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 endedJanuary 31, 2006
[ ] 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 – 11871 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
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [ ] No [ X ]
(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:
March 3, 2006
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
January 31, 2006
(unaudited)
2
| IAS Communications, Inc |
| (A Development Stage Company) |
| January 31, 2006 |
| Index |
| Balance Sheet | F–1 |
| Statements of Operations | F–2 |
| Statements of Cash Flows | F–3 |
| Notes to the Financial Statements | F–4 |
| IAS Communications, Inc |
| (A Development Stage Company) |
| Balance Sheet |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| January 31, | April 30, | ||||||||||
| 2006 | 2005 | ||||||||||
| $ | $ | ||||||||||
| Assets | |||||||||||
| Current Assets | |||||||||||
| Cash | 739 | – | |||||||||
| Accrued revenues from petroleum interests | 4,813 | – | |||||||||
| Prepaid expenses | 2,750 | 2,000 | |||||||||
| Total Assets | 8,302 | 2,000 | |||||||||
| Liabilities and Stockholders’ Deficit | |||||||||||
| Current Liabilities | |||||||||||
| Cheques issued in excess of funds on deposit | – | 523 | |||||||||
| Accounts payable | 66,544 | 83,378 | |||||||||
| Accrued liabilities | 20,987 | 19,784 | |||||||||
| Due to related parties (Note 5) | 220,814 | 200,864 | |||||||||
| Convertible debentures (Note 6) | 25,000 | 25,000 | |||||||||
| Total Liabilities | 333,345 | 329,549 | |||||||||
| Commitments and Contingent Liabilities (Notes 8 and 9) | |||||||||||
| Stockholders’ Deficit | |||||||||||
| Preferred Stock – 50,000 share authorized; none issued | – | – | |||||||||
| Common Stock | |||||||||||
| Class “A” voting – 100,000,000 shares authorized without par value | |||||||||||
| 35,243,562 shares issued and outstanding | 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 | (6,156,458 | ) | (6,158,964 | ) | |||||||
| Total Stockholders’ Deficit | (325,043 | ) | (327,549 | ) | |||||||
| Total Liabilities and Stockholders’ Deficit | 8,302 | 2,000 | |||||||||
F-1
The Accompanying Notes are an Integral Part of the Financial Statements
| IAS Communications, Inc |
| (A Development Stage Company) |
| Statements of Operations |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| Accumulated from | |||||||||||||||
| December 13, 1994 | Three Months | Nine Months | |||||||||||||
| (Date of Inception) | Ended | Ended | |||||||||||||
| to January 31, | January 31, | January 31, | January 31, | January 31, | |||||||||||
| 2006 | 2006 | 2005 | 2006 | 2005 | |||||||||||
| $ | $ | $ | $ | $ | |||||||||||
| Revenue | – | – | – | – | – | ||||||||||
| Operating Expenses | |||||||||||||||
| Depreciation | 1,823 | – | 103 | – | 447 | ||||||||||
| Interest on convertible debentures | 8,205 | 547 | 547 | 1,641 | 1,641 | ||||||||||
| Investor relations | 1,595 | – | – | – | – | ||||||||||
| License | 7,750 | 750 | 500 | 2,250 | 2,000 | ||||||||||
| Office | 16,499 | 7,659 | 818 | 9,703 | 540 | ||||||||||
| Professional fees | 126,881 | 39,517 | 15,853 | 55,464 | 20,945 | ||||||||||
| Transfer agent and regulatory | 12,945 | – | 506 | 1,408 | 2,685 | ||||||||||
| Total Operating Expenses | 175,698 | 48,473 | 18,327 | 70,466 | 28,258 | ||||||||||
| Loss from Operations | (175,698 | ) | (48,473 | ) | (18,327 | ) | (70,466 | ) | (28,258 | ) | |||||
| Other Income | |||||||||||||||
| Gain on license obligation (Note 8(c)) | 1,000 | – | – | – | – | ||||||||||
| Gain on write off of payables | 54,385 | – | – | 54,385 | – | ||||||||||
| Petroleum revenues, net (Note 5(b)) | 18,587 | 3,338 | – | 18,587 | – | ||||||||||
| Income (Loss) Before Discontinued Operations | (101,726 | ) | (45,135 | ) | (18,327 | ) | 2,506 | (28,258 | ) | ||||||
| Discontinued Operations | (6,054,732 | ) | – | – | – | – | |||||||||
| Net Income (Loss) | (6,156,458 | ) | (45,135 | ) | (18,327 | ) | 2,506 | (28,258 | ) | ||||||
| Net Loss Per Share - Basic and Diluted | |||||||||||||||
| - From Continuing Operations | – | – | – | – | |||||||||||
| - From Discontinued Operations | – | – | – | – | |||||||||||
| Weighted Average Shares Outstanding | 35,244,000 | 35,244,000 | 35,244,000 | 35,244,000 | |||||||||||
F-2
The Accompanying Notes are an Integral Part of the Financial Statements
| IAS Communications, Inc |
| (A Development Stage Company) |
| Statements of Cash Flows |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| Accumulated from | |||||||||
| December 13, 1994 | Nine Months | Nine Months | |||||||
| (Date of Inception) | Ended | Ended | |||||||
| To January 31, | January 31, | January 31, | |||||||
| 2006 | 2006 | 2005 | |||||||
| $ | $ | $ | |||||||
| Operating Activities | |||||||||
| Net Income (loss) | (6,156,458 | ) | 2,506 | (28,258 | ) | ||||
| Adjustment to reconcile net income (loss) to net cash | |||||||||
| used in operating activities | |||||||||
| Depreciation | 189,109 | – | 447 | ||||||
| Shares and options issued for services | 556,050 | – | – | ||||||
| Shares issued for convertible debenture interest | 18,786 | – | – | ||||||
| Assets written off | 455,957 | – | – | ||||||
| Gain on shares cancelled | (10 | ) | – | – | |||||
| Gain on write off of payables | (540,461 | ) | (54,386 | ) | – | ||||
| Change in operating assets and liabilities | |||||||||
| Prepaid expense | (2,750 | ) | (750 | ) | – | ||||
| Decrease in inventory | (28,615 | ) | – | – | |||||
| Accrued revenues from petroleum interest | (4,813 | ) | (4,813 | ) | – | ||||
| Accounts payable and accrued liabilities | 783,694 | 38,755 | 8,759 | ||||||
| Net Cash Used in Operating Activities | (4,729,511 | ) | (18,688 | ) | (19,052 | ) | |||
| Investing Activities | |||||||||
| Purchase of property and equipment | (99,626 | ) | – | – | |||||
| Purchase of license | (250,000 | ) | – | – | |||||
| Increase in patent protection costs | (266,822 | ) | – | – | |||||
| Net Cash Used in Investing Activities | (616,448 | ) | – | – | |||||
| Financing Activities | |||||||||
| Advances from related parties | 901,774 | 19,950 | 19,095 | ||||||
| Proceeds from issuance of common stock | 4,044,924 | – | – | ||||||
| Proceeds from convertible debentures | 400,000 | – | – | ||||||
| Checks issued in excess of funds on deposit | – | (523 | ) | (37 | ) | ||||
| Net Cash Provided by Financing Activities | 5,346,698 | 19,427 | 19,058 | ||||||
| Net Increase in Cash | 739 | 739 | 6 | ||||||
| Cash – Beginning of Period | – | – | - | ||||||
| Cash - End of Period | 739 | 739 | 6 | ||||||
| Non-cash Investing and Financing Activities | |||||||||
| Shares issued to settle related party debt | 892,741 | – | – | ||||||
| Shares issued for services | 499,098 | – | – | ||||||
| Shares issued for convertible debentures and accrued | |||||||||
| interest converted | 394,661 | – | – | ||||||
| Shares issued for technology | 1 | – | – | ||||||
| Shares issued to an officer donated back and cancelled | (10 | ) | – | – | |||||
| Supplemental Disclosures: | |||||||||
| Interest paid | 2,188 | 875 | |||||||
| Income tax paid | – | – |
F-3
The Accompanying Notes are an Integral Part of the Financial Statements
| IAS Communications, Inc |
| (A Development Stage Company) |
| Notes to the Financial Statements |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| 1. | Interim Reporting |
The accompanying unaudited interim financial statements have been prepared by IAS Communications, Inc. (the "Company") pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended April 30, 2005, as filed with the United States Securities and Exchange Commission. | |
The results of operations for the nine months ended January 31, 2006 are not indicative of the results that may be expected for the full year. | |
| 2. | Continuance of Operations |
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 “Accounting and Reporting by Development Stage Enterprises”. | |
The financial statements have been prepared using generally accepted accounting principles in the United States of America applicable for a going concern which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. At January 31, 2006, the Company had a working capital deficiency of $325,043, which is not sufficient to meet its planned business objectives and ongoing operations for the next twelve months. The Company has accumulated losses of $6,156,458 since its inception. Its ability to continue as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. | |
| 3. | Recent Accounting Pronouncements |
In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154,“Accounting Changes and Error Corrections – A Replacement of APB Opinion No. 20 and SFAS No. 3”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The provisions of SFAS No. 154 are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position. | |
In December 2004, the FASB issued SFAS No. 123R,“Share Based Payment”. SFAS 123R is a revision of SFAS No. 123“Accounting for Stock-Based Compensation”, and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award – the requisite service period (usually the vesting period). SFAS 123R requires that the compensation cost relating to share-based payment transactions be recognized in financial statements. That cost will be measured based on the fair value of the equity or liability instruments issued. Public entities that file as small business issuers will be required to apply SFAS 123R in the first interim or annual reporting period that begins after December 15, 2005. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position. | |
In March 2005, the SEC staff issued Staff Accounting Bulletin No. 107 (“SAB 107”) to give guidance on the implementation of SFAS 123R. The Company will consider SAB 107 during implementation of SFAS 123R. |
F-4
| IAS Communications, Inc |
| (A Development Stage Company) |
| Notes to the Financial Statements |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| 3. | Recent Accounting Pronouncements (continued) | |
In December 2004, the FASB issued SFAS No. 153,“Exchanges of Nonmonetary Assets - An Amendment of APB Opinion No. 29”. The guidance in APB Opinion No. 29,“Accounting for Nonmonetary Transactions”, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. The guidance in that Opinion, however, included certain exceptions to that principle. SFAS No. 153 amends Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. The provisions of SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of this standard did not have a material effect on the Company’s results of operations or financial position. | ||
| 4. | Asset Retirement Obligation | |
The Company accounts for asset retirement obligations in accordance with the provisions of SFAS 143“Accounting for Asset Retirement Obligations”. SFAS 143 requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company does not have any asset retirement obligations related to its oil and gas properties. | ||
| 5. | Related Party Transactions | |
| (a) | 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 of the Company. | |
| (b) | The Company entered into an agreement dated April 6, 2005, with a private company controlled by the President of the Company to acquire a working interest in two oil wells located in Burleson County, Texas. The wells are producing but a value cannot be placed on them due to vertical fracture features that prevent the estimation of reserves. The Company agreed to issue up to 1,000,000 shares (issued – nil) of restricted common stock at the rate of one share for every $0.10 of revenue from the wells. Refer to Note 8 (b). | |
| (c) | The Company entered into an agreement with a professional law firm in which a partner of the firm is an Officer and Director of the Company. Refer to Note 8 (a). | |
| 6. | Convertible Debentures | |
On June 15, 1997, the Company offered three year, 8¾% interest, convertible debentures. The debentures were convertible into Class “A” shares until June 15, 2000. As at January 31, 2006, $25,000 of debentures remain outstanding. Interest is due annually. | ||
| 7. | Stock Options | |
The Company accounts for stock-based awards using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25). Under the intrinsic value method of accounting, compensation expense is recognized if the exercise price of the Company’s employee stock options is less than the market price of the underlying common stock on the date of grant. SFAS No. 123, “Accounting for Stock-Based Compensation,” (SFAS 123), established a fair value based method of accounting for stock-based awards. Under the provisions of SFAS 123, companies that elect to account for stock-based awards in accordance with the provisions of APB 25 are required to disclose the pro forma net income (loss) that would have resulted from the use of the fair value based method under SFAS 123. | ||
F-5
| IAS Communications, Inc |
| (A Development Stage Company) |
| Notes to the Financial Statements |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| 7. | Stock Options (continued) |
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 fair value of the employee's purchase rights, pursuant to stock options, under SFAS 123, was estimated using the Black-Scholes model. | |
The pro forma information is as follows: |
| Three Months Ended | Nine Months Ended | ||||
| January 31, | January 31, | January 31, | January 31, | ||
| 2006 | 2005 | 2006 | 2005 | ||
| $ | $ | $ | $ | ||
| Net income (loss) — as reported | (45,135) | (18,327) | 2,506 | (28,258) | |
| Add: Stock-based compensation expense included in net loss — as reported | – | – | – | – | |
| Deduct: Stock-based compensation expense determined under fair value method | – | – | – | (43,680) | |
| Net income (loss) — pro forma | (45,135) | (18,327) | 2,506 | (71,938) | |
| Net income (loss) per share (basic) — as reported | – | – | – | – | |
| Net income (loss) per share (basic) — pro forma | – | – | – | – | |
| 8. | Commitments | ||
| a) | The Company entered into an agreement with a professional law firm (the “Law Firm”) in which a partner of the firm is an Officer and Director of the Company. The Company agreed to pay a cash fee equal to 5% of any financings with parties introduced to the Company by the Law Firm. The Company also agreed to pay an equity fee equal to 5% of the equity issued by the Company to parties introduced by the Law Firm, in the form of options, warrants, or common stock. | ||
| b) | On April 6, 2005, the Company entered into an agreement with a private company controlled by the President of the Company to acquire working interests (15.5% and 6.65%) in two producing oil wells located in Burleson County, Texas. The Company agreed to issue 1,000,000 shares of restricted common stock at the rate of one share for every $0.10 of revenue from the wells. The shares will be issued after the Company receives reports on the prior quarter’s production. | ||
| c) | By Sublicense Agreements dated July 10, 1995, the Company was granted an exclusive worldwide sublicense by Integral Concepts Inc. (“ICI”) and West Virginia University Research Corporation (“WVURC”) to the CTHA technology, excluding all military and governmental applications and resulting procurement interests. On March 17, 2005, the Company entered into Settlement and Release Agreements with each of ICI and WVURC to terminate the July 10, 1995 Agreements. Accordingly, the Company was released from all previously accrued royalty fees. | ||
On March 17, 2005, the Company entered into a Non-Exclusive License Agreement with WVURC for the development, manufacture, use and sale of the CTHA technology. The agreement was retroactively effective on January 15, 2005. The terms of the non-exclusive sublicense agreement are as follows: | |||
| (i) | The Company will pay a license fee of $3,000 for each calendar year, payable on or before January 15 of each year (paid). | ||
| (ii) | The Company will pay a royalty 10% of net sales. | ||
| (iii) | The Company will pay a royalty of 50% of all other sublicense revenues. | ||
All royalties in items (ii) and (iii) are payable within 30 days of each calendar quarter. The terms of the agreement remain in effect until the expiration of the last to expire of the patents included in the CTHA technology. | |||
| d) | On November 3, 2005, the Company entered into a letter of intent to purchase a 37.5% net revenue interest in a producing oil well and drill two exploration wells in Overton and Clay County, Tennessee, in consideration for $400,000. On January 17, 2006, this agreement was terminated. | ||
F-6
| IAS Communications, Inc |
| (A Development Stage Company) |
| Notes to the Financial Statements |
| (Expressed in U.S. Dollars) |
| (Unaudited) |
| 9. | Contingent Liability |
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 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. | |
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-7
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 $6,156,458, and have a working capital deficit of $325,043. 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 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
On November 3, 2005, we entered into a letter of intent to purchase a 37.5% net revenue interest in a producing oil well in Overton and Clay County, Tennessee, in consideration for $400,000. We also entered into a letter of intent to drill two exploration wells in the Overton and Clay County, Tennessee. We will earn a 75% net revenue interest in each well location. On January 17, 2006, this agreement was terminated.
3
Results of Operations
Nine months ended January 31, 2006 (“2006”) compared to the nine months ended January 31, 2005 (“2005”)
The Company had no revenue from operations for 2006 and nil for 2005.
The Company had net income of $2,506 in 2006, compared to a net loss of $28,258 for 2005. The decrease in loss for 2006 was mainly due to the write off of accounts payable of $54,385, and other income of $18,587 received from two recently purchased shares of two oil wells.
Our basic and diluted net loss per share was $nil for 2006 and 2005.
Liquidity
During 2006, we financed our operations by receiving financial support from related parties in the amount of $10,959. These amounts are unsecured, non-interest bearing and due on demand. We also received $18,587 from recently purchased shares of two oil wells in Texas.
Our cash position has not changed during the nine months ended January 31, 2006, and our working capital deficit as at January 31, 2006 was $325,043 compared to $327,549 as at April 30, 2005.
Item 3. Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this quarterly report, being January 31,2006, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our President and our Chief Financial Officer. Based upon that evaluation, our President and our Chief Financial Officer concluded that our company's disclosure controls and procedures are effective. There have been no changes in our company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date we carried out our evaluation.
Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our President and our Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.
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. |
4
| 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. |
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 15, 2006 | IAS Communications, Inc. |
| By: /s/ John G. Robertson | |
| John G. Robertson, President | |
| (Principal Executive Officer) | |
| By: /s/ James Vandeberg | |
| James Vandeberg, Chief Operating | |
| Officer and Chief Financial Officer |
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