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

                                   FORM 10-KSB

                                   (Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                   For the Fiscal Year Ended February 28, 2006

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

             For the transition period from _________ to __________

                         Commission file number: 0-23506

                                   IGIA, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                              33-0601498
   (State or other jurisdiction of        (IRS Employer Identification No.)
    incorporation or organization)

                         16 East 40th Street, 12th Floor
                               New York, NY 10016
                    (Address of principal executive offices)

                                 (212) 575-0500
              (Registrant's telephone number, including area code)

             521 Fifth Avenue, 20th Floor, New York, New York 10175
              (Former name, former address and former fiscal year,
                          if changed since last report)

      Securities registered under Section 12(b) of the Exchange Act: None.

      Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value $.001

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 past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined by
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

State Registrant's revenues for fiscal year ended February 28, 2006: $25,532,151

State the aggregate market value of the common stock held by non-affiliates of
the Registrant: $339,099 as of June 9, 2006 based on the average high and low
price of $.0081 per share as of June 9, 2006

State the number of shares outstanding of each of the registrant's classes of
common equity, as of the latest practicable date: 52,014,044 shares issued and
outstanding as of June 9, 2006.

<PAGE>

                           FORWARD LOOKING STATEMENTS

         This Annual Report on Form 10-KSB (including the section regarding
Management's Discussion and Analysis of Financial Condition and Results of
Operations) contains forward-looking statements regarding 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 deemed to represent an all-inclusive
means of identifying forward-looking statements as denoted in this Annual Report
on Form 10-KSB. Additionally, statements concerning future matters are
forward-looking statements.

         Although forward-looking statements in this Annual Report on Form
10-KSB reflect the good faith judgment of our Management, such statements can
only be based on facts and factors currently known by us. Consequently,
forward-looking statements are inherently subject to risks and uncertainties and
actual results and outcomes may differ materially from the results and outcomes
discussed in or anticipated by the forward-looking statements. Factors that
could cause or contribute to such differences in results and outcomes include,
without limitation, those specifically addressed under the heading "Risks
Related to Our Business" below, as well as those discussed elsewhere in this
Annual Report on Form 10-KSB/A. Readers are urged not to place undue reliance on
these forward-looking statements, which speak only as of the date of this Annual
Report on Form 10-KSB/A. We file reports with the Securities and Exchange
Commission ("SEC"). You can read and copy any materials we file with the SEC at
the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You
can obtain additional information about the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an
Internet site (www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC, including us.

         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 Annual Report on Form 10-KSB/A. Readers are urged to carefully
review and consider the various disclosures made throughout the entirety of this
annual Report, which attempt to advise interested parties of the risks and
factors that may affect our business, financial condition, results of operations
and prospects.

                                     PART I

ITEM 1. -  BUSINESS

Our History

         We were incorporated in the State of Delaware in May 1992 under the
name Quasar Projects Company for the purpose of merging with or acquiring a
company with operations and assets. From its inception through April 28, 1999,
we generated nominal revenues and did not actively engage in business.

         On April 28, 1999, we acquired Diva Entertainment, Inc., a Florida
corporation, which was engaged in the business of operating and managing two
wholly-owned talent management companies: Prima Eastwest Model Management, Inc.,
a California corporation, and Que Management, Inc., a New York corporation. At
that time, we changed our name to Diva Entertainment, Inc. From April 28, 1999
through June 10, 2004, we were in the business of representing professional
fashion models, commercial actors and theatrical actors.

         On June 11, 2004, we entered into the Securities Purchase Agreement,
pursuant to which we acquired our wholly-owned subsidiary Tactica International,
Inc. and sold our former subsidiary Diva Entertainment, Inc.

         On June 11, 2004, pursuant to a Securities Purchase Agreement and Plan
of Reorganization ("Merger") , we acquired Tactica International, Inc., in a
transaction viewed as a reverse acquisition. Under the terms of the agreement,
we acquired all of the issued and outstanding preferred and common shares in
Tactica in exchange for the agreement to issue such number of shares of our
common stock as would represent approximately 78.7% percent of our outstanding
shares. We sold our former subsidiary Diva Entertainment, Inc.

         As a result of the acquisition, a change in control occurred in the
ownership and management of Diva. In connection with the acquisition, the
President of IGIA, Inc., Avi Sivan, was appointed Chief Executive Officer of
Diva. The former directors and officers of Diva resigned as of the acquisition
date.

         On June 8, 2004, we changed our corporate name from Diva Entertainment
Inc. to IGIA, Inc.

         Since June 11, 2004, we have been in the business of the direct
marketing and distribution of proprietary and branded personal care and home
care products. We are no longer in the business of talent management.

General Background

         We, through our wholly-owned operating subsidiaries, Tactica
International, Inc. ("Tactica"), Shopflash, Inc., and Kleenfast, Inc
("Kleenfast") are a direct marketer and distributor of proprietary and branded
personal care and home care products. We established a niche within the direct
marketing industry, a market which the "Direct Marketing Association" expects to
grow from $2 to $3 trillion dollars in annual sales within the next five years.
We use a comprehensive and focused marketing and distribution program that
includes widespread television and internet advertising combined with global
product placement in well known retail outlets worldwide, as well as through
popular mail order catalogs, and directly through our websites, primarily
www.igia.com.

         We do not currently have any operations at the parent level.


                                        2
<PAGE>

         In March 2000, a majority interest in Tactica was purchased by Helen of
Troy Limited or HoT, a developer and marketer of personal care products. The
transaction gave Tactica access to capital to expand marketing and distribution.
Tactica expanded its focus on distribution and more than doubled the number of
retail outlets carrying Tactica's products to more than 45,000 worldwide. On
April 29, 2004, Tactica's management purchased back the 55% interest in Tactica
held by HoT. In exchange for HoT's 55% interest and approximately $17 million of
secured Tactica debt and accrued interest payable, HoT received marketable
securities, intellectual properties, including the Epil-Stop(R) brand, and the
right to certain Tactica tax refunds. On June 11, 2004, Tactica acquired us
pursuant to an acquisition by us of all of the outstanding securities of Tactica
and the acquisition by Tactica's stockholders of the majority of our outstanding
securities

         On October 21, 2004, Tactica, our principal subsidiary, filed a
voluntary petition for relief under Chapter 11 of Title 11 of the United States
Bankruptcy Code (the "Bankruptcy Code") in Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court"). IGIA is not seeking bankruptcy
protection.

         On January 13, 2006, the Bankruptcy Court issued a confirmation order
approving the Revised First Amended Plan of Reorganization Proposed by Tactica
and IGIA (the "Plan") that provides for Tactica's exit from bankruptcy. On March
28, 2006, a Notice of Effective Date of the Plan was filed with the Bankruptcy
Court. Upon being declared effective, the Plan eliminated $14,853,421 of
Tactica's pre-petition liabilities. The plan calls for Tactica's pre-petition
creditors to receive distributions of the following assets: (i) $2,175,000 cash
paid by Tactica's former shareholders; (ii) $700,000 cash paid by Tactica; (iii)
$75,000 cash paid by the Registrant, Tactica, and the Board Members; (iv) up to
$275,000 cash paid by Innotrac Corporation; (v) the rights and proceeds in
connection with avoidance and other actions including uncollected pre-petition
invoices payable by a Tactica customer; and (vi) 5,555,033 newly issued shares
of the Registrant's common stock that was in number equal to 10% of the
outstanding shares of common stock as of the Plan's effective date and is
exempted from the registration requirements of Section 5 of the Securities Act
of 1933, as amended and State registration requirements by virtue of Section
1145 of the Bankruptcy Code and applicable non-bankruptcy law. Certain
post-petition creditors, including firms that provided professional services to
Tactica, have submitted a total of approximately $583,000 in claims to the
Bankruptcy Court for post-petition administrative expenses. Tactica is reviewing
the administrative expense claims to determine whether to seek possible
settlements and payment schedules or a resolution by the Bankruptcy Court.

Summary of Historical Financial Information

         Set forth below is a summary of our historical financial information
for the years ended February 28, 2006 and February 28, 2005 and is derived from
the financial statements attached hereto.


                               Fiscal Year Ending
                             (Amounts in thousands)


                                           February 28,            February 28,
                                              2006                    2005
                                           ------------            ------------

  Net Sales                                  $ 25,532               $11,324
  Gross Profit (Loss)                          16,164                  (234)
  Operating Expenses                           27,411                14,209
  Loss from Operations                        (11,247)              (14,443)
  Reorganization Items                         (1,787)               (1,558)
  Net  Loss                                   (17,159)              (16,197)

Products

         We design, develop and sell proprietary and branded personal care and
other products directly to consumers and to retailers. We continue to develop
new products and enhance existing products in order to maintain and improve
consumer acceptance of our products.

Sales and Marketing

         Since its inception in 1992, Tactica has established a worldwide market
for its family of personal and skin care products, and the Epil-Stop(R) hair
removal products, the latter of which was sold to Helen of Troy or HoT in April
2004. We use a comprehensive and focused marketing and distribution program that
includes widespread television and internet advertising combined with global
product placement in well known retail outlets worldwide, as well as through
popular mail order catalogs, and directly through our websites, primarily
www.igia.com.


                                       3
<PAGE>

         We use direct response marketing to sell these products directly to
consumers primarily under our own brands and licensed trademarks. The
acquisition of licensing rights represents a component of our growth strategy.
We market our line of floor care products under our Milinex and Wind Storm
brands. We previously marketed our floor care products under the Singer brand
that we licensed in fiscal 2004. Tactica has also sold its products through
major pharmacy and general merchandise retail chains and globally recognized
mail order catalogs. Tactica's products also periodically were featured on home
shopping channels such as QVC and our infomercials are shown on national cable
and broadcast television channels such as the TV Guide Channel, CNBC and The
Game Show Channel. Tactica markets its products internationally through
distributors covering more than 100 countries worldwide. No customer accounted
for 10% or more of net sales during fiscal 2006 or 2005. Tactica's U.S. sales
comprised 96% and 68% of total net sales in fiscal 2006 and 2005, respectively.

Manufacturing and Distribution

         We contract with unaffiliated manufacturers both within and outside the
U.S. to manufacture our products. We arrange for our products to be shipped to
our customers by third party warehouse facilities in Los Angeles, California and
Holtsville, New York, and a related party warehouse facility that we no longer
use. We also sometime ships products from manufacturers directly to retailers.
Tactica's retail customers often seek to minimize their inventory levels and
often demand that we fulfill their orders within relatively short time frames.
Consequently, these inventory management practices often required us to carry
substantial levels of inventory in order to meet our customers' needs, which
given the required level of working capital had limited our ability to satisfy
retail customer.

         Most of our products manufactured outside the countries in which they
are sold are subject to import duties, which have the effect of increasing the
amount we pay to obtain such products.

License Agreements, Trademarks and Patents

         Most of our products we sell are branded with our own trademarks,
including IGIA for our personal care products and Milinex, Power Storm and Wind
Storm for our floorcare products. We previously marketed our line of floor care
products under the Singer brand pursuant to our April 2003 license agreement
with The Singer Company B.V., for use of the Singer brand name on floor care
products sold exclusively through Tactica within the United States and Canada.
We mutually agreed to terminate the agreement on September 29, 2005 and no
longer market Singer branded products.

         Pursuant to a stock purchase agreement, dated as of April 29, 2004,
Tactica transferred ownership of the Epil-Stop brand to HoT in exchange for
HoT's equity interest in Tactica, and Tactica provided HoT a non-exclusive
royalty-free perpetual license to use to its U.S. patent, as well as
corresponding patent applications. Tactica has filed or obtained licenses for
design and utility patents in the U.S. and several foreign countries. We do not
believe that the loss of any particular patent or patent license would have a
materially adverse effect on our business.

Backlog

         We ship some of our products to direct response customers and provide
these customers with estimated delivery dates at the time that we receive their
respective orders. All direct response orders are subject to cancellation by the
customer at any time prior to shipment. At February 28, 2006, we had
approximately $949,000 in unfilled direct response customer orders. There was no
significant backlog of orders in any of our other distribution channels at
February 28, 2006.

Competition

         We sell products in the "As Seen on TV" market, the personal care and
the home care products market. These markets are very competitive. Maintaining
and gaining market share depends heavily on product development and enhancement,
pricing, quality, performance, packaging and availability, brand name
recognition, patents, and marketing and distribution approaches. Our primary
competitors in these markets include Thane International, Home Medics and HoT.
Most of our competitors have significantly greater financial and other resources
than we do.

Regulation

         Our products are generally not regulated by the U.S. Food and Drug
Administration (FDA), however our products could be and have been subject to FDA
regulations. National Advertising Council (NAC) has, from time to time, reviewed
our advertising and communicated recommended modifications to us and the U.S.
Federal Trade Commission (FTC). In addition, the FTC, and state and local
consumer affairs bodies oversee aspects of our sales and marketing activities
and customer handling processes. Our ability to sell products can be and has
been adversely affected by actions taken by the FDA, FTC, NAC, and state and
local authorities and by future changes in regulations.


                                       4
<PAGE>

         Our electrical products must meet the safety standards imposed in
various national, state, local, and provincial jurisdictions. Our electrical
products sold in the U.S. are designed, manufactured, and tested to meet the
safety standards of Underwriters Laboratories, Inc. or Electronic Testing
Laboratories.

Employees

         As of June 9, 2006, we employed 30 full-time employees, of whom 3 are
senior managers, 4 are dedicated to sales and marketing, 8 are customer service
employees, 2 are distribution employees, 5 are accounting and finance employees,
1 is dedicated to information systems and 7 are administrative personnel. We
have never experienced a work stoppage and we believe that we have satisfactory
working relations with our employees.

Risk Related to Business

         You should carefully consider the following risk factors and all other
information contained herein as well as the information included in this Annual
Report in evaluating our business and prospects. The risks and uncertainties
described below are not the only ones we face. Additional risks and
uncertainties, other than those we describe below, that are not presently known
to us or that we currently believe are immaterial may also impair our business
operations. If any of the following risks occur, our business and financial
results could be harmed. You should refer to the other information contained in
this Annual Report, including our consolidated financial statements and the
related notes.

Risks Relating to Our Business:
-------------------------------

The Chapter 11 Reorganization Has A Material Negative Effect On Our Business,
Financial Condition And Results of Operations.

         Tactica, our operating subsidiary filed to reorganize under Chapter 11
of the U.S. Bankruptcy Code in October 2004 and its plan of reorganization was
declared effective in March 2006. The bankruptcy has had a material negative
effect on our business, financial condition and results of operations. Certain
post-petition creditors, including firms that provided professional services to
Tactica, have submitted a total of approximately $583,000 in claims to the
Bankruptcy Court for post-petition administrative expenses for the years ended
February 28, 2006 and 2005, respectively. In addition, as described under
"Liquidity and Capital Resources" we have a significant working capital deficit
and we are seeking additional working capital for operations.

         If we are unable to resolve post-petition administrative expense claims
and service other financial obligations as they become due, we will be required
to adopt alternative strategies, which may include, but are not limited to,
actions such as further reducing management and employee headcount and
compensation, attempting to further restructure financial obligations and/or
seeking a strategic merger, acquisition or a sale of assets. There can be no
assurance that any of these strategies could be affected on satisfactory terms.
However, if during that period or thereafter, we are not successful in
generating sufficient liquidity from operations or in raising sufficient capital
resources, on terms acceptable to us, this could have a material adverse effect
on our business, results of operations, liquidity and financial condition. In
such event, we may be forced to discontinue our operations.

Auditors Have Expressed Substantial Doubt About Our Ability To Continue As A
Going Concern.

         In their report dated May 18, 2006, Russell Bedford Stefanou
Mirchandani LLP stated that the financial statements of IGIA for the year ended
February 28, 2006 were prepared assuming that IGIA would continue as a going
concern. Our ability to continue as a going concern is an issue raised as a
result of Tactica having filed for bankruptcy protection on October 21, 2004,
its recurring losses from operations and our net capital deficiency. We continue
to experience net operating losses. Our ability to continue as a going concern
is subject to our ability to generate a profit. Our continued net operating
losses and stockholders' deficit increases the difficulty in meeting such goals
and there can be no assurances that such methods will prove successful.

Our Common Stock Trades In A Limited Public Market, The NASD OTC Electronic
Bulletin Board; Accordingly, Investors Face Possible Volatility Of Share Price.

         Our common stock is currently quoted on the NASD OTC Bulletin Board
under the ticker symbol IGAI.OB. As of June 9, 2006 there were 52,014,044 shares
of Common Stock outstanding.

         There can be no assurance that a trading market will be sustained in
the future. Factors such as, but not limited to, technological innovations, new
products, acquisitions or strategic alliances entered into by us or our
competitors, government regulatory action, patent or proprietary rights
developments, and market conditions for penny stocks in general could have a
material effect on the liquidity of our common stock and volatility of our stock
price.


                                       5
<PAGE>

Our Future Operations Are Contingent On Our Ability To Recruit Employees.

         In the event that we are able to further expand our business, we expect
to experience growth in the number of employees and the scope of our operations.
In particular, we may hire additional sales, marketing and administrative
personnel. Additionally, acquisitions could result in an increase in employee
headcount and business activity. Such activities could result in increased
responsibilities for management. We believe that our ability to increase our
customer support capability and to attract, train, and retain qualified
technical, sales, marketing, and management personnel, will be a critical factor
to our future success.

We May Not Be Able To Manage Our Growth Effectively.

         Our future success will be highly dependent upon our ability to
successfully manage the expansion of our operations. Our ability to manage and
support our growth effectively will be substantially dependent on our ability
to: 1) implement adequate improvements to financial and management controls,
reporting and order entry systems, and other procedures and 2) hire sufficient
numbers of financial, accounting, administrative, and management personnel. Our
expansion and the resulting growth in the number of our employees would result
in increased responsibility for both existing and new management personnel. We
are in the process of establishing and upgrading our financial accounting and
procedures. We may not be able to identify, attract, and retain experienced
accounting and financial personnel. Our future operating results will depend on
the ability of our management and other key employees to implement and improve
our systems for operations, financial control, and information management, and
to recruit, train, and manage its employee base. We may not be able to achieve
or manage any such growth successfully or to implement and maintain adequate
financial and management controls and procedures, and any inability to do so
would have a material adverse effect on our business, results of operations, and
financial condition.

Our Success Is Dependent On Our Ability To Address Market Opportunities.

         Our future success depends upon our ability to address potential market
opportunities while managing our expenses to match our ability to finance our
operations. This need to manage our expenses places a significant strain on our
management and operational resources. If we are unable to manage our expenses
effectively, we may be unable to finance our operations. If we are not
successful in generating sufficient liquidity from operations or in raising
sufficient capital resources, on terms acceptable to us, this could have a
material adverse effect on our business, results of operations, liquidity and
financial condition and would prevent us from being able to utilize potential
market opportunities.

We Are Seeking Additional Financing.

         We are seeking additional capital to continue our operations and will
endeavor to raise funds through the sale of equity shares and revenues from
operations. We have been financing our operations since June 2004 merger with
Tactica through funds loaned to us directly and indirectly by certain officers
and directors, the sale of an aggregate of $3,760,000 principal amount of
callable secured convertible notes and through operations. We have used the
financing to increase our direct response sales business and fund Tactica's
emergence from bankruptcy. We need additional capital to continue our operations
and will endeavor to raise funds through the sale of equity shares and revenues
from operations.

         However, there can be no assurance that we will generate adequate
revenues from our operations. Failure to generate such adequate operating
revenues would have an adverse impact on our financial position and results of
operations and ability to continue as a going concern. Our operating and capital
requirements during the next fiscal year and thereafter will vary based on a
number of factors, including the level of sales and marketing activities for our
products. Accordingly, we may be required to obtain additional private or public
financing including debt or equity financing and there can be no assurance that
such financing will be available as needed or, if available, on terms favorable
to us. Any additional equity financing may be dilutive to stockholders and such
additional equity securities may have rights, preferences or privileges that are
senior to those of our existing common stock.

         Furthermore, debt financing, if available, will require payment of
interest and may involve restrictive covenants that could impose limitations on
our operating flexibility. Our failure to successfully obtain additional future
funding may jeopardize our ability to continue our business and operations.

         If we raise additional funds by issuing equity securities, existing
stockholders may experience a dilution in their ownership. In addition, as a
condition to giving additional funds to us, future investors may demand, and may
be granted, rights superior to those of existing stockholders.


                                        6
<PAGE>

The Sales Of Our Products Have Been Very Volatile And Our Results Of Operations
Could Fluctuate Materially.

         The sales of our products rely on television advertising and direct
response marketing campaigns. In addition, within direct response marketing,
products often have short life cycles. This leads to volatility in our revenues
and results of operations. For example, our net sales for the fiscal year ended
February 28, 2006 increased 125.46% as compared with our fiscal year ended
February 28, 2005, and our net sales for the fiscal year ended February 28, 2005
decreased 71.40% as compared with the fiscal year ended February 29, 2004. This
was primarily caused by substantially reduced sales. In addition, as part of our
April 2004 purchase agreement with HoT, HoT acquired the right to market and
sell Epil-Stop, one of our most popular products at the time, in the United
States and assumed the liabilities associated with United States sales of the
Epil-Stop product. We therefore expect that our sales could continue to decline
or be volatile and as a result, that our financial position could be adversely
affected.

Changes In Foreign Policy, International Law Or The Internal Laws Of The
Countries Where Our Manufacturers Are Located Could Have A Material Negative
Effect On Our Business, Financial Condition And Results Of Operations.

         All of our products are manufactured by unaffiliated companies, some of
which are in the Far East. Risks associated with such foreign manufacturing
include: changing international political relations; changes in laws, including
tax laws, regulations and treaties; changes in labor laws, regulations, and
policies; changes in customs duties and other trade barriers; changes in
shipping costs; interruptions and delays at port facilities; currency exchange
fluctuations; local political unrest; and the availability and cost of raw
materials and merchandise. To date, these factors have not significantly
affected our production capability. However, any change that impairs our ability
to obtain products from such manufacturers, or to obtain products at marketable
rates, would have a material negative effect on our business, financial
condition and results of operations.

Our Business Will Suffer If We Do Not Develop And Competitively Market Products
That Appeal To Consumers.

         We sell products in the "As Seen on TV" market. These markets are very
competitive. Maintaining and gaining market share depends heavily upon price,
quality, brand name recognition, patents, innovative designs of new products and
replacement models, and marketing and distribution approaches. We compete with
domestic and international companies, some of which have substantially greater
financial and other resources than we have. We believe that our ability to
produce reliable products that incorporate developments in technology and to
satisfy consumer tastes with respect to style and design, as well as our ability
to market a broad offering of products in each applicable category at
competitive prices, are keys to our future success.

Our Business, Financial Condition And Results Of Operations Could Be Materially
Adversely Affected If We Are Unable To Sell Products Under Our Own Brands And
Trademarks.

         A significant portion of our sales revenue is derived from sales of
products under our own brands and licensed trademarks. As the percentage of our
sales of such products increases, we will become increasingly dependent upon the
continued use of such brands and trademarks. Actions we take and those taken by
licensors and other third parties, with respect to products we license from
them, could greatly diminish the value of any of our brands and licensed
trademarks. If we are unable to develop and sell products under existing or
newly acquired brands and licensed trademarks or the value of the trademarks
were diminished by the licensor or third parties, the effect on our business,
financial condition and results of operations could be materially adversely
affected.

Many Of Our Competitors Are Larger And Have Greater Financial And Other
Resources Than We Do And Those Advantages Could Make It Difficult For Us To
Compete With Them.

         Many of our current and potential competitors may have substantial
competitive advantages relative to us, including: longer operating histories;
significantly greater financial, technical and marketing resources; greater
brand name recognition; larger existing customer bases; and more popular
products. These competitors may be able to respond more quickly to new or
emerging technologies and changes in customer requirements and devote greater
resources to develop, promote and sell their products or services than we can.


                                        7
<PAGE>

We Are Dependent On Our Management Team And The Loss Of Any Key Member Of This
Team May Prevent Us From Implementing Our Business Plan In A Timely Manner.

         Our success depends largely upon the continued services of our
executive officers and other key personnel, particularly Avi Sivan, our Chief
Executive Officer, and Prem Ramchandani, our President. We have entered into
employment agreements with Mr. Sivan and Mr. Ramchandani. We obtained key person
life insurance policies on Mr. Sivan and Mr. Ramchandani in accordance with
terms of the March 23, 2005 Securities Purchase Agreement. The loss of Mr. Sivan
or Mr. Ramchandani would be expected to have a material adverse effect on our
operations.

Our Business, Financial Condition And Results Of Operations Will Suffer If We Do
Not Accurately Forecast Customers' Demands.

         Because of our reliance on manufacturers in the Far East, our
production lead times are relatively long. Therefore, we must commit to
production well in advance of customer orders. If we fail to forecast consumer
demand accurately, we may encounter difficulties in filling customer orders or
in liquidating excess inventories, or may find that customers are canceling
orders or returning products. Our relatively long production lead time may
increase the amount of inventory and the cost of storing inventory.
Additionally, changes in retailer inventory management strategies could make
inventory management more difficult. Any of these results could have a material
adverse effect on our business, financial condition and results of operations.

Our Products And Business Practices May Be Subject To Review By Third Party
Regulators And Consumer Affairs Monitors And Actions Resulting From Such
Reviews, Including, But Not Limited To, Cease And Desist Orders, Fines And
Recalls.

         Although our products are generally not regulated by the U.S. Food and
Drug Administration (FDA), we have in the past and on occasion may in the future
sell products that are subject to FDA regulations. Our advertising is subject to
review by the National Advertising Council (NAC) and our advertisements could be
and have been subject to NAC recommendations for modification. The U.S. Federal
Trade Commission (FTC) and state and local consumer affairs bodies oversee
various aspects of our sales and marketing activities and customer handling
processes. If any of these agencies, or other agencies that have a right to
regulate our products, engage in reviews of our products or marketing procedures
we may be subject to various enforcement actions from such agencies. If such
reviews take place, as they have in the past, our executives may be forced to
spend time on the regulatory proceedings as opposed to running our business. In
addition to fines, adverse actions from an agency could result in our being
unable to market certain products the way we would like or at all, or prevent us
from selling certain products entirely.

We Purchase Essential Services And Products From Third Parties, Which If
Interrupted, Could Have A Material Impact On Our Ability To Operate.

         We currently outsource significant portions of our business functions,
including, but not limited to, warehousing, customer service, inbound call
center functions and payment processing for all direct response sales, customer
order fulfillment, and product returns processing and shipping. From time to
time we have experienced interruptions in these essential services for varying
periods of time and future interruptions can and will occur. If such
interruptions occur for extended periods of time, our operations may be
materially adversely affected. Many of our products are produced in South China.
Should we experience any interruption or interference with the operations of the
third party suppliers of goods and services, we might experience a shortage of
inventory. This type of shortage could have a material adverse effect on our
financial position, results of operations, and cash flow.

Our Direct Response Sales Operation Is Dependent On Having Adequate Credit Card
Activity Processing Capacity With The Major Credit Card Companies And A Credit
Card Processor.

         A third party credit card processor regulates our daily credit card
sales order volume and sets limits as to the maximum sales volume it will
process. In addition, credit card companies, such as Visa and MasterCard, and
credit card processors typically maintain a record of the level of customer
requests to have charges for our products reversed (chargebacks). The credit
card companies and processors may fine us for "high chargeback levels", modify
our sales volume limit, make a demand for additional reserves or even
discontinue doing business with us. The direct response business is known for
relatively high chargeback levels and we have experienced periods of higher than
accepted levels of chargeback activity that has led to fines and disruptions in
credit card processing of customer orders. We endeavor to maintain reasonable
business practices and customer satisfaction, which in part, contribute to lower
levels of chargeback activity. Nevertheless, excess chargeback activity could
result in our being unable to have customers pay us using credit cards.


                                        8
<PAGE>

Our Future Acquisitions, If Any, And New Products May Not Be Successful, Which
Could Have A Material Adverse Effect On Our Financial Condition And Results Of
Operations.

         We have in the past, and may in the future, decide to acquire new
product lines and businesses. The acquisition of a business or of the rights to
market specific products or use specific product names involves a significant
financial commitment. In the case of an acquisition, such commitments are
usually in the form of either cash or stock consideration. In the case of a new
license, such commitments could take the form of license fees, prepaid
royalties, and future minimum royalty and advertising payments. While our
strategy is to acquire businesses and to develop products that will contribute
positively to earnings, there is no guarantee that all or any of our
acquisitions will be successful. Anticipated synergies may not materialize, cost
savings may be less than expected, sales of products may not meet expectations
and acquired businesses may carry unexpected liabilities. Each of these factors
could result in a newly acquired business or product line having a material
negative impact on our financial condition and results of operations.

Our Company And/Or Our Former Management May Be Subject To Fines, Sanctions
And/Or Penalties Of An Indeterminable Nature As A Result Of Potential Violations
Of Federal Securities Laws In Connection With The Amendment Of Our Certificate
Of Incorporation From 20,000,000 To 100,000,000 On June 8, 2004.

         On May 27, 2004, the shareholders holding a majority of our outstanding
common stock voted to increase our authorized our common stock to 100,000,000
shares. On June 8, 2004, prior to mailing the required information statement, we
filed a certificate of amendment with the Delaware Secretary of State to
increase the number of shares of common stock we are authorized to issue. As a
result, we filed the certificate of amendment prior to fully complying with all
Federal securities laws. Due to the aforementioned, we may be subject to fines,
sanctions and/or penalties.

Risks Relating to Our Current Financing Arrangement:
----------------------------------------------------

There Are A Large Number Of Shares Underlying Our Callable Secured Convertible
Notes, And Warrants That May Be Available For Future Sale And The Sale Of These
Shares May Depress The Market Price Of Our Common Stock.

         As of June 9, 2006, we had 52,014,044 shares of common stock issued and
outstanding and callable secured convertible notes outstanding or an obligation
to issue callable secured convertible notes that may be converted into an
estimated 508,000,000 shares of common stock at current market prices, and
outstanding warrants or an obligation to issue warrants to purchase 56,000,000
shares of common stock. In addition, the number of shares of common stock
issuable upon conversion of the outstanding callable secured convertible notes
may increase if the market price of our stock declines. All of the shares,
including all of the shares issuable upon conversion of the notes and upon
exercise of our warrants, may be sold without restriction. The sale of these
shares may adversely affect the market price of our common stock.

The Continuously Adjustable Conversion Price Feature of Our Callable Secured
Convertible Notes Could Require Us To Issue A Substantially Greater Number Of
Shares, Which Will Cause Dilution To Our Existing Stockholders.

         Our obligation to issue shares upon conversion of our callable secured
convertible notes is essentially limitless. The following is an example of the
amount of shares of our common stock that are issuable, upon conversion of the
callable secured convertible notes (excluding accrued interest), based on market
prices 25%, 50% and 75% below the current conversion price, as of June 9, 2006
of $.0072.
                                                Number                % of
% Below     Price Per                          of Shares           Outstanding
Market       Share        With Discount        Issuable               Stock
------       -----        -------------        --------               -----

25%          $.0054            $.0025          1,513,227,513          96.68%
50%          $.0036            $.0017          2,269,841,270          97.76%
75%          $.0018            $.0008          4,539,682,540          98.87%

         As illustrated, the number of shares of common stock issuable upon
conversion of our secured convertible notes will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders.

The Continuously Adjustable Conversion Price Feature Of Our Callable Secured
Convertible Notes May Encourage Investors To Make Short Sales In Our Common
Stock, Which Could Have A Depressive Effect On The Price Of Our Common Stock.

         The $3,000,000 8% and the $760,000 6% callable secured convertible
notes are convertible into shares of our common stock at 50% and 65% discounts,
respectively, to the trading price of the common stock prior to the conversion.
The significant downward pressure on the price of the common stock as the
selling stockholder converts and sells material amounts of common stock could
encourage short sales by investors. This could place further downward pressure
on the price of the common stock. The selling stockholder could sell common
stock into the market in anticipation of covering the short sale by converting
their securities, which could cause the further downward pressure on the stock
price. In addition, not only the sale of shares issued upon conversion or
exercise of notes, warrants and options, but also the mere perception that these
sales could occur, may adversely affect the market price of the common stock.


                                        9
<PAGE>

The Issuance Of Shares Upon Conversion Of The Callable Secured Convertible Notes
And Exercise Of Outstanding Warrants May Cause Immediate And Substantial
Dilution To Our Existing Stockholders.

         The issuance of shares upon conversion of the callable secured
convertible notes and exercise of warrants may result in substantial dilution to
the interests of other stockholders since the selling stockholders may
ultimately convert and sell the full amount issuable on conversion. Although the
selling stockholders may not convert their callable secured convertible notes
and/or exercise their warrants if such conversion or exercise would cause them
to own more than 4.99% of our outstanding common stock, this restriction does
not prevent the selling stockholders from converting and/or exercising some of
their holdings and then converting the rest of their holdings. In this way, the
selling stockholders could sell more than this limit while never holding more
than this limit. There is no upper limit on the number of shares that may be
issued which will have the effect of further diluting the proportionate equity
interest and voting power of holders of our common stock, including investors in
this offering.

In The Event That Our Stock Price Declines, The Shares Of Common Stock Allocated
For Conversion Of The Callable Secured Convertible Notes, Registered Pursuant To
A Registration Statement Declared Effective in December, May Not Be Adequate And
We May Be Required To File A Subsequent Registration Statement Covering
Additional Shares. If The Shares We Have Allocated And Are Registering Herewith
Are Not Adequate And We Are Required To File An Additional Registration
Statement, We May Incur Substantial Costs In Connection Therewith.

         Based on our current market price and the potential decrease in our
market price as a result of the issuance of shares upon conversion of the
callable secured convertible debentures, we have made a good faith estimate as
to the amount of shares of common stock that we are required to register and
allocate for conversion of the Callable Secured Convertible Notes. As we do not
currently have the required amount of shares available, we may be required to
file an additional registration statement after we have increased our authorized
common stock. In the event that our stock price decreases, the shares of common
stock we have allocated for conversion of the callable secured convertible
debentures and are registering hereunder may not be adequate. If the shares we
have allocated to the registration statement are not adequate and we are
required to file an additional registration statement, we may incur substantial
costs in connection with the preparation and filing of such registration
statement.

Risks Relating to Our Common Stock:
-----------------------------------

If We Fail To Remain Current On Our Reporting Requirements, We Could Be Removed
From The OTC Bulletin Board Which Would In Turn Trigger Default Provisions Under
the Callable Secured Convertible Notes and Limit The Ability of Broker-Dealers
To Sell Our Securities And The Ability Of Stockholders To Sell Their Securities
In The Secondary Market.

         Companies trading on the OTC Bulletin Board, such as us, must be
reporting issuers under Section 12 of the Securities Exchange Act of 1934, as
amended, and must be current in their reports under Section 13, in order to
maintain price quotation privileges on the OTC Bulletin Board. If we fail to
remain current on our reporting requirements, we could be removed from the OTC
Bulletin Board and, in turn, declared in default of the Callable Secured
Convertible Notes. As a result, the market liquidity for our securities could be
severely adversely affected by limiting the ability of broker-dealers to sell
our securities and the ability of stockholders to sell their securities in the
secondary market. In addition, we may be unable to cure the default, which may
have an adverse material effect on our Company.

Our Common Stock Is Subject To The "Penny Stock" Rules Of The SEC And The
Trading Market In Our Securities Is Limited, Which Makes Transactions In Our
Stock Cumbersome And May Reduce The Value Of An Investment In Our Stock.

         The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:

         o        that a broker or dealer approve a person's account for
                  transactions in penny stocks; and
         o        the broker or dealer receives from the investor a written
                  agreement to the transaction, setting forth the identity and
                  quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:

         o        obtain financial information and investment experience
                  objectives of the person; and
         o        make a reasonable determination that the transactions in penny
                  stocks are suitable for that person and the person has
                  sufficient knowledge and experience in financial matters to be
                  capable of evaluating the risks of transactions in penny
                  stocks.


                                       10
<PAGE>

The broker or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prescribed by the Commission relating to the penny
stock market, which, in highlight form:

         o        sets forth the basis on which the broker or dealer made the
                  suitability determination; and
         o        that the broker or dealer received a signed, written agreement
                  from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities
subject to the "penny stock" rules. This may make it more difficult for
investors to dispose of our common stock and cause a decline in the market value
of our stock.

ITEM 2 - PROPERTIES

         We lease approximately 10,000 square feet of office space from a
non-affiliated building owner, located at 16 East 40th Street, 12th Floor, New
York, New York 10016 at a rate of approximately $25,000 per month. The lease for
the New York office space commenced on April 15, 2006 and expires October 14,
2008. We also contract with third party logistics companies for fulfillment
services and the use of warehouse space in Los Angeles, California, and
Holtsville, New York on standard terms. We do not own any property.

         We consider our premises adequate for our purposes for the immediate
future.

ITEM 3 - LEGAL PROCEEDINGS

         In the ordinary course of business, we may be involved in legal
proceedings from time to time. Although occasional adverse decisions or
settlements may occur, management believes that the final disposition of such
matters will not have a material adverse effect on its financial position,
results of operations or liquidity.

         On March 28, 2006, a Notice of Effective Date of Revised First Amended
Plan of Reorganization Proposed by Tactica and IGIA, Inc. (the "Plan") was filed
with The United States Bankruptcy Court for the Southern District of New York
(the "Bankruptcy Court"). On January 13, 2006, the Bankruptcy Court issued a
confirmation order approving the Plan that provides for Tactica's exit from
bankruptcy. Tactica is a wholly-owned operating subsidiary of IGIA (the
"Registrant"). The Registrant is not seeking bankruptcy protection.

         Upon being declared effective by the Bankruptcy Court, the Plan
eliminated $14,853,421 of Tactica's pre-petition liabilities. The plan calls for
Tactica's pre-petition creditors to receive distributions of the following
assets: (i) $2,175,000 cash paid by Tactica's former shareholders; (ii) $700,000
cash paid by Tactica; (iii) $75,000 cash paid by the Registrant, Tactica, and
the Board Members; (iv) up to $275,000 cash paid by Innotrac Corporation; (v)
the rights and proceeds in connection with avoidance and other actions including
uncollected pre-petition invoices payable by a Tactica customer; and (vi)
5,555,033 newly issued shares of the Registrant's common stock that was in
number equal to 10% of the outstanding shares of common stock as of the Plan's
effective date and is exempted from the registration requirements of Section 5
of the Securities Act of 1933, as amended and State registration requirements by
virtue of Section 1145 of the Bankruptcy Code and applicable non-bankruptcy law.
Certain post-petition creditors, including firms that provided professional
services to Tactica, have submitted a total of approximately $583,000 in claims
to the Bankruptcy Court for post-petition administrative expenses. Tactica is
reviewing the administrative expense claims to determine whether to seek
possible settlements and payment schedules or a resolution by the Bankruptcy
Court.

         A civil complaint was filed on December 2, 2005 in the United States
District Court Southern District of New York by Hughes Holdings, LLC, Global
Asset Management, LLC, Allied International Fund, Inc., Robert DePalo, Gary
Schonwald and Susan Heineman (the "DePalo parties") as plaintiffs against Peter
Zachariou, Fountainhead Investments, Inc., Accessible Development, Corp., Allan
Carter, Chadel, Ltd., John D'Avanzo, Jason Fok, Tabacalera, Ltd., Terrence
DeFranco, Altitude Group, LLC, Virginia Casadonte, (the "Diva parties"), Shai
Bar Lavi and IGIA, Inc. and certain officers and directors (the "IGIA parties").
The DePalo parties' claim for $279,480.60 plus costs, interest and punitive
damages is alleged to have resulted from their holdings of securities issued by
Diva Entertainment, Inc. and, subsequent to the Company's June 2004 reverse
merger, those of IGIA, Inc. We believe the complaint against the Company and its
officers and directors is without merit and we are mounting a vigorous defense
in cooperation with our insurance carrier, including a counterclaim against the
plaintiffs. The Diva parties have filed an answer; counterclaim against the
DePalo parties; and a cross-claim against certain of the IGIA parties seeking in
excess of $2.3 million; disgorgement of any profits realized by the DePalo
parties and punitive damages. The Company continues to believe that no damage
claim against the IGIA parties is justifiable and therefore has not provided for
any liability in its financial statements as of February 28, 2006.

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

            On March 22, 2005, the holders of a majority of our issued and
outstanding shares of common stock authorized an additional increase in the
number of our authorized shares of common stock from 500,000,000 to
1,000,000,000 shares.

         On March 29, 2005, the holders of a majority of our issued and
outstanding shares of common stock authorized the adoption of the Company's 2005
Stock Incentive Plan and the authorization of the reservation for issuance of
2,500,000 shares of common stock thereunder.


                                       11
<PAGE>

                                     PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

         Our Common Stock is traded on the OTC Bulletin Board, referred to
herein as the OTCBB, under the symbol "IGAI.ob". The following table sets forth
the high and low bid prices of our Common Stock, as reported by the OTCBB for
each quarter since our stock began trading on the OTCBB. The quotations set
forth below reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions.


2006 Fiscal Year                                      High          Low
----                                                  ----          ---
December 1, 2005 - February 28, 2006                 $0.200      $0.010

September 1, 2005 - November 30, 2005                $0.120      $0.050

June 1, 2005 - August 31, 2005                       $0.130      $0.020

March 1, 2005 -  May 31, 2005                        $0.035      $0.020

2005 Fiscal Year                                      High          Low
----                                                  ----          ---
December 1, 2004 - February 28, 2005                 $0.090      $0.035

September 1, 2004 - November 30, 2004                $0.500      $0.030

June 1, 2004 - August 31, 2004                       $5.000      $0.050*

March 1, 2004 - May 31, 2005                         $0.035      $0.020

* On April 15, 2004 we had a market maker establish a bid price for our common
stock on the OTC Bulletin Board; however, our common stock did not begin to
trade until June 18, 2004.

         As of June 9, 2006, there were approximately 496 holders of record of
our common stock.

         We have appointed Continental Stock Transfer & Trust Company, 17
Battery Place, New York, New York 10004, as transfer agent for our shares of
Common Stock.

Sale of Unregistered Securities

         To obtain funding for the purpose of payment of general corporate and
operating purposes, including the payment of auditor and legal fees the Company
entered into a Securities Purchase Agreement with the Investors on June 7, 2006
for the sale of (i) $760,000 in Callable Secured Convertible Notes and (ii)
stock purchase warrants to buy 50,000,000 shares of our common stock. On June 7,
2006, the Investors purchased the $760,000 in Notes and received Warrants to
purchase an aggregate of 50,000,000 shares of our common stock.

         The Notes bear interest at 6%, mature three years from the date of
issuance, and are convertible into our common stock, at the Investors' option,
at a conversion price equal to the lower of (i) $0.04 or (ii) 35% of the average
of the three lowest intraday trading prices for our common stock during the 20
trading days before, but not including, the conversion date. As of June 7, 2006,
the average of the three lowest intraday trading prices for our common stock
during the preceding 20 trading days as reported on the Over-The-Counter
Bulletin Board was $0.0068 and, therefore, the conversion price for the Callable
Secured Convertible Notes was $0.002. Based on this conversion price, the
$760,000 Notes, excluding interest, were convertible into 380,000,000 shares of
our common stock.

         We may prepay the Notes in the event that no event of default exists,
there are a sufficient number of shares available for conversion of the Callable
Secured Convertible Notes and the market price is at or below $.06 per share.
The full principal amount of the Notes is due upon default under the terms of
Notes. In addition, we have granted the Investors a security interest in
substantially all of our assets and intellectual property as well as
registration rights.

         The Warrants are exercisable until five years from the date of issuance
at a purchase price of $0.009 per share. In addition, the exercise price of the
Warrants is adjusted in the event we issue common stock at a price below market.

         The Investors have contractually agreed to restrict their ability to
convert the Notes and exercise the Warrants and receive shares of our common
stock such that the number of shares of the Company common stock held by them
and their affiliates after such conversion or exercise does not exceed 4.99% of
the Company's then issued and outstanding shares of common stock.

Dividend Policy

            We have never paid any cash dividends on our capital stock and do
not anticipate paying any cash dividends on the Common Shares in the foreseeable
future. We intend to retain future earnings to fund ongoing operations and
future capital requirements of our business. Any future determination to pay
cash dividends will be at the discretion of the Board and will be dependent upon
our financial condition, results of operations, capital requirements and such
other factors as the Board deems relevant.


                                       12
<PAGE>

Equity Compensation Plan Information

            On March 29, 2005, the majority of our stockholders approved a stock
incentive plan and authorized 2,500,000 shares of common stock for issuance of
stock awards and stock options thereunder. We adopted this stock incentive plan
on November 3, 2005, which was twenty days after a definitive information
statement was mailed to our stockholders. On February 28, 2006, we made grants
of 1,275,000 options to Company management and employees.

Equity Compensation Plan Information

<TABLE>
<CAPTION>

                                                                                                Number of securities
                                                                                              remaining available for
                                   Number of securities to          Weighted-average           future issuance under
                                   be issued upon exercise        exercise price of          equity compensation plans
                                   of outstanding options,       outstanding options,          (excluding securities
                                     warrants and rights          warrants and rights         reflected in column (a))
      Plan category                         (a)                          (b)                            (c)
----------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>                          <C>
Equity compensation plans                 1,275,000                      $.02                         1,225,000
approved by security holders

Equity compensation plans not
approved by security holders                 0                           $.00                             0

             Total                        1,275,000                      $.02                         1,225,000
</TABLE>


                                       13
<PAGE>

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

         The following discussion contains forward-looking statements that are
subject to significant risks and uncertainties about us, our current and planned
products, our current and proposed marketing and sales, and our projected
results of operations. There are several important factors that could cause
actual results to differ materially from historical results and percentages and
results anticipated by the forward-looking statements. We have sought to
identify the most significant risks to our business, but cannot predict whether
or to what extent any of such risks may be realized nor can there be any
assurance that we have identified all possible risks that might arise.

         Investors should carefully consider all of such risks before making an
investment decision with respect to our stock. The following discussion and
analysis should be read in conjunction with our financial statements and notes
thereto. This discussion should not be construed to imply that the results
discussed herein will necessarily continue into the future, or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future. Such discussion represents only the best present
assessment from our management.

         Information about us, including a description of our business, markets,
properties, competition and historical financial information, is provided in
summary form regarding our business and affairs. This information is not
intended to be complete and should be read in conjunction with the financial
statements and other documents appended hereto or described herein.

History

         We were incorporated in the State of Delaware in May 1992 under the
name Quasar Projects Company for the purpose of merging with or acquiring a
company with operations and assets. From its inception through April 28, 1999,
we generated nominal revenues and did not actively engage in business.

         On April 28, 1999, we acquired Diva Entertainment, Inc., a Florida
corporation, which was engaged in the business of operating and managing two
wholly-owned talent management companies: Prima Eastwest Model Management, Inc.,
a California corporation, and Que Management, Inc., a New York corporation. At
that time, we changed our name to Diva Entertainment, Inc. From April 28, 1999
through June 10, 2004, we were in the business of representing professional
fashion models, commercial actors and theatrical actors.

         On June 11, 2004, we entered into the Securities Purchase Agreement,
pursuant to which we acquired our wholly-owned subsidiary Tactica International,
Inc. and sold our former subsidiary Diva Entertainment, Inc.

         Since June 11, 2004, we have been in the business of the direct
marketing and distribution of proprietary and branded personal care and home
care products. We are no longer in the business of talent management.

General Background

         We, through our wholly-owned operating subsidiaries, Tactica
International, Inc. ("Tactica") and Shopflash, Inc., are a direct marketer and
distributor of proprietary and branded personal care and home care products. We
established a niche within the direct marketing industry, a market which the
"Direct Marketing Association" expects to grow from $2 to $3 trillion dollars in
annual sales within the next five years. We sell through major retail chains and
mail order catalogs as well as on our websites.

         All of our operations occur in our Tactica subsidiary, which we
acquired as of June 11, 2004 and our Shopflash subsidiary, which we established
in April 2005. We do not currently have any operations at the parent level.

Comparison of Fiscal Years Ended February 28, 2006 To February 28, 2005

Results of Operations

Revenue

         We sell a variety of consumer products and houseware products directly
to individual customers and to retailers. We use direct response television
advertising extensively to promote sales. Our net sales for the fiscal year
ended February 28, 2006 ("fiscal 2006") were $25,532,151, an increase of
$14,207,701, or 125.5%, compared to net sales of $11,324,450 for the fiscal year
ended February 28, 2005 ("fiscal 2005").


                                       14
<PAGE>

         We are currently focusing on generating revenue by selling our products
directly to consumers through their responses to our television advertising. We
are advertising our products that have indicated encouraging levels of consumer
acceptance. Our direct response sales operation requires that we purchase, up to
two weeks in advance, television advertising time to run our infomercials and to
purchase, up to eight weeks in advance, products that we sell. We used cash
realized in fiscal 2006 from sales of our $3,000,000 in Callable Secured
Convertible Notes to, among other things, significantly increase our purchases
of television advertising time and product needed to fulfill customer orders.

         The increase in net sales for fiscal 2006 as compared to fiscal 2005
reflects the significant increases in our direct response television advertising
and availability of product as well as uninterrupted fulfillment services.
Although our net sales increased as a result of our sale of $3,000,000 in
Callable Secured Convertible Notes during fiscal 2006, a substantial amount of
cash from sales has been held back by the credit card merchant banks to
establish rolling reserves for the customer payment processing they do for us.
As a result, we did not have sufficient cash to obtain all of the product needed
to fulfill customer orders on hand, especially for our floor care product line.

         Our sales for fiscal 2006 consisted primarily of direct response sales
of our floor care products generated by responses to our infomercials that
feature an innovative vacuum cleaner of our own design. We sold vacuum cleaners
under our own non-licensed brands and the Singer Lazer Storm brand name
according to an April 2003 license agreement with The Singer Company, B.V. which
was mutually terminated on September 29, 2005. Using our direct response sales
operation capabilities, we plan to increase sales of other products using
licensed and non-licensed brands.

Gross Profit

         Our gross profit was $16,163,879 for fiscal 2006 versus our gross loss
of ($234,146) for fiscal 2005, an increase of $16,398,025. The increase in gross
profit for fiscal 2006 is primarily the result of increased revenue and gross
profit margins of products sold.

         Our gross profit percentage for fiscal 2006 was 63.3%, as compared to
(2.1%) for fiscal 2005. Our gross profit percentage for fiscal 2006 was higher
due to the relatively higher gross profit percentage we realized on our direct
response sales that have comprised the majority of our net sales this fiscal
year. For fiscal 2005, we realized low gross margins from our sales of our
excess inventory to specialty retailers at reduced prices, including sales of
products at below our cost. In addition, our gross profits in those periods were
reduced for the write down of inventory to estimated market value, when such
value was below cost.

Operating expenses

         Operating expenses for fiscal 2006 were $27,410,771, an increase of
$13,201,809 from $14,208,962, or 92.9% as compared to fiscal 2005. The increase
in operating expenses is primarily the result of increased media advertising and
increased selling, general and administrative expense, partially offset by a
one-time $3,275,000 charge for a financial advisory fee in the prior fiscal
year.

         We increased in our media advertising spending in fiscal 2006 by
$10,564,705 as compared to fiscal 2005. We air our television infomercials to
sell our products directly to consumers and to increase awareness of the
products we sell to retailers. Media advertising requires us to make upfront
purchases that we were able to significantly increase this fiscal year by using
proceeds from sales of our $3,000,000 in Callable Secured Convertible Notes.

         We spent $5,912,104 or 57.3% more on other selling, general and
administrative expenses in fiscal 2006 as compared to fiscal 2005. The increased
spending is primarily attributable to increased sales. Other selling, general
and administrative expense declined as percentage of sales. For fiscal 2006,
other selling, general and administrative expense was 63.6% of net sales as
compared to 91.1% for fiscal 2005. We have implemented a lower operating cost
structure as part of our business restructuring that has led to reduced
personnel, warehouse operations costs, and other general and administrative
expenses, partially offset by higher credit card merchant fees for our direct
response sales. For fiscal 2006, our merchant fees, including those associated
with high chargeback levels, were $2,673,077 or 10.5% of sales. Management has
plans to improve its chargeback experience by implementing better customer
service practices.

         Operating expenses for fiscal 2005 included a one-time expense of
$3,275,000 for financial advisory fees that were incurred in connection with the
June 2004 reverse merge transaction. The fees consisted of 1,250,000 shares of
IGIA Common Stock issued and paid to our financial advisor upon closing of the
June 11, 2004 reverse merger transaction.

         Operating expenses for fiscal 2006 and 2005 include purchases of
$4,650,936 and $178,450, respectively, of order fulfillment and customer
services rendered by Brass Logistics LLC, a company in which Mr. Sivan, Mr.
Ramchandani and a significant shareholder have an ownership interest.


                                       15
<PAGE>

Interest expense and other income / expense

We incurred net interest expense of $991,271 in fiscal 2006, an increase of
$814,846. Interest expense for fiscal 2006 consisted primarily of interest on
the accretion of the Callable Secured Convertible Notes of $729,011, coupon
interest on the Callable Secured Convertible Notes of $87,916, amortization of
the related issue costs of $76,765 and interest on the Helen of Troy line of
credit of $64,487. The Notes were issued on March 24, 2005, April 14, 2005 and
December 22, 2005. Interest expense for fiscal 2005 consisted primarily of
Tactica's line of credit with Helen of Troy which was eliminated on April 29,
2004. Other income for fiscal 2006 was $2,686,417 consisting primarily of a
one-time, non-cash, gain of $2,672,946 resulting from the settlement of debt
owed to Helen of Troy. In fiscal 2005, other income was negligible. In fiscal
2006, the Company incurred an unrealized loss in accounting for the fair value
of the Callable Secured Convertible Notes and related warrant derivatives
relating to the convertible notes it obtained in fiscal 2006. The total non-cash
financial impact to the Company's income statement amounted to $5,820,026 and is
shown as Other Income.

Reorganization items

         In fiscal 2006, Tactica incurred professional fees of $1,786,965 in
connection with its business restructuring and reorganization under chapter 11.
In fiscal 2005, Tactica incurred $1,558,103 of expense in connection with its
business restructuring and reorganization under chapter 11 including
professional fees of $686,683 and a $871,420 one-time charge for the estimated
remaining lease obligations under the Sublease Agreement for our New York
offices ($813,094) and for telephone equipment ($58,326). We rejected the lease
agreements under the Bankruptcy Code and moved into less costly New York offices
in March 2005. The lease obligations are pre-petition liabilities.

Net Loss

         Our net loss for fiscal 2006 was $17,158,737 in contrast to a net loss
of $16,197,364 for fiscal 2005. The increase in our fiscal 2006 loss is
attributed to increased charges in fiscal 2006 for financing activities and
reorganizing Tactica's business under Chapter 11 as compared to fiscal 2005. Our
fiscal 2006 net loss includes charges of $10,186,135, consisting of a $5,820,026
unrealized loss and $729,011 in accretion for our Callable Secured Convertible
Notes, a $4,534,692 charge for settling Tactica's third-party pre-petition
liabilities, $2,684,559 in other income from settling Tactica's pre-petition
liability with HoT and $1,786,965 in professional fees. The fiscal 2005 net loss
includes $4,833,103 in charges consisting of a one-time $3,275,000 charge for a
financial advisory fee and $1,558,103 in reorganization items described above.

         Our net loss per common share (basic and diluted) was ($0.92) in fiscal
2006 as compared to our ($0.90) net loss per common share for fiscal 2005.

         The weighted average number of outstanding shares was 18,718,114 and
18,002,933, respectively, for fiscal 2006 and 2005.


                                       16
<PAGE>

Liquidity and Capital Resources

Overview

         As of February 28, 2006, we had a $21.9 million working capital deficit
and negative net worth of $31.2 million. Excluding pre-petition liabilities, the
working capital deficit was approximately $7.0 million as of February 28, 2006.
As of February 28, 2005, Tactica had a working capital deficit of $14.4 million
and negative net worth of approximately $14.3 million.

         For fiscal 2006 we generated a net cash flow deficit from operating
activities of $3,060,242 consisting primarily of the fiscal 2006 net loss of
$17,158,737, which was partially offset by adjustments for non cash expenses and
increases in operating liabilities. The primary fiscal 2006 non cash expenses
were the $6,549,037 unrealized loss and accretion related to the accounting for
the callable secured convertible notes (see Note 7 to the financial statements)
and $1,850,133 from net settlements of Tactica's pre-petition liabilities in
connection with finalizing its reorganization plan. Our accounts payable and
accrued expenses increased $7,030,038 in fiscal 2006, consisting primarily of a
$2,643,108 increase in accounts payable to Brass Logistics LLC, a related party
and a former provider of warehouse and customer order fulfillment services,
$443,509 increase in sales taxes payable and $1,697,787 for television and
Internet advertising media purchases. The operating cash flow derived from
increases in the operating liabilities was partially offset by a $1,175,205
increase in prepaid advertising and other prepayments, a $594,566 increase in
accounts receivable, and a $155,068 increase in inventory that are associated
with our significantly higher volume of direct response business in fiscal 2006.

         Cash used in investing activities totaled $45,693, which was utilized
for the acquisition of property and equipment.

         Cash provided by financing activities totaled $3,111,662 consisting of
$2,676,662 in net proceeds from loans and $435,000 advanced by two significant
shareholders of the Company, respectively.

         We expect capital expenditures to be nominal for fiscal 2007. These
anticipated expenditures are for continued investments in property and equipment
used in our business.

Acquisition of Tactica

         The June 11, 2004 reverse merger between us and Tactica gave us access
to public markets for financing. Despite the transaction with Helen of Troy and
reverse merger, we were not yet able to raise sufficient additional working
capital. As a result of the foregoing factors, Tactica did not have an available
source of working capital to satisfy a demand by Innotrac that Tactica
immediately pay all amounts allegedly due to Innotrac and continue its normal
operation of business. Tactica and Innotrac agreed upon the terms of a
Stipulation which contemplated the filing of a bankruptcy petition that was
subsequently made on October 21, 2004. On June 23, 2005, the Bankruptcy Court
issued the Innotrac Settlement, under which Innotrac has taken the inventory in
exchange for full satisfaction of Tactica's liability to Innotrac that was fixed
at $3,000,000. Accordingly, the accompanying condensed consolidated balance
sheet as of February 28, 2006 excludes the inventory and liabilities associated
with the Innotrac Settlement.

Financings

         To provide funds for Tactica's continued ordinary course operations and
working capital needs, Tactica entered into a Credit Agreement with Tactica
Funding 1, LLC ("Tactica Funding" and a related party) on December 8, 2004,
under which Tactica Funding agreed to a debtor in possession loan up to an
aggregate principal amount of $300,000 (the "Loan"). The Loan bears interest at
a rate of 9% per annum. The entire principal was due and payable on February 28,
2005. As Security for the Loan, Tactica granted to Tactica Funding a first
priority security interest in substantially all of the assets of Tactica, except
as to permitted liens for which the Tactica Funding security interest is junior
and subordinate, including certain carve out expenses that Tactica incurred for
professional fees and other bankruptcy case matters. Mr. Sivan is a member and
Mr. Ramchandani is a manager and a member of Tactica Funding 1, LLC. As of
February 28, 2006, the Company owed $300,000 of note principal, which is
included in Notes Payable - related parties, and unpaid interest of $6,723.

         To obtain additional funding for the purpose of providing a loan to
Tactica, in the form of debtor in possession financing and exit financing in the
context of Tactica's chapter 11 case, we entered into a Securities Purchase
Agreement with New Millennium Capital Partners II, LLC, AJW Qualified Partners,
LLC, AJW Offshore, Ltd. and AJW Partners, LLC on March 23, 2005 for the sale of
(i) $3,000,000 in callable secured convertible notes and (ii) warrants to buy
6,000,000 shares of our common stock. Our registration statement for the common
stock issuable pursuant to Callable Secured Convertible Notes was declared
effective by the SEC on December 22, 2005. According to the terms and conditions
of the Securities Purchase Agreement, the investors disbursed to us: $1,000,000
on March 24, 2005; $1,000,000 on April 20, 2005; and $1,000,000 on December 22,
2005. Accordingly, we have received a total of approximately $2,677,000 in net
proceeds after deducting approximately $323,000 of expenses and prepaid interest
pursuant to the Securities Purchase Agreement. The funds from the sale of the
Callable Secured Convertible Notes were used for business development purposes,
working capital needs, pre-payment of interest, payment of consulting,
accounting and legal fees and borrowing repayment in accordance with the April
20, 2005 Credit Agreement between IGIA, Inc. and Tactica.


                                       17
<PAGE>

         The callable secured convertible notes bear interest at 8%, mature
three years from the date of issuance, and are convertible into our common
stock, at the investors' option, at the lower of (i) $0.04 or (ii) 50% of the
average of the three lowest intraday trading prices for the common stock on a
principal market for the 20 trading days before but not including the conversion
date. The full principal amount of the callable secured convertible notes is due
upon default under the terms of secured convertible notes. The warrants are
exercisable until five years from the date of issuance at a purchase price of
$0.03 per share. In addition, the conversion price of the secured convertible
notes and the exercise price of the warrants will be adjusted in the event that
we issue common stock at a price below the fixed conversion price, below market
price, with the exception of any securities issued in connection with the
Securities Purchase Agreement. The conversion price of the callable secured
convertible notes and the exercise price of the warrants may be adjusted in
certain circumstances such as if we pay a stock dividend, subdivide or combine
outstanding shares of common stock into a greater or lesser number of shares, or
take such other actions as would otherwise result in dilution of the selling
stockholder's position. The selling stockholders have contractually agreed to
restrict their ability to convert or exercise their warrants and receive shares
of our common stock such that the number of shares of common stock held by them
and their affiliates after such conversion or exercise does not exceed 4.99% of
the then issued and outstanding shares of common stock. In addition, we have
granted the investors a security interest in substantially all of our assets and
intellectual property and registration rights.

         In February 2006, we began working with a media placement agent for
direct response sales campaigns regarding two of our household products sold by
our Shopflash, Inc. subsidiary. The media placement agent places our
advertisements on television and the Internet and provides additional campaign
support that has allowed us to further develop the campaigns. According to our
agreement, the media placement agent receives fees and has a security interest
in goods and proceeds related to the campaigns. Our arrangement with the media
placement agent is short-term and we are considering other similar arrangements
for our active campaigns and ones under development. As of February 28, 2006, we
owed $1,358,116 to the media placement agent.

         Tactica emerged from bankruptcy on March 28, 2006 by using the proceeds
from the debtor in possession financings and generating cash flow from sales of
its products to consumers through response to our television advertising of
select products that have demonstrated encouraging levels of consumer
acceptance. We are reducing cash required for operations by reducing operating
costs by moving to less costly office space and decreasing staff levels and by
deferring management's salaries. In addition, our sales to retail and
international customers are reduced by our limited working capital and their
adverse response to our bankruptcy, which has enabled us to reduce operations
that were not generating liquidity.

         To obtain funding for the purpose of payment of general corporate and
operating purposes, including the payment of auditor and legal fees, the Company
entered into a Securities Purchase Agreement with the Investors on June 7, 2006
for the sale of (i) $760,000 in Callable Secured Convertible Notes and (ii)
stock purchase warrants to buy 50,000,000 shares of our common stock. On June 7,
2006, the Investors purchased the $760,000 in Notes and received Warrants to
purchase an aggregate of 50,000,000 shares of our common stock.

         The Notes bear interest at 6%, mature three years from the date of
issuance, and are convertible into our common stock, at the Investors' option,
at a conversion price equal to the lower of (i) $0.04 or (ii) 35% of the average
of the three lowest intraday trading prices for our common stock during the 20
trading days before, but not including, the conversion date. As of June 7, 2006,
the average of the three lowest intraday trading prices for our common stock
during the preceding 20 trading days as reported on the Over-The-Counter
Bulletin Board was $0.0068 and, therefore, the conversion price for the Callable
Secured Convertible Notes was $0.002. Based on this conversion price, the
$760,000 Notes, excluding interest, were convertible into 380,000,000 shares of
our common stock.

         We may prepay the Notes in the event that no event of default exists,
there are a sufficient number of shares available for conversion of the Callable
Secured Convertible Notes and the market price is at or below $.06 per share.
The full principal amount of the Notes is due upon default under the terms of
Notes. In addition, we have granted the Investors a security interest in
substantially all of our assets and intellectual property as well as
registration rights.

         The Warrants are exercisable until five years from the date of issuance
at a purchase price of $0.009 per share. In addition, the exercise price of the
Warrants is adjusted in the event we issue common stock at a price below market.

         The Investors have contractually agreed to restrict their ability to
convert the Notes and exercise the Warrants and receive shares of our common
stock such that the number of shares of the Company common stock held by them
and their affiliates after such conversion or exercise does not exceed 4.99% of
the Company's then issued and outstanding shares of common stock.


                                       18
<PAGE>

         Our ability to achieve sustained profitability is dependent on several
factors, including, but not limited to, our ability to: generate liquidity from
operations; satisfy our ongoing operating costs on a timely basis; and to
resolve all of our post-petition administrative costs. We still need additional
investments in order to continue operations for cash flow to break even.
Additional investments are being sought, but we cannot guarantee that we will be
able to obtain such investments. Financing transactions may include the issuance
of equity or debt securities, obtaining credit facilities, or other financing
mechanisms. However, the trading price of our common stock and the downturn in
the U.S. stock and debt markets make it more difficult to obtain financing
through the issuance of equity or debt securities. Even if we are able to raise
the funds required, it is possible that we could incur unexpected costs and
expenses, fail to collect significant amounts owed to us, or experience
unexpected cash requirements that would force us to seek alternative financing.
Further, if we issue additional equity or debt securities, stockholders may
experience additional dilution or the new equity securities may have rights,
preferences or privileges senior to those of existing holders of our common
stock. If additional financing is not available or is not available on
acceptable terms, we will have to curtail our operations again, attempt to
further restructure financial obligations and/or seek a strategic merger,
acquisition or a sale of assets.

         The independent auditor's report on the Company's February 28, 2006
financial statements included in this Annual Report states that the Company's
recurring losses raise substantial doubts about the Company's ability to
continue as a going concern.

         The effect of inflation on our revenue and operating results was not
significant. Our operations are located in North America and there are no
seasonal aspects that would have a material effect on our financial condition or
results of operations.

Off Balance Sheet Arrangements

         The Company does not maintain off-balance sheet arrangements nor does
it participate in non-exchange traded contracts requiring fair value accounting
treatment.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

         Financial Reporting Release No. 60, recently released by the Securities
and Exchange Commission, requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. The notes to the consolidated financial statements include a summary
of significant accounting policies and methods used in the preparation of our
Consolidated Financial Statements. In addition, Financial Reporting Release No.
61 was recently released by the SEC requires all companies to include a
discussion which addresses, among other things, liquidity, off-balance sheet
arrangements, contractual obligations and commercial commitments. The following
is a brief discussion of the more significant accounting policies and methods
used by us.

         The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of financial statements in accordance with
generally accepted accounting principles in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, including the recoverability of tangible and intangible
assets, disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses during
the reported period.

         On an on-going basis, we evaluate our estimates. The most significant
estimates relate to our recognition of revenue, the allowance for doubtful
accounts receivable and inventory valuation reserves.

         We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements:

Revenue Recognition

         Revenues are recognized in the period that services are provided. For
revenue from product sales, the Company recognizes revenue in accordance with
Staff Accounting Bulletin No. 104, REVENUE RECOGNITION ("SAB104"), which
superceded Staff Accounting Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL
STATEMENTS ("SAB101"). SAB 101 requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectibility is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the selling prices of the products delivered and the collectibility of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company defers any revenue for which
the product has not been delivered or is subject to refund until such time that
the Company and the customer jointly determine that the product has been
delivered or no refund will be required.


                                       19
<PAGE>

         SAB 104 incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"),
MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS. EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF 00-21 on
the Company's consolidated financial position and results of operations was not
significant.

         We recognize revenue when we ship our product to customers. Customers
at times request credits for returned product or in connection with incentives
such as cooperative advertising agreements. We reduce sales or increase selling,
general, and administrative expenses, depending on the nature of the credits,
for estimated future credits to customers. Management bases such estimates
either on historical information about credits issued, relative to total sales,
or on specific knowledge of incentives offered to retailers.

Allowance for doubtful accounts

         We maintain an allowance for doubtful accounts to reduce amounts to
their estimated realizable value. A considerable amount of judgment is required
when we assess the realization of accounts receivables, including assessing the
probability of collection and the current credit-worthiness of each customer. If
the financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, an additional provision for
doubtful accounts could be required. We initially record a provision for
doubtful accounts based on our historical experience, and then adjust this
provision at the end of each reporting period based on a detailed assessment of
our accounts receivable and allowance for doubtful accounts. In estimating the
provision for doubtful accounts, we consider: (i) the aging of the accounts
receivable; (ii) trends within and ratios involving the age of the accounts
receivable; (iii) the customer mix in each of the aging categories and the
nature of the receivable; (iv) our historical provision for doubtful accounts;
(v) the credit worthiness of the customer; and (vi) the economic conditions of
the customer's industry as well as general economic conditions, among other
factors.

Beneficial Conversion Feature

         The convertible feature of certain of our convertible notes provides
for a rate of conversion that is below market value. Such feature is normally
characterized as a "beneficial conversion feature" ("BCF"). Pursuant to Emerging
Issues Task Force Issue No. 98-5 ("EITF 98-5"), "ACCOUNTING FOR CONVERTIBLE
SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR CONTINGENTLY ADJUSTABLE
CONVERSION RATIO" and Emerging Issues Task Force Issue No. 00-27,"APPLICATION OF
EITF ISSUE NO. 98-5 TO CERTAIN CONVERTIBLE INSTRUMENTS," the relative fair
values of the BCFs have been recorded as a discount from the face amount of the
respective debt instrument. The Company is amortizing the discount using the
effective interest method through maturity of such instruments. The Company will
record the corresponding unamortized debt discount related to the BCF and
warrants as interest expense when the related instrument is converted into the
Company's common stock.

Derivative Finanacial Instrument

         In connection with the issuance of certain convertible notes payable,
the terms of the notes payable provided for a conversion of the notes into
shares of the Company's common stock at a rate which was determined to be
variable. The Company determined that the variable conversion feature was an
embedded derivative instrument pursuant to SFAS No.133, "ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," as amended. The accounting
treatment of derivative financial instruments required that the Company record
the derivatives and related warrants at their fair values as of the inception
date of the note agreements and at fair value as of each subsequent balance
sheet date. In addition, under the provisions of EITF Issue No. 00-19,
"ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS INDEXED TO, AND POTENTIALLY
SETTLED IN, A COMPANY'S OWN STOCK," as a result of entering into the note
agreements, the Company was required to classify all other non-employee warrants
as derivative liabilities and record them at their fair values at each balance
sheet date. Any change in fair value was recorded as non-operating, non-cash
income or expense at each balance sheet date. If the fair value of the
derivatives was higher at the subsequent balance sheet date, the Company
recorded a non-operating, non-cash charge. If the fair value of the derivatives
was lower at the subsequent balance sheet date, the Company recorded
non-operating, non-cash income.


                                       20
<PAGE>

Inventories

         Inventories consist almost entirely of finished goods. We account for
inventory using a first-in-first-out system in which we record inventory on our
balance sheets at the lower of our cost or net realizable value. A product's
cost is comprised of the amount that we pay our manufacturer for product,
tariffs and duties associated with transporting product across national borders
and freight costs associated with transporting the product from our
manufacturers to our warehouse locations. When circumstances dictate that we use
net realizable value in lieu of cost, we base our estimates on expected future
selling prices less expected disposal costs. The Cost of goods sold line item on
the Statements of Operations is comprised of the book value (lower of cost or
net realizable value) of inventory sold to customers during the reporting
period.

Stock-Based Compensation

         In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure-an amendment of SFAS 123."
This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the fair market value of the Company's stock at the date of the grant
over the exercise price of the related option. The Company has adopted the
annual disclosure provisions of SFAS No. 148 in its financial reports for the
fiscal years 2006 and 2005.


                                       21
<PAGE>

ITEM 7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                          INDEX TO FINANCIAL STATEMENTS

IGIA, INC. AND SUBSIDIARY                                                Page

Report of Independent Registered Public Accounting Firm                  F-2

Consolidated Balance Sheet as of February 28, 2006                       F-3

Consolidated Statement of Operations for the years ended
February 28, 2006 and 2005                                               F-4

Consolidated Statements of Deficiency in Stockholders'
Equity for the years ended February 28, 2006 and 2005                    F-5

Consolidated Statements of Cash Flows for the years ended
February 28, 2006 and 2005                                               F-6

Notes to Consolidated Financial Statements                            F-7 - F-26







                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors
IGIA, Inc.:

We have audited the accompanying consolidated balance sheet of IGIA, Inc. and
its wholly-owned subsidiaries (Tactica International Inc.- Debtors-in-Possession
from October 21, 2004), collectively, the "Company," as of February 28, 2006,
and the related consolidated statements of operations, deficiency in
stockholders' equity, and cash flows for the two years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our auditS in accordance with 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. 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company as of
February 28, 2006, and the consolidated results of its operations and its cash
flows for the two years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its 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/ Russell Bedford Stefanou Mirchandani LLP

New York, New York
May 18, 2006



                                       F-2
<PAGE>

                                   IGIA, INC.
                     (Formerly Tactica International, Inc.)
                      CONDENSED CONSOLIDATED BALANCE SHEET


<TABLE>
<CAPTION>

                                                                                              February 28,
                                        ASSETS                                                   2006
                                                                                             ------------
<S>                                                                                          <C>
CURRENT ASSETS:
Cash                                                                                         $      7,887
Accounts receivable, net of allowance for doubtful accounts of $114,933                           688,199
Inventories                                                                                       444,361
Prepaid advertising                                                                               927,343
Other prepayments                                                                                 344,024
Other current assets                                                                              349,689
                                                                                             ------------
     Total current assets                                                                       2,761,503
Property and equipment, net of accumulated depreciation of $413,930                               116,180
                                                                                             ------------
        Total Assets                                                                         $  2,877,683
                                                                                             ============

               LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Pre-petition liabilities, including related party of $455,734                                $ 14,853,421
Accounts payable                                                                                4,329,889
Accounts payable - related party                                                                2,688,862
Accrued expenses                                                                                1,631,124
Notes payable - related parties                                                                 1,117,793
                                                                                             ------------
     Total current liabilities                                                                 24,621,089
                                                                                             ------------
LONG TERM LIABILITIES:
Callable secured convertible notes                                                                629,187
Warrant liability related to callable secured convertible notes                                   119,496
Derivative liability related to callable secured convertible notes                              8,700,530
                                                                                             ------------
     Total long term liabilities                                                                9,449,213
                                                                                             ------------
TOTAL LIABILITIES                                                                              34,070,302
                                                                                             ------------

Commitments and contingencies

DEFICIENCY IN STOCKHOLDERS' EQUITY:
Preferred stock, Series E, par value $0.001 per share;  261,574 shares issued and
outstanding                                                                                           262
Preferred stock, Series G, par value $0.001 per share;  50,000 shares issued and
outstanding                                                                                            50
Common stock, par value $0.001 per share; 26,562,933 shares issued and outstanding                 26,563
Additional paid -in- capital                                                                   14,155,623
Accumulated deficit                                                                           (45,375,117)
                                                                                             ------------
     Total Deficiency in Stockholders' Equity                                                 (31,192,619)
                                                                                             ------------
Total Liabilities and Deficiency in Stockholders' Equity                                     $  2,877,683
                                                                                             ============
</TABLE>


       See accompanying footnotes to the consolidated financial statements


                                       F-3
<PAGE>

                                   IGIA, INC.
                     (Formerly Tactica International, Inc.)
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>

                                                                                Year Ended February 28,
                                                                             2006                    2005
                                                                         ------------            ------------
<S>                                                                      <C>                     <C>
REVENUES:
     Net sales                                                           $ 25,532,151            $ 11,324,450
     Cost of sales                                                          9,297,707              11,558,596
     Cost of sales - related party                                             70,565                      --
                                                                         ------------            ------------
     Gross profit (loss)                                                   16,163,879                (234,146)
                                                                         ------------            ------------
OPERATING EXPENSES:
     Media advertising                                                     11,178,572                 613,867
     Other selling, general and administrative                             11,651,828              10,141,645
     Other selling, general and administrative - related party              4,580,371                 178,450
     Financial advisory fee                                                        --               3,275,000
                                                                         ------------            ------------
     Total operating expenses                                              27,410,771              14,208,962
                                                                         ------------            ------------
LOSS FROM OPERATIONS                                                      (11,246,892)            (14,443,108)
                                                                         ------------            ------------
OTHER INCOME (EXPENSES):
     Interest expense, net                                                   (991,271)               (176,425)
     Unrealized loss on adjustment of derivative and warrant
         liability to fair value of underlying securities                  (5,820,026)                     --
     Other                                                                  2,686,417                 (19,728)
                                                                         ------------            ------------
                                                                           (4,124,880)               (196,153)
                                                                         ------------            ------------
LOSS BEFORE REORGANIZATION ITEMS AND INCOME TAXES                         (15,371,772)            (14,639,261)
                                                                         ------------            ------------
REORGANIZATION ITEMS:
     Provision for executory contracts                                             --                (871,420)
     Professional fees                                                     (1,786,965)               (686,683)
                                                                         ------------            ------------
                                                                           (1,786,965)             (1,558,103)
                                                                         ------------            ------------
LOSS BEFORE INCOME TAXES                                                  (17,158,737)            (16,197,364)

Income taxes benefit                                                               --                      --
                                                                         ------------            ------------
NET LOSS                                                                 $(17,158,737)           $(16,197,364)
                                                                         ============            ============
Net loss per common share - basic                                        $      (0.92)           $      (0.90)
                                                                         ============            ============
Net loss per common share - fully diluted                                $      (0.92)           $      (0.90)
                                                                         ============            ============
Weighted average common shares outstanding - basic                         18,718,114              18,002,933
                                                                         ============            ============
Weighted average common shares outstanding - fully diluted                 18,718,114              18,002,933
                                                                         ============            ============
</TABLE>


       See accompanying footnotes to the consolidated financial statements


                                       F-4
<PAGE>


                                   IGIA, INC.
                     (Formerly Tactica International, Inc.)
     CONDENSED CONSOLIDATED STATEMENTS OF DEFICIENCY IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>



                                                         Series E                    Series G
                                                      Preferred Stock            Preferred Stock                Common Stock
                                                --------------------------- ---------------------------   ------------------------
                                                   Shares         Amount     Shares           Amount       Shares         Amount
<S>                                             <C>            <C>          <C>            <C>            <C>          <C>
Balance at March 1, 2004                                 --    $         --          --    $         --        1,000   $     77,000

Exchange of net assets and liabilities,
with previous majority shareholder of
Tactica, for 100% of previous owners' equity
interest

Cancellation of Tactica International,
Inc. shares                                                                                                   (1,000)       (77,000)

Issuance of shares in connection with
merger with Diva Entertainment, Inc.                                                                       9,400,000          9,400

Receipt and subsequent cancellation of
shares received in exchange for distribution
of wholly-owned subsidiary to shareholder                                                                 (3,725,000)        (3,725)

Cancellation of shares previously issued
in connection with merger with Diva
Entertainment, Inc.                                                                                       (1,209,000)        (1,209)

Issuance of shares in exchange for
previously issued and outstanding shares
held by Diva Entertainment, Inc. preferred
shareholders                                                                                               6,693,340          6,693

Issuance of shares in exchange for
previously issued and outstanding shares
held by Diva Entertainment, Inc. common
shareholders                                                                                               5,593,593          5,594

Issuance of preferred shares in
connection with merger with Diva
Entertainment, Inc.                                 261,000             261

Issuance of shares in exchange for
services rendered                                                                                          1,250,000          1,250

Issuance of shares in exchange for
services rendered                                                                                          1,750,000          1,750

Cancellation of previously issued shares
in connection with services rendered                                                                      (1,750,000)        (1,750)

Issuance of preferred shares in exchange
for previously incurred debt                            574               1

Net loss
                                                -----------    ------------   ----------   ------------   ----------   ------------
Balance at March 1, 2005                            261,574    $        262          --    $         --   18,002,933   $     18,003

Conversion of Callable Secured
Convertible Notes                                                                                          7,560,000          7,560

Issuance of shares in exchange for
services rendered                                                                                          1,000,000          1,000

Issuance of preferred shares                                                     50,000              50

Net loss
                                                -----------    ------------   ----------   ------------   ----------   ------------
Balance at February 28, 2006                        261,574    $        262      50,000    $         50   26,562,933   $     26,563
                                                ===========    ============   ==========   ============   ==========   ============
<CAPTION>

                                                                                     Total
                                                 Additional                      Deficiency in
                                                  Paid-In       Accumulated      Stockholders'
                                                  Capital         Deficit           Equity
                                                ------------    ------------    --------------

<S>                                             <C>             <C>             <C>
Balance at March 1, 2004                        $    756,480    $(12,019,016)   $(11,185,536)

Exchange of net assets and liabilities,
with previous majority shareholder of
Tactica, for 100% of previous owners' equity
interest                                           6,198,587                       6,198,587

Cancellation of Tactica International,
Inc. shares                                           77,000                              --

Issuance of shares in connection with
merger with Diva Entertainment, Inc.                                                   9,400

Receipt and subsequent cancellation of
shares received in exchange for distribution
of wholly-owned subsidiary to shareholder              3,725                              --

Cancellation of shares previously issued
in connection with merger with Diva
Entertainment, Inc.                                    1,209                              --

Issuance of shares in exchange for
previously issued and outstanding shares
held by Diva Entertainment, Inc. preferred
shareholders                                                                           6,693

Issuance of shares in exchange for
previously issued and outstanding shares
held by Diva Entertainment, Inc. common
shareholders                                                                           5,594

Issuance of preferred shares in
connection with merger with Diva
Entertainment, Inc.                                                                      261

Issuance of shares in exchange for
services rendered                                  3,273,750                       3,275,000

Issuance of shares in exchange for
services rendered                                  4,583,250                       4,585,000

Cancellation of previously issued shares
in connection with services rendered              (4,583,250)                     (4,585,000)

Issuance of preferred shares in exchange
for previously incurred debt                       3,632,159                       3,632,160

Net loss                                                         (16,197,364)    (16,197,364)
                                                ------------    ------------    ------------
Balance at March 1, 2005                        $ 13,942,910    $(28,216,380)   $(14,255,205)

Conversion of Callable Secured
Convertible Notes                                     92,263                          99,823

Issuance of shares in exchange for
services rendered                                    119,000                         120,000

Issuance of preferred shares                           1,450                           1,500

Net loss                                                         (17,158,737)    (17,158,737)
                                                ------------    ------------    ------------
Balance at February 28, 2006                    $ 14,155,623    $(45,375,117)   $(31,192,619)
                                                ============    ============    ============
</TABLE>


       See accompanying footnotes to the consolidated financial statements


                                       F-5
<PAGE>

                                   IGIA, INC.
                     (Formerly Tactica International, Inc.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                                         Year Ended February 28,
                                                                                        2006                2005
                                                                                    ------------        ------------
<S>                                                                                 <C>                 <C>
Cash flows from operating activities:
  Net loss                                                                          $(17,158,737)       $(16,197,364)
  Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization                                                        66,939              76,520
     Unrealized loss related to  adjustment of derivative and warrant
         liability to fair value of underlying securities                              5,820,026                  --
     Accretion of callable secured convertible notes payable                             729,011                  --
     Gain on Settlement of Debts                                                      (2,684,559)                 --
     Issuance of Series G preferred stock for services                                     1,500                  --
     Common stock issued in reverse merger                                                    --              21,948
     Interest income debited to notes receivable                                              --             (51,042)
     Issuance of common stock for services                                               120,000           3,275,000
     Advertising expenses paid by officers                                               368,200                  --
     Interest expense credited to notes payable                                           95,302              74,855
  Changes in operating assets and liabilities:
     Accounts receivable                                                                (594,566)            860,846
     Inventory                                                                          (155,068)          7,519,202
     Tax refund receivable                                                                    --             107,058
     Prepaid advertising                                                                (831,181)                 --
     Other prepayments                                                                  (344,024)                 --
     Other current assets                                                                (22,291)            988,188
     Other assets                                                                             --              (7,114)
     Accounts payable                                                                  3,358,375           1,241,145
     Accounts payable - related party                                                  2,643,108                  --
     Customer advances                                                                   (35,524)                 --
     Accrued expenses                                                                  1,028,555             526,595
     Pre-petition liabilities                                                          4,534,692             485,884
                                                                                    ------------        ------------
          Net cash used in operating activities                                       (3,060,242)         (1,078,279)
                                                                                    ------------        ------------
Cash flows from investing activities
     Purchases of property and equipment                                                 (45,693)            (14,842)
                                                                                    ------------        ------------
          Net cash used in investing activities                                          (45,693)            (14,842)
                                                                                    ------------        ------------
Cash flows from financing activities
     Proceeds from line of credit                                                             --             510,037
     Pre-petition liability                                                                   --             100,000
     Proceeds from notes payable - related parties                                       435,000             300,000
     Proceeds from callable secured convertible notes payable                          2,676,662                  --
                                                                                    ------------        ------------
          Net cash provided by financing activities                                    3,111,662             910,037
                                                                                    ------------        ------------
          Net increase (decrease) in cash                                                  5,727            (183,084)
Cash and cash equivalents at beginning of year                                             2,160             185,244
                                                                                    ------------        ------------
Cash and cash equivalents at end of year                                            $      7,887        $      2,160
                                                                                    ============        ============
</TABLE>


       See accompanying footnotes to the consolidated financial statements


                                       F-6
<PAGE>

                                   IGIA, INC.
                     (Formerly Tactica International, Inc.)
                   Notes to Consolidated Financial Statements
                                February 28, 2006

(1)   Summary of Significant Accounting Policies

(a)   General

IGIA, Inc., formerly Tactica International, Inc. (the "Company", "Registrant" or
"IGIA"), is incorporated under the laws of the State of Delaware. The Company,
through its wholly-owned subsidiaries, Tactica International, Inc. ("Tactica"),
Shopflash, Inc. (Shopflash) and Kleenfast, Inc. (Kleenfast) designs, develops,
imports, and distributes personal care and household products to major retailers
and through direct marketing. We purchase our products from unaffiliated
manufacturers most of which are located in the People's Republic of China and
the United States. The consolidated financial statements include the accounts of
the Registrant and its wholly-owned subsidiaries. All significant inter-company
transactions and balances have been eliminated in consolidation.

(b)   Chapter 11 Reorganization and  Going Concern

In the ordinary course of Tactica's business, Innotrac warehoused Tactica's
products, processed orders and inventory and shipped these products to Tactica's
customers. Innotrac informed Tactica that Innotrac would not permit Tactica to
remove its inventory stored with Innotrac unless Tactica paid Innotrac all
amounts allegedly due. Despite numerous attempts to obtain financing prior to
its filing for bankruptcy protection, Tactica was unable to do so. As a result
of the foregoing factors, Tactica did not have a sufficient available source of
working capital to continue its normal operation of business. Although Tactica
and Innotrac attempted to reach an out of court agreement to resolve the terms
of payment to Innotrac, the terms could not be agreed upon. The parties agreed
upon the terms of the Stipulation, which contemplated the filing of a bankruptcy
petition and Court approval.

On October 21, 2004, Tactica, our principal subsidiary, filed a voluntary
petition for relief under Chapter 11 of Title 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court"). IGIA is not seeking bankruptcy protection.

On October 25, 2004, the Court approved, on an interim basis, a Stipulation and
Consent Order (the "Stipulation") with Innotrac Corporation ("Innotrac") (a copy
of the Stipulation and the Order approving the Stipulation on an interim basis,
are filed as an exhibit to the Form 8-K for October 21, 2004, filed by IGIA).
Following the interim approval of the Stipulation by the Court on October 25,
2004, Innotrac began processing, packing and releasing Tactica's inventory for
fulfillment of customer orders.

On June 23, 2005, the Bankruptcy Court issued the Innotrac Settlement, under
which Innotrac has taken the inventory in exchange for full satisfaction of
Tactica's liability to Innotrac that was fixed at $3,000,000. Accordingly, the
accompanying condensed consolidated balance sheet as of February 28, 2006
excludes the inventory and liabilities associated with the Innotrac Settlement.

On January 10, 2006, the Bankruptcy Court approved an agreement dated October
25, 2005 between Tactica, the Official Committee of Unsecured Creditors
appointed in Tactica's bankruptcy, IGIA, Inc., Tactica Funding 1 LLC, certain
Tactica officers and directors, and two former Tactica shareholders, including
Helen of Troy Limited ("HoT"). The agreement provided that, among other things,
each party was released of all claims and liabilities that occurred prior to the
date of the agreement. Immediately prior to the January 10, 2006 effective date
of the agreement, the Company owed Helen of Troy Limited $2,672,946, consisting
of $2,612,082 of pre-petition and $60,864 of post-petition liabilities, which
the Company wrote off and recognized a $2,672,946 gain in the fiscal year ended
February 28, 2006 that is included in Other Income. The parties also reaffirmed
the terms of the April 29, 2006 agreement between Tactica and Helen of Troy and
cancelled a license agreement that gave Tactica the right to sell Epil-Stop
products in certain international markets. The agreement also provided for
certain parties to make specified payments to a trust controlled by Tactica's
unsecured creditors.

On January 13, 2006, the Bankruptcy Court issued a confirmation order approving
the Revised First Amended Plan of Reorganization Proposed by Tactica and IGIA
(the "Plan") that provides for Tactica's exit from bankruptcy. On March 28,
2006, a Notice of Effective Date of the Plan was filed with the Bankruptcy
Court. Upon being declared effective, the Plan eliminated $14,853,421 of
Tactica's pre-petition liabilities. The plan calls for Tactica's pre-petition
creditors to receive distributions of the following assets: (i) $2,175,000 cash
paid by Tactica's former shareholders; (ii) $700,000 cash paid by Tactica; (iii)
$75,000 cash paid by the Registrant, Tactica, and the Board Members; (iv) up to
$275,000 cash paid by Innotrac Corporation; (v) the rights and proceeds in
connection with avoidance and other actions including uncollected pre-petition
invoices payable by a Tactica customer; and (vi) 5,555,033 newly issued shares
of the Registrant's common stock that was in number equal to 10% of the
outstanding shares of common stock as of the Plan's effective date and is
exempted from the registration requirements of Section 5 of the Securities Act
of 1933, as amended and State registration requirements by virtue of Section
1145 of the Bankruptcy Code and applicable non-bankruptcy law. Certain
post-petition creditors, including firms that provided professional services to
Tactica, have submitted a total of approximately $583,000 in claims to the
Bankruptcy Court for post-petition administrative expenses. Tactica is reviewing
the administrative expense claims to determine whether to seek possible
settlements and payment schedules or a resolution by the Bankruptcy Court.


                                      F-7
<PAGE>

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the accompanying
financial statements during the fiscal years 2006 and 2005, the Company incurred
losses from operations of $17,158,737 and $16,197,364, respectively. These
factors, among others, may indicate that the Company will be unable to continue
as a going concern for a reasonable period of time.

The Company is actively pursuing additional equity financing through discussions
with investment bankers and private investors. There can be no assurance that
the Company will be successful in its effort to secure additional equity
financing.

The Company's existence is dependent upon management's ability to develop
profitable operations and resolve its liquidity problems. Management anticipates
the Company will attain profitable status and improve its liquidity through the
continued developing, marketing and selling of its products and additional
equity investments in the Company. However, no assurance can be given that
management's actions will result in profitable operations or the resolution of
its liquidity problems. The accompanying consolidated financial statements do
not include any adjustments that might result should the Company be unable to
continue as a going concern.

Tactica's Balance Sheet as of February 28, 2006 and Statement of Operations for
the fiscal year ended February 28, 2006 is as follows:

                           Tactica International, Inc
                              Debtor-in-Possession
                                   (Unaudited)

                                  Balance Sheet

                                                                    February 28,
                               Assets                                  2006
                                                                   ------------
Due from affliate                                                  $  2,457,115
Other current assets                                                  1,095,289
                                                                   ------------
      Total current assets                                            3,552,404

Property and equipment, net                                             116,180
                                                                   ------------
   Total Assets                                                    $  3,668,584
                                                                   ============

          Liabilities and Deficiency in Stockholders' Equity

Pre-petition liabilities, including related party of $455,734      $ 14,853,421
Due to parent                                                         6,905,344
Due to related party                                                  2,476,919
Other current liabilities                                             9,368,129
                                                                   ------------
    Total current liabilities                                        33,603,813

Total Deficiency in Stockholders' Equity                            (29,935,229)
                                                                   ------------

   Total Liabilities and Deficiency in Stockholders' Equity        $  3,668,584
                                                                   ============



                                       F-8
<PAGE>

                             Statement of Operations
                                                                     Year Ended
                                                                    February 28,
                                                                       2006
                                                                   ------------
Revenues:
Net sales                                                          $ 20,410,374
Cost of sales                                                         7,982,607
Cost of sales - related party                                            70,565
                                                                   ------------
Gross profit                                                         12,357,202

Operating Expenses:
Media advertising                                                     8,517,274
Other selling, general and administrative                             9,557,383
Other selling, general and administrative - related party             3,784,299
                                                                   ------------
Total Operating Expenses                                             21,858,956
                                                                   ------------
Loss from Operations                                                 (9,501,754)
                                                                   ------------
Other Income (Expenses):
Interest expense, net                                                  (220,270)
Other                                                                 2,686,278
                                                                   ------------
                                                                      2,466,008
                                                                   ------------
Reorganization Item:
Professional fees                                                    (1,786,965)
                                                                   ------------
Net loss before income tax benefit                                   (8,822,711)

Income tax benefit                                                           --
                                                                   ------------

Net Loss                                                           $ (8,822,711)
                                                                   ============

(c)   Revenue Recognition

Revenues are recognized in the period that services are provided. For revenue
from product sales, the Company recognizes revenue in accordance with Staff
Accounting Bulletin No. 104, Revenue Recognition ("SAB104"), which superceded
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
("SAB101"). SAB 101 requires that four basic criteria must be met before revenue
can be recognized: (1) persuasive evidence of an arrangement exists; (2)
delivery has occurred; (3) the selling price is fixed and determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4) are
based on management's judgments regarding the fixed nature of the selling prices
of the products delivered and the collectibility of those amounts. Provisions
for discounts and rebates to customers, estimated returns and allowances, and
other adjustments are provided for in the same period the related sales are
recorded. The Company defers any revenue for which the product has not been
delivered or is subject to refund until such time that the Company and the
customer jointly determine that the product has been delivered or no refund will
be required.

SAB 104 incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"),
Multiple-Deliverable Revenue Arrangements. EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF 00-21 on
the Company's consolidated financial position and results of operations was not
significant.

(d)   Consideration Paid to Customers

We offer our customers certain incentives in the form of cooperative advertising
arrangements, product markdown allowances, trade discounts, cash discounts, and
slotting fees. We account for these incentives in accordance with Emerging
Issues Task Force Issue No. 01-9, Accounting for Consideration Given by a Vendor
to a Customer, ("EITF 01-9"). Markdown allowances, trade discounts, cooperative
advertising program participation and cash discounts are all recorded as
reductions of Net sales. Customer incentives included in sales approximated
$8,100 and $652,000 for fiscal year 2006 and 2005, respectively.


                                       F-9
<PAGE>

(e) Shipping and Handling Revenues and Expenses

We report revenue from shipping and handling charges on the Net sales line of
our Statements of Operations, in accordance with paragraph 5 of Emerging Issues
Task Force Issue 00-10, Accounting for Shipping and Handling Fees and Costs. We
only include charges for shipping and handling in Net sales for sales made to
direct response customers and retail customers ordering relatively small dollar
amounts of product. Our shipping and handling expenses far exceed our shipping
and handling revenues. Shipping and handling expenses are included in our
Statements of Operations on the Other operating expenses line. Our expenses for
shipping and handling for fiscal year 2006 approximated $4,975,000 and
$2,442,000 for fiscal year 2005.

(f)   Advertising Expense

Advertising expense is comprised of media, agency, and production expenses. In
accordance with Statement of Position 93-7, Reporting on Advertising Costs,
direct response advertising expenses are charged to expense in the period in
which the related revenues are recognized. Certain production costs to produce
direct response advertising are capitalized and amortized over the expected life
of the advertisement. Amortization expense relating to the production costs for
the fiscal year 2006 and 2005 approximated $27,000 and 428,000, respectively.
Prepaid advertising was $927,343 as of February 28, 2006.

(g)   Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.

(h)   Valuation of Accounts Receivable

We maintain an allowance for doubtful accounts to reduce amounts to their
estimated realizable value. A considerable amount of judgment is required when
we assess the realization of accounts receivables, including assessing the
probability of collection and the current credit-worthiness of each customer. If
the financial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, an additional provision for
doubtful accounts could be required. We initially record a provision for
doubtful accounts based on our historical experience, and then adjust this
provision at the end of each reporting period based on a detailed assessment of
our accounts receivable and allowance for doubtful accounts. In estimating the
provision for doubtful accounts, we consider: (i) the aging of the accounts
receivable; (ii) trends within and ratios involving the age of the accounts
receivable; (iii) the customer mix in each of the aging categories and the
nature of the receivable; (iv) our historical provision for doubtful accounts;
(v) the credit worthiness of the customer; and (vi) the economic conditions of
the customer's industry as well as general economic conditions, among other
factors.

(i)   Inventories and Cost of Goods Sold

Inventories consist primarily of finished products held in public warehouses
that are stated at the lower of cost or market, determined on a FIFO (first-in,
first-out) basis. A product's cost is comprised of the amount that we pay our
manufacturer for product, tariffs and duties associated with transporting
product across national borders and freight costs associated with transporting
the product from our manufacturers to our warehouse locations. Innotrac held
Tactica's products at its Reno, Nevada facility under terms of the Stipulation
and a first priority secured interest in the inventory. On June 23, 2005, the
Bankruptcy Court issued the Innotrac Settlement, under which Innotrac has taken
the inventory in exchange for full satisfaction of Tactica's liability to
Innotrac that was fixed at $3,000,000. Accordingly, the accompanying condensed
consolidated balance sheet as of February 28, 2006 excludes the inventory and
liabilities associated with the Innotrac Settlement.

The Company recorded a charge of $8,821 and $2,305,252 for impairment of
previously acquired inventory during the fiscal years ending 2006 and 2005,
respectively.

The Cost of Goods Sold line item on the Statements of Operations is comprised of
the book value (lower of cost or net realizable value) of inventory sold to
customers during the reporting period.

(j)  Property and Equipment

Property and equipment is capitalized at cost and depreciated using the
straight-line method over the estimated useful lives of the various assets.
Expenditures for normal maintenance and repairs are expensed as incurred. The
cost of property and equipment sold or otherwise retired and the related
accumulated depreciation is removed from the accounts, with any resulting gain
or loss included in the results from operations.


                                      F-10
<PAGE>

(k)  Income Taxes

     The Company has adopted Financial Accounting Standard No. 109 ("SFAS 109")
which requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statement or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between financial statements
and tax basis of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse. These temporary
differences include derivative costs, depreciation, allowance for doubtful
accounts, inventory valuation adjustments, accrued expenses and net operating
losses. Deferred taxes are reduced by a valuation allowance to the extent that
realization of the related deferred tax asset is not assured.

(l)   Use of Estimates

The preparation of financial statements requires the Company to make estimates
and assumptions that affect reported amounts of assets, liabilities, revenue and
expenses. Such estimates include the allowance for doubtful accounts, inventory
valuation, reserve for sales returns, derivative valuation, warranty reserves
and disclosure of the contingent assets and liabilities at the date of the
consolidated financial statements. Actual results could differ from those
estimates.

(m)   Reclassification

Certain reclassifications have been made to conform the prior period's data to
the current presentation. These reclassifications had no effect on reported
losses.

(n)   Long-Lived Assets

The Company has adopted Statement of Financial Accounting Standards No. 144
("SFAS 144"). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Events relating to recoverability may include
significant unfavorable changes in business conditions, recurring losses, or a
forecasted inability to achieve break-even operating results over an extended
period. The Company evaluates the recoverability of long-lived assets based upon
forecasted undercounted cash flows. Should impairment in value be indicated, the
carrying value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate disposition of
the asset. SFAS No. 144 also requires assets to be disposed of be reported at
the lower of the carrying amount or the fair value less costs to sell.

(o) Net Loss Per Common Share

The Company computes earnings per share under Financial Accounting Standard No.
128, "Earnings Per Share" ("SFAS 128"). Net loss per common share is computed by
dividing net loss by the weighted average number of shares of common stock and
dilutive common stock equivalents outstanding during the year. Dilutive common
stock equivalents consist of shares issuable upon conversion of convertible
preferred shares and the exercise of the Company's stock options and warrants
(calculated using the treasury stock method). During 2006, common stock
equivalents are not considered in the calculation of the weighted average number
of common shares outstanding because they would be anti-dilutive, thereby
decreasing the net loss per common share.

(p)   Liquidity

As shown in the accompanying financial statements, the Company has incurred a
net loss of $17,158,737 and $16,197,364 during the year ended February 28, 2006
and 2005, respectively. The Company's current liabilities exceeded its current
assets by $21,859,586 as of February 28, 2006. The Company's liabilities
exceeded its current assets by $31,308,799 as of February 28, 2006.

(q)   Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company
to concentrations of credit risk, consist primarily of cash, cash equivalents
and accounts receivable. The Company places its cash and temporary cash
investments with credit quality institutions. At times, such investments may be
in excess of the FDIC insurance limit. The Company periodically reviews its
trade receivables in determining its allowance for doubtful accounts. The
allowance for doubtful accounts was $114,933 at February 28, 2006.


                                      F-11
<PAGE>

(r)   Stock Based Compensation

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123". This statement
amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
statement amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company has chosen to continue to account
for stock-based compensation using the intrinsic value method prescribed in APB
Opinion No. 25 and related interpretations. Accordingly, compensation expense
for stock options is measured as the excess, if any, of the fair market value of
the Company's stock at the date of the grant over the exercise price of the
related option.

Had compensation costs for the Company's stock options been determined based on
the fair value at the grant dates for the awards, the Company's net loss and
losses per share would have been as follows:

<TABLE>
<CAPTION>

                                                                                    2006              2005
                                                                              ----------------   ---------------
<S>                                                                           <C>                <C>
Net loss - as reported                                                        $   (17,158,737)   $  (16,197,364)
Add: Total stock based employee compensation expense as reported under
     the intrinsic value method (APB. No. 25)                                              --                --
Deduct: Total stock based employee compensation expense as reported
        under the fair value based method (SFAS No. 123)                              (24,500)               --
                                                                              ----------------   ---------------
Net loss - Pro Forma                                                          $   (17,134,237)   $  (16,197,364)
                                                                              ================   ===============
Net loss attributable to common stockholders - Pro forma                      $          (.92)   $        $(.90)
                                                                              ================   ===============
Basic (and assuming dilution) loss per share - as reported                    $          (.92)   $         (.90)
                                                                              ================   ===============
Basic (and assuming dilution) loss per share - Pro forma                      $          (.92)   $         (.90)
                                                                              ================   ===============
</TABLE>

On December 16, 2004, the Financial Accounting Standards Board ("FASB") issued
FASB Statement No. 123R (revised 2004), "Share-Based Payment" which is a
revision of FASB Statement No. 123, "Accounting for Stock-Based Compensation".
Statement 123R supersedes APB opinion No. 25, "Accounting for Stock Issued to
Employees", and amends FASB Statement No. 95, "Statement of Cash Flows".
Generally, the approach in Statement 123R is similar to the approach described
in Statement 123. However, Statement 123R requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro-forma disclosure is no longer
an alternative. On April 14, 2005, the SEC amended the effective date of the
provisions of this statement. The effect of this amendment by the SEC is that
the Company will have to comply with Statement 123R and use the Fair Value based
method of accounting no later than the first quarter of our fiscal year 2007. We
will adopt SFAS No. 123(R) on March 1, 2006.

SFAS No. 123(R) permits public companies to adopt its requirements using one of
two methods:

A "modified prospective" method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of SFAS No.
123(R) for all share-based payments granted after the effective date and (b)
based on the requirements of SFAS No. 123(R) for all awards granted to employees
prior to the effective date of SFAS No. 123(R) that remain unvested on the
effective date; or

A "modified retrospective" method which includes the requirements of the
modified prospective method described above, but also permits entities to
restate based on the amounts previously recognized under SFAS No. 123(R) for
purposes of pro forma disclosures either (a) all prior periods presented or (b)
prior interim periods of the year of adoption.

The adoption of SFAS No. 123(R)'s fair value method will have an impact on our
results of operations, although it will have an insignificant impact on our
overall financial position. During the fiscal year ended February 28, 2006, we
issued an additional 1,275,000 options to our employees and directors whose fair
values at the date of issue was $.02 per share. At February 28, 2006, we had
1,275,000 options available for issue under our employee stock option plan.


                                      F-12
<PAGE>

(s)   Comprehensive Income

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS 130"), establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company does not have any items of comprehensive
income to report.

(t)   Segment Information

Statement of Financial Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information ("SFAS 131") establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by the
chief operating decision maker, or decision-making group, in making decisions on
how to allocate resources and assess performance. The information disclosed
herein, materially represents all of the financial information related to the
Company's principal operating segment.

(u)   Research and Development

The Company accounts for research and development costs in accordance with
Statement of Financial Accounting Standards No. 2, "Accounting for Research and
Development Costs" ("SFAS 2"). Under SFAS 2, all research and development costs
must be charged to expense as incurred. Accordingly, internal research and
development costs are expensed as incurred. Third-party research and development
costs are expensed when the contracted work has been performed or as milestones
have been achieved. Company-sponsored research and development costs related to
both present and future products are expensed in the period incurred. The
Company has not incurred any research and product development costs for the
fiscal year 2006 or 2005.

(v)   Beneficial Conversion Feature and  Derivative Financial Instruments

Beneficial Conversion Feature

The convertible feature of certain of our convertible notes provides for a rate
of conversion that is below market value. Such feature is normally characterized
as a "beneficial conversion feature" ("BCF"). Pursuant to Emerging Issues Task
Force Issue No. 98-5 ("EITF 98-5"), "Accounting For Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratio" and
EITF Issue No. 00-27,"Application of EITF Issue No. 98-5 to Certain Convertible
Instruments," the relative fair values of the BCFs have been recorded as a
discount from the face amount of the respective debt instrument. The Company is
amortizing the discount using the effective interest method through maturity of
such instruments. The Company will record the corresponding unamortized debt
discount related to the BCF and warrants as interest expense when the related
instrument is converted into the Company's common stock.

Derivative Finanacial Instruments

In connection with the issuance of certain convertible notes payable, the terms
of the notes payable provided for a conversion of the notes into shares of the
Company's common stock at a rate which was determined to be variable. The
Company determined that the variable conversion feature was an embedded
derivative instrument pursuant to SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," as amended. The accounting treatment of
derivative financial instruments required that the Company record the
derivatives and related warrants at their fair values as of the inception date
of the note agreements and at fair value as of each subsequent balance sheet
date. In addition, under the provisions of EITF Issue No. 00-19, "Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in a
Company's Own Stock," as a result of entering into the note agreements, the
Company was required to classify all other non-employee warrants as derivative
liabilities and record them at their fair values at each balance sheet date. Any
change in fair value was recorded as non-operating, non-cash income or expense
at each balance sheet date. If the fair value of the derivatives was higher at
the subsequent balance sheet date, the Company recorded a non-operating,
non-cash charge. If the fair value of the derivatives was lower at the
subsequent balance sheet date, the Company recorded non-operating, non-cash
income.


                                      F-13
<PAGE>

(w)   New Accounting Guidance

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations, an interpretation of FASB Statement
No. 143," ("FIN 47") which requires an entity to recognize a liability for the
fair value of a conditional asset retirement obligation when incurred if the
liability's fair value can be reasonably estimated. The Company is required to
adopt the provisions of FIN 47 no later than the first quarter of fiscal 2006.
The Company does not expect the adoption of this Interpretation to have a
material impact on its consolidated financial position, results of operations or
cash flows.

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154
("SFAS 154"), "Accounting Changes and Error Corrections" which provides guidance
on the accounting for and reporting of accounting changes and correction of
errors. This statement changes the requirements for the accounting for and
reporting of a change in accounting principle and applies to all voluntary
changes in accounting principle. It also applies to changes required by an
accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. This statement is effective for
accounting changes and corrections of errors made in fiscal years beginning
after December 15, 2005. The Company does not anticipate a material effect upon
the adoption of this statement.

On November 3, 2005, the FASB issued FASB Staff Position on SFAS 115 and 124,
The Meaning of Other-Than-Temporary Impairment and its Application to Certain
Investments ("FSP FAS 115-1" and "124-1"). This FSP addresses the determination
as to when an investment is considered impaired, whether that impairment is
other than temporary, and the measurement of an impairment loss. It is effective
for reporting periods beginning after December 15, 2005. Accordingly, the
Company is reviewing its processes and will adopt the required accounting and
disclosures.

On February 16, 2006 the FASB issued SFAS 155, "Accounting for Certain Hybrid
Instruments," which amends SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," and SFAS 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." SFAS 155 allows financial
instruments that have embedded derivatives to be accounted for as a whole
(eliminating the need to bifurcate the derivative from its host) if the holder
elects to account for the whole instrument on a fair value basis. SFAS 155 also
clarifies and amends certain other provisions of SFAS 133 and SFAS 140. This
statement is effective for all financial instruments acquired or issued in
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption of this new standard to have a material impact on its financial
position, results of operations or cash flows.

In March 2006, the FASB issued FASB Statement No. 156, Accounting for Servicing
of Financial Assets - an amendment to FASB Statement No. 140. Statement 156
requires that an entity recognize a servicing asset or servicing liability each
time it undertakes an obligation to service a financial asset by entering into a
service contract under certain situations. The new standard is effective for
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption of this new standard to have a material impact on its financial
position, results of operations or cash flows.

(2)   Acquisition and Capital Restructure

Corporate Restructure of Tactica

Through April 29, 2004, Tactica was a majority owned subsidiary of HoT. On April
29, 2004, the Company and its stockholders entered into a series of transactions
that consolidated ownership of Tactica, whereby the minority stockholders, who
collectively owned a 45% interest in the Company, contributed $3,030,000 in
marketable securities to Tactica. The majority stockholder, HoT, sold its 55%
ownership interest in Tactica to the minority stockholders and accepted the
marketable securities and rights to certain Tactica tax refunds and intellectual
properties in full satisfaction of $17,261,000 owed by Tactica under the secured
line of credit and loan payable. In connection with these transactions, the
Company's loans to the minority stockholders were eliminated.

The assets transferred and liabilities assumed were valued at their historical
costs, which did differ materially from their fair values.

The Company accounted for the transaction in accordance with APB No. 29,
Accounting for Non Monetary Transactions, and as a result, the Company realized
a net forgiveness of indebtedness of $6,198,587 as an adjustment to additional
paid in capital. No gain or loss was recognized in connection with the
transaction. On June 11, 2004, the Company entered into a Securities Purchase
Agreement and Plan of Reorganization ("Merger") with Diva Entertainment, Inc.
("Diva"), an inactive publicly registered shell corporation with no significant
assets or operations. In accordance with Statement of Financial Accounting
Standards No. 141, "Business Combinations", the Company was the acquiring
entity. While the transaction was accounted for using the purchase method of
accounting, in substance the Agreement was a recapitalization of the Company's
capital structure.

For accounting purposes, the Company has accounted for the transaction as a
reverse acquisition and the Company was the surviving entity. From July 1999,
until the date of the Merger, Diva was an inactive entity, with no operations.
The Company did not recognize goodwill or any intangible assets in connection
with the transaction.


                                      F-14
<PAGE>

Diva changed its name to IGIA, Inc. and effective with the Merger, 6,693,340
shares of IGIA Common Stock were issued for the conversion of all outstanding
Diva Series A, B and C convertible preferred stock. In addition, IGIA issued
5,593,593 shares of common Stock in exchange for the remaining outstanding
shares of Common Stock held by Diva's shareholders.

Effective with the Merger, Diva received 3,725,000 shares of Common Stock from a
stockholder in exchange for its wholly-owned subsidiary that was also named Diva
Entertainment, Inc, an entity with no material assets or significant operations.
In connection with the exchange, Diva cancelled its 3,725,000 shares. No gain or
loss was recognized in connection with this transaction.

Effective with the Merger, all previously outstanding 1,000 shares of common
stock were exchanged for an aggregate of 9,400,000 shares of the Diva's Common
Stock and 261,000 shares of Series E Convertible Preferred Stock. The value of
the stock that was issued was the historical cost of the Diva's net tangible
assets, which did not differ materially from their fair value.

Effective with the Merger, Diva agreed and cancelled 1,209,000 shares of its
Common Stocks.

IGIA issued a total of 3,000,000 shares of Common Stock to its financial
advisors of which 1,250,000 shares related to the Merger and 1,750,000 shares
were subject to release from escrow upon the Company raising certain additional
capital within a specified time period, a contingency that was not satisfied. As
a result, the 1,750,000 shares were returned to the Company and cancelled. These
shares were valued at the weighted average of $2.62 per share which represented
the fair value of services received, which did not differ materially from the
value of the shares issued.

The Company and certain Tactica vendors agreed to convert $3,632,159 of accounts
payable into IGIA Series E Convertible Preferred Stock. IGIA issued 574 new
Series E shares and caused certain additional Series E shares to be given by
Company management stockholders to the vendors.

The accompanying financial statements present the historical financial
condition, results of operations and cash flows of the Company prior to the
merger with Diva.

(3) Accounts Receivable

Accounts receivable was comprised of the following at February 28, 2006:

Accounts receivable                                        $    803,132
Less: allowance for doubtful accounts                          (114,933)
                                                           ------------
Accounts receivable, net                                   $    688,199
                                                           ============

In addition, IGIA has an accounts receivable of $6,905,344 that is due from
Tactica as of February 28, 2006, which resulted from IGIA's issuance of shares
of Common Stock in satisfaction of Tactica's financial advisory fee and issuance
of Series E shares to Tactica's vendors (see Note 2). The receivable has been
eliminated in the consolidated financial statements as of February 28, 2006 and
subsequently, in accordance with the Plan (see Notes 1a and 13), IGIA converted
its receivable from Tactica into an equity investment.

(4) Inventories

Inventories are stated at the lower of cost or market determined by the first-in
first-out method. Components of inventories as of February 28, 2006, are as
follows:

Finished goods                                             $    478,535
Less: write down                                                (34,174)
                                                           ------------
Total                                                      $    444,361
                                                           ============

(5)  Property and Equipment

A summary of property and equipment at February 28, 2006 is as follows:


                                                 Useful
                                             lives (years)
                                             ------------
Furniture and fixtures                             7        $      50,318
Computer equipment                                 5              272,782
Office equipment                                   5               95,136
Computer software                                  3               61,110
Tooling costs                                      1               29,500
Vehicle                                            5               21,264
                                                            -------------
                                                                  530,110
Less: accumulated depreciation                                   (413,930)
                                                            -------------
                                                            $     116,180
                                                            =============


                                      F-15
<PAGE>

Depreciation and amortization expense was approximately $67,000 and $77,000 for
the year ended February 28, 2006 and 2005, respectively.

(6)   Pre-Petition Liabilities

Under the Bankruptcy Code, Tactica's liabilities as of the October 21, 2004
filing date are deemed pre-petition liabilities that are subject to a Court
supervised and approved resolution. The Company's pre-petition liabilities of
$14,853,421 are carried on the balance sheet as of February 28, 2006 and until
such time as they are liquidated through the Stipulation and other bankruptcy
proceedings described in Footnote 13.

Following the January 13, 2006 Bankruptcy Court confirmation order that approved
the Plan providing for Tactica's exit from bankruptcy, Tactica made agreements
with several pre-petition creditors for the purposes of fixing the amount of
their pre-petition claims to be settled under the Plan. The settlement of
pre-petition claims, which is necessary for Tactica's Plan to become effective,
resulted in final pre-petition claim amounts that differed from previous
pre-petition liability amounts. Tactica's $14,853,421 in pre-petition
liabilities as of February 28, 2006 includes $4,523,079 resulting from such
post-confirmation settlements and the accompanying charge is included in the
loss from operations reported in the Company's consolidated statement of
operations for the year then ended.

Tactica's pre-petition liabilities are subject to comprise and include a
$250,000 remainder owed to the U.S. Federal Trade Commission for an April 2004
judgment that is secured by certain customer accounts receivable, a $813,094
liability for remaining rent due under a Sublease Agreement that the Company
rejected and a $100,000 convertible note payable including interest at 10% per
annum that included warrants to purchase 100,000 shares of Common Stock at $1.00
per share over a five-year period (the "Bridge Note"). Prior to maturing in
March 2005, the Bridge Note holder had the option of converting unpaid note
principal together with accrued and unpaid interest to the Company's common
stock at $1.00 per share. In accordance with Emerging Issues Task Force Issue
98-5, Accounting for Convertible Securities with a Beneficial Conversion
Features or Contingently Adjustable Conversion Ratios ("EITF 98-5"), the Company
recognized an imbedded beneficial conversion feature present in the Bridge Note
and determined that an insignificant portion of the proceeds was attributable to
the intrinsic value of that feature and also to the warrants.

(7)   Callable Secured Convertible Notes

A summary of Callable Secured Convertible Notes at February 28, 2006 is as
follows:

<TABLE>
<CAPTION>

                                                                                             February 28, 2006
                                                                                            --------------------

<S>                                                                                         <C>
Callable Secured Convertible Notes; 8% per annum; due three years from the dates
of issuance; Noteholder has the option to convert unpaid note principal of the
Company's common stock at the lower of (i) $0.04 or (ii) 50% of the average of
the three lowest intra-day trading prices for the common stock on a principal
market for the 20 trading days before, but not including, the conversion date.
The Company granted the noteholder a security interest in substantially all of
the Company's assets and intellectual property and registration rights.                      $           629,187

Less: current portion                                                                                        --
                                                                                            --------------------
Callable Secured Convertible Notes Payable - long term portion                               $          629,187
                                                                                            ====================
</TABLE>


                                      F-16
<PAGE>

To obtain funding for the purpose of providing a loan to Tactica, in the form of
debtor in possession financing and exit financing in the context of Tactica's
chapter 11 proceedings, the Company entered into a Securities Purchase Agreement
with four accredited investors ("Investors" or "Selling Stockholders") on March
23, 2005 for the sale of (i) $3,000,000 in Callable Secured Convertible Notes
and (ii) warrants to buy 6,000,000 shares of common stock. The Company sold to
third party investors $1,000,000 in Callable Secured Convertible Notes on March
24, 2005 and, following the filing of the Company's registration statement on
April 14, 2005, an additional $1,000,000 on April 20, 2005 and an additional
$1,000,000 on December 22, 2005 upon the Company's registration statement being
declared effective.

Accordingly, as of February 28, 2006 the Company received net proceeds from the
sales of $2,676,662, net of $323,338 of expenses and prepaid interest pursuant
to the Securities Purchase Agreement which the Company capitalized and amortizes
over the maturity period (three years) of the Callable Secured Convertible
Notes.

The Callable Secured Convertible Notes bear interest at 8% and are convertible
into the Company's common stock, at the Investors' option, at the lower of (i)
$0.04 or (ii) 50% of the average of the three lowest intra-day trading prices
for the common stock on a principal market for the 20 trading days before, but
not including, the conversion date. Interest is due and payable quarterly,
except in any month in which the Company's trading price, as defined, is greater
than $.03125. The full principal amount of the Callable Secured Convertible
Notes is due upon default. The warrants are exercisable until five years from
the date of issuance at a purchase price of $0.03 per share. In addition, the
conversion price of the Callable Secured Convertible Notes and the exercise
price of the warrants will be adjusted in the event that the Company issues
common stock at a price below the fixed conversion price, below market price,
with the exception of any securities issued in connection with the Securities
Purchase Agreement. The conversion price of the Callable Secured Convertible
Notes and the exercise price of the warrants may be adjusted in certain
circumstances such as if the Company pays a stock dividend, subdivide or combine
outstanding shares of common stock into a greater or lesser number of shares, or
take such other actions as would otherwise result in dilution of the Selling
Stockholders' position. The Selling Stockholders have contractually agreed to
restrict their ability to convert or exercise their warrants and receive shares
of the Company's common stock such that the number of shares of common stock
held by the Investors and their affiliates after such conversion or exercise
does not exceed 4.99% of the then issued and outstanding shares of common stock.
In addition, the Company has granted the Investors registration rights and a
security interest in substantially all of the Company's assets and a security
interest in its intellectual property.

The transaction, to the extent that it is to be satisfied with common stock of
the Company would normally be included as equity obligations. However, in the
instant case, due to the indeterminate number of shares which might be issued
under the embedded convertible host debt conversion feature, the Company is
required to record a liability relating to both the detachable warrants and the
embedded convertible feature of the note payable (included in the liabilities as
a "derivative liability").

The accompanying financial statements comply with current requirements relating
to warrants and embedded warrants as described in FAS 133, EITF 98-5 and 00-27,
and APB 14 as follows:

         o        The Company allocated the proceeds received between
                  convertible debt and the detachable warrants based upon the
                  relative fair market values on the dates the proceeds were
                  received.

         o        Subsequent to the initial recording, the increase in the fair
                  value of the detachable warrants, determined under the
                  Black-Scholes option pricing formula and the increase in the
                  intrinsic value of the embedded derivative in the conversion
                  feature of the convertible debentures are accrued as
                  adjustments to the liabilities at February 28, 2006.

         o        The expense relating to the increase in the fair value of the
                  Company's stock reflected in the change in the fair value of
                  the warrants and derivatives (noted above) is included as an
                  other income item in the form of an unrealized interest
                  expense arising from convertible financing on the Company's
                  balance sheet.

         o        Accreted principal of $729,011 as of February 28, 2006.


                                      F-17
<PAGE>

The following table summarizes the various components of the convertible
debentures as of February 28, 2006:



            Callable Secured Convertible Notes                 $   629,187
            Warrant liability                                      119,496
            Derivative liability                                 8,700,530
                                                               -----------
                                                                 9,449,213

            Adjustment of derivative and warrant liability
              to fair value                                     (2,270,989)

            Unrealized loss related to conversion of
              the Callable Secured Convertible Notes to
              common shares charged to interest expense         (5,820,026)

            Accretion of principal related to the Callable
              Secured Convertible Notes                           (729,011)

                                                               -----------

            Total Callable Secured Convertible Notes           $   629,187
                                                               ===========


(8)   Income Taxes

The provision for income taxes for the fiscal years 2006 and 2005 differs from
the amount which would be expected as a result of applying the statutory tax
rates to the losses before income taxes due primarily to changes in the
valuation allowance to fully reserve net deferred tax assets.

The tax effects of significant temporary differences representing deferred tax
assets at February 28, 2006 were as follows:

             Net operating loss carryforwards            $      7,960,000
             Valuation allowance                               (7,960,000)
                                                         ----------------

             Net deferred tax assets                     $             --
                                                         ================

At February 28, 2006, the Company had net operating loss carry forwards of
approximately $30.6 million. The realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which those
temporary differences become deductible. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. Given
the uncertainty over the Company's ability to continue as a going concern,
realization of the deferred tax assets is more likely than not, therefore the
asset is fully offset by a valuation allowance.

As of the end of fiscal year 2006, the net operating loss carryforwards included
in the gross deferred tax asset totaling approximately $30.6 million will expire
if not utilized by fiscal year 2027.

The components of income tax expense were as follows:

                           Current       $          0
                           Deferred                 0
                                         ------------

                                         $          0
                                         ============


                                      F-18
<PAGE>

(9)  Capital Stock

We are authorized to issue 1,000,000,000 shares of Common Stock having a par
value of $0.001 per share. We are authorized to issue 1,000,000 shares of
preferred stock, having a par value of $0.001 per share, of which 261,574 have
been designated Series E Convertible Preferred Stock. As of February 28, 2006,
we had 26,562,933 shares of Common Stock, 261,574 shares of Series E Convertible
Preferred Stock, and 50,000 shares of Series G Preferred Stock issued and
outstanding.

Preferred Stock

Our preferred stock may be issued in one or more series, the terms of which may
be determined at the time of issuance by our board of directors, without further
action by stockholders, and may include voting rights (including the right to
vote as a series on particular matters), preferences as to dividends and
liquidation, conversion, redemption rights and sinking fund provisions.

Series E Convertible Preferred Stock

Current holders of our preferred stock (i) have general ratable rights to
dividends from funds legally available therefore, when, as and if declared by
the Board of Directors; (ii) are entitled to share ratably in all assets
available for distribution to stockholders upon liquidation, dissolution or
winding up of our affairs; (iii) do not have preemptive, subscription or
conversion rights, nor are there any redemption or sinking fund provisions
applicable thereto; and (iv) are entitled to one vote per share on all matters
on which stockholders may vote at all stockholder meetings. The preferred stock
does not have cumulative voting rights.

As of February 28, 2006, there were 261,574 shares of our Series E Convertible
Preferred Stock issued and outstanding. All issued and outstanding shares of
Series E Convertible Preferred Stock will automatically convert into an
aggregate of 26,157,421 shares of our Common Stock upon satisfaction of certain
shareholder requirements.

Subsequent to the Merger and during the fiscal year 2005, the Company issued an
aggregate of 574 shares of Series E preferred stock to settle certain
outstanding accounts payable of $3,632,159.

Series G Preferred Stock

On March 31, 2005, we issued 25,000 shares of Series G preferred stock to each
of Avi Sivan, the Chief Executive Officer of the Company, and Prem Ramchandani,
the President of the Company. The Series G preferred stock was issued to Mr.
Sivan and Mr. Ramchandani in consideration of the fact that in connection with
the recent financing obtained by the Company, Mr. Sivan and Mr. Ramchandani
agreed to pledge all of their equity ownership in the Company to secure the
obligations of the Company. Without such pledge of equity, including a pledge of
the Series G preferred stock by Mr. Sivan and Mr. Ramchandani, the transaction
would not have been consummated. The stated value of the Series G preferred
stock at the time of issuance was $0.03 per share. As of February 28, 2006,
there were 50,000 shares of Series G preferred stock issued and outstanding.

Current holders of Series G preferred stock (i) have general ratable rights to
dividends from funds legally available therefrom, when, as and if declared by
the Board of Directors; (ii) are entitled to share ratably in all assets
available for distribution to stockholders upon liquidation, dissolution or
winding up of our affairs; (iii) do not have preemptive, subscription or
conversion rights, nor are there any redemption or sinking fund provisions
applicable thereto; and (iv) are entitled to 10,000 votes per share on all
matters on which stockholders may vote at all stockholder meetings. The
preferred stock does not have cumulative voting rights.

Common Stock

In connection with assistance provided to the Company in arranging and
concluding the funding discussed in Note 7, on December 22, 2005, the Company
issued 1,000,000 shares of its common stock at $.12 per share, which represented
the fair value of the services received and approximated the value of the stock
issued.

During the three months ended February 28, 2006, holders of the Callable Secured
Convertible Notes dated March 22, 2005 exercised a series of partial conversions
and were issued 7,560,000 shares of common stock at a conversion price averaging
$.0132 per share.

Warrants

As of February 28, 2006, there were outstanding warrants to purchase 100,000
shares of common stock at $1.00 per share that are exercisable within a
five-year period ending August 2, 2009 and 6,000,000 shares of common stock at
$.03 per share that are exercisable within a five-year period ending March 23,
2010 through December 21, 2010.


                                      F-19
<PAGE>

Non-Employee Warrants

The following table summarizes the changes in warrants outstanding and the
related prices for the shares of the Company's common stock issued to
non-employees of the Company as of February 28, 2006:

<TABLE>
<CAPTION>

                      Warrants Outstanding                                Warrants Excercisable
-----------------------------------------------------------------       ---------------------------
                                                     Weighted                           Weighted
                              Weighted Average        Average                            Average
 Exercise      Number       Remaining Contractual    Exercise               Number      Exercise
  Prices     Outstanding         Life (Years)          Prices             Exercisable     Prices
-----------------------------------------------------------------       ---------------------------
<S>           <C>                   <C>                 <C>                 <C>            <C>
  $ 0.03      6,000,000             4.34                $0.03               6,000,000      $ 0.03
  $ 1.00        100,000             3.44                $1.00                 100,000      $ 1.00
           ---------------                                              ---------------
              6,100,000             4.32                $0.05               6,100,000      $ 0.05
           ---------------                                              ---------------
</TABLE>

         Transactions involving warrants issued to non-employees are summarized
as follows:

                                                                     Weighted
                                                                      Average
                                                Number of            Price Per
                                                  Shares               Share
                                              -------------        -------------
Outstanding at March 1, 2005                        100,000            $1.00
           Granted                                6,000,000            $0.03
           Canceled or expired                           --               --
           Exercised                                     --               --
                                              -------------
Outstanding at February 28, 2006                  6,100,000
                                              -------------


Employee Stock Options

The following table summarizes the changes in options outstanding and the
related prices for the shares of the Company's common stock issued to employees
of the Company under a non-qualified employee stock option plan.

<TABLE>
<CAPTION>

                           Options Outstanding                                            Options Excercisable
--------------------------------------------------------------------------          ---------------------------------
                                                             Weighted                                     Weighted
                                   Weighted Average           Average                                     Average
 Exercise          Number        Remaining Contractual       Exercise                    Number           Exercise
   Prices        Outstanding          Life (Years)             Prices                  Exercisable         Prices
------------   --------------- -------------------------- ----------------          -----------------   -------------
<S>               <C>                      <C>               <C>                        <C>                <C>
   $ 0.02         1,275,000                5                 $   0.02                   1,275,000          $ 0.02
               ---------------                                                      -----------------
                 1,275,000                 5                 $   0.02                   1,275,000          $ 0.02
               ===============                                                      =================
</TABLE>


                                      F-20
<PAGE>

      A summary of the Company's stock option activity and related information
is as follows:

<TABLE>
<CAPTION>

                                                                                              Weighted
                                                                                               Average
                                                                   Number of                  Price Per
                                                                     Shares                     Share
                                                                ----------------          -----------------
<S>                                                             <C>                       <C>
      Outstanding at March 1, 2004                                          --                         --
                     Granted                                                --                         --
                     Canceled or expired                                    --                         --
                     Forfeited                                              --                         --
                                                                ----------------          -----------------
      Outstanding at March 1, 2005                                          --                         --
                     Granted                                         1,275,000                       0.02
                     Canceled or expired                                                               --
                     Forfeited                                              --                         --
                                                                ----------------
      Outstanding at February 28, 2006                               1,275,000                       0.02
                                                                ================
</TABLE>


      Significant assumptions (weighted-average):
          Risk-free interest rate at grant date                    4.55%
          Expected stock price volatility                           280%
          Expected dividend payout                                   --
          Expected option life-years (a)                           5.00

      (a) The expected option life is based on contractual expiration dates.

(10)  Cash Flows

The following are non-cash transactions for fiscal year 2006 and 2005:

On April 29, 2004, Tactica and HoT entered into an agreement under which Tactica
was released from $17,261,334 in secured debt payable to HoT in exchange for
certain Tactica corporate income tax refunds of $2,901,115, accounts receivable
of $369,495, marketable securities of $3,030,000 and certain Tactica intangible
assets, including all rights to the Epil-Stop(R) brand that had no book value.
In connection with the transaction, Tactica increased its accrued chargeback
reserve by $1,000,000 for Epil-Stop claims and eliminated a $2,025,473 deferred
tax asset used to offset the gain from the transaction. The $7,935,250 net
result was added to additional paid-in-capital.


                                      F-21
<PAGE>

The $3,030,000 marketable securities given to HoT were obtained by Tactica from
its minority stockholders as full satisfaction for $3,500,000 in loans
receivable from the minority stockholders together with accrued interest of
$1,266,663, which was extinguished prior to its maturity date of March 14, 2005.
The $1,736,663 net result was deducted from additional paid-in-capital. Tactica
loaned its three minority stockholders a total of $3,500,000 on March 14, 2000
in connection with a $3,500,000 loan by HoT to Tactica. The loan receivable
accrued interest at 8.75% per annum.

Effective with the Merger, 6,693,340 shares of IGIA Common Stock were issued for
the conversion of all outstanding Diva Series A, B and C convertible preferred
stock. In addition, IGIA issued 5,593,593 shares of Common Stock in exchange for
remaining outstanding of shares of Diva's Common Stock.

Prior to the Merger, Diva received 3,725,000 shares of Common Stock from a
stockholder in exchange for its wholly-owned subsidiary that was also named Diva
Entertainment, Inc. In connection with the exchange Diva cancelled its 3,725,000
shares.

Effective with the Merger, all previously outstanding 1,000 shares of common
stock owned by the Company's shareholders were exchanged for an aggregate of
9,400,000 shares of the Diva's Common Stock and 261,000 shares of Series E
Convertible Preferred Stock. The value of the stock that was issued was the
historical cost of the Diva's net tangible assets which did not differ
materially from their fair value.

Effective with the Merger, Diva agreed and cancelled 1,209,000 shares of its
Common Stock.

The Company issued a total of 3,000,000 shares of Common Stock to its financial
advisors of which 1,250,000 shares related to the Merger. These share were
valued at the weighted average price of $2.62 per share which represented the
fair value of services received which did not differ materially from the value
of the stock issued and 1,750,000 shares were subject to release from escrow
upon the Company raising certain additional capital within a specified time
period, a contingency that was not satisfied.

The Company and certain Tactica vendors agreed to convert $3,632,159 of accounts
payable into IGIA Series E Convertible Preferred Stock. IGIA issued 574 new
Series E shares and caused certain additional Series E shares to be given by
Company management stockholders to the vendors.

On March 31, 2005, we issued 25,000 shares of Series G preferred stock to each
of Avi Sivan, the Chief Executive Officer of the Company, and Prem Ramchandani,
the President of the Company. The Series G Preferred Stock was issued to Mr.
Sivan and Mr. Ramchandani in consideration of the fact that in connection with
the recent financing obtained by the Company, Mr. Sivan and Mr. Ramchandani
agreed to pledge all of their equity ownership in the Company to secure the
obligations of the Company. Without such pledge of equity, including a pledge of
the Series G Preferred Stock by Mr. Sivan and Mr. Ramchandani, the transaction
would not have been consummated. The stated value of the Series G preferred
stock at the time of issuance was $0.03 per share.

In connection with the sale of the Callable Secured Convertible Notes described
in Note 7, approximately $323,000 was withheld from the $3,000,000 proceeds to
pay certain expenses and to pre-pay interest. Further, holders of the Callable
Secured Convertible Notes dated March 22, 2005 exercised a series of partial
conversions and were issued 7,560,000 shares of common stock at a conversion
price averaging approximately $.0132 per share.

In connection with the Innotrac Settlement discussed in Note 1, Tactica
exchanged its inventory in full satisfaction of its pre-petition liability to
Innotrac of $3,000,000. Accordingly, Tactica's inventory and liabilities
associated with the Innotrac Settlement were reduced.

In connection with assistance provided to the Company in arranging and
concluding the funding, on December 22, 2005, the Company issued 1,000,000
shares of its common stock at $.12 per share to a third party upon the
effectiveness of the registration statement.

During the year ended February 28, 2006, Mr. Sivan and Mr. Ramchandani paid, on
behalf of the Company, expenses for advertising totaling $368,200 in exchange
for unsecured promissory notes as discussed in Note 12.

Cash paid for interest during the fiscal year ended February 28, 2006 and 2005
was $29,935 and $0, respectively.

Cash paid for taxes during the fiscal year ended February 28, 2006 and 2005 was
$0 and $0, respectively.

The Company recognized non-cash gains from settlements of debts totaling
$2,684,559, including the $2,672,946 settlement with Helen of Troy Limited as
discussed in Note 1.

(11) Commitments and Contingencies

Beginning in February 2005, the Company leases its office facility under a
non-cancelable operating lease expiring in April 2006. Rent expense for years
ended February 28, 2006 and 2005 was $184,319 and $ 716,392, respectively.


                                      F-22
<PAGE>

Future remaining minimum rentals for non-cancelable operating leases with terms
in excess of one year as of February 28, 2006 were as follows:

                                            2007  $  297,554
                                            2008     302,407
                                            2009     190,595
                                                  ----------
                                                  $  790,556
                                                  ==========

Included in the results of operations for the year ended February 28, 2006 and
in accrued expenses at February 28, 2006 are costs incurred or accrued related
to litigation and contingencies arising in the normal course of business.
Management believes that amounts accrued are adequate as of February 28, 2006
and that any additional costs that may result from resolution of these
contingencies would not have a material effect on the Company's financial
position, results of operations, or cash flows.

The Company engaged Brass Logistics LLC, a related party, to perform warehouse
and customer order fulfillment services in connection with the Company's direct
response sales business. Certain third party vendors and a credit card processor
that did business with Brass Logistics LLC have made claims against Brass
Logistics LLC for monies deemed owed for services rendered and credit card
processing activity and have threatened to make claims against the Company.
Management is prepared to defend the Company against such actions, if taken, and
believes that it has sufficiently provided for liabilities pertaining to
services rendered by Brass Logistics LLC. As detailed in Note 12, Brass
Logistics LLC is a related party.

In February 2006, we began working with a media placement agent for direct
response sales campaigns regarding two of our household products sold by
Shopflash. The media placement agent places our advertisements on television and
on the internet and provides additional campaign support that has allowed us to
further develop the campaigns. According to our agreement, the media placement
agent receives fees and has a security interest in goods and proceeds related to
the campaigns. Our arrangement with the media placement agent is short-term and
we are considering other similar arrangements for our active campaigns including
ones under development. As of February 28, 2006, we owed $1,358,116 to the media
placement agent.

Litigation

The Company is subject to other legal proceedings and claims, which arise in the
ordinary course of its business. Although occasional adverse decisions or
settlements may occur, the Company believes that the final disposition of such
matters should not have a material adverse effect on its financial position,
results of operations or liquidity.

A civil complaint was filed on December 2, 2005 in the United States District
Court Southern District of New York by Hughes Holdings, LLC, Global Asset
Management, LLC, Allied International Fund, Inc., Robert DePalo, Gary Schonwald
and Susan Heineman (the "DePalo parties") as plaintiffs against Peter Zachariou,
Fountainhead Investments, Inc., Accessible Development, Corp., Allan Carter,
Chadel, Ltd., John D'Avanzo, Jason Fok, Tabacalera, Ltd., Terrence DeFranco,
Altitude Group, LLC, Virginia Casadonte, (the "Diva parties"), Shai Bar Lavi and
IGIA, Inc. and certain officers and directors (the "IGIA parties"). The DePalo
parties' claim for $279,480.60 plus costs, interest and punitive damages is
alleged to have resulted from their holdings of securities issued by Diva
Entertainment, Inc. and, subsequent to the Company's June 2004 reverse merger,
those of IGIA, Inc. We believe the complaint against the Company and its
officers and directors is without merit and we are mounting a vigorous defense
in cooperation with our insurance carrier, including a counterclaim against the
plaintiffs. The Diva parties have filed an answer; counterclaim against the
DePalo parties; and a cross-claim against certain of the IGIA parties seeking in
excess of $2.3 million; disgorgement of any profits realized by the DePalo
parties and punitive damages. The Company continues to believe that no damage
claim against the IGIA parties is justifiable and therefore has not provided for
any liability in its financial statements as of February 28, 2006.

Derivative Financial Instruments

The Company's derivative financial instruments consist of embedded derivatives
related to the 8% Callable Secured Convertible Notes entered into on March 23,
2005 (see Note 7). These embedded derivatives include certain conversion
features, variable interest features, call options and default provisions. The
accounting treatment of derivative financial instruments requires that the
Company record the derivatives and related warrants at their fair values as of
the inception date of the Note Agreement and at fair value as of each subsequent
balance sheet. In addition, under the provisions of EITF Issue No. 00-19,
"Accounting for Derivative Financial Instruments Indexed to, and Potentially
Settled in, a Company's Own Stock," as a result of entering into the Notes, the
Company is required to classify all other non-employee stock options and
warrants as derivative liabilities and mark them to market at each reporting
date. Any change in fair value will be recorded as non-operating, non-cash
income or expense at each reporting date. If the fair value of the derivatives
is higher at the subsequent balance sheet date, the Company will record a
non-operating, non-cash charge. If the fair value of the derivatives is lower at
the subsequent balance sheet date, the Company will record non-operating,
non-cash income. Conversion-related derivatives were valued using the Binomial
Option Pricing Model with the following assumptions: dividend yield of 0%;
annual volatility of 51% -280%; and risk free interest rate of 4.5% - 4.88% as
well as probability analysis related to trading volume restrictions. The
derivatives are classified as long-term liabilities (see Note 7).

(12) Related Party Transactions

Mr. Sivan and Mr. Ramchandani, stockholders of the Company, have an ownership
interest in Prime Time Media, a company which has a pre-petition accounts
payable from the Company in the amount of $455,734. The Company did not purchase
any goods or services from Prime Time Media in fiscal year 2006 or 2005.

Mr. Sivan, Mr. Ramchandani and a significant shareholder have an ownership
interest in Brass Logistics LLC, a company which has a post-petition accounts
payable in the amount of $2,688,862. The Company purchased $4,650,936 and
$178,450 in order fulfillment and customer services from Brass Logistics LLC in
fiscal year 2006 and 2005, respectively. Fees and costs under the June 14, 2004
agreement fluctuate based upon the amount of orders placed and fulfilled. The
contract provides for the provision of services for an indefinite term.

On December 8, 2004, Tactica entered into a Credit Agreement with Tactica
Funding 1, LLC ("Tactica Funding"). Mr. Sivan is a member and Mr. Ramchandani is
a manager and a member of Tactica Funding. Under the Credit Agreement, Tactica
Funding agreed to provide Tactica with a secured loan of up to an aggregate
principal amount of $300,000 (the "Loan") for Tactica's continued ordinary
course of operations and working capital needs, as evidenced by a promissory
note. The Loan bears interest at a rate of 9% per annum and is payable monthly.
Notwithstanding the foregoing, the Loan bears a default rate of interest of 12%
per annum.. As security for the Loan, Tactica granted to Tactica Funding a first
priority security interest in substantially all of the assets of Tactica, except
as to permitted liens for which the Tactica Funding security interest is junior
and subordinate, including the Callable Secured Convertible Notes and certain
carve out expenses that Tactica incurs for professional fees and other
bankruptcy case matters. As of February 28, 2006, the Company owed $300,000 of
note principal, which is included in Notes Payable - related parties, and unpaid
interest of $6,723.

From time to time, Mr. Sivan and Mr. Ramchandani have paid certain advertising
expenses on behalf of the Company and have advanced funds to the Company for
working capital purposes in the form of unsecured promissory notes, accruing
interest at 8% per annum. As of February 28, 2006, the balance due to Mr. Sivan
and Mr. Ramchandani collectively was $817,793, including accrued interest, and
is included in Notes Payable - related parties.

On March 31, 2005, we issued 25,000 shares of Series G preferred stock to each
of Avi Sivan, the Chief Executive Officer of the Company, and Prem Ramchandani,
the President of the Company. The Series G preferred stock was issued to Mr.
Sivan and Mr. Ramchandani in consideration of the fact that in connection with
the recent financing obtained by the Company, Mr. Sivan and Mr. Ramchandani
agreed to pledge all of their equity ownership in the Company to secure the
obligations of the Company. Without such pledge of equity, including a pledge of
the Series G preferred stock by Mr. Sivan and Mr. Ramchandani, the transaction
would not have been consummated. The stated value of the Series G preferred
stock at the time of issuance was $0.03 per share. As of February 28, 2006,
there were 50,000 shares of Series G preferred stock issued and outstanding.


                                      F-23
<PAGE>

(13) Subsequent Events

On March 28, 2006, a Notice of Effective Date of the Plan was filed with the
Bankruptcy Court. Upon being declared effective, the Plan eliminated $14,853,421
of Tactica's pre-petition liabilities. The plan calls for Tactica's pre-petition
creditors to receive distributions of the following assets: (i) $2,175,000 cash
paid by Tactica's former shareholders; (ii) $700,000 cash paid by Tactica; (iii)
$75,000 cash paid by the Registrant, Tactica, and the Board Members; (iv) up to
$275,000 cash paid by Innotrac Corporation; (v) the rights and proceeds in
connection with avoidance and other actions including uncollected pre-petition
invoices payable by a Tactica customer; and (vi) 5,555,033 newly issued shares
of the Registrant's common stock that was in number equal to 10% of the
outstanding shares of common stock as of the Plan's effective date and is
exempted from the registration requirements of Section 5 of the Securities Act
of 1933, as amended and State registration requirements by virtue of Section
1145 of the Bankruptcy Code and applicable non-bankruptcy law. Certain
post-petition creditors, including firms that provided professional services to
Tactica, have submitted a total of approximately $583,000 in claims to the
Bankruptcy Court for post-petition administrative expenses. Tactica is reviewing
the administrative expense claims to determine whether to seek possible
settlements and payment schedules or a resolution by the Bankruptcy Court.

In April 2006, the Company signed a lease with a non-affliated building owner
and moved into a new office space located at 16 East 40th Street, 12th Floor,
New York, New York 10016 at a rate of approximately $25,000 per month,
increasing $2,751 per annum. The lease for the New York office space commenced
on April 15, 2006 and expires October 14, 2008.

Subsequent to the date of the balance sheet, holders of the Callable Secured
Convertible Notes dated March 22, 2005 exercised a series of partial conversions
and were issued 22,440,000 shares of common stock at a conversion price
averaging approximately $.0057 per share.

To obtain funding for the purpose of payment of general corporate and operating
purposes, including the payment of auditor and legal fees, the Company entered
into a Securities Purchase Agreement with the Investors on June 7, 2006 for the
sale of (i) $760,000 in Callable Secured Convertible Notes and (ii) stock
purchase warrants to buy 50,000,000 shares of our common stock. On June 7, 2006,
the Investors purchased the $760,000 in Notes and received warrants to purchase
an aggregate of 50,000,000 shares of our common stock.

The Notes bear interest at 6%, mature three years from the date of issuance, and
are convertible into our common stock, at the Investors' option, at a conversion
price equal to the lower of (i) $0.04 or (ii) 35% of the average of the three
lowest intraday trading prices for our common stock during the 20 trading days
before, but not including, the conversion date. As of June 7, 2006, the average
of the three lowest intraday trading prices for our common stock during the
preceding 20 trading days as reported on the Over-The-Counter Bulletin Board was
$0.0068 and, therefore, the conversion price for the Callable Secured
Convertible Notes was $0.002. Based on this conversion price, the $760,000
Notes, excluding interest, were convertible into 380,000,000 shares of our
common stock.

The Company may prepay the Notes in the event that no event of default exists,
there are a sufficient number of shares available for conversion of the Callable
Secured Convertible Notes and the market price is at or below $.06 per share.
The full principal amount of the Notes is due upon default under the terms of
the Notes. In addition, the Company has granted the Investors a security
interest in substantially all of the Company's assets and intellectual property
as well as registration rights.

The warrants are exercisable until five years from the date of issuance at a
purchase price of $0.009 per share. In addition, the exercise price of the
warrants is adjusted in the event the Company issues common stock at a price
below market.

The Investors have contractually agreed to restrict their ability to convert the
Notes and exercise the warrants and receive shares of our common stock such that
the number of shares of the Company common stock held by them and their
affiliates after such conversion or exercise does not exceed 4.99% of the
Company's then issued and outstanding shares of common stock.

(14) Loss per Share

As of February 28, 2006, there were 206,000,000 potential shares excluded from
the calculation to compute diluted loss per share as their inclusion would have
reduced net loss per share.


                                      F-24
<PAGE>

(15)  Restatement of Quarterly Financial Statements (Unaudited)

During 2006, it was determined that the correct application of accounting
principles had not been applied in the accounting for convertible debentures and
detachable warrants (See note 7), in the previously issued interim consolidated
financial statements as of May 31, 2005, August 31, 2005 and November 30, 2005.

Under the original accounting for the debentures and detachable warrants, the
Company recognized an embedded beneficial conversion feature present in the
convertible note and allocated a portion of the proceeds equal to the intrinsic
value of that feature to additional paid in capital. Accordingly, the proceeds
attributed to the common stock, convertible debt and warrants have been restated
to reflect the relative fair value method.

In accordance with Accounting Principles Board Opinion, Accounting Changes (APB
20), the necessary corrections to apply the accounting principles on the
aforementioned transactions are reflected in the summary Statement of
Operations, Balance Sheet, and Statement of Cash Flows as described below:

The effect on the Company's previously issued interim May 31, 2005 financial
statements is summarized below:

<TABLE>
<CAPTION>

                                                  May, 31, 2005         May 31, 2005        Amount increase
                                               financial statement   financial statement    (decrease) in May
                                                balance prior to      post restatement     31, 2005 financial
                                                   restatement                                  statements
                                               -------------------   -------------------   -------------------
<S>                                                 <C>                   <C>                     <C>
Balance Sheet:
  Derivative liability                               $        -0-          $  2,000,000           $ 2,000,000
  Warrant liability                                           -0-                50,293                50,293
  Convertible debentures                                  163,982                99,543               (64,439)
  Total liabilities                                    20,296,231            22,282,085             1,985,854
  Additional paid in capital                           15,944,360            13,944,360            (2,000,000)
  Total stockholders' deficit                         (15,147,737)          (17,133,591)            1,985,854

Statement of Operations - three months
  Loss on change in derivative and warrant
    liability                                                 -0-               (50,293)               50,293
  Interest expense                                       (230,385)             (165,946)              (64,439)
  Loss before income taxes                             (2,894,032)           (2,879,886)              (14,146)
  Net loss                                             (2,894,032)           (2,879,886)              (14,146)
  Basic and diluted loss per share:                         (0.16)                (0.16)                  -0-

Statement of Cash Flows - three months:
  Net cash used in operating activities                  (694,674)             (694,674)                  -0-
  Net cash provided by investing activities                   -0-                   -0-                   -0-
  Net cash provided by financing activities          $  1,790,009          $  1,790,009                   -0-
</TABLE>


(15)   Restatement of Quarterly Financial Statements (Unaudited)  (continued)

The effect on the Company's previously issued interim August 31, 2005 financial
statements is summarized below:

<TABLE>
<CAPTION>

                                                  August, 31, 2005      August 31, 2005        Amount increase
                                               financial statement     financial statement      (decrease) in
                                                 balance prior to       post restatement       August 31, 2005
                                                     restatement                             financial statements
                                                  ---------------         --------------     --------------------
<S>                                               <C>                      <C>                  <C>
Balance Sheet:
  Derivative liability                               $        -0-          $    666,667           $   666,667
  Warrant liability                                           -0-               147,930               147,930
  Convertible debentures                                  328,864               267,580               (61,284)
  Total liabilities                                    20,043,441            20,796,754               753,313
  Additional paid in capital                           15,944,360            13,944,360            (2,000,000)
  Total stockholders' deficit                         (15,299,740)          (16,053,053)              753,313

Statement of Operations - three months
  Gain on change in derivative and warrant
    liability                                                 -0-             1,235,696             1,235,696
  Interest expense                                       (250,139)             (253,294)                3,155
  Income (loss) before income taxes                      (152,003)            1,080,538             1,232,541
  Net Income (loss)                                      (152,003)            1,080,538             1,232,541
  Basic income (loss) per share:                            (0.01)                 0.06                  0.07
  Fully diluted income (loss) per share                     (0.01)                 0.01                  0.02

Statement of Operations-six months:
  Gain on change in  derivative  and warrant
    liability                                                 -0-             1,185,404             1,185,404
  Interest expense                                       (480,524)             (419,240)              (61,284)
  Loss before income taxes                             (3,046,035)           (1,799,347)            1,246,688
  Net loss                                             (3,046,035)           (1,799,347)            1,246,688
  Basic and fully diluted loss per share                    (0.17)                (0.10)                 0.07

Statement of Cash Flows - six months:
  Net cash used in operating activities                (1,724,373)           (1,724,373)                  -0-
  Net cash used in investing activities                    (6,723)               (6,723)                  -0-
  Net cash provided by financing activities          $  1,790,009          $  1,790,009                   -0-
</TABLE>


                                      F-25
<PAGE>

(15) - Restatement of Quarterly Financial Statements (Unaudited) (continued))

The effect on the Company's previously issued interim November 30, 2005
financial statements is summarized below:


<TABLE>
<CAPTION>

                                                 November 30, 2005     November 30, 2005      Amount increase
                                                financial statement   financial statement      (decrease) in
                                                  balance prior to      post restatement      November 30, 2005
                                                    restatement                             financial statements
                                                  ---------------        --------------     --------------------
<S>                                                  <C>                   <C>                    <C>
Balance Sheet:
  Derivative liability                               $       -0-           $ 4,000,000            $4,000,000
  Warrant liability                                          -0-               425,601               425,601
  Convertible debentures                                 491,954               433,790               (58,164)
  Total liabilities                                   23,115,831            27,483,268             4,367,437
  Additional paid in capital                          15,944,360            13,944,360            (2,000,000)
  Total stockholders' deficit                        (17,438,947)          (21,806,384)            4,367,437

Statement of Operations - three months
  Loss on change in derivative and warrant
    liability                                                -0-            (3,611,005)            3,611,005
  Interest expense                                      (197,356)             (200,476)                3,120
  Loss before income taxes                            (2,139,207)           (5,753,332)            3,614,125
  Net Loss                                            (2,139,207)           (5,753,332)            3,614,125
  Basic and fully diluted loss per share:                  (0.12)                (0.32)                (0.20)

Statement of Operations - nine months:
  Loss on change in derivative and warrant
    liability                                                -0-            (2,425,601)            2,425,601
  Interest expense                                      (677,880)             (619,716)              (58,164)
  Loss before income taxes                            (5,185,242)           (7,552,679)            2,367,437
  Net loss                                            (5,185,242)           (7,552,679)            2,367,437
  Basic and fully diluted loss per share                   (0.29)                (0.42)                (0.13)

Statement of Cash Flows - nine months:
  Net cash used in operating activities               (1,735,453)           (1,735,453)                  -0-
  Net cash used in investing activities                  (29,294)              (29,294)                  -0-
  Net cash provided by financing activities          $ 1,790,009           $ 1,790,009                   -0-
</TABLE>


                                      F-26
<PAGE>

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

         On July 20, 2004, the Company, formerly known as Diva Entertainment,
Inc. , dismissed Paritz & Company P.A. ("Paritz") as its principal independent
auditors, and the Company engaged Russell Bedford Stefanou Mirchandani LLP as
its certifying accountant for the fiscal year ending February 28, 2005. The
decision to change its certifying accountant was approved by the Company's Board
of Directors. The Company has not previously consulted Russell Bedford Stefanou
Mirchandani LLP.

         Paritz's reports on the consolidated financial statements of Diva for
fiscal years ended June 30, 2003 and 2002 did not contain any adverse opinion or
a disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles; however, the audit reports for the years
ended June 30, 2003 and 2002 contained an explanatory paragraph regarding the
substantial doubt about Diva's ability to continue as a going concern. During
fiscal years 2003 and 2002 and the subsequent interim period through July 20,
2004, there were no disagreements with Paritz regarding any matters of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Paritz, would have caused Paritz to make reference to the subject matter of the
Paritz, would have caused Paritz to make reference to the subject matter of the
disagreements in connection with its report.

ITEM 8A - CONTROLS AND PROCEDURES

         Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed by us in
the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by us in the reports that we
file under the Exchange Act is accumulated and communicated to our management,
including our principal executive and financial officers, as appropriate to
allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

         As of February 28, 2006, our management carried out an evaluation,
under the supervision of our Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of our system of
disclosure controls and procedures pursuant to the Securities and Exchange Act ,
Rule 13a-15(d) and 15d-15(d) under the Exchange Act. Based on their evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures need improvement and were not adequately
effective as of February 28, 2006 to ensure timely reporting with the Securities
and Exchange Commission. Our management is in the process of identifying
deficiencies with respect to our disclosure controls and procedures and
implementing corrective measures, which includes the establishment of new
internal policies related to financial reporting.

Changes in Internal Control over Financial Reporting

         As required by Rule 13a-15(d), IGIA management, including the Chief
Executive Officer and Chief Financial Officer, respectively also conducted an
evaluation of IGIA's internal controls over financial reporting to determine
whether any changes occurred during the fourth fiscal quarter that have
materially affected, or are reasonably likely to materially affect, IGIA's
internal control over financial reporting. During the preparation of our
financial statements as of and for the year ended February 28, 2006, we
concluded that the current system of disclosure controls and procedures was not
effective because of the internal control weaknesses identified below. As a
result of this conclusion, we initiated the changes in internal control also
described below. It should be noted that any system of controls, however well
designed and operated, can provide only reasonable, and not absolute, assurance
that the objectives of the system will be met. In addition, the design of any
control system is based in part upon certain assumptions about the likelihood of
future events.

Deficiencies and Corrective Actions Relating to the Company's Internal Controls
over Financial Reporting

         During the course of the audit of the Company's February 28, 2006
financial statements, our registered independent public accounting firm
identified certain material weaknesses relating to our internal controls and
procedures within the areas of revenue recognition, accounts payable, cash
disbursements, inventory accounting and document retention. Certain of these
internal control deficiencies may also constitute deficiencies in our disclosure
controls.

         In order to review the financial condition and prepare the financial
disclosures in this document, our officers have been responding to
recommendations from our auditors to properly and accurately account for the
financial information contained in this Form 10-KSB. Detailed validation work
was done by internal personnel with respect to all consolidated balance sheet
account balances to substantiate the financial information that is contained in
this Form 10-KSB. Additional analysis was performed on consolidated income
statement amounts and compared to prior period (both year over year and
consecutive period) amounts for reasonableness. Management is in the process of
implementing a more effective system of controls, procedures and other changes
in the areas of revenue recognition, cash disbursements, account reconciliation
and document control to insure that information required to be disclosed in this
annual report on Form 10-KSB has been recorded, processed, summarized and
reported accurately. Our management acknowledges the existence of this problem,
and has developed procedures to address them to the extent possible given
limitations in financial and manpower resources. Among the changes being
implemented are:

Revenue recognition

         o        Criteria and procedures established to reconcile invoicing and
                  shipping records
         o        Criteria and procedures established to reconcile direct
                  response sales activity records
         o        Control function established to review and monitor compliance
                  to new procedures


                                       22
<PAGE>

         o        Improved document control and file check out procedures

Cash Disbursements and liability recognition

         o        Document control system established and monitored for
                  compliance
         o        Cut off procedures formalized and consistently applied
         o        Centralized departmental budgets and accountability
                  established
         o        Purchasing procedures have been formalized and implementation
                  has begun

Account Reconciliations

         o        Procedures established and personnel assigned to reconcile key
                  accounts on a timely basis

Control function added to review reconciliations

         During 2006, it was determined that the correct application of
accounting principles had not been applied in the accounting for convertible
debentures and detachable warrants in the previously issued interim consolidated
financial statements as of May 31, 2005, August 31, 2005 and November 30, 2005.

         Under the original accounting for the debentures and detachable
warrants, the Company recognized an embedded beneficial conversion feature
present in the convertible note and allocated a portion of the proceeds equal to
the intrinsic value of that feature to additional paid in capital. Subsequently,
the Company determined that the variable conversion feature, which is present in
the debentures, is an embedded derivative instrument pursuant to SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended. The
accounting treatment of derivative financial instruments requires that the
Company record the derivatives and related warrants at their fair values as of
the inception date of the note agreements and at fair value as of each
subsequent balance sheet date. In addition, under the provisions of EITF Issue
No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Copmany's Own Stock," as a result of entering into the
note agreements, the Company is required to classify all other non-employee
warrants as derivative liabilities and record them at their fair values at each
balance sheet date. Any change in fair value should be recorded as
non-operating, non-cash income or expense at each balance sheet date. If the
fair value of the derivatives is higher at the subsequent balance sheet date,
the Company records a non-operating, non-cash charge. If the fair value of the
derivatives is lower at the subsequent balance sheet date, the Company records
non-operating, non-cash income. Accordingly, the proceeds attributed to the
common stock, convertible debt and warrants have been restated to reflect the
relative fair value method.

         Our officers have been working with the Board of Directors to address
recommendations from the Company's registered independent public accounting firm
regarding deficiencies in the disclosure controls and procedures. The Company is
currently engaged in the implementation of a new internal control procedures.
Management expects that the new procedures, once implemented, will correct the
deficiencies and will result in disclosure controls and procedures pursuant to
Rule 13a-14 of the Exchange Act, that will timely alert the Chief Executive
Officer and Chief Financial Officer to material information relating to the
Company required to be included in the Company's Exchange Act filings.

ITEM 8B - OTHER INFORMATION

         None.

ITEM 9 - DIRECTORS AND OFFICERS OF THE REGISTRANT

Our executive officers and directors and their respective ages and positions as
of the date hereof are as follows:

Names                  Ages        Position
----------------     --------      ------------------------------------------
Avi Sivan               43         Chairman of the Board and Chief Executive
                                   Officer

Prem Ramchandani        58         President, Treasurer and Director

Kurt Streams            44         Chief Financial Officer and Assistant
                                   Secretary

Paul Greenfield         61         Secretary and General Counsel


Avi Sivan, Chairman of the Board of Directors and Chief Executive Officer since
June 11, 2004, founded Tactica International, Inc., currently our wholly-owned
operating subsidiary, and has been its Chief Executive Officer since March 2000.
From 1997 to March 2000, Mr. Sivan served as the Chief Executive Officer of
Tactical International, LLC. Mr. Sivan is a driving force in making us a player
in the Direct Response Television (DRTV) industry. Mr. Sivan is the creator of
the IGIA(R) brand of products.


                                       23
<PAGE>

Prem Ramchandani, President, Treasurer and a Director since June 11, 2004, has
served as Tactica's President, Treasurer and Director since March 2000. From
1997 until March 2000, he served as Chief Operating Officer of Tactica
International, LLC. From 1983 until 1994, Mr. Ramchandani served as President of
Investment Planning Group, a private firm providing investment analysis and
financing for real estate transactions. In 1975, he was an officer of the Urban
Academy for Management, a privately held consulting firm that provided financial
management and technical assistance services. Mr. Ramchandani received an MBA in
finance in 1972 from Columbia University in New York, and in 1970 a BTech degree
in Chemical Engineering from the Indian Institute of Technology.

Kurt Streams, Chief Financial Officer and Assistant Secretary since June 11,
2004, has served as Tactica's Chief Financial Officer since January 2004. Mr.
Streams was Chief Financial Officer of The Deal LLC, a privately held financial
news publishing company, from March 2000 through January 2004. From September
1995 to March 2000 Mr. Streams was Chief Financial Officer for Norland Medical
Systems, Inc., a public medical device manufacturing company. From 1989 through
1995 he was an auditor with Deloitte & Touche LLP and was promoted to Senior
Audit Manager following a 27-month posting in Europe. Mr. Streams received a
B.A. in Economics in 1983 from the University of Massachusetts at Amherst.

Paul Greenfield, Secretary and General Counsel since June 11, 2004, has served
as Tactica's General Counsel since August 15, 2002. From 1989 through August
2002, Mr. Greenfield was in private practice as a partner at the law firm
Crupain & Greenfield where he focused on general litigation with emphasis on
products liability, intellectual property and trial work. Mr. Greenfield
received a JD from Brooklyn Law School in 1969.

Board of Directors

         All of our directors hold office until the next annual meeting of
stockholders and the election and qualification of their successors. Our
executive officers are elected annually by the Board of Directors to hold office
until the first meeting of the Board following the next annual meeting of
stockholders and until their successors are chosen and qualified.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and persons who beneficially own more than ten
percent of a registered class of our equity securities to file with the SEC
initial reports of ownership and reports of change in ownership of common stock
and other equity securities of our company. Officers, directors and greater than
ten percent stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. Based solely upon a review of Forms
3 and 4, and amendments thereto, furnished to us under Rule 16a-3(e) during the
fiscal year ended February 28, 2006, and Forms 5, and amendments thereto,
furnished to us with respect to the fiscal year ended February 28, 2006, we
believe that during the fiscal year ended February 28, 2006, our executive
officers, directors and all persons who own more than ten percent of a
registered class of our equity securities complied with all Section 16(a) filing
requirements, except as follows: (1) Avi Sivan failed to report one transaction;
(2) Prem Ramchandani failed to report one transaction; (3) Avraham Ovadia, a
greater than ten percent stockholder, failed to report one transaction and (4)
Shai Bar-Lavi, a greater than ten percent stockholder, failed to report one
transaction. In each instance, the transaction not reported was the contribution
of certain of their Series E preferred shares to Tactica's vendors along with
the Company's issuance of Series E shares in settlement of amounts Tactica owed
to its vendors.

Code of Ethics

         Because we are an early-development stage company with limited
resources, we have not yet adopted a "code of ethics", as defined by the SEC,
that applies to our Chief Executive Officer, Chief Financial Officer, principal
accounting officer or controller and persons performing similar functions. We
are in the process of drafting and adopting a Code of Ethics.


                                       24
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth the annual and long-term compensation
for services in all capacities to Tactica for Tactica's fiscal years ended
February 28, 2006, February 28, 2005 and February 29, 2004 paid to our Chief
Executive Officer and the other executive officers who earned more than $100,000
per year at the end of the last completed fiscal year. We refer to all of these
officers collectively as our "named executive officers."

<TABLE>
<CAPTION>

                                              Summary Compensation Table
-------------------------------------------------------------------------------------------------------------------------------
                                                                                      Long Term Compensation
                                                                    ------------------------------ ----------------------------
                                   Annual Compensation                         Awards                        Payouts
                       -------------------------------------------  -----------------------------  ----------------------------
                                                         Other        Restricted     Securities
      Name And                                           Annual          Stock        Underlying     LTIP        All Other
      Principal                  Salary      Bonus      Award(s)      Compensation     Options/     Payouts     Compensation
      Position          Year       ($)        ($)          ($)            ($)          SARs (#)       ($)           ($)
---------------------- -------- ---------- ----------- ------------ ----------------- ------------ ---------- -----------------
<S>                     <C>     <C>             <C>       <C>            <C>            <C>          <C>            <C>
Avi Sivan               2006    496,154           0       31,204           --           300,000          --             --
Chief Executive         2005    514,539           0       31,798           --                --          --             --
Officer                 2004    503,201           0       39,100           --                --          --             --

Prem                    2006    496,154           0       48,111           --           300,000          --             --
Ramchandani,            2005    514,539           0       44,056           --                --          --             --
President               2004    503,201           0       42,728           --                --          --             --

Kurt Streams,           2006    200,000           0          800           --           150,000          --             --
Chief Financial         2005    200,000           0            0           --                --          --             --
Officer                 2004    192,308           0            0           --                --          --             --

Paul Greenfield,        2006    200,000           0            0           --           150,000          --             --
Secretary and           2005    200,000           0            0           --                --          --             --
General Counsel         2004    201,282           0            0           --                --          --             --
</TABLE>


Options Grants

<TABLE>
<CAPTION>

                                                                  OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                            -----------------------------------------------------------------------------------
                                                                           [Individual Grants]
                                            -----------------------------------------------------------------------------------
                                               Number of
                                               securities
                 Name And                      underlying           Percent of total           Exercise or
                 Principal                     options/SARs      options/SARs granted to       base price
                 Position                      granted (#)       employees in fiscal year        ($/Sh)         Expiration date
                   (a)                              (b)                   (c)                      (d)                (e)
------------------------------------------- ----------------- ----------------------------- --------------- -------------------
<S>                                             <C>                       <C>                   <C>                <C>   <C>
Avi Sivan , Chief Executive Officer             300,000                   23.5%                 $0.02              02/28/2010
Prem Ramchandani, President                     300,000                   23.5%                 $0.02              02/28/2010
Kurt Streams, Chief Financial Officer           150,000                   11.8%                 $0.02              02/28/2010
Paul Greenfield, General Counsel                150,000                   11.8%                 $0.02              02/28/2010
</TABLE>


Equity Compensation Plan Information

<TABLE>
<CAPTION>

                                                                                                Number of securities
                                                                                              remaining available for
                                   Number of securities to          Weighted-average           future issuance under
                                   be issued upon exercise        exercise price of          equity compensation plans
                                   of outstanding options,       outstanding options,          (excluding securities
                                     warrants and rights          warrants and rights         reflected in column (a))
      Plan category                         (a)                          (b)                            (c)
----------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                            <C>                          <C>
Equity compensation plans                 1,275,000                      $.02                         1,225,000
approved by security holders

Equity compensation plans not
approved by security holders                 0                           $.00                             0

             Total                        1,275,000                      $.02                         1,225,000
</TABLE>


                                       25
<PAGE>

         As of the date hereof, there were 1,275,000 options to purchase shares
of our common stock are outstanding.

Employment Agreements with Executive Officers

         Tactica, our wholly-owned subsidiary, entered into an employment
agreement dated April 29, 2004, with Avi Sivan. Pursuant to the employment
agreement, Mr. Sivan is to serve as our Chief Executive Officer for a base
compensation of at least $600,000 per year. The contract, which is for a
five-year period, automatically extends by one day, every day, unless terminated
earlier by us or Mr. Sivan by written notice ("Non-renewal Notice"). Mr. Sivan
is eligible for incentive compensation expressed as 10% of EBITDA for the fiscal
year then ended. On July 1, 2004, Mr. Sivan's employment agreement was amended
temporarily by oral agreement such that, effective August 1, 2004, (i) Mr. Sivan
will receive a base compensation of $490,000, (ii) Mr. Sivan is eligible for
incentive compensation expressed as 8% of EBITDA for the fiscal year then ended,
and (iii) Mr. Sivan's incentive compensation is subject to cap of $400,000 per
year.

         In addition, Mr. Sivan is entitled to participate in our standard
executive benefit program, including group health insurance, death and
disability benefits provided for under our applicable insurance policy. If after
death or twenty-six weeks of continuous disability ("Disability"), Mr. Sivan's
employment agreement will be terminated, and he, or his estate will be entitled
to severance pay, calculated as a one time multiple of his total average
compensation over the preceding three years, in the event that a Non-renewal
Notice has been given by us prior to his death or Disability, in lieu of the one
times (1x) multiple, the multiple shall be the remaining number of years between
the date of his death or Disability and the third (3rd) anniversary of the date
of the Non-renewal Notice, but in no event less than one (1) year. Upon death,
his estate will be entitled to any accrued benefits, not yet paid, including
pro-rata incentive payments payable upon termination of employment for other
than death, disability or cause are provided for as follows: If terminated by
resignation for "good reason" or by us other than for "cause" (as such terms are
defined in the employment agreement) or a result of Non-renewal Notice, Mr.
Sivan will be entitled to receive all salary, benefits and incentive
compensation for two years after the date of termination of employment and all
stock options previously grated to Mr. Sivan will immediately vest. If Mr.
Sivan's employment is terminated for good reason due to a "change of control"
(as such term is defined in the employment agreement), Mr. Sivan will be
entitled to receive, within 30 days after providing notice of election to
terminate his employment due to a change in control, a lump sum payment equal to
the net present value of the sum of five times Mr. Sivan's then current base
salary plus five times the sum of Mr. Sivan's highest annualized bonus
compensation during the three year period prior to the change of control.

         We have identical employment agreements and amendments thereto with Mr.
Prem Ramchandani, pursuant to which Mr. Ramchandani is employed as President of
Tactica.

         Tactica, our wholly-owned subsidiary, entered into an employment
agreement dated January 19, 2004, with Kurt Streams. Pursuant to the employment
agreement, Mr. Streams is to serve as our Chief Financial Officer for a base
compensation of at least $200,000 per year. Mr. Streams is eligible for bonus
compensation of between 10% and 20% of his annual salary. In the event of
termination, except for cause or upon the failure to give required notice, Mr.
Streams shall receive a lump-sum severance payment equal to four months salary
plus any bonus which is payable.

         Tactica, our wholly-owned subsidiary, entered into an employment
agreement dated August 15, 2002, with Paul Greenfield. Pursuant to the
employment agreement, Mr. Greenfield is to serve as our Secretary and General
Counsel for a base compensation of $200,000 per year. In the event of
termination, except for cause or upon the failure to give required notice, Mr.
Greenfield shall receive a lump-sum severance payment equal to four months
salary.

Director Compensation

         Non-employee directors, of which there are currently none, are expected
to be compensated $1,000 for each meeting of the Board of Directors attended, as
well as reimbursement of reasonable out of pocket expenses incurred in
connection with the attendance of meetings of the Board of Directors.


                                       26
<PAGE>

ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

         The following table sets forth information regarding the beneficial
ownership of our common stock (assuming conversion of all of the issued and
outstanding shares of Series E Preferred Stock) as of June 9, 2006 and as
adjusted to reflect the maximum number of shares of our common stock which may
be issued upon conversion of the Convertible Preferred Stock by:

         o        each person known by us to be the beneficial owner of more
                  than 5% of our Common Stock;
         o        each of our directors;
         o        each of our executive officers; and
         o        our executive officers and directors as a group.

         Beneficial ownership is determined in accordance with the rules of the
SEC and includes voting and investment power. Under SEC rules, a person is
deemed to be the beneficial owner of securities which may be acquired by such
person upon the exercise of options and warrants or the conversion of
convertible securities within 60 days from the date on which beneficial
ownership is to be determined. Each beneficial owner's percentage ownership is
determined by dividing the number of shares beneficially owned by that person by
the base number of outstanding shares, increased to reflect the
beneficially-owned shares underlying options, warrants or other convertible
securities included in that person's holdings, but not those underlying shares
held by any other person.

<TABLE>
<CAPTION>

                                                                    Amount and Nature
Title of Class             Name of Beneficial Owner                of Beneficial Owner               Percent of Class
<S>                        <C>                                         <C>                               <C>
Common Stock               Avi Sivan  (3)                              9,947,500 (1)                     14.0%

Common Stock               Prem Ramchandani  (3)                       9,947,500 (1)                     14.0%

Common Stock               Avraham Ovadia                              9,947,500 (1)                     14.0%

Common Stock               Shai Bar-Lavi                               5,007,500 (2)                     11.4%

Common Stock               Kurt Streams                                        0                          0.0%

Common Stock               Paul Greenfield                                     0                          0.0%

Common Stock               All directors and named                    19,895,000 shares                  27.9%
                           executive officers as a group
</TABLE>

(1) Includes 7,101,250 shares of common stock issuable upon conversion of
71,012.5 shares of Series E Convertible Preferred Stock.
(2) Includes 3,396,250 shares of common stock issuable upon conversion of
33,962.5 shares of Series E Convertible Preferred Stock.
(3) Avi Sivan and Prem Ramchandani each pledged all of their equity to New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
Ltd. and AJW Partners, LLC in connection with the sale of an aggregate of
$3,000,000 principal amount of callable secured convertible notes.

<TABLE>
<CAPTION>

                                                                    Amount and Nature
Title of Class             Name of Beneficial Owner                 of Beneficial Owner               Percent of Class
<S>                        <C>                                            <C>                            <C>
Series G Preferred         Avi Sivan  (2)                                 25,000 (1)                     50.0%

Series G Preferred         Prem Ramchandani  (2)                          25,000 (1)                     50.0%
</TABLE>

(1) Shares of Series G Preferred Stock are not convertible to common stock and
have no liquidation preference. The holders of the Series G Preferred Stock are
entitled to 10,000 votes per share.
(2) Avi Sivan and Prem Ramchandani each pledged all of their equity to New
Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
Ltd. and AJW Partners, LLC in connection with the sale of an aggregate of
$3,000,000 principal amount of callable secured convertible notes.


                                       27
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Avraham Ovadia, a 14% stockholder, serves as the exclusive distributor
of Tactica's products in South Africa. During fiscal 2003, Tactica sold an
immaterial amount of goods to Mr. Ovadia's company, Home Mark (Pty) Ltd. In the
past Mr. Ovadia also has produced infomercials for Tactica.

         Mr. Sivan and Mr. Ramchandani have an ownership interest in Prime Time
Media, a company which has pre-petition accounts payable from us in the amount
of $455,734.

         We have an agreement with Brass Logistics, a company in which Messrs.
Sivan and Ramchandani have an ownership interest, pursuant to which Brass
Logistics acts as our non-exclusive fulfillment center of our Singer vacuum
products and our personal care products in the United States and Canada.

         In connection with Tactica's former sublease of office space in New
York City, an affiliate of HoT issued a $389,000 standby letter of credit which
the third party lessor drew upon in satisfaction of rent not paid by Tactica.

         On December 8, 2004, Tactica entered into a Credit Agreement with
Tactica Funding 1, LLC. Mr. Sivan is a member and Mr. Ramchandani is a manager
and a member of Tactica Funding 1, LLC. Under the Credit Agreement Tactica
Funding 1, LLC agreed to provide Tactica with a secured loan of up to an
aggregate principal amount of $300,000, to provide funds for Tactica's continued
ordinary course operations and working capital needs, as evidenced by a
promissory note. The loan bears interest at a rate of 9% per annum and is
payable monthly. Notwithstanding the foregoing, the Loan bears a default rate of
interest of 12% per annum. The entire principal is due and payable. As security
for the loan, Tactica granted to Tactica Funding 1, LLC a first priority
security interest in substantially all of the assets of Tactica, except as to
permitted liens for which the Tactica Funding security interest is junior,
including the callable secured convertible notes, and subordinate certain carve
out expenses that Tactica incurred for professional fees and other bankruptcy
case matters. As of February 28, 2006, the Company owed $300,000 of note
principal, which is included in Notes Payable - related parties, and unpaid
interest of $6,723.

         From time to time, Mr. Sivan and Mr. Ramchandani have paid certain
advertising expenses on behalf of the Company and have advanced funds to the
Company for working capital purposes in the form of unsecured promissory notes,
accruing interest at 8% per annum. As of February 28, 2006, the balance due to
Mr. Sivan and Mr. Ramchandani collectively was $817,793, including accrued
interest, and is included in Notes Payable - related parties.

         We issued 25,000 shares of Series G Preferred Stock to each of Mr.
Sivan and Mr. Ramchandani. The Series G Preferred Stock was issued to Mr. Sivan
and Mr. Ramchandani in consideration of the fact that in connection with the
financing we obtained from New Millennium Capital Partners II, LLC, AJW
Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC in the form of
a sale of (i) $3,000,000 in callable secured convertible notes and (ii) stock
purchase warrants to buy 6,000,000 shares of our common stock, Mr. Sivan and Mr.
Ramchandani agreed to pledge all of their equity ownership in us to the
investors to secure our obligations. Without such pledge of equity, including a
pledge of the Series G Preferred Stock, by Mr. Sivan and Mr. Ramchandani the
investors would not have entered into the financing transaction.

         We believe that the terms of all of the above transactions are
commercially reasonable and no less favorable to us than we could have obtained
from an unaffiliated third party on an arm's length basis. Our policy requires
that all related parties recuse themselves from negotiating and voting on behalf
of our company in connection with related party transactions.


                                       28
<PAGE>

ITEM 13.   EXHIBITS

Exhibits:
<TABLE>
<CAPTION>

Exhibit
Number            Description
------            -----------
<S>               <C>
2.1 (1)           Securities Purchase Agreement and Plan of Reorganization, dated June 11, 2004, by and among IGIA, Inc.,
                  Tactica International, Inc. and its shareholders.
3.1 (2)           Articles of Incorporation.
3.2 (1)           Certificate of Amendment, dated May 27, 2004.
3.3 (2)           By-Laws.
4.1 (5)           Certificate of Designations for Series E Convertible Preferred Stock, filed on June 8, 2004.
4.2 (3)           Amended and Restated Certificate of Designations for Series G Preferred Stock, filed on April 1, 2005.
4.3               Specimen Certificate of Common Stock.
4.4 (4)           Securities Purchase Agreement dated March 23, 2005 by and among the Company and New Millennium Capital
                  Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC.
4.5 (4)           Callable Secured Convertible Note in the name of New Millennium Capital Partners II, LLC dated March 23,
                  2005.
4.6 (4)           Callable Secured Convertible Note in the name of AJW Qualified Partners, LLC dated March 23, 2005.
4.7 (4)           Callable Secured Convertible Note in the name of AJW Offshore, Ltd. dated March 23, 2005.
4.8 (4)           Callable Secured Convertible Note in the name of AJW Partners, LLC dated March 23, 2005.
4.9 (4)           Stock Purchase Warrant in the name of New Millennium Capital Partners II, LLC dated March 23, 2005.
4.10 (4)          Stock Purchase Warrant in the name of AJW Qualified Partners, LLC dated March 23, 2005.
4.11 (4)          Stock Purchase Warrant in the name of AJW Offshore, Ltd. dated March 23, 2005.
4.12 (4)          Stock Purchase Warrant in the name of AJW Partners, LLC dated March 23, 2005.
4.13 (4)          Registration Rights Agreement dated March 23, 2005 by and among the Company and New Millennium Capital
                  Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC.
4.14 (4)          Security Agreement dated March 23, 2005 by and among the Company and New Millennium Capital Partners II,
                  LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC.
4.15 (4)          Intellectual Property Security Agreement dated March 23, 2005 by and among the Company and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore, Ltd. and AJW Partners,
                  LLC.
10.1 (5)          Executive Employment Agreement by and between Tactica International, Inc. and Avi Sivan, dated April 29,
                  2004.
10.2 (5)          Executive Employment Agreement by and between Tactica International, Inc. and Prem Ramchandani, dated
                  April 29, 2004.
10.3 (5)          Employment Agreement by and between Tactica International, Inc. and Kurt Streams, dated January 19, 2004.
10.4 (5)          Service Agreement by and between Brass Logistics, LLC and IGIA, Inc..
21.1              Subsidiaries

31.1              Certification of Chief Executive Officer pursuant to Item 601(b)(31) of Regulation S-B, as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2              Certification of Chief Financial Officer pursuant to Item 601(b)(31) of Regulation S-B, as adopted
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1              Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.
32.1              Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.
-------------------------------------------
</TABLE>

(1) Incorporated herein by reference to the exhibit to Registrant's Current
Report on Form 8-K dated June 18, 2004.
(2) Incorporated by reference to the exhibit of same number filed with the
Company's Registration Statement on Form 10-SB.
(3) Incorporated herein by reference to the exhibit to Registrant's Current
Report on Form 8-K dated April 1, 2005.
(4) Incorporated herein by reference to the exhibits to Registrant's Current
Report on Form 8-K dated March 28, 2005.
(5) Incorporated herein by reference to the exhibits to Registrant's
Registration Statement on Form SB-2 dated April 14, 2005.


                                       29
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees. The aggregate fees billed by our auditors, for professional services
rendered for the audit of our annual financial statements for the years ended
February 28, 2006 and February 28, 2005, and for the reviews of the financial
statements included in our Quarterly Reports on Form 10-QSB during that fiscal
year were $103,998 and approximately $57,375, respectively.

Audit Related Fees. The Company incurred fees to auditors of $45,098 and
$60,000, respectively for audit related fees during the fiscal years ended
February 28, 2006 and February 28, 2005.

Tax Fees. The Company incurred fees to auditors of $16,613 and $0 respectively
for tax compliance, tax advice or tax compliance services during the fiscal
years ended February 28, 2006 and February 28, 2005.

All Other Fees. The Company did not incur any other fees billed by auditors for
services rendered to the Company, other than the services covered in "Audit
Fees" for the fiscal years ended February 28, 2006 and February 28, 2005.

         The Board of Directors has considered whether the provision of
non-audit services is compatible with maintaining the principal accountant's
independence.

POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF INDEPENDENT AUDITORS

         The Company currently does not have a designated Audit Committee, and
accordingly, the Company's Board of Directors' policy is to pre-approve all
audit and permissible non-audit services provided by the independent auditors.
These services may include audit services, audit-related services, tax services
and other services. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The independent auditors
and management are required to periodically report to the Company's Board of
Directors regarding the extent of services provided by the independent auditors
in accordance with this pre-approval, and the fees for the services performed to
date. The Board of Directors may also pre-approve particular services on a
case-by-case basis.


                                       30
<PAGE>

                                   SIGNATURES

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

                           IGIA, INC.

                           By: /s/ Avi Sivan
                               ---------------------------------------
                               Avi Sivan
                               Chief Executive Officer and Chairman of the Board


         In accordance with the requirements of the Securities Act of 1933, this
report was signed by the following persons in the capacities and on the dates
stated.

<TABLE>
<CAPTION>

SIGNATURE                                            TITLE                              DATE
<S>                                      <C>                                        <C>

       /s/ Avi Sivan                     Chief Executive Officer and                June 13, 2006
--------------------------------         Chairman of the Board
Avi Sivan

        /s/ Prem Ramchandani             President, Treasurer and Director          June 13, 2006
--------------------------------
Prem Ramchandani

       /s/ Kurt Streams                  Chief Financial Officer and                June 13, 2006
--------------------------------         Assistant Secretary
Kurt Streams
</TABLE>


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