Authoriszor (AUTHE) 10QSB 2003 Q3 Quarterly report (small business)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended September 30, 2003
Commission File No. 000-27869

AUTHORISZOR INC.

(Exact name of registrant as specified in charter)

Delaware	75-2661571
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)
First Floor, Ebor Court, Westgate, Leeds	LS1 4ND
(Address of principal executive offices)	(Postal Code)
Registrant’s telephone number, including area code: (+44) 113-245-4788

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES  o     NO  ý

As of July 28, 2005, there were 20,768,511 shares of the common stock, $0.01 par value, of the registrant issued and outstanding.

Transitional Small Business Disclosure Format (check one)

YES  o     NO  ý

AUTHORISZOR INC.

September 30, 2003

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Balance Sheet as of September 30, 2003 (unaudited)
	Statements of Operations for the three months ended September 30, 2003and September 30, 2002 (unaudited)
	Statements of Cash Flows for the three months ended September 30, 2003 and September 30, 2002 (unaudited)
	Notes to Financial Statements (unaudited)
Item 2.	Management’s Discussion and Analysis and Plan of Operation
Item 3.	Controls and Procedures
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 2.	Changes in Securities
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS

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AUTHORISZOR INC.

BALANCE SHEET

	September 30, 2003 (unaudited)
ASSETS
Other	$	1,848
Total current assets	1,848
TOTAL ASSETS	$	1,848
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Accounts payable	$	5,816
Accrued liabilities	279,614
Total current liabilities	285,430
Mandatorily Redeemable Preferred Stock	753,856
Total long term liabilities	753,856
Stockholders’ Deficiency
Common stock, $.01 par value per share; authorized: 30,000,000 shares; issued and outstanding: 20,768,511 shares at September 30, 2003	207,685
Additional paid-in capital	36,903,135
Accumulated deficit	(38,148,258		)
Total stockholders’ deficiency	(1,037,438		)
Total liabilities and stockholders’ deficiency	$	1,848

The accompanying notes are an integral part of these statements.

F-1

AUTHORISZOR INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended September 30
	2003			2002
Net sales	$	0		$	0
Cost of sales	0			0
Gross profit	0			0
Operating expenses
Administrative	13,750			201,541
Total operating expenses	13,750			201,541
Operating loss	(13,750		)	(201,541		)
Other income (expense)
Interest (expense) income, net	(18,846		)	48
Other income	0			2,302
Gain on amounts due from affiliates, previously written off	0			579,109
Equity in earnings of affiliates	0			26,000
Total other income (expense), net	(18,846		)	607,459
Net profit/(loss)	(32,596		)	405,918
Preferred stock dividend	—			24998
Net (loss)income attributable to common stockholders	$	(32,596	)	$	380,920
Weighted average shares outstanding:
Basic and diluted	20,768,511			20,768,511
Loss per common share:
Basic and diluted	$	(0.00	)	$	0.02

The accompanying notes are an integral part of these statements.

F-2

AUTHORISZOR INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the three months Ended September 30
	2003			2002
Cash flows from operating activities
Net (loss) income during the period	$	(32,596	)	$	405,918
Adjustments to reconcile net loss to net cash provided by operating activities:
Change in ownership of WRDCLogsys Ltd	0			(579,109		)
Equity in earnings in WRDCLogsys Ltd	0			(26,000		)
Depreciation and amortization	0			415
Changes in operating assets and liabilities	32,596			272,948
Net cash provided by operating activities	0			74,172
Cash flows from financing activities:
Redemption of preferred stock	0			(229,919		)
Net cash used in financing activities	0			(229,919		)
Net decrease in cash and cash equivalents	0			(155,747		)
Cash and cash equivalents at beginning of period	0			194,943
Cash and cash equivalents at end of period	$	0		$	39,196
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	0		$	48

The accompanying notes are an integral part of these statements.

F-3

AUTHORISZOR INC.

NOTE A – BASIS OF PREPARATION

The financial statements of Authoriszor Inc. (the “Company”) contained herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  In the opinion of management, all adjustments necessary for a fair presentation of the financial statements have been made.  All such adjustments, in the opinion of management, are of a normal recurring nature.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full fiscal year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, have been condensed or omitted pursuant to the interim reporting rules of the SEC.  The financial statements should be read in conjunction with the audited financial statements and related notes as of June 30, 2003, included in the Company’s Form 10-KSB, as amended by the Company’s Form 10-KSB/A.

NOTE B  – NET INCOME (LOSS) PER COMMON SHARE

The Company computes basic income per share based on the weighted average number of common shares outstanding. Diluted income per share is also computed using the weighted average number of common shares outstanding, except if the effect of inclusion of stock options and warrants would not have a dilutive effect. The Company has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS 123). Had compensation cost for stock options granted to employees been determined consistent with SFAS 123, the Company’s net income per share would have been as appears in the pro forma amounts indicated in the table next.

	Three months ended September 30,
	2003			2002
(Loss)income attributable to common stockholders, as reported	$	(32,596	)	$	380,920
Deduct: Total stock-based employee compensation expense as determined under fair value based method, net of related tax effect	(50,814		)	(358,735		)
Pro forma net (loss) income	$	(83,410	)	$	22,815
Basic and Diluted (loss)income per share
As reported	$	(0.00	)	$	0.02
Pro forma	$	(0.00	)	$	(0.00	)

F-4

Item 2.  Management’s Discussion and Analysis or Plan of Operation

All matters stated in this report are stated as of the date of this report, which is September 30, 2003, even though this Report has been filed at a later time.  Except as otherwise noted herein, events that have taken place after September 30, 2003, are covered in our filings after this date.

The following description of “Management’s Discussion and Analysis or Plan of Operation” constitutes forward-looking statements for purposes of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and as such involves known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.  The words “expect,” “estimate,” “anticipate,” “predict,” “believes,” “plan,” “seek,” “objective” and similar expressions are intended to identify forward-looking statements.  Important factors that could cause our actual results, performance or achievement to differ materially from our expectations include the following:

•One or more of the assumptions or other cautionary factors discussed in connection with particular forward-looking statements or elsewhere in this Form 10-QSB prove not to be accurate;

•Errors in our cost estimates and cost overruns;

•Our inability to obtain financing for general operations and for the marketing of our products, including, without limitation, as a result of being delisted from the Nasdaq National Market System (“Nasdaq NMS”);

•If we experience labor and/or employment problems such as the loss of key personnel, inability to hire and/or retain competent personnel, etc.;

•If we experience unanticipated problems and/or force majeure events (including, but not limited to, accidents, fires, acts of God or terrorism, etc.), or we are adversely affected by problems of our suppliers, shippers, customers or others;

•If we experience additional currency translation losses due to the continued decline of the UK pound sterling versus the U.S. dollar;

Results of Operations

The following is a discussion of the results of operations for the three months ended  September 30, 2003 compared with the three months ended  September 30, 2002.

Expenses

We have no premises in the current quarter. No office or insurance costs have been incurred in the current quarter following the restructuring of the company. Professional fees have reduced from $89,000 to $13,750, as we have not been active in the quarter ended September 30, 2003.

Other Income and Expense

Other income in the three months ended September 30, 2002 included $26,000, being our share of the earnings of WRDCLogsys Ltd, which was accounted for under the equity method of accounting. Our share in WRDCLogsys Ltd ceased prior to this period following the pledge arrangements described below.

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Financing Management’s Plan of Operation

During this quarter, the Board of Directors have sought further options for us.

Mr. Hanson, our CEO, has contracted corporate finance advisers through WRDCLogsys Ltd, whose brief includes researching options for the Authoriszor Inc listing, including selling of the shell to a private corporation wishing to reverse onto the market, or another technology business in a related field to security, requiring a listing as a vehicle to raise money. These advisers are Geoffrey Dodsworth – a Chartered Accountant, and Masters Hanover Europe ltd. WRDCLogsys Ltd also have retained ARC Associates – a registered and regulated corporate finance adviser, who are considering a wide range of strategic options for WRDCLogsys Ltd and related opportunities for Authoriszor Inc.

Following an extensive investigation into the failure to pay rent of the Company’s former sub-tenants at the Burlington Massachusetts offices (Directech), we have learned that they have no assets to pay its indebtedness to the Company. Action can be taken against Directech directors, but the advice is that we would have to prove the directors have taken money for themselves to the detriment of the creditors. In summary therefore, to either petition for Directech’s bankruptcy or to attempt to prove a channeling of funds away from creditors, would be necessarily expensive and time consuming, with no favorable outcome suggested. Therefore the Company will take no further action at present.

Under the terms of the pledge agreement and on the 8^th July 2003, Mass Mutual Life Insurance Company called in its security from the pledge agreement made with them on 24^th March 2003. This is because the Company was unable to pay its indebtedness to the creditors, whereby the creditors are able to exercise the realization of the collateral provided. The other creditors have exercised their right as reported in the Company’s 10-KSB June 30^th 2003, with the exception of Decherts.

Item 3.  Controls and Procedures

Our Chief Executive and Chief Financial Officer conducted an evaluation of the effectiveness of our disclosure controls and procedures. Based an this evaluation, our Chief Executive Officer and Chief Financial Officer  concluded that our disclosure controls and procedures were effective as of September 30, 2003 in alerting him in a timely manner to material information required to be included in our SEC reports. In addition, no change in our internal control over the financial reporting occurred during the fiscal quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.OTHER INFORMATION

Item 1.   Legal Proceedings.

None

Item 2.   Changes in Securities.

(a)None

(b)None

(c)During the quarter ended September 30, 2003, we have issued the following securities in transactions not registered under the Securities Act:

None

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Item 3.   Default Upon Senior Securities.

None

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

None

Item 5.   Other Information.

None.

Item 6.   Exhibits and Reports on Form 8-K .

EXHIBITS

The following exhibits are furnished in accordance with Item 601 of Regulation S-B.

2.1†	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).
2.2†	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).
2.3††	Investment Agreement, dated as of July 18th, 2002, by and among Authoriszor Inc., Authoriszor Holdings Limited, Roy Williams, Garcia Hanson, Zalcany Limited and Noblepoint Limited. The Business Plan referenced in the Investment Agreement has been omitted pursuant to Item 601(b)(2) of Regulation SB.
2.4††	Articles of Association of Authoriszor Holdings Limited.
4.1†	Certificate of Designations, Preferences and Relative Rights, Qualifications, Limitations and Restrictions of the Series A Cumulative Redeemable Preferred Stock of Authoriszor Inc (Exhibit 4.1).
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 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

†Incorporated by reference to the Exhibit indicated in parenthesis in our Current Report on Form 8-K/A, field with the SEC on January 30, 2002.

††Incorporated by reference to the Exhibit indicated in parenthesis in our Current Report on Form 8-K filed with the SEC on July 18, 2002.

REPORTS ON FORM 8-K

1.None.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.

			AUTHORISZOR INC.
			(Registrant)
Date:	July 18, 2005	By:	/s/ Garcia Hanson
			Garcia Hanson
			Chief Executive Officer,
			Chief Financial Officer and Secretary
			(Principal Financial and Accounting Officer)

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INDEX TO EXHIBITS

2.1†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).

2.2†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).

2.3††Investment Agreement, dated as of July 18th, 2002, by and among Authoriszor Inc., Authoriszor Holdings Limited, Roy Williams, Garcia Hanson, Zalcany Limited and Noblepoint Limited.  The Business Plan referenced in the Investment Agreement has been omitted pursuant to Item 601(b)(2) of Regulation SB.

2.4††Articles of Association of Authoriszor Holdings Limited.

4.1†Certificate of Designations, Preferences and Relative Rights, Qualifications, Limitations and Restrictions of the Series A Cumulative Redeemable Preferred Stock of Authoriszor Inc (Exhibit 4.1).

31.1Certification pursuant to Rules 13a-14(a) and 15(d)-14(a) promulgated under the Securities Exchange Act of 1934.

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

†Incorporated by reference to the Exhibit indicated in parenthesis in our Current Report on Form 8-K/A, field with the SEC on January 30, 2002.

††Incorporated by reference to the Exhibit indicated in parenthesis in our Current Report on Form 8-K filed with the SEC on July 18, 2002.

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