SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

              Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

                         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            (I.R.S. Employer
         incorporation or organization)            Identification No.)

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

Registrant's telephone number, including area code: (650) 685-2403

Securities registered pursuant to Section 12(b) of the Act:

                          COMMON STOCK, $.01 PAR VALUE
         COMMON STOCK PURCHASE WARRANTS, EXPIRATION DATE APRIL 12, 2004
         --------------------------------------------------------------
                                (Title of class)

Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

         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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes........ No...X.....

         The aggregate market value of the common equity held by non-affiliates
of the registrant as of March 25, 2004 was approximately $3,885,000.

         The number of shares of the registrant's common stock outstanding as of
March 25, 2004: 71,894,324 shares of Common Stock.
<PAGE>
                                TABLE OF CONTENTS

                                                                            PAGE
                                     PART I

Item 1.  Business ............................................................3

Item 2.  Properties .........................................................10

Item 3.  Legal Proceedings ..................................................10

Item 4.  Submission of Matters to a Vote of Security Holders ................11


                                     PART II

Item 5.  Market for Registrant's Common Stock and
         Related Stockholder Matters ........................................11

Item 6.  Selected Financial Data ............................................14

Item 7.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations ..........................................16

Item 7A. Quantitative and Qualitative Disclosures about Market Risk .........36

Item 8.  Financial Statements and Supplementary Data ........................36

Item 9.  Changes in and Disagreements With Accountants On Accounting
         and Financial Disclosure ...........................................36

Item 9A. Controls and Procedures ............................................37


                                    PART III

Item 10. Directors and Executive Officers of the Registrant .................37

Item 11. Executive Compensation .............................................37

Item 12. Security Ownership of Certain Beneficial Owners
         and Management and Related Stockholder Matters .....................37

Item 13. Certain Relationships and Related Transactions .....................38

Item 14. Controls and Procedures ............................................38


                                     PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K ....38

SIGNATURES

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                                     PART I

The following discussion, 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 of 1933 and Section 21E of the Securities
Exchange Act of 1934) 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.

Item 1.  Business

GENERAL DEVELOPMENT OF BUSINESS AND PRODUCT STATUS

We were incorporated in Delaware on November 12, 1998 under the name
foreignTV.com, Inc. In December 1999, we changed our name to Medium4.com, Inc.
On January 3, 2003, we changed our name to IA Global, Inc. We have also acquired
the domain name iaglobalinc.com for non-product use. Our executive offices are
located at 533 Airport Blvd. Suite 400 Burlingame, CA 94010. Our telephone
number is (650) 685-2403 and our primary website is located at
www.iaglobalinc.com. The information on our website is not a part of this
report.

We have incurred net losses of $2.1 million, $1.5 million and $6.2 million for
the years ended December 31, 2003, 2002 and 2001, respectively. We had revenues
of $1.1 million, $.4 million and $.7 million for the years ended December 31,
2003, 2002 and 2001, respectively. Our losses have been financed primarily by
the sale of equity in our company, by loans from related parties, and through
the issuance of equity for services. We expect our net losses to continue for
the foreseeable future.

Our business model has changed substantially over the last several years. During
2002 and 2003, we shifted our business model from being a provider of broadband
entertainment channels with revenues derived from advertising, to a developer of
media, entertainment and technology products and services. This shift in focus
was implemented primarily through acquisitions, as described below. Through our
merger and acquisition program, we intend to further increase the number of
majority owned companies within IA Global and expect that these will focus on
the media, entertainment and technology areas. We may also expand further our
licensing business. To this end, we may develop such media, entertainment and
technology products and services internally, or acquire them from other parties.

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<PAGE>

Internet Data Acceleration Products

On February 10, 2003, we acquired a 76.9% equity interest in iAccele Co. Ltd.
("iAccele"), a privately held Japanese corporation engaged in the business of
providing an Internet data transmission acceleration product that targets
narrowband users, as well as broadband users, for 100.0 million Japanese Yen, or
approximately $830,000 based on the Japanese Yen/US dollar exchange rate on that
date. On December 29, 2003, we sold this 76.9% ownership interest in iAccele to
GM2 Co. Ltd., a Japanese-based private company, for approximately $280,000 in
cash. As part of the transaction, we forgave approximately $300,000 of
inter-company debt owed to us by iAccele.

We acquired iAccele with the intent to become a wholesale distributor of an
Internet acceleration product. However, we subsequently determined that we would
prefer to be a developer and licensor of the core Internet acceleration
technology, rather than a wholesale distributor of such products. Therefore, we
sold our interest in iAccele, and have instead been developing our own
proprietary Internet accelerator product in conjunction with QuikCAT.com, Inc.
("QuikCAT"), an Ohio based private company, that was the core technology
provider to iAccele. We have licensed the core technology from QuikCAT, as
described below, and have also developed a user interface for this Internet
acceleration product, which we believe will enhance the commercial reception of
the product.

On October 6, 2003, we acquired an exclusive reseller license from QuikCAT for
its Internet acceleration software ("iNet Client") for the territories of
Australia, New Zealand and Japan. This license was approved by the United States
Bankruptcy Court, Northern District of Ohio on December 15, 2003. The cost of
the license was $110,000, of which $10,000 was paid on September 3, 2003, and
$100,000 was paid on January 15, 2004. The license term is for three years, with
one year annual automatic renewals if the product is commercially deployed. The
license requires a 5% royalty on net revenues, which is to be paid monthly. In
addition, QuikCAT is to be granted (at their option) either a 10% net interest
in the profits, which is to be paid every six months, or a 10% equity share of
the entity that markets the iNet Client Software in the local marketplace. The
license can be terminated under certain conditions. Given QuikCAT's financial
position, the license agreement required QuikCAT to place in independent escrow
the source code for the software. This source code may be released to us under
certain conditions.

On October 31, 2003, we completed a joint venture agreement with London Wall
Investments Pty. Ltd., a privately held corporation located in Perth, Australia,
whereby we acquired a 50% equity stake in a newly formed company to be called
QuikCAT Australia Pty Ltd ("QuikCAT Australia") for a nominal value, which was
subsequently reduced to 47.26% following the issuance of shares to consultants.
On March 31, 2004, QuikCAT Australia was recapitalized by a subscription for
common shares totaling $100,000, with our contribution being $50,000. After this
recapitalization, our ownership percentage increased to 47.54%.

We have appointed QuikCAT Australia to market the services, products and
intellectual property under the iNet Client software license from QuikCAT. In
addition, we have advised QuikCAT that QuikCAT Australia will be the entity that
markets the iNet Client software in Australia and New Zealand, and therefore,
that QuikCAT Australia will have the obligation to pay the 5% royalty on net
revenues, which is to be paid monthly, and 10% of its net profits from this
business, which is to be paid every six months.

We own the client interface software that was developed to work with the iNet
Client software, and receive a 5% royalty from QuikCAT Australia on their net
profits from the sales of their services that incorporate the client interface.
We have no other contracts or agreements with other companies at this time for
the client interface software. The Internet acceleration service is software
based and uses a combination of highly advanced and proven compression and

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<PAGE>

caching technologies to increase substantially the speed of delivery of Internet
and email data to the end-user. We believe that our client interface software
substantially enhances the core technology licensed to us by QuikCAT and is
critical to the commercial development and acceptance of the service.

QuikCAT Australia launched the product in Australia and New Zealand in March,
2004. QuikCAT Australia's Internet and email acceleration service accelerates
the delivery of data (I.E., web based content and email) over the Internet, in
particular, over the "last mile" where the transmission of data is typically the
slowest for a dial-up connection to the Internet. QuikCAT Australia's solution
transforms data into a highly compressed, proprietary format that is optimised
for accelerated delivery. The transformed data transverses the Internet faster
and requires fewer network resources than the original message, thereby reducing
the overall load and utilisation of network devices which results in faster
delivery of web content (text and images) and email over the existing network
infrastructure. Their product website is http://www.quikcat.au.com.

In addition to the equity capital described above, we have loaned a total of
$74,060 to QuikCat Australia for business development and working capital
purposes. These loans are unsecured, but are redeemable by QuikCAT Australia at
any time after one year if there are sufficient surplus assets. Interest accrues
at 3.5% after certain profit targets are achieved.

As part of our strategy to develop our Internet data acceleration products, on
February 5, 2004, we entered into an agreement with QuikCAT to acquire
substantially all of its assets of QuikCAT for $700,000, plus the assumption of
certain contracts, agreements and liabilities. QuikCAT has filed for bankruptcy
in the United States Bankruptcy Court, Northern District of Ohio, and therefore,
our acquisition is subject to approval by the Bankruptcy Court. Notwithstanding
our signed purchase agreement, there can be no assurance that the Bankruptcy
Court will approve our bid or that the Bankruptcy Court will not award the
assets to another bidder.

In addition, we are in discussions with the parent company of QuikCAT,
Innovative Computing Group, Inc. ("ICG"), to acquire certain assets of ICG that
are related to the technology that we intend to acquire from QuikCAT. As part of
these discussions, on February 5, 2004, we agreed to loan ICG up to $150,000
secured by source code for the Miliki SuperCompressor, which is a software
product that compresses electronic documents and images and allows a user to
email large files much faster and to save these files using much less storage
space. We have advanced $100,000 to ICG under this loan agreement. The note is
due May 5, 2004 and accrues interest at 4% annually. Completion of the ICG and
QuikCAT asset acquisitions are subject to further approvals, including approval
of the Bankruptcy Court in the case of QuikCAT, and there is no assurance that
these transactions will be closed.

Fan Club Entertainment Co. Ltd.

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

The Share Purchase Agreement provides that we will receive 67% equity interest
or 268,000 shares in Fan Club. Cyber Holdings, which already held 20,000 shares
in Fan Club, following the share purchase would have a 33% equity interest in
Fan Club by paying 56 million Japanese Yen to Fan Club for an additional 112,000

                                       5
<PAGE>

shares. Cyber Holdings' obligation was not paid as of December 31, 2003. A
receivable was not booked due to the lack of certainty over the receipt of the
funds as of December 31, 2003.

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

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

On July 28, 2003, Fan Club signed a subcontract with Cyberbred to exclusively
manage the Marvel Fan Club in Japan in accordance with the agreement between
Cyberbred and Marvel that is discussed above. This subcontract expires May 31,
2008, and is cancelable under certain conditions. The proceeds from our
investment in Fan Club were used to fund a 100,000,000 Yen payment by Cyberbred
to Marvel under their agreement and to provide working capital for Fan Club.

During the quarter ending December 31, 2003, Fan Club's main source of revenue
was derived from the activities associated with Marvel, as received from
Cyberbred and other companies. These activities include the following:

   o  Website development - By utilizing the knowledge of the staff and
      management, websites will be established to increase the number of members
      of the Marvel Fan Club, distribute a mail magazine, and data mine the
      member database.

   o  Marvel Fan Club Magazine - Create and produce a monthly magazine for
      members of the Marvel Fan Club.

   o  Marvel Fan Club Merchandising - Create and sale of Marvel merchandise to
      fan club members.

   o  Event Planning - Assist in the planning and running of an events for
      Marvel Fan Club. For example, an exhibition was held at the end of this
      year in a major Japanese department store, Parco. This was the first
      official event for the Marvel Fan Club in Japan. The event planning work
      included ticket sales and pamphlet production.

In order to strengthen the Fan Club management team, three personnel were hired
in November 2003. Fan Club's objective is to increase sales orders and to
continue outsourcing most of the work received. As sales increase, management
will look to further increase Fan Club's staff.

Rex Tokyo Co. Ltd.

On March 18, 2004, we executed separate share purchase agreements with Rex Tokyo
Co. Ltd. ("Rex Tokyo") and its management, pursuant to which we acquired, in
aggregate, a 60.5% ownership interest in Rex Tokyo. We purchased 1,000 shares of
Rex Tokyo stock from the company for 100 million Yen, or approximately $942,000
based on the Japanese Yen/US dollar exchange rate on March 25 2004, the date we
funded the payment. In addition, we purchased 150 Rex Tokyo shares from Mr.
Ejima, the CEO of Rex Tokyo, for 462,000 shares of our common stock, issued at
$.30 per share, which is the average closing price for the five days prior to
closing.

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<PAGE>

Rex Tokyo is a supplier and re-fitter of equipment for the Pachinko industry in
Japan. Pachinko is a gambling game that is similar to pinball and is very
popular in Japan. Rex Tokyo supplies items such as automatic medal dispensing
machines, automatic cigarette butt disposal systems, as well as new Pachinko
gaming machines. In addition, Rex Tokyo also contracts to carry out the
maintenance of the machinery within the Pachinko gaming parlors.

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

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

The acquisition of Fan Club and Rex Tokyo and the development of the Internet
acceleration technology business with QuikCAT and QuikCAT Australia are key
components of our strategy to shift our business model to the development of
media, entertainment and technology products and services.

STRATEGY

Our strategy and business model have changed substantially over the last several
years. During 2002 and 2003, we shifted our business model from being a provider
of broadband entertainment channels with revenues derived from advertising, to a
developer of media, entertainment and technology products and services. We
intend to operate primarily as a holding company with a concentrated focus on
acquiring companies that operate in the three primary areas of media,
entertainment, and technology. The cross-over synergies between these areas are
of great interest to us, particularly with respect to the connection between the
Japanese and US markets. We have an active merger and acquisition program and
intend to further leverage our asset base to grow the company through
acquisition. We may also develop such media, entertainment and technology
products and services internally. Our acquisitions of Fan Club and Rex Tokyo and
our joint venture company, QuikCAT Australia reflect our new business strategy.

DISTRIBUTION METHODS

Internet Acceleration Client Software

In November 2003, we appointed QuikCAT Australia to market the services,
products and intellectual property that we licensed from QuikCAT, in the
territories of Australia and New Zealand. We have not contracted with any other
parties as yet for other territories.

QuikCAT Australia operates as a wholesaler of the data acceleration service
offering. It will license its software to ISPs, resellers and joint venture
partners, who in turn will be responsible for marketing and support to end
customers. Its main distribution channels are made up of the following:

   o  Interet Service Providers (ISP) - Australia and New Zealand have a number
      of major ISP's. QuikCAT Australia plans to distribute the acceleration
      service through these ISP's.

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<PAGE>

   o  Governmental Departments - QuikCAT Australia is planning to introduce the
      data acceleration service to state and local government departments.
      Trials are expected to precede sales in these channels.

   o  Joint Venture Entities - QuikCAT Australia expects that a customized
      version of the data acceleration service can be produced where a business
      model presents itself in a market outside of the typical ISP model. To
      this end, they may enter into a joint venture arrangement with other
      companies to distribute such a service.

   o  Agents - An agent network may be established by QuikCAT Australia to
      further expand its ability to reach a wide customer base. Agents may
      further distribute the service offering by any of the above described
      channels.

COMPETITION

Internet Acceleration Client Software

The market for our Internet acceleration products is competitive and is subject
to rapid technological change, frequent product introductions with improved
performance, competitive pricing and changing industry standards.


We believe that the principal factors on which QuikCAT Australia will compete
include:

    -   Product performance,
    -   Product quality,
    -   Product reliability,
    -   Value,
    -   Customer service and support and
    -   Length of operating history, industry experience and name recognition.

Our direct competitors in the data acceleration market for the Internet include
Propel, Artera and Slipstream. We are aware that other companies are currently
providing an Internet data transmission acceleration service that targets
Internet users. We can give no assurance that those companies will accept the
software created by us over the acceleration services provided by other
companies or created by themselves, or that these or other companies will not
develop technology that surpasses the technology of ours.

Due to our lack of operating history and limited experience in the data
acceleration business, it may be possible for a competitor to enter the market
and compete directly against us.

We compete not only against companies in the broadband marketplace, but also
against those companies offering various forms of Internet access. This may
include, but is not limited to DSL, ISDN, broadband and dial-up access. It may
also be possible for competitors to package our data acceleration service into
their current Internet access product, and therefore, become resellers for us.
This situation may lead to our competitors becoming allies.

The market for data acceleration products is still at an early stage in
Australia and New Zealand. We anticipate that the consumer will become better
educated as to the merits of data acceleration over time. Currently, many
consumers are unaware as to the differences between the various Internet
connection services provided. It may appear to consumers as if our product is in
competition with other vendors, when in fact the two products may be
complimentary. This perceived competition may limit our ability to make sales.

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Many of our competitors and certain prospective competitors have significantly
longer operating histories, larger installed bases, greater name recognition and
significantly greater technical, financial, manufacturing and marketing
resources. A number of these competitors have long established relationships
with our customers and potential customers.

Fan Club Entertainment

Cyberbred's license in respect of Marvel, and accordingly our subcontract with
Cyberbred, is not exclusive and Marvel can contract with other operators of
Marvel fan clubs in Japan and elsewhere. There can be no assurance that
competitors will not emerge who will be larger and better funded than Fan Club.

GEOGRAPHICAL MARKETS

Internet Acceleration Client Software

On October 6, 2003, we were granted an exclusive reseller license by QuikCAT for
the iNet Client software for the territories of Australia, New Zealand and
Japan. This license was approved by the United States Bankruptcy Court, Northern
District of Ohio on December 15, 2003. In November 2003, we appointed QuikCAT
Australia to market the services, products and intellectual property that we
licensed from QuikCAT, in the territories of Australia and New Zealand. We have
the right within our reseller license to submit a formal business plan to
QuikCAT for territories beyond Australia, New Zealand and Japan.

Fan Club Entertainment

The terms of Cyberbred's contract with Marvel restrict the operation of the
Marvel fan club to the territory of Japan. Given the limited resources of Fan
Club and its current contract obligations with Cyberbred, we anticipate that at
present Fan Club will operate primarily in Japan.

INTELLECTUAL PROPERTY

We regard our copyrights, trademarks, trade secrets, domain name rights and
similar intellectual property as significant to our growth and success. We rely
upon a combination of copyright and trademark laws, trade secret protection,
domain name registration agreements confidentiality and non-disclosure
agreements and contractual provisions with our employees and with third parties
to establish and protect our proprietary rights.

Internet Acceleration Client

We were granted an exclusive license by QuikCAT for the iNet Client software on
October 6, 2003 for the territories of Australia, New Zealand and Japan. This
license was approved by the United States Bankruptcy Court, Northern District of
Ohio on December 15, 2003. In addition, QuikCAT has placed the source code in
escrow to secure their obligations to us under the license.

We have made an offer to purchase substantially all of QuikCAT's assets,
including the iNet Client software and several patents relating to its
intellectual property. We are also in the process of making an offer for
substantially all of ICG's assets. Completion of the ICG and QuikCAT asset
acquisitions are subject to further approvals, including approval of the
Bankruptcy Court in the case of QuikCAT, and there is no assurance that these
transactions will be closed.

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Fan Club Entertainment

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

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

EMPLOYEES

As of March 15, 2004, we had three full-time employees. In addition, two of our
executive officers worked approximately thirty hours per week on our business.
Accordingly, conflicts of interest may arise in the allocation of management
time among their various business activities. Our chief operating officer
resigned effective March 31, 2004.

ITEM 2.  PROPERTIES

Our executive offices are located at 533 Airport Blvd. Suite 400, Burlingame, CA
94010. We pay approximately $1,000 per month in rent for our executive offices.
The lease for our executive offices may be cancelled on thirty days prior
notice. As of October 1, 2003, Fan Club Entertainment Co. Ltd. leased offices
from Cyberbred Co. Ltd, an affiliated company, for approximately $2,000 per
month. The term of the lease began October 1, 2003 and continues through
September 30, 2005, but may be cancelled on six months prior notice.

We believe our offices and operating facilities are adequate for our current
purposes.

ITEM 3.  LEGAL PROCEEDINGS

As previously disclosed, on September 26, 2003, Andzej Krakowski, a former
employee of foreignTV.com, Inc., filed a civil action seeking damages and
injunctive relief for (i) statutory damages, costs and attorney fees resulting
from our alleged willful copyright infringement, (ii) monetary damages in the
amount of $436,477 for alleged breach of an employment agreement with
foreignTV.com, (iii) the issuance of 180,000 shares of common stock in IA
Global, (iv) monetary damages for alleged fraud, (v) monetary damages of at
least $1,200,000, and (vi) punitive damages, costs and attorney fees. On January
10, 2004, the United States District Court for the Southern District of New York
dismissed without prejudice the complaint filed by Andzej Krakowski. In February
9, 2004, Mr. Krakowski filed for arbitration with the American Arbitration
Association in East Providence, Rhode Island.

We are a successor corporation to foreignTV.com, Inc. and Medium4.com, Inc.
("Medium"). As part of the September 25, 2002 Agreement and Assignment between
Medium, IAJ and David Badner, a major stockholder and former consultant to us,
Mr. Badner has agreed to indemnify and hold us harmless against any expenses,
obligations and liabilities related to any breach of the representations and
warranties made to us in those agreements,and any creditor claims arising from
those agreements which facilitated our financial restructuring.

While there can be no guarantee that we will be successful in resolving this
claim with Mr. Krakowski, we doe believe that we are appropriately indemnified
by Mr. Badner for Mr. Krakowski's claims.

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

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<PAGE>

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

During 2003, no matters were submitted to a vote of stockholders through the
solicitation of proxies or otherwise. Our Annual Shareholder Meeting is
currently scheduled for May 14, 2004.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         Our common stock trades on the American Stock Exchange ("Amex") under
the symbol IAO. The following table sets forth the range of the high and low
sales prices of the common stock for the periods indicated:

         QUARTER ENDED                        HIGH            LOW
         -------------                        ----            ---
         March 31, 2002                      $0.500          $0.260
         June 30, 2002                       $0.540          $0.200
         September 30, 2002                  $0.130          $0.060
         December 31, 2002                   $0.140          $0.060

         March 31, 2003                      $0.250          $0.040
         June 30, 2003                       $0.500          $0.100
         September 30, 2003                  $1.250          $0.240
         December 31, 2003                   $0.540          $0.250

As of March 25, 2004, the closing price of the company's common stock was $.35
per share. As of March 25, 2004, there were approximately 188 stockholder's of
record of our common stock. The number of stockholders does not include
beneficial owners holding shares through nominee names.

As of December 31, 2003, we have 1,678,433 common stock purchase warrants
outstanding (the "warrants"), which are listed on Amex under the symbol IAO.WS.
Their has been virtually no trading activity for the warrants during the past
two fiscal years. On March 31, 2003, we announced that the expiration date of
the warrants was extended to April 12, 2004 and the exercise price of the
warrants was reduced to $3.50 per share. On March 26, 2004, we again announced
that the warrants would expire April 12, 2004.

DIVIDEND POLICY

We have never paid any cash dividends and intend, 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.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table provides information as of December 31, 2003 about our
common stock that may be issued upon the exercise of options, warrants and
rights under all of our existing equity compensation plans.

                                       11
<PAGE>

<TABLE>
<CAPTION>
                               NUMBER OF SECURITIES TO BE      WEIGHTED AVERAGE -
                               ISSUED UPON EXERCISE OF         EXERCISE PRICE OF          NUMBER OF SECURITIES
                                 OUTSTANDING OPTIONS,         OUTSTANDING OPTIONS,       REMAINING AVAILABLE FOR
     PLAN CATEGORY               WARRANTS AND RIGHTS          WARRANTS AND RIGHTS            FUTURE ISSUANCE
     -------------             -----------------------        --------------------       -----------------------
<S>                                  <C>                             <C>                          <C>
Equity compensation plans
   approved by security
   holders ....................      2,550,000(1)                    $5.70                        0(2)

Equity compensation plans
   not approved by
   security holders ...........              0                           0                        0
                                     ---------                       -----                        -

TOTAL .........................      2,550,000(1)                    $5.70                        0(2)
</TABLE>
(1)   Does not reflect the grant of options to purchase 7,000,000 shares of
      common stock, at an average exercise price of $.19, which grant is subject
      to stockholder approval of the amendment to the 1999 and 2000 Plans.

(2)   Does not give effect to the amendment of the 1999 and 2000 Plans pursuant
      to which the number of shares authorized will be increased from 1,500,000
      to 12,000,000, subject to stockholder approval of the amendment to the
      1999 and 2000 Plans.

RECENT SALES OF UNREGISTERED SECURITIES

On February 5, 2003, we granted 1,500,000 incentive stock options at $0.08 per
share to two executives of the company, exercisable immediately, and which
expire on February 5, 2013.

In April 2003, the board of directors voted to amend the conversion price for
the 1,678,433 warrants outstanding from our public offering from an exercise
price of $9.00 per share to an exercise price of $3.50 per share. On March 26,
2004, we announced that the warrants would expire April 12, 2004.

On June 15, 2003, the board of directors, subject to shareholder approval at the
forthcoming 2003 annual meeting of shareholders, approved an increase in the
number of shares available for issuance under the 1999 and 2000 stock options
plans from 1,500,000 to 11,500,000 shares.

On June 15, 2003, we granted 4,975,000 stock options, subject to shareholder
approval at the forthcoming 2003 annual meeting of shareholders, with an
exercise price of $.20 per share. Four million five hundred thousand of the
stock options were issued to the directors and officers of the company, and
these options vest over three years. Four hundred and seventy five thousand
options are performance based stock options and none of the performance based
stock options were earned The 4,500,000 stock options issued to the officers and
directors expire on June 15, 2013.

On June 30, 2003, we agreed to sell to PBAA Fund Ltd ("PBAA"),an affiliate of
our major shareholder, 13,333,333 shares of our common stock at an average price
of $0.15 per share, for a total of $2.0 million, representing an approximate 25%
discount to the trailing five-day average closing price of our common stock
ending June 15, 2003, the date PBAA made its investment commitment. As PBAA's
purchase price per share was at a discount to market, our stockholders will be
asked to ratify and approve this transaction at our forthcoming 2003 annual
meeting of stockholders, as required by the applicable rules of the American
Stock Exchange. We recorded a deemed dividend of $693,333 in connection with
this transaction.

                                       12
<PAGE>

On June 30, 2003, Inter Asset Japan LBO Fund, an affiliate of our major
shareholder, converted the principal amount of a convertible promissory note, as
well as approximately $95,000 of accrued interest thereon, into 1,158 shares of
our Series B convertible preferred stock. The 1,158 shares of Series B
Convertible Preferred Stock are convertible into 11,580,000 shares of common
stock, subject to the approval by our shareholders of an amendment to our
Certificate of Incorporation increasing our authorized common stock to at least
100,000,000 shares.

On August 5, 2003, we committed to issue 350,000 shares of our common stock at
$.472 per share in conjunction with the acquisition of Fan Club Entertainment
Co. Ltd. which is the average closing price for the five days prior to closing
of the acquisition of Fan Club.

On November 11, 2003, we agreed to sell to Inter Asset Japan Co Ltd, an
affiliate of our major shareholder, 1,666,666 shares of our common stock at an
average price of $0.30 per share, for a total of $500,000, representing an
approximate 17% discount to the trailing five-day average closing price of our
common stock ending November 6, 2003, the date IAJ made its investment
commitment. We recorded a deemed dividend of $106,667 in connection with this
transaction.

On November 11, 2003, the board of directors, subject to shareholder approval at
the forthcoming 2003 annual meeting of shareholders, approved an increase in the
number of shares available for grant under the 1999 and 2000 stock options plans
from 11,500,000 to 12,000,000 shares.

On December 2, 2003, we reached agreement with PBAA to convert approximately
$834,000 in outstanding convertible debt plus interest of approximately $33,000
into our common stock. PBAA, an affiliate of our majority shareholder, plans to
convert the remainder of its outstanding debt under a revised agreement from its
original contract dated January 31, 2003.

Under the conversion terms, we plan to issue 3,163,436 shares of common stock to
PBAA at a conversion rate of $0.30, representing an approximate 15% discount to
the trailing twenty day average closing price of the our common stock ending
November 21, 2003, the date PBAA made its investment commitment. As the
conversion purchase price per share was at a discount to market, our
shareholders will be asked to ratify and approve this transaction, as required
by the applicable rules of the American Stock Exchange at the company's
forthcoming 2003 annual meeting of shareholders. We recorded a deemed dividend
of $177,152 in connection with this transaction and a foreign exchange
adjustment of approximately $85,000.

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

On December 31, 2003, we issued 250,000 shares of common stock for settlement of
accounts payable at a price of $.32 per share.

On January 12, 2004, we granted 400,000 stock options, subject to shareholder
approval at the forthcoming 2003 annual meeting of shareholders, at an exercise
price of $.30 per share to an executive of the company. These options vest over
three years and expire on January 12, 2014.

On February 25, 2004, we granted 1,000,000 stock options, subject to shareholder
approval at the forthcoming 2003 annual meeting of shareholders, at an exercise
price of $.30 per share to employees of Fan Club. These options vest over three
years and expire on February 25, 2014.

                                       13
<PAGE>

On March 18, 2004, we purchased 150 Rex Tokyo Co Ltd shares from Mr. Ejima, the
CEO of Rex Tokyo, as part of the acquisition of Rex Tokyo, for 462,000 shares of
our common stock issued at $.30 per share, which is the average closing price
for the five days prior to closing.

On March 21, 2004, we announced that PBAA, an affiliate of the company's
majority shareholder, has invested an additional $1.5 million into the company
in a private placement. Under the financing terms, the company has issued a $1.5
million convertible note, convertible into approximately 5 million shares of our
common stock, representing a conversion price per share of $0.30, which was the
fair-market value of the trailing five-day average closing price of our common
stock ending March 5, 2004, the date PBAA committed to make the investment. The
conversion of this note is subject to approval by our shareholders of an
amendment to our Certificate of Incorporation increasing its authorized common
stock to at least 150,000,000 shares.

On March 18, 2004, we granted 1,500,000 stock options, subject to shareholder
approval at the forthcoming 2003 annual meeting of shareholders, at an exercise
price of $.30 per share to employees of Rex Tokyo. These options vest over three
years and expire on March 18, 2014.

The company's stockholders will be requested to approve an amendment to our
certificate of incorporation to increase the number of shares of common stock
which we shall be authorized to issue from 75,000,000 to 150,000,000 at the
company's forthcoming 2003 annual meeting of its stockholders.

ITEM 6.  SELECTED FINANCIAL DATA

In the following table, we provide you with our selected consolidated historical
financial and other data. We have prepared the consolidated selected financial
information using our consolidated financial statements for the five years ended
December 31, 2003. When you read this selected consolidated historical financial
and other data, it is important that you read along with it the historical
financial statements and related notes in our consolidated financial statements
included in this report, as well as Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations.

                                              Years Ended December 31,
                                    -------------------------------------------
                                      2003     2002     2001     2000     1999
                                    -------  -------  -------  -------  -------
                                   (dollars in thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenue ........................... $ 1,145  $   406  $   709  $   390  $    46
Net loss ..........................  (2,148)  (1,493)  (6,239)  (9,531)  (3,760)
Net loss to common shareholders ...  (3,125)  (1,493)  (7,239)  (9,531)  (3,760)
Net loss per share ................   (0.05)   (0.04)   (0.39)   (0.91)   (0.41)

BALANCE SHEET DATA:
Total assets ......................   4,217      451      240    2,132    6,482
Long-term liabilities/deferred
  revenues/minority interests .....      45        -      305      785        -
Stockholder's equity (deficiency) .   2,685     (891)    (864)     429    5,992

                                       14
<PAGE>

                 SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)

                                       Quarter Ended, (in Thousands)
                             ---------------------------------------------------
                             March 31     June 30    September 30    December 31
                             --------     -------    ------------    -----------
Year ended December 31, 2003

Net revenues ............... $     5      $    99      $   127         $   914

Gross profit (loss) ........    (104)         (92)         (26)            239

Net income (loss) ..........    (719)        (807)        (697)             75

Net income (loss) to common
 shareholders ..............    (719)        (804)        (694)           (908)

Net income (loss) per share
 to common shareholders ....   (0.01)       (0.02)       (0.01)          (0.01)

Year ended December 31, 2002

Net revenues ............... $   138      $    88      $   180         $     -

Gross profit (loss) ........     103           64          180             (25)

Net income (loss) ..........    (170)        (260)         258          (1,321)

Net income (loss) to common
 shareholders ..............    (170)        (260)         258          (1,321)

Net income (loss) per share
 to common shareholders ....   (0.01)       (0.01)        0.01           (0.03)

                                       15
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

INTRODUCTION

We have incurred net losses of $2.1 million, $1.5 million and $6.2 million for
the years ended December 31, 2003, 2002 and 2001, respectively. We had revenues
of $1.1 million, $.4 million and $.7 million for the years ended December 31,
2003, 2002 and 2001, respectively. Our losses have been financed primarily by
the issuance of related party loans, the sale of equity in our company and
through the issuance of equity for services. We expect our net losses to
continue for the foreseeable future.

Our business model has changed substantially over the last several years. During
2002 and 2003, we shifted our business model from being a provider of broadband
entertainment channels with revenues derived from advertising, to a developer of
media, entertainment and technology products and services. This shift in focus
was implemented primarily through acquisitions, as described below. We intend to
grow our business by acquiring additional companies, with a focus on media,
entertainment and technology businesses, as well as by developing our own media
and technology products.

The acquisition of Fan Club and Rex Tokyo and the development of the Internet
acceleration technology with QuikCAT and QuikCAT Australia are key components of
our strategy to shift our revenue model from broadband entertainment channels
and revenues derived from advertising to a renewed focus on developing media
technology products and services and on licensing revenues. We may develop such
media technology products and services internally, or acquire them from other
parties.

We received $280,000 from the sale of iAccele on January 16, 2004, $400,000 from
a subscription agreement from an affiliated party on January 12, 2004, $354,000
from the sale of our Fan Club shares on February 10, 2004 and $1,500,000 from a
convertible note from an affiliated party on March 17, 2004. We may need to
obtain additional financing in order to continue our current operations,
including the cash flow needs of Fan Club, Rex Tokyo and QuikCAT Australia and
to acquire businesses. Our major shareholder has indicated a willingness to
support our financing efforts. However, there can be no assurance that the we
will be able to secure additional funding, or that if such funding is available,
whether the terms or conditions would be acceptable to us, from our major
shareholder or otherwise. Moreover, if we raise additional capital through
borrowing or other debt financing, we would incur substantial interest expense.
Sales of additional equity securities will dilute on a pro rata basis the
percentage ownership of all holders of common stock. If we do raise more equity
capital in the future, it is likely that it will result in substantial dilution
to our current stockholders.

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.

                                       16
<PAGE>

(dollars in thousands)
                                             Year Ended December 31,
                                   ---------------------------------------------
                                     2003        2002     $ Variance  % Variance
                                   -------     -------    ----------  ----------

Revenue .........................  $ 1,145     $   406     $   739      182.0%

Cost of sales ...................    1,128          84       1,044     1242.9%
                                   -------     -------     -------     ------

Gross profit ....................       17         322        (305)      94.7%
                                   -------     -------     -------     ------

Expenses:
Selling, general and
  adminstrative expenses ........    2,383         903       1,480      163.9%
Writedown of fixed assets .......        -          38         (38)        *
                                   -------     -------     -------     ------
Total expenses ..................    2,383         941       1,442      153.2%
                                   -------     -------     -------     ------

Operating loss ..................   (2,366)       (619)     (1,747)     282.2%
                                   -------     -------     -------     ------

Other Income (Expense):
Interest income .................       13           -          13         *
Interest expense ................     (374)     (1,085)        711     -65.5%
Other Income ....................       11         211        (200)    -94.8%
Gain on sale of personal
  computer business .............      104           -         104         *
Loss in equity investment in
  iAccele Australia Pty Ltd .....       (1)          -          (1)        *
Gain on sale of iAccele Co. Ltd.       674           -         674         *
Foreign currency translation
  adjustments ...................     (172)          -        (172)        *
                                   -------     -------     -------     ------
Total other income (expense) ....      255        (874)      1,129      129.2%
                                   -------     -------     -------     ------
Loss before minority interests ..   (2,111)     (1,493)       (618)      41.4%
  and income taxes
Minority interests ..............       22           -          22         *
                                   -------     -------     -------     ------
Loss before income taxes
  taxes .........................   (2,133)     (1,493)       (640)      42.9%
Income taxes:
Current .........................       (8)          -          (8)        *
Deferred ........................       23           -          23         *
                                   -------     -------     -------     ------
Net loss ........................  $(2,148)    $(1,493)    $  (655)      43.9%
                                   =======     =======     =======     ======

                                       17
<PAGE>

(dollars in thousands)
                                             Year Ended December 31,
                                   ---------------------------------------------
                                     2002        2001     $ Variance  % Variance
                                   -------     -------    ----------  ----------

Revenue .........................  $   406     $   709        (303)       -42.7%

Cost of sales ...................       84         701        (617)       -88.0%
                                   -------     -------     -------     --------

Gross profit ....................      322           8         314       3925.0%
                                   -------     -------     -------     --------

Expenses:
Selling, general and
  adminstrative expenses ........      903       5,420      (4,517)       -83.3%
Writedown of fixed assets .......       38         250        (212)       -84.8%
Writedown of capitalized
  development costs .............        -         535        (535)          *
                                   -------     -------     -------     --------
Total expenses ..................      941       6,205      (4,729)       -76.2%
                                   -------     -------     -------     --------

Operating loss ..................     (619)     (6,197)      5,043        -81.4%
                                   -------     -------     -------     --------

Other Income (Expense):
Interest income .................        -           1          (1)          *
Interest expense ................   (1,085)          -      (1,085)          *
Other Income ....................      211          16         195       1218.8%
Write down of investments .......        -         (59)         59           *
                                   -------     -------     -------     --------
Total other income (expense) ....     (874)        (42)       (832)     -1981.0%
                                   -------     -------     -------     --------
Loss before minority interests ..   (1,493)     (6,239)      4,211        -67.5%
  and income taxes
Minority interests ..............        -           -           -           *
                                   -------     -------     -------     --------
Loss before income taxes
  taxes .........................   (1,493)     (6,239)      4,211        -67.5%
Income taxes:
Current .........................        -           -           -           *
Deferred ........................        -           -           -           *
                                   -------     -------     -------     --------
Net loss ........................  $(1,493)    $(6,239)    $ 4,211        -67.5%
                                   =======     =======     =======     ========

                                       18
<PAGE>

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

Revenue

Net revenue for the year ended December 31, 2003 increased $739,000 to
$1,145,000, as compared to the year ended December 31, 2002. This increase was
due to revenue from our 2003 acquisitions. Fan Club recorded revenue of $744,000
and iAccele recorded revenue of $401,000. The iAccele revenue primarily related
to the amortization of deferred revenue and the sale of new iAccele software
licenses sold to value added resellers (VARs), internet service providers (ISPs)
or directly to end-users. Revenues for the year ended December 31, 2002 resulted
from earned license fees and these sales were not repeated in 2003.

As of December 31, 2003, we had deferred revenues of $463,000. This is an
increase of $463,000 from December 31, 2002. The increase in deferred revenues
relates to products and service (Fan Club) that were completed as of December
31, 2003 but not accepted by the end-user until after December 31, 2003.

Cost of Sales

Cost of sales for the year ended December 31, 2003 increased $1,044,000 to
$1,128,000, as compared to the year ended December 31, 2002. This increase was
due to Fan Club expenses of $565,000, primarily related to outsourced website
development for customers and outsourced expenses related to a December, 2003
fan club exhibition. In addition, this increase related to iAccele expenses of
$564,000, primarily due to license fees on iAccele software, other iAccele costs
and depreciation on computer leases for which we deferred revenues.

Cost of sales for the year ended December 31, 2002 resulted from depreciation
and amortization of software and equipment used in the production of the website
of $49,000 and production costs for the development of our original content of
$22,000. These costs were not repeated in 2003.

Expenses

Selling, general and administrative expenses for the year ended December 31,
2003 increased $1,442,000 to $2,383,000, as compared to the year ended December
31, 2002. This was due to increased operating expenses of $1,310,000 related to
the iAccele and $115,000 related the Fan Club acquisitions.

For 2003 and 2002, the selling, general and administrative expenses consisted
primarily of employee and independent contractor expense, rent, overhead,
equipment and depreciation, amortization of identifiable intangible assets and
intellectual property, professional and consulting fees, sales and marketing
costs, and other general and administrative costs. The difference in the current
periods compared to the prior periods is primarily due to the acquisition of
iAccele on February 10, 2003, the sales and marketing expenses related to the
sale of iAccele software licenses and the acquisition of Fan Club on August 5,
2003.

Selling general and administrative expenses for the year ending December 31,
2002 included a write down of fixed assets of $38,000. This write down was not
repeated in 2003.

Other Income (Expense)

Other income for the year ended December 31, 2003 was $255,000 as compared to
other expense of $874,000 year ended December 31, 2002. This increase was due a
gain on sale of iAccele of $674,000 and a gain on the sale of the computer
business of $104,000, offset by interest and beneficial conversion rights on
related party loans of $374,000 and a foreign currency translation adjustment
from the sale of iAccele of $172,000.

                                       19
<PAGE>

Other expense for the year ended December 31, 2002 included approximately
$211,000 of other income during the year ended December 31, 2002 relating to the
forgiveness of indebtedness due to negotiated settlements with several
creditors, offset by interest and beneficial conversion rights on related party
loans of $1,085,000.

Net Income (Loss)

Net loss was $2,148,000 for the year ended December 31, 2003 as compared to a
net loss of $1,493,000 for the year ended December 31, 2002. The reasons for the
increased loss were discussed above.

Deemed Dividends

Deemed dividends for the year ended December 31, 2003 were $977,000. This
expense related to common stock issued to related parties at a discount to the
market price. There was no deemed dividend for the year ended December 31, 2002.

Grant of Stock Options

On February 5, 2003, we granted 1,500,000 incentive stock options at $.08 per
Share to two executives of the company, exercisable immediately and which expire
on February 5, 2013.

On June 15, 2003, we granted 4,975,000 stock options, subject to shareholder
approval at the forthcoming 2003 annual meeting of shareholders, with an
exercise price of $.20 per share. Four million five hundred thousand of the
stock options were issued to the directors and officers of the company, and
these options vest over three years. Four hundred and seventy five thousand
options are performance based stock options and none of the performance based
stock options were earned. These 4,500,000 stock options expire on June 15,
2013.

We have not recorded any compensation expense for stock options granted to
employees during the year ended December 31, 2003.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

Revenue

Net revenue for the year ended December 31, 2002 decreased $303,000 to $406,000,
as compared to the year ended December 31, 2001. Revenue for the year ended
December 31, 2002 resulted from earned license fees. Revenue for the year ended
December 31, 2001 resulted from earned license fees of $500,000 and the sale of
encoding mechanisms of approximately $200,000. The sale of the encoding
mechanisms was a one-time sale arrangement with a licensee.

Cost of Sales

Cost of sales for the year ended December 31, 2002 decreased $617,000 to
$84,000, as compared to the year ended December 31, 2001. Cost of sales for the
year ended December 31, 2002 resulted from depreciation and amortization of
software and equipment used in the production of the website of $49,000 and
production costs for the development of our original content of $22,000. Cost of
sales for the year ended December 31, 2001 resulted from depreciation and
amortization of software and equipment used in the production of the website of
$561,000 and production costs for the development of our original content of
$81,000.

                                       20
<PAGE>

The production costs incurred in 2002 were residual costs incurred after the
cessation of our own content production efforts during the year ended December
31, 2001. Depreciation and amortization were reduced significantly for 2002 from
2001 due to the write down of assets used for content production written off
during the year ended December 31, 2001 and the relocation of our executive
offices from Miami, Florida to Burlingame, California, in the amounts of
approximately $38,000 and $250,000 for the years ended December 31, 2002 and
2001, respectively. We wrote down capitalized development expenses in the amount
of approximately $535,000 during the year ending December 31, 2001 as the direct
result of our not producing content.

Expenses

Selling, general and administrative expenses for the year ended December 31,
2002 decreased $4,729,000 to $941,000, as compared to the year ended December
31, 2001. Selling, general and administrative expenses for the year ended
December 31, 2002, consisted primarily of approximately $6,000 of depreciation
and amortization, $526,000 in personnel costs, $90,000 in professional and
consulting fees and $281,000 for rent, travel, and telephone.

Selling, general and administrative expenses for the year ended December 31,
2001 consisted primarily of approximately $4.1 million in personnel costs
(including $2.2 million of equity compensation), $340,000 in professional and
consulting fees, $366,000 of depreciation and amortization and $535,000 of rent,
travel and telephone. The reduction in personnel costs, professional and
consulting fees and other general and administrative costs from the year ended
December 31, 2001 is direct result of our not producing content.

Selling general and administrative expenses for the year ending December 31,
2002 included a write down of fixed assets of $38,000. Selling general and
administrative expenses for the year ending December 31, 2001 included a write
down of fixed assets of $250,000 related to the relocation of our executive
offices from Miami, Florida to Burlingame, California. In addition, selling
general and administrative expenses for the year ending December 31, 2001
included a write down of capitalized development costs of $535,000 is the direct
result of our not producing content.

Other Income (Expense)

Other expense for the year ended December 31, 2002 was $874,000 as compared to
other expense of $42,000 year ended December 31, 2001. Other expense for the
year ended December 31, 2002 included approximately $211,000 of other income
during the year ended December 31, 2002 relating to the forgiveness of
indebtedness due to negotiated settlements with several creditors, offset by
interest and beneficial conversion rights on related party loans of $1,085,000.
Other expense for the year ended December 31, 2001 included approximately
$59,000 related to the write down of investments, offset by other income of
$15,000.

Net Income (Loss)

Net loss was $1,493,000 for the year ended December 31, 2002 as compared to a
net loss of $6,239,000 for the year ended December 31, 2001. The reasons for the
decreased loss were discussed above.

Deemed Dividends

There was no deemed dividend for the year ended December 31, 2002. Deemed
dividends for the year ended December 31, 2001 was $1,000,000. This expense
related to common stock issued to related parties at a discount to the market
price.

                                       21
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

We had cash of approximately $.7 million and net working capital of
approximately $1.6 million as of December 31, 2003. We had a net loss of $2.1
million for the year ended December 31, 2003 and we expect to incur operating
losses through 2004.

We received $280,000 from the sale of iAccele on January 16, 2004, $400,000 from
a subscription agreement from an affiliated party on January 12, 2004, $354,000
from the sale of our Fan Club shares on February 10, 2004 and $1,500,000 from a
convertible note from an affiliated party on March 17, 2004. We may need to
obtain additional financing in order to continue our current operations,
including the cash flow needs of Fan Club, Rex Tokyo and QuikCAT Australia and
to acquire businesses. Our major shareholder has indicated a willingness to
support our financing efforts. However, there can be no assurance that the we
will be able to secure additional funding, or that if such funding is available,
whether the terms or conditions would be acceptable to us, from our major
shareholder or otherwise. Moreover, if we raise additional capital through
borrowing or other debt financing, we would incur substantial interest expense.
Sales of additional equity securities will dilute on a pro rata basis the
percentage ownership of all holders of common stock. If we do raise more equity
capital in the future, it is likely that it will result in substantial dilution
to our current stockholders.

Since inception, we have financed our operations primarily through sales of our
equity securities in our initial public offering and from several private
placements, loans and capital contributions, primarily from related parties. Net
cash proceeds from these items have totaled approximately $17.4 million as of
December 31, 2003, with approximately $8.8 million raised in the initial public
offering, $6.4 million raised in private placements, $2.1 million raised in the
conversion of debt and $.1 million raised from a capital contribution. In
addition, we have issued equity for non-cash items totaling $9.4 million,
including $6.9 million issued for services, $2.3 million related to a beneficial
conversion feature and $.2 million related to the Fan Club acquisition.

Operating Activities

Net cash used in operations for the year ended December 31, 2003 was $499,000.
This amount was primarily related to a net loss of $2,148,000, the gain of sale
of iAccele of $674,000 and increases in accounts receivable of $1,266,000 and
prepaid costs of $438,000. This was offset by depreciation and amortization of
$558,000, amortization of beneficial conversion feature of $277,000 and
increases in accounts payable of $2,612,000 and deferred revenue of $463,000.

Investing Activities

Net cash used in investing activities for the year ended December 31, 2003 was
$1,874,000. This amount related to the acquisitions of $1,938,000 discussed
below, purchase of capital expenditures of $598,000, offset by proceeds from the
sale of equipment of $702,000.

On February 10, 2003, we acquired an approximately 76.9% equity interest in
iAccele, a privately held Japanese corporation engaged in the business of
providing an Internet data transmission acceleration service that targets
narrowband users, as well as broadband users, for 100.0 million Japanese Yen, or
approximately $830,000 based on the Japanese Yen/US dollar exchange rate on that
date. On December 29, 2003, we completed the sale of this 76.9% ownership
interest in iAccele to GM2 Co. Ltd., a Japanese-based private company. Under the
agreement, we received approximately $280,000 in cash on January 16, 2004. As
part of the transaction, we forgave approximately $300,000 of inter-company debt
owed by iAccele to the company.

                                       22
<PAGE>

On August 5, 2003, we executed a Share Purchase Agreement to acquire from Cyber
Holdings a 67% equity interest in Fan Club. Fan Club provides advertising,
merchandising, publishing, website and data management services to Cyberbred Co.
Ltd. ("Cyberbred"). The purchase price for our equity interest in Fan Club was
134,000,000 Japanese Yen, or $1,112,960 (based on the Japanese Yen/US dollar
exchange rate on August 5, 2003), as well as 350,000 shares of our common stock.
In February 2004, we executed a share purchase agreement to sell 75,040 shares
of Fan Club for approximately $354,000 in cash to Cyber Holdings. Upon
completion of this sale, we owned a 67% interest in Fan Club and Cyber Holdings
owned the remaining 33%. The sale of shares on February 5, 2004, was conducted
to maintain the initially agreed balance of share holdings between the two
companies at 67% and 33%, respectively.

We purchased and subsequently leased 600 computers to an investee of the major
shareholder of the company, foreignTV Japan Co Ltd, a Japanese limited liability
company ("foreignTV"). We previously held a minority ownership in foreignTV, but
sold its interest in 2002. IAJ, a principal stockholder of the company,
currently owns approximately 66% of the outstanding shares of foreignTV. These
computers cost approximately $1,000 per machine or approximately $600,000. The
company expects to receive about $1,200,000 over the term of these leases for
the equipment under lease. The terms of the leases are as follows;

   o  Lease 1 dated June 10, 2003 for 100 computers. The monthly rental is
      950,000 Yen or approximately $8,000 per month.

   o  Lease 2 dated June 20, 2003 for 200 computers. The monthly rental is
      1,900,000 Yen or approximately $17,000 per month.

   o  Lease 3 dated August 1, 2003 for 300 computers. The monthly rental is
      2,850,000 Yen or approximately $25,000 per month.

   o  The rental period for each lease is for 2 years.

   o  The lease contract shall be automatically extended for six months if
      foreignTV does not object at least one month prior to the contract's
      termination date.

   o  These computers are to be returned to the company upon termination of the
      leases.

These leases were not recorded as a financing lease, because these leasing
transactions are between related parties under common control. As a result,
revenues are not being recognized on any cash receipts. In addition, since the
lessee of these computers is not sufficiently capitalized, the company's ability
to collect the lease payments is not certain. The company has received 3,429,749
Yen or approximately $31,000 during the quarter ending September 30, 2003 and
this amount has been booked as deferred revenue on the balance sheet.

These computers are being depreciated over three years.

On November 17, 2003, the company assigned to IAJ (a) the lease with foreignTV
Japan for the 600 personal computers, (b) unpaid invoices totaling 18,947,500
Yen, or approximately $166,000, from foreignTV Japan, (c) and rights to cash
received of 3,429,749 Yen, or approximately $31,000, in exchange for (a)
cancellation of a 34,000,000 Yen, or approximately $298,000, loan from IAJ and
related accrued interest, and (b) 34,000,000 Yen, or approximately $298,000 that
was received by the company on December 18, 2003. In connection with the sale of
iAccele, the company sold these computers to the purchaser and recorded an gain
of $103,785.

                                       23
<PAGE>

On March 18, 2004, we executed separate share purchase agreements with Rex Tokyo
Co. Ltd. ("Rex Tokyo") and its management, pursuant to which we acquired, in
aggregate, a 60.5% ownership interest in Rex Tokyo. We purchased 1,000 shares of
Rex Tokyo stock from the company for 100 million Yen, or approximately $942,000
based on the Japanese Yen/US dollar exchange rate on March 17, 2004. In
addition, we purchased 150 Rex Tokyo shares from Mr. Ejima, the CEO of Rex
Tokyo, for 462,000 shares of our common stock.

Financing Activities

Net cash provided by financing activities for the year ended December 31, 2003
was $2,433,000. This amount related to loans from related parties of $1,288,000
and the proceeds from the sale of stock of $2,500,000, offset by a loan to
QuikCAT Pty Ltd. of $75,000 and the repayment of loans payable-related party of
$1,281,000.

In order to finance the purchase of iAccele, we borrowed 100.0 million Japanese
Yen, or approximately $830,000 based on the Japanese Yen/US dollar exchange rate
on that date, from PBAA Fund Ltd., a British Virgin Islands limited liability
company. The principal amount of this loan, together with interest thereon at
4.50% per annum, is due and payable on January 31, 2004. We may defer payment of
the principal amount of this loan, but not accrued interest, for one additional
year with the consent of PBAA. We may prepay all or specified minimum portions
of this loan at any time after March 31, 2003 upon payment of certain prepayment
penalties.

iAccele used 70.0 million of the 100.0 million Japanese Yen that it received
from the company to partially repay a contractual obligation of 150.0 million
Japanese Yen, since reduced by iAccele's payment of 30.0 million Japanese Yen,
that it owes to InfoShowerX, a Japanese public company, which was incurred by
iAccele in connection with a December 2002 reorganization by which iAccele,
previously an unincorporated operating division of InfoShowerX, acquired the
division's assets from InfoShowerX and became a stand-alone corporation. iAccele
was required to repay this contractual obligation to InfoShowerX in its entirety
by the end of April 2003. Further, 42.0 million Japanese Yen was paid by iAccele
between February 10, 2003 and June 30, 2003 and the balance of 8.0 million
Japanese Yen in August 2003.

During the quarter ended June 30, 2003, iAccele borrowed 52,500,000 Yen, or
approximately $454,000, from IAJ. This financing was made in four separate
advances. These advances bear interest at rates ranging from 3.5% to 6.7% per
annum. These advances matured during the following dates: 5,500,000 Yen or
approximately $45,000 on July 25, 2003, 7,000,000 Yen, or approximately $62,000,
on July 27, 2003, 10,000,000 Yen, or approximately $89,000, on August 1, 2003
and 30,000,000 Yen, or approximately $258,000, on December 1, 2003. The company
repaid 18,500,000 Yen, or approximately $160,000, on July 25, 2003. The
remaining 4,000,000 Yen which was due on August 1, 2003 was deferred with a new
note until the end of 2003. Therefore, the total outstanding amount to IAJ due
in December, 2003 and bearing interest at 3.5% per annum is 34,000,000 Yen, or
approximately $ 290,000. As part of the sale of iAccele to GM2 on December 29,
2003, we forgave approximately $300,000 of inter-company debt owed by iAccele to
the company.

On June 30, 2003, we agreed to sell to PBAA Fund Ltd ("PBAA"), an affiliate of
our major shareholder, 13,333,333 shares of its common stock at an average price
of $0.15 per share, for a total of $2.0 million, representing an approximate 25%
discount to the trailing five-day average closing price of our common stock
ending June 15, 2003, the date PBAA made its investment commitment. As PBAA's
purchase price per share was at a discount to market, our stockholders will be
asked to ratify and approve this transaction, as required by the applicable
rules of the American Stock Exchange at the our forthcoming 2003 annual meeting
of its stockholders.

                                       24
<PAGE>

On October 31, 2003, we completed a joint venture agreement with London Wall
Investments Pty. Ltd., a privately held corporation located in Perth, Australia,
whereby we acquired a 50% equity stake in a newly formed company to be called
QuikCAT Australia Pty Ltd ("QuikCAT Australia") for a nominal value, which was
subsequently reduced to 47.25% following the issuance of shares to a consultant.
On March 31, 2004, QuikCAT Australia was recapitalized by a subscription for
common shares totaling $100,000, with our contribution being $50,000. After this
recapitalization, our ownership percentage increased to 47.54%.

In addition to the equity capital described above, we have loaned a total of
$74,060 to QuikCat Australia for business development and working capital
purposes. These loans are unsecured, but are redeemable, by QuikCAT Australia at
any time after one year if there are sufficient surplus assets. Interest accrues
at 3.5% after certain profit targets are achieved.

On November 11, 2003, we agreed to sell to Inter Asset Japan Co Ltd, an
affiliate of our major shareholder, 1,666,666 shares of our common stock at an
average price of $0.30 per share, for a total of $500,000, representing an
approximate 17% discount to the trailing five-day average closing price of our
common stock ending November 6, 2003, the date IAJ made its investment
commitment.

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

On March 21, 2004, we announced that PBAA, an affiliate of the company's
majority shareholder, has invested an additional $1.5 million into the company
in a private placement. Under the financing terms, the company has issued at
$1.5 million convertible note, that is convertible into approximately 5 million
shares of our common stock representing a conversion price per share of $0.30,
which was the fair-market value of the trailing five-day average closing price
of our common stock ending March 5, 2004, the date PBAA committed to make the
investment. This subject to approval by our shareholders of an amendment to our
Certificate of Incorporation increasing its authorized common stock to at least
150,000,000 shares.

Other Material Commitments. The company's contractual cash obligations as of
December 31, 2003 are summarized in the table below.
<TABLE>
<CAPTION>
                                                   Less Than                                      Greater Than
 Contractual Cash Obligations         Total          1 Year        1-3 Years       3-5 Years        5 Years
 ----------------------------      ----------      ----------      ---------       ---------      ------------
<S>                                <C>             <C>                <C>             <C>             <C>
 Operating leases ...........      $   15,706      $   15,706         $ -             $ -             $ -

 Capital lease obligations ..               -               -           -               -               -

 Long term debt repayment ...               -               -           -               -               -

 Capital expenditures .......               -               -           -               -               -

 Acquisitions ...............       1,305,000       1,305,000           -               -               -
</TABLE>

                                       25
<PAGE>

Non-Cash Financing Activities

On June 30, 2003, Inter Asset Japan LBO No.1 Fund ("IAJ"), elected to convert
its $1,064,000 Mezzanine Finance Loan Note due from the company, plus accrued
interest of $95,000 into Series B Preferred Stock at the conversion rate of
$1,000 per share. We issued 1,158 shares of Series B Preferred Stock in exchange
for the note and accrued interest.

On August 5, 2003, we committed to issue 350,000 shares of our common stock at
$.472 per share in conjunction with the acquisition of Fan Club Entertainment
Co. Ltd. which is the average closing price for the five days prior to closing.

On December 2, 2003, we reached agreement with PBAA to convert approximately
$834,000 in outstanding convertible debt plus interest of approximately $33,000
in exchange for our common stock. PBAA, an affiliate of our majority
shareholder, plans to convert the remainder of its outstanding debt under a
revised agreement from its original contract dated January 31, 2003.

Under the conversion terms, we plan to issue 3,163,436 shares of common stock to
PBAA at a conversion rate of $0.30, representing an approximate 15% discount to
the trailing twenty day average closing price of the our common stock ending
November 21, 2003, the date PBAA made its investment commitment. As the
conversion purchase price per share was at a discount to market, our
shareholders will be asked to ratify and approve this transaction, as required
by the applicable rules of the American Stock Exchange at the company's
forthcoming 2003 annual meeting of shareholders.

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

On December 31, 2003, we issued 250,000 shares of common stock for settlement of
accounts payable at a price of $.32 per share.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The application of GAAP involves the exercise of varying degrees of judgment. On
an ongoing basis, the company evaluates its 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

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

                                       26
<PAGE>

Stock-Based Compensation

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

Intangible Assets

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

Other Intangible Assets--Other intangible assets primarily relate to acquired
software, trademarks and customer lists acquired in our purchase of Fan Club and
iAccele. On January 1, 2003, we adopted the provisions of SFAS No. 144,
ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, which generally
requires impairment losses to be recorded on long-lived assets (excluding
goodwill) used in operations, such as property, equipment and improvements, and
intangible assets, when indicators of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of the assets. Amortization was based on the straight-line
method over two years for iAccele. The company is amortizing the intangible
assets and intellectual property for Fan Club over sixty months on a straight -
line basis, which is the life of the Marvel Enterprises, Inc. agreement.

Revenue Recognition

We recognize revenue when it is realized. We consider revenue realized when the
product has been shipped or the services have been provided to the customer, and
collectiility is reasonably assured. Deferred revenue includes amounts billed to
customers for which revenue has not been recognized that generally results from
products completed by the company prior to year-end but not accepted by end
users until after year-end.

Accounts Receivable and Allowance for Doubtful Accounts

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

Debt and Equity financing of Capital Transactions - Beneficial Conversion
Features

                                       27
<PAGE>

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 the convertible debt. EITF 98-5 recognition of a conversion
feature that is in-the-money at issuance as additional paid-in-capital, measured
by allocating a portion of the proceeds equal to the intrinsic value of that
feature. The intrinsic value of the feature is the difference between the
conversion price and the fair value of the stock into which the security is
convertible, multiplied by the number of shares. According to EITF 00-27, the
issuance proceeds should not be reduced by issuance costs when calculating the
intrinsic value of the conversion feature. These beneficial conversion features
of debt or equity instruments, depending on the specific facts and circumstances
will determine whether such beneficial conversion feature is to be recorded as
an expense to be amortized over a period of time, expensed immediately or
recorded as a deemed dividend.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities," which addresses consolidation by business enterprises of VIEs that
either: (i) do not have sufficient equity investment at risk to permit the
entity to finance its activities without additional subordinated financial
support, or (ii) have equity investors that lack an essential characteristic of
a controlling financial interest.

Throughout 2003, the FASB released numerous proposed and final FASB Staff
Positions (FSPs) regarding FIN 46, which both clarified and modified FIN 46's
provisions. In December 2003, the FASB issued Interpretation No. 46 (FIN 46-R),
which will replace FIN 46 upon its effective date. FIN 46-R retains many of the
basic concepts introduced in FIN 46; however, it also introduces a new scope
exception for certain types of entities that qualify as a "business" as defined
in FIN 46-R, revises the method of calculating expected losses and residual
returns for determination of the primary beneficiary, includes new guidance for
assessing variable interests, and codifies certain FSPs on FIN 46. FIN 46-R did
not have a material impact on our Consolidated Financial Statements.

In 2003, the Emerging Issues Task Force (EITF) reached a consensus on two issues
relating to the accounting for multiple-element arrangements: Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables," and Issue No.
03-05, "Applicability of AICPA SOP 97-2 to Non- Software Deliverables in an
Arrangement Containing More Than Incidental Software." The consensus opinion in
EITF No. 03-05 clarifies the scope of both EITF 00-21 and Statement of Financial
Position (SOP) 97-2, "Software Revenue Recognition," and was reached on July 31,
2003. The transition provisions allow either prospective application or a
cumulative effect adjustment upon adoption. EITF Nos. 00-21 and 03-05 did not
have a material impact on our Consolidated Financial Statements.

In December 2003, the FASB revised SFAS No.132, "Employers' Disclosures about
Pensions and other Post-retirement Benefits, an amendment of FASB Statements No.
87, 88 and 106." This new SFAS No. 132 retains all of the disclosure
requirements of SFAS No. 132; however, it also requires additional annual
disclosures describing types of plan assets, investment strategy, measurement
date(s), expected employer contributions, plan obligations, and expected benefit
payments of defined benefit pension plans and other defined benefit
postretirement plans. SFAS No. 132 did not have a material impact on our
Consolidated Financial Statements.

                                       28
<PAGE>

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 addresses significant issues
relating to the implementation of SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and develops
a single accounting model, based on the framework established in SFAS No. 121
for long-lived assets to be disposed of by sale, whether such assets are or are
not deemed to be a business. SFAS No. 144 also modifies the accounting and
disclosure rules for discontinued operations. The standard was adopted on
January 1, 2003, and did not have a material impact on our consolidated
financial statements. The sale of iAccele operations are presented in the
Consolidated Financial Statements in accordance with SFAS No. 144.

In April 2003, the FASB issued SFAS No.149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 clarifies under
what circumstances a contract with an initial net investment meets the
characteristics of a derivative as discussed in SFAS No. 133. It also specifies
when a derivative contains a financing component that requires special reporting
in the Consolidated Statement of Cash Flows. SFAS No. 149 amends certain other
existing pronouncements in order to improve consistency in reporting these types
of transactions. The new guidance is effective for contracts entered into or
modified after June 30, 2003, and for hedging relationships designated after
June 30, 2003. SFAS No. 149 did not have a material effect on our Consolidated
Financial Statements.

In May 2003, the FASB issued SFAS No.150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. It establishes
classification and measurement standards for three types of freestanding
financial instruments that have characteristics of both liabilities and equity.
The provisions of SFAS No. 150 are effective for (i) instruments entered into or
modified after May 31, 2003, and (ii) pre-existing instruments as of July 1,
2003. In November 2003, through the issuance of FSP 150-3, the FASB indefinitely
deferred the effective date of certain provisions of SFAS No. 150, including
mandatory redeemable instruments as they relate to minority interests in
consolidated finite-lived entities. The adoption of SFAS No. 150, as modified by
FSP 150-3, did not have a material effect 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 of 1933 and Section 21E of the Securities
Exchange Act of 1934) 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.

                                       29
<PAGE>

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.

-  WE HAVE A LIMITED OPERATING HISTORY

We have a limited operating history on which to base an evaluation of our
business and prospects, having only commenced our initial business operations in
April 1999. In addition, we have shifted our revenue model from broadband
entertainment channels and revenues derived from advertising, to a renewed focus
on developing media technology products and services and on licensing revenues.
Our prospects must be considered in light of the risks, difficulties and
uncertainties frequently encountered by companies in an early stage of
development, particularly companies in new and rapidly evolving markets such as
the market for media technology products and services.

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

-  WE EXPECT TO INCUR LOSSES FOR THE FORESEEABLE FUTURE

We have only recently recognized revenues from services and we have experienced
net losses since inception. We expect to incur losses on both a quarterly and an
annual basis for the foreseeable future. There can be no assurance that we will
ever achieve profitability.

-  WE REVISED OUR BUSINESS PLAN

At the beginning of 2003, we revised our business plan to expand into other
areas of media entertainment and technology. We have shifted the revenue model
from broadband entertainment channels and revenues derived predominantly from
advertising, to a renewed focus on developing media technology products and
services, and on generating licensing revenues. To this end, we may develop such
media entertainment and technology products and services internally, or acquire
them from other parties.

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

We may need to obtain additional financing in order to continue our current
operations, including the cash flow needs of Fan Club, Rex Tokyo and QuikCAT
Australia and to acquire businesses. Our major shareholder has indicated a
willingness to support our financing efforts. However, there can be no assurance
that the we will be able to secure additional funding, or that if such funding
is available, whether the terms or conditions would be acceptable to us, from
our major shareholder or otherwise. Moreover, if we raise additional capital

                                       30
<PAGE>

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

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

In May 2003, we received notice from the AMEX Staff indicating that we were
below certain of AMEX's continued listing standards, due to losses in two of our
most recent fiscal years with shareholder equity below $2 million, and had
sustained losses so substantial in our overall operations that it appeared
questionable, in the opinion of the Exchange, as to whether we would be able to
continue operations, as set forth in Section 1003(a)(i) and Section 1003(a)(iv)
of the AMEX "company Guide." We were afforded the opportunity to submit a plan
of compliance to AMEX and on July 7, 2003 presented our plan, with a further
amended submission on September 8, 2003.

On September 30, 2003, AMEX notified us that it accepted our plan of compliance
and granted us an extension until November 27, 2004 to regain compliance with
the continued listing standards. We will be subject to periodic review by AMEX
Staff during the extension period, during which we will be required to make
progress consistent with the plan and to regain compliance with the continued
listing standards.

Failure by our stockholders to approve or ratify the proposals we are presenting
at our 2003 annual stockholder meeting or not achieving our plan of compliance
accepted by AMEX could result in our common stock being delisted from AMEX,
which could materially affect the ability of our stockholders to dispose of
their shares and reduce the liquidity of their investment. In addition,
delisting could affect our ability to obtain financing to support future
operations and acquisitions.

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

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

   -  Use of significant amounts of cash,

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

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

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

                                       31
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

-  WE ARE DEPENDENT ON CERTAIN THIRD PARTY LICENSES AND AGREEMENTS

We rely on certain agreements and technologies we license from third parties to
operate our business. We have been developing our own proprietary Internet
accelerator product in conjunction with QuikCAT Technologies, Inc. ("QuikCAT")
an Ohio based private company. Development of the interface for this product was
outsourced, with the core patent based technology being licensed from QuikCAT.

                                       32
<PAGE>

We own the client interface software that was developed to work with the iNet
Client software, and receive a 5% royalty from QuikCAT Australia on their net
profits from the sales of their services that incorporate the client interface.
We have no other contracts or agreements with other companies at this time for
the client interface software. The Internet acceleration service is software
based and uses a combination of highly advanced and proven compression and
caching technologies to increase substantially the speed of delivery of Internet
and email data to the end-user. We believe that our client interface software
substantially enhances the core technology licensed to us by QuikCAT and is
critical to the commercial development and acceptance of the service.

We were granted an exclusive Reseller License Agreement by QuikCAT for the iNet
Client Software on October 6, 2003 for the territories of Australia, New Zealand
and Japan. This license was approved by the United States Bankruptcy Court,
Northern District of Ohio on December 15, 2003. The cost of the license was
$110,000, of which $10,000 was paid on September 3, 2003 and the balance was
paid on January 15, 2004. The license term is for three years, with one year
annual automatic renewals if the product is commercially deployed. The license
requires a 5% royalty on net revenues, which is to be paid monthly, and a 10%
net interest in the profits of QuikCAT Australia, which is to be paid every six
months. The license can be terminated under certain conditions.

QuikCAT has licensed the IP from Innovative Computing Group ("ICG"), a private
US company owned substantially by Dr Olu Lafe. Dr Lafe, the inventor of the IP,
holds the underlying patents to the IP and has assigned these to ICG.

QuikCAT itself is in US chapter 11 bankruptcy. Our position is protected by US
court endorsement of the license. As part of the agreement to license the
Internet Accelerator, we protected our access to the QuikCAT source code via an
escrow agreement and the deposit of the source code with an escrow agent.

As part of our strategy to develop our Internet data acceleration products, on
February 5, 2004, we entered into an agreement with QuikCAT to acquire
substantially all of its assets of QuikCAT for $700,000, plus the assumption of
certain contracts, agreements and liabilities. QuikCAT has filed for bankruptcy
in the United States Bankruptcy Court, Northern District of Ohio, and therefore,
our acquisition is subject to approval by the Bankruptcy Court. Notwithstanding
our signed purchase agreement, there can be no assurance that the Bankruptcy
Court will approve our bid or that the Bankruptcy Court will not award the
assets to another bidder.

In addition, we are in discussions with the parent company of QuikCAT,
Innovative Computing Group, Inc. ("ICG"), to acquire certain assets of ICG that
are related to the technology that we intend to acquire from QuikCAT. As part of
these discussions, on February 5, 2004, we agreed to loan ICG up to $150,000
secured by source code for the Miliki SuperCompressor, which is a software
product that compresses electronic documents and images and allows a user to
email large files much faster and to save these files using much less storage
space. We have advanced $100,000 to ICG under this loan agreement. The note is
due May 5, 2004 and accrues interest at 4% annually. Completion of the ICG and
QuikCAT asset acquisitions are subject to further approvals, including approval
of the Bankruptcy Court in the case of QuikCAT, and there is no assurance that
these transactions will be closed.

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

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

                                       33
<PAGE>

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

-  WE ARE SUBJECT TO COMPETITIVE PRESSURES

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

In addition to the foregoing, some of our key customers or potential customers
might decide to build their own Internet data transmission acceleration product
or company's which provide advertising, merchandising, publishing, website and
data management services. Although this has not been the industry trend over the
past year, if this were to happen, we might be adversely impacted thereby.

-  WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY RIGHTS

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

-  THE COMPANY IS EXPOSED TO LEGAL CLAIMS

We have been, currently are, or in the future may be involved in legal
proceedings or claims. Such claims are detailed in Part 1, Item 3, Legal
Proceedings. Such claims, whether with or without merit, could be time-consuming
and expensive to defend and could divert management's time and attention. There
can be no guarantee that we will be successful in resolving such claims.

-  WE 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 our officers. Our success
will depend on the performance of our officers, our ability to retain and

                                       34
<PAGE>

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 MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE

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

   -  Quarterly variations in our operating results,

   -  Announcements of technological innovations,

   -  New product introductions by us or our competitors,

   -  Competitive activities,

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

   -  Additions or departures of key personnel,

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

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

   -  General market and economic conditions,

   -  Defending significant litigation, and

   -  Foreign exchange gains and losses.

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

-  OUR PRINCIPAL STOCKHOLDER HAS SUBSTANTIAL INFLUENCE OVER OUR COMPANY

As of March 25, 2004,Inter Asset Japan LBO No. 1 Fund ("IAJ LBO Fund"), PBAA
Fund Ltd. ("PBAA"),Terra Firma Fund Ltd. ("Terra Firma") and Inter Asset Japan
Co. Ltd. ("IAJ") collectively hold approximately 82.7% of our common stock. Such
entities stated in a Schedule 13D that they may be deemed to constitute a
"group" for the purposes of Rule 13d-3 under the Exchange Act. Mr. Margerison,
one of our Directors, and our President and Chief Executive Officer, currently
serves as the Chairman of IAJ, a Japanese venture capital company.

IAJ has the ability to cause a change of control of the board of directors of
the company 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.

                                       35
<PAGE>

-  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 March 25, 2004, 71.9 million shares of common
stock were outstanding. Significant shares were held by our principal
stockholder and other company insiders. As an "affiliate" (as defined under Rule
144 of the Securities Act ("Rule 144") of the company, they may only sell their
shares of common stock in the public market in compliance with the volume
limitations of Rule 144.

-  WE ARE EXPOSED TO FOREIGN CURRENCY RISKS

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

-WE HAVE LIMITED INSURANCE

We have limited director and officer insurance and no commercial insurance
policies. Any significant insurance claims would have a material adverse effect
on our business, financial condition and results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Currency

We were exposed to foreign currency risks due to the acquisition Fan Club on
August 5, 2003 and iAccele on February 10, 2003. The iAccele acquisition was
financed by a 100.0 million Japanese Yen loan, or approximately $830,000 based
on the Japanese Yen/US dollar exchange rate on that date. On December 2, 2003,
we announced that it reached agreement with our majority shareholder to convert
approximately $834,000 in outstanding convertible debt plus interest of
approximately $33,000 in exchange for 3,163,436 shares of our common stock. As
part of this transaction and the operations of the iAccele acquisition, we
recognized a foreign currency translation adjustment of $172,069 for the year
ending December 31, 2003.

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 do not have any outstanding long term liabilities as of December 31, 2003. We
do not trade in hedging instruments or "other than trading" instruments and we
are exposed to interest rate risks for any long-term liabilities. We believe
that the impact of a 10% increase or decline in interest rates would not be
material to our financial condition and results of operations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to our consolidated financial statements beginning on page F-1
of this report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                       36
<PAGE>

ITEM 9A. CONTROLS AND PROCEDURES

Our principal executive officer and principal financial officer evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2003. Based
on this evaluation, our principal executive officer and principal financial
officer concluded that, as of December 31, 2003, 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 III

Pursuant to Paragraph G(3) of the General Instructions to Form 10-K, portions of
the information required by Part III of Form 10-K are incorporated by reference
from our Proxy Statement to be filed with the SEC in connection with the 2003
Annual Meeting of Stockholders ("the proxy statement").

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information concerning executive officers and directors appears in proposal 1 of
our proxy statement. This portion of our proxy statement is incorporated herein
by reference. The board has determined that Masazumi Ishii, our audit committee
chairman, is an audit committee financial expert within the meaning of SEC
rules.

ITEM 11. EXECUTIVE COMPENSATION

Information concerning executive compensation appears under executive
compensation in our proxy statement. This portion of our proxy statement is
incorporated herein by reference.

EMPLOYMENT AGREEMENTS

Information concerning employment agreements appears in proposal 1 of our proxy
statement. This portion of our proxy statement is incorporated herein by
reference.

COMPENSATION OF DIRECTORS

Our directors who are not otherwise our employees are compensated at the rate of
$1,000 per month.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

Information concerning security ownership of certain beneficial owners and
management appears in the introduction section of our proxy statement. This
portion of our proxy statement is incorporated herein by reference.

Information concerning accountant fees and services appear in the independent
auditor section of the proxy statement. This portion of our proxy statement is
incorporated herein by reference.

                                       37
<PAGE>

Information concerning new plan benefits and securities authorized for issuance
under equity compensation plans appear in proposal 7 of the proxy statement.
This portion of our proxy statement is incorporated herein by reference.

Information concerning board meetings and committees appear in proposal 1 of the
proxy statement. This portion of our proxy statement is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions appears in
the "certain transactions" section of our proxy statement. This portion of our
proxy statement is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Information concerning principal accounting fees and services appears under the
section "independent public accountants" of our proxy statement. This portion of
our proxy statement is incorporated herein by reference.


                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) FINANCIAL STATEMENTS:

Our financial statements, as indicated by the Index to Consolidated Financial
Statements set forth below, begin on page F-1 of this Form 10-K, and are hereby
incorporated by reference. Financial statement schedules have been omitted
because they are not applicable or the required information is included in the
financial statements or notes thereto.


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                  Page

         Report of Independent Auditors ...........................F-1

         Consolidated Balance Sheets as of
              December 31, 2003 and 2002...........................F-2

         Consolidated Statements of Operations
              for the years ended December 31, 2003,
              2002 and 2001 .......................................F-3

         Consolidated Statement of Stockholders' Equity
              (Deficiency) for the years ended December 31,
              2003, 2002 and 2001..................................F-4

         Consolidated Statement of Cash Flows
              for the years ended December 31, 2003,
              2002 and 2001 .......................................F-5

         Notes to Consolidated Financial
              Statements ..........................................F-6

                                       38
<PAGE>

(b) REPORTS ON FORM 8-K:

We filed the following reports on Form 8-K during the fourth quarter of the year
ended December 31, 2003:

   *  Amendment to the current report on Form 8-K, dated August 15, 2003, was
      filed on October 22, 2003. The items reported were as follows:

      o  Item 2 - Acquisition or Dispositions of Assets, which reported the
         updated agreement to acquire a 67% equity interest in Fan Club
         Entertainment and filing revised documents related to such
         acquisitions.

      o  Item 7 - Financial Statements and Exhibits, which filed the following:

         (a) Financial statements of business acquired.

         Fan Club Entertainment's audited financial statements for the period
         from March 1, 2003, its date of inception, through June 30, 2003
         expressed in Japanese Yen.

         (b) Pro Forma financial information.

         The unaudited Pro Forma Condensed Consolidated Balance Sheet of the
         company and Fan Club Entertainment as of June 30, 2003 and the
         unaudited Pro Forma Condensed Consolidated Statement of Operations of
         the company and Fan Club Entertainment for the six months ended June
         30, 2003.

   *  Current report on Form 8-K, dated December 3, 2003, was filed on December
      3, 2003. The items reported were as follows:

      o  Item 5 - Other Events and Required FD Disclosures, which reported the
         following:

         -  On November 12, 2003, we agreed to sell to Inter Asset Japan Co.
            Ltd., 1,666,666 shares of our common stock at an average price of
            $0.30 per share, for a total of $.5 million, and

         -  On November 17, 2003, we assigned to Inter Asset Japan (a) the lease
            with foreignTV Japan for the 600 personal computers, (b) unpaid
            invoices totaling 18,947,500 Yen, or approximately $166,000, from
            foreignTV Japan, (c) and rights to cash received of 3,429,749 Yen,
            or approximately $31,000, in exchange for (a) cancellation of a
            34,000,000 Yen, or approximately $298,000, loan from Inter Asset
            Japan and related accrued interest, and (b) 34,000,000 Yen, or
            approximately $298,000, to be wired to the company by December 1,
            2003, and

         -  On October 31, 2003, we completed a joint venture agreement with
            London Wall Investments Pty. Ltd., a privately held corporation
            located in Perth, Australia, whereby we will acquire a 50% equity
            stake in a newly formed company to be called QuikCat Australia Pty
            Ltd for a nominal value, and

         -  On December 2, 2003, IA Global Inc., announced that it reached
            agreement with its majority shareholder to convert approximately
            $834,000 in outstanding convertible debt plus interest of
            approximately $33,000 in exchange for approximately 3.16 million
            shares of common stock its common stock.

                                       39
<PAGE>

   *  Current report on Form 8-K, dated December 29, 2003, was filed on January
      26, 2004. The items which reported the following:

      o  Item 2 - Acquisition or Dispositions of Assets, On December 29, 2003,
         we executed a share purchase agreement to sell our 76.9% interest in
         iAccele Co. Ltd. ("iAccele"), for approximately $280,000 to GM2 Co.
         Ltd., a private Japanese corporation ("GM2"). In addition, iAccele had
         approximately $700,000 of liabilities that had previously been
         reflected in the consolidated balance sheet of our company. In
         connection with the sale, we agreed to cancel approximately $300,000 of
         inter-company debt owed by iAccele to us. We received the funds from
         GM2 on January 16, 2004.

      o  Item 5 - Other Events and Required FD Disclosures, which reported the
         following:

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

         -  On January 10, 2004, the United States District Court Southern
            District of New York dismissed without prejudice the complaint filed
            by Andzej Krakowski.

(c) EXHIBITS:

    EXHIBIT
    NUMBER    EXHIBIT DESCRIPTION
    -------   -------------------

    3.1       Certificate of Incorporation, as amended, of Registrant (1)

    3.2       Certificate of Amendment, dated January 3, 2003, to the
              Certificate of Incorporation of the Registrant (2)

    3.3       Certificate of Designation of Preferences and Rights of the
              Registrant's Series A convertible preferred stock (3)

    3.4       By-laws of Registrant, as amended (4)

    4.1       Form of Certificate evidencing shares of common stock (1)

    10.1      1999 Stock Option Plan (1)

    10.2      2000 Stock Option Plan (5)

    10.3      Investment Agreement, dated as of February 10, 2003, between
              IA Global, Inc. and IAccele Co., Inc. (6)

    10.4      Indemnification Agreement, dated as of February 10, 2003,
              among IA Global, Inc., IAccele Co., Inc. and InfoShowerX Co.,
              Ltd. (6)

    10.5      Intercompany Loan Agreement, dated as of January 31, 2003,
              between IA Global, Inc. and PBAA Fund Ltd. (6)

    10.6      Employment Agreement, dated February 3, 2003, between IA
              Global, Inc. and Alan Margerison (7)

                                       40
<PAGE>

    10.7      Employment Agreement, dated February 3, 2003, between IA
              Global, Inc. and Satoru Hirai (7)

    10.8      Amendment to Employment Agreement, dated May 21, 2003, between
              IA Global, Inc. and Satoru Hirai. (8)

    10.9      Notice of Conversion of Promissory Note, dated June 30, 2003,
              between IA Global, Inc. and Inter Asset Japan Co Ltd. (8)

    10.10     Subscription Agreement, dated June 30, 2003, between IA
              Global, Inc. and PBAA Fund Ltd. (8)

    10.11     Subcontract Agreement, dated July 28, 2003, between Cyberbred
              Co Ltd and Fan Club Entertainment Co Ltd. (8)

    10.12     Letter of Intent, dated July 31, 2003, between IA Global, Inc.
              and London Wall Investments Pty Ltd. (8)

    10.13     Share Purchase Agreement, dated as of August 5, 2003, between
              IA Global, Inc. and Cyber Holdings Co Ltd. (8)

    10.14     Indemnification Agreement, dated as of August 5, 2003, among
              IA Global, Inc., Cyber Holdings Co Ltd. and Fan Club
              Entertainment Co Ltd. (8)

    10.15     Certificate of Officers, dated as of August 5, 2003, among IA
              Global, Inc., Cyber Holdings Co Ltd. and Fan Club
              Entertainment Co Ltd. (8)

    10.16     Business Development Loan and Venture Agreement, dated August
              18, 2003, between IA Global, Inc. and London Wall Investments
              Pty Ltd. (9)

    10.17     Subscription Agreement, dated November 6, 2003, between IA
              Global, Inc. and Inter Asset Japan Co Ltd. (9)

    10.18     Agreement to Sell Personal Computers, dated November 17, 2003,
              between IA Global, Inc., iAccele Co Ltd. and Inter Asset Japan
              Co, Ltd. (10)

    10.19     Notice of Intent to Convert 100 Million Yen Intracompany Loan
              to IA Global Common Stock, dated November 21, 2003, between IA
              Global, Inc. and PBAA Fund, Ltd. (10)

    10.20     Share Subscription Agreement, dated December 29, 2003, between
              IA Global, Inc. and PBAA Fund Ltd. (11)

    10.21     Purchase Agreement, dated December 29, 2003, among IA Global,
              Inc., GM2 Co Ltd and iA Ltd and iAccele Co Ltd. (11)

    10.22     Share Purchase Agreement, dated as of February 5, 2004,
              between IA Global, Inc. and Cyber Holdings Co Ltd. (12)

    10.23     Certificate of Officers, dated as of February 5, 2004, among
              IA Global, Inc., Cyber Holdings Co Ltd. and Fan Club
              Entertainment Co Ltd. (12)

    10.24     Employment Agreement, dated January 12,2004, between IA
              Global, Inc. and Mark Scott

    10.25     Offer to Hire Mark Scott, dated January 12, 2004, between IA
              Global, Inc. and Mark Scott.

                                       41
<PAGE>

    10.26     Secured Promissory Note, dated February 5, 2004, between IA
              Global, Inc. and Innovative Computing Group, Inc.

    10.27     Security Agreement, dated February 5, 2004, between IA Global,
              Inc. and Innovative Computing Group, Inc.

    10.28     Subscription Agreement, dated March 5, 2004, between IA
              Global, Inc. and PBAA Fund Ltd.

    10.29     Convertible Promissory Note, dated March 5, 2004, between IA
              Global, Inc. and PBAA Fund Ltd.

    10.30     Stockholder's Agreement, dated March 18, 2004, among IA
              Global, Inc., Rex Tokyo Co Ltd, Hiroyuki Ejima and all holders
              of Rex Tokyo Co Ltd common shares.

    10.31     Share Exchange Agreement, dated March 18, 2004, between IA
              Global, Inc. and Hiroyuki Ejima.

    10.32     Share Purchase Agreement, dated March 18, 2004, between IA
              Global, Inc. and Rex Tokyo Co Ltd

    10.33     Reseller License Agreement, dated October 6, 2003, between IA
              Global, Inc. and QuikCAT.com, Inc.

    10.34     Redeemable Note, dated December 31, 2003, between IA Global,
              Inc. and QuikCAT Australia Pty Ltd.

    10.35     Redeemable Note, dated February 13, 2004, between IA Global,
              Inc. and QuikCAT Australia Pty Ltd.

    10.36     Series B Subscription B Form, dated March 26, 2004, between IA
              Global, Inc. and QuikCAT Australia Pty Ltd.

    21.1      Subsidiaries of the Registrant

    23.1      Consent of Radin, Glass & Co., LLP

    31.1      Section 302 Certifications

    31.2      Section 302 Certifications

    32.1      Section 906 Certifications

    32.2      Section 906 Certifications
__________

(1)  Filed as an exhibit to Registrant's Registration Statement on Form S-1, as
     amended (File No. 333-71733), and incorporated herein by reference.

(2)  Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
     January 3, 2003, and incorporated herein by reference.

(3)  Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
     November 8, 2001, and incorporated herein by reference.

(4)  Filed as an exhibit to Registrant's Registration Statement on Form 8-A
     (File No. 1-15863), and incorporated herein by reference.

(5)  Filed as an exhibit to Registrant's Definitive Form 14A filed on June 6,
     2000, and incorporated herein by reference.

                                       42
<PAGE>

(6)  Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
     February 25, 2003, and incorporated herein by reference.

(7)  Filed as an exhibit to Registrants's Annual Report on Form 10-K, dated
     April 15, 2003, and incorporated herein by reference.

(8)  Filed as an exhibit to Registrants's Amended Quarterly Report for the
     period ending June 30, 2003 on Form 10-Q/A dated February 3, 2004 and
     incorporated herein by reference.

(9)  Filed as an exhibit to Registrants's Amended Quarterly Report on Form
     10-Q/A for the period ending September 30, 2003, dated February 3, 2004 and
     incorporated herein by reference.

(10) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
     December 3, 2003, and incorporated herein by reference.

(11) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
     January 26, 2004, and incorporated herein by reference.

(12) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated
     February 17, 2004, and incorporated herein by reference.



                                       43
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

                           Shareholders and Directors
                                 IA Global, Inc.

We have audited the accompanying consolidated balance sheets of IA Global, Inc.
as of December 31, 2003 and 2002, and the related consolidated statements of
operations, shareholders' equity (deficiency) and cash flows for each of the
three years then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IA Global, Inc.
(formerly: Medium4.com, Inc.) as of December 31, 2003 and 2002, and the results
of its operations and its cash flows for each of the three years then ended in
conformity with accounting principles generally accepted in the United States.

As discussed in Note 3, the company restated its consolidated financial
statements for the years ended December 31, 2002 and 2001.


                                        /s/ Radin, Glass & Co., LLP
                                        Certified Public Accountants
New York, New York
March 15, 2004



                                       F-1
<PAGE>
<TABLE>
                                   IA GLOBAL, INC. AND SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEET
<CAPTION>

                                                                              December 31,
                                                                   ----------------------------------
                                                                       2003                  2002
                                                                   ------------          ------------
ASSETS
<S>                                                                <C>                   <C>
CURRENT ASSETS:
  Cash and cash equivalents ..............................         $    676,782          $    444,383
  Accounts receivable, net of allowance
   for doubtful accounts of $0 ...........................            1,266,335                     -
  Consumption and deferred tax receivable ................               49,482                     -
  Prepaid costs ..........................................              438,142                     -
  Subscription receivable ................................              400,000                     -
  Other current assets ...................................              296,163                     -
                                                                   ------------          ------------
    Total current assets .................................            3,126,904               444,383

EQUIPMENT, NET ...........................................                  812                   812

OTHER ASSETS
  Intangible assets, net .................................            1,014,685                     -
  Loan to QuikCAT Australia Pty Ltd ......................               74,849                     -
  Other assets ...........................................                    -                 5,477
                                                                   ------------          ------------

                                                                   $  4,217,250          $    450,672
                                                                   ============          ============


LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)

CURRENT LIABILITIES:
  Accounts payable - trade ...............................         $    861,148          $    246,353
  Accrued liabilities ....................................              138,580                31,000
  Loan payable - related party ...........................                    -             1,063,857
  Deferred revenue .......................................              463,119                     -
  Investment in QuikCAT Australia Pty Ltd ................                1,137                     -
  Income taxes payable - foreign .........................               23,754                     -
                                                                   ------------          ------------
    Total current liabilities ............................            1,487,739             1,341,210
                                                                   ------------          ------------

MINORITY INTERESTS .......................................               44,706                     -
                                                                   ------------          ------------

STOCKHOLDER'S EQUITY DEFICIENCY):
  Series B Preferred stock, $.01 par value, 5,000 shares
    authorized 1,158 and -0- issued and outstanding,
    respectively (liquidation value $1,158,000) ..........                   12                     -
  Common stock, $.01 par value, 75,000,000 shares
    authorized, 71,894,324 and 51,797,556, issued and
    outstanding, respectively ............................              718,943               517,976
  Paid in capital ........................................           26,049,286            19,744,331
  Accumulated deficit ....................................          (24,147,785)          (21,022,845)
  Unearned compensation expense ..........................                    -               (80,000)
  Treasury stock .........................................              (50,000)              (50,000)
  Foreign currency translation adjustment ................              114,349                     -
                                                                   ------------          ------------
    Total stockholder's equity (deficiency) ..............            2,684,805              (890,538)
                                                                   ------------          ------------

                                                                   $  4,217,250          $    450,672
                                                                   ============          ============

                            See notes to consolidated financial statements.
                                                  F-2
</TABLE>
<PAGE>
<TABLE>
                                   IA GLOBAL, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
                                                                Years Ended December 31,
                                                   --------------------------------------------------
                                                       2003               2002               2001
                                                   ------------       ------------       ------------
                                                                        Restated           Restated
                                                                         Note 3             Note 3
<S>                                                <C>                <C>                <C>
REVENUE .....................................      $  1,144,654       $    406,046       $    708,803

COST OF SALES ...............................         1,128,075             84,280            700,443
                                                   ------------       ------------       ------------

GROSS PROFIT ................................            16,579            321,766              8,360
                                                   ------------       ------------       ------------

EXPENSES:
  Selling, general and administrative .......         2,383,253            903,001          5,420,437
  Write down of fixed assets ................                 -             37,759            250,000
  Write down of capitalized development costs                 -                  -            534,498
                                                   ------------       ------------       ------------
    Total expenses ..........................         2,383,253            940,760          6,204,935
                                                   ------------       ------------       ------------

OPERATING LOSS ..............................        (2,366,674)          (618,994)        (6,196,575)
                                                   ------------       ------------       ------------

OTHER INCOME (EXPENSE):
  Interest income ...........................            13,234                212              1,351
  Interest expense ..........................          (373,999)        (1,084,620)                 -
  Other income ..............................            11,036            210,695             15,332
  Gain loss on sale of computer business ....           103,785                  -                  -
  Loss on equity investment in QuikCAT
         Australia Pty Ltd ..................            (1,137)                 -                  -
  Gain on sale of iAccele Co. Ltd ...........           674,406                  -                  -
  Foreign currency translation adjustment ...          (172,069)                 -                  -
  Write down of investments .................                 -                  -            (59,000)
                                                   ------------       ------------       ------------
    Total other income (expenses) ...........           255,256           (873,713)           (42,317)
                                                   ------------       ------------       ------------

LOSS BEFORE MINORITY INTERESTS
  AND INCOME TAXES ..........................        (2,111,418)        (1,492,707)        (6,238,892)

MINORITY INTERESTS ..........................            21,790                  -                  -
                                                   ------------       ------------       ------------

LOSS BEFORE INCOME TAXES ....................        (2,133,208)        (1,492,707)        (6,238,892)

INCOME TAXES:
  Current ...................................            (8,158)                 -                  -
  Deferred ..................................            22,738                  -                  -
                                                   ------------       ------------       ------------

NET LOSS ....................................        (2,147,788)        (1,492,707)        (6,238,892)

Deemed dividends ............................          (977,152)                 -         (1,000,000)
                                                   ------------       ------------       ------------

NET LOSS APPLICABLE TO COMMON SHAREHOLDERS ..      $ (3,124,940)      $ (1,492,707)      $ (7,238,892)
                                                   ============       ============       ============

Per share of Common-
  Basic net loss per share ..................      $      (0.05)      $      (0.04)      $      (0.39)
                                                   ============       ============       ============
  Diluted net loss per share ................      $      (0.05)      $      (0.04)      $      (0.39)
                                                   ============       ============       ============
  Weighted average shares of common
    stock outstanding .......................        59,243,914         36,480,248         18,334,433
  Weighted average shares of common stock
    and common equivalent shares
    outstanding .............................        59,243,914         36,480,248         18,334,433

                            See notes to consolidated financial statements.
                                                 F-3
</TABLE>
<PAGE>
<TABLE>
                                            IA GLOBAL, INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENT OF STOCKHOLDER'S (DEFICIENCY)

<CAPTION>


                                                    Preferred Stock                Common Stock             Additional
                                                  --------------------       ------------------------        Paid in
                                                  Shares       Amount          Shares         Amount         Capital
                                                  ------       -------       ----------      --------      ------------
<S>                                                <C>         <C>           <C>             <C>           <C>
Balance as of December 31, 2001 ............       1,000       $    10       29,672,556      $296,726      $ 18,664,745

Proceeds from conversion of
  preferred shares .........................      (1,000)          (10)      20,000,000       200,000          (199,990)
Stock issued for services ..................           -             -        2,125,000        21,250           151,000
Valuation of beneficial
  conversion feature .......................           -             -                -             -         1,063,857
Contribution of capital ....................           -             -                -             -            64,719
Unearned compensation expense ..............           -             -                -             -                 -
Net loss ...................................           -             -                -             -                 -
                                                  ------       -------       ----------      --------      ------------

Balance as of December 31, 2002 ............           -             -       51,797,556       517,976        19,744,331

Issuance of common stock for
  settlement of accounts payable ...........           -             -          250,000         2,500            76,684
Proceed from sale of common
  stock subscribed .........................           -             -       13,333,333       133,333         1,866,667
Common stock issued for Fan Club
  Entertainment Co Ltd acquisition .........           -             -          350,000         3,500           161,700
Conversion of note payable to
  preferred stock ..........................       1,158            12                -             -         1,157,988
Conversion of note payable to
  common stock .............................           -             -        3,163,436        31,634           917,453
Proceed from sale of common stock ..........           -             -        1,666,666        16,667           483,333
Proceed from sale of common
  stock subscribed .........................           -             -        1,333,333        13,333           386,667
Valuation of beneficial
  conversion feature .......................           -             -                -             -           277,311
Contribution of capital ....................           -             -                -             -                 -
Unrealized foreign exchange gain ...........           -             -                -             -                 -
Unearned compensation expense ..............           -             -                -             -                 -
Deemed dividend ............................           -             -                -             -           977,152
Net loss ...................................           -             -                -             -                 -
                                                  ------       -------       ----------      --------      ------------

Balance as of December 31, 2003 ............       1,158       $    12       71,894,324      $718,943      $ 26,049,286
                                                  ======       =======       ==========      ========      ============
                                                                                                            (continued)
                                    See notes to consolidated financial statements.
                                                          F-4A
</TABLE>
<PAGE>
<TABLE>
                                            IA GLOBAL, INC. AND SUBSIDIARIES
                                  CONSOLIDATED STATEMENT OF STOCKHOLDER'S (DEFICIENCY)
                                                      (continued)
<CAPTION>

                                                               Accumulated                                     Total
                                                                  Other                      Unearned      Stockholder's
                                              Accumulated     Comprehensive   Treasury     Compensation       Equity
                                                Deficit          Income *       Stock        Expense        (Deficiency)
                                             ------------     ------------    --------     ------------     -----------
<S>                                          <C>              <C>             <C>           <C>             <C>
Balance as of December 31, 2001 .........    $(19,530,138)    $          -    $(50,000)    $   (245,788)    $  (864,445)

Proceeds from conversion of
  preferred shares ......................               -                -           -                -               -
Stock issued for services ...............               -                -           -         (160,000)         12,250
Valuation of beneficial
  conversion feature ....................               -                -           -                -       1,063,857
Contribution of capital .................               -                -           -                -          64,719
Unearned compensation expense ...........               -                -           -          325,788         325,788
Net loss ................................      (1,492,707)               -           -                -      (1,492,707)
                                             ------------     ------------    --------     ------------     -----------

Balance as of December 31, 2002 .........     (21,022,845)               -     (50,000)         (80,000)       (890,538)

Issuance of common stock for
  settlement of accounts payable ........               -                -           -                -          79,184
Proceed from sale of common
  stock subscribed ......................               -                -           -                -       2,000,000
Common stock issued for Fan Club
  Entertainment Co Ltd acquisition ......               -                -           -                -         165,200
Conversion of note payable to
  preferred stock .......................               -                -           -                -       1,158,000
Conversion of note payable to
  common stock ..........................               -                -           -                -         949,087
Proceed from sale of common stock .......               -                -           -                -         500,000
Proceed from sale of common
  stock subscribed ......................               -                -           -                -         400,000
Valuation of beneficial
  conversion feature ....................               -                -           -                -         277,311
Contribution of capital .................               -                -           -                -               -
Unrealized foreign exchange gain ........               -          114,349           -                -         114,349
Unearned compensation expense ...........               -                -           -           80,000          80,000
Deemed dividend .........................        (977,152)               -           -                -               -
Net loss ................................      (2,147,788)               -           -                -      (2,147,788)
                                             ------------     ------------    --------     ------------     -----------

Balance as of December 31, 2003 .........    $(24,147,785)    $    114,349    $(50,000)     $         -     $ 2,684,805
                                             ============     ============    ========     ============     ===========

*    Comprehensive income, i.e., net income (loss), plus, or less, the change in
     foreign currency balance sheet translation adjustments, totaled
     $(2,033,439) in 2003, $(1,492,707) in 2002 and $(6,238,892) in 2001,
     respectively.

                                    See notes to consolidated financial statements.
                                                          F-4B
</TABLE>
<PAGE>
<TABLE>
                                            IA GLOBAL, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENT OF CASH FLOWS

<CAPTION>
                                                                                       Years Ended December 31,
                                                                              -----------------------------------------
                                                                                  2003           2002           2001
                                                                              -----------    -----------    -----------
<S>                                                                           <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss ................................................................   $(2,147,788)   $(1,492,707)   $(6,238,892)
  Adjustments to reconcile net loss to net cash used in
   operating activities:
    Depreciation and amortization .........................................       557,885         54,940        927,164
    Impairment of fixed assets/investment in foreignTVJapan.com ...........             -              -        309,000
    Gain from sale of iAccele Co Ltd ......................................      (674,406)             -              -
    Write down of fixed assets ............................................             -         37,759              -
    Gain on sale of computer business .....................................      (103,785)             -
    Write down of software development costs ..............................             -              -        534,498
    Unearned compensation expense .........................................             -        165,788      1,154,880
    Equity based compensation .............................................        80,000        172,250      2,369,900
    Beneficial conversion feature .........................................       277,311      1,063,857              -
    Equity loss from investment in QuickCAT Australia Pty Ltd. ............         1,137              -              -
    Minority interests ....................................................        21,790              -              -
    Accrued interest on notes/loans payable ...............................       124,747              -              -
    Accounts receivable ...................................................    (1,266,335)             1              -
    Consumption and deferred tax receivable ...............................       (49,482)             -              -
    Prepaid costs .........................................................      (438,142)             -              -
    Other current assets ..................................................       (93,860)           376         13,761
    Other assets ..........................................................         5,477         22,092              -
    Accounts payable ......................................................     2,612,336        (97,608)      (170,679)
    Accrued liabilites ....................................................       107,580       (180,843)      (141,655)
    Income taxes payable - foreign ........................................        23,754              -              -
    Deferred revenue ......................................................       463,119       (305,000)      (480,000)
                                                                              -----------    -----------    -----------

NET CASH USED IN OPERATIONS ...............................................      (498,661)      (559,095)    (1,722,023)
                                                                              -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Software development costs ............................................       (39,347)             -              -
    Purchases of intangible assets including Fan Club Entertainment  Co Ltd    (1,107,590)             -              -
    Purchase of iAccele Co Ltd ............................................      (830,358)             -              -
    Purchases of capiial expenditures .....................................      (598,431)             -         75,466
    Proceeds from sale of equipment .......................................       702,216              -              -
    Marketable securities .................................................             -              -            220
    Investment in foreignTVJapan.com ......................................             -        100,000              -
                                                                              -----------    -----------    -----------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES .......................    (1,873,510)       100,000         75,686
                                                                              -----------    -----------    -----------

CASH PROVIDED BY FINANCING ACTIVITIES:
    Proceeds from loan payable - related party ............................     1,288,167        885,098        193,479
    Repayments of loan payable- related party .............................    (1,280,816)             -              -
    Loan to QuikCAT Australia Pty Ltd. ....................................       (74,849)             -              -
    Purchase of treasury stock ............................................             -              -        (50,000)
    Proceeds from issuance of preferred stock .............................             -              -        996,000
    Proceeds from issuance of common stock ................................     2,500,000              -        474,776
                                                                              -----------    -----------    -----------

NET CASH PROVIDED BY FINANCING ACTIVITIES .................................     2,432,502        885,098      1,614,255
                                                                              -----------    -----------    -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ......................        60,330        426,003        (32,082)

EFFECT OF EXCHANGE RATE CHANGES ON CASH ...................................       172,069              -              -

CASH AND CASH EQUIVALENTS, beginning of the period ........................       444,383         18,380         50,462
                                                                              -----------    -----------    -----------

CASH AND CASH EQUIVALENTS, end of the period ..............................   $   676,782    $   444,383    $    18,380
                                                                              ===========    ===========    ===========
                                                                                                            (continued)

                                    See notes to consolidated financial statements.
                                                          F-5A
</TABLE>
<PAGE>
<TABLE>
                                            IA GLOBAL, INC. AND SUBSIDIARIES
                                          CONSOLIDATED STATEMENT OF CASH FLOWS
                                                       (continued)
<CAPTION>
                                                                                       Years Ended December 31,
                                                                              -----------------------------------------
                                                                                  2003           2002           2001
                                                                              -----------    -----------    -----------
<S>                                                                           <C>            <C>            <C>
Supplemental disclosures of cash flow information:

    Interest paid .........................................................   $         -    $         -    $         -

    Taxes paid ............................................................   $       334    $         -    $     4,889

Non-cash financing activities:

    Conversion of debt/accounts payable to equity .........................   $ 2,186,215    $         -    $         -

    Common stock and options issued for services ..........................   $         -    $   172,250    $ 2,369,900

    Contribution of debt to equity ........................................   $         -    $    64,719    $         -

    Conversion of preferred stock to common stock .........................   $         -    $   200,000    $         -

    Common stock issued for Fan Club Entertainment Co Ltd  acquisition ....   $   165,200    $         -    $         -

    Issuance of common stock for subscription receivable ..................   $   400,000    $         -    $         -



                                    See notes to consolidated financial statements.
                                                          F-5B
</TABLE>
<PAGE>
                                 IA GLOBAL, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       THREE YEARS ENDED DECEMBER 31, 2003


NOTE 1.  BUSINESS

IA Global, Inc. and Subsidiaries (the "company) formerly known as Medium4.com,
Inc. and foreignTV.com, Inc. is a Delaware corporation formed on November 12,
1998. The company was organized to develop opportunities as an Internet
broadcaster of international and niche content. In 2000, the company relocated
its corporate offices to Miami, Florida. In 2002 the company relocated again to
Burlingame, California.

The company's business model has changed substantially over the last several
years. During 2002 and 2003, we shifted our business model from being a provider
of broadband entertainment channels with revenues derived from advertising, to a
developer of media, entertainment and technology products and services. This
shift in focus was implemented primarily through acquisitions, as described
below. Through our merger and acquisition program, we intend to further increase
the number of majority owned companies within IA Global and expect that these
will focus on the media, entertainment and technology areas. We may also expand
further our licensing business. To this end, we may develop such media
technology products and services internally, or acquire them from other parties.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

PRINCIPLES OF CONSOLIDATION- The consolidated financial statements include the
accounts of the company and its majority-owned subsidiaries. QuikCAT Australia
Pty Ltd is accounted for on an equity basis based on our 47.5% equity ownership
as of December 31, 2003. Intercompany items and transactions have been
eliminated in consolidation.

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

ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS- Accounts receivable
consists primarily of amounts due to the company from our 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 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. Revenue on certain of the
receivable has been deferred as indicated in Note 4.

EQUIPMENT- Equipment represents machinery, equipment and software which are
stated at cost less accumulated depreciation. Depreciation of machinery and
equipments is computed by the declining method over the estimated useful lives
of the related assets (approximately 3-5 years). Software developed or obtained
for internal use is depreciated using the straight-line method over the
estimated useful life of the software, generally not in excess of five years.

INTANGIBLE ASSETS / INTELLECTUAL PROPERTY - The company amortized the intangible
assets and intellectual property acquired in connection with the acquisition of
iAccele over twenty-four months on a straight - line basis. For the Fan Club
acquisition, the company is amortizing the intangible assets and intellectual
property over sixty months on a straight - line basis, which is the life of the
Marvel Enterprises, Inc. agreement.

                                       F-6
<PAGE>

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. At
December 31, 2003 and 2002, respectively, the company believes that there has
not been an impairment of long-lived assets, after recording the write down of
equipment and the investment in foreignTVJapan.com during the year ended
December 31, 2002. See Note 19.

SOFTWARE DEVELOPMENT COSTS- The company capitalizes software development costs
upon the establishment of technological feasibility, subject to net realizable
value onsiderations. These costs are included in the balance sheet in property
and equipment. Capitalization ends when the product is available for general
release. Capitalized software development costs are amortized over 24 months
using the higher of the straight line method or the ratio of current gross
revenues to the total of the current and expected future revenues of the
product. Costs capitalized in 2003 of $145,802 were sold as part of the iAccele
sale on December 29, 2003 and included expenses to adopt licensed internet
acceleration software to the Japanese Market. At December 31, 2000, the company
capitalized $833,649 of such software development costs, net of accumulated
amortization. The costs were amortized over 30 months on a straight-line basis.
At December 31, 2001, such costs were written off.

FAIR VALUE OF FINANCIAL INSTRUMENTS- The carrying amounts reported in the
balance sheet for cash and cash equivalents, accounts receivable and accounts
payable and loan payable-related party 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 the convertible debt. EITF 98-5
recognition of a conversion feature that is in-the-money at issuance as
additional paid-in-capital, measured by allocating a portion of the proceeds
equal to the intrinsic value of that feature. The intrinsic value of the feature
is the difference between the conversion price and the fair value of the stock
into which the security is convertible, multiplied by the number of shares.
According to EITF 00-27, the issuance proceeds should not be reduced by issuance
costs when calculating the intrinsic value of the conversion feature. These
beneficial conversion features of debt or equity instruments, depending on the
specific facts and circumstances will determine whether such beneficial
conversion feature is to be recorded as an expense to be amortized over a period
of time, expensed immediately or recorded as a deemed dividend.

SOFTWARE REVENUE AND COST RECOGNITION- The company's revenue recognition
policies are in accordance with Statement of Position ("SOP") 97-2, Software
Revenue Recognition.

The company sold its software and provides support service on a subscription
basis through Value Added Resellers ("VARs"), Internet Service Providers
("ISPs") or directly to end-users. They purchase either 13 months/12 months/6
months/3 months/ or 30 days license products, and receive a copy of the iAccele
software and full access to the acceleration server maintained by the company.
Revenues are recognized ratably over the license period upon delivery of the
software to the end user, by the VAR, ISP or the company. The revenue
recognition process does not begin until the end user has possession of the
software and activated the use of such software, hence no revenue is recorded by
delivering software to the VAR or ISP.

                                       F-7
<PAGE>

The VAR's have prepaid for some of the licensed products. The company has
recorded a receivable for all of the licensed products sold to the VAR's with an
related deferred revenue amount until such time the licensed product is
delivered and activated by the end user. The receivables have been reduced to
reflect the prepayments made by the VAR's. Upon confirmation, via an activation
request, of the licensed products delivered to the end user, the revenue
recognition process begins and the related sales are amortized as revenues over
the term of the licensed product sold.

As detailed more fully in Note 14, the company has a license agreement to use
certain internet acceleration technology which forms the basis of the iAccele
software service. The company pays a license fee for each customer purchasing
this product. Fees paid under this license are capitalized as deferred license
fee and amortized to cost of sales over the life of the product period from the
month of selling and receiving the cash from the customers, to the expiration
month of the product life span. This license agreement was transferred as part
of the sale of iAccele on December 29, 2003.

FAN CLUB REVENUE RECOGNITION- Fan Club's main source of revenue was derived from
the activities associated with Marvel, as received from Cyberbred and other
companies. These activities include the following:

   o  Website development- By utilizing the knowledge of the staff and
      management, websites will be established to increase the number of members
      of the Marvel Fan Club, distribute a mail magazine, and data mine the
      member database.

   o  Marvel Fan Club Magazine - Create and produce a monthly magazine for
      members of the Marvel Fan Club.

   o  Marvel Fan Club Merchandising - Create and sale of Marvel merchandise to
      fan club members.

   o  Event Planning - Assist in the planning and running of an events for
      Marvel Fan Club. For example, an exhibition was held at the end of this
      year in a major Japanese department store, Parco. This was the first
      official event for the Marvel Fan Club in Japan. The event planning work
      included ticket sales and pamphlet production.

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

LICENSE REVENUE RECOGNITION- The company recorded revenues from its license
agreements on a straight line basis over the term of the license agreements. If
a license agreement is terminated, then the remaining unearned balance of the
deferred revenues are recorded as earned if applicable. The company has also
sold an encoding machine in 2001, which such revenues have been recorded upon
delivery and set up of the machine.

ADVERTISING COSTS- Advertising costs are expensed as incurred. There were no
advertising costs incurred for the years ending December 31, 2003, 2002 and
2001.

                                       F-8
<PAGE>

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 unrealized foreign currency exchange and the statement of
operations under other comprehensive income, net of tax: foreign currency
translation adjustments, respectively.

STOCK BASED COMPENSATION - The company has a stock-based employee compensation
plans, which are described more fully in Note 8. The company accounts for those
plans under the recognition and measurement principles of APB Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related Interpretations. No
stock-based employee compensation cost is reflected in the net loss, as all
stock options granted under that plan had an exercise price equal to the market
value of the underlying common stock on the date of grant. The following table
illustrates the effect on net loss and earnings per share if the company had
applied the fair value recognition provisions of FASB Statement No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, to stock-based employee compensation.

                                               Year ended December 31,
                                               -----------------------
                                          2003           2002           2001
                                          ----           ----           ----
Net loss available to common
shareholders, as reported ........... $(3,124,940)  $  (1,492,707)  $(7,238,892)

Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all
awards, net of related tax effects ..    (227,031)              -      (487,502)
                                      -----------   -------------   -----------
Pro-forma net loss available to
common shareholders ................. $(3,351,971)  $  (1,492,707)  $(7,726,394)
                                      ===========   =============   ===========
Earnings per share:
Basic and Diluted - as reported ..... $      (.05)  $       (.04)   $      (.39)
Basic and Diluted - pro-forma ....... $      (.06)  $       (.04)   $      (.42)

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

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

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

                                                   For the Year Ended
                                                      December 31,
                                                   -------------------
                                                   2003          2002
                                                   ----          ----
         Risk free interest rate ..........        3.75%         4.08%
         Expected life ....................        10 yrs      10 years
         Dividend rate ....................        0.00%         0.00%
         Expected volatility ..............         65%           75%

COMPREHENSIVE INCOME - The company 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 translation adjustments and is presented in
the Statements of Operations.

                                       F-9
<PAGE>

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

For the Year Ended December 31,            2003          2002           2001
--------------------------------------  -----------   -----------   -----------
Income (loss) from operations
 before income taxes:
   U.S. Operations ...................  $(1,611,170)  $(1,492,707)  $(6,238,892)
   Japan Operations ..................     (536,618)            -             -
                                        -----------   -----------   -----------
Total Income (loss) from Operations
   Before Income Taxes ...............  $(2,147,788)  $(1,492,707)  $(6,238,892)
                                        ===========   ===========   ===========

The provision (benefits) for income taxes by geographic operations is as
follows:

For the Year Ended December 31,            2003          2002           2001
--------------------------------------  -----------   -----------   -----------
   U.S. Operations ...................  $         -   $         -   $         -
   Japan Operations ..................       14,580             -             -
                                        -----------   -----------   -----------
Total Provision (Benefit) for
 Income Taxes ........................  $    14,580   $         -   $         -
                                        ===========   ===========   ===========

The components of provision for income taxes by taxing jurisdiction are as
follows:

For the Year Ended December 31,            2003          2002           2001
--------------------------------------  -----------   -----------   -----------
U.S. federal, state and local:
   Current ...........................  $         -   $         -   $         -
   Deferred ..........................  $         -   $         -   $         -

Japan:
   Current ...........................  $    (8,158)  $         -   $         -
   Deferred ..........................  $    22,738   $         -   $         -

A reconciliation of the company's effective tax rate to the statutory U.S.
federal tax rate is as follows:

For the Year Ended December 31,            2003          2002           2001
--------------------------------------  -----------   -----------   -----------
Statutory rate .......................     35.0%         35.0%         35.0%
Foreign tax differential .............      3.9             -             -
State and local ......................      5.7           5.7           5.7
                                        -----------   -----------   -----------
   Effective rate ....................     44.6%         40.7%         40.7%
                                        ===========   ===========   ===========

The effect of tax law changes on deferred tax assets and liabilities did not
have a significant effect on the company's effective tax rate.

                                      F-10
<PAGE>

The significant components of activities that gave rise to deferred tax assets
that are recorded in the Consolidated Balance Sheets were as follows:

At December 31,                                         2003            2002
------------------------------------------------    -----------     -----------
Deferred income ................................    $    11,500     $         -
Operating loss carryforwards ...................      4,550,000       4,435,000
                                                    -----------     -----------
   Gross Deferred Tax Assets ...................      4,561,500       4,435,000
Less: Valuation allowance ......................     (4,550,000)     (4,435,000)
                                                    -----------     -----------
   Deferred Tax Assets, net of Allowance .......    $    11,500     $         -
                                                    ===========     ===========

The valuation allowance at December 31, 2003, principally applies the net
operating loss carryforwards that, in the opinion of management, are more likely
than not to expire before the company can use them.

For tax return purposes, the company has available net operating carryforwards
of approximately $13 million and expires in various years through 2023.

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.

INVESTMENT IN FOREIGNTVJAPAN.COM - The company acquired a 10% ownership interest
on January 8, 2000 for $159,000 when we signed a Local Affiliate Agreement
("Agreement") with foreignTVJapan.com. This company was formed to develop
associations with foreign entities with such foreign entities paying us for the
use of one our domain names, a link to our website and the use of some content
on our website. The agreement had a ten year term and the company has recorded
this investment utilizing the cost method. See Notes 14and 19.

The company did not exercise significant influence over the operating or
financial policies of this entity. A portion of such investment was believed to
be unrecoverable by management and was written down in 2001 by $59,000. The
remaining recorded value of such ownership in foreignTVJapan.com of $100,000 was
repurchased by them on September 25, 2002 for $100,000.

In May-December 2002, Inter Asset Japan LBO No 1, an affiliate of our major
stockholder, acquired a 66.7% ownership interest in foreignTVJapan Co., Ltd.

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - In January 2003, the FASB issued FIN
46, "Consolidation of Variable Interest Entities," which addresses consolidation
by business enterprises of VIEs that either: (i) do not have sufficient equity
investment at risk to permit the entity to finance its activities without
additional subordinated financial support, or (ii) have equity investors that
lack an essential characteristic of a controlling financial interest.

Throughout 2003, the FASB released numerous proposed and final FASB Staff
Positions (FSPs) regarding FIN 46, which both clarified and modified FIN 46's
provisions. In December 2003, the FASB issued Interpretation No. 46 (FIN 46-R),
which will replace FIN 46 upon its effective date. FIN 46-R retains many of the
basic concepts introduced in FIN 46; however, it also introduces a new scope

                                      F-11
<PAGE>

exception for certain types of entities that qualify as a "business" as defined
in FIN 46-R, revises the method of calculating expected losses and residual
returns for determination of the primary beneficiary, includes new guidance for
assessing variable interests, and codifies certain FSPs on FIN 46. FIN 46-R did
not have a material impact on the company's Consolidated Financial Statements.

In 2003, the Emerging Issues Task Force (EITF) reached a consensus on two issues
relating to the accounting for multiple-element arrangements: Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables," and Issue No.
03-05, "Applicability of AICPA SOP 97-2 to Non- Software Deliverables in an
Arrangement Containing More Than Incidental Software." The consensus opinion in
EITF No. 03-05 clarifies the scope of both EITF 00-21 and Statement of Financial
Position (SOP) 97-2, "Software Revenue Recognition," and was reached on July 31,
2003. The transition provisions allow either prospective application or a
cumulative effect adjustment upon adoption. EITF Nos. 00-21 and 03-05 did not
have a material impact on the company's Consolidated Financial Statements.

In December 2003, the FASB revised SFAS No.132, "Employers' Disclosures about
Pensions and other Post-retirement Benefits, an amendment of FASB Statements No.
87, 88 and 106." This new SFAS No. 132 retains all of the disclosure
requirements of SFAS No. 132; however, it also requires additional annual
disclosures describing types of plan assets, investment strategy, measurement
date(s), expected employer contributions, plan obligations, and expected benefit
payments of defined benefit pension plans and other defined benefit
postretirement plans. SFAS No. 132 did not have a material impact on the
company's Consolidated Financial Statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 addresses significant issues
relating to the implementation of SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and develops
a single accounting model, based on the framework established in SFAS No. 121
for long-lived assets to be disposed of by sale, whether such assets are or are
not deemed to be a business. SFAS No. 144 also modifies the accounting and
disclosure rules for discontinued operations. The standard was adopted on
January 1, 2003, and did not have a material impact on the company's
Consolidated Financial Statements. The sale of iAccele operations are presented
in the Consolidated Financial Statements in accordance with SFAS No. 144.

In April 2003, the FASB issued SFAS No.149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 clarifies under
what circumstances a contract with an initial net investment meets the
characteristics of a derivative as discussed in SFAS No. 133. It also specifies
when a derivative contains a financing component that requires special reporting
in the Consolidated Statement of Cash Flows. SFAS No. 149 amends certain other
existing pronouncements in order to improve consistency in reporting these types
of transactions. The new guidance is effective for contracts entered into or
modified after June 30, 2003, and for hedging relationships designated after
June 30, 2003. SFAS No. 149 did not have a material effect on the company's
Consolidated Financial Statements.

In May 2003, the FASB issued SFAS No.150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. It establishes
classification and measurement standards for three types of freestanding
financial instruments that have characteristics of both liabilities and equity.
The provisions of SFAS No. 150 are effective for (i) instruments entered into or
modified after May 31, 2003, and (ii) pre-existing instruments as of July 1,
2003. In November 2003, through the issuance of FSP 150-3, the FASB indefinitely
deferred the effective date of certain provisions of SFAS No. 150, including
mandatory redeemable instruments as they relate to minority interests in
consolidated finite-lived entities. The adoption of SFAS No. 150, as modified by
FSP 150-3, did not have a material effect on the company's Consolidated
Financial Statements.

                                      F-12
<PAGE>

NOTE 3.  RESTATEMENT OF 2002 AND 2001 CONSOLIDATED FINANCIAL STATEMENTS

The company made certain the following adjustment and reclassifications to the
prior year's financial statements detailed as follows:

   a. Loans payable - related party of $243,479 as of December 31, 2001 was
      previously recorded as long-term liabilities has been reclassified as
      current liabilities.

   b. The $1,000,000 valuation of the beneficial conversion feature of the sale
      of the Series A Preferred Stock in 2001 for $1,000,000 was not previously
      recorded. The $1,000,000 non-cash deemed dividend has now been recorded
      and shown as increasing the net loss to common shareholders with no net
      changes to the equity accounts.

   c. The "Write down of fixed assets" of $250,00O for the year ended December
      31, 2001 was reclassified from "Other Income (Expense)" to "Expenses" as
      an increase to the sub-title "LOSS FROM OPERATIONS".

   d. The "Write down of capitalized development costs" of $534,498 for the year
      ended December 31, 2001 and cumulatively were reclassified from "Other
      Income (Expense)" to "Expenses" as an increase to the sub-title "LOSS FROM
      OPERATIONS".

   e. An allocation of depreciation of computer and other electronic equipment
      and amortization of capitalization software costs of $561,666 for the
      years ended December 31, 2001 has been reclassified to "Cost of Sales"
      based on managements estimate of such costs attributed to the product
      lines developed from "Selling, general and administrative expenses".

   f. Amortization costs recorded as "Other assets" under investing activities
      in the consolidated statement of cash flows of $303,090 for the year ended
      December 31, 2001 and cumulatively were reclassified to Amortization as an
      "Adjustment to reconcile net loss to net cash used in operating
      activities".

   g. The write down of the $59,000 Investment in foreignTVJapan.com was
      reclassified from investing activities to "Impairment of fixed assets /
      investment in affiliate as an "Adjustment to reconcile net loss to net
      cash used in operating activities" for the year ended December 31, 2001.

   h. Production expenses of $21,728 for the year ended December 31, 2002,
      previously reported as a separate line in the consolidated statement of
      operations under "expenses" have been reclassified to be included in "cost
      of sales".

NOTE 4. ACCOUNTS RECEIVABLE/ CUSTOMER CONCENTRATION

Accounts receivable of $1,266,335 and $0 as of December 31, 2003 and 2002,
respectively, relates to Fan Club revenue recorded during the quarter ended
December 31, 2003.

The company had the following customers with sales in excess of 10% for the
years ended December 31, 2003 and 2002, repectively:

                            2003                2002
                            ----                ----
Cyberbred Co Ltd            44.3%               0.0%
ADPlannet Co Ltd            19.2%               0.0%
Quest Co Ltd                27.3%               0.0%
foreignTVJapan.com           0.0%              56.7%
Windfire International Ltd   0.0%              43.3%

                                      F-13
<PAGE>

Cyberbred and ADPlannet were Fan Club customers. Quest was an iAccele customer
and this business was sold on December 29, 2003.

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

NOTE 5. PREPAID COSTS

Prepaid costs of $438,142 and $0 as of December 31, 2003 and 2002, respectively,
relates to costs incurred by Fan Club for revenue that was deferred as of
December 31, 2003.

NOTE 6. OTHER CURRENT ASSETS

Other current assets of $296,163 and $0 as of December 31, 2003 and 2002,
respectively, included a receivable from GM2 of $279,356 related to the sale of
iAccele on December 29, 2003. This cash was received on January 16, 2004.

NOTE 7. INTANGIBLE ASSETS

Intangible assets of $1,014,685 and $0 as of December 31, 2003 and 2002
respecxtively, consisted of the following:

                                          Amount           Estimated Life
                                       ----------          --------------
Licensing fee ........................ $  933,708              5-years
Other intangible .....................    188,117              5-years
                                       ----------
                                        1,121,825

Less: accumulated amortization .......   (107,140)
                                       ----------
         Intangible assets, net ...... $1,014,685
                                       ==========

Total amortization expense for the year ended December 31, 2003 amounted to
$557,885 of which $457,617 related to iAccele intangible assets that were sold
on December 29, 2003.

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

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

NOTE 8.  EQUIPMENT

The company disposed of its leasehold improvements and equipment due to its
relocation to California during 2002. The fixed assets written down represented
certain equipment noted above that is no longer being utilized due to the
company not developing content. The impairment valuation was determined by
management estimating the resale value of the equipment not being utilized. Due
to the rapid technological changes in the computer industry most of the
equipment not being used has been rendered useless.

NOTE 9.  LOAN TO QUIKCAT AUSTRALIA PTY LTD

During the year ended December 31, 2003, the company made loans to QuikCAT
Australia Pty Ltd ("QuikCAT Australia") in the aggregated amount of $74,850.
Interest accrues at 3.5% after certain profit targets are achieved. The company
acquired 47.5% of QuikCAT Australia in 2003.

                                      F-14
<PAGE>

NOTE 10. LOAN PAYABLE - RELATED PARTY

Loan payable-related party was $0 and $1,063,857 as of December 31, 2003 and
2002, respectively. The company owed David Badner, a stockholder and a former
consultant of the company, $563,857 as of September 25, 2002 pursuant to a
convertible promissory note dated May 31, 2002 (the "Convertible Promissory
Note"). The company has been informed by Inter Asset Japan that as of September
25, 2002, Inter Asset Japan LBO Fund No. 1 ("IAJ LBO Fund"), a related party,
acquired the Convertible Promissory Note from Mr. Badner. The interest rate
under the Convertible Promissory Note was 10% per annum.

During the three months ended December 31, 2002, IAJ LBO Fund loaned the company
an additional $500,000 under the Convertible Promissory Note, thereby increasing
the principal amount to $1,063,857. The proceeds from this additional loan were
used for working capital purposes.

The Convertible Promissory Note was convertible into the company's Series B
convertible preferred stock. Each share of Series B convertible preferred stock
is convertible into 10,000 shares of the company's common stock. On June 30,
2003, IAJ LBO Fund converted the principal amount of the Convertible Promissory
Note, as well as approximately $95,000 of accrued interest thereon, into 1,158
shares of the company's Series B convertible preferred stock. The 1,158 shares
of Series B Convertible Preferred Stock are convertible into 11,580,000 shares
of common stock, subject to approval by the company's shareholders of an
amendment to the company's Certificate of Incorporation increasing its
authorized common stock to at least 100,000,000 shares at the company's
forthcoming 2003 annual meeting of its stockholders.

The amount outstanding to IAJ LBO Fund of $1,063,857 at December 31, 2002 was
due to a related party shareholder. The beneficial conversion feature of this
Series B Shares, pursuant to EITF 98-5 and as amended by EITF 00-27, has a
recorded value of $1,063,857, which has been limited to the proceeds of the sale
of this preferred pursuant to the EITF 98-5. This beneficial conversion feature
was recorded as interest expense in 2002, since such Convertible Promissory Note
is convertible immediately by the holder.

NOTE 11. RELATED PARTY TRANSACTIONS WITH INTER ASSET JAPAN AND CERTAIN
         RELATIONSHIPS

RELATED PARTY TRANSACTIONS WITH INTER ASSET JAPAN

Inter Asset Japan LBO No. 1 Fund ("IAJ LBO Fund"), PBAA Fund Ltd. ("PBAA"),
Terra Firma Fund Ltd. ("Terra Firma") and Inter Asset Japan Co. Ltd. ("IAJ)" and
together with IAJ LBO Fund, PBAA, and Terra Firma, our "controlling
stockholders") collectively hold approximately 82.6% of the common shares of the
company. Our controlling stockholders (other than IAJ which was not a
stockholder at the time) stated in a Schedule 13D filed with the Securities and
Exchange Commission ("SEC") on July 17, 2003, and have subsequently confirmed
orally, that they may be deemed to constitute a "group" for the purposes of Rule
13d-3 under the Securities Exchange Act of 1934 (the "Exchange Act"). Mr. Alan
Margerison, our Director, President and Chief Executive Officer, currently
serves as the Chairman of IAJ, and together with his business partner, Mr.
Hiroki Isobe, they control each of our controlling stockholders.

The following table provides details on the affiliated parties owned or
controlled by each of the company's controlling stockholders and certain other
entities, 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 December 31, 2003, that are relevant for purposes of
understanding the related party transactions that have taken place:

                                      F-15
<PAGE>

Inter Asset Japan LBO No. 1 Fund owns:

                                  foreignTV Japan Co., Ltd.............66.7%
                                  InfoshowerX Co., Ltd.................42.7%
                                  IA Global, Inc.......................38.0%

PBAA Fund Ltd. owns:

                                  IA Global, Inc.......................26.2%

Terra Firma Fund Ltd. owns:

                                  IA Global, Inc.......................15.7%

Inter Asset Japan Co., Ltd. owns:

                                  IA Global, Inc........................2.0%
                                  Cyberbred Co., Ltd...................27.0% (1)

IA Global, Inc. owns:

                                  iAccele Co., Ltd..................... 0.0% (2)
                                  QuikCAT Australia Pty Ltd............47.5%
                                  Fan Club Entertainment Co., Ltd......67.0%

InfoshowerX Co., Ltd. owns:

                                  iAccele Co., Ltd.....................23.1%

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

                                  Cyber Holdings Co. Ltd..............100.0%
                                  Cyberbred Co. Ltd....................41.9%
                                      (69.0% after September 29, 2003)

Cyber Holdings Co. Ltd. owns:

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

(1) Mr. Kazunari Ito, Chief Executive Officer of Fan Club Entertainment Co.,
    Ltd., Cyberbred Co., Ltd. and Cyberholdings Co. Ltd., repurchased the 27.1%
    ownership interest in Cyberbred from IAJ on September 29, 2003.

(2) The company sold its 76.9% interest in iAccele Co. Ltd on December 29, 2003.

Conversion of Preferred A Shares

On September 30, 2002, IAJ consummated a series of related transactions pursuant
to which IAJ, together with its affiliates, became the majority stockholder of
the company. As of such date, IAJ converted 1,000 shares of Series A convertible
preferred stock (the "Series A Preferred Stock") for 20,000,000 shares of common
stock (the "Conversion Shares"). IAJ had acquired the Series A Preferred Stock
on October 30, 2001, in a private transaction for an aggregate consideration of
$1,000,000. No additional consideration was due from or paid by IAJ for the
exercise of its right to convert the Series A Preferred Stock into Conversion
Shares.

In connection with these transactions, Jonathan Braun, the company's President
and Chief Executive Officer at that time, resigned as a director of the company
effective September 30, 2002. On October 18, 2002, Mr. Braun resigned as the
President and Chief Executive Officer. Mr. Braun's resignation was not the
result of any disagreement with the company on any matter relating to the

                                      F-16
<PAGE>

company's operations, policies or practices. Immediately following Mr. Braun's
resignation as President and Chief Executive Officer, the board of directors
elected Alan Margerison to serve as one of the company's directors and appointed
Mr.Margerison to serve as President and Chief Executive Officer.

Debt to Preferred B Shares Conversion

The company owed David Badner, a stockholder and a former consultant of the
company, $563,857 as of September 25, 2002 pursuant to a convertible promissory
note dated May 31, 2002 (the "Convertible Promissory Note"). The company has
been informed by IAJ that as of September 25, 2002, IAJ LBO Fund, our largest
stockholder, acquired the Convertible Promissory Note from Mr. Badner. The
interest rate under the Convertible Promissory Note was 10% per annum.

During the three months ended December 31, 2002, IAJ LBO Fund loaned the company
an additional $500,000 under the Convertible Promissory Note, thereby increasing
the principal amount to $1,063,857. The proceeds from this additional loan were
used for working capital purposes.

The Convertible Promissory Note was convertible into the company's Series B
convertible preferred stock. Each share of Series B convertible preferred stock
is convertible into 10,000 shares of the company's common stock. On June 30,
2003, IAJ LBO Fund converted the principal amount of the Convertible Promissory
Note, as well as approximately $95,000 of accrued interest thereon, into 1,158
shares of the company's Series B convertible preferred stock. The 1,158 shares
of Series B Convertible Preferred Stock are convertible into 11,580,000 shares
of common ctock, subject to approval by the company's shareholders of an
amendment to the company's Certificate of Incorporation increasing its
authorized common stock to at least 100,000,000 shares at the company's
forthcoming 2003 annual meeting of its stockholders.

Acquisition of iAccele Co Ltd

On February 10, 2003, the company acquired a 76.9% equity interest in iAccele Co
Ltd, a privately held Japanese corporation engaged in the business of providing
an Internet data transmission acceleration service that targets narrowband
users, as well as broadband users, for 100.0 million Japanese Yen, or
approximately $830,000 based on the Japanese Yen/US dollar exchange rate on that
date.

iAccele is engaged in the business of providing an Internet data transmission
acceleration service. Its main product offering is named after the company,
iAccele. This service allows narrow band users, as well as broadband users, to
accelerate their access to the Internet, enabling them to increase the speed of
downloading and uploading data from their local machine to the Internet. This
speeds up web browsing and network services and accelerates email services.
There is no need for the user to change his network provider connection. The
iAccele product is based on a repeat subscriber business model. Subscribers to
the service sign up for a 3 month or 1 year license, which provides them with a
copy of the iAccele software and full access to the acceleration server.

In order to finance this purchase, the company borrowed 100.0 million Japanese
Yen from PBAA Fund Ltd., a British Virgin Islands limited liability company. Mr.
Alan Margerison, our Director, President and Chief Executive Officer, currently
serves as the Chairman of IAJ, and together with his business partner, Mr.
Hiroki Isobe, they control PBAA.

The principal amount of this loan, together with interest thereon at 4.50% per
annum, is due and payable on January 31, 2004. The company may defer payment of
the principal amount of this loan, but not accrued interest, for one additional
year with the consent of PBAA. The company may prepay all or specified minimum
portions of this loan at any time after March 31, 2003 upon payment of certain
prepayment penalties.

                                      F-17
<PAGE>

If this loan is not repaid by January 31, 2004, PBAA will be afforded the right
to convert any portion of the then unpaid principal amount of the loan, as well
as any then accrued but unpaid interest thereon, into shares of the company's
common stock at a per share conversion price equal to the Japanese Yen
equivalent of 80% of the average of the US dollar closing price of the common
stock on the American Stock Exchange in the 20 consecutive trading days
immediately prior to the date upon which PBAA gave the company notice of
conversion, or, if the common stock is not then traded on the American Stock
Exchange, the closing bid price for the common stock as reported by the Nasdaq
Stock Market or such other primary exchange or stock bulletin board on which the
common stock is then traded. By way of illustration, had such conversion
occurred on February 10, 2003, PBAA would have received 7,335,145 shares of
common stock which, when added to those shares currently beneficially owned by
PBAA and its affiliates would increase their collective ownership of the
company's common stock to approximately 78.9%.

iAccele used 70.0 million of the 100.0 million Japanese Yen that it received
from the company to partially repay a contractual obligation of 150.0 million
Japanese Yen, since reduced by iAccele's payment of 30.0 million Japanese Yen,
that it owes to InfoShowerX, a Japanese public company, which was incurred by
iAccele in connection with a December 2002 reorganization by which iAccele,
previously an unincorporated operating division of InfoShowerX, acquired the
division's assets from InfoShowerX and became a stand-alone corporation. iAccele
was required to repay this contractual obligation to InfoShowerX in its entirety
by the end of April 2003. Further, 42.0 million Japanese Yen was paid by iAccele
between February 10, 2003 and June 30, 2003 and the balance of 8.0 million
Japanese Yen in August 2003. InfoShowerX has agreed to indemnify the company for
any damages that may result from representations and warranties made to the
company by iAccele to acquire the company's equity interest thereon.

IAJ and its affiliates own an aggregate of 42.7% and Hiroshi Kubori, who became
a director of the company after the acquisition and functions as CEO of iAccele,
owns approximately 5% of the capital stock of InfoShowerX. InfoShowerX owns the
balance of the capital stock of iAccele, or 23.1%.

InfoShowerX had indebtedness owed to IAJ. A portion of the payments that
InfoShowerX received from iAccele, noted above, were used to repay some of its
indebtedness to IAJ and its affiliates.

Pursuant to a one-year outsourcing agreement, dated as of December 20, 2002,
iAccele had provided business services to InfoShowerX and InfoShowerX had
provided technology services and office space to iAccele. A new agreement was
signed between the two companies for the term April 1, 2003 to July 31, 2003.

The primary factors that resulted in $1,178,000 being allocated to the
intangibles for the purchase of iAccele is due to the company acquiring $348,000
of potential liabilities in excess of the $569,000 of identifiable assets in
addition to the $830,000 of cash paid at closing. Although the company acquired
76.9% of iAccele there can be no assurance the minority interest holder would
ever pay their portion of any cash shortfalls.

The results of operations of iAccele are included in the Consolidated Statements
of Operations for the period February 11, 2003 to June 30, 2003.

The pro-forma financial data on the iAccele acquisition is included in this
section below. There are no material, nonrecurring items included in the
reported the pro-forma results.

The company purchased and subsequently leased 600 computers to an investee of
the major shareholder of the company, foreignTV Japan co. Ltd., a Japanese
limited liability company ("foreignTV"), IAJ owns approximately 66% of foreignTV
Japan. The company previously held a minority ownership in foreignTV, but sold
its interest in 2002. IAJ, a principal stockholder of the company, currently

                                      F-18
<PAGE>

owns approximately 66% of the outstanding shares of foreignTV. These computers
cost approximately $1,000 per machine or approximately $600,000. The company
expects to receive about $1,200,000 over the term of these leases for the
equipment under lease. The terms of the leases are as follows;

   o  Lease 1 dated June 10, 2003 for 100 computers. The monthly rental is
      950,000 Yen or approximately $8,000 per month.

   o  Lease 2 dated June 20, 2003 for 200 computers. The monthly rental is
      1,900,000 Yen or approximately $17,000 per month.

   o  Lease 3 dated August 1, 2003 for 300 computers. The monthly rental is
      2,850,000 Yen or approximately $25,000 per month.

   o  The rental period for each lease is for 2 years.

   o  The lease contract shall be automatically extended for six months if
      foreignTV does not object at least one month prior to the contract's
      termination date.

   o  These computers are to be returned to the company upon termination of the
      leases.

These leases were not recorded as a financing lease, because these leasing
transactions are between related parties under common control. As a result,
revenues are not being recognized on any cash receipts. In addition, since the
lessee of these computers is not sufficienty capitalized, the company's ability
to collect the lease payments is not certain. The company has received 3,429,749
Yen or approximately $31,000 during the quarter ending September 30, 2003 and
this amount has been booked as deferred revenue on the balance sheet.

These computers are being depreciated over three years.

During the quarter ended June 30, 2003, iAccele borrowed 52,500,000 Yen, or
approximately $454,000, from IAJ. This financing was made in four separate
advances. These advances bear interest at rates ranging from 3.5% to 6.7% per
annum. These advances matured during the following dates: 5,500,000 Yen or
approximately $45,000 on July 25, 2003, 7,000,000 Yen, or approximately $62,000,
on July 27, 2003, 10,000,000 Yen, or approximately $89,000, on August 1, 2003
and 30,000,000 Yen, or approximately $258,000, on December 1, 2003. The company
repaid 18,500,000 Yen, or approximately $160,000, on July 25, 2003. The
remaining 4,000,000 Yen which was due on August 1, 2003 was deferred with a new
note until the end of 2003. Therefore, the total outstanding amount to IAJ due
in December, 2003 and bearing interest at 3.5% per annum is 34,000,000 Yen, or
approximately $ 290,000.

On November 17, 2003, the company assigned to IAJ (a) the lease with foreignTV
Japan for the 600 personal computers, (b) unpaid invoices totaling 18,947,500
Yen, or approximately $166,000, from foreignTV Japan, (c) and rights to cash
received of 3,429,749 Yen, or approximately $31,000, in exchange for (a)
cancellation of a 34,000,000 Yen, or approximately $298,000, loan from IAJ and
related accrued interest, and (b) 34,000,000 Yen, or approximately $298,000 that
was received by the company on December 18, 2003.

On December 2, 2003, the company reached agreement with PBAA to convert
approximately $834,000 in outstanding convertible debt plus interest of
approximately $33,000 in exchange for our common stock. PBAA, an affiliate of
our majority shareholder, plans to convert the remainder of its outstanding debt
under a revised agreement from its original contract dated January 31, 2003.

                                      F-19
<PAGE>

Under the conversion terms, the company plans to issue 3,163,436 shares of
common stock to PBAA at a conversion rate of $0.30, representing an approximate
15% discount to the trailing twenty day average closing price of the our common
stock ending November 21, 2003, the date PBAA made its investment commitment. As
the conversion purchase price per share was at a discount to market, our
shareholders will be asked to ratify and approve this transaction, as required
by the applicable rules of the American Stock Exchange at the company's
forthcoming 2003 annual meeting of shareholders. The company recorded a deemed
dividend of $177,152 in connection with this transaction and a foreign exchange
adjustment of approximately $85,000.

On December 29, 2003, the company executed a share purchase agreement to sell
our 76.9% interest in iAccele Co. Ltd. ("iAccele"), for approximately $280,000
to GM2 Co. Ltd., a private Japanese corporation ("GM2"). In addition, iAccele
had approximately $700,000 of liabilities that had previously been reflected in
the consolidated balance sheet of our company. In connection with the sale, we
agreed to cancel approximately $300,000 of inter-company debt owed by iAccele to
us. The company received the funds from GM2 on January 16, 2004.

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

The company acquired iAccele with the intent to become a wholesale distributor
of an Internet acceleration product. However, the company subsequently
determined that we would prefer to be a developer and licensor of the core
Internet acceleration technology, rather than a wholesale distributor of such
products. Therefore, the company sold its interest in iAccele, and have instead
been developing our own proprietary Internet accelerator product in conjunction
with QuikCAT.com, Inc. ("QuikCAT"), an Ohio based private company, that was the
core technology provider to iAccele. The company has licensed the core
technology from QuikCAT and have also developed a user interface for this
Internet acceleration product, which the company believes will enhance the
commercial reception of the product.

$2.0M Financing

On June 30, 2003, the company agreed to sell to PBAA, 13,333,333 shares of
common stock at an average price of $0.15 per share, for a total of $2.0
million, representing an approximate 25% discount to the trailing five-day
average closing price of our common stock ending June 15, 2003, the date PBAA
made its investment commitment. As PBAA's purchase price per share was at a
discount to market, the company's stockholders will be asked to ratify and
approve this transaction, as required by the applicable rules of the American
Stock Exchange at the company's forthcoming 2003 annual meeting of its
stockholders. The company recorded a deemed dividend of $693,333 in connection
with this transaction.

Acquisition of Fan Club Entertainment Co, Ltd

On August 5, 2003, the company executed a Share Purchase Agreement to acquire
from Cyber Holdings Co Ltd ("Cyber Holdings") a 67% equity interest in Fan Club
Co Ltd (`Fan Club"), a privately-held Japanese company. Fan Club will provide
advertising, merchandising, publishing, website and data management services to
Cyberbred Co Ltd, ("Cyberbred"). The purchase price for the company's equity
interest in Fan Club is 134,000,000 Japanese Yen, or $1,112,960 (based on the
Japanese Yen/US dollar exchange rate on August 5, 2003), as well as 350,000
shares of the company's common stock issued at $0.472 per share, which is the
average closing price for the five days prior to closing.

                                      F-20
<PAGE>

The terms of the Share Purchase Agreement require Cyber Holdings to transfer the
rights under the Marvel agreement (described below) to Fan Club within five
months or make its best efforts to fully cooperate in any commercially
reasonable arrangement designed to provide the benefit of the Marvel agreement
to Fan Club. The company used its working capital to fund the cash portion of
the purchase price.

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

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

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

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

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

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

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

The results of operations of Fan Club are included in the Consolidated
Statements of Operations for the period August 5, 2003 to December 31, 2003.

                                      F-21
<PAGE>

The pro-forma financial data on the iAccele and Fan Club acquisitions are
included in this section below:
<TABLE>
<CAPTION>
                                                         Pre-Acquisition          Pre-Acquisition
                                     As Reported,      Operations of iAccele  Operations of Fan Club     Pro-Forma
                                      Year Ended          January 1, 2003          March 1, 2003         Year Ended
                                   December 31, 2003    To February 9, 2003      To August 4, 2003    December 31, 2003
                                   -----------------   ---------------------   ---------------------  -----------------
<S>                                   <C>                   <C>                      <C>                  <C>
Revenues .......................      $ 1,144,654           $   4,308                $      -             $ 1,148,962

Loss before extraordinary items        (2,147,788)           (226,376)                (54,081)             (2,428,245)

Net loss .......................       (3,124,940)           (226,376)                (54,081)             (3,405,397)

Loss per common share ..........      $     (0.05)                                                        $     (0.05)
</TABLE>

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

$500,000 Financing

On November 11, 2003, the company agreed to sell to IAJ, 1,666,666 shares of our
common stock at an average price of $0.30 per share, for a total of $500,000,
representing an approximate 17% discount to the trailing five-day average
closing price of our common stock ending November 6, 2003, the date IAJ made its
investment commitment. The company recorded a deemed dividend of $106,667 in
connection with this transaction.

$400,000 Financing

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

RELATIONSHIP WITH DAVID BADNER

The company owed David Badner, a stockholder and a former consultant of our
company, $563,857 as of September 25, 2002 pursuant to a convertible promissory
note dated May 31, 2002 (the "Convertible Promissory Note"). The interest rate
under the Convertible Promissory Note was 10% per annum. The Convertible
Promissory Note was convertible into our Series B convertible preferred stock.
Each share of Series B convertible preferred stock is convertible into 10,000
shares of our common stock. The Series B convertible preferred stock has no
voting rights except as may be required by law, provides for the payment of
dividends only when and if dividends are declared and paid on shares of our
common stock and then in a like amount, provides for a liquidation preference of
$1,000 per share and is not redeemable by the company.

The company has been informed by IAJ that as of September 25, 2002, IAJ LBO
Fund, our largest stockholder, acquired the Convertible Promissory Note from Mr.
Badner for $563,857. On June 30, 2003, IAJ LBO Fund converted the principal
amount of the Convertible Promissory Note that had previously be held by Mr.
Badner into shares of our Series B convertible preferred stock.

In addition to the financing efforts of Mr. Badner discussed above, Mr. Badner
assisted the company in identifying inefficiencies in our operations and in
reducing or eliminating redundant overhead and unnecessary expenses. During the
year ended December 31, 2001, Mr. Badner also assisted us in negotiating the

                                      F-22
<PAGE>

reduction of our accounts payable to various unaffiliated third parties, with
resultant savings to us of approximately $500,000. J.N. Savasta Corp., an
insurance brokerage owned by Mr. Badner and Mr. Savasta, also paid approximately
$75,000 of our insurance premiums and replaced several of our insurance policies
in effect at various times during that year with comparable coverages at
substantially lower rates, with resultant savings to us in excess of $135,000
over an 18-month period. For these and other services rendered on our behalf
during the year ended December 31, 2001, as well as in the immediately preceding
year, and in recognition of the fact that Mr. Badner had essentially acted as
our lender of last resort when we had exhausted all other possibilities for
short-term financing, the company issued to Mr. Badner and to companies
controlled by him 13,411,650 shares of our common stock.

In addition, pursuant to a consulting services agreement effective December 1,
2001, Mr. Badner provided consulting services to us at a fixed monthly rate of
$15,000, plus reimbursement for the actual cost of all reasonable expenses of
travel and entertainment, promotional activities and other expenses incurred on
behalf of the company and our subsidiaries and our affiliates in connection with
the performance of Mr. Badner's services under the agreement. The company and
Mr. Badner terminated this agreement as of September 25, 2002. Mr. Badner
generally released the company and IAJ and its affiliates from all liabilities,
and the company and Mr. Badner agreed to cooperate with each other in regard to
maintaining our AMEX listing and in the development of our business and
enhancement of the value of our company. In consideration of such cooperation
and release and in full satisfaction of our obligations to Mr. Badner under the
consulting agreement, the company agreed to issue to Mr. Badner 2,000,000 shares
of our common stock and agreed to effectuate a registration of such shares with
the SEC.

CORPORATE APARTMENT

In February 2001, the company leased a corporate apartment in Miami, Florida for
the use of Jonathan Braun, our President and Chief Executive Officer at the
time, and David Badner. These individuals used the apartment while in the
process of relocating our executive offices to Miami. The monthly rental expense
was approximately $3,800. The corporate apartment was justified as being more
cost effective than hotel expense for those two individuals while in Miami on
business for the company. In mid-2001, David Badner began paying for two-thirds
of the monthly rental expense and using the apartment for his personal use in
such promotion. Mr. Badner began paying 100% of the monthly rental expense in
April, 2002.

NOTE 12. EQUITY TRANSACTIONS

In April and May 1999 the company sold 1,678,433 shares of common stock pursuant
to an initial public offering registration at $6.00 per unit. Each unit
consisted of one share of common stock and one warrant to purchase one share of
common stock at an exercise price of $9.00. There are 1,678,433 of such warrants
outstanding as of December 31, 2000 and 1999. The warrants will be exercisable
at any time, until they expire three years after the effective date of the
Proposed Offering. The warrants may be redeemed by the company, in whole or in
part, at any time upon at least 30 days prior written notice to the registered
holders, at a price of $.05 per warrant, provided that the closing bid price of
the common ctock was at least $12.00 for the 20 consecutive trading days ending
on the third business day preceding the date of the company's giving of notice
of redemption to the warrant holders, and provided there is then a current
registration statement in effect for the shares underlying the warrants. On
March 31, 2003, we announced that the expiration date of the warrants was
extended to April 12, 2004 and the exercise price of the warrants was reduced to
$3.50 per share. On March 26, 2004, we announced that the warrants would expire
April 12, 2004.

                                      F-23
<PAGE>

In connection with the initial public offering 167,843 units were issued to the
underwriter with an exercise price of $6.60 for one share of common stock and a
warrant to purchase another share of common stock at $9.00, expiring in May
2004. There were costs of $1,287,046 applied as a reduction to such offering
proceeds.

The company issued 14,585,000 shares of common stock for services rendered at
$.15 - $.50 per share during year 2001. The company recorded $2,369,900 of
compensation expense relating to such issuance. The per share price utilized for
valuing such shares issued for services was the market price on the day such
shares were determined to be earned for the services rendered.

On October 30, 2001, the company sold 1,000 shares of Series A Convertible
Preferred Stock to an institutional investor for $1,000,000. Each share of
Series A Convertible Preferred Stock is convertible at any time or from time to
time into 20,000 shares of common stock, or an aggregate of 20,000,000 shares of
common stock if all of the Series A Convertible Preferred Stock is converted.
The beneficial conversion feature of this preferred stock, pursuant to EITF 98-5
and as amended by EITF 00-27, has a recorded value of $1,000,000, which has been
limited to the proceeds of the sale of this preferred pursuant to the EITF 98-5.
This beneficial conversion feature was recorded as a non-cash deemed dividend
during 2001, resulting in an increase in the loss applicable to common
shareholders. The paid in capital accounts as result of this adjustment was to
record the value of the beneficial conversion feature to paid in capital by
increasing such account by $1,000,000 and increasing paid in capital for the
deemed dividend of $1,000,000.

On September 30, 2002, the company converted its 1,000 of preferred shares into
20,000,000 shares of common stock. Also 2,125,000 shares were issued for
services at $0.08 per share.

A director and shareholder contributed $64,719 of indebtedness owed to the
company to capital as of September 30, 2002.

The beneficial conversion rights for the loan from Inter Asset Japan LBO Fund of
$1,063,857 was recorded at $277,311 as a contribution to capital and the related
amortization recorded as interest expense over twelve months.

On February 3, 2003, the company entered into an employment agreement with Alan
Margerison to serve, for a term of three years, as our President and Chief
Executive Officer at an annual base salary of $60,000 and eligibility to receive
compensation, including options, at the discretion of our compensation
committee. Mr. Margerison currently spends approximately 30 hours per week on
company matters.

On February 3, 2003, the company entered into an employment agreement with
Satoru Hirai to serve, for a term of three years, as our Chief Operating Officer
and Chief Financial Officer at an annual base salary of $91,200 and eligibility
to receive compensation, including options, at the discretion of our
compensation committee. This agreement was amended on May 21, 2003 and the
annual base salary was increased to $120,000. Mr. Hirai currently spends
approximately 30 hours per week on company matters. Mr. Hirai resigned effective
March 31, 2004.

These employment agreements also contain provisions for confidentiality for the
term of each agreement and thereafter. Each employment agreement also provides
for a severance payment in the amount of 25% of the executive's annual base
salary in the event that the employee is terminated by the company without
cause.

On February 5, 2003, the company granted 1,500,000 incentive stock options at
$0.08 per share to two executives of the company, exercisable immediately, and
which expire on February 5, 2013.

                                      F-24
<PAGE>

In April 2003, the board of directors voted to amend the conversion price for
the 1,678,433 warrants outstanding from our public offering from an exercise
price of $9.00 per share to an exercise price of $3.50 per share. On March 26,
2004, the company announced that the warrants would expire April 12, 2004.

On June 15, 2003, the board of directors, subject to shareholder approval at the
forthcoming 2003 annual meeting of shareholders, approved an increase in the
number of shares available for issuance under the 1999 and 2000 stock options
plans from 1,500,000 to 11,500,000 shares.

On June 15, 2003, the company granted 4,975,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders,
with an exercise price of $.20 per share. Four million five hundred thousand of
the stock options were issued to the directors and officers of the company, and
these options vest over three years. Four hundred and seventy five thousand
options are performance based stock options and none of the performance based
stock options were earned The 4,500,000 stock options issued to the officers and
directors expire on June 15, 2013.

On June 30, 2003, the company agreed to sell to PBAA Fund Ltd ("PBAA"), an
affiliate of our major shareholder, 13,333,333 shares of our common stock at an
average price of $0.15 per share, for a total of $2.0 million, representing an
approximate 25% discount to the trailing five-day average closing price of our
common stock ending June 15, 2003, the date PBAA made its investment commitment.
As PBAA's purchase price per share was at a discount to market, our stockholders
will be asked to ratify and approve this transaction at our forthcoming 2003
annual meeting of stockholders, as required by the applicable rules of the
American Stock Exchange. The company recorded a deemed dividend of $693,333 in
connection with this transaction.

On June 30, 2003, Inter Asset Japan LBO Fund, an affiliate of our major
shareholder, converted the principal amount of a convertible promissory note, as
well as approximately $95,000 of accrued interest thereon, into 1,158 shares of
our Series B convertible preferred stock. The 1,158 shares of Series B
Convertible Preferred Stock are convertible into 11,580,000 shares of common
stock, subject to the approval by our shareholders of an amendment to our
Certificate of Incorporation increasing our authorized common stock to at least
100,000,000 shares.

On August 5, 2003, the company committed to issue 350,000 shares of our common
stock at $.472 per share in conjunction with the acquisition of Fan Club
Entertainment Co. Ltd. which is the average closing price for the five days
prior to closing of the acquisition of Fan Club.

On November 11, 2003, the company agreed to sell to Inter Asset Japan Co Ltd, an
affiliate of our major shareholder, 1,666,666 shares of our common stock at an
average price of $0.30 per share, for a total of $500,000, representing an
approximate 17% discount to the trailing five-day average closing price of our
common stock ending November 6, 2003, the date IAJ made its investment
commitment. The company recorded a deemed dividend of $106,667 in connection
with this transaction.

On November 11, 2003, the board of directors, subject to shareholder approval at
the forthcoming 2003 annual meeting of shareholders, approved an increase in the
number of shares available for grant under the 1999 and 2000 stock options plans
from 11,500,000 to 12,000,000 shares.

On December 2, 2003, the company reached agreement with PBAA to convert
approximately $834,000 in outstanding convertible debt plus interest of
approximately $33,000 into our common stock. PBAA, an affiliate of our majority
shareholder, plans to convert the remainder of its outstanding debt under a
revised agreement from its original contract dated January 31, 2003.

                                      F-25
<PAGE>

Under the conversion terms, we plan to issue 3,163,436 shares of common stock to
PBAA at a conversion rate of $0.30, representing an approximate 15% discount to
the trailing twenty day average closing price of the our common stock ending
November 21, 2003, the date PBAA made its investment commitment. As the
conversion purchase price per share was at a discount to market, our
shareholders will be asked to ratify and approve this transaction, as required
by the applicable rules of the American Stock Exchange at the company's
forthcoming 2003 annual meeting of shareholders. The company recorded a deemed
dividend of $177,152 in connection with this transaction and a foreign exchange
adjustment of approximately $85,000.

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

On December 31, 2003, the company issued 250,000 shares of common stock for
settlement of accounts payable at a price of $.32 per share.

On January 12, 2004, the company granted 400,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders, at
an exercise price of $.30 per share to an executive of the company. These
options vest over three years and expire on January 12, 2014.

On February 25, 2004, the company granted 1,000,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders, at
an exercise price of $.30 per share to employees of Fan Club. These options vest
over three years and expire on February 25, 2014.

On March 18, 2004, the company purchased 150 Rex Tokyo Co Ltd shares from Mr.
Ejima, the CEO of Rex Tokyo, as part of the acquisition of Rex Tokyo, for
462,000 shares of our common stock issued at $.30 per share, which is the
average closing price for the five days prior to closing.

On March 21, 2004, the company announced that PBAA, an affiliate of the
company's majority shareholder, has invested an additional $1.5 million into the
company in a private placement. Under the financing terms, the company has
issued a $1.5 million convertible note, convertible into approximately 5 million
shares of our common stock, representing a conversion price per share of $0.30,
which was the fair-market value of the trailing five-day average closing price
of the company's common stock ending March 5, 2004, the date PBAA committed to
make the investment. The conversion of this note is subject to approval by its
shareholders of an amendment to our Certificate of Incorporation increasing its
authorized common stock to at least 150,000,000 shares.

On March 18, 2004, the company granted 1,500,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders, at
an exercise price of $.30 per share to employees of Rex Tokyo. These options
vest over three years and expire on March 22, 2014.

The company's stockholders will be requested to approve an amendment to our
certificate of incorporation to increase the number of shares of common stock
which we shall be authorized to issue from 75,000,000 to 150,000,000 at the
company's forthcoming 2003 annual meeting of its stockholders.

NOTE 13. STOCK OPTION PLAN

The company has two incentive stock option plans, which are authorized to issue
up to 500,000 and 1,000,000 shares of common stock, respectively, subject to
approval by the stockholders.

                                      F-26
<PAGE>

On February 5, 2003, the company granted 1,500,000 incentive stock options at
$.08 per Share to two executives of the company, exercisable immediately and
which expire on February 5, 2013.

On June 15, 2003, the board of directors, subject to shareholder approval at the
forthcoming 2003 annual meeting of shareholders, approved an increase in the
number of shares available for grant under the 1999 and 2000 stock options plans
from 1,500,000 to 11,500,000 shares.

On June 15, 2003, the company granted 4,975,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders,
with an exercise price of $.20 per share. Four million five hundred thousand of
the stock options were issued to the directors and officers of the company, and
these options vest over three years. Four hundred and seventy five thousand
options are performance based stock options and none of the performance based
stock options were earned. These 4,500,000 stock options expire on June 15,
2013.

On November 11, 2003, the board of directors, subject to shareholder approval at
the forthcoming 2003 annual meeting of shareholders, approved an increase in the
number of shares available for grant under the 1999 and 2000 stock options plans
from 11,500,000 to 12,000,000 shares.

The company accounts for its stock option plan under APB Opinion No. 25,
"Accounting for Stock Issued to Employees", under which no compensation expense
is recognized. The company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation", for disclosure purposes; accordingly, no compensation expense is
recognized in the results of operations for options granted at fair market value
as required by APB Opinion No. 25.

Stock option activity for the year ended December 31, 2003, 2000 and 2001 is
summarized as follows:

Employee Stock Option Plan:
                                                        Weighted Average
                                          Shares (1)(2)  Exercise Price
                                          ------------- ----------------
         Outstanding at December 31, 2000   2,234,500        $ 6.29
            Granted .....................           -             -
            Exercised ...................           -             -
            Expired or cancelled ........  (1,224,500)        (5.55)
                                           ----------        ------
         Outstanding at December 31, 2001   1,010,000          7.18
            Granted .....................           -             -
            Exercised ...................           -             -
            Expired or cancelled ........  (1,010,000)        (7.18)
                                           ----------        ------
         Outstanding at December 31, 2002           -             -
            Granted .....................           -             -
            Exercised ...................           -             -
            Expired or cancelled ........           -             -
                                           ----------        ------
         Outstanding at December 31, 2003           -        $    -
                                           ==========        ======

                                      F-27
<PAGE>

Non - Employee Stock Option Plan:
                                                        Weighted Average
                                             Shares      Exercise Price
                                             ------     ----------------
         Outstanding at December 31, 2000   2,550,000        $ 5.70
            Granted                                 -             -
            Exercised                               -             -
            Expired or cancelled                    -             -
                                           ----------        ------
         Outstanding at December 31, 2001   2,550,000          5.70
            Granted                                 -             -
            Exercised                               -             -
            Expired or cancelled                    -             -
                                           ----------        ------
         Outstanding at December 31, 2002   2,550,000          5.70
            Granted                                 -             -
            Exercised                               -             -
            Expired or cancelled                    -             -
                                           ----------        ------
         Outstanding at December 31, 2003   2,550,000        $ 5.70
                                           ==========        ======

Information, at date of issuance, regarding stock option grants for the year
ended December 31, 2003, 2002 and 2001:

                                                          Weighted    Weighted
                                                          Average     Average
                                                          Exercise    Fair
                                           Shares (1)(2)  Price       Value
                                           -------------  --------    --------
Year ended December 31, 2001:
   Exercise price exceeds market price ....          -     $    -      $    -
   Exercise price equals market price .....          -          -           -
   Exercise price is less that market price          -          -           -

Year ended December 31, 2002:
   Exercise price exceeds market price ....          -     $    -      $    -
   Exercise price equals market price .....          -          -           -
   Exercise price is less that market price          -          -           -

Year ended December 31, 2003:
   Exercise price exceeds market price ....          -     $    -      $    -
   Exercise price equals market price .....          -          -           -
   Exercise price is less that market price          -          -           -

The following table summarizes information about stock options outstanding and
exercisable at December 31, 2003:

                                       Outstanding and exercisable
                             ---------------------------------------------------
                                            Weighted-
                                             Average     Weighted
                                            Remaining     Average
                                Number        Life in     Exercise      Number
                             Outstanding      Years        Price     Exercisable
                             -----------      -----        -----     -----------
Range of exercise prices:
$1.00 to $4.00 ............     525,000        2.88         2.71        525,000
$4.00 to $6.00 ............   1,685,000        2.13         5.96      1,685,000
$9.00 .....................     340,000        2.19         9.00        340,000

                                      F-28
<PAGE>

(1)   Does not reflect the grant of options to purchase 7,000,000 shares of
      common stock, at an average exercise price of $.19, which grant is subject
      to stockholder approval of the amendment to the 1999 and 2000 Plans.

(2)   Does not give effect to the amendment of the 1999 and 2000 Plans pursuant
      to which the number of shares authorized will be increased from 1,500,000
      to 12,000,000, subject to stockholder approval of the amendment to the
      1999 and 2000 Plans.

As discussed in Note 2, for disclosure purposes in accordance with SFAS No. 123,
the fair value of each stock option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions outlined in Note 2.

If the company recognized compensation cost for the vested portion of the
employee stock option plan in accordance with SFAS No. 123, the company's
pro-forma net loss and loss per share for the years ended December 31, 2003,
2002 and 2001, would have been approximately, ($3,351,971) and ($.06),
($1,492,707) and $(.04) ($7,726,394) and $(.42), respectively.

The non-employee stock options outstanding are fully vested. The compensation
expense attributed to the issuance of these stock options will be amortized over
twenty four months. the term of service arrangement. These stock options are
exercisable for five years from the grant date.

The employee stock option plan stock options are exercisable for five years from
the grant date and vest over various terms from three to five years. As of
December 31, 2000, 705,500 of these stock options were vested. During 2001 and
2002, all of the company's employees have been terminated or resigned which
resulted in the cancellation of the stock options, pursuant to the terms of both
stock option plans.

NOTE 14. THIRD PARTY LICENSES AND AGREEMENTS

The company entered into two license agreements with related parties for the
sole and absolute use of certain Internet domain names. One of the agreements is
with an officer and director of the company and the other is with a
not-for-profit organization whose board of directors is substantially identical
to that of the company. The term of the agreements is twenty-five years through
December 31, 2023 with an additional renewal period of twenty-five years
thereafter. The agreements require the company to pay license fees, which begin
at $600 per domain name and escalate to $2,500 per domain name through the
twenty fifth year of the agreement. Thereafter, the fee increase is based on the
Consumer Price Index. The agreement with the not-for-profit organization also
requires the company to provide office space, on its premises, for up to four
employees of the not-for-profit organization for up to three years. The director
and the not-for-profit organization have waived all the rights to collection on
past due amounts through September 30, 2002 and on September 30, 2002 the
director and the not-for-profit organization terminated the license agreements
and transferred the domain names foreignTV.com, Medium4.com, Medium4TV.com and
StreamingUSA.com to the company for nominal consideration.

In May 2000, the company entered into a master affiliate agreement with Windfire
International Corporation, Ltd. ("Windfire"), a British Virgin Islands
Corporation, pursuant to which the company granted Windfire the exclusive right
for an initial term of five years to grant licenses solely to persons and
entities acceptable to the company for the establishment and operation within
the nations of Brunei, Indonesia, Kenya, Malaysia, the Philippines, Singapore,
South Africa, Tanzania, Thailand and Uganda of Internet sites that will comprise
discrete channels upon one or more of our network of web sites.

                                      F-29
<PAGE>

The master affiliate agreement required Windfire to pay us a one time fee of
$1,500,000, of which $500,000 was received in 2000. Revenues were recognized
initially on a straight line basis over the sixty month term of this agreement.
The company terminated its master affiliate agreement in 2002 with mutually
acceptable terms, requiring no additional services or monies to be exchanged or
refunded in 2002.

This recognition was accelerated in 2002 and 2001 based on management's analysis
of the legal proceedings. The company recognized revenue of $175,000 and
$250,000 in 2002 and 2001, respectively.

In 2001, the company received $34,000 for the purchase of a foreignTV network.
The remaining recorded value of such ownership in foreignTVJapan.com of $100,000
was repurchased by them during 2002 for $200,000.

The company relies on certain agreements and technologies we license from third
parties to operate our business. The company been developing our own proprietary
Internet accelerator product in conjunction with QuikCAT Technologies, Inc.
("QuikCAT") an Ohio based private company. Development of the interface for this
product was outsourced, with the core patent based technology being licensed
from QuikCAT.

The company owns the client interface software that was developed to work with
the iNet Client software, and receive a 5% royalty from QuikCAT Australia on
their net profits from the sales of their services that incorporate the client
interface. The company has no other contracts or agreements with other companies
at this time for the client interface software. The Internet acceleration
service is software based and uses a combination of highly advanced and proven
compression and caching technologies to increase substantially the speed of
delivery of Internet and email data to the end-user. The company believes that
its client interface software substantially enhances the core technology
licensed to us by QuikCAT and is critical to the commercial development and
acceptance of the service.

The company was granted an exclusive Reseller License Agreement by QuikCAT for
the iNet Client Software on October 6, 2003 for the territories of Australia,
New Zealand and Japan. This license was approved by the United States Bankruptcy
Court, Northern District of Ohio on December 15, 2003. The cost of the license
was $110,000, of which $10,000 was paid on September 3, 2003 and the balance was
paid on January 15, 2004. The license term is for three years, with one year
annual automatic renewals if the product is commercially deployed. The license
requires a 5% royalty on net revenues, which is to be paid monthly, and a 10%
net interest in the profits of QuikCAT Australia, which is to be paid every six
months. The license can be terminated under certain conditions.

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

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

On July 28, 2003, Fan Club signed a Subcontract Agreement with Cyberbred to
exclusively manage the entire Marvel Fan Club in Japan in accordance with the
agreement between Cyberbred and Marvel that is discussed above. This Subcontract
Agreement expires May 31, 2008, and is cancelable under certain conditions.
Under the July 28, 2003 agreement, Cyberbred will make "best efforts" to
transfer the rights under their agreement with Marvel, directly to Fan Club
Entertainment. At this time, this transfer has not taken place.

                                      F-30
<PAGE>

NOTE 15. COMMITMENTS AND CONTINGENCIES

The company had leased office space in New York City, NY. In early 2001, the
company terminated the lease and relinquished approximately half of their
security deposit. In addition, the related leasehold improvements have been
written off in calendar year 2000. The company has ceased leasing space in
certain countries abroad. The company was leasing space in Miami, FL, which such
lease was terminated in September 2002 for $60,430.

In 2002, the company relocated its corporate offices to California. On December
1, 2002, the company entered into new lease agreement. The company pays
approximately $1,000 per month in rent for our executive offices. The lease for
our executive offices may be cancelled on thirty days prior notice. As of
October 1, 2003, Fan Club Entertainment Co. Ltd. leased offices from Cyberbred
Co. Ltd, an affiliated company, for approximately $2,000 per month. The term of
the lease began October 1, 2003 and continues through September 30, 2005, but
may be cancelled on six months prior notice.

Rent expense for the year ended December 31, 2002, 2001, and 2000 was $73,576,
$129,451 and $157,688, respectively.

As previously disclosed, on September 26, 2003, Andzej Krakowski, a former
employee of foreignTV.com, Inc., filed a civil action seeking damages and
injunctive relief for (i) statutory damages, costs and attorney fees resulting
from our alleged willful copyright infringement, (ii) monetary damages in the
amount of $436,477 for alleged breach of an employment agreement with
foreignTV.com, (iii) the issuance of 180,000 shares of common stock in IA
Global, (iv) monetary damages for alleged fraud, (v) monetary damages of at
least $1,200,000, and (vi) punitive damages, costs and attorney fees. On January
10, 2004, the United States District Court for the Southern District of New York
dismissed without prejudice the complaint filed by Andzej Krakowski. On February
9, 2004, Mr. Krakowski filed for arbitration with the American Arbitration
Association in East Providence, Rhode Island.

The company is a successor corporation to foreignTV.com, Inc. and Medium4.com,
Inc. ("Medium"). As part of the September 25, 2002 Agreement and Assignment
between Medium, IAJ and David Badner, a major stockholder and former consultant
to us, Mr. Badner has agreed to indemnify and hold the company harmless against
any expenses, obligations and liabilities related to any breach of the
representations and warranties made to us in those agreements, and any creditor
claims arising from those agreements which facilitated our financial
restructuring.

While there can be no guarantee that we will be successful in resolving this
claim with Mr. Krakowski, the company believes that we are appropriately
indemnified by Mr. Badner for Mr. Krakowski's claims.

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

NOTE 16. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

At the beginning of 2003, the company revised its business plan to expand into
other areas of media entertainment and technology. We have shifted the revenue
model from broadband entertainment channels and revenues derived predominantly
from licensing, to a renewed focus on developing media technology products,
services and licensing revenues. To this end, we may develop such media
entertainment and technology products and services internally, or acquire them
from other parties.

                                      F-31
<PAGE>

We are organized by company. Each company reports to the CEO and he has been
identified as the Chief Operating Decision Maker ("CODM") as defined by SFAS 131
"Disclosures About Segments of an Enterprise and Related Information". The CODM
allocates resources to each of the companies using information regarding
revenues, operating income (loss) and total assets.

The following companies are the only reportable segments under the criteria of
SFAS 131 (i) IA Global, Inc., the parent company, (ii) iAccele Co Ltd, a
Japanese company engaged in the business of providing Internet data transmission
acceleration service, (iii) Fan Club Entertainment Co Ltd., a Japanese company
which provides advertising, merchandising, publishing, website and data
management services to Cyberbred Co., Ltd., and (iv) QuikCAT Australia Pty Ltd,
an Australian company engaged in the business of providing Internet data
transmission acceleration service to the Australia and New Zealand markets.

The following table presents revenues, operating income (loss) and total assets
by company for the years ended December 31, 2003 and 2002:
<TABLE>
<CAPTION>
                                                                         Fan Club           QuikCat
Company                         IA Global, Inc.    iAccele Co Ltd    Entertain. Co Ltd  Australia Pty Ltd      Total
                                ---------------    --------------    -----------------  -----------------   -----------
<S>                               <C>                <C>                <C>               <C>               <C>
Year Ended:
   December 31, 2003
   Revenue ................       $         -        $   401,000        $   744,000       $         -       $ 1,145,000

   Operating income (loss)           (959,000)        (1,472,000)            64,000                 -        (2,367,000)

   Total assets ...........         1,069,000            279,000          2,794,000            75,000         4,217,000

   December 31, 2002
   Revenue ................       $   406,000        $         -        $         -       $         -       $   406,000

   Operating loss .........          (619,000)                 -                  -                 -          (619,000)

   Total assets ...........           451,000                  -                  -                 -           451,000
</TABLE>

Geographic Region              U.S.         Japan       Australia      Total
                           -----------   -----------   -----------  -----------
Year Ended:
   December 31, 2003
   Revenue ..............  $         -   $ 1,145,000   $         -  $ 1,145,000

   Operating loss .......     (959,000)   (1,408,000)            -   (2,367,000)

   Total assets .........    1,069,000     3,073,000        75,000    4,217,000

   December 31, 2002
   Revenue ..............  $   406,000   $         -   $         -  $   406,000

   Operating loss .......     (619,000)            -             -     (619,000)

   Total assets .........      451,000             -             -      451,000


                                      F-32
<PAGE>

The following reconciles operating loss to net loss before income taxes:

                                                            Year Ended
                                                           December 31,
                                                 ------------------------------
                                                     2003               2002
                                                 -----------        -----------
Operating loss ...........................       $(2,367,000)       $  (619,000)

Other income (expense) ...................           256,000           (874,000)
                                                 -----------        -----------

Loss  before minority
  interests and income taxes .............        (2,111,000)        (1,493,000)

Minority interests .......................            22,000                  -
                                                 -----------        -----------

Loss before income taxes .................       $(2,133,000)       $(1,493,000)
                                                 ===========        ===========

NOTE 17. SUBSEQUENT EVENTS

The company received $280,000 from the sale of iAccele on January 16, 2004,
$400,000 from a subscription agreement from an affiliated party on January 12,
2004, $354,000 from the sale of our Fan Club shares on February 10, 2004 and
$1,500,000 from a convertible note from an affiliated party on March 17, 2004.

On January 12, 2004, the company granted 400,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders, at
an exercise price of $.30 per share to an executive of the company. These
options vest over three years and they expire January 12, 2014.

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

The company paid $100,000 on January 15 2004 for the final payment on its
exclusive Reseller License Agreement with QuikCAT for the iNet Client Software
on October 6, 2003 for the territories of Australia, New Zealand and Japan.

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

The company provided an additional $25,000 loan on February 13, 2004 under the
terms of the Redeemable Notes dated February 13, 2004 and the Business
Development Loan and Venture Agreement dated August 18, 2003.

On February 25, 2004, the company granted 1,000,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders, at
an exercise price of $.30 per share to employees of Fan Club. These options vest
over three years and they expire February 25, 2014.

                                      F-33
<PAGE>

As part of the company's strategy to develop our Internet data acceleration
products, on February 5, 2004, we entered into an agreement with QuikCAT to
acquire substantially all of its assets of QuikCAT for $700,000, plus the
assumption of certain contracts, agreements and liabilities. QuikCAT has filed
for bankruptcy in the United States Bankruptcy Court, Northern District of Ohio,
and therefore, our acquisition is subject to approval by the Bankruptcy Court.
Notwithstanding our signed purchase agreement, there can be no assurance that
the Bankruptcy Court will approve the company's bid or that the Bankruptcy Court
will not award the assets to another bidder.

In addition, the company is in discussions with the parent company of QuikCAT,
Innovative Computing Group, Inc. ("ICG"), to acquire certain assets of ICG that
are related to the technology that we intend to acquire from QuikCAT. As part of
these discussions, on February 5, 2004, the company agreed to loan ICG up to
$150,000 secured by source code for the Miliki SuperCompressor, which is a
software product that compresses electronic documents and images and allows a
user to email large files much faster and to save these files using much less
storage space. The company has advanced $100,000 to ICG under this loan
agreement. The note is due May 5, 2004 and accrues interest at 4% annually.
Completion of the ICG and QuikCAT asset acquisitions are subject to further
approvals, including approval of the Bankruptcy Court in the case of QuikCAT,
and there is no assurance that these transactions will be closed.

On March 31, 2004, QuikCAT Australia was recapitalized by a subscription for
common shares totaling $100,000, with our contribution being $50,000. After this
recapitalization, our ownership percentage increased to 47.54%.

QuikCAT Australia launched the product in Australia and New Zealand in March,
2004. Their product website is http://www.quikcat.au.com.

On March 18, 2004, the company executed Share Purchase Agreements and a
Stockholders Agreement with Rex Tokyo Co. Ltd. ("Rex Tokyo") and their
management, and we acquired a 60.5% ownership in Rex Tokyo. The company
purchased 1,000 shares of Rex Tokyo stock for 100 million Yen or approximately
$942,000 based on the Japanese Yen/US dollar exchange rate on March 25, 2004. In
addition, the company purchased 150 Rex Tokyo shares from Mr. Ejima, the CEO of
Rex Tokyo, for 462,000 shares of our common stock issued at $.30 per share,
which is the average closing price for the five days prior to closing. The
Stockholders Agreement place restrictions on the sale of Rex Tokyo stock in the
future, requires existing management to operate the business and place
conditions on the board of director composition. This agreement can be
terminated under certain conditions.

On March 21, 2004, the company announced that PBAA, an affiliate of the
company's majority shareholder, has invested an additional $1.5 million into the
company in a private placement. Under the financing terms, the company has
issued at $1.5 million convertible note, that is convertible into approximately
5 million shares of our common stock representing a conversion price per share
of $0.30, which was the fair-market value of the trailing five-day average
closing price of our common stock ending March 5, 2004, the date PBAA committed
to make the investment. This subject to approval by our shareholders of an
amendment to our Certificate of Incorporation increasing its authorized common
stock to at least 150,000,000 shares.

On March 18, 2004, the company granted 1,500,000 stock options, subject to
shareholder approval at the forthcoming 2003 annual meeting of shareholders, at
an exercise price of $.30 per share to employees of Rex Tokyo. These options
vest over three years and they expire March 22, 2014.

On March 26, 2004, the company announced that the warrants would expire April
12, 2004.

                                      F-34
<PAGE>

The company's stockholders will be requested to approve an amendment to Article
Four of our certificate of incorporation to increase the number of shares of
common stock which the company shall be authorized to issue from 75,000,000 to
150,000,000 at the company's forthcoming 2003 annual meeting of its
stockholders.

NOTE 18. RECLASSIFICATIONS

Certain reclassifications have been made to the prior period financial
statements in order to conform with the 2003 presentation.

NOTE 19. INVESTMENT IN FOREIGNTVJAPAN.COM

The company acquired a 10% ownership interest on January 8, 2000 for $159,000
when we signed a Local Affiliate Agreement ("Agreement") with
foreignTVJapan.com. This company was formed to develop associations with foreign
entities with such foreign entities paying us for the use of one our domain
names, a link to our website and the use of some content on our website. The
agreement had a ten year term.

In July 2000, the company entered into an amended agreement with
foreignTVJapan.com, which addressed their needs for additional content for their
channel. Under the amended agreement, foreignTVJapan.com agreed to double the
affiliate license fees payable under the original agreement, from $10,000 month
to $20,000 per month and to prepay $300,000 of this increased licensing fees in
a single lump sum. The company received the $300,000 lump sum payment in
September 2000. Junichi Watanabe, one of our directors, had the right to attend
the meetings of the board of directors of foreignTVJapan.com. The company did
not exercise significant influence over the operating or financial policies of
this entity. A portion of such investment was believed to be unrecoverable by
management and was written down in 2001 by $59,000. The remaining recorded value
of such ownership in foreignTVJapan.com of $100,000 was repurchased by them on
September 25, 2002 for 100,000.

In May-December 2002, IAJ LBO Fund acquired a 66.7% ownership interest in
foreignTVJapan Co Ltd.

                                      F-35
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, IA Global, Inc. (the "Registrant") has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.


                                        IA GLOBAL, INC.


Date: March 30, 2004                    By: /s/ Alan Margerison
                                            -------------------
                                            Alan Margerison
                                            President, Chief Executive Officer
                                            and Director


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

SIGNATURES                              TITLE                         DATE
----------                              -----                         ----

/s/ Alan Margerison           President, Chief Executive         March 30, 2004
-----------------------       Officer and Director
Alan Margerison               (Principal Executive Officer)

/s/ Mark Scott                Director, Secretary and
-----------------------       Chief Financial Officer            March 30, 2004
Mark Scott                    (Principal Financial Officer and
                              Principal Accounting Officer)

/s/ Satoru Hirai              Director                           March 30, 2004
-----------------------
Satoru Hirai

/s/ Raymond Christinson       Director                           March 30, 2004
-----------------------
Raymond Christinson

/s/ Masazumi Ishii            Director                           March 30, 2004
-----------------------
Masazumi Ishii

/s/ Hiroshi Kubori            Director                           March 30, 2004
-----------------------
Hiroshi Kubori

/s/ Jun Kumamoto              Director                           March 30, 2004
-----------------------
Jun Kumamoto

                              Director                           March 30, 2004
-----------------------
Chinin Tana