UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter endedOctober 31, 2004
¨ TRANSITION REPORT UNDER 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.
(Name of Small Business Issuer in its Charter)
| Oregon | 91-1063549 |
| (State or Other Jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No) |
#1103 – 1871 Horseshoe Way Richmond, BC V7A 5H5 Canada
(Address of Principal Executive Offices)
(604) 278-5996
Issuer's Telephone Number
_____________________________________________________
(Former Name or Former Address, if changed since last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
(1) Yes x No ¨ (2) Yes x No ¨
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of common equity, as of the latest practicable date:
December 2, 2004
Common - 35,243,562 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item 6 of this Report.
Transitional Small Business Issuer Format Yes ¨ No x
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The Financial Statements of the Company required to be filed with this 10-QSB Quarterly Report were prepared by management and commence on the following page, together with related Notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Company.
IAS Communications, Inc.
(A Development Stage Company)
Interim Financial Statements
October 31, 2004
(unaudited)
IAS Communications, Inc.
(A Development Stage Company)
Balance Sheets
(Expressed in US Dollars)
| October 31, | April 30, | |||
| 2004 | 2004 | |||
| $ | $ | |||
| (unaudited) | (audited) | |||
| Assets | ||||
| Current Assets | ||||
| Cash | 68 | 179 | ||
| Property and Equipment (Note 3) | 103 | 447 | ||
| Total Assets | 171 | 626 | ||
| Liabilities and Stockholders’ Deficit | ||||
| Current Liabilities | ||||
| Cheques issued in excess of funds on deposit | 478 | 234 | ||
| Accounts payable | 69,321 | 71,577 | ||
| Accrued liabilities (Note 6(c)) | 17,440 | 17,721 | ||
| Due to related parties (Note 7) | 182,686 | 170,917 | ||
| Convertible debentures (Note 5) | 25,000 | 25,000 | ||
| Total Liabilities | 294,925 | 285,449 | ||
| Commitments and Contingencies (Note 8) | ||||
| Stockholders’ Deficit | ||||
| Preferred Stock 50,000,000 shares authorized; none issued | - | |||
| Common Stock (Note 6) | ||||
| Class “A” voting - 100,000,000 shares authorized without | ||||
| par value; 35,243,562 shares issued and | ||||
| outstanding respectively | 5,831,415 | 5,831,415 | ||
| Class “B” non-voting - 100,000,000 shares authorized without | ||||
| par value; none issued | - | - | ||
| Deficit Accumulated During the Development Stage | (6,126,169 | ) | (6,116,238 | ) |
| Total Stockholders’ Deficit | (294,754 | ) | (284,823 | ) |
| Total Stockholders’ Deficit and Liabilities | 171 | 626 |
F-1
IAS Communications, Inc.
(A Development Stage Company)
Statements of Operations
(Expressed in US Dollars)
(unaudited)
| Accumulated from | ||||||||||
| December 13, 1994 | Three months ended | Six months ended | ||||||||
| (Date of Inception) | October 31, | October 31, | ||||||||
| to October 31, | ||||||||||
| 2004 | 2004 | 2003 | 2004 | 2003 | ||||||
| $ | $ | $ | $ | $ | ||||||
| Revenue | - | - | - | - | - | |||||
| Expenses | ||||||||||
| General and Administration | ||||||||||
| Bank charges | 2,009 | 581 | 750 | 624 | 823 | |||||
| Depreciation | 1,720 | 172 | 172 | 344 | 344 | |||||
| Interest on convertible | ||||||||||
| debentures | 5,470 | 547 | 547 | 1,094 | 1,094 | |||||
| Investor relations | 1,595 | - | - | - | - | |||||
| Office, postage and | ||||||||||
| courier | 4,189 | (126 | ) | 2,594 | (126 | ) | 1,524 | |||
| Professional fees | 41,972 | 1,933 | 4,313 | 5,092 | 6,916 | |||||
| Transfer agent and | ||||||||||
| regulatory | 8,272 | 752 | 360 | 1,403 | 385 | |||||
| 65,227 | 3,859 | 8,736 | 8,431 | 11,086 | ||||||
| Research and Development | ||||||||||
| Royalty | 6,000 | 750 | 750 | 1,500 | 1,500 | |||||
| Consulting | 210 | - | - | - | - | |||||
| 6,210 | 750 | 750 | 1,500 | 1,500 | ||||||
| Loss from Continuing | ||||||||||
| Operations | (71,437 | ) | (4,609 | ) | (9,486 | ) | (9,931 | ) | (12,586 | ) |
| Discontinued Operations | (6,054,732 | ) | - | - | - | - | ||||
| Net Loss for the Period | (6,126,169 | ) | (4,609 | ) | (9,486 | ) | (9,931 | ) | (12,586 | ) |
| Basic and Diluted Loss Per | ||||||||||
| Share | - | - | - | - | ||||||
| Weighted Average Shares | ||||||||||
| Outstanding | 35,244,000 | 35,244,000 | 35,244,000 | 35,244,000 | ||||||
F-2
IAS Communications, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Expressed in US Dollars)
(unaudited)
| Six months ended | ||||
| October 31, | ||||
| 2004 | 2003 | |||
| $ | $ | |||
| Cash Flows Used in Operating Activities | ||||
| Net loss | (9,931 | ) | (12,586 | ) |
| Adjustments to reconcile net loss to cash | ||||
| Depreciation and amortization | 344 | 344 | ||
| Change in operating assets and liabilities | ||||
| Increase (decrease) in accounts payable and accrued liabilities | (2,537 | ) | 3,683 | |
| Net Cash Used in Operating Activities | (12,124 | ) | (8,559 | ) |
| Cash Flows Provided by Financing Activities | ||||
| Cheques issued in excess of funds on deposit | 244 | - | ||
| Advances from related parties | 11,769 | 10,050 | ||
| Net Cash Provided by Financing Activities | 12,013 | 10,050 | ||
| Increase (Decrease) in Cash | (111 | ) | 1,491 | |
| Cash (Deficiency) – Beginning of Period | 179 | (1,482 | ) | |
| Cash – End of Period | 68 | 9 | ||
| Non-Cash Financing Activities | - | - | ||
| Supplemental disclosures: | ||||
| Interest paid with cash | - | 1,750 | ||
| Income tax paid with cash | - | - | ||
F-3
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 1. | Development Stage Company IAS Communications, Inc., herein “the Company”, was incorporated on December 13, 1994 pursuant to the Laws of the State of Oregon, USA. The Company is a Development Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7. The Company, a development stage company, was engaged in the commercialization of advanced antenna technology known as the Contrawound Toroidal 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 CTHA pursuant to an agreement with Integral Concepts Inc. and West Virginia University Research Corporation. See Note 8 for legal proceedings regarding underlying patents. Since May 1, 2002, the Company is no longer pursuing the development of the CTHA. The Company currently does not have any plan of operations; however, the Company plans to seek other projects, which are yet to be determined. Originally planned principal activities did not produce significant revenues and the pursuit of that business ceased. The Company suffered recurring losses from inception, totalling $6,126,169 and has a working capital deficit of $294,857. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to emerge from its current dormant status is dependent upon its successful efforts to acquire or develop a new business and raise additional equity financing to achieve profitability and positive cash flow. The Company may raise additional funds through the exercise of warrants and stock options, if exercised. Options with respect to 1,275,000 shares may be exercised for potential proceeds of $255,000. These options and warrants are currently not in-the-money and are unlikely to be currently exercised. The Company will require significant additional capital to settle its debts and provide sufficient working capital for basic operations over the next twelve months. |
| 2. | Summary of Significant Accounting Policies |
| (a) | Basis of Accounting These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America and are expressed in US dollars. | |
| (b) | Estimates and Assumptions The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods. Actual results could differ from those estimates. | |
| (c) | Comprehensive Loss SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at October 31, 2004, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. |
F-4
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 2. | Summary of Significant Accounting Policies (continued) |
| (d) | Basic and Diluted Net Income (Loss) Per Share The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. | |
| (e) | Accounting for Stock Based Compensation The Company accounts for stock based compensation in accordance with SFAS No. 123, “Accounting for Stock-Based Compensation.” This statement requires that stock awards granted subsequent to January 1, 1995, be recognized as compensation expense based on fair value at the date of grant. Alternatively, a company may account for granted stock awards to employees under Accounting Principles Board Opinion (APB) No. 25, “Accounting for Stock Issued to Employees,” and disclose pro forma income amounts, which would have resulted from recognizing such awards at their fair value. The Company has elected to account for stock-based compensation for employees under APB No. 25 and make the required pro forma disclosures for compensation expense in accordance with SFAS No. 123. The Company accounts for stock issued for services to non-employees in accordance with SFAS No. 123. Compensation expense is based on the fair market value of the stock award or fair market value of the goods and services received whichever is more reliably measurable. | |
| (f) | 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. | |
| (g) | Foreign Currency Transactions/Balances The Company’s functional currency is the Canadian dollar. The Company has adopted SFAS No. 52, “Foreign Currency Translation”. Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at rates of exchange in effect at the balance sheet date. Non-monetary assets, liabilities and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. | |
| (h) | Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of cash. Cash was deposited with a high quality credit institution. |
F-5
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 2. | Summary of Significant Accounting Policies (continued) |
| (i) | Financial Instruments Financial instruments, which include cash, accounts payable, accrued liabilities, and due to related parties, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company’s operations are in Canada and virtually all of its assets and liabilities are giving rise to significant exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. | |
| (j) | Property and Equipment Property and equipment is recorded at cost and is depreciated on a straight-line basis over an estimated useful life of five years. | |
| (k) | Long-Lived Assets In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long Lived Assets”, the carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment losses when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. | |
| (l) | Revenue Recognition The Company recognizes revenue from the sale of products and services in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104 (“SAB 104”), “Revenue Recognition in Financial Statements.” Revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed or products shipped, and collectibility is reasonably assured. | |
| (m) | Research and Development The Company charges research and development costs as incurred to operations. | |
| (n) | New Accounting Pronouncements In December 2003, the United States Securities and Exchange Commission issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB 104), which supersedes SAB 101, "Revenue Recognition in Financial Statements." The primary purpose of SAB 104 is to rescind accounting guidance contained in SAB 101 related to multiple element revenue arrangements, which was superseded as a result of the issuance of EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables." While the wording of SAB 104 has changed to reflect the issuance of EITF 00-21, the revenue recognition principles of SAB 101 remain largely unchanged by the issuance of SAB 104. The adoption of SAB 104 did not have a material impact on the Company's financial statements. | |
| (o) | Interim Financial Statements These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. |
F-6
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 3. | Property and Equipment |
| October 31, | April 30, | ||||
| 2004 | 2004 | ||||
| Accumulated | Net Book | Net Book | |||
| Cost | Amortization | Value | Value | ||
| $ | $ | $ | $ | ||
| (unaudited) | (audited) | ||||
| Computer and office equipment | 3,441 | 3,338 | 103 | 447 |
| 4. | Intangible Assets Although the Company does not intend on pursuing the CTHA, it has not terminated its rights to it. The Company’s sublicence is exclusive, covering any and all international markets but excludes all military and governmental applications and resulting procurement interests. All improvements and embodiments that are created as a result of these military applications and additional research and development efforts will be transferred directly to the Company. The terms of the sublicence agreement are as follows: |
| (i) | The Company will pay a minimum annual royalty of $3,000 on or before December 31 of each year. | |
| (ii) | The Company will pay an earned royalty on sales, leases or sublicences of the CTHA of 10% of net revenues less a credit for the minimum annual royalty. Revenues below that of the minimum annual royalty have been earned to April 30, 2004. | |
| (iii) | The Company will pay an earned royalty on sales, leases or sublicenses of the CTHA of 3% of gross revenues. As amended on March 4, 1997, it was agreed to reduce the amount of royalties to be paid by 50% in an amount not to exceed $5,000,000 for up to three years. | |
| All royalties are payable within 30 days of each calendar quarter. The term of the original licence agreement and the sublicence agreement, subject to compliance with the terms thereof, is perpetual and renewable annually. The Company paid the December 31, 2003 minimum annual royalty and intends on continuing to renew annually. | |
| 5. | Convertible Debentures The Company offered three year, 8¾% interest, convertible debentures. Interest is due annually. The remaining $25,000 of such debentures were convertible into Class “A” shares at $3.50 on June 15, 2000. In the event the shares traded below $4.00 per share over a ten-day average prior to exercising into shares of the Company during November 16, 2000 to December 16, 2000, the convertible debentures were to be exercisable at 20% below the said ten-day average. The original maturity date was June 15, 2000. The Company will offer the debenture holders an additional extension on the maturity date or convert the debenture into shares. |
F-7
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 6. | Common Stock |
| (a) | Stock Option Plan The Company has a Stock Option Plan to issue up to 2,500,000 Class “A” common shares to certain key directors and employees, approved and registered October 2, 1996, as amended. Pursuant to the Stock Option Plan the Company has granted stock options to certain directors and employees. The options are granted for current services provided to the Company. Statement of Financial Accounting Standards No. 123 ("SFAS 123") requires that an enterprise recognize, or at its option, disclose the impact of the fair value of stock options and other forms of stock based compensation in the determination of income. The Company has elected under SFAS 123 to continue to measure compensation costs on the intrinsic value basis set out in APB Opinion No. 25. As stock options are granted at exercise prices based on the market price of the Company’s shares at the date of grant, no compensation cost is recognized. However, under SFAS 123, the impact on net income and income per share of the fair value of stock options must be measured and disclosed on a fair value based method on a pro forma basis. As performance stock for non-employees is issued for services rendered, the fair value of the shares issued is recorded as compensation cost, at the date the shares are issued, based on a discounted average trading price of the Company’s stock as quoted on the Over The Counter Bulletin Board. The fair value of the employee’s purchase rights, pursuant to stock options, under SFAS 123, was estimated using the Black-Scholes model. The weighted average number of shares under option and option price for the period ended October 31, 2004 is as follows: |
| Class “A” | ||||
| Common | Weighted | Weighted | ||
| Shares | Average | Average | ||
| Under | Option | Remaining Life | ||
| Option | Price | of Options | ||
| # | $ | (Months) | ||
| Beginning of period | 1,275,000 | .20 | ||
| Cancelled | (25,000) | .20 | ||
| End of period | 1,250,000 | .20 | 28 |
| If compensation expense had been determined pursuant to SFAS 123, the Company’s net loss and net loss per share would have been as follows: |
| October 31, | October 31, | ||||
| 2004 | 2003 | ||||
| $ | $ | ||||
| (unaudited) | (unaudited) | ||||
| Net loss — as reported | (13,931 | ) | (12,586 | ) | |
| Add: Stock-based compensation included in net | |||||
| loss — as reported | - | - | |||
| Deduct: Stock-based compensation expense | |||||
| determined on a fair value basis | (43,680 | ) | (21,480 | ) | |
| Net loss — pro forma | (57,611 | ) | (34,066 | ) | |
| Basic net loss per share - as reported | - | - | |||
| Basic net loss per share - pro forma | - | - |
F-8
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 7. | Due to Related Parties The amounts due to related parties are non-interest bearing, unsecured and without specific terms of repayment. Related parties consist of companies controlled or significantly influenced by the President. |
| 8. | Legal Proceedings |
| a) | The Company is the defendant in an action claiming unpaid legal fees of approximately $27,000. The Company disputes the claim and intends to defend the action. | |
| b) | The Company was sued in April 1998 in a civil action filed in U.S. District Court for the District of Oregon (the “Oregon Litigation”). The Plaintiff, Kirk VanVoorhies, (“Plaintiff”) sought money damages and equitable relief against the Company alleging patent infringement by the Company for the CTHA. The Company notified West Virginia University (“WVU”) of this claim and contacted WVU to assist in the defence. WVU owns the patent rights to the CTHA technology, which were licensed to the Company. Two patents were granted for the CTHA to WVU; one in August 1995, and another in August 1997. The Plaintiff’s patent was approved on March 31, 1998. The Plaintiff in the Oregon Litigation is also a defendant in a pending civil action in the U.S. District Court for the Northern District of West Virginia brought by WVU (the “West Virginia Litigation”) claiming that the CTHA invention is owned by WVU. As alleged in the West Virginia Litigation, the Company believes that the patent rights for the CTHA technology belongs to WVU and therefore based on the license, the Company owns the worldwide rights to the CTHA commercial applications. Litigation, the Company believes that the patent rights for the CTHA technology belongs to WVU and therefore based on the license, the Company owns the worldwide rights to the CTHA commercial applications. A decision by the United States District Court for the Northern District of West Virginia will, if upheld on appeal, signal the end to patent litigation brought by VorteKx, Inc. against the Company. VorteKx, Inc. brought a patent infringement action against IAS in the United States District Court for the District of Oregon on a patent issued to a former graduate student at WVU, Kurt L. VanVoorhies, and subsequently assigned to VorteKx. On the Company's motion, the case was transferred to the Northern District of West Virginia and consolidated with a previously pending action filed by WVU against VanVoorhies, discussed above. The Company and WVU both claimed that the technology covered by the patent is actually owned by WVU. The Company is the sublicensee of commercial applications of the CTHA technology. In a Memorandum Opinion and Order entered February 17, 2000, the West Virginia federal court granted summary judgment for WVU in its claims against VanVoorhies. The Court also dismissed VanVoorhies' claims against WVU and third-party defendants West Virginia University Research Corporation, Dr. James E. Smith and Integral Concepts, Inc. Because the Court's holding establishes that WVU owns the technology, it should bring an end to the litigation against the Company, which was stayed pending resolution of the case against VanVoorhies. The dispute in the WVU action concerned inventions conceived during VanVoorhies' time at WVU as a graduate student and later as a graduate research assistant, particularly two inventions relating to the CTHA technology. The Court found that VanVoorhies validly assigned all rights in the first invention to WVU, including all future technology derived from the technology underlying that invention. VanVoorhies subsequently declined to assign to WVU any interest in a second invention. The Court found that the second invention constituted future technology derived from the first invention. Therefore, VanVoorhies' assignment of the first invention to WVU also effectively assigned the second invention to WVU, and WVU is the rightful owner of the patent applications filed by VanVoorhies on the CTHA technology. |
F-9
IAS Communications, Inc.
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in US Dollars)
(unaudited)
| 8. | Legal Proceedings (continued) Because one of these patent applications led to the issuance of the patent underlying VorteKx's infringement suit against the Company, VorteKx no longer has standing to pursue that infringement case. The case was stayed pending VanVoorhies' appeal from the Court's order. On May 20, 2004 the United States Court of Appeals affirmed the stay of the case. |
F-10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This report contains forward-looking statements. The words, “anticipate”, “believe”, “expect”, “plan”, “intend”, “estimate”, “project”, “could”, “may”, “foresee”, and similar expressions are intended to identify forward-looking statements. The following discussion and analysis should be read in conjunction with the Company's Financial Statements and other financial information included elsewhere in this report which contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below, as well as those discussed elsewhere in this report.
Overview
The following discussion and analysis should be read in conjunction with the enclosed consolidated financial statements and notes thereto appearing elsewhere in this report.
IAS Communications, Inc. was incorporated on December 13, 1994 pursuant to the Laws of the State of Oregon, USA.
We are a development stage company engaged in the commercialization of advanced antenna technology known as the Contrawound Toroidal Helical Antenna, herein “CTHA”, for wireless communications markets. The CTHA, developed in conjunction with researchers at West Virginia University, is reported to be a technologically advanced antenna design which can be incorporated into a wide variety of telecommunications applications. We have been granted worldwide sublicensing rights for commercial applications, excluding military and governmental applications, for the CTHA pursuant to an agreement with Integral Concepts Inc. and West Virginia University Research Corporation. However, we require a qualified antenna expert to be able to continue the development of the CTHA.
As a development stage company, management devotes most of its activities to establishing a new business. Planned principal activities have produced insignificant revenues and we have suffered recurring losses from inception, totaling $6,126,169 and have a working capital deficit of $294,857. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to emerge from the development stage with respect to our planned principal business activity is dependent upon our successful efforts to raise additional equity financing, develop additional markets for its products, identify additional licensees and receive ongoing support from the majority of our creditors and affiliates.
We may also raise additional funds through the exercise of warrants and stock options, if exercised. Options with respect to 1,250,000 shares may be exercised for potential proceeds of $250,000. These options are currently not in-the-money and are unlikely to be currently exercised.
The Company will require significant additional capital to settle its debts and provide sufficient working capital for basic operations for the next twelve months.
Progress Report
The company is seeking other opportunities that will increase the value of the shares and attract funding. The company is currently putting the CTHA projects on hold until it has raised sufficient funds and has obtain a qualified engineer to develop the said technology to the manufacturing stage.
Results of Operations
Six months ended October 31, 2004 (“2004”) compared to the six months ended October 31, 2003 (“2003”)
The Company has no revenue for 2004 and 2003.
The net loss for 2004 was $9,931 compared to $12,586 for 2003. Administrative expenses decreased by $2,655 to $8,431 as compared to $11,086 in 2003. Research and development expenses remain at $1,500 for 2004 and 2003.
Our net loss per share remained at $nil for 2004 and 2003.
Liquidity
During 2004, we financed our operations and received $11,769 by receiving financial support from related parties in the amount of $182,686. These amounts are unsecured, non-interest bearing and due on demand.
Our cash position has decreased during the six months ended October 31, 2004 from $179 to $68, and our working capital deficit, as at October 31, 2004, is $294,857.
Item 3. Controls and Procedures
| (a) | Evaluation of disclosure controls and procedures. Based on the evaluation of the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a date within 90 days of the filing date of this Quarterly Report on Form 10-QSB, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures are designed to ensure that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and are operating in an effective manner. |
| (b) | Changes in internal controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their most recent evaluation. |
PART II - OTHER INFORMATION
| Item 1. | Legal Proceedings None. |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds 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 |
| (a) Exhibits: | |
(b) Reports on Form 8-K None. |
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: December 16, 2004 | IAS Communications, Inc. |
By: /s/ John G. Robertson By: /s/ James Vandeberg |
