FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
Of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996
Commission File Number 33-16531-D
INTERNATIONAL AUTOMATED SYSTEMS, INC.
(Exact name of registrant as specified in its
charter)
UTAH 87-0447580
(State or other jurisdiction of (IRS
Employer
incorporation or organization)
Identification
No.)
512 South 860 East
American Fork, Utah 84003
(Address of principal executive offices)
Registrant's telephone number
including area code (801)763-9965
Not Applicable
Former Address, 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
proceeding 12 months (or 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 March 31, 1996, registrant had 9,186,100 shares
of common stock, no par value per share, issued and
outstanding after deducting shares held in the
corporate treasury.
<PAGE>
PART I
ITEM I - FINANCIAL STATEMENTS
The condensed financial statements included herein
have been prepared by International Automated Systems,
Inc. (the "Company" or the "Registrant"), without
audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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 such rules and
regulations, although the Company believes that the
disclosures are adequate to make the information
presented not misleading.
In the opinion of the Company, all adjustments,
consisting of only normal recurring adjustments,
necessary to present fairly the financial position of
the Company as of March 31, 1996, and the results of
its operations from June 30, 1995, through March 31,
1996, and from January 1,1996, through March 31, 1996,
and changes in its financial position from inception
through March 31, 1996, have been made. The results of
its operations for such interim period is not
necessarily indicative of the results to be expected
for the entire year. The financial statements in this
amendment have changed from those financial statements
included in the prior filing on Form 10-QSB/A for the
period ended March 31, 1996. The primary changes were
caused by differing treatment of consulting services
which the Company performed for its major shareholder
during the periods shown in the financial statements.
Registrant is a development stage company.
Historically its primary activities have been research
and development for products based on high technology.
Such development has significant risks.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources. As of March 31,
1996, Registrant had cash of $236,142 compared to cash
of $10,049 as of June 30, 1995. Cash increased because
of the sale of equity securities in the amount of
$706,000 yielding net proceeds after offering expenses
of approximately $680,000. Inventory increased to
$189,650. As of March 31, 1996, total current assets
were $455,064 and total assets were $626,043 compared
to total current assets $10,049 and total assets
$86,465 as of June 30, 1995. As of March 31, 1996,
Registrant had total liabilities of $36,764 and
shareholders' equity of $497,526. As of June 30, 1995,
Registrant had total current liabilities of $153,964
and shareholders' equity of $(81,512). The sale of
shares of common stock caused the increase in
shareholders' equity. Funds from the sale of common
stock were used to pay expenses and reduce liabilities
including a note to a related party. As of March 31,
1996, the ratio of current assets to current
liabilities was approximately 1.3 to one. As of June
30, 1995, the Company was technically insolvent because
liabilities exceeded assets.
Results of Operation. For the quarter ended March
31, 1996, Registrant had total revenues of $46,200
compared to total revenues of $1,500 for the same
period a year earlier. The following comparisons all
relate to the three month period ended March 31, 1995.
For the quarter ended March 31, 1996, Registrant had
total expenses of $213,963 compared to expenses of
$120,832 during the same quarter a year earlier. The
increase in income reflects funds received from sales
of $44,700. Cost of sales was $24,987 and gross
profit was $21,213. For the quarter ended March 31,
1996, Registrant had a net loss of $(185,616) compared
to a net loss of $(119,709) for the same quarter a year
earlier. The increase in net loss is attributable to
the increase in general and administrative expenses and
research and development expenses. Net loss per share
was $(0.02) compared to $(0.01). General and
administrative expenses were $51,692 and research and
development expenses were $161,197 compared to $109,589
and $10,781 respectively. Total expenses were $213,963
for the quarter compared to $120,832 for the same
quarter a year earlier.
For the nine period ended March 31, 1996, had total
revenues $68,721 compared total revenues of $4,500 for
the same period a year earlier. Revenues increase
because of sales in the amount of $64,221. Cost of
sales was $38,420. Gross profit was $30,301. All the
following comparisons relate to the nine month period
ended March 31, 1995, compared to the same nine month
period a year earlier. Total expenses for nine month
period ended March 31, 1996, were $395,530 compared to
$152,545 for the same period a year earlier. General
and administrative expenses declined to $94,705 from
$120,579 for the same period a year earlier. Research
and development expenses increased significantly to
$298,467 compared to $30,579 for the same period a year
earlier. The Company incurred substantial research and
development costs in its efforts to develop its
products. For the nine month period the net loss was
$(358,766) compared to $(148,550) for the same period a
year earlier. The loss for the ninth month period was
primarily attributable to the Company's increased
research and development expenses. Net loss per share
was $(0.04) compared to $(0.02).
<PAGE>
Part II.
Item 1. Legal Proceedings.
On July 2, 1996, the Company and its president
were
named as defendants in a proposed class action lawsuit
filed on behalf of certain shareholders seeking damages
for violations of the federal securities laws. The
Complaint was claims to be brought on behalf of all
persons and entities who purchased shares of common
stock of the Company during the period of May 13, 1996,
to June 27, 1996. The suit seeks damages based on the
decrease in the Company's stock price in the trading
market because the Company made allegedly material
misrepresentations concerning new technology being
developed. On August 8, 1996, an amended complaint was
filed which increased the number of plaintiffs, added
and modified certain allegations, and changed the
proposed period from April 3, 1996, to June 27, 1996.
This lawsuit is in its preliminary stages. The final
outcome of the litigation cannot be determined. The
Company intends to defend vigorously the litigation.
No provision for any liability that may result from any
adverse adjudication has been made in the accompanying
financial statements and any effect on future financial
statements is unknown. The lawsuit is now captioned
Edouard Serfaty, David D. Baker, Michael Berry,
Margaret Moskes, Craig Swapp, Linda M. Baker, Robert H.
Baker, Kourosh Khalili and Ariel Tzadik, v.
International Automated Systems, Inc., and Neldon P.
Johnson, Civil No. 2:96 CV 0583 C, filed in the United
States District Court for the District of Utah, Central
Division.
Item 2. Changes in Securities.
During the quarter Registrant issued 176,500
shares
of common stock, no par value per share. The shares
were sold to a approximately nineteen investors at
$4.00 per share and the Company realized total proceeds
of $706,000 and net proceeds of approximately $680,000.
In addition, the Company issued 3,000 shares for
services.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Matters Submitted to a Vote of the Company's
Shareholders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits, Financial Statements, Schedules and
Reports on Form 8-K.
A. Exhibits.
Ex.27 Financial Data Summary.
INTERNATIONAL AUTOMATED SYSTEMS,
INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(Unaudited)
March 31, June 30,
1996 1995
ASSETS
Current Assets
Cash
$236,142 $10,049
Accounts receivable
22,013 -
Inventory
189,650 -
Prepaid expenses
7,259 -
Total Current Assets
455,064 10,049
Property and Equipment
Computer and electronic equipment
88,786 51,302
Furniture and fixtures
11,176 3,591
Automobiles
21,657 21,657
Total Property and Equipment
121,619 76,550
Less: Accumulated depreciation
(31,563) (18,373)
Net Property and Equipment
90,056 58,177
Other Assets
Rights to technology
96,458 31,416
Accumulated amortization
(15,535) (13,177)
Other Assets, Net
80,923 18,239
Total Assets
$ 626,043 $ 86,465
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current Liabilities
Accounts payable $
8,000 $ 8,482
Accrued expenses
21,862 -
Deferred revenue
3,500 8,000
Current portion - Long-term debt
3,453 3,453
Note payable - related party
312,057 134,029
Total Current Liabilities
348,872 153,964
Long Term Debt
11,449 14,013
Stockholders' (Deficit)
Preferred stock, Class A, no par value, 5,000,000
shares authorized, no shares issued or
outstanding - -
Common stock, no par value, 45,000,000 shares
authorized, 9,189,956 and 9,013,456 shares
issued
and outstanding at March 31, 1996 and June 30,
1995,
respectively.
1,078,599 372,599
Less: Treasury stock
(3,325) (3,325)
Deficit accumulated during the development stage
(809,552) (450,786)
Total Stockholders' Equity (Deficit)
265,722 (81,512)
Total Liabilities and Stockholders' Equity (Deficit)
$ 626,043 $ 86,465
See the accompanying notes to the condensed financial
statements.
INTERNATIONAL AUTOMATED SYSTEMS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
From Inception
(September
26,
1986)
Three
Months Ended
Nine Months Ended Through
March 31,
March 31, March 31,
1996
1995 1996 1995
1996
Revenue
Sales $ 44,700 $
- - - $ 64,221 $ - $
64,221
Equipment lease income 1,500
1,500 4,500 4,500
16,500
Total Revenue 46,200
1,500 68,721 4,500
80,721
Cost of Sales 24,987
- - - 38,420 -
38,420
Gross Profit 21,213
1,500 30,301 4,500
42,301
Expenses
General and administrative 51,692
109,589 94,705
120,579 330,162
Research and development 161,197
10,781 298,467 30,579
496,910
Amortization 1,074
462 2,358 1,387
17,415
Total Expenses 213,963
120,832 395,530 152,545
844,487
Other Income/(Expense)
Interest income 7,444
- - - 7,444 -
9,356
Interest expense (310)
(377) (981)
(505) (16,722)
Net Other Income/(Expense) 7,134
(377) 6,463
(505) (7,366)
Net Loss $ (185,616) $
(119,709) $ (358,766) $
(148,550) $ (809,552)
Net Loss Per Common Share $ (0.02) $
(0.01) $ (0.04) $
(0.02) $ (0.11)
Weighted Average Shares Outstanding
9,158,089 9,002,156
9,056,729 8,937,987
7,199,279
See the accompanying notes to the condensed financial
statements.
B. Reports on Form 8-K.
None.
<PAGE>
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 thereunto duly authorized.
Date 8-14-96
International Automated Systems, Inc.
By Neldon Johnson
President and Chief Executive Officer
By Neldon Johnson
Chief Financial Officer
