<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                        _______________________________

                                  FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           THE SECURITIES ACT OF 1934

                    For the Fiscal Year Ended April 30, 1998

                          COMMISSION FILE NO. 0-21255

                            IAS COMMUNICATIONS, INC.
          (Name of small business issuer as specified in its charter)

           OREGON                                         91-1063549
 (State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                     Identification Number)

                          185 - 10751 SHELLBRIDGE WAY
                   RICHMOND, BRITISH COLUMBIA V6X 2W8, CANADA
 (Address, including postal code, of registrant's principal executive offices)

                                 (604) 278-5996
                     (Telephone number including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act: NONE

Securities registered pursuant to Section 12(g) of the Exchange Act: CLASS A
COMMON STOCK

     Indicate by check mark 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,
and (2) has been subject to such filing requirements for the past 90 days.
Yes   X
      -

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.

     The registrant's revenues for its most recent fiscal year were:  nil.

     The Aggregate market value of the voting stock held by non-affiliates of
the registrant on June 30, 1998, computed by reference to the price at which the
stock was sold on that date: $10,134,450.

     The number of shares outstanding of the registrant's Class A voting Common
Stock, no par value, as of June 30, 1998 was 9,486,350.

     Documents incorporated by reference:  None.
_______________________________________________________________________________
<PAGE>
 
                            IAS COMMUNICATIONS, INC.

                                  FORM 10-KSB

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
 
PART I                                                                                          Page
                                                                                                ----
<S>                                                                                             <C>
Item 1.   Description of Business............................................................      3

Item 2.   Property...........................................................................      7

Item 3.   Legal Proceedings..................................................................      7

Item 4.   Submission of Matters to a Vote of Security Holders................................      7
 
PART II
 
Item 5.   Market for Common Equity and Related Stockholder Matters...........................      8
 
Item 6.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations..............................................................      9
 
Item 7.   Financial Statements...............................................................     10
 
Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure...........................................................     26
                                                                                                  
PART III                                                                                          
                                                                                                  
Item 9.   Directors, Executive Officers, Promoters and Control Persons; Compliance with           
          Section 16(a) of the Exchange Act..................................................     27
                                                                                                  
Item 10.  Executive Compensation.............................................................     29
                                                                                                  
Item 11.  Security Ownership of Certain Beneficial Owners and Management.....................     31
                                                                                                  
Item 12.  Certain Relationships and Related Transaction......................................     32
                                                                                                  
Item 13.  Exhibits and Reports on Form 8-K...................................................     33
</TABLE>

                                       2
<PAGE>
 
                                     PART I

ITEM 1.        DESCRIPTION OF BUSINESS
-------        -----------------------

(a)  BUSINESS DEVELOPMENT

IAS Communications, Inc. (the "Company") is a development stage company
incorporated in the state of Oregon in 1994. Its principal business operations
are conducted in West Virginia and Illinois. The Company is engaged in the
commercialization of advanced antenna technology known as the Contrawound
Torroidal Helical Antenna, (the "CTHA"), for wireless communications markets
including cellular, meter reading and global positioning services. The CTHA,
developed in conjunction with researchers at West Virginia University, is a
technologically advanced antenna design which can be incorporated into a wide
variety of telecommunications applications. The Company has been granted world-
wide sublicensing rights for commercial applications, excluding military and
governmental applications, for the antenna. Emergent Technologies Corporation
("ETC") has the sublicense for military and governmental applications for the
CTHA technology.

Dr. James E. Smith, the Chairman of the Board of Directors of the Company ("Dr.
Smith"), is a tenured professor at West Virginia University ("WVU") and has
directed the research and development of CTHA utilizing WVU's facilities and
funding.  Under Dr. Smith's employment agreement with WVU, the patentable ideas
for the CTHA were assigned to West Virginia University Research Corporation
("WVURC") and became its property on April 12, 1994. An exclusive worldwide
license was granted by WVURC to Integral Concepts, Inc. ("ICI"), a corporation
owned and controlled by Dr. Smith, to: (1) manufacture the CTHA and, (2)
sublicense others to manufacture, market, sell copies of, license and distribute
the CTHA  (the "ICI License").

ICI entered into an option agreement with SMR Investment Ltd., ("SMR") a
corporation owned by Sue Robertson, the wife of John Robertson, the Company's
President, Chief Executive Officer and a member of the Board of Directors
("Robertson"), dated November 18, 1994, and amended December 16, 1994 (the
"Option Agreement").  The Option Agreement provided that ICI would issue a
sublicense to SMR for the CTHA subject to the payment of $250,000; a 3% royalty
from gross sales; and shares in a subsequent public entity.  The Company was
organized by SMR and Robertson as a result.  ICI retained all military and
governmental applications and resulting procurement interests.  The contract
period relating to the three percent royalty to be paid to ICI commences when
sales are made by the Company and continues during the life of the Option
Agreement.  The term of the Option  Agreement is perpetual as is the ICI
License.

On December 13, 1994, SMR assigned the rights to the Option Agreement to the
Company in consideration for $50,000 advanced by Access Information Services,
Inc. (the "Option Assignment").  Access Information Services, Inc. is a
corporation owned and controlled by Robertson.

On December 14, 1994, the Company issued 3,000,000 shares to Dr. Smith and
3,000,000 shares to Access Information Services Ltd. pursuant to the Option
Assignment.  The value assigned to the 3,000,000 shares issued to Dr. Smith was
a total of $0.50 and the value assigned to the 3,000,000 shares issued to Access
Information Systems, Inc. was $0.50.  These valuations of the 3,000,000 shares
issued to Dr. Smith and Access Information Systems, Inc. were arbitrarily
determined by the Company's Board of Directors.  The $250,000 paid to ICI was a
one-time payment.

On July 10, 1995, ICI granted an exclusive worldwide sublicense to the Company
to: (1) manufacture, sell copies of, sublicense and distribute the process and
equipment related to the design, construction and operation of the CTHA; and,
(2) to sublicense others to manufacture, sell copies of, license and distribute
the same, excluding all military and governmental applications and resulting
procurement interests (the "Sublicense").  The Sublicense was the culmination of
the agreements between ICI and SMR, and SMR and the Company.  On December 27,
1995, SMR assigned all of its rights and duties in the CTHA technology to the
Company pursuant to the Option Assignment.  The term of the Sublicense, subject
to compliance of the terms thereof, is perpetual and requires the payment of a
minimum annual royalty of $3,000.  Further, the Company will pay a royalty of
l0% of the net revenues derived from sales, leases or sublicenses of the CTHA
technology less a credit for the minimum royalty.  In addition, the 

                                       3
<PAGE>
 
Company shall pay a royalty of 3% of the gross revenues derived from the sales,
leases or sublicenses of the CTHA technology.

The Sublicense was amended effective March 4, 1997, to (i) reduce the amount of
the royalty payable by the Company by 50% over the next 3 years, (ii) clarify
that the Company's rights pertain to commercial applications, excluding military
and governmental applications, and (iii) enlarge the definition of Technology to
include all future enhancements to the CTHA technology developed by ICI, ETC, or
the Company.

The Company entered into a joint venture agreement with ETC on March 4, 1997, to
fund and develop a research and development laboratory through a new
corporation, The Eclipse Antenna Manufacturing Corporation, a West Virginia
corporation, ("TEAM").  The purpose of the joint venture is to cooperate in the
research and development of certain applications for the CTHA.  The Company and
ETC  each own 50% of the issued and outstanding common shares of TEAM.  Pursuant
to a voting agreement the Company can vote 100% of the shares of TEAM.  The
Company and ETC granted to TEAM certain rights to sell and manufacture the
antennas.  All sales of antennas by TEAM will be for the credit of either the
Company or ETC, according to the end-user.  However, the Company and ETC
retained the rights to sublicense certain rights, including development and
manufacturing rights to relating to the Technology.  The Company and ETC intend
to focus on research and development of the CTHA and arrange for other
manufacturers to fill initial orders.

Circuit Systems, Inc. ("Circuit Systems") has agreed to consult with the Company
on manufacturing  matters and to manufacture all orders for the Company. Circuit
Systems is located in Elk Grove Village, Illinois and is an underwriters
laboratory recognized manufacturer of single-sided, double-sided and multi-layer
printed circuit boards.  Circuit Systems is reputed for producing high volume
quality printed circuit boards and special orders with short lead times.

(b)  BUSINESS OF THE COMPANY

THE PRODUCT

The CTHA is a low profile, lightweight, resonant antenna the size of a postage
stamp that is shaped like a donut and is 1/60 the size of a standard monopole
antenna. It has a toroidal (donut-shaped) geometry about which has been wrapped
helical windings (coils). The windings occur in pairs which are wrapped with
opposite pitch to each other (i.e. left handed windings versus right handed
windings) and are referred to as contra-windings.  The small size of the CTHA
results from both the effect of taking long wires and wrapping them onto a small
geometry and the winding interactions which serve to slow the propagation of the
electrical current within the antenna thus behaving as a larger, lower frequency
antenna.

It can be placed on the ground, the deck of a boat, or embedded into a variety
of items like a cellular phone, pager, or meter reading devices.  It can be mass
produced inexpensively for numerous wireless applications giving it an
impressive advantage over conventional monopole and dipole antennas.

The whole unit is ground plane independent.  Traditional antennas are dependent
on the conductive plane found at the surface of the earth to achieve geographic
coverage.  For that reason the higher above the surrounding terrain that an
antenna is installed, the greater its range of coverage.  The CTHA appears from
anecdotal data and observed practical experiments to achieve its range of
coverage without reference to or being dependent on the conductive ground plane.
The result of "ground plane independence" it that the CTHA does not need to be
mounted on a tall tower or at the top of a mountain.  The CTHA' s coverage
apparently can be achieved with a ground level installation.  The elimination of
such towers is a major cost advantage and reduces interference in the visual
environment as well as in the physical environment.  Signals are fed to the
antenna through up to four networks which attach to the structure at evenly-
spaced locations.  Resulting electromagnetic fields act as if they are solely
produced by a ring of pure magnetic currents; in other words, the contributions
due to electric currents are canceled.  This planar ring of magnetic current is
electromagnetically equivalent to a linear electric current.

Compared to traditional dipole and monopole antennas, the CTHA is much shorter
in height, yet its toroidal magnetic field is equivalent to the linear electric
field produced by other taller antennas.  This makes CTHAs particularly
excellent candidates for low frequency broadcast transmission that otherwise
require prohibitively tall monopole 

                                       4
<PAGE>
 
structures above the earth ground plane. For higher frequency applications, for
example, the Company believes that the CTHA could replace a car antenna with a
structure that could be made part of the rear view mirror or similarly sized
object. Resonant operations of the CTHA provides improved efficiency.

The Company believes that the CTHA has outperformed monopole antennas by over
300% in distances achieved in some cases.  The basis for this statement is the
United States Department of Defense as reported by Jack Parsons of ETC.  While
the Company's license for the CTHA does not include military applications, the
Company believes that the results from the Department of Defense testing will
support the non-military application and use of the CTHA.  In addition, the CTHA
is half the diameter of the ground plane structure necessary for quarterwave
monopole antennas.  According to Mr. Parsons, the United States Department of
Defense tested the CTHA at distances of over 37 miles, which is much farther
than the typical 10 mile distances for monopole antennas over a period of
several weeks.

ADVANTAGES/DISADVANTAGES

The principle advantages of this antenna are:  (1) low physical profile; (2)
resonant operation providing improved efficiency; and, (3) low susceptibility to
electrostatic disturbances.  The CTHA is well suited to long distance
communication applications which require vertical polarization for improved
efficiency.  The low physical profile is conducive to flush mounted applications
for reducing aerodynamic drag on vehicles.  For low frequency fixed
applications, the significantly shorter structures can be made lighter, more
economical,  more aesthetic, and less hazardous to aircraft than the tall
antenna structures that are presently used.  The CTHA can be constructed on
rectangular or polygonal frames which can be folded and stored for portable
applications.

APPLICATIONS

There are many applications which can exploit the advantages of the CTHA.  The
small size and especially low profile make it well suited to both commercial and
military applications that would benefit from an inconspicuous antenna package.
These would include both land, air and sea vehicles.  The low profile and
magnetic principle of operation enable the antenna to be concealed in the
fuselage of the body of an airplane, car, truck, train or boat so as to reduce
drag.  The CTHA can also be applied in commercial applications, including AM, FM
and TV broadcasting and reception, and cellular phone communications.

Vice President for Research for the Company, Larry Hawkes, demonstrated the ham
radio version of the CTHA at the Dayton, Ohio Hamvention on May 15-17, 1998.
This convention is the largest hamfest in the world, with 60-90 thousand
attendees annually.  The CTHA display generated much interest and was well
attended by the visitors.  In the demo, a 3-foot diameter CTHA was placed on the
hood of a GMC Suburban, where it was able to send and receive signals.  When the
CTHA was placed under the truck, it still worked, which impressed audiences and
drew inquiries from CEOs and presidents of antenna and electronic companies.
The demo CTHAs were tuned to 7.2 MHz and 14.213 MHz, thereby replacing dipoles
65- and 33-feet long, respectively.  Audience members participated in all of the
tests and were also shown high frequency circuit board versions of the CTHA.
This demonstration successfully introduced the CTHA to users in the ham
frequency range.

LICENSING

The Company intends to license the technology to manufacture the CTHAs to third
parties.  The licenses will be limited to specific applications on an exclusive
or nonexclusive basis, depending upon the terms of the license.

SALES AND MARKETING

The Company intends to market the CTHA through licensing with third party users
and in some cases the manufacture and sale of the antenna using third party
manufacturers.

COMPETITION

The market for antennas is highly competitive.  There are numerous manufacturers
of antennas in the United States with substantially greater financial,
technical, marketing and other resources than the Company.  To the Company's

                                       5
<PAGE>
 
knowledge, no competitors are currently manufacturing any product which is
substantial similar to the CTHA and patent research does not reveal any
competing technology.  The Company has not determined if it will compete with
satellite dishes.

RAW MATERIALS

All materials necessary to make the antenna are readily available in the
marketplace from a variety of suppliers.

DEPENDENCE ON MAJOR CUSTOMERS

Since the Company is just beginning to receive orders, it will be dependent on a
few major customers for the near future.  On February 27, 1997, the Company
announced an initial order to buy antennas.  The Company and ETC announced on
April 21, 1997, that TEAM had received an order to include its antenna in a
wrist watch.  On June 12, 1997, the Company and ETC announced that TEAM had
received its first order from a company in the automatic meter reading industry.

On June 11, 1998, the Company signed a license agreement for the CTHA antenna
with ARINC, Incorporated, an ORBCOMM value added reseller.  ARINC provides
communications and systems integration engineering to business and industry.
ARINC's Dominium product line uses the ORBCOMM low earth orbit (LEO) satellite
communication system which provides global communications coverage especially
useful in remote areas that are not serviced by conventional or cellular
telephone or other terrestrial communications networks.  The Dominium tracker
unit is battery powered and equipped with the Global Positioning System.  It can
be programmed to automatically report its position and other information like
temperature, engine speed or load capacity at any desired time interval or upon
reaching a user-determined alarm value.  Dominium also markets a data messaging
line of products which integrates input/output devices for sending and receiving
text messages.  A subscriber installs the tracker unit on the asset to be
tracked or monitored for a variety of applications including truck tractors,
detached truck trailers, rail cars, ships and containers.  Dominium currently
provides service to national and regional trucking companies and to national
railroads.  Container shipping companies are currently evaluating the product
for delivery in 1999.

PATENTS

WVURC received a patent for the CTHA in August 1995. Dr. Smith is a tenured
professor at WVU and conducts his research and development regarding the CTHA at
WVU's facilities.  As a result,  WVURC owns the patent rights to the CTHA which
it licensed to ICI.  The ICI License provides that ICI can grant sublicenses of
the technology covered by the patent to third parties.  On July 10, 1995, ICI
issued the Sublicense to the Company which was amended in March 1997.

On July 29, 1997, the Company announced that the second US patent had been
granted on the CTHA.  This patent broadened the protection it already had for
the CTHA by encompassing several different geometry's not specifically covered
by the first patent.

NEED FOR GOVERNMENT APPROVAL

No government approval is necessary for the antenna other than meeting certain
frequency guidelines.

EFFECT OF EXISTING OR PROPOSED GOVERNMENTAL REGULATIONS

The antenna must meet existing governmental guidelines for antennas.  The
Company believes that the antenna meets all governmental requirements.

RESEARCH AND DEVELOPMENT

The Company has spent $1,670,284 on research and development over the past two
years.  Research and development is being jointly funded with ETC through TEAM.
Additional research and development of both a scientific 

                                       6
<PAGE>
 
and practical nature is required to complete the commercialization of the CTHA.
The cost of some future research and development will be borne by customers for
specific applications.

EMPLOYEES

In addition to its Officers, the Company currently employs three part-time
employees.  The Company anticipates adding employees as needed in the future.

ITEM 2.        PROPERTY
-------        --------

The Company's executive offices are located at #185-10751 Shellbridge Way,
Richmond, British Columbia V6X2W8, and the telephone number is (604)278-5996.
The Company leases, on a month-to-month basis, approximately 200 square feet of
space at the aforementioned office from John Robertson.  The monthly rent is
$500.00.  The Company shares space with TEAM in Morgantown, West Virginia.

ITEM 3.        LEGAL PROCEEDINGS
-------        -----------------

To the best knowledge of the Officers and Directors of the Company, neither the
Company nor any of its Officers and Directors are parties to any legal
proceeding or litigation other than as described below.  Further, the Officers
and Directors know of no threatened or contemplated legal proceedings or
litigation other than as described below.  None of the Officers and Directors
have been convicted of a felony or none have been convicted of any criminal
offense, felony and misdemeanor relating to securities or performance in
corporate office.  To the best of the knowledge of the Officers and Directors,
no investigations of felonies, misfeasance in office or securities
investigations are either pending or threatened at the present time.

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 seeks
money damages and equitable relief against the Company alleging patent
infringement by the Company for the CTHA.  The Company has notified WVU of this
claim and will assist WVU in the defense.  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.  Based upon the information available to the
Company at this time, the Company believes that the Plaintiff's alleged claim of
infringement is without legal or factual basis.

The Plaintiff in the Oregon Litigation is also a defendant in a pending civil
action in the U.S. District Court for the Northern District of West Virginia
brought by WVU (the "West Virginia Litigation") claiming that the CTHA invention
is owned by the WVU. As alleged in the West Virginia  Litigation, the Company
believes that the patent rights for the CTHA technology belongs to WVU and
therefore, based on the ICI License and the Sublicense, the Company owns the
world wide rights to the CTHA commercial applications.  The Company intends to
vigorously defend the Oregon Litigation.

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-------        ---------------------------------------------------

No matters were submitted to a vote by the Company's security holders during the
fourth quarter of its fiscal year ended April 30, 1998.

                                       7
<PAGE>
 
                                    PART II

ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-------        --------------------------------------------------------

The Common Stock of the Company trades on the OTC Bulletin Board under the
symbol "IASCA" where it has traded since April 16, 1996.  The Company's Common
Stock has traded at between $1.75 and $4.62 per share since April 16, 1996.

     The following table sets forth the high and low prices for the Company's
Common Stock, as provided by OTC and reported on the Bulletin Board for the
quarters presented.  These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions, and may not reflect actual
transactions.

                                          Bid Price          Asked Price
                                       High       Low      High       Low 
                                       -----     -----     -----     -----
Quarter ended July 31, 1996            $2.38     $1.38     $2.75     $1.62
Quarter ended October 31, 1996         $4.37     $1.87     $4.62     $2.12
Quarter ended January 31, 1997         $3.00     $1.94     $3.25     $2.06
Quarter ended April 30, 1997           $3.06     $2.00     $3.12     $2.25
Quarter ended July  31, 1997           $2.43     $1.56     $2.75     $1.75
Quarter ended October 31, 1997         $3.75     $1.68     $4.00     $1.87
Quarter ended January 31, 1998         $3.00     $2.06     $3.18     $2.37
Quarter ended April 30, 1998           $2.71     $1.93     $2.81     $2.06 


As of June 30, 1998, there were 9,486,350 shares of Common Stock outstanding,
held by 156 shareholders of record.

DIVIDEND POLICY

To date the Company has not paid any dividends on its Common Stock and does not
expect to declare or pay any dividends on such Common Stock in the foreseeable
future. Payment of any dividends will be dependent upon future earnings, if any,
the financial condition of the Company, and other factors as deemed relevant by
the Company's Board of Directors.

UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR.

     In July 1997, the Company sold, in a private placement, 99,000 shares of
Class A Common Stock at a price of $2.25 per share to 15 accredited investors.
These transactions were exempt from registration under the Act by reason of
Section 4(2) thereof and Rule 505 of Regulation D. Each certificate representing
shares issued to the investors in this private placement bears a legend
restricting transfer.

     In December 1997, the Company sold, in a private placement, $30,000 in
aggregate principal amount of its 8 3/4% of Convertible Debentures due June 15,
1998. Each Debenture is convertible into Common Stock of the Company at any time
at or prior to maturity at a conversion price of $2.50 per share up to June 15,
1998; at $3.00 from June 16, 1998 to June 15. 1999, and at $3.50 from June 16,
1999 to June 15, 2000. In the event the shares of Common Stock are trading below
$4.00 per share any consecutive ten trading day period during the period May 15,
2000 to June 15, 2000, the conversion price on June 15, 2000 shall be 80% of the
average closing bid price of Common Stock over said ten day trading period. to 4
accredited investors. These transactions were exempt from registration under the
Act by reason of Section 4(2) thereof and Rule 506 of Regulation D. Each
certificate representing debentures issued to the investors in this private
placement bears a legend restricting transfer.

                                       8
<PAGE>
 
     In December 1997, the Company sold, in a private placement, 226,600 Units
at a price of $1.75 per Units to 21 accredited investors. Each Unit consists of
one share of Common Stock and one Warrant allowing the holder to purchase an
additional share of Common Stock at $1.75 during the first year following the
issue date, and $2.25 per share during the second year following the issue date.
The purchasers of these Units were, in the opinion of management, fully informed
with respect to the financial position, business and prospects of the Company.
These transactions were exempt from registration under the Act by reason of
Section 4(2) thereof and Rule 506 of Regulation D. Each certificate representing
securities issued to the investors in this private placement bears a legend
restricting transfer.

ITEM 6.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
-------        ---------------------------------------------------------------
               PLAN OF OPERATIONS
               ------------------

MANAGEMENT'S DISCUSSION

The Company is a development stage company engaged in the commercialization of
advanced antenna technology known as the Contrawound Torroidal Helical Antenna,
("CTHA"), for wireless communications markets including cellular, meter reading
and global positioning services. The CTHA, developed in conjunction with
researchers at West Virginia University, is a technologically advanced antenna
design which can be incorporated into a wide variety of telecommunications
applications. The Company has been granted world-wide sublicensing rights for
commercial applications, excluding military and governmental applications, for
the antenna.

By News Release dated July 15, 1998, the Company announced that an agreement was
completed to build and test the CTHA for receiver sites in the narrowband
personal communications system network of MobileComm (MobileMedia
Communications, Inc.). MobileComm has agreed to assist the Company in the
completion of the design and the building of ten prototypes of the CTHA by
September 11, 1998. Based on successful test results, the Company will make the
CTHA available for purchase by MobileComm by October 30th, 1998. MobileComm is
one of the largest providers of paging and personal communications services in
the United States. MobileComm offers local, regional and nationwide coverage in
all 50 states, reaching markets of over 95% of the U.S. population, and in the
Caribbean.

On June 11, 1998, the Company announced the successful completion of a license
agreement for the CTHA Antenna with ARINC, Incorporated, an ORBCOMM value added
reseller. ARINC was founded in 1929 and is headquartered in Annapolis, Maryland.
It provides communications and systems integration engineering to business and
industry. ARINC's dominion product line uses the ORBCOMM low earth orbit
satellite communication system, which provides global communications coverage
especially useful in remote areas that are not serviced by conventional or
cellular telephone or other terrestrial communications networks.

On May 19, 1998, the Company announced the successful testing of the CTHA by
Larry Hawks for the ham version of the CTHA at the Dayton Hamvention, which
demonstration served to introduce the CTHA to users in the ham frequency range.

On April 3, 1998, the Company announced that it had received a summons and
complaint in a civil action filed in the U.S. District Court for the District of
Oregon regarding alleged patent infringement by the Company for the CTHA. The
Plaintiff seeks money damages and equitable relief against the Company alleging
patent infringement by the Company for the CTHA. The Plaintiff is also a
Defendant in a pending civil action in the U.S. District Court for the Northern
District of West Virginia brought by West Virginia University ("WVU") claiming
that the CTHA invention is owned by WVU. As a result of the pending civil
action, the Company believes that the CTHA invention belongs to WVU and
therefore, based on the license agreement between WVU and Integral Concepts and
the Sublicense Agreement between Integral Concepts and the Company, the Company
owns the worldwide rights to the CTHA commercial applications. The Company
intends to vigorously defend the Oregon litigation.

On January 22, 1998, the Company announced that Circuit Systems, Inc. confirmed
that it would commence production on the CTHA pursuant to the Company. Circuit
Systems, Inc. is located in Elk Grove, Illinois and is an

                                       9
<PAGE>
 
underwriters laboratory recognized manufacturer of single-sided, double-sided
and multi-layer printed circuit boards.

RESULTS OF OPERATIONS FOR FISCAL 1998 COMPARED TO FISCAL 1997

There were no revenues from licensing the CTHA during the two years.

The net loss in 1998 increased by $489,000 to $1,633,000 compared to $1,044,000
in 1997. Administrative expenses increased by $156,000 to $582,000 compared to
$426,000 in 1997. The major reason for the increase was $60,000 worth of shares
issued to a financial consulting firm during 1998 and $75,000 paid to public
relations firm for advertising the Company's stock. Research and development
activity increased by $432,000 to $1,051,000 compared to $619,000 in 1997. TEAM
entered into an eight month subcontract with Emergent Technologies Corporation
to conduct combined research and development activities expiring December 31,
1997. The contract was extended on a month to month basis after December 31,
1997 and a total amount of $897,000 was paid to Emergent. Emergent contributed
$364,000 towards the funding of these activities and the Company funded
$533,000. The subcontract with the WVURC was increased from $247,000 during
fiscal 1997 to $422,000 during fiscal 1998 to fund the ongoing research and
development program with CIRA. The Company also received $25,000 as a non-
recurring engineering fee from a third party to assist the Company in building
prototypes for testing.

LIQUIDITY - FISCAL 1998

During the year ended April 30, 1998, the Company financed its operations, in
part, from proceeds from two private placements. The Company raised $15,750 and
issued 7,000 shares at $2.25 per share pursuant to a private placement. The
Company raised $1,042,300 and issued 595,600 units at $1.75 per unit pursuant to
a private placement units offering. The Company received $26,875 pursuant to
options exercised and issued 87,500 shares. The Company received $40,000
pursuant to a convertible debenture.

The Company's financial resources, including an opening cash balance as at April
30, 1997 of $135,000, totalled $1,260,000. Cash used, as a result of the net
loss for the year, totalled $1,138,421, after adjustments to reconcile net loss
to cash. The Company spent $6,000 on computer equipment and $100,000 on patent
protection costs. The Company has a cash position of $16,000 as at April 30,
1998.

The Company is committed to spending $110,000 by October 20, 1998 to complete
the funding of the research and development program in conjunction with CIRA.

Subsequent to April 30, 1998 the Company has added additional funds through
completion of the units offering which raised an additional $131,000 and through
a non-recurring engineering fee of $67,000 received from a potential licensee.
The Company also entered into an agreement with an investment banker to place up
to $5,000,000 of units, each unit consisting of one $500,000, three year, 8%
interest, convertible debenture and one warrant to purchase 25,000 shares. One
unit was sold on July 22, 1998. The Company also has the potential to raise up
to $1,173,550 upon the exercise of warrants.

                                       10
<PAGE>
 
ITEM 7.        FINANCIAL STATEMENTS
-------        --------------------

IAS Communications, Inc.

(A Development Stage Company)

Consolidated Financial Statements

April 30, 1998 and 1997

Independent Auditor's Report

Consolidated Balance Sheets as of April 30, 1998 and 1997

Consolidated Statements of Operations accumulated from December 13, 1994
  (Inception) to April 30, 1998 and the years ended April 30, 1998 and 1997

Consolidated Statements of Cash Flows accumulated from December 13, 1994
  (Inception) to April 30, 1998 and the years ended April 30, 1998 and 1997

Consolidated Statement of Stockholders' Equity accumulated from December 13,
  1994 (Inception) to April 30, 1998

Notes to the Consolidated Financial Statements

                                       11
<PAGE>
 
INDEPENDENT AUDITOR'S REPORT
----------------------------


Board of Directors
IAS Communications, Inc.
(A Development Stage Company)


We have audited the accompanying consolidated balance sheets of IAS
Communications, Inc. (a Development Stage Company) as of April 30, 1998 and
1997, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the period from December 13, 1994 (inception) to April 30,
1998 and the years ended April 30, 1998 and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at April 30, 1998
and 1997, and the results of its operations and its cash flows for the period
from December 13, 1994 (inception) to April 30, 1998, and the years ended April
30, 1998 and 1997, in conformity with U.S. generally accepted accounting
principles.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has not generated any revenues or profitable
operations since inception. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments which might result from the outcome of this uncertainty.

                                                 ELLIOTT, TULK, PRYCE, ANDERSON

                                                "Elliott, Tulk, Pryce, Anderson"

                                                           CHARTERED ACCOUNTANTS
Vancouver, B.C., Canada
July 22, 1998

                                       12
<PAGE>
 
Consolidated Balance Sheets
April 30, 1998 and 1997

<TABLE> 
<CAPTION> 
                                                                                        1998          1997
                                                                                          $            $
<S>                                                                                   <C>          <C> 
                                     Assets

Current Assets
       Cash                                                                              15,882       135,039 
       Prepaid expenses                                                                  14,925        11,950 
                                                                                      ---------     --------- 
                                                                                         30,807       146,989 
Capital Assets (Note 3)                                                                  40,437        45,381 
Licence and Patent Protection Costs (Note 4)                                            368,836       285,895 
                                                                                      ---------     --------- 
                                                                                        440,080       478,265 
                                                                                      =========     =========  

                      Liabilities and Stockholders' Equity

Current Liabilities

       Accounts payable                                                                 370,512       113,860 
       Accrued liabilities                                                               80,160       127,000 
                                                                                      ---------     --------- 
                                                                                        450,672       240,860 
      Convertible Debenture (Note 6)                                                     40,000             - 
                                                                                      ---------     --------- 
                                                                                        490,672       240,860 
                                                                                      ---------     --------- 
                                                                                                                           
      Redeemable Class "A" Shares (Note 7)                                                    -       197,750 
                                                                                      ---------     --------- 

Commitments and Contingencies (Notes 9 and 10)
 
Stockholders' Equity (Deficit)

Common Stock (Note 7)
 Class "A" voting        - 100,000,000 shares authorized
                           without par value; 9,320,350
                           and 8,481,000 shares issued
                           and outstanding respectively                               3,155,884     1,648,084
                         - paid for but unissued - 20,000 shares                         35,000             -
 Class "B" non-voting    - 100,000,000 shares authorized without
                           par value; none issued                                             -             -
                                                                                      ---------     ---------
                                                                                      3,190,884     1,648,084
Preferred Stock            50,000,000 shares authorized; none issued                          -             -
</TABLE> 

                                       13
<PAGE>
 
<TABLE> 
<S>                                                                                  <C>              <C> 
Deficit Accumulated During The Development Stage                                     (3,241,476)    (1,608,429)
                                                                                      ---------      --------- 
                                                                                        (50,592)        39,655
                                                                                      ---------      --------- 
                                                                                        440,080        478,265
                                                                                      =========      =========
</TABLE>

                                       14
<PAGE>
 
Consolidated Statements of Operations
Accumulated from December 13, 1994 (Inception)
to April 30, 1998 and the years ended
April 30, 1998 and 1997
<TABLE> 
<CAPTION> 
                                                                     Accumulated       1998          1997
                                                                        $             $             $
<S>                                                               <C>              <C>           <C>  
Revenue                                                                      -             -             -
                                                                     ---------     ---------     ---------  
 
Administration Expenses
       Bank charges                                                      2,124           929           819
       Business plan                                                    45,219        26,619        18,600
       Depreciation                                                      1,154         1,030           124
       Interest on convertible debentures                                2,720         2,720             -
       Investor relations - advertising                                224,138       152,188        71,950
       Investor relations - consulting                                 206,829       119,773        70,560
       Management fees                                                 207,500        60,000        65,000
       Office, postage and courier                                      80,445        53,093        15,288
       Professional fees                                               332,217        63,267       100,604
       Rent and secretarial                                             82,223        38,223        18,500
       Telephone                                                        75,802        29,082        35,587
       Transfer agent and regulatory                                    28,132        16,787         6,647
       Travel and promotion                                             58,379        19,609        27,147
       Less interest income                                            (13,447)       (1,622)       (5,245)
                                                                     ---------     ---------     ---------  
                                                                     1,333,435       581,698       425,581
                                                                     ---------     ---------     --------- 
 
Research and Development Expenses
       Royalty                                                           9,000         3,000         3,000
       Consulting                                                      202,419        32,000       152,752
       Depreciation and amortization                                    36,220        26,634         9,586
       Market awareness and development                                 60,000        60,000             -
                       Subcontract - West Virginia University
                  Research Corporation                                 826,243       421,691       247,462
       Subcontract - Emergent Technologies Corporation               1,162,877       896,742       206,135
       Less contributions by a non-controlling shareholder            (363,718)     (363,718)            -
       Less engineering contribution by a third party                  (25,000)      (25,000)            -
                                                                     ---------     ---------     ---------  
                                                                     1,908,041     1,051,349       618,935
                                                                     ---------     ---------     --------- 
Net Loss                                                             3,241,476     1,633,047     1,044,516
                                                                     =========     =========     ========= 
Net Loss Per Share                                                                      (.18)         (.13)
                                                                                   =========     ========= 
Weighted Average Shares Outstanding                                                8,900,000     8,100,000
                                                                                   =========     =========
</TABLE> 

                                       15
<PAGE>
 
IAS Communications, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Accumulated from December 13, 1994 (Inception)
to April 30, 1998 and the years ended
April 30, 1998 and 1997
(expressed in U.S. dollars)

<TABLE>
<CAPTION>
 
 
                                                         Accumulated        1998           1997
                                                              $              $              $
<S>                                                     <C>             <C>            <C>
Cash Flows to Operating Activities
 
   Net loss                                              (3,241,476)    (1,633,047)    (1,044,516)
 
   Adjustments to reconcile net loss to cash
        Gain on shares cancelled                                (10)             -              -
        Depreciation and amortization                        37,374         27,664          9,710
        Shares issued for services                          268,458        260,125              -
 
   Change in non-cash working capital items
        Increase in prepaid expenses                        (14,925)        (2,975)        (2,192)
        Increase in accounts payable                        370,512        256,652         86,746
        Increase (decrease) in accrued liabilities           80,160        (46,840)       127,000
                                                         ----------     ----------       -------- 
Net Cash Used in Operating Activities                    (2,499,907)    (1,138,421)      (823,252)
                                                         ----------     ----------       -------- 

Cash Flows to Investing Activities
   Increase in capital assets                               (55,991)        (5,686)       (50,305)
   Increase in licence                                     (250,000)             -              -
   Increase in patent protection costs                     (140,655)       (99,975)       (25,192)
                                                         ----------     ----------       -------- 
Net Cash Used in Investing Activities                      (446,646)      (105,661)       (75,497)
                                                         ----------     ----------       --------  
Cash Flows from Financing Activities
   Increase in common stock                               2,922,435      1,084,925        848,750
   Increase in convertible debentures                        40,000         40,000              -
                                                         ----------     ----------       --------  
Net Cash Provided by Financing Activities                 2,962,435      1,124,925        848,750
                                                         ----------     ----------       --------  
Increase (Decrease) in Cash                                  15,882       (119,157)       (49,999)

Cash - Beginning of Period                                        -        135,039        185,038
                                                         ----------     ----------       --------      

Cash - End of Period                                         15,882         15,882        135,039
                                                         ==========     ==========       ========  

</TABLE> 

                                      16
<PAGE>
 

<TABLE>
<S>                                                     <C>             <C>            <C>
Non-Cash Financing Activities
The Company issued 6,000,000 Class "A"
common shares at a deemed value of $1
in total for property                                             1              -              -
 
Shares issued to an officer at inception
 donated back to the Company and cancelled                      (10)             -              -

Shares issued for services                                    8,333              -          8,333

Shares issued pursuant to performance
   stock agreements for services                            260,125        260,125              -
                                                         ----------     ----------       --------  
                                                            268,449        260,125          8,333
                                                         ==========     ==========       ========
Supplemental disclosures:

   Interest paid                                              2,720          2,720              -
   Income tax paid                                                -              -              -
</TABLE> 

                                      17
<PAGE>
 
Consolidated Statement of Stockholders' Equity (Deficit)
Accumulated from December 13, 1994 (Inception)
to April 30, 1998
<TABLE> 
<CAPTION> 
                                                                                              Deficit
                                                                                            Accumulated
                                                                    Common       Common      During the
                                                                     Stock       Stock      Development
                                                     Shares        Class "A"    Class "B"       Stage
                                                       #               $            $             $
<S>                                                <C>          <C>           <C>          <C>
Balance - December 13, 1994 (Inception)                    -             -            -              -

Shares issued to an officer at inception
 for cash at $0.10 per share                             100            10            -              -

Shares issued, at inception, for property
 at a nominal value of $1 in total
 or $.00000017 per share                           6,000,000             1            -              -

Shares issued for cash pursuant to a
   private placement at $0.10 per share              700,000             -       70,000              -

Shares issued for cash pursuant to a public
 offering memorandum at $0.75 per share              336,333             -      252,250              -

Net loss for the period                                    -             -            -        (83,615)
                                                  ----------    ----------   ----------     ---------- 
Balance - April 30, 1995                           7,036,433            11      322,250        (83,615)

Shares issued to an officer at inception
 donated back and cancelled                             (100)          (10)           -              -

Share exchange                                             -       322,250     (322,250)             -

Shares issued for cash pursuant to
 options exercised at $0.25 per share                210,000        52,500            -              -

Net loss for the year                                      -             -            -       (480,298)
                                                  ----------    ----------   ----------     ----------  
Balance - April 30, 1996                           7,246,333       374,751            -       (563,913)

Shares issued for cash pursuant to a
 private placement at $1.25 per share                500,000       625,000            -              -

Shares issued for services at $0.33 per share         25,000         8,333            -              -

Shares issued for cash pursuant to options
 exercised at $0.25 per share                        139,500        34,875            -              -

Shares issued for cash pursuant to options
 exercised at $1.25 per share                         84,500       105,625            -              -

Shares issued for cash pursuant to a
 private placement at $2.25 per share                222,000       499,500            -              -

Net loss for the year                                      -             -            -     (1,044,516)
                                                  ----------    ----------   ----------     ----------  
Balance - April 30, 1997                           8,217,333     1,648,084            -     (1,608,429)
                                                  ----------    ----------   ----------     ---------- 
</TABLE>

                                       18

<PAGE>
 
Consolidated Statement of Stockholders' Equity (Deficit)
Accumulated from December 13, 1994 (Inception)
to April 30, 1998

<TABLE> 
<CAPTION> 
                                                                                        Deficit
                                                                                      Accumulated
                                                             Common       Common       During the
                                                             Stock        Stock       Development
                                                 Shares     Class "A"    Class "B"       Stage
                                                   #           $            $              $
<S>                                             <C>         <C>          <C>         <C>
 
Carryforward from April 30, 1997                8,217,333    1,648,084           -    (1,608,429)

Shares previously issued, for cash during
 1994, pursuant to a public offering
 memorandum at $0.75 per share,
 transferred to shareholders' equity
  from redeemable status (Note 7(c))              263,667      197,750           -             -

Shares issued for cash pursuant to options
  exercised at $0.25 per share                     83,500       20,875           -             -

Shares issued for cash pursuant to options
  exercised at $1.50 per share                      4,000        6,000           -             -

Shares issued for cash pursuant to a
  private placement at $2.25 per share              7,000       15,750           -             -

Shares issued for cash pursuant to a
  private placement, at $1.75 per share           575,600    1,007,300           -             -

Shares issued for services pursuant to a
 performance stock agreement at a
 deemed value of $1.17 per share                 100,000      117,000           -             -

Shares issued for services pursuant to a
 performance stock agreement at a
 deemed value of $2.50 per share                    9,250       23,125           -             -

Shares issued for services pursuant to a
 performance stock agreement at a
 deemed value of $2.00 per share                   60,000      120,000           -             -

Net loss for the year                                   -            -           -    (1,633,047)
 
Balance - April 30, 1998                        9,320,350    3,155,884           -    (3,241,476)
                                                =========    =========   =========     =========
</TABLE>

Notes to the Consolidated Financial Statements

1.  Development Stage Company

            IAS Communications, Inc. herein "the Company" was incorporated on
            December 13, 1994, pursuant to the Laws of the State of Oregon.

            The Company is a development stage company engaged in the
            commercialization of advanced antenna technology known as the
            Contrawound Torroidal Helical Antenna, herein "CTHA", for wireless
            communications markets including cellular, meter reading and global
            positioning 

                                       19
<PAGE>
 
            services. The CTHA, developed in conjunction with researchers at
            West Virginia University, is a technologically advanced antenna
            design which can be incorporated into a wide variety of
            telecommunications applications. The Company has been granted
            worldwide sublicensing rights for commercial applications, excluding
            military and governmental applications, for the CTHA pursuant to an
            agreement with Integral Concepts Inc. and West Virginia University
            Research Corporation.

            In a development stage company, management devotes most of its
            activities to establishing a new business.  Planned principle
            activities have not yet produced significant revenue.  The ability
            of the Company to emerge from the development stage with respect to
            its planned principle business activity is dependent upon its
            successful efforts to raise additional equity financing and develop
            markets for its products.

            The Company has subsequently raised $131,250 to complete a private
            placement of units at $1.75 per unit and plans to raise additional
            funds through a $5,000,000 units private placement, each unit
            consisting of a three year 8% convertible debenture and a warrant to
            acquire 25,000 Class "A" shares.  The Company also received $67,000
            towards a $100,000 non-recurring engieering fee from a potential
            licensee.  Warrants in the amount of 670,600 at $1.75 may be
            exercised to net $1,173,550.

2.  Summary of Significant Accounting Policies

          (a) Basis of Consolidation

                These financial statements include the accounts of the Company
                and a newly incorporated company, The Eclipse Antenna
                Manufacturing Co. herein "TEAM", which is 50% equity owned and
                100% controlled through a voting agreement. All significant
                inter-company accounts have been eliminated.

          (b) Year-End

                The Company's fiscal year-end is April 30.

          (c) Research and Development

                Research and development costs are expensed in the period in
                which they are incurred.

          (d) Capital Assets

                Capital assets are recorded at cost and are depreciated on a
                straight-line basis over their estimated useful lives of five
                years.

          (e) Licence and Patent Protection Costs

                Costs associated with patent protection and licences are
                amortized over 20 years upon licenceable product being developed
                which occurred on February 1, 1997.

          (f) Cash and Cash Equivalents

                The Company considers all highly liquid instruments with a
                maturity of three months or less at the time of issuance to be
                cash equivalents.

          (g) Use of Estimates

                The preparation of consolidated financial statements in
                conformity with generally accepted accounting principles
                requires management to make estimates and assumptions that
                affect the reported amounts of assets and liabilities and
                disclosure of contingent assets and liabilities at the date of
                the financial statements and the reported amounts of revenues
                and expenses during the periods. Actual results could differ
                from those estimates.

                                       20
<PAGE>
 
          (h) Tax Accounting

                Potential benefits of income tax losses are not recognized in
                the accounts until realization is more likely than not. Research
                and development costs are deducted in the year incurred and
                added to net operating loss.

                The Company has adopted Statement of Financial Accounting
                Standards No. 109 ("SFAS 109") as of its inception. The Company
                has incurred net operating losses as scheduled below:

                Year of Loss                Amount             Year of   
                                              $              Expiration  
                1995                         89,000             2010     
                1996                        497,000             2011     
                1997                      1,057,000             2012     
                1998                      1,425,000             2013      

                Pursuant to SFAS 109 the Company is required to compute tax
                asset benefits for net operating losses carried forward.
                Potential benefit of net operating losses have not been
                recognized in these financial statements because the Company
                cannot be assured it is more likely than not it will utilize the
                net operating losses carried forward in future years.

                The components of the net deferred tax asset at the end of April
                30, 1998 and 1997, and the statutory tax rate, the effective tax
                rate and the elected amount of the valuation allowance are
                scheduled below:

                                             1998                  1997         
                                              $                     $           
                Net Operating Loss        1,425,000             1,056,537       
                Statutory Tax Rate          113,900 + 34%         113,900 + 34% 
                                            in excess of          in excess of  
                                         $  335,000            $  335,000       
                Effective Tax Rate                -                     -       
                Deferred Tax Asset          485,000               359,000       
                Valuation Allowance        (485,000)             (359,000)      
                Net Deferred Tax Asset            -                     -       
                                         ==========            ==========    

                                       21
<PAGE>
 
3.  Capital Assets
<TABLE> 
<CAPTION> 
                                                                                    1998       1997
                                                                   Accumulated     Net Book   Net Book
                                                         Cost      Amortization     Value      Value
                                                          $             $             $          $
<S>                                                    <C>            <C>          <C>         <C> 
  Computer equipment                                      7,991        1,154        6,837        2,181
  Research and development equipment                     48,000       14,400       33,600       43,200
                                                         ------       ------       ------       ------
                                                         55,991       15,554       40,437       45,381
                                                         ======       ======       ======       ======
 
       Depreciation per class of capital asset:

       Computer equipment                                                           1,030          124
  Research and development equipment                                                9,600        4,800
</TABLE>

4.  Licence and Patent Protection Costs
<TABLE>
<CAPTION>
                                    1998            1997
                                 Accumulated      Net Book      Net Book
                                    Cost        Amortization     Value       Value
                                      $             $             $            $
<S>                              <C>           <C>             <C>         <C>
   Licence                          250,001         16,667      233,334     245,834
   Patent protection costs          140,655          5,153      135,502      40,061
                                    -------         ------      -------     ------- 
                                    390,656         21,820      368,836     285,895
                                    =======         ======      =======     ======= 
</TABLE>

       Pursuant to the terms of an option agreement dated November 18, 1994, and
       amended December 16, 1994, between SMR Investments Ltd. ("SMR") and
       Integral Concepts Inc. ("ICI") and an assignment of this option agreement
       dated December 13, 1994, the Company acquired a sublicence to the CTHA,
       subject to entering into a formal sublicence agreement. Pursuant to the
       terms of the option agreement, the Company paid $250,000 to ICI, which
       owns the exclusive licence obtained from West  Virginia University
       Research Corporation ("WVURC") in an agreement dated April 12, 1994.
       SMR, ICI and WVURC are not related to each other. Pursuant to the
       assignment agreement, the Company issued 3,000,000 shares to each of
       Access Information Systems Inc.  (A company controlled by SMR) and a
       director of the Company (principal of ICI) for a total deemed value of $1
       for all 6,000,000 shares issued.

       Pursuant to the original licence agreement between WVURC and ICI, ICI was
       granted the exclusive licence to manufacture the CTHA or sublicence
       others to manufacture, market, sell copies of, licence and distribute the
       CTHA.  On July 10, 1995, the Company and ICI entered into a sublicence
       agreement, which incorporates the terms and conditions of the original
       licence agreement between WVURC and ICI.  The sublicence is exclusive,
       covering any and all international markets but excludes all military and
       governmental applications and resulting procurement interests which are
       retained by ICI and WVURC for development purposes.  All improvements and
       embodiments that are created as a result of these military applications
       and additional research and development efforts by ICI and WVURC will be
       transferred directly to the Company.  The terms of the sublicence
       agreement, which incorporates the financial obligations that ICI owes
       WVURC pursuant to the original licence agreement, are as follows:

                                       22
<PAGE>
 
           (i)   The Company will pay WVURC a minimum annual royalty of $3,000
                 on or before December 31 of each year.

           (ii)  The Company will pay WVURC an earned royalty on sales, leases
                 or sublicences of the CTHA of 10% of net revenues less a credit
                 for the minimum annual royalty. No revenues have been earned to
                 date.

           (iii) The Company will pay ICI an earned royalty on sales, leases or
                 sublicences of the CTHA of 3% of gross revenues. As amended on
                 March 4, 1997, ICI agreed to reduce the amount of royalties to
                 be paid by 50% in an amount not to exceed $5,000,000 for up to
                 3 years.

          All royalties are payable within 30 days of each calendar quarter.
          The term of the original licence agreement and the sublicence
          agreement, subject to compliance with the terms thereof, is perpetual
          and renewable annually.

5.   Joint Venture Agreement

          The Company entered into a Joint Venture Agreement ("JVA") with
          Emergent Technologies Corporation (ETC) on March 4, 1997.  The JVA
          required a new company to be incorporated (TEAM) whereby the Company
          owns 50% and ETC owns 50%.  Pursuant to a voting agreement the Company
          can vote 100% of the shares of TEAM and therefore the accounts of TEAM
          are consolidated with the accounts of the Company.  The President of
          ETC is the President of TEAM. TEAM was organized on June 4, 1997,
          under the laws of the State of West Virginia.  The Company retains the
          worldwide commercial sublicence rights to the CTHA excluding all
          military and governmental applications.

          The business purpose of TEAM is to cooperate in the research and
          development of certain applications for the CTHA and to assemble and
          manufacture certain products relating thereto.  IAS can buy product
          from TEAM at cost to manufacture plus 30% for all commercial
          applications and ETC can buy product from TEAM at cost to manufacture
          plus 30% for all military applications.  ETC acquired the worldwide
          sublicence from ICI for all military and governmental applications on
          January 2, 1997.

          TEAM entered into a contract with ETC to carry out combined research
          and development activities to December 31, 1997.  This contract is
          renewable on a monthly basis at the option of TEAM. ETC and the
          Company have each funded TEAM $250,000 as required in the JVA.  The
          Company has advanced a further $285,700 and ETC has advanced a further
          $113,668 towards combined research and development activities.

6.   Convertible Debenture

          The Company offered, in a private placement a three year, 8 3/4%
          interest, convertible debenture to raise $500,000, of which $40,000
          was sold prior to closing.  Interest is paid annually and the
          debenture is convertible into Class "A" common shares at $2.50, $3.00
          and $3.50 on June 15, 1998, 1999 and 2000, respectively.  In the event
          the shares are trading below $4.00 per share over a ten-day average
          prior to exercising into shares of the Company during the last month
          of the third year, the convertible debenture will be exercisable at
          20% below the said ten-day average.  The maturity date is June 15,
          2000.

7.   Common Stock

     (a)  Stock Option Plan

               On October 2, 1996 the Company registered 1,000,000 Class "A"
               shares for issuance under a Stock Option Plan. Pursuant to the
               Plan the Company has granted stock options to certain directors
               and employees. The options are granted for services provided or
               to be provided to the Company. Statement of Financial Accounting
               Standards No. 123 ("SFAS 123") requires that an enterprise
               recognize, or at its option, disclose, the impact of the fair
               value of stock options and other forms of stock based
               compensation in the determination 

                                       23
<PAGE>
 
               of income. The Company has elected under SFAS 123 to continue to
               measure compensation cost on the intrinsic value basis set out in
               APB Opinion No. 25. As options are granted at exercise prices
               based on the market price of the Company's shares at the date of
               grant, no intrinsic value adjustment is required.

<TABLE>
<CAPTION>
 April 30,     Price       Granted      Exercised      April 30,           Expiry
   1997          $            #             #            1998               Date
    #                                                      #
<S>             <C>         <C>          <C>            <C>          <C>
  173,000       0.25            -         83,500         89,500      December 29, 1999

   37,500       0.25            -              -         37,500      February 4, 2000

    3,000       1.25            -              -          3,000      March 4, 2001

   25,000       1.50            -          4,000         21,000      August 21, 2001

  530,000       2.25            -              -        530,000      December 19, 2001

        -       2.50       17,500              -         17,500      August 1, 2001

        -       2.25       25,000              -         25,000      April 14, 2003
 --------                --------        -------        ------- 
  768,500                  42,500         87,500        723,500
 ========                ========        =======        =======
</TABLE>

     (b)  Units Offering
 
               A total of $1,173,550 ($131,250 received after April 30, 1998)
               has been received to July 9, 1998 (date of closing) pursuant to a
               private placement and foreign offering of 670,600 units at $1.75
               per unit. Each unit has been issued and contained one share and
               one warrant to acquire one additional share at $1.75 per share
               expiring one year after receipt of funds and $2.25 per share
               expiring two years after.

     (c)  Redeemable Class "A" Shares

               Between December 14, 1994 and March 6, 1995, the Company received
               subscriptions for 263,667 Class "B" shares and received $197,750
               from investors in States where they have the right to revoke
               their subscription and demand their investment be returned to
               them within three years of subscription as to $161,500 and within
               six years as to $36,250. The 263,667 redeemable Class "B" shares
               were issued and then exchanged for 263,667 Class "A" shares.
               Holders of these shares did not revoke their subscriptions and/or
               have sold these shares and thus all 263,667 Class "A" shares are
               not considered redeemable and $197,750 has been transferred to
               shareholders' equity.

8.   Related Party Transactions

          Management fees of $60,000 (1997 - $65,000) and rent and secretarial
          fees of $18,000 (1997 - $18,500) has been paid to directors or
          companies under their control. All fees were recorded at their
          exchange amounts.

9.   Commitments and Contingencies

         (a)  Contractual Commitments

              (i)    The Company entered into an agreement on October 21, 1997
                     and amended May 15, 1998 with WVURC to fund ongoing
                     research and development of the CTHA in the amount of
                     $444,927.  The budget ending date is October 20, 1998. A
                     total of $334,311 of this budget has been spent to April
                     30, 1998.

              (ii)   See Note 10 for ongoing compensation commitments including
                     a Performance Stock Plan.

                                       24
<PAGE>
 
              (iii)  See Note 7 for commitments to issue shares upon the
                     exercise of stock options and warrants.

         (b)  Contingent liability - Development Stage Company (See Note 1).

         (c)  Litigation

                     An action has commenced against the Company by a company
                     owned by a former student of West Virginia University with
                     respect to an alleged infringement of a certain U.S.
                     Patent.

                     The Company is disputing the validity of this claim and
                     based on the current legal action with the plaintiff by
                     West Virginia University regarding the CTHA the Company is
                     requesting a motion to stay the action.

10.  Compensation Agreements and Performance Stock Plan

         (a)  The Company has allotted up to 1,000,000 shares to be issued
              pursuant to a Performance Stock Plan. Compensation is recorded
              when the shares are issued, which approximates the period when the
              services are rendered, and recorded at the fair market value of
              the shares issued.

              (i)    The Company is committed to issue up to 500,000 shares to
                     the President of ETC and President of TEAM whom is also an
                     employee of the Company. A total of 100,000 shares were
                     issued on May 5, 1997, at a deemed value of $1.17 per share
                     for compensation of $117,000. The amount of $117,000 was
                     accrued as at April 30, 1997, and charged to research and
                     development consulting expense. The remaining 400,000
                     shares shall be earned as to 100,000 shares for every
                     1,000,000 CTHA's sold.

              (ii)   The Company is committed to issue 182,000 shares to two
                     financial consulting firms. A total of 60,000 shares were
                     issued during the year at $2.00 per share, 12,000 shares
                     were issued May 28, 1998 at $2.37 per share ($28,440 was
                     accrued at April 30, 1998) 55,000 shares were issued June
                     23, 1998, 30,000 shares are to be issued in July, 1998 and
                     25,000 shares are to be issued in December, 1998.

         (b)  The Company is committed to pay compensation of $30,000 to each of
              Access Information Systems and Dr. Smith for fiscal 1999.

11.  Subsequent Events

         Subsequent to April 30, 1998 the Company has:

              (i)    received a further $131,250 and, together with $35,000
                     received prior to April 30, 1998, issued 95,000 units at
                     $1.75 per unit.

              (ii)   issued 67,000 shares and is committed to issue a further
                     455,000 shares pursuant to various performance stock
                     agreements entered into.

              (iii)  granted stock options to acquire 100,000 shares at prices
                     between $2.25 and $3.00.

              (iv)   received $67,000 towards a $100,000 non-recurring
                     engineering fee from a potential licensee.

              (v)    issued 2,000 shares pursuant to $5,000 of convertible
                     debentures converted at $2.50 per share.

                                       25
<PAGE>
 
              (vi)   entered into an agreement with an investment banker to
                     place up to $5,000,000 of units, each unit consisting of
                     one $500,000, three year, 8% interest, convertible
                     debenture and one warrant to purchase 25,000 Class "A"
                     shares. One unit was sold on July 22, 1998.

ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-------        ---------------------------------------------------------------
               FINANCIAL DISCLOSURE
               --------------------

None.

                                       26
<PAGE>
 
                                    PART III

ITEM 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
-------   -------------------------------------------------------------
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
          -------------------------------------------------

The following table sets forth the name, age and position of each Executive
Officer and Director of the Company:

<TABLE>
<CAPTION>
==================================================================================================================
NAME                                      AGE       POSITION
<S>                                       <C>         <C>
------------------------------------------------------------------------------------------------------------------ 
James Earl Smith, Ph.D.                   47        Chairman of the Board of Directors
------------------------------------------------------------------------------------------------------------------  
John G. Robertson                         57        President, Principal Executive Officer and a member of
                                                    the Board of Directors
------------------------------------------------------------------------------------------------------------------  
Jennifer Lorette                          26        Secretary/Treasurer, Principal Accounting Officer and
                                                    Chief Financial Officer
------------------------------------------------------------------------------------------------------------------  
Patrick Badgley                           54        Member of the Board of Directors
------------------------------------------------------------------------------------------------------------------  
Paul E. Lamarche                          55        Member of the Board of Directors
==================================================================================================================
</TABLE>

All Directors of the Company have served since December 13, 1994.  The Executive
Officers were elected on February 4, 1995, and will serve for one year or until
their respective successors are elected and qualified.  All officers currently
devote part-time to the operation of the Company.

EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY:

JAMES EARL SMITH PH.D - CHAIRMAN OF THE BOARD OF DIRECTORS
----------------------------------------------------------

Dr. Smith is a founder and Chairman of the Board of Directors.  Since 1989, Dr.
Smith has been an Associate Professor in the Mechanical and Aerospace
Engineering Department, West Virginia University, Morgantown, West Virginia.
Since September 1990, Dr. Smith has been a Director of the Center for Industrial
Research Applications, West Virginia University.  Since February 1994, Dr. Smith
has been President and a Director of Integral Visions Systems, Inc. a West
Virginia corporation engaged in the business of 3-D machine vision calorimetry.
Since September 1992, Dr. Smith has been President and a Director of Integral
Concepts, Inc., a West Virginia corporation engaged in the business of
technology transfer from the research to the commercial sector.  From April 1992
to March 1994, Dr. Smith was a consultant to CK Engineering, Inc., located in
Montreal, Canada, which is engaged in the business of mechanism analysis and
development.  From January 1992 to March 1993, Dr. Smith was a consultant to Reg
Technologies, Inc. located in Richmond, British Columbia which is engaged in the
business of mechanism analysis and development.  Dr. Smith holds the degree of
Doctor of Philosophy in Mechanical Engineering from West Virginia University.

JOHN G. ROBERTSON - PRESIDENT, PRINCIPAL EXECUTIVE OFFICER AND A MEMBER OF THE
------------------------------------------------------------------------------
BOARD OF DIRECTORS
------------------

Mr. Robertson is a founder, President, Principal Executive Officer and a member
of the Board of Directors of the Company.  Since May 1977, Mr. Robertson has
been President and a member of the Board of Directors of SMR Investments Ltd., a
British Columbia corporation engaged in the business of management and
investment consulting.  Since October 1984, Mr. Robertson has been President and
a Director of Reg Technologies, Inc., a British Columbia corporation engaged in
the business of developing a rotary engine.  Since June 1994, Mr. Robertson has
been President of REGI U.S., Inc. ("REGI U.S."), an Oregon corporation which is
engaged the business of developing a rotary engine.  REGI U.S. is controlled by
Rand Energy Group, Inc., a British Columbia corporation of which Reg
Technologies, Inc. is the majority shareholder.  Both REGI U.S. and Reg
Technologies, Inc. are engaged in the business of developing a rotary engine and
other devices utilizing Rand Cam(TM) Technology. REGI U.S. owns the U.S. rights
to the Rand Cam(TM) technology and Rand Energy Group, Inc. owns the worldwide
rights exclusive of the U.S. Since May 1980, Mr. Robertson has been President
and a Director of Teryl Resources Corp., a British Columbia corporation, engaged
in exploring and developing gold properties. Since February 1979, Mr. Robertson
has been President and Director of

                                       27
<PAGE>
 
Flame Petro-Minerals Exploration Co., a British Columbia corporation engaged in
exploration of oil, gas and gold properties.

JENNIFER LORETTE - SECRETARY/TREASURER, PRINCIPAL FINANCIAL OFFICER AND
-----------------------------------------------------------------------
PRINCIPAL ACCOUNTING OFFICER
----------------------------

Ms. Lorette is a founder, Secretary/Treasurer, Principal Financial Officer and
Principal Accounting Officer of the Company.  Since April 1994, Ms. Lorette has
been Vice President of Administration of Reg Technologies Inc.  Since June 1994,
Ms. Lorette has been a Vice President of REGI U.S. and Chief Financial Officer
and Vice President of Flame Petro Minerals Corp.  From February 1994 to April
1994, Ms. Lorette was an executive assistant and from December 1992 to February
1994, she was a receptionist at Reg Technologies, Inc.

PATRICK BADGLEY - A MEMBER OF THE BOARD OF DIRECTORS
----------------------------------------------------

Mr. Badgley is a founder and a member of the Board of Directors of the Company.
Since February 1994, Mr. Badgley has been a Vice President of REGI U.S., and
since July 1993 has been a Director of Reg Technologies, Inc.  From November
1986 to February 1994, Mr. Badgley was the Director of Research and Development
for Adiabatics, Inc., an Indiana corporation, which was engaged in the business
of advanced engine concepts.  Prior to this he worked for Cummins Engine
Company, Curtiss Wright Corporation and Deere and Company.  Mr. Badgley holds a
Bachelor of Mechanical Engineering degree from the Ohio State University,
Columbus, Ohio.

PAUL E. LAMARCHE - A MEMBER OF THE BOARD OF DIRECTORS
-----------------------------------------------------

Mr. Lamarche is a founder and member of the Board of Directors.  Since October
1991, Mr. Lamarche has been President of Troy Design Manufacturing, driveline
division, which is engaged in the business of automotive power train engines.
Since 1990, Mr. Lamarche has been a Director of Pioneer Automotive, driveline
division, and President to Neotech Industries, Inc., which is engaged in the
business of engineering services (automotive).  Since 1994, Mr. Lamarche has
been a director for the driveline dynamics group for Aerotek Engine Services, a
Michigan corporation.  Mr. Lamarche holds a Bachelor of Science degree from the
University of Waterloo, Ontario, Canada.

SIGNIFICANT EMPLOYEES:

LARRY HAWKS
-----------

Mr. Hawks has been appointed Vice President in charge of Research and
Development and the Chief Engineer for the CTHA project.  Mr. Hawks has
extensive experience in ELF, VLF & RF technology.  Mr. Hawks has worked for the
Hebrew University in Israel (responsible for radiation studies).  He was
previously Engineering Manager in charge of all divisional engineering
operations for producing and design of the IBM PC Junior for AMP Corp.  Mr.
Hawks is currently the Chief Engineer for ACM (a division of Eikenberry
Associates in Kokomo, Indiana, an injection moulding company).

BARCLAY HAMBROOK  P. ENG. MBA
-----------------------------

Mr. Hambrook has been appointed Vice President of Business Development.  Mr.
Hambrook has acted as advisor to IAS having completed the Company's initial
business plan in 1996.  He had been active in communications over the last five
years and successfully negotiated the establishment of technology driven, joint
venture companies in Asia, Europe and North America.  Mr. Hambrook as a
principal of Enercana Capital provides corporate finance services.

STEVE GULYAS
------------

Mr. Gulyas has been appointed Vice President of Sales for the CTHA for
commercial applications.  Mr. Gulyas is an experienced salesperson with several
important connections in the telecommunications industry.  He has introduced the
CTHA to several major potential end users.

FAMILY RELATIONSHIPS - none.

                                       28
<PAGE>
 
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS. - none.

SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, other
than Mr. Badgley and Mr. Lamarche, who filed no Forms during the year, no
officer, director or beneficial owner of more than ten percent of the Common
Stock of the Company failed to file on a timely basis reports required to be
filed by Section 16(a) of the Exchange Act during the most recent fiscal year.

ITEM 10.    EXECUTIVE COMPENSATION
--------    ----------------------

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

SUMMARY COMPENSATION TABLE

     The following table sets forth the aggregate cash compensation paid for
services rendered to the Company during the last three fiscal years by the
Company's Chief Executive Officer and the Company's most highly compensated
executive officers who served as such at the end of the last fiscal year.  No
executive officer had an annual salary and bonus in excess of $100,000 during
such year.

<TABLE>
<CAPTION>
                                                                                    LONG-TERM
                                                                                   COMPENSATION
                                          ANNUAL COMPENSATION                         AWARDS
                                     -----------------------------------------   ----------------
         NAME AND                                               OTHER ANNUAL
    PRINCIPAL POSITION        YEAR   SALARY ($)   BONUS ($)   COMPENSATION ($)    OPTIONS (#)(1)
---------------------------   ----   ----------   ---------   ----------------   ----------------
<S>                           <C>    <C>          <C>         <C>                <C>
John G. Robertson             1998         -0-         -0-                -0-             -0-
President, Chief              1997         -0-         -0-                -0-             -0-
Executive Officer             1996         -0-         -0-                -0-         150,000

James E. Smith                1998     $15,000         -0-                -0-             -0-
Chairman and                  1997     $30,000         -0-                -0-             -0-
Director                      1996     $30,000         -0-                -0-         150,000

Patrick Badgley               1998         -0-         -0-                -0-             -0-
Director                      1997         -0-         -0-                -0-             -0-
                              1996         -0-         -0-                -0-          50,000

Paul Lamarche                 1998     $ 8,000         -0-                -0-             -0-
Director                      1997     $ 6,000         -0-                -0-             -0-
                              1996         -0-         -0-                -0-          50,000

Jennifer Lorette              1998         -0-         -0-                -0-             -0-
Vice President                1997         -0-         -0-                -0-             -0-
                              1996         -0-         -0-                -0-          50,000
</TABLE>
_____________________
(1)  Represents options granted under the Company's 1996 Stock Option Plan.

A management fee of $2,500.00 per month is accrued for payment to Access
Information Services, Inc., a corporation controlled by Robertson.  Further, the
sum of $1,500.00 is accrued for payment to Access Information Services, Inc. for
rent and secretarial services.

A fee of $2,500.00 per month is accrued for payment to Dr. Smith in his capacity
as a director and as Chairman of the Board of Directors.

                                       29
<PAGE>
 
Mr. Lamarche is paid $8,000 per year by the Company.

No other compensation is paid to any of the Executive Officers or Directors of
the Company. The Company may in the future create retirement, pension, profit
sharing, insurance and medical reimbursement plans covering its Officers and
Directors.  At the present time, no such plans exist.  No advances have been
made or are contemplated by the Company to any of its Officers or Directors.

STOCK OPTIONS GRANTED

No stock options were granted to any of the Executive Officers or Directors
during the past fiscal year.

STOCK OPTIONS EXERCISED AND HELD AT YEAR END

The following table sets forth certain information concerning exercises of stock
options pursuant to stock option plans by the named Executive Officers and
Directors during the year ended April 30, 1998 and stock options held at year
end.

                 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
                           AND YEAR END OPTION VALUES

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------- 
                                                        Number of                     Value of
                                                       Unexercised             Unexercised Options at
                                                   Options at Year End                Year End
                                               ---------------------------------------------------------
 
                          Shares
                        Acquired on    Value
Name                     Exercise     Realized   Exercisable   Unexercisable   Exercisable   Unexercisable
---------------------------------------------------------------------------------------------------------- 
<S>                   <C>           <C>        <C>           <C>             <C>           <C>
John G. Robertson             -0-        -0-       150,000             -0-      $337,500             -0-
----------------------------------------------------------------------------------------------------------  
Jennifer Lorette              -0-        -0-        50,000             -0-      $112,500             -0-
----------------------------------------------------------------------------------------------------------  
Patrick Badgley               -0-        -0-        90.000             -0-      $122,500             -0-
----------------------------------------------------------------------------------------------------------  
Dr. James Smith            40,000    $83,600       200,000             -0-      $350,000             -0-
---------------------------------------------------------------------------------------------------------- 
Paul Lamarche               8,000    $17,790        85,000             -0-      $121,250             -0-
----------------------------------------------------------------------------------------------------------
</TABLE>

(1)  On April 30, 1998, the closing price of Common Stock was $2.12. For
     purposes of the foregoing table, stock options with an exercise price less
     than that amount are considered to be "in-the-money" and are considered to
     have a value equal to the difference between this amount and the exercise
     price of the stock option multiplied by the number of shares covered by the
     stock option.

LONG TERM INCENTIVE PLAN AWARDS

     The Company does not have any Long Term Incentive Plans.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS

     The Company does not have any employment contracts, termination of
employment and change of control arrangements.

                                       30
<PAGE>
 
REPRICING OF OPTIONS

     The Company has never repriced any outstanding options.

ITEM 11.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------       --------------------------------------------------------------

PRINCIPAL SHAREHOLDERS

The following table sets forth, as of June 30, 1998, the outstanding Class A
Common Stock of the Company owned of record or beneficially by each person who
owned of record, or was known by the Company to own beneficially, more than 5%
of the Company's Common Stock, and the name and shareholdings of each Executive
Officer and Director and all Executive Officers and Directors as a group. A
person is deemed to be the beneficial owner of securities that can be acquired
by such person within 60 days from the date of this report upon the exercise of
warrants or options.  Each beneficial owner's percentage ownership is determined
by assuming that options that are held by such person and which are exercisable
within 60 days from the date are exercised.

<TABLE>
<CAPTION>
============================================================================================================================== 
                                                                                                   PERCENTAGE OF CLASS A
                                                                               CLASS A                  SHARES OWNED
                                                                             SHARES OWNED
NAME
<S>                                                                          <C>                   <C>
------------------------------------------------------------------------------------------------------------------------------ 
James Earl Smith[1]
Chairman of the Board of Directors                                               3,205,000                        32%
------------------------------------------------------------------------------------------------------------------------------  
John G. Robertson[1][2] President and member of the Board of
Directors                                                                        3,197,200                        32%
------------------------------------------------------------------------------------------------------------------------------  
Jennifer Lorette[1]
Secretary/Treasurer, Chief Financial Officer and Principal                         106,000                         1%
Accounting Officer
------------------------------------------------------------------------------------------------------------------------------  
Patrick Badgley[1]                                                                  90,000                         1%
------------------------------------------------------------------------------------------------------------------------------  
Paul E. Lamarche[1]                                                                 85,000                         1%
------------------------------------------------------------------------------------------------------------------------------ 
ALL EXECUTIVE OFFICERS & DIRECTORS AS A GROUP (FIVE
INDIVIDUALS)                                                                     6,683,200                     66.40%
============================================================================================================================== 
</TABLE>

All shares are held beneficially and of record and each record shareholder has
sole voting and investment power.

[1]  These individuals are the Executive Officers and Directors of the Company
     and may be deemed to be "parents or founders" of the Company as that term
     is defined in the Rules and Regulations promulgated under the Securities
     Act of 1933, as amended. Includes options to purchase shares of Class A
     Voting Common Stock at exercise prices of $0.25 and $2.25 per share.

[2]  3,000,000 shares are registered in the name of Access Information Services,
     Inc., a corporation controlled by Mr. Robertson.

CHANGES IN CONTROL

     There are no arrangements known to the Company the operation of which may
     result in a change of control of the Company.

                                       31
<PAGE>
 
ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------       ----------------------------------------------

TRANSACTIONS WITH DIRECTORS

Certain Transactions
--------------------

The Company issued 100 shares of Class A Voting Common Stock to its directors on
December 13, 1994.  On July 12, 1995, these shares were donated back to the
Company and canceled.

Dr. Smith, a tenured professor at WVU and the Company's Chairman of the Board of
Directors organized development of the concept of the CTHA at WVU.  Pursuant to
terms of his employment at WVU, WVU and WVURC own the world wide rights to any
invention made or developed by WVU personnel.  Accordingly ownership rights to
the CTHA belong to WVU and WVURC.

On April 12, 1994, WVURC granted the ICI License to ICI, which is owned by Dr.
Smith to: (1) manufacture CTHAs and (2)  sublicense others to manufacture,
market, sell copies of, license and distribute CTHAs.  The consideration for the
license was:  (1) $1.00 and (2) a royalty of $3,000.00 per year or 10% of the
net revenues received by ICI which ever is greater.

ICI entered into an option agreement with SMR Investments Ltd. ("SMR"), a
corporation owned by Sue Robertson, the wife of  Robertson, dated November 18,
1994, and amended December 16, 1994 (the "Option Agreement").  The Option
Agreement provided that ICI would issue a sublicense to SMR for the CTHA subject
to the payment of $250,000; a 3% royalty from gross sales; and a subsequent
public entity to be established.  The Company was organized by SMR and Robertson
as a result.  ICI retained all military applications and resulting procurement
interests.  The contract period relating to the three percent royalty to be paid
to ICI commences when sales are made by SMR/the Company and continue during the
life of the Option Agreement.  The term of the Option Agreement is perpetual as
is the ICI License.

On December 13, 1994, SMR assigned the rights to the Option Agreement to the
Company in consideration of $50,000 advanced by Access Information Services,
Inc. (the "Option Assignment").  Access Information Services, Inc. is a
corporation owned and controlled by Robertson.

On December 14, 1994, the Company issued 3,000,000 Class A Shares to Dr. Smith
and 3,000,000 Class A Shares to Access Information Services, Inc., pursuant to
the Option Assignment.  The value assigned to the 3,000,000 Class A common
shares issued to Dr. Smith was a total of $0.50 and the value assigned to the
3,000,000 Class A common shares issued to Access Information Services Inc. was
$0.50.  The valuation of the 3,000,000 shares issued to Dr. Smith and Access
Information Services, Inc. was arbitrarily determined by the Company's Board of
Directors.  The $250,000 has been paid to ICI and was a one time payment.

On July 10, 1995, ICI entered into the  Sublicense wherein ICI granted to the
Company the exclusive worldwide right to manufacture, sell copies of, sublicense
and distribute the process and equipment related to the design, construction and
operation of the CTHA and to further sublicense others the rights to
manufacture, sell copies of, license and distribute the same, excluding all
military applications and procurement interests.  The Sublicense was the
culmination of the agreement between ICI and SMR, and SMR and the Company.  On
December 27, 1995, SMR assigned all of its rights and duties in the CTHA
technology to the Company.  The purpose of this assignment was to assign any and
all rights or duties which may have been held by SMR as a result of the Option
Agreement, it being understood that the Option Agreement was nothing more than
an agreement in principle.  The term of the Sublicense is perpetual and requires
the payment of a minimum annual royalty of $3,000.  Further, the Company will
pay a royalty of 10% of the net revenues derived from sales, licenses or
sublicenses of the CTHA technology with a credit for the minimum royalty.  In
addition the Company shall pay a royalty of 3% of the gross revenues derived
from the sales, licenses or sublicenses of the CTHA technology.

The Company and ICI amended the Sublicense in March 1997 to clarify the
applications of CTHA technology subject to the Company's sublicense. As amended,
the Company has exclusive rights to all commercial applications.  ETC has the
exclusive rights to all governmental and military applications for the CTHA
antenna.  In consideration 

                                       32
<PAGE>
 
for the amendment, the Company received a 50% reduction in royalties to be paid
to ICI over a three year period plus an enlarged definition of Technology to
include all future enhancements to the CTHA technology.

The Company entered into a joint venture with ETC to fund a research and
development laboratory and a manufacturing facility, TEAM.  The Company and ETC
each own 50% of TEAM. They  granted TEAM certain rights to sell and manufacture
the antennas.  All sales of antennas by TEAM will be for the credit of either
the Company or ETC, according to the end user.  However the Company and ETC
retained certain rights to sublicense development and manufacturing of antennas.

To date, there have not been any transactions between the Company and its
officers, directors, principal shareholders or affiliates other than as set
forth above.  The Company believes that the transactions described here were on
terms more favorable to the Company's officers, and directors, than otherwise
could be obtained if such transactions were with non-related parties.

ITEM 13.       EXHIBITS AND REPORTS ON FORM 8-K
--------       --------------------------------

(a)  Index to and Description of Exhibits
 
<TABLE> 
<CAPTION> 
Number                        Description                                     Page No.
------                        -----------                                     ---------
<S>                 <C>                                                          <C>
  3                 Articles of Incorporation and By-Laws
  3.1               Articles of Incorporation                                    (1)
  3.2               Article of Amendment                                         (1)
  3.3               By-Laws                                                      (1)
  4                 Instruments Defining Rights of Security Holders
  4.1               Specimen Share Certificate for Class A Shares                (1)
  4.2               Specimen Share Certificate for Class B Shares                (1)
  4.3               Specimen Warrant
  4.4               Specimen Debenture
  10                Material Contracts
  10.1              Agreement between West Virginia University Research
                    Corporation and Integral Concepts, Inc.                      (1)
  10.2              Agreement between Integral Concepts, Inc. and
                    SMR Investments, Inc.                                        (1)
  10.3              Agreement between SMR Investments, Inc. and
                    the Company                                                  (1)
  10.4              Agreement with Greg Ruff                                     (1)
  10.5              British Columbia Confidential Offering Memorandum.           (1)
  10.6              Sublicense Agreement between Integral Concepts, Inc. and
                    the Company.                                                 (1)
  10.7              Project Agreement between the Company and West Virginia
                    Center for Industrial Research Applications                  (1)
  10.8              Assignment Agreement between SMR Investments, Inc. and
                    the Company                                                  (1)
  10.9              Amendment Agreement, effective March 4, 1997, between
                    Integral Concepts, Inc. and the Company                      (2)
  10.10             Joint Venture Agreement between Emergent Technologies
                    Corporation and the Company                                  (2)
  23                Consent of Experts and Counsel
  23.1              Consent of Elliott Tulk Pryce Anderson
  23.2              Consent of Jack Parsons                                      (1)
  27                Financial Data Schedule
</TABLE> 
____________________

                                       33
<PAGE>
 
(1)  Incorporated by reference from Form S-1 Registration Statement (33-92592).

(2)  Incorporated by reference from Form 10-KSB for Fiscal Year 1997.

(b)  Reports on Form 8-K:

     None

                                       34
<PAGE>
 
SIGNATURES

Pursuant to the requirements Section 13 of the Securities Exchange Act of 1934,
the Registrant has duly caused this report or amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                    IAS COMMUNICATIONS, INC.



                                    By: /s/ John G. Robertson
                                        ---------------------------------------
                                        John G. Robertson, President
                                        Chief Executive Officer and Director

Dated:  July 29, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons in-the in the capacities indicated as
of July 29, 1998.


Signature                                              Title
---------                                              -----
 
/s/ John G. Robertson                        President, Chief Executive 
----------------------------------------     Officer and Director
John G. Robertson                            
 
 
/s/ James E. Smith                           Chairman of the
----------------------------------------     Board of Directors
James E. Smith                               
 
 
/s/ Patrick Badgley                          Director
----------------------------------------
Patrick Badgley
 
 
/s/  Paul Lamarche                           Director
----------------------------------------
Paul Lamarche
 
 
/s/ Jennifer Lorette                         Chief Financial Officer
----------------------------------------     and Principal Accounting 
Jennifer Lorette                             Officer

                                       35