Ias Energy (IASCA) 10-Q 2011 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

[ X ]

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period endedJuly 31, 2010

[   ]

Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period ___________________to

Commission File Number0-21255

IAS ENERGY, INC.

(Exact name of Small Business Issuer as specified in its charter)

Oregon	91-1063549
(State or other jurisdiction of incorporation or	(IRS Employer Identification No.)
organization)
#240 – 11780 Hammersmith Way
Richmond, BC, Canada	V7A 5A9
(Address of principal executive offices)	(Postal or Zip Code)
Issuer’s telephone number, including area code:	(604) 278-5996

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 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  o

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  o       No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of ‘‘accelerated filer and large accelerated filer’’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

o

Accelerated filer

o

Non-accelerated filer

o

Smaller reporting company

x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   o       Nox

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 71,778,062 common shares outstanding as of October 7, 2010.

1

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Our unaudited interim consolidated financial statements follow.  These statements are presented in U.S. dollars and are prepared in accordance with generally accepted accounting principles in the United States.

F-1

IAS Energy, Inc.

(A Development Stage Company)

Interim Consolidated Financial Statements

(Expressed in U.S. Dollars)
(Unaudited)

July 31, 2010

Reader’s Note:

The unaudited interim consolidated financial statements of IAS Energy, Inc. (the “Company”) for the three month period ended July 31, 2010 have been prepared by management and have not been reviewed by the Company’s auditors.

F-2

IAS Energy, Inc. and Subsidiary

(A Development Stage Company)

Consolidated Balance Sheets

	July 31, 2010	April 30, 2010
	(Unaudited)
Assets
Current Assets
Cash	$         2,564	$       72,322
Available-for-sale securities	12,089	15,102
Prepaid expenses	5,731	17,842
Due from related parties	7,843	1,630
Total Current Assets	28,227	106,896
Property and equipment	512	585
Total Assets	$     28,739	$     107,481
Liabilities and Stockholders’ Deficit
Current Liabilities
Accounts payable	78,004	84,359
Accrued liabilities	10,604	7,442
Due to related parties	1,693,244	1,717,434
Debentures	25,000	25,000
Total Liabilities	1,806,852	1,834,235
Stockholders’ Deficit
Preferred Stock, 50,000,000 shares authorized, none issued
and outstanding	-	-
Common stock and additional paid-in capital in excess of par:
Class A voting, 100,000,000 common shares authorized
without par value, 78,898,062 and 71,403,562 shares     issued and outstanding, respectively	13,408,608	13,362,158
Class B non-voting, 100,000,000 common shares authorized
without par value, none issued and outstanding	-	-
Accumulated other comprehensive income (loss)	3,395	1,985
Deficit accumulated during the development stage	(15,190,116)	(15,090,897)
Total Stockholders’ Deficit	(1,778,113)	(1,726,754)
Total Liabilities and Stockholders’ Deficit	$     28,7395	$     107,481

The accompanying notes are an integral part of these consolidated financial statements.

F-3

IAS Energy, Inc. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

			December 13, 1994
	Three Months Ended		(Inception)
	July 31,		through
	2010	2009	July 31, 2010
Revenue
Oil and natural gas sales	$       11,803	$             -	$         133,385
Service revenue	-	-	7,726
Total Revenue	11,803	-	141,111
Operating expenses
Depletion and depreciation	-	-	5,897
Lease operating expense	9,632	-	33,609
License	-	-	16,500
Office and administrative	92,239	95,442	1,206,911
Professional fees	3,144	26,923	704,226
Transfer agent and regulatory	6,258	1,792	49,306
Gain on write-off of payables	-	-	(63,487)
Loss from equity investment	-	-	76,535
Impairment – goodwill	-	-	7,018,592
Impairment – petroleum interest	-	33,108	384,106
Total Operating Expenses	111,273	157,265	9,432,195
Loss from operations	(99,470)	(157,265)	(9,291,084)
Other Income (Expenses)
Gain on sale of available-for-sale securities	798	3,502	124,299
Interest expense	(547)	(547)	(18,349)
Gain on license obligation	-	-	1,000
Gain (loss) on settlement of obligation to issue shares	-	-	48,750
Loss before discontinued operations	(99,219)	(154,310)	(9,135,384)
Discontinued operations	-	-	(6,054,732)
Net loss	$     (99,219)	$  (154,310)	(15,190,116)
Other comprehensive income (loss)
Unrealized gain (loss) on available-for-sale securities	$           1,410	$     54,876	127,379
Reclassification adjustment for gains included in net loss	-	-	(122,320)
Loss foreign currency translation	-	(2,216)	(1,664)
Total other comprehensive income (loss)	1,410	52,660	3,395
Comprehensive loss	$     (97,809)	$    (101,650)	$      (15,186,721)
Loss Per Share – Basic and Diluted	$           (0.00)	$         (0.01)
Weighted average number of class A common shares
Outstanding – basic and diluted	71,298,894	70,142,890

The accompanying notes are an integral part of these consolidated financial statements.

F-4

IAS Energy, Inc. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

			December 13, 1994
	Three Months Ended		(Inception)
	July 31,		through
	2010	2009	July 31, 2010
Cash flows from operating activities:
Net loss	$    (99,219)	$   (154,310)	$     (15,190,116)
Adjustments to reconcile loss to net cash used by
operating activities
Assets written-off	-	-	455,957
Bad debt expense	-	-	9,649
Depreciation and depletion	73	-	193,256
Gain on shares cancelled	-	-	(10)
Gain on sale of available-for-sale securities	(798)	(3,502)	(124,299)
Gain on write-off of payables	-	-	(549,562)
Shares issued for services	-	-	630,125
Shares issued for convertible debenture interest	-	-	18,786
Loss on settlement of obligation to issue shares	-	-	(53,750)
Shares issued to settle obligation	-	-	107,500
Warrants issued for services	-	-	18,681
Stock-based compensation	-	38,452	349,003
Loss from equity investment	-	33,108	76,535
Impairment loss on oil and gas properties	-	-	381,533
Impairment loss on goodwill	-	-	7,018,592
Change in operating assets and liabilities
Prepaid expenses and deposits	12,111	(14,775)	62,489
Inventory	-	-	(28,615)
Accrued revenues from oil and gas properties	-	-	(9,649)
Accounts payable and accrued liabilities	(3,193)	62,199	514,856
Due from related parties	(6,213)	-	111,356
Net Cash Used in Operating Activities	(97,239)	(38,828)	(6,007,683)
Cash flows from investing activities:
Acquisition, net of cash received	-	-	(350,000)
Cash acquired from Power Telecom	-	13,090	13,960
Purchase of property and equipment	-	-	(100,211)
Purchase of license	-	-	(250,000)
Increase in patent protection costs	-	-	(266,822)
Investment in oil and gas properties	-	-	(555,000)
Recoveries to oil and gas properties	-	-	277,500
Proceeds from sale of available-for-sale securities	3,551	-	250,893
Purchase of securities	-	-	(115,878)
Net Cash Provided by (Used in) Investing Activities	3,551	13,090	(1,095,558)
Cash flows from financing activities:
Advances from (repayment to) related parties	(24,190)	19,167	2,227,557
Bank indebtedness	-	1,102
Proceeds from issuance of common stock	43,450	7,500	4,480,277
Proceeds from convertible debentures	-	-	400,000
Proceeds from common stock subscribed	-	-	4,000
Net Cash Provided by Financing Activities	19,260	27,769	7,111,834
Effect of exchange rate changes on cash	4,670	(2,216)	(6,029)
Net increase (decrease) in cash	(69,758)	(185)	2,564
Cash, beginning of year	72,322	275	-
Cash, end of year	$          2,564	$            90	$             2,564
Supplemental Disclosures:
Interest paid	$                -	$             -	$             4,813
Income tax paid	-	-	-
Non-cash investing and financing activities:
Issuance of common stock to settle related party debt	$                -	$             -	$        892,741
and accrued interest converted	-	-	394,661
Issuance of common stock for technology	-	-	1
Issuance of common stock for revenue interest	-	33,108	53,425
Net liabilities assumed from acquisition	-	-	267,653
Issuance of common stock for investment	-	-	6,477,474
Unrealized gain on available-for-sale securities	$        1,410	$            -	$        69,233

The accompanying notes are an integral part of these consolidated financial statements.

F-5

IAS Energy, Inc. and Subsidiary

(A Development Stage Company)

Consolidated Statements of Stockholders’ Equity (Deficit)

December 13, 1994 (inception) through July 31, 2010

(Unaudited)

					Deficit
	Class A Common Stock				Accumulated	Accumulated		Total
	and Additional		Obligation		During the	Other		Stockholders’
	Paid-in Capital		to Issue		Development	Comprehensive		Equity
	Shares	Amount		Shares	Stage		Income (Loss)		(Deficit)
Balance – 13 December 1994 (Date of inception)	-	$               -		$          -	$                   -		$                  -		$                 -
Shares issued for cash	100	10		-	-		-		10
Shares issued for technology	6,000,000	1		-	-		-		1
Stock issued for cash pursuant to:	-	-		-	-		-		-
Private placement	700,000	70,000		-	-		-		70,000
Public offering memorandum	336,333	252,250		-	-		-		252,250
Net loss for the period	-	-		-	(83,615)		-		(83,615)
Balance – April 30, 1995	7,036,433	322,261		-	(83,615)		-		238,646
Shares previously issued, donated back and cancelled	(100)	(10)		-	-		-		(10)
Shares issued for cash pursuant to options exercised	210,000	52,500		-	-		-		52,500
Net loss for the year	-	-		-	(480,298)		-		(480,298)
Balance – April 30, 1996	7,246,333	374,751		-	(563,913)		-		(189,162)
Shares issued for cash pursuant to:
Private placement	722,000	1,124,500		-	-		-		1,124,500
Options exercised	224,000	140,500		-	-		-		140,500
Shares issued for services	25,000	8,333		-	-		-		8,333
Net loss for the year	-	-		-	(1,044,516)		-		(1,044,516)
Balance – April 30, 1997	8,217,333	1,648,084		-	(1,608,429)		-		39,655
Shares issued for cash pursuant to:
Public offering memorandum	263,667	197,750		-	-		-		197,750
Options exercised	87,500	26,875		-	-		-		26,875
Private placement	,000	15,750		-	-		-		15,750
Private placement and foreign units offering	575,600	1,007,300		-	-		-		1,007,300
Shares issued for services	169,250	260,125		-	-		-		260,125
Net loss for the year	-	-		-	(1,633,047)		-		(1,633,047)
Balance – April 30, 1998	9,320,350	3,155,884		-	(3,241,476)		-		(85,592)
Shares issued for cash pursuant to:
Options exercised	2,000	500		-	-		-		500
Private placement and foreign units offering	95,000	166,250		-	-		-		166,250
Private placement	200,000	200,000		-	-		-		200,000
Exercise of warrants	48,000	84,000		-	-		-		84,000
Shares issued for services	132,000	230,640		-	-		-		230,640
Shares issued pursuant to conversion of convertible
debentures including accrued interest	471,508	345,520		-	-		-		345,520
Net loss for the year	-	-		-	(1,219,435)		-		(1,219,435)
Balance – April 30, 1999	10,268,858	$    4,182,794		$          -	$   (4,460,911)		$                   -		$    (278,117)
Shares issued for cash pursuant to:
Private placement	968,902	484,451		-	-		-		484,451
Options exercised	2,500	2,500		-	-		-		2,500
Warrants exercised	18,125	30,938		-	-		-		30,938
Shares issued pursuant to conversion of convertible
debentures including accrued interest	62,854	38,266		-	-		-		38,266
Net loss for the year	-	-		-	(572,169)		-		(572,169)
Balance – April 30, 2000	11,321,239	4,738,949		-	(5,033,080)		-		(294,131)
Shares issued to settle debt	267,048	211,781		-	-		-		211,781
Shares issued pursuant to conversion of convertible
debentures including accrued interest	12,358	10,875		-	-		-		10,875
Net loss for the year	-	-		-	(755,406)		-		(755,406)
Balance – April 30, 2001	11,600,645	4,961,605		-	(5,788,486)		-		(826,881)
Net loss for the year	-	-		-	(752,321)		-		(752,321)
Balance – April 30, 2002	11,600,645	4,961,605		-	(6,540,807)		-		(1,579,202)
Shares issued for cash pursuant to a private placement	944,250	188,850		-	-		-		188,850
Shares issued to settle related party debt	22,698,667	680,960		-	-		-		680,960
Net income for the year	-	-		-	304,576		-		304,576
Unrealized gain on available-for-sale securities	-	-		-	-		4,800		4,800
Balance – April 30, 2003	35,243,562	5,831,415		-	(6,236,231)		4,800		(400,016)
Net income for the year	-	-		-	119,993		-		119,993
Unrealized gain on available-for-sale securities	-	-		-	-		27,019		27,019
Balance – April 30, 2004	35,243,562	5,831,415		-	(6,116,238)		31,819		(253,004)
Net loss for the year	-	-		-	(42,726)		-		(42,726)
Unrealized gain on available-for-sale securities	-	-		-	-		44,178		44,178
Balance – April 30, 2005	35,243,562	5,831,415		-	(6,158,964)		75,997		(251,552)
Obligation to issue shares	-	-		53,425	-		-		53,425
Net loss for the year	-	-		-	(59,428)		-		(59,428)
Unrealized gain on available-for-sale securities	-	-		-	-		140,700		140,700
Balance – April 30, 2006	35,243,562	5,831,415		53,425	(6,218,392)		216,697		(116,855)
Shares issued pursuant to oil revenue agreement	279,477	53,425		(53,425)	-		-		-
Shares issued for cash pursuant to a private placement	500,000	200,000		-	-		-		200,000
Obligation to issue shares	-	-		62,446	-		-		62,446
Stock-based compensation	-	48,710		-	-		-		48,710
Net loss for the year	-	-		-	(24,619)		-		(24,619)
Unrealized gain on available-for-sale securities	-	-		-	-		(18,332)		(18,332)
Reclassification adjustment on sale of available-for-sale
securities	-	-		-	-		(120,000)		(120,000)
Balance – April 30, 2007	36,023,039	$     6,133,550		$   62,446	$    (6,243,011)		$         78,365		$        31,350
Shares issued for cash pursuant to:
Private placement	58,000	21,903		-	-		-		21,903
Options exercised	137,500	27,500		-	-		-		27,500
Warrants exercised	40,000	16,000		-	-		-		16,000
Shares issued for services	149,500	74,075		-	-		-		74,075
Settlement of obligation to issue shares	-	107,500		-	-		-		107,500
Shares issued pursuant to exercise of option to purchase
investment in Power Telecom (Note 3)	22,000,000	4,280,473		-	-		-		4,280,473
Fair value of warrants issued for services	-	18,681		-	-		-		18,681
Common stock subscribed	-	-		4,000	-		-		4,000
Obligation to issue shares	-	-		80,892	-		-		80,892
Stock-based compensation	-	90,671		-	-		-		90,671
Net loss for the year	-	-		-	(945,351)		-		(945,351)
Unrealized gain on available-for-sale securities	-	-		-	-		(39,395)		(39,395)
Reclassification adjustment on sale of available-for-sale
securities	-	-		-	-		(2,320)		(2,320)
Balance – April 30, 2008	58,408,039	10,770,353		147,338	(7,188,362)		36,650		3,765,979
Reclassification adjustment for gains included in net loss	-	(121,763)		-	121,763		-		-
Settlement of obligation to issue shares	505,778	147,338		(147,338)	-		-		-
Shares issued for cash	100,000	20,000		-	-		-		20,000
Shares issued pursuant to option exercise	50,000	2,500		-	-		-		2,500
Shares issued pursuant to exercise of option to purchase
investment in Power Telecom (Note 3)	11,000,000	2,197,001		-	-		-		2,197,001
Stock-based compensation	-	135,630		-	-		-		135,630
Net loss for the year	-	-		-	(659,111)		-		(659,111)
Foreign company translation adjustment	-	-		-	-		(1,664)		(1,664)
Unrealized loss on available-for-sale securities	-	-		-	-		(100,824)		(100,824)
Balance – April 30, 2009	70,063,817	13,151,059		-	(7,725,710)		(65,838)		5,359,511
Shares issued pursuant to oil revenue agreement	224,745	33,107		-	-		-		33,107
Shares issued pursuant to option exercise	150,000	7,500		-	-		-		7,500
Option and warrant expense	-	73,992		-	-		-		73,992
Shares issued for cash	965,000	96,500		-	-		-		96,500
Net loss for the period	-	-		-	(7,365,187)		-		(7,365,187)
Unrealized gain on available-for-sale securities	-	-		-	-		67,823		67,823
Balance – April 30, 2010	71,403,562	13,362,158		-	(15,090,897)		1,985		(1,726,754)
Share subscription received	-	(96,500)		-	-		-		(96,500)
Shares issued for cash	1,459,500	145,950		-	-		-		145,950
Share issuance cost		(3,000)		-	-		-		(3,000)
Net loss for the period	-	-		-	(99,219)		-		(99,219)
Unrealized gain on available-for-sale securities	-	-		-			1,410		1,410
Balance – July 31, 2010	71,898,062	$    13,408,608		$         -	$   (15,190,116)		$           3,395		$  (1,778,113)

The accompanying notes are an integral part of these consolidated financial statements.

F-6

IAS Energy, Inc. and Subsidiary

(A Development Stage Company)

Notes to the Interim Consolidated Financial Statements

(Unaudited)

Note 1 - Nature of Business and Basis of Presentation

IAS Energy, Inc. was incorporated on December 13, 1994 pursuant to the Laws of the State of Oregon. The Company is a Development Stage Company. On May 24, 2007, the Company changed its name to IAS Energy, Inc.  The Company has minimal oil and gas revenues and is acquiring and developing a video-sharing website, as described in Note 3.

These consolidated financial statements include the accounts of the Company and its 60% owned subsidiary, Power Telecom Limited (“Power Telecom”), since the date the Company acquired control on September 3, 2008.

In a development stage company, management devotes most of its activities to establishing a new business, including raising capital to acquire interest in the website. Planned principle activities have not yet produced any revenues and the Company has suffered operating losses as is normal in development stage companies.

Basis of accounting and principles of consolidation

These unaudited interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and are expressed in U.S. dollars for interim financial information using the same accounting policies and methods of application as the audited consolidated financial statements of the Company for the year ended April 30, 2010.  These unaudited interim consolidated financial statements do not include all the information and note disclosures required by generally accepted accounting principles for annual financial statements of the Company and should be read in conjunction with the audited consolidated financial statements of the Company as at April 30, 2010. In the opinion of management, all adjustments considered necessary for fair presentation have been included in these financial statements.  Interim results are not necessarily indicative of the results expected for the fiscal year.

Note 2 - Going Concern

The Company incurred a net loss of $99,219 and $154,310 during the three months ended July 31, 2010 and 2009, respectively and at July 31, 2010 had an accumulated deficit of $15,190,116 since its inception. The Company also has working capital deficit of $1,778,625 at July 31, 2010. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements have been prepared on a going basis and do not include any adjustments that might result from the outcome of this uncertainty.

At July 31, 2010, the Company has suffered losses from development stage activities to date.  Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.  

Note 3 - Acquisition

On November 26, 2007, the Company entered into an Equity Share Purchase Agreement (the “Agreement”) with all of the stockholders of Power Telecom, a corporation organized under the laws of Hong Kong. Pursuant to the Agreement the Company, at its option, has the right to purchase all of the issued and outstanding shares of capital stock of Power Telecom.  The consideration to be paid under the Agreement consists of 55,000,000 Class A shares of common stock of the Company and the Company is required to make cash payments to Power Telecom totaling $650,000 towards the further development of Power Telecom’s business.  Power Telecom owns the rights to the Chinese website www.video1314.com, an information sharing website.  The Company paid a non-refundable deposit of $50,000 to Power Telecom upon execution of the Agreement and an additional $300,000 capital contribution. Pursuant to the Agreement, the Company received a series of irrevocable exclusi ve options to purchase up to 100% of the shares of Power Telecom in stages as described below:

F-7

(i)

To purchase an initial 20% interest in Power Telecom, the Company must issue 10,000,000 Class A common shares, pay $50,000 to Power Telecom and issue 1,000,000 Class A common shares as a finder’s fee. The Company exercised this option on November 26, 2007. The 11,000,000 common shares issued were recorded at a fair value of $1,880,032.

(ii)

To purchase an additional 20% interest in Power Telecom, the Company must issue an additional 10,000,000 Class A common shares, pay a further $100,000 to Power Telecom, and issue an additional 1,000,000 Class A common shares as a finder’s fee. The Company exercised this option on March 5, 2008. The 11,000,000 common shares issued were recorded at a fair value of $2,400,441.

(iii)

To purchase an additional 20% interest in Power Telecom, the Company must issue an additional 10,000,000 Class A common shares, pay a further $150,000 to Power Telecom, and issue an additional 1,000,000 Class A common shares as a finder’s fee. The Company exercised this option on September 3, 2008. The 11,000,000 common shares issued were recorded at a fair value of $2,197,001.

(iv)

To purchase an additional 20% interest in Power Telecom, the Company must issue an additional 10,000,000 Class A common shares, pay a further $150,000 to Power Telecom, and issue an additional 1,000,000 Class A common shares as a finder’s fee.

(v)

To purchase an additional 20% interest in Power Telecom, the Company must issue an additional 10,000,000 Class A common shares, pay a further $150,000 to Power Telecom, and issue an additional 1,000,000 Class A common shares as a finder’s fee.

In accordance with FASB ASC 805, acquisitions of a controlling interest are accounted for under the purchase method of accounting.  Under the purchase method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair values.  Goodwill is recorded to the extent the purchase price consideration, including certain acquisition and closing costs, exceeds the fair value of the net identifiable assets acquired at the date of the acquisition.

Effective September 3, 2008, the Company owned a 60% interest in Power Telecom by having issued 33,000,000 Class A shares of common stock of the Company and making an equity contribution of $350,000 to Power Telecom for working capital purposes.

Up until September 2, 2008, the Company’s 40% investment in Power Telecom was accounted for using the equity method with the Company’s share of losses being $76,535 since acquisition.  Upon purchasing the 60% interest, the acquisition was accounted for using the purchase method and the consolidated statements of operations and cash flows include the results of operations of Power Telecom from September 3, 2008 to April 30, 2009.  The losses applicable to the non-controlling interest of Power Telecom have been allocated only to the Company’s interest as the losses exceed the non-controlling interest in the common shares of Power Telecom.

The purchase price of the 60% interest of Power Telecom is detailed as follows:

Capital contribution in cash

$   350,000

Fair value of shares of IAS’s common stock:

First tranche of 11 million shares

1,880,032

Second Tranche of 11 million shares

2,400,441

Third tranche of 11 million shares

2,197,001

Loss in equity investment prior to September 3, 2008

     (76,537)

Total Purchase Price

$ 6,750,937

The acquisition has been accounted for in accordance with the provision of FASB ASC 805. The total purchase price was allocated to the net tangible assets based on the estimated fair values. The final allocation of the purchase price is as follows:

F-8

Assets purchased:
Cash and cash equivalents	$         13,960
Receivables, prepaids and other current assets	2,562
Goodwill	7,018,592
Total assets acquired	7,035,114
Liabilities assumed:
Accounts payable and accrued liabilities	(284,177)
Total liabilities assumed	(284,177)
Purchase price	$   6,750,937

Goodwill represents the excess of the purchase price over the estimated fair value of the assets acquired net of the fair value of liabilities assumed in an acquisition. FASB ASC 350 requires that intangible assets with indefinite lives, including goodwill, be evaluated on an annual basis for impairment or more frequently if an event occurs or circumstances change that could potentially result in impairment.  The goodwill was tested by performing the two-step impairment test. For the year ended April 30, 2009, no impairment was recorded. During the year ended April 30, 2010, impairment was recorded and the full amount of goodwill of $7,018,592 was written-off.  

The first tranche of 11,000,000 shares issued on November 26, 2007, used the five-day average trading price of $0.23, before the announcement was made 23 October 2007, in the calculation of the fair value.  

The second tranche of 11,000,000 shares issued on March 5, 2008, used the five-day average trading price of $0.28 in the calculation of the fair value.  

The third tranche of 11,000,000 shares issued on July 30, 2008, used the five-day average trading price of $0.25 in the calculation of the fair value.  

Since these shares have trading restrictions, the aggregate fair value was calculated using the above prices, over the estimated time (based on trading restrictions) to achieve free trading status, using a 10% discount factor.

Pro forma information

The following consolidated pro forma financial information presents the combined results of operations of the Company and Power Telecom for the year ended April 30, 2009 as if the acquisitions had occurred at May 1, 2008, including the issuance of the Company’s common shares as consideration for the acquisition of Power Telecom.  

	Consolidated Pro Forma
	Years Ended
	April 30,
	2009	2008
Revenues	$           38,346	$           26,300
Net loss	(748,576)	(1,261,652)
Basic and diluted loss per common share	$            (0.01)	$            (0.03)

The amounts of revenue and net loss of Power Telecom since the acquisition date included in the consolidated income statement for the year ended April 30, 2009 are $7,726 and $166,395, respectively.

The consolidated pro forma financial information does not include adjustments to remove certain private company expenses, which may not be incurred in future periods.  Similarly, the unaudited consolidated pro forma financial information does not include adjustments for additional expenses, such as rent, insurance, and other expenses that

F-9

would have been incurred subsequent to the acquisition date.   The unaudited consolidated pro forma financial information does not necessarily reflect the results of operations that would have occurred had the Company and Power Telecom been a single entity during these periods.

As part of the Option Agreement, the Company granted 1,000,000 stock options as stock based compensation to the subsidiary’s key employees to purchase 1,000,000 Class A common shares of the Company at a price of $0.33 per share for a period of five years. The 1,000,000 stock options were recorded at a fair value of $267,954. The options vest as to 12.5% upon grant date and an additional 12.5% every 90 days thereafter.

Change in control

Per the Option Agreement dated November 26, 2007 (Option Agreement) between the Company, Mr. Samuel Kam, a businessman and the shareholders of Biotonus Clinique Bon Port (Hong Kong) Limited, who collectively owns 100% of the issued and outstanding shares of Power Telecom, upon the exercise of the fourth option as described above, Mr. Samuel Kam and the shareholders of Biotonus Clinique Bon Port (Hong Kong) Limited will own the majority shares of common stock of the Company.

In addition, pursuant to the Option Agreement, upon the Company fully exercising the options described above, the Board of Directors of the Company shall consist of five persons, three to be nominated by Mr. Samuel Kam and the shareholders of Biotonus Clinique Bon Port (Hong Kong) Limited and two to be nominated by John Robertson, the current President of the Company. From the Option Agreement until the earlier of the date that the Company has fully exercised the options and December 31, 2013, Mr.  Samuel Kam and the shareholders of Biotonus Clinique Bon Port (Hong Kong) Limited covenant to vote their shares of the Company in favor of the composition of the Board of Directors of the Company as John Robertson, the current President of IAS, shall so direct in writing. Thus the control of the company will remain with Mr. John Robertson at least before December 31, 2013.

As at July 31, 2010 and the date of these financial statements the Company does not intend to exercise options to acquire further interest in Power Telecom.

Note 4 - Asset Retirement Obligation

The total future asset retirement obligation was estimated by management based on the Company’s net ownership interest in all wells and facilities, estimated costs to reclaim and abandon the wells and facilities, and the estimated timing of the costs to be incurred in future periods.  Although the Company’s wells are producing, the Company has estimated the total ARO to be $Nil As of July 31 and April 30, 2010, because the costs to be incurred in shutting down the wells are estimated to be minimal.

Note 5 - Related Party Transactions

Related party transactions were in the normal course of operations and are recorded at their exchange amounts. Amounts due to and from related parties are unsecured, non-interest bearing and due on demand. Related parties consist of companies that have common directors and/or officers with the Company and companies that are controlled by a significant shareholder of the Company.

As at July 31, 2010, the Company had an accounts receivable balance of $7,843 (April 30, 2010 - $1,630) which was due from related companies. The amount comprised of advances and/or expenses paid by the Company.  The amounts are non-interest bearing, unsecured and without specific terms of repayment.

As at July 31, 2010, the Company owed related companies $1,693,244 (April 30, 2010- $1,717,434) comprised of advances and/or expenses paid on behalf of the Company.  The amounts are non-interest bearing, unsecured and without specific terms of repayment.

During the three months ended July 31, 2010, the Company paid fees to a professional law firm in which a partner of the firm is an officer and director of the Company for legal fees of $nil (2010 - $188).

On April 7, 2008, the Company entered into an agreement with Teryl Resources Corp, a related company, to sell to

F-10

Teryl the remaining 40% working interest in the three gas wells located in Know and Laurel Counties, Kentucky.  In consideration, the Company received an initial payment of $25,000 and the balance will be determined after an independent valuation report prepared by a qualified petroleum geologist.  During the year ended April 30, 2009 both parties agreed to indefinitely suspend the agreement due to the characteristics of the well and the low production volumes.  As at July 31, 2010 and the date of these consolidated financial statements the sale was not completed. As such, the $25,000 paid to the Company during the year ended April 30, 2009 was recorded as due to Teryl.

During the three months ended July 31, 2010 the Company accrued $40,702 (HK$304,200) (2010 - $39,248; HK$304,200) management fees to the general manager of Power Telecom who is a shareholder owning more than 10% of the Company’s outstanding Class A common shares.

The Company shares office space with companies with related directors and officers.  The Company occupied this space rent-free during the three months ended July 31, 2010 and 2009.

Note 6 - Debentures

As at July 31 and April 30, 2010, the Company had two notes outstanding with an aggregate principal amount of $25,000. The notes are unsecured and bear interest at 8.75% per annum. The notes are in default as they originally matured on June 15, 2000. During the three months ended July 31, 2010 the Company accrued interest expense of $547 (2010 - $547) on the two notes.

Note 7 - Available-For-Sale-Securities

Theavailable-for-sale securities have been accounted for using the fair value method. The Company recorded gain of $798 (2010- $3,502) on sale of available for sale securities during the three months ended July 31, 2010. Cost and fair value of the securities are as follows:

Three Months Ended July 31, 2010			Three Months Ended July 31, 2009
Cost	Unrealized Gain	Fair Value	Cost	Unrealized Loss	Fair Value
$8,695	$3,394	$12,089	$118,439	$(11,387)	$107,052

Fair Value Measurements

The Company values its marketable securities held for sale under FASB ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

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Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The Company uses Level 1 to value its marketable securities available for sale.

The following table sets forth by level with the fair value hierarchy the Company’s financial assets and liabilities measured at fair value on July 31 and April 30, 2010:

July 31, 2010:	Level 1	Level 2	Level 3	Total
Assets
Marketable securities available for sale	$    12,089	$      -	$      -	$    12,089
Liabilities
None	$           -	$      -	$      -	$           -
April 30, 2010:	Level 1	Level 2	Level 3	Total
Assets
Marketable securities held for sale	$    15,102	$      -	$      -	$    15,102
Liabilities
None	$           -	$      -	$      -	$           -

Note 8 - Common Stock

On July 30, 2010 the Company issued an aggregate of 120,000 units pursuant to a private placement for total proceeds of $12,000.  Each unit consisted of one common share and one share purchase warrant to purchase one additional common share at a price of $0.15 per share, exercisable on or before July 29, 2011.  

On June 2, 2010 the Company issued 1,339,500 units pursuant to a private placement for total proceeds of $133,950.  Each unit consisted of one common share and one share purchase warrant to purchase one additional Common Share at a price of $0.15 per share, exercisable on or before June 1, 2011.  

On July 31, 2009, the Company issued 224,745 Class A common shares to a private company controlled by the President of the Company to fulfill its obligation per agreement. The fair value of the shares of $33,107 was recorded as a loss on the impairment of petroleum interest during the year ended April 30, 2010.

During the year ended April 30, 2010, the Company issued 150,000 Class A common shares at $0.05 per share upon the exercise of stock options for proceeds of $7,500.

During the year ended April 30, 2010, the Company sold 965,000 units under a private placement for cash proceeds of $96,500. Each unit consisted of one Class A common shares and one common stock warrant. The warrants are exercisable at $0.15 per share and have a term of one year.

Note 9 – Common Stock Options

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 Plan, the Company has granted stock options to certain directors and employees.

F-12

On October 22, 2007, the Company approved the 2007 Stock Option Plan to issue up to 2,000,000 Class A common shares to directors and employees and registered them on Form S-8 with the Securities and Exchange Commission.

On April 19, 2010, the Company granted 50,000 stock options from the 2007 Stock Option Plan to an employee exercisable at $0.20 per share, through April 19, 2015. The fair value of options was estimated to be $8,185 on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 2.54%, expected volatility of 187%, an expected option life of 5 years and no expected dividends.

On February 12, 2009, the Company granted 50,000 stock options from the 2007 Stock Option Plan to an employee exercisable at $0.20 per share, through February 12, 2014. The fair value of options was estimated to be $618 on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 1.28%, expected volatility of 185%, an expected option life of 2.5 years and no expected dividends.

These options granted on April 19, 2010 and February 12, 2009 vest as follows:

[i]

25% of the options vest upon granting of the option; such initial vest is referred to as the “First Vesting”;

[ii]

The second 25% of the options vest 90 days from the date of exercise of the First Vesting; such second vesting is referred to as the “Second Vesting”;

[iii]

The third 25% of the options vest 90 days from the date of exercise of the Second Vesting; such third vesting is referred to as the “Third Vesting”;

[iv]

The fourth and final 25% of the options vest 90 days from the date of the exercise of the Third Vesting; and

[v]

The options expire 60 months from the date of grant.

On April 1, 2009, the Company granted 200,000 common stock options from the 2007 Stock Option Plan to a consultant exercisable at $0.05 per share, up to April 1, 2010. The fair value of options was estimated to be $6,610 on the date of grant using the Black-Scholes option pricing model using the following weighted average assumptions: risk free interest rate of 0.41%, expected volatility of 224.44%, an expected option life of 0.5 years and no expected dividends.

These options vest as follows:

[i]

25% of the options vest upon granting of the option; such initial vest is referred to as the “First Vesting”;

[ii]

The second 25% of the options vest 30 days from the date of exercise of the First Vesting; such second vesting is referred to as the “Second Vesting”;

[iii]

The third 25% of the options vest 30 days from the date of exercise of the Second Vesting; such third vesting is referred to as the “Third Vesting”;

[iv]

The fourth and final 25% of the options vest 30 days from the date of the exercise of the Third Vesting; and

[v]

The options expire 12 months from the date of grant.

During the three months ended July 31, 2010 and 2009, the Company recorded stock-based compensation of $nil and $38,452, respectively. At July 31 and April 30, 2010 the Company had $207,544 unrecognized compensation cost related to non-vested stock options, which will be recognized over future periods.

A summary of the Company’s stock option activity for the three months ended July 31, 2010 and 2009 is as follows:

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	Three Months Ended July 31, 2010		Three Months Ended July 31, 2009
		Weighted		Weighted
		Average		Average
		Exercise		Exercise
	Options	Price	Options	Price
Outstanding at beginning of period	2,275,000	$    0.29	2,375,000	$    0.28
Exercised	-	-	(150,000)	0.05
Outstanding at end of period	2,275,000	$    0.29	2,225,000	$    0.29
Exercisable at end of period	1,250,000	$    0.32	862,500	$    0.32

The intrinsic value of “in the money” options at July 31 and April 30, 2010 was $nil.

At July 31, 2010, the range of exercise prices and the weighted average remaining contractual life of the outstanding options was $0.20 to $0.96 per share and 1.88 years, respectively.

At April 30, 2010, the range of exercise prices and the weighted average remaining contractual life of the outstanding options was $0.20 to $0.96 per share and 2.13 years, respectively.

Note 10 - Common Stock Warrants

During the three months ended July 31, 2010 the Company sold 494,500 common stock warrants as part of a private placement. The warrants are exercisable at $0.15 per share and have a term of one year.

During the years ended April 30, 2010 and 2009, the Company sold 965,000 and 110,000 common stock warrants as part of a private placement. The warrants are exercisable at prices ranging from $0.15 to $0.50 per share and have a term of one year.

A summary of the Company’s common stock warrant activity for the three months ended July 31, 2010 and 2009 is as follows:

	July 31, 2010		July 31, 2009
		Weighted		Weighted
		Average		Average
		Exercise		Exercise
	Warrants	Price	Warrants	Price
Outstanding at beginning of period	965,000	$    0.15	210,000	$    0.33
Issued	494,500	0.15	-	-
Exercised	-	-	-	-
Expired	-	0.33	(10,000)	0.50
Cancelled	-	-	-	-
Outstanding at end of period	1,459,500	$    0.15	200,000	$    0.45
Exercisable at end of period	1,459,500	$    0.15	200,000	$    0.45

The intrinsic value of “in the money” warrants at July 31 and April 30, 2010 was $nil.

At July 31, 2010, the range of exercise prices and the weighted average remaining contractual life of the outstanding warrants was $0.15 per share and 0.85 year, respectively.

At April 30, 2010, the range of exercise prices and the weighted average remaining contractual life of the outstanding warrants was $0.15 per share and 1.09 years, respectively.

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Note 11 - Oil and Gas Properties

(a)

The Company entered into an agreement on 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 Company agreed to issue up to 1,000,000 shares of restricted common stock at the rate of one share for every $0.10 of revenue from the wells. The Company issued 775,255 of the shares due during the year ended April 30, 2009 and issued the remaining 224,745 shares on July 31, 2009 to complete the transaction.

The Company’s portion of revenue earned from these wells during the three months ended July 31, 2010 and 2009 totaled $11,803 and $nil, respectively.

The wells are producing but a value cannot be placed on them due to the characteristics of the well and the low production volumes. As a result, all costs are impaired immediately. Total impairment recorded on the above wells was $nil and $nil and $33,108 for the three months ended July 31, 2010 and 2009, respectively.

(b)

On 4 May 2006, the Company entered into an agreement with Energy Source Inc. (“ESI”) to drill up to 24 gas wells located in Kentucky. The Company can earn a 100% working interest (60% net revenue interest) in four gas wells by paying $185,000 per well and has the option to acquire a 100% working interest (60% net revenue interest) in an additional 20 wells over an 18-month period at a price to be agreed upon. Each well is subject to a 12.5% net revenue interest to the landowner and a 27.5% interest to ESI.   On 18 May 2006, the Company entered into an agreement with Teryl, a public company related by common directors and officers, to farm-out a 40% working interest, outlined above, subject to a 12.5% net revenue interest to the landowner and a 27.5% interest to ESI, in consideration for paying 50% of the total costs of the wells.  The Company received $277,500 from Teryl during the year ended April 30, 2007, rep resenting 50% of the cost of drilling the first, second and third wells.  On 28 September 2006, the Company assigned a 20% working interest (12% net revenue interest) in the third well drilled as part of a financing agreement.

The Company’s portion of revenue earned from these wells during the three months ended July 31, 2010 and 2009 totaled $nil.

Due to the nature of these wells and the low production volumes, the Company is unable to estimate proved reserves. As a result all costs are impaired immediately.

Note 12 - Commitments

On September 9, 2009, the Company’s 60% owned subsidiary, Power Telecom, who is the owner of website “Video 1314”, entered into an advertising agreement with Panpacific Business Ltd. The agreement states that Panpacific Business Ltd. will be the exclusive advertiser for the Video 1314 website for a period of 2 years. Power Telecom will offer 40% of its advertising revenue to Panpacific Business Ltd.

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Item 2.

Management's Discussion and Analysis of Financial Condition and

Results of Operations

Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q constitute "forward-looking statements."  These statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy.  These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements.  Such risks and uncertainties include those set forth in our 10-K for the fiscal year ended April 30, 2010.  We do not intend to update the forward-looking information to reflect actual results or changes in the factor s affecting such forward-looking information. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.

All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

Business Overview

We are a development stage company incorporated in the state of Oregon in 1994.  Our principal business operations are conducted in British Columbia and in China.  Our principal business operations include the acquisition and exploration of oil and gas interests in North America and continued development of the Video1314 website.

We currently own a 60% interest in Power Telecom Limited (“PTL”) and have an option to purchase the remaining 40% interest.  PTL owns a 100% beneficial interest in www.video1314.com (“Video1314”) a Chinese Web 2.0 platform similar to YouTube (www.youtube.com).  

Video1314 is a fast growing Chinese Web 2.0 platform, similar towww.youtube.com, that allows users to share videos, music, and audio as well as sell goods and services using videos in its marketplace. Since its launch, Video1314 has attracted millions of users and is fast becoming one of Asia’s top Web2.0 destinations. Video1314 currently serves the Greater China region, which includes mainland China, Hong Kong, Macau and Taiwan. The features of the site are focused on free online photo, video and audio sharing; a marketplace to buy and sell goods using video, photo and audio technologies; and online educational gaming.  

The website traffic for Video1314.com has increased from 4,000,000 hits per month in November to 69,388,229 hits in July 2010.  

Our plan of operation for the twelve months following the date of this report is to continue to develop the Video1314 website business.  We anticipate spending approximately $300,000 for general and administrative expenses, including fees we will incur in complying with reporting obligations.  

As of July 31, 2010, we had a working capital deficit of $1,778,625, compared to a working capital deficit of $1,727,339 as at April 30, 2010.  Further losses are expected until we are able to generate sufficient revenues from our 60% interest in Video1314 to cover our expenses.  

Results of Operations for Three Months Ending July 31, 2010 (“2011”) Compared to the Three Months Ended July 31, 2009 (“2010”)

We had a net loss of $99,219 during the three months ended July 31, 2010, compared to a net loss of $154,310 during the three months ended July 31, 2009.

Office and administrative expenses decreased by $3,203 from $95,442 2010 to $92,239 in 2011. The changes are largely due to the decrease in stock based compensation and a smaller increase in consulting fees. In 2010 we had

3

stock based compensation expense of $38,452 for stock options granted and vested during the period; in the same period of fiscal 2011 we did not have stock options granted or vested. In the first three months of 2010 we incurred consulting fees of $12,784; in the first three months of 2011 we had consulting fees increased to $25,569 due to the $12,500 consulting fees paid to Tritos Inc. for shareholder information advice and public relations services, which was absent in 2010.

Professional fees decreased by $23,779 from $26,923 in 2010 to $3,144 in 2011 because in the three months ended July 31, 2010 we streamlined our financial reporting process, and did not engage audit or review services by our auditors, while accounting and auditor review fees were significant in the three months ended July 31, 2009 due to audit and accounting services on completing the acquisition of 60% interest in Power Telecom.

Transfer agent and regulatory fees decreased by $4,468 from $1,792 in 2010 to $6,259 in 2011 as a result of increased share transactions in the current period.

The impairment loss on petroleum interests decreased by $33,108 from $33,108 in 2010 to zero in 2011, due to lack of capital expenditures in the current period on our working interest in its two wells located on the petroleum property in Burleson Country, Texas.

Related party transactions and balances

Related party transactions were in the normal course of operations and are recorded at their exchange amounts. Amounts due to and from related parties are unsecured, non-interest bearing and due on demand. Related parties consist of companies that have common directors and/or officers with the Company and companies that are controlled by a significant shareholder of the Company.

As at July 31, 2010, the Company had an accounts receivable balance of $7,843 (April 30, 2010 - $1,630) which was due from related companies. The amount comprised of advances and/or expenses paid by the Company.  The amounts are non-interest bearing, unsecured and without specific terms of repayment.

As at July 31, 2010, the Company owed related companies $1,693,244 (April 30, 2010- $1,717,434) comprised of advances and/or expenses paid on behalf of the Company.  The amounts are non-interest bearing, unsecured and without specific terms of repayment.

During the three months ended July 31, 2010, the Company paid fees to a professional law firm in which a partner of the firm is an officer and director of the Company for legal fees of $nil (2010 - $188).

On April 7, 2008, the Company entered into an agreement with Teryl Resources Corp, a related company, to sell to Teryl the remaining 40% working interest in the three gas wells located in Know and Laurel Counties, Kentucky.  In consideration, the Company received an initial payment of $25,000 and the balance will be determined after an independent valuation report prepared by a qualified petroleum geologist.  During the year ended April 30, 2009 both parties agreed to indefinitely suspend the agreement due to the characteristics of the well and the low production volumes.  As at July 31, 2010 and the date of these consolidated financial statements the sale was not completed. As such, the $25,000 paid to the Company during the year ended April 30, 2009 was recorded as due to Teryl.

During the three months ended July 31, 2010 the Company accrued $40,702 (HK$304,200) (2010 - $39,248; HK$304,200) management fees to the general manager of Power Telecom who is a shareholder owning more than 10% of the Company’s outstanding Class A common shares.

The Company shares office space with companies with related directors and officers.  The Company occupied this space rent-free during the three months ended July 31, 2010 and 2009.

Liquidity and Capital Resources

In the past, we have derived most of our development and operating capital primarily from the issuance of capital stock and advances from related parties.  We have also received minimal revenue from our oil and gas wells.  

4

Although we intend to continue utilizing these sources, there is no assurance that these sources and methods would continue to be available in the future.

We repaid $24,290 during the three months ended July 31, 2010 to our affiliated companies with common officers and directors.  The total amount owing to related parties is $1,693,244 or 93.71% of total current liabilities as at July 31, 2010. The balances owing to related parties are non-interest bearing, unsecured and repayable on demand.  Our affiliated companies have indicated that they will not be demanding repayment of these funds during the next fiscal year and will advance, or pay expenses on our behalf if further funds are needed.

As of July 31, 2010, our cash position was $2,564, compared to $72,322 as of April 30, 2010, and we had a working capital deficit of $1,778,625 at July 31, 2010.  We anticipate that our estimated cash requirements for operational expenses for the fiscal year ending April 30, 2011 will be approximately $300,000.

In the event that no other sources of capital were available to us in the future, on a reasonable financial basis, we would face the same obstacles as many small, undercapitalized companies do, and, in the worst case, we could be forced to reorganize or liquidate, either of which consequence would likely have an adverse financial effect upon our shareholders.

During the three months ended July 31, 2010 we financed our cash used in operations of $97,239 (three months ended July 31, 2009 – cash used in operations $38,828) as follows:

(a)

Proceeds from issuance of common shares $43,450 (2009 - $7,500) from the issuance of Common Shares pursuant to an exercise of stock options; and

(b)

We received $3,551 from the sale of available for sale securities (2009 - $nil).  

In addition, in the current period we repaid our related companies $24,190; while in the same period last year we advanced $19,167 from our related parties.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our stockholders.

Critical Accounting Policies

Please see our audited consolidated financial statements for the year ended April 30, 2010 for certain accounting policies that are most important to the portrayal of our current financial condition and results of operations.

Contractual Obligations

We do not currently have any contractual obligations requiring any payment obligation from us.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of theSecurities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4.

Controls and Procedures

Disclosure Controls

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by

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us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of July 31, 2010. Based on the evaluation of these disclosure controls and procedures, and in light of the material weaknesses found in our internal controls over financial reporting, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

Changes in Internal Control

We have not been able to implement any of the recommended changes to our internal control over financial reporting included in our Annual Report on Form 10-K for the year ended April 30, 2010.

During the three months ended July 31, 2010, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II- OTHER INFORMATION

Item 1.

Legal Proceedings

We are not a party to any pending legal proceeding.  Management is not aware of any threatened litigation, claims or assessments.

Item 1A.

Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.

Defaults Upon Senior Securities

None.

Item 4.

(Removed and Reserved)

Item 5.

Other Information

None.

Item 6.

Exhibits and Report on Form 8-K

(a)

Exhibit(s)

31.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002

31.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002

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32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002

(b)

Reports on Form 8-K

None.

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SIGNATURES

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

October 7, 2010

IAS ENERGY, INC.

/s/John G. Robertson

John G. Robertson,

Chief Executive Officer