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, 1999 COMMISSION FILE NO. 33-28562
AUTHORISZOR INC.
(Exact name of registrant as specified in charter)
DELAWARE 75-2661571
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
8201 PRESTON ROAD, SUITE 600
DALLAS TEXAS 75225
- --------------------------------------------------------------------------------
(Address of principal (Postal Code)
executive offices)
Registrant's telephone number, including area code: (214) 890-8065
Former Name: TOUCAN GOLD CORPORATION; Former Fiscal Year: December 31
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 X NO
----- -----
As of November 18, 1999, there were 13,765,808 shares of the common stock, $0.01
par value, of the registrant issued and outstanding.
Transitional Small Business Disclosure Format (check one)
YES NO X
----- ------
i
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<TABLE>
<CAPTION>
AUTHORISZOR INC.
September 30, 1999
INDEX
PART I. FINANCIAL INFORMATION Page No.
--------
<S> <C> <C>
Item 1. Financial Statements
------
Consolidated Balance Sheets as of September 30, 1999(unaudited)
and June 30, 1999 ............................................................................F-1
Consolidated Statements of Operations for the three months
ended September 30, 1999, and 1998 (unaudited) and for the
period beginning January 15, 1997 and ending on September 30,
1999
(unaudited)..................................................................................F-2
Consolidated Statement of Stockholders' Equity for the three months ended September 30,
1999 (unaudited)..............................................................................F-3
Consolidated Statements of Cash Flows for the three months ended September 30, 1999
and 1998 (unaudited) and for the period beginning January 15, 1997 and ending on September 30,
1999 (unaudited)..............................................................................F-4
Notes to Consolidated Financial Statements (unaudited)........................................F-5
Item 2. Management's Discussion and Analysis or Plan of Operation......................................1
------
Item 3. Quantitative and Qualitative Disclosures About Market Risk......................................4
------
PART II. OTHER INFORMATION...............................................................................4
Item 1. Legal Proceedings...............................................................................4
------
Item 2. Changes in Securities and Use of Proceeds.......................................................4
------
Item 3. Defaults Upon Senior Securities.................................................................4
------
Item 4. Submission of Matters to a Vote of Security Holders.............................................4
------
Item 5. Other Information...............................................................................5
------
Item 6. Exhibits and Reports on Form 8-K................................................................7
------
SIGNATURES........................................................................................................9
</TABLE>
i
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<TABLE>
<CAPTION>
AUTHORISZOR INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
<S> <C> <C>
September 30, June 30,
ASSETS 1999 1999
(unaudited)
------------- --------
Cash $ 824,440 $ 698
Prepaid expenses 9,912 -
Receivables and other assets 67,352 2,498
--------------- ----------------
Total current assets 901,704 3,196
Investment in securities 346,500 -
Investment in subsidiary 1,707,398 -
Computer and equipment, net of accumulated depreciation 130,442 21,594
Intangible assets 30,000 -
--------------- ----------------
$ 3,116,044 $ 24,790
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Amounts payable to related parties $ 105,624 $ -
Accounts payable and other liabilities 78,333 100,670
--------------- ----------------
Total current liabilities $ 183,957 $ 100,670
Stockholders' equity (deficit)
Preferred stock, par value .01 per share; authorized: 2,000,000
shares; issued and outstanding: none - -
Common stock, $.01 par value per share; authorized: 30,000,000
shares; issued and outstanding: 13,765,748 shares and 60
shares, respectively 137,658 9
Additional paid-in capital 3,097,172 -
Accumulated deficit during the development stage (299,796) (78,735)
Accumulated other comprehensive income (loss) (2,947) 2,846
--------------- -----------------
Total stockholders' equity (deficit) 2,929,087 (75,880)
--------------- -----------------
$ 3,116,044 $ 24,790
=============== =================
</TABLE>
The accompanying notes are an integral part of these statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
AUTHORISZOR INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
January 15, 1997
Three months (inception) to
ended September 30, September 30,
------------------- -------------
1999 1998 1999
---- ---- ----
<S> <C> <C> <C>
Net sales $ - $ - $ 37,001
Cost and expenses
Cost of sales - - 10,559
Administrative expenses 420,570 17,354 525,747
----------- ----------- ----------
Total cost and expenses 420,570 17,354 536,306
Other income (expense)
Interest income 230 - 230
Gain on sale of investments 199,279 - 199,279
----------- ----------- ----------
Total other income 199,509 - 199,509
----------- ----------- ----------
Net loss $ (221,061) $ (17,354) $ (299,796)
=========== =========== ==========
Loss per share - basic and diluted $ .02 $ -
=========== ===========
Weighted average shares outstanding 12,120,395 12,120,395
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
AUTHORISZOR INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the three months ended September 30, 1999
(unaudited)
Accumulated
Additional other Accumulated comprehensive
Common Stock paid-in-capital deficit income (loss) Total
-------------------------- --------------- ------------ -------------- ---------
Shares Amount
------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 1, 1999 60 $ $ - $ (78,735) $ 2,846 $ (75,880)
Sale of Common Stock ($0.16 17,835 2,828 - - - 2,828
per share)
Recapitalization (Note B) 13,747,913 137,821 3,097,172 - - 3,231,993
Comprehensive income (loss)
Foreign currency translation - - - - (5,793) (5,793)
Net loss - - - (221,061) - (221,061)
---------- --------- ----------- ----------- ----------- ----------
Total - - - - - (226,854)
---------- --------- ----------- ----------- ----------- ----------
Balance at September 30, 1999 13,765,808 $ 137,658 $ 3,097,172 $ (299,796) $ (2,947) $2,932,087
---------- --------- ----------- ----------- ----------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
AUTHORISZOR INC.
(A DEVELOPMENTAL STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
January 15,1997
(inception) to
Three months ended September 30, September 30,
-------------------------------- ---------------
1999 1998 1999
------------ ------------ ---------------
<S> <C> <C> <C>
Operating activities
Net loss $ (221,061) $ (17,354) $ (299,796)
Adjustments to reconcile loss to net cash
provided by (used in) operating activities
Gain on sale of investments (199,279) - (199,279)
Net changes in operating assets and
liabilities
Receivables and other assets (69,848) (357) (62,041)
Accounts payable and accrued expenses 86,817 17,258 191,237
------------- ------------ -------------
Net cash provided by (used in)
operating activities (403,371) (453) (369,879)
Investing activities
Purchase of capital assets (108,850) - (141,625)
Sale of investments in securities 1,360,579 - 1,360,579
Purchase of intangible assets (30,000) - (30,000)
------------- ------------ -------------
Net cash provided by
investing activities 1,221,729 - 1,188,954
Financing activities
Recapitalization 711 - 711
Issuance of stock 2,828 - 2,837
------------- ------------ -------------
Net cash provided by financing activities 3,539 - 3,548
Effect of exchange rate changes on cash 1,845 - 1,817
------------- ------------ -------------
Net increase (decrease) in cash 823,742 (453) 824,440
Cash at beginning of period 698 631 -
------------- ------------ -------------
Cash at end of period $ 824,440 $ 178 824,440
------------- ------------ -------------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
AUTHORISZOR INC.
(A DEVELOPMENTAL STAGE ENTERPRISE)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(unaudited)
NOTE A - BASIS OF PRESENTATION
The consolidated financial statements of Authoriszor Inc. and subsidiaries (the
"Company") contained herein have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission. In the opinion
of management, all adjustments necessary for a fair presentation of the
consolidated financial position as of September 30, 1999, and the consolidated
results of operations and cash flows for the three months then ended 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 generally accepted accounting principles
have been condensed or omitted pursuant to the interim reporting rules of the
Securities and Exchange Commission. The interim consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and related notes as of June 30, 1999, included in the Company's Form
8-K.
NOTE B - RECAPITALIZATION TRANSACTION
On July 22, 1999, Toucan Gold corporation ("Toucan") acquired all of the
outstanding capital stock of Authoriszor Ltd. (formerly known as ITIS
Technologies Ltd), a U.K. company, in exchange for 4,680,375 shares of common
stock. At June 30, 1999, Toucan had disposed of all of its operations.
Concurrent with the acquisition of Authoriszor Ltd., Toucan changed its name to
Authoriszor Inc.
The acquisition has been accounted for as a recapitalization of Authoriszor
Ltd.. Accordingly, the accompanying financial statements are those of
Authoriszor Ltd., whose fiscal year end is June 30th. On July 22, 1999, the
equity of Toucan was $3,231,993, consisting primarily of cash, investments in
securities, and investment in Toucan Mining Limited (Note C).
NOTE C - SPIN-OFF OF SUBSIDIARY
On July 16, 1999, the Board of Directors approved the spin-off of all of the
outstanding common shares of its subsidiary Toucan Mining Plc (formerly known as
Toucan Mining Limited ("TML")) to the stockholders of the Company. The record
date for the spin-off is to be determined by the Board. Accordingly, in the
balance sheet at September 30, 1999, TML has been deconsolidated and is carried
at the Company's equity in the underlying net assets of TML at the date the
Board approved the spin-off.
NOTE D - GRANT OF STOCK OPTIONS
During September and October of 1999, options to purchase 646,214 shares of the
Company's common stock at exercise prices ranging from $1.00 to $3.00 per share
were granted to certain employees and consultants of the Company.
F-5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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 the
actual results, performance or achievements of the Company 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 the actual results, performance or achievement of the Company to differ
materially from the Company's expectations include the following:
o 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;
o the Company is unsuccessful in securing sales through its anticipated
marketing efforts;
o mistakes in cost estimates and cost overruns;
o the Company's inability to obtain financing for general operations
including the marketing of the Company's products;
o non-acceptance of one or more products of the Company in the market-place
for whatever reason;
o the Company's inability to supply any product to meet market demand;
o generally unfavorable economic conditions that would adversely effect
purchasing decisions by distributors, resellers or end-users;
o development or a similar competing product at a similar price point;
o the inability to successfully integrate one or more acquisitions, joint
ventures or new subsidiaries with the Company's operations (including the
inability to successfully integrate businesses that may be diverse as to
type, geographic area, or customer base and the diversion of management's
attention among several acquired businesses) without substantial costs,
delays, or other problems;
o if the Company experiences labor and/or employment problems such as the
loss of key personnel, inability to hire and/or retain competent personnel,
etc.;
1
<PAGE>
o if the Company experiences unanticipated problems and/or force majeure
events (including but not limited to accidents, fires, acts of God etc.),
or is adversely affected by problems of its suppliers, shippers, customers
or others; and
o the risk factors set forth in the Company's Form 10-QSB for the quarter
ended June 30, 1999.
All written or oral forward-looking statements attributable to the
Company are expressly qualified in their entirety by such factors. The Company
undertakes no obligation to publicly release the result of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
The following discussion should be read in conjunction with the
Consolidated Financial Statements, including the notes thereto.
Review of Operations
The Company, through its wholly-subsidiary Authoriszor Ltd. (formerly
known as ITIS Technologies Ltd.), develops, sells and markets application
software under the brand name Authoriszor for the management and securitization
of Internet-based wide area networks. The Company's software may be used by
those companies whose employees require secure remote access to such companies'
primary computer systems through the Internet.
The Company's objective is to establish itself as a leading supplier of
Internet network management software throughout the world. In order to achieve
this objective the Company is targeting large end-users whose employees require
secure remote access to such companies' primary computer systems through the
Internet. The Company has focused its initial marketing efforts in the United
Kingdom and United States.
As reported in a Form 8-K filed with the Securities and Exchange
Commission on August 6, 1999 and in order to begin its operations as an
Internet-based company, the Company, which was previously conducting operations
as a mineral development company, on July 22, 1999 acquired Authoriszor Ltd.,
United Kingdom Internet-based company. Following this acquisition, the name of
the Company was changed to Authoriszor Inc., and the trading symbol for the
Company's common stock on the OTC Bulletin Board was changed to " AUOR." Since
the acquisition of Authoriszor Ltd., the Company has focused its efforts on
setting up its development center, preparing for the opening of its first sales
office and recruiting employees and management. The Company's business plan and
business are described in the Company's Form 10-QSB for the quarter ended June
30, 1999. Certain specific activities implementing the Company's business plan
are set forth in Part II. Item 5. Other Information in this Form 10-QSB.
2
<PAGE>
Results of Operations
The following is a discussion of the results of operations for the
quarter ended September 30,1999 compared with the quarter ended September 30,
1998.
Administrative expenses increased to $420,570 in the quarter ended
September 30, 1999 from $17,354 in the quarter ended September 30, 1998. This
increase was attributable primarily to costs incurred in setting up the
Company's development center, preparing for the opening of a sales office,
recruiting employees, legal and professional fees in connection with the
recapitalization transaction (Note B to Financial Statements), and costs in
connection with being a public company.
In the quarter ended September 30, 1999, the Company recognized a gain
on the sale of investment securities in the amount of $199,279. These securities
had been received in connection with the aforementioned recapitalization
transaction.
Financing Management's Plan of Operation
Following the acquisition of Authoriszor Ltd. in July 1999, the Company
had approximately $1,600,000 in cash and other liquid assets, including
securities of Minmet Plc. ("Minmet"). Following the acquisition of Authoriszor
Ltd., the Company sold in the third quarter of 1999 10.5 million Minmet shares
with Minmet's consent at the placing price of 8 pence (sterling) per share.
These transactions resulted in net cash proceeds to the Company of approximately
$1,360,000. Pursuant to its agreement with Minmet, the Company may not sell any
of its remaining Minmet shares until January 6, 2001 without Minmet's prior
approval. The Company has provided loans to Authoriszor Ltd. through September
30, 1999 of approximately $509,500.
In order to continue the planned expansion of both development and
marketing resources, the Company will need to provide additional loans to
Authoriszor Ltd. and to raise additional capital. The Company intends to effect
a private placement of its common stock to raise approximately $5,000,000. There
can, however, be no assurance that additional debt or equity financing will be
available, if and when needed, or that, if available, such financing could be
completed on commercially favorable terms. Failure to obtain additional
financing, could have a material adverse effect on the Company's business,
results of operations and financial condition.
Year 2000 Compliance
Many currently installed computer systems and software products are
coded to accept only two digit entries in the date code field. These date code
fields will need to accept four digit entries to distinguish 21st century dates
from 20th century dates. As a result, many companies' computer systems and/or
software may need to be upgraded or replaced to comply with such "Year 2000"
requirements. Significant uncertainty exists in the software industry concerning
the potential effects associated with such compliance.
3
<PAGE>
The Company has reviewed its own software products and believes that
there will be no adverse impact with the Year 2000 date change. All of the
Company's products are designed to record, store, and process calendar dates
occurring before and after January 1, 2000 with the same full-year accuracy
(i.e. four numeric characters instead of two).
An impact analysis has been completed that has identified no major risk
of failure within the Company's in-house computer systems, which include the
accounting and management information systems.
This risk to the Company's business relates not only to the Company's
computer systems, but also to some degree to those of the Company's suppliers
and customers. The Company has reviewed its current suppliers and its current
pilot sites and anticipates no problems associated with Year 2000 compliance in
these areas. The Company will continue to carefully monitor its new suppliers to
ensure that they are supplying compliant goods and services where relevant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not own, either directly or indirectly, any market
risk sensitive instruments.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
(a) None
(b) None
(c) On July 22, 1999, the Company issued 4,680,375 shares (the
"Acquisition Shares") of the Company's common stock to the
former shareholders of Authoriszor Ltd. in connection with the
acquisition of Authoriszor Ltd. by the Company. The
Acquisition Shares were issued pursuant to the exemption from
registration under the Securities Act set forth in Section
4(2) of the Securities Act.
The Company has agreed to grant certain options (the
"Options") to purchase shares (the "Option Shares") of Company
common stock to certain employees and non-employees of the
Company pursuant to a Stock Option Plan to be approved by the
Board of Directors of the Company. See Part II. Item 5. Other
Information. It is contemplated that the Stock Option Plan and
the issuance of the Option Shares upon exercise of the Options
will be registered under the Securities Act on Form S-8.
4
<PAGE>
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Pursuant to a Written Consent executed by stockholders of record owning
more than a majority of the issued and outstanding shares of Common Stock, the
Company's stockholders approved an amendment to the Company's Certificate of
Incorporation changing the name of the Company from "Toucan Gold Corporation" to
"Authoriszor Inc."
ITEM 5. OTHER INFORMATION.
The following significant events have occurred during the quarter ended
September 30, 1999.
1. The Company acquired Authoriszor Ltd. on July 22,1999. On August 25, 1999,
the name of the Company was changed to Authoriszor Inc. On August 26, 1999,
the trading symbol for the Company's common stock was changed to "AUOR."
Pursuant to the Sale Share Agreement, Robert P. Jeffcock and Ian McNeill
have been elected to the Board of Directors of Authoriszor Ltd. The Company
has appointed James L. Jackson and David R. Wray to its Board of Directors.
2. Authoriszor Ltd. entered into employment contracts with James Jackson,
David Wray and David Blanchfield. These three individuals were the sole
shareholders and employees of Authoriszor Ltd. prior to its acquisition by
the Company.
3. On July 22, 1999, the Company entered into consulting contract arrangements
with Barry Jones through his consulting company CMM Ventures Limited, and
with Ian McNeill through his consulting company Commercial Technology
Limited.
4. In August 1999, Authoriszor Ltd. moved its corporate offices to Harrogate,
Yorkshire, England. The headquarters building was refurbished and was
equipped with the necessary computer and associated communications hardware
and software. The total cash expenditure for these activities was
approximately $140,730.
5. In August 1999, Authoriszor Ltd. appointed the Butler Group, a leading UK
firm of industry analysts, to review the Company's product lines.
6. In August 1999, Dahl Morrow International, a recruitment firm, was
appointed as the executive search consultants to locate a United States
Chief Executive Officer for the Company.
5
<PAGE>
7. In August 1999, Stern and Co., a public relations company, was appointed to
spearhead the Company's United States and international public relations
efforts.
8. In September 1999, the Company established its development offices at
Drumhill Works in Bradford, England, and two additional development staff
and a Company administrator were recruited and commenced employment with
the Company.
9. Effective October 1, 1999, Sir Malcolm Rifkind was appointed as a
consultant to the Board of Directors of the Company. Pursuant to his
Consulting Agreement, Sir Malcolm Rifkind was granted stock options to
acquire 200,000 shares of the Company's common stock at an exercise price
of $1.00 per share. See Part II. Item 5. Other Information - Paragraph 17.
10. In October 1999, Barry Jones was appointed as the Marketing Director of the
Company and was also appointed to the Board of Directors of Authoriszor
Ltd. In connection therewith, Barry Jones was granted stock options to
acquire 131,214 shares of the Company's common stock at an exercise price
of $2.00 per share. See Part II. Item 5. Other Information - Paragraph 17.
11. In October 1999, Bell Pottinger, a public relations company, was appointed
by Authoriszor Ltd. to spearhead Authoriszor Ltd.'s United Kingdom public
relations efforts.
12. In October 1999, the Company, along with representatives from Authoriszor
Ltd., attended the Fall Internet World show in New York, where the Company
was invited to exhibit its products in the Microsoft Partner Pavilion.
13. In October 1999, the Company filed an application for five broad based
patents with the United States Patent Office.
14. The Company has extended offers of employment to three additional
developers, two sales staff employees and one marketing staff employee.
15. The Company, along with representatives from Authoriszor Ltd., attended the
International Computer Security Conference in Washington D.C. during
November 1999.
16. In November 1999 Raymond Seitz, former United States ambassador to the
United Kingdom and currently Vice Chairman - Europe of Lehman Brothers, was
named Chairman of the Board of the Company.
6
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17. The Company has agreed to grant the Options to several of its employees and
certain non-employees. The following table describes the Options:
<TABLE>
<CAPTION>
===============================================================================================================
No. of Option Vesting Vesting
Name Options Exercise Date Start Date End Vesting Conditions
Price
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Patrick 25,000 $2.50 10/1/2000 9/30/2002 Up to a maximum of 6,250 per
Burns* year starting on the vesting date.
Glenn 25,000 $2.50 10/1/2000 9/30/2002 Up to a maximum of 6,250 per
A.R.M year starting on the vesting date.
Hirst*
Paul Allan 25,000 $2.50 10/1/2000 9/30/2002 Up to a maximum of 6,250 per
Swain* year starting on the vesting date.
Henry 20,000 $1.00 10/1/2000 9/30/2002 All shares exercisable after the
Bellingham+ vesting start date for a period of 2
years
Richard 20,000 $1.00 10/1/2000 9/30/2002 All shares exercisable after the
Roscoe+ vesting start date for a period of 2
years.
Sir Malcolm 200,000 $1.00 10/1/1999 9/30/2002 All shares exercisable after vesting
Rifkind+ start date for a period of 3 years.
Barry Jones* 131,214 $2.00 10/1/2000 9/30/2002 Up to a maximum of 25% per year
starting on the vesting date.
Raymond 200,000 $3.00 11/1/1999 10/30/2002 All shares exercisable after the
Seitz* vesting start date for a period of 3
years.
===============================================================================================================
<FN>
*An employee, director or officer of the Company.
+Advisor or consultant to the Company.
</FN>
</TABLE>
18. On July 16, 1999, the Board of Directors of the Company approved the
spin-off (the "Spin- Off") of all of the outstanding shares (the "TML
Shares") of Toucan Mining Plc (formerly known as Toucan Mining Ltd)
("TML")), the Company's subsidiary engaged in the mineral development
business, to the stockholders of the Company. The TML Shares will be
distributed on a share for share basis to holders of the Company's common
stock (the "Common Stock") as of the record date to be determined by the
Board of Directors. The date of the distribution of the TML Shares has not
been determined because the consummation of the distribution of the TML
Shares is dependent upon the satisfaction of the following conditions: (i)
the registration of the TML Shares under the Exchange Act and (ii) the
furnishing of an Information Statement to the stockholders as of the record
date describing TML and the distribution of the TML Shares that
substantially complies with Regulation 14C under the Exchange Act. The
Company has filed a registration statement on Form 20-F with respect to the
TML Shares with the Securities and Exchange Commission under the Exchange
Act. Pursuant to Delaware corporate law, if the distribution of the TML
Shares is not consummated within 60 days of a record date, a new record
date must be selected. Accordingly, the Board of Directors has determined
to set a record date for the Spin-Off when there is more certainty as to
the distribution date. The ITIS Shareholders have agreed in the Share Sale
Agreement that they are not entitled to participate in the Spin-Off.
7
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
The following exhibits are furnished in accordance with Item 601 of Regulation
S-B.
3.1* Amendment to the Certificate of Incorporation of the Company filed
on August 25, 1999, with the Secretary of State of Delaware.
10.1(1) 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)
10.2(1) 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)
10.3(1) Letter of Appointment, dated July 22, 1999, by and between David J.
Blanchfield and ITIS Technologies Ltd. (Exhibit 10.3)
10.4(1) Letter of Appointment, dated July 22, 1999, by and between James L.
Jackson and ITIS Technologies Ltd. (Exhibit 10.4)
10.5(1) Letter of Appointment, dated July 22, 1999, by and between David R. Wray
and ITIS Technologies Ltd. (Exhibit 10.5)
10.6(1) Engagement Letter, dated July 22, 1999, by and between Commercial
Technology Ltd. and ITIS Technologies Ltd. (Exhibit 10.6)
10.7(1) Engagement Letter, dated July 22, 1999, by and between CCM Ventures Ltd.
and ITIS Technologies Ltd. (Exhibit 10.7)
10.8(1) Engagement Letter, dated July 22, 1999, by and between Robert Jeffcock
and Toucan Gold Corporation. (Exhibit 10.8)
10.9* Consulting Agreement, dated September 23, 1999 by and between Sir
Malcolm Rifkind and Authoriszor Ltd.
27* Financial Data Schedule (Exhibit 27).
- ------------------
(1) Incorporated by reference to the exhibit shown in parenthesis included
in the Company's Current Report on Form 8-K, filed by the Company with
the Securities and Exchange Commission on August 6, 1999.
*Filed herewith
8
<PAGE>
REPORTS ON FORM 8-K
1. The Company filed a Current Report on Form 8-K with the Securities and
Exchange Commission on July 30, 1999 describing the closing of the
transactions with Minmet Plc, the approval of the spin-off of Toucan
Mining Plc, a wholly owned subsidiary of the Company, and the execution
of a Release and Settlement Agreement between the Company and an owner
of certain mining claims.
2. The Company filed a Current Report on Form 8- K with the Securities and
Exchange Commission on August 6, 1999 describing the acquisition of
Authoriszor Ltd. (formerly known as ITIS Technologies Ltd).
3. The Company filed a Current report on Form 8-K/A with the Securities
and Exchange Commission on November 17, 1999 describing the change of
the name of the Company from "Toucan Gold Corporation" to "Authoriszor
Inc." and containing financial statements of Authoriszor Ltd..
9
<PAGE>
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: November 23, 1999 By: /s/ Robert P. Jeffcock
---------------------------------
Robert P. Jeffcock, President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 19, 1999 By: /s/ Robert A. Pearce
---------------------------------
Robert A. Pearce, Chief Financial
Officer (Principal Financial
Officer and Principal Accounting
officer)
10
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF TOUCAN GOLD CORPORATION
Toucan Gold Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:
FIRST: That the Board of Directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendment to the
Certificate of Incorporation of the Corporation:
Article 1 of the Certificate of Incorporation of the Corporation is hereby
amended to read in its entirety as follows:
"1. The name of the Corporation is Authoriszor Inc. (the
"Corporation")."
SECOND: That in lieu of a meeting and vote of stockholders, the holders of
a majority of the Corporation's capital stock entitled to vote on such
amendment have given their written consent to such amendment in
accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.
THIRD: That the foregoing amendment was duly adopted in accordance with the
applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment has been duly executed as
of the 25th day of August, 1999.
TOUCAN GOLD CORPORATION
/s/ Robert P. Jeffcock
-----------------------------
Robert P. Jeffcock, President
ATTEST:
/s/ Robert P. Jeffcock
- ------------------------------
Robert P. Jeffcock, Secretary
Authoriszor Limited
Windsor House
Cromwall Road
Harrogate
North Yorkshire
HG1 2PW
Tel: 44 1423 630300
23rd September 1999
The Rt. Hon. Sir Malcolm Ridkind KCMG QC
Eskgrove House
Inveresk
East Lothian
EH21 7TD
Dear Sir Malcolm,
This letter is to confirm the agreement we have reached with regard to the
consulting agreement with Authoriszor Ltd.
1. This agreement is between yourself and Authoriszor Ltd., though you will
also be consulting for the parent company Authoriszor Inc.
2. The initial term of the agreement is to be for 2 years, after which either
side can give 6 months notice.
3. The consulting agreement will commence as of 1st October 1999.
4. Your retainer will be (pound)2,500 per month plus VAT. You will also be
granted a 3 year option to acquire 200,000 Authoriszor Inc. common shares
at US$1 per share.
5. You will be expected to devote an average of approximately 2 days per month
on Authoriszor's affairs. Your responsibilities would include:
a. Helping the company with top level introductions in government, the
armed forces, banks etc.
b. Promoting Authoriszor and its software, to the media and business
community. This would include business lunches/seminars where you
would be one of the guest speakers.
c. Helping in the search for a suitable person to act for Authoriszor
Inc. as non- executive Chairman.
If you could confirm that the above accurately reflects our agreement, I will
instruct Jenkens and Gilchrist, Authoriszor Inc.'s American Attorneys to start
work on the option agreement.
Yours sincerely,
/s/ Robert Jeffcock
-------------------------------
Robert Jeffcock
Director Authoriszor Ltd.
CEO & Chairman Authoriszor Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for Authoriszor, Incorporated
</LEGEND>
<CIK> 0000850083
<NAME> Authoriszor, Incorporated
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 824,440
<SECURITIES> 346,500
<RECEIVABLES> 67,652
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 901,704
<PP&E> 130,442
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,116,044
<CURRENT-LIABILITIES> 183,957
<BONDS> 0
0
0
<COMMON> 137,658
<OTHER-SE> 2,794,429
<TOTAL-LIABILITY-AND-EQUITY> 3,116,044
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 420,570
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (221,061)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
