FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Quarterly Report Under Section 13 or 15(d)

Of the Securities Exchange Act of 1934

For Quarter Ended March 31, 2015

Commission File Number 33-16531-D

INTERNATIONAL AUTOMATED SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

UTAH 87-0447580

(State or other jurisdiction of (IRS Employer

incorporation or organization) Identification No.)

55 North Merchant Street 608

American Fork, Utah 84003

(Address of principal executive offices)

Registrant's telephone number

including area code (801)423-8132

Not Applicable Former Address, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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

No x

As of October 1, 2015, registrant had 67,394,305 shares of common stock, no par value per share, issued and outstanding.

5,700,000 shares of preferred stock issued and outstanding.

FORWARD-LOOKING STATEMENTS

This report references to “International Automated Systems,” the “Company,” “we,” “us,” and “our” refer to International Automated Systems, Inc.

In this report on Form 10-Q contains certain forward-looking statements and for this purpose any statements contained in this quarterly report that are statements of historical fact are intended to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing words the meaning of the foregoing words such as “may”, “will”, “expect”, “believe”, “anticipate”, ”estimate”, or “continue”, or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties and actual results may differ materially depending on a variety of factors many of which are not within our control. These factors include but are not limited to economic conditions generally and in the markets in which we may participate, competition within our chosen industry, technological advances and failure by us to successfully develop business relationships.

We caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made, are based on certain assumptions and expectations which may or may not be valid or actually occur and which involve various risks and uncertainties.

Unless otherwise required by applicable law, we do not undertake and specifically disclaim any obligations to update any forward-looking statement to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

PART I

ITEM I - FINANCIAL STATEMENTS

The condensed financial statements included herein have been prepared by International Automated Systems, Inc. (the "Company" or the "Registrant"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

In the opinion of the Company, all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial position of the Company as of March 31, 2015, and the results of its operations from June 30, 2014, through March 31, 2015. The results of its operations for such interim period is not necessarily indicative of the results to be expected for the entire year.


INTERNATIONAL AUTOMATED SYSTEMS, INC
Balance Sheets

ASSETS
			March 31,		June 30,
			2015		2014
CURRENT ASSETS			(unaudited)

	Cash and cash equivalents		$	4,423	$	26,108
	Accounts receivable			-		-

		Total Current Assets		4,423		26,108

PROPERTY AND EQUIPMENT, net				279,315		280,832

		TOTAL ASSETS	$	283,738	$	306,940

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

	Accounts payable		$	5,904	$	2,677
	Related party payable			198,293		147,196

		Total Current Liabilities		204,197		149,873

Long-term notes payable				-		-

		TOTAL LIABILITIES		204,197		149,873
				199,774
STOCKHOLDERS' EQUITY

	Preferred stock, no par value; 22,000,000 shares authorized,
		5,700,000 and 5,700,000 shares issued and outstanding, respectively		470,264		470,264
	Common stock, no par value, 225,000,000 shares authorized,
		64,894,305 and 64,894,305 issued and outstanding, respectively		39,650,775		39,650,775
	Accumulated deficit			(40,041,498)		(39,963,972)

		Total Stockholders' Equity		79,541		157,067

		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	283,738	$	306,940

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


INTERNATIONAL AUTOMATED SYSTEMS, INC
Statements of Operations
(unaudited)

			For the Three Months Ended				For the Nine Months Ended
			March 31,				March 31,
			2015		2014		2015		2014

REVENUES			$	-	$	-	$	-	$	-

OPERATING EXPENSES

	Research and development			2,137		42,210		5,242		135,064
	Depreciation expense			506		10,778		1,517		32,333
	General and administrative			34,519		199,450		70,767		956,393

		Total Operating Expenses		37,162		252,438		77,526		1,123,790

NET LOSS			$	(37,162)	$	(252,438)	$	(77,526)	$	(1,123,790)

BASIC AND DILUTED LOSS PER SHARE			$	(0.00)	$	(0.00)	$	(0.00)	$	(0.02)

WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING				64,894,305		64,894,305		64,894,305		64,894,305

The accompanying notes are an integral part of these financial statements


INTERNATIONAL AUTOMATED SYSTEMS, INC
Statements of Cash Flows
(Unaudited)

				For the Nine Months Ended
				March 31,
				2015		2014
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss			$	(77,526)	$	(1,123,790)
	Adjustments to reconcile net loss to net
		cash from operating activities:
		Depreciation and amortization			1,517		32,333
	Changes in current assets and liabilities:
		(Increase) / decrease in accounts receivable			-		668,258
		Increase / (decrease) in accounts payable			3,227		77,669

			Net cash used in operating activities		(72,782)		(345,530)

Cash flows used in investing activities
	Purchase of property and equipment				-		-

			Net cash used in (provided by) investing activities		-		-

Cash flows provided by financing activities
	Payments on cash advances from related party				51,097		-

			Net cash provided by financing activities		51,097		-

Net change in cash					(21,685)		(345,530)
Cash at beginning of period					26,108		402,656

Cash at end of period				$	4,423	$	57,126

Supplemental cash flow information
	Cash payments for interest			$	-	$	-
	Cash payments for income taxes				-		-

Non Cash Financing Activities				$	-	$	-

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

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - International Automated Systems, Inc. (the “Company” or “IAS”) was incorporated in the State of Utah on September 26, 1986. The Company’s activities to date have consisted of developing a business plan, raising capital through the issuance of debt and equity instruments, developing power generation equipment and obtaining the rights to certain technology related to electronic security and communication equipment.

Use of Estimates - The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Basis of Presentation / Going Concern - The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2015, the Company had $4,423 of available cash and a working capital deficit of $199,774. For the nine months ended March 31, 2015 and 2014, the Company had no revenue, no operating income and used net cash for operating activities of $72,782 and $345,530, respectively. As of March 31, 2015 the Company’s losses accumulated from inception totaled $40,041,498. These factors, among others, indicate that the Company may be unable to continue as a going concern for the next twelve months. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional financing as may be required, and ultimately to attain sufficient cash flow from operations to meet its obligations on a timely basis. Management is in the process of negotiating various sales agreements and believes these sales may generate sufficient cash flow for the Company to continue as a going concern. If the Company is unsuccessful in these efforts and does not attain sufficient sales to permit profitable operations or if it cannot obtain sufficient additional financing, it may be required to substantially curtail or terminate its operations.

Concentration Risks - The Federal Deposit Insurance Corporation (FDIC) insures cash deposits in most general bank accounts for up to $250,000 per institution. The Company had no cash deposits that exceeded insured amounts as of March 31, 2015, and June 30, 2014, respectively.

Cash Equivalents - The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments - The Company’s financial instruments consist of cash and cash equivalents, payables, and notes payable. The carrying amount of cash and cash equivalents and payables approximates fair value because of the short-term nature of these items. The carrying amount of the notes payable approximates fair value as the individual borrowings bear interest at rates that approximate market interest rates for similar debt instruments.

Impairment - The Company records impairment losses on property and equipment and patents when indicators of impairment are present and undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. Furthermore, the Company makes periodic assessments about each patent and the related technology to determine if it plans to continue to pursue the technology and if the patent has value.

Research and Development - Research and development has been the principal function of the Company. Research and development costs are expensed as incurred. Expenses in the accompanying financial statements include certain costs which are directly associated with the Company’s research and development of the Solar Power Plant technology, Steam Turbine technology, Automated Fingerprint Identification Machine technology, Digital Wave Modulation Technology and other various projects. These costs, which consist primarily of monies paid for consulting expenses, materials and supplies and compensation costs amounted to $5,242 and $135,064 for the nine months ended March 31, 2015 and 2014, respectively.

Advertising Costs - Advertising costs are expensed when incurred. Advertising expense was $258 and $7,648 for the nine months ended March 31, 2015 and 2014, respectively.

Property and Equipment - Property and equipment are recorded at cost and are depreciated using the straight-line method based on the expected useful lives of the assets which range from five to ten years. Depreciation expense for the nine months ended March 31, 2015, and 2014, was $1,517 and $32,333, respectively. The major classes of assets are as follows:

Income Taxes - The Company recognizes the amount of income taxes payable or refundable for the current year and recognizes deferred tax assets and liabilities for operating loss carryforwards and for the future tax consequences attributable to differences between the financial statement amounts of certain assets and liabilities and their respective tax basis. Deferred tax assets and deferred liabilities are measured using enacted tax rates expected to apply to taxable income in the years those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance to the extent that uncertainty exists as to whether the deferred tax assets will ultimately be realized.

Condensed Financial Statements - The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2015, and 2014, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s June 30, 2015 audited financial statements. The results of operations for the three month and the nine month periods ended March 31, 2015, and 2014, are not necessarily indicative of the operating results for the full year.

Recent Accounting Pronouncements – The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

NOTE 2 – BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic earnings per share is computed by dividing the net income or loss applicable to common shares by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing the net income or loss by the sum of the weighted average number of common shares plus the weighted average common stock equivalents which would arise from the exercise of outstanding stock options, issuance of stock held in trust and conversion of Series B Preferred Shares into options to purchase shares of common stock, using the treasury stock method and the average market price per share during the period.

NOTE 3 – RELATED PARTY TRANSACTIONS

The Company owes $198,293 and $147,196 to its president for expenses paid on the Company’s behalf as of March 31, 2015, and June 30, 2014, respectively. The liability is non-interest bearing, unsecured and due upon demand.

NOTE 4 – STOCK BASED COMPENSATION

Options and Warrants

The Company’s board of directors authorized the Company to enter into an agreement dated May 14, 2004, and amended October 13, 2004, with the Company’s president, in which the Company acquired patents, patents pending, designs and contracts related to certain technology (developed by the president) from the president. The direct costs of developing and obtaining the acquired patents, patents pending, designs and contracts were paid and capitalized by the Company. No additional value has been assigned to these patents as a result of them being acquired from the president.

As consideration, the Company authorized and issued warrants to purchase 100,000,000 shares of common stock to the president and agreed to pay the president royalties in the future equal to 10% of future sales proceeds from the technology. The warrants, which were considered stock-based compensation for services to be rendered, had no intrinsic value on the grant date. The fair value of the warrants was $37,136,781, calculated on the grant date using the Black-Scholes model. The following assumptions were used for this grant: Average risk-free interest rate of 4.79%; expected lives of 10 years; expected dividend yield of zero percent; and expected volatility of 138.76%. On July 1, 2006, the Company began recognizing stock-based compensation expense over the graded exercisability period of the options using the straight-line basis over the requisite service period for each separately exercisability portion of the award as if the award was, in-substance, multiple awards.

The agreement contains a standard anti-dilution clause that gives the president the right to purchase the same number of shares of common stock, given reclassification, reorganization or change by a stockholder, as were purchasable prior to any such changes, at a total price equal to that payable upon the exercise of the options. Appropriate adjustments shall be made to the exercise price so the aggregate purchase price of the shares will remain the same. The warrants have an exercise price of $0.40 per share and are all exercisable as of March 31, 2015.

The following table summarizes the stock option and warrant activity as of and for the nine month period ended March 31, 2015, and the years ended June 30, 2014, and 2013:

36,920,000

NOTE 5 – PREFERRED STOCK

Series A Preferred Stock

The Series A Preferred Stock has equal dividend rights to the common shares, is not convertible into common shares, has no cumulative dividend requirements and has liquidation preferences equivalent to the common shares. 3,400,000 shares of the Series A Preferred Stock are entitled to the voting rights of 10 common shares, and 2,000,000 shares of the Series A Preferred Stock are entitled to the voting rights of 100 common shares. At March 31, 2015, and June 30, 2014, there were 5,400,000 Series A Preferred Stock issued and outstanding, respectively.

Series B Preferred Stock

The Series B Preferred Stock has equal dividend rights to the common shares, has no cumulative dividend requirements, has liquidation preferences equivalent to the common shares and each preferred share is entitled to the voting rights of 10 common shares. Each share is convertible into options to purchase two shares of common stock at $3.00 per share, exercisable immediately and the options expire ten years from the date the preferred stock is issued. At March 31, 2015, and June 30, 2014, there were 300,000, series B Preferred shares issued and outstanding.

The Company’s policy for recording interest and penalties associated with taxes is to recognize it as a component of income tax

NOTE 6 – SUBSEQUENT EVENTS

In accordance with ASC 855, the Company evaluated subsequent events through the date these financial statements were issued. There were no additional material subsequent events that required recognition or additional disclosure in these financial statements.

ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.

Liquidity and Capital Resources.

The results discussed below are for the three and nine month periods ended March 31, 2015, and March 31, 2014, respectively.

Revenues

For the three month and the nine month periods ended March 31, 2015, and 2014, there were no revenues.

Research and Development Expenses

During the three months ended March 31, 2015, research and development expenses declined from $49,478 to $851. For the nine months ending on March 31, 2015 and 2014, research and development expenses declined from $92,854 to $3,105.

General and Administrative Expenses

During the three months ended March 31, 2015, and 2014, respectively, the general and administrative expenses declined from $199,450 to $34,519. During the nine months ended March 31, 2015, and 2014, the general and administrative expenses declined from $956,393 to $70,767. The decline reflected a reduction in personnel.

Net Loss

For the three months ended March 31, 2015, our net loss was $37,162 compared to a net loss of $252,438 for the three months ended March 31, 2014. The decrease was a result of reductions in expenses incurred.

For the nine months ended March 31, 2015, our net loss was $77,526 compared to a net loss of $1,123,790. The decline in the net loss represented the combined reductions in expenses incurred.

Financial Condition, Liquidity and Capital Resources

During the nine months ended March 31, 2015, the Company used cash in operations of $71,782 compared to $345,530 used during the comparable period of 2014. The decrease in cash used was due to reduced expenditures for research and development costs and general and administrative costs net of the cash flow in 2014 arising from the collection of $668,258 of accounts receivable and the increase of $77,669 of accounts payable during the nine months ended March 31, 2014.

There was no net cash used or provided by investing activities during either the nine months ended March 31, 2015 or 2014.

Net cash provided by financing activities during the nine months ended March 31, 2015 amounted to $51,097 representing payments made on the Company’s behalf by a related party. During the nine months ended March 31, 2014, there was no cash provided by financing activities.

At March 31, 2015, the Company had cash on hand of $4,423, which is not sufficient to meet our operating needs for the next twelve months. Because we are engaged in the research and development of our products and aren’t receiving material cash proceeds from our sales, we will need to continue to raise additional capital on an ongoing basis. We anticipate that we may need to secure additional sources of capital to support our operating and development costs and to grow the Company.

At March 31, 2015, our current assets were $4,423 and our current liabilities were $204,197 resulting in a working capital deficit of $199,774. At June 30, 2014, the current assets were $26,108 and our current liabilities were $149,873 resulting in a working capital deficit of $123,765

Company’s Business

The products which the Company has under development were described in its report on Form 10-K which was filed on or about July 16, 2015. Generally speaking the Company is continuing to develop these products. The Company is incorporating the report on Form 10-K filed on July 16, 2015, into this report by reference.

The Company has an Alternate Solar Energy Thermal System (“System”) which can be used with the Company’s bladeless turbine to generate power. The system captures the solar energy onto a receiver and the energy is used to propel the bladeless turbine. The System may use multiple concentrators to supply a single turbine.

The Company has an Automated Fingerprint Identification Machine (“AFIM”), designed to have the capability of verifying the identity of individuals. The AFIM is able to identify a person utilizing information previously stored. The Company believes that it has the ability to connect a series of AFIM’s to a single personal computer. The person whose identity will be verified as the AFIM reads the fingerprint. The fingerprint being verified has previously been read and stored within the system.

The Company has technology, referred to as the Digital Wave Modulation (“DWM”). The Company believes that this technology may increase the amount of information which may be transmitted. To date the commercial feasibility of this technology is uncertain. There is competition in communication, data transfer and storage systems. There are risks related to development of commercially viable products as well as an uncertain demand. The Company’s development is limited by funds available for development. .

The Company has patented a propulsion steam turbine. It uses the expansion of steam to be propulsion to create a rotational force. The Company believes that its turbine is as effective as other turbines, is smaller in size, requires less maintenance, is less expensive to manufacture, is mass producible, and does not require cooling towers. It is more mobile and water conserving than other turbines. The Company may not be able to successfully manufacture because of lack of sufficient funding, government interference and regulation, lack of acceptance in the industry, and many other conditions not under the Company’s control.

The Company has developed an Automatic Self-Service Check-out System. The check-out system is referred to as the “Self-Check System.” In retail operations the Self-Check System allows customers to check out the items to be purchased. A scanner reads the bar codes of the items being purchased and a scale weighs the scanned items that are placed in the receiving baskets. The Self-Check System is designed to replace clerk-operated cashier registers. When fully implemented a store manager is able to maintain accurate inventory of items on a real-time basis.

For the Self-Check System to operate at least 95% of the items must have bar codes. The retailer may have to purchase equipment to be able to put bar codes on items in the store. The Company believes that the Self-check System may reduce thefts and employees will be unable to circumvent the check-out systems.

Another market being tested is automatic ordering and payment. The customers would use a touch screen to initiate an order, and make payment using the Company’s AFIM technology. The order would be sent automatically to the food preparers.

Patents and Trade Secrets

The Company has been assigned or will be assigned the rights to several U.S. patents. Four patents pertaining to the AFIM technology were granted in January 1997, February 2001, July 2001, and September 2002. Seven patents pertaining to the DWM technology were granted in May 1996, June 1997, November 1997, July 2000, September 2000, October 2000, and May 2001. A patent relating to shelf tag was granted on September 2003. Four patents relating to the turbine were granted in March 2003, January 2004, February 2006, and November 2007. A patent pertaining to the solar energy technology was granted in October 2007.

The Company has not sought or received an opinion from an independent patent attorney regarding the strength of the patents or patents pending and the ability of the Company to withstand any challenge to the patent or any future efforts by the Company to enforce its rights under a patent or patents against others. In 2008 a court held that one of the AFIM patents was invalid.

The Company believes that it has trade secrets and it has made efforts to safeguard and secure its trade secrets. There can be no assurance that these safeguards will enable the Company to prevent competitors from gaining knowledge of these trade secrets and using them to their advantage and to the detriment of the Company.

The Company relies on its technology in the development of its products. There can be no assurance that others may not develop technology which competes with the Company’s products and technology.

Accounting Policies and Estimates

We believe that our financial statements and the accompanying notes are prepared in conformity with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions about future events that affect the reported amounts in the financial statements and the accompanying notes. We identified certain accounting policies which are important in the financial statements’ reporting of financial condition, results of operations, or liquidity. Accounting policies cover accounting matters that are inherently uncertain because the future resolution of such matters is unknown.

Off-Balance Sheet Arrangements.

Under SEC regulations, we are required to disclose our off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, such as changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we may enter into lease commitments, purchase commitments and other contractual obligations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item. Certain market risks were disclosed in the Company’s June 30, 2014, Form 10K, which was filed July 16, 2015.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and the participation of management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our 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 of accounting principles generally accepted in the United States.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 2015. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organization of the Treadway Commission (COSO) in Internal Control -- Integrated Framework. Based on this evaluation, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that as of March 31, 2015 our internal control over financial reporting was not effective.

This report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this report.

Changes in Internal Control over Financial Reporting

During the most recent quarter ended March 31, 2015, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

Part II.

Item 1. Legal Proceedings.

There is a lawsuit pending. Refer to the June 30, 2013 Form 10K filed on or about July 16, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On August 13, 2015, the Company sold 2,500,000 shares of restricted common stock at price of $0.32 per share. The proceeds were received by the Company on August 13, 2015.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Matters Submitted to a Vote of the Company's Shareholders.

None.

Item 5. Other Information.

Our shares of common stock are quoted on the electronic over the counter bulletin board under the symbol “IAUS”.

Item 6. Exhibits, Financial Statements, Schedules and Reports on Form 10-Q.

A. Exhibits.

No.

Description

31.1

Certification pursuant to Section 302

31.2

Certification pursuant to Section 302

32.1

Certification

32.2

Certification

B. Reports on Form 8-K.

None

Signatures

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

Date: October 1, 2015

International Automated Systems, Inc.

By /s/Neldon Johnson

President and Chief Executive Officer

October 2, 2015

INTERNATIONAL AUTOMATED SYSTEMS INC 10-Q