**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, 2007**





**o
      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 incorporation or organization)
            (IRS
                Employer Identification No.)





**16
      East 40** **th** **Street, 12** **th** **Floor**


**New
      York, NY 10016**


(Address
      of principal executive offices)





**(212)
      575-0500**


(Registrant's
      telephone number, including area code)





**N/A**


(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 of1934 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 o





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. o





State
      Registrant's revenues for fiscal year ended February 28, 2007:
      $6,020,023





State
      the
      aggregate market value of the common stock held by non-affiliates of the
      Registrant: $242,181 as of July 13, 2007 based on the average bid and asked
      price of $0.0006 per share as of July 13, 2007.





State
      the
      number of shares outstanding of each of the registrant's classes of common
      equity, as of the latest practicable date: 403,634,177 shares
      issued and outstanding as of July 13, 2007.


1




**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.
      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. We file reports with the Securities and Exchange Commission ("SEC").
      We
      make available on our website under "Investor Relations/SEC Filings," free
      of
      charge, our annual reports on Form 10-KSB, quarterly reports on Form 10-QSB,
      current reports on Form 8-K and amendments to those reports as soon as
      reasonably practicable after we electronically file such materials with or
      furnish them to the SEC. Our website address is www.igia.com. You can also
      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. 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 described above
      under the heading "Recent Developments," 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"), Kleenfast, Inc. 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.




2




All
      of
      our operations occur in our Tactica subsidiary, which we acquired as of June
      11,
      2004, our Shopflash, Inc. subsidiary, which we established in April 2005 and
      our
      Kleenfast, Inc. subsidiary that we established in January 2006. We do not
      currently have any operations at the parent level.




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® 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.




**Summary
      of Historical Financial Information**




Set
      forth
      below is a summary of our historical financial information for the years ended
      February 28, 2007 and February 28, 2006 is derived from our financial statements
      attached hereto.





**Fiscal
                Year Ending**
              **(Dollar
                amounts in thousands)****February
                28,**
              **2007**
            
            **February
                28,**
              **2006****Net
                Sales**
            
            
            6,020
            
            
            25,532**Gross
                Profit**
            
            
            4,315
            
            
            16,164**SG&A**
            
            
            11,838
            
            
            27,411**Operating
                loss**
            
            
            (7,523
            )
            
            (11,247
            )**Net
                income (loss)**
            
            
            669
            
            
            (17,159
            )





**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® hair removal products the
      latter of which was sold to HoT in April 2004. We use a comprehensive and
      focused marketing and distribution program that includes widespread print and
      television 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
      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 previously marketed
      a
      line of floor care products under our Milinex and Wind Storm brands and 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 2007 or 2006.
      Tactica’s U.S. sales comprised nearly 100% of total net sales in fiscal 2007 and
      2006, 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
      Lebanon, Tennessee, and a related party warehouse facility that we no longer
      use. We also sometimes ship products from manufacturers directly to retailers.
      Our 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 would often require us to
      carry substantial levels of inventory in order to meet our customers’ needs,
      which given the required level of working capital has limited our ability to
      satisfy retail customer orders.




3




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..
      We
      previously marketed our line of floor care products under our Milinex and Wind
      Storm brands and 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. There was no significant backlog of orders in any of our distribution
      channels at February 28, 2007.




**Competition**




We
      sell
      products in the “As Seen on TV” market, the personal care and 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, Helen of Troy Limited or 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 its 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.




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
      July 13, 2007, IGIA has two employees, Mr. Avi Sivan, Chief Executive Officer,
      and Mr. Prem Ramchandani, President and Interim Chief Financial Officer. 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.




4




**Risks
      Relating to Our Business** **:**





**The
      Chapter 11 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. 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 and to satisfy our obligations.





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 July 3, 2007, Russell Bedford Stefanou Mirchandani LLP stated
      that
      the financial statements of IGIA for the year ended February 28, 2007 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 July 13, 2007, there were approximately
      403,634,177  shares
      of
      Common Stock outstanding, of which approximately 393,634,177 shares are tradable
      without restriction under the Securities Act.





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 actions, 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.





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





In
      the
      event 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.




5




**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 the June 2004 merger with Tactica through
      funds loaned to us directly and indirectly by certain officers and directors,
      the sale 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.





We
      are
      currently in default of interest payment obligations and we are accruing
      interest at the annual default rate of interest of 15%. The note holders have
      the right to deliver to us a written notice of default. In the event that the
      default is not cured within ten days of notice, the callable secured convertible
      notes shall become immediately due and payable at an amount equal to 130% of
      the
      outstanding principal plus amounts due for accrued interest and penalty
      provisions. This default could prevent or hinder are ability to raise any
      additional capital. As of February 28, 2007, we recorded the default payment
      of
      130% of the outstanding principal.





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.





**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,
      2007 decreased 76.4% as compared with our fiscal year ended February 28, 2006,
      and our net sales for the fiscal year ended February 28, 2006 increased 125.5%
      as compared with the fiscal year ended February 28, 2005. This was primarily
      caused by substantially reduced working capital availability.





**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.




6




**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 Licensed
      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, 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.





**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, June 7, 2006, July 27, 2006 and November 6, 2006 Securities Purchase
      Agreements. Nevertheless, we have not paid Mr. Sivan and Mr. Ramchandani any
      of
      their salaries that have been accruing during the fiscal year ended February
      28,
      2007 and may not be able to make substantial payments for the foreseeable
      future. 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.




7




In
      2004
      we entered into a consent degree with the FTC, in connection with a claim filed
      against Tactica International, Inc, our wholly owned subsidiary, pursuant to
      which we agreed to cease soliciting the sale of goods which we did not have
      a
      reasonable expectation of shipping within the advertised time, provide buyers
      with a revised shipping date and offer buyers the opportunity to agree to a
      delay or cancel an order and receive a prompt refund, cancel orders as requested
      and receive a prompt refund and maintain and preserve records for a specified
      period.





If
      the
      FTC, or any other agency that has a right to regulate our products, engage
      in
      reviews of our products or marketing procedures we may be subject to additional
      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.





**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.





**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
      July 13, 2007, we had 403,634,177  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 27,042,030,680 shares of common stock at current market prices, and outstanding
      warrants or an obligation to issue warrants to purchase 221,000,000 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.




8




**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
      average market price, as of July 10, 2007 of $0.0006.





The
      following relates to outstanding callable secured convertible notes in the
      aggregate principal amount of $2,496,284, which are convertible at a 50%
      discount:


Number
              
              %
                  of%
                  Below
              
              Price
                  Per
              
              With
                  Discount
              
              of
                  Shares
              
              OutstandingMarket
              
              Share
              
              at
                  50%
              
              Issuable
              
              Stock25%
              
              $
              .0005
              
              $
              .0002
              
              
              11,094,594,089
              
              
              96.47
              %50%
              
              $
              .0003
              
              $
              .0002
              
              
              16,641,891,133
              
              
              97.62
              %75%
              
              $
              .0002
              
              $
              .0001
              
              
              33,283,782,267
              
              
              98.80
              %





The
      following relates to outstanding callable secured convertible notes in the
      aggregate principal amount of $2,132,112, which are convertible at a 75%
      discount:




Number
              
              %
                  of%
                  Below
              
              Price
                  Per
              
              With
                  Discount
              
              of
                  Shares
              
              OutstandingMarket
              
              Share
              
              at
                  75%
              
              Issuable
              
              Stock25%
              
              $
              .0005
              
              $
              .0001
              
              
              18,952,106,667
              
              
              97.91
              %50%
              
              $
              .0003
              
              $
              .00008
              
              
              28,428,160,000
              
              
              98.59
              %75%
              
              $
              .0002
              
              $
              .00004
              
              
              56,856,320,000
              
              
              99.29
              %





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
      callable secured convertible notes are convertible into shares of our common
      stock at 50% and 75% 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.





**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.




9




**The
      Shares Of Common Stock Allocated For Conversion Of The Callable Secured
      Convertible Notes And Registered Pursuant To This Prospectus Are Not Be Adequate
      And We Will Be Required To File A Subsequent Registration Statement Covering
      Additional Shares And Will 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 Notes, the shares of common stock we have allocated for conversion
      of the Callable Secured Convertible Notes and are registering hereunder are
      not
      adequate. If the shares we have allocated to the registration statement are
      not
      adequate we are required to file an additional registration statement and we
      will incur substantial costs in connection with the preparation and filing
      of
      such registration statement. ****





**If
      We Are Required For Any Reason To Repay Our Outstanding Callable Secured
      Convertible Notes, We Would Be Required To Deplete Our Working Capital, If
      Available, Or Raise Additional Funds. Our Failure to Repay the Callable Secured
      Convertible Notes, If Required, Could Result In Legal Action Against Us, Which
      Could Require The Sale Of Substantial Assets.**





In
      March
      2005, we entered into a financing arrangement involving the sale of an aggregate
      of $3,000,000 principal amount of callable secured convertible notes and stock
      purchase warrants to buy 6,000,000 shares of our common stock. The callable
      secured convertible notes are due and payable, with 8% interest, three years
      from the date of issuance, unless sooner converted into shares of our common
      stock. We currently have $2,496,283 callable secured convertible notes
      outstanding with respect to this financing. In addition, we entered into
      subsequent financing arrangement involving the sale of an aggregate of
      $2,140,000 principal amount of callable secured convertible notes and stock
      purchase warrants to buy 215,000,000 shares of our common stock. The callable
      secured convertible notes are due and payable, with 6% interest, three years
      from the date of issuance, unless sooner converted into shares of our common
      stock. We are in default of interest payment obligations and we are accruing
      interest at the annual default rate of interest of 15%. The note holders have
      the right to deliver to us a written notice of default. In the event that the
      default is not cured within ten days of notice, the callable secured convertible
      notes shall become immediately due and payable at an amount equal to 130% of
      the
      outstanding principal plus amounts due for accrued interest and penalty
      provisions. We have not received a written notice of default. If we are served
      with a default notice, we expect that we would be unable to repay the notes
      when
      required. The note holders could commence legal action against us and foreclose
      on all of our assets to recover the amounts due. Any such action would require
      us to curtail or cease operations.





**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 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:





·
            that
                a broker or dealer approve a person's account for transactions in
                penny
                stocks; and


·
            the
                broker or dealer receive 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:





·
            obtain
                financial information and investment experience objectives of the
                person;
                and


·
            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




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:





·
            sets
                forth the basis on which the broker or dealer made the suitability
                determination; and


·
            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.





Disclosure
      also has to be made about the risks of investing in penny stocks in both public
      offerings and in secondary trading, about the commissions payable to both the
      broker-dealer and the registered representative, and current quotations for
      the
      securities and the rights and remedies available to an investor in cases of
      fraud in penny stock transactions. Finally, monthly statements have to be sent
      disclosing recent price information for the penny stock held in the account
      and
      information on the limited market in penny stocks.





**ITEM
      2 - PROPERTIES**





We
      lease
      approximately 7,500 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 $20,000 per month. The lease for the New York office
      space
      commenced on April 15, 2006 and expires October 14, 2008. We also contract
      with
      a third party logistics company for fulfillment services and the use of
      warehouse space in Lebanon, Tennessee on standard terms. We do not own any
      property.





**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.





Claim
      of
      Singer Worldwide LLC and KSIN Luxembourg III, S.ar.I. for $30,000.00 in costs
      incurred under a April 2, 2003 license agreement with Tactica International,
      Inc.; the Company is required by a Consent Order for Permanent Injunction dated
      January 16, 2006, to make twelve monthly payments in 2007 as settlement of
      the
      remaining costs, to maintain and staff a dedicated toll-free customer service
      telephone number and perform certain other administrative tasks. Singer filed
      a
      contempt motion that in Bankruptcy Court concerning noncompliance with the
      Consent Order that was heard in June 2007, and the Company has addressed the
      noncompliance complaints, however the Company has objected to Singer’s request
      to pay Singer’s legal costs for filing the motion of approximately $15,000,
      which is currently scheduled to be heard in Bankruptcy Court on July 19,
      2007.





Tactica
      has entered into a stipulated settlement agreement and confession of judgment
      with DLA Piper Rudnick Gray Cary US LLP for payment of $204,033 for services
      in
      connection with resolution of its post-petition administrative claims and
      disputed pre-petition claims.




11




On
      July
      7, 2006, IGIA was served with a Summons and Complaint filed in Los Angeles
      County Superior Court, Los Angeles, California by a major carrier. The Complaint
      seeks payment by IGIA of $783,344.86 plus $195,836.22 of collection costs and
      an
      unspecified amount of interest thereon as compensation for the breach of a
      contract between the major carrier and Brass Logistics, LLP. The Complaint
      alleges that Brass Logistics, LLP shipped packages using the services of the
      major carrier and failed to pay for the services. The Complaint further alleges
      that shipments contained products sold by IGIA and therefore benefited IGIA.
      IGIA believes that it has adequately reflected in its consolidated financial
      statements as of May 31, 2006, the liability for fulfillment services rendered
      by Brass Logistics, LLP that are the subject of the Complaint. . The Company
      filed an answer and is currently seeking to replace counsel it had retained
      in
      California. Discovery is ongoing and IGIA intends to vigorously defend this
      action. A trial date has been set in August 2007.





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 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, Shai Bar Lavi and IGIA, Inc. and its officers and directors. The
      plaintiffs 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. The Diva parties filed a 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. In June 2007, the Company entered into a settlement agreement
      that provides for the Company to issue a $300,000 convertible debenture, the
      liability for which has been provided for in its financial statements as of
      February 28, 2007. The Company is in discussions concerning terms for the
      convertible debenture and effectuating the final settlement.





In
      February 2006, Shopflash, Inc., a wholly owned subsidiary of the Company, began
      working with a media placement agent for direct response sales campaigns
      regarding two household products that Shopflash, Inc. has sold. The media
      placement agent placed the Shopflash, Inc. advertisements on television and
      the
      Internet and provided additional campaign support that allowed Shopflash,
      Inc. to further develop the campaigns. According to the agreement between
      the parties, the media placement agent receives fees and has a security interest
      in goods and proceeds related to the campaigns. The media placement agent has
      acted to exercise contractual rights to assume control over the sales campaigns.
      As a result, Shopflash, Inc. has discontinued its participation in the two
      sales
      campaigns. Shopflash, Inc. filed suit against DC Media Capital seeking damages
      resulting from the manner that they managed the sales campaigns and have
      withheld customer information needed by Shopflash to service customers. DC
      Media
      Capital has filed a lawsuit against Shopflash, Inc., Avi Sivan, Prem Ramchandani
      and Kurt Streams seeking $3,000,000 plus punitive damages and recovery costs,
      an
      amount that substantially exceeds the $1.6 million amount DC Media Capital
      previously sought. Motions to dismiss both of the actions are filed and opposed
      and the matters may be consolidated.





On
      September 22, 2006, an adversary proceeding was filed in the U.S. Bankruptcy
      Court, Eastern District of New York by H.Y. Applied under Data Services, Inc
      (a
      debtor in possession) against Shopflash, Inc. & Tactica International
      asserting for fulfillment services, allegedly provided for the two companies,
      both of which are wholly owned subsidiaries of IGIA. The claim against Tactica
      is for $1,660.57, the claim against Shopflash is for $54, 661.80. In January
      2007, the bankruptcy of H.Y. Applied Inter Data Services, Inc. was converted
      to
      a Chapter 7 proceeding with a court appointed trustee handling the matter and
      asserting the claims in the U.S. Eastern District Bankruptcy Court. Both claims
      are disputed by the Company, which believes that the services claimed were
      not
      performed; that the Company was overcharged, and falsely billed, and that H.Y.
      Applied Data Services, Inc. converted funds and product belonging to the Company
      and that H.Y. Applied Data Services, Inc. actually owes in excess of $100,000.00
      dollars to the Company. The Company has asserted an answer with counterclaims.
      Discovery is ongoing.





An
      assignee of United Parcel Service filed suit against Tactica International
      seeking $152,299.06 for shipping services allegedly provided to IGIA. The
      Company is challenging the liability in the litigation.




The
      American Express Merchant Services Company asserted a claim on March 27, 2007
      in
      Los Angeles County Superior Court in the amount of $324,941.87 against Brass
      Logistics, LLC, a fulfillment house used by the company in the past, the
      President of Brass Logistics and Tactica International. The plaintiff alleges
      that these services were provided on behalf of Tactica. The Company is seeking
      counsel in California and the parties have had preliminary settlement
      discussions.





Klestadt
      & Winters, LLP, a law firm previously employed by the company has commenced
      an action for legal fees allegedly earned in the total amount of $24,180.41.
      The
      action is pending in the Civil Court of the City of New York. The company has
      filed a response to the action and is engaged in settlement discussions with
      the
      plaintiff. The Company defeated a motion of summary judgment by the plaintiff
      and the action is scheduled to go to trial on July 18, 2007.




12




On
        February 28, 2007, an Agreed Final Order was executed and approved by the
        Circuit Court of Kanawha County in West Virginia that settled a civil
        enforcement action brought by the State of West Virginia, through its Attorney
        General, against IGIA, Inc. and Prem Ramchandani, individually and as President
        of IGIA, Inc. The settlement requires IGIA, Inc. to pay the State of West
        Virginia a civil penalty in the amount of $176,139.27, to be paid in equal
        monthly installments of $10,000 beginning March 5, 2007, with the final payment
        to be made on October 6, 2008. IGIA, Inc. also agreed not to transact business
        in the State of West Virginia until the full settlement amount has been paid.
        The State of West Virginia agreed that the civil penalties paid by IGIA,
        Inc.
        shall be used by the State to provide restitution to eligible consumers.
        In the
        settlement IGIA and Mr. Ramchandani did not admit any of the allegations
        contained in the State’s complaint.
  The
        Attorney General of the State of Kansas has asserted a claim against the
        Company
        for alleged unfair trade practices. The matter appears to be resolved upon
        the
        entry of a consent judgment and the payment of up to $2,200. The terms are
        currently being negotiated.





The
      Attorney General of the State of Missouri has asserted a claim against Brass
      Logistics, LLC and Tactica International, Inc. for alleged unfair trade
      practices. The action seeks full restitution for all aggrieved Missouri
      consumers, a civil penalty of $1,000 per actual violation and a payment to
      the
      State equal to 10% of the restitution and penalties. Based on Tactica’s
      preliminary review of customer records, the population of Tactica’s Missouri
      customers who purchased vacuum cleaners was less than 10 customers. The Company
      plans to answer the complaint and work with the Attorney General’s office to
      resolve the matter.




On November
      26, 2006, Moore Wallace North America, Inc, the lessor of subleased premises
      formerly occupied by the company’s wholly owned subsidiary, Tactica
      International, Inc. has obtained a judgment against Tactica for $45,572.92,
      in
      the Civil Court of the City of New York, in connection with Tactica’s former
      occupancy of the premises located at 521 Fifth Avenue, New York, New York.
      The
      Company recognizes the need to resolve this matter, and intends to open
      discussions towards that end, in the near future.




Rite
      Aid
      was sued by an individual who alleges injury caused by a product purchased
      from
      Rite Aid. Rite Aid is defending against the claim and has sued IGIA, Inc.,
      the
      alleged product supplier, for any damages that may result. The amount of claims
      has not yet been established. We intend to defend the foregoing lawsuit
      vigorously, but, because the lawsuit is still in the preliminary stages, we
      cannot predict the outcome and are not currently able to evaluate the likelihood
      of success or the range of potential loss, if any, that might be incurred in
      connection with the action.




The
      Telemarketing Company, a telemarketing firm previously employed by the Company
      has commenced an action for service fees allegedly earned in the total amount
      of
      $8,485.88 in the First Civil Court of Cook County, Illinois, and obtained a
      default judgment. The Company is engaged in settlement discussions with the
      plaintiff.




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





None





13




**PART
      II**





**ITEM
      5 - MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
      ISSUER PURCHASES OF EQUITY SECURITIES**





**Market
      Information**





Our
      Common Stock is traded on the OTC Bulletin Board, referred to herein as the
      OTCBB, under the symbol "IGAIE.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.




2008
                  Fiscal Year
              
              High
              
              LowMarch
                  1, 2007 - May 31, 2007
              
              $
              0.0012
              
              $
              0.00042007
                  Fiscal YearDecember
                  1, 2006 - February 28, 2007
              
              $
              0.0053
              
              $
              0.0008September
                  1, 2006 - November 30, 2006
              
              $
              0.008
              
              $
              0.0024June
                  1, 2006 - August 31, 2006
              
              $
              0.059
              
              $
              0.0034March
                  1, 2006 - May 31, 2006
              
              $
              0.026
              
              $
              0.0092006
                  Fiscal Year
              
              
              High
              
              
              LowDecember
                  1, 2005 - February 28, 2006
              
              $
              0.200
              
              $
              0.010September
                  1, 2005 - November 30, 2005
              
              $
              0.120
              
              $
              0.050June
                  1, 2005 - August 31, 2005
              
              $
              0.130
              
              $
              0.020March
                  1, 2005 - May 31, 2005
              
              $
              0.035
              
              $
              0.020




As
      of
      July 13, 2007, 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.





**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.





**Equity
      Compensation Plan Information**


The
        following table shows information with respect to our equity compensation
        plan
        under which our common stock is authorized for issuance as of the fiscal
        year
        ended February
        28, 2007 .




14




**EQUITY
      COMPENSATION PLAN INFORMATION**




**Plan
                category**
            **Number
                of securities**
              **to
                be issued upon**
              **exercise
                of**
              **outstanding
                options,**
              **warrants
                and rights**
            **Weighted
                average**
              **exercise
                price of**
              **outstanding
                options,**
              **warrants
                and rights**
            **Number
                of securities**
              **remaining
                available for future issuance under equity compensation plans (excluding
                securities reflected in column (a)****(a)**
            **(b)**
            **(c)****Equity
                compensation plans approved by security holders**
            700,000
            $0.014
            1,800,000**Equity
                compensation plans not approved by security
                holders**
            -0-
            -0-
            -0-**Total**
            700,000
            $0.02
            1,800,000




As
      of the
      date hereof, there were 700,000 options to purchase shares of our common stock
      are outstanding.


15


**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 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 that 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.




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® 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.




**Comparison
      of Fiscal Years Ended February 28, 2007 To February 28,
      2006**




16




*Results
      of Operations*




*Revenue*




In
      the
      fiscal years ended February 28, 2007 (“Fiscal 2007”) and February 28, 2006
      (“Fiscal 2006”), we sold a variety of consumer products and home care products
      directly to individual customers and to retailers. We used direct response
      television advertising to promote sales. Our net sales for Fiscal 2007 were
      $6,020,023, a decrease of $19,512,128, or 76.4%, compared to net sales of
      $25,532,151 for Fiscal 2006.




The
      decrease in net sales for Fiscal 2007 as compared to Fiscal 2006 reflects the
      significant decreases in our direct response television advertising as a result
      of constraints from a lack of cash needed to purchase and ship product to
      customers in a timely and consistent manner and by disruptions to operations
      caused by changes in providers of services for customer order fulfillment and
      credit card processing. We began Fiscal 2007 with negative working capital
      of
      $21.9 million and $7,887 in cash. We engaged Parcel Corporation of America
      (“PCA”) for customer order fulfillment and a media placement agent in connection
      with a houseware products sales campaign we initiated. Shortly after integrating
      our operating activities with PCA and launching the campaign, PCA advised
      us that the logistics company they used to ship our products went bankrupt
      and that PCA also was ceasing operations within two weeks. While getting
      established with a new service provider, we noted an unusually high level number
      of calls from customers concerned about their order status and PCA’s inability
      to effectively handle matters. In addition, our credit card merchant banks
      also
      noted an elevated level of customer inquires and chargeback requests. As a
      result, the credit card merchant banks increased the amount of cash they
      withheld from customer orders and placed in rolling reserves and they delayed
      releases of funds to us. As a result, we did not have sufficient cash to obtain
      all of the product needed to fulfill customer orders on hand which led to order
      cancellations.  To address similar issues we experienced after replacing
      PCA, we terminated the fulfillment services that two other vendors provided
      us,
      one of which filed for bankruptcy, and we consolidated our fulfillment
      activities with one service provider.




The
      direct response sales campaigns that used the credit terms provided by a media
      placement agent contributed the majority of our current fiscal year’s first and
      second quarter revenues. The media placement agent has demanded that we repay
      all amounts outstanding, which are approximately $2.0 million, and has
      acted to exercise contractual rights to assume control over the sales campaigns.
      As a result, we have discontinued participation in the two sales campaigns
      and
      did not generate third quarter revenues from them. We are focusing on selling
      our core personal care products. We currently have limited working capital
      and
      access to credit that we need to purchase television air time and products.
      Our
      direct response sales operation requires that we use cash to 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. Until such time
      as we obtain additional working capital and credit availability, we expect
      our
      purchases and direct response revenues to be substantially lower and comprised
      primarily of personal care products. We are also licensing our products for
      sale
      by other direct marketers in order to generate licensing revenue and continued
      brand exposure.




Our
      revenues for Fiscal 2006 consisted primarily of sales of a vacuum cleaner under
      the Singer Lazer Storm brand name according to an April 2003 license agreement
      with The Singer Company, B.V. that was mutually terminated on September 29,
      2005.




*Gross
      Profit*




Our
      gross
      profit was $4,315,031 for Fiscal 2007 versus our gross profit of $16,163,879
      for
      Fiscal 2006, a decrease of $11,848,848 or 73.3%. The decrease in gross profit
      for Fiscal 2007 is the result of decreased revenue.




Our
      gross
      profit percentage for Fiscal 2007 was 71.7%, as compared to 63.3% for Fiscal
      2006. The gross profit percentage for Fiscal 2007 was higher than the gross
      profit percentage realized in Fiscal 2006 as a result of the change in mix
      of
      products sold. Revenues and gross profits for Fiscal 2007 and Fiscal 2006 were
      derived from our direct response sales operation.




*Operating
      expenses*




Operating
      expenses for Fiscal 2007 were $11,838,272, a decrease of $15,572,499 from
      $27,410,771, or 56.8% as compared to Fiscal 2006. For Fiscal 2007, operating
      expense was 196.6% of net sales as compared to 107.4% for the comparable period
      in Fiscal 2006. The decrease in the dollar amounts of operating expenses for
      Fiscal 2007 is primarily the result of decreased media advertising and decreased
      customer order fulfillment services as a result of lower sales volume. As a
      result of lower revenues for Fiscal 2007, our fixed operating and overhead
      expenses were a greater percentage of revenue in Fiscal 2007 compared to Fiscal
      2006.




We
      decreased our media advertising spending in Fiscal 2007 by $7,094,205, as
      compared to Fiscal 2006. We purchased less television air time as a result
      of
      constraints from a lack of cash needed to purchase and ship product to customers
      in a timely and consistent manner and due to disruptions to operations caused
      by
      changes in providers of services for customer order fulfillment and credit
      card
      processing.




17




We
      spent
      $8,478,294 or 44.7% less on other selling, general and administrative expenses,
      including related party, in Fiscal 2007 as compared to Fiscal 2006. Selling
      expenses associated with the volume of sales have decreased and we have also
      reduced the number of personnel on staff in response to the reduced level of
      activity.




*Interest
      expense and other income / expense*




We
      incurred net interest expense of $5,280,721 and $991,271 in Fiscal 2007 and
      Fiscal 2006, respectively, an increase of $4,289,450. Interest expense for
      Fiscal 2007 consisted primarily of $2,078,686 in coupon interest on the Notes,
      $2,926,407 in amortization of the discount related to the beneficial conversion
      feature and amortization of the related issue costs, and $152,412 in interest
      on
      notes payable to related parties. The Notes Interest expense for Fiscal 2006
      consisted primarily of $893,692 in coupon interest on the Notes, amortization
      of
      the discount related to the beneficial conversion feature and amortization
      of
      the related issue costs, $64,487 in interest attributable to our former majority
      stockholder and $42,108 in interest on notes payable to related parties.
      Increased interest expense for Fiscal 2007 is primarily attributable to the
      Notes being in default which resulted in charges for accelerating the accretion
      on the Notes and our accruing interest on the Notes at a 15% per annum default
      rate of interest as compared to the 8% per annum stated rate. In addition,
      during Fiscal 2007, we sold $1,960,000 of Notes, which has increased the amount
      of our interest bearing obligations.





*Financing
      costs related to convertible debt*





In
      accordance with the default terms of the convertible debt agreements, we accrued
      financing costs related to a default premium equal to 30% of the outstanding
      principal of $6,615,240 in 2007. The total default premium charge was $1,334,519
      in Fiscal 2007.





*Reorganization
      items*




Pursuant
      to the March 28, 2006 Notice of Effective Date of the Plan that was filed with
      the Bankruptcy Court Tactica eliminated $14,872,653 of pre-petition liabilities
      and paid a total of $775,000 in cash to the creditors and 5,555,033 shares
      of
      IGIA common stock that were valued at $88,881 as of the Effective Date, thereby
      realizing a net gain of $14,008,772 in Fiscal 2007. In Fiscal 2006, Tactica
      incurred professional fees of $1,786,965 in connection with its business
      restructuring and reorganization under chapter 11.




*Net
      Income and Loss*




Our
      net
      income for Fiscal 2007 was $669,329 in contrast to net loss of $17,158,737
      for
      Fiscal 2006. Our net income for Fiscal 2007 resulted primarily from the
      $14,008,772 in income from extinguishments of pre-petition liabilities in
      connection with Tactica’s business restructuring and reorganization under
      chapter 11. The net loss for Fiscal 2006 includes $5,820,026 unrealized loss
      on
      adjustment of derivative and warrant liability to the fair value of the IGIA
      securities underlying the Callable Secured Convertible Notes discussed above
      and
      $1,786,965 of net expenses incurred in connection with Tactica’s business
      restructuring and reorganization under chapter 11.





Our
      net income per common share was ($0.00) (basic and diluted) for Fiscal
      2007 as compared to our ($0.92) (basic and diluted) net loss per common share
      for Fiscal 2006.




The
      weighted average number of outstanding shares was 198,951,091 (basic) for
      Fiscal 2007 as compared to 18,718,114 (basic and diluted) for Fiscal 2006.
      The
      weighted average number of outstanding shares was 27,592,461,199 (diluted)
      for
      Fiscal 2007. For Fiscal 2006, common stock equivalents derived from shares
      issuable in conversion of the Callable Secured Convertible Notes and warrants
      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 share.





**Liquidity
      and Capital Resources**




Overview




18




As
      of
      February 28, 2007, we had a $29.8 million working capital deficit and negative
      net worth of $29.8 million. As of February 28, 2006, we had a $21.9 million
      working capital deficit and negative net worth of $31.2 million. Our cash
      position at February 28, 2007 was $26,780 as compared to $7,887 as of February
      28, 2006.





For
      Fiscal 2007, we generated a net cash flow deficit from operating activities
      of
      $2,440,559 consisting primarily of a net income of $669,329, adjusted primarily
      for total non-cash additions to net income of $9,291,557 and decreases in
      prepaid advertising of $927,343, accounts receivable of $654,709, other assets
      of $524,232, inventories of $323,919 and an increase in accounts payable and
      accrued expenses of $3,770,124. Our accounts receivable is comprised primarily
      of funds held aside by the credit card processor we use for processing customer
      payments of direct response sales.





There
      was
      $31,941 and $45,693 of investing activities during Fiscal 2007 and Fiscal 2006,
      respectively that consisted primarily of office equipment purchases. We expect
      capital expenditures to continue to be nominal for fiscal 2008. These
      anticipated expenditures are for continued investments in property and equipment
      used in our business.





Cash
      provided by financing activities totaled $2,491,393 consisting mainly of
      proceeds from related party loans, the sales of our Callable Secured Convertible
      Notes and a $250,000 loan from a third party that was used to purchase product
      for sale.





Acquisition
      of Tactica





The
      June
      11, 2004 reverse merger between us and Tactica gave us access to public markets
      for financing and enabled Tactica to convert approximately $3.6 million of
      accounts payable into Series E Convertible Preferred Stock. Despite the
      transaction with Helen of Troy Limited that eliminated approximately $17 million
      in secured debt owed by Tactica and our reverse merger, we were not 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 Corporation (“Innotrac”), Tactica’s provider of inventory
      warehousing and customer order fulfillment services, that Tactica immediately
      pay all amounts allegedly due to Innotrac and continue its normal operation
      of
      business.





Tactica’s
      Chapter 11 Reorganization




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 $14,873,169 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 IGIA, Tactica, and the Board Members; (iv) up to $275,000 cash
      paid by Innotrac; (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 IGIA 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 Tactica post-petition creditors have submitted
      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.




Financing





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 August 31, 2006.
      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
      May
      31, 2007, the Company owed $300,000 of note principal, which is included in
      Notes Payable - related parties, and unpaid interest of $35,940.




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 Agreements with New
      Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
      Ltd. and AJW Partners, LLC on March 23, 2005, June 7, 2006, July 27, 2006,
      November 6, 2006 and February 1, 2007 and June 7, 2007 for the sale of (i)
      $5,140,000 in callable secured convertible notes and (ii) warrants to buy
      221,000,000 shares of our common stock. We have received a total of
      approximately $4,547,000 in net proceeds after deducting approximately $393,000
      of expenses and prepaid interest pursuant to the Securities Purchase Agreements.
      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.




19




The
      $3,000,000 in 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 $2,140,000 in Callable Secured Convertible 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) 25% 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. The full principal amount of the Callable
      Secured Convertible Notes is due upon default under the terms of secured
      convertible notes. The 6,000,000 in warrants are exercisable until five years
      from the date of issuance at a purchase price of $0.03 per share and the
      215,000,000 in warrants are exercisable until seven years from the date of
      issuance at a purchase price of $0.009. 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.




From
        time
        to time, Mr. Sivan and Mr. Ramchandani have paid certain advertising expenses
        on
        our behalf and have advanced us funds for working capital purposes in the
        form
        of unsecured promissory notes, accruing interest at 8% per annum. As of February
        28, 2007, the balance due to Mr. Sivan and Mr. Ramchandani collectively was
        $1,288,417, including accrued interest. On October 4, 2006, IGIA converted
        $52,000 of interest due (based on a closing price of $0.0052) on promissory
        notes issued to Avi Sivan, our Chief Executive Officer, and Prem Ramchandani,
        our President, into an aggregate of 10,000,000 shares of common stock. On
        March
        13, 2006, APA International LLC advanced $250,000 to the Company for working
        capital purposes in the form of an unsecured promissory note, accruing interest
        at 8% per annum. As of February 28, 2007, the balance due to APA International
        LLC was $307,050, including accrued interest. Mr. Sivan, Mr. Ramchandani
        and a
        significant shareholder own APA International LLC.
  In
        February 2006, Shopflash, Inc., a wholly owned subsidiary of the Company,
        began
        working with a media placement agent for direct response sales campaigns
        regarding two household products that Shopflash, Inc. has sold. The media
        placement agent placed the Shopflash, Inc. advertisements on television and
        the
        Internet and provided additional campaign support that allowed Shopflash,
        Inc. to further develop the campaigns. According to the agreement between
        the parties, the media placement agent receives fees and has a security interest
        in goods and proceeds related to the campaigns. The media placement agent
        has
        acted to exercise contractual rights to assume control over the sales campaigns.
        As a result, Shopflash, Inc. has discontinued its participation in the two
        sales
        campaigns. Shopflash, Inc. filed suit against DC Media Capital seeking damages
        resulting from the manner that they managed the sales campaigns and have
        withheld customer information needed by Shopflash to service customers. DC
        Media
        Capital has filed a lawsuit against Shopflash, Inc., Avi Sivan, Prem Ramchandani
        and Kurt Streams seeking $3,000,000 plus punitive damages and recovery costs,
        an
        amount that substantially exceeds the $1.6 million amount DC Media Capital
        previously sought. Motions to dismiss both of the actions are filed and opposed
        and the matters may be consolidated.





On
      April
      4, 2006, we entered into a loan agreement to borrow up to $250,000 for purchases
      of product for sale in our direct response operations.




We
      used
      proceeds from the above financings to fund Tactica’s Plan, including fees paid
      to professionals involved with the bankruptcy proceedings, and to expand our
      business of selling products to consumers through direct response advertising.
      Despite our financing and operating activities and Tactica’s emergence from
      bankruptcy on March 28, 2006, we continue to have a significant working capital
      deficit. Our current liabilities include significant obligations to providers
      of
      shipping and customer order fulfillment services, a media placement agent,
      state
      sales tax agencies and customers for payments made to us.




We
      are
      reducing cash required for operations by reducing operating costs by decreasing
      purchases of media and products, reducing staff levels and deferring
      management’s salaries. In addition, we are working to manage our current
      liabilities while we continue to make changes in operations to improve our
      cash
      flow and liquidity position.




20




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 to cash flow 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, 2007 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.





We
      do not
      maintain off-balance sheet arrangements nor do we 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***





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.





***Valuation
      of Accounts Receivable***





Our
      allowance for doubtful accounts reflects our best estimate of probable losses,
      determined principally on the basis of historical experience and specific
      allowances for known troubled accounts.





***Beneficial
      Conversion Feature***




21




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 amortized the discount using the
      effective interest method through maturity of such instruments .
      The
      Company recorded the corresponding unamortized debt discount related to the
      BCF
      and warrants as interest expense when the related instrument was converted
      into
      the Company's common stock. As a result of the convertible notes being in
      default, the Company has accelerated the amortization of the remaining discount
      on such instruments and recognized the corresponding cost as interest
      expense.





***Derivative
      Financial 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.





***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.





22


**ITEM
      7 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**





**IGIA,
      INC.**





**INDEX
      TO FINANCIAL STATEMENTS**





PageReports
                of Independent Registered Public Accounting Firm
            
            F-2Consolidated
                Balance Sheet as of February 28, 2007
            
            F-3
                - F-4Consolidated
                Statements of Operations for the years ended
              February
                28, 2007 and February 28, 2006
            
            F-5Consolidated
                Statement of Deficiency of Stockholders' Equity for the two years
                ended
                February 28, 2007
            
            F-6Consolidated
                Statements of Cash Flows for the years ended
              February
                28, 2007 and February 28, 2006
            
            F-7
                - F-9Notes
                to Consolidated Financial Statements
            
            F-10
                - F-22











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, collectively, the "Company," as of February 28,
      2007,
      and the related consolidated statements of operations, deficiency in
      stockholders' equity, and cash flows for each of the two years in the period
      ended February 28, 2007. 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 each of the two years in the period ended February 28,
      2007 in conformity with accounting principles generally accepted in the
      United States of America.





As
      discussed in Note 1(r) to the consolidated financial statements, the
      Company adopted the provisions of Statement of Financial Accounting Standards
      No. 123(R), "Share-Based Payment" effective March 1, 2006.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1(b) to the financial
      statements, the Company has suffered recurring losses from operations and has
      a
      net capital deficiency that raises 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(b). The consolidated financial statements do not
      include any adjustments that might result from the outcome of this
      uncertainty.





/s/RBSM
                  LLPRBSM LLP




New
      York,
      New York


July
      3,
      2007





F-2


**IGIA,
                    INC.****(Formerly
                    Tactica International, Inc.)****CONSOLIDATED
                    BALANCE SHEET**
  **February
                    28,****ASSETS**
                
                **2007****CURRENT
                    ASSETS:**Cash
                
                $
                26,780Accounts
                    receivable, net of allowance for doubtful accounts of $130,598
                    (Note
                    2)
                
                
                33,490Prepaid
                    expenses
                
                
                126,651Total
                    current assets
                
                
                186,921Property
                    and equipment, net of accumulated depreciation of $483,754 (Note
                    4)
                
                
                114,947Security
                    deposits
                
                
                108,280Total
                    Assets
                
                $
                410,148**LIABILITIES
                    AND DEFICIENCY IN STOCKHOLDERS’ EQUITY****CURRENT
                    LIABILITIES:**Accounts
                    payable
                
                $
                4,882,351Accounts
                    payable - related party
                
                
                2,623,362Accrued
                    expenses (Note 5)
                
                
                4,383,751Customer
                    deposits
                
                
                118,180Notes
                    payable (Note 6)
                
                
                284,876Notes
                    payable - related parties (Note 11)
                
                
                1,931,407Callable
                    secured convertible notes (Note 7)
                
                
                5,782,914Derivative
                    liability related to callable secured convertible notes
                
                
                9,952,746Total
                    current liabilities
                
                
                29,959,587**LONG
                    TERM LIABILITIES:**Notes
                    payable - long term portion (Note 6)
                
                
                38,937Warrant
                    liability related to callable secured convertible notes
                
                
                180,877Total
                    long term liabilities
                
                
                219,814**TOTAL
                    LIABILITIES**
                
                
                30,179,401Commitments
                    and contingencies (Note 12)**DEFICIENCY
                    IN STOCKHOLDERS’ EQUITY  (Note 9):**Preferred
                    stock, Series E, par value $0.001 per share; 3019 shares issued
                    and
                    outstanding
                
                
                3Preferred
                    stock, Series G, par value $0.001 per share; 50,000 shares issued
                    and
                    outstanding
                
                
                50Common
                    stock, par value $ 0.001 per share; 325,714,177 shares issued
                    and
                    outstanding
                
                
                325,714Common
                    stock subscription
                
                
                2,518Additional
                    paid -in- capital
                
                
                14,608,250Accumulated
                    deficit
                
                
                (44,705,788
                )Total
                    Deficiency in Stockholders’ Equity
                
                
                (29,769,253
                )Total
                    Liabilities and Deficiency in Stockholders’ Equity
                
                $
                410,148
  See
                    accompanying footnotes to the consolidated financial statements


F-3


**IGIA,
                  INC.****(Formerly
                  Tactica International, Inc.)****CONSOLIDATED
                  STATEMENTS OF OPERATIONS**
  **Year
                  Ended February 28,****2007**
              
              **2006****REVENUES:**Net
                  sales
              
              $
              6,020,023
              
              $
              25,532,151Cost
                  of sales
              
              
              1,704,992
              
              
              9,297,707Cost
                  of sales - related party
              
              
              -
              
              
              70,565Gross
                  profit
              
              
              4,315,031
              
              
              16,163,879**OPERATING
                  EXPENSES:**Media
                  advertising
              
              
              4,084,367
              
              
              11,178,572Other
                  selling, general and administrative
              
              
              7,753,905
              
              
              11,651,828Other
                  selling, general and administrative - related party
              
              
              -
              
              
              4,580,371Total
                  operating expenses
              
              
              11,838,272
              
              
              27,410,771**LOSS
                  FROM OPERATIONS**
              
              
              (7,523,241
              )
              
              (11,246,892
              )**OTHER
                  INCOME (EXPENSES):**Interest
                  expense, net
              
              
              (5,280,721
              )
              
              (991,271
              )Financing
                  costs
              
              
              (1,334,519
              )
              
              -Unrealized
                  gain (loss) on adjustment of derivative and warrantliability
                  to fair value of underlying securities
              
              
              646,403
              
              
              (5,820,026
              )Other
              
              
              152,635
              
              
              2,686,417(5,816,202
              )
              
              (4,124,880
              )**LOSS
                  BEFORE REORGANIZATION ITEMS AND INCOME TAXES**
              
              
              (13,339,443
              )
              
              (15,371,772
              )**REORGANIZATION
                  ITEMS:**Gain
                  on extinquishment of bankruptcy debts
              
              
              14,008,772
              
              
              -Professional
                  fees
              
              
              -
              
              
              (1,786,965
              )14,008,772
              
              
              (1,786,965
              )**INCOME
                  (LOSS) BEFORE INCOME TAXES**
              
              
              669,329
              
              
              (17,158,737
              )Income
                  taxes benefit
              
              
              -
              
              
              -**NET
                  INCOME (LOSS)**
              
              $
              669,329
              
              $
              (17,158,737
              )Net
                  income (loss) per common share - basic
              
              $
              0.00
              
              $
              (0.92
              )Net
                  income (loss) per common share - fully diluted
              
              $
              0.00
              
              $
              (0.92
              )Weighted
                  average common shares outstanding - basic
              
              
              198,951,091
              
              
              18,718,114Weighted
                  average common shares outstanding - fully diluted
              
              
              27,592,461,199
              
              
              18,718,114
  See
                  accompanying footnotes to the consolidated financial statements
 F-4
  **IGIA,
                  INC.****(Formerly
                  Tactica International, Inc.)****CONSOLIDATED
                  STATEMENTS OF DEFICIENCY IN STOCKHOLDERS’ EQUITY**
  **Total****Common**
              
              **Additional**
              
              
              
              **Deficiency
                  in****Series
                  E**
              
              **Series
                  G**
              
              
              
              
              
              **Stock**
              
              **Paid-In**
              
              **Accumulated**
              
              **Stockholders’****Preferred
                  Stock**
              
              **Preferred
                  Stock**
              
              **Common
                  Stock**
              
              **Subscription**
              
              **Capital**
              
              **Deficit**
              
              **Equity****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**Balance
                  at March 1, 2005
              
              
              261,574
              
              $
              262
              
              
              -
              
              $
              -
              
              
              18,002,933
              
              $
              18,003
              
              
              -
              
              $
              13,942,910
              
              $
              (28,216,380
              )
              $
              (14,255,205
              )Conversion
                  of Callable Secured Convertible Notes
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              7,560,000
              
              
              7,560
              
              
              
              
              
              92,263
              
              
              
              
              
              99,823Issuance
                  of shares in exchange for services rendered
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,000,000
              
              
              1,000
              
              
              
              
              
              119,000
              
              
              
              
              
              120,000Issuance
                  of preferred shares
              
              
              
              
              
              
              
              
              50,000
              
              
              50
              
              
              
              
              
              
              
              
              
              
              
              1,450
              
              
              
              
              
              1,500Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (17,158,737
              )
              
              (17,158,737
              )Balance
                  at March 1, 2006
              
              
              261,574
              
              $
              262
              
              
              50,000
              
              $
              50
              
              
              26,562,933
              
              $
              26,563
              
              $
              -
              
              $
              14,155,623
              
              $
              (45,375,117
              )
              $
              (31,192,619
              )Conversion
                  of Callable Secured Convertible Notes
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              166,483,500
              
              
              166,484
              
              
              
              
              
              245,297
              
              
              
              
              
              411,781Issuance
                  of Common stock in connection with bankruptcy settlement
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              3,037,230
              
              
              3,037
              
              
              2,518
              
              
              83,326
              
              
              
              
              
              88,881Issuance
                  of shares in exchange for services rendered
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              83,775,000
              
              
              83,775
              
              
              
              
              
              81,010
              
              
              
              
              
              164,785Fair
                  value of options granted
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,590
              
              
              
              
              
              1,590Issuance
                  of shares as payment for interest on loans
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              20,000,000
              
              
              20,000
              
              
              
              
              
              67,000
              
              
              
              
              
              87,000Conversion
                  of Series E perferred stock
              
              
              (258,555
              )
              
              (259
              )
              
              
              
              
              
              
              
              25,855,514
              
              
              25,855
              
              
              
              
              
              (25,596
              )
              
              
              
              
              -Net
                  income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              669,329
              
              
              669,329Balance
                  at February 28, 2007
              
              
              3,019
              
              $
              3
              
              
              50,000
              
              $
              50
              
              
              325,714,177
              
              $
              325,714
              
              $
              2,518
              
              $
              14,608,250
              
              $
              (44,705,788
              )
              $
              (29,769,253
              )
  See
                  accompanying footnotes to the consolidated financial statements
   F-5
 **IGIA,
                    INC.****(Formerly
                    Tactica International, Inc.)****CONSOLIDATED
                    STATEMENTS OF CASH FLOWS**
  **Year
                    Ended February 28,****2007**
                
                **2006**Cash
                    flows from operating activities:Net
                    income (loss)
                
                $
                669,329
                
                $
                (17,158,737
                )Adjustments
                    to reconcile net income to net cash used in operating
                    activities:Depreciation
                    and amortization
                
                
                82,643
                
                
                66,939Unrealized
                    gain related to adjustment of derivative and warrantliability
                    to fair value of underlying securities
                
                
                (646,403
                )
                
                5,820,026Accretion
                    of callable secured convertible notes payable
                
                
                5,565,508
                
                
                729,011Gain
                    on non-cash settlement of bankruptcy debts
                
                
                (14,784,288
                )
                
                (2,684,559
                )Issuance
                    of Series G preferred stock for services
                
                
                -
                
                
                1,500Issuance
                    of common stock for services
                
                
                164,785
                
                
                120,000Stock
                    options granted
                
                
                1,590
                
                
                -Advertising
                    expenses paid by officers
                
                
                -
                
                
                368,200Interest
                    expense credited to notes payable
                
                
                204,166
                
                
                95,302Inventory
                    valuation allowance
                
                
                120,442
                
                
                -Changes
                    in operating assets and liabilities:Accounts
                    receivable
                
                
                654,709
                
                
                (594,566
                )Inventory
                
                
                323,919
                
                
                (155,068
                )Prepaid
                    advertising
                
                
                927,343
                
                
                (831,181
                )Other
                    current assets
                
                
                632,512
                
                
                (366,315
                )Other
                    assets
                
                
                (108,280
                )
                
                -Accounts
                    payable
                
                
                946,159
                
                
                3,358,375Accounts
                    payable - related party
                
                
                (65,500
                )
                
                2,643,108Customer
                    advances
                
                
                (18,658
                )
                
                (35,524
                )Accrued
                    expenses
                
                
                2,889,465
                
                
                1,028,555Pre-petition
                    liabilities
                
                
                -
                
                
                4,534,692Net
                    cash used in operating activities
                
                
                (2,440,559
                )
                
                (3,060,242
                )Cash
                    flows from investing activitiesPurchases
                    of property and equipment
                
                
                (31,941
                )
                
                (45,693
                )Net
                    cash used in investing activities
                
                
                (31,941
                )
                
                (45,693
                )Cash
                    flows from financing activitiesProceeds
                    from loan
                
                
                250,000
                
                
                -Repayment
                    of loan
                
                
                (3,644
                )
                
                -Proceeds
                    from callable secured convertible notes payable
                
                
                1,527,324
                
                
                2,676,662Proceeds
                    from notes payable - related parties
                
                
                850,000
                
                
                435,000Repayment
                    of notes payable - related parties
                
                
                (132,287
                )
                
                -Net
                    cash provided by financing activities
                
                
                2,491,393
                
                
                3,111,662Net
                    increase in cash
                
                
                18,893
                
                
                5,727Cash
                    and cash equipment at beginning of year
                
                
                7,887
                
                
                2,160Cash
                    and cash equivalent at end of year
                
                $
                26,780
                
                $
                7,887Supplemental
                    Disclosures of Cash Flow InformationCash
                    paid for interest
                
                $
                11,406
                
                $
                107,341Cash
                    paid for taxes
                
                $
                -
                
                $
                -
  See
                    accompanying footnotes to the consolidated financial statements


F-6





**IGIA,
      INC.**


**(formerly
      Tactica International, Inc.)**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**


**February
      28, 2007**






**NOTE
      1 - SUMMARY OF 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.




F-7


**IGIA,
        INC.**
 **(formerly
        Tactica International, Inc.)**
 **NOTES
        TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
        28, 2007**


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 BankruptcyCourt. 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.





As
      a
      result of the Company exiting bankruptcy, the Company recorded a gain on
      extinguishments of debt of $14,008,772 for the year ended February 28,
      2007.





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. The operating losses, negative working capital
      and
      net worth raise substantial doubt about the Company’s ability to continue as a
      going concern. The Company’s ability to obtain additional financing depends on
      the availability of its borrowing capacity, the success of its growth strategy
      and its future performance, each of which is subject to general economic,
      financial, competitive, legislative, regulatory, and other factors beyond the
      Company’s control.





The
      Company needs additional investments in order to continue operations to
      cash flow break even. Additional investments are being sought, but the
      Company cannot guarantee that such investments will be obtained.
      Financing transactions may include the issuance of equity or debt securities,
      obtaining credit facilities, or other financing mechanisms. However, the trading
      price of the Company's common stock could make it more difficult
      to obtain financing through the issuance of equity or debt securities. Even
      if the Company is able to raise the funds required, it is possible
      that the Company could incur unexpected costs and expenses, fail to collect
      significant amounts owed to the Company, or experience unexpected cash
      requirements that would force the Company to seek alternative
      financing. Further, if the Company issues 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, the Company will have to curtail its
      operations.




F-8


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**





**Tactica
                International, Inc****Debtor-in-Possession**(Unaudited)**Balance
                Sheet**February
                28,Assets
            
            2006Due
                from affiliate
            
            $
            2,457,115Other
                current assets
            
            
            1,095,289Total
                current assets
            
            
            3,552,404Property
                and equipment, net
            
            
            102,660**Total
                Assets**
            
            
            **3,655,064**Liabilities
                and Deficiency in Stockholders' EquityPre-petition
                liabilities
            
            $
            14,853,421Due
                to parent
            
            
            6,905,344Due
                to related party
            
            
            2,476,919Other
                current liabilities
            
            
            9,368,129Total
                current liabilities
            
            
            33,603,813Total
                Deficiency in Stockholders' Equity
            
            
            (29,948,749
            )**Total
                Liabilities and Deficiency in Stockholders'
                Equity**
            
            $
            3,655,064**Statement
                of Operations**Year
                EndedFebruary
                28,2006**Revenues:**Net
                sales
            
            $
            20,410,374Cost
                of sales
            
            
            7,982,607Cost
                of sales - related party
            
            
            70,565Gross
                profit
            
            
            12,357,202**Operating
                Expenses:**Media
                advertising
            
            
            8,517,274Other
                selling, general and administrative
            
            
            9,557,383Other
                selling, general and administrative - related party
            
            
            3,784,299Total
                Operating Expenses
            
            
            21,858,956**Loss
                from Operations**
            
            
            (9,501,754
            )**Other
                Income (Expense):**Interest
                expense, net
            
            
            (220,270
            )Other
            
            
            2,686,2782,466,008**Reorganization
                Item:**Professional
                fees
            
            
            (1,786,965
            )Net
                loss before income tax benefit
            
            
            (8,822,711
            )Income
                tax benefit
            
            
            -**Net
                Loss**
            
            $
            (8,822,711
            )





F-9


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


(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
      $0
      and $8,100 for fiscal year 2007 and 2006, respectively.





(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 2007 approximated $1,032,000 and $4,975,000 for
      fiscal year 2006.





(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 2007 and 2006 approximated $11,000 and 27,000, respectively. Prepaid
      advertising was $23,375
      as of February 28, 2007.





(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




F-10


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


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. 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.





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, 2007 excludes the
      inventory and liabilities associated with the Innotrac Settlement.





The
      Company recorded a charge of $173,258 and
      $8,821 for impairment of previously acquired inventory during the fiscal years
      ending 2007 and 2006, respectively. As of February, 28, 2007, the Company had
      recorded an inventory impairment allowance on all inventories held.





(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.





(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




F-11


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


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 income (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 debt and the exercise of the Company's stock options and warrants
      (calculated using the treasury stock method), if such effect is
      dilutive.





As
      of
      February 28, 2006, the assumed conversion of convertible debt into 508,000,000
      common shares and the exercise of outstanding options and warrants to purchase
      17,536,184 common shares were not included in the computation of diluted loss
      per share because the assumed conversion and exercise would be anti-dilutive
      for
      periods presented. As February 28, 2007, diluted earnings per common share
      are
      equal to net earnings divided by the weighted average number of common shares
      outstanding during the period, including the assumed conversion of convertible
      debt into 27,042,030,680 common shares and the effect of stock options and
      warrants to purchase 221,870,000 common shares were included in the computation
      of diluted earnings per share.





(p)
      Liquidity





As
      shown
      in the accompanying financial statements, the Company has incurred a net loss
      from operations of $7,523,241 and $11,246,892 during the year ended February
      28,
      2007 and 2006, respectively. The Company's current liabilities exceeded its
      current assets by $29,772,666 as of February 28, 2007.





(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 $130,598 at February 28, 2007.





(r)
      Stock
      Based Compensation





On
      March
      1, 2006, the Company adopted Statement of Financial Accounting Standards No.
      123
      (revised 2004) "Share-Based Payment" ("SFAS 123 (R)") which requires the
      measurement and recognition of compensation expense for all share-based payment
      awards made to employees and directors including employee stock options and
      employee stock purchases related to a Employee Stock Purchase Plan based on
      the
      estimated fair values. SFAS 123 (R) supersedes the Company's previous accounting
      under Accounting Principles Board Opinion No.25, "Accounting for Stock Issued
      to
      Employees" ("APB 25") for the periods beginning fiscal 2006.





The
      Company adopted SFAS 123 (R) using the modified prospective transition method,
      which required the application of the accounting standard as of March 1, 2006.
      The Consolidated Financial statements as of and for year ended ended February
      28, 2007 reflect the impact of SFAS 123(R). In accordance with the modified
      prospective transition method, the Company's Consolidated Financial Statements
      for the prior periods have not been restated to reflect, and do not include
      the
      impact of SFAS 123 (R). The Company did not recognize any stock based
      compensation expense under SFAS 123 (R) for the year ended February 28, 2007.
      Pro forma stock based compensation was $24,499 for the year ended February
      28,
      2006.





Aggregate
      intrinsic value of options outstanding and options exercisable at February
      28,
      2007 and 2005 was $0 and $0, respectively. Aggregate intrinsic value
      represents the difference between the Company's closing stock price on the
      last
      trading day of the fiscal period, which was $0.0009 as of February 28, 2007,
      and
      the exercise price multiplied by the number of options outstanding.





The
      modified transition method of SFAS 123 (R) requires the presentation of pro
      forma information for periods presented prior to the adoption of SFAS 123 (R)
      regarding net loss and net loss per share as if we had accounted for our stock
      plans under the fair value method of SFAS 123 (R). For pro forma purposes,
      the
      fair value of stock options was estimated using the Black-Scholes option
      valuation model and amortized on a straight-line basis. The pro forma amounts
      are as follows:




F-12


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


2006Net
                income (loss) as reported
            
            $
            (17,158,737
            )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 method (SFAS No. 123)
            
            
            (24,499
            )Net
                loss - Pro Forma
            
            $
            (17,183,236
            )Net
                loss attributable to common stockholders - Pro forma
            
            $
            (0.92
            )Basic
                (and assuming dilution) loss per share - as reported
            
            $
            (0.92
            )Basic
                (and assuming dilution) loss per share - Pro forma
            
            $
            (0.92
            )





In
      accordance with the modified prospective transition method, the Company's
      Consolidated Financial Statements for the prior periods have not been restated
      to reflect, and do not include the impact of SFAS 123 (R). The Company
      recognized stock based compensation expense under SFAS 123 (R) of $ 1,590 for
      the year ended February 28, 2007. During the year ended February 28, 2007,
      stock-based compensation expense recognized during the period is based on the
      value of the portion of share-based payment awards that is ultimately expected
      to vest during the period.





(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 2007 or 2006.





(v)
      Beneficial Conversion Feature and Derivative Financial Instruments





Beneficial
      Conversion Feature




F-13


**IGIA,
            INC.**
 **(formerly
            Tactica International, Inc.)**
 **NOTES
            TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
            28, 2007**
 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. Prior to
        the
        debt instruments being in default, the Company amortized the discount using
        the
        effective interest method through maturity of such instruments. The Company
        recorded the corresponding unamortized debt discount related to the BCF and
        warrants as interest expense when the related instrument was converted into
        the
        Company's common stock. The Company accelerated the amortization in the fiscal
        year ended February 28, 2007 during which the debt instruments were in
        default.


Derivative
      Financial 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.





(w)
      Recent Accounting Developments ****




In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”). This statement defines fair value, establishes a framework
      for measuring fair value and expands disclosures about fair value measurements.
      This statement does not require any new fair value measurements. The effective
      date of this statement is for fiscal years beginning after November 15,
      2007. The Company is currently evaluating the impact, if any, of the adoption
      of
      SFAS 157.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities—Including an amendment of FASB
      Statement No. 115” (“SFAS 159”). This statement permits all entities to
      choose, at specified election dates, to measure eligible items at fair value
      (the “fair value option”). A business entity must report unrealized gains
      and losses on items for which the fair value option has been elected in earnings
      at each subsequent reporting date. Upfront costs and fees related to items
      for which the fair value option is elected must be recognized in earnings as
      incurred and not deferred. This statement is effective as of the beginning
      of an
      entity’s first fiscal year that begins after November 15, 2007. The Company
      is currently evaluating the impact, if any, of the adoption of SFAS 159.





In
      July 2006, the FASB issued Financial Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement
      No. 109” (“FIN 48”), which is a change in accounting for income taxes. FIN
      48 specifies how tax benefits for uncertain tax positions are to be recognized,
      measured, and derecognized in financial statements; requires certain disclosures
      of uncertain tax matters; specifies how reserves for uncertain tax positions
      should be classified on the balance sheet; and provides transition and interim
      period guidance, among other provisions. FIN 48 is effective for fiscal years
      beginning after December 15, 2006. We do not anticipate that this FASB will
      have any material impact on our financial condition or results of
      operations.





In
      September 2006, the SEC issued SAB No. 108, “Considering the Effects
      of Prior Year Misstatements When Quantifying Misstatements in Current Year
      Financial Statements” (“SAB 108”), which provides interpretive guidance on how
      the effects of the carryover or reversal of prior year misstatements should
      be
      considered in quantifying a current year misstatement. The guidance is
      applicable for fiscal years ending after November 15, 2006. We do not
      anticipate that this SAB will have any material impact on our financial
      condition or results of operations.





**NOTE
      2- ACCOUNTS RECEIVABLE**




At
                February, 28, 2007, accounts receivable was comprised of the
                following:Accounts
                receivable
            
            $
            164,088Less:
                allowance for doubtful accounts
            
            
            (130,598
            )Accounts
                receivable, net
            
            $
            33,490




F-14


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


**NOTE
      3- INVENTORY**





Inventories
      are stated at the lower of cost or market determined by the first-in first
      out
      method. At February 28, 2007, components of inventories comprise of the
      following:




Finished
                goods
            
            $
            207,432Less:
                write down
            
            
            (207,432
            )Total
            
            $
            -








**NOTE
      4- PROPERTY AND EQUIPMENT**


At
      February 28, 2007, property and equipment comprised of the
      following:





Usefullives
                (years)Furniture
                and fixtures
            
            
            7
            
            $
            52,108Leasehold
                improvements
            
            
            3
            
            
            29,306Computer
                equipment
            
            
            5
            
            
            277,842Office
                equipment
            
            
            5
            
            
            95,137Computer
                software
            
            
            3
            
            
            61,110Tooling
                costs
            
            
            1
            
            
            29,500Vehicle
            
            
            5
            
            
            53,698598,701Less
                accumulated depreciation
            
            
            
            
            
            (483,754
            )$
            114,947





Depreciation
      and amortization expense was approximately $83,000 and $67,000 for the year
      ended February 28, 2007 and 2006, respectively.





**NOTE
      5- ACCRUED EXPENSES**





At
      February 28, 2007, accrued expenses comprised of the following:





Accrued
                payroll
            
            $
            1,036,999Accrued
                delinquent payroll taxes
            
            
            273,737Accrued
                delinquent sales taxes
            
            
            801,078Accrued
                sales returns and other allowances
            
            
            1,100,555Other
                litigation and other accrued expenses
            
            
            1,171,383Total
            
            $
            4,383,751





**NOTE
      6- NOTES PAYABLE**





On
      April
      4, 2006, the Company entered into a loan agreement to borrow up to $250,000
      for
      purchases of products. Advances under the loan agreement are charged with a
      4%
      service fee and begin to bear interest at a rate of 25% per annum after unpaid
      advances are outstanding 30 days from the date of the advance. On November
      10,
      2006, the Company converted $35,000 of interest and fees due (based on a closing
      price of $0.0035) on borrowings into 10,000,000 shares of common stock. As
      of
      February 28, 2007, the balance due on this loan is $277,990, including
      interest.




In
        July
        2006, the Company financed the purchase of a new automobile for $49,469 and
        traded in its old automobile. The loan bears interest at 8.84% per annum
        and is
        payable in 72 equal
        installments of $888 per month.


F-15


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


A
      summary
      of loans payable at February 28, 2007 is as follows:




Loan
                payable, including unpaid interest - 4% service fee for each advance,
                25%
                per annum for unpaid advances outstanding for 30 days
            
            $
            277,990Bank
                loan - 8.84% per annum, 72 monthly principal and interest payments of
                $888
            
            
            45,823Total
            
            
            323,813Less:
                current portion
            
            
            (284,876
            )Loan
                payable - long term portion
            
            $
            38,937




As
      of
      February 28, 2007, loans payable outstanding mature as follows:


2008
              
              $
              284,8762009
              
              
              8,4592010
              
              
              8,4592011
              
              
              8,4592012
                  and thereafter
              
              
              13,560Total
              
              $
              323,813





**NOTE
      7-CALLABLE SECURED CONVERTIBLE NOTES**





A
                summary of Callable Secured Convertible Notes at February 28, 2007
                is as
                follows:Callable
                Secured Convertible Notes issued on March 24, 2005; 15% per annum
                based
                upon a default rate of interest; 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.
            
            $
            2,496,283Callable
                Secured Convertible Notes issued on June 7, 2006; 15% per annum based
                upon
                a default rate of interest; due three years from the date 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) 25% 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.
            
            
            760,000Callable
                Secured Convertible Notes issued on July 27, 2006; 15% per annum
                based
                upon a default rate of interest; due three years from the date 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) 25% 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.
            
            
            492,112Callable
                Secured Convertible Notes issued on November 6, 2006; 15% per annum
                based
                upon a default rate of interest; due three years from the date 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) 25% 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.
            
            
            500,000Callable
                Secured Convertible Notes issued on February 1, 2007; 15% per annum
                based
                upon a default rate of interest; due three years from the date 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) 25% 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.
            
            
            200,000Subtotal
            
            
            4,448,395Default
                payment (*)
            
            
            1,334,519Total
            
            
            5,782,914Less:
                current portion
            
            
            (5,782,914
            )Callable
                Secured Convertible Note Payables - long term portion
            
            $
            —




F-16


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


(*)
      The
      Company is in default of the terms of the Callable Secured Convertible Notes.
      The investors have the right under the Callable Secured Convertible Notes to
      deliver to the Company a written notice of default. In the event
      that a default is not cured within ten days of notice, the Callable
      Secured Convertible Notes shall become immediately due and payable at an amount
      equal to 130% of outstanding principal plus amounts due for accrued interest
      and
      penalty provisions. The Company has not received a written notice of
      default. In accordance with the default terms of the convertible debt
      agreements, the Company accrued financing costs related to a default premium
      equal to 30% of the outstanding principal of $4,448,395 as of February 28,
      2007.
      The total default premium charge was $1,334,519 during the year ended February
      28, 2007.





March
      2005 Securities Purchase Agreement:





The
      Callable Secured Convertible Notes bear interest at a rate of 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.




As
      of
      February 28, 2007, the Company is in default of interest payment obligations
      on
      the $3,000,000 Callable Secured Convertible Notes. Interest accrues at 8% per
      annum and is payable quarterly following prepayment of the first year ended
      interest due. Principal and interest obligations under the Callable Secured
      Convertible Notes are convertible into the Company’s common stock, at the
      investors' option. To date, the investors have opted to only convert principal
      and the Company has not made quarterly interest payments. Therefore the Company
      is accruing interest at a default rate of 15% per annum.




June
      2006
      Securities Purchase Agreement:





The
      Company entered into a Securities Purchase Agreement with four accredited
      investors on June 7, 2006 for the issuance of an aggregate of $760,000 of
      convertible notes ("Convertible Notes") and attached to the Convertible Notes
      were warrants to purchase 50,000,000 shares of the Company's common stock.
      In
      exchange, the Company received net proceeds of $437,497 after deducting expenses
      of $25,450 and paying general corporate and operating expenses, including the
      payment of auditor and legal fees of $297,053. The Convertible Notes accrue
      interest at 6 % per annum, payable quarterly, and are due three years from
      the
      date of the note. The note holder has the option to convert any unpaid note
      principal to the Company's common stock at a rate of the lower of a) $0.04
      or b)
      25% 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. Interest is due and payable quarterly, except in any month
      in which the Company's trading price, as defined, is greater than $.00875.
      The
      full principal amount of the Callable Secured Convertible Notes is due upon
      default. The warrants are exercisable until seven years from the date of
      issuance at a purchase price of $0.009 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.




F-17


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


As
      of
      February 28, 2007, the Company is in default of interest payment obligations
      on
      the $760,000 Callable Secured Convertible Notes issued on June 7, 2006. Interest
      accrues at 6% per annum and is payable quarterly. Principal and interest
      obligations under the Callable Secured Convertible Notes are convertible
      into the Company's common stock, at the investors' option. To date,
      the investors have not opted to convert any principal or interest and the
      Company has not made the first quarterly interest payment that was due on
      September 7, 2006. Interest on the $760,000 Callable Secured Convertible Notes
      accrues at a default rate of 15% per annum.




July
      2006
      Securities Purchase Agreement:





The
      Company entered into a Securities Purchase Agreement with four accredited
      investors on July 27, 2006 for the issuance of an aggregate of $500,000 of
      convertible notes ("Convertible Notes") and attached to the Convertible Notes
      were warrants to purchase 75,000,000 shares of the Company's common stock.
      In
      exchange, the Company received net proceeds of $441,298.79 after deducting
      expenses of $58,701.21. The Convertible Notes accrue interest at 6 % per annum,
      payable quarterly, and are due three years from the date of the note. The note
      holder has the option to convert any unpaid note principal to the Company's
      common stock at a rate of the lower of a) $0.04 or b) 25% 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. Interest
      is due and payable quarterly, except in any month in which the Company's trading
      price, as defined, is greater than $.00875. The full principal amount of the
      Callable Secured Convertible Notes is due upon default. The warrants are
      exercisable until seven years from the date of issuance at a purchase price
      of
      $0.009 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.




As
      of
      February 28, 2007, the Company is in default of interest payment
      obligations on the $500,000 Callable Secured Convertible Notes issued on July
      27, 2006. Interest accrues at 6% per annum and is payable quarterly. Principal
      and interest obligations under the Callable Secured Convertible Notes are
      convertible into the Company's common stock, at the investors' option.
      To date, the investors have not opted to convert any principal or interest
      and the Company has not made the first quarterly interest payment
      that was due on October 27, 2006. Interest on the $500,000 Callable
      Secured Convertible Notes accrues at a default rate of 15% per
      annum.





November
      2006 Securities Purchase Agreement:





The
      Company entered into a Securities Purchase Agreement with four accredited
      investors on November 6, 2006 for the issuance of an aggregate of $500,000
      of
      convertible notes ("Convertible Notes") and attached to the Convertible Notes
      were warrants to purchase 50,000,000 shares of the Company's common stock.
      In
      exchange, the Company received net proceeds of $475,000 after deducting expenses
      of $25,000. The Convertible Notes accrue interest at 6 % per annum, payable
      quarterly, and are due three years from the date of the note. The note holder
      has the option to convert any unpaid note principal to the Company's common
      stock at a rate of the lower of a) $0.04 or b) 25% 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. Interest
      is
      due and payable quarterly, except in any month in which the Company's trading
      price, as defined, is greater than $.00875. The full principal amount of the
      Callable Secured Convertible Notes is due upon default. The warrants are
      exercisable until seven years from the date of issuance at a purchase price
      of
      $0.009 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.




F-18


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


As
      of
      February 28, 2007, the Company is in default of interest payment obligations
      on
      the $500,000 Callable Secured Convertible Notes issued on November 6, 2006.
      Interest accrues at 6% per annum and is payable quarterly. Principal and
      interest obligations under the Callable Secured Convertible Notes are
      convertible into the Company’s common stock, at the investors’ option. To date,
      the investors have not opted to convert any principal or interest and the
      Company does not expect to pay the first quarterly interest payment that is
      due February 6, 2007. Interest on the $500,000 Callable Secured Convertible
      Notes accrues at a default rate of 15% per annum.




February
      2007 Securities Purchase Agreement:





The
      Company entered into a Securities Purchase Agreement with four accredited
      investors on February 1, 2007 for the issuance of an aggregate of $200,000
      of
      convertible notes ("Convertible Notes") and attached to the Convertible Notes
      were warrants to purchase 20,000,000 shares of the Company's common stock.
      In
      exchange, the Company received net proceeds of $173,528.11 after deducting
      expenses of $26,471.89. The Convertible Notes accrue interest at 6 % per annum,
      payable quarterly, and are due three years from the date of the note. The note
      holder has the option to convert any unpaid note principal to the Company's
      common stock at a rate of the lower of a) $0.04 or b) 25% 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. Interest
      is due and payable quarterly, except in any month in which the Company's trading
      price, as defined, is greater than $.00875. The full principal amount of the
      Callable Secured Convertible Notes is due upon default. The warrants are
      exercisable until seven years from the date of issuance at a purchase price
      of
      $0.009 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.




At
      of
      February 28, 2007, the Company expects to be in default of interest payment
      obligations on the $200,000 Callable Secured Convertible Notes issued on
      February 1, 2007. Interest accrues at 6% per annum and is payable quarterly.
      Principal and interest obligations under the Callable Secured Convertible Notes
      are convertible into the Company’s common stock, at the investors’ option. To
      date, the investors have not opted to convert any principal or interest and
      the
      Company does not expect to pay the first quarterly interest payment that is
      due May 1, 2007. Interest on the $200,000 Callable Secured Convertible
      Notes accrues at a default rate of 15% per annum.




The
      transactions, to the extent that they are 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 notes 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:




·
            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.




F-19


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


·
            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,
                2007.





·
            The
                income (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 (expense)
                item in the form of an unrealized gain (loss) on adjustment of derivative
                and warranty liability to fair
                value.





·
            Accreted
                principal of $1,674,185 as of February 28,
                2007.





The
      following table summarizes the various components of the convertible debentures
      as of February 28, 2007:




Callable
                Secured Convertible Notes
            
            $
            4,448,395Default
                payment
            
            
            1,334,5195,782,914Unamortized
                discount
            
            
            ( 
                -
            )Total
                Callable Secured Convertible Notes
            
            $
            5,782,914





As
      a
      result of the decrease (increase) in the Company stock price, the Company
      recorded an unrealized gain (loss) on the adjustment of derivative and warrant
      liability to fair value of the underlying securities of $646,402 and
      ($5,820,026) for the years ended February 28, 2007 and 2006,
      respectively.





**NOTE
      8-INCOME TAXES**





The
      provision for income taxes for the fiscal years 2007 and 2006 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, 2007 were as follows:




Net
                operating loss carryforwards
            
            $
            6,250,000Valuation
                allowance
            
            
            (6,250,000
            )Net
                deferred tax assets
            
            $
            -




At
      February 28, 2007, the Company had net operating loss carry forwards of
      approximately $25.0 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 $25.0 million will expire if
      not
      utilized by fiscal year 2027.





F-20


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


The
      components of income tax expense were as follows:





Current
            
            $
            -Deferred
            
            
            -$
            -





**NOTE
      9- CAPITAL STOCK**




The
      Company is authorized to issue 1,000,000,000 shares of common stock and
      1,000,000 shares of preferred stock, of which 261,574 have been designated
      Series E convertible preferred stock and 50,000 have been designated Series
      G
      preferred stock. As of February 28, 2007, the Company had issued and outstanding
      325,714,177 shares of common stock, 3,019.07 shares of Series E convertible
      preferred stock and 50,000 shares of Series G preferred stock.




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.





On
      June
      27, 2006, IGIA issued 25,855,514 shares of common stock for the conversion
      of
      258,555.14 shares of IGIA Series E convertible preferred stock in accordance
      with the 100 to 1 conversion ratio. Mr. Sivan and Mr. Ramchandani each held
      71,012.50 shares of Series E preferred stock and each received 7,101,250 common
      shares for the conversion.





As
      of
      February 28, 2007, there were 3,019.07 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 301,907 shares of our Common Stock upon satisfaction of certain
      shareholder requirements.





Series
      G
      Preferred Stock





On
      March
      31, 2005, the Company 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, 2007, 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 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 the Company's 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





Holders
      of the Callable Secured Convertible Notes
      dated March 23, 2005 exercised a series of partial conversions and were issued
      144,483,500 shares of common stock at a conversion price
      averaging approximately $.0028 per share.





Holders
      of the Callable Secured Convertible Notes
      dated July 27, 2006 exercised a series of partial conversions and were issued
      22,000,000 shares of common stock at a conversion price averaging approximately
      $.0004 per share .




F-21


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


On
      September 7, 2006, the Company issued 1,775,000 shares of common stock to two
      consultants in exchange for legal services pursuant to compensation agreements
      dated August 7, 2006. The shares were valued at $9,585 (based on a closing
      price
      of $0.0054).




On
      October 4, 2006, the Company converted $52,000 of interest due (based on a
      closing price of $0.0052) on promissory notes issued the Chief Executive Officer
      and President of the Company, into an aggregate of 10,000,000 shares of common
      stock.





On
      November 10, 2006, IGIA converted $35,000 of interest due (based on a closing
      price of $0.0035) on borrowings, pursuant to the Company’s April 4, 2006 loan
      agreement, into 10,000,000 shares of common stock.




On
      January 4, 2007, the Company issued 2,000,000 shares of common stock to a
      consultant in exchange for legal services pursuant to a compensation agreement
      dated August 7, 2006. The shares were valued at $5,000 (based on a closing
      price
      of $0.0025)




On
      January 8, 2007, the Company issued 8,000,000 shares of common stock to each
      of
      Mr. Sivan and Mr. Prem Ramchandani in accordance with Management Retention
      Agreements dated December 20, 2006 and 24,000,000 shares of common stock to
      consultants in accordance with compensation agreements dated December 19, 2006.
      Collectively, these shares were valued at $100,000 (based upon a closing price
      of $ .0025 ).





On
      February 20, 2007, the Company issued 10,000,000 shares of common stock to
      a
      consultant in accordance with a compensation agreement dated December 19, 2006.
      The shares were valued at $12,000 (based upon a closing price of
      $.0012).





On
      February 21, 2007, the Company issued 10,000,000 shares of common stock to
      a
      vendor as repayment of accounts payable and future services and 10,000,000
      to a
      consultant in exchange for legal services pursuant to a compensation agreement
      dated August 7, 2006. Collectively, these shares were valued at $20,000 (based
      upon a closing price of $.0010).




On
      February 27, 2007, the Company issued 10,000,000 of common stock to a vendor
      for
      payment of services. The shares were valued at $18,200 (based on a closing
      price
      of $.00182).




**Warrants**





As
      of
      February 28, 2007, there were outstanding warrants to purchase 6,000,000 shares
      of common stock at $.03 per share that are exercisable within a five-year period
      ending March 23, 2010 through April 19, 2010 and outstanding warrants to
      purchase 195,000,000 shares of common stock at $.09 per share that are
      exercisable within a seven-year period ending June 7, 2013 through January
      31,
      2014.





*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, 2007:





Warrants
                Outstanding
            
            Warrants
                ExercisableExercise
                Prices
            
            Number
                Outstanding
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable
            
            Weighted
              Average
              Exercise
                Price$
                0.03
            
            
            6,000,000
            
            
            3.34
            
            $
            0.03
            
            
            6,000,000
            
            $
            0.03$
                0.09
            
            
            50,000,000
            
            
            6.27
            
            $
            0.09
            
            
            50,000,000
            
            $
            0.09$
                0.09
            
            
            75,000,000
            
            
            6.41
            
            $
            0.09
            
            
            75,000,000
            
            $
            0.09$
                0.09
            
            
            50,000,000
            
            
            6.69
            
            
            0.09
            
            
            50,000,000
            
            $
            0.09$
                0.09
            
            
            20,000,000
            
            
            6.93
            
            $
            0.09
            
            
            20,000,000
            
            $
            0.09201,000,000
            
            
            6.47
            
            $
            0.09
            
            
            201,000,000
            
            $
            0.09




F-22


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


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





Number
                of Shares
            
            Weighted
                Average Price Per ShareOutstanding
                at March 1, 2006
            
            
            6,100,000
            
            $
            .05Granted
            
            
            195,000,000
            
            
            .09Canceled
                or expired
            
            
            (100,000
            )
            
            1.00Exercised
            
            
            —
            
            
            —Outstanding
                at February 28, 2007
            
            
            201,000,000
            
            $
            .09





Warrants
      issued to non-employees did not result in any charge to operations. The
      significant assumptions used to determine the fair values, using a Black-Scholes
      option pricing model are as follows:





**Warrants
      issued in conjunction with the securities purchase agreement dated March 2005:**





Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            4.00
            %Expected
                stock price volatility
            
            
            71
            %Expected
                dividend payout
            
            
            —Expected
                warrant life-years (a)
            
            
            5.00




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





**Warrants
      issued in conjunction with the securities purchase agreement dated June 2006:**





Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            4.98
            %Expected
                stock price volatility
            
            
            353
            %Expected
                dividend payout
            
            
            —Expected
                warrant life-years (a)
            
            
            7.00





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




**Warrants
      issued in conjunction with the securities purchase agreement dated July 2006:**




Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            5.10
            %Expected
                stock price volatility
            
            
            403
            %Expected
                dividend payout
            
            
            —Expected
                warrant life-years (a)
            
            
            7.00





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




F-23


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


**Warrants
      issued in conjunction with the securities purchase agreement dated November
      2006:**




Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            4.69
            %Expected
                stock price volatility
            
            
            414
            %Expected
                dividend payout
            
            
            —Expected
                warrant life-years (a)
            
            
            7.00





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




**Warrants
      issued in conjunction with the securities purchase agreement dated February
      2007:**




Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            4.84
            %Expected
                stock price volatility
            
            
            400
            %Expected
                dividend payout
            
            
            —Expected
                warrant life-years (a)
            
            
            7.00





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





**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,
      directors and consultants of the Company under a non-qualified employee stock
      option plan.




Options
                Outstanding
            
            Options
                ExercisableExercise
                Prices
            
            Number
                Outstanding
            
            Weighted
                Average Remaining Contractual Life (Years)
            
            Weighted
              Average
              Exercise
                Prices
            
            Number
                Exercisable
            
            Weighted
              Average
              Exercise
                Prices$
                0.02
            
            
            570,000
            
            
            4.00
            
            $
            0.02
            
            
            570,000
            
            $
            0.02$
                0.006
            
            
            300,000
            
            
            4.50
            
            $
            0.006
            
            
            300,000
            
            $
            0.006870,000
            
            
            4.17
            
            $
            0.015
            
            
            870,000
            
            $
            0.015





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




WeightedAverageNumber
                of
            
            Price
                PerShares
            
            ShareOutstanding
                at February 28, 2006
            
            
            1,275,000
            
            $
            0.02Granted
            
            
            300,000
            
            
            0.006Canceled
                or expired
            
            
            
            
            
            -Forfeited
            
            
            (705,000
            )
            
            0.02Outstanding
                at February 28, 2007
            
            
            870,000
            
            $
            0.015




For
      the
      year ended February 28, 2006:


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.




F-24


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


For
      the
      stock options granted September 1, 2006:


Significant
                assumptions (weighted-average):Risk-free
                interest rate at grant date
            
            
            4.68
            %Expected
                stock price volatility
            
            
            412
            %Expected
                dividend payout
            
            
            —Expected
                option life-years (a)
            
            
            5.00




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




**NOTE
      10- CASH FLOWS**





The
      following are non-cash transactions for the year ended February 28,
      2007:





The
      Company recognized non-cash gains from the settlement of bankruptcy debts
      totaling $14,008,772. In connection with the settlement, the Company issued
      3,037,230 shares of its common stock and is obligated to issue an additional
      2,517,803 shares as required by the Plan.





Holders
      of the Callable Secured Convertible Notes
      dated March 23, 2005 exercised a series of partial conversions and were issued
      144,483,500 shares of common stock at a conversion price averaging approximately $.0028 per share.





In
      connection with the finance and purchase of the new automobile, the Company
      borrowed $49,469 from a bank. Along with the purchase, the Company traded in
      its
      old automobile and received a trade in allowance of $4,500. No gain or loss
      was
      recognized on the transaction as the cost of the new automobile was reduced
      by
      the remaining net book value of the old automobile.




On
      June
      27, 2006, IGIA issued 25,855,514 shares of common stock for the conversion
      of
      258,555.14 shares of IGIA Series E convertible preferred stock in accordance
      with the 100 to 1 conversion ratio. Mr. Sivan and Mr. Ramchandani each held
      71,012.50 shares of Series E preferred stock and each received 7,101,250 common
      shares for the conversion.





On
      September 1, 2006, the Company granted options under the stock option
      plan to purchase 300,000 shares of the Company’s common stock in
      exchange for services to be rendered in the future. The options are fully
      vested and expire five years from the date of grant and are
      exercisable at $.006 per share.





On
      September 7, 2006, the Company issued 1,775,000 shares of common stock to two
      consultants in exchange for legal services pursuant to compensation agreements
      dated August 7, 2006. The shares were valued at $9,585 (based on a closing
      price
      of $0.0054).




On
      October 4, 2006, the Company converted $52,000 of interest due (based on a
      closing price of $0.0052) on promissory notes issued the Chief Executive Officer
      and President of the Company, into an aggregate of 10,000,000 shares of common
      stock.





On
      November 10, 2006, IGIA converted $35,000 of interest due (based on a closing
      price of $0.0035) on borrowings, pursuant to the Company’s April 4, 2006 loan
      agreement, into 10,000,000 shares of common stock.





The
      following are non-cash transactions for the year ended February 28,
      2006:





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.




F-25


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


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, 2007 and 2006 was $11,406
      and $107,341, respectively. Cash paid for taxes during the fiscal year ended
      February 28, 2007 and 2006 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.




**NOTE
      11- RELATED PARTY TRANSACTIONS**




The
      Company has $2,623,362 in accounts payable to Brass Logistics LLC, a provider
      of
      inventory warehousing and customer order fulfillment services. Mr. Sivan, Mr.
      Ramchandani and a shareholder have an ownership interest in Brass Logistics
      LLC.
      The Company purchased $0 and $4,650,936 in services from Brass Logistics LLC
      in
      the year ended February 28, 2007 and 2006, 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.





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. On October 4, 2006, the Company converted $52,000 of interest due (based
      on a closing price of $0.0052) on the notes into an aggregate of 10,000,000
      shares of common stock. As of February 28, 2007, the balance due to Mr. Sivan
      and Mr. Ramchandani collectively was $1,288,417, including accrued interest,
      and
      is included in Notes Payable - related parties.





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"), to provide funds 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 incurred for professional
      fees
      and other bankruptcy case matters. As of February 28, 2007, the Company owed
      $300,000 of note principal and unpaid interest of $35,940, which is included
      in
      Notes Payable - related parties.





On
      March
      13, 2006, APA International LLC advanced $250,000 to the Company for working
      capital purposes in the form of an unsecured promissory note, accruing interest
      at 8% per annum. As of February 28, 2007, the balance due to APA International
      LLC was $307,050 including accrued interest, and is included in Notes Payable
      -
      related parties. Mr. Sivan, Mr. Ramchandani and a shareholder own APA
      International LLC





On
      March
      31, 2005, the Company 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, 2007,
      there were 50,000 shares of Series G preferred stock issued and outstanding.




F-26


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


**NOTE
      12- COMMITMENTS AND CONTINGENCIES**





*Operating
      Leases*





The
      Company leases its office facility under a non-cancelable operating lease
      expiring in April 2008. Net rent expense for years ended February 28, 2007
      and
      2006 was $141,591and $184,319 respectively.





Future
      remaining minimum rentals for non-cancelable operating leases with terms in
      excess of one year as of February 28, 2007 were as follows:


2008
              
              $
              302,4072009
              
              
              190,595$
              790,556





The
      Company subleases office space on a month-to-month basis under cancelable
      operating leases. Rental income derived from such leases for 2007 and 2006
      totaled $148,050 and $0, respectively and is included in Other
      Income.


*Bankruptcy*
 
 a)
              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.
 
 b)
              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.


*Litigation*





Included
      in the results of operations for the year ended February 28, 2007 and in accrued
      expenses at February 28, 2007 are costs incurred or accrued related to
      litigation and contingencies arising in the normal course of business. The
      Company is unable to predict the extent of its ultimate liability with respect
      to any and all future litigation matters. The costs and other effects of
      any future litigation, legal and administrative cases and proceedings,
      settlements, judgments and investigations, claims and changes in the below
      litigation could have a material adverse effect on the Company’s financial
      condition and operating results. The following is a summary of our current
      litigation:





a)
            Claim
                of Singer Worldwide LLC and KSIN Luxembourg III, S.ar.I. for $30,000.00
                in
                costs incurred under a April 2, 2003 license agreement with Tactica
                International, Inc.; the Company is required by a Consent Order for
                Permanent Injunction dated January 16, 2006, to make twelve monthly
                payments in 2007 as settlement of the remaining costs, to maintain
                and
                staff a dedicated toll-free customer service telephone number and
                perform
                certain other administrative tasks. Singer filed a contempt motion
                that in
                Bankruptcy Court concerning noncompliance with the Consent Order
                that was
                heard in June 2007, and the Company has addressed the noncompliance
                complaints, however the Company has objected to Singer’s request to pay
                Singer’s legal costs for filing the motion of approximately $15,000, which
                is currently scheduled to be heard in Bankruptcy Court on July 19,
                2007.





b)
            Tactica
                has entered into a stipulated settlement agreement and confession
                of
                judgment with DLA Piper Rudnick Gray Cary US LLP for payment of $204,033
                for services in connection with resolution of its post-petition
                administrative claims and disputed pre-petition
                claims.




F-27


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


c)
            On
                July 7, 2006, IGIA was served with a Summons and Complaint filed
                in Los
                Angeles County Superior Court, Los Angeles, California by a major
                carrier.
                The Complaint seeks payment by IGIA of $783,344.86 plus $195,836.22
                of
                collection costs and an unspecified amount of interest thereon as
                compensation for the breach of a contract between the major carrier
                and
                Brass Logistics, LLP. The Complaint alleges that Brass Logistics,
                LLP
                shipped packages using the services of the major carrier and failed
                to pay
                for the services. The Complaint further alleges that shipments contained
                products sold by IGIA and therefore benefited IGIA. IGIA believes
                that it
                has adequately reflected in its consolidated financial statements
                as of
                May 31, 2006, the liability for fulfillment services rendered by
                Brass
                Logistics, LLP that are the subject of the Complaint. . The Company
                filed
                an answer and is currently seeking to replace counsel it had retained
                in
                California. Discovery is ongoing and IGIA intends to vigorously defend
                this action. A trial date has been set in August
                2007.





d)
            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 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, Shai
                Bar Lavi
                and IGIA, Inc. and its officers and directors. The plaintiffs 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. The Diva parties filed a 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. In June 2007, the Company entered into
                a
                settlement agreement that provides for the Company to issue a $300,000
                convertible debenture, the liability for which has been provided
                for in
                its financial statements as of February 28, 2007. The Company is
                in
                discussions concerning terms for the convertible debenture and
                effectuating the final settlement.





e)
            In
                February 2006, Shopflash, Inc., a wholly owned subsidiary of the
                Company,
                began working with a media placement agent for direct response sales
                campaigns regarding two household products that Shopflash, Inc. has
                sold.
                The media placement agent placed the Shopflash, Inc. advertisements
                on
                television and the Internet and provided additional campaign support
                that
                allowed Shopflash, Inc. to further develop the campaigns. According
                to the agreement between the parties, the media placement agent receives
                fees and has a security interest in goods and proceeds related to
                the
                campaigns. The media placement agent has acted to exercise contractual
                rights to assume control over the sales campaigns. As a result, Shopflash,
                Inc. has discontinued its participation in the two sales campaigns.
                Shopflash, Inc. filed suit against DC Media Capital seeking damages
                resulting from the manner that they managed the sales campaigns and
                have
                withheld customer information needed by Shopflash to service customers.
                DC
                Media Capital has filed a lawsuit against Shopflash, Inc., Avi Sivan,
                Prem
                Ramchandani and Kurt Streams seeking $3,000,000 plus punitive damages
                and
                recovery costs, an amount that substantially exceeds the $1.6 million
                amount DC Media Capital previously sought. Motions to dismiss both
                of the
                actions are filed and opposed and the matters may be
                consolidated.





f)
            On
                September 22, 2006, an adversary proceeding was filed in the U.S.
                Bankruptcy Court, Eastern District of New York by H.Y. Applied under
                Data
                Services, Inc (a debtor in possession) against Shopflash, Inc. &
                Tactica International asserting for fulfillment services, allegedly
                provided for the two companies, both of which are wholly owned
                subsidiaries of IGIA. The claim against Tactica is for $1,660.57,
                the
                claim against Shopflash is for $54, 661.80. In January 2007, the
                bankruptcy of H.Y. Applied Inter Data Services, Inc. was converted
                to a
                Chapter 7 proceeding with a court appointed trustee handling the
                matter
                and asserting the claims in the U.S. Eastern District Bankruptcy
                Court.
                Both claims are disputed by the Company, which believes that the
                services
                claimed were not performed; that the Company was overcharged, and
                falsely
                billed, and that H.Y. Applied Data Services, Inc. converted funds
                and
                product belonging to the Company to, and that H.Y. Applied Data Services,
                Inc. actually owes in excess of $100,000.00 dollars to the Company.
                The
                Company has asserted an answer with counterclaims. Discovery is ongoing.





g)
            An
                assignee of United Parcel Service filed suit against Tactica International
                seeking $152,299.06 for shipping services allegedly provided to IGIA.
                The
                Company is challenging the liability in the litigation.





h)
            The
                American Express Merchant Services Company asserted a claim on March
                27,
                2007 in Los Angeles County Superior Court in the amount of $324,941.87
                against Brass Logistics, LLC, a fulfillment house used by the company
                in
                the past, the President of Brass Logistics and Tactica International.
                The
                plaintiff alleges that these services were provided on behalf of
                Tactica.
                The Company is seeking counsel in California and the parties have
                had
                preliminary settlement discussions.





i)
            Klestadt
                & Winters, LLP, a law firm previously employed by the company has
                commenced an action for legal fees allegedly earned in the total
                amount of
                $24,180.41. The action is pending in the Civil Court of the City
                of New
                York. The company has filed a response to the action and is engaged
                in
                settlement discussions with the plaintiff. The Company defeated a
                motion
                of summary judgment by the plaintiff and the action is scheduled
                to go to
                trial on July 18, 2007.




F-28


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


j)
            On
                February 28, 2007, an Agreed Final Order was executed and approved
                by the
                Circuit Court of Kanawha County in West Virginia that settled a civil
                enforcement action brought by the State of West Virginia, through
                its
                Attorney General, against IGIA, Inc. and Prem Ramchandani, individually
                and as President of IGIA, Inc. The settlement requires IGIA, Inc.
                to pay
                the State of West Virginia a civil penalty in the amount of $176,139.27,
                to be paid in equal monthly installments of $10,000 beginning March
                5,
                2007, with the final payment to be made on October 6, 2008. IGIA,
                Inc.
                also agreed not to transact business in the State of West Virginia
                until
                the full settlement amount has been paid. The State of West Virginia
                agreed that the civil penalties paid by IGIA, Inc. shall be used
                by the
                State to provide restitution to eligible consumers. In the settlement
                IGIA
                and Mr. Ramchandani did not admit any of the allegations contained
                in the
                State’s complaint.





k)
            The
                Attorney General of the State of Kansas has asserted a claim against
                the
                Company for alleged unfair trade practices. The matter appears to
                be
                resolved upon the entry of a consent judgment and the payment of
                up to
                $6,000. The terms are currently being
                negotiated.





l)
            The
                Attorney General of the State of Missouri has asserted a claim against
                Brass Logistics, LLC and Tactica International, Inc. for alleged
                unfair
                trade practices. The action seeks full restitution for all aggrieved
                Missouri consumers, a civil penalty of $1,000 per actual violation
                and a
                payment to the State equal to 10% of the restitution and penalties.
                Tactica’s answer is due on or about June 23, 2007. Based on Tactica’s
                preliminary review of customer records, the population of Tactica’s
                Missouri customers who purchased vacuum cleaners was less than 10
                customers. The Company plans to answer the complaint and work with
                the
                Attorney General’s office to resolve the
                matter.





m)
            On November
                26, 2006, Moore Wallace North America, Inc, the lessor of subleased
                premises formerly occupied by the company’s wholly owned subsidiary,
                Tactica International, Inc. has obtained a judgment against Tactica
                for
                $45,572.92, in the Civil Court of the City of New York, in connection
                with
                Tactica’s former occupancy of the premises located at 521 Fifth Avenue,
                New York, New York.. The Company recognizes the need to resolve this
                matter, and intends to open discussions towards that end, in the
                near
                future.





n)
            Rite
                Aid was sued by an individual who alleges injury caused by a product
                purchased from Rite Aid. Rite Aid is defending against the claim
                and has
                sued IGIA, Inc., the alleged product supplier, for any damages that
                may
                result. The amount of claims has not yet been established. We intend
                to
                defend the foregoing lawsuit vigorously, but, because the lawsuit
                is still
                in the preliminary stages, we cannot predict the outcome and are
                not
                currently able to evaluate the likelihood of success or the range
                of
                potential loss, if any, that might be incurred in connection with
                the
                action.





o)
            The
                Telemarketing Company, a telemarketing firm previously employed by
                the
                Company has commenced an action for service fees allegedly earned
                in the
                total amount of $8,485.88 in the First Civil Court of Cook County,
                Illinois, and obtained a default judgment. The Company is engaged
                in
                settlement discussions with the
                plaintiff.





*Payroll
      Taxes*





At
      February 28, 2007, the Company is delinquent with remitting payroll taxes of
      approximately $273,737, including estimated penalties and interest related
      to
      payroll taxes withheld since July 2006. The Company has recorded the delinquent payroll taxes,
      which
      are included in accrued expenses on the balance sheet. Although the Company
      has
      not entered into any formal repayment agreements with the respective tax
      authorities, management plans to make payment as funds become available.
      Penalties and interest amounts are subject to increase based on a number of
      factors that can cause the estimated liability to increase
      further.




*Sales
      Taxes*





At
      February 28, 2007, the Company is delinquent with remitting sales taxes of
      approximately $801,078, including related estimated penalties and interest
      related to sales taxes withheld since 2005 in the states of New York and
      California. The Company has recorded the delinquent sales taxes ,
      which
      are included in accrued expenses on the balance sheet. Although the Company
      has
      not entered into any formal repayment agreements with the respective tax
      authorities, management plans to make payment as funds become available.
      Penalties and interest amounts are subject to increase based on a number of
      factors that can cause the estimated liability to increase further.





*Default
      of Callable Secured Convertible Notes*




F-29


**IGIA,
          INC.**
 **(formerly
          Tactica International, Inc.)**
 **NOTES
          TO CONSOLIDATED FINANCIAL STATEMENTS**
 **February
          28, 2007**


The
      Company is in default of the terms of the Callable Secured Convertible Notes.
      The investors have the right under the Callable Secured Convertible Notes to
      deliver to the Company a written notice of default. In the event
      that a default is not cured within ten days of notice, the Callable
      Secured Convertible Notes shall become immediately due and payable at an amount
      equal to 130% of outstanding principal plus amounts due for accrued interest
      and
      penalty provisions. The Company has not received a written notice of
      default. In accordance with the default terms of the convertible debt
      agreements, the Company accrued financing costs related to a default premium
      equal to 30% of the outstanding principal of $4,448,395 as of February 28,
      2007.
      The total default premium charge was $1,334,519 during the year ended February
      28, 2007.




**NOTE
      13- SUBSEQUENT EVENTS**





Subsequent
      to the date of the balance sheet, holders of the Callable Secured Convertible
      Notes dated July 27, 2006 exercised a series of partial conversions and were
      issued 27,920,000 shares of common stock at a conversion price averaging
      approximately $.0001 per share.





During
      the period from March 7, 2007 through June 11, 2007, the Company issued
      50,000,000 shares of common stock to a consultant in exchange for legal services
      pursuant to the Company’s 2007 Incentive Stock Plan filed on February 13, 2007
      under Form S-8. The shares were valued at $50,000 (based on the cost of services
      performed).




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 its 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. The Diva parties filed a 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. In June 2007, the Company entered into a settlement agreement
      that provides for the Company to issue a $300,000 convertible debenture, the
      liability for which has been provided for in its financial statements as of
      February 28, 2007. The Company is in discussions concerning terms for the
      convertible debenture and effectuating the final settlement.




The
      Company entered into a Securities Purchase Agreement with three accredited
      investors on June 7, 2007 for the issuance of an aggregate of $180,000 of
      convertible notes ("Convertible Notes") and attached to the Convertible Notes
      were warrants to purchase 20,000,000 shares of the Company's common stock.
      In
      exchange, the Company received net proceeds of $170,000.00 after deducting
      expenses of $10,000. The Convertible Notes accrue interest at 6 % per annum,
      payable quarterly, and are due three years from the date of the note. The note
      holder has the option to convert any unpaid note principal to the Company's
      common stock at a rate of the lower of a) $0.04 or b) 25% 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. Interest
      is due and payable quarterly, except in any month in which the Company's trading
      price, as defined, is greater than $.00875. The full principal amount of the
      Callable Secured Convertible Notes is due upon default. The warrants are
      exercisable until seven years from the date of issuance at a purchase price
      of
      $0.009 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
      Company expects to be in default of interest payment obligations on the $180,000
      Callable Secured Convertible Notes issued on June 7, 2007. Interest accrues
      at
      6% per annum and is payable quarterly. Principal and interest obligations under
      the Callable Secured Convertible Notes are convertible into the Company’s common
      stock, at the investors’ option. To date, the investors have not opted to
      convert any principal or interest.





F-30





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





None





**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, 2007, our management carried out an evaluation, under the
      supervision of our Chief Executive Officer and the Interim 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 Interim Chief Financial Officer
      concluded that our disclosure controls and procedures need improvement and
      were
      not adequately effective as of February 28, 2007 to ensure timely reporting
      with
      the Securities and Exchange Commission. Our management is seeking additional
      working capital that will be necessary for addressing 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), our management, including the Chief Executive
      Officer and Interim Chief Financial Officer, respectively also conducted an
      evaluation of our internal controls over financial reporting to determine
      whether any changes occurred during the fiscal year ended February 28, 2007
      that
      have materially affected, or are reasonably likely to materially affect, our
      internal control over financial reporting. During the preparation of our
      financial statements as of and for the fiscal year ended February 28, 2007,
      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 determined the need to obtain additional working
      capital that could be used, in part, to initiate changes in internal controls.
      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 Our Internal Controls over Financial
      Reporting and Disclosure Controls and Procedures**




During
      the course of the preparation of our February 28, 2007 financial statements,
      we
      identified certain material weaknesses relating to our internal controls and
      procedures within the areas of revenue recognition, liability recognition and
      inventory accounting. Some of these internal control deficiencies may also
      constitute deficiencies in our disclosure controls.





a)
            In
                order to review the financial condition and prepare the financial
                disclosures in this document, the Company’s internal personnel did
                detailed validation work 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 obtaining additional working capital
                that
                would be needed for implementing a more effective system of controls,
                procedures and other changes in the areas of revenue recognition,
                liability recognition and inventory accounting 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 managementacknowledges
                the existence of this problem, and has developed procedures to address
                them to the extent possible given limitations in financial and manpower
                resources. Our internal controls depend on an effective integration
                of our
                records with the activity reporting systems of certain third party
                service
                providers, including our fulfillment service providers and our credit
                card
                processors. When we engage a new fulfillment service provider or
                credit
                card processor, as we did during the fiscal year ended February 28,
                2007,
                we need to integrate our records with their activity reporting systems.
                Among the changes needed to be implemented
                are:


Revenue
        and Liability Recognition
 ·
              Criteria
                  and procedures established to reconcile invoicing and shipping
                  records
 
 ·
              Criteria
                  and procedures established to reconcile direct response sales activity
                  records
  ·
              Control
                  function established to review and monitor compliance to new
                  procedures
 
 ·
              Improved
                  document control and file check out
                  procedures
 
 Inventory
        Accounting
 ·
              Document
                  control system established and monitored for
                  compliance
 
 ·
              Cut
                  off procedures formalized and consistently
                  applied
 
 ·
              Purchasing
                  procedures have been formalized and implementation has
                  begun
  Our
        officers have been working with the Board of Directors to address the
        improvements regarding deficiencies in the disclosure controls and procedures.
        We are currently engaged in seeking additional working capital that will
        be
        required for the implementation of new internal control procedures. Management
        expects that new associated procedures, once implemented, will correct the
        deficiencies and will result in disclosure controls and procedures pursuant
        to
        Rule 13a-14 of the Exchange Act, which will timely alert the Chief Executive
        Officer and Interim Chief Financial Officer to material information relating
        to
        our company required to be included in our Exchange Act
        filings.
  (a)
              Changes
                  in internal controls
  During
        the fiscal year ended February 28, 2007, we decreased the number of employees,
        including accounting and other administrative personnel who were responsible
        for
        processing and recording our activity, which has decreased the effectiveness
        of
        our internal controls. We intend to hire personnel needed to operate the
        business and internal controls should we obtain additional working
        capital.




23





**ITEM
      8B - OTHER INFORMATION**





None


**PART
      III**








**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
            44
            Chairman
                of the Board and Chief Executive OfficerPrem
                Ramchandani
            59
            President,
                Interim Chief Financial Officer, Treasurer and DirectorYehiel
                Ben-Harush
            38
            Director





**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® brand of products.





**Prem
      Ramchandani,** President,
      Interim Chief Financial Officer, Treasurer and a Director since June 11, 2004,
      he 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 a founder 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.





**Yehiel
      Ben-Harush** ,
      Director, since July 14, 2006. Mr. Ben-Harush is currently the President of
      Interbelmont Realty Corp., a company which provides services in connection
      with
      real estate purchased for investment, which he founded in July 1998. From March
      1995 through June 1998 Mr. Ben-Harush was the Director of Residential Sales
      for
      Dwelling Quest Realty.








**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.




24


**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Exchange Act of 1934 requires the Company's directors
      and executive officers, and persons who own more then 10 percent of the
      Company's Common Stock, to file with the SEC the initial reports of ownership
      and reports of changes in ownership of common stock. Officers, directors and
      greater than 10 percent stockholders are required by SEC regulation to furnish
      the Company with copies of all Section 16(a) forms they file.





Specific
      due dates for such reports have been established by the Commission and the
      Company is required to disclose any failure to file reports by such dates.
      Based
      solely on its review of the copies of such reports received by it, or written
      representations from certain reporting persons that no Forms 5 were required
      for
      such persons, the Company believes that during the fiscal year ended February
      28, 2007, there was no failure to comply with Section 16(a) filing requirements
      applicable to its officers, directors and ten percent stockholders.





**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.





**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following table sets forth the annual and long-term compensation 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."





**Summary** **Compensation Table update for stock**




Name
                & Principal Position
            Year
            Salary
                ($)
            Bonus
                ($)
            Stock
                Awards ($)
            Option
                Awards ($)
            Non-Equity
                Incentive Plan Compensation ($)
            Change
                in Pension Value and Non-Qualified Deferred Compensation Earnings
                ($)
            All
                Other Compensation ($)
            Total
                ($)Avi
                Sivan
              Chief
                Executive
              Officer
            2006
              2007
            496,154
              490.000
            0
            0
              20,000
            0
              0
            0
              0
            0
              0
            31,204
              0
            527,358
              510,000Prem
                Ramchandani President and Interim
              Chief
                Financial
              Officer
            2006
              
              2007
            496,154
              
              490,000
            0
              
              0
            0
              
              20,000
            0
              
              0
            0
              
              0
            0
              
              0
            48,111
              
              0
            544,265
              
              510,000





**Options
      Grants**





**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 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 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.






25


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.




**Outstanding
      Equity Awards at Fiscal Year-End Table.**




Option
                Awards
            Stock
                AwardsName
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            Number
              of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Securities
                Underlying
              Unexercised
              Unearned
              Options
              (#)
            Option
              Exercise
              Price
              ($)
            Option
              Expiration
              Date
            Number
              of
                Shares
              or
                Units
              of
                Stock
              That
                Have
              Not
              Vested
              (#)
            Market
              Value
                of
              Shares
                or
              Units
                of
              Stock
              That
                Have
              Not
              Vested
              ($)
            Equity
              Incentive
              Plan
                Awards:
              Number
              of
              Unearned
              Shares,
              Units
                or
              Other
                Rights
              That
                Have
              Not
              Vested
              (#)
            Equity
                Incentive
              Plan
                Awards:
              Market
                or Payout
              Value
              of
              Unearned
              Shares,
              Units
                or
              Other
              Rights
              That
                Have
              Not
              Vested
              ($)None.








**Director
      Compensation**





Name
              (a)
            Fees
                Earned or Paid in Cash
              ($)
              (b)
            Stock
                Awards
              ($)
              (c)
            Option
              Awards
                ($)
              (d)
            Non-Equity
                Incentive Plan Compensation ($)
              (e)
            Change
                in Pension Value and Nonqualified Deferred Compensation Earnings
              (f)
            All
                Other Compensation
              ($)
              (g)
            Total
              ($)
              (h)None.





Non-employee
      directors receive $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


**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 July 13, 2007 and as adjusted to
      reflect the maximum number of shares of our common stock which may issued upon
      conversion of the Convertible Preferred Stock by:





·
            each
                person known by us to be the beneficial owner of more than 5% of
                our
                Common Stock;


·
            each
                of our directors;


·
            each
                of our executive officers; and


·
            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.


**Amount
                  and Nature****Title
                  of Class**
              
              **Name
                  of Beneficial Owner**
              
              **of
                  Beneficial Owner**
              
              **Percent
                  of Class**Common
                  Stock
              
              
              Avi
                  Sivan(1)(2)
              
              
              10,147,500
              
              
              2.50
              %Common
                  Stock
              
              
              Prem
                  Ramchandani(1)(2)
              
              
              12,697,500
              
              
              3.13
              %Common
                  Stock
              
              
              Yehiel
                  Ben-Harush(2)
              
              
              100,000
              
              
              0.02
              %Common
                  Stock
              
              
              All
                  directors and named
                executive
                  officers as a group
              
              
              22,945,000
              
              
              5.66
              %





(1)
            Avi
                Sivan and Prem Ramchandani each pledged 9,947,500 shares of common
                stock
                toNew
                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.


(2)
            Includes
                options issued, which are exercisable immediately, as follows: Sivan
                -
                200,000; Ramchandani - 200,000; and Ben-Harush -
                100,000.


**Title
                  of Class**
              
              **Name
                  of Beneficial Owner**
              
              Amount
                    and Natureof Beneficial Owner
              
              **Percent
                  of Class**Series
                  G Preferred
              
              
              Avi
                  Sivan(2)
              
              
              25,000(1)
              
              
              50.0
              %Series
                  G Preferred
              
              
              Prem
                  Ramchandani(2)
              
              
              25,000(1)
              
              
              50.0
              %





(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 9,947,500 shares of IGIA
                Common Stock and 25,000 shares of their IGIA Series G Preferred
                Stock 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


**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**





As
      of
      February 28, 2007, we have $2,627,862 in accounts payable to Brass Logistics
      LLC, a provider of inventory warehousing and customer order fulfillment
      services. Mr. Sivan, Mr. Ramchandani and a significant shareholder have an
      ownership interest in Brass Logistics LLC. We purchased $0 and $4,650,936 in
      services from Brass Logistics LLC in the fiscal years ended February 28, 2007
      and 2006, respectively. Fees and costs under the June 14, 2004 agreement
      fluctuated based upon the amount of orders placed and fulfilled. Brass Logistics
      LLC has ceased its operations.





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 16% per annum. We owed
      $305,579 as of February 28, 2005, consisting of the entire Note principal and
      related accrued interest. 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 and subordinate, including the Callable Secured
      Convertible Notes and certain carve out expenses that Tactica incurs for
      professional fees and other bankruptcy case matters.




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 May 31, 2006, the balance due to Mr. Sivan and Mr. Ramchandani
      collectively was $1,365,270, including accrued interest, and is included in
      Notes Payable - related parties. On October 4, 2006 the Company converted
      $52,000 of interest due (based on a closing market price of $0.0052) in exchange
      for the issuance of an aggregate of 10,000,000 shares of our common stock to
      Mr.
      Sivan and Mr. Ramchandani.




On
      March
      13, 2006, APA International LLC advanced $250,000 to the Company for working
      capital purposes in the form of an unsecured promissory note, accruing interest
      at 8% per annum. As of May 31, 2006, the balance due to APA International LLC
      was $289,997, including accrued interest, and is included in Notes Payable
      -
      related parties. Mr. Sivan, Mr. Ramchandani and a significant shareholder own
      APA International LLC.




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


**ITEM
      13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.**





***Exhibits:***


ExhibitNumber
              Description2.1
                  (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
                  (10)
              Certificate
                  of Amendment, dated November 3, 20053.4
                  (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.4.16
                  (5)
              Callable
                  Secured Convertible Note in the name of New Millennium Capital
                  Partners
                  II, LLC dated April 20, 20054.17
                  (5)
              Callable
                  Secured Convertible Note in the name of AJW Qualified Partners,
                  LLC dated
                  April 20, 20054.18
                  (5)
              Callable
                  Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                  April 20,
                  20054.19
                  (5)
              Callable
                  Secured Convertible Note in the name of AJW Partners, LLC dated
                  April 20,
                  20054.20
                  (5)
              Stock
                  Purchase Warrant in the name of New Millennium Capital Partners
                  II, LLC
                  dated April 20, 20054.21
                  (5)
              Stock
                  Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                  April
                  20, 20054.22
                  (5)
              Stock
                  Purchase Warrant in the name of AJW Offshore, Ltd. dated April
                  20,
                  20054.23
                  (5)
              Stock
                  Purchase Warrant in the name of AJW Partners, LLC dated April 20,
                  20054.24
                  (6)
              Callable
                  Secured Convertible Note in the name of New Millennium Capital
                  Partners
                  II, LLC dated December 22, 20054.25
                  (6)
              Callable
                  Secured Convertible Note in the name of AJW Qualified Partners,
                  LLC dated
                  December 22, 20054.26
                  (6)
              Callable
                  Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                  December
                  22, 20054.27
                  (6)
              Callable
                  Secured Convertible Note in the name of AJW Partners, LLC dated
                  December
                  22, 20054.28
                  (6)
              Stock
                  Purchase Warrant in the name of New Millennium Capital Partners
                  II, LLC
                  dated December 22, 20054.29
                  (6)
              Stock
                  Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                  December
                  22, 20054.30
                  (6)
              Stock
                  Purchase Warrant in the name of AJW Offshore, Ltd. dated December
                  22,
                  20054.31
                  (6)
              Stock
                  Purchase Warrant in the name of AJW Partners, LLC dated December
                  22,
                  20054.32
                  (7)
              Securities
                  Purchase Agreement dated June 7, 2006 by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.33
                  (7)
              Callable
                  Secured Convertible Note in the name of New Millennium Capital
                  Partners
                  II, LLC dated June 7, 20064.34
                  (7)
              Callable
                  Secured Convertible Note in the name of AJW Qualified Partners,
                  LLC dated
                  June 7, 20064.35
                  (7)
              Callable
                  Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                  June 7,
                  20064.36
                  (7)
              Callable
                  Secured Convertible Note in the name of AJW Partners, LLC dated
                  June 7,
                  20064.37
                  (7)
              Stock
                  Purchase Warrant in the name of New Millennium Capital Partners
                  II, LLC
                  dated June 7, 20064.38
                  (7)
              Stock
                  Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                  June 7,
                  20064.39
                  (7)
              Stock
                  Purchase Warrant in the name of AJW Offshore, Ltd. dated June 7,
                  20064.40
                  (7)
              Stock
                  Purchase Warrant in the name of AJW Partners, LLC dated June 7,
                  2006
  29
  4.41
                  (7)
              Registration
                  Rights Agreement dated June 7, 2006 by and among the Company and
                  New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.42
                  (7)
              Security
                  Agreement dated June 7, 2006 by and among the Company and New Millennium
                  Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                  Ltd.
                  and AJW Partners, LLC4.43
                  (7)
              Intellectual
                  Property Security Agreement dated June 7, 2006 by and among the
                  Company
                  and New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                  LLC,
                  AJW Offshore, Ltd. and AJW Partners, LLC4.44
                  (8)
              Securities
                  Purchase Agreement dated July 27, 2006 by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.45(8)
              Callable
                  Secured Convertible Note in the name of New Millennium Capital
                  Partners
                  II, LLC dated July 27, 20064.46(8)
              Callable
                  Secured Convertible Note in the name of AJW Qualified Partners,
                  LLC dated
                  July 27, 20064.47(8)
              Callable
                  Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                  July 27,
                  20064.48(8)
              Callable
                  Secured Convertible Note in the name of AJW Partners, LLC dated
                  July 27,
                  20064.49(8)
              Stock
                  Purchase Warrant in the name of New Millennium Capital Partners
                  II, LLC
                  dated July 27, 20064.50(8)
              Stock
                  Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                  July 27,
                  20064.51(8)
              Stock
                  Purchase Warrant in the name of AJW Offshore, Ltd. dated July 27,
                  20064.52(8)
              Stock
                  Purchase Warrant in the name of AJW Partners, LLC dated July 27,
                  20064.53(8)
              Registration
                  Rights Agreement dated July 27, 2006 by and among the Company and
                  New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.54(8)
              Security
                  Agreement dated July 27, 2006 by and among the Company and New
                  Millennium
                  Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                  Ltd.
                  and AJW Partners, LLC4.55(8)
              Intellectual
                  Property Security Agreement dated July 27, 2006 by and among the
                  Company
                  and New Millennium Capital Partners II, LLC, AJW Qualified Partners,
                  LLC,
                  AJW Offshore, Ltd. and AJW Partners, LLC4.56(8)
              Amendment
                  to Callable Secured Convertible Notes dated July 27, 2006 by and
                  among the
                  Company and New Millennium Capital Partners II, LLC, AJW Qualified
                  Partners, LLC, AJW Offshore, Ltd. and AJW Partners, LLC4.57
              Escrow
                  Agreement dated July 27, 2006 by and among the Company, New Millennium
                  Capital Partners II, LLC, AJW Qualified Partners, LLC, AJW Offshore,
                  Ltd.,
                  AJW Partners, LLC and Owen Naccarato4.44
                  (11)
              Securities
                  Purchase Agreement dated November 6, 2006 by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.45(11)
              Callable
                  Secured Convertible Note in the name of New Millennium Capital
                  Partners
                  II, LLC dated November 6, 20064.46(11)
              Callable
                  Secured Convertible Note in the name of AJW Qualified Partners,
                  LLC dated
                  November 6, 20064.47(11)
              Callable
                  Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                  November
                  6, 20064.48(11)
              Callable
                  Secured Convertible Note in the name of AJW Partners, LLC dated
                  November
                  6, 20064.49(11)
              Stock
                  Purchase Warrant in the name of New Millennium Capital Partners
                  II, LLC
                  dated November 6, 20064.50(11)
              Stock
                  Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                  November
                  6, 20064.51(11)
              Stock
                  Purchase Warrant in the name of AJW Offshore, Ltd. dated November
                  6,
                  20064.52(11)
              Stock
                  Purchase Warrant in the name of AJW Partners, LLC dated November
                  6,
                  20064.53(11)
              Registration
                  Rights Agreement dated November 6, 2006 by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.54
                  (11)
              Securities
                  Purchase Agreement dated February 1, 2007 by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC4.55(11)
              Callable
                  Secured Convertible Note in the name of New Millennium Capital
                  Partners
                  II, LLC dated February 1, 20074.56(11)
              Callable
                  Secured Convertible Note in the name of AJW Qualified Partners,
                  LLC dated
                  February 1, 20074.57(11)
              Callable
                  Secured Convertible Note in the name of AJW Offshore, Ltd. dated
                  February
                  1, 20074.58(11)
              Callable
                  Secured Convertible Note in the name of AJW Partners, LLC dated
                  February
                  1, 20074.59(11)
              Stock
                  Purchase Warrant in the name of New Millennium Capital Partners
                  II, LLC
                  dated February 1, 20074.60(11)
              Stock
                  Purchase Warrant in the name of AJW Qualified Partners, LLC dated
                  February
                  1, 20074.61(11)
              Stock
                  Purchase Warrant in the name of AJW Offshore, Ltd. dated February
                  1,
                  20074.62(11)
              Stock
                  Purchase Warrant in the name of AJW Partners, LLC dated February
                  1,
                  20074.63(11)
              Registration
                  Rights Agreement dated February 1, 2007 by and among the Company
                  and New
                  Millennium Capital Partners II, LLC, AJW Qualified Partners, LLC,
                  AJW
                  Offshore, Ltd. and AJW Partners, LLC10.1
                  (9)
              Executive
                  Employment Agreement by and between Tactica International, Inc.
                  and Avi
                  Sivan, dated April 29, 2004.10.2
                  (9)
              Executive
                  Employment Agreement by and between Tactica International, Inc.
                  and Prem
                  Ramchandani, dated April 29, 2004.10.4
                  (4)
              Service
                  Agreement by and between Brass Logistics, LLC and IGIA,
                  Inc.21.1
                  (9)
              Subsidiaries23.1
              Consent
                  of RBSM LLP (filed herewith).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 Interim 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.
  30
  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 Interim Chief Financial Officer pursuant to 18 U.S.C. Section
                  1350 as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.


___________________________________________





(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
      Registrant’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 Current Report
      on Form 8-K dated April 21, 2005.


(6)
      Incorporated herein by reference to the exhibits to Registrant's Current Report
      on Form 8-K dated December 28, 2005.


(7)
      Incorporated herein by reference to the exhibits to Registrant's Current Report
      on Form 8-K dated June 13, 2006.


(8)
      Incorporated herein by reference to the exhibits to Registrant's Current Report
      on Form 8-K dated August 2, 2006.


(9)
      Incorporated herein by reference to the exhibit of the same number filed with
      the Registrant’s Registration Statement on Form SB-2 dated April 14,
      2005.


(10)
      Incorporated herein by reference to the exhibit of the same number filed with
      the Registrant’s Registration Statement on Form SB-2 dated November 9,
      2005.


(11)
      Incorporated herein by reference to the exhibits to Registrant's Current Report
      on Form 8-K dated November 13, 2006.





**ITEM
      14. PRINCIPAL ACCOUNTNAT FEEES 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, 2007 and February 28, 2006, and for the reviews of the financial
      statements included in our Quarterly Reports on Form 10-QSB during that fiscal
      year were $154,472 and approximately $103,998, respectively.





Audit
      Related Fees. The Company incurred fees to auditors of $15,475 and $45,098,
      respectively for audit related fees during the fiscal years ended February
      28,
      2007 and February 28, 2006.





Tax
      Fees.
      The Company incurred fees to auditors of $15,469 and $16,613 respectively for
      tax compliance, tax advice or tax compliance services during the fiscal years
      ended February 28, 2007 and February 28, 2006.





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, 2007 and February 28, 2006.





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


31


**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.




SIGNATURE
              
              TITLE
              DATEChief
                  Executive Officer and
              July
                  13, 2007/s/
                  Avi Sivan
              
              Chairman
                  of the BoardAvi
                  Sivan/s/
                    Prem Ramchandani
              
              President,
                  Interim Chief Financial Officer, Treasurer and Director
              July
                  13, 2007Prem
                  Ramchandani/s/
                  Yehiel Ben-Harush
              
              Director
              July
                  13, 2007Yehiel
                  Ben-Harush
  32