UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB
                                 August 14, 1998


                      For the quarter ended: June 30, 1998

                         Commission file number: 0-26322


                                    IAC, Inc.


                              a Nevada corporation
                              IRS Number 88-0303769


              One Larkspur Plaza Drive, Larkspur, California 94939

                                                      (415) 459-7600






Check whether 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. Yes _X__ No __





                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
1,172,895 shares.

Transitional Small Business Disclosure Format (Check one):    Yes ___    No _X_


<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements.


                                    IAC, Inc.
                                  BALANCE SHEET
                                  June 30, 1998
                                   (Unaudited)

                                    ASSETS
CURRENT ASSETS
Prepaid expense
                                                   --------------------
TOTAL CURRENT ASSETS
                                                   --------------------

OTHER ASSETS
Organizational costs, net of amortization                        1,429
                                                   --------------------
                                                                 1,429
                                                   --------------------

TOTAL ASSETS                                                    $1,429
                                                   ====================


                            LIABILITIES AND EQUITY

CURRENT LIABILITIES
Accounts payable (including overdraft)                          $4,982
Other liabilities
                                                   --------------------
TOTAL CURRENT LIABILITIES                                       $4,982
                                                   --------------------


STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000                         2,500
shares authorized; 630,000 shares outstanding
Capital stock, $.001 par value, 25,000,000                       1,173
shares authorized; 1,172,895 shares outstanding
Additional paid in capital                                     702,545
Accumulated deficit                                           (709,482)
                                                   --------------------
                                                                (3,553)
                                                   --------------------

LIABILITIES AND STOCKHOLDERS' EQUITY                            $1,429
                                                   ====================




See notes to unaudited consolidated financial statements.


<PAGE>


                                    IAC, INC.
                             STATEMENT OF OPERATIONS
                             AND ACCUMULATED DEFICIT
                                   (Unaudited)

                                                    Three Months Ended
                                        June 30, 1998             June 30, 1997
                                        -------------             -------------

REVENUES
    Management fees                                                     $29,074
    Other income                                                              0
                                   -------------------    ----------------------
                                                                        $29,074
                                   -------------------    ----------------------

OPERATING AND GENERAL EXPENSES
Compensation and employee benefits                                        9,711
Promotion and advertising                                                     0
Administrative expenses                                                  35,523
                                   -------------------    ----------------------
                                                                         45,234
                                   -------------------    ----------------------
LOSS FROM OPERATIONS                                                    (16,160)
                                   -------------------    ----------------------

INCOME TAXES                                                                  0
                                    ------------------    ----------------------

NET LOSS                                                                (16,160)

Accumulated Deficit-
beginning of period                          (709,482)                 (731,989)
                                   -------------------    ----------------------

Accumulated Deficit- end of period           (709,482)                ($748,149)
                                    ==================    ======================

Loss Per Share                                $  0.0                     ($0.00)
                                   ===================    ======================

 .




See notes to unaudited consolidated financial statements


<PAGE>


                                    IAC, INC.
                             STATEMENT OF OPERATIONS
                             AND ACCUMULATED DEFICIT
                                   (Unaudited)

                                                   Six Months Ended
                                        June 30, 1998             June 30, 1997
                                        -------------             -------------

REVENUES
    Management fees                                                     $57,430
    Other income                                                             26
                                    ------------------    ----------------------
                                                                        $57,456
                                    ------------------    ----------------------

OPERATING AND GENERAL EXPENSES
Compensation and employee benefits                                       43,981
Promotion and advertising                                                 3,224
Administrative expenses                                                  78,222
                                    ------------------    ----------------------
                                                                        125,027
                                    ------------------    ----------------------
LOSS FROM OPERATIONS                                                    (67,571)
                                    ------------------    ----------------------

INCOME TAXES                                     (800)                     (800)
                                   -------------------    ----------------------

NET LOSS                                                                (68,371)

DEFICIT-beginning of period                  (708,682)                 (679,778)
                                  --------------------    ----------------------

DEFICIT- end of period                    $  (709,482)              $  (748,149)
                                 =====================    ======================

Loss Per Share                                $  0.0                   $  (0.02)
                                 =====================    ======================

 .




See notes to unaudited consolidated financial statements


<PAGE>


                                    IAC, INC.
                             STATEMENT OF CASH FLOWS
                                   (Unaudited)


                                                     Six Months Ended
                                              June 30, 1998       June 30, 1997
                                              ------------         -------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss                                                               ($68,371)
Adjustment to reconcile net loss to net cash provided
by (used in) operating activities:
   Amortization                                                           8,635
   Increase in receivable from related party
   Decrease in refundable payroll taxes
   Increase in accounts payable and other liabilities                    47,623
   Decrease in note receivable from related party
   Issuance of shares of common stock for services
                                              -------------       --------------
                                              -------------       --------------
Net Cash Provided by Operating Activities                               (12,113)
                                              -------------       --------------

CASH FLOWS FROM INVESTING ACTIVITIES
    Sale of investment securities
                                              -------------       --------------
Net Cash Used In Investing Activities
                                              -------------       --------------

CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock, net of expenses
                                              -------------       --------------
                                              -------------       --------------
Net Cash Provided By Financing Activities
                                              -------------       --------------

Net Increase (Decrease) In Cash                                         (12,113)
Cash At Beginning Of Period                                              11,713
                                              =============       ==============
Cash (Overdraft) At End Of Period                                         ($400)
                                              =============       ==============

            Income taxes paid during period
                                              =============       ==============



See notes to unaudited consolidated financial statements.










<PAGE>


                                    IAC, INC
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE PERIODS ENDED JUNE 30, 1998 AND 1997

Note 1 - Organization, operations and basis of presentation:

Organization:

IAC,  Inc.(IAC)  is a Nevada  corporation  engaged in the business of managing a
malpractice insurance contract between International  Associations' Coalitions',
Inc.,  (Coalitions)  a related  party,  and an  insurance  company,  Pacific Rim
Insurance Company, a minority stockholder of IAC. The members of Coalitions' and
its successor,  Health Professionals  Coalition,  Inc. (Health), are podiatrists
seeking affordable  malpractice insurance.  Under the management contract,  IAC,
Inc. is entitled to receive  27.5% of the premiums  paid by the  podiatrists  to
United and Pacific Rim.

The  term of the  insurance  contract  between  Coalitions'  and  the  insurance
carriers is one year and is generally  renewable if both parties have  performed
satisfactorily.  The  management  contract  with  Coalitions'  also  has a  term
concurrent with the insurance contract.

Coalitions'   is  a  wholly  owned  by  the  Company's   Chairman  and  majority
shareholder.  In September, 1996, the business of Coalitions' was transferred to
a newly created  company,  Health  Professionals  Coalition,  Inc. which is also
wholly owned by IAC's Chairman .

On December 8, 1995,  IAC formed a  subsidiary,  Mt. Tam Re, Inc. in Nevis (in
the West Indies)  with  initial  capital of $25,000.  Mt. Tam Re was formed to
provide reinsurance coverage for other insurance companies.

Basis of presentation:

The  consolidated  financial  statements have been prepared on the going concern
basis.  IAC has  reported a loss during the last two years and for the six month
period ended June 30, 1997. In addition,  its current liabilities  substantially
exceed its available cash. Losses are expected to continue.

On March 5, 1997, the Company and Health Professionals Coalition,  Inc. signed a
Consent  Cease and Desist  Order  (Cease and Desist  Order)  issued by the Texas
Insurance Commissioner that insurance coverage for podiatrists resident in Texas
must be terminated effective April 21, 1997. In 1996, Health & Coalition, in the
aggregate,  collected insurance premiums of $95,000 from podiatrists residing in
Texas. IAC received related management fees of approximately $26,000 (20% of its
revenue) in 1996. The Cease and Desist Order also requires  payment of a $10,000
fine which was recognized as an expense in the quarter ended March 31, 1997.


<PAGE>


                                    IAC, INC
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE PERIODS ENDED JUNE 30, 1998 AND 1997

Note  1  -  Organization,  operations  and  summary  of  significant  accounting
policies:

Organization:
         IAC, Inc. ("IAC") is a Nevada corporation engaged in the business of
managing a malpractice insurance contract between International Associations'
Coalition, Inc. ("Coalitions"), a related party, and an unrelated insurance 
company, United International, Inc. ("United").  Effective October 1, 1996, the
insurance contract was assumed by Pacific Rim Insurance Company ("Pacific Rim"),
a minority stockholder of IAC.  The members of Coalitions and its successor,
Health Professionals Coalitions, Inc. ("Health") are podiatrists seeking
affordable malpractice insurance.  Under the management contract, IAC is
entitled to receive 27.5% of the premiums paid by the podiatrists to United and
Pacific Rim each month.
         The term of the insurance  contract between the  Coalitions/Health  and
the  insurance  carriers is one year and is generally  renewable if both parties
have performed satisfactorily. The management contract between IAC and Coalition
also has a term concurrent with the insurance contract.  The management contract
between IAC and Coalitions/Health was terminated effective December 31, 1997.
         Coalitions was wholly owned by IAC's Chairman and majority shareholder.
In  September  1996,  the business of  Coalitions'  was  transferred  to a newly
created  company,  Health  Professionals  Coalition,  Inc., which is also wholly
owned by IAC's majority shareholder.
         On December 8, 1995, IAC formed a subsidiary, Mt. Tam Re, Inc. in Nevis
(in the West Indies) with initial capital of $25,000.  Mt. Tam Re was formed to
provide reinsurance coverage for other insurance companies.  Mt Tam Re, Inc. was
dissolved in 1997.

Basis of Presentation
         The consolidated  financial  statements have been prepared on the going
concern basis.  IAC has reported a net loss during the past two years. IAC has a
$4,182 working  capital  deficit and  stockholders'  deficit of $2,753,  and has
effectively ceased operations as a result of terminating its management contract
with Health Professionals, Inc.
effective December 31, 1997.
         In  addition,  pursuant to a Cease and Desist Order issued by the Texas
Insurance  Commissioner  effective  April 21,  1997,  IAC and  Health  could not
provide  insurance for podiatrists  residing in Texas,  since Pacific Rim is not
licensed in Texas and was ordered to pay a $10,000 fine. The Order provided that
IAC could in the future accept payment of premiums if they became  authorized to
conduct  business in Texas by either forming a risk retention group or retaining
an insurance broker and insurer licensed in Texas.  Management was unable either
to form a risk retention group or retain an insurer licensed in Texas.
         The foregoing raises  substantial  doubt about the Company's ability to
continue as a going concern. Management is planning to refocus the business as a
result of  terminating  its  agreement  with Health  Professionals,  Inc. and is
searching for an acquisition candidate.







                                    IAC, INC
                          NOTES TO FINANCIAL STATEMENTS
                  FOR THE PERIODS ENDED JUNE 30, 1998 AND 1997

Note 2 - Summary of significant accounting policies:
         The  process of  preparing  financial  statements  in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  regarding  certain types of assets,  liabilities,  revenues and
expenses.  Such estimates primarily relate to unsettled  transactions and events
as of the date of the financial statements. Accordingly, upon settlement, actual
results may differ from the estimated amounts.
         Revenues are recorded by IAC when  collected.  Expenses are recorded on
         the accrual basis of accounting.
         The  carrying  value  of  cash,  marketable  equity  securities,   note
receivable, accounts payable and accrued liabilities is a reasonable estimate of
fair value of these financial instruments.

Note 3 - Preferred stock:
         Each share of preferred  stock is entitled to one vote per share and is
convertible  into 10 shares of common  stock;  the  preferred  stock has neither
dividend rights nor preference in liquidation.

Note 4 - Income taxes:
         At December 31, 1997, a valuation  allowance of approximately  $110,000
was  provided  for  deferred  tax assets  relating  primarily  to the future tax
benefit of IAC's net operating loss  carryforwards.  As a result, the future tax
benefit  of  IAC's  net  operating   losses  has  not  been  recognized  in  the
accompanying financial statements.
         At December 31,  1997,  IAC's  consolidated  net  operating  loss carry
forwards (NOL's)  amounted to  approximately  $545,000 for federal tax purposes.
These NOL's will expire from 1999 through  2012.  For  California  franchise tax
purposes, the NOL is approximately $287,000 and expires in 2002.


Note 5 - Subsequent Event:
         On July 23, 1998 IAC signed an acquisition  agreement  with  Integrated
Masonry  Systems  International,  Ltd.  (IMSI).  IMSI  holds  the  domestic  and
international  patents and rights to make and distribute its insulated  building
block and has signed contracts with several foreign  governments to supply block
to joint venture  construction  projects in those countries.  The first of these
projects is scheduled to begin in 60 days.  The company  currently has assets of
approximately $8.5 million.
         As part of the acquisition agreement,  IAC, Inc. will reverse split its
stock on a 4:1 ratio and then issue new common stock in exchange for IMSI's 15.3
million shares. The reverse split will be effective August 14, 1998.
         Closing  will  occur as soon as a minimum  of 60% of IMSI's  shares has
been tendered.


<PAGE>


Item 2.   Management's Discussion and Analysis or Plan of Operation.

         The following  discussion relates to the unaudited financial statements
for the three month  periods  ended June 30, 1998 and 1997 which are included in
Item 1 above.

Basis of presentation:
         The  consolidated  financial  statements  as of June 30, 1998 have been
prepared on the going concern basis. IAC has reported a loss during the last two
years. In addition,  its current liabilities  substantially exceed its available
cash.  The Company  currently has no operating  business and is searching for an
appropriate acquisition.

 Liquidity:
         IAC has used all of its cash in its  operations  with the  result  that
cash reserves  were  depleted at December 31, 1997.  As of June 30, 1998,  IAC's
current liabilities of $4,982 exceed its cash resources.

Discussion of quarterly results:
         The Company ceased operations effective December 31, 1997.


                           PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.
         NA.
Item 2.   Changes in Securities.
         The  Company's  common  stock  was  reverse  split  on a 4 for 1 basis,
effective August 14, 1998.
Item 3.   Defaults Upon Senior Securities.
         NA.
Item 4.   Submission of Matters to a Vote of Security Holders.
         NA.
Item 5.   Other Information.
         NA.
Item 6.   Exhibits and Reports on Form 8-K.
         a.  Exhibits
                  NA

         b. Reports on Form 8-K.
                  No reports have been filed on Form 8-K during this quarter.


/S/   Jeffrey E. Ferries, President

August 14, 1998