UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________  FORM 10-K  (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended March 31, 2010  or  [  ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  Commission File Number: 1-15863  IA Global, Inc. (Exact name of Registrant as specified in its charter) ___________________________  DELAWARE13-4037641(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)  101 CALIFORNIA STREET, SUITE 2450, SAN FRANCISCO, CA 94111 (Address of principal executive offices)  (zip code)  Registrant's telephone number, including area code:(415) 946-8828  Securities registered pursuant to Section 12(b) of the Act:  Common Stock, $.01 Par Value[Over-the-Counter Bulletin Board](Title of class)(Name of Each Exchange on which registered)  Securities registered pursuant to Section 12(g) of the Act:None ___________________________  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ] No [X]  Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] 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 large accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.  Large accelerated filer [  ]Accelerated filer  [  ]Non-accelerated filer  [  ]Smaller reporting company  [X]  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]  The aggregate market value of the common equity held by non-affiliates of the registrant as of March 31, 2010 was approximately $2,283,756. The number of shares of the registrants common stock outstanding as of July 14, 2010 was 351,666,245 shares.  Documents Incorporated By Reference [None.]     TABLE OF CONTENTS

PAGEPART IItem 1.Business1Item 1A.Risk Factors4Item 1B.Unresolved Staff Comments10Item 2.Properties10Item 3.Legal Proceedings10Item 4.(Removed and Reserved).11PART IIItem 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities11Item 6.Selected Financial Data19Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations20Item 7A.Quantitative and Qualitative Disclosures about Market Risk27Item 8.Financial Statements and Supplementary Data28Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure28Item 9A.Controls and Procedures28Item 9B.Other Information28PART IIIItem 10.Directors, Executive Officers and Corporate Governance29Item 11.Executive Compensation32Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters43Item 13.Certain Relationships and Related Transactions, and Director Independence44Item 14.Principal Accounting Fees and Services45PART IVItem 15.Exhibits, Financial Statement Schedules46SIGNATURES
ii

PART I

CHANGE IN YEAR-END

On July 25, 2007, the Board of Directors resolved that the fiscal year of that the Company began on January 1, 2007 would end on December 31, 2007, and from that date forward, the fiscal year of the Company will be the period beginning on April 1 of each year and ending on March 31 of the following year. The Company filed a Form 10-K for the calendar year ending December 31, 2007 and filed a Transition Report on Form 10-K to reflect the three month transition period of January 1, 2008 through March 31, 2008.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

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, as amended ("Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act") regarding us and our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as revenue projections, projected profitability, growth strategies, 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 this report.

EXCHANGE RATES

Certain information in this Annual Report on Form 10-K is expressed in Japanese Yen and the Philippine Peso. At March 31, 2010, the exchange rate for the Japanese Yen was US $1= Yen [93.3364] and the Philippine Peso was US $1= [45.3054]. In this Form 10-K, at "current exchange rates" is defined as the exchange rates as of the date of the transaction.

ITEM 1.  BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

THE COMPANY AND OUR BUSINESS

We are a global services and outsourcing company focused on growing existing businesses and expansion through global mergers and acquisitions.  We are utilizing our current partnerships to acquire growth businesses in target sectors and markets at discounted prices.  We are actively engaging in discussions with businesses that would benefit from our business acumen and marketing expertise, knowledge of Asian Markets, and technology infrastructure. Unless the context otherwise requires, the term Company, we, us, or our refers to IA Global, Inc. and all of its legal subsidiaries.

ACQUISITION OF CAR PLANNER CO LTD

On May 20, 2010, we announced the closing of the 100% acquisition of JSK Fund Co Ltd., which owns 100% of Car Planner Co Ltd (Car Planner), both of which are Japanese companies, from JSK Fund, Inc. Group, a party affiliated with an existing shareholder, RXR Cross Border Investment Un.

1

Car Planner receives service and commission revenue by selling automotive parts over the internet to approximately 728 car dealers, gas stations, and car maintenance shops in Japan. Car Planner is expected to expand their Business to Business (B to B) model to include Business to Consumer (B to C) transactions during fiscal year 2011. Their website is www.carplanner.jp.

Car Planner was established in 2006. During the year ending March 31, 2010, Car Planner recorded sales of $1.5 million and net income of $120,000. Car Planner was acquired for 30,000,000 JPY or approximately $325,000 at current exchange rate. The acquisition was financed through the issuance of 25,000,000 shares of our common stock valued at $.013 per share.

ACQUISITION OF JOHNNY CO LTD.

On June 4, 2010, we announced the closing of the 60% acquisition of Johnny Co Ltd. (Johnny) from Hynox Corporation, both of which are Japanese companies.

Johnny engages in the distribution and sales of new video gaming hardware such as the Sony PlayStation 3, PSP, Nintendo DS, Wii and XBox 360 along with associated gaming software. Johnny is also engaged in buying used hardware and software and selling refurbished hardware and secondhand software.

Johnny operates7 direct management stores and 3 franchise stores in the Iwate, Akita and Aomori prefectures in Northern Japan. Mr. Jun Sugiura, founder and CEO, will retain 40% ownership of the Johnny Co Ltd. Their website is http:// www.fc-johnny.jp and the mobile website is http://www.fc-johnny.jp/mobile.

During the fiscal year ended August 31, 2009, Johnny reported revenues of approximately $6.2 million and net income of approximately $100,000. During the fiscal year ended August 31, 2010, Johnny expects to report revenues of approximately $9.6 million and net income of approximately $250,000 in accordance with JGAAP. The 60% share of Johnny was acquired for 14,000,000 shares of our common stock valued at $.013 or approximately $178,000.

BUSINESS PROCESS OUTSOURCING (BPO)

In the Philippines, we acquired 100% of Shift Resources Inc. (Shift) on April 10, 2008 and Asia Premier Executive Suites, Inc. (Asia Premier) on May 27, 2008, multi-service call center operations that have now been merged into a single Company operating as Global Hotline Philippines. Global Hotline Philippines provides inbound and outbound telemarketing services, and collocation facilities to a variety of industries on a world-wide basis. In addition, it signed a long term Business Processing and Marketing Services Agreement with HTMT Global Solutions Limited ("HTMT") on January 9, 2009. Global Hotline Philippines may also extensively use HTMT's world class infrastructure, certifications, and extensive call center facilities to deliver services to Global Hotline Philippines' growing client base. Under a revenue sharing and collocation basis Global Hotline Philippines can now undertake outsourcing projects without the need to infuse new capital to build out additional call center facilities.  On June 14, 2010, we outsourced our call center operations and recorded an intangible asset impairment of $793,000 as of March 31, 2010.

DECONSOLIDATION OF GLOBAL HOTLINE, INC.

Until recently, we also operated in Japan through our wholly-owned subsidiary, Global Hotline, Inc. (GHI or Global Hotline). In May 2009, a dispute arose between GHI and one of its lenders, H Capital, Inc (H Capital). The dispute resulted in H Capital claiming ownership of IA Globals shares in GHI, which had been pledged as collateral for certain loans borrowed by the subsidiary. Although we continue to sue H Capital for damages, on December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

CORPORATE INFORMATION

We were incorporated in Delaware on November 12, 1998. The Companys executive offices are located at 101 California Street, Suite 2450, San Francisco, CA 94111, with its operating units being located primarily in the Pacific Rim region. The Companys telephone number is (415) 946-8828 and its principal website address is located at www.iaglobalinc.com. The information on our website is not incorporated as a part of this Form 10-K.


2

THE COMPANY'S COMMON STOCK

Our common stock currently trades on the OTCBB Exchange ("OTCBB") under the symbol "IAGI."

INDUSTRY OVERVIEW

The Asian markets have been growing at a swift pace in recent years and this growth is expected to continue into the foreseeable future. The growth is based on a shift in economic activity from Europe and North America to the Asian markets and a growth in intra-Asian economic activity. The growth of a generally affluent middle class within most Asian countries is driving demand for an increasing spread of goods and services, particularly in the 20 -35 year old age demographic. Although much attention has been given to China and India, Japan continues to be the second largest economy in the world. These and other factors are contributing to the growth of our existing investments and present us with an increasing number of quality investment opportunities in Asia and beyond.

Over the past several years there has been a tremendous change in sentiment toward outsourcing, with the strategy that used to be thought of as a "good idea that should be discussed" is today one of critical and urgent importance for most large organizations. As a result, outsourcing growth is continuing to expand across a wide range of industries and functions, and seems unstoppable given the current economic climate.

KEY MARKET OPPORTUNITIES

Currently, our key market priorities are, among other things, to:

Provide an opportunity for U.S. investors to acquire an interest in BtoB, BtoC and infrastructure companies in Asia, particularly in Japan, Philippines and China.Capitalize on our funding from RXR Cross Border Investment Un, World Investment Un and Ascendiant.Capitalize on our acquisitions of Car Planner and Johnny.Acquire international growth businesses at discounted prices in our target sectors and markets in conjunction with business partners. We expect to focus on growth opportunities with businesses that require improvements in management, financial processes and liquidity to be successful.Leverage our presence in Asia with U.S.-based companies seeking to expand their Asian businesses.Enhance our investor relations.
PRIMARY RISKS AND UNCERTAINTIES

We are exposed to various risks related to legal claims, our need for additional financing, our level of indebtedness, declining economic conditions, our controlling shareholder groups, the sale of significant numbers of our shares and a volatile market price for our common stock. These risks and uncertainties are discussed in further detail in Item 1A, "Factors That May Effect Future Results."

DISTRIBUTION METHODS

In the Philippines, we acquired 100% of Shift on April 10, 2008 and Asia Premier on May 27, 2008, multi-service call center operations that have now been merged into a single company operating as Global Hotline Philippines. On June 14, 2010, we outsourced our call center operations and recorded an intangible asset impairment of $793,000 as of March 31, 2010.

3

COMPETITION

Global Hotline Philippines operates in a competitive market segment. Our competitive advantages have been our lower cost infrastructure, our customer acquisition competencies, our superior client service culture, and our focus on this niche. Secondly, the Philippines has risen to become the world's second largest location for BPO operations, fulfilling a market need that is expected to expand over the next several years. Global Hotline Philippines faces competition from organizations such as Convergys Corp, PeopleSupport Corp, and Accenture Corp among others. Global Hotline Philippines differentiates itself by deploying a mix model of standard BPO services with secured margin co-location services.

GEOGRAPHICAL MARKETS

Global Hotline Philippines operates in the Philippines, but services customers world-wide.

INTELLECTUAL PROPERTY

We regard our trade secrets, domain name rights and 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.

LICENSES

We have no licenses as of March 31, 2010.

EMPLOYEES

As of March 31, 2010, we had 12 full-time and 2 part-time employees. Most employees were based in the Philippines. The Chief Executive Officer and Chief Financial Officer are based out of the offices in the United States.

WEBSITE ACCESS TO UNITED STATES SECURITIES AND EXCHANGE COMMISSION REPORTS

We file annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission ("SEC"). You may read and copy any document we file at the SEC's Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information concerning filers. We also maintain a web site at http://www.iaglobalinc.com that provides additional information about our Company and links to documents we file with the SEC. The Company's charters for the Audit Committee, the Compensation Committee, and the Nominating Committee; and the Code of Conduct & Ethics are also available on our website. The information on our website is not part of this Form 10-K.

ITEM 1A. RISK FACTORS

FACTORS THAT MAY AFFECT FUTURE RESULTS

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


4

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.

THE COMPANY COULD BE EXPOSED TO LEGAL CLAIMS, AND THE OUTCOME OF ANY DISPUTES RESULTING FROM SUCH CLAIMS COULD ADVERSELY AFFECT THE COMPANYS FINANCIAL CONDITION OR RESULTS OF OPERATIONS

There are no pending legal proceedings against us that are expected to have a material adverse effect on our cash flows, financial condition or results of operations. We continue to work with various vendors and former employees on past due liabilities.

POTENTIAL LEGAL PROCEEDING  GLOBAL HOTLINE

As has been previously disclosed, we pledged our shares of our Global Hotline Japanese subsidiary as collateral for certain loans borrowed from H Capital, an unlicensed Japanese lender, for such subsidiary. On May 26, 2009, Global Hotline and IA Global received notices from H Capital demanding repayment of the loans. On May 27, 2009, Global Hotline and SG Telecom did not repay the loans as requested by H Capital. On June 2, 2009, H Capital submitted documents claiming ownership of our 600 shares of Global Hotline. Global Hotlines management previously provided our stock certificates to H Capital in March 2009.

Although we engaged Japanese corporate counsel to sue H Capital for damages, the aforementioned events have resulted in IA Global losing control over the day-to-day management and operations of Global Hotline. In addition, we did not have access to the financial records of Global Hotline that are necessary to periodically report our financial position and results of operations as a consolidated subsidiary of IA Global.

On December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

Concurrent with our deconsolidation of Global Hotline, management has determined, in conjunction with legal counsel, that any obligations that may arise from Global Hotline, that existed prior or subsequent to our decision to deconsolidate are not our obligations.

Prior to December 8, 2009 Global Hotline had significant liabilities to Japanese banks in excess of approximately $12,000,000. These loans were unsecured and personally guaranteed by either the CEO or CFO of Global Hotline. In addition to theses bank loans, Global Hotline had payroll, social insurance and other tax liabilities of approximately 800,000,000 Yen, or approximately $9.0 million at current exchange rates, as of September 30, 2009.  Portions of the payroll, social insurance and other tax liabilities were repaid from cash flow from accounts receivable.

The status of Global Hotlines bank loans and tax liabilities is unknown subsequent to December 8, 2009. In addition, the status of other trade debt, or any debt or obligation of Global Hotline is unknown subsequent to December 8, 2009. In addition to debt, Global Hotline has obligation under various operating leases, the status of which is unknown subsequent to December 8, 2009.

Global Hotline has revenue contracts requiring performance for their various vendors. The status of performance, or any liability for non-performance, is unknown subsequent to December 8, 2009.

With regards to the above referenced liabilities, or potential liabilities of Global Hotline, our management along with our Japanese legal counsel, has determined that we have no legal obligation for these liabilities or potential liabilities. Assertions against us for Global Hotline liabilities, or potential liabilities, might be sustained. The Company intends to defend themselves against any assertions related to liabilities or potential liabilities resulting from Global Hotline prior to or subsequent to December 8, 2009. The Company has not accrued for any liabilities related to Global Hotline as of March 31, 2010.  Global Hotline filed for bankruptcy on February 12, 2010 in accordance with Japanese bankruptcy laws.


5

On October 7, 2009, we filed a civil claim against H Capital in Tokyo, Japan District Court related to the ownership of Global Hotline. On May 5, 2010, we dropped the original civil claim and filed a new civil claim for damages of $1,000,000 against H Capital and other affiliated parties. The claim has not been reviewed by the Tokyo, Japan District Court. Management, based on their consultation with Japanese legal counsel, is unable to determine the outcome of this dispute with H Capital.

POTENTIAL LEGAL PROCEEDING  ARQUEMAX VENTURES LLC (AMV)

On April 1, 2009, we agreed to issue preferred stock (IAO Preferred Stock), at $1,000 per share, to AMV for $317,000 in the Amendment to Share Exchange Agreement. On January 11, 2010, AMV requested that the $317,000 of IAO Preferred Stock be converted into 12,800,000 shares of our common stock. We declined to convert this IAO Preferred Stock.

At AMVs sole discretion, AMV had the option to (1) convert some or all of its IAO Preferred Stock into 12,800,000 shares of our common stock pro rata at $0.025 per share; or (2) exchange IAO Preferred Stock for 971,458 Taicom Securities Co Ltd (Taicom) Stock owned by us on a pro rata basis. The conversion of IAO Preferred Stock intoTaicom Stock was to be automatically triggered in the case of certain events, including delisting from NYSE AMEX Equities Exchange, bankruptcy or insolvency.

On July 17, 2009 and September 28, 2009, AMV notified us that we were in default under clause 3.1 (vi) of the Agreement and as a result did not fund the $60,000 due June 30, 2009, July 15, 2009 and July 31, 2009. However, AMV was late in funding as required by the Agreement.

On November 16, 2009, but effective August 4, 2009, AMV claimed ownership of our shares in Taicom. This resulted in a loss on investment of approximately $2,820,000.

Taicom declared bankruptcy on December 25, 2009 in accordance with Japanese bankruptcy laws.

WE WILL NEED ADDITIONAL FINANCING TO SUPPORT OUR BUSINESS STRATEGY (WHICH INCLUDES ACQUIRING OR INVESTING IN NEW BUSINESSES) AND ONGOING OPERATIONS

We will need to obtain additional financing in order to continue our current operations, service our debt repayments and acquire businesses. There can be no assurance that we will be able to secure funding, or that if such funding is available, the terms or conditions would be acceptable to us. If the Company is unable to obtain additional financing, we may need to restructure our operations, divest all or a portion of our business or file for bankruptcy.

Our recent efforts to generate additional liquidity, including through sales of our common stock, are described in more detail in the financial statement notes set forth in this report.

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

DECLINING GENERAL ECONOMIC, BUSINESS, OR INDUSTRY CONDITIONS MAY CAUSE REDUCED REVENUES AND PROFITABILITY

Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining real estate market in the U.S. have contributed to increased volatility and diminished expectations for the global economy and expectations of slower global economic growth going forward. These factors, combined with volatile oil prices, declining business and consumer confidence and increased unemployment, precipitated a recession. If the economic climate in the U.S. or abroad does not improve from its current condition or continues to deteriorate, our customers or potential customers could reduce or delay their purchases of our products, which would adversely impact our revenues and our ability to manage inventory levels, collect customer receivables and ultimately our profitability.

Volatility and disruption of financial markets could affect our access to credit. The current difficult economic market environment has caused contraction in the availability of credit in the marketplace. This could potentially reduce or eliminate sources of liquidity for the Company.



6

OUR CONTROLLING SHAREHOLDER GROUP HAS SUBSTANTIAL INFLUENCE OVER OUR COMPANY

As of March  31, 2010, IAJ LBO Fund, PBAA Fund Limited, Terra Firma, Inter Asset Japan Co Ltd (IAJ), IA Turkey and Hiroki Isobe, (collectively, the Controlling Shareholders) collectively held approximately 43.2% of our common stock. These Controlling Shareholders have stated in a Schedule 13D that they may be deemed to constitute a group for the purposes of Rule 13d-3 under the Exchange Act. Hiroki Isobe controls each of our Controlling Shareholders. As of July 14, 2010, the Controlling Shareholders hold 8.0% of our common stock.

IAJ and other large shareholders could cause a change of control of our board of directors if in combination with another large shareholder elects candidates of their choice to the board at a shareholder meeting, and approve or disapprove any matter requiring stockholder approval, regardless of how our other shareholders may vote. Further, under Delaware law, IAJ and other large shareholders could have a significant influence over our affairs, if in combination with another large shareholder, 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.

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

Sales or issuances of a large number of shares of common stock (including pursuant to the equity line of credit transaction that we recently entered into with Ascendiant Capital Group, LLC, which is described in more detail elsewhere in this prospectus) in the public market or the perception that sales may occur could cause the market price of our common stock to decline. As of July 14, 2010, there were 351.7 million shares of common stock issued and outstanding. Significant shares of common stock are held by our principal shareholders, other Company insiders and other large shareholders. As affiliates (as defined under Rule 144 of the Securities Act (Rule 144)) of the Company, our principal shareholders, other Company insiders and other large shareholders may only sell their shares of common stock in the public market pursuant to an effective registration statement or in compliance with Rule 144.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE VOLATILE

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

A bankruptcy filing by the Company,Announcements by us regarding liquidity, significant acquisitions, equity investments and divestitures, strategic relationships, addition or loss of significant customers and contracts, capital expenditure commitments, loan, note payable and agreement defaults, loss of our subsidiaries and impairment of assets and our OTCBB Exchange listing,Issuance of convertible or equity securities for general or merger and acquisition purposes,Issuance or repayment of debt, accounts payable or convertible debt for general or merger and acquisition purposes,Alleged manipulation of our stock price,Sale of a significant number of our common stock by shareholders,General market and economic conditions,Quarterly variations in our operating results,Defending significant litigation,Investor relation activities,Announcements of technological innovations,

7

New product introductions by us or our competitors,Competitive activities,Additions or departures of key personnel,Issuance of loans to customers or related or affiliated parties, andForeign exchange gains and losses.
These broad market and industry factors may have a material adverse effect on the market price of our common stock, regardless of our actual operating performance. These factors could have a material adverse effect on our business, financial condition and results of operations.

RISKS ASSOCIATED WITH EQUITY LINE OF CREDIT WITH ASCENDIANT CAPITAL GROUP, LLC

The Securities Purchase Agreement with Ascendiant Capital Group, LLC (Ascendiant) will terminate if our common stock is not listed on one of several specified trading markets (which include the NYSE AMEX, OTCBB Exchange and Pink Sheets, among others), if we file protection from its creditors or if a Registration Statement on Form S-1 or S-3 is not effective.

If the price or the trading volume of our common stock does not reach certain levels, we will be unable to draw down all or substantially all of our $5,000,000 equity line of credit.

The maximum draw down amount every 11 trading days under our equity line of credit facility is the lesser of $250,000 or 15% of the total trading volume of our common stock for the 10-trading-day period prior to the draw down multiplied by the volume-weighted average price of our common stock for such period. If our stock price and trading volume remain at current levels, we will not be able to draw down all $5,000,000 available under the equity line of credit.

If we not able to draw down all $5,000,000 available under the equity line of credit or if the Securities Purchase Agreement is terminated, we may be forced to curtail the scope of our operations or alter our business plan if other financing is not available to us.
WE MAY INCUR LOSSES IN THE FUTURE

We have experienced net losses since inception. There can be no assurance that we will achieve or maintain profitability.

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 engage in discussions relating to possible acquisitions, equity investments, mergers, strategic alliances, joint ventures and divestitures. 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 impairment expenses related to goodwill and amortization expenses related to other intangible assets, and

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

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

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


8

- 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 public Company that may not have been in place in private companies, prior to acquisition,

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

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

From time to time, we have also engaged in discussions with candidates regarding the potential acquisitions of our product lines, technologies and businesses. If a 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 any purchaser,

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

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

- Collect the proceeds from any divestitures.

In addition, if customers of the divested business do not receive the same level of service from the new owners, this may adversely affect our other businesses to the extent that these customers also purchase other products offered by us. All of these efforts require varying levels of management resources, which may divert our attention from other business operations.

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

WE ARE DEPENDENT ON KEY PERSONNEL

Our success depends to a significant degree upon the continued contributions of key management and other personnel, some of whom could be difficult to replace. We do not maintain key man life insurance covering certain of our officers. Our success will depend on the performance of our officers, our ability to retain and motivate our officers, our ability to integrate new officers into our operations and the ability of all personnel to work together effectively as a team. Our employment agreements with our Chief Executive Officer and Chief Financial Officer expire September 4, 2010 and August 24, 2010, respectively. 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.

WE HAVE LIMITED INSURANCE

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

WE ARE EXPOSED TO FOREIGN CURRENCY GAINS AND LOSSES

The majority of our operations are located in Japan and the Philippines. 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, Philippine Peso and US Dollar would have a material adverse or positive effect on our business, financial condition and results of operations.


9

WE ARE SUBJECT TO COMPETITIVE PRESSURES

We face competition from entities that provide competing call center operations, including entities that resell telephone and broadband lines and insurance products in the Philippines. Certain of our competitors may be able to devote greater resources to marketing, adopt more aggressive pricing policies and devote substantially more resources to developing their services and products. We may be unable to compete successfully against current and future competitors, and competitive pressures may have a material adverse effect on our business. Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing decisions or acquisitions that could have a material adverse or positive effect on our business, prospects, financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.  PROPERTIES

Our executive offices are currently located at 101 California Street, Suite 2450, San Francisco, CA 94111. The office is leased, and the lease is renewable on a month to month basis for $300 per month.

Global Hotlines Philippines vacated its offices on April 5, 2010.

ITEM 3.  LEGAL PROCEEDINGS

There are no pending legal proceedings against us that are expected to have a material adverse effect on our cash flows, financial condition or results of operations. We continue to work with various vendors and former employees on past due liabilities.

POTENTIAL LEGAL PROCEEDING  GLOBAL HOTLINE

As has been previously disclosed, we pledged our shares of our Global Hotline Japanese subsidiary as collateral for certain loans borrowed from H Capital, an unlicensed Japanese lender, for such subsidiary. On May 26, 2009, Global Hotline and IA Global received notices from H Capital demanding repayment of the loans. On May 27, 2009, Global Hotline and SG Telecom did not repay the loans as requested by H Capital. On June 2, 2009, H Capital submitted documents claiming ownership of our 600 shares of Global Hotline. Global Hotlines management previously provided our stock certificates to H Capital in March 2009.

Although we engaged Japanese corporate counsel to sue H Capital for damages, the aforementioned events have resulted in IA Global losing control over the day-to-day management and operations of Global Hotline. In addition, we did not have access to the financial records of Global Hotline that are necessary to periodically report our financial position and results of operations as a consolidated subsidiary of IA Global.

On December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

Concurrent with our deconsolidation of Global Hotline, management has determined, in conjunction with legal counsel, that any obligations that may arise from Global Hotline, that existed prior or subsequent to our decision to deconsolidate are not our obligations.

Prior to December 8, 2009 Global Hotline had significant liabilities to Japanese banks in excess of approximately $12,000,000. These loans were unsecured and personally guaranteed by either the CEO or CFO of Global Hotline. In addition to theses bank loans, Global Hotline had payroll, social insurance and other tax liabilities of approximately 800,000,000 Yen, or approximately $9.0 million at current exchange rates, as of September 30, 2009.  Portions of the payroll, social insurance and other tax liabilities were repaid from cash flow from accounts receivable.


10

The status of Global Hotlines bank loans and tax liabilities is unknown subsequent to December 8, 2009. In addition, the status of other trade debt, or any debt or obligation of Global Hotline is unknown subsequent to December 8, 2009. In addition to debt, Global Hotline has obligation under various operating leases, the status of which is unknown subsequent to December 8, 2009.

Global Hotline has revenue contracts requiring performance for their various vendors. The status of performance, or any liability for non-performance, is unknown subsequent to December 8, 2009.

With regards to the above referenced liabilities, or potential liabilities of Global Hotline, our management along with our Japanese legal counsel, has determined that we have no legal obligation for these liabilities or potential liabilities. Assertions against us for Global Hotline liabilities, or potential liabilities, might be sustained. The Company intends to defend themselves against any assertions related to liabilities or potential liabilities resulting from Global Hotline prior to or subsequent to December 8, 2009. The Company has not accrued for any liabilities related to Global Hotline as of March 31, 2010.  Global Hotline filed for bankruptcy on February 12, 2010 in accordance with Japanese bankruptcy laws.

On October 7, 2009, we filed a civil claim against H Capital in Tokyo, Japan District Court related to the ownership of Global Hotline. On May 5, 2010, we dropped the original civil claim and filed a new civil claim for damages of $1,000,000 against H Capital and other affiliated parties. The claim has not been reviewed by the Tokyo, Japan District Court. Management, based on their consultation with Japanese legal counsel, is unable to determine the outcome of this dispute with H Capital.

POTENTIAL LEGAL PROCEEDING  ARQUEMAX VENTURES LLC (AMV)

On April 1, 2009, we agreed to issue IAO Preferred Stock, at $1,000 per share, to AMV for $317,000 in the Amendment to Share Exchange Agreement. On January 11, 2010, AMV requested that the $317,000 of IAO Preferred Stock be converted into 12,800,000 shares of our common stock. We declined to convert this IAO Preferred Stock.

At AMVs sole discretion, AMV had the option to (1) convert some or all of its IAO Preferred Stock into 12,800,000 shares of our common stock pro rata at $0.025 per share; or (2) exchange IAO Preferred Stock for 971,458 Taicom Stock owned by us on a pro rata basis. The conversion of IAO Preferred Stock into Taicom Stock was to be automatically triggered in the case of certain events, including delisting from NYSE AMEX, bankruptcy or insolvency.

On July 17, 2009 and September 28, 2009, AMV notified us that we were in default under clause 3.1 (vi) of the Agreement and as a result did not fund the $60,000 due June 30, 2009, July 15, 2009 and July 31, 2009. However, AMV was late in funding as required by the Agreement.

On November 16, 2009, but effective August 4, 2009, AMV claimed ownership of our shares in Taicom. This resulted in a loss on investment of approximately $2,861,000.

Taicom declared bankruptcy on December 25, 2009 in accordance with Japanese bankruptcy laws.

ITEM 4.  (REMOVED AND RESERVED)

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock trades on OTCBB Exchange under the symbol "IAGI". The following table sets forth the range of the high and low sale prices of the common stock for the periods indicated:


11

QUARTER ENDEDHIGHLOWJune 30, 2009$0.110$0.030September 30, 2009$0.070$0.030December 31, 2009$0.060$0.030March 31, 2010$0.040$0.010June 30, 2008$0.330$0.200September 30, 2008$0.230$0.070December 31, 2008$0.080$0.030March 31, 2009$0.090$0.030
As of March 31, 2010, the closing price of the Company's common stock was $.01 per share. As of July 14, 2010, there were 351,666,245 shares of common stock outstanding held by approximately 190 stockholders of record. The number of stockholders, including the beneficial owners' shares through nominee names is approximately 1,300.

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.

RECENT SALES OF UNREGISTERED SECURITIES

During the three months ended March 31, 2010, the following unregistered sales of equity securities occurred:

PRIVATE PLACEMENTS WITH INTER ASSET JAPAN LBO NO. 1 FUND

On August 2, 2009, the Company entered into a Stock Purchase Agreement (Agreement 1) with Inter Asset Japan LBO No 1 Fund, an existing shareholder of the Company (the Shareholder). Under the terms of the Agreement 1, the Company agreed to issue and sell to the Shareholder 1,500,000 shares (the Shares) of the Companys common stock, par value $0.01 per share, for an aggregate purchase price of $60,000, or $0.04 per share (the Purchase Price). The Company issued and sold the Shares to the Shareholder in reliance on the exemption from the registration requirements set forth in the Securities Act provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC under the Securities Act.

Agreement 1 contains certain representations and warranties of the Shareholder and the Company, including customary investment-related representations provided by the Shareholder, as well as acknowledgements by the Shareholder that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the Shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

Agreement 1 also grants the Shareholder registration rights that it may exercise at its option and provides the Shareholder with a right of first offer if the Company proposes to issue securities in the future (subject to certain customary exceptions). Finally, the Shareholder has the right to demand that the Company redeem all or any portion of the Shares at any time on or after October 31, 2009, for a redemption price equal to the greater of the Purchase Price or the listed market price for the Companys common stock as of the redemption date.

On August 17, 2009, the Company entered into a Stock Purchase Agreement (Agreement 2) with the Shareholder. Under the terms of Agreement 2, the Company agreed to issue and sell to the Shareholder 5,000,000 shares of our common stock for an aggregate purchase price of $200,000, or $0.04 per share.


12

Also under the terms of the Agreement, the Shareholder has committed to purchase, and the Company agreed to issue and sell to the Shareholder, additional shares of the Companys common stock in accordance with the following schedule:

2,500,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$100,000 on or before September 4, 2009.1,250,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$50,000 on or before September 18, 2009.50,000,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000 on or before November 10, 2009.
The Shareholders obligation to purchase the foregoing shares by the date specified is conditioned upon the representations and warranties of the Company contained in Agreement 2 being accurate as of the date of such closing.

Finally, the Shareholder had the option, but did not purchase on or before December 31, 2009, an additional 50,000,000 shares of Common Stock at a purchase price of US$.04 per share, or an aggregate price of $2,000,000.

On November 4, 2009, the Company entered into an Amendment (Amendment 1) to Agreement 2 with the Shareholder. Under the terms of Amendment 1, the Shareholder agreed to not acquire in excess of 19.9% of the Companys outstanding stock prior to the Annual Stockholder Meeting held on December 18, 2009.

On January 26, 2010, the Company received a $250,000 funding commitment under an Amendment to Agreement 2 (Amendment 2) with the Shareholder. Under the terms of the Amendment 2, the Company agreed to issue and sell to the Investor 6,250,000 shares of the Companys common stock for an aggregate purchase price of $250,000, or $0.04 per share.

The Shareholder had the option, but not purchase, on or before March 31, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.

Finally, the Shareholder had the option, but did not purchase, on or before April 30, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000, as long as $500,000 has been funded by February 28, 2010.

On April 16, 2010, the Company signed an Amendment to the Stock Purchase Agreement (Amendment 3) with the Shareholder. Under the terms of the Amended Agreement, the Company sold to the Shareholder in total 18,383,750 shares of Common Stock for $735,350. In addition, the parties agreed to terminate the Stock Purchase Agreement dated August 17, 2009 and the Amendment to the Stock Purchase Agreement dated January 26, 2010.

The Shareholder had the option, but did not purchase, on or before March 31, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.

The Shareholder had the option, but did not purchase, on or before April 30, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.

On April 16, 2010, the Company signed an Amendment to Escrow Agreement (Escrow Agreement) with Inter Asset Japan LBO No.1 Fund, Beseto Partners Incorporation Committee and M&A Japan Inc. The parties agreed to terminate the Escrow Agreement dated December 18, 2009. The Company agreed to return 200 million Yen or approximately $2.2 million in exchange for not issuing 55,969,633 shares of IAGI common stock. The Korean Venture Capital Fund was not successfully formed.

The Company issued and sold the shares of common stock to the Shareholder in Agreement 2 in reliance on the exemption from the registration requirements set forth in the Securities Act provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC under the Securities Act.


13

Agreement 2 contains certain representations and warranties of the Shareholder and the Company, including customary investment-related representations provided by the Shareholder, as well as acknowledgements by the Shareholder that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

Agreement 2 also grants the Shareholder registration rights that it may exercise at its option and provides the Shareholder with a right of first offer if the Company proposes to issue securities in the future (subject to certain customary exceptions).

Under the terms of its August 2, 2009 and the August 17, 2009 Stock Purchase Agreements and related Amendments with the Shareholder, as of March 31, 2010, the Company sold to the Shareholder, 75,453,383 shares at a purchase price of $.04 per share, or an aggregate price of $3,018,135.  As of July 14, 2010 and after the termination of the Escrow Agreement, the Company sold to the Shareholder 19,883,750 shares at a purchase price of $.04 per share, or an aggregate price of $795,350.

On March 5, 2010, the Company issued 2,250,000 performance warrants to acquire shares of common stock to the Sterling Group, Inc. in connection with the sale of the Companys common stock. The warrants are exercisable at $.015 per share and expire on March 14, 2013. If registered, the warrants may be called by the Company if the share price closes above $.10 for five days.

During the three months ended March 31, 2010, the Company sold to the Shareholder 3,733,750 shares at a purchase price of $.04 per share, or an aggregate price of $149,350.

EQUITY LINE OF CREDIT TRANSACTION WITH ASCENDIANT CAPITAL GROUP, LLC

On September 29, 2009, the Company entered into a Securities Purchase Agreement with Ascendiant, pursuant to which Ascendiant agreed to purchase up to $5,000,000 worth of shares of the Companys common stock from time to time over a 24-month period, provided that certain conditions are met. The financing arrangement entered into by the Company and Ascendiant is commonly referred to as an equity line of credit or an equity drawdown facility.

Under the terms of the Securities Purchase Agreement, Ascendiant will not be obligated to purchase shares of IA Globals common stock unless and until certain conditions are met, including but not limited to the SEC declaring effective a Registration Statement (the Registration Statement) on Form S-1 and the Company maintaining an Effective Registration Statement which registers Ascendiants resale of any shares purchased by it under the equity drawdown facility. The customary terms and conditions associated with Ascendiants registration rights are set forth in a Registration Rights Agreement that was also entered into by the parties on September 29, 2009.

The Registration was declared effective on March 9, 2010, IA Global has the right to sell and issue to Ascendiant, and Ascendiant will be obligated to purchase from IA Global, up to $5,000,000 worth of shares of the Companys common stock over a 24-month period beginning on such date (the Commitment Period). IA Global will be entitled to sell such shares from time to time during the Commitment Period by delivering a draw down notice to Ascendiant. In such draw down notices, IA Global will be required to specify the dollar amount of shares that it intends to sell to Ascendiant, which will be spread over a nine-trading-day pricing period. For each draw, IA Global will be required to deliver the shares sold to Ascendiant in three installments (following the third, sixth and ninth trading days in the pricing period, respectively). Ascendiant is entitled to liquidated damages in connection with certain delays in the delivery of its shares.

The Securities Purchase Agreement also provides for the following terms and conditions:

Purchase Price - 90% of the Companys volume-weighted average price (VWAP).Threshold Price - IA Global may specify a price below which it will not sell shares during the applicable nine-trading-day pricing period. If the purchase price falls below the threshold price on any day(s) during the pricing period, such day(s) will be removed from the pricing period (and Ascendiants investment amount will be reduced by 1/9 for each such day).

14

Maximum Draw - 15% of IA Globals total trading volume for the 10-trading-day period immediately preceding the applicable draw down, times the average VWAP during such period (but in no event more than $250,000).Minimum Draw - None.Minimum Time Between Draw Down Pricing Periods - Two trading days.Minimum Use of Facility - IA Global is obligated to sell at least $1,000,000 worth of shares of its common stock to Ascendiant during the Commitment Period.Commitment Fees - IA Global issued 8,333,333 shares of its common stock to Ascendiant ($125,000 worth of shares based on the Companys closing bid price on the trading day immediately prior to the SEC declaring the Registration Statement effective, IA Global issued another 7,058,581 or $75,000 worth of shares of its common stock in three installments over a period of 90 days following the effectiveness date.Other Fees and Expenses  On October 21, 2009, the Company issued 400,000 shares of common stock valued at $10,000 under the 2007 Stock Incentive Plan as compensation to Ascendiants legal counsel for the legal fees and expenses it incurred in connection with negotiating and documenting the equity line of credit. Pursuant to separate agreements, IA Global has also agreed to pay an aggregate of 3.0% in fees (to be paid in connection with each draw down).Indemnification - Ascendiant is entitled to customary indemnification from IA Global for any losses or liabilities it suffers as a result of any breach by IA Global of any provisions of the Securities Purchase Agreement, or as a result of any lawsuit brought by any stockholder of IA Global (except stockholders who are officers, directors or principal stockholders of IA Global).Conditions to Ascendiants Obligation to Purchase Shares - Trading in IA Globals common stock must not be suspended by the SEC or other applicable trading market; IA Global must not have experienced a material adverse effect; all liquidated damages and other amounts owing to Ascendiant must be paid in full; the Registration Statement must be effective with respect to Ascendiants resale of all shares purchased under the equity drawdown facility; there must be a sufficient number of authorized but unissued shares of IA Global common stock; and the issuance must not cause Ascendiant to own more than 9.99% of the then outstanding shares of IA Global common stock, or more than 19.9% of the number of shares of common stock outstanding on September 29, 2009 to have been issued under the equity drawdown facility (without shareholder approval).Termination - The Securities Purchase Agreement will terminate if IA Globals common stock is not listed on one of several specified trading markets (which include the NYSE AMEX, OTC Bulletin Board and Pink Sheets, among others); if IA Global files for protection from its creditors; or if the Registration Statement was not declared effective by the SEC by June 29, 2010. IA Global may terminate the Securities Purchase Agreement if Ascendiant fails to fund a draw down within 10 trading days after the end of the applicable settlement period, or if the SEC provides comments on the Registration Statement requiring certain changes in the transaction structure and/or documents.
The Securities Purchase Agreement also contains certain representations and warranties of IA Global and Ascendiant, including customary investment-related representations provided by Ascendiant, as well as acknowledgements by Ascendiant that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. IA Global provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations. IA Globals representations and warranties are qualified in their entirety (to the extent applicable) by the Companys disclosures in the reports it files with the SEC. IA Global also delivered confidential disclosure schedules qualifying certain of its representations and warranties in connection with executing and delivering the Securities Purchase Agreement.


15

The shares to be issued by IA Global to Ascendiant under the Securities Purchase Agreement will be issued in private placements in reliance upon the exemption from the registration requirements set forth in the Securities Act provided for in Section 4(2) of the Securities Act, and the rules promulgated by the SEC thereunder.

Under the terms of its September 29, 2009 Securities Purchase Agreement with Ascendiant, as of March 31, 2010, the Company sold to Ascendiant 1,739,048  shares at a purchase price of $.013 per share, or an aggregate price of $21,884.  As of July 14, 2010, the Company sold to the Shareholder 8,015,507 shares at a purchase price of $.011 per share, or an aggregate price of $89,730.

STOCK PURCHASE AGREEMENT WITH MGVJ CO LTD

On January 26, 2010, the Company received a $480,000 funding commitment under a Stock Purchase Agreement (Stock Purchase) with MGVJ Co. Ltd. (MGVJ), a new shareholder of the Company. Under the terms of the Stock Purchase, the Company agreed to issue and sell to MGVJ 9,600,000 shares of the Companys common stock for an aggregate purchase price of $480,000, or $0.05 per share, with payments as follows:

(i)        2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before March 31, 2010.

(ii)       2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before April 30, 2010.
(iii)      2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before May 31, 2010.

(iv)      2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before June 30, 2010.

MGVJs obligation to purchase the foregoing shares by the dates specified was conditioned upon the representations and warranties of the Company contained in the Agreement being accurate as of such dates.

The Company issued and sold the shares of common stock to MGVJ in reliance on the exemption provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC thereunder.

The Stock Purchase contains certain representations and warranties of MGVJ and the Company, including customary investment-related representations provided by MGVJ, as well as acknowledgements by MGVJ that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

The Company issued and sold the shares of common stock to the Investor in reliance on the exemption from the registration requirements set forth in the Securities Act of 1933 (the Securities Act) provided under Section 4(2) of the Securities Act and Regulation D promulgated by the Securities and Exchange Commission (the SEC) under the Securities Act.

On April 16, 2010, the Company signed an Amendment to the MGVJ Stock Purchase Agreement (MGVJ Amended Agreement) with MGVJ. Under the terms of the Amended Agreement and during the three months ended March 31, 2010, the Company sold to MGVJ 1,300,000 shares of Common Stock at a purchase price of $.05 per share, or an aggregate price of $65,000. In addition, the parties agreed to terminate the Stock Purchase Agreement dated January 26, 2010.

OTHER EQUITY ISSUANCES

On March 19, 2010, the compensation committee awarded Mr. Scott, its Chief Financial Officer, 400,000 shares of restricted stock under the 2007 Stock Incentive Plan. The award was granted at the fair market price of $0.014 per share based on the adjusted closing price on March 18, 2010, the last trading day before the compensation committee approved the award. In accordance with the 2007 Stock Incentive Plan, the award vested on March 19, 2010.

16

Share Repurchase Program

The following information summarizes the purchases through March 31, 2010 related to our share repurchase plan:

TotalTotal No. ofMaximum No. ofNo. ofAve. PriceShare PurchasedShares that can beSharesPaid Peras part of PubliclyPurchased UnderPeriod (1)PurchasesShareAnnounced Planthe PlanYear Ended December 31, 2007April 2, 2007- April 30, 20071,866,355$0.2511,866,355July 1, 2007-July 31, 200730,0000.39830,000August 1, 2007- August 31, 2007135,0000.437135,000September 1, 2007- September 30, 200760,0000.48160,000October 1, 2007- October 31, 200715,0000.47815,000November 1, 2007- November 30, 200731,5000.42731,500December 1, 2007- December 31, 2007516,4000.347516,4002,654,2550.2812,654,2554,000,000Total Purchased Treasury shares Year ended December 31, 20072,654,2552,654,2554,000,000Transfer to Slate Consulting Co Ltd (2)(2,026,355)(0.267)Net effective total year ended December 31, 2007627,9000.3232,654,2554,000,000Balance at December 31, 2007627,9002,654,2554,000,000Activity Trans. Period - 3 mo. Ended March 31, 2008Activity Trans. Period - Year Ended March 31, 2009Activity - Year Ended March 31, 2010Sale of Slate back to CEO of Slate for return of IA shares
(1,000,000 @ $0.03)1,000,0000.030Total as of March 31, 20101,627,900$0.1742,654,2554,000,000
(1)   On March 22, 2007, IA Global's Board of Directors authorized and announced a stock repurchase program for up to four million shares, starting on April 2, 2007.

(2)   Shares transferred to Slate Consulting Co Ltd as of December 31, 2007 related to the equity investment that closed August 24, 2007.


17

[iaglobaltemplatefor2010fo002.gif]

The above assumes that $100 was invested in the common stock and each index on March 31, 2005. Although the Company has not declared a dividend on its common stock, the total return for each index assumes the reinvestment of dividends. Stockholder returns over the periods presented should not be considered indicative of future returns. The foregoing table shall not be deemed incorporated by reference by any general statement incorporating by reference the Form 10-K into any filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the acts.

18

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of March 31, 2010 related to the equity compensation plans in effect at that time.


|                             |  |                              |  |                      |  |                           
|---------------------------- |  | ---------------------------- |  | -------------------- |  | --------------------------
|                             |  | (a)                          |  | (b)                  |  | (c)                       
|                             |  |                              |  |                      |  | Number of securities      
|                             |  |                              |  |                      |  | remaining available       
|                             |  | Number of securities         |  | Weighted-average     |  | for future issuance       
|                             |  | to be issued upon            |  | exercise price of    |  | under equity compensation 
|                             |  | exercise of outstanding      |  | outstanding options, |  | plan (excluding securities
|Plan Category                |  | options, warrants and rights |  | warrants and rights  |  | reflected in column (a))  
|Equity compensation plan     |  |                              |  |                      |  |                           
|approved by shareholders (1) |  | 9,103,929                    |  | 0.063                |  | 5,327,221                 
|Equity compensation plans    |  |                              |  |                      |  |                           
|not approved by shareholders |  |                             |  |                     |  |                          
|Total                        |  | 9,103,929                    |  | 0.063                |  | 5,327,221                 

(1)   Awards granted under the 2007 Plan and the 1999 and 2000 Stock Incentive Plans (the "Plans"). No further awards may be granted under the Plans.  ITEM 6.  SELECTED FINANCIAL DATA  In the following tables, 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 years ended March 31, 2010 and 2009, the three months ended March 31, 2008 and the year ended December 31, 2007. 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.  Three MonthsYears Ended March 31,EndedYears Ended December 31,20102009March 31, 2008200720062005(dollars in thousands, except per share data)STATEMENT OF OPERATIONS DATA:Revenue$$$$$$Net loss from continuing operations(7,456)(13,013)(803)(2,987)(2,544)(2,074)Net (loss) profit(574)(20,242)360(8,259)(3,770)(2,071)Net (loss) profit applicable to common shareholders(574)(20,242)360(8,259)(3,770)(2,071)Net loss per share from continuing operations(0.03)(0.07)(0.02)(0.02)(0.02)Net loss per share(0.11)(0.05)(0.03)(0.02)BALANCE SHEET DATA:Total assets2,54825,19034,94029,92221,64028,134Stockholder's (deficit) equity(534)(6,285)5,1304,8849,2596,016  19   ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

During the year ended March 31, 2010 and 2009, we had no revenues from continuing operations. During the year ended March 31, 2010 and 2009, we had approximately $.6 million and $20.2 million, respectively.

Certain recent developments relating to our recent efforts to generate additional liquidity, including through sales of our common stock, are described in more detail in the notes to the financial statements included in this report.

DECONSOLIDATION OF GLOBAL HOTLINE, INC.

As has been previously disclosed, we pledged its shares of Global Hotline as collateral for certain loans borrowed from H Capital, an unlicensed Japanese lender, by such subsidiary. On May 26, 2009, Global Hotline and IA Global received notices from H Capital demanding repayment of the loans. On May 27, 2009, Global Hotline and SG Telecom did not repay the loans as requested by H Capital. On June 9, 2009, H Capital submitted documents claiming ownership of the Companys 600 shares of Global Hotline. Global Hotlines management previously provided the Companys stock certificates to H Capital in March 2009.

Although we have engaged Japanese corporate counsel to sue H Capital for damages, these events have resulted in IA Global losing control over the day-to-day management and operations of Global Hotline. In addition, we did not have access to the financial records of Global Hotline that are necessary to periodically report our financial position and results of operations as a consolidated subsidiary of IA Global.

On December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

BUSINESS PROCESS OUTSOURCING

In the Philippines, we acquired 100% of Shift on April 10, 2008 and Asia Premier on May 27, 2008, multi-service call center operations that have now been merged into a single company operating as Global Hotline Philippines. On June 14, 2010, we outsourced our call center operations and recorded an intangible asset impairment of $793,000 as of March 31, 2010. As a result, we accounted for Global Hotline Philippines as a discontinued operation.

CHANGE IN FISCAL YEAR

On July 25, 2007, the Board of Directors resolved that the fiscal year of the Company that began on January 1, 2007 would end on December 31, 2007, and from that date forward, the fiscal year of the Company will be the period beginning on April 1 of each year and ending on March 31 of the following year. The Company filed a Form 10-K for the calendar year ending December 31, 2007 and filed a Transition Report on Form 10-K to reflect the three month transition period of January 1, 2008 through March 31, 2008.


20

RESULTS OF OPERATIONS

The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from year-to-year.

(dollars in thousands)
Year Ended March 31,20102009$ Variance% Variance(audited)(audited)Revenue$$$0.0%Cost of sales0.0%Gross profit0.0%Selling, general and administrative expenses2,4792,465140.6%Operating loss(2,479)(2,465)(14)0.6%Other income (expense):Interest income14(14)-100.0%Interest expense and amortization of beneficial conversion feature(168)(332)16449.4%Other income20269(249)-92.6%Gain on equity investment in Australia Secured Financial Limited265(265)-100.0%Gain on equity investment in GPlus Media Co Ltd13(13)-100.0%Loss on equity investment in Slate Consulting Co Ltd(16)(10)(6)-60.0%Loss on investment in Taicom Securities Co Ltd(422)422100.0%Loss on forfeiture of Taicom Securities Co Ltd(2,820)(2,820)-100.0%Retirement of debt(60)60100.0%Loss on sale of Slate Consulting Co Ltd(1,285)(1,285)-100.0%Loss on sale of Taicom Securities Co Ltd(1,737)1,737100.0%Loss on sale of GPlus Media Co Ltd(1,287)1,287100.0%Impairment of equity investment in Australian Secured Financial Limited(7,195)7,195100.0%Impairment of Global Hotlines Philippines investment(793)(793)-100.0%Gain on sale of IA Global Co Ltd9191100.0%Loss on foreign currency transaction adjustment(6)(66)6090.9%Total other expense(4,977)(10,548)5,57152.8%(Loss) from continuing operations(7,456)(13,013)5,55742.7%Gain (loss) from discontinued operations7,199(7,229)14,428199.6%Net loss(257)(20,242)19,98598.7%Deemed Preferred Stock Dividend(317)(317)-100.0%Net loss attributable to common shareholders$(574)$(20,242)$19,66897.2%
YEAR ENDED MARCH 31, 2010 COMPARED TO THE YEAR ENDED MARCH 31, 2009

EXPENSES

Selling, general and administrative expenses for the year ended March 31, 2010 increased $14,000 to $2,479,000 as compared to $2,465,000for the year ended March 31, 2009. The expenses for the year ended March 31, 2010 included $200,000 in severance and forensic audit expenses of $414,000 incurred during the review of Global Hotline.

The selling, general and administrative expenses consisted primarily of employee and independent contractor expenses, severance, rent, forensic audit, overhead, equipment and depreciation, professional and consulting fees, sales and marketing costs, investor relations, legal, stock option and other general and administrative costs.


21

OTHER INCOME/EXPENSE

Other expense for the year ended March 31, 2010 was $4,977,000 as compared to $10,548,000 for the year ended March 31, 2009. The other expense increase was primarily related to the loss on forfeiture of Taicom Securities Co Ltd of $2,820,000, the loss on sale of Slate Consulting Co Ltd of $1,285,000 and the impairment of the Global Hotlines Philippines investment of $793,000.

On December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

On November 16, 2009, but effective August 4, 2009, AMV claimed ownership of our shares in Taicom. This resulted in a loss on investment of approximately $2,820,000.

On December 16, 2009, the Company sold its 20.25% interest in Slate to Ray Pedersen, Chief Executive Officer of Slate. We reported an impairment loss of approximately $1,285,000 as a result of the sale during the year ended March 31, 2010.

Other expense for the year ended March 31, 2009 was $10,548,000. The other expense increase was primarily related to a net loss on equity investments of $154,000, a loss on sale of securities to Taicom of $1,737,000 and GPlus Media of $1,287,000, an impairment write-down on our ASFL equity investment of $7,195,000 and interest expense of $327,000, offset by other income of $269,000.

NET LOSS

Net loss for the year ended March 31, 2010 was $574,000 as compared to a net loss of $20,242,000 for the year ended March 31, 2009.

During the year ended March 31, 2010 and 2009, respectively, we recorded net loss on discontinued operations of $2.9 million and $7.2 million at Global Hotline and Global Hotline Philippines. Also, on December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

On June 14, 2010, we outsourced our call center operations and recorded an asset impairment of $793,000 as of March 31, 2010. As a result, we accounted for Global Hotline Philippines as a discontinued operation for periods ending after March 31, 2010.

On April 1, 2009, the Company agreed to issue preferred stock to AMV for $317,000 in the Amendment to Share Exchange Agreement. The Company valued the conversion feature of such Preferred Stock to be $317,000 and recorded a deemed dividend during the year ended March 31, 2010.


22

(dollars in thousands)


|                                                                        |  |                      |         |             |   |            |   |            |         |   |  |        |  
|----------------------------------------------------------------------- |  | -------------------- | ------- | ----------- | - | ---------- | - | ---------- | ------- | - |  | ------ | -
|                                                                        |  | Year Ended March 31, |        
|                                                                        |  | 2009                 |         | 2008        |   | $ Variance |   | % Variance |        
|                                                                        |  | (audited)            |         | (unaudited) |   |            |   |            |        
|Revenue                                                                 |  | $                    |        |             | $ |           |   | $          |        |   |  | 0.0    | %
|Cost of sales                                                           |  |                      |        |             |   |           |   |            |        |   |  | 0.0    | %
|Gross profit                                                            |  |                      |        |             |   |           |   |            |        |   |  | 0.0    | %
|Selling, general and administrative expenses                            |  |                      | 2,465   |             |   | 2,070      |   |            | 395     |   |  | 19.1   | %
|Operating loss                                                          |  |                      | (2,465  | )           |   | (2,070     | ) |            | (395    | ) |  | 19.1   | %
|Other income (expense):                                                 |  |                      |         |             |   |            |   |            |         |   |  |        |  
|Interest income                                                         |  |                      | 14      |             |   | 14         |   |            |        |   |  | 0.0    | %
|Interest expense and amortization of beneficial conversion feature      |  |                      | (332    | )           |   | (767       | ) |            | 435     |   |  | 56.7   | %
|Other income                                                            |  |                      | 269     |             |   | 28         |   |            | 241     |   |  | 860.7  | %
|Gain (loss) on equity investment in Australia Secured Financial Limited |  |                      | 265     |             |   | (227       | ) |            | 492     |   |  | 216.7  | %
|Gain on equity investment in GPlus Media Co Ltd                         |  |                      | 13      |             |   | 20         |   |            | (7      | ) |  | -35.0  | %
|Loss on equity investment in Slate Consulting Co Ltd                    |  |                      | (10     | )           |   | (44        | ) |            | 34      |   |  | -77.3  | %
|Loss on investment in Taicom Securities Co Ltd                          |  |                      | (422    | )           |   |           |   |            | (422    | ) |  | -100.0 | %
|Retirement of debt                                                      |  |                      | (60     | )           |   |           |   |            | (60     | ) |  | -100.0 | %
|Conversion of debenture expense                                         |  |                      |        |             |   | (120       | ) |            | 120     |   |  | 100.0  | %
|Loss on sale of Taicom Securities Co Ltd                                |  |                      | (1,737  | )           |   |           |   |            | (1,737  | ) |  | -100.0 | %
|Loss on sale of GPlus Media Co Ltd                                      |  |                      | (1,287  | )           |   |           |   |            | (1,287  | ) |  | -100.0 | %
|Impairment of equity investment in Australian Secured Financial Limited |  |                      | (7,195  | )           |   |           |   |            | (7,195  | ) |  | -100.0 | %
|(Loss) gain on foreign currency transaction adjustment                  |  |                      | (66     | )           |   | 9          |   |            | (75     | ) |  | -833.3 | %
|Total other expense                                                     |  |                      | (10,548 | )           |   | (1,087     | ) |            | (9,461  | ) |  | -870.4 | %
|Loss from continuing operations                                         |  |                      | (13,013 | )           |   | (3,157     | ) |            | (9,856  | ) |  | -312.2 | %
|(Loss) from discontinued operations                                     |  |                      | (7,229  | )           |   | (3,897     | ) |            | (3,332  | ) |  | -85.5  | %
|Net loss                                                                |  | $                    | (20,242 | )           | $ | (7,054     | ) | $          | (13,188 | ) |  | -187.0 | %

YEAR ENDED MARCH 31, 2009 COMPARED TO THE YEAR ENDED MARCH 31, 2008 (UNAUDITED)  EXPENSES  Selling, general and administrative expenses for the year ended March 31, 2009 increased $395,000 to $2,465,000 as compared to $2,070,000for the year ended March 31, 2009.  The selling, general and administrative expenses consisted primarily of employee and independent contractor expenses, rent, overhead, equipment and depreciation, professional and consulting fees, sales and marketing costs, investor relations, legal, stock option and other general and administrative costs.  OTHER INCOME/EXPENSE  Other expense for the year ended March 31, 2009 was $10,548,000 as compared to $1,087,000 for the year ended March 31, 2008. The other expense increase was primarily related to a net loss on equity investments of $154,000, a loss on sale of securities to Taicom of $1,737,000 and GPlus Media of $1,287,000, an impairment write-down on our ASFL equity investment of $7,195,000 and interest expense of $327,000, offset by other income of $269,000.  Other expense for the year ended March 31, 2008 was primarily related to interest expense and amortization of beneficial conversion feature of $767,000 and a net loss on equity investments of $251,000.  NET LOSS  Net loss for the year ended March 31, 2009 was $20,242,000 as compared to a net loss of $7,054,000 for the year ended March 31, 2008.  23   During the year ended March 31, 2009 and 2008, respectively, we recorded net loss on discontinued operations of $7.2 million and $3.9 million at Global Hotline and Global Hotline Philippines.

(dollars in thousands)
3 Months Ended March 31,20082007$ Variance% Variance(audited)(unaudited)Revenue$$$0.0%Cost of sales0.0%Gross profit0.0%Selling, general and administrative expenses501471306.4%Operating loss(501)(471)(30)6.4%Other income (expense):Interest income19(19)-100.0%Interest expense and amortization of beneficial conversion feature(210)(196)(14)-7.1%Other income1414100.0%(Loss) gain on equity investment in Australia Secured Financial Limited(94)15(109)-726.7%Gain on equity investment in GPlus Media Co Ltd77100.0%Loss on equity investment in Slate Consulting Co Ltd(17)(17)-100.0%Loss on foreign currency transaction adjustment(2)(2)-100.0%Total other expense(302)(162)(140)86.4%Loss from continuing operations(803)(633)(170)-26.9%Gain (loss) from discontinued operations1,163(211)1,374651.2%Net profit (loss)$360$(844)$1,204142.7%
THREE MONTHS ENDED MARCH 31, 2008 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2007

EXPENSES

Selling, general and administrative expenses for the three months ended March 31, 2008 increased $30,000 to $501,000 as compared to $471,000for the three months ended March 31, 2007.

The selling, general and administrative expenses consisted primarily of employee and independent contractor expenses, rent, overhead, equipment and depreciation, professional and consulting fees, sales and marketing costs, investor relations, legal, stock option and other general and administrative costs.

OTHER INCOME/EXPENSE

Other expense for the three months ended March 31, 2008 was $302,000 as compared to $162,000 for the three months ended March 31, 2007. The other expense increase was primarily related to interest expense and amortization of beneficial conversion feature of $210,000 and a net loss on equity investments of $104,000.

Other expense for the three months ended March 31, 2007 was primarily related to interest expense and amortization of beneficial conversion feature of $196,000.

NET PROFIT (LOSS)

Net profit for the three months ended March 31, 2008 was $360,000 as compared to a net loss of $844,000 for the three months ended March 31, 2007.


24

During the three months ended March 31, 2008, we recorded a net profit on discontinued operations of $1.2 million at Global Hotline and Global Hotline Philippines.During the three months ended March 31, 2007, we recorded a net loss on discontinued operations of $.2 million at Global Hotline and Global Hotline Philippines.

(dollars in thousands)
Year Ended December 31,20072006$ Variance% Variance(audited)(audited)Revenue$$$0.0%Cost of sales0.0%Gross profit0.0%Selling, general and administrative expenses2,0401,77926114.7%Operating loss(2,040)(1,779)(261)14.7%Other income (expense):Interest income3391(58)-63.7%Interest expense and amortization of beneficial conversion feature(753)(797)44-5.5%Other income1414100.0%Gain on equity investment in Australia Secured Financial Limited(120)70(190)-271.4%Gain on equity investment in GPlus Media Co Ltd1313100.0%Loss on equity investment in Slate Consulting Co Ltd(26)(26)-100.0%Conversion of debenture expense(120)(120)-100.0%Loss on foreign currency transaction adjustment12(129)141109.3%Total other expense(947)(765)(182)-23.8%Loss from continuing operations before income taxes(2,987)(2,544)(443)-17.4%(Loss) from discontinued operations(5,272)(1,226)(4,046)-330.0%Net loss$(8,259)$(3,770)$(4,489)-119.1%
YEAR ENDED DECEMBER 31, 2007 VS. YEAR ENDED DECEMBER 31, 2006

EXPENSES

Selling, general and administrative expenses for the year ended December 31, 2007 increased $261,000 to $2,040,000 as compared to $1,779,000for the year ended December 31, 2006.

The selling, general and administrative expenses consisted primarily of employee and independent contractor expenses, rent, overhead, equipment and depreciation, professional and consulting fees, sales and marketing costs, investor relations, legal, stock option and other general and administrative costs.

OTHER INCOME/EXPENSE

Other expense for the year ended December 31, 2007 was $947,000 as compared to $765,000 for the year ended December 31, 2006. The other expense increase was primarily related to interest expense and amortization of beneficial conversion feature of $753,000 and a net loss on equity investments of $133,000.

Other expense for the year ended December 31, 2006 was primarily related to interest expense and amortization of beneficial conversion feature of $797,000.

NET LOSS

Net loss for the year ended December 31, 2007 was $8,259,000 as compared to a net loss of $3,770,000 for the year ended December 31, 2006.

During the year ended March 31, 2009 and 2008, respectively, we recorded net loss on discontinued operations of $5.3 million and $1.2 million at Global Hotline and Global Hotline Philippines.


25

LIQUIDITY AND CAPITAL RESOURCES

We had cash of approximately $2.2 million, a net working capital deficit of approximately $.3 million and total indebtedness of $.2 million as of March 31, 2010. This reflects the $2.2 million escrow deposit that was returned April 16, 2010.

We will need to obtain additional financing to implement the business plan, service our debt repayments and acquire new businesses. There can be no assurance that we will be able to secure funding, or that if such funding is available, whether the terms or conditions would be acceptable to us.

Volatility and disruption of financial markets could affect our access to credit. The current difficult economic market environment is causing contraction in the availability of credit in the marketplace. This could potentially reduce or eliminate the sources of liquidity for the Company.

If the Company is unable to obtain additional financing, we may need to restructure our operations, divest all or a portion of our business or file for bankruptcy.

Since our inception, we have financed our operations primarily through sales of our equity securities in our initial public offering and from several subsequent private placements, loans and capital contributions, primarily from related parties. Net cash proceeds from these items have totaled approximately $24.1 million as of March  31, 2010, with approximately $8.8 million raised in the initial public offering, $11.8 million raised in private placements and $4.0 million raised in the conversion of debt, offset by $0.8 million used for the share repurchase program. In addition, we have issued equity for non-cash items totaling $32.4 million, including $7.0 million from the ASFL equity investment, $4.1 million from the Taicom equity investment, $1.4 million each from the GPlus and Slate equity investments, $.3 and $.2 million related to the Asia Premier and Shift acquisition, respectively, $7.3 million issued for services, $3.6 million related to a beneficial conversion feature, $4.0 million from debenture conversions, and $3.1 million related to the GHI acquisition. Additional funding was obtained from notes payable and long term debt of approximately $.2 million.

OPERATING ACTIVITIES

Net cash used in operating activities for the year ended March 31, 2010 was $1.4 million. This amount was primarily related to depreciation and amortization and other non-cash expenses of $ 4.8 million, an increase in accounts payable of $.4 million and an increase in accrued liabilities and payroll taxes of $.3 million, offset by a net loss of $.3 million and net cash used for discontinued operations $6.6 million.

On December 8, 2009, we reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, we accounted for Global Hotline as a discontinued operation. Our reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

In the Philippines, we acquired 100% of Shift on April 10, 2008 and Asia Premier on May 27, 2008, multi-service call center operations that have now been merged into a single company operating as Global Hotline Philippines. On June 14, 2010, we outsourced our call center operations and recorded an intangible asset impairment of $793,000 as of March 31, 2010. As a result, we accounted for Global Hotline Philippines as a discontinued operation for periods ending after March 31, 2010.

FINANCING ACTIVITIES

Net cash provided by financing activities for the year ended March 31, 2010 was $3.6 million. This amount was primarily related to the sale of common stock of $3.2 million, proceeds from debt of $.1 million and $.3 million from the sale of preferred stock. We returned the $2.2 million escrow deposit on April 16, 2010.


26

The Companys contractual cash obligations as of March 31, 2010 are summarized in the table below (1):

ContractualLess ThanGreater ThanCash ObligationsTotal1 Year1-3 Years3-5 Years5 YearsOperating leases$2,253$2,253$0$0$0Note payable205,5006,000199,50000Capital expenditures00000Acquisitions00000$207,753$8,253$199,500$0$0
(1)  Based on the end of period exchange rate.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

INCOME TAXES

We are subject to income taxes in both the U.S. and foreign (Japan and Philippines) 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 in the US due to IA Global, Inc. not demonstrating any consistent profitable operations. In the event that the actual results differ from these estimates or we adjust these estimates in future periods, we may need to adjust the recorded valuation.

STOCK-BASED COMPENSATION

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY RISK

We were exposed to foreign currency risks due to our operations in Japan and the Philippines. We do not trade in hedging instruments or other than trading instruments and we are exposed to foreign currency exchange risks.

INTEREST RATE RISK

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


27

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.

ITEM 9A. CONTROLS AND PROCEDURES

CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2010. The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of March 31, 2010, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control--Integrated Framework, our management concluded that our internal control over financial reporting was effective as of March 31, 2010.

The effectiveness of our internal control over financial reporting as of March 31, 2010 has not been audited by Sherb & Co., LLP, an independent registered public accounting firm, as stated in their report which is included herein.

CHANGES IN INTERNAL CONTROL

There has been no change in our internal control over financial reporting during the quarter ended March 31, 2010 that has materially effected or is likely to materially affect our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

There were no disclosures of any information required to be filed on Form 8-K during the three months ended March 31, 2010 that were not filed.


28

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The names and ages of IA Global's executive officers, as of July 14, 2010, as well as certain biographical information, is set forth below.

NameAgePositions and Offices HeldSinceBrian Hoekstra50DirectorAugust 2, 2009Chief Executive OfficerSeptember 4, 2009Mark Scott57Chief Financial OfficerOctober 2, 2003PresidentAugust, 2005 - February 2007Chief Operating OfficerFebruary 2007 - August 24, 2009SecretaryJanuary, 2004DirectorJanuary, 2004 - December 2008Ryuhei Senda50Management DirectorAugust 2, 2009Michael Garnreiter58Independent DirectorSeptember 4, 2009Jack Henry66Independent DirectorSeptember 4, 2009Greg LeClaire41Independent DirectorSeptember 4, 2009
Business Experience Descriptions

Brian Hoekstra

Mr. Hoekstra has more than 25 years of professional experience including corporate management, strategic planning, intellectual property, and business development, as well as extensive technical expertise in lasers, optics, solar, LCD, semiconductor, and materials processing. From September 1999 until September 2009, he was Founder, President & CEO of Applied Photonics, Inc., a leading laser solutions provider for the flat panel display industry with an installation base located primarily in Asia.

From February 1998 until September 1999, Mr. Hoekstra was Vice President, Technology at Accudyne Corporation, a semiconductor capital equipment manufacturer.  From 1992 until 1998, he held various corporate and contractor positions specializing in licensing, marketing, technology transfer, and commercialization.  Clients included the State of Florida, Disney, and NASA. From 1986 until 1992, he was Deputy Director of a NASA Commercial Center specializing in space-based crystal growth and a co-investigator on several space shuttle experiments. From 1984 until 1986, he was a leading researcher at the Air Force Materials Laboratory at Wright Patterson AFB, Ohio and was the DoD technical representative for the International Space Station Microgravity Science Advisory Board.

Mr. Hoekstra graduated from Illinois Institute of Technology with a bachelor's degree in physics in 1981, attended the U.S. Air Force Academy from 1977 until 1979, and has completed numerous professional military and continuing education courses. He was an independent director of Amtech Systems, Inc. (NASDAQ: ASYS) from February 19, 2007 until December 21, 2009.

Ryuhei Senda

Mr. Senda has more than 25 years of professional experience including project and corporate management, strategic planning and business development, as well as management of investment funds. Mr. Senda was Director of Business Development of Applied Photonics, Inc., a leading laser solutions provider for the flat panel display industry from April 2004 to February 2009.

Mr. Senda was the project manager of Mitsubishi Corporation in Japan from April 1992 to March 2004 and played key roles introducing and spreading 2D bar code in Japanese and U.S. markets. At the same time, he managed the investment fund for the next generation technologies funded by Mitsubishi Corporation and certain other major Japanese companies.


29

Mr. Senda graduated from Hitotsubashi University in Tokyo, Japan with a bachelors degree of business in 1981.

Michael Garnreiter

Mr. Garnreiter is currently a consultant to Fenix Financial Forensics, a Scottsdale Arizona based consulting firm, providing expert testimony and litigation support to the legal and corporate legal communities. From August 2006 through December 2009, Mr. Garnreiter was Managing Member of Rising Sun Restaurant Group, L.L.C., a private restaurant operating company. From April 2002 through June 2006, Mr. Garnreiter was Executive Vice President, Treasurer, and Chief Financial Officer of the Main Street Restaurant Group, a $225 million public restaurant operating company.

Mr. Garnreiter is also a director of TASER International, Inc. (NASDAQ: TASR), Knight Transportation Inc. (NYSE: KNX) and Amtech Systems, Inc. (NASDAQ: ASYS). Mr. Garnreiter previously served as a general partner of the international accounting firm of Arthur Andersen from 1974 through his retirement in March 2002. Mr. Garnreiter holds a B.S. degree in accounting from California State University at Long Beach and is a Certified Public Accountant.

Mr. Garnreiter is the chairman of our Audit Committee and a member of our Nominations and Governance and Compensation Committees.

Jack Henry

Mr. Henry has served on the board of directors of Grand Canyon Education, Inc. (NASDAQ: LOPE) since November 2008 and currently serves as the chairman of its audit committee. He also currently serves on the boards of directors of several private companies and previously served on the boards of directors of five other public-reporting companies. Mr. Henry co-founded and is currently the President of the Arizona Chapter of the National Association of Corporate Directors (NACD).

Mr. Henry began his career in 1966 with Arthur Andersen. He became a Partner in 1976 and was Managing Partner of the Phoenix office from 1982 to 2000. In 2000, Jack retired from Arthur Andersen and formed Sierra Blanca Ventures LLC, a private consulting and investment firm. He has served in a variety of community positions including chairman of the Arizona Chamber of Commerce and Greater Phoenix Leadership, Greater Phoenix Economic Council, Arizona Business Hall of Fame, Phoenix Convention & Visitors Bureau, Junior Achievement, Violence Prevention Initiative, Arizona Economic Forum and the Super Bowl 96 Executive Committee.

Mr. Henry is a frequent speaker and consultant on audit committee and corporate governance matters. Mr. Henry holds both a bachelors degree and an MBA from the University of Michigan.

Greg LeClaire

Mr. LeClaire has served as a director of our Company since September 2009.  He currently serves as Chief Financial Officer of ePercipio LLC, an online training company.  He is also a member of the board of directors and chairman of the audit committee of LiveDeal, Inc. (NASDAQ: LIVE).

From June 2009 to January 2010, he served as a financial, operational and strategic development consultant in the technology sector.  He was Chief Financial Officer and Corporate Secretary of ClearOne Communications, Inc. (NASDAQ: CLRO), a manufacturer and marketer of audio conferencing and related products, from September 2006 until May 2009.

From April 2006 until August 2006, Mr. LeClaire served as Vice President  Finance and Administration for LiveDeal, Inc., an Internet classifieds company that was acquired by a publicly-traded company.  Prior to that, Mr. LeClaire was Vice President and Chief Financial Officer of Utah Medical Products, Inc. (NASDAQ: UTMD), a multi-national medical device corporation, from January 2001 until April 2006.

Mr. LeClaire has significant experience in the areas of finance and accounting, SEC reporting, Sarbanes-Oxley compliance, budgeting and financial management.  He holds a Master of Science degree in management from Stanford Universitys Graduate School of Business and a Bachelor of Science degree in accounting from the University of Utah.


30

Audit Committee

The Audit Committee has three members and met five times during the year ended March 31, 2010. The Audit Committee is comprised solely of non-employee Directors, The Board has determined that all the members of the Audit Committee are financially literate. The Board also has determined that Mr. Michael Garnreiter, Chairman of the Audit Committee, is an Audit Committee Financial Expert under SEC regulations adopted under the Sarbanes-Oxley Act of 2002. The Board has adopted a charter for the Audit Committee, a copy of which is available on the Company's website at www.iaglobalinc.com.

The Audit Committee's responsibilities, discussed in detail in the charter include, among other duties, the responsibility to:

- appoint the independent registered accounting firm;

- review the arrangements for and scope of the audit by independent registered accounting firm;

- review the independence of the independent registered accounting firm;

- consider the adequacy and effectiveness of the system of internal accounting and financial controls and review any proposed corrective actions;

- review and monitor our policies regarding business ethics and conflicts of interest;

- discuss with management and the independent auditors our draft quarterly interim and annual financial statements and key accounting and reporting matters; and

- review the activities and recommendations of our accounting department.

CODE OF CONDUCT AND ETHICS

The Company has adopted conduct and ethics standards titled the Code of Conduct and Ethics (the "Code of Conduct"), which are available at www.iaglobalinc.com. These standards were adopted by the Board to promote transparency and integrity of the Company. The standards apply to the Board, executives and employees. Waivers of the requirements of the Code of Conduct or associated polices with respect to members of the Board or executive officers are subject to approval of the full Board.

The Company's Code of Conduct includes the following:

- promotes honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;

- promotes the full, fair, accurate, timely and understandable disclosure of the Company's financial results in accordance with applicable disclosure standards, including, where appropriate, standards of materiality;

- promotes compliance with applicable SEC and governmental laws, rules and regulations;

- deters wrongdoing; and

- requires prompt internal reporting of breaches of, and accountability for adherence to, the Code of Conduct.

On an annual basis, each director and executive officer is obligated to complete a Director and Officer Questionnaire which requires disclosure of any transactions with the Company in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Pursuant to the Code of Conduct, the Audit Committee and the Board are charged with resolving any conflict of interest involving management, the Board and employees on an ongoing basis.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The Company's executive officers, directors and 10% stockholders are required under the Exchange Act to file reports of ownership and changes in ownership with the SEC. Copies of these reports must also be furnished to the Company.


31

Based solely on a review of copies of reports furnished to the Company, or written representations that no reports were required, the Company believes that during 2010 its executive officers, directors and 10% holders complied with all filing requirements.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

OVERVIEW OF COMPENSATION PROGRAM

This Compensation Discussion and Analysis describes the material elements of compensation awarded to, earned by or paid to each of our named executive officers who served during the year ended March 31, 2010. This compensation discussion primarily focuses on the information contained in the following tables and related footnotes and narrative for the last completed fiscal year, but we also describe compensation actions taken after the last completed fiscal year to the extent that it enhances the understanding of our executive compensation disclosure.

The compensation committee (for purposes of this analysis, the "committee") of the Board has responsibility for overseeing, reviewing and approving executive compensation and benefit programs in accordance with the committees charter.  The members of the committee are Greg LeClaire (Chairman), Michael Garnreiter and Jack Henry.

During 2010, the Company changed its board of directors during August and September 2009 and its chief executive officer, Mr. Derek Schneideman resigned August 2, 2009. Mr. Brian Hoekstra was appointed chief executive officer on September 4, 2009.

On December 8, 2009, the Company deconsolidated the operations of Global Hotline, effective as of July 1, 2009. As a result, Mr. Anan and Nagae are no longer named executive officers.

Throughout this proxy statement, the individuals who served as the Company's chief executive officer and chief financial officer during the year ended March 31, 2010, are referred to as the "named executive officers".

COMPENSATION PHILOSOPHY AND OBJECTIVES

The major compensation objectives for named executive officers are as follows:

·to attract and retain highly qualified individuals capable of making significant contributions to the long-term success of the Company;·to motivate and reward named executive officers whose knowledge, skills, and performance are critical to the Companys success;·to closely align the interests of the Companys named executive officers and other key employees with those of its shareholders; and·to utilize incentive based compensation to reinforce performance objectives and reward superior performance; and
ROLE OF CHIEF EXECUTIVE OFFICER IN COMPENSATION DECISIONS

The Board approves all compensation for the chief executive officer. The committee makes recommendations on the compensation for the chief executive officer and approves all compensation decisions, including equity awards, for the named executive officers of the Company. The Company's chief executive officer makes recommendations regarding the base salary and non-equity compensation of other named executive officers that are approved by the committee in its discretion.

SETTING EXECUTIVE COMPENSATION

The committee believes that compensation for named executive officers must be managed to what the Company can afford and in a way that allows for the Company to meet its goals for overall performance. During 2010, the committee reduced the base salary paid to the named executive officers during 2010 based on the financial condition of the Company. The committee does not use a peer group of publicly-traded and privately-held companies in structuring the compensation packages.


32

EXECUTIVE COMPENSATION COMPONENTS FOR THE YEAR ENDED MARCH 31, 2009

The committee did not use a formula for allocating compensation among the elements of total compensation during the year ended March 31, 2010. The committee believes that in order to attract and retain highly effective people it must maintain a flexible compensation structure. For the year ended March 31, 2010, the principal components of compensation for named executive officers were base salary, performance-based incentive compensation, stock awards and stock option grants.

Base Salary

Base salary is intended to ensure that the Company's employees are fairly and equitably compensated. Base salary is used to appropriately recognize and reward the experience and skills that employees bring to the Company and provides motivation for career development and enhancement. During their tenure, base salary ensures that all employees continue to receive a basic level of compensation that reflects any acquired skills which are competently demonstrated and are consistently used at work.

Base salaries for the Company's named executive officers are initially established based on their prior experience, the scope of their responsibilities and the applicable competitive market compensation paid by other companies for similar positions. During 2010, the committee reduced the base salary paid to the named executive officers based on the financial condition of the Company. Based upon review of its compensation criteria, the committee had established base salaries for its chief executive officer and chief financial officer of $250,000 and $200,000, respectively. However, based on the financial condition of the Company, the committee set the base salary at $98,000 for the chief executive officer on September 4, 2009 and $96,000 for the chief financial officer on August 24, 2009.

Performance-Based Incentive Compensation

The committee believes incentive compensation reinforces performance objectives, rewards superior performance and is consistent with the creation of stockholder value. All of the Company's named executive officers are eligible to receive performance-based incentive compensation. The committee reduced the cash component of performance-based incentive compensation paid to the named executive officers during 2010 based on the financial condition of the Company.

Mr. Schneideman resigned August 2, 2010 and did not receive incentive compensation during the year ended March 31, 2010.

Mr. Hoekstra's incentive compensation during the year ended March 31, 2010 included the following:

The committee awarded Mr. Hoekstra 800,000 shares of restricted stock at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on November 4, 2009, the last trading day before the committee meeting. In accordance with the Companys 2007 Stock Incentive Plan, the restricted stock award vests in quarterly installments over three years beginning on September 4, 2009.

Mr. Scott's incentive compensation during the year ended March 31, 2010 included the following:

On August 24, 2009, the board of directors awarded Mr. Scott 200,000 shares of restricted stock at the fair market price of $0.05 per share based on the adjusted closing price on August 20, 2009, the last trading day before the board of directors approved the grant. In accordance with the 2007 Stock Incentive Plan, the restrictions on the restricted stock lapsed on November 23, 2009.

On March 19, 2010, the committee awarded Mr. Scott 400,000 shares of stock at the fair market price of $0.014 per share based on the adjusted closing price on March 18, 2010, the last trading day before the committee approved the grant. In accordance with the 2007 Stock Incentive Plan, the grant vested on March 19, 2010.

On March 19, 2010, the committee authorized a $10,000 discretionary bonus to be paid to Mr. Scott on or before April 14, 2010.

OWNERSHIP GUIDELINES

The committee does not require our named executive officers to hold any minimum number of our shares. However, to directly align the interests of executive officers with the interests of the stockholders, the committee encourages each named executive officer to maintain an ownership interest in the Company.


33

STOCK OPTION PROGRAM

Stock options are an integral part of our executive compensation program. They are intended to encourage ownership and retention of the Company's common stock by named executive officers and employees, as well as non-employee members of the board. Through stock options, the objective of aligning employees' long-term interest with those of stockholders may be met by providing employees with the opportunity to build a meaningful stake in the Company.

The Stock Option Program assists the Company by:

- enhancing the link between the creation of stockholder value and long-term executive incentive compensation;

- providing an opportunity for increased equity ownership by executives; and

- maintaining competitive levels of total compensation.

Stock option award levels are determined based on market data, vary among participants based their positions within the Company and are granted by and at the discretion of the committee. Newly hired executive officers or promoted executive officers are generally awarded stock options, at the discretion of the committee, at the next regularly scheduled committee meeting on or following their hire or promotion date. In addition, such executives are eligible to receive additional stock option on a discretionary basis after performance criteria are achieved.

Options are awarded at the closing price of the Company's common stock on the date of the grant or last trading day prior to the date of the grant. The committee's policy is not to grant options with an exercise price that is less than the closing price of the Company's common stock on the grant date.

On June 17, 2009, certain key executives, employees, and directors of the Company voluntarily cancelled stock option grants to purchase an aggregate of 5,439,583 shares of common stock. The grants were previously issued on various dates and prices above $.13 per share.

On June 17, 2009, the Company awarded stock option grants totaling 5,439,583 shares to certain key executives, employees, and directors. The grants were priced at $.05 per share, the closing price of the Companys common stock on June 16, 2009, the date before the scheduled compensation committee meeting at which such grants were approved. In accordance with the 2007 Stock Incentive Plan, the grants immediately vested and expire on June 16, 2019.

Generally, the majority of the options granted by the committee vest quarterly over three years of the ten-year option term. Vesting and exercise rights cease upon termination of employment and/or service, except in the case of death (subject to a one year limitation), disability or retirement. Stock options vest immediately upon termination of employment without cause or an involuntary termination following a change of control. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents.

Mr. Schneideman, the Companys former Chief Executive Officer, received the following stock option grants during the year ended March 31, 2010:

On June 17, 2009, Mr. Schneideman voluntarily cancelled stock option grants to purchase an aggregate of 2,000,000 shares of common stock. The grants were previously issued on various dates and prices above $.13 per share. On June 17, 2009, the Company awarded stock option grants totaling 2,000,000 shares to Mr. Schneideman. The grants were priced at $.05 per share, the closing price of the Companys common stock on June 16, 2009, the date before the scheduled compensation committee meeting at which such grants were approved. In accordance with the 2007 Stock Incentive Plan, the grants immediately vested and expire on June 16, 2019. The stock options were granted as an incentive to Mr. Schneideman.

Mr. Hoekstra, the Companys Chief Executive Officer received the following stock option grants during the year ended March 31, 2010:


34

On September 4, 2009, the Company awarded to Mr. Hoekstra an option to purchase 400,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on the date of the award. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on September 3, 2019. This grant was issued in conjunction with Mr. Hoekstras appointment to the board of directors.

On November 5, 2009, the compensation committee awarded Mr. Hoekstra an option to purchase 1,200,000 shares of the Companys common stock. The award was granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on November 4, 2009, the last trading day before the compensation committee approved the award. The stock option vests quarterly over three years beginning on September 4, 2009 and expires on September 3, 2019. The grant was made in conjunction with his appointment as the Companys Chief Executive Officer. The grant was based on market compensation paid by other companies for similar positions.

Mr. Scott, the Companys Chief Financial Officer, received the following stock option grants during the year ended March 31, 2010:

On June 17, 2009, Mr. Scott voluntarily cancelled stock option grants to purchase an aggregate of 2,000,000 shares of common stock. The grants were previously issued on various dates and prices above $.13 per share. On June 17, 2009, the Company awarded stock option grants totaling 2,000,000 shares to Mr. Scott. The grants were priced at $.05 per share, the closing price of the Companys common stock on June 16, 2009, the date before the scheduled compensation committee meeting at which such grants were approved. In accordance with the 2007 Stock Incentive Plan, the grants immediately vested and expire on June 16, 2019. The stock options were granted as an incentive to Mr. Scott.

On August 24, 2009, the Company awarded Mr. Scott an option to purchase 300,000 shares of the Companys common stock. The award was granted at the fair market price of $0.05 per share based on the adjusted closing price of the Companys common stock on August 20, 2009, the last trading day before the board of directors approved the grant. In accordance with the 2007 Stock Incentive Plan, the stock option vests quarterly over three years and expires on August 23, 2019.The grant was made as an incentive based component of Mr. Scotts compensation and based on market compensation paid by other companies for similar positions.

RETIREMENT AND OTHER BENEFITS

The Company has no other retirement, savings, long-term stock award or other type of plans for the named executive officers.

PERQUISITES AND OTHER PERSONAL BENEFITS

During the year ended March 31, 2010, the Company provided the named executive officers with perquisites and other personal benefits that the Company and the committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The committee expects to review the levels of perquisites and other personal benefits provided to named executive officers. In addition, the Company paid $13,183 for a Tokyo apartment for the former Chief Executive Officer. During a portion of fiscal year 2010, since he spent a considerable amount of time working in Japan at the Company's operations, the Company paid for a Tokyo apartment.

Currently, the Company has Employment Agreements with Brian Hoekstra, the Company's Chief Executive Officer and Mark Scott, the Chief Financial Officer, see page 39 for a description of these agreements. These Employment Agreements contain potential payments upon termination, see page 41 for further discussion of these payments.

TAX AND ACCOUNTING IMPLICATIONS

Deductibility of Executive Compensation

Subject to certain exceptions, Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") generally denies a deduction to any publicly held corporation for compensation paid to its chief executive officer and its three other highest paid executive officers (other than the principal financial officer) to the extent that any such individual's compensation exceeds $1 million. "Performance-based compensation" (as defined for purposes of Section 162(m)) is not taken into account for purposes of calculating


35

the $1 million compensation limit, provided certain disclosure, shareholder approval and other requirements are met. We periodically review the potential consequences of Section 162(m) and may structure the performance-based portion of our executive compensation to comply with certain exceptions to Section 162(m). However, we may authorize compensation payments that do not comply with the exceptions to Section 162(m) when we believe that such payments are appropriate and in the best interests of the stockholders, after taking into consideration changing business conditions or the officer's performance.

Section 409A is a relatively recent provision of the Code. If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A of the Code, and such benefits do not comply with Section 409A of the Code, the executive would be subject to adverse tax treatment, including accelerated income recognition (in the first year that benefits are no longer subject to a substantial risk of forfeiture) and an additional income tax of 20% of the amount so recognized.

Accounting for Stock-Based Compensation

Beginning on January 1, 2006, the Company began accounting for stock-based payments including its Stock Option Program in accordance with the requirements of ASC 718, Compensation-Stock Compensation.

COMPENSATION COMMITTEE REPORT

The Compensation Committee, composed entirely of independent directors in accordance with the applicable laws and regulations, sets and administers policies that govern the Company's executive compensation programs, and incentive and stock programs. The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

THE COMPENSATION COMMITTEE

Greg LeClaire, Chairman
Michael Garnreiter
Jack Henry

REMUNERATION OF EXECUTIVE OFFICERS

The following table provides information concerning remuneration of the chief executive officer, the chief financial officer during the fiscal years ended March 31, 2010, 2009 and 2008.

Non-EquityIncentiveStockOptionPlanAll OtherName andYearSalaryBonusAwardsAwardsCompensationCompensationTotalPrincipal PositionEnding($) (5)($) (5)($) (4)($) (2)($) (1)($) (3)($)Derek Schneideman3/31/2010$312,551$$$100,000$$17,470$430,021Chief Executive Officer3/31/2009$250,000$$48,723$169,000$$15,704$483,4273/31/2008$250,000$$$417,000$30,000$$697,000Brian Hoekstra3/31/2010$56,078$$32,000$48,000$$$136,078Chief Executive Officer3/31/2009$$$$$$$3/31/2008$$$$$$$Mark Scott3/31/2010$154,439$10,000$15,600$115,000$$$295,039Chief Financial Officer3/31/2009$200,000$$43,441$97,000$$$340,4413/31/2008$200,000$$$314,250$24,000$$538,250

36

SUMMARY COMPENSATION TABLE

(1) The March 31, 2008 amounts reflect bonuses earned and paid for the year ended March 31, 2008 for Mr. Schneideman and Mr. Scott.

(2) These amounts reflects the dollar amount recognized for financial statement reporting purposes for the fiscal year ended March 31, 2010, 2009 and 2008, in accordance with FASB ASC Topic 718 of awards pursuant to the 2007 Stock Incentive Plan. Assumptions used in the calculation of this amount are included in footnotes to the Company's audited financial statements for the fiscal years ended March 31, 2010, 2009 and 2008.

(3) The year ended March 31, 2010 amount reflects $13,183 for Tokyo apartment and $4,287 for consulting for Mr. Schneideman. The year ended March 31, 2019 amount reflects $15,704 for a Tokyo apartment for Mr. Schneideman.

(4) The amount for 2010 for Mr. Hoekstra includes $32,000 for the issuance of 800,000 shares of common stock related to his appointment as Chief Executive Officer. The amount for 2010 for Mr. Scott includes $10,000 and $5,600 for the issuance of 200,000 and 400,000 shares, respectively, of common stock for discretionary bonuses. The amounts for 2009 for Mr. Schneideman include a $38,106 increase in his base salary with the issuance of 131,400 shares common stock and a bonus of $10,617 with the issuance of 151,670 shares common stock for achieving profitability targets of $730,844 for the quarter ended June 30, 2009. The amounts for 2009 for Mr. Scott include a $35,478 increase in his base salary with the issuance of 131,400 shares of common stock and a bonus of $10,617 with the issuance of 151,670 shares common stock for achieving profitability targets of $730,844 for the quarter ended June 30, 2009.

(5) The year ended March 31, 2010 amounts reflects (i) $100,000 paid and $110,417 accrued, but not paid to Mr. Schneideman as severance under his Agreement and Full Release of Claims, which was effective as of August 2, 2009. On June 8, 2010, Mr. Schneideman converted $50,000 into 5,000,000 shares of common stock at $.01 per share; (ii) $20,147 paid and $35,661 accrued, but not paid to Mr. Hoekstra. On May 21, 2010, Mr. Hoekstra converted $15, 244 into 1,385,818 shares of common stock at $.011 per share; and (iii) $142,439 paid and $12,000 accrued, but not paid to Mr. Scott.

GRANTS OF PLAN BASED AWARDS IN FISCAL YEAR ENDED MARCH 31, 2010

NameGrant
DateEstimated Future Payouts Under
Non-Equity Incentive Plan
AwardsEstimated Future Payouts Under
Equity Incentive Plan
AwardsAll Other
Stock
Awards;
Number of
Shares of
Stock
or Units
(#)  (2)All Other
Option
Awards;
Number of
Securities
Underlying
Options
(#) (1)Exercise
or Base
Price of
Option
Awards
($/Sh)Grant
Date
Fair
Value of
Stock
and
Option
AwardsThreshold
($)Target
($)Maximum
($)Threshold
(#)Target
(#)Maximum
(#)Derek Schneideman6/17/2009$         $    $         2,000,000$  0.050$100,000Brian Hoekstra11/5/2009$         $    $         800,0001,200,000$  0.040$ 80,000Mark Scott6/17/2009$         $    $         2,000,000$  0.050$100,0008/24/2009$         $    $         200,000300,000$  0.050$ 25,0003/19/2010$         $    $         400,000$  0.014$   5,600
(1)  The amount shown in this column reflects the number of options granted pursuant to the 2007 Stock Incentive Plan and vest either immediately or quarterly over three years.

(2)  The amount for 2010 for Mr. Hoekstra includes $32,000 for the issuance of 800,000 shares of common stock related to his appointment as Chief Executive Officer. The amount for 2010 for Mr. Scott includes $10,000 and $5,600 for the issuance of 200,000 and 400,000 shares, respectively, of common stock for discretionary bonuses.


37

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR ENDED MARCH 31, 2010

Option AwardsStock AwardsNameNumber of
Securities
Underlying
Unexercised
Options
Exercisable
(#)Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Options
Unexerciseable
(#)Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)Option
Exercise
Price
($)Option
Expiration
DateNumber of
Shares or Units
of Stock
That Have Not
Vested
(#)Market Value
of Shares or
Units of
Stock That
Have Not Vested
($)Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That
Have Not
Vested
(#)Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares,
Units, or Other
Rights That HaveNot Vested
($)Derek Schneideman(2)100,000$   0.142/12/2017$        $                (2)200,000$   0.127/28/2018$        $                (3)2,000,000$   0.056/16/2019$        $                Brian Hoekstra(1)57,143342,857$   0.049/3/2019$        $                (1)1,107,69292,308$   0.0411/4/2019$        $                Mark Scott(2)175,000$   0.152/22/2017$        $                (2)200,000$   0.127/28/2018$        $                (2)250,000$   0.061/29/2019$        $                (3)2,000,000$   0.056/16/2019$        $                (1)50,000250,000$   0.058/23/2019$        $                
(1)  All options vest quarterly over a three year term. Such option awards have a ten year life.

(2)  On June 17, 2009, the Change of Control Provision 8.2 (d) was triggered under the Schneideman and Scott Agreements (as defined below) because during any period of twenty-four consecutive months, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board. All stock options were vested as of June 17, 2009.

(3)  On June 17, 2009, Mr. Schneideman and Mr. Scott voluntarily cancelled stock option grants to purchase an aggregate of 2,000,000 shares of common stock. The grants were previously issued on various dates and prices above $.13 per share.  On June 17, 2009, the Company awarded stock option grants totaling 2,000,000 shares each  to Mr. Schneideman and Mr. Scott.

OPTION EXERCISES AND STOCK VESTED

Option Awards (1)Stock Awards (2)Number of SharesValue RealizedNumber of SharesValue RealizedNameAcquired on Exerciseon ExerciseAcquired on Vestingon Vesting(#)($)(#)($)Derek Schneideman$$Brian Hoekstra$800,000$32,000Mark Scott$600,000$15,600
(1) The Companys named executive officers did not exercise any stock options during the year ended March 31, 2010, 2009 and 2008.

(2) The amount for 2010 for Mr. Hoekstra includes $32,000 for the issuance of 800,000 shares of common stock related to his appointment as Chief Executive Officer. The amount for 2010 for Mr. Scott includes $10,000 and $5,600 for the issuance of 200,000 and 400,000 shares, respectively, of common stock for discretionary bonuses.


38

PENSION BENEFITS

The Company does not provide any pension benefits.

NONQUALIFIED DEFERRED COMPENSATION

The Company's does not have a nonqualified deferral program.

EMPLOYMENT AGREEMENTS

During 2010, the Company changed its board of directors during August and September 2009 and its Chief Executive Officer, Mr. Derek Schneideman resigned August 2, 2009. Mr. Brian Hoekstra was appointed Chief Executive Officer on September 4, 2009.

Brian Hoekstras Employment Agreement

On November 5, 2009, the Company entered into an Employment Agreement with Brian Hoekstra, the Companys Chief Executive Officer, which is effective as of September 4, 2009.

The Employment Agreement provides for a one-year term and is renewable on a mutually agreeable basis. The Company agreed to pay Mr. Hoekstra an annual base salary of $98,000, and provide for participation in the Companys benefit programs available to other senior executives (including group insurance arrangements). Mr. Hoekstra is also eligible for discretionary performance bonuses based upon performance criteria to be determined by the Companys Compensation Committee. If Mr. Hoekstras employment is terminated without Cause (as defined in the Employment Agreement), Mr. Hoekstra will be entitled to a payment equal to three months base salary paid at the Companys discretion in a lump sum or over the subsequent year.

The Compensation Committee also awarded Mr. Hoekstra 800,000 shares of restricted stock and an option to purchase 1,200,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on November 4, 2009, the last trading day before the Compensation Committee granted such awards. In accordance with the Companys 2007 Stock Incentive Plan, the restricted stock and the stock option vest in quarterly installments over three years beginning on September 4, 2009. The stock options expire on September 3, 2019.

Derek Schneideman's Employment Agreement

On August 2, 2009, Derek Schneideman resigned as the Companys Chief Executive Officer and as a member of the Board, effective immediately upon the Companys filing of its Annual Report on Form 10-K for the fiscal year ended March 31, 2009, which occurred on September 3, 2009. Mr. Schneideman did not resign from the Board due to any disagreement with the Company relating to the Companys operations, policies or practices.

In connection with Mr. Schneidemans resignation, he and the Company entered into a Separation Agreement and Full Release of Claims (the Separation Agreement), which was effective as of August 2, 2009. Pursuant to the Separation Agreement, the Company made or agreed to make the following severance payments to Mr. Schneideman:

·$100,000 was paid upon the Companys filing of its 2009 Form 10-K on September 3, 2009.·$100,000 was payable as of November 3, 2009.  On June 8, 2010, the Company agreed to issue 5,000,000 shares of common stock to Derek Schneideman, for $50,000, or $.01 per share, the date agreement was signed. The shares do not have registration rights. $50,000 remains payable as of March 31, 2010, provided that (i) the Companys filings with the SEC are not determined to contain materially inaccurate information, material representations or material omissions, (ii) evidence of fraud or illegal acts on the part of Mr. Schneideman is not discovered, and (iii) Mr. Schneideman has not made any misrepresentations in connection with its purchase of the Shares, as described above.
Mr. Schneideman did not exercise his limited right to revoke the Separation Agreement and was paid $42,409 and is owed $10,417 as of March 31, 2010 for accrued but unpaid salary, benefits and business expense reimbursements as of the date of the Separation Agreement.


39

The Separation Agreement provides that Mr. Schneideman will continue to provide services to the Company as a consultant for a period of 12 months following the effective date of his resignation as Chief Executive Officer. In exchange for such services, the Company agreed to pay Mr. Schneideman $2,000 per month. The Company is entitled to terminate the consulting relationship upon 30 days advance notice and payment of the consulting fee to which Mr. Schneideman would be entitled in the 30 days following such notice. The Company has paid $4,287 and owes $10,475 in consulting fees as of March 31, 2010.

In consideration of and for the severance payments and consulting arrangement described above, Mr. Schneideman provided a broad release in favor of the Company with respect to any and all rights, claims, demands, causes of actions and liabilities of any nature relating to his employment with the Company, the termination of such employment, and/or his entry into the Separation Agreement.

Finally, the Separation Agreement also contains customary provisions with respect to confidentiality, non-disclosure, non-solicitation, non-disparagement and Mr. Schneidemans return of any property of the Company in his possession.

Mark Scott's Employment Agreement

On August 24, 2009, the Company entered into a new Employment Agreement with Mark Scott, which replaced his Employment Agreement dated September 5, 2007.

Mark Scotts Employment Agreement (Scott Agreement) had a one-year term beginning on August 24, 2009, and is renewable on a mutually agreeable basis. The Company agreed to pay Mr. Scott an annual base salary of $96,000, and provide for participation in the Companys benefit programs available to other senior executives (including group insurance arrangements). Also under the Scott Agreement, Mr. Scott is eligible for discretionary performance bonuses based upon performance criteria to be determined by the Companys Compensation Committee based on criteria under development. If Mr. Scotts employment is terminated without Cause (as defined in the Scott Agreement), Mr. Scott will be entitled to a payment equal to one years annual base salary paid at the Companys discretion in a lump sum or over the next year.

On August 24, 2009, the board of directors awarded Mr. Scott 200,000 shares of restricted stock and an option to purchase 300,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.05 per share based on the adjusted closing price on August 20, 2009, the last trading day before the board of directors approved the grant. These options vest quarterly over three years from the date of the grant. In accordance with the 2007 Stock Incentive Plan, the restrictions on the restricted stock lapsed on November 23, 2009 and the stock options expire on August 23, 2019.

On May 17, 2010, the Company entered into an Amendment to Employment Agreement (Amended Scott Agreement) with Mark Scott, our Chief Financial Officer.

The Amended Scott Agreement allows Mr. Scott to serve as a consultant for unrelated businesses so long as such activities do not interfere with the performance of Executives duties under his Employment Agreement dated August 24, 2009.

Definitions Used in Employment Agreements

For purposes of the Employment Agreements described above, the following definitions apply:

1.   "Termination without Cause" means the Company involuntarily terminates the executive's at any time and for any reason, or no reason whatsoever, upon written notice to the executive.

2.   "Cause": means:

(i)Executives willful and continued refusal to substantially perform his duties hereunder;(ii)Executives conviction of a felony, or his guilty plea to or entry of a nolo contendere plea to a felony charge; or(iii)Executives breach of any material term of this Agreement or the Companys written policies and procedures, as in effect from time to time.

40

POTENTIAL PAYMENTS UPON TERMINATION

The Company's Employment Agreements with the Named Executive Officers have provisions providing for severance payments as discussed below.

Brian Hoekstra

The following table shows the potential payments upon termination for Brian Hoekstra, the Company's Chief Executive Officer:

Executive
Payments Upon
SeparationFor Cause
Termination
on 3/31/10Early
or Normal
Retirement
on 3/31/10Not For Good
Cause
Termination
on 3/31/10Disability
or Death
on 3/31/10Compensation:Base salary (1)$$$24,500$Performance-based incentive compensation$$$$Stock options$$$$Benefits and Perquisites:Health and welfare benefits$$$$Accrued vacation pay (2)$2,827$29,780$29,780$29,780Total$2,827$29,780$54,280$29,780
(1) Reflects three months severance to be paid upon termination without cause.

(2) Reflects the value of vacation pay accrued as of March 31, 2010.

Mark Scott

The following table shows the potential payments upon termination for Mark Scott, the Company's Chief Financial Officer:

Executive
Payments Upon
SeparationFor Cause
Termination
on 3/31/10Early
or Normal
Retirement
on 3/31/10Not For Good
Cause
Termination
on 3/31/10Disability
or Death
on 3/31/10Compensation:Base salary (1)$$$96,000$Performance-based incentive compensation$$$$Stock options$$$$Benefits and Perquisites:Health and welfare benefits$$$$Accrued vacation pay (2)$20,169$20,169$20,169$20,169Total$20,169$20,169$116,169$20,169
(1) Reflects twelve months severance to be paid upon termination without cause.

(2) Reflects the value of vacation pay accrued as of March 31, 2010.


41

DIRECTOR COMPENSATION

The Company uses a combination of cash and stock-based incentive compensation to attract and retain qualified candidates to serve on the Board. In setting director compensation, the Company considers the significant amount of time that Directors expend in fulfilling their duties to the Company as well as the skill-level required by the Company of members of the Board. During a portion of the year ended March 31, 2010, Derek Schneideman, the Company's former Chief Executive Officer served on the Board, but did not receive any compensation for his service as a director, The compensation disclosed in the Summary Compensation Table on page 37 represents their total compensation.

DIRECTOR SUMMARY COMPENSATION TABLE

The table below summarizes the compensation paid by the Company to non-employee directors during the year ended March 31, 2010.

NameFees Earned
Or Paid In
Cash ($)Option
Awards ($) (1)Total ($)Masazumi Ishii (2)$9,900$22,500$32,400Eric La Cara (3)$12,150$27,529$39,679Michael Garnreiter (4)$18,900$16,000$34,900Jack Henry (4)$15,400$16,000$31,400Greg LeClaire (4)$18,900$16,000$34,900Brian Hoekstra (5)$1,700$16,000$17,700Ryuhei Senda (5)$11,900$16,000$27,900
(1) Reflects the dollar amount recognized for financial statement reporting purposes for the year ended March 31, 2010 in accordance with FASB ASC Topic 718. The assumptions used in the valuation of options is included in the Footnotes of the Form 10-K as filed with the SEC on July 14, 2010. As of March 31, 2010, Mr. Garnreiter, Mr. Henry, Mr. LeClaire, Mr. Hoekstra and Mr. Senda each had 400,000 shares options outstanding to purchase the indicated number of shares of the Company's common stock.

(2) On August 2, 2010, Mr. Ishii resigned from the Board. On December 3, 2009, Mr. Ishii forfeited stock options totaling 650,000 shares.

(3) On November 11, 2009, Mr. La Cara resigned from the Board. On February 10, 2010, Mr. la Cara forfeited stock options totaling 750,583 shares.

(4) On September 4, 2009, Mr. Garnreiter, Mr. Henry, Mr. LeClaire were appointed to the board of directors.

(5) On August 2, 2009, Mr. Hoekstra and Mr. Senda were appointed to the board of directors.

COMPENSATION PAID TO BOARD MEMBERS

Our independent non-employee directors are compensated at a base rate of $1,700 per month. In addition, for serving as committee chairman they are paid $500 per month for the Nominations and Governance Committee and $1,000 per month for the Audit and Compensation Committees. All independent non-employee directors' fees are paid in cash or in Company stock.

STOCK OPTION PROGRAM

Each non-employee Director receives stock option grants having a calculated Black-Scholes value that approximates the value of their annual cash and committee chairman compensation. Each non-employee Director received a grant of 400,000 options at $.04 per share on September 4, 2009. Options received by non-employee Directors are granted at the fair market price of the Company's Common Stock on the date of the grant and vest quarterly over three years.


42

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

RELATED PARTY TRANSACTIONS WITH INTER ASSET JAPAN AND ITS AFFILIATES, AND OUR CONTROLLING SHAREHOLDER GROUP

The following table sets forth certain information regarding the ownership of our common stock as of September 1, 2009 by:

- each director and nominee for director;

- each person known by us to own beneficially 5% or more of our common stock;

- each officer named in the summary compensation table elsewhere in this report; and

- all directors and executive officers as a group.

The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial owner" of a security if that person has or shares voting power," which includes the power to vote or to direct the voting of such security, or "investment power," which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days. Under these rules more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.

Unless otherwise indicated below, each beneficial owner named in the table has sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Unless otherwise indicated, the address of each beneficial owner of more than 5% of common stock is IA Global. Inc., 101 California Street, Suite 2450, San Francisco, California 94111.

NumberPercentageGreater Than 5% OwnershipInter Asset Japan Co., Ltd-Inter Asset Japan LBO No. 1 Fund ("IAJ LBO")-88,606,52928.2%(1)35F Atago Green Hills Mori Tower2-5-1 Atago, Minato-KuTokyo, 105-6235 JapanPBAA Fund, Ltd ("PBAA")24,104,1527.7%(1)Woodbourne HallPO Box 3162Road Town, TortolaBritish Virgin IslandsTerra Firma Fund , Ltd. ("Terra Firma")-13,100,0004.2%(1)Woodbourne HallPO Box 3162Road Town, TortolaBritish Virgin IslandsInter Asset Japan Co. Ltd. ("IAJ")-2,200,0000.7%(1)35F Atago Green Hills Mori Tower2-5-1 Atago, Minato-KuTokyo, 105-6235 Japan

43

IA Turkey Equity Portfolio Ltd. ("IA Turkey")2,500,0000.8%(1)Mill Mall, Suite 6 Wickhams CayPO Box 3085Road Town, TortolaBritish Virgin IslandsHiroki Isobe5,194,1471.6%(1)Inter Asset Japan Co. Ltd.35F Atago Green Hills Mori Tower2-5-1 Atago, Minato-KuTokyo, 105-6235 Japan135,704,82843.2%Michael Ning and Affiliates-Taicom Securities Co Ltd and Affiliates25,802,4008.2%(2)1-5-5 Nishi ShinsaibashiUrban Building Shinsaibashi 10th FloorChuo-ku, Osaka 542-0086 JapanMichael Ning6,594,7942.1%(2)c/o ArqueMax Ventures, LLC27520 Hawthorne Blvd., Suite 290Rolling Hills Estates, CA 90274  USA32,397,19410.3%
The symbol - means less than 1%.

(1) Reflects the shares beneficially owned by IAJ, IAJ LBO No. 1, PBAA, Terra Firma, IA Turkey and Hiroki Isobe. These entities stated in a Schedule 13D filed with the SEC on February 24, 2009 and have subsequently confirmed orally, that they may be deemed to constitute a "group" for the purposes of Rule13d-3 under the Securities Exchange Act of 1934 ("Exchange Act"). Mr. Hiroki Isobe controls each of IAJ, IAJ LBO Fund, PBAA, Terra Firma and IA Turkey.

(2) Reflects the shares beneficially owned by Taicom and Michael Ning. These entities stated in a Schedule 13D filed with the SEC on July 18, 2008 that they may be deemed to constitute a "group" for the purposes of Rule 13d-3 under the Exchange Act. Mr. Michael Ning controlled Taicom, which filed for bankruptcy on December 25, 2009. Mr. Ning has not updated his holdings.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

RELATED PARTY TRANSACTIONS WITH INTER ASSET JAPAN AND ITS AFFILIATES, AND OUR CONTROLLING SHAREHOLDER GROUP

During the year ended March 31, 2010 the Company did not have any related party transactions with Inter Asset Japan Co Ltd ("IAJ") and affiliates, and IAJ LBO Fund, PBAA Fund Limited, Terra Firma, IAJ, IA Turkey and Hiroki Isobe (collectively, the "Controlling Shareholder Group") except for funding as described previously.

REVIEW AND APPROVAL OF RELATED PERSON TRANSACTIONS.

The Company has operated under a Code of Conduct for many years. The Company's Code of Conduct requires all employees, officers and directors, without exception, to avoid the engagement in activities or relationships that conflict, or would be perceived to conflict, with the Company's interests or adversely affect its reputation. It is understood, however, that certain relationships or transactions may arise that would be deemed acceptable and appropriate upon full disclosure of the transaction, following review and approval to ensure there is a legitimate business reason for the transaction and that the terms of the transaction are no less favorable to the Company than could be obtained from an unrelated person.


44

The Audit Committee is responsible for reviewing and approving, as appropriate, all transactions with related persons. The Company has not adopted a written policy for reviewing related person transactions. The Company reviews all relationships and transactions in which the Company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. As required under SEC rules, transactions, if any, that are determined to be directly or indirectly material to the Company or a related person are disclosed.

Director Independence

The Board affirmatively determines the independence of each director and nominee for election as a director in accordance with independence standards.

Based on these standards, at its meeting held on June 14, 2010, the Board determined that each of the following non-employee Directors are independent and has no relationship with the Company, except as a Director and stockholder of the Company:

- Michael Garnreiter
- Jack Henry
- Greg LeClaire

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

AUDIT COMMITTEE PRE-APPROVAL POLICY

The Audit Committee has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the Audit Committee subject to certain restrictions. The policy sets out the specific services pre-approved by the Audit Committee and the applicable limitations, while ensuring the independence of the independent auditors to audit the Company's financial statements is not impaired. The pre-approval policy does not include a delegation to management of the Audit Committee responsibilities under the Exchange Act. During fiscal year ended March 31, 2010, the Audit Committee pre-approved all audit and permissible non-audit services provided by our independent auditors.

SERVICE FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee engaged Sherb and Co LLP to perform an annual audit of the Company's financial statements for the fiscal year ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008, and for the year ended December 31, 2007. The following is the breakdown of aggregate fees paid to the auditors for the Company for the last three fiscal years:

Year EndedYear EndedYear EndedMarch 31, 2010March 31, 2009December 31, 2008Audit fees$139,500$120,000$125,000Audit related fees48,68548,13833,100Tax fees10,1256,0009,300All other fees$198,310$174,138$167,400
- "Audit fees" are fees paid for professional services for the audit of our financial statements.

- "Audit Related fees" are fees billed by Sherb and Co. LLP. to us for services not included in the first two categories, specifically, SAS 100 reviews, SEC filings and consents, and accounting consultations on matters addressed during the audit or interim reviews, and review work related to quarterly filings.

- "Tax fees" are fees primarily for tax compliance in connection with filing US income tax returns.



45

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(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

PageReport of Independent Registered Public Accounting FirmF-1Consolidated Balance Sheetsas of March 31, 2010 and 2009F-2Consolidated Statements of Operationsfor the year ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008and for the year ended December 31, 2007F-3Consolidated Statement of Stockholders' Deficiencyfor the year ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008and for the year ended December 31, 2007F-4Consolidated Statement of Cash Flowsfor the year ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008and for the year ended December 31, 2007F-5Notes to Consolidated Financial StatementsF-6 - F-38
(b) EXHIBITS:

EXHIBITNUMBEREXHIBIT DESCRIPTION3.1Amended and Restated Certificate of Incorporation of IA Global, Inc. dated July 10, 2007. (2)3.2Amended and Restated Bylaws of IA Global, Inc. dated July 29, 2008. (3)3.3Certificate of Designation of Preferences and Rights of the Registrant's Series A Convertible Preferred Stock. (4)3.4Certificate of Designation of Preferences and Rights of the Registrant's Series B Convertible Preferred Stock. (5)3.5Certificate of Designations, Rights and Preferences of the Series A-1 Preferred Stock of IA Global, Inc. dated October 18, 2006. (6)3.6Certificate Eliminating Reference to a Series B Convertible Preferred Shares of Stock from the Certificate of Incorporation of IA Global, Inc. dated October 18, 2006. (6)3.7Certificate Eliminating Reference to a Series A-1 Convertible Preferred Shares of Stock from the Certificate of Incorporation of IA Global, Inc. dated March 29, 2007. (7)

46

3.8Certificate of Designations, Rights and Preferences of the ArqueMax Ventures, LLC Series Preferred Stock of IA Global, Inc. dated April 20, 2009. (10)4.1Specimen of Stock Certificate. (8)4.2IA Global, Inc. 2007 Incentive Plan, as amended. (9) *4.31999 and 2000 Stock Option Plans. (11)*10.1Amendment to Share Exchange Agreement dated April 1, 2009 by and between IA Global, Inc., Taicom Securities Co Ltd and ArqueMax Ventures, LLC. (12)10.2Form of Performance Warrant dated April 1, 2009 by and between IA Global, Inc. and Michael Ning. (12)10.3Services Agreement dated April 1, 2009 by and between IA Global, Inc. and ArqueMax Ventures , LLC. (12)10.4Extension of Services Agreement dated May 31, 2009 by and between IA Global, Inc. and ArqueMax Ventures , LLC. (13)10.5Services Agreement dated June 8, 2009 by and between IA Global, Inc. and ArqueMax Ventures, LLC. (14)10.6Form of Performance Warrant dated June 2, 2009, but effective June 8, 2009 by and between IA Global, Inc. and ArqueMax Ventures , LLC. (14)10.7Separation Agreement and Full Release of Claims dated August 2, 2009 by and between IA Global, Inc. and DerekSchneideman (15) *10.8Amended and Restated Employment Agreement dated August 24, 2009 by and between IA Global, Inc. and Mark Scott (15) *10.9Employment Agreement dated November 5, 2009 but effective September 4, 2009 by and between IA Global, Inc. and Brian Hoekstra (15) *10.10Stock Purchase Agreement dated August 17, 2009 by and between IA Global, Inc. and Inter Asset Japan LBO No. 1 Fund (16)10.11Securities Purchase Agreement dated September 29, 2009 by and between IA Global, Inc. and Ascendiant Capital Group, LLC (16)10.12Registration Rights Agreement dated September 29, 2009 by and between IA Global, Inc. and Ascendiant Capital Group, LLC (16)10.13Amendment to Stock Purchase Agreements dated November 4, 2009 by and between IA Global, Inc. and Inter Asset Japan LBO No. 1 Fund (17)10.14Amendment to Share Exchange Agreement dated December 16, 2009 by and between IA Global, Inc. and Slate Consulting Co Ltd (17)10.15Escrow Agreement dated December 18, 2009 amongst IA Global, Inc., Inter Asset Japan LBO No.1 Fund, Besoto Partners Incorporation Committee and M&A Japan, Inc. (translated from Japanese) (17)10.16Stock Purchase Agreement dated January 26, 2010 by and between IA Global, Inc. and MGVJ Co Ltd (1)10.17Amendment to Stock Purchase Agreements dated January 26, 2010 by and between IA Global, Inc. and Inter Asset Japan LBO No. 1 Fund (1)

47

14.1Code of Conduct Ethics dated July 10, 2009. (14)21.1Subsidiaries of the Registrant (1)23.1Consent of Sherb and Co LLP (1)31.1Section 302 Certifications. (1)31.2Section 302 Certifications. (1)32.1Section 902 Certifications. (1)32.2Section 902 Certifications. (1)99.1Audit Committee Charter dated July 10, 2009. (14)99.2Compensation Committee Charter dated July 10, 2009. (14)99.3Nominations and Governance Committee Charter dated July 10, 2009. (14)99.4Merger and Acquisition Committee Charter dated July 10, 2009. (14)__________________

*   Indicates management contract or compensatory plan.

(1)   Filed herewith.

(2)   Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the period ending June 30, 2007, and filed on August 20, 2007, and incorporated herein by reference.

(3)   Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q/A for the period ending September 30, 2008, and filed on November 20, 2008, and incorporated herein by reference.

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

(5)   Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the period ending March 31, 2006, and filed on May 15, 2006, and incorporated herein by reference.

(6)   Filed as an exhibit to Registrant's Current Report on Form 8-K, dated October 19, 2006 and filed on October 24, 2006, and incorporated herein by reference.

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

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

(9)   Filed as Exhibit 4.1 to the Company's Form S-8 filed on September 5, 2008, and incorporated herein by reference.

(10)  Filed as an exhibit to Registrant's Current Report on Form 8-K, dated April 20, 2009 and filed on April 20, 2009, and incorporated herein by reference.

(11)  Filed as an exhibit to Registrant's From S-8, dated June 21, 2004, and incorporated herein by reference.

(12)  Filed as an exhibit to Registrant's Current Report on Form 8-K, dated April 1, 2009 and filed on April 6, 2009 and incorporated herein by reference.



48

(13) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated May  31, 2009 and filed on June 4, 2009 and incorporated herein by reference.

(14) Filed as an exhibit to Registrant's Current Report on Form 8-K, dated July 14, 2009 and filed on July 15, 2009 and incorporated herein by reference.

(15)   Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the period ending September 30, 2009, and filed on January 8, 2010, and incorporated herein by reference.

(16)   Filed as an exhibit to Companys Registration Statement on Form S-1 (File No. 333-163612), filed on December 9, 2009, and incorporated herein by reference.

(17)   Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the period ending December 31, 2009, and filed on February 19, 2010, and incorporated herein by reference.


49

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
IA Global, Inc.

We have audited the accompanying consolidated balance sheets of IA Global, Inc. (the "Company") as of March 31, 2010 and 2009 and the related consolidated statement of operations, stockholders' deficiency and cash flows for the years ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008, and for the year ended December 31, 2007. These consolidated 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 the standards of the Public Company Accounting Oversight Board (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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. 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 the Company as of March 31, 2010 and 2009 and the results of their operations and their cash flows for the years ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008, and for the year ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant operating losses, and has a working capital deficit as of March 31, 2010, as more fully described in Note 1. These issues raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Sherb & Co., LLP
Certified Public Accountants
New York, New York
July 14, 2010


F-1

IA GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

March 31,20102009ASSETSCURRENT ASSETS:Cash and cash equivalents$2,228,808$Prepaid expenses170,85239,633Other current assets29,936Net assets- discontinued operations118,58220,901,589Total current assets2,548,17820,941,222EQUIPMENT, NET2261,580OTHER ASSETSInvestment in Taicom Securities Co Ltd2,861,365Equity investment in Slate Consulting Co Ltd1,386,054$2,548,404$25,190,221LIABILITIES AND STOCKHOLDERS DEFICIENCYCURRENT LIABILITIES:Cash overdraft$$5,508Accounts payable - trade848,426461,274Accrued liabilities911,630669,910Note payable - current portion of long term debt6,00024,000Net liabilities- discontinued operations1,116,60230,114,985Total current liabilities2,882,65831,275,677LONG TERM  LIABILITIES:Long term debt199,500199,500STOCKHOLDERS DEFICIENCY:Preferred stock, $.01 par value, 5,000 authorized, none outstandingLLC Series Preferred stock, $.01 par value, 317 shares authorizedand 317 and 0, issued and outstanding, respectively (liquidation value $317,000)317,000Common stock, $.01 par value, 450,000,000 shares authorized,315,677,003 and 219,113,889 issued, and 314,049,103and 218,485,989 outstanding, respectively3,156,7712,191,140Additional paid in capital56,466,93953,056,216Accumulated deficit(60,146,365)(59,572,442)Accumulated other comprehensive loss(45,192)(1,706,963)(250,847)(6,032,049)Less common stock in treasury, at cost(282,907)(252,907)Total stockholders deficiency(533,754)(6,284,956)$2,548,404$25,190,221
Note: Reflects deconsolidation of Global Hotline, Inc., retroactive to July 1, 2009, as described in Footnote 3.

See notes to consolidated financial statements.


F-2

IA GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|----------------------------------------------------------------------- |  | --------------------- | ----------- | ----------------- | - | -------------- | - | ---- | ----------- | - | - | ----------- | -
|                                                                        |  |                       |             | Transition Period |   |                |  
|                                                                        |  |                       |             | The Three         |   | Year Ended     |  
|                                                                        |  | Years Ended March 31, |             | Months Ended      |   | December 31,   |  
|                                                                        |  | 2010                  |             | 2009              |   | March 31, 2008 |   | 2007 |            
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|REVENUE                                                                 |  | $                     |            |                   | $ |               |   | $    |            |   | $ |            |  
|COST OF SALES                                                           |  |                       |            |                   |   |               |   |      |            |   |   |            |  
|GROSS PROFIT                                                            |  |                       |            |                   |   |               |   |      |            |   |   |            |  
|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                            |  |                       | 2,479,146   |                   |   | 2,464,701      |   |      | 501,269     |   |   | 2,039,529   |  
|OPERATING LOSS                                                          |  |                       | (2,479,146  | )                 |   | (2,464,701     | ) |      | (501,269    | ) |   | (2,039,529  | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|OTHER INCOME (EXPENSE):                                                 |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Interest income                                                         |  |                       |            |                   |   | 14,060         |   |      | 82          |   |   | 33,203      |  
|Interest expense and amortization of beneficial  conversion feature     |  |                       | (168,194    | )                 |   | (331,710       | ) |      | (209,948    | ) |   | (752,979    | )
|Other income                                                            |  |                       | 20,918      |                   |   | 269,372        |   |      | 13,610      |   |   | 14,233      |  
|Gain (loss) on equity investment in Australia Secured Financial Limited |  |                       |            |                   |   | 265,039        |   |      | (94,261     | ) |   | (119,562    | )
|Gain on equity investment in GPlus Media Co Ltd                         |  |                       |            |                   |   | 12,510         |   |      | 7,582       |   |   | 12,804      |  
|Loss on equity investment in Slate Consulting Co Ltd                    |  |                       | (16,298     | )                 |   | (10,427        | ) |      | (17,178     | ) |   | (26,341     | )
|Loss on investment in Taicom Securities Co Ltd                          |  |                       |            |                   |   | (421,702       | ) |      |            |   |   |            |  
|Conversion of debenture expense                                         |  |                       |            |                   |   |               |   |      |            |   |   | (120,046    | )
|Retirement of debt                                                      |  |                       |            |                   |   | (60,395        | ) |      |            |   |   |            |  
|Loss on forfeiture of Taicom Securities Co Ltd                          |  |                       | (2,820,365  | )                 |   |               |   |      |            |   |   |            |  
|Loss on sale of Slate Consulting co Ltd                                 |  |                       | (1,284,756  | )                 |   |               |   |      |            |   |   |            |  
|Loss on sale of Taicom Securities Co Ltd                                |  |                       |            |                   |   | (1,736,934     | ) |      |            |   |   |            |  
|Loss on sale of GPlus Media Co Ltd                                      |  |                       |            |                   |   | (1,286,766     | ) |      |            |   |   |            |  
|Impairment of equity investment in Australian Secured Financial Limited |  |                       |            |                   |   | (7,195,394     | ) |      |            |   |   |            |  
|Impairment of Global Hotlines Philippines investment                    |  |                       | (793,000    | )                 |   |               |   |      |            |   |   |            |  
|Gain on sale of IA Global Co Ltd                                        |  |                       | 91,222      |                   |   |               |   |      |            |   |   |            |  
|Loss (gain) on foreign currency transaction adjustment                  |  |                       | (6,214      | )                 |   | (66,290        | ) |      | (1,861      | ) |   | 11,381      |  
|Total other expense                                                     |  |                       | (4,976,687  | )                 |   | (10,548,637    | ) |      | (301,974    | ) |   | (947,307    | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|NET LOSS FROM CONTINUING OPERATIONS                                     |  |                       | (7,455,833  | )                 |   | (13,013,338    | ) |      | (803,243    | ) |   | (2,986,836  | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Gain from forfeit of discontinued operations                            |  |                       | 10,062,614  |                   |   |               |   |      |            |   |   |            |  
|(Loss) from discontinued operations                                     |  |                       | (2,863,704  | )                 |   | (7,228,592     | ) |      | 1,163,608   |   |   | (5,272,127  | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|NET (LOSS) PROFIT                                                       |  |                       | (256,923    | )                 |   | (20,241,930    | ) |      | 360,365     |   |   | (8,258,963  | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Deemed Preferred Stock Dividend                                         |  |                       | (317,000    | )                 |   |               |   |      |            |   |   |            |  
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|NET (LOSS) PROFIT ATTRIBUTABLE TO COMMON SHAREHOLDERS                   |  | $                     | (573,923    | )                 | $ | (20,241,930    | ) | $    | 360,365     |   | $ | (8,258,963  | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Basic and diluted loss per share of common-                             |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Basic loss per share from continuing operations                         |  | $                     | (0.03       | )                 | $ | (0.07          | ) | $    |            |   | $ | (0.02       | )
|Basic profit (loss) per share from discontinued operations              |  |                       | 0.03        |                   |   | (0.04          | ) |      |            |   |   | (0.03       | )
|Total basic loss per share                                              |  | $                     | (0.00       | )                 | $ | (0.11          | ) | $    |            |   | $ | (0.05       | )
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Diluted profit (loss) per share from continuing operations              |  | $                     | *           |                   | $ | *              |   | $    |            |   | $ | *           |  
|Diluted profit (loss) per share from discontinued operations            |  |                       | *           |                   |   | *              |   |      |            |   |   | *           |  
|Total diluted profit (loss) per share                                   |  | $                     | *           |                   | $ | *              |   | $    |            |   | $ | *           |  
|                                                                        |  |                       |             |                   |   |                |   |      |             |   |   |             |  
|Weighted average shares of common stock outstanding- basic              |  |                       | 247,360,222 |                   |   | 205,833,118    |   |      | 164,980,626 |   |   | 151,229,245 |  
|Weighted average shares of common stock outstanding- diluted            |  |                       | *           |                   |   | *              |   |      | *           |   |   | *           |  

* Diluted calculation is not presented as it is anti-dilutive.  Note: Reflects deconsolidation of Global Hotline, Inc., retroactive to July 1, 2009, as described in Footnote 3.  See notes to consolidated financial statements.  F-3   IA GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIENCY


|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |   | 
|------------------------------------------------------------------ |  | --------------- | - | ------------ | ---------- | --------------- | - | ----------- | - | ------------- | --------- | -------- | ------ | ------------- | ----- | - | ----------- | - | - | ---------- | - | - | -------- | - | - | ----------- | - | 
|                                                                   |  |                 |   |              |            |                 |   |             |   | Accumulated   |           |          |        |               |      
|                                                                   |  |                 |   |              |            |                 |   |             |   | Other         |           |          |        | Total         |      
|                                                                   |  |                 |   |              |            | Additional      |   |             |   | Comprehensive |           |          |        | Stockholder's |      
|                                                                   |  | Preferred Stock |   | Common Stock |            | Paid in
Capital |   | Accumulated |   | Income        |           | Treasury |        | Deficiency/   |      
|                                                                   |  | Shares          |   | Amount       |            | Shares          |   | Amount      |   |               | Deficit   |          | (Loss) |               | Stock |   | Equity      |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Balance as of December 31, 2006                                    |  | 4,375           |   | $            | 7,000,000  |                 | $ | 109,165,157 |   | $             | 1,091,651 |          | $      | 32,835,714    |       | $ | (31,431,914 | ) | $ | (186,614   | ) | $ | (50,000  | ) | $ | 9,258,837   |  
|Conversion of preferred stock to common stock                      |  | (4,375          | ) |              | (7,000,000 | )               |   | 43,750,000  |   |               | 437,500   |          |        | 6,562,500     |       |   |            |   |   |           |   |   |         |   |   |            |  
|123R compensation expense                                          |  |                |   |              |           |                 |   |            |   |               |          |          |        | 174,514       |       |   |            |   |   |           |   |   |         |   |   | 174,514     |  
|Exercise of stock options                                          |  |                |   |              |           |                 |   | 434,166     |   |               | 4,342     |          |        | 83,575        |       |   |            |   |   |           |   |   |         |   |   | 87,917      |  
|Proceeds from sale of common stock                                 |  |                |   |              |           |                 |   | 1,189,703   |   |               | 11,896    |          |        | 367,981       |       |   |            |   |   |           |   |   |         |   |   | 379,877     |  
|Equity investment in GPLus Media Co Ltd for common stock           |  |                |   |              |           |                 |   | 3,885,713   |   |               | 38,857    |          |        | 1,321,143     |       |   |            |   |   |           |   |   |         |   |   | 1,360,000   |  
|Equity investment in Slate Consulting Co Ltd for common stock      |  |                |   |              |           |                 |   | 3,600,000   |   |               | 36,000    |          |        | 1,404,000     |       |   |            |   |   |           |   |   |         |   |   | 1,440,000   |  
|Conversion of debentures to common stock                           |  |                |   |              |           |                 |   | 4,885,367   |   |               | 48,854    |          |        | 1,485,241     |       |   |            |   |   |           |   |   |         |   |   | 1,534,095   |  
|Repurchase of common stock                                         |  |                |   |              |           |                 |   | (2,026,355  | ) |               | (20,263   | )        |        | (521,269      | )     |   |            |   |   |           |   |   | (202,907 | ) |   | (744,439)   |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Other comprehensive income - foreign currency translation          |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   |            |   |   | (347,542   | ) |   |         |   |   | (347,542    | )
|Net loss                                                           |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   | (8,258,963  | ) |   |           |   |   |         |   |   | (8,258,963  | )
|Comprehensive loss                                                 |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   | (8,606,505  | )
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Balance as of December 31, 2007                                    |  |                |   |              |           |                 |   | 164,883,751 |   |               | 1,648,837 |          |        | 43,713,399    |       |   | (39,690,877 | ) |   | (534,156)  |   |   | (252,907 | ) |   | 4,884,296   |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|123R compensation expense                                          |  |                |   |              |           |                 |   |            |   |               |          |          |        | 60,000        |       |   |            |   |   |           |   |   |         |   |   | 60,000      |  
|Exercise of stock options                                          |  |                |   |              |           |                 |   | 86,458      |   |               | 865       |          |        | 12,635        |       |   |            |   |   |           |   |   |         |   |   | 13,500      |  
|Conversion of debentures to common stock                           |  |                |   |              |           |                 |   | 333,334     |   |               | 3,333     |          |        | 96,667        |       |   |            |   |   |           |   |   |         |   |   | 100,000     |  
|Repurchase of common stock                                         |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   |            |   |   |           |   |   |         |   |   |            |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Other comprehensive income - foreign currency translation          |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   |            |   |   | (287,708   | ) |   |         |   |   | (287,708    | )
|Net loss                                                           |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   | 360,365     |   |   |           |   |   |         |   |   | 360,365     |  
|Comprehensive income                                               |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   | 72,657      |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Balance as of March 31, 2008                                       |  |                 |   |              |           |                 |   | 165,303,543 |   |               | 1,653,035 |          |        | 43,882,701    |       |   | (39,330,512 | ) |   | (821,864   | ) |   | (252,907 | ) |   | 5,130,453   |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|123R compensation expense                                          |  |                |   |              |           |                 |   |            |   |               |          |          |        | 473,620       |       |   |            |   |   |           |   |   |         |   |   | 473,620     |  
|Exercise of stock options                                          |  |                 |   |              |            |                 |   | 62,958      |   |               | 630       |          |        | 10,170        |       |   |            |   |   |           |   |   |         |   |   | 10,800      |  
|Issuance of common stock for services                              |  |                |   |              |           |                 |   | 963,222     |   |               | 9,633     |          |        | 181,681       |       |   |            |   |   |           |   |   |         |   |   | 191,314     |  
|Conversion of debt                                                 |  |                 |   |              |            |                 |   | 6,632,500   |   |               | 66,325    |          |        | 283,778       |       |   |             |   |   |            |   |   |          |   |   | 350,103     |  
|Conversion of debentures to common stock                           |  |                |   |              |           |                 |   | 13,992,971  |   |               | 139,931   |          |        | 2,238,890     |       |   |            |   |   |           |   |   |         |   |   | 2,378,821   |  
|Common stock issued for Shift Resources Inc. acquisition           |  |                |   |              |           |                 |   | 826,086     |   |               | 8,260     |          |        | 181,740       |       |   |            |   |   |           |   |   |         |   |   | 190,000     |  
|Common stock issued for Asia Premier Inc. acquisition              |  |                |   |              |           |                 |   | 1,250,000   |   |               | 12,500    |          |        | 287,500       |       |   |            |   |   |           |   |   |         |   |   | 300,000     |  
|Proceeds from sale of common stock                                 |  |                |   |              |           |                 |   | 4,082,609   |   |               | 40,826    |          |        | 576,136       |       |   |            |   |   |           |   |   |         |   |   | 616,962     |  
|Equity investment in Taicom Securities Co Ltd                      |  |                |   |              |           |                 |   | 26,000,000  |   |               | 260,000   |          |        | 4,940,000     |       |   |            |   |   |           |   |   |         |   |   | 5,200,000   |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Other comprehensive income - foreign currency translation          |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   |            |   |   | (885,099   | ) |   |         |   |   | (885,099    | )
|Net loss                                                           |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   | (20,241,930 | ) |   |           |   |   |         |   |   | (20,241,930 | )
|Comprehensive loss                                                 |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   | (21,127,029 | )
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Balance as of March 31, 2009                                       |  |                |   |              |           |                 |   | 219,113,889 |   |               | 2,191,140 |          |        | 53,056,216    |       |   | (59,572,442 | ) |   | (1,706,963 | ) |   | (252,907 | ) |   | (6,284,956  | )
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|123R compensation expense                                          |  |                |   |              |           |                 |   |            |   |               |          |          |        | 364,503       |       |   |            |   |   |           |   |   |         |   |   | 364,503     |  
|Issuance of common stock for services                              |  |                |   |              |           |                 |   | 10,133,333  |   |               | 101,333   |          |        | 81,627        |       |   |            |   |   |           |   |   |         |   |   | 182,960     |  
|Proceeds from sale of common stock                                 |  |                |   |              |           |                 |   | 86,429,781  |   |               | 864,298   |          |        | 2,527,593     |       |   |            |   |   |           |   |   | (30,000  | ) |   | 3,361,891   |  
|Proceeds from sale of ArqueMax Ventures LLC Series preferred stock |  | 317             |   |              | 317,000    |                 |   |            |   |               |          |          |        |              |       |   |            |   |   |           |   |   |         |   |   | 317,000     |  
|Deemed dividend on ArqueMax Ventures LLC convertible debentures    |  |                |   |              |           |                 |   |            |   |               |          |          |        | 120,000       |       |   |            |   |   |           |   |   |         |   |   | 120,000     |  
|Deemed dividend on LLC Series Preferred                            |  |                |   |              |           |                 |   |            |   |               |          |          |        | 317,000       |       |   |            |   |   |           |   |   |         |   |   | 317,000     |  
|Other comprehensive income - foreign currency translation          |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   |            |   |   | 1,661,771  |   |   |         |   |   | 1,661,771   |  
|Net loss                                                           |  |                |   |              |           |                 |   |            |   |               |          |          |        |              |       |   | (573,923    | ) |   |           |   |   |         |   |   | (573,923    | )
|Comprehensive profit                                               |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   | 1,404,848   |  
|                                                                   |  |                 |   |              |            |                 |   |             |   |               |           |          |        |               |       |   |             |   |   |            |   |   |          |   |   |             |  
|Balance as of March 31, 2010                                       |  | 317             |   | $            | 317,000    |                 | $ | 315,677,003 |   | $             | 3,156,771 |          | $      | 56,466,939    |       | $ | (60,146,365 | ) | $ | (45,192    | ) | $ | (282,907 | ) | $ | (533,754    | )

Note: Reflects deconsolidation of Global Hotline, Inc., retroactive to July 1, 2009, as described in Footnote 3.  See notes to consolidated financial statements.  F-4   IA GLOBAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|-------------------------------------------------------------------------------------------- |  | -------------------- | ---------- | ------------ | - | -------------- | - | ----------------- | -------- | ---------- | - | ---------- | -
|                                                                                             |  |                      |            |              |   |                |   | Transition
Period |          |            |  
|                                                                                             |  |                      |            |              |   |                |   | The Three         |          | Year Ended |  
|                                                                                             |  | Year Ended March 31, |            | Months Ended |   | December 31,   |  
|                                                                                             |  | 2010                 |            | 2009         |   | March 31, 2008 |   | 2007              |         
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                        |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Net (loss) income                                                                            |  | $                    | (256,923   | )            | $ | (20,241,930    | ) | $                 | 360,365  |            | $ | (8,258,963 | )
|Adjustments to reconcile net income (loss) to net cash used in operating activities          |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Depreciation and amortization                                                                |  |                      | 1,354      |              |   | 2,945          |   |                   | 633      |            |   | 3,231      |  
|Amortization of beneficial conversion feature                                                |  |                      | 120,000    |              |   | 79,593         |   |                   | 104,166  |            |   | 416,667    |  
|Amortization of prepaid financing                                                            |  |                      | 9,068      |              |   | 79,593         |   |                   |         |            |   |           |  
|Stock based compensation                                                                     |  |                      | 368,590    |              |   | 473,620        |   |                   | 60,000   |            |   | 174,514    |  
|Stock issued for services                                                                    |  |                      | 95,587     |              |   | 191,313        |   |                   |         |            |   |           |  
|Stock issued for financing services (Ascendiant)                                             |  |                      | 10,000     |              |   | 0              |   |                   |         |            |   |           |  
|Conversion of debenture expense                                                              |  |                      |           |              |   |               |   |                   |         |            |   | 120,047    |  
|Loss on equity investments                                                                   |  |                      | 16,298     |              |   | 154,580        |   |                   | 103,857  |            |   | 133,099    |  
|Loss on disposal of equity investment                                                        |  |                      | 1,284,756  |              |   | 3,023,434      |   |                   |         |            |   |           |  
|Impairment of equity investment                                                              |  |                      |           |              |   | 7,195,394      |   |                   |         |            |   |           |  
|Loss on forfeiture of investment                                                             |  |                      | 2,861,365  |              |   |               |   |                   |         |            |   |           |  
|Changes in operating assets and liabilities:                                                 |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Prepaid expenses                                                                             |  |                      | (15,287    | )            |   | (59,617)       |   |                   | 11,265   |            |   | 88,722     |  
|Other current assets                                                                         |  |                      | 25,064     |              |   |               |   |                   |         |            |   | 2,512      |  
|Accounts payable - trade                                                                     |  |                      | 387,152    |              |   | 336,495        |   |                   | 64,928   |            |   | 84,726     |  
|Accrued liabilities and payroll taxes                                                        |  |                      | 296,527    |              |   | (59,935        | ) |                   | 1,369    |            |   | 197,678    |  
|Consumption taxes received                                                                   |  |                      |           |              |   | (3,026         | ) |                   | 1,706    |            |   |           |  
|Net cash provided by (used in) continuing operations                                         |  |                      | 5,203,551  |              |   | (8,827,541     | ) |                   | 708,289  |            |   | (7,037,767 | )
|Net cash (used in) provided by discontinued operations                                       |  |                      | (6,553,605 | )            |   | 7,987,612      |   |                   | (610,127 | )          |   | 6,104,600  |  
|NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                          |  |                      | (1,350,054 | )            |   | (839,929       | ) |                   | 98,162   |            |   | (933,167   | )
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                        |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Capital expenditures                                                                         |  |                      |           |              |   | (2,708         | ) |                   |         |            |   | (3,338     | )
|Acquisition of investment in Australian Secured Financial Limited                            |  |                      |           |              |   |               |   |                   |         |            |   | (250,000   | )
|Dividend from equity investment                                                              |  |                      |           |              |   | 32,464         |   |                   |         |            |   |           |  
|Cash from disposal of equity investment                                                      |  |                      |           |              |   | 253,932        |   |                   |         |            |   |           |  
|NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:                                         |  |                      |           |              |   | 283,688        |   |                   |         |            |   | (253,338   | )
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|CASH FROM FINANCING ACTIVITIES:                                                              |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Cash overdraft                                                                               |  |                      | (5,508     | )            |   | 5,508          |   |                   |         |            |   |           |  
|Proceeds from debt                                                                           |  |                      | 120,000    |              |   | 549,603        |   |                   |         |            |   | 500,000    |  
|Repayments of debt                                                                           |  |                      | (18,000    | )            |   | (744,000       | ) |                   | 13,500   |            |   |           |  
|Proceeds from exercise of options                                                            |  |                      |           |              |   | 10,800         |   |                   |         |            |   | 87,917     |  
|Proceeds from sale of common stock                                                           |  |                      | 3,165,370  |              |   | 616,962        |   |                   |         |            |   | 379,877    |  
|Proceeds from sale of preferred shares                                                       |  |                      | 317,000    |              |   |                |   |                   |          |            |   |           |  
|Purchase of common shares for treasury                                                       |  |                      |           |              |   |               |   |                   |         |            |   | (744,439   | )
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                    |  |                      | 3,578,862  |              |   | 438,873        |   |                   | 13,500   |            |   | 223,355    |  
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                         |  |                      | 2,228,808  |              |   | (117,368       | ) |                   | 111,662  |            |   | (963,150   | )
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                      |  |                      |           |              |   | (90,035        | ) |                   | (287,708 | )          |   | (347,542   | )
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|CASH AND CASH EQUIVALENTS, beginning of period                                               |  |                      |           |              |   | 207,403        |   |                   | 383,449  |            |   | 1,694,141  |  
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|CASH AND CASH EQUIVALENTS, end of period                                                     |  | $                    | 2,228,808  |              | $ |               |   | $                 | 207,403  |            | $ | 383,449    |  
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Supplemental disclosures of cash flow information:                                           |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Interest paid                                                                                |  | $                    | 3,491      |              | $ | 57,614         |   | $                 | 100,849  |            | $ |           |  
|Taxes paid                                                                                   |  | $                    | 2,698      |              | $ | 1,610          |   | $                 |         |            | $ |           |  
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Non-cash investing and financing activities:                                                 |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Conversion of debentures into Common Stock                                                   |  | $                    | 120,000    |              | $ | 2,300,000      |   | $                 | 100,000  |            | $ |           |  
|Deemed dividend on issuance of LLC Series Preferred Stock                                    |  | $                    | 317,000    |              | $ |               |   | $                 |         |            | $ |           |  
|Conversion of interest payable on debentures into Common Stock                               |  | $                    |           |              | $ | 78,822         |   | $                 |         |            | $ |           |  
|Common stock issued for prepaid financing fees                                               |  | $                    | 125,000    |              | $ |               |   | $                 |         |            | $ |           |  
|Issuance of Common Stock for acquisition of Subsidiary -                                     |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Asia Premier Executive Suites, Inc.                                                          |  | $                    |           |              | $ | 300,000        |   | $                 |         |            | $ |           |  
|                                                                                             |  |                      |            |              |   |                |   |                   |          |            |   |            |  
|Conversion of accrued liabilities into Common Stock                                          |  | $                    | 54,807     |              | $ |               |   | $                 |         |            | $ |           |  
|Common stock returned to treasury on sale of equity investment - Slate Consulting Co., Ltd.  |  | $                    | 30,000     |              | $ |               |   | $                 |         |            | $ |           |  
|Note receivable on sale of equity investment - Slate Consulting Co., Ltd.                    |  | $                    | 55,000     |              | $ |               |   | $                 |         |            | $ |           |  
|Issuance of Common Stock for acquisition of Subsidiary - Shift Resources, Inc.               |  | $                    |           |              | $ | 190,000        |   | $                 |         |            | $ |           |  
|Issuance of Common Stock for acquisition of Investment - Taicom Securities Co., Ltd.         |  | $                    |           |              | $ | 5,200,000      |   | $                 |         |            | $ |           |  
|Issuance of Note Payable for acquisition of Subsidiary - Asia Premier Executive Suites, Inc. |  | $                    |           |              | $ | 268,000        |   | $                 |         |            | $ |           |  
|Settlement of note payable for common stock                                                  |  | $                    |           |              | $ | 350,103        |   | $                 |         |            | $ |           |  
|Conversion of Series A-1 Preferred Stock into common stock                                   |  | $                    |           |              | $ |               |   | $                 |         |            | $ | 7,000,000  |  
|Equity investment in Slate Consulting Co Ltd for common stock                                |  | $                    |           |              | $ |               |   | $                 |         |            | $ | 1,440,000  |  
|Equity investment in GPlus Media Co Ltd for common stock                                     |  | $                    |           |              | $ |               |   | $                 |         |            | $ | 1,360,000  |  
|Conversion of debentures and accrued interest into common stock                              |  | $                    |           |              | $ |               |   | $                 |         |            | $ | 1,414,048  |  

Note: Reflects deconsolidation of Global Hotline, Inc., retroactive to July 1, 2009, as described in Footnote 3.  See notes to consolidated financial statements.  F-5   IA GLOBAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BUSINESS

THE COMPANY AND OUR BUSINESS

IA Global, Inc. (the Company) is a global services and outsourcing company focused on growing existing businesses and expansion through global mergers and acquisitions.  The Company is utilizing its current partnerships to acquire growth businesses in target sectors and markets at discounted prices.  The Company is actively engaging in discussions with businesses that would benefit from our business acumen and marketing expertise, knowledge of Asian Markets, and technology infrastructure.

BUSINESS PROCESS OUTSOURCING (BPO)

In the Philippines, we acquired 100% of Shift on April 10, 2008 and Asia Premier on May 27, 2008, multi-service call center operations that have now been merged into a single company operating as Global Hotline Philippines. On June 14, 2010, we outsourced our call center operations and recorded an intangible asset impairment of $793,000 as of March 31, 2010.

DECONSOLIDATION OF GLOBAL HOTLINE, INC.

Until recently, the Company also operated in Japan through its wholly-owned subsidiary, Global Hotline. In May 2009, a dispute arose between GHI and one of its lenders, H Capital. The dispute resulted in H Capital claiming ownership of IA Globals shares in GHI, which had been pledged as collateral for certain loans borrowed by the subsidiary. Although the Company continues to sue H Capital for damages, on December 8, 2009, the Company reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, the Company accounted for Global Hotline as a discontinued operation. The Companys reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

CORPORATE INFORMATION

We were incorporated in Delaware on November 12, 1998. The Companys executive offices are located at 101 California Street, Suite 2450, San Francisco, CA 94111, with its operating units being located primarily in the Pacific Rim region. The Companys telephone number is (415) 946-8828 and its primary website is located at www.iaglobalinc.com. The information on our website is not a part of this Form 10-K.

GOING CONCERN

These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States on a going concern basis, which presumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.

The Company has incurred operating losses for the year ended March 31, 2010 and 2009, the transition period for the three months ended March 31, 2008, and for the year ended December 31, 2007, as well having an accumulated deficit of approximately $60,100,000 and $59,600,000, and a working capital deficit of approximately $334,500 (reflects $2.2 million Korean escrow deposit that was returned April 16, 2010) and $10,334,000, each as of March 31, 2010 and 2009, respectively.

The Companys ability to continue as a going concern is dependent upon the continued development of our business and investments, obtaining additional financing to develop such business, and the success of the Companys business plan. The outcome of these matters cannot be predicted at this time. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue its business.

F-6

On December 8, 2009, the Company reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, the Company accounted for Global Hotline as a discontinued operation. The Companys reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date. These events and their impact on our financial statements are discussed in more detail in other portions of this report, including Note 3 of the Financial Statements.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior periods' financial statements to conform to the current year classification. These reclassifications had no effect on previously reported results of operations or retained earnings.

CHANGE IN YEAR-END

On July 25, 2007, the Board of Directors resolved that the fiscal year of the Company that began on January 1, 2007 would end on December 31, 2007, and from that date forward, the fiscal year of the Company will be the period beginning on April 1 of each year and ending on March 31 of the following year. The Company filed a Form 10-K for the calendar year ending December 31, 2007 and filed a Transition Report on Form 10-K to reflect the three month transition period of January 1, 2008 through March 31, 2008.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. Inter-Company items and transactions have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS - The Company classifies highly liquid temporary investments with an original maturity of three months or less when purchased as cash equivalents. The Company maintains cash balances at various financial institutions. Balances at US banks are insured by the Federal Deposit Insurance Corporation up to US$250,000. Balances in Japanese banks are generally insured by the Deposit Insurance Corporation of Japan up to 10,000,000 Yen per depositor per bank or approximately US$111,000 as of December 31, 2009. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk for cash on deposit.

EQUIPMENT - Equipment consists of machinery, equipment and software, which are stated at cost less accumulated depreciation and amortization. Depreciation of machinery and equipment is computed by the accelerated or straight-line methods over the estimated useful lives of the relevant asset, generally 2 years.

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 the projected cost associated with selling the asset). To the extent carrying values exceed fair values, an impairment loss is recognized in operating results.

EQUITY INVESTMENTS - The Company accounts for equity investments using the equity method unless its value has been determined to be other than temporarily impaired, in which case we write the investment down to its impaired value. The company reviews these investments periodically for impairment and makes appropriate reductions in carrying value when an other-than-temporary decline is evident; however, for non-marketable equity securities, the impairment analysis requires significant judgment. During its review, the company evaluates the financial condition of the issuer, market conditions, and other factors providing an indication of the fair value of the investments. Adverse changes in market conditions or operating results of the issuer that differ from expectation, could result in additional other-than-temporary losses in future periods.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The Company has adopted FASB Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements, for assets and liabilities measured at fair value on a recurring basis. Topic 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

F-7

Level 1:Observable inputs such as quoted market prices in active markets for identical assets or liabilitiesLevel 2:Observable market-based inputs or unobservable inputs that are corroborated by market dataLevel 3:Unobservable inputs for which there is little or no market data, which require the use of the reporting entitys own assumptions.
All cash and cash equivalents include money market securities and commercial paper that are considered to be highly liquid and easily tradable as of March 31, 2010. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.

The carrying amounts of the Companys financial assets and liabilities, such as cash, accounts receivable, prepayments and other current assets, accounts payable, taxes payable, accrued expenses and other current liabilities, approximate their fair values because of the short maturity of these instruments. The Companys note payable approximates the fair value of such instrument based upon managements best estimate of interest rates that would be available to the Company for similar financial arrangement at March 31, 2010 and 2009.

In addition, Topic 820 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value option for any of its qualifying financial instruments.

ADVERTISING COSTS - Advertising costs are expensed as incurred. There were minimal advertising costs incurred for the year ended March 31, 2010 and 2009, the transition period the three months ended March 31, 2008, and the year ended December 31, 2007.

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 periods ended. Adjustments resulting from these translations are reflected in the consolidated balance sheet under other comprehensive income and the statement of operations under other income (expense).

STOCK BASED COMPENSATION - The Company accounts for the grant of stock options and restricted stock awards in accordance with ASC 718, Compensation-Stock Compensation.   ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation. In addition, the Company records expense over the vesting period in connection with stock options granted. The compensation expense for stock-based awards includes an estimate for forfeitures and is recognized over the expected term of the award on a straight line basis.

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

The TransitionPeriodFor the ThreeFor theFor the Years EndedMonths EndedYear EndedMarch 31,March 31,December 31,2010200920082007Risk free interest rate3.61%3.96%3.73%5.39%Expected life9.36 yrs8 yrs.8 yrs.8 yrs.Dividend rate0.00%0.00%0.00%0.00%Expected volatility174%112%122%111%

F-8

The Company recorded $364,503 and $473,620 of compensation expense, net of related tax effects, relative to stock options for the years ended March 31, 2010 and 2009  in accordance with ASC 718. Net loss per share (basic and diluted) associated with this expense was approximately ($0.00). The Company recorded $60,000 of compensation expense, net of related tax effects, relative to stock options for the transition period three months ended March 31, 2008, respectively in accordance with ASC 718. Net loss per share basic and diluted for this expense was approximately ($0.00). The Company recorded $174,514, net of related tax effects, relative to stock options for the year ended December 31, 2007 in accordance with ASC 718. Net loss per share basic and diluted for this expense was approximately ($0.00).

As of March 31, 2010, there is approximately $53,853 of total unrecognized costs related to employee granted stock options that are not vested. These costs are expected to be recognized over a period of approximately three years.

The Company recorded $60,000 of compensation expense, net of related tax effects, relative to stock options for the transition period three months ended March 31, 2008, respectively in accordance with ASC 718. Net loss per share basic and diluted for this expense was approximately ($0.00).

The Company recorded $174,514, net of related tax effects, relative to stock options for the year ended December 31, 2007 in accordance with ASC 718. Net loss per share basic and diluted for this expense was approximately ($0.00).

In addition to options granted to employees, the Company grants options and warrants to non-employees for services. The Company did not issue any shares of common stock to non-employees during the year ended March 31, 2010. The Company issued 21,429 shares of common stock to non-employees at an average exercise price of $.280 per share during the year ended March 31, 2008. There are 273,929 stock options outstanding that are held by non-employees as of March 31, 2009, which carry an average exercise price of $.342 per share.

The Company issued grants for 55,000 shares of common stock at an average exercise price of $.267 per share to non-employee consultants during the three months ended March 31, 2008. The grants were expensed immediately. There are 227,500 stock options outstanding for non-employees as of March 31, 2008 at an average exercise price of $.356 per share.

The Company issued grants for 172,500 shares of common stock at $.384 per share in the year ended December 31, 2007. The grants were expensed immediately. There are 172,500 stock options at $.384 per share outstanding as of December 31, 2007. There were no non-employee stock options outstanding as of December 31, 2006.

COMPREHENSIVE INCOME - The Company has adopted ASC 220, Comprehensive Income. This statement establishes rules for the reporting of comprehensive income and its components. Comprehensive income consists of net loss to common shareholders and foreign currency transaction adjustments and is presented in the Consolidated Statements of Operations and Stockholders Equity.



INCOME TAXES - Income tax provision (benefit) is based on reported income (loss) 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 in the countries and locations where that company operates out of. The Company recognizes refundable and deferred assets to the extent that management has determined their realization. As of March 31, 2010 and 2009, the Company had no refundable tax assets.

Subsequent to the deconsolidation of Global Hotline and the accounting for its operations and those of Global Hotline Philippines as discontinued operations, as noted in Note 3, the Companys continuing operations with regards to accounting for benefits (provisions) of income taxes are all within US taxing jurisdictions.

The table below summarizes the rate reconciliation of our income tax provision (benefit) computed at the statutory U.S. Federal rate and the actual tax rate:

Year Ended March 31,20102009Income tax provision (benefit) at Federal statutory rate35%35%State income taxes, net of Federal Benefit4.6%4.6%Permanent differences1.1%(1.3%)Increase in valuation allowance(40.7%)(38.3%)Tax provision (benefit) rate

F-9
Total deferred taxes at March 31, 2010 and 2009 were approximately $15,700,000 and $12,700,000, respectively and related primarily to net operating loss carryforwards. We recognized a valuation allowance for these deferred tax assets based on an evaluation that it is not more likely than not that realization will occur. Our deferred tax assets as of March 31, 2010 and 2009 are as follows:

March 31,20102009Loss carryforwards$15,700,000$12,700,000Valuation allowance(15,700,000)(12,700,000)Deferred tax asset, net of allowance$-$-
For tax return purposes, the Company has available US NOL carry forwards of approximately $24,700,000, as well as capital loss carryovers of $15,000,000, which expire in various years through 2030, subject to any potential Section 382 limitations of the Internal Revenue Code of 1986, as amended (the "Code") due to ownership changes in IA Global.


NET LOSS PER SHARE  Under the provisions of ASC 260, Earnings Per Share, basic income (loss) per common share is computed by dividing income (loss) available to common shareholders by the weighted average number of shares of common stock outstanding for the periods presented. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would then share in the income of the Company, subject to anti-dilution limitations. The common stock equivalents have not been included as they are anti-dilutive. As of March 31, 2010, there were options outstanding for the purchase of 9,103,929 common shares, warrants for the purchase of 13,732,064 common shares, 3,554,546 shares of common stock issued as collateral for loans, which could potentially dilute future earnings per share. As of March 31, 2009, there were options outstanding for the purchase of 11,693,512 common shares, warrants for 38,962,243 common shares and shares issued as collateral for loans of 3,554,546 shares of common stock which could potentially dilute future earnings per share.

DIVIDEND POLICY - The Company has never paid any cash dividends and intends, for the foreseeable future, to retain any future earnings for the development of our business. Our future dividend policy will be determined by the board of directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.

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.

RECENT ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements applicable to the Company are summarized below.

EITF Issue No. 07-5 (ASC 815), Determining Whether an Instrument (or embedded Feature) is Indexed to an Entitys Own Stock (EITF 07-5) was issued in June 2008 to clarify how to determine whether certain instruments or features were indexed to an entitys own stock under EITF Issue No. 01-6 (ASC 815), The Meaning of Indexed to a Companys Own Stock (EITF 01-6) (ASC 815),. EITF 07-5(ASC 815), applies to any freestanding financial instrument (or embedded feature) that has all of the characteristics of a derivative as defined in FAS 133, for purposes of determining whether that instrument (or embedded feature) qualifies for the first part of the paragraph 11(a) scope exception. It is also applicable to any freestanding financial instrument (e.g., gross physically settled warrants) that is potentially settled in an entitys own stock, regardless of whether it has all of the characteristics of a derivative as defined in FAS 133 (ASC 815), for purposes of determining whether to apply EITF 00-19 (ASC 815). EITF 07-5(ASC 815) does not apply to share-based payment awards within the scope of FAS 123(R), Share-Based Payment (FAS 123(R) (ASC 718)). However, an equity-linked financial instrument issued to investors to establish a market-based measure of the fair value of employee stock options is not within the scope of FAS 123(R) and therefore is subject to EITF 07-5(ASC 815).In January 2009, the FASB issued FSP EITF 99-20-1 (ASC 325), to amend the impairment guidance in EITF Issue No. 99-20 (ASC 325) in order to achieve more consistent determination of whether an other-than-temporary impairment (OTTI) has occurred. This FSP amended EITF 99-20 (ASC 325) to more closely align the OTTI guidance therein to the guidance in Statement No. 115 (ASC 320, 10-35-31). Retrospective application to a prior interim or annual period is prohibited. The guidance in this FSP was considered in the assessment of OTTI for various securities at December 31, 2008.
F-10

On June 5, 2003, the United States Securities and Exchange Commission (SEC) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), as amended by SEC Release No. 33-9072 on October 13, 2009. Commencing with its annual report for the year ending March 31, 2011, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement of:◦Management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;◦Management’s assessment of the effectiveness of its internal control over financial reporting as of year- end; and◦The framework used by management to evaluate the effectiveness of the Companys internal control over financial reporting.Furthermore, it is required to file the auditors attestation report separately on the Companys internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.In June 2009, the FASB approved the FASB Accounting Standards Codification (the Codification) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the Codification will be considered non-authoritative. The Codification is effective for interim and annual periods ending after September 15, 2009.In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-04 Accounting for Redeemable Equity Instruments - Amendment to Section 480-10-S99 which represents an update to section 480-10-S99, distinguishing liabilities from equity, per EITF Topic D-98, Classification and Measurement of Redeemable Securities. The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.In August 2009, the FASB issued the FASB Accounting Standards Update No. 2009-05 Fair Value Measurement and Disclosures Topic 820  Measuring Liabilities at Fair Value, which provides amendments to subtopic 820-10, Fair Value Measurements and Disclosures  Overall, for the fair value measurement of liabilities. This update provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1. A valuation technique that uses: a. The quoted price of the identical liability when traded as an asset b. Quoted prices for similar liabilities or similar liabilities when traded as assets. 2. Another valuation technique that is consistent with the principles of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. The amendments in this update also clarify that both a quoted price in an active market for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-08 Earnings Per Share  Amendments to Section 260-10-S99,which represents technical corrections to topic 260-10-S99, Earnings per share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock. The Company does not expect the adoption of this update to have a material impact on its consolidated financial position, results of operations or cash flows.

F-11

In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-09 Accounting for Investments-Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees. This update represents a correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee. Additionally, it adds observer comment Accounting Recognition for Certain Transactions Involving Equity Instruments Granted to Other Than Employees to the Codification. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.In September 2009, the FASB issued the FASB Accounting Standards Update No. 2009-12 Fair Value Measurements and Disclosures Topic 820  Investment in Certain Entities That Calculate Net Assets Value Per Share (or Its Equivalent), which provides amendments to Subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The amendments in this update permit, as a practical expedient, a reporting entity to measure the fair value of an investment that is within the scope of the amendments in this update on the basis of the net asset value per share of the investment (or its equivalent) if the net asset value of the investment (or its equivalent) is calculated in a manner consistent with the measurement principles of Topic 946 as of the reporting entitys measurement date, including measurement of all or substantially all of the underlying investments of the investee in accordance with Topic 820. The amendments in this update also require disclosures by major category of investment about the attributes of investments within the scope of the amendments in this update, such as the nature of any restrictions on the investors ability to redeem its investments at the measurement date, any unfunded commitments (for example, a contractual commitment by the investor to invest a specified amount of additional capital at a future date to fund investments that will be made by the investee), and the investment strategies of the investees. The major category of investment is required to be determined on the basis of the nature and risks of the investment in a manner consistent with the guidance for major security types in U.S. GAAP on investments in debt and equity securities in paragraph 320-10-50-1B. The disclosures are required for all investments within the scope of the amendments in this update regardless of whether the fair value of the investment is measured using the practical expedient. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.In October 2009, the FASB issued guidance for amendments to FASB Emerging Issues Task Force on EITF Issue No. 09-1 Accounting for Own-Share Lending Arrangements in Contemplation of a Convertible Debt Issuance or Other Financing (Subtopic 470-20) Subtopic. This accounting standards update establishes the accounting and reporting guidance for arrangements under which own-share lending arrangements issued in contemplation of convertible debt issuance. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2009. Earlier adoption is not permitted. The Company does not expect the adoption to have a material impact on its consolidated financial position, results of operations or cash flows.
A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our consolidated financial statements.

NOTE 3.  DECONSOLIDATED AND RETURNED ASSETS, ACQUISITIONS, INVESTMENTS

ACQUISITION OF CAR PLANNER CO LTD

On May 20, 2010, the Company announced the closing of the 100% acquisition of JSK Fund Co Ltd., which owns 100% of Car Planner,  both of which are Japanese companies, from JSK Fund, Inc. Group, JSK Fund, Inc. Group, a party affiliated with an existing shareholder, RXR Cross Border Investment Un.

Car Planner records service and commission revenue by selling automotive parts over the internet to approximately 728 car dealers, gas stations, and car maintenance shops in Japan. Car Planner is expected to expand their B to B model to include B to C during FY 2011. Their website is www.carplanner.jp.

Car Planner was acquired for 30,000,000 JPY or approximately $325,000 at current exchange rate. The acquisition was financed through the issuance of 25,000,000 shares of our common stock valued at $.013 per share.


F-12

ACQUISITION OF JOHNNY CO LTD

On June 4, 2010, the Company announced the closing of the 60% acquisition of Johnny from Hynox Corporation, both of which are Japanese companies.

Johnny engages in the distribution and sales of new video gaming hardware such as the Sony PlayStation 3, PSP, Nintendo DS, Wii and XBox 360 along with associated gaming software. Johnny is also engaged in buying used hardware and software and selling refurbished hardware and secondhand software.

Johnny operates7 direct management stores and 3 franchise stores in the Iwate, Akita and Aomori prefectures in Northern Japan. Mr. Jun Sugiura, founder and CEO, will retain 40% ownership of the Johnny Co Ltd. Their website is http:// www.fc-johnny.jp and the mobile website is http://www.fc-johnny.jp/mobile.

The 60% share of Johnny was acquired for 14,000,000 shares of our common stock valued at $.013 or approximately $178,000.

Business Process Outsourcing ("BPO")

DECONSOLIDATION OF GLOBAL HOTLINE, INC.

As has been previously disclosed, the Company pledged its shares of its Global Hotline Japanese subsidiary as collateral for certain loans borrowed from H Capital, an unlicensed Japanese lender, by such subsidiary. On May 26, 2009, Global Hotline and IA Global received notices from H Capital demanding repayment of the loans. On May 27, 2009, Global Hotline and SG Telecom did not repay the loans as requested by H Capital. On June 9, 2009, H Capital submitted documents claiming ownership of the Companys 600 shares of Global Hotline. Global Hotlines management previously provided the Companys stock certificates to H Capital in March 2009.

Although the Company has engaged Japanese corporate counsel to sue H Capital for damages, these events have resulted in IA Global losing control over the day-to-day management and operations of Global Hotline. In addition, the Company did not have access to the financial records of Global Hotline that are necessary to periodically report our financial position and results of operations as a consolidated subsidiary of IA Global.

On December 8, 2009, the Company reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, the Company accounted for Global Hotline as a discontinued operation. The Companys reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date.

The Company will continue to pursue its civil claim against H Capital.

GLOBAL HOTLINES PHILIPPINES, INC.

In the Philippines, IA Global is the 100% owner of Asia Premier and Shift, companies that have been merged into a single organization and operate Global Hotline Philippines.

On May 27, 2008, the Company acquired 100% of Asia Premier. Asia Premier provides flexible in-bound and out-bound call center, lead generation, and co-location service solutions to international companies. Asia Premier facilities are equipped with fully redundant, world-class Internet and network facilities, are capable of handling 300 or more seats, have a 24-hour back-up to ensure clients have seamless service, consistent high-quality bandwidth and technical support 365 days a year.

The transaction was structured as a share exchange in which IA Global issued 1,250,000 shares of its common stock at $.24 per share, the average closing price during the negotiations, totaling $300,000; plus three notes payable totaling $268,000, of which $262,000 was paid as of June 30, 2009. The transaction was valued at $618,000.

On April 10, 2008, the Company acquired 100% of Shift. Shift provides a range of in-bound and out-bound call centers, lead generation and customer service solutions for international companies across multiple time zones.


F-13

The transaction was structured as a share exchange in which the Company issued 826,086 shares of its common stock at $.23 per share, the average closing price during the negotiations, totaling $190,000 plus a payment of $35,000 at closing. The transaction was valued at $225,000.

Asia Premier and Shift were acquired because they have contracts that we expected to be renewed in an industry sector that was expected to grow. The purchase price resulted in identifiable intangible assets. Their results are included in the financial statements of IA Global for all periods since acquisition. There were no contingent payments earned, options or commitments in the acquisition agreement. There was no purchased research and development assets acquired or written off with the acquisition.

As of March 31, 2010, Global Hotline Philippines operates one call center in the Philippines and employs 10 full-time and 2 part-time employees. In addition, it signed a long term Business Processing and Marketing Services Agreement with HTMT Global Solutions Limited (HTMT) on January 9, 2009. Global Hotline Philippines has the option to use HTMTs infrastructure, certifications, and extensive call center facilities to deliver services to Global Hotline Philippines growing client base.

On June 14, 2010, the Company outsourced our call center operations and recorded an intangible asset impairment of $793,000 as of March 31, 2010. As a result, we accounted for Global Hotline Philippines as a discontinued operation.

SALE OF IA GLOBAL CO LTD

On October 1, 2009, the Company sold IA Global Co Ltd, a Japanese corporation to Kosuki Doi, a Japanese citizen. The Company received 1 Jpy Yen and recorded a gain on sale of $91,222. The Company sold the wholly owned subsidiary because it had diminished in value.

SUMMARY OF SOLD, IMPAIRED OR FORFEITED EQUITY INVESTMENTS

Sold, impaired or returned equity investments for the year ended March 31, 2010 are as follows:

SOLD EQUITY INVESTMENT IN SLATE CONSULTING CO. LTD.

In Japan, the Company had an equity investment in Slate Consulting Co Ltd (Slate), a Japanese executive search firm with operations in Tokyo and a call center in Manila, Philippines.

For the year ended March 31, 2010 and 2009, the Company recorded a loss on our investment in Slate of $16,298 and $10,427, respectively that decreased our investment in Slate, respectively.

On December 16, 2009, the Company sold its 20.25% interest in Slate to Ray Pedersen, Chief Executive Officer of Slate. The Company, in return for this equity investment, received the return of 1 million shares of IA Global shares valued at $.03 per share, the closing price on December 18, 2009, and a commitment for approximately $55,000 in cash to be paid installments by July 2010. As of March 31, 2010, Slate has paid $5,000 and the Company wrote-off $9,923 due to a dispute. On April 27, 2010, Slate paid $6,092.The Company reported an impairment loss as a result of the sale of approximately $1,284,756 during the year ended March 31, 2010. The $39,859 due from Slate was recorded as other current assets as of March 31, 2010. The Companys sold its 20.5% share in Slate because it had a diminished value, after weighing several indicators such as the lack of control, decline in current business environment due to negative economic changes in the country and world, continued lack of producing meaningful profitable operations even after the implementation of new business strategies.

FORFEITED INVESTMENT IN TAICOM SECURITIES CO. LTD.

In Japan, the Company had an investment in Taicom, a Japanese securities firm. Taicom provided a broad range of value-added financial services and competitive products. These services currently included the brokerage of Japanese commodities, options derivatives trading, foreign currency, equities and margin as well as offering wealth management and investment consulting services to diversified clients. In addition to offering a broad news and information gathering network, Taicom offers creative solutions that meet the sophisticated trading needs of its clients. Taicom is a member of the Osaka Stock Exchange. Taicom is headquartered in Tokyo and Osaka and has three branch offices in Japan.


F-14

Starting the fourth quarter in the year ended March 31, 2009, the Company accounted for Taicom under the cost method. Under the cost method, a long-term investment is recorded at cost and carried at that amount until it is sold or otherwise disposed of or until it is written down. A write-down from cost, subsequent to becoming a cost method investment, is appropriate when dividends received represent a liquidating dividend, that is, a dividend received in excess of earnings subsequent to investment date. Otherwise, any dividends received should be recorded as investment income.

Taicom was a member of the Osaka Stock Exchange. Taicom is headquartered in Tokyo and in Osaka and has three branch offices in Japan.

JUNE 3, 2008 EXCHANGE AGREEMENT

The transaction between the Company and Taicom was structured as a share exchange in which the Company issued 26,000,000 shares of its common stock at $.20 per share, the close price during the negotiations in exchange for 1,389,750 Class B Preferred Shares of Taicom. The transaction was valued at $5,200,000.

DECEMBER 12, 2008 AMENDMENT TO SHARE EXCHANGE AGREEMENT

On December 12, 2008, the Company and Taicom entered into an Amendment to Share Exchange Agreement (the "Amendment"). Pursuant to this Amendment, the Company agreed to return 302,100 of its Taicom Preferred Shares on each of December 12, 2008, January 20, 2009 and February 20, 2009 or 906,300 in total, in exchange for three $130,000 cash payments or $390,000 in total. Upon the completion of these payments, the Company's 20% interest in Taicom would be reduced to approximately 8% or 483,450 Class B Preferred Shares of Taicom. The February 13, 2009 share return may be adjusted on a pro-rata basis if the average closing share price of the common stock for the period December 12, 2008 to February 13, 2009 is below $.038 per share.

As of February 13, 2009, Taicom paid a total of $180,000 to the Company and the Company has returned 302,100 Taicom shares to Taicom, reducing the Company's interest in Taicom to 16%. Taicom has paid $50,000 toward their January 20, 2009 payment. The remaining $80,000 due on the January 20, 2009 payment has not been made. In addition, the entire February 20, 2008 payment was not received.

For the year ended March 31, 2009, the Company recorded a loss on our investment in Taicom of $421,702 that decreased our investment in Taicom. In addition, subsequent to our return of 513,570 Taicom Class B Preferred Shares with respect to the above December 12, 2008, February 2, 2009 and April 1, 2009 payments, as per the above amendments, the Company recorded a loss of $1,736,934 on the sale of its equity investment in Taicom.

APRIL 1, 2009 FORM OF PERFORMANCE WARRANT

On April 1, 2009, the Company amended the Form of Performance Warrant that it previously issued to Mr. Ning on December 12, 2008 (as amended, the Amended Warrant). The Amended Warrant reduced the number of shares of common stock that Taicom could receive upon the closing of certain financings to 3,591,250 from 32,500,000 common shares. The Company agreed to register the common stock issuable upon the exercise of the Amended Warrant with NYSE AMEX and file a registration statement on Form S-3 within 60 days of approval by NYSE AMEX. The Amended Warrant was issued to an accredited investor in a transaction that was exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act.

JUNE 2, 2009 FORM OF PERFORMANCE WARRANT

On June 2, 2009, the Company entered into a Form of Performance Warrant (the Warrant) with AMV. The Warrant provides that AMV is entitled to purchase up to 5,213,105 shares of the Companys common stock for $.05 per share. The Warrant is exercisable for a sixty month period and requires the payment of $300,000 in funding that is reflected in the June 8, 2009 Services Agreement. The Company agreed to register the common stock issuable upon the exercise of the Warrant with NYSE AMEX and file a registration statement on Form S-3 within sixty days of approval by NYSE AMEX. The Performance Warrant was issued to an accredited investor in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act.

The Company has declined to issue the Form of Performance Warrant because the $300,000 in funding was not received.


F-15

APRIL 1, 2009 AMENDMENT TO SHARE EXCHANGE AGREEMENT

On April 1, 2009, the Company agreed to issue IAO Preferred Stock , at $1,000 per share, to AMV for $317,000 in the Amendment to Share Exchange Agreement. The Company valued the conversion feature of such Preferred Stock to be $317,000 and recorded a deemed dividend during the year ended March 31, 2010.

At AMVs sole discretion, AMV may either (1) convert some or all of its IAO Preferred Stock into 12,800,000 shares of the Companys common stock pro rata at $0.025 per share; or (2) exchange IAO Preferred Stock for 971,458 Taicom Stock owned by the Company pro rata. The conversion of IAO Preferred Stock intoTaicom Stock is automatically triggered in the case of certain events, including delisting from NYSE AMEX, bankruptcy or insolvency.

On July 17, 2009 and September 28, 2009, AMV notified the Company that we were in default under clause 3.1 (vi) of the Agreement and as a result AMV did not fund the $60,000 due June 30, 2009, July 15, 2009 and July 31, 2009. However, AMV was late in funding as required by the Agreement. On October 30, 2009, the Company agreed to issue 4,000,000 shares based on the $120,000 in funded under this Agreement.

On November 16, 2009, but effective August 4, 2009, AMV claimed ownership of our shares in Taicom. This resulted in a loss on investment of approximately $2,861,000.

On January 11, 2010, AMV requested that the $317,000 of IAO Preferred Stock be converted into 12,800,000 shares of the Companys common stock. We declined to convert this IAO Preferred Stock..

JUNE 8, 2009 SERVICES AGREEMENT

On June 8, 2009, the Company entered into a Services Agreement with AMV. Pursuant to this agreement, AMV agreed to provide aggregate funds in cash of $300,000 in exchange for IA Global Convertible Senior Debentures (Debentures) that carry a 12% interest rate and were due December 8, 2009. The Debentures were convertible into 10,000,000 shares of IAO Common Stock at $0.030 per share immediately upon issuance. In the event Company was not able to repay the principal amount plus accrued interest by December 8, 2009, AMV had the right to convert such Debentures into (1) the proportionate number of shares of the Companys common stock, or (2) exchange 940,121 shares of Taicom Preferred Class B stock owned by the Company on a pro rata basis. The $300,000 in funding was to be paid in five independent tranches. The Company recorded interest expense of $120,000 attributed to the valuation of the beneficial conversion feature on the Debentures.

On July 17, 2009 and September 28, 2009, AMV notified us that we were in default under the June 8, 2009 Services Agreement and as a result did not fund the $60,000 due on each of June 30, 2009, July 15, 2009 and July 31, 2009. However, the Company asserted that AMV was late in providing funding as required under the agreement.

On October 30, 2009, the Company agreed to issue 4,000,000 shares of its common stock to AMV based on the $120,000 in aggregate funds provided by AMV under the agreement.

On November 16, 2009, but effective August 4, 2009, AMV claimed ownership of our shares in Taicom. This resulted in a loss on investment of approximately $2,861,000.

Taicom declared bankruptcy on December 25, 2009 in accordance with Japanese bankruptcy laws.

Sold, impaired or returned equity investments for the year ended March 31, 2009 are as follows:

IMPAIRED EQUITY INVESTMENT IN AUSTRALIAN SECURED FINANCIAL LIMITED

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

F-16

ASFL raised funds through the issuance of private loans and bank debt within Australia and provided short term, secured, real property loans to businesses and investors in Australia. The bank line of credit used to fund the business has been terminated effective November 2009 and ASFL was not able to replace the bank line of credit with any funding and is expected to be liquidated.

For the year ended March 31, 2009, the Company recorded a profit on our investment in ASFL of $265,039 that increased our investment in ASFL. The investment in ASFL was considered impaired as of March 31, 2009 and write-down on our ASFL equity investment of $7,195,394 was recorded during the year ended March 31, 2009.

SOLD EQUITY INVESTMENT IN GPLUS MEDIA CO LTD

On August 24, 2007, the Company closed a 25.0% equity investment in GPlus Media Co Ltd (GPlus) by agreeing to issue 3,885,713 shares of common stock with a total value of $1,360,000 or $.35 per share, which was the closing price on August 20, 2007, the day negotiations were completed.

For the year ended March 31, 2009, the Company recorded a gain on our investment in GPlus of $12,510 that increased our investment in GPlus. On March 6, 2009, the Company sold its 25% interest in GPlus to the management of GPlus for $73,931 and recorded a loss on sale of $1,286,766 during the year ended March 31, 2009.

SUMMARY OF DISCONTINUED OPERATIONS AND ACQUISITION NOT COMPLETED

Discontinued operations for the year ended December 31, 2007 are as follows:

On October 22, 2007, the Company signed definitive agreements to acquire 100% of the Outsourcing Business Division (Outsourcing Business Division) of LINC Media, Inc. (LINC Media), a Tokyo, Japan-based Company.

On March 12, 2008, the Company and LINC Media terminated the definitive agreements due to the U.S. market conditions. LINC Media retains the $110,000 paid to date, less $10,000 deducted for legal fees. There are no additional fees or cash payments or stock issuances required by the Company or LINC Media. The $110,000 paid to date has been written off as of December 31, 2007 and is accounted for as a loss from disposal of a discontinued operation.

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

As of March 31,20102009Balance Sheet-Cash and cash equivalents$15$3,620,239Accounts receivable - trade5835,994,117Notes receivable2,684,794Other current assets64,0482,676,373Fixed assets53,9362,206,269Other assets3,719,797Assets of discontinued operations$118,582$20,901,589Accounts payable - trade$182,607$1,116,755Accrued liabilites604,51910,277,936Long term debt329,47615,265,602Deferred revenue3,454,692Other liabilitiesNet liabilities- discontinued operations$1,116,602$30,114,985

F-17

Transition PeriodThe ThreeYear EndedYears Ended March 31,Months EndedDecember 31,20102009March 31, 20082007Statement of Operations-Revenue$13,427,540$57,107,050$16,048,904$29,136,435Loss from discontinued operations(2,863,704)(7,228,592)1,163,608(5,272,127)Gain from forfeit of discontinued operations10,062,614
NOTE 4.  PREPAID EXPENSES

Prepaid expenses were $170,852 and $39,633 as of March 31, 2010 and 2009, respectively. These assets included prepaid insurance, prepaid financing costs and other costs incurred by the Company.

NOTE 5.  ACCOUNTS PAYABLE

Accounts payable were $848,426 and $461,274 as of March 31, 2010 and 2009, respectively. Such liabilities consisted of amounts due to vendors for external audit, forensic audit, legal and other expenses incurred by the Company.

NOTE 6. ACCRUED LIABILITIES

Accrued liabilities were $911,630 and $669,910 as of March 31, 2010 and 2009, respectively. Such liabilities consisted of the following:

March 31,20102009Accrued salaries$235,874$112,151Trade debt not in accounts payable192,11769,799Accrued interest483,639487,960Other accrued expenses$911,630$669,910
NOTE 7. NOTES PAYABLE/ LONG TERM DEBT

Notes payable and long term debt were $205,500 and $223,500 as of March 31, 2010 and 2009, respectively. Such liabilities consisted of the following:

1.On July 14, 2008 and August 11, 2008, the Company entered into three-year loan agreements with Artemis Capital Group LLC, pursuant to which the Company received loans in the principal amount totaling approximately $199,500 at an interest rate of 7.0% per annum. The interest was payable quarterly beginning in October 2008. The Company issued 3,000,000 shares of common stock as of September 30, 2008 and 554,546 shares of common stock on November 19, 2008, which serve as collateral for the loans. In addition, the Company paid $34,613 in fees, which are being amortized over the life of the loan. At the termination of the loans, the Company may repay the loans, forfeit the shares to the lender or renew the loans on a year by year basis based on mutually agreeable terms. The loan cannot be terminated within the first eighteen months of the loan and after this period, it can be repaid with a 10% penalty. Total interest expense for these loans for the year ended March 31, 2010 and 2009 was $14,972 and $8,756, respectively.2.In connection with the acquisition of Asia Premier, the Company entered a note payable totaling $268,000. As of March 31, 2010, a total of $6,000 remains unpaid from this note payable. The note payable is secured by the assets of Asia Premier and is non-interest bearing.

F-18

All the loans were used for working capital. Future principal repayments for all long term debt as of March 31, 2010 are as follows:

Years Ended March 31,2011$6,0002012199,500Total$205,500
NOTE 8. RELATED PARTY RELATIONSHIPS WITH INTER ASSET JAPAN AND AFFILIATES

As of March 31, 2010, IAJ LBO Fund, PBAA Fund Limited, Terra Firma, Inter Asset Japan Co Ltd ("IAJ"), IA Turkey and Hiroki Isobe, (collectively, the "Controlling Shareholders") collectively hold approximately 43.2% of our common stock. These Controlling Shareholders have stated in a Schedule 13D that they may be deemed to constitute a "group" for the purposes of Rule 13d-3 under the Exchange Act. Hiroki Isobe and controls each of our Controlling Shareholders.

The following table provides details on the affiliated parties owned or controlled by each of the Company's controlling stockholders and certain other entities, as of March 31, 2010, that are relevant for purposes of understanding the related party transactions that have taken place:

Ownership:

IA Global, Inc. owns:Global Hotline Philippines, Inc.100.0%(1)IA Global Japan Co Ltd.100.0%Inter Asset Japan LBO No. 1 Fund owns:IA Global, Inc.28.2%(2)PBAA Fund Ltd. owns:IA Global, Inc.7.7%(2)Terra Firma Fund Ltd. owns:IA Global, Inc.4.2%(2)Inter Asset Japan Co., Ltd. owns:IA Global, Inc..7%(2)IA Turkey Equity Portfolio Ltd owns:IA Global, Inc..8%(2)Mr. Hiroki Isobe owns:IA Global, Inc.1.6%(2)
(1)   Established on July 4, 2008. Asia Premier and Shift Resources operate as Global Hotline Philippines, Inc.

(2)   Based on a Schedule 13D (Amendment No. 23) filed with the SEC on June 9, 2010.


F-19

NOTE 9. EQUITY TRANSACTIONS

During the period subsequent to March 31, 2010, the following stockholder equity events occurred:

OTHER EQUITY ISSUANCES

On May 21, 2010, the Company agreed to issue 1,385,818 shares of common stock to Brian Hoekstra, its Chief Executive Officer for $15,244, or $.011 per share, the date agreement was signed. The shares do not have registration rights.

On May 25, 2010, the Company issued 4,500,000 warrants to acquire shares of common stock to National Securities Corporation and two individuals in connection with investment banking services. The warrants are exercisable at $.010 per share and expire on May 24, 2013.

On June 8, 2010, the Company agreed to issue 5,000,000 shares of common stock to Derek Schneideman, its former Chief Executive Officer for $50,000, or $.01 per share, the date agreement was signed. The shares do not have registration rights.

On June 14, 2010, the compensation committee awarded Mr. Senda 500,000 shares of stock at the fair market price of $0.013 per share based on the adjusted closing price on June 14, 2010, the date the committee approved the grant. In accordance with the 2007 Stock Incentive Plan, the grant vested on June 14, 2010.

STOCK PURCHASE AGREEMENTS WITH RXR CROSS BORDER INVESTMENT UN

On April 16, 2010, the Company received a $102,915 funding commitment under a Stock Purchase Agreement (Agreement) with RXR Cross Border Investment Un (RXR), a new shareholder of the Company. Under the terms of the Agreement, the Company agreed to issue and sell to RXR 8,576,250 shares of the Companys common stock for an aggregate purchase price of $102,915, funded during March 10, 2010 and April 16, 2010. The price per share is $.012, the average during the periods of the wires.

On April 29, 2010, the Company received a $100,000 funding commitment under a Stock Purchase Agreement 2 (Agreement 2) with RXR. Under the terms of Agreement2, the Company agreed to issue and sell to RXR 12,000,000 Shares at a purchase price of US$.012 per share, the price on signing, or an aggregate price of US$100,000 on or before May 31, 2010. RXR did not fund the $100,000 on or before May 31, 2010.

RXRs obligation to purchase the foregoing shares by the dates specified was conditioned upon the representations and warranties of the Company contained in the Agreement being accurate as of such dates.

The Company issued and sold the shares of common stock to RXR in reliance on the exemption provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC thereunder.

The Agreement contains certain representations and warranties of the RXR and the Company, including customary investment-related representations provided by RXR, as well as acknowledgements by RXR that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

The Company issued and sold the shares of common stock to RXR in reliance on the exemption from the registration requirements set forth in the Securities Act of 1933 (the Securities Act) provided under Section 4(2) of the Securities Act and Regulation D promulgated by the Securities and Exchange Commission (the SEC) under the Securities Act.

STOCK PURCHASE AGREEMENTS WITH WORLD INVESTMENT UN

On June 15, 2010, the Company received a $145,000 funding commitment under a Stock Purchase Agreement (Agreement) with World Investment Un (World), a new shareholder of the Company. Under the terms of the Agreement, the Company agreed to issue and sell to World 12,083,333 shares at a purchase price of US$.012 per share, the price on signing, or an aggregate price of US$145,000 on or before June 15, 2010.

F-20

Worlds obligation to purchase the foregoing shares by the dates specified was conditioned upon the representations and warranties of the Company contained in the Agreement being accurate as of such dates.

The Company issued and sold the shares of common stock to World in reliance on the exemption provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC thereunder.

The Agreement contains certain representations and warranties of World and the Company, including customary investment-related representations provided by World, as well as acknowledgements by the World that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

The Company issued and sold the shares of common stock to World in reliance on the exemption from the registration requirements set forth in the Securities Act of 1933 (the Securities Act) provided under Section 4(2) of the Securities Act and Regulation D promulgated by the Securities and Exchange Commission (the SEC) under the Securities Act.

As of July 14, 2010, the Company sold to the Shareholder 25,416,667 shares at a purchase price of $.012 per share, or an aggregate price of $305,000.

During the twelve months ended March 31, 2010, the following stockholder equity events occurred:

OTHER EQUITY ISSUANCES

On April 20, 2009, the Company agreed to issue 317 shares of ArqueMax Ventures, LLC Series Preferred Stock (IAO Preferred Stock) of the Company. The IAO Preferred Stock, $.01 par value, was sold at $1,000 per share, has a liquidation value of $317,000 and has no voting rights.

At AMVs sole discretion, AMV may either (1) convert some or all of its IAO Preferred Stock into 12,800,000 shares of the Companys common stock pro rata at $0.025 per share; or (2) exchange IAO Preferred Stock for 971,458 Taicom Stock owned by the Company pro rata. The conversion of IAO Preferred Stock into Taicom Stock is automatically triggered in the case of certain events, including delisting from NYSE AMEX, bankruptcy or insolvency.

The Company recorded a deemed dividend of $317,000, upon the issuance of the Preferred Stock, due to the conversion price per share being below market on the date of issuance.

On May 12, 2009, the Company sold 600,000 shares of common stock to A to B Capital Special Situations Fund LP for $30,000 or $0.05 per share, the closing price on May 12, 2009, the date the subscription agreement was signed.

On May 12, 2009, the Company issued warrants for a total of 428,571 shares of common stock to A to B Capital Special Situations Fund LP related to the common stock they purchased on May 12, 2009. The warrants are exercisable at $.07 per share, above the market price on May 12, 2009, and expire on May 14, 2012.

On May 21, 2009, the Company issued 750,000 performance warrants to acquire shares of common stock to the Sterling Group, Inc. in connection with the sale of the Companys common stock. The warrants are exercisable at $.10 per share and expire on May 20, 2012. If registered, the warrants may be called by the Company if the share price closes above $.20 for five days.

On May 21, 2009, the Company issued 250,000 performance warrants to acquire shares of common stock to Marc Page in connection with the sale of the Companys common stock. The warrants are exercisable at $.10 per share and expire on May 20, 2012.

On June 1, 2009, the shareholders of the Company approved the increase in the number of authorized common shares from 300,000,000 to 450,000,000 shares.


F-21

On June 10, 2009, the Company sold 167,500 shares of common stock to Derek Schneideman, its former Chief Executive Officer, for $10,050 or $0.06 per share, the closing price on June 10, 2009, the date the subscription agreement was signed.

On October 30, 2009, the Company agreed to issue 4,000,000 shares of its common stock to AMV based on the $120,000 in aggregate funds provided by AMV under the June 8, 2009 Services Agreement. The Company recorded interest expense of $120,000 attributed to the valuation of the beneficial conversion feature on the Debentures.

On November 4, 2009, the Company agreed to issue 600,000 shares of common stock to AIM Capital Corporation in a private placement for $24,000 or $0.04 per share, the closing price on December 28, 2009, the date agreement was reached. The Company agreed to register the shares.

On December 30, 2009, the Company agreed to issue 2,569,850 shares of common stock to former directors of the Company in a private placement for $106,794 or $0.04 per share, the closing price on December 28, 2009, the date agreement was reached. The shares do not have registration rights.

On March 5, 2010, the Company issued 2,250,000 performance warrants to acquire shares of common stock to the Sterling Group, Inc. in connection with the sale of the Companys common stock. The warrants are exercisable at $.015 per share and expire on March 14, 2013. If registered, the warrants may be called by the Company if the share price closes above $.10 for five days.

On March 19, 2010, the committee awarded Mr. Scott 400,000 shares of stock at the fair market price of $0.014 per share based on the adjusted closing price on March 18, 2010, the last trading day before the committee approved the grant. In accordance with the 2007 Stock Incentive Plan, the grant vested on March 19, 2010.

Unless otherwise indicated, the common stock was issued to the accredited investors in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act. In addition, certain shares issuances are discussed elsewhere in this Form 10-Q,

PRIVATE PLACEMENTS WITH INTER ASSET JAPAN LBO NO. 1 FUND

On August 2, 2009, the Company entered into a Stock Purchase Agreement (Agreement 1) with Inter Asset Japan LBO No 1 Fund, an existing shareholder of the Company (the Shareholder). Under the terms of the Agreement 1, the Company agreed to issue and sell to the Shareholder 1,500,000 shares (the Shares) of the Companys common stock, par value $0.01 per share, for an aggregate purchase price of $60,000, or $0.04 per share (the Purchase Price). The Company issued and sold the Shares to the Shareholder in reliance on the exemption from the registration requirements set forth in the Securities Act provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC under the Securities Act.

Agreement 1 contains certain representations and warranties of the Shareholder and the Company, including customary investment-related representations provided by the Shareholder, as well as acknowledgements by the Shareholder that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the Shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

Agreement 1 also grants the Shareholder registration rights that it may exercise at its option and provides the Shareholder with a right of first offer if the Company proposes to issue securities in the future (subject to certain customary exceptions). Finally, the Shareholder has the right to demand that the Company redeem all or any portion of the Shares at any time on or after October 31, 2009, for a redemption price equal to the greater of the Purchase Price or the listed market price for the Companys common stock as of the redemption date.

On August 17, 2009, the Company entered into a Stock Purchase Agreement (Agreement 2) with the Shareholder. Under the terms of Agreement 2, the Company agreed to issue and sell to the Shareholder 5,000,000 shares of our common stock for an aggregate purchase price of $200,000, or $0.04 per share.


F-22

Also under the terms of the Agreement, the Shareholder has committed to purchase, and the Company agreed to issue and sell to the Shareholder, additional shares of the Companys common stock in accordance with the following schedule:

2,500,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$100,000 on or before September 4, 2009.1,250,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$50,000 on or before September 18, 2009.50,000,000 shares at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000 on or before November 10, 2009.
The Shareholders obligation to purchase the foregoing shares by the date specified is conditioned upon the representations and warranties of the Company contained in Agreement 2 being accurate as of the date of such closing.

Finally, the Shareholder had the option, but did not purchase, on or before December 31, 2009, an additional 50,000,000 shares of Common Stock at a purchase price of US$.04 per share, or an aggregate price of $2,000,000.

On November 4, 2009, the Company entered into an Amendment (Amendment 1) to Agreement 2 with the Shareholder. Under the terms of Amendment 1, the Shareholder agreed to not acquire in excess of 19.9% of the Companys outstanding stock prior to the Annual Stockholder Meeting held on December 18, 2009.

On January 26, 2010, the Company received a $250,000 funding commitment under an Amendment to Agreement 2 (Amendment 2) with the Shareholder. Under the terms of the Amendment 2, the Company agreed to issue and sell to the Investor 6,250,000 shares of the Companys common stock for an aggregate purchase price of $250,000, or $0.04 per share.

The Shareholder had the option, but did not purchase, on or before March 31, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.

Finally, the Shareholder had the option, but did not purchase, on or before April 30, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000, as long as $500,000 has been funded by February 28, 2010.

On April 16, 2010, the Company signed an Amendment to the Stock Purchase Agreement (Amendment 3) with the Shareholder. Under the terms of the Amended Agreement, the Company sold to the Shareholder in total 18,383,750 shares of Common Stock for $735,350. In addition, the parties agreed to terminate the Stock Purchase Agreement dated August 17, 2009 and the Amendment to the Stock Purchase Agreement dated January 26, 2010.

The Shareholder had the option, but did not purchase, on or before March 31, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.

The Shareholder had the option, but did not purchase, on or before April 30, 2010, an additional 50,000,000 shares of common stock at a purchase price of US$.04 per share, or an aggregate price of US$2,000,000.

On April 16, 2010, the Company signed an Amendment to Escrow Agreement (Escrow Agreement) with Inter Asset Japan LBO No.1 Fund, Beseto Partners Incorporation Committee and M&A Japan Inc. The parties agreed to terminate the Escrow Agreement dated December 18, 2009. The Company agreed to return 200 million Yen or approximately $2.2 million in exchange for not issuing 55,969,633 shares of IAGI common stock. The Korean Venture Capital Fund was not successfully formed.

The Company issued and sold the shares of common stock to the Shareholder in Agreement 2 in reliance on the exemption from the registration requirements set forth in the Securities Act provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC under the Securities Act.


F-23

Agreement 2 contains certain representations and warranties of the Shareholder and the Company, including customary investment-related representations provided by the Shareholder, as well as acknowledgements by the Shareholder that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

Agreement 2 also grants the Shareholder registration rights that it may exercise at its option and provides the Shareholder with a right of first offer if the Company proposes to issue securities in the future (subject to certain customary exceptions).

Under the terms of its August 2, 2009 and the August 17, 2009 Stock Purchase Agreements and related Amendments with the Shareholder, as of March 31, 2010, the Company sold to the Shareholder, 75,453,383 shares at a purchase price of $.04 per share, or an aggregate price of $3,018,135.  As of July 14, 2010 and after the termination of the Escrow Agreement, the Company sold to the Shareholder 19,883,750 shares at a purchase price of $.04 per share, or an aggregate price of $795,350.

During the three months ended March 31, 2010, the Company sold to the Shareholder 3,733,750 shares at a purchase price of $.04 per share, or an aggregate price of $149,350.

EQUITY LINE OF CREDIT TRANSACTION WITH ASCENDIANT CAPITAL GROUP, LLC

On September 29, 2009, the Company entered into a Securities Purchase Agreement with Ascendiant, pursuant to which Ascendiant agreed to purchase up to $5,000,000 worth of shares of the Companys common stock from time to time over a 24-month period, provided that certain conditions are met. The financing arrangement entered into by the Company and Ascendiant is commonly referred to as an equity line of credit or an equity drawdown facility.

Under the terms of the Securities Purchase Agreement, Ascendiant will not be obligated to purchase shares of IA Globals common stock unless and until certain conditions are met, including but not limited to the SEC declaring effective a Registration Statement (the Registration Statement) on Form S-1 and the Company maintaining an Effective Registration Statement which registers Ascendiants resale of any shares purchased by it under the equity drawdown facility. The customary terms and conditions associated with Ascendiants registration rights are set forth in a Registration Rights Agreement that was also entered into by the parties on September 29, 2009.

The Registration was declared effective on March 9, 2010, IA Global has the right to sell and issue to Ascendiant, and Ascendiant will be obligated to purchase from IA Global, up to $5,000,000 worth of shares of the Companys common stock over a 24-month period beginning on such date (the Commitment Period). IA Global will be entitled to sell such shares from time to time during the Commitment Period by delivering a draw down notice to Ascendiant. In such draw down notices, IA Global will be required to specify the dollar amount of shares that it intends to sell to Ascendiant, which will be spread over a nine-trading-day pricing period. For each draw, IA Global will be required to deliver the shares sold to Ascendiant in three installments (following the third, sixth and ninth trading days in the pricing period, respectively). Ascendiant is entitled to liquidated damages in connection with certain delays in the delivery of its shares.

The Securities Purchase Agreement also provides for the following terms and conditions:

Purchase Price - 90% of the Companys volume-weighted average price (VWAP).Threshold Price - IA Global may specify a price below which it will not sell shares during the applicable nine-trading-day pricing period. If the purchase price falls below the threshold price on any day(s) during the pricing period, such day(s) will be removed from the pricing period (and Ascendiants investment amount will be reduced by 1/9 for each such day).Maximum Draw - 15% of IA Globals total trading volume for the 10-trading-day period immediately preceding the applicable draw down, times the average VWAP during such period (but in no event more than $250,000).Minimum Draw - None.
F-24

Minimum Time Between Draw Down Pricing Periods - Two trading days.Minimum Use of Facility - IA Global is obligated to sell at least $1,000,000 worth of shares of its common stock to Ascendiant during the Commitment Period.Commitment Fees - IA Global issued 8,333,333 shares of its common stock to Ascendiant ($125,000 worth of shares based on the Companys closing bid price on the trading day immediately prior to the SEC declaring the Registration Statement effective, IA Global issued another 7,058,581 or $75,000 worth of shares of its common stock in three installments over a period of 90 days following the effectiveness date.Other Fees and Expenses  On October 21, 2009, the Company issued 400,000 shares of common stock valued at $10,000 under the 2007 Stock Incentive Plan as compensation to Ascendiants legal counsel for the legal fees and expenses it incurred in connection with negotiating and documenting the equity line of credit. Pursuant to separate agreements, IA Global has also agreed to pay an aggregate of 3.0% in fees (to be paid in connection with each draw down).Indemnification - Ascendiant is entitled to customary indemnification from IA Global for any losses or liabilities it suffers as a result of any breach by IA Global of any provisions of the Securities Purchase Agreement, or as a result of any lawsuit brought by any stockholder of IA Global (except stockholders who are officers, directors or principal stockholders of IA Global).Conditions to Ascendiants Obligation to Purchase Shares - Trading in IA Globals common stock must not be suspended by the SEC or other applicable trading market; IA Global must not have experienced a material adverse effect; all liquidated damages and other amounts owing to Ascendiant must be paid in full; the Registration Statement must be effective with respect to Ascendiants resale of all shares purchased under the equity drawdown facility; there must be a sufficient number of authorized but unissued shares of IA Global common stock; and the issuance must not cause Ascendiant to own more than 9.99% of the then outstanding shares of IA Global common stock, or more than 19.9% of the number of shares of common stock outstanding on September 29, 2009 to have been issued under the equity drawdown facility (without shareholder approval).Termination - The Securities Purchase Agreement will terminate if IA Globals common stock is not listed on one of several specified trading markets (which include the NYSE AMEX, OTC Bulletin Board and Pink Sheets, among others); if IA Global files for protection from its creditors; or if the Registration Statement was not declared effective by the SEC by June 29, 2010. IA Global may terminate the Securities Purchase Agreement if Ascendiant fails to fund a draw down within 10 trading days after the end of the applicable settlement period, or if the SEC provides comments on the Registration Statement requiring certain changes in the transaction structure and/or documents.
The Securities Purchase Agreement also contains certain representations and warranties of IA Global and Ascendiant, including customary investment-related representations provided by Ascendiant, as well as acknowledgements by Ascendiant that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. IA Global provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations. IA Globals representations and warranties are qualified in their entirety (to the extent applicable) by the Companys disclosures in the reports it files with the SEC. IA Global also delivered confidential disclosure schedules qualifying certain of its representations and warranties in connection with executing and delivering the Securities Purchase Agreement.

Under the terms of its September 29, 2009 Securities Purchase Agreement with Ascendiant, as of March 31, 2010,  the Company sold to Ascendiant 1,739,048  shares at a purchase price of $.013 per share, or an aggregate price of $21,884.  As of July 14, 2010, the Company sold to the Shareholder 8,015,507 shares at a purchase price of $.011 per share, or an aggregate price of $89,730.

The shares to be issued by IA Global to Ascendiant under the Securities Purchase Agreement will be issued in private placements in reliance upon the exemption from the registration requirements set forth in the Securities Act provided for in Section 4(2) of the Securities Act, and the rules promulgated by the SEC thereunder.

F-25

STOCK PURCHASE AGREEMENT WITH MGVJ CO LTD

On January 26, 2010, the Company received a $480,000 funding commitment under a Stock Purchase Agreement (Stock Purchase) with MGVJ Co. Ltd. (MGVJ), a new shareholder of the Company. Under the terms of the Stock Purchase, the Company agreed to issue and sell to MGVJ 9,600,000 shares of the Companys common stock for an aggregate purchase price of $480,000, or $0.05 per share, with payments as follows:

(i)        2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before March 31, 2010.

(ii)       2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before April 30, 2010.
(iii)      2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before May 31, 2010.

(iv)      2,400,000 shares at a purchase price of US$.05 per share, or an aggregate price of US$120,000, on or before June 30, 2010.

MGVJs obligation to purchase the foregoing shares by the dates specified was conditioned upon the representations and warranties of the Company contained in the Agreement being accurate as of such dates.

The Company issued and sold the shares of common stock to MGVJ in reliance on the exemption provided under Section 4(2) of the Securities Act and Regulation D promulgated by the SEC thereunder.

The Stock Purchase contains certain representations and warranties of MGVJ and the Company, including customary investment-related representations provided by MGVJ, as well as acknowledgements by MGVJ that it has reviewed certain disclosures of the Company (including the periodic reports that the Company has filed with the SEC) and that the Companys issuance of the shares has not been registered with the SEC or qualified under any state securities laws. The Company provided customary representations regarding, among other things, its organization, capital structure, subsidiaries, disclosure reports, absence of certain legal or governmental proceedings, financial statements, tax matters, insurance matters, real property and other assets, and compliance with applicable laws and regulations.

The Company issued and sold the shares of common stock to the Investor in reliance on the exemption from the registration requirements set forth in the Securities Act of 1933 (the Securities Act) provided under Section 4(2) of the Securities Act and Regulation D promulgated by the Securities and Exchange Commission (the SEC) under the Securities Act.

On April 16, 2010, the Company signed an Amendment to the Stock Purchase Agreement (MGVJ Amended Agreement) with MGVJ. Under the terms of the MGVJ Amended Agreement and during the three months ended March 31, 2010, the Company sold to MGVJ 1,300,000 shares of Common Stock at a purchase price of $.05 per share, or an aggregate price of $65,000. In addition, the parties agreed to terminate the Stock Purchase Agreement dated January 26, 2010.

During the twelve months ended March 31, 2009, the following stockholder equity events occurred:

On April 1, 2008, the Company issued 200,000 shares of common stock to two consultants for financing and other services. The shares were valued at $.28 per share, the closing price on March 31, 2008.

On April 10, 2008, the Company signed definitive agreements and closed the 100% acquisition of Shift. The transaction was structured as a share exchange in which the Company issued 826,086 shares of its common stock at $.23 per share, the close price during the negotiations, totaling $190,000 plus a payment of $35,000. The transaction was valued at $225,000.

On April 16, 2008, the Company agreed to issue 120,000 shares of common stock to a consultant for investor relation services. The shares were valued at $.25 per share, the closing price on April 7, 2008, the date the agreement was reached.


F-26

On April 24, 2008 and May 8, 2008, the Company sold 1,000,000 and 1,500,000, shares of our common stock, respectively, to Michael Ning for $200,000 and $300,000, respectively, or $.20 per share. In connection with the purchase of the common stock, on May 8, 2008, the Company issued warrants for a total of 5,000,000 shares of common stock to Mr. Ning. The warrants are exercisable at $.20 per share and expire on May 7, 2013. The Company agreed to register the shares and warrants within two months after approval by NYSE AMEX market. The shares of common stock were issued to the accredited investors in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act.

On May 27, 2008, the Company acquired 100% of Asia Premier. The transaction was structured as a share exchange in which IA Global issued 1,250,000 shares of its common stock at $.24 per share, the close price during the negotiations, totaling $300,000; plus three Notes Payable totaling $268,000, which become due over the next nine months, and an earn-out capped at $50,000 based on profitability of the Asia Premier business over the next nine months. The transaction was valued at $618,000.

On June 3, 2008, the Company announced that it had closed a 20% equity investment in Taicom. The transaction between the Company and Taicom was structured as a share exchange in which the Company issued 26,000,000 shares of its common stock at $.20 per share, the close price during the negotiations in exchange for 1,389,750 Class B Preferred Shares of Taicom. The transaction was valued at $5,200,000.

On June 28, 2008, the Company converted $2,300,000 of debentures by issuing 7,666,579 shares of common stock. In addition, the Company issued an additional 5,862,734 shares during the three months ended December 31, 2008 based on the June 23-27, 2008 average closing price of $.22 per share less 25% due to the resetting of the pricing for these outstanding debentures. On September 22, 2008, the Company issued 463,658 shares of common stock to certain debenture holders related to the conversion of $78,822 of interest at $.17 per share.

On July 9, 2008, the Company filed a registration statement on Form S-3 covering 33,112,422 shares, related to equity investments, acquisitions and service agreements which were declared effective by the SEC on July 23, 2008.

On July 23, 2008, the Company issued 15,000 shares at $.20 per share or $3,000 to Anna Alioto, above the closing market price of $0.14 per share, for investor relation services.

On July 28, 2008, the Company issued warrants for a total of 1,900,000 shares of common stock to Mr. Ning related to the common stock he purchased on April 24, 2008 and May 8, 2008. The warrants are exercisable at $.17 per share and expire on July 27, 2013.

On July 31, 2008, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on August 7, 2008. This registration statement allows for the issuance of preferred stock, common stock and warrants valued up to $5 million, limited to no more than 33% of our public float in any twelve month period.

On August 21, 2008 and August 26, 2008, the Company sold 582,609 shares of common stock to Mr. La Cara, Mr. Ishii, Mr. Nelson and Ms. Towada for $66,962, or $0.11 per share, the closing market price on the day preceding the signing of the private placement memorandum.

On September 12, 2008, the Company issued 100,000 shares at $.10 per share to Financial West Investment Group, Inc., the closing market price on September 11, 2008, for financing and investor relation services.

On January 26, 2009, the Company sold 1,000,000 shares of common stock to Mr. Mark Gustavson for $50,000 or $0.05 per share, the closing market price during the negotiations of the subscription memorandum.

On February 3, 2009, the Company issued 750,000 warrants to acquire shares of common stock to the Sterling Group, Inc. for consulting services. The warrants are exercisable at $.05 per share and expire on February 2, 2012. On February 3, 2009, the Company issued 750,000 performance warrants to acquire shares of common stock to the Sterling Group, Inc. for consulting services. The warrants are exercisable at $.10 per share and expire on February 2, 2012. If registered, the warrants maybe called by the Company if the share price closes above $.20 for five days.


F-27

On February 3, 2009, the Company issued 250,000 warrants to acquire shares of common stock to Marc Page for consulting services. The warrants are exercisable at $.05 per share and expire on February 2, 2012. On February 3, 2009, the Company issued 250,000 performance warrants to acquire shares of common stock to Marc Page for consulting services. The warrants are exercisable at $.10 per share and expire on February 2, 2012.

The common stock was issued to the accredited investors in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act.

During the three months ended March 31, 2008, the following stockholder equity events occurred:

On March 22, 2007, the Company announced a stock repurchase program. Starting on April 2, 2007, the Company may repurchase up to 4,000,000 shares at market prices in open market or private transactions. As of March 31, 2008 and December 31, 2007, the Company repurchased 2,654,255 shares in public and private transactions at an average price of $0.281 per share. The Company reused 2,026,355 shares as part of our Slate equity investment at an average cost of $.267 per share. The Company owns 627,900 shares at an average cost of $.323 per share as of March 31, 2008. The shares are valued using the cost method of accounting for treasury stock.

On January 18, 2008, the Company filed a registration statement on Form S-3 covering 7,870,355 shares, related to equity investments and convertible Debentures, which was declared effective by the SEC on February 1, 2008.

On March 14, 2008, Eric La Cara, a director, exercised stock options totaling 86,458 shares of common stock for $13,500 or $.156 per share.

During the year ended December 31, 2007, the following stockholder equity events occurred:

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

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

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

On March 26, 2007, the Company announced an odd lot tender offer. Starting on April 2, 2007, the Company will repurchase odd lots from stockholders who own fewer than 100 shares. The program was for thirty days and may be extended in 30 day increments. On May 2, 2007, the Company extended this odd lot program until June 15, 2007. On June 15, 2007, this program expired and no shares were tendered under the program.

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

On April 27, 2007, Mr. Jun Kumamoto, a former director of the Company currently functioning as a consultant, exercised 30,000 stock options at an average price of $0.183 per share and forfeited 520,000 stock options at $0.201 per share.

During the three months ended June 30, 2007, we sold 547,281 shares of our common stock in private placements for $200,000 or approximately $0.365 per share. During November and December 2007, we sold 642,422 shares of our common stock in private placements for $179,878 or approximately $.28 per share.

On June 29, 2007, the shareholders of IA Global authorized an increase in the number of authorized shares to 300,000,000 shares.


F-28

On July 30, 2007, the Company made an Offer to our debenture holders ("Offer"). Pursuant to this Offer, the debenture holders could convert their Debentures into common stock at a 10% discount of $0.27 per share and would receive shares of common stock for any accrued interest at $0.27 per share. The Offer expired on August 31, 2007, and $400,000 of debentures and $64,048 of accrued interested were converted into 1,718,696 shares of common stock. The additional shares of common stock totaling 385,362 related to the discount and interest were registered in January 2008.

During August and September 2007, $500,000 of debentures was converted into 1,666,669 shares of common stock. During November and December 2007, $450,000 of debentures was converted into 1,500,002 shares of common stock.

On August 24, 2007, the Company closed a 25.0% equity investment in GPlus Media Co Ltd by agreeing to issue 3,885,713 shares of common stock with a total value of $1,360,000 or $.35 per share, which was the closing price on August 20, 2007, the day negotiations were completed.

On August 24, 2007, the Company closed a 20.25% equity investment in Slate Consulting by agreeing and has issued 3,600,000 shares of common stock with a total value Of $1,440,000 or $0.40 per share, which was the average closing market price on August 17, 2007, the day negotiations were completed.

For the August 24, 2007 equity investments, the shares of common stock will be issued to the accredited investors in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act.

On August 31, 2007, the Company filed a registration statement on Form S-3 covering 5,059,476 shares, related to various private placements.

On September 7, 2007, the Company filed a registration statement on Form S-3 covering 29,773,146 shares, related to a debt conversion and various private placements.

On September 22, 2007, Raymond Christinson, a former director, exercised stock options totaling 404,166 shares of common stock for $82,417 or $.204 per share. Mr. Christinson forfeited stock options totaling 245,834 shares of common stock.

On October 12, 2007, the Company filed a registration statement on Form S-8 covering 20,000,000 shares, related to the 2007 Plan.

During November and December 2007, the Company sold 642,422 shares of our common stock in private placements for $179,878 or approximately $.28 per share. The Company incurred a fee of $14,390 in conjunction with the private placements. The Company agreed to register the shares within six months of the closing of the private placement. In addition, on April 1, 2008, the Company issued warrants for 62,243 shares of common stock. The warrants are exercisable at $.28 per share and expire five (5) years after the closing of the private placement. The shares of common stock were issued to the accredited investors in a transaction that will be exempt from registration pursuant to Section 4(2) of the Securities Act, and/or Regulation D promulgated under the Securities Act.


F-29

The following table summarizes information about warrants outstanding and exercisable at March 31, 2010:

NumberPartyDatesSharesPriceW-1Carter, Terry and Company4/1/08-3/31/201331,1220.28W-2Brian Adams4/1/08-3/31/201331,1210.28W-3Michael Ning5/8/08-5/7/20131,000,0000.20W-4Michael Ning5/8/08-5/7/20131,500,0000.20W-5ArqueMax Ventures LLC7/28/08-7/27/20131,900,0000.17W-6ArqueMax Ventures LLC12/12/08-12/11/20133,591,2500.04W-7Sterling Group, Inc.2/3/09-2/2/2012750,0000.05W-8Sterling Group, Inc.2/3/09-2/2/2012750,0000.10W-9Marc Page2/3/09-2/2/2012250,0000.05W-10Marc Page2/3/09-2/2/2012250,0000.10W-11A to B Capital Special Situations Fund, LP5/15/09-5/14/2012428,5710.07W-12Sterling Group, Inc.5/21/09-5/20/2012750,0000.10W-13Marc Page5/21/09-5/20/2012250,0000.10W-14Sterling Group, Inc.3/5/10-3/4/20132,250,0000.0213,732,0640.095
NOTE 10. STOCK INCENTIVE PLAN

The Company received stockholder approval of the 2007 Stock Incentive Plan ("2007 Plan") on June 29, 2007. Under this 2007 Plan, the Company grants stock options for shares of common stock to employees, directors and consultants. In accordance with the 2007 Plan, the stock options are granted at the fair market value of the common stock. The 2007 Plan provides that the options will have a life of up to ten years from the date of grant. The options granted under the 2007 Plan vest quarterly or annually over a period of three years. Certain options granted under the 2007 Plan vest over shorter periods. Under the 2007 Plan, the Company may grant options, restricted stock or other awards for the purchase of up to 20 million shares. On July 29, 2008, the stockholders voted to increase the number of shares authorized under the 2007 Stock Incentive Plan from 20,000,000 to 27,500,000 at the Company's annual shareholder meeting.

A total of 9,103,929 shares of common stock underlying option grants under the 2007 Plan, as amended, are outstanding as of March 31, 2010. Options for the purchase of 11,693,512 shares were outstanding as of March 31, 2009. Shares underlying options that expire, or are cancelled without delivery of shares, generally become available for future re-issuance under the 2007 Plan.

The following option activity occurred subsequent to the year ended March 31, 2010:

On May 14, 2010, Derek Schneideman, the Companys former Chief Executive Officer voluntarily cancelled stock option grants to purchase an aggregate of 2,300,000 shares of common stock. The grants were previously issued on various dates and an average price of $.06 per share.

On May 14, 2010, the Company awarded Mr. Schneideman an option to purchase 2,000,000 shares of the Companys common stock. The award was granted at the fair market price of $0.01 per share based on the adjusted closing price on May 14, 2010, the date the board of directors approved the grant. In accordance with the 2007 Stock Incentive Plan, the stock options vested immediately and expire on May 13, 2020.

The following option activity occurred during the year ended March 31, 2010:

On May 24, 2009, Mae Towada, a former director, forfeited stock options totaling 400,000 shares that were previously issued at an average price of $.245 per share.

On June 17, 2009, certain key executives, employees, and directors of the Company voluntarily cancelled stock option grants to purchase an aggregate of 5,439,583 shares of common stock. The grants were previously issued on various dates and prices above $.13 per share.


F-30

On June 17, 2009, Global Hotlines Philippines granted options to purchase 23,000 shares of the Companys common stock. The awards were granted at the fair market price of $.05 per share. The stock options were granted to provide a proper incentive for employees, officers and directors and to reduce the cost of the stock option grants over the subsequent three years.

On June 17, 2009, the Company awarded stock option grants totaling 5,439,583 shares to certain key executives, employees, and directors. The grants were priced at $.05 per share, the closing price of the Companys common stock on June 16, 2009, the date before the scheduled compensation committee meeting at which such grants were approved. In accordance with the 2007 Stock Incentive Plan, the grants are vested immediately and expire on June 16, 2019. The stock options were granted to provide a proper incentive for employees, officers and directors and to reduce the cost of the stock option grants over the subsequent three years. The Company expensed $345,846 during the year ended March 31, 2010 related to this transaction.

On August 24, 2009, the Company awarded Mr. Scott, our Chief Financial Officer, an option to purchase 300,000 shares of the Companys common stock. The award was granted at the fair market price of $0.05 per share based on the adjusted closing price of the Companys common stock on August 20, 2009, the last trading day before the board of directors approved the grant. In accordance with the 2007 Stock Incentive Plan, the stock option vests quarterly over three years and expires on August 23, 2019.

On September 4, 2009, the Company awarded to each of Messrs. Hoekstra, Senda, Henry, Garnreiter and LeClaire (all directors of the Company) an option to purchase 400,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on the date of the award. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on September 3, 2019.

On October 31, 2009, Global Hotlines Philippines awarded to Bernadine Bernardo, an employee, an option to purchase 15,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on the date of the award. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on October 30, 2019.

On November 5, 2009, the compensation committee awarded Mr. Hoekstra an option to purchase 1,200,000 shares of the Companys common stock. The award was granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on November 4, 2009, the last trading day before the compensation committee approved the award. The stock option vests quarterly over three years beginning on September 4, 2009 and expires on September 3, 2019.

On December 3, 2009, Masazumi Ishii, a former director, forfeited stock options totaling 650,000 shares that were previously issued at an average price of $.072 per share.

On December 31, 2009, Global Hotline, Inc. employees forfeited stock options totaling 4,055,000 shares that were previously issued at an average price of $.222 per share.

On February 1, 2010, Global Hotlines Philippines awarded to Nick De Guzman Bernardo, an employee, an option to purchase 15,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.03 per share based on the adjusted closing price of the Companys common stock on the date of the award. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on January 31, 2020.

On February 10, 2010, Eric La Cara, a former director, forfeited stock options totaling 750,583 shares that were previously issued at an average price of $.069 per share.

On February 10, 2010, Glenn Espino, a former Global Hotlines Philippines employee, forfeited stock options totaling 250,000 shares that were previously issued at an average price of $.28 per share.

On March 31, 2010, former Global Hotlines Philippines employees forfeited stock options totaling 37,000 shares that were previously issued at an average price of $.05 per share.

The following option activity occurred during the year ended March 31, 2009:


F-31

On April 27, 2008, the Company's compensation committee granted performance stock option grants for 135,000 shares of common stock to the employees of GPlus at an average price of $.280 per share, the close price on April 26, 2008, the last day before the compensation committee meeting. The stock option grants vest on March 31, 2009 if GPlus achieves revenues of $3,200,000 for the period of April 1, 2008 to March 31, 2009 and are being awarded to employees of an equity investment.

On May 16, 2008, the board of directors, upon the recommendation of the compensation committee, granted stock options to purchase common stock of 700,000 shares to our executive officers. The options were granted at the fair market price of $0.29 per share based on the adjusted closing price on May 9, 2008, the day the board of directors agreed on the grant. In accordance with the IA Global, Inc. 2007 Stock Incentive Plan, as amended (the "2007 Stock Incentive Plan") the stock options vest quarterly over three years and expire on May 8, 2018.

On May 30, 2008, the Company's board of directors granted stock options to purchase common stock of 656,000 shares to Global Hotline Philippines Inc. The options were granted at the fair market price of $0.28 per share based on the adjusted closing price on May 30, 2008, the day the board of directors approved the grant. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on May 29, 2018.

On July 29, 2008, the Company's compensation committee, granted stock options to purchase common stock of 200,000 shares each to Mr. Anan, Mr. Ishii, Mr. La Cara, Mr. Nelson, Mr. Schneideman, Mr. Scott and Ms. Towada for their election to the board of directors. The options were granted at the fair market price of $0.12 per share based on the adjusted closing price on July 29, 2008, the day the directors were elected to the board of directors. In accordance with the 2007 Stock Incentive Plan the stock options vest quarterly over three years and expire on July 28, 2018.

On July 29, 2008, the stockholders voted to increase the number of shares authorized under the 2007 Stock Incentive Plan from 20,000,000 to 27,500,000 at the Company's annual shareholder meeting.

On July 31, 2008, Eric La Cara, a director, exercised stock options totaling 62,958 shares of common stock for $10,800 or $.172 per share.

On September 4, 2008, the Company's compensation committee ratified a stock option grant to purchase common stock of 200,000 shares to Raul Rabe, a director of Global Hotline Philippines Inc. The options were granted at the fair market price of $0.28 per share based on the adjusted closing price on August 29, 2008, the day the grant was committed to Mr. Rabe. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on August 28, 2018.

On January 30, 2009, the compensation committee granted stock options to purchase common stock of 250,000 shares to Mr. Scott, the Company's COO/CFO. The options were granted at the fair market price of $0.06 per share based on the adjusted closing price on January 30, 2009, the day the board of directors agreed on the grant. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on January 29, 2019.

During the year ended March 31, 2009, the Company cancelled or the option holders forfeited options underlying 737,000 shares at an average exercise price of $.245 per share.

The following option activity occurred during the three months ended March 31, 2008:

On January 3, 2008, the compensation committee granted to Mr. Brian Nelson, a new director, stock options to purchase 200,000 shares of common stock. The options were granted at the fair market price of $.31 per share, which was the adjusted closing price on January 3, 2008, the day prior to the compensation committee meeting. In accordance with the 2007 Plan, the stock options will vest quarterly over three years and expire on January 2, 2018.

On March 5, 2008, the compensation committee granted to Mr. Hideki Anan, CEO of Global Hotline and Mr. Kyo Nagae, CFO of Global Hotline, stock options to purchase 750,000 and 500,000 shares of common stock, respectively. The options were granted at the fair market price of $0.29 per share based on the adjusted closing price on February 4, 2008, the last trading day before the compensation committee meeting. In accordance with the 2007 Plan, the stock options vest quarterly over three years and expire on March 4, 2018.


F-32

The following option activity occurred during the year ended December 31, 2007:

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

On February 22, 2007, the compensation committee granted to Mr. John Margerison, a Director, stock options to purchase 200,000 shares of common stock. The options were granted at the fair market price of $0.15 per share based on the adjusted closing price on February 21, 2007 and 110% of the intraday price on February 21, 2007, the last trading day before the compensation committee meeting. In accordance with the 2000 Stock Option Plan, the stock options vest quarterly over three years and expire on February 21, 2017. Subsequent to the grant of stock options, Mr. Margerison resigned from the board of directors on April 17, 2007 and forfeited the stock options on July 16, 2007.

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

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

On March 29, 2007, the compensation committee granted to Mr. Clifford J. Bernstein, a Director, stock options to purchase 200,000 shares of common stock. The options were granted at the fair market price of $0.31 per share based on the adjusted closing price on March 29, 2007, the date of his appointment. In accordance with the 2000 Stock Option Plan, the stock options vest quarterly over three years and expire on March 28, 2017. Subsequent to the grant of stock options, Mr. Bernstein resigned from the board of directors on December 22, 2007 and forfeited the stock options on March 22, 2008.

On July 11, 2007, the compensation committee granted stock options to purchase common stock of (i) 200,000 shares to Mr. Anan and Ms. Towada, new Directors; (ii) 150,000 shares to Mr. Bernstein, Mr. Ishii and Mr. La Cara, Directors; (iii) 1,000,000 shares to Mr. Schneideman, the Company's CEO and Chairman of the Board of Directors; and (iv) 500,000 shares to Mr. Scott, the Company's COO and CFO.

These options were granted at the fair market price of $0.37 per share based on the adjusted closing price on July 10, 2007, the last trading day before the compensation committee meeting. In accordance with the 2007 Plan, the stock options vest quarterly over three years and expire on July 10, 2017.

On October 3, 2007, the Company's compensation committee granted stock options to purchase common stock of (i) 100,000 shares to Mr. Schneideman, the Company's Chief Executive Officer and Chairman of the Board of Directors and (ii) 275,000 shares to Mr. Scott, the Company's Chief Operating and Financial Officer.

The options were granted at the fair market price of $0.47 per share based on the adjusted closing price on October 3, 2007, the last trading day before the compensation committee meeting. In accordance with the 2007 Stock Incentive Plan, the stock options vest quarterly over three years and expire on October 2, 2017.

At various times during the year ended December 31, 2007, the Company granted options for the purchase of 172,500 shares of the Company's common stock, to various consultants at an average exercise price of $0.384 per share. Of these options granted, 42,500 were exercisable upon their date of grant. The remaining 130,000 granted, vest quarterly over three years from the date of grant. These options were value at $66,295, and were all expensed on the date of their grant. The Company valued these options using a Black-Scholes valuation model with the following weighted assumptions: an expected average life of 8.48 years, a risk free interest rate of 5.30%, an expected volatility of 111.26%, and an expected dividend rate of 0.00%.

F-33

Stock option activity, for options granted under the 2007 Stock Incentive Plan as amended, for the year ended March 31, 2010 and 2009, three months ended March 31, 2008 and the years ended December 31, 2007 are summarized as follows:

Weighted AverageOptionsExercise Price$Outstanding as of December 31, 20064,200,0000.214899,484Granted5,347,5000.2841,516,545Exercised(434,166)(0.202)(87,917)Forfeitures(1,055,834)(0.211)(222,666)Outstanding as of December 31, 20078,057,5000.2612,105,446Granted1,505,0000.292439,299Exercised(86,458)(0.156)(13,500)Forfeitures(350,000)(0.336)(117,500)Outstanding as of March 31, 20089,126,0420.2642,413,745Granted3,387,4290.190642,230Exercised(62,959)(0.172)(10,800)Forfeitures(757,000)(0.245)(185,560)Outstanding as of March 31, 200911,693,512$0.2452,859,615Granted8,992,5830.046417,179ExercisedForfeitures(11,582,166)(0.234)(2,704,999)Outstanding as of March 31, 20109,103,929$0.063571,795

The following table summarizes information about stock options outstanding and exercisable at March 31, 2010:



Range of
Exercise
PricesNumber
OutstandingWeighted Average
Remaining Life
in YearsWeighted Average Exercise PriceNumber ExercisableWeighted Average Exercise Price Exercisable$0.03 to $0.043,230,0009.51years$0.04434,583$0.04$0.054,725,0009.20years$0.054,475,000$0.05$0.11 to $0.15875,0007.83years$0.13875,000$0.13$0.24 to $0.53273,9294.60years$0.34142,500$0.419,103,9298.73years$0.065,927,083$0.07

There is no aggregate intrinsic value of the exercisable options as of March 31, 2010.

NOTE 11. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

There are no pending legal proceedings against us that are expected to have a material adverse effect on our cash flows, financial condition or results of operations. The Company continues to work with various vendors and former employees on past due liabilities.

LEGAL PROCEEDING  GLOBAL HOTLINE

As has been previously disclosed, the Company pledged its shares of Global Hotline as collateral for certain loans borrowed from H Capital, an unlicensed Japanese lender, for such subsidiary. On May 26, 2009, Global Hotline and IA Global received notices from H Capital demanding repayment of the loans. On May 27, 2009, Global Hotline and SG Telecom did not repay the loans as requested by H Capital. On June 2, 2009, H Capital submitted documents claiming ownership of the Companys 600 shares of Global Hotline. Global Hotlines management previously provided the Companys stock certificates to H Capital in March 2009.

Although the Company has engaged Japanese corporate counsel to sue H Capital for damages, the aforementioned events have resulted in IA Global losing control over the day-to-day management and operations of Global Hotline. In addition, the Company did not have access to the financial records of Global Hotline that are necessary to periodically report our financial position and results of operations as a consolidated subsidiary of IA Global.

On December 8, 2009, the Company reached the decision to deconsolidate the operations of Global Hotline, effective as of July 1, 2009. As a result, the Company accounted for Global Hotline as a discontinued operation. The Companys reported net loss improved by $10.1 million for the year ended March 31, 2010 and our stockholders deficit as of March 31, 2010 decreased by $10.1 million as a result of recording a gain from the forfeiture of Global Hotline represented by the excess of Global Hotlines liabilities over its assets on the deconsolidation date.

Concurrent with Companys deconsolidation of Global Hotline, management has determined, in conjunction with Japanese counsel, that any obligations that may arise from Global Hotline, that existed prior, or subsequent, to their decision to deconsolidate, is not an obligation of the Company.


F-34

Prior to December 8, 2009 Global Hotline had significant liabilities to Japanese banks in excess of approximately $12,000,000. These loans were unsecured and personally guaranteed by either the CEO or CFO of Global Hotline. In addition to theses bank loans, Global Hotline had payroll, social insurance and other tax liabilities at of approximately 800,000,000 Yen, or approximately $9.0 million at current exchange rates, as of September 30, 2009. Portions of the payroll, social insurance and other tax liabilities were repaid from cash flow from accounts receivable.

The status of Global Hotlines bank loans and tax liabilities is unknown subsequent to December 8, 2009. In addition, the status of other trade debt, or any debt or obligation of Global Hotline is unknown subsequent to December 8, 2009. In addition to debt, Global Hotline has obligation under various operating leases, the status of which is unknown subsequent to December 8, 2009.

Global Hotline has revenue contracts requiring performance for their various vendors. The status of performance, or any liability for non-performance, is unknown subsequent to December 8, 2009.

With regards to the above referenced liabilities, or potential liabilities of Global Hotline, management of the Company along with their Japanese legal counsel, has determined that the Company has no legal obligation for these liabilities or potential liabilities. Assertions against the Company for Global Hotline liabilities, or potential liabilities, might be sustained. The Company intends to defend themselves against any assertions related to liabilities or potential liabilities resulting from Global Hotline prior to or subsequent to December 8, 2009. The Company has not accrued for any liabilities related to Global Hotline as of March 31, 2010. Global Hotline filed for bankruptcy on February 12, 2010 in accordance with Japanese bankruptcy laws.

On October 7, 2009, we filed a civil claim against H Capital in Tokyo, Japan District Court related to the ownership of Global Hotline. On May 5, 2010, we dropped the original civil claim and filed a new civil claim for damages of $1,000,000 against H Capital and other affiliated parties. The claim has not been reviewed by the Tokyo, Japan District Court. Management, based on their consultation with Japanese legal counsel, is unable to determine the outcome of this dispute with H Capital.

LEGAL PROCEEDING  AMV

On April 1, 2009, the Company agreed to issue IAO Preferred Stock, at $1,000 per share, to AMV for $317,000 in the Amendment to Share Exchange Agreement. On January 11, 2010, AMV requested that the $317,000 of IAO Preferred Stock be converted into 12,800,000 shares of the Companys common stock. The Company declined to convert this IAO Preferred Stock.

At AMVs sole discretion, AMV had the option to (1) convert some or all of its IAO Preferred Stock into 12,800,000 shares of our common stock pro rata at $0.025 per share; or (2) exchange IAO Preferred Stock for 971,458 Taicom Stock owned by the Company on a pro rata basis. The conversion of IAO Preferred Stock intoTaicom Stock was to be automatically triggered in the case of certain events, including delisting from the NYSE AMEX Equities Exchange, bankruptcy or insolvency.

On July 17, 2009 and September 28, 2009, AMV notified us that we were in default under clause 3.1 (vi) of the Agreement and as a result did not fund the $60,000 due June 30, 2009, July 15, 2009 and July 31, 2009. However, AMV was late in funding as required by the Agreement.

On November 16, 2009, but effective August 4, 2009, AMV claimed ownership of our shares in Taicom. This resulted in a loss on investment of approximately $2,820,000.

Taicom declared bankruptcy on December 25, 2009 in accordance with Japanese bankruptcy laws.

Brian Hoekstras Employment Agreement

On November 5, 2009, the Company entered into an Employment Agreement with Brian Hoekstra, the Companys Chief Executive Officer, which is effective as of September 4, 2009.

The Employment Agreement provides for a one-year term and is renewable on a mutually agreeable basis. The Company agreed to pay Mr. Hoekstra an annual base salary of $98,000, and provide for participation in the Companys benefit programs available to other senior executives (including group insurance arrangements). Mr. Hoekstra is also eligible for discretionary performance bonuses based upon performance criteria to be determined by the Companys Compensation Committee. If Mr. Hoekstras employment is terminated without Cause (as defined in the Employment Agreement), Mr. Hoekstra will be entitled to a payment equal to three months base salary paid at the Companys discretion in a lump sum or over the subsequent year.

F-35

The Compensation Committee also awarded Mr. Hoekstra 800,000 shares of restricted stock and an option to purchase 1,200,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.04 per share based on the adjusted closing price of the Companys common stock on November 4, 2009, the last trading day before the Compensation Committee meeting. In accordance with the Companys 2007 Stock Incentive Plan, the restricted stock and the stock option vest in quarterly installments over three years beginning on September 4, 2009. The stock options expire on September 3, 2019.

Derek Schneideman's Employment Agreement

On August 2, 2009, Derek Schneideman resigned as the Companys Chief Executive Officer and as a member of the Board, effective immediately upon the Companys filing of its Annual Report on Form 10-K for the fiscal year ended March 31, 2009, which occurred on September 3, 2009. Mr. Schneideman did not resign from the Board due to any disagreement with the Company relating to the Companys operations, policies or practices.

In connection with Mr. Schneidemans resignation, he and the Company entered into a Separation Agreement and Full Release of Claims (the Separation Agreement), which was effective as of August 2, 2009. Pursuant to the Separation Agreement, the Company made or agreed to make the following severance payments to Mr. Schneideman:

$100,000 was paid upon the Companys filing of its 2009 Form 10-K on September 3, 2009.$100,000 was payable as of November 3, 2009.  On June 8, 2010, the Company agreed to issue 5,000,000 shares of common stock to Derek Schneideman, for $50,000, or $.01 per share, the date agreement was signed. The shares do not have registration rights. $50,000 remains payable as of March 31, 2010, provided that (i) the Companys filings with the SEC are not determined to contain materially inaccurate information, material representations or material omissions, (ii) evidence of fraud or illegal acts on the part of Mr. Schneideman is not discovered, and (iii) Mr. Schneideman has not made any misrepresentations in connection with its purchase of the Shares, as described above.
Mr. Schneideman did not exercise his limited right to revoke the Separation Agreement and was paid $42,409 and is owed $10,417 as of March 31, 2010 for accrued but unpaid salary, benefits and business expense reimbursements as of the date of the Separation Agreement.

The Separation Agreement provides that Mr. Schneideman will continue to provide services to the Company as a consultant for a period of 12 months following the effective date of his resignation as Chief Executive Officer. In exchange for such services, the Company agreed to pay Mr. Schneideman $2,000 per month. The Company is entitled to terminate the consulting relationship upon 30 days advance notice and payment of the consulting fee to which Mr. Schneideman would be entitled in the 30 days following such notice. The Company has paid $4,287 and owes $10,475 in consulting fees as of March 31, 2010.

In consideration of and for the severance payments and consulting arrangement described above, Mr. Schneideman provided a broad release in favor of the Company with respect to any and all rights, claims, demands, causes of actions and liabilities of any nature relating to his employment with the Company, the termination of such employment, and/or his entry into the Separation Agreement.

Finally, the Separation Agreement also contains customary provisions with respect to confidentiality, non-disclosure, non-solicitation, non-disparagement and Mr. Schneidemans return of any property of the Company in his possession.

Mark Scott's Employment Agreement

On August 24, 2009, the Company entered into a new Employment Agreement with Mark Scott, which replaces his Employment Agreement dated September 5, 2007.


F-36

Mark Scotts Employment Agreement (Scott Agreement) had a one-year term beginning on August 24, 2009, and is renewable on a mutually agreeable basis. The Company agreed to pay Mr. Scott an annual base salary of $96,000, and provide for participation in the Companys benefit programs available to other senior executives (including group insurance arrangements). Also under the Scott Agreement, Mr. Scott is eligible for discretionary performance bonuses based upon performance criteria to be determined by the Companys Compensation Committee based on criteria under development. If Mr. Scotts employment is terminated without Cause (as defined in the Scott Agreement), Mr. Scott will be entitled to a payment equal to one years annual base salary paid at the Companys discretion in a lump sum or over the next year.

On August 24, 2009, the board of directors awarded Mr. Scott 200,000 shares of restricted stock and an option to purchase 300,000 shares of the Companys common stock. The awards were granted at the fair market price of $0.05 per share based on the adjusted closing price on August 20, 2009, the last trading day before the board of directors approved the grant. In accordance with the 2007 Stock Incentive Plan, the restrictions on the restricted stock lapsed on November 23, 2009 and the stock options expire on August 23, 2019.

On May 17, 2010, the Company entered into an Amendment to Employment Agreement (Amended Scott Agreement) with Mark Scott, our Chief Financial Officer.

The Amended Scott Agreement allows Mr. Scott to serve as a consultant for unrelated businesses so long as such activities do not interfere with the performance of Executives duties under his Employment Agreement dated August 24, 2009.

NOTE 12. SUBSEQUENT EVENTS

The Company evaluates subsequent events, for the purpose of adjustment or disclosure, up through the date the financial statements are issued.

REPORT OF MANAGEMENT

IA Global, Inc. and Subsidiaries

IA Global, Inc. is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements included in this annual report. The consolidated financial statements and notes included in this annual report have been prepared in conformity with United States generally accepted accounting principles and necessarily include some amounts that are based on management's best estimates and judgments.

We, as management of IA Global, Inc., are responsible for establishing and maintaining effective adequate control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

The Audit Committee, consisting entirely of independent directors, meets regularly with management, internal auditors and the independent registered public accounting firm, and reviews audit plans and results, as well as management's actions taken in discharging responsibilities for accounting, financial reporting and internal control. Sherb & Co., LLP, independent registered public accounting firm, and the internal auditors have direct and confidential access to the Audit Committee at all times to discuss the results of their examinations.


F-37

REPORT ON MANAGEMENT'S ASSESSMENT OF INTERNAL CONTROL OVER FINANCIAL REPORTING

Management assessed the corporation's system of internal control over financial reporting as of March 31, 2010, in relation to criteria for effective internal control over financial reporting as described in "Internal Control--Integrated Framework," issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of March 31, 2010, its system of internal control over financial reporting is effective based on the criteria of the "Internal Control--Integrated Framework".

/s/ Brian Hoekstra/s/ Mark ScottBrian HoekstraMark ScottChief Executive OfficerChief Financial Officer
San Francisco, CA
July 14, 2010

F-38

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: July 14, 2010By:/s/ Brian HoekstraBrian HoekstraChief Executive Officer and DirectorBy:/s/ Mark ScottMark ScottChief Financial Officer and Secretary
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:

SIGNATURESTITLEDATE/s/ Brian HoekstraChief Executive Officer and DirectorJuly 14, 2010Brian Hoekstra(Principal Executive Officer)/s/ Mark ScottChief Financial Officer and SecretaryJuly 14, 2010Mark Scott(Principal Financial/Accounting Officer)/s/ Michael GarnreiterIndependent DirectorJuly 14, 2010Michael Garnreiter/s/ Jack HenryIndependent DirectorJuly 14, 2010Jack Henry/s/ Greg LeClaireIndependent DirectorJuly 14, 2010Greg LeClaire/s/ Ryuhei SendaDirectorJuly 14, 2010Ryuhei Senda