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<PAGE>
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 July 31, 1997
-------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _____________________
Commission File No. 0-21255
-------
IAS COMMUNICATIONS, INC.
------------------------
(Exact name of small business issuer as specified in its charter)
OREGON 91-1063549
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
185-10751 SHELLBRIDGE WAY, RICHMOND, BC CANADA V6X 2W8
--------------------------------------------------------
(Address of principal executive offices)
(604) 278-5996
--------------
(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
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: As of September 10, 1997 -
8,603,500 shares of common stock, no par value.
<PAGE>
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
PART I -- FINANCIAL INFORMATION Page
---------------------
ITEM 1. FINANCIAL STATEMENTS.....................................................................................2
Balance Sheets as of July 31, 1997 and 1996 (unaudited)...........................................................3
Statement of Operations for the three months ended July 31, 1997 and 1996 (unaudited).............................4
Statement of Cash Flows for the three months ended July 31, 1997 and 1996 (unaudited).............................5
Statement of Stockholders' Equity...........................................................................6 and 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS..........................................................................8 and 9
PART II -- OTHER INFORMATION.....................................................................................10
-----------------
Signatures.......................................................................................................11
</TABLE>
-1-
<PAGE>
PART I FINANCIAL INFORMATION
---------------------
Item 1. Financial statements (Unaudited)
-2-
<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Balance Sheets
July 31, 1997 and 1996
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
$ $
Assets
Current Assets
Cash and short term investments 155,397 125,565
Prepaid expenses 10,336 6,950
--------- -------
165,733 128,515
Capital Assets 44,357 -
Licence and Patents 282,262 265,489
--------- -------
492,352 398,004
========= =======
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable 232,642 34,903
Accrued liabilities 5,250 -
Due to related companies 21,725 -
--------- -------
259,617 34,903
Convertible Debenture 25,000 -
--------- -------
Total Liabilities 284,617 34,903
--------- -------
Redeemable Class "A" Shares 197,750 197,750
Stockholders' Equity
Common Stock
Class "A" voting - 100,000,000 shares authorized without par value;
8,602,500 shares and 7,622,444 shares issued
and outstanding respectively 1,784,459 769,001
- paid for but unissued 37,500 175,000
Class "B" non-voting - 100,000,000 shares authorized without par value;
none issued - -
--------- --------
1,821,959 944,001
Preferred Stock 50,000,000 shares authorized; none issued - -
Deficit Accumulated During The Development Stage (1,811,974) (778,650)
--------- -------
9,985 165,351
--------- -------
492,352 398,004
========= =======
</TABLE>
-3-
<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Statement of Operations
Accumulated from December 13, 1994 (Inception)
To July 31, 1997 and the periods ended
July 31, 1997 and 1996
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated May 1, 1997 May 1, 1996
During the to to
Development July 31, July 31,
Stage 1997 1996
$ $ $
<S> <C> <C> <C>
Revenue - - -
--------- --------- ---------
Administration Expenses
Bank charges 1,732 537 132
Business plan 18,600 - -
Consulting 24,000 - 5,333
Depreciation 290 166 -
Investor relations 208,543 49,537 22,853
Management fees 162,500 15,000 15,000
Office, postage and courier 32,548 5,196 902
Professional fees 246,956 2,006 33,784
Rent and secretarial 57,500 13,500 4,500
Telephone 52,720 6,000 -
Transfer agent and regulatory 14,107 2,762 300
Travel and promotion 42,082 3,312 14,833
Less interest (12,460) (635) (1,044)
--------- --------- ---------
849,118 97,381 96,593
--------- --------- ---------
Research and Development Expenses
Depreciation 15,619 6,033 -
Consulting 182,419 12,000 5,333
Prototype construction and testing 758,068 87,381 118,144
Royalty 6,750 750 -
--------- --------- ---------
962,856 106,164 118,144
--------- --------- ---------
Net Loss 1,811,974 203,545 214,727
========= ========= =========
Net Loss Per Share (.02) (.03)
Weighted Average Shares Outstanding 8,595,000 7,682,000
========= =========
(including redeemable shares)
</TABLE>
-4-
<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Statement of Cash Flows
Accumulated from December 13, 1994 (Inception)
to July 31, 1997 and the periods ended
July 31, 1997 and 1996
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Accumulated May 1, 1997 May 1, 1996
During the to to
Development July 31, July 31,
Stage 1997 1996
$ $ $
<S> <C> <C> <C>
Cash Flows to Operating Activities
Net loss (1,811,974) (203,545) (214,737)
Adjustment to reconcile net loss to cash
Gain on shares cancelled (10) - -
Depreciation 15,909 6,199 -
Change in non-cash working capital items
Decrease (increase) in
prepaid expenses (10,336) 1,614 2,808
Increase in accounts payable
and accrued liabilities 363,225 114,032 (544)
--------- ------- -------
Net Cash Used in Operating Activities (1,443,186) (81,700) (212,473)
Cash Flows to Investing Activities
Increase in capital assets (51,847) (1,542) -
Increase in licence (250,000) - -
Increase in patent protection costs (40,680) - -
Net Cash Used in Investing Activities (342,527) (1,542) -
--------- ------- -------
Cash Flows from Financing Activities
Increase in convertible debenture 25,000 25,000 -
Increase in redeemable shares issued 197,750 - -
Increase in common stock 1,659,135 19,375 394,250
Increase (decrease) in subscriptions 37,500 37,500 (241,250)
Increase in due to related companies 21,725 21,725 -
--------- ------- -------
Net Cash Provided by Financing Activities 1,941,110 103,600 153,000
Increase (Decrease) in Cash 155,397 20,358 (59,473)
Cash - Beginning of Period - 135,039 185,038
--------- ------- -------
Cash - End of Period 155,397 155,397 125,565
========= ======= =======
Non-Cash Financing Activity
The Company issued 6,000,000 Class "A"
common shares at a deemed value of $1
in total for property 1 - -
Shares issued to an officer at
incorporation donated back to the
Company and cancelled (10) - (10)
Shares issued for services 125,333 117,000 -
--------- ------- -------
125,324 117,000 (10)
========= ======= =======
</TABLE>
-5-
<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
Accumulated from December 13, 1994 (Inception)
to July 31, 1997
(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 inception
for cash, at $0.10 per share 100 10 - -
Shares issued at inception, for property,
at a nominal value of $1 in total
or $.00000017 per share 6,000,000 1 - -
Shares issued, pursuant to a private
placement, at $0.10 per share 700,000 - 70,000 -
Shares issued, pursuant to a public
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 inception
donated back and cancelled (100) (10) - -
Share exchange - 322,250 (322,250) -
Shares issued, pursuant to options
exercised, at $0.25 per share 210,000 52,500 - -
Net loss for the year - - - (480,298)
--------- --------- ------- ---------
Balance - April 30, 1996 7,246,333 374,751 - (563,913)
Shares issued, pursuant to a private
placement, at $1.25 per share 500,000 625,000 - -
Shares issued, for services, at $0.33
per share 25,000 8,333 - -
Shares issued, pursuant to options
exercised, at $0.25 per share 139,500 34,875 - -
Shares issued, pursuant to options
exercised, at $1.25 per share 84,500 105,625 - -
Shares issued, pursuant to a private
placement, at $2.25 per share 222,000 499,500 - -
Net loss for the year - - - (1,044,516)
--------- --------- ------- ---------
Balance - April 30, 1997 8,217,333 1,648,084 - (1,608,429)
</TABLE>
-6-
<PAGE>
IAS Communications, Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
Accumulated from December 13, 1994 (Inception)
to July 31, 1997
(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 - April 30, 1997 - carried forward 8,217,333 1,648,184 - (1,608,429)
Shares issued, pursuant to options
exercised, at $0.25 per share 14,500 3,625 - -
Shares issued, pursuant to a private
placement, at $2.25 per share 7,000 15,750 - -
Shares issued, pursuant to a performance
stock agreement, at a deemed value
of $1.17 per share for compensation
to a consultant 100,000 117,000 - -
Net loss for the period - - - (203,545)
--------- --------- ---------- ---------
*8,338,833 1,784,459 - (1,811,974)
========= ========= ========== =========
</TABLE>
* not including 263,667 Class "A" shares previously issued and
treated as Redeemable Preferred Shares.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION
- -----------------------
The Company is a development stage company engaged in the
commercialization of advanced antenna technology known as the Contrawound
Torroidal Helical Antenna, herein "CTHA", for wireless communications markets
including cellular, meter reading and global positioning services. 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
worldwide sublicensing rights for commercial applications, excluding military
and governmental applications, for the antenna.
During fiscal 1997, the Company entered into a joint venture agreement,
herein "JVA", with ETC dated March 4, 1997. The JVA required a limited company
to be incorporated, The Eclipse Antenna Manufacturing Corporation, herein
"TEAM", whereby the Company will own 50% of the issued and outstanding common
shares and ETC will own the remaining 50%. Pursuant to a voting agreement the
Company can vote 100% of the shares of TEAM. The control person of ETC will be
the operator. TEAM was organized on June 4, 1997 under the laws of the State of
West Virginia. The Company retains the worldwide commercial sublicense rights to
the CTHA.
The purpose of the joint venture is to cooperate in the research and
development of certain applications for the CTHA and to assemble and manufacture
certain products relating thereto. IAS will buy product from TEAM at cost to
manufacture plus 30% for all commercial applications and ETC will buy product
from TEAM at cost to manufacture plus 30% for all military applications. ETC
acquired the worldwide sublicense from ICI for all military applications on
January 2, 1997.
On May 5, 1997, the Company and ETC have each contributed $150,000 to TEAM
as required in the JVA. These funds will be spent on formation costs and to
equip a research and development facility to further the commercialization of
the applications and prototype construction. A further $100,000 each will be
required on an as needed basis.
During fiscal 1997, the Company received an initial purchase order for
10,000 units of its CTHA. The Company will fill this order once TEAM completes
its manufacturing processes and specifications have been approved. This initial
order will be filled by TEAM on a contracted-out basis.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 21, 1997 COMPARED TO THE
- ------------------------------------------------------------------------------
THREE MONTHS ENDED JULY 31, 1996
--------------------------------
There were no revenues from licensing the CTHA during the two periods.
The net loss in total and each component were comparable in 1997 to 1996.
The Company spend $87,381 on research conducted by CIRA during the quarter.
LIQUIDITY - FISCAL 1997
- -----------------------
During the three months ended July 31, 1997, the Company financed its
operations, in part, from proceeds from two private placements. The Company
raised $15,750 and issued 7,000 Class "A" common shares at $2.25 per share. The
Company also raised $37,500 by way of subscriptions and will issue 21,429 shares
at $1.75 per share. The Company also received $3,625 pursuant to options
exercised and issued 14,500 Class "A" common shares at $.25. The Company has
also raised $25,000 pursuant to a convertible debenture and has received $21,725
pursuant to related company loans.
The Company's financial resources, including an opening cash balance as at
April 30, 1997 of $135,039, totalled $233,639. Cash used, as a result of the net
loss for the year, totalled $81,700, after adjustments to reconcile net loss to
cash and the Company spent $1,542 on computer equipment.
The cash balance of $155,397, the completion of the convertible debenture
issue and a private placement of shares at $1.75 should together provide
adequate additional funds to pay current liabilities of $259,617. The Company is
committed to spending an additional $25,913 to complete the funding of the
research and development program in conjunction with CIRA, the total budget to
July 31, 1997 is for $514,346 of which $488,433 has been incurred to July 31,
1997. The balance of cash resources should provide enough funds for
administrative expenses over the next twelve months and working capital.
-8-
<PAGE>
PART II Other Information
-----------------
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27 Financial Data Schedule
-9-
<PAGE>
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: September 10, 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)
-10-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JUL-31-1997
<CASH> 155,397
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 165,733
<PP&E> 326,619
<DEPRECIATION> 0
<TOTAL-ASSETS> 492,352
<CURRENT-LIABILITIES> 259,617
<BONDS> 0
0
0
<COMMON> 1,784,459
<OTHER-SE> 260,250
<TOTAL-LIABILITY-AND-EQUITY> 492,352
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 203,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (203,545)
<INCOME-TAX> 0
<INCOME-CONTINUING> (203,545)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (203,545)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
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