** | **—**     | ** **    | 100,529    |       |
| Prepaid expenses                                                             | ** ** | **354,247**    | ** **    | 887,866    |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Other                                                                        |       | ** **     | ** **    | (313,229   | )          |
| (Decrease)  increase in operating liabilities:                               |       | ** **     | ** **    |       |       |
|                                                                         |       | ** **     | ** **    |       |       |
| Accounts payable                                                             | ** ** | **(290,054**   | **)**         | (127,499   | )          |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Accrued expenses  and other payables                                         | ** ** | **(297,159**   | **)**         | (2,683,017 | )          |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Deferred revenue                                                             |       | ** **     | ** **    | (373,871   | )          |
|                                                                         |       | ** **     | ** **    |       |       |
| Total  adjustments                                                           | ** ** | **(1,211,398** | **)**         | 5,641,050  |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Net Cash Used in  Operating Activities                                       | ** ** | **(194,943**   | **)**         | (8,485,566 | )          |
|                                                                         |       | ** **     | ** **    |       |       |
| Cash Flows from  Investing Activities:                                       |       | ** **     | ** **    |       |       |
|                                                                         |       | ** **     | ** **    |       |       |
| Acquisition of  property and equipment                                       | ** ** | **—**     | ** **    | (91,973    | )          |
| Sale of  investment in securities                                            | ** ** | **—**     | ** **    | 793,948    |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Acquisitions of  businesses                                                  | ** ** | **—**     | ** **    | (1,457,650 | )          |
| Decrease  (increase) in restricted cash                                      | ** ** | **—**     | ** **    | 1,508,276  |       |
| Net Cash  Provided by (Used in) Investing Activities                         | ** ** | **—**     | ** **    | 752,601    |       |
|                                                                         |       | ** **     | ** **    |       |       |
| Cash Flows from  Financing Activities:                                       |       | ** **     | ** **    |       |       |
| Proceeds from  issuance of stock, preferred                                  | ** ** | **—**     | ** **    | 211,188    |       |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Payments on  long-term obligations                                           | ** ** | **—**     | ** **    | (88,550    | )          |
| Net Cash  Provided by Financing Activities                                   | ** ** | **—**     | ** **    | 122,638    |       |
|                                                                         |       | ** **     | ** **    |       |       |
| Effect of  exchange rate change on cash                                      | ** ** | **—**     | ** **    | (1,534,759 | )          |
|                                                                         |       | ** **     | ** **    |       |       |
| Net Decrease in  Cash and Cash Equivalents                                   | ** ** | **194,943**    | ** **    | (9,145,086 | )          |
|                                                                         | ** ** | ** **     | ** **    |       |       |
| Cash and Cash  Equivalents, beginning of year                                | ** ** | **194,943**    | ** **    | 9,340,029  |       |
| Cash and Cash  Equivalents, end of year                                      | ** ** | **$**          | **—**    | ** ** | $          | 194,943 |   |
| Supplemental  Disclosure:                                                    |       | ** **     | ** **    |       |       |
| Cash paid for  interest                                                      | ** ** | **$**          | **—**    | ** ** | $          | 31,044 |   |

 

*Seenotes to financial statements.*

 

F-5

----

 

#### **Notes toFinancial Statements**

* *

*YearsEnded June 30, 2003 and 2002*

** **

**1.****             Summary of Significant Accounting Policies**

** **

A summary of significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.

 

***Organization -***Authoriszor Inc. and Subsidiaries previously provided technology consulting services and a suite of security software in the e-commerce, security and workflow sectors of the information technology industry internationally. As described below, the Company’s ownership interest in 100% of its operating subsidiaries was eliminated as a result of a series of transactions during fiscal 2003.

 

***Basis of presentation and realization of assets -***The financial statements have been prepared on a basis that contemplates Authoriszor Inc.’s continuation as a going concern and the realization of our assets and liquidation of our liabilities in the ordinary course of business. During fiscal 2003, the Company’s interest in its subsidiaries was eliminated as a result of a series of transactions. As of June 30, 2003, the Company is no longer an operating entity. These matters, among others, raise substantial doubt about our ability to remain a going concern for a reasonable period of time. The financial statements do not include any adjustments relating to the recoverability or classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Authoriszor’s continued existence is dependent on its ability to obtain additional financing sufficient to allow it to meet its obligations as they become due and to achieve profitable operations.

 

In March 2002, it became clear that the Company had insufficient working capital for its needs, and after exploring several potential options the Directors decided that the only option open to them was to raise additional working capital through the Company’s UK subsidiary, Authoriszor Holdings Limited (“AHL”). On July 18, 2002, Authoriszor Inc. effectively sold 65% of its holding in AHL to (“the Investors”) for approximately $906,000. As a result of this transaction, the Company owned 35% of AHL, and AHL owns all the groups operating subsidiaries.

 

Following the Investment Agreement of July 18, 2002our financial ability to meet our creditor obligations worsened significantlybecause our sub-tenant defaulted on the rental agreement for the premises weleased in Burlington, Massachusetts. Prior to this increased liability, management believed that we would beable to satisfy our financial obligations.

 

Once it became clear that this might not be the casewe entered into a series of Settlement Agreements and Pledge Agreements datedMarch, April and May of 2003, which provided the creditors of the Company setout in the table below (the “Creditors”), with a continuing and unconditionalsecurity interest in all of the stock held by the Company in WRDCLogsys Ltd, tosecure the prompt, timely and complete payment of all obligations and liabilitieshas to the creditors. The Pledge Agreements remain in force until the earlierof the payment in full of the debt within 100 days from the date of signatureof the pledge agreement, or the creditors realization of the collateralprovided.

 

The proportion of WRDCLogsys shares pledged isproportional to the amount owed, and in the case of WRDCLogsys all creditorshave consented that WRDCLogsys has shares pledged at twice the proportion inview of the cash that has continued to be introduced into the Company byWRDCLogsys at the behest of its shareholders. Upon the terms of the agreements,upon default of the Company to pay the debt to the creditor, the creditors havetherefore consented jointly to receive shares in WRDCLogsys Ltd in thefollowing proportions:

 
| **Creditor**                                 | ** ** | **Amount Owed** | ** **    | **No. of Shares Pledged as  Security** | ** **     |
|----------------------------------------------|------------|-----------------|---------------|----------------------------------------|----------------|
| Alec Karys  (former employee)                |       | $               | 26,130        |                                   | 152,221        |   |
| Decherts  (Lawyers)                          |       | $               | 53,480        |                                   | 311,546        |   |
| Massachusetts  Mutual Life Insurance Company |       | $               | 475,000       |                                   | 2,767,112      |   |
| “UK Consortium”                    |       | $               | 618,892       |                                   | 7,210,713      |   |
| **Totals**                                   | ** ** | **$**           | **1,173,502** | ** **                             | **10,441,592** | ** ** |

 

F-6

----

 

In addition, on May 2, 2003, $618,892 of debt owing bythe Company to WRDCLogsys Ltd was assigned to a consortium of investors “UKConsortium”, which included Pelican Capital Limited, which Ian McNeill, adirector of WRDCLogsys Ltd is the controlling party of. The proposal has been for the Company tosettle the debt it owes to WRDCLogsys, by moving shares to this consortiumbecause of the provisions of Section 151 of the UK Companies Act 1985, in whichit would be deemed illegal for a company to receive its own shares insettlement of a debt, and would be considered “financial assistance” under theprovisions of that Act

 

The Company defaulted on the obligations owing underthe agreements on the termination of the 100 days from the date on which thepledge agreements were signed. As a result, the Creditors called up theirshares based on the provisions of the agreements, and the Company no longer hasa minority ownership interest (35%) in WRDCLogsys Ltd., as these shares are nowheld by the Creditors.  The call was madeby Massachusetts Mutual on July 24, 2003, UK Consortium on August 12, 2003,Alec Karys on October 16, 2003  andDecherts on March 10, 2004

 

#### ***Software development costs -***Softwaredevelopment costs are expensed as incurred. Statement of Financial AccountingStandard No. 86 “Accounting for the Costs of Computer Software to be Sold,Leased, or Otherwise Marketed” (SFAS No. 86) requires the capitalization ofcertain software development costs once technological feasibility isestablished, which the Company defines as establishment of a working model. Theworking model criteria used as the Company’s process of creating software(including enhancements) does not include a detailed program design. To date,the period between achieving technological feasibility and the generalavailability of such software has been short and software development costsqualifying for capitalization have been insignificant. Accordingly, the Companyhas not capitalized any software development costs.

####  

***Propertyand equipment -***Property and equipment are stated atcost. Depreciation is provided in amounts sufficient to relate the cost ofdepreciable assets to operations over their estimated service lives, using thestraight-line method. The range of useful lives for the classes of assets areas follows:

 
| Computers and  Equipment | ** ** | 4 years | ** ** |
|--------------------------|------------|---------|------------|

 

Expenditures for repairs and maintenance are charged to expense asincurred and additions and improvements that significantly extend the lives ofassets are capitalized. Upon sale or retirement of depreciable property, thecost and accumulated depreciation are removed from the related accounts and anygain or loss is reflected in the results of operations.

 

#### ***Cash and cash equivalents -***Forthe purposes of the financial statements, the Company considers all highlyliquid investments purchased with an original maturity of three months or lessto be cash equivalents.

####  

#### ***Allowance for doubtful accounts -***Managementmust make estimates of uncollectability of accounts receivable. Managementspecifically analyzes accounts receivable and analyzes historical bad debts,customer concentrations, credit worthiness, current economic trends and changesin customer payment terms when evaluating adequacy of the allowance fordoubtful accounts.

####  

#### ***Income taxes -***TheCompany utilizes the liability method of accounting for income taxes. Under theliability

 

F-7

----

 

#### method,deferred tax assets and liabilities are provided on differences betweenfinancial reporting and tax bases of assets and liabilities and are measuredusing the enacted tax rates and laws that will be in effect when thedifferences are expected to reverse. An allowance against deferred tax assetsis recorded when it is more likely than not that such tax benefits will not berealized.

####  

#### ***Use of estimates in financial statements -***Inpreparing financial statements in conformity with generally accepted accountingprinciples, management makes estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosures of contingent assets andliabilities at the date of the financial statements, as well as the reportedamounts of revenues and expenses during the reporting period. Actual resultscould differ from those estimates.

####  

#### ***Income(Loss) per share -***TheCompany computes basic loss per share based on the weighted average number ofcommon shares outstanding. Diluted income(loss) per common share is alsocomputed using the weighted average number of common shares outstanding, exceptif the effect of inclusion of stock options and warrants would be antidilutive.

####  

The Company has adoptedthe disclosure only provisions of Statement of Financial Accounting StandardsNo. 123, “Accounting for Stock-Based Compensation” (SFAS 123). Had compensationcost for stock options granted to employees been determined consistent withSFAS 123, the Company’s net loss and loss per share would have been the followingpro forma amounts:

** **
| **Years Ending June 30,**                               | ** ** | **2003**     | ** **  | **2002**    | ** ** |
|---------------------------------------------------------|------------|--------------|-------------|-------------|------------|
|                                                    |       | ** **   | ** **  |        |       |
| Net  Profit/(Loss) as Reported                          | ** ** | **$**        | **934,917** | ** **  | $          | (14,126,616 | ) |
| Net Loss –  Proforma                               | ** ** | **(500,024** | **)**       | (15,474,094 | )          |
| Income(Loss) Per  Share - Basic and Diluted as Reported | ** ** | **0.05**     | ** **  | (0.71       | )          |
| Loss Per Share –  Proforma                         | ** ** | **(0.02**    | **)**       | (0.78       | )          |
|                                                         |            |              |             |             |            |  |  |

** **

***Revenuerecognition -***The Company recognizes revenue inaccordance with the provisions of Statements of Position 97-2 and 98-9 issuedby the American Institute of Certified Public Accountants. It recognizesrevenue from software sales at the time of product shipment, or in accordancewith the terms of the licensing contracts, when collectability is probable andthe Company has no significant obligations remaining under the licenseagreement. In instances where significant obligations remain, revenuerecognition is delayed until such obligations have been satisfied. The Companyalso provides training, consulting and on-going support.

 

Revenue on long-term contracts reflects the contractactivity during the period and represents the proportion of total contractvalue that costs incurred to date bear to total expected costs.

 

***Foreigncurrency translation and transaction losses -***Assets andliabilities of the Company’s subsidiaries are translated at the rate ofexchange in effect at the close of the period. Revenues and expenses aretranslated at the weighted average of exchange rates in effect during theperiod. The effects of exchange rate fluctuations on translating foreigncurrency assets and liabilities into U.S. dollars are included as part of theaccumulated other comprehensive income component of stockholders’ equity(deficiency). The Company suffered currency transaction losses of approximately$20,000 during the year ended June 30, 2003 and made gains of $406,000 in theyear ended June 30, 2002. The loss arose on the repayment of intercompanybalances. The transaction losses have been reflected in the statement ofoperations.

 

***Goodwill-***In July 2001, the Financial Accounting Standards Boardissued Statement of Financial Accounting Standards No. 141 (SFAS 141),“Business Combinations”. This standard eliminates the pooling method ofaccounting for business combinations initiated after June 30, 2001. Inaddition, SFAS 141 addresses the accounting for intangible assets and goodwillacquired in a business combination. This portion of SFAS 141 is effective forbusiness combinations completed after June 30, 2001. The Company does notexpect SFAS 141

 

F-8

----

 

to have a material effect on the Company’s financialposition or results of operations.

 

In July 2001, the Financial Accounting Standards Boardissued Statement of Financial Accounting Standards No. 142 (SFAS 142),“Goodwill and Intangible Assets”, which revises the accounting for purchasedgoodwill and intangible assets. Under SFAS 142, goodwill and intangible assetswith indefinite lives will no longer be amortized, but will be tested forimpairment annually, and also in the event of an impairment indicator. TheCompany adopted SFAS 142 on January 1, 2002.

 

Due to the slow down in the industry, the goodwillarising from the Company’s acquisition of Logsys Solutions Ltd., a companyincorporated in the UK (“Logsys”), and WRDC Ltd., a company incorporated in theUnited Kingdom (“WRDC”), was considered to be materially impaired from theoriginal carrying value.

 

The value of the Company’s investment in thesesubsidiaries has been written down by approximately $6,447,000. The value as ofJune 30, 2002 is based upon the proceeds received from the sale on July 18,2002 of 65% of the shares in AHL, which owns 100% of Logsys and WRDC.

 

The goodwill that resulted from the Company’sacquisition of WRDC was being amortized using the straight-line method over aperiod of ten years.

 

***Stock-based compensation -***The Company accountsfor stock-based compensation to employees using the intrinsic value method.Accordingly, compensation cost for employee stock options is measured as theexcess, if any, of the quoted market price of the Company’s stock at the dateof the grant over the amount an employee must pay to acquire that stock. Stockoptions granted to non-employees are recorded at fair value at the time ofgrant.

 

**2.****             Restructuringand Exit Charges**

 

***Closure of U.K.headquarters and operations -***During the fourth quarter2002 and following the resignation of the Chief Executive Officer and ChiefFinancial Officer, a decision was made to close the U.K. Headquarters inHarrogate and relocate remaining staff to the offices of WRDC in Leeds. As a resultof this closure the Company has accrued liabilities at June 30, 2002 forseverance costs and termination benefits for terminated employees and lease andother contract obligations, as well as for legal and other professional costsassociated with the restructuring on July 18, 2002.

 

In May 2001, the Company subleased the office space ofour prior headquarters in Burlington, Massachusetts to Directech, Inc. as aresult of the restructuring undertaken by management.  The sublease with Directech called for monthlypayments to be made to us in the amount of $31,400 per month, which wassubstantially equal to the amount that we paid in monthly rent under our priorlease.

 

The sublease was effective until April 28, 2005, whichwas equal to the length of the original lease that we entered into in May2001.  On July 19, 2002, Directechdefaulted on its sublease with the Company because of the status of theirlargest customer, WorldCom.  The Companyentered into discussions with the landlord and Directech with the objective ofresolving this matter, but Directech has not able to make any further paymentson the sublease since its default on the lease.

 

The landlord has drawn down on the Company’s letter ofcredit issued by Citizens Bank supporting the lease of $220,000 in September2002 as payment of rentals in advance for part of the period remaining underthe lease and we entered into a series of Settlement Agreements and PledgeAgreements described above, which provided our landlord, Massachusetts MutualLife with a continuing and unconditional security interest in all

 

F-9

----

 

of the stock held by the Company in WRDCLogsys Ltd, tosecure the prompt, timely and complete payment of all obligations andliabilities the Company had to it.

 

The Company defaulted on the obligations owing underthe Pledge Agreements on or about July 8, 2003. As a result, MassachusettsMutual on July 24, 2003 called up its shares based on the provisions of theagreements and the Company’s obligations under the Pledge Agreement (and underthe lease) were satisfied in full.

** **

**3.****             Commitments**

** **

***Operating leases -***The Company leasedoffice space, under operating lease agreements which were due to expire throughDecember 2008. The total rent expense was approximately $208,700 and $660,000the years ended June 30, 2003 and 2002, respectively. 

 

There are no future rental commitments under operatingleases as of June 30, 2003. 

** **

**4.****             Stock Options, Warrants and Stock BasedCompensation**

** **

***Stock and stock options -*****The Company’s 1999 Stock Plan (the 1999Plan) provides for grants of options up to 1,000,000 shares of common stock,and the 2000 Stock Plan (the 2000 Plan) provides for grants of options up to1,700,000 shares. Pursuant to the Plans, the Company may grant Incentive StockOptions to any employee or officer of the Company or of any subsidiary of theCompany, and may grant Non-qualified Stock Options to any person eligible toreceive Incentive Stock Options, and also to directors, consultants or advisorsof the Company or its subsidiaries. As of June 30, 2003, there were 775,284options available for grant.

 

Following is a summary ofstock option activity including grants outside of the Plans:

** **
| ** **                  | ** ** | **Options** | ** ** | **Exercise  Price** | ** ** | **Weighted  Average  Exercise Price** | ** ** |
|-----------------------------|------------|-------------|------------|---------------------|------------|---------------------------------------|------------|
|                        |       |        |       |                |       |                                  |       |
| Outstanding,  July 2001     |       | 2,941,080   |       |                |       | $                                     | 4.97       |   |
| Granted                     |       | —      |       | —              |       |                                  |       |
| Forfeited                   |       | (612,328    | )          | 1.50 - 10.25        |       | 5.28                                  |       |
| Outstanding,  June 30, 2002 |       | 2,328,752   |       | 1.00 - 10.75        |       | 4.71                                  |       |
| Granted                     |       | —      |       | —              |       | —                                |       |
| Forfeited                   |       | —      |       | —              |       | —                                |       |
| Outstanding,  June 30, 2003 |       | 2,328,752   |       | 1.00 - 10.75        |       | 4.71                                  |       |
|                        |       |        |       |                |       |                                  |       |
| Exercisable,  June 30, 2002 |       | 1,336,250   |       | 1.00 - 10.75        |       | 3.13                                  |       |
| Exercisable,  June 30, 2003 |       | 1,972,501   |       | 1.01 - 10.75        |       | 4.08                                  |       |
|                             |            |             |            |                     |            |                                       |            |  |

 

Following isadditional information regarding stock options outstanding at June 30, 2003:

 

F-10

----

 

** **
| ** **                     | ** ** | **Outstanding**         | ** ** | **Exercisable**                                    | ** ** |
|--------------------------------|------------|-------------------------|------------|----------------------------------------------------|------------|
| **Range of  Exercise Prices**  | ** ** | **Number  Outstanding** | ** ** | **Weighted  Average  Remaining  Contractual Life** | ** ** | **Weighted  Average  Exercise Price** | ** ** | **Number  Exercisable** | ** ** | **Weighted  Average  Exercise Price** | ** ** |
| ** **                     | ** ** | ** **              | ** ** | ** **                                         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| $  1.01- 1.26        |       | 963,750                 |       | 4.5                                                |       | $ | 1.26 |   | 963,750 |   | $ | 1.26 |   |
| $  2.50 - 3.00       |       | 265,000                 |       | 2.4                                                |       | 2.95 |   | 258,750 |   | 2.96 |   |
| $  6.75 - 7.75       |       | 700,002                 |       | 5.3                                                |       | 6.64 |   | 500,001 |   | 7.05 |   |
| $  9.75 – 10.75 |       | 400,000                 |       | 4.3                                                |       | 10.13 |   | 250,000 |   | 10.15 |   |
|                           |       | 2,328,752               |       |                                               |       |   |   | 1,972,501 |   |   |   |
|                                |            |                         |            |                                                    |            |  |  |  |  |  |  |  |  |

** **

**5.****             Income Taxes**

** **

Due to taxable losses, the company has no tax expensefor either the year ended June 30, 2003 or 2002.

 

At June 30, 2003, the Company has a net operating losscarryforwards of approximately $38,100,000, expiring through 2023, available tooffset future taxable income. Deferred tax assets consist primarily of the netoperating loss carryforward. Deferred tax liabilities are not significant.

 

The Company’s netdeferred tax asset of approximately $13,000,000 has been offset by a valuationallowance of an equal amount at June 30, 2003, due to the uncertainty ofrealizing the net deferred tax asset through future operations. Utilization of net loss carryforwards in thefuture may be limited if changes in the Company’s stock ownership create achange in control as provided in Section 382 of the Internal Revenue Code.

** **

**6.****             Business Segments and Foreign Operations**

** **

The Company has two reportable segments: Consultingand Implementation Services and Technology Business. The Consulting andImplementation Services segment provides functional business solutions ande-business transformation services incorporating business processes andinterest technologies. The Technology Business segment sells security softwareand solutions designed to secure corporate information while enablingbusinesses to provide secure access to their corporate website and applicationsand to conduct secure communications over computer networks and the internet..

 

The accounting policiesof the segments are the same as those described in the summary of significantaccounting policies. The Company measures segment profit or loss as operatingincome (loss). The Company does not allocate expenditures for assets on asegment basis for internal management reporting and, therefore, suchinformation is not presented. Information on segments is as follows:

 

F-11

----

 
| **June 30, 2002**                  | ** ** | **Consulting and  Implementation  Services** | ** **    | **Technology  Services** | ** ** | **Unallocated  Corporate** | ** ** | **Total**       | ** **  |
|------------------------------------|------------|----------------------------------------------|---------------|--------------------------|------------|----------------------------|------------|-----------------|-------------|
| ** **                         | ** ** | ** **                                   | ** **    | ** **               | ** ** | ** **                 | ** ** | ** **      | ** **  |
| **Revenue**                        | ** ** | **$**                                        | **2,123,335** | ** **               | **$**      | **4,609,573**              | ** ** | **$**           | **147,575** | ** ** | **$** | **6,880,483** | ** ** |
| **Depreciation  and Amortization** | ** ** | **10,565**                                   | ** **    | **6,472,570**            | ** ** | **6,951,029**              | ** ** | **13,434,164**  | ** **  |
| **Operating  Profit (Loss)**       | ** ** | **167,319**                                  | ** **    | **(6,596,098**           | **)**      | **(8,501,429**             | **)**      | **(14,930,208** | **)**       |
| **Assets**                         | ** ** | **1,021,447**                                | ** **    | **1,957,774**            | ** ** | **1,106,568**              | ** ** | **4,085,489**   | ** **  |
|                                    |            |                                              |               |                          |            |                            |            |                 |             |  |  |  |  |

 

Information regardingforeign operations for the year ended June 30, 2002 is as follows. Sales areattributed to countries based upon the location of the customer.

 
| **June 30,**        | ** ** | **2002**      | ** **    |
|---------------------|------------|---------------|---------------|
|                |       |          |          |
| Revenue:            | ** ** | ** **    | ** **    |
| United States       | ** ** | **$**         | **282,051**   | ** ** |
| United Kingdom      | ** ** | **6,364,718** | ** **    |
| ** **          | ** ** | **$**         | **6,646,769** | ** ** |
| Long-Lived  Assets: | ** ** | ** **    | ** **    |
| United States       | ** ** | **$**         | **640,760**   | ** ** |
| United Kingdom      | ** ** | **338,656**   | ** **    |
| ** **          | ** ** | **$**         | **979,416**   | ** ** |

 

F-12

----

 

## **ITEM 9.  DIRECTORS AND EXECUTIVEOFFICERS OF THE REGISTRANT**

 

**Executive Officers**

 
| **Name**      | ** ** | **Position**                                                                         |
|---------------|------------|--------------------------------------------------------------------------------------|
|          |       |                                                                                 |
| Paul Ayres    |       | Director                                                                             |
| Don Box       |       | Director                                                                             |
| Garcia Hanson |       | Chief Executive  Officer/Chief Financial Officer, Chief Operating Officer, Secretary |

 

On September 2, 2002, Authoriszor Inc Boardresignations were received from Raymond Seitz, James Jackson, Sir MalcolmRifkind and Godfrey Shingles.  Ourremaining board is comprised of Garcia Hanson, our Chief Executive Officer,Chief Financial Officer, Chief Operating Officer and Secretary of the Company,Paul Ayres and Don Box.

 

Paul Ayers has been a Director since January2001.  From January 2001 to March 28,2002 he served as our President and Chief Executive Officer.  He also served from October 2000 to March2002 as Managing Director of Authoriszor Limited.  Prior to joining Authoriszor Limited, Mr.Ayres was the General Manager for European Operations for Real Networks, Inc.,a company engaged in the internet software business, from 1997 until joining Authoriszor.  During 1995-1997, Mr. Ayres was GeneralManager for Netscape Communications’ Northern European operations.  Mr. Ayres attended the University ofEssex/Cambridge University, majoring in Political Science and Law.

 

Don Box has served as one of our Directors since May1996 and served as our Assistant Secretary from May 1996 through January2000.  Mr. Box has served as ExecutiveVice President at Remington Oil and Gas Corporation, a publicly held oil andgas exploration and production company, since November 1997.  He served as Chairman of the Board of BoxEnergy Corporation, which is listed on NASDAQ, a public company owning oil andgas interests in the Gulf of Mexico and mainland U.S., from 1993 throughNovember 1997, and served as Chief Executive Officer and President of BoxEnergy Corporation from January 1996 through November 1997.  Since 1992, Mr. Box has been President and aDirector of Box Brothers Holding Company, which is engaged in the oil and gasbusiness.  From 1990 until 1996, Mr. Boxwas President of Race Circuits Management of Texas, which was engaged in motorsports promotion.  Don Box holds aBachelor of Science degree in Economics from the Wharton School of Business anda Masters degree in Business Administration from Southern Methodist University.

 

Garcia Hanson has been our Chief Executive Officer andChief Financial Officer since March 28, 2002. He is also our Chief Operating Officer. Mr. Hanson has also served on our Board of Directors since March 28,2002.  Mr. Hanson also serves as theManaging Director of WRDC Limited and Logsys Solutions Limited, two of ourformer subsidiaries.  Mr. Hanson hasserved as the Managing Director of WRDC Limited since 1994.

 

**Section 16 (a) BeneficialOwnership Reporting Compliance**

 

Section 16 (a) of the Securities Exchange Act of 1934,as amended, requires our directors, officers and persons who beneficially ownmore than 10% of our common stock (“10% Stockholders”) to file reports ofownership and changes in ownership with the Securities and Exchange Commission(the “SEC”).  Based solely uponinformation provided to us by our directors, officers and 10% Stockholders, toour knowledge, we believe that all of these filing requirements were satisfiedby our directors, officers and 10% Stockholders.

 

## **ITEM10.  EXECUTIVE COMPENSATION**

 

**DirectorCompensation**

 

Our directors are reimbursed for actual and reasonableout of pocket expenses in connection with attendance at Board and committeemeetings.

 

----

 

**ExecutiveCompensation**

 

The followingtable provides summary information concerning compensation paid by us to ourChief Executive Officers and the other Named Executive Officer for the threemost recent fiscal years. The summary information provided is for the12 months ended June 30, 2003, 2002, and 2001.  All of the officers referred to below havebeen paid in pound sterling through Authoriszor Limited.  For purposes of Summary Compensation Tableand the discussion set forth under “Executive Compensation – EmploymentContracts, Termination of Employment and Change-in Control Agreements, theforeign currency exchange rate of $1.40 per pound sterling has been used.

 

For purposes ofthis disclosure, the Named Executive Officers consist of:

 

•     Our Chief Executive andFinance Officers during the fiscal year ended June 30, 2003 (the “Fiscal Year2003”).

 

**Summary Compensation Table**

 
| **Name and Principal Position**        | ** ** | **Fiscal  Year** | ** ** | **Annual  Salary** | ** ** | **Bonus** | ** ** | **Long Term  Compensation  No. of Securities  Underlying Options** | ** ** | **All Other  Annual  Compensation** | ** ** |
|----------------------------------------|------------|------------------|------------|--------------------|------------|-----------|------------|-------------------------------------------------------------------------|------------|-------------------------------------|------------|
|                                   |       |             |       |               |       |      |       |                                                                    |       |                                |       |
| **Chief  Executive Officers**          |       |             |       |               |       |      |       |                                                                    |       |                                |       |
| Garcia Hanson(1)                       |       | 2003             |       | —             |       | —    |       | —                                                                  |       | —                              |       |
| Chief Executive  Officer and           |       | 2002             |       | $                  | 377,399    |      | 98,875     |                                                                    | 400,000    |                                | $          | 38,539 |   |
| President                              |       | 2001             |       | $                  | 34,346     |      | N/A        |                                                                    | N/A        |                                | N/A        |   |
|                                   |       |             |       |               |       |      |       |                                                                    |       |                                |       |
| Paul Ayres(2)                          |       | 2003             |       | —             |       | N/A       |       | N/A                                                                     |       |                                |       |
| Chief Executive  Officer and President |       | 2002             |       | $                  | 346,173    |      | N/A        |                                                                    | 400,000    |                                | $          | 841,753 | (4) |
|                                   |       | 2001             |       | $                  | 312,256    |      | N/A        |                                                                    | 500,000    |                                | —     |   |

 

**StockOptions**

 

There were nostock options granted to officers or employees during Fiscal Year 2003.

 

The following tableprovides certain information concerning the exercise of stock options in FiscalYear 2003 by the Chief Executive Officers and the Named Executive Officers andunexercised stock options held by such officers at the end of Fiscal Year 2003.

 

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(1) Mr.Hanson was appointed Chief Operations Officer on May 8,2001.  He was subsequently appointed tobe Chief Executive Officer and President on March 28, 2001. He was paid asalary of $210,000 per annum up to February 28, 2002, at the date he agreed toreduce his salary to $140,000 per annum. He received a car allowance of $15,120, which was unchangedthroughout.  He received a pension of7.5% of the original salary of $210,000, which he elected to reduce to 3.75% ofthis salary from February 28, 2002. Following the restructuring of the group atJuly 18, 2002 Mr Hanson no longer receives a salary or other employee relatedbenefits from Authoriszor Inc.

(2) Mr. Ayres was paid a salary of $420,000 per annum up to February28, 2002, at that date he agreed to reduce his salary to $280,000 perannum.  He received a car allowance untilOctober 31, 2001 pro-rata at an annual rate of $15,120, and pension pro-rata of7.5% of his original salary of $420,000. Mr. Ayres resigned as Chief Executive Officer and President on March 28,2002.  Therefore, the compensationinformation reflected herein for Fiscal Year 2002 reflects compensation throughsuch date.  Please see “ExecutiveCompensation – Employment Contracts, Termination of Employment andChange-in-Control Agreements” for further information concerning thecompensation paid to Mr. Ayres in connection with his resignation.

 

17

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**AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL**

**AND OPTION VALUES FOR FISCAL YEAR ENDED JUNE 30, 2003**

 
| ** **    | ** ** | ** **                        | ** ** | ** **          | ** ** | **Number of Securities  Underlying Unexercised  Options at June 30, 2003 (#)** | ** ** | **Value of Unexercised In-the-Money Options at  June 30, 2003 ($)  (1)** | ** ** |
|---------------|------------|-----------------------------------|------------|---------------------|------------|-----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|
| **Name**      | ** ** | **Shares  Acquired  on Exercise** | ** ** | **Value  Realized** | ** ** | **Exercisable**                                                                               | ** ** | **Unexercisable**                                                                            | ** ** | **Exercisable** | ** ** | **Unexercisable** | ** ** |
|          |       |                              |       |                |       |                                                                                          |       |                                                                                         |       |   |   |   |   |
| Garcia Hanson |       | -0-                               |       | -0-                 |       | —                                                                                        |       | —                                                                                       |       | -0- |   | -0- |   |
| Paul Ayres    |       | -0-                               |       | -0-                 |       | 300,000                                                                                       |       | 100,000                                                                                      |       | -0- |   | -0- |   |

 

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(1)   Marketvalue of underlying securities at exercise date or fiscal year end, as the casemay be, minus the exercise price.

 

During Fiscal Year 2002,the UK subsidiary Authoriszor Limited made certain contributions to directors,executive officers and other employees of Authoriszor Limited with respect tothe personal pension plan of each such person in the UK.  Pursuant to the terms of such plan,Authoriszor Limited made a contribution to the personal pension plans ofdirectors and officer of Authoriszor Limited in an amount that did not exceed7.5% of the annual salary of such directors and executive officers. Certain ofour Named Executive Officers have received contributions pursuant to suchplan.  See footnotes 1-3 contained underthe table captioned “Summary Compensation Table.”

 

**EmploymentContracts, Termination of Employment and Change-in-Control Agreements**

 

In connection withthe execution of the agreement to acquire WRDC, our Board of Directorsappointed Garcia Hanson as our Chief Operating Officer, effective May 8,2001.  In addition, the Board ofDirectors of Authoriszor Holdings Ltd. (“AHL”) appointed Mr. Hanson as theOperations Director of Authoriszor Ltd., a wholly owned subsidiary ofAuthoriszor Holdings Limited.  Mr. Hansonalso continued in his capacity as Managing Director of WRDC.

 

The Employment Agreement with Mr. Hanson was for an unspecified term,with either party able to terminate the Employment Agreement upon 12 monthsprior notice of such termination. Pursuant to the Employment Agreement, the Executive was entitled tocompensation of:

 

**•**      abase salary of $220,000; and

•      abonus based upon the achievement of certain quarterly targets as determined byour Board of Directors.

 

Theagreement contained a nondisclosure provision with an unlimited duration andnon-competition and non-interference provisions effective for twelve monthssubsequent to termination of the agreement.

 

Mr.Hanson became President and Chief Executive Officer on March 28, 2002 and wasappointed to our Board of Directors of on that date.   The Compensation Committee of the Board ofDirectors agreed to amend and restate that Employment Agreement dated as of May8, 2002, by and between Mr. Hanson and us, effective March 1, 2002.  Subject to the negotiation and execution ofdefinitive documentation with respect to such agreement, the CompensationCommittee determined that the agreement should be amended to include thefollowing terms:

 

•      Abase salary of $140,000

 

OnOctober 7, 2000, we entered into an Employment Agreement with Paul Ayrespursuant to which Mr. Ayres became the Managing Director of AuthoriszorLimited.  The term of this agreement wasone year, expiring October 6, 2002.  TheEmployment Agreement was terminable immediately for cause by us, terminablevoluntarily by Mr. Ayres upon 45 days written notice, and after the one yearterm of employment has lapsed, both us and Mr. Ayreswere required to give six months notice of termination.  Mr. Ayers was entitled to compensation in thefollowing amount (assuming a currency conversion ration of £1.50 British Poundsper $1.00 United States):

 

18

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•      abase salary of $277,500;

•      amaximum annual bonus of $210,000, payable monthly, provided that certainrevenue targets were achieved; provided, however, that $26,250 shall be payableas a minimum guaranteed bonus for the first three months of employment;

•      inaddition, up to an additional $45,000 was payable in the event that otheragreed upon targets were achieved;

•      stockoptions to purchase a cumulative total of 200,000 shares our common stock at anexercise price of $9.75 per share, subject to certain adjustments as providedin the stock option agreement to be executed, that vest 25% per year for aperiod of four years.

 

The optionsterminate on October 6, 2010.  In theevent we are sold during the term of the agreement, all salary payments andbonus payments under the agreement became immediately due and payable.

 

Subsequently, ourBoard of Directors announced that it had appointed Paul Ayres, the ManagingDirector of Authoriszor Ltd., to the positions of President and Chief ExecutiveOfficer and appointed Andrew Cussons, the Finance Director of Authoriszor Ltd.,our Chief Financial Officer to replace the Executive, effective as of January31, 2001.  In addition, effective January29, 2001, our Board of Directors appointed Mr. Ayres and Mr. Cussons to ourBoard of Directors.

 

In connection with theforegoing, the Compensation Committee of the Board of Directors agreed to amendand restate that certain Employment Agreement, datedas of October 7, 2000, by and between Mr. Ayres and us, effective February 9,2001.  Subject to the negotiation andexecution of definitive documentation with respect to such agreement, theCompensation Committee determined that the agreement should include the followingterms:

 

**•**      a base salary of $450,000; and

•      stockoptions to purchase a cumulative total of 200,000 shares of our common stock atan exercise price of $1.50 per share under our 2000 Omnibus Stock Option andIncentive Plan (the “2000 Plan”), subject to certain adjustments as provided inthe stock option agreement to be negotiated and executed in connection withsuch grant.

 

The CompensationCommittee of the Board of Directors agreed to further amend and restate thatcertain Employment Agreement dated February 9, 2001 by and between Mr. Ayresand us, effective March 1, 2002.  Subjectto the negotiation and execution of definitive documentation with respect tosuch agreement, the Compensation Committee determined that the agreement beamended to including the following terms:

 

**•**      Abase salary of $300,000;

 

As part of arestructuring plan approved by the Board of Directors, Paul Ayres has resignedas President and Chief Executive Officer, and from other various executive anddirector positions that he had held with the Company and its subsidiaries.  Mr. Ayres has entered into a CompromiseAgreement with the Company.  Also, Mr.Ayres will continue for a limited time to be retained as a non-executivedirector on a no fee basis.  Pursuant tothe terms of the Compromise Agreement, we have paid Mr. Ayres $22,500 onexecution of the agreement and an additional payment of $7,500 was made in June2002.  We also issued to Mr. Ayres 40,142shares of our Series A Cumulative Redeemable PreferredStock (“Preferred Stock”).  The provisionof a Company car and healthcare benefits continued in force for Mr. Ayres untilDecember 31, 2002.  Additionally, 400,000stock options previously granted to Mr. Ayres were vested immediately onexecution of the agreement.

 

We entered into a Consultancy Agreement, dated as ofMay 23, 2002, with a company owned by Mr. Ayres and Mr. Cussons that has agreedto provide certain consulting services to us for six (6) months following theeffective date of the Consultancy Agreement. We agreed to pay the consultingcompany payments aggregating $75,750. The sum of $15,000 was paid in June 2002and the balance of $60,750 was paid in July 2002. In addition it was agreedthat a further payment would be made to the consulting company exclusivelydependent on, and receipt by us of, anticipated funds in relating to a taxcredit we were seeking. Application was made to the UK Inland Revenue in theamount of $261,385 with respect to the tax credit (the “First Tax Credit”) andthe sum of $120,000 was to be paid to the consulting company on receipt by thecompany of the First Tax Credit. The proceeds of the tax credit were receivedin July 2002. The receipt by the Company of funds with respect to the SecondTax Credit is

 

19

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subject to the Inland Revenueapproving the amount of the applicable tax credit claimed by the Company. TheInland Revenue subsequently approved the Second Tax Credit and the consultingcompany invoiced the Company £26,133.50 in December 2002 and it was paid inOctober 2003 as a result of receiving the funds from the Inland Revenue. Inaddition, the consulting company is entitled to receive a further payment of£20,000 if the Company (or any subsidiary) receives funding in the sum of£250,000 or more from a specified private UK investment company as a result ofthe consulting company’s services.

 

## ** **

## **ITEM 11.  SECURITY OWNERSHIP OFCERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS**

 

Our onlyoutstanding class of equity securities is our common stock and our Series A Preferred Redeemable Stock.  The following table sets forth certaininformation with respect to what we believe is the beneficial ownership of ourcommon stock as of June 30, 2003, by

 

•      eachperson known by us to beneficially own more than 5% of the outstanding sharesof common stock;

•      ourdirectors; and

•      allof our directors and executive officers as a group.

 

20

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| **Person or Group**                               | ** ** | **Shares  of  Common Stock  Beneficially  Owned (1A)** | ** ** | **Percentage  of  Shares of Common  Stock Beneficially  Owned (1A)** | ** ** | **Shares  of Series A  Preferred Stock  Beneficially  Owned (1B)** | ** ** | **Percentage  of Shares  of Series A Preferred  stock Beneficially  Owned (1B)** | ** ** | **Total  Shares  Beneficially  Owned (1A, 1B)** | ** ** | **Percentage  of Total  Shares Beneficially  Owned (1A, 1B)** | ** ** |
|---------------------------------------------------|------------|--------------------------------------------------------|------------|----------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|----------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|---------------------------------------------------------------|------------|
| **Directors****:**                                |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
|                                              |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Paul Ayres(1)++++                                 |       | 300,000                                                |       | 1.4                                                                  | %          | 40,142                                                             |       | 10.6                                                                             | %          | 340,142                                         |       | 1.6                                                           | %          |
| Don Box (2)++                                     |       | 120,000                                                |       |                                                                 | *          |                                                               |       |                                                                             |       | 120,000                                         |       |                                                          | *          |
| Garcia Hanson                                     |       | 1,527,637                                              |       | 7.4                                                                  | %          | 79,937                                                             |       | 21.2                                                                             | %          | 1,607,574                                       |       | 7.6                                                           | %          |
|                                              |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| **Directors  and Executive Officers as a Group:** |       | 1,947,637                                              |       | 9.2                                                                  | %          | 120,079                                                            |       | 31.8                                                                             | %          | 2,067,716                                       |       | 9.8                                                           | %          |
| (3 persons)                                       |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
|                                              |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| **Beneficial  Owners of 5% or More:**             |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
|                                              |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Roy Williams(3)                                   |       | 2,154,842                                              |       | 10.4                                                                 | %          |                                                               |       |                                                                             |       | 2,154,842                                       |       | 10.2                                                          | %          |
| Birkett House, 27  Albermarle Street              |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| London WIX 4LQ,  England                          |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Brian Edmondson                                   |       | 1,527,637                                              |       | 7.4                                                                  | %          | 194,897                                                            |       | 51.7                                                                             | %          | 1,722,534                                       |       | 8.1                                                           | %          |
| 1st Floor,  Ebor Court                            |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Westgate, Leeds  L514ND, England                  |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| James Leonard  Jackson (4)                        |       | 1,280,108                                              |       | 6.2                                                                  | %          |                                                               |       |                                                                             |       | 1,280,108                                       |       | 6.0                                                           | %          |
| 2 Parklands,  Studley Roger                       |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Ripon, North  Yorkshire, GH4 3AY,                 |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| England                                           |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| David John  Blanchfield (4)                       |       | 1,275,037                                              |       | 6.1                                                                  | %          |                                                               |       |                                                                             |       | 1,275,037                                       |       | 6.0                                                           | %          |
| Sunwood Farm  Cocun Lane,                         |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Clayton, Bradford                                 |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| West Yorkshire,  BD14 GPY, England                |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| David Robert  Wray(4)                             |       | 1,260,429                                              |       | 6.1                                                                  | %          |                                                               |       |                                                                             |       | 1,260,429                                       |       | 5.9                                                           | %          |
| Dove House,  Shimden Hall Rd.,                    |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |
| Halifax, HX3 9XA,  England                        |       |                                                   |       |                                                                 |       |                                                               |       |                                                                             |       |                                            |       |                                                          |       |

 

21

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| +      |   | The address for these executive officers and  directors is 1st Floor, Ebor Court, Westgate, Leeds,  LS1 4ND United Kingdom.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ++     |   | The address for this  director is 8201 Preston Road, Suite 600, Dallas, Texas 75225-6211.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ++++   |   | The address for this  executive officer is 1st Floor Ebor Court, Westgate, Leeds LS1 4ND, England.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *      |   | Less than one percent  (1%)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| (1A)   |   | Based upon 20,768,511  shares of common stock outstanding as of June 30, 2003. Unless otherwise  indicated, includes shares owned by a spouse, minor children or by relatives  sharing the same home, entities owned or controlled by the named person. Also  includes shares if the named person has the right to acquire such shares  within 60 days of June 30, 2003 by the exercise of any right or option.  Unless otherwise noted, shares are owned of record and beneficially by the  named person.                                                                                                                                                                                                                                                                             |
| (1B)   |   | Based upon 753,856  shares of Series A Redeemable Preferred Stock outstanding as of June 30,  2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (1)    |   | Mr. Ayres was granted  an option to purchase 200,000 shares of common stock at an exercise price of  $9.75 per share which vests up to 25% per year annually beginning on October  7, 2001. In addition, effective February 9, 2001, Mr. Ayres was granted a  further option to acquire 200,000 shares of common stock at an exercise price  of $1.50. This further option is immediately exercisable for a 10 year  term.                                                                                                                                                                                                                                                                                                                                                        |
| (2)    |   | Mr. Box was granted a  stock option to acquire 100,000 shares of our common stock at an exercise  price of $7.75 per share on November 10, 2000. The stock option is  immediately exercisable for a three (3) year term.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| (3)    |   | Includes 655,334 shares  of the Company’s common stock held by Zalcany Limited, a company organized  under the laws of the UK of which Roy Williams owns 50% of the issued and  share capital and is one of two directors; 290,000 shares of our common stock  held by Mustardseed Estates Ltd., a company organized under the laws of the  UK of which Roy Williams retains 99.9% voting control; and 67,500 shares of  our common stock held by the Cardinal Williams Pension Fund of which Roy  Williams is one of two trustees and the sole beneficiary. Includes 484,008  shares held by an Isle of Man trust in which Roy Williams is included in  a class of potential beneficiaries. Mr. Williams disclaims beneficial  ownership of the shares owned by this trust. |
| (4)    |   | Includes shares of our  common stock issued to those individuals pursuant to the acquisition of IT IS  Technologies Ltd, now named Authoriszor Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

22

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**Securities Authorized forIssuance Under Equity Compensation Plans**

 

As of June 30, 2003, ourequity compensation plan information was as follows:

 

**Equity Compensation PlanInformation**

 
| **Plan Category**                                           | ** ** | **Number of securities to  be issued upon exercise  of outstanding options,  warrants and rights** | ** ** | **Weighted-average  exercise price of  outstanding options,  warrants and rights** | ** ** | **Number of securities  remaining available for  future issuance under  equity compensation  plans (excluding  securities reflected in  column (a))** | ** ** |
|-------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                  | ** ** | **(a)**                                                                                            | ** ** | **(b)**                                                                            | ** ** | **(c)**                                                                                                                                               | ** ** |
| Equity compensation plans approved by security  holders     |       | 1,924,716                                                                                          |       | 4.41                                                                               |       | 775,284                                                                                                                                               |       |
| Equity compensation plans not approved by security  holders |       | 404,036                                                                                            |       | 6.14                                                                               |       | —                                                                                                                                                |       |
| Total                                                       |       | 2,328,752                                                                                          |       | 4.71                                                                               |       | 775,284                                                                                                                                               |       |

 

## **ITEM 12.**  CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS

 

On May8, 2001, we entered into certain agreements (the “Acquisition Agreements”)pursuant to which the Company, directly or through Authoriszor HoldingsLimited, agreed to (i) initially increase its ownership interest from 25.1% (ona fully diluted basis) to 66.4% (on a fully diluted basis) of the outstandingcapital stock of WRDC, (referred to herein as the “First Step Transaction,”);and (ii) ultimately acquire the remaining shares of WRDC capital stock not thenalready owned by the Company or Authoriszor Holdings Limited upon theoccurrence of certain events (the “Second Step Transaction”).  The consideration payable in connection withthe First Step Transaction and the Second Step Transaction was determinedpursuant to arms-length negotiations among the parties thereto.  The source of the cash consideration withrespect to the First Step Transaction was our cash reserves.  Each of the dollar amounts contained hereinreflect the currency exchange rate in effect immediately prior to the executionof the Acquisition Agreements.

 

TheFirst Step Transaction was consummated, in part, at a closing (the “InitialClosing”) on May 8, 2001.  In connectionwith the Initial Closing, in exchange for certain shares of capital stock ofWRDC held by shareholders (the “Shareholders”) of WRDC, Garcia Hanson and BrianEdmondson, the Company (i) share (“Common Stock”), of the Company to theShareholders and (ii) paid to the Shareholders approximately $1,356,000 ((pound) 941,766) in cash.  The Company was alsoobligated to issue to the Shareholders up to 195,555 additional shares (the “ContingentShares”) of Common Stock, subject to the realization of certain accountsreceivables of WRDC.  As of the datehereof, the Company has not finalized its determination as to whether therequirements for the issuance of the Contingent Shares have beensatisfied.  Also, as part of the FirstStep Transaction the Company subscribed for an additional amount of capitalstock directly form WRDC for an aggregate subscription price of $720,000purposes.  One-half of this amount was paid by the Company at the Initial Closing withthe balance (the “Subscription Balance”) to be paid to WRDC no later than six(6) months after the Initial Closing. The Subscription Balance has not been paid by the Company to WRDC atthis time.

 

TheAcquisition Agreements obligated the Company to purchase the remaining sharesof WRDC capital stock not then already owned by the Company or AuthoriszorHoldings Limited upon the occurrence of certain events, but in no event laterthan January 1, 2002.  The considerationto be paid in connection with the Second Step Transaction was to consist of 55%in shares of Common Stock and 45% in cash; provided, however, that in no eventwas the Company required to issue more than 19.9% of the issued and outstandingshares of Common Stock as of the date (the”Measuring Date”) immediately priorto the Initial Closing.  If the exchangeratio set forth in the Acquisition Agreements would otherwise require theCompany to issue more shares (the “Excess Shares”) than 19.9% of the issued andoutstanding shares of Common Stock and/or currency fluctuations during theinterim

 

23

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between the Initial Closing and the Second Closing (asdefined herein) or otherwise, the Company was required to pay to the Shareholderan amount in cash (the “Cash Equivalent”) equivalent to the aggregate marketvalue of the Excess Shares.

 

TheCompany and the Shareholders have decided to close the Second Step Transactionat this time and to amend the Acquisition Agreements to provide thatShareholders shall receive a new class of preferred stock in lieu of the CashEquivalent.

 

In connection with the second closing of the WRCDacquisition on December 4, 2001 the Company paid to Garcia Hanson, our ChiefExecutive Officer and Chief Financial Officer and Brian Edmondson $618,328((pound) 438,546) in cash and agreed to issue to Garcia Hanson and BrianEdmondson 1,062,680 shares of Common Stock and 194,897 shares of Series ACumulative Redeemable Preferred Stock, par value $0.01 per share (“Series APreferred”).  The powers, preferences andrights of the Series A Preferred are set forth in ourCertificate of designations, Preferences and Relative Rights, Qualifications,Limitations and Restrictions. (“Certificate of Designations”).

 

The Certificate of Designations requires us to paycumulative dividends to the holders of the Series APreferred a rate of ten percent (10%) per annum of the original purchase priceof $2.00 per share (“Original Purchase Price”) of the Series A Preferredannually on December 31 of each year commencing December 31, 2002.  In addition, upon any liquidation,dissolution or winding up of the Company, the holders of the Series A Preferredshall be entitled to receive, in preference to the holders of Common Stock, aper share amount equal to the Original Purchase Price plus any accrued butunpaid dividends.

 

Further, the holders of at least fifty-one percent(51%) of the then outstanding shares of Series A Preferred may elect to requireus to redeem their shares of Series A Preferred upon (i) the occurrence ofcertain Redemption Dates (as defined in the Certificate of Designations), (ii)the closing of a secondary fundraising by the Company in which the Companyraises at last $5 million, or (iii) the consolidation, merger or reorganizationof the Company with or into any other corporation, where the holders of CommonStock determined on a fully diluted basis immediately before such merger,consolidation or reorganization hold less than fifty percent (50%) of theCommon Stock of the Company or the capital stock of the surviving entity as sodetermined immediately after such transaction. Upon such redemption, the holders of the Series APreferred shall be entitled to receive an amount in cash equal to the OriginalPurchase Price plus any accrued but unpaid dividends then owed.

 

For so long as any of the shares of Series A Preferred issued by us remain outstanding, the holders ofa majority of the then outstanding Series A Preferred are entitled to nominateand elect one (1) director to our Board of Directors.  Except for the right to elect (1) director tothe Board, the holders of the Series A Preferred shall not have the right tovote their stock as shareholders unless we violate any material powers,preference or rights of the Series A Preferred.   As of the date hereof, the holders of theSeries A Preferred have not nominated a director tothe Board.

 

In connection with the Initial Closing, the Boardappointed Garcia Hanson, one of the Shareholders, as Chief Operating Officer ofthe Company and the Board of Directors of Authoriszor Holdings Limitedappointed Mr. Hanson as the Operations Director of Authoriszor Limited, awholly owned subsidiary of Authoriszor Holdings Limited.  Mr. Hanson continued in his capacity asManaging Director of WRDC.

 

The foregoing summary is not intended to be completeand is subject to, and is qualified in its entirety by reference to, all of theprovisions of the exhibits to the Form 8-K/A, filed January 30, 2002.

 

The followingsummarizes certain material agreements between us and our executive officers,directors and existing stockholders with a beneficial interest in excess of 5%of our outstanding common stock. It is not a complete description of suchagreements and, therefore, this discussion is qualified in its entirety byreference to the agreements, copies of which will be made available forinspection upon written request and have been filed by us with the Securitiesand Exchange Commission. It is our intention that in the future, any transactionswith our directors, officers, employees or affiliates will be minimal and willbe approved in advance by a majority of the disinterested members of our Board.

 

On May 8, 2001, wepurchased an additional equity interest in WRDC Limited, a company incorporatedin the United Kingdom, increasing our ownership interest from 27.2% (25.1% on afully diluted basis) to 66.4%.  We

 

24

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issued to certainshareholders of WRDC 929,914 shares of our common stock, one half of which wasissued to Garcia Hanson, who is an officer, director, and greater than 5%stockholder, and paid cash of approximately $996,000 to such shareholders ofWRDC, one half of which was paid to Mr. Hanson. We also committed to issue an additional 195,555 shares of our commonstock equally to each of Mr. Hanson and other shareholders of WRDC, subject tothe realization of certain of WRDC’s accounts receivable.  Also on this date we subscribed foradditional WRDC shares from WRDC for a purchase price of approximately $720,000and granted options to WRDC employees to purchase 237,000 shares of our commonstock.  We also on this date committed toacquire the remaining 33.6% ownership interest in WRDC not already owned by usupon the occurrence of certain events, but in no event later than January 1,2002. The purchase price payable to such other shareholders for the remaininginterest is approximately $3,100,000, of which Mr. Hanson receivedone-half.  We are required to payapproximately $1,564,000 in cash, of which $1,260,000 is in an escrow account,and we are required to pay the remaining portion by issuing shares of ourcommon stock to such shareholders of WRDC. However, in the event that the exchange ratio set forth in theacquisition documents would require us to issue more than 19.9% of the issuedand outstanding shares of our common stock, as of May 7, 2001, we will insteadbe required to pay to such shareholders of WRDC an amount in cash equal to theaggregate market value of such excess shares. Moreover, when we acquire the remainder of shares of outstanding capitalstock of WRDC, we may be obligated to make such payment entirely in cash if:

 

•      we declare, or otherwise seek, or are forced to seek,protection from creditors under the federal bankruptcy laws; or

•      ifon the date that we are otherwise required to purchase the remainingoutstanding shares of capital stock of WRDC, we are not listed on NASDAQ or theOTC Bulletin Board, or otherwise quoted on a public market in North America orEurope.

 

Subsequently and as of December 4, 2001 the Companypurchased the remaining 33.6% ownership interest in WRDC by paying eachshareholder $618,328 in cash, and 1,062,680 in shares of common stock, and194,897 shares of Series A Cumulative Redeemable Preferencestock.

 

Inconnection with the transaction whereby we increased our ownership interest inWRDC, our Board of Directors appointed Garcia Hanson as our Chief OperatingOfficer.  In addition, Mr. Hanson hasjoined the Board of Directors of Authoriszor Holdings Limited and AuthoriszorLimited, and has been appointed as the Operations Director of AuthoriszorLimited.  Mr. Hanson will also continuein his capacity as Managing Director of WRDC. For further information concerning the terms and conditions upon whichwe acquired WRDC, please see our Annual Report on Form 10-KSB that was filedwith the Securities and Exchange Commission on October 19, 2001.

 

On July 18, 2002,(we entered into an investment agreement (the “Investment Agreement”), dated asof July 18th July, 2002, with Authoriszor Holdings Limited (“AHL”),Roy Williams (“Williams”), a beneficial owner of more than 5% of theoutstanding shares of Common Stock, Garcia Hanson (“Hanson”), our President, adirector, and beneficial owner of more than 5% of the outstanding shares ofCommon Stock, Zalcany Limited (“Zalcany”) and Noblepoint Limited (“Noblepoint,”and collectively with Williams, Hanson and Zalcany, the “Investors”), pursuantto which, the Investors purchased Preferred Ordinary Shares of AuthoriszorHoldings Limited (the “AHL Preferred Shares”), a subsidiary of the Company, foran aggregate purchase price of £574,994.94 ($902,684.56).   As a result, the Company’s equity interestin AHL, which is in the form of ordinary shares of AHL (the “AHL OrdinaryShares”), has decreased from 100% to 35%.

 

Followingthis transaction and a restructuring of the ownership of shares of itssubsidiaries, Authoriszor Holdings Limited owns all of the capital stock ofWRDC Limited, Authoriszor Limited, Logsys Limited and, indirectly through WRDCLimited, over 75% of the stock of PAD (London) Limited and WRDC AG.  Also, Authoriszor Holdings Limited’s name waschanged to WRDC Logsys Limited.  TheInvestment Agreement restricts AHL from making payments to the Company withoutthe consent of the Investors however, approximately £300,000 ($470,970.00) ofthe investment proceeds were paid to Company by Authoriszor Holdings Limited inpayment of certain inter-company indebtedness. In connection with this transaction, the Company redeemed 117,742.5shares of the Company’s Series A Cumulative RedeemablePreferred Stock owned by Hanson for the aggregate redemption price set forth inthe Series A Preferred Stock designations of £150,000 ($235,845.00).  Also, since we no longer control AuthoriszorHoldings Limited, effective July 18, 2002, we will not be able to consolidatethe financial statements of AHL and its subsidiaries.

 

25

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Hansonutilized a significant portion of the proceeds from the redemption inconnection with the purchase of his Authoriszor Holdings Limited PreferredShares.  The Investment Agreement alsoprohibits Authoriszor Holdings Limited from issuing shares of its stock withoutthe consent of the Investors, except that Authoriszor Holdings Limited mayissue a certain number additional shares (the “Additional Shares”) at apurchase price not less than the price paid by the Investors.  If all the Additional Shares are issued, theCompany’s equity interest in Authoriszor Holdings Limited would be reduced to32.4%.  The Investment Agreement providesthat the board of directors of Authoriszor Holdings Limited shall consist ofnot less than four persons, including two persons nominated by theInvestors.  The current members of theboard of directors of Authoriszor Holdings Limited following the completion ofthe transaction are Hanson, Godfrey Stephen Shingles and Ian McNeill.  We does not have theright to nominate a director.

 

Thepowers, preferences and rights of the AHL Ordinary Shares and AHL PreferredShares are set forth in the Articles of Association of Authoriszor HoldingsLimited (“AHL Articles”), which is incorporated by reference as an exhibit tothis Form 10-KSB.  The AuthoriszorHoldings Limited Articles contain a right of first refusal provision thatgrants to any shareholder of Authoriszor Holdings Limited, which currentlyconsists of the Company and the Investors (collectively, the “AHL Shareholders”),the first right to purchase the shares of Authoriszor Holdings Limited thatanother Authoriszor Holdings Limited Shareholder desires to sell to athird-party.  The price of such purchasewill be determined by either a mutual agreement between the directors ofAuthoriszor Holdings Limited and the transferring Authoriszor Holdings LimitedShareholder or by an independent accountant.

 

Pleasealso see the section “Employment Contracts, Termination of Employment andChange-in-Control Agreements” under Part III Item 10, Executive Compensation ofthis Report for a description of additional transactions and agreements withour officers, directors and greater than 5% stockholders.

 

26

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**ITEM 13.****EXHIBITS AND REPORTS ON FORM 8-K**

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                                  |
|----------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                                                                                                             |
| 2.1                  |       | Agreement and Plan of  Merger, dated July 29, 1996, and among Toucan Gold Corporation and  Starlight Acquisitions, Inc. (incorporated by reference from the Current  Report on Form 8-K dated July 29, 1996, Exhibit 2.1).                   |
| 2.2                  |       | Share Exchange  Agreement, dated May 10, 1996, by and among Starlight Acquisitions, Inc.  and Toucan Mining Limited (incorporated by reference from the Current Report  on Form 8-K dated May 13, 1996, Exhibit 2).                          |
| 2.3(4)               |       | Share Sale Agreement  regarding ITIS Technologies Ltd., dated July 22, 1999, by and among  David J. Blanchfield, James L. Jackson, David R. Wray, Barry  Jones, Ian McNeill and Toucan Gold Corporation. (Exhibit 10.1)                 |
| 2.4(12)              |       | Stock Purchase  Agreement, dated as of May 8, 2001, by and among Authoriszor Inc.,  Authoriszor Holdings Limited and the Shareholders named therein (Exhibit  2.1).                                                                                              |
| 2.5(12)              |       | Subscription Agreement,  dated as of May 8, 2001, by and among Authoriszor Inc., Authoriszor Holdings  Limited, WRDC Limited and the Shareholders named therein (Exhibit 2.2).                                                                                   |
| 2.6(12)              |       | Articles of Association  of WRDC Limited, dated as of May 8, 2001 (Exhibit 2.3).                                                                                                                                                                                 |
| 2.7(12)              |       | Deed of Mortgage, dated  as of May 8, 2001, by and between Authoriszor Inc., Garcia Hanson and Brian  Edmondson (Exhibit 2.4)                                                                                                                                    |
| 2.8(14)              |       | Stock Purchase  Agreement, dated as of July 3, 2001, by and among Authoriszor Holdings  Limited, Logsys Holdings Limited and Stewart Leslie Ashton (Exhibit 2.1)                                                                                                 |
| 2.9(15)              |       | Deed of Agreement,  dated as of December 4, 2001, by and among Authoriszor Inc., Authoriszor  Holdings Limited, WRDC Limited, Garcia Hanson and Brian Edmondson (Exhibit  2.5)                                                                                   |
| 2.10(15)             |       | Side Letter to the Deed  of Agreement, dated as of December 4, 2001, by and among Authoriszor Inc.,  Authoriszor Holdings Limited, Garcia Hanson and Brian Edmondson (Exhibit 2.6)                                                                               |
| 3.1                  |       | Certificate of  Incorporation of Toucan Gold Corporation filed on July 22, 1996 with the  Secretary of State of the State of Delaware (incorporated by reference from  the Current Report on Form 8-K dated July 29, 1996,  Exhibit 4.1).    |
| 3.2                  |       | Amendment to our  Certificate of Incorporation filed on August 25, 1999, with the  Secretary of State of Delaware (incorporated by reference to our Quarterly  Report on Form 10-QSB for the quarter ended September 30, 1999,  Exhibit 3.1) |
| 3.3(13)              |       | Bylaws of Authoriszor  Inc., as amended March 21, 2001 (Exhibit 3.1).                                                                                                                                                                                       |
| 3.4(15)              |       | Certificate of  Designation, Preferences and Related Rights, Qualifications, Limitations and  Restrictions of Series A Cumulative Redeemable Preferred Stock of Authoriszor  Inc. (Exhibit 4.1)                                                                  |
| 4.1(3)               |       | Option Agreement, dated  September 27, 1997, by and between L. Clark Arnold and Toucan Gold  Corporation (incorporated by reference to Exhibit 10.2 to our Annual  Report on Form 10-KSB for the period ended December 31, 1997)        |
| 4.2(3)               |       | Amendment Number One to  Stock Option Agreement, dated as of April 27, 1999, by and between  L. Clark Arnold and Toucan Gold Corporation (Exhibit 4.2)                                                                                            |
| 4.3(3)               |       | Amended and Restated  Stock Option Agreement, dated as of April 1, 1999, by and between  Robert P. Jeffcock and Toucan Gold Corporation (Exhibit 4.4)                                                                                             |
| 4.4(3)               |       | Option Agreement, dated  February 2, 1998, by and between Robert A. Pearce and Toucan Gold  Corporation (incorporated by reference to Exhibit 10.4 to our Annual  Report on Form 10-KSB for the period ended December 31, 1997)         |
| 4.5(3)               |       | Amendment Number One to  Stock Option Agreement, dated as of April 27, 1999, by and between  Robert A. Pearce and Toucan Gold Corporation (Exhibit 4.6)                                                                                           |
| 4.6(3)               |       | Amended and Restated  Stock Option Agreement, dated as of April 1, 1999, by and between David  Carmichael and Toucan Gold Corporation (Exhibit 4.8)                                                                                                    |
| 10.1(1)              |       | Warrant Agreement,  dated July 29, 1996, by and between Toucan Gold Corporation and R. Haydn  Silleck (Exhibit 10.1).                                                                                                                                  |
| 10.2(1)              |       | Warrant Agreement dated  July 29, 1996, by and between Toucan Gold Corporation and John B.  Marvin (Exhibit 10.2).                                                                                                                                |
| 10.3(1)              |       | Warrant Agreement dated  July 29, 1996, by and between Toucan Gold Corporation and Peter S.  Daley (Exhibit 10.3).                                                                                                                                |
| 10.4(1)              |       | Warrant Agreement dated  July 29, 1996, by and between Toucan Gold Corporation and Jay Lutsky  (Exhibit 10.4).                                                                                                                                         |
| 10.5(2)              |       | Agreement for the sale  and purchase of the whole of the issued share capital of Anagram Limited,  dated December 3, 1998, among Toucan Mining Limited, Toucan Gold  Corporation, Inc. and                                                                  |

 

27

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|      |   | Minmet Plc  (Exhibit 10.1).                                                                                                                                                                                                                            |
|-----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.6(2)   |   | Supplemental Agreement  dated December 3, 1998 among Toucan Mining Limited, Toucan Gold  Corporation, Inc. and Minmet Plc (Exhibit 10.2).                                                                                                         |
| 10.7(2)   |   | Option Agreement  Regarding Mineradora De Bauxita Ltda, dated December 3, 1998, among  Toucan Mining Limited, Toucan Gold Corporation, Inc. and Anagram Limited  (Exhibit 10.3).                                                                  |
| 10.8(2)   |   | Agreement for the  purchase of the whole of the issued share capital of Mineradora de Bauxita  Ltda, dated December 3, 1998 among Toucan Mining Limited, Toucan Gold  Corporation, Inc. and Anagram Limited (Exhibit 10.4).                       |
| 10.9(2)   |   | Form of Minmet Plc  Warrant Instrument (Exhibit 10.5).                                                                                                                                                                                            |
| 10.10(4)  |   | Deed of Indemnity,  dated July 22, 1999, by and among David J. Blanchfield,  James L. Jackson, David R. Wray, Barry Jones, Ian McNeill and  Toucan Gold Corporation. (Exhibit 10.2)                                                |
| 10.11(4)  |   | Letter of Appointment,  dated July 22, 1999, by and between David J. Blanchfield and ITIS  Technologies Ltd. (Exhibit 10.3)                                                                                                                  |
| 10.12(4)  |   | Letter of Appointment,  dated July 22, 1999, by and between James L. Jackson and ITIS  Technologies Ltd. (Exhibit 10.4)                                                                                                                      |
| 10.13(4)  |   | Letter of Appointment,  dated July 22, 1999, by and between David R. Wray and ITIS  Technologies Ltd. (Exhibit 10.5)                                                                                                                         |
| 10.14(4)  |   | Engagement Letter,  dated July 22, 1999, by and between CCM Ventures Ltd. and ITIS  Technologies Ltd. (Exhibit 10.7)                                                                                                                              |
| 10.15(4)  |   | Engagement Letter dated  July 22, 1999, by and between Robert Jeffcock and Toucan Gold  Corporation. (Exhibit 10.8)                                                                                                                               |
| +10.16    |   | Consulting Agreement,  dated September 23, 1999 by and between Sir Malcolm Rifkind and  Authoriszor Limited (incorporated by reference to our Quarterly Report on  Form 10-QSB for the quarter ended September 30, 1999,  Exhibit 10.9) |
| +10.17(5) |   | Executive Employment  Agreement, dated as of January 1, 2000, by and between Authoriszor Inc.  and Richard A. Langevin. (Exhibit 10.1)                                                                                                       |
| +10.18(5) |   | Authoriszor Inc. 1999  Stock Plan. (Exhibit 10.2)                                                                                                                                                                                                      |
| +10.19(7) |   | Form of  Agreement under the 1999 Stock Plan and Schedule of Agreements                                                                                                                                                                                |
| +10.20(5) |   | Agreement, dated  November 12, 1999, by and between Authoriszor Inc. and  Raymond G. H. Seitz (Exhibit 10.4)                                                                                                                            |
| +10.21(5) |   | Consulting Agreement,  dated September 23, 1999, by and between Authoriszor Inc. and Sir  Malcolm Rifkind (Exhibit 10.5)                                                                                                                          |
| +10.22(5) |   | Stock Option Agreement,  dated as of September 23, 1999, by and between Authoriszor Inc. and Sir  Malcolm Rifkind. (Exhibit 10.6)                                                                                                                 |
| 10.23(5)  |   | Placing Agreement,  dated as of January 28, 2000, by and among Authoriszor Inc., Beeson  Gregory Limited and certain Directors of Authoriszor Inc. (Exhibit 10.7)                                                                                 |
| 10.24(5)  |   | Supplemental Placing  Agreement, dated as of February 9, 2000, by and among Authoriszor Inc.,  Beeson Gregory Limited and certain Directors of Authoriszor Inc.  (Exhibit 10.8)                                                                   |
| 10.25(5)  |   | Registration Rights  Agreement, dated February 16, 2000, by and between Authoriszor Inc. and  Beeson Gregory Limited. (Exhibit 10.9)                                                                                                              |
| 10.26(5)  |   | Lock-up Agreement,  dated January 2000, by and among Authoriszor Inc., Beeson Gregory Limited and  Raymond Seitz and others. (Exhibit 10.10)                                                                                                           |
| 10.27(5)  |   | Deed of Covenant, dated as of February 22, 2000, by and among  Authoriszor Holdings Limited, WRDC Limited and certain persons named in  Schedule 1 to the Deed. (Exhibit 10.11)                                                                   |
| 10.28(5)  |   | Shareholders’  Agreement, dated as of January 27, 2000, by and among Authoriszor  Holdings Limited, WRDC Limited, the shareholders of WRDC Limited and  Authoriszor Inc., relating to WRDC Limited. (Exhibit 10.12)                          |
| 10.29(5)  |   | Letter Agreement, dated  February 22, 2000, by and between Authoriszor Holdings Limited and WRDC  Limited regarding credit facility. (Exhibit 10.13)                                                                                              |
| 10.30(5)  |   | Letter Agreement, dated  February 22, 2000, by and between Authoriszor Holdings Limited and WRDC  Limited regarding credit facility. (Exhibit 10.14)                                                                                              |
| 10.31(6)  |   | Share Sale Agreement,  dated as of January 28, 2000, by and between Authoriszor Inc. and Golden  Ridge Group Limited. (Exhibit 2.1)                                                                                                               |
| +10.32(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.33).                                                                                                                          |
| +10.33(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.34).                                                                                                                          |
| +10.34(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.35)                                                                                                                           |

 

28

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| +10.35(7)   |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.36).                                                                                                                           |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| +10.36(7)   |   | Stock Option Agreement,  dated as of November 1, 1999, between Authoriszor Inc. and Raymond Seitz  (Exhibit 10.37).                                                                                                                                     |
| 10.37(7)    |   | Lease Agreement, dated  as of April 28, 2000, between Authoriszor Inc. and Massachusetts Mutual  Life Insurance Company (Exhibit 10.38).                                                                                                                |
| 10.38(7)    |   | Consulting Agreement,  dated as of April 2000, between Authoriszor Inc. and Fred Sawin (Exhibit  10.39).                                                                                                                                                     |
| 10.39(7)    |   | Employment Agreement,  dated as of March 15, 2000, between Authoriszor Inc. and Ed Vasko  (Exhibit 10.40).                                                                                                                                              |
| 10.40(8)    |   | Consulting  Agreement, dated July 1, 2000, between Authoriszor Inc. and Commercial  Technology Ltd (Exhibit 10.40).                                                                                                                                          |
| 10.41(8)    |   | Reimbursement  Agreement, dated September 28, 2000 and effective as of October 1, 1999,  between Authoriszor Inc. and Authoriszor Limited (Exhibit 10.41).                                                                                                   |
| +10.42(9)   |   | Letter  Agreement, dated as of September 30, 2000, and executed as of October 31,  2000, by and between Authoriszor Inc. and Godfrey S. Shingles (Exhibit 10.1).                                                                                             |
| +10.43(9)   |   | Letter of  Employment, dated October 16, 2000, by and between Authoriszor Inc. and Alec  P. Karys (Exhibit 10.2).                                                                                                                                            |
| +10.44(9)   |   | Letter of  Employment, dated October 4, 2000, by and between Authoriszor Inc. and Paul  Ayres (Exhibit 10.3).                                                                                                                                                |
| 10.45(9)    |   | Consulting  Agreement, dated July 21, 2000, by and between Authoriszor Inc. and Edward F.  Rogers (Exhibit 10.4).                                                                                                                                            |
| +10.46(10)  |   | Authoriszor Inc.  2000 Omnibus Stock and Incentive Plan.                                                                                                                                                                                                     |
| +10.47(7)   |   | Letter of  Employment, dated May 1, 2000, by and between Authoriszor Inc. and Fred Sawin  (Exhibit 10.39)                                                                                                                                                    |
| +10.48(11)  |   | Severance and  Release Agreement, dated as of January 29, 2001, by and between Authoriszor  Inc. and Richard A. Langevin.                                                                                                                                    |
| +10.49(11)  |   | Stock Option Agreement,  dated as of January 31, 2000, by and between Authoriszor Inc. and Richard A.  Langevin.                                                                                                                                             |
| +10.50(12)  |   | Service  Agreement, dated as of May 8, 2001, by and among Authoriszor Inc. and Garcia  Hanson. Form of Stock Option Agreement, dated as of May 8, 2001, by and  between the Authoriszor Inc. and each of the former holders of WRDC Options  (Exhibit 10.1). |
| +10.51(12)  |   | Form of Stock  Option Agreement, dated as of May 8, 2001, by and between the Authoriszor  Inc. and each of the former holders of WRDC Options (Exhibit 10.2).                                                                                                |
| 10.52 (13)  |   | Sublease  Agreement, effective as of July 1, 2001, by and between Authoriszor Inc. and  Directech, Inc. (Exhibit 10.52).                                                                                                                                     |
| +10.53 (13) |   | Stock Option  Agreement, dated as of October 7, 2000, by and between Authoriszor Inc. and  Paul Ayres (Exhibit 10.53).                                                                                                                                       |
| +10.54 (13) |   | Stock Option  Agreement, dated as of October 16, 2000, by and between Authoriszor Inc. and  Alec Karys (Exhibit 10.54).                                                                                                                                      |
| +10.55 (13) |   | Stock Option  Agreement, dated as of November 10, 2000, by and between Authoriszor Inc. and  Don Box (Exhibit 10.55).                                                                                                                                        |
| +10.56 (13) |   | Stock Option  Agreement, dated as of October 18, 2000, by and between Authoriszor Inc. and  Geoff Shingles (Exhibit 10.56).                                                                                                                                  |
| +10.57 (13) |   | Form of Stock  Option Agreement by and between Authoriszor Inc. and various employees with  respect to the Authoriszor Inc. 2000 Omnibus Stock and Incentive Plan  (Exhibit 10.57).                                                                          |
| +10.58 (13) |   | Stock Option  Agreement, dated as of February 9, 2001, by and between Authoriszor Inc. and  Paul Ayres (Exhibit 10.58).                                                                                                                                      |
| +10.59 (13) |   | Stock Option  Agreement, dated as of February 9, 2001, by and between Authoriszor Inc. and  Andrew Cussons (Exhibit 10.59).                                                                                                                                  |
| +10.60 (13) |   | Stock Option  Agreement, dated as of February 9, 2001, by and between Authoriszor Inc. and  Alec Karys (Exhibit 10.60).                                                                                                                                      |
| +10.61(16)  |   | Stock Option  Agreement, dated as of July 3, 2001, by and between Authoriszor Inc. and S.  Ashton (Exhibit 10.1)                                                                                                                                             |
| +10.62(17)  |   | Service  Agreement, dated as of September 27, 2001, by and between Authoriszor Inc.  and Paul Ayres (Exhibit 10.1)                                                                                                                                           |
| +10.63(17)  |   | Compromise  Agreement, dated as of March 29, 2002, by and between Authoriszor Inc. and  Paul Ayres (Exhibit 10.2)                                                                                                                                            |

 

29

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|       |   |                                                                                                                                                                                               |
|------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| +10.64(17) |   | Consultancy  Agreement, dated as of May 23, 2002, by and between Authoriszor Inc. and  Utilis Ventures Limited (Exhibit 10.3)                                                                      |
| +10.65(17) |   | Service  Agreement, dated as of September 27, 2001, by and between Authoriszor Inc.  and Andrew Cussons (Exhibit 10.4)                                                                             |
| +10.66(17) |   | Compromise  Agreement, dated as of March 29, 2001, by and between Authoriszor Inc. and  Andrew Cussons (Exhibit 10.5)                                                                              |
| 10.67(17)  |   | License and  Distribution Agreement, by and between Authoriszor Inc. and Sanford  Technologies, Inc. dated as of March 25, 2002, and supplemental letter, dated  May 9, 2002 (Exhibit 10.6)        |
| 10.68(18)  |   | Investment  Agreement, dated as of July 18, 2002, by and among Authoriszor Inc.,  Authoriszor Holdings Limited, Roy Williams, Garcia Hanson, Zalcany Limited  and Noblepoint Limited (Exhibit 2.4) |
| 10.69(18)  |   | Articles of  Association of Authoriszor Holdings Limited (Exhibit 2.2)                                                                                                                             |
| 10.70(19)  |   | Settlement and Pledge  Agreement with Alex Karys dated as of April 18, 2003 (Exhibit 10.4).                                                                                                        |
| 10.71(19)  |   | Settelment and  Pledge Agreement dated as of March 24, 2003 with Massachusetts Mutual Life  Insurance Company (Exhibit 10.1).                                                                      |
| 10.72(19)  |   | Settlement and  Pledge Agreement dated as of April 17, 2003 with Decherts (Exhibit 10.3)                                                                                                           |
| 10.73(19)  |   | Letter Agreement  with The Group dated March 24, 2003 (Exhibit 10.2)                                                                                                                               |
| 31.1† |   | Certification  pursuant to Rules 13a-14(a) and 15(d)-14(a) promulgated under the Securities  Exchange Act of 1934.                                                                                 |
| 32.1† |   | Certification  pursuant to 18 U.S.C. Section 1350, as adoped pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002.                                                                           |

 

----

†              Filedherewith.

+              Compensationplan, benefit plan or employment contract or arrangement.

(1)           Incorporatedby reference to the exhibit shown in parenthesis included in our Annual Reporton Form 10-KSB for the period ended December 31, 1996, filed by uswith the Securities and Exchange Commission.

(2)           Incorporatedby reference to the exhibit shown in parenthesis included in our Current Reporton Form 8-K, filed January 5, 1999 by us with the Securities andExchange Commission.

(3)           Incorporatedby reference to the exhibit shown in parenthesis to our Registration Statementon Form S-8 filed with the Securities and Exchange Commission onJanuary 10, 2000.

(4)           Incorporatedby reference to the exhibit shown in parenthesis included in our Current Reporton Form 8-K, filed by us with the Securities and Exchange Commission onAugust 6, 1999.

(5)           Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10QSB for the quarter ended December 31, 1999.

(6)           Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K, filed by us on February 14, 2000 with the Securities andExchange Commission.

(7)           Incorporatedby reference to the Exhibit shown in parenthesis from our RegistrationStatement on Form S-1, filed by us on May 18, 2000 with the Securities andExchange Commission.

(8)           Incorporatedby reference to the exhibit shown in parenthesis from our Annual Report onForm 10-KSB, filed by us on September 29, 2000 with the Securities andExchange Commission.

(9)           Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-QSB, filed by us on November 14, 2000 with the Securities andExchange Commission.

(10)         Incorporatedby reference to Appendix A contained in our definitiveProxy Statement pertaining to the 2000 Annual Meeting of Stockholders filedwith the Securities and Exchange Commission on October 10, 2000 pursuant toRegulation 14A.

(11)         Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K filed by us with the Securities and Exchange Commission on January 30,2001.

(12)         Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K filed by us with the Securities and Exchange Commission on May 9,2001.

(13)         Incorporatedby reference to the exhibit shown in parenthesis from our Report on Form 10-KSBfiled by us with the Securities and Exchange Commission on October 22, 2001.

(14)         Reserved.

(15)         Reserved.

(16)         Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-KSB filed by us with the Securities and Exchange Commission in November14, 2001.

 

30

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(17)         Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-QSB filed by us with the Securities and Exchange Commission on June 24,2002.

(18)         Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K filed by us with the Securities and Exchange Commission on August 2,2002.

(19)         Incorporatedby reference to the exhibit shown in parenthesis from our Report on Form 10-QSBfiled by us with the Securities and Exchange Commission on November 29, 2004.

 

(d)           Reportson Form 8-K.

 

None.

 

31

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# **SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized, on March 1, 2005.

 
|   | **AUTHORISZOR INC.** |
|--------|----------------------|
|   |                 |   |
|   | By:                  | /s/ Garcia Hanson |   |
|   |                 | Garcia Hanson |
|   |                 | Chief Executive  Officer, President and |
|   |                 | Chief Financial Officer |
|   |                 | (Principal Executive  Officer and |
|   |                 | (Principal Financial  Officer) |

 

Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated. Each person whose signature to this report appears below hereby appointsGarcia Hanson as his attorney-in-fact to sign on his behalf, individually andin each capacity stated below, and to file all amendments to this report, whichamendment or amendments may make such changes in and additions to the report asany such attorney-in-fact may deem necessary or appropriate.

 
| **Signature**     | ** ** | **Title**                                                                                                         | ** ** | **Date**      | ** ** |
|-------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|---------------|------------|
|              |       |                                                                                                              |       |          |       |
| /s/Paul Ayers     |       | Director                                                                                                          |       | March 1, 2005 |       |
| Paul Ayres        |       |                                                                                                              |       |          |       |
|              |       |                                                                                                              |       |          |       |
|              |       | Director                                                                                                          |       | March 1, 2005 |       |
| Don D. Box        |       |                                                                                                              |       |          |       |
|              |       |                                                                                                              |       |          |       |
| /s/ Garcia Hanson |       | Chief Executive  Officer, President                                                                               |       | March 1, 2005 |       |
| Garcia Hanson     |       | Chief Financial  Officer, Secretary  and Director (Principal Executive  Officer and Principal Financial  Officer) |       |          |       |

 

**INDEX TO EXHIBITS**

 

The following documentsare filed as a part of this report. Those exhibits previously filed and incorporated herein by reference areidentified below.  Exhibits not requiredfor this report have been omitted.

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                  |
|----------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                 |       |                                                                                                                                                                                                                                             |
| 2.1                  |       | Agreement and Plan of  Merger, dated July 29, 1996, and among Toucan Gold Corporation and  Starlight Acquisitions, Inc. (incorporated by reference from the Current  Report on Form 8-K dated July 29, 1996, Exhibit 2.1).   |
| 2.2                  |       | Share Exchange  Agreement, dated May 10, 1996, by and among Starlight Acquisitions, Inc.  and Toucan Mining Limited (incorporated by reference from the Current Report  on Form 8-K dated May 13, 1996, Exhibit 2).          |
| 2.3(4)               |       | Share Sale Agreement  regarding ITIS Technologies Ltd., dated July 22, 1999, by and among  David J. Blanchfield, James L. Jackson, David R. Wray, Barry  Jones, Ian McNeill and Toucan Gold Corporation. (Exhibit 10.1) |
| 2.4(12)              |       | Stock Purchase  Agreement, dated as of May 8, 2001, by and among Authoriszor Inc.,  Authoriszor Holdings Limited and the Shareholders named therein (Exhibit  2.1).                                                                              |
| 2.5(12)              |       | Subscription Agreement,  dated as of May 8, 2001, by and among Authoriszor Inc., Authoriszor Holdings  Limited, WRDC Limited and the Shareholders named therein (Exhibit 2.2).                                                                   |

 

32

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| 2.6(12)    |   | Articles of Association  of WRDC Limited, dated as of May 8, 2001 (Exhibit 2.3).                                                                                                                                                                                 |
|------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.7(12)    |   | Deed of Mortgage, dated  as of May 8, 2001, by and between Authoriszor Inc., Garcia Hanson and Brian  Edmondson (Exhibit 2.4)                                                                                                                                    |
| 2.8(14)    |   | Stock Purchase  Agreement, dated as of July 3, 2001, by and among Authoriszor Holdings  Limited, Logsys Holdings Limited and Stewart Leslie Ashton (Exhibit 2.1)                                                                                                 |
| 3.1        |   | Certificate of  Incorporation of Toucan Gold Corporation filed on July 22, 1996 with the  Secretary of State of the State of Delaware (incorporated by reference from  the Current Report on Form 8-K dated July 29, 1996,  Exhibit 4.1).    |
| 3.2        |   | Amendment to our  Certificate of Incorporation filed on August 25, 1999, with the  Secretary of State of Delaware (incorporated by reference to our Quarterly  Report on Form 10-QSB for the quarter ended September 30, 1999,  Exhibit 3.1) |
| 3.3(13)    |   | Bylaws of Authoriszor  Inc., as amended March 21, 2001 (Exhibit 3.1).                                                                                                                                                                                       |
| 4.1(3)     |   | Option Agreement, dated  September 27, 1997, by and between L. Clark Arnold and Toucan Gold  Corporation (incorporated by reference to Exhibit 10.2 to our Annual  Report on Form 10-KSB for the period ended December 31, 1997)        |
| 4.2(3)     |   | Amendment Number One to  Stock Option Agreement, dated as of April 27, 1999, by and between  L. Clark Arnold and Toucan Gold Corporation (Exhibit 4.2)                                                                                            |
| 4.3(3)     |   | Amended and Restated  Stock Option Agreement, dated as of April 1, 1999, by and between  Robert P. Jeffcock and Toucan Gold Corporation (Exhibit 4.4)                                                                                             |
| 4.4(3)     |   | Option Agreement, dated  February 2, 1998, by and between Robert A. Pearce and Toucan Gold  Corporation (incorporated by reference to Exhibit 10.4 to our Annual  Report on Form 10-KSB for the period ended December 31, 1997)         |
| 4.5(3)     |   | Amendment Number One to  Stock Option Agreement, dated as of April 27, 1999, by and between  Robert A. Pearce and Toucan Gold Corporation (Exhibit 4.6)                                                                                           |
| 4.6(3)     |   | Amended and Restated  Stock Option Agreement, dated as of April 1, 1999, by and between David  Carmichael and Toucan Gold Corporation (Exhibit 4.8)                                                                                                    |
| 10.1(1)    |   | Warrant Agreement,  dated July 29, 1996, by and between Toucan Gold Corporation and R. Haydn  Silleck (Exhibit 10.1).                                                                                                                                  |
| 10.2(1)    |   | Warrant Agreement dated  July 29, 1996, by and between Toucan Gold Corporation and John B.  Marvin (Exhibit 10.2).                                                                                                                                |
| 10.3(1)    |   | Warrant Agreement dated  July 29, 1996, by and between Toucan Gold Corporation and Peter S.  Daley (Exhibit 10.3).                                                                                                                                |
| 10.4(1)    |   | Warrant Agreement dated  July 29, 1996, by and between Toucan Gold Corporation and Jay Lutsky  (Exhibit 10.4).                                                                                                                                         |
| 10.5(2)    |   | Agreement for the sale  and purchase of the whole of the issued share capital of Anagram Limited,  dated December 3, 1998, among Toucan Mining Limited, Toucan Gold  Corporation, Inc. and Minmet Plc (Exhibit 10.1).                                  |
| 10.6(2)    |   | Supplemental Agreement,  dated December 3, 1998 among Toucan Mining Limited, Toucan Gold  Corporation, Inc. and Minmet Plc (Exhibit 10.2).                                                                                                             |
| 10.7(2)    |   | Option Agreement  Regarding Mineradora De Bauxita Ltda, dated December 3, 1998, among  Toucan Mining Limited, Toucan Gold Corporation, Inc. and Anagram Limited  (Exhibit 10.3).                                                                       |
| 10.8(2)    |   | Agreement for the  purchase of the whole of the issued share capital of Mineradora de Bauxita  Ltda, dated December 3, 1998 among Toucan Mining Limited, Toucan Gold  Corporation, Inc. and Anagram Limited (Exhibit 10.4).                            |
| 10.9(2)    |   | Form of Minmet Plc  Warrant Instrument (Exhibit 10.5).                                                                                                                                                                                                 |
| 10.10(4)   |   | Deed of Indemnity,  dated July 22, 1999, by and among David J. Blanchfield, James L.  Jackson, David R. Wray, Barry Jones, Ian McNeill and Toucan Gold  Corporation. (Exhibit 10.2)                                                     |
| 10.11(4)   |   | Letter of Appointment,  dated July 22, 1999, by and between David J. Blanchfield and ITIS  Technologies Ltd. (Exhibit 10.3)                                                                                                                       |
| 10.12(4)   |   | Letter of Appointment,  dated July 22, 1999, by and between James L. Jackson and ITIS  Technologies Ltd. (Exhibit 10.4)                                                                                                                           |
| 10.13(4)   |   | Letter of Appointment,  dated July 22, 1999, by and between David R. Wray and ITIS  Technologies Ltd. (Exhibit 10.5)                                                                                                                              |
| 10.14(4)   |   | Engagement Letter,  dated July 22, 1999, by and between CCM Ventures Ltd. and It is  Technologies Ltd. (Exhibit 10.7)                                                                                                                                  |
| 10.15(4)   |   | Engagement Letter,  dated July 22, 1999, by and between Robert Jeffcock and Toucan Gold  Corporation. (Exhibit 10.8)                                                                                                                                   |
| +10.16 (5) |   | Consulting Agreement,  dated September 23, 1999 by and between Sir Malcolm Rifkind and                                                                                                                                                                      |

 

33

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|      |   | Authoriszor Limited  (incorporated by reference to our Quarterly Report on Form 10-QSB for  the quarter ended September 30, 1999, Exhibit 10.9)                                                                     |
|-----------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| +10.17(5) |   | Executive Employment  Agreement, dated as of January 1, 2000, by and between Authoriszor Inc.  and Richard A. Langevin. (Exhibit 10.1)                                                                              |
| +10.18(5) |   | Authoriszor Inc. 1999  Stock Plan. (Exhibit 10.2)                                                                                                                                                                             |
| +10.19(7) |   | Form of  Agreement under the 1999 Stock Plan and Schedule of Agreements                                                                                                                                                       |
| +10.20(5) |   | Agreement, dated  November 12, 1999, by and between Authoriszor Inc. and  Raymond G. H. Seitz (Exhibit 10.4)                                                                                                   |
| +10.21(5) |   | Consulting Agreement,  dated September 23, 1999, by and between Authoriszor Inc. and Sir  Malcolm Rifkind (Exhibit 10.5)                                                                                                 |
| +10.22(5) |   | Stock Option Agreement,  dated as of September 23, 1999, by and between Authoriszor Inc. and Sir  Malcolm Rifkind. (Exhibit 10.6)                                                                                        |
| 10.23(5)  |   | Placing Agreement,  dated as of January 28, 2000, by and among Authoriszor Inc., Beeson  Gregory Limited and certain Directors of Authoriszor Inc. (Exhibit 10.7)                                                        |
| 10.24(5)  |   | Supplemental Placing  Agreement, dated as of February 9, 2000, by and among Authoriszor Inc.,  Beeson Gregory Limited and certain Directors of Authoriszor Inc.  (Exhibit 10.8)                                          |
| 10.25(5)  |   | Registration Rights  Agreement, dated February 16, 2000, by and between Authoriszor Inc. and  Beeson Gregory Limited. (Exhibit 10.9)                                                                                     |
| 10.26(5)  |   | Lock-up Agreement,  dated January 2000, by and among Authoriszor Inc., Beeson Gregory Limited and  Raymond Seitz and others. (Exhibit 10.10)                                                                                  |
| 10.27(5)  |   | Deed of Covenant, dated as of February 22, 2000, by and among  Authoriszor Holdings Limited, WRDC Limited and certain persons named in  Schedule 1 to the Deed. (Exhibit 10.11)                                          |
| 10.28(5)  |   | Shareholders’  Agreement, dated as of January 27, 2000, by and among Authoriszor  Holdings Limited, WRDC Limited, the shareholders of WRDC Limited and  Authoriszor Inc., relating to WRDC Limited. (Exhibit 10.12) |
| 10.29(5)  |   | Letter Agreement, dated  February 22, 2000, by and between Authoriszor Holdings Limited and WRDC  Limited regarding credit facility. (Exhibit 10.13)                                                                     |
| 10.30(5)  |   | Letter Agreement, dated  February 22, 2000, by and between Authoriszor Holdings Limited and WRDC  Limited regarding credit facility. (Exhibit 10.14)                                                                     |
| 10.31(6)  |   | Share Sale Agreement,  dated as of January 28, 2000, by and between Authoriszor Inc. and Golden  Ridge Group Limited. (Exhibit 2.1)                                                                                      |
| +10.32(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.33).                                                                                                 |
| +10.33(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.34).                                                                                                 |
| +10.34(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and Richard A.  Langevin (Exhibit 10.35)                                                                                                  |
| +10.35(7) |   | Stock Option Agreement,  dated as of January 1, 2000, between Authoriszor Inc. and  Richard A. Langevin (Exhibit 10.36).                                                                                                 |
| +10.36(7) |   | Stock Option Agreement,  dated as of November 1, 1999, between Authoriszor Inc. and Raymond Seitz  (Exhibit 10.37).                                                                                                           |
| 10.37(7)  |   | Lease Agreement, dated  as of April 28, 2000, between Authoriszor Inc. and Massachusetts Mutual  Life Insurance Company (Exhibit 10.38).                                                                                      |
| 10.38(7)  |   | Consulting Agreement,  dated as of April 2000, between Authoriszor Inc. and Fred Sawin (Exhibit  10.39).                                                                                                                           |
| 10.39(7)  |   | Employment Agreement,  dated as of March 15, 2000, between Authoriszor Inc. and Ed Vasko  (Exhibit 10.40).                                                                                                                    |
| 10.40(8)  |   | Consulting  Agreement, dated July 1, 2000, between Authoriszor Inc. and Commercial  Technology Ltd (Exhibit 10.40).                                                                                                                |
| 10.41(8)  |   | Reimbursement  Agreement, dated September 28, 2000 and effective as of October 1, 1999,  between Authoriszor Inc. and Authoriszor Limited (Exhibit 10.41).                                                                         |
| +10.42(9) |   | Letter  Agreement, dated as of September 30, 2000, and executed as of October 31,  2000, by and between Authoriszor Inc. and Godfrey S. Shingles (Exhibit 10.1).                                                                   |
| +10.43(9) |   | Letter of  Employment, dated October 16, 2000, by and between Authoriszor Inc. and Alec  P. Karys (Exhibit 10.2).                                                                                                                  |
| +10.44(9) |   | Letter of  Employment, dated October 4, 2000, by and between Authoriszor Inc. and Paul  Ayres (Exhibit 10.3).                                                                                                                      |
| 10.45(9)  |   | Consulting  Agreement, dated July 21, 2000, by and between Authoriszor Inc. and Edward F.  Rogers (Exhibit 10.4).                                                                                                                  |

 

34

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| +10.46(10)  |   | Authoriszor Inc.  2000 Omnibus Stock and Incentive Plan.                                                                                                                                                                                                     |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| +10.47(7)   |   | Letter of  Employment, dated May 1, 2000, by and between Authoriszor Inc. and Fred Sawin  (Exhibit 10.39)                                                                                                                                                    |
| +10.48(11)  |   | Severance and  Release Agreement, dated as of January 29, 2001, by and between Authoriszor  Inc. and Richard A. Langevin.                                                                                                                                    |
| +10.49(11)  |   | Stock Option  Agreement, dated as of January 31, 2000, by and between Authoriszor Inc. and  Richard A. Langevin.                                                                                                                                             |
| +10.50(12)  |   | Service  Agreement, dated as of May 8, 2001, by and among Authoriszor Inc. and Garcia  Hanson. Form of Stock Option Agreement, dated as of May 8, 2001, by and  between the Authoriszor Inc. and each of the former holders of WRDC Options  (Exhibit 10.1). |
| +10.51(12)  |   | Form of Stock  Option Agreement, dated as of May 8, 2001, by and between the Authoriszor  Inc. and each of the former holders of WRDC Options (Exhibit 10.2).                                                                                                |
| 10.52 (13)  |   | Sublease  Agreement, effective as of July 1, 2001, by and between Authoriszor Inc. and  Directech, Inc. (Exhibit 10.52)                                                                                                                                      |
| +10.53 (13) |   | Stock Option  Agreement, dated as of October 7, 2000, by and between Authoriszor Inc. and  Paul Ayres. (Exhibit 10.53)                                                                                                                                       |
| +10.54 (13) |   | Stock Option  Agreement, dated as of October 16, 2000, by and between Authoriszor Inc. and  Alec Karys. (Exhibit 10.54)                                                                                                                                      |
| +10.55 (13) |   | Stock Option  Agreement, dated as of November 10, 2000, by and between Authoriszor Inc. and  Don Box. (Exhibit 10.55)                                                                                                                                        |
| +10.56 (13) |   | Stock Option  Agreement, dated as of October 18, 2000, by and between Authoriszor Inc. and  Geoff Shingles. (Exhibit 10.56)                                                                                                                                  |
| +10.57 (13) |   | Form of Stock  Option Agreement by and between Authoriszor Inc. and various employees with  respect to the Authoriszor Inc. 2000 Omnibus Stock and Incentive Plan.  (Exhibit 10.57)                                                                          |
| +10.58 (13) |   | Stock Option  Agreement, dated as of February 9, 2001, by and between Authoriszor Inc. and  Paul Ayres. (Exhibit 10.58)                                                                                                                                      |
| +10.59 (13) |   | Stock Option  Agreement, dated as of February 9, 2001, by and between Authoriszor Inc. and  Andrew Cussons. (Exhibit 10.59)                                                                                                                                  |
| +10.60 (13) |   | Stock Option  Agreement, dated as of February 9, 2001, by and between Authoriszor Inc. and  Alec Karys. (Exhibit 10.60)                                                                                                                                      |
| +10.61(16)  |   | Stock Option  Agreement, dated as of July 3, 2001, by and between Authoriszor Inc. and S.  Ashton (Exhibit 10.1)                                                                                                                                             |
| +10.62(17)  |   | Service  Agreement, dated as of September 27, 2001, by and between Authoriszor Inc.  and Paul Ayres (Exhibit 10.)                                                                                                                                            |
| +10.63(17)  |   | Compromise  Agreement, dated as of March 29, 2002, by and between Authoriszor Inc. and  Paul Ayres (Exhibit 10.2)                                                                                                                                            |
| +10.64(17)  |   | Consultancy  Agreement, dated as of May 23, 2002, by and between Authoriszor Inc. and  Utilis Ventures Limited (Exhibit 10.3)                                                                                                                                |
| +10.65(17)  |   | Service  Agreement, dated as of September 27, 2001, by and between Authoriszor Inc.  and Andrew Cussons (Exhibit 10.4)                                                                                                                                       |
| +10.66(17)  |   | Compromise  Agreement, dated as of March 29, 2001, by and between Authoriszor Inc. and  Andrew Cussons (Exhibit 10.5)                                                                                                                                        |
| 10.67(17)   |   | License and  Distribution Agreement, by and between Authoriszor Inc. and Sanford  Technologies, Inc. dated as of March 25, 2002, and supplental letter, dated  May 9, 2002 (Exhibit 10.6)                                                                    |
| 10.68(18)   |   | Investment  Agreement, dated as of July 18, 2002, by and among Authoriszor Inc.,  Authoriszor Holdings Limited, Roy Williams, Garcia Hanson, Zalcany Limited  and Nobelpoint Limited (Exhibit 2.4)                                                           |
| 10.69(18)   |   | Articles of Association  of Authoriszor Holdings Limited (Exhibit 2.2)                                                                                                                                                                                       |
| 10.70 (19)  |   | Settlement and  Pledge Agreement with Alex Karys dated as of April 18, 2003 (Exhibit 10.4)                                                                                                                                                                   |
| 10.71 (19)  |   | Settelment and  Pledge Agreement dated as of March 24, 2003 with Massachusetts Mutual Life  Insurance Company (Exhibit 10.1)                                                                                                                                 |
| 10.72 (19)  |   | Settlement and  Pledge Agreement dated as of April 17, 2003 with Decherts (Exhibit 10.3)                                                                                                                                                                     |
| 10.73 (19)  |   | Letter Agreement  with The Group dated March 24, 2003 (Exhibit 10.2)                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                         |
| 31.1†  |   | Certification  pursuant to Rules 13a-14(a) and 15(d)-14(a) promulgated under the Securities  Exchange Act of 1934                                                                                                                                            |

 

35

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| 32.1† |   | Certification  pursuant to 18 U.S.C. Section 1350, as adoped pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |
|------------|--------|-------------------------------------------------------------------------------------------------------------------------|

 

----

†              Filedherewith.

+              Compensationplan, benefit plan or employment contract or arrangement.

(1)           Incorporatedby reference to the exhibit shown in parenthesis included in our Annual Reporton Form 10-KSB for the period ended December 31, 1996, filed by uswith the Securities and Exchange Commission.

(2)           Incorporatedby reference to the exhibit shown in parenthesis included in our Current Reporton Form 8-K, filed January 5, 1999 by us with the Securities andExchange Commission.

(3)           Incorporatedby reference to the exhibit shown in parenthesis to our Registration Statementon Form S-8 filed with the Securities and Exchange Commission onJanuary 10, 2000.

(4)           Incorporatedby reference to the exhibit shown in parenthesis included in our Current Reporton Form 8-K, filed by us with the Securities and Exchange Commission onAugust 6, 1999.

(5)           Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-QSB for the quarter ended December 31, 1999.

(6)           Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K, filed by us on February 14, 2000 with the Securities andExchange Commission.

(7)           Incorporatedby reference to the Exhibit shown in parenthesis from our Registration Statementon Form S-1, filed by us on May 18, 2000 with the Securities and ExchangeCommission.

(8)           Incorporatedby reference to the exhibit shown in parenthesis from our Annual Report onForm 10-KSB, filed by us on September 29, 2000 with the Securities and ExchangeCommission.

(9)           Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-QSB, filed by us on November 14, 2000 with the Securities andExchange Commission.

(10)         Incorporatedby reference to Appendix A contained in our definitiveProxy Statement pertaining to the 2000 Annual Meeting of Stockholders filedwith the Securities and Exchange Commission on October 10, 2000 pursuant toRegulation 14A.

(11)         Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K filed by us with the Securities and Exchange Commission on January 30,2001.

(12)         Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K filed by us with the Securities and Exchange Commission on May 9,2001.

(13)         Incorporatedby reference to the exhibit shown in parenthesis from our Report on Form 10-KSBfiled by us with the Securities and Exchange Commission on October 22, 2001.

(14)         Reserved.

(15)         Reserved.

(16)         Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-KSB filed by us with the Securities and Exchange Commission in November14, 2001.

(17)         Incorporatedby reference to the exhibit shown in parenthesis from our Quarterly Report onForm 10-QSB filed by us with the Securities and Exchange Commission on June 24,2002.

(18)         Incorporatedby reference to the exhibit shown in parenthesis from our Current Report onForm 8-K filed by us with the Securities and Exchange Commission on August 2,2002.

(19)         Incorporatedby reference to the exhibit shown in parenthesis from our Report on Form 10-QSBfiled by us with the Securities and Exchange Commission on November 29, 2004.

 

36

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