<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) OR 12(g)
IAS COMMUNICATIONS, INC.
(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 V6X2W8, CANADA
(Address, including postal code, of registrant's principal executive offices)
(604) 278-5996
(Telephone number including area code)
Securities to be registered under Section 12(b) of the Exchange Act: NONE
Securities to be registered under Section 12(g) of the Exchange Act: CLASS A
COMMON STOCK
<PAGE> 2
IAS COMMUNICATIONS, INC.
FORM 10-SB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I Page
<S> <C> <C> <C>
Item 1. Description of Business.........................................................................3
Item 2. Management's Discussion and Analysis or
Plan of Operations..............................................................................8
Item 3. Property........................................................................................8
Item 4. Security Ownership of Certain Beneficial Owners and Management.................................10
Item 5. Directors, Executive Officers, Promoters and Control Persons of the Company....................11
Item 6. Executive Compensation.........................................................................13
Item 7. Certain Relationships and Related Transactions.................................................14
Item 8. Description of Securities......................................................................15
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity
and Other Stockholder Matters..................................................................17
Item 2. Legal Proceedings..............................................................................17
Item 3. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.......................................................................17
Item 4. Recent Sales of Unregistered Securities........................................................18
Item 5. Indemnification of Directors and Officers......................................................18
PART F/S
Index to Financial Statements....................................................................................19
PART III
Item 1. Exhibits and Reports on Form 8-K...............................................................20
</TABLE>
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PART I
ALTERNATIVE 3
ITEM 1. DESCRIPTION OF BUSINESS
(a) BUSINESS DEVELOPMENT
The Company is a development stage corporation formed under the laws of
the State of Oregon in December 1994 and has not generated any revenues from the
operation of its proposed business. The proposed business of the Company is to
develop the toroidal helical antenna ("THA") and license the rights to
manufacture the THA to third parties in North America.
(b) BUSINESS OF THE COMPANY
THE PRODUCT
The THA is a low profile, resonant antenna. It has a toroidal (donut
shaped) geometry about which has been wrapped helical windings (coils). Compared
to traditional dipole and monopole antennas, the THA is much shorter in height
(about 1/60th of the other antennas), yet its toroidal magnetic field is
equivalent to the linear electric fields produced by other antennas. The
windings occur in pairs which are wrapped with opposite pitch to each other
(i.e. left handed windings versus right handed windings) and are referred to as
contra-windings. The small size of the THA results from both the effect of
taking long wires and wrapping them onto a small geometry and the winding
interactions which serve to slow the propagation of the electrical current
within the antenna (thus behaving as a larger, lower frequency antenna).
The whole unit is ground plane independent. Traditional antennas are
dependent on the conductive plane found at the surface of the earth to achieve
geographic coverage. For that reason the higher above the surrounding terrain
that an antenna is installed, the greater its range of coverage. The THA appears
from anecdotal data and observed practical experiments to achieve its range of
coverage without reference to or being dependent on the conductive ground plane.
The result of "ground plane independence" is that the THA does not need to be
mounted on a tall tower or at the top of a mountain. The THA' s coverage
apparently can be achieved with a ground level installation. The elimination of
such towers is a major cost advantage and reduces interference in the visual
environment as well as in the physical environment. Signals are fed to the
antenna through up to four networks which attach to the structure at
evenly-spaced locations. Resulting electromagnetic fields act as if they are
solely produced by a ring of pure magnetic currents; in other words, the
contributions due to electric currents are canceled. This planar ring of
magnetic current is electromagnetically equivalent to a linear electric current.
The THA has not been manufactured for commercial use at this time. Two
prototypes have been created and are currently being tested by the Department of
Defense. The two prototypes were developed by a West Virginia University
research team under the direction of Dr. James E. Smith, Chairman of the board
of the Company. While the Company's license for the THA does not include
military application, the Company believes that the results from the testing by
the Department of Defense will verify the practical application of the THA for
non-military uses.
Compared to traditional dipole and monopole antennas, the THA is much
shorter in height (about 1/60th of the other antennas), yet its toroidal
magnetic field is equivalent to the linear electric field produced by other
taller antennas. This makes THAs particularly excellent candidates for low
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frequency broadcast transmission that otherwise require prohibitively tall
monopole structures above the earth ground plane. For higher frequency
applications, for example, the Company believes that the THA could replace a car
antenna with a structure that could be made part of the rear view mirror or
similarly sized object. There is no assurance, however, that such replacement
would in fact be practical or achievable.
The Company believes that the THA also outperforms monopole antennas by
over 300% in distances achieved. The basis for this statement is the United
States Department of Defense as reported by Mr. Jack Parsons of Wintec, Inc.
Wintec, Inc. ("Wintec") is paid $2,000.00 per month to advise the Company on the
progress of the tests by the Department of Defense. Wintec's agreement with the
Company is oral and there are no written documents to reflect the terms. In
addition, the THA is half the diameter of the ground plane structure necessary
for quarterwave monopole antennas. According to Wintec, the United States
Department of Defense tested the THA over a period of several weeks at distances
of over 37 miles, which is much farther than the typical 10 mile distances for
monopole antennas.
Due to the THA's ground plane independence, it, unlike other antennas,
is not affected by placement. Resonant operations of the THA provides improved
efficiency. In addition, THA's are lighter, cost substantially less than other
antennas, are more aesthetic, and, for commercial broadcast antennas, are less
hazardous to aircraft because of the elimination of a tower. The manufacture of
one of the prototypes confirmed the lower cost. The primary reason for the lower
cost is the elimination of the tower to raise the THA above the ground.
Potential uses of THAs include the military, ranging from infantry and
artillery to intelligence and signal units, and civilian uses. The Company,
however, has no right to the military application of the THAs. The civilian uses
include AM, FM and TV broadcasting and reception, as well as cellular phone and
other two-way communication. Also, the THAs could be used by law enforcement
agencies such as the FBI, ATF, immigration and naturalization units, and
intelligence units. The THA has not been used for any of the civilian uses
described above and accordingly there are no assurances that the THA could ever
operate as anticipated.
Possible future alterations may improve the THA even more. There are no
assurances that the future alterations discussed herein will be able to be made
or that such alterations will result in even greater cost reductions of the THA.
Future diameter reductions (a reduction as much as two orders of magnitude,
achieved by increasing the number of turns or by the use of ferrite cores) will
allow for upgrades and broad band applications. A longer distance of
communication is also possible. All of these improvements, in addition, will
contribute to even greater cost reduction of the THA.
In June 1996, the Company completed successful testing of the
Contrawound Toroidal Helical Antenna ("CTHA"), a variation of the THA. Several
prototype CTHAs were built including a wireless local area network, cellular
telephone and wireless telephone. These antennas were constructed to confirm
that the design and measurement techniques used by the Company were functional
across a broad spectrum of frequencies. Several successfully built laboratory
models of CTHA's operated at selected frequencies from 2 megahertz to 950
megahertz.
Based on data gathered from several days of near and far field testing,
the following data was confirmed:
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- The empirical data taken during the project closely approximates the
radiation pattern projected by West Virginia University's ("WVU")
computer numerical analysis. The WVU analysis projected that the CTHA
would exhibit an isotropic-like radiation pattern. Radiation intensity is
nearly equal in all directions. Further testing will should confirm the
CTHA to be the first antenna on the market to offer this very unique
characteristic.
- The data received from several days of near and far field testing
revealed that the gain and radiation pattern of CTHA's operating at
different frequencies were nearly identical. Further tests were repeated
at far field distances to confirm that the physical properties and
electromagnetic performance of the CTHA are scalable across a very broad
frequency spectrum.
From the experiments conducted through June 1996, several advantages of the CTHA
over monopole antennas have been noted including :
- the CTHA is 1/60 the height of a monopole antenna
- the CTHA operates more efficiently with a single phase feed
- the CTHA weighs 80% less in most applications
- the CTHA can be flush mounted for low profile packaging
- the CTHA radiates in all directions, making it the first
antenna to accomplish this important feature
The CTHA is a unique antenna with properties and characteristics unlike
any other antenna that Wintec has previously studied. One of the more beneficial
characteristics observed repeatedly during these formal tests was that the CTHA
is an impedance invariant antenna. That is to say that its impedance is not
affected by its environment and does not change when the antenna is folded
conformally around non-conducting materials. Additional testing will be
conducted to determine the effect of conducting materials on the antenna.
A proof of concept antenna order has been received from the Commercial
and Government Systems division of the Eastman Kodak Company which will conduct
independent evaluations to see if the CTHA will meet its requirements for use on
a developmental Digital Image Capture system for a potential government program.
The initial over the ocean evaluation of the CTHA was completed in June
1996 and was a resounding success. The tests directly compared the performance
between a quarter wave monopole antenna (8 foot tall) and the CTHA (1 inch tall)
out to the communications failure distance for the monopole antenna. Radios were
controlled by a computer which initiated a call one time per minute for the
duration of the test run. The signal to noise ratio was recorded from each
antenna at each call and was automatically ranked for that call segment. The
CTHA continued to operate with a perfect score for both receiving and
transmiting throughout the test. This outstanding performance is due to the
unique isotropic like radiation pattern of the CTHA.
The evaluation took place with a high frequency single sideband
antenna for commercial maritime use during the ocean trials. This was very
successful in that the CTHA communicated over 700 miles on its first attempt.
This antenna may be used on commercial vessels for long distance communications.
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The test of these antennas has verified all previous claims of the
CTHA's capabilities as a formidable antenna in the market.
The Company entered into a fixed-price contract with Emergent
Technologies Corporation of Morgantown, West Virginia ("Emergent") to fund the
prototype development and testing of specific applications of the THA in the
amount of $111,271.00. A total of $60,000.00 had been paid by the Company
through April 30, 1996. Based upon a final report issued in June 1996, the
Company entered in to a phase two fixed price contract with Emergent for the
development of cellular and personal communications CTHAs for commercial use by
the end of calendar 1996.
Additional research and development of both a scientific and practical
nature is required to complete the commercialization of the THA.
ADVANTAGES/DISADVANTAGES
The principle advantages of this antenna are: (1) low physical profile;
(2) resonant operation providing improved efficiency; and, (3) low
susceptibility to electrostatic disturbances. The THA is well suited to long
distance communication applications which require vertical polarization for
improved efficiency. The low physical profile is conducive to flush mounted
applications for reducing aerodynamic drag on vehicles. For low frequency fixed
applications, the significantly shorter structures can be made lighter, more
economical, and more aesthetic, and less hazardous to aircraft, than the tall
antenna structures that are presently used. The THA can be constructed on
rectangular or polygonal frames which can be folded and stored for portable
applications. A specific configuration of the THA, the QuadContra antenna, has
been developed in an attempt to maximize performance. The Quad Contra Antenna
("QCA") is based entirely upon the technology of the THA. It involves winding
the THA with necessary lengths of insulated wire to create multiple antennas. No
QCAs have been manufactured and there is no assurance any QCAs will ever be
developed or manufactured. The Company is unaware at this time of any
disadvantages of the THA. The THA is still in the testing and development stage
and accordingly there is no assurance that the technology will operate as
anticipated.
APPLICATIONS
There are many applications which can exploit the advantages of the
THA. The small size and especially low profile make it well suited to both
commercial and military applications that would benefit from an inconspicuous
antenna package. These would include land, air and sea vehicles. The low profile
and magnetic principle of operation enable the antenna to be concealed in the
fuselage of the body of an airplane, car, truck, train or boat so as to reduce
drag. The THA can also be applied in commercial applications, including AM, FM
and TV broadcasting and reception, and cellular phone communications. The
company's license does not include military applications.
DISTRIBUTION
PRODUCTION
The Company intends to contract with independent third parties to
manufacture the THA. The Company has not entered in to any negotiations with any
manufacturer as of the date hereof, but believes that there are a number of
manufacturers who are capable of manufacturing the THA. The Company has
contacted several such manufacturers. Two such manufacturers have advised the
Company that they are interested in manufacturing the THA. There is no assurance
that the
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Company will enter into an agreement with anyone to manufacture the THA.
Accordingly, in the event that the Company does not enter into an agreement to
manufacture the THA or in the event the Company locates a manufacturer that
subsequently ceases operations for any reason, serious financial consequences to
the Company could result.
SALES AND MARKETING
The Company intends to market the THA' s and licensing agreements
through independent sales representatives. As of the date hereof, the Company
has not retained any independent sales representatives.
COMPETITION
The market for antennas is highly competitive. There are numerous
manufacturers of antennas in the United States with substantially greater
financial, technical, marketing and other resources than the Company. To the
Company's knowledge, no competitors are currently manufacturing any product
which is substantial similar to the THA and patent research does not reveal any
competing technology. The Company has not determined if it will compete with
satellite dishes.
LICENSING
The Company also intends to license the technology to manufacture the
THAs to third parties. The licenses will be limited to specific geographical
areas on an exclusive or nonexclusive basis, depending upon the terms of the
license. The Company has not entered into any negotiations with anyone to
license the THA technology as of the date thereof.
On February 14, 1995, the Company entered into an agreement with West
Virginia University Center for Industrial Research Applications ("WVUCIR") to
test and demonstrate the size and efficiency advantages that the THA possesses
over traditional monopole antennas by completing computer simulation and design,
fabrication and testing of commercially viable prototypes. By the terms of the
agreement, the Company will pay a total of $231,372.67 to WVUCIR. A total of
$155,590 has been expended through April 30, 1996. The Company believes that the
testing by WVUCIR will complete the research and development of the THA. WVUCIR
does not obtain any rights to the THA technology by virtue of its testing. The
Company entered into this agreement with WVUCIR before ICI granted the July 10,
1995 sublicense referred to below in contemplation of and in the belief that the
sublicense would be granted to the Company in the near future.
On July 10, 1995 the Company and Integral Concepts Inc. ("ICI") entered
into an exclusive sublicense agreement that gives the Company the same terms and
conditions of the license agreement between West Virginia University Research
Center ("WVURC") and ICI as follows:
1. The Company will pay a minimum annual royalty starting December 31,
1995 of $3,000.00.
2. The Company will pay WVURC 10% of net revenue on earned royalties,
leases or sublicenses.
3. The Company will pay ICI a 3% royalty on all gross sales.
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PATENTS
West Virginia University Research Corporation has received a patent for
the THA. The Company is not affiliated with West Virginia University ("WVU").
Dr. Smith is a tenured professor at WVU and conducts his research and
development regarding the THA at WVU's facilities. As a result thereof, the
WVURC owns the patent rights to the THA which it licensed to ICI. The license
between the WVURC and ICI provides that ICI can grant sublicenses to third
parties to the technology covered by the patent. On July 10, 1995, ICI issued
such a sublicense to the Company.
EMPLOYEES
In addition to its Officers, the Company currently employs three
part-time employees. The Company anticipates adding employees as needed in the
future. In the event the Company is unable to engage and retain the necessary
personnel in the future, its business would be materially and adversely
affected.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS - INCEPTION (DECEMBER 13, 1994) THROUGH APRIL 30, 1996.
The Company is a development stage start-up company with no operating
history and no revenues or earnings from operations. There is no assurance that
the Company will ever have material revenues or that its operations will be
profitable.
The Company has no commitments for lines or letters of credit.
The 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. 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 plans to raise capital with
private placements, public offerings and the exercise of stock options.
From December 1994 to March 1995, the Company sold 1,300,000 shares of
its Class B Nonvoting Common Stock to residents of the United States of America
and Canada. In the United States, the Class B Nonvoting Shares of Common Stock
were sold to residents of Arizona, California, Florida, Georgia, Idaho,
Illinois, Michigan, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon,
Pennsylvania, Texas, Washington and Wisconsin. None of the shares were
registered with any state or federal securities agencies. As a result, the
Company believes that the sales in Arizona, California, Florida, Georgia,
Illinois, Michigan, Nevada, New York, Pennsylvania, Texas and Washington
violated the respective state securities laws, which could result in the Company
returning up to $197,749.75 plus interest to the purchasers in those states. In
addition, Class B Nonvoting Shares were sold in the Canadian Provinces of
Manitoba, Alberta and Saskatchewan without registration, which could result in
the Company returning an additional $10,125.00. The foregoing could have an
adverse effect upon the Company's operations. Currently, the Company does not
have adequate funds to pay all of the claims as a result of the
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aforementioned violative sales. In the event all of the purchasers make claims,
the Company will have to raise additional funds through the sale of equity or
debt securities. There is no assurance, however, that the Company can obtain
sufficient funds to pay all of the claims and accordingly, it is conceivable
that the Company may have to cease operations.
During the year holders of 1,300,000 Class "B" non-voting shares agreed
to exchange these shares for 1,300,000 Class "A" voting shares. Of the 1,300,000
Class "A" shares issued and outstanding, 263,667 are redeemable Class "A"
shares.
Between December 14, 1994 and March 6, 1995 the Company received
subscriptions for 263,667 Class "B" shares and received $197,750 from investors
in states where they have the right to revoke their subscription and demand
their investment be returned to them within three years of subscription as to
$161,500 and within six years as to $36,250. The 263,667 redeemable Class "B"
shares were issued and then exchanged for 263,667 Class "A" shares, and are
outstanding. To date, holders of these shares have not revoked their
subscriptions.
Initial operations will include locating a proposed manufacture and
begin the promotion of the THA. Further, the Company intends to license the
technology to manufacture the THAs to third parties. The Company has not entered
into any negotiations to manufacture or license the THA technology. While the
license to military applications of the THA has not been granted to the Company,
the Company believes that such exclusion will not have any adverse effect on the
Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company issued 6,000,000 shares of its Class A Voting Common Stock
for a total of $1.00 as partial consideration to acquire an option to acquire an
exclusive license to manufacture and/or license the rights to manufacture the
toroidal helical antenna. The option was acquired from a director and a company
controlled by a director by issuing 3,000,000 shares to each of the related
parties. The Company issued 100 shares of its Class A Voting Common Stock for
$10.00 in cash, which were donated back to the Company and canceled on July 12,
1995 and 1,300,000 shares of its Class B Non-Voting Common Stock for $520,000 in
cash. The cash and property have been used for organizational matters and
preparation of the prospectus for an exchange offer.
Pursuant to an agreement dated January 31, 1995, the Company agreed to
issue 75,000 shares of Class A Common Stock as compensation to a supplier of
services to be paid upon the effective date of a registration statement for the
exchange offer. Pursuant to an amended agreement on April 11, 1996, the parties
amended the above agreement as follows:
1. $10,000.00 paid on April 11, 1996 and $62,500.00 paid on April 22,
1996.
2. 25,000 Class A shares to be issued on April 22, 1996 and an option
to acquire 50,000 Class A shares @ $1.25. This option was exercised
on April 25, 1996.
Pursuant to a private placement memorandum dated March 1, 1996 to issue
up to 400,000 Class A shares at $1.25 per share, investors have subscribed for
283,000 shares for $353,750.00 and a total of $62,500.00 was received pursuant
to the exercise of stock options through April 30, 1996.
The Company issued 210,000 shares @ $0.25 per shares pursuant to
options exercised in April of 1996 to raise $52,500.00.
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ITEM 3. PROPERTY
The Company's headquarters and executive offices are located at
#185-10751 Shellbridge Way, Richmond, British Columbia V6X2W8 and the telephone
number is (604)278-5996. The Company leases, on a month-to-month basis,
approximately 200 square feet of space at the aforementioned office from John
Robertson, President of the Company. The monthly rent fee is $500.00.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of July 3, 1996, the outstanding
Class A Common Stock of the Company owned of record or beneficially by each
person who owned of record, or was know by the Company to own beneficially, more
than 5% of the Company's Common Stock, and the name and shareholdings of each
Officer and Director and all Officers and Directors as a group.
All of the Shares of Common Stock presently issued and outstanding are
"Restricted Securities" as that term is defined under the Securities Act of
1933, as amended, and, as such, may not be sold in the absence of registration
under the Securities Act of 1933, as amended, or the availability of an
exception therefrom.
<TABLE>
<CAPTION>
====================================================================================================================
PERCENTAGE OF CLASS A
CLASS A SHARES OWNED
SHARES OWNED
NAME
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
James Earl Smith[1]
Chairman of the Board of Directors 3,150,000 38%
- --------------------------------------------------------------------------------------------------------------------
John G. Robertson[1][2] President and member of the
Board of Directors 3,600,834 44%
- --------------------------------------------------------------------------------------------------------------------
Jennifer Lorette[1]
Secretary/Treasurer, Chief Financial Officer and
Principal Accounting Officer 63,000 .8%
- --------------------------------------------------------------------------------------------------------------------
Patrick Badgley[1] 46,000 .6%
- --------------------------------------------------------------------------------------------------------------------
Paul E. Lamarche[1] 50,000 .6%
- --------------------------------------------------------------------------------------------------------------------
ALL OFFICERS & DIRECTORS AS A GROUP (FIVE INDIVIDUALS)
6,909,834 88.38%
====================================================================================================================
</TABLE>
All shares are held beneficially and of record and each record shareholder has
sole voting and investment power.
[1] These individuals are the Officers and Directors of the Company and may
be deemed to be "parents or founders" of the Company as that term is
defined in the Rules and Regulations
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promulgated under the Securities Act of 1933, as amended. Includes
options to purchase shares of Class A Voting Common Stock at an
exercise price of $0.25 per share.
[2] 3,000,000 shares are registered in the name of Access Information
Services, Inc., a corporation controlled by Mr. Robertson.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
COMPANY
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position of each Officer and
Director of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
====================================================================================================================
<S> <C> <C>
James Earl Smith, Ph.D. 46 Chairman of the Board of Directors
====================================================================================================================
John G. Robertson 55 President, Principal Executive Officer and a member of
the Board of Directors
====================================================================================================================
Jennifer Lorette 23 Secretary/Treasurer, Principal Accounting Officer and
Chief Financial Officer
====================================================================================================================
Patrick Badgley 53 Member of the Board of Directors
====================================================================================================================
Paul E. Lamarche 54 Member of the Board of Directors
====================================================================================================================
</TABLE>
All Directors of the Company have served since December 13, 1994, The Officers
were elected on February 4, 1995, and will serve for one year or until their
respective successors are elected and qualified. No compensation has been paid
or accrued to any Officer or Director to date. All officers currently devote
part-time to the operation of the Company.
JAMES EARL SMITH PH.D. - CHAIRMAN OF THE BOARD OF DIRECTORS
Dr. Smith is a founder and Chairman of the Board of Directors. Since 1989, Dr.
Smith has been an Associate Professor in the Mechanical and Aerospace
Engineering Department, West Virginia University, Morgantown, West Virginia.
Since September 1990, Dr. Smith has been a Director of the Center for Industrial
Research Applications, West Virginia University. Since February 1994, Dr. Smith
has been President and a Director of Integral Visions Systems, Inc. a West
Virginia corporation engaged in the business of 3-D machine vision calorimetry.
Since September 1992, Dr. Smith has been President and a Director of Integral
Concepts, Inc., a West Virginia corporation engaged in the business of
technology transfer from the research to the commercial sector. From April 1992
to March 1994, Dr. Smith was a consultant to CK Engineering, Inc., located in
Montreal, Canada, which is engaged in the business of mechanism analysis and
development. From January 1992 to March 1993, Dr. Smith was a consultant to Reg
Technologies, Inc. located in Richmond, British Columbia which is engaged in the
business of mechanism analysis and development. Dr. Smith holds the degree of
Doctor of Philosophy in Mechanical Engineering from West Virginia University.
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JOHN G. ROBERTSON - PRESIDENT, PRINCIPAL EXECUTIVE OFFICER AND A MEMBER OF THE
BOARD OF DIRECTORS
Mr. Robertson is a founder, President, Principal Executive Officer and a member
of the Board of Directors of the Company. Since May 1977, Mr. Robertson has been
President and a member of the Board of Directors of SMR Investments Ltd., a
British Columbia corporation engaged in the business of management and
investment consulting. Since October 1984, Mr. Robertson has been President and
a Director of Reg Technologies, Inc., a British Columbia corporation engaged in
the business of developing a rotary engine. Since June 1994, Mr. Robertson has
been President of REGI U.S., Inc. ("REGI U.S."), an Oregon corporation which is
engaged the business of developing a rotary engine. REGI U.S. is controlled by
Rand Energy Group, Inc., a British Columbia corporation of which Reg
Technologies, Inc. is the majority shareholder. Both REGI U.S. and Reg
Technologies, Inc. are engaged in the business of developing a rotary engine and
other devices utilizing Rand Cam(TM) Technology. REGI U.S. owns the U.S. rights
to the Rand Cam(TM) technology and Rand Energy Group, Inc. owns the worldwide
rights exclusive of the U.S. Since May 1980, Mr. Robertson has been President
and a Director of Teryl Resources Corp., a British Columbia corporation, engaged
in exploring and developing gold properties. Since February 1979, Mr. Robertson
has been President and Director of Flame Petro-Minerals Exploration Co., a
British Columbia corporation engaged in exploration of oil, gas and gold
properties.
JENNIFER LORETTE - SECRETARY/TREASURER, PRINCIPAL FINANCIAL OFFICER AND
PRINCIPAL ACCOUNTING OFFICER
Ms. Lorette is a founder, Secretary/Treasurer, Principal Financial Officer and
Principal Accounting Officer of the Company. Since April 1994, Ms. Lorette has
been Vice President of Administration of Reg Technologies Inc. Since June 1994,
Ms. Lorette has been a Vice President of REGI U.S. and Chief Financial Officer
and Vice President of Flame Petro Minerals Corp. From February 1994 to April
1994, Ms. Lorette was an executive assistant and from December 1992 to February
1994, she was a receptionist at Reg Technologies, Inc. From October 1990 to July
1992, Ms. Lorette was a receptionist for Nickels Custom Cabinets, Richmond,
British Columbia.
PATRICK BADGLEY - A MEMBER OF THE BOARD OF DIRECTORS
Mr. Badgley is a founder and a member of the Board of Directors of the Company.
Since February 1994, Mr. Badgley has been a Vice President of REGI U.S., and
since July 1993 has been a Director of Reg Technologies, Inc. From November 1986
to February 1994, Mr. Badgley was the Director of Research and Development for
Adiabatics, Inc., an Indiana corporation, which was engaged in the business of
advanced engine concepts. Prior to this he worked for Cummins Engine Company,
Curtiss Wright Corporation and Deere and Company. Mr. Badgley holds a Bachelor
of Mechanical Engineering degree from The Ohio State University, Columbus, Ohio.
PAUL E. LAMARCHE - A MEMBER OF THE BOARD OF DIRECTORS
Mr. Lamarche is a founder and member of the Board of Directors. Since October
1991, Mr. Lamarche has been President of Troy Design Manufacturing, driveline
division, which is engaged in the business of automotive power train engines.
Since 1990, Mr. Lamarche has been a Director of Pioneer Automotive, driveline
division, and President to Neotech Industries, Inc., which is engaged in the
business of engineering services (automotive). Since 1994, Mr. Lamarche has been
a director for the driveline dynamics group for Aerotek Engine Services, a
Michigan corporation.
12
<PAGE> 13
Mr. Lamarche holds a Bachelor of Science degree from the University of Waterloo,
Ontario, Canada.
ITEM 6. EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND OFFICERS
A management fee of $2,500.00 per month is paid to Access Information
Services, Inc., a corporation controlled by John Robertson, the Company's
President and a member of the Board of Directors. Further, the sum of $1,500.00
is paid to Access Information Services, Inc. for rent and secretarial services.
Dr. Smith receives a fee of $2,500.00 per month in his capacity as a
director and as Chairman of the Board of Directors.
The Company may in the future create retirement, pension, profit
sharing, insurance and medical reimbursement plans covering its Officers and
Directors. At the present time, no such plans exist. No advances have been made
or are contemplated by the Company to any of its Officers or Directors.
STOCK OPTIONS GRANTED
The Company issued options on December 29, 1994 to the Company's
Officers and Directors, exercisable at twenty-five cents ($0.25) per share, to
acquire "restricted" shares of the Class A Voting Common Stock as follows:
James Smith, Ph.D. 150,000
John Robertson 150,000
Jennifer Lorette 50,000
Patrick R. Badgley 50,000
Paul Lamarche 50,000
The options have an expiration of December 29, 1999 and do not expire
upon termination of employment.
The following table sets forth certain information concerning exercises
of stock options pursuant to stock option plans by the named executive officers
during the year ended April 30, 1996 and stock options held at year end.
13
<PAGE> 14
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of
Unexercised Unexercised Options at
Options at Year End Year End
--------------------------------- -----------------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ------------- ------------ --------------- ----------------- --------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
John G. Robertson 150,000 $225,000 -0- -0- -0- -0-
- ------------------- ------------- ------------ --------------- ----------------- --------------- -------------------
Jennifer Lorette 50,000 $75,000 -0- -0- -0- -0-
- ------------------- ------------- ------------ --------------- ----------------- --------------- -------------------
Patrick Badgley 10,000 $15,000 40,000 -0- $60,000 -0-
- ------------------- ------------- ------------ --------------- ----------------- --------------- -------------------
</TABLE>
(1) On April 30, 1996, the closing price of Common Stock was $1.75. For
purposes of the foregoing table, stock options with an exercise price
less than that amount are considered to be "in-the-money" and are
considered to have a value equal to the difference between this amount
and the exercise price of the stock option multiplied by the number of
shares covered by the stock option.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Smith, a tenured professor at West Virginia University ("WVU") and
the Company's Chairman of the Board of Directors, organized the development of
the concept of the THA at WVU. Pursuant to the terms of this employment at WVU,
WVU and West Virginia University Research Corporation ("WVURC") own world wide
rights to any invention made or developed by WVU personnel. Accordingly the
ownership rights to the THA belong to WVU and WVURC.
On April 12, 1994, WVURC granted an exclusive license to Integral
Concepts, Inc. ("ICI") which is owned by Dr. Smith: (1) to manufacture THAs and
to license others to do so; and (2) to sublicense others to manufacture, market,
sell copies of, license and distribute THAs. The consideration for the license
was: (1) $1.00 and (2) a royalty of $3,000.00 per year or 10% of the net
revenues received by ICI which ever is greater.
ICI entered into an option agreement with SMR Investments Ltd. ("SMR"),
a corporation owned by Sue Robertson, the wife of John Robertson, dated November
18, 1994 and amended December 16, 1994. The option agreement provided that ICI
would issue a sublicense to SMR for the THA subject to the payment of $250,000;
a 3% royalty from gross sales; and a subsequent public entity to be established.
The Company was organized by SMR and John Robertson as a result thereof. ICI
retained all military applications and resulting procurement interests. The
contract period relating to the three percent royalty to be paid to ICI
commences when sales are made by SMR/the Company and continue during the life of
the agreement between ICI and SMR. The term of the foregoing agreement is
perpetual as is the agreement between WVURC and ICI.
14
<PAGE> 15
On December 13, 1994, SMR assigned the rights to the foregoing
agreement with ICI to the Company in consideration of $50,000 advanced by Access
Information Services, Inc. (the "Option Assignment"). Access Information
Services, Inc. is a corporation owned and controlled by Robinson.
On December 14, 1994, the Company issued 3,000,000 Class A Shares to
James E. Smith, Ph.D., the Company's Chairman of the Board of Directors and
3,000,000 Class A Shares to Access Information Services, Inc., pursuant to the
Option Assignment. The value assigned to the 3,000,000 Class A common shares
issued to Dr. Smith was a total of $0.50 and the value assigned to the 3,000,000
Class A common shares issued to Access Information Services Inc. was $0.50. The
valuation of the 3,000,000 shares issued to Dr. Smith and Access Information
Services, Inc. was arbitrarily determined by the Company's Board of Directors.
The $250,000 has been paid to ICI and was a one time payment.
On July 10, 1995, ICI entered into a sublicense with the Company,
wherein ICI granted to the Company the exclusive worldwide right to manufacture,
sell copies of, sublicense to and distribute the process and equipment related
to the design, construction and operation of the THA and to further sublicense
to others the rights to manufacture, sell copies of, license and distribute the
same, excluding all military applications and procurement interests. The July
10, 1995 sublicense agreement was the culmination of the agreement between ICI
and SMR, and SMR and the Company. On December 27, 1995, SMR assigned all of its
rights and duties in the THA technology to the Company. The purpose of this
assignment was to assign any and all rights or duties which may have been held
by SMR as a result of the Option Agreement, it being understood that the Option
Agreement was nothing more than an agreement in principle. The term of the
license granted by ICI is perpetual and requires the payment of a minimum annual
royalty of $3,000. Further, the Company will pay a royalty of 10% of the net
revenues derived from sales, licenses or sublicenses of the THA technology with
a credit for the minimum royalty. In addition the Company shall pay a royalty of
3% of the gross revenues derived from the sales, licenses or sublicenses of the
THA technology.
To date, there have not been any other transactions between the Company
and its Officers, Directors, principal shareholders or affiliates other than as
set forth above. The Company believes that the transactions described here were
on terms more favorable to the Company's officers and directors than otherwise
could be obtained if such transactions were with non-related parties.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is presently authorized to issue 100,000,000 shares of its
no par value Class A Voting Common Stock. Presently 6,000,000 shares are issued
and outstanding. The holders of the Class A Shares are entitled to one vote per
share on each matter submitted to a vote at any meeting of shareholders. Shares
of Common Stock do not carry cumulative voting rights and, therefore, a majority
of the outstanding shares of Common Stock will be able to elect the entire Board
of Directors and, if they do so, minority shareholders would not be able to
elect any members to the Board of Directors.
Shareholders of the Company have no preemptive rights to acquire
additional shares of Common Stock or other securities. The Common Stock is not
subject to redemption and carries no subscription or conversion rights. In the
event of liquidation of the Company, the shares of Common Stock are entitled to
share equally in corporate assets after satisfaction of all liabilities.
15
<PAGE> 16
The shares of Common Stock, when issued, will be fully paid and non-assessable.
There are no outstanding options, warrants or rights to purchase shares of the
Company's Common Stock, other than disclosed in this Registration Statement.
16
<PAGE> 17
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
There is a limited public market for the Common Stock of the Company
which currently trades on the NASD OTC Bulletin Board under the symbol "IASCA"
where it has been traded since April 16, 1996. The Company's Common Stock has
traded at between $1.75 and $2.00 per share since April 16, 1996.
As of July 3, 1996, there were 7,803,000 shares of Common Stock
outstanding, held by 81 shareholders of record and by various broker/dealers on
behalf of 246 street name shareholders.
To date the Company has not paid any dividends on its Common Stock and
does not expect to declare or pay any dividends on such Common Stock in the
foreseeable future. Payment of any dividends will be dependent upon future
earnings, if any, the financial condition of the Company, and other factors as
deemed relevant by the Company's Board of Directors.
ITEM 2. LEGAL PROCEEDINGS
The Officers and Directors of the Company certify that to the best of
their knowledge, neither the Company nor any of its Officers and Directors are
parties to any legal proceeding or litigation other than as described below.
Further, the Officers and Directors know of no threatened or contemplated legal
proceedings or litigation other than as described below. None of the Officers
and Directors have been convicted of a felony or none have been convicted of any
criminal offense, felony and misdemeanor relating to securities or performance
in corporate office. To the best knowledge of the Officers and Directors, no
investigations of felonies, misfeasance in office or securities investigations
are either pending or threatened at the present time, other than as described
below:
John Robertson, the Company's President, Chief Executive Officer and a
member of the Board of Directors is a defendant in a lawsuit captioned Keltic
Bryce Enterprises Inc. v. Teryl Resources Corp., David Ian Hodge, D. Stafford
Johnston, Lydia Lowe, Gary Medford, John G. Robertson and Susanne M. Robertson,
Case No. C930366 pending in the Supreme Court of British Columbia wherein it is
alleged that on December 3, 1991, Teryl Resources Corp. ("Teryl") issued a
convertible debenture to Keltic Bryce Enterprises Inc. ("Keltic") in
consideration of $150,000. The debenture was convertible into common stock and
warrants at the election of Keltic. Keltic elected to convert the debenture, but
Teryl did not or could not convert the same pursuant to its agreement. It is
alleged that John Robertson was a director of Teryl at all times mentioned and
accordingly is liable for damages and punitive damages as a result thereof, all
in accordance with the laws of British Columbia. Keltic is seeking undisclosed
actual and punitive monetary damages to be determined by a jury. John Robertson
denies the allegations. The case is currently pending in the aforementioned
court.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
17
<PAGE> 18
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of
securities of the Company without registration since formation of the Company.
No such sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
(a) On December 14, 1994 the Company sold a total of 6,000,100 shares of Class A
Common Stock to two founders and directors of the Company in exchange for cash
and certain contract rights. Since the shareholders were accredited investors,
the issuance of the Common Stock was exempt from registration under Regulation D
and Section 4(2) of the Securities Act of 1933, as amended.
(b) Between December 20, 1994 and January 31, 1995, the Company made a private
placement of 700,000 shares of Class B Common Stock at $.10 per share. This
transaction was exempt from registration under Section 504 of Regulation D of
the Securities Act of 1933, as amended.
(c) During the period December 14, 1994 and March 6, 1995, the Company issued
600,000 shares of Class B Common Stock at $.75 per share. This transaction was
exempt from registration under Section 504 of Regulation D of the Securities Act
of 1933, as amended.
These shares of Class B Common Stock were exchanged in March 1996 for
shares of Class A Common Stock pursuant to an exchange offer registered on Form
S-1 Registration Statement (33-92592).
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation provide that the Company must
indemnify each of its (i) fiduciaries within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, with respect to any employee
benefit plan, and (ii) directors and officers, to the fullest extent permitted
under the Oregon Business Corporation Act against all liabilities incurred by
reason of the fact that the person is or was a director or officer of the
Company or a fiduciary of an employee benefit plan, or is or was serving at the
request of the Company as a director or officer, or fiduciary of an employee
benefit plan, of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise.
The effect of these provisions is potentially to indemnify the
Company's directors and officers from all costs and expenses of liability
incurred by them in connection with any action, suit or proceeding in which they
are involved by reason of their affiliation with the Company.
18
<PAGE> 19
PART F/S
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Report of Public Accountants....................................................................................F-1
Balance Sheet at April 30, 1995 and 1996........................................................................F-2
Statements of Operations for the years ended April 30, 1995 and 1996............................................F-3
Statements of Cash Flows Accumulated From December 13, 1994 (Inception) to
April 30, 1996 and for the years ended April 30, 1995 and 1996................................................F-4
Statements of Stockholder's Equity (Deficit) From December 13, 1994 (Inception) to
April 30, 1996................................................................................................F-5
Notes to the Financial Statements...............................................................................F-6
</TABLE>
19
<PAGE> 20
[ETPA LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
Board of Directors
IAS Communications, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of IAS Communications, Inc. (a
Development Stage Company) as of April 30, 1996 and 1995 and the related
statements of operations, stockholders' equity and cash flows for the period
from December 13, 1994 (inception) to April 30, 1996 and the periods ended April
30, 1996 and 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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
audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as at April 30, 1996 and 1995
and the results of its operations and its cash flows for the period from
December 13, 1994 (inception) to April 30, 1996 and the periods ended April 30,
1996 and 1995 in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has not generated any revenues or profitable operations
since inception. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also discussed in Note 2. The financial statements do not include
any adjustments which might result from the outcome of this uncertainty.
/s/ Elliot Tulk
/s/ Pryce Anderson
CHARTERED ACCOUNTANTS
Vancouver, B.C.
June 4, 1996
F-1
<PAGE> 21
IAS Communications, Inc.
(A Development Stage Company)
Balance Sheets
April 30, 1996 and 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
1996 1995
$ $
<S> <C> <C>
Assets
Current Assets
Cash 185,038 188,147
Prepaid expenses 9,758 4,000
-------- -------
194,796 192,147
Licence (Note 4) 250,001 250,001
Patents (Note 4) 15,488 --
-------- -------
460,285 442,148
======== =======
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable and accrued liabilities 35,447 5,752
Redeemable Class "A" Shares (Note 5) 197,750 197,750
Subscriptions Received (Note 5) 416,250 --
-------- -------
649,447 203,502
-------- -------
Stockholders' Equity (Deficit)
Common Stock (Note 5)
Class "A" voting 100,000,000 shares authorized without
par value; 7,510,000 and 6,000,100
shares issued and outstanding respectively 374,751 11
Class "B" non-voting 100,000,000 shares authorized without
par value; nil and 1,036,333 shares
issued and outstanding respectively -- 322,250
-------- -------
374,751 322,261
Preferred Stock
Authorized: 50,000,000
Deficit Accumulated During The Development Stage (563,913) (83,615)
-------- -------
(189,162) 238,646
-------- -------
460,285 442,148
======== =======
</TABLE>
Commitments and Contingent Liabilities (Note 7)
** see Notes to the Financial Statements **
F-2
<PAGE> 22
IAS Communications, Inc.
(A Development Stage Company)
Statement of Operations
Accumulated from December 13, 1994 (Inception)
To April 30, 1996 and the periods ended
April 30, 1996 and 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated May 1, 1995 December 13, 1994
During the to (Inception)
Development April 30, to
Stage 1996 April 30, 1995
$ $ $
<S> <C> <C> <C>
Revenue -- -- --
---------- ---------- ----------
Administration Expenses
Bank charges 376 255 121
Consulting 24,000 24,000 --
Investor relations 16,496 14,496 2,000
Management fees (Note 6) 82,500 60,000 22,500
Office, postage and courier 12,064 11,472 592
Professional fees 144,346 108,590 35,756
Rent and secretarial (Note 6) 25,500 18,000 7,500
Telephone 11,133 252 10,881
Transfer agent and regulatory 4,698 3,048 1,650
Travel and promotion 11,623 6,005 5,618
Less interest (6,580) (3,577) (3,003)
---------- ---------- ----------
326,156 242,541 83,615
---------- ---------- ----------
Research and Development Expenses
Consulting 17,667 17,667 --
Prototype construction and testing
(Note 7) 217,090 217,090 --
Royalty (Note 4) 3,000 3,000 --
---------- ---------- ----------
237,757 237,757 --
---------- ---------- ----------
Net Loss 563,913 480,298 83,615
========== ========== ==========
Net Loss Per Share (.078) (.065) (.01)
========== ========== ==========
Weighted Average Shares Outstanding 7,258,767 7,310,000 7,149,408
========== ========== ==========
(including redeemable shares)
</TABLE>
** see Notes to the Financial Statements **
F-3
<PAGE> 23
IAS Communications, Inc.
(A Development Stage Company)
Statement of Cash Flows
Accumulated from December 13, 1994 (Inception)
to April 30, 1996 and the periods ended
April 30, 1996 and 1995
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated May 1, 1995 December 13, 1994
During the to (Inception)
Development April 30, to
Stage 1996 April 30, 1995
$ $ $
<S> <C> <C> <C>
Cash Flows to Operating Activities
Net loss (563,913) (480,298) (83,615)
Adjustment to reconcile net loss to cash
Gain on shares cancelled (10) (10) --
Change in non-cash working capital items
Increase in prepaid expenses (9,758) (5,758) (4,000)
Increase in accounts payable 35,447 29,695 5,752
-------- -------- --------
Net Cash Used in Operating Activities (538,234) (456,371) (81,863)
-------- -------- --------
Cash Flows to Investing Activities
Increase in licence (250,000) -- (250,000)
Increase in patent protection costs (15,488) (15,488) --
-------- -------- --------
Net Cash Used in Investing Activities (265,488) (15,488) (250,000)
-------- -------- --------
Cash Flows from Financing Activities
Increase in redeemable shares issued 197,750 -- 197,750
Increase in shares issued - cash 374,760 52,500 322,260
Increase in subscriptions for shares 416,250 416,250 --
-------- -------- --------
Net Cash Provided by Financing Activities 988,760 468,750 520,010
-------- -------- --------
Increase (Decrease) in Cash -- (3,109) 188,147
Cash - Beginning of Period 185,038 188,147 --
-------- -------- --------
Cash - End of Period 185,038 185,038 188,147
======== ======== ========
Non-Cash Financing Activity
The Company issued 6,000,000 Class "A"
common shares at a deemed value of $1
in total for property (see Note 4) 1 -- 1
Shares issued to an officer at
incorporation donated back to the
Company and cancelled (10) (10) --
-------- -------- --------
(9) (10) 1
======== ======== ========
</TABLE>
** see Notes to the Financial Statements **
F-4
<PAGE> 24
IAS Communications, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity (Deficit)
Accumulated from December 13, 1994 (Inception)
to April 30, 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 (Note 5) -- 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)
=========== ======= ======== ========
</TABLE>
(* not including redeemable shares)
** see Notes to the Financial Statements **
F-5
<PAGE> 25
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
April 30, 1996 and 1995
(expressed in U.S. dollars)
1. Date of Incorporation
The Company is a development stage company which was incorporated under
the Laws of the State of Oregon on December 13, 1994.
2. 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 (See Note 7). Management expects the contracts to be completed
by June 30, 1996 at which time a limited number of applications may be
licensable without incurring any extra costs. The Company will then
research other applications of the antenna which will require funds to
be raised at that time. 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.
3. Summary of Significant Accounting Policies
(a) Year-End
The Company's fiscal year-end is April 30.
(b) Research and Development
Research and development is expensed in the period in which the
activities occurred.
(c) Patents and Licence
Costs associated with patent protection and licences will be
amortized over 20 years upon licenceable product being
developed.
(d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a
maturity of three months or less at the time of issuance to be
cash equivalents.
(e) Tax Accounting
Potential benefits of income tax losses are not recognized in
the accounts until realization is more likely than not.
Research and development is deducted in the year incurred and
added to net operating loss.
F-6
<PAGE> 26
.. 2 ..
(e) Tax Accounting (continued)
The Company has adopted SFAS 109 as of its inception. The
Company has incurred net operating losses as scheduled below:
<TABLE>
<CAPTION>
Year of Loss Amount Expiration Date
$
<S> <C> <C>
April 30, 1995 83,615 2010
April 30, 1996 480,298 2011
</TABLE>
Pursuant to SFAS 109 the Company is required to compute tax
asset benefits for net operating loss carryforwards. Potential
benefit of net income losses have not been recognized in the
financial statements because the Company cannot be assured that
it is more likely than not that it will utilize the net
operating loss carryforwards in future years.
The components of the net deferred tax asset at the end of
April 30, 1996 and 1995, and the statutory tax rate, the
effective tax rate and the elected amount of the valuation
allowance are scheduled below:
<TABLE>
<CAPTION>
April 30, 1996 April 30, 1995
$ $
<S> <C> <C>
Net Operating Loss 480,298 83,615
Statutory Tax Rate 114,150 +39% 13,750 + 34%
in excess of in excess of
$335,000 75,000
Effective Tax Rate -- --
Deferred Tax Asset 163,550 16,679
Valuation Allowance (163,550) (16,679)
-------- -------
Net Deferred Tax Asset -- --
======== =======
</TABLE>
4. 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.
F-7
<PAGE> 27
.. 3..
4. Licence and Patents
(a) Licence (continued)
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.
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.
5. Common Stock
(a) Stock options
The Company granted certain directors and employees stock
options to acquire 600,000 Class "A" shares exercisable as to
510,000 at $0.25, expiring December 29, 1999, as to 50,000 at
$0.25, expiring February 24, 2000 and as to 40,000 at $1.25,
expiring March 4, 2000. These options are currently exercisable.
Stock options to acquire 50,000 shares at $0.25 per share were
cancelled on September 7, 1995. During the year options with
respect to 210,000 shares exercisable at $0.25, expiring
December 29, 1999 were exercised and $52,500 received.
(b) Commitment
Pursuant to an agreement dated January 31, 1995, the Company
committed 75,000 shares as compensation to a supplier of
services to be paid upon the effective date of a registration
statement. The value to be assigned to the 75,000 shares was to
be $25,000.
F-8
<PAGE> 28
.. 4 ..
5. Common Stock
b) Commitment (continued)
Pursuant to an amendment agreement on April 11, 1996 the parties
agreed to amend the above agreement as follows:
(i) $10,000 (paid).
(ii) $62,500 (paid on April 22, 1996).
(iii) 25,000 Class "A" shares to be issued on April 22,
1996 (not issued; the deemed value of $8,333 has
been accrued).
(iv) An option to acquire 50,000 Class "A" shares at
$1.25 per share. This option was exercised on April
25, 1996. These shares have not been issued.
c) Exchange of 1,300,000 Class "B" non-voting shares to 1,300,000
Class "A" voting shares
During the year holders of 1,300,000 Class "B" non-voting shares
agreed to exchange these shares for 1,300,000 Class "A" voting
shares. Of the 1,300,000 Class "A" shares issued and
outstanding, 263,667 are redeemable Class "A" shares as
discussed in (d) below.
d) Redeemable Class "A" shares
Between December 14, 1994 and March 6, 1995 the Company received
subscriptions for 263,667 Class "B" shares and received $197,750
from investors in states where they have the right to revoke
their subscription and demand their investment be returned to
them within three years of subscription as to $161,500 and
within six years as to $36,250. The 263,667 redeemable Class "B"
shares were issued and then exchanged for 263,667 Class "A"
shares, and are outstanding. To date, holders of these shares
have not revoked their subscriptions.
e) 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 have subscribed for 283,000 shares
and deposited $353,750 into the Company's treasury.
These shares have not been issued.
(ii) A total of $62,500 was received pursuant to stock
options being exercised. The 50,000 shares have not
been issued.
6. Related Party Transactions
(a) See Note 4 - the option to acquire the exclusive licence to The
Technology was assigned by SMR and ICI, controlled by directors
of the Company, John Robertson and James E. Smith, respectively.
(b) 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).
(c) See Note 3 - a 3% royalty on gross sales will be paid to ICI.
F-9
<PAGE> 29
.. 5 ..
7. Commitments and Contingent Liabilities
(a) Commitments
(i) See Notes 4 and 5 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
$155,590 has been expended to April 30, 1996.
(iii) The Company has 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. A total of $60,000 has been
paid to April 30, 1996. A final report is expected by
June 30, 1996.
(iv) See Note 5 for commitments to issue shares upon the
exercise of stock options.
(b) Contingent liability - Continuance of Business (See Note 2).
F-10
<PAGE> 30
PART III
ITEM 1. INDEX TO AND DESCRIPTION OF EXHIBITS
<TABLE>
<CAPTION>
Number Description Page No.
- ------ ----------- --------
<S> <C> <C> <C>
2 ARTICLES OF INCORPORATION AND BY-LAWS
2.1 Articles of Incorporation.....................................................................(1)
2.2 Article of Amendment..........................................................................(1)
2.3 By-Laws.......................................................................................(1)
3 INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS
3.1 Specimen Share Certificate for Class A Shares.................................................(1)
6 MATERIAL CONTRACTS
6.1 Agreement between West Virginia University Research Corporation and
Integral Concepts, Inc......................................................................(1)
6.2 Agreement between Integral Concepts, Inc. and
SMR Investments, Inc........................................................................(1)
6.3 Agreement between SMR Investments, Inc. and
the Company.................................................................................(1)
6.4 Agreement with Greg Ruff......................................................................(1)
6.5 British Columbia Confidential Offering Memorandum.............................................(1)
6.6 Sublicense Agreement between Integral Concepts, Inc. and
the Company.................................................................................(1)
6.7 Project Agreement between the Company and West Virginia
Center for Industrial Research Applications.................................................(1)
6.8 Assignment Agreement between SMR Investments, Inc. and
the Company.................................................................................(1)
6.9 Agreement between Emergent Technologies Corporation and the Company..............................
27 FINANCIAL DATA SCHEDULE...................................................................................
</TABLE>
- --------------------
(1) Incorporated by reference from Form S-1 Registration Statement
(33-92592).
20
<PAGE> 31
SIGNATURES
Pursuant to the requirements Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this report or amendment to be signed on
its behalf by the undersigned, thereunto duly authorized.
IAS COMMUNICATIONS, INC.
By: /s/ John G. Robertson
------------------------------------
John G. Robertson, President
Chief Executive Officer and Director
Dated: July 29, 1996
21
<PAGE> 1
EXHIBIT 6.9
EMERGENT TECHNOLOGIES CORPORATION
Route 7, Box 145
Morgantown, West Virginia 26505
27 June 1996
Mr. John Robertson
IAS Communications, Inc.
Suite 185-10751
Shellbridge Way
Richmond BC V6X2W8
Mr. Robertson:
This is further to our discussions and is in regard to our proposal for the
development of cellular and personal communications systems CTHAs sent to you
on 14 June 1996. Please be advised that to meet the schedules we have
coordinated, and to make the antenna technology available for commercialization
during this calendar year we would like your authorization to start work
effective July 1, 1996.
This is a fixed cost contract with a period of performance of 150 days from
authorization to proceed. Please sign, date, and return this letter with a
first payment of US $25,000 by courier so we can solidify our schedule and
start work next week. We will invoice the 3 following months at U.S. $30,000
and submit a final invoice for the balance of US $39,864 on 1 November 1996.
Our enthusiasm and confidence are very high following the successes of our
first phase effort and we are equally confident that the second phase will be
as successful.
Sincerely,
Jack Parsons, President
Emergent Technology Corporation
BE IT RESOLVED THAT:
THE ABOVE AGREEMENT IS APPROVED
BY THE BOARD OF DIRECTORS OF
IAS COMMUNICATIONS, INC.
Authorization to Proceed:
/s/ John Robertson Date: June 28, 1996
John Robertson, President IAS
/s/ Patrick Badgley
/s/ Paul Lamarche
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<CASH> 185,038
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 194,796
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 460,285
<CURRENT-LIABILITIES> 35,447
<BONDS> 0
0
0
<COMMON> 374,751
<OTHER-SE> (563,913)
<TOTAL-LIABILITY-AND-EQUITY> 460,285
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 480,298
<LOSS-PROVISION> (480,298)
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<INCOME-PRETAX> (480,298)
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