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UNITED STATESSECURITIES AND EXCHANGE COMMISSION
  WASHINGTON, D.C. 20549 
  _______________________________

FORM 10-KSB

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

For the Fiscal Year Ended April 30, 2007

COMMISSION FILE NO. 0-21255

IAS ENERGY, 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)

240  11780 HAMMERSMITH WAY RICHMOND, BRITISH COLUMBIA
V7A 5E9, 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:

|Title of each class        | Name of each Exchange on which registered:
|-------------------------- | ------------------------------------------
|Common Stock, no par value | Over the Counter Bulletin Board           

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.

[ X ] Yes [ ] No

Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the 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. [ X ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]

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State the issuers revenues for its most recent fiscal year: $
24,060  Oil and Gas Revenue

The aggregate market value of the voting stock held by
non-affiliates of the registrant on July 7, 2007, computed by reference to the
price at which the stock was sold on that date: $5,990,500.80 .

The number of shares outstanding of the registrant's Common
Stock, no par value, as of fiscal year ended April 30, 2007 and July 7, 2007 was
36,023,039.

Documents incorporated by reference: See Exhibits.

Transitional Small Business Disclosure Format (Check one): Yes (
) No (X).

- 2 -

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IAS ENERGY, INC.

FORM 10-KSB

TABLE OF CONTENTS

|PART I                                                                                                                                                    | 4 
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | --
|ITEM 1. DESCRIPTION OF BUSINESS                                                                                                                           | 4 
|BUSINESS DEVELOPMENT                                                                                                                                      | 4 
|BUSINESS OF THE ISSUER                                                                                                                                    | 4 
|RISK FACTORS                                                                                                                                              | 5 
|PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS,
      ROYALTY AGREEMENTS, LABOR CONTRACTS, INCLUDING DURATION                                     | 9 
|RESEARCH AND DEVELOPMENT                                                                                                                                  | 11
|NUMBER
      OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES                                                                                         | 11
|ITEM 2. DESCRIPTION OF
      PROPERTY                                                                                                                     | 11
|ITEM 3. LEGAL PROCEEDINGS                                                                                                                                 | 13
|ITEM 4. SUBMISSION OF
      MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                         | 14
|PART II                                                                                                                                                   | 14
|ITEM 5. MARKET FOR
      COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER
      PURCHASES OF EQUITY SECURITIES                     | 14
|DIVIDEND POLICY                                                                                                                                           | 15
|RECENT SALES OF UNREGISTERED SECURITIES                                                                                                                   | 15
|ITEM 6: MANAGEMENT'S DISCUSSION AND
      ANALYSIS OR PLAN OF OPERATIONS                                                                                  | 16
|PLAN OF OPERATIONS                                                                                                                                        | 16
|LIQUIDITY AND CAPITAL RESOURCES                                                                                                                           | 17
|ITEM 7: FINANCIAL
      STATEMENTS                                                                                                                        | 17
|ITEM 8. CHANGES IN AND DISAGREEMENTS
      WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                                        | 17
|ITEM
      8A. CONTROLS AND PROCEDURES                                                                                                                    | 17
|ITEM
      8B. OTHER INFORAMTION                                                                                                                          | 19
|PART
      III                                                                                                                                            | 20
|ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, CORPORATE
      GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | 20
|ITEM
      10. EXECUTIVE COMPENSATION                                                                                                                     | 23
|ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
      RELATED STOCKHOLDER MATTERS                                       | 25
|ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE                                                            | 26
|ITEM
      13. EXHIBITS                                                                                                                                   | 28
|ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                                     | 29
|SIGNATURES                                                                                                                                                | 30

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PART I

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

BUSINESS DEVELOPMENT

IAS Energy, Inc. (formerly IAS Communications, Inc.) (referred
to herein as us, we, our") is a development stage company incorporated in the
state of Oregon in 1994. Our principal business operations have historically
been conducted in Indiana and B.C. Canada. Our principal business operations are
the acquisition and exploration of oil and gas interests in North America.
Historically, we have been engaged in the commercialization of an antenna
technology.

BUSINESS OF THE ISSUER

On April 6, 2005, we entered into an agreement with JGR
Petroleum, Inc. (JGR) to purchase an interest in two producing wells located
in Burleson County, Texas from JGR. We agree to issue 1,000,000 shares of
restricted common stock of IAS to JGR as full consideration for the purchase of
interests. The shares are to be issued quarterly on the basis of one share for
every $0.10 revenue from the oil and gas wells.

On November 3, 2005, we entered into a letter of intent to
purchase a 37.5% net revenue interest in a producing oil well in Overton and
Clay County, Tennessee, in consideration for $400,000. We also entered into a
letter of intent to drill two exploration wells in the Overton and Clay County,
Tennessee. In January 2006, we decided not to proceed with this project.

In April 2006, we signed a term sheet with a private oil and
gas company to drill initially 4 gas wells in Kentucky, with an option to drill
an additional 20 wells over a 18 month period. The term sheet is for a 100%
interest, subject to a 12 1⁄2 % interest to the landowner and 27 1⁄2 % interest to
the operator. We will retain a 60% net revenue interest in the wells. The term
sheet is subject to a definitive agreement to be signed and drilling of the
first well.

On May 4, 2006, the Company entered into a joint venture
drilling agreement with Energy Source Inc. (ESI) where the Company can earn a
60% interest in 4 gas wells in Kentucky and the option to acquire a 60% interest
in an additional 20 wells over an 18 month period by paying $185,000 per well
for the first 4 wells, and a price to be agreed upon for all additional wells.
Payment for the first well is payable within twenty days of the agreement (paid
subsequently) and payments for additional wells are due twenty days after
written notice is provided by ESI. In addition the Company must pay a monthly
maintenance fee of $300 per well and any additional maintenance expenses, a
monthly dehydration fee and a $0.55 per MCF transportation fee at 60% of the
head volume as well as any third party transportation and marketing fees
incurred in delivering gas to the sales point.

In June 2006, the Ken Lee #1 well was successfully completed as
a commercial gas well. The initial open flow tested 1.22 MCF of high BTU gas.
The well was completed to a depth of 1410' in the Big Lime formation.

The successful drill results for the Ken Lee #1 gas well
provides confirmation of a productive gas field in the Knox and Laurel counties,
Kentucky.

In July 2006, we commenced the drilling of the Elvis Farris #2
well, located on the Farris Lease, in Laurel County, Kentucky. Testing of the
first two wells has commenced.

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Teryl Resources Inc. has an option to earn a 40% interest by
paying 50% of the costs of each well that Teryl elects to participate in.

Competition

The strength of commodity prices has resulted in significantly
increased operating cash flows and has led to increased drilling activity. This
industry activity has increased competition for undeveloped lands; skilled
personnel; access to drilling rigs, service rigs and other equipment; and access
to processing and gathering facilities, all of which may cause drilling and
operating costs to increase. Most of our competitors are larger than us and have
substantially greater financial and marketing resources. In addition, some of
our competitors may be able to secure products and services from vendors on more
favorable terms, offer a greater product selection, and adopt more aggressive
pricing policies than we can.

Governmental and Environmental Regulations

The oil and natural gas industry is subject to extensive
controls and regulations imposed by various levels of government. We do not
expect that any of these controls or regulations will affect our operations in a
manner materially different than they would affect other oil and gas industry
participants of similar size.

Past Activities of Our Company

Until fiscal 2002, we were engaged in the commercialization of
advanced antenna technology known as the Contrawound Toroidal Helical Antenna,
(the "CTHA"), for wireless communications markets. Since then, The CTHA
technology has been on hold due to unsuccessful attempts to complete a license
agreement with potential customers.

RISK FACTORS

You should carefully consider the following risks and the other
information in this Report and our other filings with the SEC before you decide
to invest in us or to maintain or increase your investment.

The risks and uncertainties described below are not the only
ones facing us. Additional risks and uncertainties may also adversely impact and
impair our business. If any of the following risks actually occur, our business,
results of operations, or financial condition would likely suffer. In such case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.

Risks Specific to Our Company

Developmental Stage Company.

We were incorporated on December 13, 1994. We are a development
stage company. In a development stage company, management devotes most of its
activities to establishing a new business. Planned principal activities have not
yet produced significant revenues and we have suffered recurring operating
losses as is normal in development stage companies. We also have a working
capital deficiency of $243,546 as at April 30, 2007, which our auditors have
stated raises substantial concern on our ability to meet planned business
objectives or to fund oil and gas exploration and ongoing operations for the
next twelve months.. Our ability to emerge from the

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development stage with respect to our planned principal
business activity is dependent upon our successful efforts to raise additional
equity financing, receive funding from affiliates and controlling shareholders,
and develop a market for our products.

Limited Operating History.

The Company had oil and gas revenue of $24,060 during the year
ended April 30, 2007, but it is not likely that we will be able to generate
sufficient revenue in the future until we acquire another business. We have no
significant assets or financial resources, and will, in all likelihood, sustain
operating expenses without corresponding revenues for a period of time that
cannot yet be determined. This may result in our continuing to incur net
operating losses.

Need for Additional Financing.

We have experienced significant working capital deficiencies
and negative cash flows in the past. Our ability to continue in business depends
upon our continued ability to obtain working capital. We will require additional
financing in order to continue Our ability to continue in business depends upon
our continued ability to obtain such additional capital and financing. There can
be no assurance that any such financing would be available upon terms and
conditions acceptable to us, if at all. The inability to obtain additional
financing in a sufficient amount when needed and upon acceptable terms and
conditions could have a material adverse effect upon us. If additional funds are
raised by issuing equity securities, further dilution to existing or future
shareholders is likely to result. If adequate funds are not available on
acceptable terms when needed, we may be required to delay, scale back or
eliminate our promotional and marketing campaign or our development programs.
Inadequate funding also could impair our ability to compete in the marketplace
and could result in its dissolution.

Control by Current Insiders.

Approximately 25,000,000 common shares, not including currently
exercisable options or warrants, are owned by current affiliates and insiders
representing control of approximately 70% of the total voting power.
Accordingly, the present insiders will continue to elect all of our directors
and generally control our affairs.

Uncertain Ability to Manage Growth.

Our ability to achieve our planned growth is dependent upon a
number of factors including our ability to hire, train and assimilate management
and other employees, the adequacy of our financial resources, our ability to
identify and efficiently provide such new products and services as our customers
may require in the future and our ability to adapt our own systems to
accommodate expanded operations. In addition, there can be no assurance that we
will be able to achieve our planned expansion or that we will be able to manage
such expanded operations successfully. Failure to manage anticipated growth
effectively and efficiently could have a material adverse effect on us.

Part-Time Management.

Our present officers and directors have other full-time or
part-time positions for employers unrelated to us. As a result, some of our
officers and directors serve on an as-needed basis. The lack of full-time
management could have an adverse effect on us.

- 6 -

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As Our Properties Are in the Exploration and Development Stage,
there Can Be No Assurance that We Will Establish Commercial Discoveries on Our
Properties.

Exploration for economic reserves of oil and gas is subject to
a number of risk factors. Few properties that are explored are ultimately
developed into producing oil and/or gas wells. Our properties are in the
exploration and development stage only and are without proven reserves of oil
and gas. We may not establish commercial discoveries on any of our properties.

The Potential Profitability of Oil and Gas Ventures Depends
Upon Factors Beyond the Control of Our Company.

The potential profitability of oil and gas properties is
dependent upon many factors beyond our control. For instance, world prices and
markets for oil and gas are unpredictable, highly volatile, potentially subject
to governmental fixing, pegging, controls, or any combination of these and other
factors, and respond to changes in domestic, international, political, social,
and economic environments. Additionally, due to worldwide economic uncertainty,
the availability and cost of funds for production and other expenses have become
increasingly difficult, if not impossible, to project. In addition, adverse
weather conditions and availability of drilling equipment can also hinder
drilling operations. These changes and events may materially affect our
financial performance. These factors cannot be accurately predicted and the
combination of these factors may result in our company not receiving an adequate
return on invested capital.

There Can Be No Assurance Our Wells Will Become Profitable.

Our wells may not become productive wells, and even if they do,
they may become uneconomic in the event water or other deleterious substances
are encountered which impair or prevent the production of oil and/or gas from
the well. In addition, production from any well may be unmarketable if it is
impregnated with water or other deleterious substances. Also, the marketability
of oil and gas which we may acquire or discover will be affected by numerous
factors, including the proximity and capacity of oil and gas pipelines and
processing equipment, market fluctuations of prices, taxes, royalties, land
tenure, allowable production and environmental protection, all of which could
result in greater expenses than revenue generated by the well.

Competition in the Oil and Gas Industry is Highly Competitive
and there Is No Assurance that We Will Be Successful in Acquiring the Leases.

The oil and gas industry is intensely competitive. We compete
with numerous individuals and companies, including many major oil and gas
companies, which have substantially greater technical, financial and operational
resources and staffs. Accordingly, there is a high degree of competition for
desirable oil and gas leases, suitable properties for drilling operations and
necessary drilling equipment, as well as for access to funds. We cannot predict
if the necessary funds can be raised or that any projected work will be
completed.

Risks Specific to Our Industry

The Marketability of Natural Resources Will Be Affected by
Numerous Factors Beyond Our Control which May Result in Us Not Receiving an
Adequate Return on Invested Capital To Be Profitable or Viable.

The marketability of natural resources which we may acquire or
discover will be affected by numerous factors beyond our control. These factors
include market fluctuations in oil and gas pricing and demand, the proximity and
capacity of natural resource markets and processing equipment,

- 7 -

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governmental regulations, land tenure, land use, regulation
concerning the importing and exporting of oil and gas and environmental
protection regulations. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in us not receiving
an adequate return on invested capital to be profitable or viable.

Oil and Gas Operations Are Subject to Comprehensive Regulation
Which May Cause Substantial Delays or Require Capital Outlays in Excess of those
Anticipated Causing an Adverse Effect on Our Company.

Oil and gas operations are subject to federal, state, and local
laws relating to the protection of the environment, including laws regulating
removal of natural resources from the ground and the discharge of materials into
the environment. Oil and gas operations are also subject to federal, state, and
local laws and regulations which seek to maintain health and safety standards by
regulating the design and use of drilling methods and equipment. Various permits
from government bodies may be required for drilling operations to be conducted;
we can give no assurance that we will receive such permits. Environmental
standards imposed by federal, provincial, or local authorities may be changed
and any such changes may have material adverse effects on our activities.
Moreover, compliance with such laws may cause substantial delays or require
capital outlays in excess of those anticipated, thus causing an adverse effect
on us. Additionally, we may be subject to liability for pollution or other
environmental damages. To date we have not been required to spend any material
amount on compliance with environmental regulations. However, we may be required
to do so in future and this may affect our ability to expand or maintain our
operations.

Risks Related to Our Securities

You Will Be Subject to The Penny Stock Rules to the Extent Our
Stock Price on the OTC Bulletin Board Is Less Than $5.00.

Since the common shares are not listed on a national stock
exchange or quoted on the NASDAQ Market within the United States, trading in the
common shares on the OTC Electronic Bulletin Board is subject, to the extent the
market price for the common shares is less than $5.00 per share, to a number of
regulations known as the "penny stock rules". The penny stock rules require a
broker-dealer to deliver a standardized risk disclosure document prepared by the
SEC, to provide the customer with additional information including current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, monthly account statements showing the
market value of each penny stock held in the customer's account, and to make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
To the extent these requirements may be applicable they will reduce the level of
trading activity in the secondary market for the common shares and may severely
and adversely affect the ability of broker-dealers to sell the common shares.

Future Sales of Shares May Adversely Impact the Value of Our
Stock.

We will seek to raise additional capital through the sale of
our common stock. Future sales of our common stock could cause the market price
of our common stock to decline.

Because of the Limited Market for Our Shares, Share Prices May
Be Highly Volatile.

The market prices of equity securities of small companies have
experienced extreme price volatility in recent years not necessarily related to
the individual performance of specific companies. Factors such as announcements
by us or our competitors concerning products, technology,

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governmental regulatory actions, other events affecting oil and
gas companies generally and general market conditions may have a significant
impact on the market price of our shares and could cause it to fluctuate
substantially.

Dilution.

Sales of additional equity securities through a traditional
underwritten offering or through private placement offerings may dilute, on a
pro rata basis, the value of our common shares. The grant and exercise of
warrants of creditors or otherwise or stock options would also likely result in
a dilution of the value of our common shares.

In addition, we may grant additional stock options or other
forms of equity-based incentive compensation to attract and retain such
personnel. We also may in the future offer equity participation in connection
with the obtaining of non-equity financing, such as debt or leasing arrangements
accompanied by warrants to purchase our equity securities. Any of these actions
could dilute the value of our common shares.

Dividend Policy.

As of the date of this Form 10-KSB, we have not paid any
dividends on our common stock and we do not expect to declare or pay any
dividends on our common stock for the foreseeable future.

Anti-Takeover Provisions.

At the present time, our Board of Directors has not adopted any
shareholder rights plan or any anti-takeover provisions in our Charter or
Bylaws.

PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY
AGREEMENTS, LABOR CONTRACTS, INCLUDING DURATION

We obtained the rights to the CTHA through a series of
transactions. Dr. James E. Smith ("Dr. Smith"), a tenured professor at West
Virginia University ("WVU"), 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. SMR and Robertson
organized the Company 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
us and continues during the life of the Option Agreement. The term of the Option
Agreement is perpetual as is the ICI License.

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On December 13, 1994, we were assigned the rights to the Option
Agreement by SMR 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, we 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 our 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 us 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 us. On December
27, 1995, SMR assigned all of its rights and duties in the CTHA technology to us
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, we 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, we 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 us by 50% over the next 3 years,
(ii) clarify that our 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 us.

Effective March 17, 2005, we entered into a settlement and
release agreement with Integral Concepts Inc. (ICI) to terminate the exclusive
worldwide sublicense granted to the Company by ICI.

We 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 we own 50% and ETC owns 50% of TEAM. Pursuant
to a voting agreement we can vote 100% of the shares of TEAM. 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. We retain the worldwide commercial sublicense
rights to the CTHA excluding all military and governmental applications.

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

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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 that 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, we were issued the Sublicense by ICI, which was amended in
March 1997.

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

On March 17, 2005, we entered into a Non-Exclusive License
Agreement with WVURC regarding the CTHA technology sublicense. IAS and WVURC
agree to license the CTHA technology back to IAS on a nonexclusive basis for the
worldwide rights. IAS will continue to pay a minimum royalty fee of US$3,000 to
WVURC and a royalty of 10% of the net sales, whichever is greater.

In addition, effective March 17, 2005, we entered into a
settlement and release agreement with West Virginia University Research
Corporation. WVRUC agrees to waive the US$315,778.50 research and development
payment due from IAS in consideration for the termination of the IAS sublicense
agreement with ICI. IAS will unconditionally release and discharge WVURC and
related parties from all claims IAS may have against them.

RESEARCH AND DEVELOPMENT

We spent $3,000 in 2007 on research and development as compared
to $3,000 in 2006. Research and development is required to keep the license in
good standing.

NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES

In addition to our Officers, we currently employ no full-time
employees and utilize contractors as required.

|ITEM 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

Our executive offices are located at #240-11780 Horseshoe Way,
Richmond, British Columbia V7A 5E9, and the telephone number is (604) 278-5996.
We utilize approximately 200 square feet of space at the aforementioned office
from SMR Investments. The Company occupied this space rent-free during the
fiscal year.

Oil and Gas Properties

As of April 30, 2007, we had a working interest in two
properties, but as of the date of this report, the Company does not own any
properties.

On April 6, 2005, we entered into an agreement with JGR
Petroleum, Inc. (JGR) to purchase an interest in two producing wells located
in Burleson County, Texas from JGR. The wells are producing but a value cannot
be placed on them due to vertical fracture features that prevent the estimation
of reserves.

On May 4, 2006, the Company entered into a joint venture
drilling agreement with Energy Source Inc. (ESI) where the Company can earn a
60% interest in 4 gas wells in Kentucky and the option

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to acquire a 60% interest in an additional 20 wells over an 18
  month period by paying $185,000 per well for the first 4 wells, and a price
  to be agreed upon for all additional wells. Payment for the first well was paid
  and payments for additional wells are due twenty days after written notice is
  provided by ESI. In addition the Company must pay a monthly maintenance fee
  of $300 per well and any additional maintenance expenses, a monthly dehydration
  fee and a $0.55 per MCF transportation fee at 60% of the head volume as well
  as any third party transportation and marketing fees incurred in delivering
  gas to the sales point. To April 30, 2007, the Company’s portion of revenue
  from the wells was approximately $14,490. The first three wells were paid and
  drilled during the year. During the fiscal year ended April 30, 2007, the Company
  recorded depletion of $2,604 on capitalized costs relating to this area..

On May 18, 2006, the Company entered into an agreement with Teryl
  Resources Corp. (“Teryl”), a public company related by common directors
  and officers, to farm out a 40% working interest outlined above, subject to
  a 12.5% net revenue interest to the land-owner and a 27.5% interest to ESI,
  in consideration for paying 50% of the total costs of the wells. The Company
  received $277,500 from Teryl during the period, representing 50% of the cost
  of drilling the first, second, and third wells.

On September 28, 2006, the Company issued 10 units at $20,000
  per unit for cash proceeds of $200,000 to three related parties pursuant to
  a private placement. Each unit consists of 50,000 shares of common stock, 25,000
  share purchase warrants, and a 20% working interest (12% net interest) in the
  3rd well. This well is to be drilled with the proceeds from this private placement.

Exploratory and Development Wells Drilled

We have participated in the drilling of several wells during
the last three fiscal years.

In June 2006, the Ken Lee #1 well was successfully completed as
a commercial gas well. The initial open flow tested 1.22 MCF of high BTU gas.
The well was completed to a depth of 1410' in the Big Lime formation.

The successful drill results for the Ken Lee #1 gas well and
previous drill results provides confirmation of a productive gas field in the
Knox and Laurel counties, Kentucky. The Ken Lee #1 gas well is currently in
production.

In July 2006, we commenced the drilling of the Elvis Farris #2
well, located on the Farris Lease, in Laurel County, Kentucky. Testing has
commenced.

On November 1, 2006 we announced that the Clarence Bright #1
well in Laurel County, Kentucky is completed. The total depth on the well was
1742 feet with two production zones, one in the Big Lime @ 1240 to 1250 and one
in Waverly @ 1252 to 1260. The open flow was 747 MCF with 230 PSI. The gathering
line to this well is in the process of being laid. Ken Lee #1 and Elvis Farris
#2 are also in production and the Company will update on flow rates as soon as
the mid-line compressor is installed. Additional wells in Knox & Laurel
Counties are planned in the near future.

The two producing wells located in Burleson County, Texas are
producing but a value cannot be placed on them due to vertical fracture features
that prevent the estimation of reserves.

Miscellaneous

We are not obligated to provide quantities of oil or gas in the
future under existing contracts or agreements. We have not filed any reports
containing oil or gas reserve estimates with any federal or foreign governmental
authority or agency within the past 12 months.

- 12 -

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

To the best of the knowledge of our Officers and Directors,
neither the Company nor any of our Officers and Directors are parties to any
material legal proceeding or litigation other than as described below. Further,
our Officers and Directors know of no threatened or contemplated legal
proceedings or litigation other than as described below. None of our Officers
and Directors has been convicted of a felony and none has been convicted of any
criminal offense, felony or misdemeanor, relating to securities or performance
in corporate office. To the best of the knowledge of our 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, Kirk VanVoorhies, (Plaintiff) sought money damages and equitable
relief against the Company alleging patent infringement by the Company for the
CTHA. The Company notified West Virginia University (WVU) of this claim and
contacted WVU to assist in the defense. WVU owns the patent rights to the CTHA
technology, which were licensed to the Company. Two patents were granted for the
CTHA to WVU; one in August 1995, and another in August 1997. The Plaintiffs
patent was approved on March 31, 1998.

The Plaintiff in the Oregon Litigation is also a defendant in a
pending civil action in the U.S. District Court for the Northern District of
West Virginia brought by WVU (the West Virginia Litigation) claiming that the
CTHA invention is owned by WVU. As alleged in the West Virginia Litigation, the
Company believes that the patent rights for the CTHA technology belongs to WVU
and therefore based on the license, the Company owns the worldwide rights to the
CTHA commercial applications. Litigation, the Company believes that the patent
rights for the CTHA technology belongs to WVU and therefore based on the
license, the Company owns the worldwide rights to the CTHA commercial
applications.

A decision by the United States District Court for the Northern
District of West Virginia will, if upheld on appeal, signal the end to patent
litigation brought by VorteKx, Inc. against the Company.

VorteKx, Inc. brought a patent infringement action against IAS
in the United States District Court for the District of Oregon on a patent
issued to a former graduate student at WVU, Kurt L. VanVoorhies, and
subsequently assigned to VorteKx. On the Company's motion, the case was
transferred to the Northern District of West Virginia and consolidated with a
previously pending action filed by WVU against VanVoorhies, discussed above. The
Company and WVU both claimed that the technology covered by the patent is
actually owned by WVU. The Company is the sublicensee of commercial applications
of the CTHA technology.

In a Memorandum Opinion and Order entered February 17, 2000,
the West Virginia federal court granted summary judgment for WVU in its claims
against VanVoorhies. The Court also dismissed VanVoorhies' claims against WVU
and third-party defendants West Virginia University Research Corporation, Dr.
James E. Smith and Integral Concepts, Inc. Because the Court's holding
establishes that WVU owns the technology, it should bring an end to the
litigation against the Company, which was stayed pending resolution of the case
against VanVoorhies.

The dispute in the WVU action concerned inventions conceived
during VanVoorhies' time at WVU as a graduate student and later as a graduate
research assistant, particularly two inventions relating to the CTHA technology.
The Court found that VanVoorhies validly assigned all rights in the first
invention to WVU, including all future technology derived from the technology
underlying that invention. VanVoorhies subsequently declined to assign to WVU
any interest in a second invention. The Court found that the second invention
constituted future technology

- 13 -

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derived from the first invention. Therefore, VanVoorhies'
assignment of the first invention to WVU also effectively assigned the second
invention to WVU, and WVU is the rightful owner of the patent applications filed
by VanVoorhies on the CTHA technology.

Because one of these patent applications led to the issuance of
the patent underlying VorteKx's infringement suit against the Company, VorteKx
no longer has standing to pursue that infringement case. The case was stayed
pending VanVoorhies' appeal from the Court's order. On May 20, 2004 the United
States Court of Appeals affirmed the stay of the case.

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

No matters were submitted to a vote by our security holders
during the fourth quarter of our fiscal year ended April 30, 2007.

Subsequent to April 30, 2007, on May 24, 2007, at a special and
general meeting of the shareholders of the Company, the shareholders of the
Company approved the following changes to the Companys articles of
incorporation:

- The name of the company has been changed to IAS Energy, Inc.
- The purpose for which the corporation is organized is simplified to any
  lawful activity for which the corporation may be organized; and
- Reduction of the number of shares required to amend the articles of
  incorporation from two-thirds to a majority.

Additionally John G. Robertson, James L. Vandeberg, and
Jennifer Lorette were elected directors of the Company to hold office until the
next annual meeting of the shareholders and until their successors are elected
and qualified or until they resign or are removed from office.

The shareholders approved Smythe Ratcliffe LLP, Chartered
Accountants as auditor of the Company until the next Annual Meeting of
Shareholders.

The Oregon Secretary of State, Corporation Department, accepted
the amendment as filed May 30, 2007.

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
      AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.
|------- | ------------------------------------------------------------------------------------------------------------------------

Our Common Stock trades on the OTC Bulletin Board under the
symbol "IASCA.OB" where it has traded since April 16, 1996. Our Common Stock has
traded at between $0.010 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 reported by Nasdaq Trading & Market Services for
the quarters presented. These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions, and may not reflect actual
transactions.

- 14 -

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|                               | Bid Price | Asked Price
|------------------------------ | --------- | -----------
|                               | High $    | Low $      
|Quarter Ended July 31, 2005    | .15       | .10        
|Quarter Ended October 31, 2005 | .14       | .10        
|Quarter Ended January 31, 2006 | .16       | .10        
|Quarter Ended April 30, 2006   | .43       | .12        
|Quarter Ended July 31, 2006    | .45       | .32        
|Quarter Ended October 31, 2006 | .40       | .25        
|Quarter Ended January 31, 2007 | .33       | .15        
|Quarter Ended April 30, 2007   | .24       | .15        

As of July 7, 2007 there were 36,023,039 shares of Common Stock
outstanding, held by 131 shareholders of record.

DIVIDEND POLICY

To date we have not paid any dividends on our Common Stock and
do 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, our financial condition, and other factors as deemed relevant
by our Board of Directors.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about our common
stock that may be issued upon the exercise of options, warrants and rights under
all of our equity compensation plans as of April 30, 2007.

Plan Category
    Number of Shares To Be Issued Upon
      Exercise
    Weighted Average Exercise Price (2)
    Number of Securities Available for
      Issuance2003 Stock Option Plan (1)
    1,250,000
    $0.20
    669,000


|(1) | The Company has a Stock Option Plan to issue up to
      2,500,000 shares to certain key directors and employees, approved August
      1996 and amended November 1, 2000. Pursuant to the Plan, the Company has
      granted stock options to certain directors and employees.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                 
|(2) | The price reflects the weighted average exercise price of
      those options which are vested and exercisable.                                                                                                                                                                 

RECENT SALES OF UNREGISTERED SECURITIES

Set forth below is information regarding the issuance and sales
of our securities without registration during the past fiscal year. No such
sales involved of an underwriter and no commissions were paid in connection with
the sale of any securities. See the Statement of Stockholders Equity and the
Notes to our audited financial statements for the fiscal year ended April 30,
2007 for more information on recent sales of unregistered securities.

| | a) | On September 28, 2006, the Company issued 10 units at
      $20,000 per unit for cash proceeds of $200,000 to three related parties
      pursuant to private placement subscription agreements. Each unit consists
      of 50,000 shares of common stock, 25,000 share purchase warrants, and a 2%
      working interest (1.2% net interest) in the Kentucky wells to be drilled
      with the proceeds from this private placement. Each share purchase warrant
      is exercisable to acquire one share of common stock at $0.40 per share for
      a period of one year. This offering was exempt from registration under
      Rule 506 and Section 4(2) of the Securities Act of 1933, as amended (the
      "Act"). Each certificate representing securities issued to the investors
      in this private placement bears a legend restricting transfer. In
      addition, if the exemptions under Rule 506 under and Section 4(2) of the
      Act are not
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 15 -

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| |    | available, $120,000 of the sales to non-U.S. residents
      were exempt pursuant to Regulation S under the Act.                                                                                                                                                                                                                                            
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                             
| | b) | On August 8, 2006, the Company issued 279,477 shares of
      common stock with a fair value of $53,425 to a private company controlled
      by the President of the Company pursuant to petroleum agreement. This
      offering was exempt from registration under Rule 506 and Section 4(2) of
      the Securities Act of 1933, as amended (the
"Act").

During the fiscal year ended April 30, 2007, there were no
shares issued in connection with the exercise of warrants or stock options. Note
8, Oil and Gas Properties and Note 9, Commitments to our audited financial
statements for the years ended April 30, 2007 and April 30, 2006 for future
commitments to issue unregistered securities.

|ITEM 6: | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATIONS
|------- | ----------------------------------------------------------------

This report contains forward-looking statements. The words,
"anticipate", "believe", expect", "plan", "intend", "estimate", "project",
"could", "may", "foresee", and similar expressions are intended to identify
forward-looking statements. The following discussion and analysis should be read
in conjunction with our Financial Statements and other financial information
included elsewhere in this report which contains, in addition to historical
information, forward-looking statements that involve risks and uncertainties.
Our actual results could differ materially from the results discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include those discussed below, as well as those discussed elsewhere
in this report.

PLAN OF OPERATIONS

We were incorporated on December 13, 1994 pursuant to the Laws
of the State of Oregon, USA. We are a development stage company. Our principal
business operations have historically been conducted in Indiana and B.C. Canada.
Our principal business operations are the acquisition and exploration of oil and
gas interests in North America. Historically, we have been engaged in the
commercialization of an antenna technology.

In a development stage company, management devotes most of its
activities to establishing a new business. Planned principal activities have not
yet produced significant revenues and we have suffered recurring operating
losses as is normal in development stage companies. We also have a working
capital deficiency of $243,546 as at April 30, 2007, which our auditors have
stated raises substantial concern on our ability to meet planned business
objectives or to fund oil and gas exploration and ongoing operations for the
next twelve months. Our ability to emerge from the development stage with
respect to our planned principal business activity is dependent upon our
successful efforts to raise additional equity financing, receive funding from
affiliates and controlling shareholders, and develop a market for our
products.

We may raise additional funds through the exercise of warrants
and stock options, if exercised. Options with respect to 1,250,000 shares may be
exercised for potential proceeds of $250,000. Warrants with respect to 250,000
shares may be exercised for potential proceeds of $100,000. These options and
warrants are currently not in-the-money and are unlikely to be currently
exercised.

Results of Operation for the Year Ended April 30, 2007 ("2007")
as compared to the Year Ended April 30, 2006 ("2006")

- 16 -

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During 2007 we incurred revenue of $24,000 compared to $28,000
  in 2006. Administrative expenses increased by $24,000 in 2007 to $38,000 as
  compared to $14,000 in 2006. No management fees were charged during 2007 or
  2006. Transfer agent and regulatory expenses decreased by $1,000 to $1,700 from
  $2,700. Professional fees decreased by $15,000 to $51,000 from $66,000 in 2006.
  In 2007 we had an impairment loss on petroleum interests of $62,500 compared
  to $53,500 in 2006, and we wrote-off accounts payable of $9,000, as compared
  to $54,000 in 2006. During 2007 we incurred an unrealized loss on securities
  held for trading of $18,000 compared to a gain of $141,000 in 2006, and we had
  a gain on sale of available-for-sale securities of $103,000 as compared to $Nil
  in 2006. As a result of the gain on sale of available-for-sale securities, the
  write-off of the accounts payable, the oil and gas revenues, the impairment
  loss on petroleum interests, the unrealized loss on securities held for trading
  and the reclassification adjustment for gains included in net income, we incurred
  a net loss of $163,000 as compared to net income of $81,000 in 2006 and we incurred
  a net loss per share of $nil as compared to a net income of $nil in both 2007
  and 2006.

LIQUIDITY AND CAPITAL RESOURCES

During 2007 we financed our operations and received $385,000
by:

| | (i)  | receiving financial support from related parties in the
      amount of $185,000. These amounts are unsecured, non-interest bearing and
      due on demand.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii) | Received $200,000 from the issuance of shares of common
      stock.                                                                                        

During 2007 we invested these funds as follows:

| | (i)   | $82,500 of these funds was spent on operating activities
      as discussed above under Results of Operation for the year ended April 30,
      2007.
| | ----- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | $277,500 was invested in oil and gas
properties.                                                                                                     
| | (iii) | $13,000 was used in the purchase of
  securities.                                                                                                    

As at April 30, 2007, our cash position is $12,285 as compared
to $313 in 2006, and our working capital deficit is $243,546.

|ITEM 7: | FINANCIAL STATEMENTS
|------- | --------------------

Our financial statements are included and begin immediately
following the signature page to this report. See Item 13 for a list of the
financial statements and financial statement schedules included.

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

None.

|ITEM 8A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

We carried out an evaluation, under the supervision and with
the participation of our management, including the President, and the Chief
Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures [as defined in the Exchange Act Rule
13a-15(e)] as of the end of the period covered by this report. Based upon the
evaluation of the effectiveness of the disclosure controls and procedures as of
the end of the period covered by

- 17 -

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this annual report, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of such date, the disclosure controls
and procedures were effective at the reasonable assurance level with respect to
such disclosure controls and procedures being designed to ensure that
information relating to the Registrant required to be disclosed by the Company
in reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC.

There are inherent limitations to the effectiveness of any
system of disclosure controls and procedures, including the possibility of human
error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide
reasonable , and not absolute assurance, of achieving the desired control
objectives, and management necessarily was required to apply its judgement in
evaluating the cost-benefit relationship of possible controls and procedures.

There was no significant change in our internal control over
financial reporting that occurred during our most recently completed fiscal year
ended April 30, 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting. Nor were there
any significant deficiencies or material weaknesses in our internal controls
requiring corrective actions.

Extension of Compliance Date for Managements Report on
Internal Control Over Financial Reporting

The Company is a non-accelerated filer as defined in Rule 12b-2
of the Act. On September 21, 2005, the Securities and Exchange Commission
extended the compliance dates for non-accelerated filers concerning the
provisions of Exchange Act Rule 13a-15(d) or 15d-15(d), whichever applies,
requiring an evaluation of changes to internal control over financial reporting
requirements with respect to the companys first periodic report due after the
first annual report that must include managements report on internal control
over financial reporting. A company that is a non-accelerated filer must begin
to comply with these requirements for its first fiscal year ending on or after
July 15, 2007. In addition, the compliance period was extended to the amended
portion of the introductory language in paragraph 4 of the certification
required by Exchange Act Rules 13a-14(a) and 15d-14(a) that refers to the
certifying officers responsibility for establishing and maintaining internal
control over financial reporting for the company, as well as paragraph 4(b). The
amended language must be provided in the first annual report required to contain
managements internal control report and in all periodic reports filed
thereafter. The extended compliance dates also apply to the amendments of
Exchange Act Rules 13a-15(a) and 15d-15(a) relating to the maintenance of
internal control over financial reporting.

Under the internal control reporting provisions of the Act,
Management will be responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) under the
Exchange Act. Internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with accounting principles generally accepted in the United States of
America.

The Companys internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and

- 18 -

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directors of the Company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use, or disposition of the Companys assets that could have a material effect on
the financial statements.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

Prior to the extended deadline in 2007, management will conduct
an evaluation of the effectiveness of internal control over financial reporting
based on the framework in Internal Control  Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this
evaluation, management will determine whether the Companys internal control
over financial reporting is effective. Managements assessment of the
effectiveness of the Companys internal control over financial reporting will be
audited by an independent registered public accounting firm and stated in their
report which will be included in the Companys Form 10-KSB filing.

There were no changes in the Companys internal controls that
have materially affected, or are reasonably likely to materially affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|ITEM 8B. | OTHER INFORAMTION.
|-------- | ------------------

On September 8, 2005, Manning Elliott agreed to resign as IAS
Energy, Inc.s (the "Company") principal auditor, effective as of such date. On
September 8, 2005, the Company appointed Smythe Ratcliffe LLP as the principal
auditor of the Company, effective as of such date. The resignation of Manning
Elliott was accepted and the appointment of Smythe Ratcliffe LLP was approved by
the Companys Audit Committee.

The reports of Manning Elliott on the Company's financial
statements for the two fiscal years 2005 and 2004 did not contain an adverse
opinion or a disclaimer of opinion on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles.

The Company has authorized Manning Elliott to respond fully to
questions of its successor independent auditors.

There were no disagreements with Manning Elliott for the past
two fiscal years any subsequent interim period preceding such resignation,
declination or dismissal on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure, which
disagreement, if not resolved to the satisfaction of Manning Elliott, would have
caused it to make reference to the subject matter of the disagreement in
connection with its report.

The Company has requested Manning Elliott to furnish it a
letter addressed to the SEC stating whether it agrees with the above statements.
A copy of that letter, dated September 13, 2005, was filed with our 8-K on
September 13, 2005.

- 19 -

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WEST VIRGINIA UNIVERSITY RESEARCH CORPORATION NON-EXCLUSIVE
LICENSE AGREEMENT

On March 17, 2005, we closed on a transaction pursuant to which
we entered into a Non-Exclusive License Agreement with West Virginia University
Research Corporation (WVURC) regarding the CTHA technology sublicense.

We obtained the rights to the CTHA through a series of
transactions. Dr. James E. Smith ("Dr. Smith"), a tenured professor at West
Virginia University ("WVU"), 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 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 manufacture the CTHA and sublicense others to manufacture, market,
sell copies of, license and distribute the CTHA.

On July 10, 1995, ICI granted an exclusive worldwide sublicense
to us. 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.

IAS and WVURC agree to license the CTHA technology back to IAS
on a nonexclusive basis for the worldwide rights. IAS will continue to pay a
minimum royalty fee of US$3,000 to WVURC and a royalty of 10% of the net sales,
whichever is greater.

In addition, effective March 17, 2005, we entered into a
settlement and release agreement with West Virginia University Research
Corporation. WVRUC agrees to waive the US$315,778.50 research and development
payment due from IAS in consideration for the termination of the IAS sublicense
agreement with ICI. IAS will unconditionally release and discharge WVURC and
related parties from all claims IAS may have against them.

INTEGRAL CONCEPTS INC. SETTLEMENT AND RELEASE AGREEMENT

Effective March 17, 2005, we entered into a settlement and
release agreement with Integral Concepts Inc. (ICI) to terminate the exclusive
worldwide sublicense granted to the Company by ICI.

PART III

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

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

- 20 -

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|Name              | Age | Position                                                                                                
|----------------- | --- | --------------------------------------------------------------------------------------------------------
|                  |     |                                                                                                         
|John G. Robertson | 66  | Principal Executive Officer,
      President, Chairman of the Board and Member of the Board of Directors
|Jennifer Lorette  | 35  | Secretary and Member of the Board of Directors                                                          
|James Vandeberg   | 63  | Chief Operating Officer, Chief
      Financial Officer and Member of the Board of Directors             

All our Directors have served since the formation of the
Company in December, 1994, except for James L. Vandeberg, who was appointed to
the Board of Directors in November, 1998. The Executive Officers were elected on
February 4, 1995, except for James L. Vandeberg, who was appointed as Chief
Operating Officer on August 1st, 1999. All officers currently devote part-time
to our operations.

There are no family relationships between any director or
executive officer and any other director or executive officer.

The present and principal occupations of our directors and
executive officers during the last five years are set forth below:

John G. Robertson - President, Principal Executive Officer and
a Member of the Board of Directors

Mr. Robertson has been the President and Principal Executive
Officer and a Director of the Company since its formation. Mr. Robertson has
been Chairman, President and Chief Executive Officer of REGI U.S., Inc. since
July 1992. Since October 1984 Mr. Robertson has been President and a Director of
Reg Technologies Inc., a British Columbia corporation listed on the TSX Venture
Exchange that has financed the research on the Rand Cam Engine since 1986. REGI
U.S. is controlled by Rand Energy Group, Inc., a British Columbia corporation of
which Reg Technologies Inc. is the majority shareholder. 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 June 1997 Mr. Robertson has been
President, Principal Executive Officer and a Director of
Information-Highway.com, Inc., a Florida corporation traded on the PinkSheets,
and its predecessor. He is also the President and Founder of Teryl Resources
Corp., a public company trading on the TSX Venture Exchange involved in gold,
diamond, and oil and gas exploration. He is also President of Linux Gold Corp.,
a public company trading on the OTC Bulletin Board. 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.

James L. Vandeberg - Chief Operating Officer, Chief Financial
Officer and a Member of the Board of Directors

Mr. Vandeberg became a Director of the Company in November
1998, its Chief Operating Officer in August 1999 and its Chief Financial Officer
in November 2001. Mr. Vandeberg is an attorney in Seattle, Washington. He has
served as our legal counsel since 1996. Mr. Vandeberg's practice focuses on the
corporate finance area, with an emphasis on securities and acquisitions. Mr.
Vandeberg was previously general counsel and secretary of two NYSE companies. He
is a director of Information-Highway.com, Inc., a Florida corporation traded on
the Pink Sheets. He is also a director of REGI U.S., Inc., an Oregon corporation
traded on the OTC Bulletin Board

- 21 -

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since November 1998 and its Chief Operating Officer since
November 1999 and Chief Financial Officer since January 2006. Mr. Vandeberg is
also a director of Reg Technologies Inc. which is traded on the OTC Bulletin
Board and the TSX Venture Exchange. Mr. Vandeberg has also been a director of
ASAP Show Inc. since May 2005. He is a member and former director of the
American Society of Corporate Secretaries. He became a member of the Washington
Bar Association in 1969 and of the California Bar Association in 1973. Mr.
Vandeberg graduated cum laude from the University of Washington with a Bachelor
of Arts degree in accounting in 1966, and from New York University School of Law
in 1969, where he was a Root-Tilden Scholar.

Jennifer Lorette - Secretary/Treasurer and a Member of the
Board of Directors

Ms. Lorette is a founder, and has been Secretary/Treasurer,
Principal Financial Officer and Principal Accounting Officer of the Company
since February 1995. Since June 1994 Ms. Lorette has been Vice President and
director of REGI U.S., Inc., an Oregon corporation traded on the OTC bulletin
board. Since April 1994 she has also been Vice President of Administration and
Secretary for Reg Technologies, Inc., a British Columbia corporation listed on
the TSX Venture Exchange that has financed the research on the Rand Cam Engine
since 1986. REGI U.S. is controlled by Rand Energy Group, Inc., a British
Columbia corporation of which Reg Technologies Inc. is the majority shareholder.
Since June 1997 Ms. Lorette has been Executive Vice President and a Director of
Information-Highway.com, Inc., a Florida corporation traded on the PinkSheets,
and its predecessor. Since June 1994 Ms. Lorette has also been Vice President
and Secretary of Linux Gold Corp. Since November 1997 Ms. Lorette has been Vice
President of Teryl Resources Corp., a public company trading on the TSX Venture
Exchange involved in gold, diamond, and oil and gas exploration. She also became
a director in February 2001.

Audit Committee

Our Audit Committee consists of the entire Board of Directors
of the Company. None of the members of the Audit Committee are independent
directors.

We do not currently have a financial expert in our audit
committee due to our relatively small size. In 2007, we had no employees and we
relied upon the services of a chartered accounting firm in Vancouver, BC,
Canada, to prepare our interim unaudited quarterly consolidated financial
statements. Also, we retained the audit services of Smythe Ratcliffe LLP,
Chartered Accountants to perform the audit on our year-end consolidated
financial statements.

Moreover, the audit committee is comprised of seasoned business
professionals, whereby two members each have over 25 years of experience in the
investment business, are board members of several corporations and one of the
members is an attorney whose practice focuses on the corporate finance area,
with an emphasis on securities and acquisitions.

On these bases, we believe that the audit committee has
adequate resources available to it when financial expertise and advice are
necessary.

Section 16(a) Beneficial Ownership Reporting Compliance

Based solely upon a review of Forms 3, 4 and 5 furnished to us,
other than James Vandeberg who furnished no Forms to us during the year, no
officer, director or beneficial owner of more than ten

- 22 -

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percent of our Common Stock 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.

Code of Ethics

The Board of Directors does not have any committees. Our Board
of Directors has not adopted a code of ethics that applies to our principal
executive officer, principal financial officer. We believe that due to the small
size of the Company and existing systems we have in place that there is no real
benefit to having a formal code of ethics.

Directors are subject to the laws of the State of Oregon,
whereby they are required to act honestly, in good faith and in the best
interests of the Company.

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

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.

Name and Principal Position
    Year
    Salary ($)
    Bonus ($)
    Stock Awards ($)
    Option Awards ($) (1)
    Non-Equity Incentive Plan
      Compensation ($)
    Nonqualified Deferred Compensation
      ($)
    All Other Compensa- tion ($)
    Total ($)John G. Robertson President, Chief
      Executive Officer
    2007 2006 2005
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil


(1) This column represents the dollar amount recognized for
financial statement reporting purposes with respect to the year ended April 30,
2007 for the fair value of stock options granted to each of our named executive
officers calculated in accordance with SFAS 123R. For additional information on
the valuation assumptions with respect to these option grants, refer to Note 6
of our financial statements and related notes. These amounts reflect only our
accounting expense for these option grants and do not correspond to the actual
value that will be recognized by our named executive officers. See the
Outstanding Equity Awards at April 30, 2007 table below for more information on
options held by the named executive officers.

A management fee of $2,500.00 per month is accrued for payment
to Access Information Services, Inc., a corporation controlled by the Robertson
Family Trust, the beneficiary of which is Kelly Wells, daughter of John G.
Robertson.

The Company entered into an agreement with a professional law
firm (the Law Firm) in which a partner of the firm is an Officer and Director
of the Company. The Company agreed to pay a cash fee equal to 5% of any
financings with parties introduced to the Company by the Law Firm. The Company
also agreed to pay an equity fee equal to 5% of the equity issued by the Company

- 23 -

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to parties introduced by the Law Firm, in the form of options,
warrants or common stock. No professional fees were paid to related parties
during the years ended April 30, 2006 and 2005.

The Company entered into an agreement dated April 6, 2005 with
a private company controlled by the President of the Company to acquire a
working interest in two oil wells located in Burleson County, Texas. The Company
agreed to issue up to 1,000,000 shares (issued  279,477) of restricted common
stock at the rate of one share for every $0.10 of revenue from the wells. To
April 30, 2007, revenue from the wells was approximately $52,008 resulting in an
obligation to the Company to issue approximately 276,000 shares.

The Company has no other agreement at this time, with any
officer or director, regarding employment with the Company or compensation for
services other than herein described. Compensation of officers and directors is
determined by the Companys Board of Directors and not subject to shareholder
approval. 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.

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

Mr. Robertson was granted options to purchase 1,000,000 shares
of common stock at $0.20 per share. These options were previously due to expire
on November 20, 2006. On November 20, 2006, the Board of Directors extended the
expiry date to November 20, 2011.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

The following table sets forth information about outstanding
equity awards held by our named executive officers as of April 30, 2007.

Option Awards (1)

Name
    Number of Securities Underlying
      Unexercised Options granted (#) Exercisable
    Number of Securities Underlying
      Unexercised Options granted (#) Unexercisable
    Equity Incentive Plan Awards:
      Number of Securities Underlying Unexercised Unearned
      Options (#)
    Option Exercise Price ($)
    Option Expiration dateJohn Robertson
    1,000,000
    Nil
    Nil
    $0.20
    November 20, 2011


(1) There were no Stock Awards awarded to the named executive
officers. Accordingly, this disclosure has been omitted.

Compensation of Directors

During the most recently completed financial year, the Company
paid no cash compensation (including salaries, fees, directors fees,
commissions, bonuses paid for services rendered during

- 24 -

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the most recently completed fiscal year, bonuses paid during
the most recently completed fiscal year for services rendered in a previous
year, and any compensation other than bonuses earned during the most recently
completed fiscal year the payment of which was deferred) to the Directors for
services rendered.

Executive Officers of the Company, who also act as Directors of
the Company, do not receive any additional compensation for services rendered in
such capacity other than as paid by the Company to such Executive Officers in
their capacity as Executive Officers (see Compensation of Executive Officers).

|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------------
|         |                                                                                                      

The following table sets forth, as of July 9, 2007 our
outstanding Class A Common Stock owned of record or beneficially by each person
who owned of record, or was known by us to own beneficially, more than 5% of our
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.

|Name                                               |  | Class A Common Shares |  |  | Percentage of  | 
|-------------------------------------------------- |  | --------------------- |  |  | -------------- | 
|                                                   |  | Owned                 |  |  | Class A Shares | 
|                                                   |  |                       |  |  | Owned          | 
|John G. Robertson, President and member of         |  | 21,497,168            |  |  | 59.68%         | 
|the Board of Directors [1] [2]                     |  |                       |  |  |                | 
|Access Information Services, Inc. [3]              |  | 12,476,508            |  |  | 34.63%         | 
|JGR Petroleum Inc. [8]                             |  | 7,976,360             |  |  | 22.14%         | 
|SMR Investments [9]                                |  | 4,442,252             |  |  | 12.33%         | 
|Robertson Family Trust [4]                         |  | 20,452,868            |  |  | 56.78%         | 
|Jennifer Lorette Secretary/Treasurer [1]
      [6] |  | 146,000               |  |  | *              | 
|James L. Vandeberg [1][5], Chief Operating         |  | 100,000               |  |  | *              | 
|Officer, Chief Financial Officer and Member        |  |                       |  |  |                | 
|of the Board of Directors                          |  |                       |  |  |                | 
|ALL EXECUTIVE OFFICERS &                           |  | 264,185,420           |  |  | 72.69%         | 
|DIRECTORS AS A GROUP (FOUR                         |  |                       |  |  |                | 
|INDIVIDUALS) (7)                                   |  |                       |  |  |                | 

* Less than one percent of the issued and outstanding shares as
at April 30, 2007 and as at the date of this Form 10-KSB: 36,023,039 Except as
noted below, all shares are held beneficially and of record and each record
shareholder has sole voting and investment power.

[1] These individuals are our Executive Officers and Directors
and may be deemed to be our "parents or founders" as that term is defined in the
Rules and Regulations promulgated under the Securities Act of 1933, as amended.

[2] Includes 12,476,508 shares registered in the name of Access
Information Services, Ltd., a corporation controlled by the Robertson Family
Trust, 7,976,360 shares registered in the name of

- 25 -

---

JGR Petroleum Inc. , a corporation controlled by the Robertson
Family Trust and 1,000,000 options that are currently exercisable. Mr. Robertson
is one of three trustees of the Robertson Family Trust, which acts by the
majority vote of the three trustees. Mr. Robertson disclaims beneficial
ownership of the shares owned or controlled by the Robertson Family Trust. Mr.
Robertson's address is the same as our address.

[3] Access Information Services is a corporation owned by the
Robertson Family Trust. Its address is 240 - 11780 Hammersmith Way, Richmond,
British Columbia V7A 5E9, Canada.

[4] Includes 12,476,508 shares owned of record by Access
Information Services, a corporation owned by the trust and 7,976,360 shares
registered in the name of JGR Petroleum Inc. , a corporation controlled by the
Robertson Family Trust. The address of the Robertson Family Trust is 240 - 11780
Hammersmith Way, Richmond, British Columbia V7A 5E9, Canada.

[5] Includes 100,000 options that are currently exercisable.
Mr. Vandeberg's address is 22344 NE 31st Street, Sammamish, WA 98074.

[6] Includes 100,000 options that are currently exercisable.
Ms. Lorette's address is the same as our address.

[7] Includes 12,476,508 shares registered in the name of Access
Information Services, Inc., a corporation controlled by the Robertson Family
Trust, 7,976,360 shares registered in the name of JGR Petroleum Inc. , a
corporation controlled by the Robertson Family Trust and 1,000,000 options that
are currently exercisable. Mr. Robertson is one of three trustees of the
Robertson Family Trust, which acts by the majority vote of the three trustees.
Mr. Robertson disclaims beneficial ownership of the shares owned or controlled
by the Robertson Family Trust.

[8] JGR Petroleum Inc. is a corporation owned by The Robertson
Family Trust. Its address is 240 - 11780 Hammersmith Way, Richmond, British
Columbia V7A 5E9, Canada

[9] SMR Investments is a corporation owned by Sue Robertson,
the wife of Mr. Robertson. Its address is 240 - 11780 Hammersmith Way, Richmond,
British Columbia V7A 5E9, Canada

CHANGES IN CONTROL

We know of no arrangements the operation of which may result in
a change of our control.

|ITEM 12. | CERTAIN RELATIONSHIPS
      AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------------
|         |                                                                                

Integral Concepts, Inc. ("ICI"), holder of the exclusive
worldwide license to the CTHA technology, entered into an option agreement with
SMR Investments Ltd. ("SMR"), a corporation owned by Sue Robertson, the wife of
Mr. 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. We were
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
us and SMR and continue during the life of the Option Agreement. The term of the
Option Agreement is perpetual as is the ICI License.

- 26 -

---

On December 13, 1994, SMR assigned us the rights to the Option
Agreement 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 the Robertson Family Trust.

On December 14, 1994, we issued 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 Access Information
Services Inc. was $0.50. The valuation of the 3,000,000 shares issued to Access
Information Services, Inc. was arbitrarily determined by our 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 us 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 us. On
December 27, 1995, SMR assigned us all of its rights and duties in the CTHA
technology. 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, we 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 we shall pay a royalty of 3%
of the gross revenues derived from the sales, licenses or sublicenses of the
CTHA technology.

We amended the Sublicense with ICI in March 1997 to clarify the
applications of CTHA technology subject to our sublicense. As amended, we have
exclusive rights to all commercial applications. Emergent Technologies
Corporation ("ETC") has the exclusive rights to all governmental and military
applications for the CTHA antenna. In consideration for the amendment, we
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.

Effective March 17, 2005, we entered into a settlement and
release agreement with Integral Concepts Inc. (ICI) to terminate the exclusive
worldwide sublicense granted to the Company by ICI.

The Company entered into an agreement dated April 6, 2005, with
a private company controlled by the President of the Company to acquire a
working interest in two oil wells located in Burleson County, Texas. The wells
are producing but a value cannot be placed on them due to vertical fracture
features that prevent the estimation of reserves. The Company agreed to issue up
to 1,000,000 shares (issued  279,477) of restricted common stock at the rate of
one share for every $0.10 of revenue from the wells. Refer to Note 8 (a) to our
financial statements.

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

- 27 -

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Director Independence

Our common stock is traded on the over-the-counter bulletin
board. Therefore, the company is not required to have independent members of the
board of directors.

|ITEM 13. | EXHIBITS.
|-------- | ---------

Number
      Description3.1
      Articles of Incorporation
      (1)3.2
      Article of Amendment
      (1)3.3
      By-Laws
      (1)4.1
      Specimen Share Certificate for Class A Shares
      (1)4.2
      Specimen Share Certificate for Class B Shares
      (1)4.3
      Specimen Warrant
      (2)4.4
      Specimen Debenture
      (2)10.1
      Marketing Agreement between IAS and Information Highway.com,
        Inc.
      (3)10.2
      Professional Service Agreement
        between IAS and Cadence Design 
        Systems, Inc.
      (3)10.3
      Consulting Agreement between IAS and Capital Research Group
        Inc.
      (3)10.4
      License Agreement between IAS and World Tracking Technologies,
        Inc.
      (3)10.5
      Amendment to License Agreement between IAS and
        World Tracking 
        Technologies, Inc.
      (3)10.6
      License Agreement between IAS and ARINC Incorporated
      (3)10.7
      Renewal Lease Agreement for Kokomo, Indiana Facilities
      (3)10.8
      Amendment No.2 to License Agreement
        between IAS and Wherify 
        Wireless, Inc. (formerly World Tracking Technologies, Inc.)
      (4)10.9
      JGR
        Petroleum, Inc. Interest in Oil and Gas Wells
      (5)10.10
      West Virginia University Research
        Corporation Non-Exclusive License 
        Agreement
      (5)10.11
      West Virginia University Research Corporation
        Settlement and 
        Release Agreement
      (5)10.12
      Integral Concepts Inc. Settlement And Release Agreement
      (5)10.13
      Joint Venture Agreement
        between IAS and Energy Source, Inc. May 4, 
        2006
      (6)23.1
      Consent of Smythe Ratcliffe
      (6)31.1
      Certification of Chief
        Executive Officer pursuant to Section 302 of the 
        Sarbanes-Oxley Act of 2002
      (6)31.2
      Certification
        of Chief Financial Officer pursuant to Section 302 of the 
        Sarbanes-Oxley Act of 2002
      (6)


- 28 -

---

32.1
      Certification
        of John Robertson, Chief Executive Officer, pursuant to 18 
        U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes -
        
        Oxley Act of 2002
      (6)32.2
      Certificate of James
        Vandeberg, Chief Financial Officer pursuant to 18 
        U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes -
        
        Oxley Act of 2002
      (6)


|(1) | Incorporated by reference from Form S-1 Registration
      Statement (33-92592).
|--- | --------------------------------------------------------------------------------
|(2) | Incorporated by reference from Form 10-KSB for Fiscal
      Year 1998.          
|(3) | Incorporated by reference from Form 10-KSB for Fiscal
      Year 2000.          
|(4) | Incorporated by reference from Form 10-KSB for Fiscal
      Year 2001.          
|(5) | Incorporated by reference from Form 10-KSB for Fiscal
      Year 2006           
|(6) | Attached hereto.                                                                

|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.
|-------- | ---------------------------------------

The following table discloses accounting fees and services
which we paid to our auditors, Smythe Ratcliffe LLP, in fiscal 2007 and 2006:

|                          | 2007        | 2006       
|------------------------- | ----------- | -----------
|Type of Services Rendered | Fiscal Year | Fiscal Year
|                          | (CAD$)      | (CAD$)     

(a) Audit Fees
      $29,468
    $5,000(b) Audit-Related
      Fees
    $0
    $0(c) Tax Fees
      $0
    $2,200(d) All Other Fees
    $0
    $0


- 29 -

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SIGNATURES

In accordance with Section 13 or 15(d) 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 ENERGY, INC.

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

Dated: August 9, 2007

In accordance with the Securities Exchange Act of 1934, this
  report has been signed by the following persons on behalf of the Registrant
  and in the capacities indicated as of August 9, 2007.

|Signature                   |  | Title                                | Date  
|--------------------------- |  | ------------------------------------ | ------
|                            |  |                                      |       
|/s/ John G.
      Robertson |  | Chairman of the Board, President,    | 8/9/07
|(John G. Robertson)         |  | Chief Executive Officer and Director |       
|                            |  |                                      |       
|                            |  |                                      |       
|/s/James Vandeberg          |  | Chief Operating Officer and          | 8/9/07
|(James Vandeberg)           |  | Chief Financial Officer and Director |       
|                            |  |                                      |       
|                            |  |                                      |       
|/s/ Jennifer
      Lorette  |  | Vice President, Secretary            | 8/9/07
|(Jennifer Lorette)          |  | and Director                         |       

- 30 -

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|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|(Expressed in U.S. Dollars)        

|April 30, 2007                                                |      
|------------------------------------------------------------- | -----
|                                                              | Index
|Report of Independent Registered
      Public Accounting Firm | F1  
|Balance Sheets                                                | F2  
|Statements of Operations                                      | F3  
|Statements of Cash Flows                                      | F4  
|Statements of Stockholders
      Equity                      | F5  
|Notes to the Financial Statements                             | F7  

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

**TO THE DIRECTORS AND STOCKHOLDERS OF IAS ENERGY, INC. (FORMERLY IAS
  COMMUNICATIONS, INC.)
  (A Development Stage Company)**

We have audited the accompanying balance sheets of IAS Energy,
  Inc. (formerly IAS Communications, Inc.) (A Development Stage Company) as at
  April 30, 2007 and 2006 and the statements of operations, stockholders’
  deficit and cash flows for the years then ended and the cumulative totals for
  the development stage of operations from May 1, 2006 (date of inception of oil
  and gas operations) through April 30, 2007. 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 the standards of
  the Public Company Accounting Oversight Board (United States of America). 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, based on our audits, the financial statements
  referred to above present fairly, in all material respects, the financial position
  of the Company as at April 30, 2007 and 2006 and the results of its operations
  and its cash flows for the years then ended and the cumulative totals for the
  development stage of operations from May 1, 2006 (date of inception of oil and
  gas operations) through April 30, 2007 in conformity with accounting principles
  generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going-concern. As discussed in note 1 to
  the financial statements, the Company has sustained accumulated losses of $6,243,011
  since its inception and has deficits in working capital and equity, which raises
  substantial doubt about its ability to continue as a going-concern. The financial
  statements do not include any adjustments related to the recoverability and
  classification of asset carrying amounts or the amounts and classification of
  liabilities that might result should the Company be unable to continue as a
  going-concern. Management’s plans in regard to these matters are also
  described in note 1.

*“Smythe Ratcliffe LLP” (signed)*

Chartered Accountants

Vancouver, British Columbia
  July 11, 2007

|7th Floor,
      Marine Building
      355 Burrard Street, Vancouver, BC
      Canada V6C 2G8 | Fax: 604.688.4675
      Telephone: 604.687.1231
      Web: SmytheRatcliffe.com | 
|--------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | 

F-1

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Balance Sheets                     
|(Expressed in U.S. Dollars)        

|                                                                             |  | April 30,  |   |  | April 30,  |  
|---------------------------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|                                                                             |  | 2007       |   |  | 2006       |  
|                                                                             |  | $          |   |  | $          |  
|Assets                                                                       |  |            |   |  |            |  
|Current Assets                                                               |  |            |   |  |            |  
|Cash                                                                         |  | 12,285     |   |  | 313        |  
|Available-for-sale securities                                                |  | 194,243    |   |  | 216,697    |  
|Accounts receivable                                                          |  | 3,468      |   |  |           |  
|Accrued revenues from petroleum interests                                    |  | 5,394      |   |  | 1,396      |  
|Prepaid expenses                                                             |  | 2,000      |   |  | 12,000     |  
|Due from related parties                                                     |  | 32,357     |   |  | 22,323     |  
|Total Current Assets                                                         |  | 249,747    |   |  | 252,729    |  
|Oil and Gas Properties
      (Note 8)                                        |  | 274,896    |   |  |           |  
|Total Assets                                                                 |  | 524,643    |   |  | 252,729    |  
|                                                                             |  |            |   |  |            |  
|Liabilities and Stockholders Equity (Deficit)                               |  |            |   |  |            |  
|Current Liabilities                                                          |  |            |   |  |            |  
|Accounts payable                                                             |  | 3,613      |   |  | 69,174     |  
|Accrued liabilities                                                          |  | 6,183      |   |  | 16,792     |  
|Due to related parties (Note 4)                                              |  | 458,497    |   |  | 258,618    |  
|Debentures (Note 5)                                                          |  | 25,000     |   |  | 25,000     |  
|Total Liabilities                                                            |  | 493,293    |   |  | 369,584    |  
|Commitments (Note 9)                                                         |  |            |   |  |            |  
|Stockholders Equity (Deficit)                                               |  |            |   |  |            |  
|Preferred Stock  50,000 share authorized; none issued                       |  |           |   |  |           |  
|Common Stock and Paid-in Capital in Excess
      of Par                      |  |            |   |  |            |  
|Class A voting  100,000,000 shares authorized
      without par value     |  |            |   |  |            |  
|36,023,039 (2006 - 35,243,562) shares issued
      and                       |  |            |   |  |            |  
|outstanding                                                                  |  | 6,133,550  |   |  | 5,831,415  |  
|Class B non-voting  100,000,000
      shares authorized without par value |  |            |   |  |            |  
|none issued                                                                  |  |           |   |  |           |  
|Obligation to Issue Shares (Note 7(b))                                       |  | 62,446     |   |  | 53,425     |  
|Deficit Accumulated During the Development Stage                             |  | (6,243,011 | ) |  | (6,218,392 | )
|Accumulated Other Comprehensive Income                                       |  | 78,365     |   |  | 216,697    |  
|Total Stockholders
      Equity (Deficit)                                   |  | 31,350     |   |  | (116,855   | )
|Total Liabilities and Stockholders Equity (Deficit)                         |  | 524,643    |   |  | 252,729    |  

F-2

The Accompanying Notes are an Integral Part of these Financial
  Statements

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Statements of Operations           
|(Expressed in U.S. Dollars)        

|                                                                   |  | Year Ended |   |  | Cumulative from |  
|------------------------------------------------------------------ |  | ---------- | - |  | --------------- | -
|                                                                   |  |            |   |  | May 1, 2006 to  |  
|                                                                   |  | April 30,  |   |  | April 30,       |  
|                                                                   |  | 2007       |   |  | 2006            |  
|                                                                   |  | $          |   |  | $               |  
|                                                                   |  |            |   |  |                 |  
|Revenue                                                            |  |            |   |  |                 |  
|Petroleum
      and natural gas sales                              |  | 24,060     |   |  | 27,948          |  
|Total Revenue                                                      |  | 24,060     |   |  | 27,948          |  
|                                                                   |  |            |   |  |                 |  
|Operating Expenses                                                 |  |            |   |  |                 |  
|Depletion                                                          |  | 2,604      |   |  |                |  
|Interest on convertible debentures                                 |  | 2,188      |   |  | 2,188           |  
|License                                                            |  | 3,000      |   |  | 3,000           |  
|Office                                                             |  | 37,880     |   |  | 13,953          |  
|Professional fees                                                  |  | 50,685     |   |  | 66,489          |  
|Transfer agent and regulatory                                      |  | 1,727      |   |  | 2,707           |  
|Total Operating Expenses                                           |  | 98,084     |   |  | 88,337          |  
|(Loss) from Operations                                             |  | (74,024    | ) |  | (60,389         | )
|Other Income (Expense)                                             |  |            |   |  |                 |  
|Gain on sale of available-for-sale
      securities                |  | 102,750    |   |  |                |  
|Gain on write-off of payables                                      |  | 9,101      |   |  | 54,386          |  
|Impairment loss  petroleum interests
      (Note 8(a))            |  | (62,446    | ) |  | (53,425         | )
|Net (Loss) Income                                                  |  | (24,619    | ) |  | (59,428         | )
|Other Comprehensive Income                                         |  |            |   |  |                 |  
|Unrealized gain (loss) on available-for-sale securities            |  | (18,332    | ) |  | 140,700         |  
|Reclassification adjustment for gains included
      in net income |  | (120,000   | ) |  |                |  
|Net unrealized gain
      (loss) on available for sale securities  |  | (138,332   | ) |  | 140,700         |  
|Comprehensive Income (Loss)                                        |  | (162,951   | ) |  | 81,272          |  
|                                                                   |  |            |   |  |                 |  
|Net Loss Per share  Basic and Diluted                             |  |           |   |  |                |  
|                                                                   |  |            |   |  |                 |  
|Weighted Average Number of Shares Outstanding                      |  | 35,739,621 |   |  | 35,243,562      |  

F-3

The Accompanying Notes are an Integral Part of these Financial
  Statements

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Statements of Cash Flows           
|(Expressed in U.S. Dollars)        

|                                                                                  |  | Year      |   |  | Cumulative from |  
|--------------------------------------------------------------------------------- |  | --------- | - |  | --------------- | -
|                                                                                  |  | Ended     |   |  | May 1, 2006 to  |  
|                                                                                  |  | April 30, |   |  | April 30,       |  
|                                                                                  |  | 2007      |   |  | 2006            |  
|                                                                                  |  | $         |   |  | $               |  
|Operating Activities                                                              |  |           |   |  |                 |  
|Net (loss) income                                                                 |  | (24,619   | ) |  | (59,428         | )
|                                                                                  |  |           |   |  |                 |  
|Adjustments to reconcile net loss to net cash used in operating
      activities: |  |           |   |  |                 |  
|Gain on sale of
      securities                                                  |  | (102,750  | ) |  |                |  
|Gain on write-off of payables                                                     |  | (9,101    | ) |  | (54,386         | )
|Stock-based compensation                                                          |  | 48,710    |   |  |                |  
|Depletion                                                                         |  | 2,604     |   |  |                |  
|Impairment loss
       petroleum interests                                       |  | 62,446    |   |  | 53,425          |  
|                                                                                  |  |           |   |  |                 |  
|Change in operating assets and liabilities:                                       |  |           |   |  |                 |  
|Prepaid expenses                                                                  |  | 10,000    |   |  | (10,000         | )
|Accounts receivable                                                               |  | (3,468    | ) |  |                |  
|Accrued revenues from petroleum
      interest                                    |  | (3,998    | ) |  | (1,396          | )
|Accounts payable
      and accrued liabilities                                    |  | (67,069   | ) |  | 36,147          |  
|Due to related parties                                                            |  | 4,845     |   |  | (22,323         | )
|                                                                                  |  |           |   |  |                 |  
|Net Cash Used in Operating
      Activities                                       |  | (82,400   | ) |  | (57,961         | )
|                                                                                  |  |           |   |  |                 |  
|Investing Activities                                                              |  |           |   |  |                 |  
|Investment in oil
      and gas properties                                        |  | (555,000  | ) |  |                |  
|Recoveries to oil and gas properties                                              |  | 277,500   |   |  |                |  
|Proceeds from sale
      of securities                                            |  | 102,750   |   |  |                |  
|Purchase of securities                                                            |  | (115,878  | ) |  |                |  
|                                                                                  |  |           |   |  |                 |  
|Net Cash Used in Investing
      Activities                                       |  | (290,628  | ) |  |                |  
|                                                                                  |  |           |   |  |                 |  
|Financing Activities                                                              |  |           |   |  |                 |  
|Advances from related
      parties                                               |  | 185,000   |   |  | 58,797          |  
|Check issued in excess of funds
      on deposit                                  |  |          |   |  | (523            | )
|Proceeds from issuance of common
      stock                                      |  | 200,000   |   |  |                |  
|                                                                                  |  |           |   |  |                 |  
|Net Cash Provided by Financing Activities                                         |  | 385,000   |   |  | 58,274          |  
|                                                                                  |  |           |   |  |                 |  
|Net Increase in Cash                                                              |  | 11,972    |   |  | 313             |  
|Cash  Beginning
      of Period                                                  |  | 313       |   |  |                |  
|Cash  End of Period                                                              |  | 12,285    |   |  | 313             |  
|                                                                                  |  |           |   |  |                 |  
|Non-cash Investing and Financing Activities                                       |  |           |   |  |                 |  
|Issuance of common stock
      for revenue interest                               |  | 53,425    |   |  |                |  
|                                                                                  |  |           |   |  |                 |  
|Supplemental Disclosures:                                                         |  |           |   |  |                 |  
|Interest paid                                                                     |  | 2,188     |   |  | 2,188           |  
|Income tax paid                                                                   |  |          |   |  |                |  

F-4

The Accompanying Notes are an Integral Part of these Financial
  Statements

---

|IAS Energy, Inc.                                            
|------------------------------------------------------------
|(Formerly IAS Communications, Inc.)                         
|(A Development Stage Company)                               
|Statements of Stockholders Equity (Deficit)                
|From December 13, 1994 (Date of Inception) to April 30, 2007
|(Expressed in U.S. Dollars)                                 

|                                                     |  |              |   |  |            |   |  |            |  |  | Deficit       |   |  |            |  
|---------------------------------------------------- |  | ------------ | - |  | ---------- | - |  | ---------- |  |  | ------------- | - |  | ---------- | -
|                                                     |  |              |   |  |            |   |  |            |  |  | Accumulated   |   |  | Total      |  
|                                                     |  | Common Stock |   |  | Obligation |   |  | During the |  |  | Stockholders |  
|                                                     |  | Class A      |   |  |            |   |  | to Issue   |  |  | Development   |   |  | Equity     |  
|                                                     |  | Shares       |   |  | Amount     |   |  | Shares     |  |  | Stage         |   |  | (Deficit)  |  
|                                                     |  | #            |   |  | $          |   |  | $          |  |  | $             |   |  | $          |  
|Balance  December 13, 1994 (Date of inception)      |  |             |   |  |           |   |  |           |  |  |              |   |  |           |  
|Shares issued for cash                               |  | 100          |   |  | 10         |   |  |           |  |  |              |   |  | 10         |  
|Shares issued for technology                         |  | 6,000,000    |   |  | 1          |   |  |           |  |  |              |   |  | 1          |  
|Stock issued for cash pursuant to:                   |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|A private placement                                  |  | 700,000      |   |  | 70,000     |   |  |           |  |  |              |   |  | 70,000     |  
|A public offering memorandum                         |  | 336,333      |   |  | 252,250    |   |  |           |  |  |              |   |  | 252,250    |  
|Net loss for the period                              |  |             |   |  |           |   |  |           |  |  | (83,615       | ) |  | (83,615    | )
|Balance  April 30, 1995                             |  | 7,036,433    |   |  | 322,261    |   |  |           |  |  | (83,615       | ) |  | 238,646    |  
|Shares previously issued, donated back and           |  | (100         | ) |  | (10        | ) |  |           |  |  |              |   |  | (10        | )
|cancelled                                            |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|Shares issued for cash pursuant to options           |  | 210,000      |   |  | 52,500     |   |  |           |  |  |              |   |  | 52,500     |  
|exercised                                            |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|Net loss for the year                                |  |             |   |  |           |   |  |           |  |  | (480,298      | ) |  | (480,298   | )
|Balance  April 30, 1996                             |  | 7,246,333    |   |  | 374,751    |   |  |           |  |  | (563,913      | ) |  | (189,162   | )
|Shares issued for cash pursuant to:                  |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|A private placement                                  |  | 722,000      |   |  | 1,124,500  |   |  |           |  |  |              |   |  | 1,124,500  |  
|Options exercised                                    |  | 224,000      |   |  | 140,500    |   |  |           |  |  |              |   |  | 140,500    |  
|Shares issued for services                           |  | 25,000       |   |  | 8,333      |   |  |           |  |  |              |   |  | 8,333      |  
|Net loss for the year                                |  |             |   |  |           |   |  |           |  |  | (1,044,516    | ) |  | (1,044,516 | )
|Balance  April 30, 1997                             |  | 8,217,333    |   |  | 1,648,084  |   |  |           |  |  | (1,608,429    | ) |  | 39,655     |  
|Shares issued for cash pursuant to:                  |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|A public offering memorandum                         |  | 263,667      |   |  | 197,750    |   |  |           |  |  |              |   |  | 197,750    |  
|Options exercised                                    |  | 87,500       |   |  | 26,875     |   |  |           |  |  |              |   |  | 26,875     |  
|A private placement                                  |  | 7,000        |   |  | 15,750     |   |  |           |  |  |              |   |  | 15,750     |  
|A private placement and
      foreign units offering |  | 575,600      |   |  | 1,007,300  |   |  |           |  |  |              |   |  | 1,007,300  |  
|Shares issued for services                           |  | 169,250      |   |  | 260,125    |   |  |           |  |  |              |   |  | 260,125    |  
|Net loss for the year                                |  |             |   |  |           |   |  |           |  |  | (1,633,047    | ) |  | (1,633,047 | )
|Balance  April 30, 1998                             |  | 9,320,350    |   |  | 3,155,884  |   |  |           |  |  | (3,241,476    | ) |  | (85,592    | )
|Shares issued for cash pursuant to:                  |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|Options exercised                                    |  | 2,000        |   |  | 500        |   |  |           |  |  |              |   |  | 500        |  
|A private placement and
      foreign units offering |  | 95,000       |   |  | 166,250    |   |  |           |  |  |              |   |  | 166,250    |  
|A private placement                                  |  | 200,000      |   |  | 200,000    |   |  |           |  |  |              |   |  | 200,000    |  
|Exercise of warrants                                 |  | 48,000       |   |  | 84,000     |   |  |           |  |  |              |   |  | 84,000     |  
|Shares issued for services                           |  | 132,000      |   |  | 230,640    |   |  |           |  |  |              |   |  | 230,640    |  
|Shares issued pursuant to conversion of              |  | 471,508      |   |  | 345,520    |   |  |           |  |  |              |   |  | 345,520    |  
|convertible debentures including accrued interest    |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|Net loss for the year                                |  |             |   |  |           |   |  |           |  |  | (1,219,435    | ) |  | (1,219,435 | )
|Balance  April 30, 1999                             |  | 10,268,858   |   |  | 4,182,794  |   |  |           |  |  | (4,460,911    | ) |  | (278,117   | )
|Shares issued for cash pursuant to:                  |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|A private placement                                  |  | 968,902      |   |  | 484,451    |   |  |           |  |  |              |   |  | 484,451    |  
|Options exercised                                    |  | 2,500        |   |  | 2,500      |   |  |           |  |  |              |   |  | 2,500      |  
|Warrants exercised                                   |  | 18,125       |   |  | 30,938     |   |  |           |  |  |              |   |  | 30,938     |  
|Shares issued pursuant to conversion of              |  | 62,854       |   |  | 38,266     |   |  |           |  |  |              |   |  | 38,266     |  
|convertible debentures including accrued interest    |  |              |   |  |            |   |  |            |  |  |               |   |  |            |  
|Net loss for the year                                |  |             |   |  |           |   |  |           |  |  | (572,169      | ) |  | (572,169   | )
|Balance  April
      30, 2000                       |  | 11,321,239   |   |  | 4,738,949  |   |  |           |  |  | (5,033,080    | ) |  | (294,131   | )

F-5

The Accompanying Notes are an Integral Part of these Financial
  Statements

---

|IAS Energy, Inc.                                            
|------------------------------------------------------------
|(Formerly IAS Communication, Inc.)                          
|(A Development Stage Company)                               
|Statements of Stockholders Equity (Deficit) (Continued)    
|From December 13, 1994 (Date of Inception) to April 30, 2007
|(Expressed in U.S. Dollars)                                 

|                                           |  |              |  |  |            |  |  |             |   |  | Deficit       |   |  |               |   |  |            |  
|------------------------------------------ |  | ------------ |  |  | ---------- |  |  | ----------- | - |  | ------------- | - |  | ------------- | - |  | ---------- | -
|                                           |  |              |  |  |            |  |  |             |   |  | Accumulated   |   |  |               |   |  | Total      |  
|                                           |  | Common Stock |  |  | Obligation |  |  | During the  |   |  | Accumulated   |   |  | Stockholders |  
|                                           |  | Class A      |  |  | to Issue   |  |  | Development |   |  | Comprehensive |   |  | Equity        |  
|                                           |  | Shares       |  |  | Amount     |  |  | Shares      |   |  | Stage         |   |  | Income        |   |  | (Deficit)  |  
|                                           |  | #            |  |  | $          |  |  | $           |   |  | $             |   |  | $             |   |  | $          |  
|Balance  April 30, 2000                   |  | 11,321,239   |  |  | 4,738,949  |  |  |            |   |  | (5,033,080    | ) |  |              |   |  | (294,131   | )
|Shares issued to settle debt               |  | 267,048      |  |  | 211,781    |  |  |            |   |  |              |   |  |              |   |  | 211,781    |  
|Shares issued pursuant to conversion of    |  | 12,358       |  |  | 10,875     |  |  |            |   |  |              |   |  |              |   |  | 10,875     |  
|convertible debentures including accrued   |  |              |  |  |            |  |  |             |   |  |               |   |  |               |   |  |            |  
|interest                                   |  |              |  |  |            |  |  |             |   |  |               |   |  |               |   |  |            |  
|Net loss for the year                      |  |             |  |  |           |  |  |            |   |  | (755,406      | ) |  |              |   |  | (755,406   | )
|Balance  April 30, 2001                   |  | 11,600,645   |  |  | 4,961,605  |  |  |            |   |  | (5,788,486    | ) |  |              |   |  | (826,881   | )
|Net loss for the year                      |  |             |  |  |           |  |  |            |   |  | (752,321      | ) |  |              |   |  | (752,321   | )
|Balance April 30, 2002                     |  | 11,600,645   |  |  | 4,961,605  |  |  |            |   |  | (6,540,807    | ) |  |              |   |  | (1,579,202 | )
|Shares issued for cash pursuant to a       |  | 944,250      |  |  | 188,850    |  |  |            |   |  |              |   |  |              |   |  | 188,850    |  
|private placement                          |  |              |  |  |            |  |  |             |   |  |               |   |  |               |   |  |            |  
|Shares issued to settle related party debt |  | 22,698,667   |  |  | 680,960    |  |  |            |   |  |              |   |  |              |   |  | 680,960    |  
|Net income for the year                    |  |             |  |  |           |  |  |            |   |  | 304,576       |   |  |              |   |  | 304,576    |  
|Unrealized gain on
      securities        |  |             |  |  |           |  |  |            |   |  |              |   |  | 4,800         |   |  | 4,800      |  
|Balance April 30, 2003                     |  | 35,243,562   |  |  | 5,831,415  |  |  |            |   |  | (6,236,231    | ) |  | 4,800         |   |  | (400,016   | )
|Net income for the year                    |  |             |  |  |           |  |  |            |   |  | 119,993       |   |  |              |   |  | 119,993    |  
|Unrealized gain on securities              |  |             |  |  |           |  |  |            |   |  |              |   |  | 27,019        |   |  | 27,019     |  
|Balance April 30, 2004                     |  | 35,243,562   |  |  | 5,831,415  |  |  |            |   |  | (6,116,238    | ) |  | 31,819        |   |  | (253,004   | )
|Net loss for the year                      |  |             |  |  |           |  |  |            |   |  | (42,726       | ) |  |              |   |  | (42,726    | )
|Unrealized gain on
      securities        |  |             |  |  |           |  |  |            |   |  |              |   |  | 44,178        |   |  | 44,178     |  
|Balance April 30, 2005                     |  | 35,243,562   |  |  | 5,831,415  |  |  |            |   |  | (6,158,964    | ) |  | 75,997        |   |  | (251,552   | )
|Obligation to issue shares                 |  |             |  |  |           |  |  | 53,425      |   |  |              |   |  |              |   |  | 53,425     |  
|Net loss for the year                      |  |             |  |  |           |  |  |            |   |  | (59,428       | ) |  |              |   |  | (59,428    | )
|Unrealized gain on
      securities        |  |             |  |  |           |  |  |            |   |  |              |   |  | 140,700       |   |  | 140,700    |  
|Balance April 30, 2006                     |  | 35,243,562   |  |  | 5,831,415  |  |  | 53,425      |   |  | (6,218,392    | ) |  | 216,697       |   |  | (116,855   | )
|Shares issued pursuant to oil revenue      |  | 279,477      |  |  | 53,425     |  |  | (53,425     | ) |  |              |   |  |              |   |  |           |  
|agreement                                  |  |              |  |  |            |  |  |             |   |  |               |   |  |               |   |  |            |  
|Shares issued for cash pursuant to a       |  | 500,000      |  |  | 200,000    |  |  |            |   |  |              |   |  |              |   |  | 200,000    |  
|private placement                          |  |              |  |  |            |  |  |             |   |  |               |   |  |               |   |  |            |  
|Obligation to issue shares                 |  |             |  |  |           |  |  | 62,446      |   |  |              |   |  |              |   |  | 62,446     |  
|Stock-based compensation                   |  |             |  |  | 48,710     |  |  |            |   |  |              |   |  |              |   |  | 48,710     |  
|Net loss for the year                      |  |             |  |  |           |  |  |            |   |  | (24,619       | ) |  |              |   |  | (24,619    | )
|Unrealized gain on securities              |  |             |  |  |           |  |  |            |   |  |              |   |  | (18,332       | ) |  | (18,332    | )
|Realized gain on sale
      of securities  |  |             |  |  |           |  |  |            |   |  |              |   |  | (120,000      | ) |  | (120,000   | )
|Balance April 30, 2007                     |  | 36,023,039   |  |  | 6,133,550  |  |  | 62,446      |   |  | (6,243,011    | ) |  | 78,365        |   |  | 31,350     |  

F-6

The Accompanying Notes are an Integral Part of these Financial
  Statements

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|1. | CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | IAS Energy, Inc. (formerly IAS Communication,
        Inc.) was incorporated on December 13, 1994 pursuant to the Laws of the
        State of Oregon, USA. The Company is a Development Stage Company, as defined
        by Statement of Financial Accounting Standard (SFAS) No. 7
        Accounting and Reporting by Development Stage Enterprises.
        On May 30, 2007 the Company changed its name to IAS Energy, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The financial statements have been prepared
        using generally accepted accounting principles in the United States of
        America applicable for a going concern which assumes that the Company
        will realize its assets and discharge its liabilities in the ordinary
        course of business. At April 30, 2007, the Company had a working capital
        deficiency of $243,546, which raises substantial concern on its ability
        to meet planned business objectives or to fund oil and gas exploration
        and ongoing operations for the next twelve months. The Company has accumulated
        losses of $6,243,011 since its inception. Its ability to continue as a
        going concern is dependent upon the ability of the Company to obtain the
        necessary financing to meet its obligations and pay its liabilities arising
        from normal business operations when they come due. These factors raise
        substantial doubt regarding the Companys ability to continue as
        a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | (e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-7

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | (f)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   | (g)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   | (h)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   | (i)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   | (j)                                                  
|   |                                                      
|   |                                                      

F-8

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------

| | (j) | Oil and Gas Properties (Continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | The costs of unproved properties are not amortized until
        it is determined whether or not proved reserves can be assigned to the
        properties. Until such determination is made the Company assesses annually
        whether impairment has occurred, and includes in the amortization base
        drilling exploratory dry holes associated with unproved properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | The Company applies a ceiling test to the capitalized
        cost in the full cost pool. The ceiling test limits such cost to the estimated
        present value, using a ten percent discount rate, of the future net revenue
        from proved reserves, based on current economic and operating conditions.
        Specifically, the Company computes the ceiling test so that capitalized
        cost, less accumulated depletion and related deferred income tax, do not
        exceed an amount (the ceiling) equal to the sum of: (A) The present value
        of estimated future net revenue computed by applying current prices of
        oil and gas reserves (with consideration of price changes only to the
        extent provided by contractual arrangements) to estimated future production
        of proved oil and gas reserves as of the date of the latest balance sheet
        presented, less estimated future expenditures (based on current cost)
        to be incurred in developing and producing the proved reserves computed
        using a discount factor of ten percent and assuming continuation of existing
        economic conditions; plus (B) the cost of property not being amortized;
        plus (C) the lower of cost or estimated fair value of unproven properties
        included in the costs being amortized; less (D) income tax effects related
        to differences between the book and tax basis of the property. When proved
        reserves are not available, the Company uses the projected reserve estimates
        as provided by the operator. These reserve estimates are based upon the
        historical experience of similar wells in the same area.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | For unproven properties, the Company excludes from capitalized
        costs subject to depletion, all costs directly associated with the acquisition
        and evaluation of the unproved property until it is determined whether
        or not proved reserves can be assigned to the property. Until such a determination
        is made, the Company assesses the property at least annually to ascertain
        whether impairment has occurred. In assessing impairment the Company considers
        factors such as historical experience and other data such as primary lease
        terms of the property, average holding periods of unproved property, and
        geographic and geologic data. The Company adds the amount of impairment
        assessed to the cost to be amortized subject to the ceiling test.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (k) | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | The Company recognizes oil and gas revenue when production
        is sold at a fixed or determinable price, persuasive evidence of an arrangement
        exists, delivery has occurred and title has transferred, and collectibility
        is reasonably assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (l) | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | Potential benefits of income tax losses are not recognized
        in the accounts until realization is more likely than not. The Company
        has adopted SFAS No. 109 Accounting for Income Taxes
        as of its inception. Pursuant to SFAS No. 109 the Company is required
        to compute tax asset benefits for net operating losses carried forward.
        The potential benefits 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (m) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | In February 2007, the Financial Accounting Standards
        Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial
        Assets and Financial Liabilities  Including an Amendment of FASB
        Statement No. 115. This statement permits entities to choose to
        measure many financial instruments and certain other items at fair value.
        Most of the provisions of SFAS No. 159 apply only to entities that elect
        the fair value option. However, the amendment to SFAS No. 115, Accounting
        for Certain Investments in Debt and Equity Securities, applies
        to all entities with available-for-sale and trading securities. SFAS No.
        159 is effective as of the beginning of an entitys first fiscal
        year that begins after November 15, 2007. Early adoption is permitted
        as of the beginning of a fiscal year that begins on or before November
        15, 2007, provided the entity also elects to apply the provision of SFAS
        No. 157, Fair Value Measurements.The adoption of this
        statement is not expected to have a material effect on the Company's financial
        statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     | In September 2006, the Securities and Exchange Commission
        issued Staff Accounting Bulletin (SAB) No. 108, Considering
        the Effects of Prior Year Misstatements when Quantifying Misstatements
        in Current Year Financial Statements.SAB No. 108 addresses
        how the effects of prior year uncorrected misstatements should be considered
        when quantifying misstatements in current year financial statements. SAB
        No. 108 requires companies to quantify misstatements using a balance sheet
        and income statement approach and to evaluate whether either approach
        results in quantifying an error that is material in light of relevant
        quantitative and qualitative factors. SAB No. 108 is effective for fiscal
        years ending after November 15, 2006. The adoption of SAB No. 108 did
        not have a material effect on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-9

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
|-- | -----------------------------------------------------
|   |                                                      
|   | (m)                                                  
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      
|   |                                                      

F-10

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|3. | ASSET RETIREMENT OBLIGATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The total future ARO was estimated by management
        based on the Companys net ownership interest in all wells and facilities,
        estimated costs to reclaim and abandon the wells and facilities and the
        estimated timing of the costs to be incurred in future periods. Although
        the Companys wells are producing, the Company has estimated the
        total ARO to be $nil as at April 30, 2007 (2006 - $nil) because the costs
        to be incurred in shutting down the wells are estimated to be minimal.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | DEBENTURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | On June 15, 1997, the Company offered three
        year, 83⁄4% interest debentures. As at April 30, 2007, $25,000 of debentures
        remains outstanding. Interest is due annually.                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | STOCK OPTION PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The Company has a Stock Option Plan to issue
        up to 2,500,000 Class A common shares to certain key directors
        and employees, approved and registered October 2, 1996, as amended. Pursuant
        to the plan, the Company has granted stock options to certain directors
        and employees.                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the year ended April 30, 2007, the
        Company extended the term on 1,200,000 options for a further five years.
        The fair value of the options was estimated at the date of extension using
        the Black-Scholes option pricing model using the following weighted average
        assumptions: risk free interest rate of 4.59%, expected volatility of
        229%, an expected option life of 5 years and no expected dividends. The
        weighted average fair value of options granted was $0.25 per option.  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | The fair value of the original options was
        deducted from the fair value of the modified options for a difference
        of $194,840. During the year ended April 30, 2007, $48,710 stock-based
        compensation expense was charged to operations for the vested incremental
        increase in the fair value of these stock options. The balance of $146,130
        of unrecognized compensation cost related to the non-vested stock options
        held by the employees will be recognized over future periods.          

F-11

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|6. | STOCK OPTION PLAN(Continued)                                        
|-- | --------------------------------------------------------------------
|   |                                                                     
|   | These options have the following vesting schedule:                  
|   |                                                                     
|   | [i]                                                                 
|   |                                                                     
|   | [ii]                                                                
|   |                                                                     
|   | [iii]                                                               
|   |                                                                     
|   | [iv]                                                                
|   |                                                                     
|   | [v]                                                                 
|   |                                                                     
|   | The following table summarized stock option
        plan activities:

| |                                    |  | Year Ended     |   |  | Year Ended       | 
| | ---------------------------------- |  | -------------- | - |  | ---------------- | 
| |                                    |  | April 30, 2007 |   |  | April 30, 2006   | 
| |                                    |  | Shares         |   |  | Weighted         | 
| |                                    |  |                |   |  | Average Exercise | 
| |                                    |  |                |   |  | Price            | 
| |                                    |  | #              |   |  | $                | 
| |                                    |  |                |   |  |                  | 
| | Outstanding at beginning of period |  | 1,250,000      |   |  | 0.20             | 
| | Granted                            |  | 1,200,000      |   |  | 0.20             | 
| | Exercised                          |  |               |   |  |                 | 
| | Cancelled/Modified                 |  | (1,200,000     | ) |  | 0.20             | 
| |                                    |  |                |   |  |                  | 
| | Outstanding at end
      of period |  | 1,250,000      |   |  | 0.20             | 
| |                                    |  |                |   |  |                  | 
| | Exercisable at end
      of period |  | 350,000        |   |  | 0.20             | 

Additional information regarding options
  outstanding and exercisable as at April 30, 2007, is as follows:

| | Options Outstanding | 
| | ------------------- | 
| | Expiry Date         | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| | October 8, 2008     | 
| | November 20, 2011   | 
| |                     | 
| | Options outstanding | 
| |                     | 
| | Options Exercisable | 
| | Expiry Date         | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| |                     | 
| | October 8, 2008     | 
| | November 20, 2011   | 
| |                     | 
| | Options exercisable | 

F-12

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|6. | STOCK OPTION PLAN(Continued)                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | As at April 30, 2007, there was $146,130 of total unrecognized
        compensation costs related to non-vested share- based compensation arrangements
        granted under the Plan which are expected to be recognized over a weighted-
        average period of 54 months. The total fair value of shares vested during
        the years ended April 30, 2007 and 2006 was $48,710 and $nil, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | A summary of the status of the Companys non-vested
        shares as of April 30, 2007, and changes during the year ended April 30,
        2007, is presented below:                                                                                                                                                                                                                                          

| |                              |  |           |   |  | Weighted-Average | 
| | ---------------------------- |  | --------- | - |  | ---------------- | 
| |                              |  |           |   |  | Grant-Date       | 
| |                              |  | Shares    |   |  | Fair Value       | 
| | Non-vested shares            |  | #         |   |  | $                | 
| |                              |  |           |   |  |                  | 
| | Non-vested at May 1, 2006    |  | -         |   |  | -                | 
| |                              |  |           |   |  |                  | 
| | Granted                      |  | 1,200,000 |   |  | 0.25             | 
| | Forfeited                    |  | -         |   |  | -                | 
| | Vested                       |  | (300,000  | ) |  | 0.25             | 
| |                              |  |           |   |  |                  | 
| | Non-vested at April 30, 2007 |  | 900,000   |   |  | 0.25             | 

|7. | COMMON STOCK
|-- | ------------
|   |             
|   | a)          
|   |             
|   | b)          
|   |             
|   | c)          
|   |             
|   |             

| |                                                                                  |  |          |  |  |           |  |  | Weighted average | 
| | -------------------------------------------------------------------------------- |  | -------- |  |  | --------- |  |  | ---------------- | 
| |                                                                                  |  | Shares   |  |  |           |  |  | exercise price   | 
| |                                                                                  |  | #        |  |  |           |  |  | $                | 
| |                                                                                  |  |          |  |  |           |  |  |                  | 
| | Balance, April 30, 2006                                                          |  | -        |  |  |           |  |  | -                | 
| | Exercised                                                                        |  | -        |  |  |           |  |  | -                | 
| | Granted                                                                          |  | 250,000  |  |  |           |  |  | 0.40             | 
| | Balance, April
      30, 2007                                                    |  | 250,000  |  |  |           |  |  | 0.40             | 
| |                                                                                  |  |          |  |  |           |  |  |                  | 
| | At April 30, 2007, the following
      share purchase warrants were outstanding: |  |          |  |  |           |  | 
| |                                                                                  |  |          |  |  |           |  |  |                  | 
| |                                                                                  |  |          |  |  |           |  |  |                  | 
| |                                                                                  |  | Exercise |  |  | April 30, |  |  | April 30,        | 
| | Expiry Date                                                                      |  | Price    |  |  | 2007      |  |  | 2006             | 
| |                                                                                  |  | $        |  |  | #         |  |  | #                | 
| |                                                                                  |  |          |  |  |           |  |  |                  | 
| | September 28, 2007                                                               |  | 0.40     |  |  | 250,000   |  |  | -                | 
| |                                                                                  |  |          |  |  |           |  |  |                  | 
| | Warrants outstanding                                                             |  |          |  |  | 250,000   |  |  | -                | 

F-13

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|8. | OIL AND GAS PROPERTIES
|-- | ----------------------

| |                                            |  | April 30,    |   |  | April 30,    |  
| | ------------------------------------------ |  | ------------ | - |  | ------------ | -
| |                                            |  | 2007         |   |  | 2006         |  
| |                                            |  | Net Carrying |   |  | Net Carrying |  
| |                                            |  | Value        |   |  | Value        |  
| |                                            |  | $            |   |  | $            |  
| |                                            |  |              |   |  |              |  
| | Proved Properties, Kentucky and Texas, USA |  |              |   |  |              |  
| |                                            |  |              |   |  |              |  
| | Acquisition Costs                          |  | 393,371      |   |  | 53,425       |  
| | Depletion                                  |  | (2,604       | ) |  |             |  
| | Impairment                                 |  | (115,871     | ) |  | (53,425      | )
| |                                            |  |              |   |  |              |  
| | Net Carrying Value                         |  | 274,896      |   |  |             |  

| | a) | The Company entered into an agreement dated April 6,
        2005 with a private company controlled by the President of the Company
        to acquire a working interest in two oil wells located in Burleson County,
        Texas. The Company agreed to issue up to 1,000,000 shares (issued - 279,477)
        of restricted common stock at the rate of one share for every $0.10 of
        revenue from the wells. To April 30, 2007, revenue from the wells was
        approximately $52,008. During the fiscal year ended April 30, 2007, the
        Company received/accrued $9,570 of revenue from the wells. The approximately
        276,000 shares of restricted common stock issuable at April 30, 2007 pursuant
        to this agreement have been recorded at the quoted market price prevailing
        at the time of receipt of the oil and gas revenues and are accrued in
        the amount of $62,446 in obligation to issue shares. Refer to Note 7(b).                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | The wells are producing but a value cannot be placed
        on them due to vertical fracture features that prevent the estimation
        of reserves. Accordingly, cumulative impairment loss of $115,871 equal
        to the investment in the oil wells that would have otherwise been recorded
        has been charged to operations. During the fiscal year ended April 30,
        2007, $62,446 (April 30, 2006 - $53,425) of impairment loss was incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b) | On May 4, 2006, the Company entered into an agreement
        with Energy Source Inc. (“ESI”) to drill up to 24 gas wells
        located in Kentucky. The Company can earn a 100% working interest (60%
        net revenue interest) in 4 gas wells by paying $185,000 per well and has
        the option to acquire a 100% working interest (60% net revenue interest)
        in an additional 20 wells over an 18 month period at a price to be agreed
        upon. Each well is subject to a 12.5% net revenue interest to the land-owner
        and a 27.5% interest to ESI. The first three wells were paid and drilled
        during the year.
      On May 18, 2006, the Company entered into an agreement
        with Teryl Resources Corp. (“Teryl”), a public company related
        by common directors and officers, to farm out a 40% working interest outlined
        above, subject to a 12.5% net revenue interest to the land-owner and a
        27.5% interest to ESI, in consideration for paying 50% of the total costs
        of the wells. The Company received $277,500 from Teryl during the period,
        representing 50% of the cost of drilling the first, second, and third
        wells.
      On September 28, 2006, the Company assigned a 20% working
        interest (12% net revenue interest) in the third well drilled as part
        of the financing described in Note 7(a).
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | To April 30, 2007, the Company’s portion of the
        revenue from the wells was approximately $14,490. During the fiscal year
        ended April 30, 2007, the Company recorded depletion of $2,604 on capitalized
        costs relating to this area.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|9. | COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | By sublicense agreements dated July 10, 1995,
        the Company was granted an exclusive worldwide sublicense by Integral
        Concepts Inc. (ICI) and West Virginia University Research
        Corporation (WVURC) to the CTHA technology, excluding all
        military and governmental applications and resulting procurement interests.
        On March 17, 2005, the Company entered into settlement and release agreements
        with each of ICI and WVURC to terminate the July 10, 1995 agreements.
        Accordingly, the Company was released from all previously accrued royalty
        fees.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On March 17, 2005, the Company entered into
        a non-exclusive license agreement with WVURC for the development, manufacture,
        use and sale of the CTHA technology. The agreement was retroactively effective
        on January 15, 2005. The terms of the non-exclusive sublicense agreement
        are as follows:                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | All royalties in items (b) and (c) are payable
        within 30 days of each calendar quarter. The terms of the agreement remain
        in effect until the expiration of the last to expire of the patents included
        in the CTHA technology.                                                                                                                                                                                                                                                                                                                                                                     

F-14

---

|IAS Energy, Inc.                   
|-----------------------------------
|(Formerly IAS Communications, Inc.)
|(A Development Stage Company)      
|Notes to the Financial Statements  
|(Expressed in U.S. Dollars)        

|10. | INCOME TAX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Potential benefits of income tax losses are not recognized
        in the accounts until realization is more likely than not. The Company
        has net operating losses of $6,207,000, which commence expiring in 2010.
        Pursuant to SFAS No. 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 more likely than not will utilize
        the net operating losses carried forward in future years. For the years
        ended April 30, 2007 and 2006, the valuation allowance established against
        the deferred tax assets increased by $8,000 and $21,000, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The components of the net deferred tax asset at April
        30, 2007 and 2006 and the statutory tax rate, the effective tax rate and
        the elected amount of the valuation allowance are scheduled below:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| |                        |  | April 30,  |   |  | April 30,  |  
| | ---------------------- |  | ---------- | - |  | ---------- | -
| |                        |  | 2007       |   |  | 2006       |  
| |                        |  | $          |   |  | $          |  
| | Net Operating Losses   |  | 6,207,000  |   |  | 6,182,000  |  
| | Statutory Tax Rate     |  | 35%        |   |  | 35%        |  
| | Effective Tax Rate     |  |           |   |  |           |  
| | Deferred Tax Asset     |  | 2,172,000  |   |  | 2,164,000  |  
| | Valuation Allowance    |  | (2,172,000 | ) |  | (2,164,000 | )
| | Net Deferred Tax Asset |  |           |   |  |           |  

Pursuant to SFAS No. 109, the Company
  is required to compute tax asset benefits for non-capital losses carried forward.
  Potential benefit of non-capital 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 losses carried forward in future years.

The reconciliation of income tax attributable
  to continuing operations computed at the statutory tax rates to income tax expense
  is:

| |                                                           |  | April 30, |   |  | April 30, |  
| | --------------------------------------------------------- |  | --------- | - |  | --------- | -
| |                                                           |  | 2007      |   |  | 2006      |  
| |                                                           |  | $         |   |  | $         |  
| | Income tax benefit computed at U.S. statutory
      rates |  | 8,617     |   |  | 20,800    |  
| | Write-off of accounts payable                             |  | (3,185    | ) |  | (19,035   | )
| | Unrecognized tax losses                                   |  | (5,432    | ) |  | (1,765    | )
| | Future income tax
      benefit                           |  |          |   |  |          |  

|11. | SUBSEQUENT EVENT                                                         
|--- | -------------------------------------------------------------------------
|    |                                                                          
|    | On May 30, 2007, the Company changed its name to IAS
        Energy, Inc.

F-15

---