----

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| UTAH                                                                            | 87-0447580                                         |
|---------------------------------------------------------------------------------|----------------------------------------------------|
| (State                  or other jurisdiction of incorporation or organization) | (IRS                  Employer Identification No.) |

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**INTERNATIONAL        AUTOMATED SYSTEMS, INC.**

***(A        Development Stage Company)***

**TABLE        OF CONTENTS**

|                                                                                                                                                                                                                                                                                         |                                                                               | **Page** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|----------|
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| PART                    I - FINANCIAL INFORMATION                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    1.                                                                                                                                                                                                                                                                   | Financial                    Statements                                            | 3        |
|                                                                                                                                                                                                                                                                                         |                                                                               |
| Condensed                    Balance Sheets as of September 30, 2006 and June 30, 2006                                                                                                                                                                                                       | 3                                                                                  |
|                                                                                                                                                                                                                                                                                         |                                                                               |
| Unaudited                    Condensed Statements of Operations for the Three Months Ended                    September                    30, 2006 and 2005 and for the Period from                    September 26, 1986 (Date of Inception) through September 30,                    2006 | 4                                                                                  |
|                                                                                                                                                                                                                                                                                         |                                                                               |
| Unaudited                    Condensed Statements of Cash Flows for the Three Months Ended                    September                    30, 2006 and 2005 and for the Period from September 26, 1986                    (Date of                    Inception) through September 30, 2006 | 5                                                                                  |
|                                                                                                                                                                                                                                                                                         |                                                                               |
| Notes                    to the Unaudited Condensed Financial Statements                                                                                                                                                                                                                     | 7                                                                                  |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    2.                                                                                                                                                                                                                                                                   | Management’s                    Discussion and Analysis or Plan of Operation | 11       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    3.                                                                                                                                                                                                                                                                   | Controls                    and Procedures                                         | 12       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| PART                    II - OTHER INFORMATION                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    1.                                                                                                                                                                                                                                                                   | Legal                    Proceedings                                               | 13       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    2.                                                                                                                                                                                                                                                                   | Changes                    in Securities                                           | 13       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    3.                                                                                                                                                                                                                                                                   | Commitments                    and Contingencies                                   | 14       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    4.                                                                                                                                                                                                                                                                   | Defaults                    Upon Senior Securities                                 | 14       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    5.                                                                                                                                                                                                                                                                   | Submission                    of Matters to a Vote of Security Holders             | 14       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    6.                                                                                                                                                                                                                                                                   | Other                    Information                                               | 14       |
|                                                                                                                                                                                                                                                                                         |                                                                               |     |
| Item                    7.                                                                                                                                                                                                                                                                   | Exhibits                    and Reports on Form 8-K                                | 14       |

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**INTERNATIONAL        AUTOMATED SYSTEMS, INC.**

**ASSETS**

|                                                                                                                                                                                                                                                       |   | Unaudited                      |        | Audited                   |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|-------------|---------------------------|--------|
|                                                                                                                                                                                                                                                       |   | September                  30, |        | June                  30, |   |
|                                                                                                                                                                                                                                                       |   | 2006                           |        | 2006                      |   |
| **CURRENT                  ASSETS**                                                                                                                                                                                                                        |   |                           |        |                      |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |
| Cash                                                                                                                                                                                                                                                       |   | $                              | 353,756     |                      | $      | 708,379 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **Total                  Current Assets**                                                                                                                                                                                                                  |   |                           | 353,756     |                      |   | 708,379 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| Property                  and Equipment, net of $105,308 and $98,430 accumulated depreciation,                  respectively                                                                                                                               |   |                           | 378,291     |                      |   | 196,791 |   |
| Patents,                  net of $12,009 and $11,174 accumulated amortization,                  respectively                                                                                                                                               |   |                           | 227,792     |                      |   | 203,473 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **TOTAL                  ASSETS**                                                                                                                                                                                                                          |   | $                              | 959,839     |                      | $      | 1,108,643 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' DEFICIT**                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **CURRENT                  LIABILITIES**                                                                                                                                                                                                                   |   |                           |        |                      |   |   |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| Accounts                  payable                                                                                                                                                                                                                          |   | $                              | 51,050      |                      | $      | 128,995 |   |
| Accrued                  payroll taxes                                                                                                                                                                                                                     |   |                           | 61,254      |                      |   | 59,829 |   |
| Related                  party payable                                                                                                                                                                                                                     |   |                           | 227,995     |                      |   | 392,886 |   |
| Deposits                  from customers                                                                                                                                                                                                                   |   |                           | 495,000     |                      |   | 459,000 |   |
| Notes                  payable-current portion                                                                                                                                                                                                             |   |                           | 9,330       |                      |   | 9,330 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **Total                  Current Liabilities**                                                                                                                                                                                                             |   |                           | 844,629     |                      |   | 1,050,040 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| Net                  Long-Term Liabilities - Notes Payable                                                                                                                                                                                                 |   |                           | 124,994     |                      |   | 68,287 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **TOTAL                  LIABILITIES**                                                                                                                                                                                                                     |   |                           | 969,623     |                      |   | 1,118,327 |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **STOCKHOLDERS'                  DEFICIT**                                                                                                                                                                                                                 |   |                           |        |                      |   |   |   |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| Preferred                  stock, Class A, no par value; 4,400,000 shares authorized, 3,400,000                  shares issued and outstanding                                                                                                             |   |                           | 294,786     |                      |   | 294,786 |   |
| Preferred                  stock, Class B, no par value, 600,000 shares authorized, 300,000                  shares                  issued and outstanding                                                                                                |   |                           | -           |                      |   | - |   |
| Common                  stock, no par value, 45,000,000 shares authorized, 26,290,622 and                  25,532,622 shares issued and outstanding, net 709,918 and 842,918                  shares                  held in escrow account, respectively |   |                           | 14,154,953  |                      |   | 12,083,707 |   |
| Deficit                  accumulated during the development stage                                                                                                                                                                                          |   |                           | (14,459,523 | )                         |   | (12,388,177 | ) |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **Total                  Stockholders' Deficit**                                                                                                                                                                                                           |   |                           | (9,784      | )                         |   | (9,684 | ) |
|                                                                                                                                                                                                                                                       |   |                           |        |                      |   |   |   |
| **TOTAL                  LIABILITIES AND STOCKHOLDERS' DEFICIT**                                                                                                                                                                                           |   | $                              | 959,839     |                      | $      | 1,108,643 |   |

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**INTERNATIONAL        AUTOMATED SYSTEMS, INC.**

|                                                               |   | For                  the Three Months Ended |       | For                  the PeriodFrom                  Inception(September                  26, 1986) Through |   |
|--------------------------------------------------------------------|--------|---------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------|--------|
|                                                               |   | September                  30,              |       | September                  30,                                                                              |   |
|                                                               |   | 2006                                        |       | 2005                                                                                                        |   | 2006 |   |
| **REVENUES**                                                       |   |                                        |       |                                                                                                        |   |   |   |
| Sales                                                              |   | $                                           | -          |                                                                                                        | $      | - |   | $ | 111,226 |   |
| Income                  from related party                         |   |                                        | -          |                                                                                                        |   | - |   |   | 32,348 |   |
| **Total                  Revenue**                                 |   |                                        |       |                                                                                                        |   |   |   |   | 143,574 |   |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **COST                  OF GOODS SOLD**                            |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| Cost                  of sales                                     |   |                                        | -          |                                                                                                        |   | - |   |   | 81,927 |   |
| Write                  down of carrying value of inventories       |   |                                        | -          |                                                                                                        |   | - |   |   | 233,131 |   |
| **Total                  Costs of Sales**                          |   |                                        | -          |                                                                                                        |   | - |   |   | 315,058 |   |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **GROSS                  LOSS**                                    |   |                                        | -          |                                                                                                        |   |   |   |   | (171,484 | ) |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **OPERATING                  EXPENSES**                            |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| General                  and administrative                        |   |                                        | 1,925,672  |                                                                                                        |   | 141,796 |   |   | 9,385,679 |   |
| Research                  and development                          |   |                                        | 145,674    |                                                                                                        |   | 73,737 |   |   | 5,641,974 |   |
| Impairment                  of patents                             |   |                                        | -          |                                                                                                        |   | - |   |   | 110,082 |   |
| License                  fees                                      |   |                                        | -          |                                                                                                        |   | - |   |   | 270,634 |   |
| **Total                  Operating Expenses**                      |   |                                        | 2,071,346  |                                                                                                        |   | 215,533 |   |   | 15,408,369 |   |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **LOSS                  FROM OPERATIONS**                          |   |                                        | (2,071,346 | )                                                                                                           |   | (215,533 | ) |   | (15,579,853 | ) |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **OTHER                  INCOME (EXPENSES)**                       |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| Gain                  (loss) on impairment of assets               |   |                                        | -          |                                                                                                        |   | - |   |   | (583 | ) |
| Gain                  (loss) on disposal of property and equipment |   |                                        | -          |                                                                                                        |   | - |   |   | (17,359 | )  |
| Forfeiture                  of deposits                            |   |                                        | -          |                                                                                                        |   | - |   |   | (236,803 | ) |
| Interest                  income                                   |   |                                        | -          |                                                                                                        |   | - |   |   | 22,444 |   |
| Other                                                              |   |                                        | -          |                                                                                                        |   | - |   |   | (29,392 | ) |
| **Total                  Other Income (Expenses)**                 |   |                                        | -          |                                                                                                        |   | - |   |   | (261,693 | ) |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **LOSS                  BEFORE EXTRAORDINARY GAIN**                |   |                                        | (2,071,346 | )                                                                                                           |   | (215,533 | ) |   | (15,841,693 | ) |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **Extraordinary                  Gain on Sale of Patents**         |   |                                        | -          |                                                                                                        |   | - |   |   | 1,382,023 |   |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| **NET                  LOSS**                                      |   | $                                           | (2,071,346 | )                                                                                                           | $      | (215,533 | ) | $ | (14,459,523 | ) |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| Basic                  and Diluted Loss Per Share                  |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| Loss                  before extraordinary gain                    |   | $                                           | (0.08      | )                                                                                                           | $      | (0.03 | ) |   |   |   |
| Extraordinary                  gain                                |   |                                        | -          |                                                                                                        |   | - |   |   |   |   |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| Net                  Loss Applicable to Common Shareholders        |   | $                                           | (0.08      | )                                                                                                           | $      | (0.03 | ) |   |   |   |
|                                                               |   |                                        |       |                                                                                                        |   |   |   |   |   |   |
| Weighted                  Shares Used in Per Share Calculation     |   |                                        | 25,623,321 |                                                                                                        |   | 21,561,928 |   |   |   |   |

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**INTERNATIONAL        AUTOMATED SYSTEMS, INC.**

|                                                                                                       |   | For                  the Three Months |       | For                  the Period From Inception (September 26, 1986) Through |   |
|------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|-----------------------------------------------------------------------------|--------|
|                                                                                                       |   | Ended                  September 30,  |       | September                  30,                                              |   |
|                                                                                                       |   | 2006                                  |       | 2005                                                                        |   | 2006 |   |
| **CASH                  FLOWS FROM OPERATING ACTIVITIES**                                                  |   |                                  |       |                                                                        |   |   |   |
| Net                  loss                                                                                  |   | $                                     | (2,071,346 | )                                                                           | $      | (215,533 | ) | $ | (14,459,523 | ) |
| Adjustments                  to reconcile net loss to net cash from operating                  activities: |   |                                  |       |                                                                        |   |   |   |   |   |   |
| Depreciation                  and amortization                                                             |   |                                  | 7,713      |                                                                        |   | 4,828 |   |   | 360,915 |   |
| Stock                  based compensation                                                                  |   |                                  | 1,742,349  |                                                                        |   | 15,000 |   |   | 4,428,156 |   |
| Settlement                  of liability                                                                   |   |                                  | -          |                                                                        |   | - |   |   | - |   |
| Forfeiture                  of deposits                                                                    |   |                                  | -          |                                                                        |   | - |   |   | 236,803 |   |
| Write                  down of inventory                                                                   |   |                                  | -          |                                                                        |   | - |   |   | 16,945 |   |
| Write                  off of equipment to research & development                                      |   |                                  | -          |                                                                        |   | - |   |   | 23,900 |   |
| Loss                  on disposal of equipment                                                             |   |                                  | -          |                                                                        |   | - |   |   | 17,942 |   |
| Impairment                  of patents and abandonment of in-process rights to                  technology |   |                                  | -          |                                                                        |   | - |   |   | 356,632 |   |
| Gain                  on sale of patents                                                                   |   |                                  | -          |                                                                        |   | - |   |   | (1,382,023 | ) |
| Gain                  on settlement of debt                                                                |   |                                  | -          |                                                                        |   | - |   |   | (6,123 | ) |
| Stock                  issued for expenses                                                                 |   |                                  | -          |                                                                        |   | - |   |   | 63,600 |   |
| Changes                  in current assets and liabilities:                                                |   |                                  |       |                                                                        |   |   |   |   |   |   |
| Deposits                  from customers                                                                   |   |                                  | 36,000     |                                                                        |   | - |   |   | 495,000 |   |
| Accounts                  payable                                                                          |   |                                  | (77,945    | )                                                                           |   | (84,474 | ) |   | 51,050 |   |
| Related                  party payable                                                                     |   |                                  | 85,109     |                                                                        |   | - |   |   | 477,995 |   |
| Accrued                  liabilities                                                                       |   |                                  | 1,425      |                                                                        |   | 473 |   |   | 161,253 |   |
| **Net                  Cash From Operating Activities**                                                    |   |                                  | (276,695   | )                                                                           |   | (279,706 | ) |   | (9,157,478 | ) |
|                                                                                                       |   |                                  |       |                                                                        |   |   |   |   |   |   |
| **CASH                  FLOWS FROM INVESTING ACTIVITIES**                                                  |   |                                  |       |                                                                        |   |   |   |   |   |   |
| Purchase                  of property and equipment                                                        |   |                                  | (122,378   | )                                                                           |   | - |   |   | (525,247 | ) |
| Proceeds                  from sale of property and equipment                                              |   |                                  | -          |                                                                        |   | 11,237 |   |   | - |   |
| Purchase                  of rights to technology                                                          |   |                                  | (25,154    | )                                                                           |   | (1,356 | ) |   | (681,888 | ) |
| Organization                  costs                                                                        |   |                                  | -          |                                                                        |   | - |   |   | (1,880 | ) |
| Net                  cash advanced to related party                                                        |   |                                  | -          |                                                                        |   | - |   |   | (1,644,988 | ) |
| Proceeds                  from capital lease receivable                                                    |   |                                  | -          |                                                                        |   | - |   |   | 44,220 |   |
| Repayment                  of cash loaned to related party                                                 |   |                                  | -          |                                                                        |   | - |   |   | 53,254 |   |
| Net                  proceeds from sale of patents                                                         |   |                                  | -          |                                                                        |   | - |   |   | 1,382,023 |   |
| **Net                  Cash From Investing Activities**                                                    |   |                                  | (147,532   | )                                                                           |   | 9,881 |   |   | (1,374,506 | ) |
|                                                                                                       |   |                                  |       |                                                                        |   |   |   |   |   |   |
| **CASH                  FLOWS FROM FINANCING ACTIVITIES**                                                  |   |                                  |       |                                                                        |   |   |   |   |   |   |
| Proceeds                  from issuance of common stock                                                    |   |                                  | 78,897     |                                                                        |   | 407,818 |   |   | 4,564,435 |   |
| Cash                  from controlling shareholder                                                         |   |                                  | -          |                                                                        |   | - |   |   | 6,270,559 |   |
| Payments                  for treasury stock                                                               |   |                                  | -          |                                                                        |   | - |   |   | (3,325 | ) |
| Payments                  for stock offering costs                                                         |   |                                  | -          |                                                                        |   | - |   |   | (56,509 | ) |
| Proceeds                  from net borrowings from related party                                           |   |                                  | -          |                                                                        |   | 145,220 |   |   | 78,101 |   |
| Proceeds                  from notes payable                                                               |   |                                  | -          |                                                                        |   | - |   |   | 29,857 |   |
| Payments                  on note payable and obligations capital lease                                    |   |                                  | (9,293     | )                                                                           |   | (550 | ) |   | (153,037 | ) |
| Proceeds                  from related party deposits                                                      |   |                                  | -          |                                                                        |   | - |   |   | 224,400 |   |
| Purchases                  of equipment held for distribution                                              |   |                                  | -          |                                                                        |   | - |   |   | (68,741 | ) |
| **Net                  Cash From Financing Activities**                                                    |   |                                  | 69,604     |                                                                        |   | 552,488 |   |   | 10,885,740 |   |
|                                                                                                       |   |                                  |       |                                                                        |   |   |   |   |   |   |
| **NET                  CHANGE IN CASH**                                                                    |   |                                  | (354,623   | )                                                                           |   | 282,663 |   |   | 353,756 |   |
| **CASH                  AT BEGINNING OF PERIOD**                                                           |   |                                  | 708,379    |                                                                        |   | 40,885 |   |   | - |   |
| **CASH                  AT END OF PERIOD**                                                                 |   | $                                     | 353,756    |                                                                        | $      | 323,548 |   | $ | 353,756 |   |

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**INTERNATIONAL        AUTOMATED SYSTEMS, INC.**

|                                                                                |   | For                  the ThreeMonths                  EndedSeptember                  30, |    |
|-------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------|---------|
|                                                                                |   | 2006                                                                                      |    | 2005 |   |
| SUPPLEMENTAL                  DISCLOSURES OF CASH                  FLOW INFORMATION |   |                                                                                      |    |   |   |
|  Purchase                  of land with notes payable                          |   | $                                                                                         | 66,000  |   | $ | - |   |
|  Issuance                  of common stock in exchange for payment of debt     |   | $                                                                                         | 250,000 |   | $ | - |   |

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**NOTE        1 - INTERIM FINANCIAL STATEMENTS**

**NOTE        2 - BUSINESS CONDITION/GOING CONCERN**

**NOTE        3 - STOCK BASED COMPENSATION**

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| Expected                  volatility factor | 138.76% |   | Average                  expected life (years) | 10     |
|---------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                        |    |   |                                           |   |
| Risk-free                  interest rate    | 4.79%   |   | Dividend                  yield                | 0      |

----

| Expected                  volatility factor | 137.47% |   | Average                  expected life (years) | 10     |
|---------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                        |    |   |                                           |   |
| Risk-free                  interest rate    | 5.73%   |   | Dividend                  yield                | 0      |

| Expected                  volatility factor | 137.47% |   | Average                  expected life (years) | 5      |
|---------------------------------------------|---------|--------|------------------------------------------------|--------|
|                                        |    |   |                                           |   |
| Risk-free                  interest rate    | 5.73%   |   | Dividend                  yield                | 0      |

| Options                         |                                        |                                                        | Number                          |                                                        |
|---------------------------------|---------------------------------------------|-------------------------------------------------------------|---------------------------------|-------------------------------------------------------------|
| Outstanding                  at | Weighted                  Average           | Weighted                  Average                           | Exercisable                  at | Weighted                  Average                           |
| Sept.                  30, 2006 | Remaining                  Contractual Life | Exercise                  Price                             | Sept.                  30, 2006 | Exercisable                  Price                          |
| 1,600,000                       | 3.9                  years                  | $                        3.00 | 1,300,000                       | $                        3.00 |
| 99,375,000                      | 29.05                  years                | $                        0.40 | 9,375,000                       | $                        0.40 |

| Net                  loss, as reported                                                                                                            |   | $      | (215,533   | )      |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
|                                                                                                                                              |   |   |       |   |
| Deduct:                  Total stock-based employee compensation expense determined under                  fair-value based method for all awards |   |   | (2,038,792 | )      |
| Pro                  forma net loss, as restated                                                                                                  |   | $      | (2,254,325 | )      |
|                                                                                                                                              |   |   |       |   |
| Pro                  forma loss per common share:                                                                                                 |   |   |       |   |
| Basic                  and diluted loss per common share as reported                                                                              |   | $      | 0.01       |   |
| Diluted                  and diluted loss per common share pro forma                                                                              |   | $      | 0.010      |   |

----

**NOTE        4 - COMMITMENTS AND CONTINGENCIES**

*Sales        Commitments*

*Legal        *
***-***

*Payroll        Tax Contingency*

**NOTE        5 - STOCKHOLDERS EQUITY**

***Common        Stock Issued for Cash***

**NOTE        6 - LOAN FROM SHAREHOLDER**

**NOTE          7 - CUSTOMER DEPOSITS**

**NOTE        8 - SUBSEQUENT EVENT**

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**ITEM        2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF        OPERATION**

**FORWARD        LOOKING STATEMENTS**

**LIQUIDITY        AND CAPITAL RESOURCES**

**RESULTS        OF OPERATIONS**

**Three        Months Ended September        30, 2006 compared        to Three Months Ended September        30, 2005**

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**FUTURE        BUSINESS**

**ITEM        3: CONTROLS AND PROCEDURES**

**Evaluation        of Disclosure Controls and Procedures**

**Changes        in Internal Control over Financial Reporting**

----

**PART        II - OTHER INFORMATION**

**ITEM        1. LEGAL PROCEEDINGS**

**ITEM        2. CHANGES IN SECURITIES**

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**ITEM        3. COMMITMENTS AND CONTINGENCIES**

**ITEM        4. DEFAULTS UPON SENIOR SECURITIES.**

**ITEM        5. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**ITEM        6. OTHER INFORMATION.**

**ITEM        7. EXHIBITS AND REPORTS ON FORM 8-K**

**a.        Exhibits**

|   | 31.1 | Certification                  by the Chief Executive Officer Pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002 |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31.2 | Certification                  by the Chief Financial Officer Pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002 |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.1 | Certification                  by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350                  Adopted                  Pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002 |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32.2 | Certification                  by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350                  Adopted                  Pursuant to Section 906 of the Sarbanes-Oxley Act of                  2002 |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**SIGNATURES**

**International        Automated Systems, Inc.**

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