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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1997
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-21255
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IAS COMMUNICATIONS, INC.
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(Exact name of small business issuer as specified in its charter)
Oregon 91-1063549
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
185-10751 SHELLBRIDGE WAY, RICHMOND, BC. CANADA V6X 2W8
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(Address of principal executive offices)
(604) 278-5996
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(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports 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
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State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of March 10, 1997 - 8,438,000
shares of common stock, no par value.
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INDEX
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<CAPTION>
Page
<S> <C>
PART I -- Financial Information
Item 1. Financial statements................................... 2
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Balance Sheets as of January 31, 1997 and 1996 (unaudited)..... 3
Statements of Operations for the three months and
nine months ended January 31, 1997 and 1996 (unaudited)... 4
Statement of Cash Flows for the nine months ended
January 31, 1997 and 1996 (unaudited)..................... 5
Notes to the Financial Statements.............................. 6
Item 2. Management's Discussion and Analysis of Results of
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Operations and Financial Condition.................. 7 and 8
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PART II -- Other Information................................... 9
Signatures..................................................... 10
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PART I Financial Information
Item 1. Financial statements (Unaudited)
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IAS Communications, Inc.
(A Development Stage Company)
Balance Sheets
as of January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
January 31,
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1997 1996
<S> <C> <C>
Assets
Current Assets
Cash $ 274,921 $ 4,527
Prepaid expenses 6,950 5,333
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281,871 9,860
Computer equipment 46,827 -
Licence 250,001 250,001
Patents 36,912 14,933
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$ 615,611 $ 274,794
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Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 70,022 $ 109,703
Redeemable Shares (263,667 Class "A" Common Shares) 197,750 197,750
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267,772 307,453
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Stockholders' Equity
Common Stock (Note 1), 100,000,000 Class "A" voting
shares authorized without par value; 8,408,000
shares and 7,036,333 shares issued
and outstanding respectively 1,565,834 322,251
Paid for but unissued - 25,000 Class "A" shares (Note 1) 56,250 -
Common Stock, 100,000,000 Class "B" non-voting shares
authorized without par value - -
Preferred Stock, 50,000,000 shares authorized, no par value - -
Deficit Accumulated During The Development Stage (1,274,245) (354,910)
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347,839 (32,659)
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$ 615,611 $ 274,794
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<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Statements of Operations
for the three months and nine months
ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
January 31, January 31,
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1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenue $ - $ - $ - $ -
---------- ---------- ---------- ----------
Administration Expenses
Bank charges (264) 54 601 162
Investor relations 51,434 - 99,289 -
Management fees 12,000 15,000 50,000 45,000
Office, postage and courier 4,282 212 13,089 2,039
Professional fees 30,767 4,289 78,028 63,481
Rent and secretarial 5,000 4,500 14,000 13,500
Telephone 18,000 - 28,800 -
Transfer agent and regulatory 542 - 3,515 1,653
Travel and promotion 4,739 - 27,985 1,790
Less interest (1,779) (146) (3,475) (2,963)
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124,721 23,909 311,832 124,662
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Research and Development Expenses
Consulting 7,219 8,400 20,552 14,733
Depreciation 2,603 - 2,603 -
Prototype construction and testing 44,243 49,196 372,345 128,900
Royalty 3,000 3,000 3,000 3,000
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57,065 60,596 398,500 146,633
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Net Loss $ (181,786) $ (84,505) $ (710,332) $ (271,295)
========== ========== ========== ==========
Net Loss Per Share $ (.02) $ (.01) $ (.09) $ (.04)
========== ========== ========== ==========
Weighted Average Shares Outstanding 8,213,100 7,300,000 7,981,400 7,300,000
(including redeemable shares) ========== ========== ========== ==========
</TABLE>
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IAS Communications, Inc.
(A Development Stage Company)
Statement of Cash Flows
for the nine months ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
January 31,
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1997 1996
<S> <C> <C>
Cash Flows to Operating Activities
Net loss $(710,332) $(271,295)
Adjustment to reconcile net loss to cash
Depreciation 2,603 -
Gain on shares cancelled - (10)
Decrease (increase) in prepaid expenses 2,808 (1,333)
Increase in accounts payable 42,908 103,951
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Net Cash Used in Operating Activities (662,013) (168,687)
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Cash Flows to Investing Activities
(Increase) in computer equipment (49,430) -
(Increase) in patent protection costs (21,424) (14,933)
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Net Cash Used in Investing Activities (70,854) (14,933)
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Cash Flows from Financing Activity
Increase in common stock 822,750 -
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Increase (decrease) in Cash 89,883 (183,620)
Cash - Beginning of Period 185,038 188,147
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Cash - End of Period $ 274,921 $ 4,527
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Non-Cash Financing Activity
Shares issued to an officer at
incorporation donated back to the
Company and cancelled $ - $ (10)
Shares issued to settle debt - A total of 25,000 shares
were issued at $0.333 to settle $8,333 of accounts payable (8,333) -
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$ (8,333) $ (10)
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</TABLE>
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<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
for the nine months ended January 31, 1997
(Unaudited)
1. Common Stock - Class "A"
(a) Stock option activity
<TABLE>
<CAPTION>
Granted
April 30 during the January 31,
1996 Price period Exercised 1997
# $ # # # Expiry Date
<S> <C> <C> <C> <C> <C>
260,000 0.25 - 86,000 174,000 December 29, 1999
50,000 0.25 - 12,500 37,500 February 24, 2000
37,500 1.25 - 34,500 3,000 March 4, 2000
- 2.25 25,000 - 25,000 August 21, 2001
2.25 510,000 - 510,000 October 16, 2001
------- ------- ------- -------
347,500 535,000 133,000 749,500
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(b) Paid for but unissued
Pursuant to a private placement to issue up to 400,000 Class "A" common
shares at $2.25 per share, investors have subscribed for 215,000 shares
and deposited $483,750 into the Company's treasury. A total of 190,000
Class "A" common shares were issued on January 24, 1997, the balance of
25,000 shares were issued March 3, 1997.
2. Related Party Transactions
A management fee of $2,500 per month and rent and secretarial fees of $1,500
per month has been paid to a company controlled by a director. A management
fee of $2,500 per month has been paid to a director and Chairman of the
Board.
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..2..
Item 2. Management's Discussion and Analysis of Results of Operations and
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Financial Condition
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Management's Discussion
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The Company is a development stage company engaged in the commercialization of
advanced antenna technology ("CTHA") for wireless communications markets
including cellular and global positioning services ("GPS"). The CTHA, developed
in conjunction with researchers at West Virginia University, is a
technologically advanced antenna design which can be incorporated into a wide
variety of telecommunications applications. The Company has been granted
exclusive worldwide sublicensing rights for commercial applications (excluding
military/governmental applications) for the antenna.
During the nine months ended January 31, 1997 the Company completed development
contracts with Emergent Technologies Inc. ("Emergent") and continued funding the
research work of the Center for Industrial Research Applications at West
Virginia University ("CIRA"). CIRA reports tests of the CTHA have demonstrated
it can communicate via groundwave, skywave, near-incident vertical skywave,
satellite, and line-of-sight. This breadth of capability is unique to the
industry and indicates that the CTHA has the potential to support any current
antenna application.
During the three months ended January 31, 1997 CIRA and Emergent completed
testing the cellular phone, pager, and GPS applications of the CTHA. The
completed project provided an advancement in the understanding of the CTHA and
the report concludes the antenna to be a commercially viable product for both
the cellular and GPS markets. The tests demonstrated enhanced reliability in
cellular and GPS communications while greatly reducing the size requirements for
antennas which will enable cellular and GPS manufacturers to further downsize
product lines and assure a long term market for the CTHA.
During the three months ended January 31, 1997 the Company was negotiating a
joint venture agreement with Emergent to equip and fund research and development
on the CTHA and process initial orders through subcontracting. On March 4, 1997
this agreement was executed and provides for initial contributions of up to
$250,000 from each joint venturer within 90 days of the agreement, of which,
$175,000 each is required by March 31, 1997. The joint venture agreement calls
for a decision by the joint venture partners as to the need to construct a
permanent manufacturing facility owned and operated by the joint venture or to
continue to subcontract out the manufacturing and filling of purchase orders.
The Company owns 50% of the joint venture.
On February 27, 1997 the Company received an initial purchase order for 10,000
units of its CTHA from Symphony, Inc., a Michigan based original equipment
manufacturer of point-of-sale ("POS") terminals. Symphony will install these
antennas in its "Soloist" mobile magnetic and smart card reader. These POS
terminals are used by vendors when accepting VISA or MasterCard payments for
their products or services in remote locations. Product testing by Symphony,
done under real-world conditions, has shown the CTHA superior to standard whip
antennas in establishing reliable cellular phone links under adverse field
conditions.
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..3..
Results of operations for the nine months ended January 31, 1997 compared to the
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nine months ended January 31, 1996
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There were no revenues from licensing the CTHA during the periods.
The net loss in 1997 increased by $439,037 to $710,332 compared to $271,295 in
1996. The increased net loss in 1997 was due to administrative expenses which
increased by $187,170 to $311,832 as compared to $124,662 in 1996. The major
components of this increase was due to an increase in investor relations costs
of $99,289 as compared to nil in 1996; professional fees increased by $14,547 to
$78,028 as compared to $63,481 in 1996; travel, promotion, telephone and office
increased by $66,045 to $69,874 as compared to $3,829 in 1996. During 1997,
research and development costs increased by $251,867 to $398,500 compared to
$146,633 in 1996. The increase during the period was due to two completed
contracts with Emergent, totalling $206,000, and ongoing research conducted by
CIRA, with costs during the period totalling $164,000.
Results of operations for the three months ended January 31, 1997 compared to
- -----------------------------------------------------------------------------
the three months ended January 31, 1996
- ---------------------------------------
There were no revenues from licensing the CTHA during the periods.
The net loss in 1997 increased by $97,281 to $181,786 compared to $84,505 in
1996. The increased net loss in 1997 was due to administrative expenses which
increased by $99,812 to $123,721 as compared to $23,909 in 1996. The major
components of this increase was due to an increase in investor relations costs
of $51,434 as compared to nil in 1996; professional fees increased by $26,478 to
$30,767 as compared to $4,289 in 1996; travel, promotion, telephone and office
increased by $26,809 to $27,021 as compared to $212 in 1996. Research and
development costs remained constant at $60,000 for both 1997 and 1996. The
Company completed contracts with Emergent, totalling $206,000, during November,
1996 and has limited ongoing research conducted by CIRA.
Liquidity
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During the nine months ended January 31, 1997, the Company financed its
operations in part from proceeds of a private placement whereby the Company
received the balance of subscriptions of $271,250 totalling $625,000 received to
October 2, 1996 and has issued 500,000 Class "A" common shares at $1.25 per
share. During the most recent quarter the Company raised $483,750 and issued
215,000 Class "A" common shares at $2.25 per share. During the nine month period
the Company also received $67,750 pursuant to options exercised and has issued
98,500 Class "A" common shares at $.25 per share and 34,500 Class "A" common
shares at $1.25 per share. The Company's financial resources, including an
opening cash balance as at April 30, 1996 of $185,038, totalled $1,007,788. Cash
used, as a result of the net loss for the period, totalled $662,013, after
adjustments to reconcile net loss to cash. During the period the Company spent
$70,854 on computer equipment and patent protection costs. After the above cash
outflows the Company was left with $274,921 to fund ongoing administrative
expenses; and to fund costs associated with negotiating the joint venture
agreement; and to fund the initial $250,000 joint venture contribution required
under the joint venture agreement. The Company will continue to fund a modest
research and development program in conjunction with CIRA. The Company believes
it has sufficient resources to fund operations to May 31, 1997. The Company may
have to raise a modest amount of additional funds past May 31, 1997 in order to
pay for administrative costs for the next twelve months. If the joint venture
decides to construct a manufacturing facility in the future it will fund the
costs through internally generated cash flow from sales of product.
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<PAGE>
..4..
PART II Other Information
Item 1. Legal Proceedings
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None
Item 2. Changes in Securities
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None
Item 3. Defaults upon Senior Securities
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None
Item 4. Submissions of Matters to a Vote of Security Holders
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None
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
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None
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<PAGE>
..5..
Signatures
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: March 13, 1997 IAS COMMUNICATIONS, INC.
By: /s/ John G. Robertson
-----------------------------------------
John G. Robertson, President
(Principal Executive Officer)
By: /s/ Jennifer Lorette
-----------------------------------------
Jennifer Lorette, Chief Financial Officer
(Principal Financial Officer)
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 274,921
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 281,871
<PP&E> 333,740
<DEPRECIATION> 2,603
<TOTAL-ASSETS> 615,611
<CURRENT-LIABILITIES> 70,022
<BONDS> 0
197,750
0
<COMMON> 1,622,084
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 615,611
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 710,332
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (710,332)
<INCOME-TAX> 0
<INCOME-CONTINUING> (710,332)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (710,332)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
