SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 22, 1999
--------------------------------
AUTHORISZOR INC.
(Exact name of registrant as specified in charter)
DELAWARE 33-28562 75-2661571
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
Incorporation)
8201 PRESTON ROAD
SUITE 600
DALLAS, TEXAS 73225
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (214) 890-8065
-----------------------------
TOUCAN GOLD CORPORATION
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
ITEM 5. OTHER EVENTS
------------
Effective August 25, 1999 the Company changed its name from Toucan Gold
Corporation to Authoriszor Inc. Effective August 26, 1999, the trading
symbol for the Company's common stock on the OTC Bulletin Board was
changed to AUOR.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements of businesses acquired
INDEX
-----
Page
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..............................................................F-1
BALANCE SHEET...................................................................................................F-2
STATEMENTS OF OPERATIONS........................................................................................F-3
STATEMENT OF STOCKHOLDERS' EQUITY ..............................................................................F-4
STATEMENTS OF CASH FLOWS........................................................................................F-5
NOTES TO FINANCIAL STATEMENTS...................................................................................F-6
(b) Pro Forma Financial Information
Not Applicable
(c) Exhibits
Not Applicable
2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Authoriszor Limited
We have audited the accompanying balance sheet of Authoriszor Limited (a
development stage enterprise) as of June 30, 1999 and the related statements of
operations, stockholders' equity and cash flows for the year ended June 30, 1999
and for the period January 15, 1997 (date of inception) to June 30, 1998. 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 generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Limited as of June
30, 1999 and the results of its operations and its cash flows for the year ended
June 30, 1999 and for the period January 15, 1997 (date of inception) to June
30, 1998 in conformity with generally accepted accounting principles in the
United States of America.
GRANT THORNTON
Leeds, England
November 10, 1999
F-1
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
Proforma
giving
effect for
recapitalization
June 30. June 30, 1999
1999 (unaudited)
$ $
ASSETS
CURRENT ASSETS
Cash and cash equivalents 698 1,409
Receivables and other assets (Note D) 2,498 1,026,698
---------- ----------
TOTAL CURRENT ASSETS 3,196 1,028,107
Non-current receivable (Note D) - 718,900
Office equipment, furniture and fixtures 31,633 31,633
Less accumulated depreciation 10,039 10,039
---------- ----------
21,594 21,594
Investment in subsidiary (Note E) - 1,707,398
---------- ----------
24,790 3,475,999
========== ==========
LIABILITIES
CURRENT LIABILITIES
Accounts payable 92,770 162,770
Accrued liabilities 7,900 157,107
---------- ----------
TOTAL CURRENT LIABILITIES 100,670 319,877
STOCKHOLDERS' EQUITY
Ordinary shares, $.15 par value per share; authorized - 1,000,000 -
allotted called up and fully paid 60 shares 9 137,658
Additional paid-in capital - 3,094,344
Accumulated other comprehensive income 2,846 2,846
Accumulated deficit during the development stage (78,735) (78,735)
---------- ----------
(75,880) 3,156,113
24,790 3,475,999
========== ==========
The accompanying notes are an integral part of this statement.
F-2
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
FOR THE PERIODS ENDED
Jan 15, 1997 Jan 15, 1997
(date of (date of
inception) to inception) to
June 30, 1999 June 30, 1998 June 30, 1999
$ $ $
Net Sales 37,001 3,290 33,711
Cost of sales 10,559 - 10,559
----------- ----------- -----------
GROSS PROFIT 26,442 3,290 23,152
Administrative expenses 105,177 32,394 72,783
----------- ----------- -----------
Operating loss (78,735) (29,104) (49,631)
Income taxes - - -
----------- ----------- -----------
NET LOSS (78,735) (29,104) (49,631)
=========== =========== ===========
Proforma weighted average shares outstanding:
Basic and Diluted 4,680,375 4,680,375 4,680,375
=========== =========== ===========
Proforma net loss per common share:
Basic and Diluted (0.02) (0.01) (0.01)
=========== =========== ===========
The accompanying notes are an integral part of these statements.
F-3
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD ENDED
Accumulated
Preferred Stock Common Stock other
Additional compre- Compre-
paid-in Accumulated hensive hensive
Shares Amount Shares Amount Capital deficit income Total Income
$ $ $ $ $ $ $ $ $
Shares issued:
January 1997, 60 shares in exchange
for $9.00 - - 60 9 - - - 9
Comprehensive income:
Foreign currency translation
adjustment 2,846 2,846 2,846
Net loss during the period - - - - - (78,735) - (78,735) (78,735)
------- ------ ---------- ------- --------- ------- ----- --------- -------
Total comprehensive income (75,889)
=======
------- ------ ---------- ------- --------- ------- ----- ----------
Balance at June 30, 1999 - - 60 9 - (78,735) 2,846 (75,880)
------- ------ ---------- ------- --------- ------- ----- ---------
PROFORMA GIVING EFFECT FOR
RECAPITALIZATION
Reclassification of common stock - - (60) (9) - - - (9)
Issuance of $.01 par value per
share common stock in connection
with recapitalization - - 13,765,808 137,658 3,094,344 - - 3,232,002
------- ------ ---------- ------- --------- ------- ----- ---------
Balance at June 30, 1999 (unaudited) - - 13,765,808 137,658 3,094,344 (78,735) 2,846 3,156,113
======= ====== ========== ======= ========= ======= ===== =========
The accompanying notes are an integral part of this statement.
F-4
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED
Jan 15, 1997 Jan 15, 1997
(date of (date of
inception) to inception) to
June 30, 1999 June 30, 1998 June 30, 1999
$ $ $
Net cash flows provided by operating activities
Net loss during the period (78,735) (29,104) (49,631)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 10,395 260 10,135
Accounts receivable (2,588) (416) (2,172)
Accounts payable 96,224 31,283 64,941
Accrued liabilities 8,196 2,961 5,235
------------- ------------- -------------
Net cash provided by operating activities 33,492 4,984 28,508
Net cash flows used in investing activities-acquisitions of (32,775) (4,376) (28,399)
equipment
Net cash flows provided by investing activities- 9 9 -
proceeds from issuance of stock
Effect of exchange rate changes on cash (28) - (28)
------------- ------------- -------------
Net increase in cash 698 617 81
Cash at beginning of period - - 617
------------- ------------- -------------
Cash at end of period 698 617 698
============= ============= =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest - - -
Income taxes - - -
The accompanying notes are an integral part of these statements.
F-5
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
A summary of significant accounting policies consistently applied in the
preparation of the accompanying financial statements follows.
NOTE A - COMPANY DESCRIPTION
Authoriszor Limited (the Company) was incorporated pursuant to English Law under
the name ITIS Technologies Limited in January 1997. The Company develops and
sells an Internet, extranet and intranet security solution that has been
designed to manage identity, access security, usage and functionality
characteristics of Wide Area Networks accessed through World-Wide Web
technology.
NOTE B - RECAPITALIZATION OF SHARES
On July 22, 1999, Toucan Gold Corporation (a public enterprise incorporated
under the laws of the State of Delaware, United States of America, in July 1996)
(Toucan) acquired all of the outstanding shares of the Company in exchange for
restricted shares of common stock of Toucan (the Exchange) pursuant to a Share
Exchange Agreement between Toucan and the Company. Toucan exchanged 4,680,375
shares of common stock for all of the Company's issued and outstanding shares of
common stock. At June 30, 1999, Toucan had disposed of all of its operations.
For accounting purposes, the Exchange has been treated as a recapitalization of
the Company. The accompanying financial statements are those of Authoriszor
Limited for all periods presented. A proforma balance sheet giving effect for
the recapitalization has been presented with retroactive application to June 30,
1999. In connection with the Exchange, James L. Jackson and David R. Wray became
directors of Toucan. Also, Toucan changed its name to Authoriszor Inc.
Immediately after the Exchange, the Company's former shareholders owned
approximately 34% of the outstanding common stock of Toucan.
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1 DEVELOPMENT STAGE COMPANY
The Company (a development stage company) is in the development stage as
defined by Statement of Financial Accounting Standard No. 7, "Accounting
and Reporting by Development Stage Enterprises" (SFAS No. 7).
2 REVENUE RECOGNITION
The Company recognizes revenue in accordance with the provisions of
Statement of Position 97-2 "Software Revenue Recognition" (SOP 97-2) issued
by the American Institution of Certified Public Accountants ("AICPA"). Fees
for services and maintenance are generally charged to customers separately
from the license of software. Revenues from license fees
F-6
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
are recognized upon product shipment when fees are fixed, collectability is
probable and the Company has no significant obligations remaining under the
licensing agreement. In instances where a significant vendor obligation
exists, revenue recognition is delayed until such obligation has been
satisfied.
For those licence agreements which provide the customers the right to
multiple copies in exchange for guaranteed amounts (including non
refundable advance royalties), license revenues are recognized at delivery
of the product master or the first copy. Per copy royalties on sales which
exceed the guarantee are recognized as earned.
Services revenue consists of training and consulting for which revenue is
recognized when the services are performed. Maintenance revenue consists of
ongoing support and maintenance and product updates for which revenue is
deferred and recognized ratably over the term of the contract, normally
twelve months.
In December 1998, the AICPA issued Statement of Position 98-9 "Modification
of SOP 97- 2, Software Revenue Recognition, With Respect to Certain
Transactions" (SOP 98-9). SOP 98-9 amends SOP 97-2 to require recognition
of revenue using the residual method for certain multiple-element
arrangement transactions entered into in fiscal years beginning after March
15, 1999.
The Company is currently assessing the effects of complying with SOP 98-9,
and has not yet made a determination of the impact, if any, on its
financial position or results of operations.
3 SOFTWARE DEVELOPMENT COSTS
Software development costs are included in research and development and are
expensed as incurred. Statement of Financial Accounting Standard No. 86
"Accounting for the Costs of Computer Software to be Sold, Leased, or
Otherwise Marketed" (SFAS No. 86) requires the capitalization of certain
software development costs once technological feasibility is established,
which the Company defines as establishment of a working model. The working
model criteria used as the Company's process of creating software
(including enhancements) does not include a detailed program design. The
capitalized cost is then amortized on a straight-line basis over the
estimated product life, or on the ratio of current revenues to total
projected product revenues, whichever is greater. To date, the period
between achieving technological feasibility and the general availability of
such software has been short and software development costs qualifying for
capitalization have been insignificant. Accordingly, the Company has not
capitalized any software development costs.
F-7
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
4 OFFICE EQUIPMENT, FURNITURE AND FIXTURES
Office equipment, furniture and fixtures are stated at cost. Depreciation
is provided in amounts sufficient to relate the cost of depreciable assets
to operations over their estimated services lives. The straight line method
of depreciation is followed for financial reporting purposes. The useful
life is as follows:
YEARS
-----
Office equipment, furniture and fixtures 3-10
Expenditures for repairs and maintenance are charged to expense as incurred
and additions and improvements that significantly extend the lives of
assets are capitalized. Upon sale or retirement of depreciable property,
the cost and accumulated depreciation are removed from the related accounts
and any gain or loss is reflected in the results of operations.
5 CASH
For the purpose of the statements of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
6 INCOME TAXES
The Company utilizes the liability method of accounting for income taxes.
Under the liability method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
An allowance against deferred tax assets is recorded when it is more likely
than not that such tax benefits will not be realized.
7 USE OF ESTIMATES IN FINANCIAL STATEMENTS
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements,
as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-8
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
8 NET LOSS PER SHARE
The Company's proforma net loss per share amount has been computed by
dividing net loss by the number of shares (4,680,375) issued by Toucan on
July 22, 1999, for the acquisition of all of the Company's issued and
outstanding shares, with retroactive application to all periods presented.
For periods subsequent to July 22, 1999, the weighted average shares
outstanding will include also the outstanding shares of Toucan (9,085,433)
held by the pre- merger Toucan shareholders. No common stock equivalents
were included in the computation of diluted net earnings per share.
9 FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consists of cash, trade receivables,
trade payables and accrued liabilities. The carrying amount of these
instruments approximate the fair values because of their short maturity.
10 FOREIGN CURRENCY TRANSLATION
The functional currency of the Company is the British pound sterling. The
financial statements are presented in US dollars using the principles set
out in Statement of Financial Accounting Standard No. 52 "Foreign Currency
Translation" (SFAS No. 52). Assets and liabilities are translated at the
rate of exchange in effect at the close of the period. Revenues and
expenses are translated at the weighted average of exchange rates in effect
during the period. The effects of exchange rate fluctuations on translating
foreign currency assets and liabilities into US dollars are included as
part of the accumulated other comprehensive income component of
stockholders' equity.
11 NEW ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement of Financial Accounting Standard
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
(SFAS No. 133). This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. The
Company is currently assessing the effects of adopting SFAS No.133, and has
not yet made a determination of the impact on its financial position
F-9
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
or results of operations. SFAS No. 133 will be effective for the Company's
first quarter of fiscal year 2001.
NOTE D - SALE OF MINERAL RIGHTS
On June 30, 1999, Minmet PLC (Minmet), an Irish publicly-traded company,
exercised its options to purchase (1) all of the outstanding capital stock of
Mineradora de Bauxita Ltd. (MBL), a Brazilian company and a wholly-owned
subsidiary of Toucan Mining Limited (TML) which is a wholly-owned subsidiary of
Toucan Gold Corporation (Toucan) and (2) debt in the amount of $1,000,000 plus
interest owed by MBL to Toucan. The aggregate exercise price of the options was
$3,400,000 consisting of 25 million Minmet ordinary shares, $250,000 in cash,
and warrants to purchase 7.7 million shares of Minmet at (pound) .08 per share.
The closing market price of Minmet shares at June 30, 1999 was (pound) .0825 per
share ($.13 at the then exchange rate). For accounting purposes, Toucan has
valued the Minmet shares at (pound) .07 ($.1106) per share, which is a discount
from market because of restrictions agreed to by Toucan on their sale. The
warrants were valued at $385,000.
At June 30, 1999 the amounts due to Toucan from Minmet are reflected on the
proforma balance sheet giving effect for the recapitalization as a receivable. A
portion of the consideration due from Minmet is owed to TML. In July 1999,
Minmet paid to Toucan and TML the entire amount of consideration due.
NOTE E - SPIN-OFF OF SUBSIDIARY OF TOUCAN GOLD CORPORATION
On July 16, 1999, the Board of Directors of Toucan approved the spin-off of all
of the outstanding common shares of TML to the shareholders of Toucan. Record
date for the spin-off is to be determined by the Board. Accordingly, in the
proforma balance sheet giving effect for the recapitalization at June 30, 1999,
TML has been deconsolidated from Toucan and is reflected as a non-current asset.
Also, the name of TML was changed to Toucan Mining Plc. At June 30, 1999 the
assets of TML consisted of cash of $498, a receivable from Minmet of $1,656,900
and mineral rights in the amount of $50,000. The receivable represents the
portion of the sale proceeds due to TML (Note D) and consists of the warrants to
purchase 7.7 million Minmet share, valued at $385,000, and 11.5 million Minmet
share valued at $1,271,900.
NOTE F - INCOME TAXES
The Company has adopted the provisions of Statement of Financial Accounting
Standards No 109 "Accounting for Income Taxes". Accordingly, a deferred tax
liability or deferred tax asset (benefit) is computed by applying the current
statutory tax rates to net taxable or deductible temporary differences between
pre-tax financial and taxable income.
F-10
AUTHORISZOR LIMITED
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
Deferred tax benefits are recorded only to the extent that the amount of net
deductible temporary differences or carry forward attributes may be utilized
against current period earnings, offset against taxable temporary differences
reversing in future periods, or utilized to the extent of management's estimate
of future taxable income. Deferred tax liabilities are provided for on
differences between amounts reported for financial and tax basis accounting.
At June 30, 1999 and June 30, 1998, due to the company's cumulative losses since
inception, a loss carry forward of approximately $78,000 and $29,000
respectively, may be utilized in the future for an indefinite period.
A net deferred tax asset resulting from the loss carry forward has been offset
by a valuation allowance of an equal amount at June 30, 1999 due to the
uncertainty of realizing the net deferred tax asset through future operations.
The valuation allowance was approximately $15,600. The effective tax rate
differs from the statutory rate as a result of the valuation allowance. Gross
deferred tax liabilities were immaterial.
F-11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AUTHORISZOR INC.
(Registrant)
Date: November 16, 1999 By: /s/ Robert P. Jeffcock
-----------------------------
Robert P. Jeffcock
Chief Executive Officer
(Principal Executive Officer)
Date: November 16, 1999 By: /s/ Robert A. Pearce
-----------------------------
Robert A. Pearce
Chief Financial Officer
(Principal Financial Officer)
3