________________________________________________________________________________

                                  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, 2007

                         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)


                          550 N. REO Street, SUITE 300
                                 TAMPA, FL 33609
                    (Address of principal executive offices)


                  REGISTRANT'S TELEPHONE NUMBER: (813) 261-5157

                           ___________________________


         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 a large accelerated
filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2
of the Exchange Act).

[_] Large accelerated file    [_] Accelerated filer    [X] Non-accelerated filer

         Indicated by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

         As of May 14, 2007 there were issued and outstanding 151,048,802 shares
of the Registrant's Common Stock.

________________________________________________________________________________

<PAGE>

                                 IA GLOBAL, INC.

                                    FORM 10-Q

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I.  FINANCIAL INFORMATION

     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 ...........................23

     Item 3.   Quantitative and Qualitative Disclosures About Market Risk ....37

     Item 4.   Controls and Procedures .......................................38


PART II. OTHER INFORMATION

     Item 1.   Legal Proceedings .............................................38

     Item 1A.  Risk Factors...................................................38

     Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds....38

     Item 3.   Defaults Upon Senior Securities ...............................38

     Item 4.   Submission of Matters to a Vote of Security Holders ...........39

     Item 5.   Other Information .............................................39

     Item 6.   Exhibits ......................................................39

Signatures ...................................................................40


                                        2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  Financial Statements
<TABLE>
                                       IA GLOBAL, INC. AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS
<CAPTION>
                                                                                   March 31,     December 31,
                                                                                     2007            2006
                                                                                 ------------    ------------
ASSETS                                                                            (unaudited)      (audited)
<S>                                                                              <C>             <C>
CURRENT ASSETS:
  Cash and cash equivalents ..................................................   $  3,908,186    $  4,172,889
  Marketable Securities ......................................................        253,767         250,638
  Accounts receivable, net of reserves of  $373,889 and $310,741, respectively      5,546,807       5,016,328
  Prepaid expenses ...........................................................        658,315         523,733
  Notes receivable ...........................................................              -         409,565
  Other current assets .......................................................        377,488         202,716
                                                                                 ------------    ------------
    Total current assets .....................................................     10,744,563      10,575,869

EQUIPMENT, NET ...............................................................        392,496         408,544

OTHER ASSETS
  Intangible assets, net .....................................................      1,920,537       2,317,889
  Equity investment in Australia Secured Financial Limited ...................      7,159,975       7,146,386
  Other assets ...............................................................      1,207,292       1,190,820
                                                                                 ------------    ------------

                                                                                 $ 21,424,863    $ 21,639,508
                                                                                 ============    ============

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES:
  Accounts payable - trade ...................................................   $    433,550    $    104,573
  Accrued liabilities ........................................................      3,042,703       2,477,509
  Consumption taxes received .................................................        287,271         264,514
  Income taxes payable- foreign ..............................................        761,984         416,724
  Note payable - current portion of long term debt ...........................      3,005,591       3,058,229
  Deferred revenue ...........................................................        520,036       1,297,046
                                                                                 ------------    ------------
    Total current liabilities ................................................      8,051,135       7,618,595
                                                                                 ------------    ------------

LONG TERM  LIABILITIES:
  Long term debt .............................................................      1,645,225       1,637,076
  Convertible debentures .....................................................      3,229,167       3,125,000
                                                                                 ------------    ------------
                                                                                    4,874,392       4,762,076
                                                                                 ------------    ------------
STOCKHOLDER'S EQUITY:
  Series A-1 Convertible Preferred Stock, $10,000 par value, -0- and 4,375
    authorized, issued and outstanding, (liquidation value $7,000) ...........              -       7,000,000
  Preferred stock, $.01 par value, 5,000 authorized, none outstanding ........              -               -
  Common stock, $.01 par value, 250,000,000 shares authorized,
    152,915,157 and 109,165,157 issued and outstanding, respectively .........      1,529,151       1,091,651
  Additional paid in capital .................................................     39,442,243      32,835,714
  Accumulated deficit ........................................................    (32,276,064)    (31,431,914)
  Treasury stock .............................................................        (50,000)        (50,000)
  Accumulated other comprehensive loss .......................................       (145,994)       (186,614)
                                                                                 ------------    ------------
    Total stockholder's equity ...............................................      8,499,336       9,258,837
                                                                                 ------------    ------------

                                                                                 $ 21,424,863    $ 21,639,508
                                                                                 ============    ============

                                See notes to consolidated financial statements.

                                                       3
</TABLE>
<PAGE>
<TABLE>
                                       IA GLOBAL, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
                                                                                Three Months Ended March 31,
                                                                               ------------------------------
                                                                                    2007             2006
                                                                               -------------    -------------
                                                                                (unaudited)      (unaudited)
<S>                                                                            <C>              <C>
REVENUE ....................................................................   $   6,492,723    $   3,671,305

COST OF SALES ..............................................................         996,120        1,518,937
                                                                               -------------    -------------

GROSS PROFIT ...............................................................       5,496,603        2,152,368

Selling, general and administrative expenses ...............................       5,909,818        3,861,006
                                                                               -------------    -------------

OPERATING (LOSS) PROFIT ....................................................        (413,215)      (1,708,638)
                                                                               -------------    -------------

OTHER INCOME (EXPENSE):
  Interest income ..........................................................          20,583           30,005
  Interest expense and amortization of beneficial conversion feature .......        (195,738)        (194,915)
  Other income .............................................................          (1,326)          53,593
  Gain on equity investment in Australia Secured Financial Limited .........          13,589                -
  Foreign currency transaction adjustment ..................................               -              132
                                                                               -------------    -------------
    Total other income (expense) ...........................................        (162,892)        (111,185)
                                                                               -------------    -------------

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ........................        (576,107)      (1,819,823)

Income taxes - current provision (benefit) .................................         268,043         (356,320)
                                                                               -------------    -------------

NET LOSS FROM CONTINUING OPERATIONS ........................................        (844,150)      (1,463,503)

DISCONTINUED OPERATIONS
  Income from discontinued operations ......................................               -           76,054
                                                                               -------------    -------------

NET LOSS ...................................................................   $    (844,150)   $  (1,387,449)
                                                                               =============    =============

Basic and Diluted Loss Per share of Common-
  Basic and diluted loss per share from continuing operations ..............   $       (0.01)   $       (0.01)
  Basic and diluted loss per share from discontinued operations ............               -                -
                                                                               -------------    -------------
  Total basic and diluted loss per share ...................................   $       (0.01)   $       (0.01)
                                                                               =============    =============

  Weighted average shares of common stock outstanding - Basic and diluted ..     133,470,713      105,077,842
                                                                               =============    =============

                                See notes to consolidated financial statements.

                                                       4
</TABLE>
<PAGE>
<TABLE>
                                       IA GLOBAL, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
                                                                                 Three Months Ended March 31,
                                                                                 ----------------------------
                                                                                     2007             2006
                                                                                 -----------      -----------
                                                                                 (unaudited)      (unaudited)
<S>                                                                              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss .................................................................     $  (844,150)     $(1,387,449)
  Adjustments to reconcile net loss to net cash (used in)
   provided by operating activities:
    Depreciation and amortization ..........................................         450,733          603,412
    Amortization of beneficial conversion feature ..........................         104,167          104,167
    Stock based compensation ...............................................          44,029           26,257
    Gain on equity investment in Australia Secured Financial Limited .......         (13,589)               -
    Unrealized gain on marketable securities ...............................          (3,129)               -
  Changes in operating assets and liabilities:
    Accounts receivable ....................................................        (530,479)        (664,698)
    Notes receivable .......................................................         409,565        1,636,793
    Prepaid expenses .......................................................        (134,582)         (26,346)
    Other current assets ...................................................        (174,772)          17,437
    Other assets ...........................................................         (16,472)        (118,320)
    Accounts payable - trade ...............................................         328,977         (108,510)
    Accrued liabilities ....................................................         690,194        2,930,797
    Net consumption tax payable ............................................          22,757           82,986
    Income taxes payable - foreign .........................................         345,260         (356,320)
    Deferred revenue .......................................................        (777,010)      (3,589,532)
                                                                                 -----------      -----------
Net cash used in continuing operations .....................................         (98,501)        (849,326)
  Cash used in discontinued operations .....................................               -         (157,233)
                                                                                 -----------      -----------
NET CASH USED IN OPERATING ACTIVITIES ......................................         (98,501)      (1,006,559)
                                                                                 -----------      -----------

CASH FLOWS USED IN INVESTING ACTIVITIES:
  Capital expenditures .....................................................         (37,333)         (66,431)
  Acquisition of investment in Australian Secured Financial Limited ........        (125,000)               -
                                                                                 -----------      -----------
NET CASH USED IN INVESTING ACTIVITIES: .....................................        (162,333)         (66,431)
                                                                                 -----------      -----------

CASH USED IN FINANCING ACTIVITIES:
  Repayments of long term debt .............................................         (44,489)               -
                                                                                 -----------      -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS ..................................        (305,323)      (1,072,990)

EFFECT OF EXCHANGE RATE CHANGES ON CASH ....................................          40,620           (5,991)

CASH AND CASH EQUIVALENTS, beginning of period .............................       4,172,889        4,460,986
                                                                                 -----------      -----------

CASH AND CASH EQUIVALENTS, end of period ...................................     $ 3,908,186      $ 3,382,005
                                                                                 ===========      ===========

Supplemental disclosures of cash flow information:
  Interest paid ............................................................     $    18,340      $         -
  Taxes paid ...............................................................     $         -      $         -

Non-cash investing and financing activities:
  Common stock surrendered to company in payment of note receivable ........     $         -      $   241,494
  Conversion of Series A-1 Preferred stock into common stock ...............     $ 7,000,000      $         -


                                See notes to consolidated financial statements.

                                                       5
</TABLE>
<PAGE>

                        IA GLOBAL, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION:

         IA Global, Inc. ("IA Global") operates as a strategic holding company
with a dedicated focus on growth through mergers and acquisitions in the Pacific
Rim region. In Japan, the company is a 100% owner of Global Hotline, Inc.,
("Global Hotline) an operator of major call centers for telemarketing of
telecommunications and insurance products. Since our acquisition of the Global
Hotline in June 2005, its business has expanded rapidly with the agreement of
significant multi-year contracts with major corporations.

         In Australia, the company has a 36% stake in Australian Secured
Financial Limited and its affiliates, Australian Secured Investments Ltd, ADJ
Services Pty Ltd. and Auslink Ltd (collectively, "ASFL",) which raise funds
through the issuance of debentures within Australia and provide short term,
secured, real property loans to businesses and investors in Australia. Through
this group of companies, ASFL has created a strong financial services network
leveraging its knowledge and presence in local communities to cater to a sector
of the market neglected by larger financial institutions.

         The company was incorporated in Delaware on November 12, 1998. The
company's executive offices are located at 550 N. Reo St, Suite 300, Tampa,
Florida, but its operations are located primarily in Japan and Australia. The
company's telephone number is (813) 261-5157 and its primary website is located
at www.iaglobalinc.com. The information on our website is not a part of this
report.

         The accompanying unaudited consolidated financial statements of IA
Global, Inc. and subsidiaries have been prepared in accordance with generally
accepted accounting principles ("GAAP") for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by U.S. GAAP for complete financial statements. The financial statements for the
periods ended March 31, 2007 and 2006 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 for the year ended December 31, 2006
filed with the Securities and Exchange Commission ("SEC") on April 2, 2007.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of the company and its wholly owned and majority-owned subsidiaries. In
accordance with SFAS 144, the company accounted for Rex Tokyo as discontinued
operations in its consolidated statements 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.

The company maintains cash balances at various financial institutions. Balances
at US banks are insured by the Federal Deposit Insurance Corporation up to
$100,000. Balances in Japanese banks are generally insured by the Deposit
Insurance Corporation of Japan up to 10,000,000 Yen per depositor per bank. At
times during the periods ended March 31, 2007 and 2006, the company's cash in
bank deposit accounts exceed federally insured limits with regards to certain
accounts in the United States, and exceeded Japanese statutory limits with
regards to certain accounts in Japan. The company has not experienced any losses
in such accounts and believes it is not exposed to any significant risk for cash
on deposit.

                                        6
<PAGE>

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.

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, generally 2-3 years. Software
developed or obtained for internal use is depreciated using the straight-line
method over the estimated useful life of the software, generally 2-3 years.

INTANGIBLE ASSETS / INTELLECTUAL PROPERTY - The company amortizes the intangible
assets and intellectual property acquired in connection with the acquisition of
Global Hotline, over thirty six months on a straight - line basis, which was the
time frame that the management of the company was able to project forward for
future revenue, either under agreement or through expected continued business
activities with significant telecommunications companies.

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.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts reported in the
balance sheet for cash and cash equivalents, accounts 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.

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 00-27 requires
recognition of the intrinsic value of the conversion option and is recognized as
a reduction to the carrying amount of the convertible debt and as an addition to
paid-in capital. The intrinsic value of the conversion 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. The conversion
price used in calculating the intrinsic value is the most favorable conversion
price up to maturity, assuming there are no changes to the current circumstances
except for the passage of time. Changes to the conversion terms that would be
triggered by future events not controlled by the issuer should be accounted for
as contingent conversion options, and the intrinsic value of such conversion
options would not be recognized until and unless the triggering event occurs.
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.

                                        7
<PAGE>

REVENUE RECOGNITION - Global Hotline revenue was derived from its multiple call
centers undertaking the telemarketing of telecommunications products and
services, and a range of insurance products and services in Japan. Revenue is
considered realized when the services have been provided to the customer, the
work has been accepted by the customer and collectibility is reasonably assured.
Furthermore, if an actual measurement of revenue cannot be determined, we defer
all revenue recognition until such time that an actual measurement can be
determined. If during the course of a contract management determines that losses
are expected to be incurred, such costs are charged to operations in the period
such losses are determined.

Revenues are deferred when cash has been received from the customer but the
revenue has not been earned. The company has recorded $520,036 and $1,297,046 of
deferred revenue as of March 31, 2007 and December 31, 2006, respectively.

ADVERTISING COSTS - Advertising costs are expensed as incurred. There were
minimal advertising costs incurred for the three months ended March 31, 2007 and
2006.

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 - Effective January 1, 2006, the company began
recording compensation expense associated with stock-based awards and other
forms of equity compensation in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 123-R, Share-Based Payment, ("SFAS 123R") as
interpreted by SEC Staff Accounting Bulletin No. 107. The company adopted the
modified prospective transition method provided for under SFAS 123R and
consequently has not retroactively adjusted results from prior periods. Under
this transition method, compensation cost associated with stock-based awards
recognized in 2006 includes 1) quarterly amortization related to the remaining
unvested portion of stock-based awards granted prior to December 15, 2005, based
on the grant date fair value estimated in accordance with the original
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, ("SFAS
123"); and 2) quarterly amortization related to stock-based awards granted
subsequent to January 1, 2006 based on the grant date fair value estimated in
accordance with the provisions of 123-R. In addition, the company records
expense over the vesting period in connection with stock options granted. The
compensation expense for stock-based awards includes an estimate for forfeitures
and is recognized over the expected term of the award on a straight line basis.

         When the stock options are granted, the fair value of each option grant
is estimated on the date of grant using the Black-Scholes valuation model and
the weighted assumptions noted in the following table.

                                             For the Three Months
                                                   March 31,
                                             --------------------
                                              2007          2006
                                              ----          ----
         Risk free interest rate ..........   4.65%           *
         Expected life ....................   8 yrs           *
         Dividend rate ....................   0.00%           *
         Expected volatility ..............    112%           *
         _____________

         * The company did not grant any options during the three months ended
           March 31, 2006.

                                        8
<PAGE>

         The company recorded compensation expense, net of related tax effects,
relative to stock options of $44,029 and $26,257 for the three months ended
March 31, 2007 and 2006, respectively, in accordance with SFAS 123R. Net loss
per share basic and diluted for this expense was approximately ($0.00) and
($0.00) for the three months ended March 31, 2007 and 2006, respectively.

         On February 13, 2007, the compensation committee granted to Mr.
Schneideman, CEO and Chairman of the Board, stock options to purchase 500,000
shares of common stock. The options were granted at the fair market price of
$0.14 per share based on the adjusted closing price on February 13, 2007, his
date of employment. In accordance with the 2000 Stock Option Plan, the stock
options vest quarterly over three years and expire on February 13, 2017.

         On February 22, 2007, the compensation committee granted to Mr. John
Margerison, a Director, stock options to purchase 200,000 shares of common
stock. The options were granted at the fair market price of $0.15 per share
based on the adjusted closing price on February 21, 2007 and 110% of the
intraday price on February 21, 2007, the last trading day before the
compensation committee meeting. In accordance with the 2000 Stock Option Plan,
the stock options vest quarterly over three years and expire on February 21,
2017. On April 17, 2007, Mr. Margerison, a former director, forfeited the stock
options.

         On February 23, 2007, the compensation committee granted to Mr.
Christinson, Mr. Ishii and Mr. La Cara, Directors, stock options to purchase
100,000 shares of common stock. In addition, the compensation committee granted
to Mr. Scott, the company's President and CFO, stock options to purchase 250,000
shares of common stock. These options were granted at the fair market price of
$0.15 per share based on the adjusted closing price on February 22, 2007, the
last trading day before the compensation committee meeting. In accordance with
the 2000 Stock Option Plan, the stock options vest quarterly over three years
and expire on February 22, 2017.

         On February 28, 2007, the compensation committee granted to Mr. Hideki
Anan, CEO of Global Hotline and Mr. Kyo Nagae, CFO of Global Hotline, stock
options to purchase 600,000 and 400,000 shares in total of common stock,
respectively. The options were granted at the fair market price of $0.16 per
share based on the adjusted closing price on February 27, 2007, the last trading
day before the compensation committee meeting. In accordance with the 2000 Stock
Option Plan, the stock options vest quarterly over three years and expire on
February 27, 2017.

         On March 27, 2007, the compensation committee granted to AIM Capital
Corporation stock options to purchase 25,000 shares of common stock for investor
relations services. The options were granted at the fair market price of $0.24
per share based on the adjusted closing price on March 23, 2007, the last
trading day before the compensation committee meeting. In accordance with the
2000 Stock Option Plan, the stock options vest quarterly over three years and
expire on March 22, 2017. These options will be expensed in the June 30, 2007
quarter.

         On March 29, 2007, the compensation committee granted to Mr. Clifford
J. Bernstein, a Director, stock options to purchase 200,000 shares of common
stock. The options were granted at the fair market price of $0.31 per share
based on the adjusted closing price on March 29, 2007, the date of his
appointment. In accordance with the 2000 Stock Option Plan, the stock options
vest quarterly over three years and expire on March 28, 2017.

         On April 27, 2007, Mr. Jun Kumamoto, a former director, exercised
30,000 stock options at $.183 per share and forfeited 530,000 stock options at
$.201 per share.

         The company accounts for non-employee stock transactions in accordance
with SFAS No. 123-R and EITF 96-18. There were 25,000 non-employee stock options
outstanding as of March 31, 2007.

                                        9
<PAGE>

MANAGEMENT SERVICES AGREEMENT - The company and Global Hotline implemented a
Management Services Agreement on June 1, 2005 that will be renewed for
successive one year periods starting on June 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. Global Hotline is
required to pay the company approximately $75,000 on a quarterly basis. On April
1, 2006, the Management Services Agreement was amended to require quarterly
payments of approximately 0.75% of sales, to the extent Global Hotline is
profitable. The March 2006 payment of approximately $25,000 was waived.

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.

LITIGATION COSTS - The company is subject to the possibility of legal actions
arising in the ordinary course of business. The company regularly reviews the
status of pending legal actions to evaluate the amount and likelihood of any
potential loss. The company accrues for these potential losses when it is
probable that a liability has been incurred and the amount of loss, or possible
range of loss, can be reasonably estimated. If actual results differ
significantly from the company's estimates, the company may be required to
adjust its accruals in the future.

EQUITY INVESTMENTS - The company accounts for equity investments using the
equity method unless its value has been determined to be other than temporarily
impaired, in which case we write the investment down to its impaired value. The
company reviews these investments periodically for impairment and make
appropriate reductions in carrying value when an other-than-temporary decline is
evident; however, for non-marketable equity securities, the impairment analysis
requires significant judgment. During its review, the company evaluates the
financial condition of the issuer, market conditions, and other factors
providing an indication of the fair value of the investments. Adverse changes in
market conditions or operating results of the issuer that differ from
expectation, could result in additional other-than- temporary losses in future
periods. The investment in ASFL was not considered impaired as of March 31,
2007.

MARKETABLE SECURITIES - Marketable securities that are bought and held
principally for the purpose of selling them in the near term are classified as
trading securities. Trading securities are recorded at fair value, with the
change in fair value during the period included in earnings. As of March 31,
2007 the total cost of marketable securities of $253,767 approximated their fair
market value.

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. As of March 31, 2007, there were options outstanding for the
purchase of 6,660,000 common shares and convertible debentures convertible into
12,500,018 common shares which could potentially dilute future earnings per
share. As of December 31, 2006, there were options outstanding for the purchase
of 4,200,000 common shares, preferred stock convertible into 43,750,000 common
shares and debentures convertible into 12,500,018 common shares which could
potentially dilute future earnings per share.

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.

                                       10
<PAGE>

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.

RECLASSIFICATIONS - For comparability, certain 2006 amounts have been
reclassified, where appropriate, to conform to the financial statement
presentation used in 2007.

RECENT ACCOUNTING PRONOUNCEMENTS

         In September 2006, the FASB issued SFAS No. 157; "Fair Value
Measurements". This statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. This statement applies under
other accounting pronouncements that require or permit fair value measurements,
the FASB having previously concluded in those accounting pronouncements that
fair value is a relevant measurement attribute. Accordingly, this statement does
not require any new fair value measurements. However, for some entities, the
application of this Statement will change current practices. This Statement is
effective for financial statements for fiscal years beginning after November 15,
2007. Earlier application is permitted provided that the reporting entity has
not yet issued financial statements for that fiscal year. We are currently
evaluating the provisions of FASB 157 to determine the impact on the company's
consolidated financial statements.

         In December 2006, the FASB approved FASB Staff Position (FSP) No. EITF
00-19-2, "Accounting for Registration Payment Arrangements" ("FSP EITF
00-19-2"), which specifies that the contingent obligation to make future
payments or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a provision
of a financial instrument or other agreement, should be separately recognized
and measured in accordance with SFAS No. 5, "Accounting for Contingencies". FSP
EITF 00-19-2 also requires additional disclosure regarding the nature of any
registration payment arrangements, alternative settlement methods, the maximum
potential amount of consideration and the current carrying amount of the
liability, if any. The guidance in FSP EITF 00-19-2 amends FASB Statements No.
133, "Accounting for Derivative Instruments and Hedging Activities", and No.
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity", and FASB Interpretation No. 45, "Guarantor's Accounting
and Disclosure requirement for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", to include scope exceptions for registration payment
arrangements. FSP EITF 00-19-2 is effective immediately for registration payment
arrangements and the financial instruments subject to those arrangements that
are entered into or modified subsequent to the issuance date of this FSP, or for
financial statements issued for fiscal years beginning after December 15, 2006,
and interim periods within those fiscal years, for registration payment
arrangements entered into prior to the issuance date of this FSP. The company is
currently evaluating the potential impact of FSP EITF 00-19-2 on our financial
statements. The company does not expect the impact to be material.

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities-including an amendment of FAS
115" ("SFAS 159"). SFAS 159 allows entities to choose, at specified election
dates, to measure eligible financial assets and liabilities at fair value that
are not otherwise required to be measured at fair value. If a company elects the
fair value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. SFAS 159 is
effective for fiscal years beginning after November 15, 2007. The adoption of
SFAS No 159 is not expected to have a significant impact on the company's
consolidated financial statements.

                                       11
<PAGE>

NOTE 3.  ACQUISITIONS AND DIVESTITURES

GLOBAL HOTLINE, INC.

         The acquisition of Global Hotline, a privately held Japanese company,
closed on June 15, 2005. The transaction was structured as a share exchange in
which the company issued 15,000,000 shares of its common stock in exchange for
100% of Global Hotline's equity. The common stock of the company had a value of
$.207 per share, which was the average close price during the twenty days prior
to the signing of the April 20, 2005 Share Exchange Agreement, or an aggregate
value of $3,097,500.

         Global Hotline was acquired because it held two significant contracts
with a major Japanese telecommunications company in a constantly growing key
industry sector, and the expected continuance of telemarketing services
subsequent to these two contracts. The size of these contracts contributed to a
purchase price which resulted in identifiable intangible assets. Global Hotline
results are included in the financial statements of IA Global for the period
June 15, 2005 to December 31, 2006. There were no contingent payments, options
or commitments in the acquisition agreement. There was no purchased research and
development assets acquired or written off with the acquisition.

         Global Hotline was established on September 7, 2004 as a call center
operator and telemarketer of telecommunications and insurance products and
services in Japan. They have contractual relationships with major vendors in
these industries. The buoyant demand for telecommunications and insurance
products is reflected in Global Hotline's consistently increasing revenue
streams. Global Hotline established several new contracts during 2006 and 2007
that, based on performance and renewal provisions, are expected to be extended
multiple years into the future.

         Global Hotline had a contract with KDDI Network and Solutions ("KDDI")
that initially covered the period March 16, 2005 through March 31, 2006 and
required Global Hotline to sell subscriber lines based on agreed monthly
targets. This contract was governed by the Business Outsourcing Basic Agreement
dated October 6, 2004.

         On December 13, 2005, Global Hotline entered into an amendment to the
contract with KDDI. The amendment, among other things, modified (i) the total
payments under the contract from 2,925,000,000 Yen or approximately $25,400,000
at current exchange rates to 2,331,000,000 Yen or approximately $20,300,000 at
current exchange rates (ii) the targets of subscriber lines for the period
October 1, 2005 to March 31, 2006 and (iii) increased the average compensation
rate for periods through September 30, 2005. As of March 31, 2006, Global
Hotline did not achieve the required target of lines to be sold under this
contract, as modified, and reclassified $3,889,000 from deferred revenue to
accrued liabilities in March 2006. The company believes KDDI implemented certain
contractual changes which reduced sales during the three months ended March 31,
2006. On December 29, 2006, the company finalized negotiations with KDDI and
repaid $1,019,000 and recognized the balance of $2,870,000 as revenue during the
year ended December 31, 2006.

         On April 25, 2006, Global Hotline entered into an additional agreement
with KDDI. Pursuant to this agreement, which is governed by the Business
Outsourcing Basic Agreement entered into on October 6, 2004, Global Hotline has
agreed to sell telephone products on behalf of KDDI, with sales commissions
payable from 30-90 days. In addition, the agreement included a volume incentive
and additional service commission if certain volume targets were achieved during
the six month agreement. The sales volume incentives were not achieved. The
agreement expired on September 30, 2006, but the company continued to sell to
KDDI.

                                       12
<PAGE>

         On January 1, 2007, Global Hotline entered into a new agreement with
KDDI. Pursuant to this agreement, which is governed by the Business Outsourcing
Basic Agreement entered into in September 2004, Global Hotline agreed to sell
telephone products on behalf of KDDI. Global Hotline will be paid an hourly
rate, with payment due in 30 days after the prior month is billed. The agreement
covered the period January 1, 2007 through March 31, 2007, This agreement was
automatically renewed for the period April 1, 2007 through June 30, 2007 and is
renewable for additional 3 month periods. The company expects this agreement to
result in significant revenues. The agreement may be cancelled under certain
conditions.

         On December 22, 2005, a wholly owned subsidiary of Global Hotline, IA
Partners Co Ltd ("IA Partners"), entered into an agreement (the "Partner
Contract") with Internet Service Partners, a Japanese company. Pursuant to this
agreement, IA Partners sells various internet and broadband products on behalf
of Internet Service Partners, with sales commissions payable from 30-120 days
after confirmation by Internet Service Partners. The Partner Contract was
automatically renewed on December 22, 2006, and continues to be automatically
renewable for an additional year unless it is terminated by either party upon
sixty days notice before the expiration date.

         On April 14, 2006, a 100% owned subsidiary of Global Hotline
established on April 4, 2006, SG Telecom Inc. ("SG"), entered into an Agency
Contract ("Agency Contract") with Japan Telecom Invoice Co., Ltd., a Japanese
company ("Japan Telecom"). Pursuant to this agreement, SG sells various internet
and broadband products on behalf of Japan Telecom, with sales commissions
payable within 30-90 days after confirmation by Japan Telecom. The Agency
Contract was automatically renewed on April 14, 2007, and continues to be
automatically renewable for an additional year unless it is terminated by either
party upon thirty days notice before the expiration date.

         On May 10, 2006, IA Partners entered into an Agency Agreement with
AFLAC Co Ltd ("AFLAC"), a Japanese company. Pursuant to this Agency Agreement,
IA Partners agreed to sell insurance products starting on approximately June 1,
2006 on behalf of AFLAC, with sales commissions payable from 30-120 days(1) and
ongoing commissions for up to ten years, to the extent the customer continues to
maintain the insurance. The Agency Agreement was automatically renewed on May 2,
2007 for an additional year unless it is terminated by either party upon thirty
days notice before the expiration date. The Agency Agreement maybe cancelled
under certain conditions.

         On December 29, 2006, IA Partners entered into an Agreement with AFLAC.
Pursuant to this Agreement, Global Hotline recorded $727,524 as revenue and
deferred $727,524 into 2007. During the three months ended March 31, 2007,
$645,940 was recognized as revenue based on achievement of the contract.

         On October 16, 2006, IA Partners announced an Agency Agreement with
American Home Assurance Ltd ("AHA"), a Japanese company and a division of AIG.
Pursuant to this Agency Agreement, IA Partners agreed to sell health and cancer
insurance products on behalf of AHA, with sales commission's payable from 30-120
days and ongoing commissions to the extent the customer continues to maintain
the insurance. The Agency Agreement is ongoing, but may be cancelled under
certain conditions.

         The company acquired its 100% ownership of Global Hotline from Mr.
Hideki Anan (67%), Mr. Kyo Nagae (10%) and Mr. Hiroki Isobe (23%). Mr. Anan is
the Chief Executive Officer of Global Hotline and is an experienced Japanese
telecommunications executive. Mr. Isobe is affiliated with our majority
shareholders.

                                       13
<PAGE>

         The cost to acquire these assets has been allocated to the assets
acquired according to estimated fair values as follows:

Purchase price:
Stock ..............................................................  $3,097,500
                                                                      ----------
Net assets acquired (6/15/05):
Cash ...............................................................   1,240,037
Accounts receivable ................................................   1,782,900
Other assets .......................................................   1,370,153
Recovery of tax benefit of net operating loss acquired with
   acquisition of Global Hotline. This recovery occurred
   during the three months ended September 30, 2006 ................     486,869
                                                                      ----------
                                                                       4,879,959
                                                                      ----------
Net liabilities acquired (6/15/05):
Accrued liabilities ................................................   1,903,246
Deferred revenue ...................................................   4,196,493
Other liabilities ..................................................     628,749
                                                                      ----------
                                                                       6,728,489
                                                                      ----------
Net liabilities acquired (6/15/05) .................................   1,848,530
                                                                      ----------
Identifiable customer contracts and related customer relationships .  $4,946,030
                                                                      ==========

AUSTRALIAN SECURED FINANCIAL LIMITED

         On October 19, 2006, the company closed its 36% equity investment in
ASFL, Australian companies. The transaction was structured as a share exchange
in which the company issued 4,375 of Series A-1 Convertible Preferred Stock
("Series A-1 Preferred Stock") that was exchangeable into 43,750,000 shares of
common stock upon certain conditions discussed below in exchange for 36% of
ASFL's outstanding common shares. The parties agreed to value the company's
common stock at $0.16 per share, which was the closing market price on October
2, 2006 and the day before the signing of the initial term sheet on October 3,
2006. In addition, the company paid $250,000 at closing and $125,000 on January
19, 2007 and $125,000 in April, 2007. The Series A-1 Preferred Stock were
converted into 43,750,000 shares of common stock on February 7, 2007.

         The company owns 36% of ASFL which raises funds through the issuance of
debentures in Australia and provides short term, secured, real property loans to
businesses or investors in Australia. Australian Secured Investments Ltd has an
Australian Financial Services License issued by the Australian Securities &
Investments Commission.

         This transaction expanded the company's Asia Pacific business beyond
Japan and was a new investment approach for the company. This investment allows
us to record 36% of ASFL's net income as other income.

         The company received a $423,154 dividend on December 20, 2006 from ASFL
that reduced our investment in ASFL, and as of December 31, 2006 we recorded a
gain on our investment in ASFL of $69,540 for the period October 19, 2006
through December 31, 2006. For the three months ended March 31, 2007 we recorded
a gain on our investment in ASFL of $13,589, that increased our investment in
ASFL. Our investment in ASFL is $7,159,975 as of March 31, 2007.

                                       14
<PAGE>

PRO-FORMA FINANCIAL DATA

         The pro-forma financial data for the acquisitions for the three months
ended March 31, 2006 were as follows:

3 Months Ended March 31, 2006 (Unaudited)
-----------------------------------------
                                                       Pre-
                                                    Acquisition
                                                    Operations
                                    As Reported       of ASFL       For Forma
                                   3 Months Ended   January 1 -   3 Months Ended
                                      March 31,      March 31,       March 31,
                                        2006           2006 *          2006
                                   --------------   -----------   --------------

Revenues .......................    $ 3,671,305      $      -      $ 3,671,305
Loss before extraordinary items      (1,387,449)       58,528       (1,328,921)
Net loss .......................     (1,387,449)       58,528       (1,328,921)
Loss per common share ..........          (0.01)            -            (0.01)

* - ASFL equity investment closed October 19, 2006.


SUMMARY OF DISCONTINUED OPERATIONS

         On April 4, 2006, the company closed the sale of its 60.5% interest in
Rex Tokyo back to Rex Tokyo. The company received $1,302,159 in payments during
April to June 2006. The company divested Rex Tokyo due to operating losses of
approximately $1,552,000 in 2005 and projected losses in 2006 due to industry
conditions. Sales were $29,335,000 in 2005. The company recorded a gain from
disposal of $463,375 during the year ended December 31, 2006. This gain resulted
from the gross proceeds of $1,302,159 less the net investment in Rex Tokyo after
losses of $838,784. From the operations of Rex Tokyo, the company realized a
gain of $76,054, for the three months ended March 31, 2006.

         The following table sets forth the discontinued operations for the
company:

                                                  Three Months Ended
                                                    March 31, 2006
                                                  ------------------
         Revenue .................................    $7,651,125
         Cost of sales ...........................     6,083,120
                                                      ----------
         Gross profit ............................     1,568,005
         Operating and non-operating expenses ....     1,427,106
         Minority interest .......................        49,655
         Income taxes ............................        15,190
                                                      ----------
         Income from discontinued operations .....    $   76,054
                                                      ==========

                                       15
<PAGE>

NOTE 4.  ACCOUNTS RECEIVABLE/CUSTOMER CONCENTRATION

         Accounts receivable were $5,546,807 and $5,016,328 as of March 31, 2007
and December 31, 2006, respectively. The company had the following customers
with sales in excess of 10%, these are their respective percentages of
consolidated revenue for the periods:

                                        Three Months Ended   Twelve Months Ended
                                             March 31,          December 31,
                                              2007                 2006
                                            --------             --------
         KDDI Network Solutions .........      28%                  29%
         Internet Service Partners ......      34%                  44%
         AFLAC ..........................      22%                  12%

         KDDI is a Global Hotline customer. Internet Service Partners and AFLAC
are IA Partner's customers. There were no other customers, other than the above,
in excess of 10% in the respective periods.

         KDDI accounted for 14% and 0% of accounts receivable as of March 31,
2007 and December 31, 2006, respectively. Internet Service Partners accounted
for 68% and 83% of total accounts receivable as of March 31, 2007 and December
31, 2006, respectively. AFLAC accounted for 5% and 4% of total accounts
receivable as of March 31, 2007 and December 31, 2006, respectively.

         The company anticipates that significant customer concentration will
continue for the foreseeable future.

NOTE 5.  PREPAID COSTS

         Prepaid expenses were $658,315 and $523,733 as of March 31, 2007 and
December 31, 2006, respectively. Such costs as of March 31, 2007 and December
31, 2006 consisted of prepaid insurance, prepaid financing costs and other costs
incurred by the company and prepaid commissions and other expenses incurred by
Global Hotline.

NOTE 6.  EQUIPMENT

         Equipment, net of accumulated depreciation, was $392,496 and $408,544
as of March 31, 2007 and December 31, 2006, respectively. Accumulated
depreciation was $717,594 and $655,024 as of March 31, 2007 and December 31,
2006, respectively. Total depreciation expense was $53,381 and $44,125 for the
three months ended March 31, 2007 and 2006, respectively. All equipment is used
for selling, general and administrative purposes and accordingly all
depreciation is classified in selling, general and administrative expenses,
accordingly.

Property and equipment is comprised of the following:

                                     Estimated         March 31,    December 31,
                                    Useful Lives         2007           2006
                                  ---------------    -----------    -----------
Equipment and vehicles .......    12 - 24 months     $   937,233    $   892,512
Leasehold Improvements .......    27 months              172,857        171,056
                                                     -----------    -----------
                                                       1,110,090      1,063,568
Less: accumulated depreciation                          (717,594)      (655,024)
                                                     -----------    -----------
                                                     $   392,496    $   408,544
                                                     ===========    ===========

                                       16
<PAGE>

NOTE 7.  INTANGIBLE ASSETS

         Intangible assets as of March 31, 2007 and December 31, 2006,
respectively, consisted of the following:

                                    March 31,     December 31,
                                      2007            2006        Estimated Life
                                  -----------     -----------     --------------
Customer contracts ...........    $ 4,946,030     $ 4,946,030         3 years
Less: accumulated amortization     (3,025,493)     (2,628,141)
                                  -----------     -----------
    Intangible assets, net ...    $ 1,920,537     $ 2,317,889
                                  ===========     ===========

         Total amortization expense was $397,352 and $452,742 for the three
months ended March 31, 2007 and 2006, respectively.

         The fair value of the Global Hotline intellectual property acquired was
estimated using a discounted cash flow approach based on future economic
benefits associated with agreements with significant Japanese telecommunications
companies, or through expected continued business activities with significant
telecommunications companies. In summary, the estimate was based on a projected
income approach and related discounted cash flows over three years, with
applicable risk factors assigned to assumptions in the forecasted results.

NOTE 8.  OTHER ASSETS

         Other assets were $1,207,292 and $1,190,820 as of March 31, 2007 and
December 31, 2006, respectively. Such assets as of March 31, 2007 and December
31, 2006 included loans receivable from Tesco Co Ltd, employee loans receivable
and bonds related to Global Hotline's leased facilities.

NOTE 9.  ACCRUED LIABILITIES

         Accrued liabilities were $3,042,703 and $2,477,509 as of March 31, 2007
and December 31, 2006, respectively. Such liabilities included (i) accrued
salaries and payroll taxes, and trade debt not recorded in accounts payable, for
Global Hotline and (ii) accrued interest, payroll, legal and the remaining
$125,000 due to ASFL for the equity investment that closed on October 19, 2006.

NOTE 10. NOTES PAYABLE/ LONG TERM DEBT

         Notes payable and long term debt as of March 31, 2007 and December 31,
2006, were as follows:

         On July 31, 2006, Global Hotline received a 300,000,000 Yen, or
approximately $2,616,000 at current exchange rates, working capital loan from
Mitsui Sumitomo Bank Co. Ltd. On December 29, 2006, the parties entered into an
amendment and the loan amount was reduced to 200,000,000 Yen, or approximately
$1,683,000 at current exchange rates. No other conditions of the loan were
modified. The loan, as amended, requires a one time payment of 200,000,000 Yen
on July 31, 2007, plus 6 monthly interest payments of 2.5% starting on July 31,
2006. The loan is guaranteed by the CEO of Global Hotline. There are no
covenants or security requirements related to the loan.

         On September 29, 2006, Global Hotline received a 30,000,000 Yen, or
approximately $255,000 at current exchange rates, working capital loan from
Mitsui Sumitomo Bank Co. Ltd. The loan requires monthly payments of 357,000 Yen
or approximately $3,000 at current exchange rates starting on October 31, 2006
with a final payment of 369,000 Yen or approximately $3,000 due on August 31,
2013. The loan provides for interest at 2.125% payable monthly starting on
September 30, 2006 and is guaranteed by the CEO of Global Hotline. There are no
covenants or security requirements related to the loan.

                                       17
<PAGE>

         On November 27, 2006, Global Hotline received a 100,000,000 Yen, or
approximately $863,000 at current exchange rates, working capital loan from
Resona Bank Co. Ltd. The loan requires monthly payments of 10,000,000 Yen or
approximately $86,000 starting on February 28, 2007 through the maturity on
November 28, 2007 plus interest payments of 2.0%. The loan is guaranteed by the
CEO of Global Hotline. There are no covenants or security requirements related
to the loan.

         On December 25, 2006, Global Hotline received a 30,000,000 Yen, or
approximately $252,000 at current exchange rates, working capital loan from
Resona Bank Co. Ltd. The loan requires monthly payments of 910,000 Yen or
approximately $8,000 at current exchange rates starting on October 31, 2006 with
a final payment of 880,000 Yen or approximately $7,000 due on December 25, 2009.
The loan provides for interest at 2.175% and is guaranteed by Tokyo Guarantee.
There are no covenants or security requirements related to the loan.

         On December 26, 2006, IA Partners received a 200,000,000 Yen, or
approximately $1,683,000 at current exchange rates, working capital loan from
Mitsui Sumitomo Bank Co. Ltd. The loan requires a quarterly payment of principal
of 12,500,000 Yen, or approximately $105,000 at current exchange rates, starting
on March 20, 2007 with a final payment due on December 20, 2011. Interest of
2.00% plus the 3 month TIBOR is paid quarterly starting on June 20, 2007. The
loan is guaranteed by the CEO of Global Hotline. There are no covenants or
security requirements related to the loan.

NOTE 11. CONVERTIBLE DEBENTURES

         On June 28, 2005, the company announced that it had received
commitments totaling $3,750,000 for convertible debentures. The company used the
proceeds from this financing to continue its merger and acquisition strategy,
and for general corporate purposes. This financing included a beneficial
conversion feature, which increased the stockholders' equity by $1,250,000. The
beneficial conversion will be amortized over the life of the debentures, or
until such time that they are converted. During the three months ended March 31,
2007 and the twelve months ended December 31, 2006 and 2005, the company
expensed $104,000, $417,000 and $208,000, respectively of this beneficial
conversion feature as interest expense. The company closed the sale of
$3,750,000 of convertible debentures on July 29, 2005 and realized net proceeds
of $3,483,000.

         Convertible debentures ......................     $ 3,750,000
         Beneficial conversion .......................      (1,250,000)
                                                           -----------
                                                             2,500,000
         Amortization of beneficial conversion .......         729,167
                                                           -----------
                                                           $ 3,229,167
                                                           ===========

         In June 2005, the company received subscription agreements from
thirty-four private Japanese investors. The terms of the convertible notes
provide for a conversion price of $.30 per share, or 12,500,018 shares, until
June 28, 2008, with an automatic conversion on June 28, 2008 at a 25% discount
based on the trailing five day price prior to June 28, 2008. The coupon rate is
7.5% per annum payable in cash at the earlier of the conversion date or June 28,
2008. The company filed a registration statement, which became effective in
August 2005, covering the shares issuable upon conversion. JPB (Switzerland)
A.G., a party affiliated with our majority shareholder, advised the company on
the transaction and was paid a $267,000 fee upon funding.

                                       18
<PAGE>

NOTE 12. RELATED PARTY RELATIONSHIPS WITH OUR CONROLLING SHAREHOLDER GROUP AND
         CERTAIN RELATIONSHIPS

         As of March 31, 2007, IAJ LBO Fund, PBAA, Terra Firma, IAJ, Hiroki
Isobe, Kyo Nagae and Derek Schneideman collectively hold approximately 53.1% of
our common stock (collectively, the "Controlling Shareholders"). The share
ownership percentages excludes 811,285 shares held by GMB Holdings Ltd, and
other shareholders for which Mr. Isobe has personal signing authority and
12,500,018 shares of our common stock issuable upon conversion of the
convertible debentures. These entities have 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. Hiroki Isobe and Kyo Nagae control each of our Controlling
Shareholders. On March 15, 2007, the company's controlling shareholder group
committed to IA Global and Derek Schneideman, its CEO, the right to vote
79,400,425 shares of our common stock at all 2007 shareholder meetings. Pursuant
to a new proxy granted on April 18, 2007, Mr. Schneideman, in his capacity as
Chairman and CEO of the company, had sole voting power and dispositive power
with respect to 76,864,070 shares of common stock for all the company's 2007
shareholder meetings. These shares of common stock in total represent
approximately 50.3% of the outstanding common stock of the company.

         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, 2007, that are relevant for purposes of understanding
the related party transactions that have taken place:

         Ownership:

IA Global, Inc. owns:
                                 Global Hotline, Inc. ................... 100.0%
                                 Australian Secured Financial Limited. ..  36.0%


Inter Asset Japan LBO No. 1 Fund owns:
                                 IA Global, Inc. ........................  19.4%


PBAA Fund Ltd. owns:
                                 IA Global, Inc. ........................  17.4%


Terra Firma Fund Ltd. owns:
                                 IA Global, Inc. ........................   8.6%


Inter Asset Japan Co., Ltd. owns:
                                 IA Global, Inc. ........................   3.8%


Mr. Hiroki Isobe owns:
                                 IA Global, Inc. ........................   2.9%
                                 Tesco Co Ltd. ..........................  20.0%


Kyo Nagae owns:
                                 IA Global, Inc. ........................   1.0%


Global Hotline, Inc.
                                 Inforidge Co Ltd. ...................... 100.0%
                                 IA Partners Co Ltd. .................... 100.0%
                                 SG Telecom, Inc.  ...................... 100.0%

                                       19
<PAGE>

KYO NAGAE RELATIONSHIP WITH IAJ

         In January 2006 Mr. Kyo Nagae, Chief Financial Officer of Global
Hotline, became President of IAJ and IAJ LBO Fund.

INTER ASSET JAPAN RELATIONSHIP WITH TESCO CO LTD

         IAJ owns a minority ownership percentage of approximately 20% in Tesco
Co Ltd. Global Hotline has an agent agreement with Tesco to sell their lighting
products.

NOTE 13. EQUITY TRANSACTIONS

         During the three months ended March 31, 2007, the following stockholder
equity events occurred:

         On January 3, 2007, the company filed an Information Statement on
Schedule 14C, whereby, the company acted by majority shareholder consent in
approving (1) the issuance of 43,750,000 of the company's common stock in
conjunction with the ASFL equity investment; and (2) the increase in the
company's number of authorized shares of common stock from 200 million to 250
million shares. This Information Statement indicated that these actions shall
not become effective until at least twenty (20) calendar days after this
Information Statement was sent to stockholders. The actions contemplated by this
Information Statement were effected on or about the close of business on January
29, 2007.

         On February 8, 2007, the company filed a registration statement on Form
S-3 covering 43,775,000 shares, including the 4,375 shares of Series A-1
Preferred Stock issued in conjunction with the ASFL equity investment.

         The 4,375 shares of Series A-1 Preferred Stock were converted into
43,750,000 shares of common stock on February 7, 2007.

         On March 22, 2007, the company announced a stock repurchase program.
Starting on April 2, 2007, the company may repurchase up to 4,000,000 at market
prices in open market or private transactions. During April 2007, the company
repurchased 1,856,355 shares in public and private transactions at an average
price of $0.251 per share.

         On March 26, 2007, the company announced an odd lot tender offer.
Starting on April 2, 2007, the company will repurchase odd lots from
stockholders who own under 100 shares. The program is for thirty days and maybe
extended in 30 day increments. On May 2, 2007, the company extended this odd lot
program until June 15, 2007.

         On March 29, 2007, the company filed with the Secretary of State of the
State of Delaware to eliminate the Certificate of Designation, Preferences and
Rights of the Series A-1 Preferred Stock.

NOTE 14. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

Legal Proceedings

         In April 2006, the company received notice of a suit filed against
Inter Asset Japan ("IAJ"), the company and others in the King County Superior
Court of the State of Washington by Flashpoint Ventures, LLC ("Flashpoint")
relating to the acquisition by Activated Matrix Partners, LLC ("AMP") of shares
of Activated Content Corporation ("ACC") stock from IAJ. In September and
October 2006, the company received notice of claims filed in the King County
Superior Court proceeding by AMP, ACC and an officer of these companies, Dorsey
and Whitney, LLP, attorneys for AMP, and Markwood Capital Alliance. In March
2007, the company received notice that Flashpoint had amended its claim to

                                       20
<PAGE>

include an officer of the company. The company filed motions to dismiss the
claims made by Flashpoint and others against us and the officer for lack of
personal jurisdiction over the company and for failure to state a claim. The
officer filed similar motions. A hearing is expected during the second quarter
of 2007. The company believes that it and the officer have been improperly
included in this dispute between AMP, ACC, Flashpoint, Dorsey and Whitney,
Markwood Capital Alliance and IAJ, and that there is no basis for the claims
made by the parties against the company and an officer of the company. The
company will vigorously defend against these claims.

         The company has not provided for a provision in these litigation
matters. There are no other pending legal proceedings that if adversely
determined would have a material adverse effect on the company's business or
financial condition.

Employment Agreements

         On January 12, 2004, the company entered into an Employment Agreement
with Mark Scott to serve as Chief Financial Officer, initially for a term of two
years at an annual salary of $150,000. Mr. Scott and the company have entered
into amendments to this original employment agreement on November 19, 2004, May
16, 2005, August 3, 2005, October 12, 2005, February 14, 2006 and January 24,
2007. Under his employment agreement, as amended to date, Mr. Scott serves as
President and Chief Financial Officer for a three year term commencing October
12, 2005. Mr. Scott receives an annual salary of $200,000, and is eligible to
receive other compensation, including options, bonuses and benefits, at the
discretion of the company's compensation committee. Mr. Scott's 2006 and 2007
bonus program provides for up to $50,000 in bonuses based on the achievement of
certain specified targets. Mr. Scott's employment agreement requires him to
provide nine months notice prior to terminating his employment and provides Mr.
Scott with nine months severance in the event that Mr. Scott is terminated by
the company without cause. Mr. Scott's employment agreement contains provisions
for confidentiality for the term of the agreement and thereafter. Mr. Scott
works full time for the Company.

         On February 8, 2007, the company entered into a one year Employment
Agreement with Derek Schneideman. Mr. Schneideman was appointed as Chief
Executive Officer and Chairman of the Board of Directors of the company
effective as of February 13, 2007. The Employment Agreement provides for the
payment of an annual salary of $250,000, participation in the company's group
insurance arrangements and a sign on bonus of $20,000. Also under the Employment
Agreement, Mr. Schneideman shall be paid a bonus up to $230,000 and up to
500,000 stock options and other compensation, as may be declared by the
company's compensation committee based on Mr. Schneideman raising additional
capital for the company and the company's profitability and share price
improvement. Mr. Schneideman's employment agreement requires him to provide
thirty days notice prior to terminating his employment and provides Mr.
Schneideman with six months severance in the event that Mr. Schneideman is
terminated by the company without cause. Mr. Schneideman's employment agreement
contains provisions for confidentiality for the term of the agreement and
thereafter. Mr. Schneideman works full time for the Company.

NOTE 15. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

         The company operates as a strategic holding company with a dedicated
focus on growth through mergers and acquisitions in the Pacific Rim region. It
is organized by subsidiary or equity investment. Each subsidiary or equity
investment reported to the Chief Executive Officer 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".("SFAS 131") The CODM
allocates resources to each of the companies using information regarding
revenues, operating income (loss) and total assets.

                                       21
<PAGE>

         The following subsidiaries are the only reportable segments under the
criteria of SFAS 131 (i) IA Global, Inc., the parent company, operates as a
strategic holding company with a dedicated focus on growth through mergers and
acquisitions in the Pacific Rim region, (ii) Global Hotline, which operates
exclusively in Japan. Its multiple call centers undertake the telemarketing of
telecommunications products and services, and a range of insurance products and
services, and (iii) ASFL, which raises funds through the issuance of debentures
in Australia and provides short term, secured, real property loans to businesses
or investors in Australia.

         The following table presents revenues, operating income (loss) and
total assets by company for the three months ended March 31, 2007 and 2006:

(dollars in thousands)
<TABLE>
<CAPTION>
                                  IA           Global
                                Global,       Hotline,                                  Discontinued
Company                          Inc.           Inc.           ASFL         Total        Operations      Total
                               --------       --------       --------      --------     ------------    --------
<S>                            <C>            <C>            <C>           <C>            <C>           <C>
Three Months Ended-
  March 31, 2007
  Revenue ...............      $      -       $  6,493       $      -      $  6,493       $      -      $  6,493
  Operating income (loss)          (470)            57              -          (413)             -          (413)
  Total assets ..........           962         12,860          7,603        21,425              -        21,425

  March 31, 2006
  Revenue ...............      $      -       $  3,671       $      -      $  3,671       $      -      $  3,671
  Operating loss ........          (502)        (1,207)             -        (1,709)             -        (1,709)
  Total assets ..........         3,483         10,036              -        13,519         15,446        28,965

<CAPTION>
                                                                                        Discontinued
Geographic Region                U.S.          Japan         Australia      Total        Operations      Total
                               --------       --------       ---------     --------     ------------    --------
<S>                            <C>            <C>            <C>           <C>            <C>           <C>
Three Months Ended-
  March 31, 2007
  Revenue ...............      $      -       $  6,493       $      -      $  6,493       $      -      $  6,493
  Operating income (loss)          (470)            57              -          (413)             -          (413)
  Total assets ..........           962         12,860          7,603        21,425              -        21,425

  March 31, 2006
  Revenue ...............      $      -       $  3,671       $      -      $  3,671       $      -      $  3,671
  Operating loss ........          (502)        (1,207)             -        (1,709)             -        (1,709)
  Total assets ..........         3,483         10,036              -        13,519         15,446        28,965
</TABLE>

The following reconciles operating loss to net loss:

(dollars in thousands)                                       3 Months Ended
                                                                March 31,
                                                          ---------------------
                                                            2007          2006
                                                          -------       -------
Operating loss .....................................      $  (413)      $(1,709)
Other expense ......................................         (163)         (111)
                                                          -------       -------
Loss from continuing operations  before income taxes         (576)       (1,820)
Income taxes- current  provision (benefit) .........          268          (356)
                                                          -------       -------
Net loss from continuing operations ................         (844)       (1,464)
Income from discontinued operations ................            -            77
                                                          -------       -------
Net loss ...........................................      $  (844)      $(1,387)
                                                          =======       =======

                                       22
<PAGE>

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 had revenues of $19.1 million, $15.7 million and $0.0 million for
the years ended December 31, 2006, 2005 and 2004, respectively. We have incurred
net losses from continuing operations of $4.0 million, $0.7 million and $1.1
million for the years ended December 31, 2006, 2005 and 2004, respectively. Our
losses have been financed primarily by the sale of equity in our company, by
loans from related and unrelated parties, by the issuance of convertible
debentures and through the issuance of equity for services.

OUR MISSION

         We are a strategic holding company with a dedicated focus on growth
through mergers and acquisitions in the Pacific Rim region. Our mission is to
identify and invest in business opportunities, apply our skills and resources to
grow and enhance the performance of these businesses across all business
metrics, to deliver accelerating shareholder value.

         We take a long-term "Buy to Hold" approach to our acquisitions and
partnerships. It is built on the belief that our people, combining pragmatic
hands-on management with extensive operations and financial experience, have the
expertise to grow the businesses we invest in, to optimize their potential and
provide increasing returns on investment over the long run.

         This focused, long-term approach also allows us to develop synergies
between our various investments. Being highly selective in our acquisitions
enables us to realize the potential for collaboration among previously
standalone companies, improve returns generated by networking businesses in each
market-and across the region.

OUR STRATEGY

         We have acquired a select portfolio of investments in Japan and
Australia, targeted and developed with a sharp eye for producing outstanding
growth and profitability. This has laid the foundation for an aggressive medium
term plan to establish a broad network of complementary subsidiaries and
majority-owned investments in the greater Pacific Rim region.

         To realize this plan, in fiscal 2007 we are actively expanding
investments in businesses in the consumer, technology, services, and health
sectors-sectors with long-term potential in which we can apply our skills and
resources to add significant value to our investments.

         At the same time, we are expanding our reach to encompass the
Philippines/ Singapore, India, and China, and the notable opportunities and
synergies these markets present.

                                       23
<PAGE>

OUR OPERATIONS

         The key to our operations is the unique skills and expertise of our
people, and how we support them to optimize their ability to carry out their
work. Our long-term "Buy to Hold" approach to our investments gives our
management team time to comprehensively analyze, understand and select the
companies we invest in, their sectors and competition in depth, and to
accurately gauge their potential. Our operations give them the resources they
need to carry their business plans.

         Once we have made an investment, select IA Global management work
in-house at each company to accelerate and carefully optimize all operations.
This enables them to build a rapport with key personnel, creating the speed,
flexibility and hands-on support required to improve a business and generate
rapid growth.

         At the same time we quickly work on strengthening relationships,
sharing knowledge and best practices, and actively pursuing mutual cost savings
between our investments, and tapping the new resources in each company for the
benefit of our network. Each investment depends on the caliber of the management
as well as the potential of the Company. So each investment organically
strengthens our key expertise and resources, and ability to grow further.

OUR COMPANY TODAY

         Our current portfolio of investments in Japan and Australia exemplify
our approach to identifying, analyzing and investing in opportunities, and the
capabilities and resources we subsequently bring to enhancing the business, and
our shareholders' returns.

         In Japan, we own 100% of Global Hotline, an operator of major call
centers for telemarketing of telecommunications and insurance products. Since
our acquisition of Global Hotline in June 2005, its business has expanded
rapidly with the agreement of significant multi-year contracts with major
corporations. With these revenues streams in place, revenues in 2007 are
expected to double year from the prior year.

         In Australia, we have a 36% ownership in Australian Secured Financial
Limited and its affiliates, Australian Secured Investments Ltd, ADJ Services Pty
Ltd. and Auslink Ltd (collectively, "ASFL",) which raise funds through the
issuance of debentures within Australia and provide short term, secured, real
property loans to businesses and investors in Australia. Through this group of
companies, ASFL has created a strong financial services network, leveraging its
knowledge and presence in local communities to cater to a sector of the market
neglected by larger financial institutions.

KEY MARKET OPPORTUNITIES

         Our key market opportunities are as follows:

-  We intend to aggressively grow our existing business entities during fiscal
   2007. Preliminary revenue forecasts indicate an approximate doubling of 2006
   revenues.

-  Establish a broadly based network of complementary subsidiaries and
   majority-owned investments in the Japan, the Philippines/Singapore, India
   Australia and China markets.

                                       24
<PAGE>

-  Actively expand our investments in businesses in the booming consumer,
   technology, services, and health sectors in 2007.

-  Increase investor relation/ road show activities.

-  The Company's headquarter offices are being relocated to San Francisco, CA.

-  Improve profitability by driving greater efficiencies on operating costs at
   Global Hotline.

         We expect to enhance company performance across all business metrics
and to deliver accelerating shareholder value.

PRIMARY RISKS AND UNCERTAINTIES

         We are exposed to various risks related to our controlling shareholder
groups, the sale of significant numbers of our shares, a volatile market price
for our common stock, our Global Hotline business and ASFL investment and
mergers and acquisitions and other matters. These risks and uncertainties are
discussed in Item 1A, "Factors That May Effect Future Results."

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>
                                                                               3 Months Ended March 31,
                                                                     -------------------------------------------
                                                                       2007       2006    $ Variance  % Variance
                                                                     -------    -------   ----------  ----------
<S>                                                                  <C>        <C>       <C>         <C>
Revenue ..........................................................   $ 6,493    $ 3,671    $ 2,822        76.9%
Cost of sales ....................................................       996      1,519       (523)      -34.4%
                                                                     -------    -------    -------      ------
Gross profit .....................................................     5,497      2,152      3,345       155.4%
Selling, general and administrative expenses .....................     5,909      3,861      2,048        53.0%
                                                                     -------    -------    -------      ------
Operating loss ...................................................      (413)    (1,709)     1,283        75.8%
                                                                     -------    -------    -------      ------
Other Income (Expense):
Interest income ..................................................        21         30         (9)      -30.0%
Interest expense and amortization of beneficial conversion feature      (196)      (195)        (1)        0.5%
Other Income .....................................................        (1)        54        (55)     -101.9%
Gain on equity investment in Australia Secured Financial Limited .        13          -         13       100.0%
Foreign currency transaction adjustment ..........................         -          0         (0)      100.0%
                                                                     -------    -------    -------      ------
Total other expense ..............................................      (163)      (111)       (52)       47.0%
                                                                     -------    -------    -------      ------
Loss from continuing operations before income  taxes .............      (576)    (1,820)     1,244        68.3%
Income taxes:
Current provision (benefit) ......................................       268       (356)       624       100.0%
                                                                     -------    -------    -------      ------
Net loss from continuing operations ..............................      (844)    (1,464)       620        42.3%
                                                                     -------    -------    -------      ------
Gain from disposal of discontinued operations:
Income from discontinued operations ..............................         -         77        (77)     -100.0%
                                                                     -------    -------    -------      ------
Net loss .........................................................   $  (844)   $(1,387)   $   543        39.1%
                                                                     =======    =======    =======      ======
</TABLE>

                                       25
<PAGE>

THREE MONTHS ENDED MARCH 31, 2007 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2006

         Net revenue for the three months ended March 31, 2007 increased
$2,822,000 or 76.9% to $6,493,000, as compared to the three months ended March
31, 2006. During 2006 and 2007, Global Hotline executed major contracts or
renewals with three tier 1 telecommunication companies and two major health
insurance companies in Japan.

         On December 29, 2006, IA Partners entered into a Agreement with AFLAC.
Pursuant to this Agreement, Global Hotline recorded $727,524 as revenue and
deferred $727,524 into 2007. During the three months ended March 31, 2007,
$645,940 was recognized as revenue based on achievement of the contract.

COST OF SALES

         Cost of sales for the three months ended March 31, 2007 decreased
$523,000 to $996,000 as compared to the three months ended March 31, 2006. The
decrease resulted from reduced costs for outsourced call center operations,
better management, and more effective utilization of resources by Global Hotline
to support the KDDI contract.

EXPENSES

         Selling, general and administrative expenses for the three months ended
March 31, 2007 increased $2,048,000 to $5,909,000, as compared to the three
months ended March 31, 2006. This was due to increased operating expenses of
$44,000 related to the implementation of SFAS 123 R and $2,079,000, for
additional staff, and building infrastructure, which included items such as PCs,
workstations, and software licenses, as well as significant investment in new
staff training. This expense was necessary to leverage Global Hotline`s growing
revenues. During 2006 and 2007, Global Hotline executed major contracts or
renewals with three tier 1 telecommunication companies and two major health
insurance companies in Japan.

         For 2007 and 2006, the selling, general and administrative expenses
consisted primarily of employee and independent contractor expenses, rent,
overhead, equipment and depreciation, amortization of identifiable intangible
assets and intellectual property, professional and consulting fees, sales and
marketing costs, investor relations, legal, stock option and other general and
administrative costs.

OTHER INCOME/EXPENSE

         Other expense for the three months ended March 31, 2007 was $163,000 as
compared to $111,000 for the three months ended March 31, 2006. The 2007 other
expense was primarily related to interest expense and amortization of beneficial
conversion feature of $196,000, offset by interest income of $21,000 and a gain
on equity investment of $14,000 from ASFL. The ASFL gain was reduced due to the
payoff of certain large loans during the three months ended March 31, 2007.

         The 2006 other expense was primarily related to interest expense and
amortization of beneficial conversion feature of $195,000, offset by other
income of $54,000 and interest income of $30,000.

NET LOSS FROM CONTINUING OPERATIONS

         Net loss from continuing operations was $844,000 for the three months
ended March 31, 2007 as compared to a net loss of $1,464,000 for the three
months ended March 31, 2006. The reasons for the decreased loss were due to the
increased revenues from Global Hotline's new major contracts as more fully
discussed above. The nature of Global Hotline`s business model is such that
revenues lag expenses by approximately 6-8 months.

                                       26
<PAGE>

NET LOSS

         Net loss was $844,000 for the three months ended March 31, 2007 as
compared to a net loss of $1,387,000 for the three months ended March 31, 2006.
The reasons for the decreased loss were more fully discussed above.

         In accordance with SFAS 144, we accounted for the Rex Tokyo income from
discontinued operations of $76,000 as total gain from discontinued operations in
our consolidated statement of operations.

LIQUIDITY AND CAPITAL RESOURCES

         We had cash and marketable securities of approximately $4.2 million and
net working capital of approximately $2.7 million as of March 31, 2007.

         We expect net cash used in continuing operations to improve as the
Global Hotline results from operations improve.

         During 2006, Global Hotline entered into loans of approximately
$9,277,000 and repaid loans of approximately $4,581,000. The net loans were used
to expand the business infrastructure.

         We may need to obtain additional financing in order to continue our
current operations, including the cash flow needs of Global Hotline and its
subsidiaries, to acquire businesses and make equity investments.

         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 $20.2
million as of March 31, 2007, 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, $0.1 million raised from a capital
contribution and $0.1 million raised from the exercise of stock options. In
addition, we have issued equity for non-cash items totaling $20.6 million,
including $7.0 million from the ASFL equity investment, $6.9 million issued for
services, $3.4 million related to a beneficial conversion feature, $0.1 million
related to the Rex Tokyo acquisition, and $3.1 million related to the Global
Hotline acquisition. Additional funding was obtained from notes payable and long
term debt of approximately $4.7 million and convertible debentures with
approximately $3.2 million outstanding as of March 31, 2007.

OPERATING ACTIVITIES

         Net cash used in continuing operations for the three months ended March
31, 2007 was $99,000. This amount was primarily related to a net loss from
continuing operations of $844,000, an increase in accounts receivable of
$530,000 and a decrease in deferred revenue of $777,000. This was offset by
depreciation and amortization of $451,000, a decrease in notes receivable of
$410,000 and an increase in accrued liabilities of $690,000.

         As the results of Global Hotlines operations continue to improve, we
expect better utilization of net cash. Global Hotline has executed or renewed
major contracts with three tier 1 telecommunication companies and two major
health insurance companies in Japan covering the years 2006, 2007 and beyond.
While we expect to approximately double our revenues and be profitable in 2007,
there can be no assurance that we will maintain profitability.

INVESTING ACTIVITIES

         Net cash used in investing activities for the three months ended March
31, 2007 was $162,000. This amount relates to purchase of capital expenditures
of $37,000 and the payment of $125,000 related to our equity investment in ASFL.

                                       27
<PAGE>

FINANCING ACTIVITIES

         Net cash used in financing activities for the three months ended March
31, 2007 was $44,000. This amount relates to the repayment of loans by Global
Hotline.

         Other Material Commitments. The company's contractual cash obligations
as of March 31, 2007 are summarized in the table below (1):
<TABLE>
<CAPTION>
Contractual                               Less Than                                      Greater Than
Cash Obligations            Total           1 Year        1-3 Years        3-5 Years       5 Years
--------------------      ----------      ----------      ----------      ----------     ------------
<S>                       <C>             <C>             <C>             <C>             <C>
Operating leases ...      $  999,570      $  716,788      $  199,599      $   83,184      $        0
Note payable .......      $4,650,817      $3,005,591      $1,090,715      $  554,511      $        0
Capital expenditures      $  100,000      $  100,000      $        0      $        0      $        0
Acquisitions .......      $  125,000      $  125,000      $        0      $        0      $        0
</TABLE>
(1) Based on the end of period exchange rate.


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
the recorded valuation.

STOCK-BASED COMPENSATION

         Effective January 1, 2006, we began recording compensation expense
associated with stock-based awards and other forms of equity compensation in
accordance with SFAS 123R as interpreted by SEC Staff Accounting Bulletin No.
107. We adopted the modified prospective transition method provided for under
SFAS 123R and consequently has not retroactively adjusted results from prior
periods. Under this transition method, compensation cost associated with
stock-based awards recognized in 2006 includes 1) quarterly amortization related
to the remaining unvested portion of stock-based awards granted prior to
December 15, 2005, based on the grant date fair value estimated in accordance
with the original provisions of SFAS 123; and 2) quarterly amortization related
to stock-based awards granted subsequent to January 1, 2006 based on the grant
date fair value estimated in accordance with the provisions of 123-R. In
addition, we record expense over the vesting period in connection with stock
options granted. The compensation expense for stock-based awards includes an
estimate for forfeitures and is recognized over the expected term of the award
on a straight line basis.

                                       28
<PAGE>

INTANGIBLE ASSETS

         Intangible assets primarily relate to the intangible assets and
intellectual property acquired in connection with the acquisition of Global
Hotline over thirty six months on a straight - line basis, which was the time
frame that the management of the company was able to project forward for future
revenue, either under agreement or through expected continued business
activities with significant telecommunications companies.

REVENUE RECOGNITION

         Global Hotline revenue was derived from its multiple call centers
undertaking the telemarketing of telecommunications products and services, and a
range of insurance products and services in Japan. Revenue is considered
realized when the services have been provided to the customer, the work has been
accepted by the customer and collectibility is reasonably assured. Furthermore,
if an actual measurement of revenue cannot be determined, we defer all revenue
recognition until such time that an actual measurement can be determined. If
during the course of a contract management determines that losses are expected
to be incurred, such costs are charged to operations in the period such losses
are determined.

         Revenues are deferred when cash has been received from the customer but
the revenue has not been earned. The company has recorded $520,000 and
$1,297,000 of deferred revenue as of March 31, 2007 and December 31, 2006,
respectively.

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS

         Accounts receivable consists primarily of amounts due us from our
normal business activities. We maintain reserves 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 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 00-27 requires
recognition of the intrinsic value of the conversion option and is recognized as
a reduction to the carrying amount of the convertible debt and as an addition to
paid-in capital. The intrinsic value of the conversion feature is the difference
between the conversion price and the fair value of the stock into which the
security is convertible into, multiplied by the number of shares. The conversion
price used in calculating the intrinsic value is the most favorable conversion
price up to maturity, assuming there are no changes to the current circumstances
except for the passage of time. Changes to the conversion terms that would be
triggered by future events not controlled by the issuer should be accounted for
as contingent conversion options, and the intrinsic value of such conversion
options would not be recognized until and unless the triggering event occurs.
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.

                                       29
<PAGE>

LITIGATION COSTS

         We are subject to the possibility of legal actions arising in the
ordinary course of business. We regularly review the status of pending legal
actions to evaluate the amount and likelihood of any potential loss. We accrue
for these potential losses when it is probable that a liability has been
incurred and the amount of loss, or possible range of loss, can be reasonably
estimated. If actual results differ significantly from our estimates, we may be
required to adjust our accruals in the future. We have not provided provisions
for any litigation matters as of March 31, 2007.

EQUITY INVESTMENT

         October 19, 2006, IA Global closed its 36% equity investment in ASFL.
The company issued 43,750,000 shares of its common stock for 36% of ASFL's
outstanding common shares. The parties agreed to value the company's common
stock at $0.16 per share, which was the closing market price on October 2, 2006
and the day before the signing of the initial term sheet on October 3, 2006. In
addition, the company paid $250,000 at closing and $125,000 on January 19, 2007
and $125,000 in April 2007. The total value of the investment is $7,500,000.

         ASFL raises funds through the issuance of debentures in Australia and
provides short term, secured, real property loans to businesses or investors in
Australia.

         We account for this investment using the equity method unless its value
has been determined to be other than temporarily impaired, in which case we
write the investment down to its impaired value. We review these investments
periodically for impairment and make appropriate reductions in carrying value
when an other-than-temporary decline is evident; however, for non-marketable
equity securities, the impairment analysis requires significant judgment. During
our review, we evaluate the financial condition of the issuer, market
conditions, and other factors providing an indication of the fair value of the
investments. Adverse changes in market conditions or operating results of the
issuer that differ from expectation, could result in additional
other-than-temporary losses in future periods. The investment in ASFL was not
considered impaired as of March 31, 2007.

RECENT ACCOUNTING PRONOUNCEMENTS

         In September 2006, the FASB issued SFAS No. 157; "Fair Value
Measurements". ("SFAS 157") This statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles
(GAAP), and expands disclosures about fair value measurements. This statement
applies under other accounting pronouncements that require or permit fair value
measurements, the FASB having previously concluded in those accounting
pronouncements that fair value is a relevant measurement attribute. Accordingly,
this statement does not require any new fair value measurements. However, for
some entities, the application of this Statement will change current practices.
This Statement is effective for financial statements for fiscal years beginning
after November 15, 2007. Earlier application is permitted provided that the
reporting entity has not yet issued financial statements for that fiscal year.
We are currently evaluating the provisions of SFAS 157 to determine the impact
on our consolidated financial statements.

         In December 2006, the FASB approved FASB Staff Position (FSP) No. EITF
00-19-2, "Accounting for Registration Payment Arrangements" ("FSP EITF
00-19-2"), which specifies that the contingent obligation to make future
payments or otherwise transfer consideration under a registration payment
arrangement, whether issued as a separate agreement or included as a provision
of a financial instrument or other agreement, should be separately recognized
and measured in accordance with SFAS No. 5, "Accounting for Contingencies". FSP

                                       30
<PAGE>

EITF 00-19-2 also requires additional disclosure regarding the nature of any
registration payment arrangements, alternative settlement methods, the maximum
potential amount of consideration and the current carrying amount of the
liability, if any. The guidance in FSP EITF 00-19-2 amends FASB Statements No.
133, "Accounting for Derivative Instruments and Hedging Activities", and No.
150, "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity", and FASB Interpretation No. 45, "Guarantor's Accounting
and Disclosure requirement for Guarantees, Including Indirect Guarantees of
Indebtedness of Others", to include scope exceptions for registration payment
arrangements. FSP EITF 00-19-2 is effective immediately for registration payment
arrangements and the financial instruments subject to those arrangements that
are entered into or modified subsequent to the issuance date of this FSP, or for
financial statements issued for fiscal years beginning after December 15, 2006,
and interim periods within those fiscal years, for registration payment
arrangements entered into prior to the issuance date of this FSP. We are
currently evaluating the potential impact of FSP EITF 00-19-2 on our financial
statements. We do not expect the impact to be material.

         In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities-including an amendment of FAS
115" ("SFAS 159"). SFAS 159 allows entities to choose, at specified election
dates, to measure eligible financial assets and liabilities at fair value that
are not otherwise required to be measured at fair value. If a company elects the
fair value option for an eligible item, changes in that item's fair value in
subsequent reporting periods must be recognized in current earnings. SFAS 159 is
effective for fiscal years beginning after November 15, 2007. The adoption of
SFAS No 159 is not expected to have a significant impact on our consolidated
financial statements.

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.

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<PAGE>

OUR CONTROLLING SHAREHOLDER GROUPS HAVE SUBSTANTIAL INFLUENCE OVER OUR COMPANY

         As of May 15, 2007, IAJ LBO Fund, PBAA, Terra Firma, IAJ, IA Turkey,
Hiroki Isobe, Kyo Nagae and Derek Schneideman collectively hold approximately
51.9% of our common stock (collectively, the "Controlling Shareholders"). The
share ownership percentages excludes 811,285 shares held by GMB Holdings Ltd,
and other shareholders for which Mr. Isobe has personal signing authority,
12,500,018 shares of our common stock issuable upon conversion of the
convertible debentures and 1,866,355 shares held by the company under its stock
repurchase program. These entities have 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. Hiroki Isobe and Kyo Nagae control each of our Controlling
Shareholders. In addition, Mr. Schneideman in his capacity as Chairman and CEO
of the company had sole voting power and dispositive power with respect to
76,864,070 shares of common stock for all the company's 2007 shareholder
meetings pursuant to a new proxy granted on April 18, 2007. These shares of
common stock in total represent approximately 50.3% of the outstanding common
stock of the company.

         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.

         As of May 15, 2007, the selling stockholders of ASFL control
approximately 29.0% of our common stock.

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 15, 2007, 151.0 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.

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 volatile. Our common stock price may fluctuate in response to
factors such as:

o Quarterly variations in our operating results,

o Sale of a significant number of our common stock by shareholders,

o Announcements by us regarding significant acquisitions, equity investments and
divestitures, strategic relationships, addition or loss of significant customers
and contracts, capital expenditure commitments, liquidity, and our AMEX listing,

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

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

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<PAGE>

o Investor relation activities,

o Announcements of technological innovations,

o New product introductions by us or our competitors,

o Competitive activities,

o Additions or departures of key personnel,

o Issuance of loans to customers or related or affiliated parties,

o General market and economic conditions,

o Defending significant litigation, and

o Foreign exchange gains and losses.

         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.

WE ARE EXPOSED TO CHANGES IN THE TELECOMMUNICATION AND INSURANCE INDUSTRIES.

         The Japanese telecommunications market is experiencing significant
growth due to recent regulatory changes that now permit individuals and
companies to choose their preferred telephone service provider. Global Hotline
may be affected by the following factors that would impact its ability to
operate as a telemarketer of telecommunications and insurance products in Japan.

o It's contracts with telecommunication and insurance companies may not be
renewed;

o The cost to hire and train staff to startup new contracts;

o Increased usage of wireless technology for telephone and internet usage;

o Passing of new or changes in existing legislation;

o Impact of privacy laws;

o New competitors;

o Decreased pricing;

o Changes in the availability of employees or wages paid to employees to operate
the call centers; and

o Loss of key personnel.

         In addition, the Global Hotline business has a concentration of
customers with five customers. Our business is dependent upon our ability to
operate efficiently by maintaining tight control on cash flows. Any change in
these factors could adversely affect our ability to achieve the contract rates
and to operate as a telemarketer of telecommunications and insurance products in
Japan. This could result in a repayment of cash paid under the contracts, which
would have a material adverse effect on our business, prospects, financial
condition and results of operations.

                                       33
<PAGE>

WE ARE EXPOSED TO CHANGES IN THE AUSTRALIAN FINANCE INDUSTRY

         The Australian finance industry is experiencing significant change. We
own 36% of ASFL which raises funds through the issuance of debentures in
Australia and provides short term, secured, real property loans to businesses or
investors in Australia. ASFL may be affected by the following factors that would
impact its ability to operate as a short term lender in Australia.

o Risks related to mortgage lending, including customers may not be able to
repay the loans, the value of the underlying security may decline, ASFL is
reliant on property valuations to ensure collectibility of the loans and we are
reliance on customers maintaining adequate insurance on the real property;

o Market perception of ASFL and ASFL's competitors can have a major impact on
the ability to raise funds from debentures. Any negative perception of high
defaults or inability to service debt or potential bankruptcy or liquidation by
other players in the industry can have an impact on ASFL's reputation as well.

o ASFL's license could be terminated;

o General economic conditions and changes in interest rates; o The loan
portfolio is concentrated in a small number of significant loans; o Passing of
new or changes in existing legislation; o New competitors; o Decreased pricing;

o Decreased market demand for high interest loans;

o Litigation risk;

o ASFL could default on its debentures;

o ASFL may not be able to raise sufficient funds from debentures to adequately
fund the business; and

o Loss of key personnel.

         The ASFL business is also dependent upon their ability to operate
efficiently by maintaining tight control on cash flows and raising funds from
debentures. Any change in these factors could adversely affect our ability to
operate as a short term lender in Australia. This could have a material adverse
effect on ASFL's business, prospects, financial condition and results of
operations.

WE WILL NEED ADDITIONAL FINANCING TO SUPPORT OUR OPERATIONS AND ACQUIRE
BUSINESSES.

         We will need to obtain additional financing in order to continue our
current operations, including the cash flow needs of Global Hotline and its
subsidiaries, to acquire businesses and to make equity investments. 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 will 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. When we raise more equity capital in the future, it
is likely that it will result in substantial dilution to our current
stockholders.

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

                                       34
<PAGE>

         In the normal course of business, we engage in discussions relating to
possible acquisitions, equity investments, mergers, strategic alliances, joint
ventures and divestitures. As part of our business strategy, we completed
acquisitions during early 2004, August 2004, March 2004, June 2004 and June
2005; we invested in a joint venture in July 2004; made an equity investment in
October 2006; we sold businesses in December 2004, May 2005, July 2005 and April
2006; and we divested a joint venture interest in October 2004. Such
transactions are accompanied by a number of risks, including:

o Use of significant amounts of cash,

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

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

o 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. The areas where we may face difficulties include:

o Diversion of management time, during the period of negotiation through closing
and after closing, from its focus on operating the businesses to issues of
integration.

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

o 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,

o The need to implement controls, procedures and policies appropriate for a
public company that may not have been in place in private companies, prior to
acquisition.

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

o The need to successfully develop any acquired in-process technology to realize
any value capitalized as intangible assets.

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:

o Effectively transfer liabilities, contracts, facilities and employees to any
purchaser,

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

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

o Collect the proceeds from any divestitures.

                                       35
<PAGE>

         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.

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

OUR STOCKHOLDER'S EQUITY MUST EXCEED $6 MILLION TO MAINTAIN OUR LISTING ON THE
AMERICAN STOCK EXCHANGE

         As of May 15, 2007, we are in compliance with the American Stock
Exchange ("AMEX") continued listing standards with stockholders' equity of
$8,499,336 and our common stock trades on AMEX. To maintain this listing, we
must maintain stockholders' equity of $6 million.

         We expect to maintain our AMEX listing. However, if our common stock
were to be de-listed by AMEX, we expect that our shares would continue to be
traded as a bulletin board stock. If we do not maintain our AMEX listing it
would materially affect the ability of our stockholders to dispose of their
shares, reduce the liquidity of their investment and affect our ability to
obtain financing to support future operations and acquisitions.

WE ARE DEPENDENT ON KEY PERSONNEL.

         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.

THE COMPANY IS EXPOSED TO LEGAL CLAIMS.

         We have been exposed to various legal matters during 2004 to 2007.

         In April 2006, we received notice of a suit filed against Inter Asset
Japan ("IAJ"), the company and others in the King County Superior Court of the
State of Washington by Flashpoint Ventures, LLC ("Flashpoint") relating to the
acquisition by Activated Matrix Partners, LLC ("AMP") of shares of Activated
Content Corporation ("ACC") stock from IAJ. In September and October 2006, we
received notice of claims filed in the King County Superior Court proceeding by
AMP, ACC and an officer of these companies, Dorsey and Whitney, LLP, attorneys
for AMP, and Markwood Capital Alliance. In March 2007, we received notice that
Flashpoint had amended its claim to include an officer of the company. We filed
motions to dismiss the claims made by Flashpoint and others against us and the
officer for lack of personal jurisdiction over the company and for failure to
state a claim. The officer filed similar motions. A hearing is expected during
the second quarter of 2007. We believe that we and the officer have been
improperly included in this dispute between AMP, ACC, Flashpoint, Dorsey and
Whitney, Markwood Capital Alliance and IAJ, and that there is no basis for the
claims made by the parties against us and the officer. We will vigorously defend
against these claims.

         We have not provided for a provision in these litigation matters. Their
are no other pending legal proceedings that if adversely determined would have a
material adverse effect on our business or financial condition.

                                       36
<PAGE>

OUR CUSTOMER BASE IS CONCENTRATED.

         Global Hotline has contracts with three major Japanese
telecommunications companies and two major United States insurance companies.
The loss of these contracts would have a material adverse impact on Global
Hotline's ability to produce revenue.

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 MAY INCUR LOSSES IN THE FUTURE.

         We have experienced net losses since inception. While we expect to be
profitable in 2007, there can be no assurance that we will maintain
profitability.

WE ARE EXPOSED TO FOREIGN CURRENCY GAINS AND LOSES.

         The majority of our operations are located in Japan and we have an
equity investment on Australia. 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, Australian Dollar and US Dollar would
have a material adverse or positive effect on our business, financial condition
and results of operations.

WE ARE SUBJECT TO COMPETITIVE PRESSURES.

         We face competition from entities that provide competing call center
operations, including entities that resell telephone and broadband lines and
insurance products in Japan. 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 or positive effect on our
business, prospects, financial condition and results of operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY

         We were exposed to foreign currency risks due to our ownership of
Global Hotline and our equity investment in ASFL, as these businesses operate in
Japan and Australia, respectively.

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

INTEREST RATE RISK

         We are exposed to interest rate risk at Global Hotline. As of March 31,
2007, total debt was $4,650,816. This debt provides for variable interest rates
with current interest rates of 1.5% to 2.5%.

         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.

                                       37
<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES

         Our principal executive and financial officers 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, 2007. Based on
this evaluation, our principal executive and financial officers concluded that,
as of March 31, 2007, 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

         In April 2006, we received notice of a suit filed against Inter Asset
Japan ("IAJ"), the company and others in the King County Superior Court of the
State of Washington by Flashpoint Ventures, LLC ("Flashpoint") relating to the
acquisition by Activated Matrix Partners, LLC ("AMP") of shares of Activated
Content Corporation ("ACC") stock from IAJ. In September and October 2006, we
received notice of claims filed in the King County Superior Court proceeding by
AMP, ACC and an officer of these companies, Dorsey and Whitney, LLP, attorneys
for AMP, and Markwood Capital Alliance. In March 2007, we received notice that
Flashpoint had amended its claim to include an officer of the company. We filed
motions to dismiss the claims made by Flashpoint and others against us and the
officer for lack of personal jurisdiction over the company and for failure to
state a claim. The officer filed similar motions. A hearing is expected during
the second quarter of 2007. We believe that we and the officer have been
improperly included in this dispute between AMP, ACC, Flashpoint, Dorsey and
Whitney, Markwood Capital Alliance and IAJ, and that there is no basis for the
claims made by the parties against us and the officer. We will vigorously defend
against these claims.

         We have not provided for a provision in these litigation matters. Their
are no other pending legal proceedings that if adversely determined would have a
material adverse effect on our business or financial condition.

ITEM 1A. RISK FACTORS.

         For information regarding factors that could affect the company's
results of operations, financial condition and liquidity, see the risk factors
discussion provided under "Factors that May Affect Future Results" included in
Item 2 of this Quarterly Report on Form 10-Q.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

         Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

                                       38
<PAGE>

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

         On January 3, 2007, the company filed an Information Statement on
Schedule 14C, whereby, the company acted by majority shareholder consent in
approving (1) the issuance of 43,750,000 of the company's common stock in
conjunction with the ASFL equity investment; and (2) the increase in the
company's number of authorized shares of common stock from 200 million to 250
million shares. This Information Statement indicated that these actions shall
not become effective until at least twenty (20) calendar days after this
Information Statement was sent to stockholders. The actions contemplated by this
Information Statement were effected on or about the close of business on January
29, 2007.

ITEM 5.  OTHER INFORMATION

         There were no disclosures of any information required to be filed on
Form 8-K during the three months ended March 31, 2007 that were not filed.

ITEM 6.  EXHIBITS

Exhibit No.                        Description
-----------                        -----------


3.1      Certificate Eliminating References to the Company's Series A-1
         Preferred Stock from the Certificate of Incorporation of IA Global,
         Inc., dated March 29, 2007. (1)

10.1     Amendment to Employment Agreement dated January 24, 2007 between IA
         Global, Inc. and Mark Scott. (2)*

10.2     Employment Agreement dated February 8, 2007 between IA Global, Inc. and
         Mr. Schneideman. (3)*

10.3     Outsource Business Services Agreement dated December 28, 2006 between
         Global Hotline, Inc. and KDDI Network and Solutions, Inc. Appendix to
         Outsource Business Services Agreement dated December 28, 2006 between
         Global Hotline, Inc. and KDDI Network and Solutions, Inc. (English
         translation) (4)

31.1     Section 302 Certifications, filed herewith.

31.2     Section 302 Certifications, filed herewith.

32.1     Section 906 Certifications, filed herewith.

32.2     Section 906 Certifications, filed herewith.
__________________

*   Indicates a management contract or compensatory plan.

(1) Filed as an exhibit to Registrant's Current Report on Form 8-K, dates March
    29, 2007 and filed on March 30, 2007, and incorporated herein by reference.

(2) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
    January 24, 2007 and filed on January 29, 2007, and incorporated herein by
    reference.

(3) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
    February 8, 2007 and filed on February 13, 2007, and incorporated herein by
    reference.

(4) Filed as an exhibit to Registrant's Form 10K dated December 31, 2006 and
    filed April 2, 2007.

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<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 15, 2007              By: /s/ Derek Schneideman
                                    ---------------------
                                    Derek Schneideman,
                                    Chief Executive Officer
                                    (Principal Executive Officer)

                                By: /s/ Mark Scott
                                    --------------
                                    Mark Scott,
                                    Chief Operating and Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       40