<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended July 31, 1996
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
For the transition period from ________________ to ____________________
Commission File Number 0-21255
IAS COMMUNICATIONS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Oregon 91-1063549
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification Number
185 - 10751 SHELLBRIDGE WAY
RICHMOND, BRITISH COLUMBIA V6X 2W8, CANADA
(Address of Principal Executive Offices)
(604) 278-5996
(Issuer's Telephone Number, Including Zip Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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________
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 7,622,444 shares class "A"
voting common stock and 1,036,333 shares class "B" non-voting common stock.
Transitional Small Business Disclosure Format: Yes________ No____X____
1
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PART I
ITEM 1. FINANCIAL STATEMENTS PAGE
----
The following Financial Statements are presented (in U.S.
dollars) for the Registrant, IAS Communications, Inc.
1. Balance sheet for July 31, 1996 and 1995 (unaudited) 3
2. Statement of Operations accumulated from inception 4
(December 13, 1994) to July 31, 1996 and the nine month
periods ended July 31, 1996 and 1995
3. Statement of Cash Flows accumulated from inception 5
(December 13, 1994) to July 31, 1996 and the nine month
periods ended July 31, 1996 and July 31, 1995
4. Statement of Stockholders' Equity (Deficit) accumulated from 6
inception (December 13, 1994) to July 31, 1996
5. Notes to financial statements. 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATIONS 10
PART II
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 2. CHANGES IN SECURITIES 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11
ITEM 5. OTHER INFORMATION 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
2
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
IAS Communications, Inc.
(A Development Stage Company)
Balance Sheet July 31, 1996
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
Assets
Current Assets
Cash 125,565 185,038
Prepaid expenses 6,950 9,758
-------- --------
128,515 194,796
Licence (Note 2) 250,001 250,001
Patents (Note 2) 15,488 15,488
-------- --------
398,004 460,285
======== ========
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable and accrued liabilities 34,903 35,447
Redeemable Class "A" Shares 197,750 197,750
Subscriptions Received (Note 3) 175,000 416,250
-------- --------
407,653 649,447
-------- --------
Stockholders' Equity (Deficit)
Common Stock (Note 3)
100,000,000 Class "A" voting shares
authorized without par value; 7,622,444
shares and 7,246,333 shares issued
and outstanding respectively 769,001 374,751
Preferred Stock
Authorized: 50,000,000
Deficit Accumulated During The Development Stage (778,650) (563,913)
-------- --------
(9,649) (189,162)
-------- --------
398,004 460,285
======== ========
</TABLE>
Contingency and Commitments (Notes 1 and 5)
3
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IAS Communications, Inc.
(A Development Stage Company)
Statement of Operations
Accumulated from December 13, 1994 (Inception)
To July 31, 1996 and the periods ended
July 31, 1996 and 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated May 1, 1996 May 1, 1995
During the to to
Development July 31, July 31,
Stage 1996 1995
$ $ $
<S> <C> <C> <C>
Revenue -- -- --
---------- ---------- ----------
Administration Expenses
Bank charges 508 132 32
Consulting 29,333 5,333 --
Investor relations 39,349 22,853 --
Management fees 97,500 15,000 15,000
Office, postage and courier 12,966 902 476
Professional fees 178,130 33,784 22,128
Rent and secretarial 30,000 4,500 4,500
Telephone 11,133 -- --
Transfer agent and regulatory 4,998 300 1,538
Travel and promotion 26,456 14,833 73
Less interest (7,624) (1,044) (1,866)
---------- ---------- ----------
422,749 96,593 41,881
---------- ---------- ----------
Research and Development Expenses
Consulting 17,667 -- 2,000
Prototype construction and testing 335,234 118,144 20,659
Royalty 3,000 -- --
---------- ---------- ----------
355,901 118,144 22,659
---------- ---------- ----------
Net Loss 778,650 214,727 64,540
========== ========== ==========
Net Loss Per Share (.11) (.03) (.01)
========== ========== ==========
Weighted Average Shares Outstanding 7,265,131 7,681,913 7,300,100
========== ========== ==========
(including redeemable shares)
</TABLE>
4
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IAS Communications, Inc.
(A Development Stage Company)
Statement of Cash Flows
Accumulated from December 13, 1994 (Inception)
to July 31, 1996 and the periods ended July 31, 1996 and 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated May 1, 1996 May 1, 1995
During the to to
Development July 31, July 31,
Stage 1996 1995
$ $ $
<S> <C> <C> <C>
Cash Flows to Operating Activities
Net loss (778,650) (214,737) (64,540)
Adjustment to reconcile net loss to cash
Gain on shares cancelled (10) -- --
Change in non-cash working capital items
Decrease (increase) in
prepaid expenses (6,950) 2,808 --
Increase in accounts payable 34,903 (544) 27,886
---------- -------- --------
Net Cash Used in Operating Activities (750,707) (212,473) (36,654)
---------- -------- --------
Cash Flows to Investing Activities
Increase in licence (250,000) -- --
Increase in patent protection costs (15,488) -- (13,233)
---------- -------- --------
Net Cash Used in Investing Activities (265,488) -- (13,233)
---------- -------- --------
Cash Flows from Financing Activities
Increase in redeemable shares issued 197,750 -- --
Increase in shares issued - cash 769,010 394,250 --
Increase (decrease) in subscriptions
for shares 175,000 (241,250) --
---------- -------- --------
Net Cash Provided by Financing Activities 1,141,760 153,000 --
---------- -------- --------
Decrease in Cash -- (59,473) (49,887)
Cash - Beginning of Period 125,565 185,038 --
---------- -------- --------
Cash - End of Period 125,565 125,565 138,260
========== ======== ========
Non-Cash Financing Activity
The Company issued 6,000,000 Class "A"
common shares at a deemed value of $1
in total for property 1 -- --
Shares issued to an officer at
incorporation donated back to the
Company and cancelled (10) (10) --
---------- -------- --------
(9) (10) 1
========== ======== ========
</TABLE>
5
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IAS Communications, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
Accumulated from December 13, 1994 (Inception)
to July 31, 1996
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Common During the
Stock Stock Development
Shares Class "A" Class "B" Stage
# $ $ $
<S> <C> <C> <C> <C>
Balance - December 13, 1994 (Inception) -- -- -- --
Shares issued to an officer at incorporation
for cash at $0.10 per share 100 10 -- --
Shares issued on December 13, 1994 for
property at a nominal value of $1
in total or $.00000017 per share 6,000,000 1 -- --
Shares issued from December 20, 1994 to
January 31, 1995 pursuant to a private
placement at $0.10 per share 700,000 -- 70,000 --
Shares issued from December 14, 1994 to
March 6, 1995 pursuant to an offering
memorandum at $0.75 per share 336,333 -- 252,250 --
Net loss for the period -- -- -- (83,615)
---------- -------- -------- --------
Balance - April 30, 1995 7,036,433 11 322,250 (83,615)
Shares issued to an officer at
incorporation donated back to
the Company and cancelled on
July 12, 1995 (100) (10) -- --
Share exchange -- 322,250 (322,250) --
Shares issued pursuant to options
exercised in April, 1996 at
$0.25 per share 210,000 52,500 -- --
Net loss for the year -- -- -- (480,298)
---------- -------- -------- --------
Balance - April 30, 1996 7,246,333 374,751 -- (563,913)
Shares issued from May 1 to
July 31, 1996 pursuant to a
private placement at $1.25 per share 303,000 378,750 -- --
Shares issued pursuant to options
exercised in June and July, 1996
at $0.25 per share 62,000 15,500 -- --
Net loss for the period -- -- -- (214,737)
---------- -------- -------- --------
Balance - July 31, 1996 7,611,333 769,001 -- (778,650)
========== ======== ======== ========
</TABLE>
6
<PAGE> 7
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
July 31, 1996
(expressed in U.S. dollars)
1. Nature and Continuance of Business
The Company's business purpose is to manufacture and/or licence the
rights to manufacture certain proprietary Torroidal Helical Antenna
Technology ("The Technology") excluding military applications and
resulting procurement interests.
These financial statements have been prepared on the basis of a going
concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has not generated any revenues or profitable operations since
inception. The Company's activities are in the development stage and
additional costs for the further improvement of The Technology must be
incurred. There is substantial doubt as to the Company's ability to
generate revenues and to continue as a going concern, as the
continuation of the Company as a going concern is dependent on its
ability to obtain financing and/or the attainment of revenues and
profitable operations. Management will raise additional capital through
private placements, public offerings and the exercise of stock options.
2. Licence and Patents
(a) Licence
Pursuant to the terms of an option agreement dated November 18,
1994 and amended December 16, 1994 between SMR Investments Ltd.
("SMR") and Integral Concepts Inc. ("ICI") and an assignment of
this option agreement dated December 13, 1994, the Company acquired
an exclusive sublicence to The Technology, subject to entering into
a formal sublicence agreement. Pursuant to the terms of the option
agreement, the Company paid $250,000 to ICI, which owns the
exclusive licence obtained from West Virginia University Research
Corporation ("WVURC") in an agreement dated April 12, 1994. SMR,
ICI and WVURC are not related to each other. Pursuant to the
assignment agreement, the Company issued 3,000,000 shares to each
of Access Information Systems Inc. (A company controlled by SMR)
and a director of the Company (principal of ICI) for a total deemed
value of $1 for all 6,000,000 shares issued.
Pursuant to the original licence agreement between WVURC and ICI,
ICI was granted the exclusive licence to manufacture The Technology
or sublicence others to manufacture, market, sell copies of,
licence and distribute The Technology. On July 10, 1995, the
Company and ICI entered into an exclusive sublicence agreement,
which incorporates the terms and conditions of the original licence
agreement between WVURC and ICI. The sublicence will be exclusive,
covering any and all international markets but will exclude all
military applications and resulting procurement interests which
will be retained by ICI and WVURC for development purposes. All
improvements and embodiments that are created as a result of these
military applications and additional research and development
efforts by ICI and WVURC will be transferred directly to the
Company. The terms of the sublicence agreement, which incorporates
the financial obligations that ICI owes WVURC pursuant to the
original licence agreement, are as follows:
(i) The Company will pay WVURC a minimum annual royalty starting
December 31, 1995 of $3,000.
(ii) The Company will pay WVURC an earned royalty on sales, leases
or sublicences of The Technology of 10% of net revenues less
a credit for the minimum annual royalty.
(iii) The Company will pay ICI a 3% royalty on all gross sales.
7
<PAGE> 8
2. Licence and Patents (continued)
(a) Licence (continued)
All royalties are payable within 30 days of each calendar quarter.
The agreement will be renewed for one year periods after December
31, 1996. The term of the original licence agreement and the
sublicence agreement, subject to compliance with the terms thereof,
is perpetual.
(b) Patents
The Company has paid $15,488 to register and protect patents to
July 31, 1996.
3. Common Stock
(a) Stock option activity
<TABLE>
<CAPTION>
April 30, 1996 Price Exercised July 31, 1996
# $ # # Expiry Date
<S> <C> <C> <C> <C>
300,000 0.25 62,000 238,000 December 29, 1999
50,000 0.25 - 50,000 February 24, 2000
40,000 1.25 - 40,000 March 4, 2000
------- ------ -------
390,000 62,000 328,000
======= ====== =======
</TABLE>
(b) Subscriptions received
(i) Pursuant to a private placement dated March 1, 1996, to
issue up to 400,000 Class "A" shares at $1.25 per share,
investors subscribed for 393,000 shares and deposited
$491,250 into the Company's treasury. A total of 303,000
shares were issued during the quarter and 90,000 shares
issued in August, 1996.
(ii) A total of $62,500 was received pursuant to stock options
being exercised. The 50,000 shares have not been issued as
at July 31, 1996.
4. Related Party Transactions
(a) A management fee of $2,500 per month and rent and secretarial fees
of $1,500 per month has been paid to Access (controlled by a
director, John Robertson) and $2,500 per month has been paid to a
director and Chairman of the Board, James E. Smith (principal of
ICI).
(b) See Note 3 - a 3% royalty on gross sales will be paid to ICI.
8
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5. Commitments and Contingent Liabilities
(a) Commitments
(i) See Note 1 for ongoing royalty commitments.
(ii) The Company has entered into an agreement with WVURC to fund
the computer modeling portion of the development of The
Technology in the amount of $231,373. A total of $197,463 has
been expended to July 31, 1996.
(iii)The Company entered into a fixed-price contract with Emergent
Technologies Corporation of Morgantown, West Virginia to fund
the prototype development and testing of specific applications
of The Technology in the amount of $111,271. The contract was
completed and paid in full during the quarter.
The Company has entered into a Phase 2 fixed-price contract
with Emergent to develop cellular and personal communications
systems in the amount of $154,864. A total of $25,000 has
been paid to July 31, 1996 with a final payment of $39,864 to
be paid in November, 1996.
(iv) See Note 3 for commitments to issue shares upon the exercise
of stock options.
(b) Contingent liability - Continuance of Business (see Note 1).
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
As of July 31, 1996 the Company had cash resources of $117,000 and current
accounts payable of $35,000 for net working capital of $82,000. On June 30, 1996
the company completed the first phase fixed-price contract with Emergent
Technologies Corporation of Morgantown, West Virginia to complete the prototype
development and testing of specific applications of the THA technology and
$111,271 was paid. On July 1, 1996 the Company entered into a phase two
fixed-price contract with Emergent for the development of cellular and personal
communications systems. The contract calls for one payment of $25,000 on July
10, 1996 and three monthly payments of $30,000 on August 10, September 10, and
October 10 and a final payment of $39,864 by November 10, 1996. The Company will
also be completing its contract with West Virginia University Research
corporation for the computer modeling component of the development work by
paying them $30,000. The Company is completing a private placement of 100,000
shares at $1.25 per share to net the Company $125,000 which should be sufficient
to complete the phase two development project and cover overhead to the end of
December, 1996. The Company has no definitive plans past the completion of phase
two but if further development work is needed the company plans to secure a
one-time large private placement financing to provide enough funds to pay for
development work through 1997.
10
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PART II
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27. Financial Data Schedule
11
<PAGE> 12
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.
IAS COMMUNICATIONS, INC.
(Registrant)
Dated September 13, 1996 /s/ John G. Robertson
------------------------ ---------------------
John G. Robertson, President and Chief
Executive Officer (Authorized Officer)
Dated September 13, 1996 /s/ Jennifer H. Lorette
------------------------ -----------------------
Jennifer H. Lorette, Chief Financial Officer
(Principal Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> 125,565
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 132,515
<PP&E> 265,489
<DEPRECIATION> 0
<TOTAL-ASSETS> 398,004
<CURRENT-LIABILITIES> 34,903
<BONDS> 0
0
0
<COMMON> 769,001
<OTHER-SE> 372,750
<TOTAL-LIABILITY-AND-EQUITY> 398,004
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 214,737
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (214,737)
<INCOME-TAX> 0
<INCOME-CONTINUING> (214,737)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (214,737)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
