________________________________________________________________________________

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           ___________________________

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

                         COMMISSION FILE NUMBER: 1-15863

                           ___________________________


                                 IA GLOBAL, INC.
             (Exact name of Registrant as specified in its charter)

                           ___________________________


                DELAWARE                             13-4037641
     (State or other jurisdiction of      (IRS Employer Identification No.)
     incorporation or organization)


                        533 AIRPORT BOULEVARD, SUITE 400
                              BURLINGAME, CA 94010
                    (Address of principal executive offices)


                  REGISTRANT'S TELEPHONE NUMBER: (650) 685-2403

                           ___________________________


         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 for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [X] No [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).

                                 Yes [ ] No [X]

         As of May 6, 2005 there were issued and outstanding 82,400,181 shares
of the Registrant's Common Stock.
________________________________________________________________________________

<PAGE>
                                 IA GLOBAL, INC.

                                    FORM 10-Q

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I.

     Item 1.   Financial Statements ...........................................3

               Consolidated Balance Sheet .....................................3

               Consolidated Statements of Operations ..........................4

               Consolidated Statement of Cash Flows ...........................5

               Notes to Consolidated Financial Statements .....................6

     Item 2.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations ...........................25

     Item 3.   Quantitative and Qualitative Disclosures About Market Risk ....44

     Item 4.   Controls and Procedures .......................................44


PART II.

     Item 1.   Legal Proceedings .............................................44

     Item 2.   Changes in Securities and Use of Proceeds .....................45

     Item 3.   Defaults Upon Senior Securities ...............................45

     Item 4.   Submission of Matters to a Vote of Security Holders ...........45

     Item 5.   Other Information .............................................45

     Item 6.   Exhibits and Reports on Form 8-K ..............................46

Signatures ...................................................................47

                                        2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements
<TABLE>
                                     IA GLOBAL, INC. AND SUBSIDIARIES
                                        CONSOLIDATED BALANCE SHEET
<CAPTION>
                                                                            March 31,        December 31,
                                                                              2005               2004
                                                                          ------------       ------------
                                                                           (unaudited)         (audited)
<S>                                                                       <C>                <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents ........................................      $  2,315,393       $  3,847,813
  Accounts receivable, net of allowance for doubtful accounts of
    $89,477 and $93,338, respectively ..............................         3,401,011          6,431,663
  Notes receivable .................................................           217,935            641,305
  Inventories ......................................................           650,386            164,046
  Prepaid expenses .................................................           211,955            771,036
  Consumption and deferred tax receivable ..........................            16,164            161,769
  Loan receivable from QuikCAT Australia Pty Ltd ...................            50,000            150,000
  Other current assets .............................................           416,017            136,102
  Assets held for sale .............................................           773,124            773,582
                                                                          ------------       ------------
    Total current assets ...........................................         8,051,985         13,077,316

EQUIPMENT, NET .....................................................           254,284            273,245

OTHER ASSETS
  Intangible assets, net ...........................................         1,100,327          1,271,935
  Deferred tax asset ...............................................           373,939            390,079
  Other assets .....................................................           991,051            200,641
                                                                          ------------       ------------

                                                                          $ 10,771,586       $ 15,213,216
                                                                          ============       ============

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
  Accounts payable - trade .........................................      $  2,867,227       $  6,446,656
  Notes payable ....................................................           820,266          1,474,582
  Accrued liabilities ..............................................           579,806            529,198
  Consumption taxes received .......................................            69,977            260,648
  Income taxes payable- foreign ....................................            38,778            235,047
  Current portion of long term debt ................................           598,494            484,966
                                                                          ------------       ------------
    Total current liabilities ......................................         4,974,548          9,431,097
                                                                          ------------       ------------

LONG TERM  LIABILITIES:
  Long term debt ...................................................         1,189,585            242,463
  Retirement benefits ..............................................            36,297             39,932
                                                                          ------------       ------------
                                                                             1,225,882            282,395
                                                                          ------------       ------------

MINORITY INTERESTS .................................................         1,161,355          1,365,570
                                                                          ------------       ------------

STOCKHOLDER'S EQUITY:
  Series B Preferred stock, $.01 par value, 5,000 shares authorized
    1,158 issued and outstanding (liquidation value $1,158,000) ....                12                 12
  Common stock, $.01 par value, 150,000,000 shares authorized,
    82,400,181 issued and outstanding, respectively ................           824,001            824,001
  Paid in capital ..................................................        28,785,839         28,785,839
  Accumulated deficit ..............................................       (26,135,213)       (25,590,820)
  Treasury stock ...................................................           (50,000)           (50,000)
  Other comprehensive income (loss) ................................           (14,838)           165,122
                                                                          ------------       ------------
    Total stockholder's equity .....................................         3,409,801          4,134,154
                                                                          ------------       ------------

                                                                          $ 10,771,586       $ 15,213,216
                                                                          ============       ============

                              See notes to consolidated financial statements.

                                                     3
</TABLE>
<PAGE>
<TABLE>
                                     IA GLOBAL, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                          -------------------------------
                                                                              2005               2004
                                                                          ------------       ------------
                                                                           (unaudited)        (unaudited)
<S>                                                                       <C>                <C>
REVENUE ............................................................      $  5,968,879       $  2,030,746

COST OF SALES ......................................................         4,864,214          1,511,018
                                                                          ------------       ------------

GROSS PROFIT .......................................................         1,104,665            519,728
                                                                          ------------       ------------

EXPENSES:
  Selling, general and administrative expenses .....................         2,035,905            883,168
                                                                          ------------       ------------
    Total expenses .................................................         2,035,905            883,168
                                                                          ------------       ------------

OPERATING LOSS .....................................................          (931,240)          (363,440)
                                                                          ------------       ------------

OTHER INCOME (EXPENSE):
  Interest income ..................................................             6,305              2,528
  Interest expense .................................................           (22,909)            (5,007)
  Other income .....................................................            30,659              2,648
  Foreign currency transaction adjustment ..........................            17,413              2,255
  Gain on equity investment in QuikCAT Australia Pty Ltd ...........                 -              1,956
                                                                          ------------       ------------
    Total other income (expense) ...................................            31,468              4,380
                                                                          ------------       ------------

LOSS FROM CONTINUING OPERATIONS BEFORE
  MINORITY INTERESTS AND INCOME TAXES ..............................          (899,772)          (359,060)

MINORITY INTERESTS .................................................          (204,165)            34,364
                                                                          ------------       ------------

LOSS FROM CONTINUING OPERATIONS BEFORE
  INCOME TAXES .....................................................          (695,607)          (393,424)
                                                                          ------------       ------------

INCOME TAXES:
  Current ..........................................................          (191,982)            64,123
  Deferred .........................................................                 -             11,415
                                                                          ------------       ------------

NET LOSS FROM CONTINUING OPERATIONS ................................          (503,625)          (468,962)

Loss from discontinued operations (Note 3) .........................           (40,768)                 -
                                                                          ------------       ------------

NET LOSS ...........................................................      $   (544,393)      $   (468,962)
                                                                          ============       ============

Per share of Common-
  Basic net loss per share from continuing operations ..............      $      (0.01)      $      (0.01)
  Basic net loss per share from discontinued operations ............             (0.00)                 -
                                                                          ------------       ------------
  Total basic net loss per share ...................................      $      (0.01)      $      (0.01)
                                                                          ============       ============

  Diluted net loss per share from continuing operations ............      $      (0.01)      $      (0.01)
  Diluted net loss per share from discontinued operations ..........             (0.00)                 -
                                                                          ------------       ------------
  Total diluted net loss per share .................................      $      (0.01)      $      (0.01)
                                                                          ============       ============

  Weighted average shares of common stock outstanding ..............        82,400,181         71,965,401
  Weighted average shares of common stock and common
    equivalent shares outstanding ..................................        82,400,181         71,965,401

                              See notes to consolidated financial statements.

                                                     4
</TABLE>
<PAGE>
<TABLE>
                                     IA GLOBAL, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
                                                                            Three Months Ended March 31,
                                                                               2005              2004
                                                                           -----------        -----------
                                                                           (unaudited)        (unaudited)
<S>                                                                        <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss .........................................................       $  (544,393)       $  (468,962)
  Adjustments to reconcile net loss to net cash used in
   operating activities:
    Depreciation and amortization ..................................           164,433             66,271
    Equity gain from investment in QuikCAT Australia Pty Ltd .......                 -             (1,956)
    Loss from discontinued operations ..............................            40,768                  -
    Minority interests .............................................          (204,215)           443,844
    Accrued interest on notes/loans payable ........................                 -               (948)
    Accounts receivable ............................................         3,030,652            731,605
    Notes receivable - trade .......................................           423,370                  -
    Consumption and deferred tax receivable ........................           (45,066)            32,088
    Inventory ......................................................          (486,340)            60,426
    Prepaid expenses ...............................................           559,081            311,308
    Other current assets ...........................................                 -            467,040
    Deferred tax assets ............................................            16,140             (8,171)
    Other assets ...................................................                 -              2,009
    Accounts payable ...............................................        (3,579,429)           (50,144)
    Notes payable - trade ..........................................          (654,316)                 -
    Accrued liabilities ............................................            50,608           (115,562)
    Other liabilities-retirement benefits ..........................            (3,635)            23,899
    Income taxes payable - foreign .................................          (196,269)           159,862
    Deferred revenue ...............................................                 -           (463,119)
                                                                           -----------        -----------
Net cash provided by (used in) continuing operations ...............        (1,428,611)         1,189,490
Net cash used in discontinued operations ...........................           (40,310)                 -
                                                                           -----------        -----------
NET CASH PROVIDED BY (USED IN) OPERATIONS ..........................        (1,468,921)         1,189,490
                                                                           -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in QuikCAT Australia Pty Ltd ..........................                 -            (50,000)
  Cash of Rex Tokyo Co Ltd immediately following acquisition .......                 -          1,934,839
  Purchase of Rex Tokyo Co Ltd .....................................                 -           (941,000)
  Purchases of capital expenditures ................................           (17,540)          (111,656)
  Proceeds from sale of QuikCAT Australia Pty Ltd ..................           100,000                  -
  Other current assets .............................................          (279,915)                 -
  Purchases of intangible assets ...................................            43,676                  -
  Other assets .....................................................          (790,410)            18,428
                                                                           -----------        -----------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES ................          (944,189)           850,611
                                                                           -----------        -----------

CASH PROVIDED BY FINANCING ACTIVITIES:
  Proceeds from loan payable .......................................         1,859,600                  -
  Proceeds from loan payable - related party .......................                 -          1,500,000
  Repayment of loan payable ........................................          (798,950)                 -
  Loan to Innovative Computing Group, Inc. .........................                 -           (100,000)
  Loan to QuikCAT Australia Pty Ltd. ...............................                 -            (25,000)
  Proceeds from issuance of common stock ...........................                 -            400,000
                                                                           -----------        -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES ..........................         1,060,650          1,775,000
                                                                           -----------        -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...............        (1,352,460)         3,815,101

EFFECT OF EXCHANGE RATE CHANGES ON CASH ............................          (179,960)           (18,948)

CASH AND CASH EQUIVALENTS, beginning of the period .................         3,847,813            676,782
                                                                           -----------        -----------

CASH AND CASH EQUIVALENTS, end of the period .......................       $ 2,315,393        $ 4,472,935
                                                                           ===========        ===========

Supplemental disclosures of cash flow information:
  Interest paid ....................................................       $    22,899        $         -
  Taxes paid .......................................................       $         -        $         -
Non-cash investing and financing activities:
  Common stock issued for Rex Tokyo Co Ltd .........................       $         -        $   138,600

                              See notes to consolidated financial statements.

                                                     5
</TABLE>
<PAGE>
                        IA GLOBAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION:

         The accompanying unaudited CONSOLIDATED financial statements of IA
Global, Inc. and SUBSIDIARIES (the "company") have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to prepare them for inclusion as part of the Form
10-Q.

         Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The financial statements for the period ended March 31, 2005 and
2004 are unaudited and include all adjustments necessary to a fair statement of
the results of operations for the periods then ended. All such adjustments are
of a normal recurring nature. The results of the company's operations for any
interim period are not necessarily indicative of the results of the company's
operations for a full fiscal year. For further information, refer to the
financial statements and footnotes thereto included in the company's annual
report on Form 10-K filed with the Securities and Exchange Commission for the
year ended December 31, 2004.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the company and its majority-owned subsidiaries. The company fully
consolidated the results of operations of the majority owned IA Global
Acquisition Co. in the Consolidated Statements of Operations for the three
months ending March 31, 2005 because the subsidiary incurred losses for this
period and the company does not expect to recover these losses from the minority
owner. In accordance with SFAS 144, the company accounted for the loss for the
three months ended March 31, 2005 loss of $41,000 as discontinued operations in
its consolidated statement of operations. Inter-company items and transactions
have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS - The company classifies highly liquid temporary
investments with an original maturity of three months or less when purchased as
cash equivalents.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS - Accounts receivable
consists primarily of amounts due to the company from normal business
activities. The company maintains an allowance for doubtful accounts to reflect
the expected non-collection of accounts receivable based on past collection
history and specific risks identified within the portfolio. If the financial
condition of the customers were to deteriorate resulting in an impairment of
their ability to make payments, or if payments from customers are significantly
delayed, additional allowances might be required.

NOTES RECEIVABLE - The company's Japanese subsidiaries, on occasion, accept
notes receivable in payment of accounts receivable with certain customers. These
notes are usually of a short term nature, approximately three to six months in
length. They do not bear interest and are paid by, and secured by, the
customer's bank. Total notes receivable as of March 31, 2005 and December 31,
2004 were $217,935 and $641,305, respectively.

INVENTORIES - Inventories are stated at the lower of cost (first-in, first-out)
or market. The company records a provision for excess and obsolete inventory
whenever an impairment has been identified.

EQUIPMENT - Equipment represents machinery, equipment and software, which are
stated at cost less accumulated depreciation. Depreciation of machinery and
equipment is computed by the accelerated or straight-line methods over the
estimated useful lives of the related assets (approximately 3-15 years).
Software developed or obtained for internal use is depreciated using the
straight-line method over the estimated useful life of the software, generally
not in excess of two years.

                                        6
<PAGE>

INTANGIBLE ASSETS / INTELLECTUAL PROPERTY - The company amortizes the intangible
assets and intellectual property acquired in connection with the acquisition of
Fan Club Entertainment over sixty months on a straight - line basis, which is
the life of the Marvel Enterprises, Inc. agreement. On July 30, 2004 and August
1, 2004 Fan Club, signed two license agreements with Total Insurance Management
for use in building Internet platforms, including content. The license costs of
$540,930 were capitalized and are being amortized over the two year life of the
agreements.

         The company amortized the intangible assets and intellectual property
acquired from QuikCAT.com, Inc.("QuikCAT") over sixty months on a straight -
line basis, which is the expected life of the technology. On February 9, 2005,
the company announced a definitive agreement to divest its remaining holdings
related to QuikCAT to Nanocat Technologies PTE Limited, a Singapore corporation.

LONG - LIVED ASSETS - The company reviews its long-lived assets for impairment
when changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Long-lived assets under certain circumstances are reported
at the lower of carrying amount or fair value. Assets to be disposed of and
assets not expected to provide any future service potential to the company are
recorded at the lower of carrying amount or fair value less cost to sell. To the
extent carrying values exceed fair values, an impairment loss is recognized in
operating results. The company has performed its impairment tests and determined
there were no impaired long - lived assets as of March 31, 2005.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts reported in the
balance sheet for cash and cash equivalents, accounts receivable, notes
receivable, accounts payable, notes payable and accrued liabilities and current
portion of long term debt approximate fair value based on the short-term
maturity of these instruments.

NOTES PAYABLE - The company's Japanese subsidiaries, on occasion, satisfy the
payment of their accounts payable, through the issuance of notes payable with
certain vendors. These notes are usually of a short term nature, approximately
three to six months in length. They do not bear interest and are paid by the
company's bank to the vendors upon presentation to the company's bank on the
date of maturity. In the event of insufficient funds to repay these notes, the
company's bank can proceed with bankruptcy proceedings in Japan. Total notes
payable as of March 31, 2005 and December 31, 2004 were $820,266 and $1,474,582,
respectively.

DEBT AND EQUITY FINANCING OF CAPITAL TRANSACTIONS - BENEFICIAL CONVERSION
FEATURES - The company has adopted EITF issues 98-5, ACCOUNTING FOR CONVERTIBLES
SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR CONTINGENTLY ADJUSTABLE
CONVERSION RATIOS, and 00-27, APPLICATION OF ISSUE NO. 98-5 TO CERTAIN
CONVERTIBLE SECURITIES in accounting for convertible debt. EITF 98-5 requires
recognition of a conversion feature that is in-the-money at issuance as
additional paid-in-capital, measured by allocating a portion of the proceeds
equal to the intrinsic value of that feature. The intrinsic value of the feature
is the difference between the conversion price and the fair value of the stock
into which the security is convertible, multiplied by the number of shares.
According to EITF 00-27, the issuance proceeds should not be reduced by issuance
costs when calculating the intrinsic value of the conversion feature. The
beneficial conversion feature of debt or equity instruments, depending on the
specific facts and circumstances, will determine whether such beneficial
conversion feature is to be recorded as an expense to be amortized over a period
of time, expensed immediately or recorded as a deemed dividend.

FAN CLUB REVENUE RECOGNITION - Fan Club has been refocused as a creative design
studio focused on web and traditional print media, including providing services
to the official Fan Club in Japan for Marvel Entertainment Inc. and Marvel
Characters Inc. Revenue was derived from the activities associated with Marvel
and other services, primarily received from Cyberbred. These activities include
the following:

                                        7
<PAGE>

         o Website development- Fan Club develops websites.

         o Marvel Fan Club Magazine - Fan Club creates and produces a magazine
for the Marvel Fan Club.

         o Marvel Fan Club Merchandising - Fan Club creates and sells Marvel
merchandise for the Marvel Fan Club to fan club members.

         o Event Planning - Fan Club assists in the planning and running of
events for Marvel Fan Club and other organizations.

         The company recognizes Fan Club revenue when it is realized. Revenue is
considered realized when the product has been shipped or the services have been
provided to the customer, the work has been accepted and collectibility is
reasonably assured. Deferred revenue includes amounts billed to customers for
whom revenue has not been recognized that generally results from products
completed by the company prior to year-end but not accepted by end users until
after year-end.

REX TOKYO REVENUE RECOGNITION - Rex Tokyo's revenue was derived from the
following:

         o Sale of equipment to major stores.

         o Installation of machines and fittings to major stores.

         o Maintenance of machines and other equipment in major stores.

         The company recognizes Rex Tokyo revenue when it is realized. Revenue
is considered realized when the product has been shipped or the services have
been provided to the customer, the work has been accepted by the customer and
collectibility is reasonably assured. The company accounts for certain
construction contracts/projects on the percentage-of-completion method and under
this method, income is recognized as work on contracts progresses, but estimated
losses on contracts in progress are charged to operations immediately.

ADVERTISING COSTS - Advertising costs are expensed as incurred. There were no
advertising costs incurred for the three months ended March 31, 2005 and 2004.

FOREIGN CURRENCY TRANSLATION - Foreign entities whose functional currency is the
local currency translate net assets at the end of period rates and income and
expense accounts at average exchange rates for the three month period.
Adjustments resulting from these translations are reflected in the consolidated
balance sheet under other comprehensive income and the statement of operations
under other income (expense).

STOCK BASED COMPENSATION - The company has stock-based employee compensation
plans. The company accounts for those plans under the recognition and
measurement principles of APB Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES, and related interpretations. No stock-based employee compensation
cost is reflected in the net loss, as all stock options granted under the plans
had an exercise price equal to the market value of the underlying common stock
on the date of grant. The following table illustrates the effect on net loss and
earnings per share if the company had applied the fair value recognition
provisions of FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION,
to stock-based employee compensation:

                                        8
<PAGE>
                                                     For the three months ended
                                                              March 31,
                                                     ---------------------------
                                                        2005             2004
                                                     ---------        ---------
Net loss available to common
    shareholders, as reported ................       $(544,393)       $(468,962)

Deduct: total stock-based employee
    compensation determined under fair
    value based method for all awards, net
    of related tax effects ...................         (80,342)         (29,719)
                                                     ---------        ---------

Pro-forma net loss available to common
    shareholders .............................       $(624,735)       $(498,681)
                                                     =========        =========

Earnings per share:
    Basic and diluted- as reported ...........       $   (0.01)       $   (0.01)
    Basic and diluted- pro-forma .............       $   (0.01)       $   (0.01)

         The company accounts for non-employee stock transactions in accordance
with SFAS No. 123 and EITF 96-18.

         The above stock-based employee compensation expense has been determined
utilizing a fair value method, the Black-Scholes option-pricing model.

         In accordance with SFAS 123, the fair value of each option grant has
been estimated as of the date of the grant using the Black-Scholes option
pricing model with the following weighted average assumptions:

                                            For the Three Months Ended
                                                    March 31,
                                               -------------------
                                               2005          2004
                                               ----          ----
         Risk free interest rate ..........    3.75%         3.75%
         Expected life ....................  10 years      10 years
         Dividend rate ....................    0.00%         0.00%
         Expected volatility ..............     65%           65%

MANAGEMENT SERVICES AGREEMENT - The company and Rex Tokyo implemented a
Management Services Agreement during September 2004 that will be automatically
renewed for successive one year periods starting on October 1st in the absence
of written notice of termination by either party delivered no less than three
months prior to the date on which this agreement would otherwise terminate. Rex
Tokyo is required to pay the company approximately $164,000 in April 2005 and
October 2005. As of April 30, 2005, Rex Tokyo owes approximately $82,000 for the
three months ended March 31, 2005. The company is negotiating to obtain payment
under the Management Services Agreement.

COMPREHENSIVE INCOME - The company has adopted SFAS No. 130 Reporting
Comprehensive Income. This statement establishes rules for the reporting of
comprehensive income and its components. Comprehensive income consists of net
loss to common shareholders and foreign currency transaction adjustments and is
presented in the Consolidated Statements of Operations and Stockholder's Equity
(Deficiency).

INCOME TAXES - Income tax expense is based on reported income before income
taxes. Deferred income taxes reflect the effect of temporary differences between
asset and liability amounts that are recognized for financial reporting purposes
and the amounts that are recognized for income tax purposes. These deferred
taxes are measured by applying currently enacted tax laws. Valuation allowances
are recognized to reduce the deferred tax assets to the amount that is more
likely than not to be realized. In assessing the likelihood of realization,
management considers estimates of future taxable income.

                                        9
<PAGE>

NET LOSS PER SHARE - The company has adopted SFAS 128, "Earnings per Share."
Loss per common share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding during
the period. The common stock equivalents have not been included as they are
anti-dilutive.

DIVIDEND POLICY - The company has never paid any cash dividends and intends, for
the foreseeable future, to retain any future earnings for the development of our
business. Our future dividend policy will be determined by the board of
directors on the basis of various factors, including our results of operations,
financial condition, capital requirements and investment opportunities. Rex
Tokyo was restricted from paying dividends to its stockholders under the terms
of its loan with Nihon Shinko Bank Co Ltd. On January 18, 2005, Rex Tokyo
refinanced the loan with Nihon Shinko Bank Co by entering into a with Mizuho
Bank Co Ltd, an unrelated Japanese bank.

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS -

         In January 2003, FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities (FIN No. 46). This interpretation of Accounting
Research Bulletin No. 51, Consolidated Financial Statements, provides guidance
for identifying a controlling interest in a variable interest entity established
by means other than voting interests. FIN No. 46 also requires consolidation of
a variable interest entity by an enterprise that holds such a controlling
interest. In December 2003, the FASB completed its deliberations regarding the
proposed modification to FIN No. 46 and issued Interpretation Number 46R,
Consolidation of Variable Interest Entities - an Interpretation of ARB No. 51
(FIN No. 46R). The decisions reached included a deferral of the effective date
and provisions for additional scope exceptions for certain types of variable
interests. Application of FIN No. 46R is required in financial statements of
public entities that have interests in variable interest entities or potential
variable interest entities commonly referred to as special - purpose entities
for periods ending after December 15, 2003. Application by public entities
(other than small business users) for all other types of entities is required in
financial statements for periods ending after March 15, 2004. The adoption of
FIN No. 46R did not have a material effect on the company's consolidated
financial statements.

         In December of 2003, the FASB issued a revised SFAS No. 132 "Employers'
Disclosures about Pensions and Other Postretirement Benefits". The statement
revises employers' disclosures about pension plans and other postretirement
benefit plans but it does not change the measurement or recognition of those
plans. The revised SFAS No. 132 requires additional disclosures to those in the
original SFAS 132 about the assets, obligations, cash flows, and net periodic
benefit cost of defined pension plans and other defined benefit postretirement
plans. The statement also increases quarterly pension plan and postretirement
benefit plan disclosure requirements. Revised SFAS No. 132 domestic plan
disclosure requirements are effective for financial statements with fiscal years
ending after December 15, 2003. However, disclosure of information about foreign
plans required by the Statement is effective for fiscal years ending after June
15, 2004. The company adopted this statement in December of 2003 and it did not
have a material effect on the company's consolidated financial statements.

                                       10
<PAGE>

         SFAS No. 123 (Revised 2004), "Share-Based Payment," issued in December
2004, is a revision of FASB Statement 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and its related implementation guidance. The Statement focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS No. 123 (Revised 2004)
requires a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award (with limited exceptions). That cost will be recognized over the
period during which an employee is required to provide service in exchange for
the award. This statement is effective as of the beginning of the first interim
or annual reporting period that begins after January 15, 2006 and the company
will adopt the standard in the second quarter of fiscal 2006. The company has
not determined the impact, if any, that this statement will have on the
company's consolidated financial statements.

         In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4," which clarifies the types of costs that
should be expensed rather than capitalized as inventory. This statement also
clarifies the circumstances under which fixed overhead costs associated with
operating facilities involved in inventory processing should be capitalized. The
provisions of SFAS No. 151 are effective for fiscal years beginning after June
15, 2005 and the company will adopt this standard in fiscal 2006. The company
has not determined the impact, if any, that this statement will have on the
company's consolidated financial statements.

         In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets--An Amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions" ("SFAS 153"). SFAS 153 eliminates the exception from
fair value measurement for nonmonetary exchanges of similar productive assets in
paragraph 21(b) of APB Opinion No. 29, "Accounting for Nonmonetary
Transactions," and replaces it with an exception for exchanges that do not have
commercial substance. SFAS 153 specifies that a nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS 153 is effective for the
fiscal periods beginning after June 15, 2005 and is required to be adopted by
the company in the first quarter of fiscal 2006. The company not determined the
impact, if any, that this statement will have on the company's consolidated
financial statements.

NOTE 3.  ACQUISITIONS AND DIVESTITURES

         The acquisition of Rex Tokyo Co. Ltd. ("Rex Tokyo") was a key component
of the company's strategy to operate primarily as a holding company. The company
intends to grow its Rex Tokyo business. Also, the company intends to further
increase the number of majority-owned companies by acquiring primarily Japanese
small to midsize companies at low acquisition costs in the media, entertainment
and technology areas.

REX TOKYO CO LTD

         On March 18, 2004, the company executed Share Purchase Agreements and a
Stockholders Agreement with Rex Tokyo and certain of its management, pursuant to
which the company acquired its 60.5% ownership interest in Rex Tokyo. The
company purchased 1,000 shares of Rex Tokyo stock for 100 million Yen, or
approximately $941,000 based on the Japanese Yen/US dollar exchange rate on
March 25, 2004. In addition, the company purchased 150 Rex Tokyo shares from Mr.
Ejima, the CEO of Rex Tokyo, for 462,000 shares of common stock issued at $.30
per share which is the average closing price five days before closing. The
Stockholders Agreement places restrictions on the sale of Rex Tokyo stock in the
future, requires existing management to operate the business and places
conditions on the board of director composition. This agreement can be
terminated under certain conditions. The company used working capital to fund
the cash portion of the purchase price.

                                       11
<PAGE>

         Rex Tokyo is a supplier and maintenance contractor of parts to the
Pachinko and machine gaming industry in Japan. Rex Tokyo is a supplier and
fitter of installations for both new Pachinko parlors and stores that are
carrying out re-fittings. It supplies items such as automatic medal dispensing
machines, automatic cigarette butt disposal systems, lighting systems and
Pachinko balls and other Pachinko accessory products as well as numerous new
Pachinko slot machines.

         The Pachinko industry has experienced significant consolidation since
the late 1990s, with small parlor operators being replaced by large mega-parlor
owners. Rex Tokyo's business primary expansion focus is to provide support and
services to these mega-parlor owners.

         Rex Tokyo is a member of the Pachinko Chain Store Association and the
East Japan Gaming Machinery Association. As a member of this Association, it is
authorized to certify second hand machines. Also, it is registered as a Gaming
Machinery Sales Operation with the Japan Gaming Related Business Association.
The Japan Gaming Related Business Association conducts training and
qualification testing. Its objective is to ensure that members uphold the rules
and teachings of the association in their everyday work. Once a member passes
the test of the Association, it receives the Gaming Machine Handling Manager
Certificate. Approximately half of Rex Tokyo's staff and related contractors
have achieved this qualification.

         The cost to acquire these assets was allocated to the assets acquired
according to estimated fair values. The allocation was as follows:

Purchase price:

Cash ......................................................        $   941,000
Stock .....................................................            138,600
                                                                   -----------
                                                                     1,079,600
                                                                   -----------
Net Assets Acquired (3/18/04):
Total Assets ..............................................          5,549,826
Liabilities ...............................................         (4,618,949)
                                                                   -----------

Net Assets at 3/18/04 .....................................            930,877
Reserve ...................................................            (22,159)
Plus 10 million Yen contributed by other ..................             92,328
Plus cash paid by IA Global ...............................            941,000

                                                                   -----------
                                                                     1,942,046

% Acquired ................................................              60.5%
                                                                   -----------
                                                                     1,174,938
                                                                   -----------

Negative goodwill allocated to property and equipment......        $   (95,338)
                                                                   ===========

         The company expanded this business in 2004 by acquiring new sales
offices in Kyushu and West Tokyo, Japan. In addition, Rex Tokyo established a
joint venture company, Timothy World, with Kyushu Tesco Co Ltd. for the supply
of lighting fixtures to the Pachinko industry in October, 2004 and began to sell
slot machines directly rather than as an agent during the 4th quarter of 2004.

                                       12
<PAGE>

         On December 31, 2004, the company invested 50,000,000 Yen or
approximately $488,000 in Rex Tokyo. Under the terms of the Subscription
Agreement, the company agreed to purchase 500 Series A Preference Shares of Rex
Tokyo for the sum of 200,000 Yen per Preference Share, payable in two equal
installments. The initial 50,000,000 Yen was paid by December 31, 2004 and the
balance is to be paid by December 31, 2005. The funds will be used to expand the
Rex Tokyo business.

         On March 25, 2005, Rex Tokyo announced that it has formed a new
wholly-owned subsidiary in Japan, Collaboration Co Ltd, to focus on business
development opportunities for Rex Tokyo, including the design and building of
"gaming machine islands" for pachinko slot machine stores. These "islands" are
made up of rows of gaming machines, typically sitting back-to-back, with
cabinets built around them. Instead of building cabinets on the store premises
and installing machines one by one, these "islands" can be pre-built to client
store specifications and delivered on the required day, saving onsite
construction time for the store owners.

         The pro-forma financial data for the acquisition for the quarter ended
March 31, 2004 was as follows:
                                            As Reported          Pro Forma
                                            Three Months        Three Months
                                                Ended               Ended
                                           March 31, 2004      March 31, 2004
                                           --------------      --------------
Revenues ...........................        $ 2,030,746         $ 7,670,130

Loss before extraordinary items ....           (468,962)           (357,457)

Net loss ...........................           (468,962)           (357,457)

Loss per common share ..............              (0.01)              (0.00)

There were no material, nonrecurring items included in the reported the
pro-forma results.

IA GLOBAL ACQUISITION CO / QUIKCAT.COM INC / QUIKCAT AUSTRALIA PTY LTD

         On June 10, 2004, the company closed the acquisition of the
intellectual property and other assets of QuikCAT.Com Inc. ("QuikCAT"). The
purchase price was $700,000 in cash, plus the assumption of certain contracts,
agreements and liabilities. QuikCAT had filed for bankruptcy in the United
States Bankruptcy Court, Northern District of Ohio and the company had submitted
a bid on February 5, 2004. The acquisition was funded from working capital.

         QuikCAT is focused on the development of multi-media compression
technologies for use in video, picture and audio products for license sales to
third party vendors.

         The cost to acquire these assets was allocated to the assets acquired
according to estimated fair values. The allocation was as follows:

         Purchase Price:
         Cash ...............................    $ 700,000
                                                 ---------

         Net Assets Acquired (6/10/04):
         Accounts receivable ................       34,506
         Fixed assets .......................        5,000
                                                 ---------

         Total assets .......................       39,506
                                                 ---------

         Identifiable intangible assets .....    $ 660,494
                                                 =========

                                       13
<PAGE>

         The company contributed the assets of QuikCAT and a loan to Innovative
Computing Group, Inc., parent company of QuikCAT, of $101,629 to IA Global
Acquisition Co. on June 30, 2004 in exchange for a 90.5% equity interest in IA
Global Acquisition Co. The founding shareholder, the wife of the Chief Executive
Officer of our 47.54% owned affiliate, QuikCAT Australia Pty Ltd. ("QuikCAT
Australia"), acquired 9.5% of IA Global Acquisition Co. for $500 on June 30,
2004. The company increased its ownership percentage to 95% on October 8, 2004.

         The company fully consolidated the results of operations of the
majority owned IA Global Acquisition Co. in the Consolidated Statements of
Operations for the period June 10, 2004 to March 31, 2005 because the subsidiary
incurred losses for this period and the company does not expect to recover these
losses from the minority owner. In accordance with SFAS 144, the company
accounted for the loss for the three months ended March 31, 2005 of $41,000 as
discontinued operations in its consolidated statement of operations.

         On February 9, 2005, the company announced a definitive agreement to
divest its remaining holdings related to QuikCAT to Nanocat Technologies PTE
Limited ("Nanocat"), a Singapore corporation. Nanocat is affiliated with QuikCAT
Australia.

         As part of this transaction, the company is selling the remaining
rights and assets of QuikCAT which were acquired out of Chapter 11 on June 10,
2004. In addition, the company is assigning its intellectual property rights
related to the Miliki Supercompressor product and any additions, developments
and modifications related to certain projects and products, as well as certain
customer contracts, and Nanocat is assuming certain QuikCAT related liabilities.
The total purchase price is $650,000, which will be paid with a note that will
be due in installments. The note will be secured by the assets sold to Nanocat
and Nanocat has made an initial $25,000 deposit against the first installment
due under the note.

         The company previously announced the divestiture of our Internet
accelerator Business ("iNet") outside of North America to QuikCAT Australia and
granted QuikCAT Australia an exclusive option to acquire the North America iNet
business for $213,000 in cash. This option is deemed exercised with the closing
of the definitive agreement with Nanocat.

         As part of this transaction, the company is assigning its intellectual
property rights in the iNet business outside of North America and its 47.54%
interest in QuikCAT Australia to QuikCAT Australia, for notes totaling $150,000
that are due from December 2004 thru June 2005. They have made payments of
$100,000 under the notes.

         The company decided to divest its remaining holdings related to QuikCAT
because the QuikCAT business was no longer core to our operations and the
closing of license sales was more difficult than expected. This transaction will
allow the company to focus on the development of our Rex Tokyo business.

         The transactions with Nanocat and QuikCAT Australia are expected to
close during the second quarter of 2005 and are subject to the completion of due
diligence. However, the process for closing the Nanocat transaction has taken
longer than we initially anticipated and, on March 31, 2005, we issued a default
notice under the purchase agreement to Nanocat. While Nanocat has confirmed its
intention to complete the transaction, there can be no assurance that this
transaction will close. The company has recorded assets held for sale of
$773,124 as of March 31, 2005 related to these transactions.

                                       14
<PAGE>

NOTE 4.  ACCOUNTS RECEIVABLE/ CUSTOMER CONCENTRATION

         Accounts receivable was $3,401,011 and $6,431,663 as of March 31, 2005
and December 31, 2004, respectively. The company had the following customers
with sales in excess of 10% for the three months ended March 31, 2005 and 2004:

                                  March 31,        December 31,
                                    2005               2004
                                    ----               ----
         Dainam Co Ltd              59.1%              32.4%
         Cyberbred Co Ltd            (1)               33.4%
         _________
         (1) Less than 10% in the three months ended March 31, 2005.

         Dainam is a Rex Tokyo customer. Cyberbred is a Fan Club customer. There
were no other customers in excess of 10% in the respective periods.

         The company anticipates that significant customer concentration will
continue for the foreseeable future. The March 31, 2005 quarter typically is a
seasonal low quarter for Rex Tokyo. This results in reduced sales and accounts
receivable during the quarter.

NOTE 5.  INVENTORIES

         Inventories as of March 31, 2005 and December 31, 2004, respectively,
consisted of the following:
                                            March 31,          December 31,
                                               2005                2004
                                            ---------          ------------
Raw materials ........................      $ 83,144             $ 67,941

Work in process ......................       567,241               96,106

Finished goods .......................             -                    -
                                            --------             --------

Total inventories ....................       650,386              164,046

Reserve for obsolete inventories .....             -                    -
                                            --------             --------

Net inventories ......................      $650,386             $164,046
                                            ========             ========

NOTE 6.  PREPAID COSTS

         Prepaid expenses were $211,955 and $771,036 as of March 31, 2005 and
December 31, 2004, respectively. Such costs as of March 31, 2005 consisted of
prepaid insurance and other costs incurred by the company and prepaid Fan Club
expenses related to future revenue. Such costs as of December 31, 2004 consisted
of prepaid insurance and other costs incurred by the company, production cost
advances incurred by Rex Tokyo and prepaid Fan Club expenses related to future
revenue.

NOTE 7.  OTHER CURRENT ASSETS

         Other current assets were $416,017 and $136,102 as of March 31, 2005
and December 31, 2004, respectively. Such assets as of March 31, 2005 included
marketable securities, loans receivable from Kyushu Tesco used to fund the
growth of the Timothy World business and other assets held by Rex Tokyo. Such
assets as of December 31, 2004 included marketable securities and other assets
held by Rex Tokyo.

                                       15
<PAGE>

NOTE 8.  EQUIPMENT

         Equipment was $254,284 and $273,245 as of March 31, 2005 and December
31, 2004, respectively, net of accumulated depreciation of $242,040 and
$273,245. The equipment consisted of leasehold improvements, capitalized
software licenses, vehicles and equipment. Total depreciation expense was
$36,501 and $11,458 for the three months ended March 31, 2005 and 2004,
respectively.

NOTE 9.  INTANGIBLE ASSETS

         Intangible assets as of March 31, 2005 and December 31, 2004,
respectively, consisted of the following:

                                       March 31,    December 31,
                                          2005          2004      Estimated Life
                                         ------        ------     --------------
Licensing fee .....................   $ 1,508,215   $ 1,551,891      2-5 years
Other intangible ..................       188,116       188,116        5 years
                                      -----------   -----------
                                        1,696,331     1,740,007
Less: accumulated amortization ....      (596,004)     (468,072)
                                      -----------   -----------
         Intangible Assets, net ...   $ 1,100,327   $ 1,271,935
                                      ===========   ===========

         Total amortization expense for the three months ended March 31, 2005
amounted to $127,932. The license fee amortization was $119,672 and the
amortization of other intangibles was $8,260 for the three months ended March
31, 2005.

         The fair value of the Fan Club intellectual property acquired was
estimated using a discounted cash flow approach based on future economic
benefits associated with the Marvel Enterprises contract.

         Management's evaluation of the fair value allocated to the
aforementioned Fan Club assets and liabilities acquired did not result in any
excess values for goodwill being acquired.

NOTE 10. OTHER ASSETS

         Other assets were $991,051 and $200,641 as of March 31, 2005 and
December 31, 2004, respectively. Such assets as of March 31, 2005 included loans
receivable from Kyushu Tesco Co Ltd used to fund the growth of the Timothy World
Co Ltd business and other deposits and loans held by Rex Tokyo. Such assets as
of December 31, 2004 included other deposits and loans held by Rex Tokyo.

NOTE 11. DEBT AND DEBT - AFFILIATED PARTY

         Debt was $1,788,079 and $0 as of March 31, 2005 and December 31, 2004,
respectively. Debt - affiliated party was $0 and $727,429 as of March 31, 2005
and December 31, 2004, respectively.

         On June 30, 2004, Rex Tokyo entered into a 100,000,000 Yen, or $923,275
at current exchange rates, working capital loan with Nihon Shinko Bank Co for
use as operating capital. The loan requires twenty three monthly payments of
4,167,000 Yen or approximately $37,500 at the current exchange rate plus
interest starting July 29, 2004, with a final payment of 4,159,000 Yen, or
$37,500 at the current exchange rate plus interest due on June 29, 2006. The
loan accrues interest at 9.75% based on the Japanese Yen TIBOR rate, which is
adjustable quarterly. The loan is cosigned by the CEO of Rex Tokyo and has
certain covenants, including interest coverage, minimum assets and minimum
equity. Certain activities are prohibited without consent, including
distribution of profits to stockholders, entry into new businesses and leases in
excess of certain targets. The loan is not secured.

                                       16
<PAGE>

         Inter Asset Japan and Terra Firma, significant shareholders in the
company, collectively own approximately 14.5% of Nihon Shinko Bank Co. However,
IAJ does not control Nihon Shinko Bank Co and the transaction and terms were
established on an arms-length basis.

         On January 18, 2005, Rex Tokyo refinanced a 100,000,000 Yen working
capital loan with Nihon Shinko Bank Co by entering into a 100,000,000 Yen Loan,
or $978,761 at current exchange rates, with Mizuho Bank Co Ltd, an unrelated
Japanese bank. The Nihon Shinko loan was used to expand the Rex Tokyo business.

         The loan requires thirteen quarterly payments of 7,692,000 Yen or
approximately $75,286 at the current exchange rate plus interest starting March
31, 2005, with a final payment of 7,696,000 Yen, or $75,325 at the current
exchange rate plus interest due on March 31, 2008. The loan accrues interest at
3.2% and is guaranteed by the CEO of Rex Tokyo Co Ltd. There are no covenants or
security requirements related to the loan.

         On March 25, 2005, Rex Tokyo received a 100,000,000 Yen, or
approximately $940,000 at current exchange rates, working capital loan from
Chiba Bank Ltd, an unrelated Japanese bank. The loan will be used to fund Rex
Tokyo's growth.

         The loan requires thirty five monthly payments of 2,800,000 Yen, or
approximately $26,000 at current exchange rates, plus interest starting April
25, 2005, with a final payment of 2,000,000 Yen, or approximately $19,000 at the
current exchange rates plus interest, due on March 25, 2008. The loan accrues
interest at 2.9% and is guaranteed by the CEO of Rex Tokyo Co Ltd. There are no
covenants or security requirements related to the loan.

NOTE 12. RELATED PARTY RELATIONSHIPS WITH INTER ASSET JAPAN AND CERTAIN
         RELATIONSHIPS

         As of March 31, 2005, Inter Asset Japan LBO No. 1 Fund ("IAJ LBO
Fund"), PBAA Fund Ltd. ("PBAA"), Terra Firma Fund Ltd. ("Terra Firma"), Inter
Asset Japan Co. Ltd. ("IAJ"), Alan Margerison and Hiroki Isobe collectively hold
approximately 83.1% of the company's common stock. Such entities stated in a
Schedule 13D that they may be deemed to constitute a "group" for the purposes of
Rule 13d-3 under the Exchange Act. Mr. Alan Margerison, the company's Director,
President and Chief Executive Officer, currently serves as the Chairman of IAJ,
and together with his business partner, Mr. Hiroki Isobe, control each of our
Controlling Stockholders.

         The following table provides details on the affiliated parties owned or
controlled by each of the company's controlling stockholders and certain other
entities, as of March 31, 2005, that are relevant for purposes of understanding
the related party transactions that have taken place:

                                       17
<PAGE>

OWNERSHIP:

   Inter Asset Japan LBO No. 1 Fund owns:

                               IA Global, Inc..............................33.6%

   PBAA Fund Ltd. owns:

                               IA Global, Inc..............................30.4%

   Terra Firma Fund Ltd. owns:

                               IA Global, Inc..............................13.9%

                               Nihon Shinko Bank Co.........................6.0%

   Inter Asset Japan Co., Ltd. owns:

                               IA Global, Inc...............................4.2%

                               Nihon Shinko Bank Co.........................8.5%

   IA Global, Inc. owns:

                               Fan Club Entertainment Co., Ltd. ...........67.0%

                               Rex Tokyo Co. Ltd...........................60.5%

                               IA Global Acquisition Co....................95.0%

   Mr. Kazunari Ito (Chairman of Fan Club Entertainment Co. Ltd., Cyberbred Co.
   Ltd, and Cyberholdings Co. Ltd)

                               Cyber Holdings Co. Ltd (TK Partners, Inc.) 100.0%

                               Cyberbred Co. Ltd...........................69.0%

   Cyber Holdings Co. Ltd. owns:

                               Fan Club Entertainment Co. Ltd..............33.0%

ACQUISITION OF IACCELE CO LTD

         On December 29, 2003, the company executed a share purchase agreement
to sell its 76.9% interest in iAccele Co. Ltd. ("iAccele"), for approximately
$280,000 to GM2 Co. Ltd., a private Japanese corporation ("GM2"). In connection
with the sale, the company agreed to cancel approximately $300,000 of
inter-company debt owed by iAccele. The company received the funds from GM2 on
January 16, 2004.

         Inter Asset Japan Co. Ltd. ("IAJ"), the company's majority shareholder,
holds a warrant to purchase a 25% equity interest in GM2 and has loaned GM2
approximately $500,000. However, IAJ does not control GM2. The transaction price
and terms were established on an arms-length basis and this was the only offer
the company received for iAccele.

                                       18
<PAGE>

ACQUISITION OF FAN CLUB ENTERTAINMENT CO LTD

         On August 5, 2003, the company executed a Share Purchase Agreement to
acquire from Cyber Holdings Co., Ltd. ("Cyber Holdings") a 67% equity interest
in Fan Club Co Ltd ("Fan Club"), a privately-held Japanese company. Fan Club
provides advertising, merchandising, publishing, website and data management
services to Cyberbred Co., Ltd., ("Cyberbred"). The purchase price for the
equity interest in Fan Club is 134,000,000 Yen, or $1,112,960 based on the
Japanese Yen/US dollar exchange rate on August 5, 2003, as well as 350,000
shares of company's common stock issued at $.472 per share, which is the average
closing price for the five days prior to closing.

         The terms of the Share Purchase Agreement require Cyber Holdings to
transfer the rights under the Marvel agreement (described below) to the company
within five months or make its best efforts to fully cooperate in any
commercially reasonable arrangement designed to provide the benefit of the
Marvel agreement to Fan Club. At this time, this transfer has not taken place.
The company used its working capital to fund the cash portion of the purchase
price.

         The Share Purchase Agreement provides that the company will receive 67%
Equity Interest or 268,000 shares in Fan Club. Cyber Holdings, which already
held 20,000 Shares in Fan Club, following the share purchase would have a 33%
equity interest In Fan Club by paying 56 million Japanese Yen to Fan Club for an
additional 112,000 shares. Cyber Holdings' obligation was not paid as of
December 31, 2003. A receivable was not booked due to the lack of certainty over
the receipt of the funds as of December 31, 2003.

         On February 5, 2004, the company executed a share purchase agreement to
sell 75,040 shares of Fan Club for approximately $354,000 in cash to Cyber
Holdings. Upon completion of this sale, the company owned a 67% interest in Fan
Club and Cyber Holdings owned the remaining 33%. The sale of shares on February
5, 2004, was conducted to maintain the initially agreed balance of share
holdings between the two companies at 67% and 33%, respectively.

         On June 4, 2003, Cyberbred signed a five year agreement with Marvel
Enterprises, Inc. and Marvel Characters, Inc.("Marvel") to manage their fan club
in Japan. The Marvel Characters hold the rights to well known characters such as
Spider Man, The Hulk, X-Men, Daredevil, Captain America, and The Punisher and
many others. Cyberbred, currently holds the rights to manage the Universal
Studio fan club in Japan.

         On July 28, 2003, Fan Club signed a Subcontract Agreement with
Cyberbred to exclusively manage the entire Marvel Fan Club in Japan in
accordance with the agreement between Cyberbred and Marvel that is discussed
above. This Subcontract Agreement expires May 31, 2008, and is cancelable under
certain conditions. The 134,000,000 Yen payment was advanced to Cyberbred in
late July, 2003 to fund the 100,000,000 Yen payment to Marvel under this
agreement and to provide working capital for Fan Club. There were no repayment
requirements.

         Mr. Kazunori Ito, CEO of Fan Club has been CEO of both Cyberbred and
Cyber Holdings. As of June 30, 2003, Mr. Ito owned equity interests of 41.9% in
Cyberbred and 100% in Cyber Holdings.

         There was no prior material relationship between the company and any of
our affiliates and Fan Club. However, an affiliate of IAJ LBO Fund, which is our
largest stockholder, owned an approximate 27% equity interest in Cyberbred. This
interest was sold to Mr. Ito on September 29, 2003.

         The company is not a party to the agreement between Cyberbred and
Marvel. However, this contract is material since the company would be materially
adversely affected by a termination of the relationship between Cyberbred and
Marvel. The company cannot make any assurances about the relationship between
Cyberbred and Marvel.

                                       19
<PAGE>

         Fan Club re-positioned its business during the 3rd quarter of 2004 by
establishing a creative design studio focusing on web and traditional print
media delivery, including the Marvel characters. This new design studio
compliments Fan Club's existing business providing services to the official fan
club in Japan for Marvel Entertainment Inc. and Marvel Characters Inc.

         On July 30, 2004 and August 1, 2004 Fan Club, signed two license
agreements with Total Insurance Management for use in building Internet
platforms, including content. The license costs of $540,930 were capitalized and
are being amortized over the two year life of the agreements.

$400,000 FINANCING

         On December 29, 2003, the company agreed to sell to PBAA Fund Ltd., a
related party, 1,333,333 shares of its common stock at an average price of $0.30
per share, for a total of $400,000, representing no discount to the trailing
five-day average closing price of the company's common stock ending December 29,
2003, the date PBAA Fund Ltd made its investment commitment. The funds were
received January 16, 2004.

$1,500,000 CONVERTIBLE NOTE

         On March 21, 2004, PBAA, an affiliate of the company's majority
shareholder, invested an additional $1.5 million into the company in a private
placement. Under the financing terms, the company issued a $1.5 million
convertible note, convertible into 5 million shares of our common stock by July
31, 2004, representing a conversion price per share of $0.30, which was the
fair-market value of the trailing five-day average closing price of our common
stock ending March 5, 2004, the date PBAA committed to make the investment. The
conversion price was at market value and an allocation was not required for a
beneficial conversion feature under EITF 98-5 or EITF 00-27.

         On June 18, 2004, the company announced that it had reached agreement
with PBAA to convert the $1,500,000 Note, plus accrued interest of approximately
$20,000, into 5,065,037 shares of its common stock in accordance with the terms
of the Note.

$1,130,000 FINANCING

         On November 10, 2004, the company announced that PBAA, Inter Asset
Japan and Mr. Isobe have collectively invested an additional $1,130,000 into the
company in a private placement. PBAA and Inter Asset Japan are existing
shareholders of the company and, together with their affiliates, are the
majority shareholders in the company. Mr. Isobe is affiliated with each of PBAA
and Inter Asset Japan and is a business partner with Alan Margerison, IA
Global's CEO. The company will use the proceeds from this financing to
accelerate the development of the Rex Tokyo business and for general corporate
purposes. This financing will also increase stockholders' equity which is
required in order for the company to maintain its AMEX listing.

         Under the financing terms, 4,448,820 shares of common stock were issued
at a price per share of $0.254, which was the fair-market value of the trailing
five-day average closing price ending November 8, 2004, the date the investors
committed to make the investment.

REX TOKYO CO LTD DISTRIBUTION AGREEMENT WITH HIROYUKI EJIMA

         Rex Tokyo agreed in approximately 1998 to pay monthly 5,000,000 Yen or
approximately $47,000 at current exchange rates to a majority-owned company of
the CEO of Rex Tokyo for assigning the distribution rights for certain lock
products for Tokyo, Japan to Rex Tokyo. This distribution agreement assignment
is ongoing and resulted in 2004 sales of approximately $2,800,000 at current
exchange rates.

                                       20
<PAGE>

NOTE 13. EQUITY TRANSACTIONS

         During the three months ended March 31, 2005, the following stockholder
equity events occurred:

         On February 7, 2005, the company granted 30,000 stock options in total
at an exercise price of $.29 per share to employees of Rex Tokyo. These options
vest quarterly over three years and expire on February 7, 2015.

NOTE 14. THIRD PARTY LICENSES AND AGREEMENTS

         The company relies on certain agreements and technologies licensed from
third parties to operate company business.

         On June 4, 2003, Cyberbred signed a five year agreement with Marvel to
manage their fan club in Japan. On July 28, 2003, Fan Club signed a Subcontract
Agreement with Cyberbred to exclusively manage the entire Marvel Fan Club in
Japan in accordance with the agreement between Cyberbred and Marvel. This
Subcontract Agreement expires May 31, 2008, and is cancelable under certain
conditions.

         Under the July 28, 2003 agreement, Cyberbred will make "best efforts"
to transfer the rights under their agreement with Marvel, directly to Fan Club
Entertainment. At this time, this transfer has not taken place.

         On July 30, 2004 and August 1, 2004 Fan Club signed two license
agreements with Total Insurance Management for use in building Internet
platforms, including content. The license costs of $540,930 were capitalized and
are being amortized the two year life of the agreements.

NOTE 15. COMMITMENTS AND CONTINGENCIES

         As part of the September 25, 2002 Agreement and Assignment (the
"Agreement and Assignment") between the company, IAJ and David Badner, a major
stockholder and former consultant to the company, Mr. Badner had agreed to
indemnify and hold the company harmless against certain expenses, including,
among other things, any fees and damages arising from the Krakowski matter. On
November 5, 2004, the company was notified that, in connection with the
arbitration matter initiated by Mr. Badner described below, Mr. Badner intends
to contest his indemnification obligation.

         On November 5, 2004, the company received notice from the American
Arbitration Association in New York City that Mr. Badner has commenced an
arbitration proceeding against the company, our major shareholder, Inter Asset
Japan Co Ltd, and certain officers of the company and Inter Asset Japan Co Ltd
relating to the Agreement and Assignment. Mr. Badner alleges (i) unrestricted
shares of the company's stock to which he was entitled under the agreement were
not delivered as per the terms of the agreement, (ii) unspecified commitments to
engage in future business ventures with Mr. Badner were not made, and (iii)
damages resulting from intentional misrepresentation. Mr. Badner is seeking
damages of $6 million plus interest and costs and punitive and exemplary damages
in an amount to be determined.

         On January 7, 2005, the company received notice from the American
Arbitration Association in New York City that Mr. Badner had amended his
arbitration claim against the company and our major shareholder, Inter Asset
Japan Co Ltd. Mr. Badner alleges (i) unrestricted shares of the company's stock
to which he was entitled under the Agreement and Assignment dated September 25,
2002 were not delivered as per the terms of the Agreement and Assignment, (ii)
unspecified commitments to engage in future business ventures with Mr. Badner
were not made, and (iii) damages resulting from fraud and misrepresentation. Mr.
Badner is seeking damages of $2,500,000 million plus interest related to the
breach of the Agreement, $100,000 for damages suffered related to fraud and
misrepresentations and costs and punitive and exemplary damages in an amount to
be determined.

                                       21
<PAGE>

         On February 4, 2005, the company filed an answer and counterclaim
against Mr. Badner in response to Mr. Badner's amended arbitration claim filed
on January 7, 2005. The company is seeking an award of actual damages in the sum
according to proof, plus interest, costs and attorneys' fees, on our
counterclaims against David Badner.

         The company appropriately responded to Mr. Badner's allegations by way
of our answer and counterclaims and the company intends to vigorously defend
against his claims. There is no guarantee that the company has insurance to
cover these claims or that the company will be successful in defending these
claims.

         Rex Tokyo agreed in approximately 1998 to pay monthly 5,000,000 Yen or
approximately $47,000 at current exchange rates to a majority-owned Company of
the CEO of Rex Tokyo for assigning the distribution rights for certain lock
products for Tokyo, Japan to Rex Tokyo. This distribution agreement assignment
is ongoing and resulted in 2004 sales of approximately $2,800,000 at current
exchange rates.

         On February 3, 2003, the company entered into an employment agreement
with Alan Margerison to serve, for a term of three years, as President and Chief
Executive Officer at an annual base salary of $60,000 and eligibility to receive
compensation, including options, at the discretion of the company's compensation
committee. Mr. Margerison currently works full time on company matters. This
employment agreement also contains provisions for confidentiality for the term
of each agreement and thereafter. This employment agreement also provides for a
severance payment in the amount of 25% of Mr. Margerison's annual base salary in
the event that he is terminated by the company without cause.

         On January 12, 2004, the company entered into an employment agreement
with Mark Scott to serve, for a term of two years, as Chief Financial Officer at
an annual rate of $150,000 Mr. Scott is eligible to receive compensation,
including options, bonuses and benefits, at the discretion of the company's
compensation committee. Mr. Scott works full time for the company. This
employment agreement also contains provisions for confidentiality for the term
of the agreement and thereafter. The employment agreement also provides for a
severance payment in the amount of 20% of the executive's annual base salary in
the event that the employee is terminated by the company without cause.

         On November 19, 2004, the company amended its employment agreement with
Mark Scott to serve, for a term of two years, as Chief Financial Officer at an
annual rate of $165,000. Mr. Scott is eligible to receive compensation,
including options, bonuses up to $40,000 and benefits, at the discretion of our
compensation committee. Mr. Scott works full time for the company. This
employment agreement also contain provisions for confidentiality for the term of
the agreement and thereafter. The employment agreement also provides for a
severance payment in the amount of 33% of the executive's annual base salary in
the event that the employee is terminated by the company without cause.

         On December 31, 2004, the company invested 50,000,000 Yen or
approximately $488,000 in Rex Tokyo. Under the terms of the Subscription
Agreement, the company agreed to purchase 500 Series A Preference Shares of Rex
Tokyo for the sum of 200,000 Yen per Preference Share, payable in two equal
installments. The initial 50,000,000 Yen was paid by December 31, 2004 and the
balance is to be paid by December 31, 2005. The funds will be used to expand the
Rex Tokyo business.

NOTE 16. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

         The company operates primarily as a holding company and is organized by
subsidiary. Each subsidiary reports to the President who has been designated as
the Chief Operating Decision Maker ("CODM") as defined by SFAS 131 "Disclosures
About Segments of an Enterprise and Related Information". The CODM allocates
resources to each of the companies using information regarding revenues,
operating income (loss) and total assets.

                                       22
<PAGE>

         The following subsidiaries are the only reportable segments under the
Criteria of SFAS 131 (i) IA Global, Inc., the parent company, which operates as
a holding company (ii) Rex Tokyo Co Ltd, a supplier and re-fitter of equipment
for the Pachinko and gaming industry in Japan.,(iii) Fan Club Entertainment Co
Ltd, a Japanese company which operates as a creative design studio focusing on
web and traditional print media delivery, including the Marvel characters. This
design studio compliments Fan Club's existing business providing services to the
official fan club in Japan for Marvel Entertainment Inc. and Marvel Characters
Inc. and (iv) IA Global Acquisition Co, which on February 9, 2005, the company
announced a definitive agreement to divest our remaining holdings related to
QuikCAT Technologies to Nanocat Technologies PTE Limited, a Singapore
corporation. In accordance with SFAS 144, the company accounted for the loss for
the three months ended March 31, 2005 of $41,000 as discontinued operations in
our consolidated statement of operations.

         The following table presents revenues, operating income (loss) and
total assets by company for the three months ended March 31, 2005 and 2004:
<TABLE>
(dollars in thousands)
<CAPTION>
                                                             Fan Club
                               IA Global,     Rex Tokyo     Entertain.                   Discontinued
Company                           Inc.         Co Ltd         Co Ltd         Total        Operations        Total
-------------------------      ----------     ---------     ----------     ---------     ------------     ---------
<S>                             <C>            <C>           <C>           <C>               <C>          <C>
Three Months Ended:
  March 31, 2005
  Revenue ...............       $     -        $ 5,825       $   144       $  5,969          $  -         $  5,969

  Operating income (loss)          (302)          (323)         (306)          (931)            -             (931)

  Total assets ..........           231          8,449         1,319          9,999           773           10,772

  March 31, 2004
  Revenue ...............       $     -        $ 1,101       $   930       $  2,031          $  -         $  2,031

  Operating income (loss)          (516)           133            20           (363)            -             (363)

  Total assets ..........         1,897          7,127         1,765         10,789             -           10,789

<CAPTION>
                                                                           Discontinued
Geographic Region                 U.S.          Japan          Total        Operations        Total
-------------------------       --------       --------      ---------     ------------     ---------
<S>                             <C>            <C>           <C>               <C>          <C>
Three Months Ended:
  March 31, 2005
  Revenue ...............       $     -        $ 5,969       $  5,969          $  -         $  5,969

  Operating income (loss)          (302)          (629)          (931)            -             (931)

  Total assets ..........           231          9,768          9,999           773           10,772

  March 31, 2004
  Revenue ...............       $     -        $ 2,031       $  2,031          $  -         $  2,031

  Operating income (loss)          (516)           153           (363)            -             (363)

  Total assets ..........         1,897          8,892         10,789             -           10,789

</TABLE>

                                       23
<PAGE>

         The following reconciles operating loss to net loss before income
taxes:
                                                              Three Months Ended
                                                                   March 31,
                                                              ------------------
                                                               2005        2004
                                                              ------      ------

Operating loss .........................................      $(931)      $(363)

Other income (expense) .................................         31           4
                                                              -----       -----

Loss  from continuing operations
  before minority interests and income taxes ...........       (900)       (359)

Minority interests .....................................       (205)         34
                                                              -----       -----

Loss from continuing operations
  before income taxes ..................................       (695)       (393)

Income taxes ...........................................       (192)         76
                                                              -----       -----

Net loss from continuing operations ....................       (503)       (469)

Loss from discontinued operations ......................        (41)          -
                                                              -----       -----

Net loss ...............................................      $(544)      $(469)
                                                              =====       =====

NOTE 17. SUBSEQUENT EVENTS

         The company signed a Share Exchange Agreement to acquire Global Hotline
Co Ltd. ("GHI"), a privately held Japanese company, on April 20, 2005. The
transaction is structured as a share exchange in which the company will issue
15,000,000 shares of its common stock in exchange for 100% of GHI's equity. At
the time the Share Exchange Agreement was signed, the company's common stock had
a value of $.207 per share, which was the average close price during the twenty
days prior to the signing of the Share Exchange Agreement, or an aggregate value
of $3,100,000.

         GHI was established September 7, 2004 as a call center operator and
reseller of telephone and broadband lines in Japan. The Japanese
telecommunications market is experiencing significant growth in alternative
carriers due to recent regulatory changes that now permit individuals and
companies to choose their telephone service provider.

         GHI has two contracts with a significant Japanese telecommunications
company. The first contract covers the period October 1, 2004 thru September 30,
2005 and requires GHI to sell subscriber lines based on agreed monthly targets.
GHI expects to be paid 841,000,000 Yen or $7,900,000, at current exchange rates
under this contract. The second contract covers the period March 16, 2005
through March 31, 2006 and requires GHI to sell subscriber lines based on agreed
monthly targets. GHI expects to be paid 2,925,000,000 Yen or $27,300,000, at
current exchange rates under this contract. Should the targets not be achieved
on a quarterly basis, then GHI will be required to refund portions of the
revenue to the customer. GHI has outsourced the call center operation for the
first contract with similar penalties to protect the revenues and profits. GHI
has a call center operation and is establishing a second call center operation
to support the second contract.

                                       24
<PAGE>

         The company is acquiring its 100% ownership from Mr. Hideki Anan (67%),
Mr. Kyo Nagae (10%) and Mr. Hiroki Isobe (23%). Mr. Anan, who will remain as CEO
of GHI, is an experienced Japanese telecommunications executive. Mr. Isobe is
the business partner of our CEO and is affiliated with our majority
shareholders. In addition, Inter Asset Japan Co Ltd, a related party, has loaned
GHI approximately $600,000, at current exchange rates, and guarantees the rent
on the two GHI offices. This acquisition is expected to close on May 31, 2005
and is subject to the completion of due diligence. The company expects this
acquisition to increase its stockholder's equity by $3,100,000 to above
$6,000,000 and help the company maintain its AMEX listing.

         There is no guarantee the above transaction will close. Further, the
company continues to work with AMEX to maintain its listing. There is no
guarantee that the company will be successful in maintaining its AMEX listing.

         IA Global Inc. announced the sale of Fan Club Entertainment Co Ltd
("Fan Club") as of May 12, 2005 to TK Partners, Inc., formerly Cyber Holdings Co
Ltd. As part of this transaction, the company is selling the 67% owned business
for approximately $755,000 at current exchange rates plus 350,000 shares of IA
Global common stock valued at $.16 per share. The total cash purchase price
which will be paid with $189,000 at signing and a note that is due in monthly
installments of approximately $71,000 from June 2005 thru January 2006. The note
is unsecured and TK Partners has made an initial $189,000 payment. Fan Club
reported revenues and a net loss of approximately $144,000 and $205,000,
respectively, during the three months ended March 31, 2005. The company expects
to breakeven or have a small loss on the sale of the business. The company has
decided to divest the Fan Club business as it is no longer core to our
operations and the closing of new license sales was more difficult than the
company expected.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         Forward-looking statements in this report reflect the good faith
judgment of our management and the statements are based on facts and factors as
we currently know them. Forward-looking statements are subject to risks and
uncertainties and actual results and outcomes may differ materially from the
results and outcomes discussed in the forward-looking statements. Factors that
could cause or contribute to such differences in results and outcomes include,
but are not limited to, those discussed below and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" as well as those
discussed elsewhere in this report. Readers are urged not to place undue
reliance on these forward-looking statements which speak only as of the date of
this report. We undertake no obligation to revise or update any forward-looking
statements in order to reflect any event or circumstance that may arise after
the date of the report.

INTRODUCTION

         We have incurred net losses from continuing operations of $.9 million,
$2.1 million and $1.5 million for the years ended December 31, 2004, 2003 and
2002, respectively. We had revenues of $31.6 million, $1.1 million and $.4
million for the years ended December 31, 2004, 2003 and 2002, respectively. Our
losses have been financed primarily by the sale of equity in our company, by
loans from related parties, and through the issuance of equity for services. We
expect our net loss from operations to decrease in 2005, but to continue for the
foreseeable future.

         We operate primarily as a holding company. We intend to grow our Rex
Tokyo business. Also, we intend to further increase the number of our
majority-owned companies by acquiring primarily Japanese small to midsize
companies at low acquisition costs in the media, entertainment and technology
areas.

                                       25
<PAGE>

         We received $1,500,000 from a convertible note from a related party on
March 17, 2004. In addition, on November 10, 2004, we announced that PBAA, Inter
Asset Japan And Mr. Isobe, related parties, have collectively invested an
additional $1,130,000 into the company in a private placement.

         On June 30, 2004, Rex Tokyo received a 100,000,000 Yen, or $923,275 at
current exchange rates, working capital loan with Nihon Shinko Bank Co, an
affiliated party, for use as operating capital. On January 18, 2005, Rex Tokyo
refinanced this loan by entering into a 100,000,000 Yen, or $978,761 at current
exchange rates, loan with Mizuho Bank Co Ltd, an unrelated Japanese bank.

         On March 25, 2005, Rex Tokyo received a 100,000,000 Yen, or
approximately $940,000 at current exchange rates, working capital loan from
Chiba Bank Ltd, an unrelated Japanese bank. The loan will be used to fund Rex
Tokyo's growth.

         We may need to obtain additional financing in order to continue our
current operations, including the cash flow needs of Rex Tokyo and subsidiaries,
Fan Club, IA Global Acquisition Co., to acquire businesses and to meet the
American Stock Exchange ("AMEX") requirements of $6 million in stockholders'
equity by May 15, 2005 for continued listing of our shares. Our major
shareholders thus far have indicated a willingness to support our financing
efforts. However, there can be no assurance that we will be able to secure
additional funding, or that if such funding is available, whether the terms or
conditions would be acceptable to us, from our major shareholders or otherwise.

         Moreover, if we raise additional capital through borrowing or other
debt financing, We would incur substantial interest expense. Sales of additional
equity securities will dilute on a pro rata basis the percentage ownership of
all holders of common stock. If we do raise more equity capital in the future,
it is likely that it will result in substantial dilution to our current
stockholders.

KEY MARKET OPPORTUNITIES

         Building on the acquisitions of Rex Tokyo and Fan Club, our key market
opportunities include:

         o Expanding and strengthening the Rex Tokyo business by opening
additional regional offices in Japan.

         o Vertically integrating the Rex Tokyo business by acquiring or
entering into other Pachinko/Slot machine related business activities.

         o Expanding the sale of unique lighting fixtures through our Timothy
World joint venture with Kyushu Tesco.

         o Expanding the direct sale of slot machines.

         o Recognizing unique needs in Pachinko/ slot machine industry for
improved service and maintenance levels, and adapting to provide these.

         o Meeting the needs of current customers of Rex Tokyo and expanding our
customer base in the Pachinko and Slot machine industry.

         o Continuing focus on servicing Pachinko / Slot machine stores that
operate as "Chain Stores" usually requiring a high level of automation among the
stores in the chain.

         o Expanding operations by selectively acquiring other quality companies
in Japan.

                                       26
<PAGE>

PRIMARY RISKS AND UNCERTAINTIES

         We are exposed to risks associated with our AMEX listing, legal claims,
mergers and acquisitions, a volatile share price and limited insurance. These
risks and uncertainties are discussed in "Factors That May Effect Future
Results."

         Over the last few years the Pachinko / Slot Machine industry in Japan
has seen significant growth from operators known as "Chain Stores". Rex Tokyo
has taken advantage of this growth, and focused heavily on servicing these
clients. During the three months ended March 31, 2005, 59.1% of Rex Tokyo's
revenues resulted from sales to one Chain Store. Any slow down in this side of
the industry could significantly impact Rex Tokyo's ability to perform at its
current revenue levels. Further, Chain Stores have thus far focused heavily on a
high level of automation within the stores. Any change in plans by Chain Stores
to decrease the level of automation could adversely affect Rex Tokyo's sales of
machinery and parts. This could have a material adverse effect on our business,
prospects, financial condition and results of operations.

         The Pachinko / Slot machine industry in Japan has seen significant
growth in the Slot machine side of the business, while the Pachinko market has
remained more constant in terms of total number of machines in stores. Rex Tokyo
has focused heavily on the Slot machine side of the business. Any downturn in
growth from the Slot machine market, or change in law that might curtail sales
of Slot machines, could have a material adverse effect on our business,
prospects, financial condition and results of operations.

         Rex Tokyo has expanded its sales offices based on a perceived need for
more local representation in areas where clients are based. In providing clients
with a local office, feedback from clients can be more readily received, thus
helping to improve service levels. There is also a possibility that information
from clients may be filtered prior to reaching head office. This may result in a
less accurate picture of client satisfaction levels and expectations. Rex Tokyo
regularly conducts meetings with managers from the local offices to hear their
views in an effort to combat this, however, a decrease in client satisfaction
levels could have a material adverse effect on our business prospects, financial
condition and results of operations.

         Rex Tokyo has seen an expansion of its business by aligning itself
strongly with a few core clients. If for any reason Rex Tokyo's image was
damaged with those clients or in the industry as a whole, it could have a
material adverse effect on our business, prospects, financial condition and
results of operations.

         Rex Tokyo's business is dependent upon its ability to maintain tight
control on its cash flows. In general, as the amount of work increases, the
amount of cash flow required increases. If Rex Tokyo is not able to maintain
sufficient cash flow to expand its business at the same pace as its clients are
expanding, it may lead to clients moving their accounts to other service
providers.

         Rex Tokyo is dependent upon key suppliers for supply of parts and
machinery to the Pachinko slot machine industry. It also outsources a large
amount of its maintenance and installation work. Failure to secure specific
machines or parts that clients request from suppliers may lead to a decrease in
sales. Failure to maintain good relationships with its suppliers and outsourcing
companies could result in the inability to complete work for clients.

         Revenue recognition is based on completion of work and industry
regulated police inspection being carried out so that stores can open. A change
in this system or the delay of inspections could adversely affect revenue.

                                       27
<PAGE>

         The passing of legislation that may allow for other forms of gaming
within Japan could cause a material change in the business model of Rex Tokyo.
While no legislation has been passed at this time, debate in political circles
over the introduction of legal casinos in Japan has been public knowledge for
some time. It is not known whether such legislation might ever be passed in
Japan, or if it was passed, what impact that may have on Rex Tokyo's business,
prospects, financial condition and results of operations. Further, the existence
and growth of illegal or "underground" casinos in Japan may also have a similar
negative impact.

         Fan Club Entertainment's business is focused on web and traditional
print media, including providing services to the official Fan Club in Japan for
Marvel Entertainment Inc. and Marvel Characters Inc. via appointment under an
exclusive contract with Cyberbred Co. Ltd. Any significant change in the
relationship between the above parties could adversely affect the business of
Fan Club Entertainment. From time to time, Fan Club Entertainment will be
required to seek the approval of Marvel and or Cyberbred to launch a new web
service, event, media publication or merchandising product. Lack of timely
approval of the parties, or non-approval could lead to a significant decrease in
the ability of Fan Club Entertainment to produce sales revenue, and indeed
sustain their business.

         We have expanded our operations by acquiring companies, primarily in
Japan. We have been reliant on the company's majority shareholder in assisting
us in raising financing to carry out these acquisitions. We may need to obtain
additional financing in order to continue our current operations, including the
cash flow needs of Rex Tokyo, Fan Club and IA Global Acquisition Co., to acquire
businesses and to meet AMEX requirements of $6 million in stockholders' equity
by May 15, 2005 for continued listing of our shares. Our major shareholder has
indicated a willingness to support our financing efforts. However, there can be
no assurance that we will be able to secure additional funding, or that if such
funding is available, whether the terms or conditions would be acceptable to us,
from our major shareholder or otherwise.

KEY TRENDS

         Over the last few years the Pachinko / Slot Machine industry in Japan
has seen significant growth in operators known as "Chain Stores". Rex Tokyo has
taken advantage of this growth, and focused heavily on servicing these clients.
The number of total stores in Japan has decreased during this time from
approximately 18,000 to approximately 16,000. The number of stores owned by
Chain Stores has increased dramatically, while the number of one-owner one-store
establishments have decreased.

         In addition, the increase in market penetration of slot machines as
opposed to the more traditional Pachinko machines, has resulted in slot machines
making over 30% of the market in terms of total number of machines in stores.
Rex Tokyo has focused heavily on the slot machine side of the industry.

KEY DRIVERS

         One of the key drivers in the industry for expansion has been the rapid
pace of new store openings by the Chain Stores. These stores have put an
emphasis on automating the operation within the store as much as possible, and
reducing the overhead of labor costs. Suppliers of automated equipment, such as
automatic medal dispenser and cigarette ash disposal machines, have benefited
from this expansion.

OUR STRATEGY

         We operate primarily as a holding company. We intend to grow our Rex
Tokyo business. Also, we intend to further increase the number of majority-owned
companies by acquiring primarily Japanese small to midsize companies at low
acquisition costs in the media, entertainment and technology areas.

                                       28
<PAGE>

RESULTS OF OPERATIONS

         The following table presents certain consolidated statement of
operations information and presentation of that data as a percentage of change
from period-to-period.
<TABLE>
(dollars in thousands)
<CAPTION>
                                                                       Three Months Ended March 31,
                                                            ---------------------------------------------------
                                                              2005          2004       $ Variance    % Variance
                                                            -------       -------      ----------    ----------
<S>                                                         <C>           <C>           <C>             <C>
Revenue                                                     $ 5,969       $ 2,031       $ 3,938         193.9%

Cost of sales ........................................        4,864         1,511         3,353         221.9%
                                                            -------       -------       -------        -------

Gross profit .........................................        1,105           520           585         112.5%
                                                            -------       -------       -------        -------

Expenses:
Selling, general and
  administrative expenses ............................        2,036           883         1,153         130.6%
                                                            -------       -------       -------        -------
Total expenses .......................................        2,036           883         1,153         130.6%
                                                            -------       -------       -------        -------

Operating loss .......................................         (931)         (363)         (568)        156.5%
                                                            -------       -------       -------        -------

Other Income (Expense):
Interest income ......................................            6             3             3         100.0%
Interest expense .....................................          (23)           (5)          (18)        360.0%
Other Income .........................................           31             2            29        1450.0%
Foreign currency transaction adjustment ..............           17             2            15         750.0%
Gain on equity investment in QuikCAT Australia Pty Ltd            -             2            (2)          *
                                                            -------       -------       -------        -------
Total other income (expense) .........................           31             4            27         675.0%
                                                            -------       -------       -------        -------
Loss before minority interests and income taxes ......         (900)         (359)         (541)        150.7%
Minority interests ...................................         (205)           34          (239)       -702.9%
                                                            -------       -------       -------        -------
Loss before income taxes
  taxes ..............................................         (695)         (393)         (302)         76.8%
Income taxes:
Current ..............................................         (192)           64          (256)       -400.0%
Deferred .............................................            -            12           (12)          *
                                                            -------       -------       -------        -------
Loss from continuing operations ......................         (503)         (469)          (34)          7.2%
Loss from discontinued operations ....................          (41)            -           (41)          *
                                                            -------       -------       -------        -------
Net loss .............................................      $  (544)      $  (469)      $   (75)         16.0%
                                                            =======       =======       =======        =======
* Not meaningful.
</TABLE>

                                       29
<PAGE>

THREE MONTHS ENDED MARCH 31, 2005 VS. THREE MONTHS ENDED MARCH 31, 2004

NET REVENUE

         Net revenue for the three months ended March 31, 2005 increased
$3,938,000 to $5,969,000, as compared to the three months ended March 31 2004.
Rex Tokyo recorded revenue of $5,825,000 and Fan Club recorded revenue of
$144,000. In the prior year, Rex Tokyo, which was acquired March 18, 2004,
recorded $1,101,000 and Fan Club recorded revenue of $930,000. The reduction in
Fan Club revenues resulted from delays in closing new license sales.

COST OF SALES

         Cost of sales for the three months ended March 31, 2005 increased
$3,353,000 to $4,864,000 as compared to the three months ended March 31, 2004.
This increase was due to Rex Tokyo cost of sales of $4,523,000 consisting
primarily of inventory purchases and outsourced expenses. Rex Tokyo outsources
the majority of its installation and maintenance work. Fan Club cost of sales
was $341,000 and this primarily related to outsourced website development for
customers and amortization of the Marvel contract and other license agreements.

EXPENSES

         Selling, general and administrative expenses for the three months ended
March 31, 2005 increased $1,153,000 to $2,036,000, as compared to the three
months ended March 31, 2004. This was due to increased operating expenses of
$1,625,000 related to Rex Tokyo and $109,000 related to Fan Club.

         For 2005 and 2004, the selling, general and administrative expenses
consisted primarily of employee and independent contractor expense, rent,
overhead, equipment and depreciation, amortization of identifiable intangible
assets and intellectual property, professional and consulting fees, sales and
marketing costs, investor relation, legal and other general and administrative
costs. The difference in the current periods compared to the prior periods is
primarily due to the acquisition Fan Club on August 5, 2003 and Rex Tokyo on
March 18, 2004.

OTHER INCOME/ EXPENSE

         Other income for the three months ended March 31, 2005 was $31,000 as
compared to $4,000 for the three months ended March 31, 2004. The 2005 other
income was primarily due to miscellaneous income of $31,000 from Rex Tokyo,
offset by interest expense of $23,000 from Rex Tokyo.

NET LOSS FROM CONTINUING OPERATIONS

         Net loss from continuing operations was $503,000 for the three months
ended March 31, 2005 as compared to a net loss of $469,000 for the three months
ended March 31, 2004. The reasons for the decreased loss were discussed above.

NET LOSS

         Net loss was $544,000 for the three months ended March 31, 2005 as
compared to a net loss of $469,000 for the three months ended March 31, 2004.
The reasons for the decreased loss were discussed above.

         On February 9, 2005, we announced a definitive agreement to divest our
remaining holdings related to QuikCAT Technologies ("QuikCAT") to Nanocat
Technologies PTE Limited ("Nanocat"), a Singapore corporation. In accordance
with SFAS 144, we accounted for the loss for the first quarter of 2005 of
$41,000 as discontinued operations in our consolidated statement of operations.

                                       30
<PAGE>

GRANT OF STOCK OPTIONS

         On February 7, 2005, we granted 30,000 stock options in total at an
exercise price of $.29 per share to employees of Rex Tokyo. These options vest
quarterly over three years and expire on February 7, 2015.

         We have not recorded any compensation expense for stock options granted
to employees during the three months ended March 31, 2005.

LIQUIDITY AND CAPITAL RESOURCES

         We had cash of approximately $2.3 million and net working capital of
approximately $3.1 million as of March 31, 2005. We had a net loss from
continuing operations of approximately $.9 million for the year ended December
31, 2004. We expect our net loss from operations to decrease in 2005, but to
continue for the foreseeable future.

         Rex Tokyo received a 100,000,000 Yen, or $923,275 at current exchange
rates, working capital loan with Nihon Shinko Bank Co, an affiliated party, for
use as operating capital on June 30, 2004. On January 18, 2005, Rex Tokyo
refinanced this loan by entering into a 100,000,000 Yen, or $978,761 at current
exchange rates, loan with Mizuho Bank Co Ltd, an unrelated Japanese bank.

         On March 25, 2005, Rex Tokyo received a 100,000,000 Yen, or
approximately $940,000 at current exchange rates, working capital loan from
Chiba Bank Ltd, an unrelated Japanese bank. The loan will be used to fund Rex
Tokyo's growth.

         We may need to obtain additional financing in order to continue our
current operations, including the cash flow needs of Rex Tokyo and subsidiaries,
Fan Club, IA Global Acquisition Co., to acquire businesses and to meet the
American Stock Exchange ("AMEX") requirements of $6 million in stockholders'
equity by May 15, 2005 for continued listing of our shares. Our major
shareholders thus far have indicated a willingness to support our financing
efforts. However, there can be no assurance that we will be able to secure
additional funding, or that if such funding is available, whether the terms or
conditions would be acceptable to us, from our major shareholders or otherwise.

         Moreover, if we raise additional capital through borrowing or other
debt financing, We would incur substantial interest expense. Sales of additional
equity securities will dilute on a pro rata basis the percentage ownership of
all holders of common stock. If we do raise more equity capital in the future,
it is likely that it will result in substantial dilution to our current
stockholders.

         Since inception, we have financed our operations primarily through
sales of our equity securities in our initial public offering and from several
private placements, loans and capital contributions, primarily from related
parties. Net cash proceeds from these items have totaled approximately $20.1
million as of March 31, 2005, with approximately $8.8 million raised in the
initial public offering, $7.6 million raised in private placements, $3.6 million
raised in the conversion of debt and $.1 million raised from a capital
contribution. In addition, we have issued equity for non-cash items totaling
$9.5 million, including $6.9 million issued for services, $2.3 million related
to a beneficial conversion feature, $.2 million related to the Fan Club
acquisition and $.1 million related to the Rex Tokyo acquisition. Additional
funding was obtained from short-term and long-term debt approximately $1.8
million was outstanding as of March 31, 2005.

                                       31
<PAGE>

OPERATING ACTIVITIES

         Net cash used in operations for the three months ended March 31, 2005
was $1,469,000. This amount was primarily related to a net loss of $544,000, an
increase in inventory of $486,000, a decrease in accounts payable of $3,579,000
and a decrease in notes payable of $654,000. This was offset by depreciation and
amortization of $164,000, a decrease in accounts receivable of $3,031,000, a
decrease in notes receivable of $423,000 and a decrease of prepaid expenses of
$559,000.

         The March 31, 2005 quarter typically is a seasonal low quarter for Rex
Tokyo. This results in reduced sales, accounts receivable and accounts payable
during the quarter.

INVESTING ACTIVITIES

         Net cash used in investing activities for the three months ended March
31, 2005 was $944,000. This amount was primarily related to an increase in other
current assets of $280,000 and an increase in other assets of $790,000. These
amounts relate to Rex Tokyo loans receivable from Kyushu Tesco Co Ltd which was
used to fund the growth of the Timothy World Co Ltd business.

FINANCING ACTIVITIES

         Net cash provided by financing activities for the three months ended
March 31, 2005 was $1,061,000. This amount related to proceeds from long term
debt of $1,860,000, offset by repayment of long term debt-affiliated party and
long term debt of $799,000.

         Rex Tokyo received a 100,000,000 Yen, or $923,275 at current exchange
rates, working capital loan with Nihon Shinko Bank Co, an affiliated party, for
use as operating capital on June 30, 2004. On January 18, 2005, Rex Tokyo
refinanced this loan by entering into a 100,000,000 Yen, or $978,761 at current
exchange rates, loan with Mizuho Bank Co Ltd, an unrelated Japanese bank.

         On March 25, 2005, Rex Tokyo received a 100,000,000 Yen, or
approximately $940,000 at current exchange rates, working capital loan from
Chiba Bank Ltd, an unrelated Japanese bank. The loan will be used to fund Rex
Tokyo's growth.

         Other Material Commitments. The Company's contractual cash obligations
as of March 31, 2005 are summarized in the table below (1):
<TABLE>
<CAPTION>
                                                Less Than                                  Greater Than
Contractual Cash Obligations       Total         1 Year         1-3 Years     3-5 Years      5 Years
----------------------------     ----------     ----------     ----------     ---------    ------------
<S>                              <C>             <C>           <C>             <C>             <C>
Operating leases ...........     $  639,048      $308,402      $  237,414      $93,232         $0

Capital lease obligations ..         79,950        25,811          39,878       14,261          0

Long term debt repayment ...      1,788,079       598,494       1,189,585            0          0

Capital expenditures .......        100,000       100,000               0            0          0

Acquisitions ...............        100,000       100,000               0            0          0
_________
(1) Based on the end of period exchange rate.
</TABLE>

                                       32
<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The application of GAAP involves the exercise of varying degrees of
judgment. On an ongoing basis, we evaluate our estimates and judgments based on
historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. We believe that of our
significant accounting policies (see summary of significant accounting policies
more fully described in Note 2 of notes to consolidated financial statements),
the following policies involve a higher degree of judgment and/or complexity:

INCOME TAXES

         We are subject to income taxes in both the U.S. and foreign (Japan)
jurisdictions. Significant judgment is required in determining the provision for
income taxes. We recorded a valuation for the deferred tax assets from our net
operating losses carried forward due to us not demonstrating any consistent
profitable operations. In the event that the actual results differ from these
estimates or we adjust these estimates in future periods, we may need to adjust
such valuation recorded.

STOCK-BASED COMPENSATION

         SFAS 123, ACCOUNTING FOR STOCK-BASED COMPENSATION, as amended by SFAS
148, ACCOUNTING FOR STOCK-BASED COMPENSATION-- TRANSITION AND DISCLOSURE,
encourages, but does not require, companies to record compensation cost for
stock based employee compensation plans at fair value. We have chosen to
continue to account for stock-based employee compensation using the intrinsic
value method prescribed in Accounting Principles Board (APB) Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, AND RELATED INTERPRETATIONS.
Accordingly, compensation cost for stock options granted to employees is
measured as the excess, if any, of the quoted market price of our stock at the
date of the grant over the amount an employee must pay to acquire the stock.

INTANGIBLE ASSETS

         Capitalized Software--Software license costs were capitalized upon the
establishment of technological feasibility, in accordance with SFAS No. 86,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE
MARKETED. Software license costs were capitalized based upon an assessment of
their recoverability. This assessment requires considerable judgment by
management with respect to various factors, including, but not limited to,
anticipated future gross margins, estimated economic lives, and changes in
software and hardware technology. Amortization is based on the straight-line
method over the remaining estimated economic life of the product which is two
years.

         Other Intangible Assets--Other intangible assets primarily relate to
acquired software, trademarks and customer lists acquired in our purchase of Fan
Club. On January 1, 2003, we adopted the provisions of SFAS No. 144, ACCOUNTING
FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, which generally requires
impairment losses to be recorded on long-lived assets (excluding goodwill) used
in operations, such as property, equipment and improvements, and intangible
assets, when indicators of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the carrying
amount of the assets. We are amortizing the intangible assets and intellectual
property for Fan Club Entertainment over sixty months on a straight - line
basis, which is the life of the Marvel Enterprises, Inc. agreement. We amortized
the intangible assets and intellectual property acquired in connection with the
acquisition of QuikCAT over sixty months on a straight - line basis, which is
the expected life of the technology. On February 9, 2005, we announced a
definitive agreement to divest our remaining holdings related to QuikCAT
Technologies to Nanocat Technologies PTE Limited ("Nanocat"), a Singapore
corporation. Nanocat is affiliated with QuikCAT Australia Pty Ltd., our joint
venture partner for the QuikCAT business.

                                       33
<PAGE>

REVENUE RECOGNITION

         We recognize revenue when it is realized. We consider revenue realized
when the product has been shipped or the services have been provided to the
customer, and collectibility is reasonably assured. We account for certain
construction contracts/projects on the percentage-of-completion method and under
this method, income is recognized as work on contracts progresses, but estimated
losses on contracts in progress are charged to operations immediately.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

         Accounts receivable consists primarily of amounts due us from our
normal business activities. We maintain an allowance for doubtful accounts to
reflect the expected non-collection of accounts receivable based on past
collection history and specific risks identified within our portfolio. If the
financial condition of our customers were to deteriorate resulting in an
impairment of their ability to make payments, or if payments from customers are
significantly delayed, additional allowances might be required.

DEBT AND EQUITY FINANCING OF CAPITAL TRANSACTIONS-BENEFICIAL CONVERSION FEATURES

         We have adopted Emerging Issues Task Force ("EITF") Issues 98-5,
ACCOUNTING FOR CONVERTIBLES SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR
CONTINGENTLY ADJUSTABLE CONVERSION RATIOS, and 00-27, APPLICATION OF ISSUE NO.
98-5 TO CERTAIN CONVERTIBLE SECURITIES in accounting for the convertible debt.
EITF 98-5 recognition of a conversion feature that is in-the-money at issuance
as additional paid in-capital, measured by allocating a portion of the proceeds
equal to the intrinsic value of that feature. The intrinsic value of the feature
is the difference between the conversion price and the fair value of the stock
into which the security is convertible, multiplied by the number of shares.
According to EITF 00-27, the issuance proceeds should not be reduced by issuance
costs when calculating the intrinsic value of the conversion feature. These
beneficial conversion features of debt or equity instruments, depending on the
specific facts and circumstances will determine whether such beneficial
conversion feature is to be recorded as an expense to be amortized over a period
of time, expensed immediately or recorded as a deemed dividend.

RECENT ACCOUNTING PRONOUNCEMENTS

         In January 2003, FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities ("FIN No. 46"). This interpretation of Accounting
Research Bulletin No. 51, Consolidated Financial Statements ("ARB No. 51"),
provides guidance for identifying a controlling interest in a variable interest
entity established by means other than voting interests. FIN No. 46 also
requires consolidation of a variable interest entity by an enterprise that holds
such a controlling interest. In December 2003, the FASB completed its
deliberations regarding the proposed modification to FIN No. 46 and issued
Interpretation Number 46R, Consolidation of Variable Interest Entities - an
Interpretation of ARB No. 51 (FIN No. 46R). The decisions reached included a
deferral of the effective date and provisions for additional scope exceptions
for certain types of variable interests. Application of FIN No. 46R is required
in financial statements of public entities that have interests in variable
interest entities or potential variable interest entities commonly referred to
as special - purpose entities for periods ending after December 15, 2003.
Application by public entities (other than small business users) for all other
types of entities is required in financial statements for periods ending after
March 15, 2004. The adoption of FIN No. 46R did not have a material effect on
our consolidated financial statements.

                                       34
<PAGE>

         In December of 2003, the FASB issued a revised SFAS No. 132 "Employers'
Disclosures about Pensions and Other Postretirement Benefits". The statement
revises employers' disclosures about pension plans and other postretirement
benefit plans but it does not change the measurement or recognition of those
plans. The revised SFAS No. 132 requires additional disclosures to those in the
original SFAS 132 about the assets, obligations, cash flows, and net periodic
benefit cost of defined pension plans and other defined benefit postretirement
plans. The statement also increases quarterly pension plan and postretirement
benefit plan disclosure requirements. Revised SFAS No. 132 domestic plan
disclosure requirements are effective for financial statements with fiscal years
ending after December 15, 2003. However, disclosure of information about foreign
plans required by the Statement is effective for fiscal years ending after June
15, 2004. We adopted this statement in December of 2003 and it did not have a
material effect on our consolidated financial statements.

         SFAS No. 123 (Revised 2004), "Share-Based Payment," issued in December
2004, is a revision of FASB Statement 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and its related implementation guidance. The Statement focuses
primarily on accounting for transactions in which an entity obtains employee
services in share-based payment transactions. SFAS No. 123 (Revised 2004)
requires a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award (with limited exceptions). That cost will be recognized over the
period during which an employee is required to provide service in exchange for
the award. This statement is effective as of the beginning of the first interim
or annual reporting period that begins after January 15, 2006 and we will adopt
the standard in the second quarter of fiscal 2006. We have not determined the
impact, if any, that this statement will have on our consolidated financial
statements.

         In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4," which clarifies the types of costs that
should be expensed rather than capitalized as inventory. This statement also
clarifies the circumstances under which fixed overhead costs associated with
operating facilities involved in inventory processing should be capitalized. The
provisions of SFAS No. 151 are effective for fiscal years beginning after June
15, 2005 and we will adopt this standard in fiscal 2006. We have not determined
the impact, if any, that this statement will have on our consolidated financial
statements.

         In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets--An Amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions" ("SFAS 153"). SFAS 153 eliminates the exception from
fair value measurement for nonmonetary exchanges of similar productive assets in
paragraph 21(b) of APB Opinion No. 29, "Accounting for Nonmonetary
Transactions," and replaces it with an exception for exchanges that do not have
commercial substance. SFAS 153 specifies that a nonmonetary exchange has
commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS 153 is effective for the
fiscal periods beginning after December 15, 2005 and is required to be adopted
by us in the first quarter of fiscal 2006. We have not determined the impact, if
any, that this statement will have on our consolidated financial statements.

                                       35
<PAGE>

FACTORS THAT MAY AFFECT FUTURE RESULTS

         The following factors, in addition to the other information contained
in this report, should be considered carefully in evaluating us and our
prospects. This report (including without limitation the following factors that
may affect operating results) contains forward-looking statements (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) regarding us and our business, financial condition, results of operations
and prospects. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
words are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this report.
Additionally, statements concerning future matters such as the development of
new products, enhancements or technologies, possible changes in legislation and
other statements regarding matters that are not historical are forward-looking
statements.

         Forward-looking statements in this report reflect the good faith
judgment of our management and the statements are based on facts and factors as
we currently know them. Forward-looking statements are subject to risks and
uncertainties and actual results and outcomes may differ materially from the
results and outcomes discussed in the forward-looking statements. Factors that
could cause or contribute to such differences in results and outcomes include,
but are not limited to, those discussed below and in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" as well as those
discussed elsewhere in this report. Readers are urged not to place undue
reliance on these forward-looking statements which speak only as of the date of
this report. We undertake no obligation to revise or update any forward-looking
statements in order to reflect any event or circumstance that may arise after
the date of the report.

OUR COMMON STOCK COULD BE DELISTED FROM THE AMERICAN STOCK EXCHANGE ("AMEX")

         In May 2003, we received notice from the AMEX Staff indicating that we
were below certain of AMEX's continued listing standards, due to losses in two
of our most recent fiscal years with shareholder equity below $2 million, and
had sustained losses so substantial in our overall operations that it appeared
questionable, in the opinion of the AMEX, as to whether we would be able to
continue operations, as set forth in Section 1003(a)(i) and Section 1003(a)(iv)
of the AMEX Company Guide. We were afforded the opportunity to submit a plan of
compliance to AMEX and on July 7, 2003 presented the plan, with a further
amended submission on September 8, 2003. On September 30, 2003, AMEX notified us
that it accepted our plan of compliance and granted us an extension until
November 27, 2004 to regain compliance with the continued listing standards. We
will be subject to periodic review by AMEX Staff during the extension period,
during which we will be required to make progress consistent with our plan and
to regain compliance with the continued listing standards.

         On October 7, 2004, we received notice from the AMEX Staff that we were
not in compliance with Section 1003(a)(ii), which requires a company to have
shareholders' equity of not less than $4,000,000 if the company has sustained
losses from continuing operations and/or net losses in three of its four most
recent fiscal years. AMEX Staff also informed us in that letter that we must
submit a description of the acquisition and or investment that would bring the
company into compliance with all continued listing standards by November 27,
2004. In addition, the AMEX Staff notified us that if we did not have at least
$6,000,000 in shareholders' equity in our financial report on Form 10-K for the
fiscal year ending December 31, 2004, that we would also not be in compliance
with Section 1003(a)(iii) of the AMEX Company Guide, which requires a company to
have $6,000,000 in shareholders' equity if the company has sustained losses from
continuing operations and/or net losses in our five most recent fiscal years.

                                       36
<PAGE>

         On November 10, 2004, we announced that PBAA, Inter Asset Japan and Mr.
Isobe collectively invested an additional $1,130,000 into the company in a
private placement. This increased our stockholder's equity to approximately
$4,300,000 on November 9, 2004.

         On December 27, 2004, we received notice from the AMEX Staff that we
have evidenced compliance with the requirements for continued listing on AMEX.

         In addition, the AMEX Staff reminded us that we have become subject to
Section 1009(h) of the AMEX Company Guide and our financial report on Form 10-K
for the fiscal year ending December 31, 2004, when it is was filed on
approximately April 15, 2005, must evidence compliance with Section
1003(a)(iii)of the AMEX Company Guide, which requires a company to have
shareholders' equity above $6,000,000, provided the company expects to incur
losses from continuing operations and/or net losses in its five most recent
fiscal years.

         The company signed a Share Exchange Agreement to acquire Global Hotline
Co Ltd. ("GHI"), a privately held Japanese company, on April 20, 2005. The
transaction is structured as a share exchange in which the company will issue
15,000,000 shares of its common stock in exchange for 100% of GHI's equity. At
the time the Share Exchange Agreement was signed, the company's common stock had
a value of $.207 per share, which was the average close price during the twenty
days prior to the signing of the Share Exchange Agreement, or an aggregate value
of $3,100,000.

         The company expects this acquisition to increase its stockholder's
equity by $3,100,000 to above $6,000,000 and help the company maintain its AMEX
listing. There is no guarantee the above transaction will close.

         We are working to maintain our AMEX listing, but there can be no
guarantee that this listing will be achieved after May 15, 2005. Not achieving
our plan of compliance accepted by AMEX and the listing rules set forth in the
AMEX Company Guide could result in our common stock being delisted from AMEX,
which could materially affect the ability of our stockholders to dispose of
their shares and reduce the liquidity of their investment. In addition,
delisting could affect our ability to obtain financing to support future
operations and acquisitions.

WE MAY NEED ADDITIONAL FINANCING TO SUPPORT OUR OPERATIONS AND ACQUIRE
BUSINESSES

         We may need to obtain additional financing in order to continue our
current operations, including the cash flow needs of Fan Club, Rex Tokyo and IA
Global Acquisition Co, to acquire businesses and to meet our AMEX requirements
of $6 million in stockholder's equity by March 31, 2005 for continued listing of
our shares. Our major shareholders thus far have indicated a willingness to
support our financing efforts. However, there can be no assurance that we will
be able to secure additional funding, or that if such funding is available,
whether the terms or conditions would be acceptable to us, from our major
shareholders or otherwise.

         Moreover, if we raise additional capital through borrowing or other
debt financing, we would incur substantial interest expense. Sales of additional
equity securities will dilute on a pro rata basis the percentage ownership of
all holders of common stock. If we do raise more equity capital in the future,
it is likely that it will result in substantial dilution to our current
stockholders. Any inability to obtain additional financing may materially affect
our business, financial condition and results of operations.

                                       37
<PAGE>

THE COMPANY IS EXPOSED TO LEGAL CLAIMS

         We have been, currently are, or in the future may be involved in legal
proceedings or claims. Such current claims are detailed in Part 2, Item 1, Legal
Proceedings. Such claims, whether with or without merit, could be time-consuming
and expensive to defend and could divert management's time and attention. There
can be no guarantee that we will be successful in resolving such claims.

WE MAY ENGAGE IN ACQUISITIONS, MERGERS, STRATEGIC ALLIANCES, JOINT VENTURES AND
DIVESTITURES THAT COULD RESULT IN FINANCIAL RESULTS THAT ARE DIFFERENT THAN
EXPECTED.

         In the normal course of business, we may engage in discussions relating
to possible acquisitions, mergers, strategic alliances, joint ventures and
divestitures. As part of our business strategy, we completed one acquisition
during early 2003, one acquisition in August 2003 one acquisition in March 2004
one acquisition in June 2004 and are planning to close an acquisition in May
2005, invested in a joint venture in July, 2003 and expanded the Rex Tokyo
business as discussed, and sold a business in December, 2003, a joint venture in
October 2004 and a business in February, 2005. Such transactions are accompanied
by a number of risks, including:

         - Use of significant amounts of cash,

         - Potentially dilutive issuances of equity securities on potentially
unfavorable terms,

         - Incurrence of debt on potentially unfavorable terms as well as
amortization expenses related to goodwill and other intangible assets, and

         - The possibility that we may pay too much cash or issue too much of
our stock as the purchase price for an acquisition relative to the economic
benefits that we ultimately derive from such acquisition.

         The process of integrating any acquisition may create unforeseen
operating difficulties and expenditures and is itself risky. The areas where we
may face difficulties include:

         - Diversion of management time during the period of negotiation through
closing and further diversion of such time after closing from focus on operating
the businesses to issues of integration and future products,

         - Decline in employee morale and retention issues resulting from
changes in compensation, reporting relationships, future prospects or the
direction of the business,

         - The need to integrate each company's accounting, management
information, human resource and other administrative systems to permit effective
management, and the lack of control if such integration is delayed or not
implemented,

         - The need to implement controls, procedures and policies appropriate
for a larger public company at companies that prior to acquisition had been
smaller, private companies,

         - The need to sell acquired technology and products into the
marketplace,

         - The need to incorporate acquired technology, content or rights into
our products and anticipated expenses related to such integration, and

         - The need to successfully develop an acquired in-process technology to
achieve the value currently capitalized as intangible assets.

                                       38
<PAGE>

         From time to time, we have also engaged in discussions with candidates
regarding the potential acquisitions of our product lines, technologies and
businesses. If divestiture such as this does occur, we cannot be certain that
our business, operating results and financial condition will not be materially
and adversely affected. A successful divestiture depends on various factors,
including our ability to:

         - Effectively transfer liabilities, contracts, facilities and employees
to the purchaser,

         - Identify and separate the intellectual property to be divested from
the intellectual property that we wish to keep,

         - Reduce fixed costs previously associated with the divested assets or
business, and

         - Collect the proceeds from the divestitures.

         In addition, if customers of the divested business do not receive the
same level of service from the new owners, this may adversely affect our other
businesses to the extent that these customers also purchase other products
offered by us. All of these efforts require varying levels of management
resources, which may divert our attention from other business operations.
Further, if market conditions or other factors lead us to change our strategic
direction, we may not realize the expected value from such transactions.

         If we do not realize the expected benefits or synergies of such
transactions, our consolidated financial position, results of operations, cash
flows and stock price could be negatively impacted.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE

         The market price of our common stock has been and is likely in the
future to be highly volatile. Our common stock price may fluctuate significantly
in response to factors such as:

         - Quarterly variations in our operating results,

         - Announcements of technological innovations,

         - New product introductions by us or our competitors,

         - Competitive activities,

         - Announcements by us regarding significant acquisitions, strategic
relationships, capital expenditure commitments, liquidity and our AMEX listing,

         - Additions or departures of key personnel,

         - Issuance of convertible or equity securities for general or merger
and acquisition purposes,

         - Issuance of debt or convertible debt for general or merger and
acquisition purposes,

         - General market and economic conditions,

         - Investor relation activities,

         - Defending significant litigation, and

         - Foreign exchange gains and losses.

                                       39
<PAGE>

         The stocks of technology companies have experienced extreme price and
volume fluctuations. These fluctuations often have been unrelated or
disproportionate to the operating performance of these companies. These broad
market and industry factors may have a material adverse effect on the market
price of our common stock, regardless of our actual operating performance.
Factors like this could have a material adverse effect on our business,
financial condition and results of operations.

THE SALE OF A SIGNIFICANT NUMBER OF OUR SHARES COULD DEPRESS THE PRICE OF OUR
STOCK.

         Sales or issuances of a large number of shares of common stock in the
public market or the perception that sales may occur could cause the market
price of our common stock to decline. As of May 6, 2005, 82.4 million shares of
common stock were outstanding. Significant shares were held by our principal
stockholders and other company insiders. As "affiliates" (as defined under Rule
144 of the Securities Act ("Rule 144")) of the company, our principal
stockholders and other company insiders may only sell their shares of common
stock in the public market in compliance with Rule 144, including the volume
limitations therein.

WE HAVE LIMITED INSURANCE

         We have limited director and officer insurance and commercial insurance
policies. Any significant insurance claims would have a material adverse effect
on our business, financial condition and results of operations.

WE HAVE A LIMITED OPERATING HISTORY

         We have a limited operating history on which to base an evaluation of
our business and prospects, having only commenced our initial business
operations in April 1999. In addition, we have shifted our revenue model from
broadband entertainment channels and revenues derived from advertising to
operating primarily as a holding company. We intend to grow our Rex Tokyo
business. Also, we intend to further increase the number of majority-owned
companies by acquiring primarily Japanese small to midsize companies at low
acquisition costs in the media, entertainment and technology areas. Our
prospects must be considered in light of the risks, difficulties and
uncertainties frequently encountered by companies in an early stage of
development, particularly companies in new and rapidly evolving markets such as
the market for media, entertainment and technology products and services.

         As we have such a limited history of operations, investors will be
unable to assess our future operating performance or our future financial
results or condition by comparing these criteria against their past or present
equivalents.

WE EXPECT TO INCUR LOSSES FOR THE FORESEEABLE FUTURE

         We have experienced net losses since inception. We expect our net
losses from operations to decrease during 2005, but to continue for the
foreseeable future. There can be no assurance that we will ever achieve
profitability.

OUR CUSTOMER BASE IS CONCENTRATED

         One customer was 59.1% of net revenues for the three months ended March
31, 2005. We anticipate that significant customer concentration will continue
for the foreseeable future. The loss of a significant customer would have a
material adverse effect on our business, financial condition and results of
operations.

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<PAGE>

OUR VENDOR BASE IS CONCENTRATED

         Our vendor base is concentrated in a few major suppliers for Rex Tokyo
and Fan Club. We anticipate that significant vendor concentration will continue
for the foreseeable future. Such concentration can result in pricing, payment or
supply issues and such issues would have a material adverse effect on our
business, financial condition and results of operations.

WE ARE DEPENDENT ON CERTAIN THIRD PARTY LICENSES AND AGREEMENTS

         On June 4, 2003, Cyberbred signed a five year agreement with Marvel
Enterprises, Inc. to manage their fan club in Japan. On July 28, 2003, Fan Club
signed a Subcontract Agreement with Cyberbred to exclusively manage the entire
Marvel Fan Club in Japan in accordance with the agreement between Cyberbred and
Marvel.

         Under the July 28, 2003 agreement, Cyberbred will make "best efforts"
to transfer the rights under their agreement with Marvel, directly to Fan Club
Entertainment. At this time, this transfer has not taken place.

         We currently are not a party to the agreement between Cyberbred and
Marvel. However, this contract is material to us and we would be materially
adversely affected by a termination of the relationship between Cyberbred and
Marvel. We cannot make any assurances about the relationship between Cyberbred
and Marvel.

         On July 30, 2004 and August 1, 2004 Fan Club, signed two license
agreements with Total Insurance Management for use in building Internet
platforms, including content. The license costs of $540,930 were capitalized and
are being amortized over the two year life of the agreements.

         Rex Tokyo agreed in approximately 1998 to pay monthly 5,000,000 Yen or
approximately $47,000 at current exchange rates to a majority-owned company of
the CEO of Rex Tokyo for assigning the distribution rights for certain lock
products for Tokyo, Japan to Rex Tokyo. This distribution agreement assignment
is ongoing and resulted in 2004 sales of approximately $2,800,000 at current
exchange rates.

WE ARE SUBJECT TO COMPETITIVE PRESSURES

         While we are not aware of any organization that is providing the
complete suite of services under the same business model we are utilizing, in
general, we face competition from entities that provide supply equipment and
services to the Pachinko and gaming industry or which provide advertising,
merchandising, publishing, website and data management services. Certain of our
competitors may be able to devote greater resources to marketing, adopt more
aggressive pricing policies and devote substantially more resources to
developing their services and products. We may be unable to compete successfully
against current and future competitors, and competitive pressures may have a
material adverse effect on our business. Further, as a strategic response to
changes in the competitive environment, we may from time to time make certain
pricing, service or marketing decisions or acquisitions that could have a
material adverse effect on our business, prospects, financial condition and
results of operations.

         In addition to the foregoing, some of our key customers or potential
customers might decide to supply equipment or services to the Pachinko and
gaming industry or provide advertising, merchandising, publishing, website and
data management services. Although this has not been the industry trend over the
past year, if this were to happen, we might be adversely impacted thereby.

                                       41
<PAGE>

WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS

         We regard our copyrights, trade secrets, trademarks, patents, and
similar intellectual property as significant to our growth and success. We rely
upon a combination of copyright and trademark laws, trade secret protection,
confidentiality and non-disclosure agreements and contractual provisions with
our employees and with third parties to establish and protect our proprietary
rights. Legal standards relating to the validity, enforceability and scope of
protection of certain proprietary rights in Internet-related industries are
uncertain and still evolving. We are unable to assure investors as to the future
viability or value of any of our proprietary rights or those of other companies
within the industry. We are also unable to assure investors that the steps taken
by us to protect our proprietary rights will be adequate. Furthermore, we can
give no assurance that our business activities will not infringe upon the
proprietary rights of others, or that other parties will not assert infringement
claims against us.

WE ARE DEPENDENT ON KEY PERSONNEL

         We have experienced turnover of management and directors. Our success
depends to a significant degree upon the continued contributions of key
management and other personnel, some of whom could be difficult to replace. We
do not maintain key man life insurance covering certain of our officers. Our
success will depend on the performance of our officers, our ability to retain
and motivate our officers, our ability to integrate new officers into our
operations and the ability of all personnel to work together effectively as a
team. Our failure to retain and recruit officers and other key personnel could
have a material adverse effect on our business, financial condition and results
of operations.

OUR PRINCIPAL STOCKHOLDERS HAVE SUBSTANTIAL INFLUENCE OVER OUR COMPANY

         As of May 6, 2005, Inter Asset Japan LBO No. 1 Fund ("IAJ LBO Fund"),
PBAA Fund Ltd. ("PBAA"), Terra Firma Fund Ltd. ("Terra Firma"), Inter Asset
Japan Co. Ltd. ("IAJ"), Alan Margerison and Hiroki Isobe collectively hold
approximately 83.1% of our common stock. Such entities stated in a Schedule 13D
that they may be deemed to constitute a "group" for the purposes of Rule 13d-3
under the Exchange Act. Mr. Alan Margerison, our Director, President and Chief
Executive Officer, currently serves as the Chairman of IAJ, and together with
his business partner, Mr. Hiroki Isobe, they control each of our Controlling
Stockholders.

         IAJ has the ability to cause a change of control of our board of
directors by electing candidates of its choice to the board at a stockholder
meeting, and approve or disapprove any matter requiring stockholder approval,
regardless of how our other stockholders may vote. Further, under Delaware law,
IAJ has significant influence over our affairs, including the power to cause,
delay or prevent a change in control or sale of the company, which in turn could
adversely affect the market price of our common stock.

WE ARE EXPOSED TO FOREIGN CURRENCY RISKS

         The majority of our operations are located in Japan. We do not trade in
hedging instruments or "other than trading" instruments and a significant change
in the foreign currency exchange rate between the Japanese Yen and US Dollar
would have a material adverse effect on our business, financial condition and
results of operations.

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<PAGE>

WE ARE EXPOSED TO CHANGES IN THE PACHINKO INDUSTRY

         Over the last few years the Pachinko / Slot Machine industry in Japan
has seen significant growth in operators known as "Chain Stores". Rex Tokyo has
taken advantage of this growth, and focused heavily on servicing these clients.
During the three months ended March 31, 2005, 59.1% of Rex Tokyo's revenues
resulted from sales to one Chain Store. Any slow down from this side of the
industry could significantly impact Rex Tokyo's ability to perform at its
current levels of revenue. Further, Chain Stores have thus far focused heavily
on a high level of automation within the stores. Any change in plan by Chain
Stores to decrease the level of automation could adversely affect Rex Tokyo's
sales of machinery and parts. This could have a material adverse effect on our
business, prospects, financial condition and results of operations.

         The Pachinko / Slot machine industry in Japan has seen a significant
growth in the Slot machine side of the business, while the Pachinko market has
remained more constant in terms of total number of machines in stores. Rex Tokyo
has focused heavily on the Slot machine side of the business. Any downturn in
growth of the Slot machine market, or any change in the law that might curtail
sales of Slot machines in the market, could have a material adverse effect on
our business, prospects, financial condition and results of operations.

         Rex Tokyo has expanded its sales offices based on a perceived need for
more local representation in areas where clients are based. In providing clients
with a local office, feedback from clients can be more readily received, thus
helping to improve service levels. There is also a possibility that formation
from clients may be filtered prior to reaching head office. This may result in a
less accurate picture of client satisfaction levels and expectations. Rex Tokyo
regularly conducts meetings with managers from the local offices to hear their
views in an effort to combat this, however, a decrease in client satisfaction
levels could have a material adverse effect on our business prospects, financial
condition and results of operations.

         Rex Tokyo has seen an expansion of its business by aligning itself
strongly with a number of core clients. If for any reason Rex Tokyo's image was
damaged with those clients or in the industry as a whole, it could have a
material adverse effect on our business, prospects, financial condition and
results of operations.

         Rex Tokyo's business is dependent upon its ability to maintain tight
control on its cash flow cycle. In general, as the amount of work increases the
amount of cash flow required increases. If Rex Tokyo is not able to maintain
sufficient cash flow to expand its business at the same pace as it's clients
expansion, it may lead to clients moving their accounts to other service
providers.

         Rex Tokyo is dependent upon key suppliers for supply of parts and
machinery to the Pachinko slot machine industry, It also outsources a large
amount of its maintenance and installation work. Failure to secure specific
machines or parts that clients request from suppliers may lead to a decrease in
sales. Failure to maintain good relationships with its suppliers and outsourcing
companies could result in the inability to complete work for clients.

         Revenue recognition is based on completion of work and industry
regulated police inspection being carried out so that stores can open. A change
in this system or the delay of inspections could adversely affect revenue.

         The passing of legislation that may allow for other forms of gaming
within Japan could cause a material change in the business model of Rex Tokyo.
While no legislation has been passed at this time, debate in political circles
over the introduction of legal casinos in Japan has been public knowledge for
some time. It is not known whether such legislation might ever be passed in
Japan, or if it was passed, what impact that may have on Rex Tokyo's business,
prospects, financial condition and results of operations. Further, the existence
and growth of illegal or "underground" casinos in Japan may also have a similar
negative impact.

                                       43
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY

         We were exposed to foreign currency risks due to the acquisition of Fan
Club on August 5, 2003 and Rex Tokyo on March 18, 2004. These businesses operate
in Japan.

         We do not trade in hedging instruments or "other than trading"
instruments and we are exposed to foreign currency exchange risks.

INTEREST RATE RISK

         The company is exposed to interest rate risk due to the long term debt
of $1,788,079 as of March 31, 2005. On January 18, 2005, Rex Tokyo refinanced
this loan by entering into a 100,000,000 Yen, or $978,761 at current exchange
rates, loan with Mizuho Bank Co Ltd, unrelated Japanese bank.

         On March 25, 2005, Rex Tokyo received a 100,000,000 Yen, or
approximately $940,000 at current exchange rates, working capital loan from
Chiba Bank Ltd, an unrelated Japanese bank. The loan will be used to fund Rex
Tokyo's growth.

         The company does not trade in hedging instruments or "other than
trading" instruments and is exposed to interest rate risks. We believe that the
impact of a 10% increase or decline in interest rates would not be material to
our financial condition and results of operations.

ITEM 4.  CONTROLS AND PROCEDURES

         Our principal executive officer and principal financial officer
evaluated the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31,
2005. Based on this evaluation, our principal executive officer and principal
financial officer concluded that, as of March 31, 2005, our disclosure controls
and procedures were effective in ensuring that (1) information to be disclosed
in reports we file under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified by the rules and forms promulgated
under the Exchange Act and (2) information required to be disclosed in reports
filed under the Exchange Act is accumulated and communicated to the principal
executive officer and principal financial officer as appropriate to allow timely
decisions regarding required disclosure. There were no changes in the company's
internal control over financial reporting that occurred during the company's
last fiscal quarter that have materially affected or are reasonably likely to
materially affect, the company's internal control over financial reporting.


                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On March 23, 2005 we received a dismissal of the Krakowski arbitration
from the American Arbitration Association.

         As part of the September 25, 2002 Agreement and Assignment (the
"Agreement and Assignment") between the company, IAJ and David Badner, a major
stockholder and former consultant to us, Mr. Badner has agreed to indemnify and
hold us harmless against certain expenses, including, among other things, any
fees and damages arising from the Krakowski matter. On November 5, 2004, we were
notified that, in connection with the arbitration matter initiated by Mr. Badner
described below, Mr. Badner intends to contest his indemnification obligation.

                                       44
<PAGE>

         On November 5, 2004, we received notice from the American Arbitration
Association in New York City that Mr. Badner has commenced an arbitration
proceeding against us, our major shareholder, Inter Asset Japan Co Ltd, and
certain officers of the company and Inter Asset Japan Co Ltd relating to the
Agreement and Assignment. Mr. Badner alleges (i) unrestricted shares of the
company's stock to which he was entitled under the agreement were not delivered
as per the terms of the agreement, (ii) unspecified commitments to engage in
future business ventures with Mr. Badner were not made, and (iii) damages
resulting from intentional misrepresentation. Mr. Badner is seeking damages of
$6 million plus interest and costs and punitive and exemplary damages in an
amount to be determined.

         On January 7, 2005, we received notice from the American Arbitration
Association in New York City that Mr. Badner had amended his arbitration claim
against us and our major shareholder, Inter Asset Japan Co Ltd. Mr. Badner
alleges (i) unrestricted shares of the company's stock to which he was entitled
under the Agreement and Assignment dated September 25, 2002 were not delivered
as per the terms of the Agreement and Assignment, (ii) unspecified commitments
to engage in future business ventures with Mr. Badner were not made, and (iii)
damages resulting from fraud and misrepresentation. Mr. Badner is seeking
damages of $2,500,000 million plus interest related to the breach of the
Agreement, $100,000 for damages suffered related to fraud and misrepresentations
and costs and punitive and exemplary damages in an amount to be determined.

         On February 4, 2005, we filed an answer and counterclaim against Mr.
Badner in response to Mr. Badner's amended arbitration claim filed on January 7,
2005. We are seeking an award of actual damages in the sum according to proof,
plus interest, costs and attorneys' fees, on our counterclaims against David
Badner.

         We have appropriately responded to Mr. Badner's allegations by way of
our answer and counterclaims and we intend to vigorously defend against his
claims. There is no guarantee that we have insurance to cover these claims or
that we will be successful in defending these claims.

         On November 10, 2004, we filed a lawsuit with the Superior Court of the
State of California in the County of San Mateo against several unidentified
defendants. The complaint alleges that such defendants have posted a variety of
false, misleading, and defamatory messages against us on an Internet message
board and seeks a preliminary and permanent injunction enjoining such defendants
from continuing to engage in such acts, as well as, compensatory and punitive
monetary damages. There is no guarantee that we will be successful in this legal
action.

         We believe there are no other pending legal proceedings that if
adversely determined would have a material adverse effect on our business or
financial condition.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         Not Applicable

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not Applicable

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

         There were no matters during the first quarter of the 2005 covered by
this report that were submitted to a vote of our stockholders through
solicitation of proxies or otherwise.

ITEM 5.  OTHER INFORMATION

         There were no disclosures of any information required to be filed on
Form 8-K during the first quarter of 2005 that were not filed.

                                       45
<PAGE>

ITEM 6.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) EXHIBITS

         10.1     Subscription Agreement and Annex A dated December 31, 2004
                  between IA Global, Inc. and Rex Tokyo Co Ltd. (1)

         10.2     Financial Loan Document between Rex Tokyo Co Ltd and Mizuho
                  Bank Co Ltd dated January 18, 2005. (2)

         10.3     Asset Purchase Agreement dated February 9, 2005 among IA
                  Global, Inc., IA Global Acquisition Co and Nanocat
                  Technologies Pte Limited. (3)

         10.4     Share Sale Agreement Deed of Variance dated February 9, 2005
                  among IA Global, Inc., IA Global Acquisition Co., QuikCAT
                  Australia Pty Ltd. And Marie-Rose Pontre'. (3)

         10.5     Internet Accelerator Assignment Agreement Deed of Variation
                  dated February 9, 2005 among IA Global, Inc., IA Global
                  Acquisition Co and Nanocat Technologies Pte Limited. (3)

         10.6     Financial Loan Document dated March 25, 2005 between Rex Tokyo
                  Co Ltd and Chiba Bank Ltd. (4)

         10.7     Share Exchange Agreement dated April 20, 2005 amongst IA
                  Global, Inc. Mr. Hideki Anan, Mr. Kyo Nagae and Mr. Hiroki
                  Isobe. (5)

         31.1     Section 302 Certifications

         31.2     Section 302 Certifications

         32.1     Section 906 Certifications

         32.2     Section 906 Certifications
         _________

         (1) Filed as an exhibit to Registrant's Current Report on Form 8-K,
dated December 31, 2004 and filed January 7, 2005 and incorporated herein by
reference.

         (2) Filed as an exhibit to Registrant's Current Report on Form 8-K,
dated January 18, 2005 and filed January 21, 2005 and incorporated herein by
reference.

         (3) Filed as an exhibit to Registrant's Current Report on Form 8-K,
dated February 9, 2005 and filed February 14, 2005 and incorporated herein by
reference.

         (4) Filed as an exhibit to Registrant's Current Report on Form 8-K,
dated March 25, 2005 and filed March 31, 2005 and incorporated herein by
reference.

         (5) Filed as an exhibit to Registrant's Current Report on Form 8-K,
dated April 20, 2005 and filed April 25, 2005 and incorporated herein by
reference.

                                       46
<PAGE>
                                   SIGNATURES

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

                                       IA Global, Inc.
                                       (Registrant)

Date:  May 13, 2005                    By: /s/ Alan Margerison
                                           -------------------
                                           Alan Margerison,
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


Date:  May 13, 2005                    By: /s/ Mark E. Scott
                                           -----------------
                                           Mark E. Scott,
                                           Chief Financial Officer
                                           (Principal Financial Officer and
                                           Principal Accounting Officer)


                                       47