Authoriszor (AUTHE) 10QSB 2004 Q1 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 March 31, 2004

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.

March 31, 2004

INDEX

PART I.		FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Balance Sheet as of March 31, 2004 (unaudited)
		Statements of Operations for the three and nine months ended March 31, 2004 and 2003 (unaudited)
		Statements of Cash Flows for the nine months ended March 31, 2004 and 2003(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

i

AUTHORISZOR INC.

BALANCE SHEET

	March 31, 2004
	(unaudited)
TOTAL ASSETS	$	0
LIABILITIES AND STOCKHOLDERS’ EQUITY (Deficiency)
Accounts payable and other creditors	$	34,244
Accrued liabilities	315,742
Total current liabilities	349,986
Mandatorily redeemable preferred stock	753,856
Total long term liabilities	753,856
TOTAL LIABILITIES	1,103,842
Stockholders’ Deficiency
Common stock, $.01 par value per share; authorized: 30,000,000 shares; issued and outstanding: 20,768,511 shares at March 31, 2004	207,685
Additional paid-in capital	36,903,135
Accumulated deficit	(38,214,662		)
Total stockholders’ deficiency	(1,103,842		)
Total liabilities and stockholders’ deficiency	$	0

The accompanying notes are an integral part of these statements.

F-1

AUTHORISZOR INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended March 31,						For the nine months ended March 31,
	2004			2003			2004			2003
Operating expenses
Administrative	$	14,743		$	143,255		$	42,462		$	639,804
Total operating expenses	14,743			143,255			42,462			639,804
Operating loss	(14,743		)	(143,255		)	(42,462		)	(639,804		)
Other income (expense)
Interest (expense) income, net	(18,846		)	11			(56,539		)	75
Gain on amounts due from affiliates, previously written off	0			0			0			579,108
Gain in write off of amounts due to creditors	0			446,909			0			446,909
Other income	0			5,240			0			7952
Equity in earnings of WRDCLogsys Ltd	0			35,000			0			106,000
Total other income (expense), net	(18,846		)	487,160			(56,539		)	1,140,044
Net (loss) income	-(33,589		)	343,905			(99,001		)	500,240
Preferred stock dividend	0			18,846			0			62,692
Net (loss) income attributable to common stockholders	$	(33,589	)	$	325,059		$	(99,001	)	$	437,548
Weighted average shares outstanding:
Basic and diluted	20,768,511			20,768,511			20,768,511			20,768,511
Loss per common share:
Basic and diluted	$	(0.002	)	$	0.02		$	(0.005	)	$	0.02

The accompanying notes are an integral part of these statements.

F-2

AUTHORISZOR INC.

STATEMENTS OF CASH FLOWS

 (UNAUDITED)

	For the nine months Ended March 31,
	2004			2003
	$			$
Cash flows from operating activities
Net (loss) income during the period	$	(99,001	)	$	500,240
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Equity in earnings in affiliates	0			(106,000		)
Change in ownership of WRDCLogsys Ltd	0			(579,109		)
Pledge of shares to creditors	0			28,091
Depreciation and amortisation	0			5,670
Gain on write off of creditors	0			(446,909		)
Changes in operating assets and liabilities	78,929			637,585
Net cash (used in) provided by operating activities	(20,072		)	39,568
Cash flows from financing activities:
Proceeds from loan	20,072			0
Redemption of preferred stock	0			-229,919
Net cash flows used in financing activities	20,072			-229,919
Net decrease in cash and cash equivalents	0			-190,349
Cash and cash equivalents at beginning of period	0			194,943
Cash and cash equivalents at end of period	$	0		$	4,592
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	0		$	74

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 interim 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 March 31,						Nine months ended March 31,
	2004			2003			2004			2003
(Loss) income attributable to common stockholders, as reported	$	(33,589	)	$	325,059		$	(99,001	)	$	437,548
Deduct: Total stock-based employee compensation expense as determined under fair value based method, net of related tax effect	(50,814		)	(358,735		)	(152,443		)	(1,076,206		)
Pro forma net loss	$	(84,403	)	$	(33,676	)	$	(251,444	)	$	(638,658	)
Basic and Diluted (loss) income per share
As reported	$	(0.00	)	$	0.02		$	(0.00	)	$	0.02
Pro forma	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.03	)

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 March 31, 2004, even though this Report has been filed at a later time.  Except as otherwise noted herein, events that have taken place after March 31, 2004, 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 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 and nine months ended March 31, 2004 compared with the three and nine months ended March 31, 2003.

Expenses

We have no premises as of the date of this report. We have not incurred any office or insurance costs in the current quarter following our restructuring.

Other Income and Expense

We have no other income or expenses and we hold no investments as of the date of this report.

Financing Management’s Plan of Operation

As reported in Company’s Form 10-QSB December 31, 2003 the Board considered an option that the funds raised in principle for the liquidation event identified at the time, could be pro-actively utilized to address the remedial filings

1

for a potential sale of the shell to a private corporation wishing to gain access to the markets, and based on improving sentiments for listing of technology companies on the NASDAQ market.

Therefore the Board agreed to use the funds raised from Commercial Technology Ltd (“CTL”) to fund the professional services to update the quarterly and annual reports for the Company.

The terms of the funds raised are that CTL of The Old Granary, Paradise Lane, Hazelwood, Tadcaster, North Yorkshire LS24 9NJ, a company registered in England number 1924782, has agreed to make a loan to Authoriszor Inc of $70,000, to be drawn down in tranches of $10,000 starting on the date of the agreement, with the last tranche being drawn not later than 30th June 2004. The loan will bear interest at the rate of 6% compound per annum from the date of drawdown to the date of repayment.

The loan will be repayable upon demand, and in any event upon the raising of further equity funding amounting to $500,000 or more, but the lender (CTL) clearly understands that the loan carries no security or guarantee of repayment in the event that Authoriszor was unsuccessful in raising further funds.

In consideration of CTL making the loan, and the risk and lack of security that such a loan carries, Authoriszor Inc will grant CTL a warrant to subscribe for 7,000,000 shares of common stock in Authoriszor Inc at the price of $0.001 per share (one tenth of one cent per share). The warrant may be exercised by CTL at any time after the drawdown of the first tranche of the loan, whether or not the loan has been repaid. Upon payment of $7,000, Authoriszor Inc will issue the said 7,000,000 shares to CTL.

The terms of the funds raised are detailed in the Company’s Form 8-K March 16, 2004.

On March 19, 2004 an initial $20.072 was loaned to the company by CTL.

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 March 31, 2004 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 March 31, 2004 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 March 31, 2004, we have issued the following securities in transactions not registered under the Securities Act:
	See Item 6 below.
Item 3.   Default Upon Senior Securities.

2

	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 .
	A current report on Form 8-K was filed on March 16, 2004 to disclose the Note and Warrant Purchase Agreement entered
into with the Company and Commercial Technology Limited (“CTL”).

3

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).
16.1†††	Loan and Warranty Purchase Agreement, dated as of March 15, 2004, by and among Authoriszor Inc., and Commercial Technology Limited.
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.
†††	Incorporated by reference to the Exhibit indicated in parenthesis in our Current Report on Form 8-K filed with the SEC on March 16, 2004.

REPORTS ON FORM 8-K

1.We filed a Current Report on Form 8-K/A with the SEC on March 16, 2004, reporting the Loan and Warrant Purchase Agreement entered into with the Company and Commercial Technology Limited (“CTL”).

4

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:	August 16, 2005	By:	/s/ Garcia Hanson
			Garcia Hanson
			Chief Executive Officer,
			Chief Financial Officer and Secretary
			(Principal Financial and Accounting Officer)

5

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).
16.1†††	Loan and Warrant Purchase Agreement, dated as of March 15, 2004, by and among Authoriszor Inc., and Commercial Technology Limited.
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 March 15, 2004.
††	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.
†††	Incorporated by reference to the Exhibit indicated in parenthesis in our Current Report on Form 8-K filed with the SEC on March 16, 2004.

6